Bally's (US:BALY)2023-05-08 16:00Financial Performance - Total revenue for Q1 2023 was $598.7 million, an increase of 9.2% from $548.3 million in Q1 2022[219] - Income from operations rose significantly to $376.7 million in Q1 2023, compared to $22.5 million in Q1 2022[219] - Net income for Q1 2023 was $178.3 million, a substantial increase from $1.9 million in Q1 2022, reflecting a growth of 9,284%[219] - Total revenue for the three months ended March 31, 2023, increased by 9.2% to $598.7 million, compared to $548.3 million in the same period last year, driven by growth in gaming, hotel, and food and beverage segments[226] - Total gaming revenue rose by $23.2 million, or 5.0%, to $486.9 million, while total non-gaming revenue increased by $27.3 million to $111.8 million[226] - Net income for the three months ended March 31, 2023, was $178.3 million, or $3.24 per diluted share, compared to $1.9 million, or $0.03 per diluted share, for the same period in 2022[234] - Adjusted EBITDA for the three months ended March 31, 2023, was $126.4 million, an increase of $11.7 million, or 10.2%, from $114.7 million in the same period last year[234] Expenses and Costs - Gaming and non-gaming expenses as a percentage of total revenue decreased to 45.1% in Q1 2023 from 47.4% in Q1 2022[221] - General and administrative expenses increased to 42.0% of total revenue in Q1 2023, up from 34.1% in Q1 2022[221] - General and administrative expenses increased by $64.6 million, or 34.5%, to $251.6 million, primarily due to higher operating lease expenses and costs associated with recent acquisitions[228] - The company recorded a decrease in gaming expenses by $1.6 million to $217.7 million, attributed to lower marketing costs for iGaming products[227] - Total other expense increased by $34.4 million to $60.7 million, primarily due to higher interest expenses and changes in naming rights liabilities[232] Strategic Initiatives - The company is focusing on expanding its interactive gaming segment, which is seen as a significant strategic opportunity for future growth[204] - Bally's has made progress in integrating acquired assets and deploying capital for strategic growth projects, positioning itself as a vertically integrated iGaming company[205] - The company plans to invest $100 million in Rhode Island over the extended term of its master contracts, which includes expansions and new amenities[211] - Incremental revenue from recent acquisitions, including Tropicana Las Vegas and Casino Secret, contributed $35.1 million during the quarter[226] - The company has committed to invest $100 million in Bally's Twin River over the term of its master contract, with significant progress on a 14,000 square foot spa and a 40,000 square foot casino expansion[257] - Bally's Atlantic City is undergoing a $100 million refurbishment and upgrade, with approximately $20 million estimated spending in 2023[258] - The company signed a framework agreement for a Category 4 licensed casino in Centre County, Pennsylvania, with an estimated total project cost of approximately $120 million[259] - Bally's Chicago will feature approximately 3,400 slot machines, 170 table games, and 500 hotel rooms, with an estimated cost of $70 million for the temporary casino development expected to open by late summer 2023[260] Cash Flow and Financing - For the three months ended March 31, 2023, net cash used in operating activities was $16.1 million, a decrease from net cash provided of $20.8 million in the same period last year[243] - Net cash provided by investing activities increased to $319.6 million, compared to net cash used of $72.0 million for the same period in 2022, driven by $411.0 million from sale-leaseback transactions[244] - Net cash used in financing activities was $173.6 million, a significant change from net cash provided of $4.4 million in the prior year, primarily due to increased long-term debt repayments[245] - Capital expenditures for the three months ended March 31, 2023, were $43.7 million, down from $54.5 million in the same period last year, as the company focuses on generating cash flows for long-term growth[256] - The company repurchased 1,026,343 common shares for $19.8 million under its capital return program, with $174.8 million remaining available for future repurchases[246] Debt and Interest Rates - As of March 31, 2023, the company had $1.92 billion in variable rate debt and a hypothetical 1% increase in interest rates would raise interest expenses by approximately $19.2 million over the next 12 months[266] - The effective tax rate for the first quarter of 2023 was 43.6%, compared to 151.2% in the prior year, reflecting changes in valuation allowance and tax liabilities[233] Economic Environment - The company faces macroeconomic challenges, including rising inflation and interest rates, which could impact discretionary consumer spending[212] - The company does not believe that inflation had a material effect on its business during the three months ended March 31, 2023[265] - Foreign currency transaction losses for the three months ended March 31, 2023, were $4.3 million, compared to a gain of $0.2 million for the same period in 2022[268] - The company has not historically used operational hedges or forward currency exchange contracts to manage currency exchange rate fluctuations[268] Other Commitments - The company has sponsorship commitments totaling $107.5 million, with contracts extending through June 2036[264] - The company is responsible for various gaming license fees, including a $250,000 land-based gaming fee and a $15 million reconciliation fee upon issuance of a Temporary Operating Permit[263] - The company made a one-time payment of $40 million to the City of Chicago and will pay annual fixed host community impact fees of $4 million starting from operations commencement[261] - Bally's Chicago Operating Company will pay $150 million to Chicago Tribune Company for the lease termination, with $140 million secured by standby letters of credit[262] Construction and Development - The permanent casino construction is estimated to be completed by the end of 2026[260] - The company recorded a gain on extinguishment of debt of $4.0 million from repurchasing $15.0 million of Senior Notes due 2031[247] - As of March 31, 2023, cash and cash equivalents totaled $396.9 million, an increase from $223.7 million at the end of the previous year[242]