Bally's (US:BALY)2024-05-03 13:12Part I - Financial Information Financial Statements Bally's Corporation reported a $173.9 million net loss in Q1 2024, primarily due to an operating loss and the absence of a prior-year sale-leaseback gain Condensed Consolidated Balance Sheets Balance Sheet Overview (in thousands) | Metric | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $6,635,996 | $6,861,103 | | Total Current Assets | $536,137 | $572,345 | | Property and equipment, net | $1,100,733 | $1,174,888 | | Goodwill | $1,914,853 | $1,935,803 | | Intangible assets, net | $1,812,638 | $1,871,428 | | Total Liabilities | $6,186,191 | $6,225,249 | | Long-term debt, net | $3,660,920 | $3,643,185 | | Total Stockholders' Equity | $449,805 | $635,854 | Condensed Consolidated Statements of Operations Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Total Revenue | $618,482 | $598,720 | | (Loss) Income from Operations | $(73,955) | $376,732 | | Net (Loss) Income | $(173,914) | $178,336 | | Diluted (Loss) Earnings Per Share | $(3.61) | $3.24 | - The significant decrease in income from operations is primarily due to a $374.2 million gain from a sale-leaseback transaction recorded in Q1 2023, which was not repeated in Q1 20247151 Condensed Consolidated Statements of Cash Flows Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(7,854) | $(16,112) | | Net cash (used in) provided by investing activities | $(43,401) | $319,636 | | Net cash provided by (used in) financing activities | $51,327 | $(173,568) | | Net change in cash and restricted cash | $(4,373) | $131,678 | | Cash and restricted cash, end of period | $310,889 | $396,862 | - The significant variance in investing activities year-over-year is due to $411.0 million in proceeds from a sale-leaseback transaction in Q1 202316 Notes to Condensed Consolidated Financial Statements - The company operates through three reportable segments: Casinos & Resorts, International Interactive (primarily Europe and Asia), and North America Interactive2122183 Revenue by Segment (in thousands) | Segment | Q1 2024 Revenue | Q1 2023 Revenue | | :--- | :--- | :--- | | Casinos & Resorts | $342,329 | $328,786 | | International Interactive | $234,683 | $245,572 | | North America Interactive | $41,470 | $24,362 | | Total Revenue | $618,482 | $598,720 | - In Q1 2024, the company incurred restructuring charges of $18.6 million for severance and recorded $80.1 million in accelerated depreciation related to the closure of the Tropicana Las Vegas property130132 - The company has significant capital expenditure commitments, including approximately $57.4 million remaining for Bally's Twin River, $5.5 million for Bally's Atlantic City, and a minimum of $1.34 billion for the Bally's Chicago project177178 Management's Discussion and Analysis of Financial Condition and Results of Operations Total revenue increased by 3.3% to $618.5 million in Q1 2024, but the company reported a $173.9 million net loss due to accelerated depreciation and the absence of a prior-year gain First Quarter 2024 Results - Total revenue increased by 3.3% to $618.5 million in Q1 2024, up from $598.7 million in Q1 2023, driven by the Bally's Chicago temporary casino and North American iGaming and sportsbook expansion226 - The company reported a loss from operations of $74.0 million, compared to income from operations of $376.7 million in the prior year, largely due to a Q1 2023 sale-leaseback gain and $80.1 million in accelerated depreciation on the Tropicana Las Vegas property in Q1 2024229230 - Net loss was $173.9 million, or $(3.61) per diluted share, a significant reversal from a net income of $178.3 million, or $3.24 per diluted share, in Q1 2023234 Segment Performance Adjusted EBITDAR by Segment (in thousands) | Segment | Q1 2024 Adjusted EBITDAR | Q1 2023 Adjusted EBITDAR | | :--- | :--- | :--- | | Casinos & Resorts | $89,418 | $105,123 | | International Interactive | $83,532 | $80,301 | | North America Interactive | $(10,158) | $(10,563) | | Total | $148,115 | $157,593 | - The Casinos & Resorts segment's Adjusted EBITDAR decreased by $15.7 million, primarily due to winter weather impacts across multiple properties234 - The North America Interactive segment's revenue grew 107.0% year-over-year, and its Adjusted EBITDAR loss narrowed, driven by stronger performance in iGaming and sportsbook223235 Liquidity and Capital Resources - The company ended Q1 2024 with $310.9 million in cash and restricted cash, with primary liquidity sources being cash from operations and borrowings under its Revolving Credit Facility240241 - As of March 31, 2024, total debt consisted of a $1.9 billion Term Loan Facility, $355 million drawn on the Revolving Credit Facility, and $1.49 billion in Senior Notes136248 - The company has significant capital commitments for major projects, including Bally's Chicago ($1.34 billion minimum), Bally's Twin River ($57.4 million remaining), and a potential $120 million project in Pennsylvania257259260 Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate risk on $2.26 billion of variable debt and foreign currency risk from UK operations, managed with derivatives - The company has $2.26 billion of variable rate debt outstanding, where a hypothetical 1% increase in the effective interest rate would increase annual interest expense by approximately $22.6 million266 - The company is exposed to foreign currency risk, primarily from its UK operations conducted in British Pound Sterling (GBP), and uses derivative financial instruments like cross-currency swaps to manage this exposure268 Controls and Procedures Disclosure controls and procedures were deemed ineffective as of March 31, 2024, due to material weaknesses, with remediation efforts underway - Management concluded that disclosure controls and procedures were not effective as of March 31, 2024, due to previously disclosed material weaknesses in internal control over financial reporting269 - Ongoing remediation efforts include hiring qualified staff, enhancing journal entry and account reconciliation controls within the International Interactive segment, and implementing a new ERP system to improve segregation of duties270271 Part II - Other Information Legal Proceedings The company is involved in ordinary course legal proceedings, not expected to materially impact financials, with a notable settlement with Diamond Sports Group in Q1 2024 - The company is party to various legal proceedings arising in the ordinary course of business, which are not expected to have a material impact on financial results275 - In Q1 2024, the company settled litigation with Diamond Sports Group, which had commenced as part of Diamond's Chapter 11 bankruptcy proceedings, releasing Bally's from all claims and terminating its naming rights obligation175 Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2023 - There were no material changes to the company's risk factors from those disclosed in its 2023 Annual Report on Form 10-K276 Other Information During the first quarter of 2024, no officers or directors of the company adopted or terminated any Rule 10b5-1 trading plans or any non-Rule 10b5-1 trading arrangements - No officers or directors adopted or terminated any Rule 10b5-1 trading plans during the three months ended March 31, 2024277 Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO as required by the Sarbanes-Oxley Act, and XBRL data files - The exhibits include certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002279