Bally's (US:BALY)2022-11-06 20:42Financial Data and Key Metrics Changes - For Q3 2022, the company reported $119 million of EBITDA from the Casinos and Resorts segment, with an EBITDA margin of 39.5% excluding Atlantic City [12][8] - Adjusted EBITDA for the quarter was impacted by $3 million of rent associated with the purchase of Tropicana Las Vegas, which closed on September 26 [12] - The company updated its 2022 financial forecasts, expecting revenues of $2.25 billion and adjusted EBITDA of $540 million, including $75 million of North America Interactive EBITDA losses [13][14] Business Line Data and Key Metrics Changes - The Casinos and Resorts segment showed strong performance, with Lincoln achieving nearly double-digit revenue growth and Atlantic City reporting $9.5 million positive EBITDA [8][12] - International Interactive had approximately $76 million of EBITDA at a 33.5% margin, with the UK showing a slight year-over-year increase and Asia down 3% on a constant currency basis [12][9] - North America Interactive reported $20 million of negative EBITDA, with $7 million of EBITDA drag from non-core assets [12][13] Market Data and Key Metrics Changes - New Jersey iGaming market share climbed to 3.5%, with a focus on broadening options for the bricks-and-mortar database [7] - The UK market showed a record performance, with expectations for continued growth in Q4 [9] - Asia experienced a 3.3% decline year-over-year, prompting a revision of marketing strategies to maintain profitability [9] Company Strategy and Development Direction - The company is focused on the optimal integration of its combined assets and continues to deliver strong free cash flow [6] - There is an emphasis on identifying non-core assets in North America Interactive that do not show a near-term path to profitability [16] - The company remains interested in potential acquisitions in the casino space and is exploring opportunities outside the US for Interactive growth [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing performance of the Casinos and Resorts segment and noted that October trends continued positively [14][15] - The company is preparing for potential outcomes related to the delayed UK white paper and remains optimistic about the market [20] - Management acknowledged macro factors affecting the Asian market but expressed confidence in future growth [27] Other Important Information - The company ended the quarter with $3.3 billion of net debt and has ample liquidity to fund announced projects [14] - Capital expenditures are expected to be $250 million for the year, with a long-term commitment to reduce debt to EBITDA below 5x by mid-2024 [13][14] Q&A Session Summary Question: How has October been trending? - Management indicated that October is performing well, with Casinos and Resorts continuing the positive trend seen in Q3, while the UK finished October up around 10% [14][15] Question: Can you elaborate on evaluating money-losing businesses in North America Interactive? - Management stated that they are closely examining assets that do not show a near-term path to profitability and will make decisions quickly [16] Question: What are the expectations regarding the new minister in charge of the white paper? - Management expressed positive first impressions of the new minister and noted that while the gambling review is important, it may not be the top priority [20] Question: What are the drivers of the softness in Asia? - Management attributed the decline in Asia to macro factors and expressed confidence in the region's potential for growth [27] Question: What is the long-term leverage target? - Management confirmed the target is to be below 5x debt to EBITDA by 2024 [40] Question: How flexible are share repurchases in light of potential slowdowns? - Management indicated that while they plan to continue share repurchases, they will evaluate the macro environment and prioritize funding for key projects [45]