Bally's (US:BALY)2023-08-05 17:07Financial Data and Key Metrics Changes - The company reported record second quarter revenues of $606 million, an increase of 10% year-on-year, with adjusted EBITDA of $161 million, reflecting a margin of 26.6% [20][25] - The adjusted EBITDA after accounting for rent expense was $130 million, with a margin of 21.5% [20] - The Casinos & Resorts segment generated revenues of $333 million, up 11% year-on-year, and adjusted EBITDA of $111 million, up 12% year-on-year [21][15] Business Line Data and Key Metrics Changes - The Casinos & Resorts segment reported an EBITDA margin of 33.3%, while the core portfolio, excluding lower-margin properties, had a margin of 39.4% [21] - International Interactive generated revenues of $248 million with an adjusted EBITDA of $84 million at a margin of 33.9%, driven by strong performance in the U.K., which grew 12% [21][16] - North America Interactive reported revenues of $25 million but had a negative adjusted EBITDA of $18 million, with a focus on growing iGaming in New Jersey and Pennsylvania [22][23] Market Data and Key Metrics Changes - The U.K. market continues to be a strong driver for the company's international interactive business, growing 12% in the second quarter [16][21] - The company is optimistic about the iGaming market in Pennsylvania, which launched in early June, and anticipates launching in Rhode Island in March 2024 [13][22] - The company is also focusing on expanding its presence in Ontario and leveraging its brand for online sports betting internationally [14][17] Company Strategy and Development Direction - The company is focused on integrating its three business segments and enhancing operational performance while managing its development pipeline [19][8] - Significant projects include the temporary casino at Medinah Temple in Chicago, expected to generate $50 million to $60 million of EBITDA in 2024, and the development of a permanent facility anticipated to open in 2026 [10][11] - The company aims to become a premier, full-service, vertically integrated Casinos & Resorts iGaming and online sports betting company [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining guidance for 2023, expecting revenues between $2.5 billion to $2.6 billion and adjusted EBITDA of $665 million to $700 million [25][26] - The company is closely monitoring consumer spending trends and is prepared to adjust strategies as necessary [24] - Management highlighted the positive impact of the smoking ban repeal in Shreveport, Louisiana, as a potential driver for performance [11] Other Important Information - The company has over $184 million in cash on its balance sheet and $3.2 billion in net debt [27] - A share repurchase program was executed, with approximately 748,500 shares repurchased for $10.7 million [26] - The company is exploring financing options for the Chicago project, with construction expected to begin in the second quarter of 2024 [72] Q&A Session Summary Question: Transition of CFO and adjustments - The new CFO, Marcus Glover, expressed excitement about joining a strong team and the positive performance of the Casinos & Resorts and International Interactive segments [29][30] Question: Capital allocation and deleveraging path - The focus is on the development pipeline, particularly the Chicago project, with confidence in managing Tropicana's future [31][32] Question: iGaming potential in Rhode Island - Management believes iGaming will drive higher customer spend without cannibalizing land-based operations [34][35] Question: Market share growth in New Jersey - Growth will be driven by utilizing the retail casino database and enhancing product offerings, particularly with the addition of sports betting [36][37] Question: Performance of Atlantic City property - The property has shown profitability and record revenue since its relaunch, with expectations for continued improvement [39] Question: North America Interactive expenses and profitability - The focus remains on iGaming opportunities, with expectations for reduced losses and improved profitability in the future [40][41] Question: Chicago project cash flows and financing - The temporary casino is expected to generate $50 million to $60 million annually, with cash flow estimates of $3.5 million to $5 million per month post-opening [46][47] Question: International Interactive growth sustainability - Management is confident in continued growth in the U.K. market, driven by market consolidation and customer acquisition [50][51] Question: Updates on asset integration and cost containment - The company is balancing shared services and property-level operations to maintain performance while optimizing costs [58][59] Question: Digital product strengths - The focus is on utilizing data to enhance product offerings and customer engagement, with a belief that product quality will drive business success [60][61]