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Ballys Corp (BALY) Q1 2024 Earnings Call Transcript Highlights: A Detailed Review of Financial ...

  • Revenue: Increased by 3% year-over-year to $618 million.

  • Casino & Resorts Segment Revenue: Rose by 4.1% to $342.3 million.

  • North America Interactive Revenue: Grew by 70% to $41.5 million.

  • International Interactive Revenue: Declined by 4% to $235 million.

  • UK Revenue: Increased by 12% on a USD basis and 7% on a constant currency basis.

  • Adjusted EBITDA: Casino & Resorts at $89.4 million, down 15%; International Interactive at $84 million, up 4%.

  • Net Debt: Stood at $3.57 billion.

  • Cash on Hand: Ended the quarter with $169 million.

  • 2024 Revenue Guidance: Expected to be between $2.5 billion and $2.7 billion.

  • 2024 Adjusted EBITDA Guidance: Projected to be between $655 million and $695 million.

Release Date: May 01, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • First quarter revenues increased by 3% year over year, reaching $618 million, with gains in two of the three operational segments.

  • The North America interactive segment experienced a substantial 70% growth in revenue, demonstrating strong market capture in New Jersey, Pennsylvania, and a successful launch in Rhode Island.

  • UK operations continued to perform strongly with a 12% increase in revenues, benefiting from proactive strategic planning and refined marketing strategies.

  • The temporary facility in Chicago is ramping up effectively, generating significant revenue and customer database growth, which bodes well for the permanent facility's future success.

  • Strategic reorganization and diligent cost management efforts have significantly boosted the adjusted EBITDA margin, particularly in the international interactive segment.

Negative Points

  • The international interactive segment saw a 4% decline in revenue, primarily due to reduced operations outside the UK.

  • Adverse weather in January significantly impacted the financial results, particularly in the casinos and resorts segment.

  • The North American interactive segment is expected to incur an adjusted EBITDA loss of about $30 million in 2024, although this loss is expected to decrease as the year progresses.

  • Construction disruptions and other operational challenges, such as the closure of the Tropicana and low hold in several markets, have negatively affected performance.

  • Delays in the licensing and approval process in New York have postponed the economic benefits expected from the planned integrated resort, impacting immediate and medium-term financing needs.

Q & A Highlights

Q: Hey, guys. Wanted to start with international mid maybe specifically the crown jewel or do you think the growth and also the share gains you're seeing in the UK are sustainable? And then I guess as a follow-up, I wanted to touch on Spain with these restrictions being removed, how meaningful do you think Spain could be for value? Thanks. A: Robeson Reeves, Bally's Corp-Chief Executive Officer - Director: Yes. So UK performance yet very solid, very consistent. We've got excellent customer retention. So we'll look KPO to high customer retention with our track record active levels. We're getting excellent quality acquisition volume, and we've seen improved KPIs as well, driven by our brand campaigns that we've delivered on Virgin, we just launched actually further brand campaigns with Bally's to drive further awareness and maturity doing well. So we've got a lot more tools in the locker to continue to grow and drive performance there. Adding sports will be material as well. And as some of you would have seen, the white paper consultations were released by the government commission to that arm. Personally, I wanted to say they've done a great job the UK government commission with the industry that would listen to all operators and they're doing the right thing for players and this will be a good long-term environment for great operators to existent. I'm delighted that it's been released. What I've said before on this topic is still remains true. Our larger our high-quality operators will continue to gain share and get more and more difficult for smaller operators. Very happy with where the UK is. I see a lot more that we can unlock the jump onto Spain. I'm just delighted to see that the decree largely has been reversed, and that means that we will spend in the market. We'll stick to our normal formulas, exacting formula. So we'll spend in a highly optimized fashion, will deliver growth will also drive EBITDA margins in any case. So yes, very positive with Spain, very positive with the UK, we see good upside there.

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Q: Well, I guess that's a fair a follow up. I was sort of curious what you're seeing, if you give more color what you're seeing with the Providence bridge work and maybe just an interactive angle, is there a chance you could maybe offset some of that with without gaming in the state? Thanks. A: Robeson Reeves, Bally's Corp-Chief Executive Officer - Director: I think George can comment on the bridge and then I'll give you a bit of color figure. George Papanier, Bally's Corp-President - Director: We're seeing definitely seeing impact primarily during peak periods, but not material at this time. We're obviously mitigating any impact primarily in our variable expense. We're geared towards up any customer volumes. Robeson Reeves, Bally's Corp-Chief Executive Officer - Director: And I guess we've always viewed our gaming and bricks-and-mortars complementary products, which sit alongside each other what we've seen so far. I'm pleased the launch in March in Rhode Island as you know generated in of the $1 billion GGR, the trends that we're seeing a very good and we've seen great growth actually through April. I've got a lot of confidence in the Rhode Island market. And we think it's going to be material from North America, a gaming revenue generation perspective, and we'll give good opportunities to offset some negative impacts that you sometimes get with weather and other adverse effects with bricks and mortar.

Q: Afternoon everyone. Thanks for taking my questions. I wanted to ask about the North American interactive business and just get a little bit of a qualitative longer-term vision on it. Where can we realistically expect that business to evolve to and over some two, three-year period, particularly on the heels of representative of your comments about other markets where it's hard to be smaller and sort of catch up. A: Marcus Glover, Bally's Corp-Chief Financial Officer - Executive Vice President: David, I'll start and then Robeson can clean up on it. We've always stated, especially last year, if you recall when we repositioned and went to the variable cost model and what can be white hat relationship have we kind of at that point, have repositioned our approach on this OSB. side where we say we want to have a quality product and quality offering. We want to be available in states, but it was really as a means to an eye gaming outcome. And so we believe that our future for North America interactive lies on the strength of our gaming performance so far, obviously New Jersey, Pennsylvania now recently Rhode Island, and we're seeing some great promise in Rhode Island, but we are very, very prudent with how we are approaching our positioning with OSB. from a reinvestment standpoint, I want to again have a competitive offering, but we'll be very measured with how much reinvestment we actually put on the sports side of things other Robeson give any additional color that he may have on that. But just wanted to tee it up with that initial intro?

Q: Great. Thanks, afternoon, everyone. Thanks for taking our questions. May is starting out here on on the casinos and resorts segment. Markus, if I heard you correctly, you called out 35% brick and mortar margins, excluding AC., the Trop in Chicago, if I recall correctly, I think the comparable metric what's close to 38% in the prior year quarter. So So first off, can you just break out how much of an impact that flow through you from adverse weather in January had on margins? And then second, how do you sort of think about the puts and takes here on the cost side heading into the remainder of 2024? A: Marcus Glover, Bally's Corp-Chief Financial Officer - Executive Vice President: Yes. I'll let George, thanks for the question. I'll let George start and then I'll give any color commentary should there be the need for it after he answered. George Papanier, Bally's Corp-President - Director: Jeff, and let me know if I miss anything, there was a lot to unpack in that. So one of the questions was on the impact from weather. Last year, we did 33% margin in January of this year, we did 24%. So obviously you had a significant impact on weather. No data point would be if you look at February and March combined last year, we did 36% and this year 33%. This is of course, without volume, Chicago and also without a truck Canada's or as truck cabins winding down during Q1 so really the only impact that we saw was really a 100 basis points for those two months. And that was really as a result of specifically the union increases through a collective bargaining last year, part of 2023 that flowed through this year. But I don't know if I missed any part of your question.

Q: Thanks. Good afternoon. I appreciate

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.