Ballys (BALY) Q2 Earnings call transcript Jul 31, 2024

In Bally's Corporation's second quarter 2024 earnings call, executives provided an update on the company's performance and future growth prospects across its Casino & Resorts, International Interactive, and North America Interactive segments. The call, led by CEO Robeson Reeves, revealed a mixed picture of growth and challenges, with some segments showing strong revenue growth while others faced headwinds.

Financial Performance and Growth

Bally's reported a 3% increase in consolidated revenues to $622 million, with growth in its Casino & Resorts and North America Interactive segments. The Casino & Resorts segment saw a 3% increase, driven by the ramp-up in Chicago and general stability across its portfolio, despite challenges in Rhode Island and Atlantic City. The North America Interactive segment, on the other hand, delivered a strong quarter with the full implementation of iGaming in Rhode Island and continued success in New Jersey and Pennsylvania.

The International Interactive segment faced a 7% revenue decline, primarily due to challenges outside of the UK market. The company is focusing on maximizing profit yield and reducing uneconomic marketing, particularly in Asia, where it is experiencing challenges due to ongoing regulatory issues.

Strategic Developments and Expansion

Bally's announced a strategic construction and financing arrangement with Gaming & Leisure Properties, which includes funding for its flagship permanent casino in Chicago and a sale-leaseback transaction for properties in Kansas City and Shreveport. These moves signal a significant expansion of Bally's presence in the gaming industry, particularly in Chicago, where it plans to open a permanent casino resort by the second half of 2026. The company is also exploring options for its Las Vegas and New York properties, with plans to develop a world-class integrated resort in the Bronx.

Operational Challenges

The earnings call highlighted several operational challenges, including the impact of the Rhode Island Bridge closure on traffic and revenue, elevated promotional activity from competitors, and turnover in Atlantic City's relationship marketing team. Despite these challenges, Bally's remains optimistic about its future prospects, particularly in its North America Interactive segment, where it is investing in technology and customer acquisition strategies.

Future Outlook

Looking ahead, Bally's is focused on delivering on its development pipeline, including the Chicago permanent casino resort and the expansion of its North America Interactive segment. The company expects to incur an adjusted EBITDA loss of better than $30 million in 2024, with losses decreasing in a non-linear fashion. Despite these challenges, Bally's is confident in its ability to grow and expand its operations, particularly in strategic markets like Chicago and New York.

Investor Insights

During the call, investors and analysts asked questions about the impact of the merger agreement with Casino Queen, the cost structure of the North American Interactive business, and the impact of the Rhode Island Bridge closure on revenue. Management provided detailed responses, highlighting the company's focus on growth, operational efficiency, and strategic investments.

In conclusion, Bally's Corporation's second quarter 2024 earnings call provided a comprehensive update on the company's financial performance, strategic developments, and future outlook. Despite challenges in certain segments, Bally's remains optimistic about its growth prospects, particularly in its North America Interactive and Chicago casino developments. With a focus on operational efficiency and strategic expansion, Bally's is well-positioned to navigate the competitive gaming industry and capitalize on opportunities for growth.