Bally's Corporation Q4 FY2023 earnings call

Management Statement and Operational Highlights

• Robust Performance: Fourth quarter 2023 revenues grew 6% year-over-year to $612 million, with all segments contributing. Full year 2023 revenues and adjusted EBITDA increased 9%.
• Development Pipeline:
  • Chicago: Temporary facility operational since September, with ongoing efforts to ramp up operations; permanent facility timeline remains on track with site access expected late summer 2024.
  • Las Vegas: Tropicana closure on April 2nd to pave way for stadium construction; development lands next to the stadium under evaluation.
  • New York: Early stages of pursuing a world-class casino and entertainment complex in the Bronx, with license acquisition as the first step.
• Interactive Segments:
  • International Interactive: UK operations strong with improved customer acquisition and marketing strategies; Asia showing stabilization.
  • North America Interactive: Progress on Bally Bet OSB rollout, with focus on optimizing marketing investments and anticipating Rhode Island iGaming launch in March 2024.

Segment Performance

• Casinos & Resorts: Fourth quarter 2023 revenues grew 7% to $342.3 million, with full year 2023 revenues up 11% and adjusted EBITDA up 8%. Rhode Island properties, Kansas City, Quad Cities, and Atlantic City (first full year of profit since acquisition) performed well.
• International Interactive: Fourth quarter 2023 revenues increased 2.1% to $236 million, with full year 2023 revenues up 2.8% and adjusted EBITDA up 6.8%. UK operations excelled, and Asia showed stabilization.
• North America Interactive: Fourth quarter 2023 revenue up 27% to $33.4 million. 2024 expected adjusted EBITDA loss of approximately $30 million, with progress on Bally Bet OSB rollout.

Guidance

• Bally's expects 2024 revenue in the range of $2.5 to $2.7 billion.
• 2024 adjusted EBITDA expected to be between $655 million and $695 million.
• North America Interactive expected to have an adjusted EBITDA loss of approximately $30 million in 2024.
• 2024 capital expenditure guidance is $165 million, excluding spending for Chicago site prep/demolition and Tropicana.

Risks

• Regulatory Changes: Uncertainties related to UK regulatory overhaul, including affordability checks and state limits, which could impact business performance.
• Weather Impact: Severe weather in January affected Casinos & Resorts segment, though trends are returning to normal.
• Market Competition: Hyper-competitive environments in some markets, requiring continuous efforts to maintain and gain market share.
• Development Execution: Risks associated with timely execution of development projects, including Chicago permanent facility and New York license acquisition.

Question and Answer

Q: Barry Jonas asked about the Chicago temporary facility's player base and transfer to permanent, Tropicana's stadium plans, and weather impact on Casinos & Resorts.

A: George Papanier responded that the Chicago temp facility is building a database, with a younger demographic, and aims to transfer all to the permanent; Tropicana's stadium plans are with the ACE, and weather impact was ~20% in January but trends are normalizing.

Q: Jeff Stantial inquired about International Interactive's UK regulatory changes, Japan stabilization, and Chicago Temporary Facility's EBITDA target.

A: Robeson Reeves noted UK regulations are manageable, Japan is stabilizing, and Marcus Glover confirmed the $50 million EBITDA target for the Chicago temp remains intact.

Q: Jordan Bender asked about C&R guidance, Tropicana's impact, and NA Online strategy.

A: Marcus Glover said Tropicana closure is incorporated in guidance, and Robeson Reeves stated NA Online will stay in all markets, focusing on iGaming.

Q: Chad Beynon discussed International Interactive margins, capital returns, and CapEx.

A: Robeson Reeves said margins are sustainable for expansion, and Charlie Diao mentioned capital allocation considers development and returns.

Q: Jonnathan Navarrete asked about UK consumer, CapEx, and New York license.

A: Robeson Reeves talked about stable UK consumers, CapEx separates development, and George Papanier said New York is in early stages of RFP process.

Q: David Katz inquired about Chicago financing.

A: Charlie Diao stated financing for Chicago is in progress with confidence in securing it.

Q: Brandt Montour asked about International Interactive guidance and capital allocation.

A: Robeson Reeves explained Asia's lap and rational guidance, and Charlie Diao discussed leverage and capital allocation philosophy