Q2 2024 Earnings Summary
- Robust North America Interactive Growth and Streamlined Operations: The company’s North America Interactive segment showed exceptional momentum with 95% year-over-year revenue improvement, and management highlighted upcoming OSB launches and a transition to unified technology stacks to drive acquisition and reduce marketing costs.
- Strong UK Performance and Enhanced Player Experience: The UK business continues to deliver with 9% year-over-year revenue growth, record-month revenues, and significant investments in improved native applications and real-time monitoring that bolster customer retention and safety.
- Rapid Database Growth in Chicago as a Launchpad for Future Expansion: The temporary Chicago facility is attracting significant traffic—with nearly 120,000 visitors in June and a database that has doubled to over 100,000 players—indicating robust momentum ahead of the permanent facility scheduled for 2026.
- Market-specific headwinds: The Casino & Resorts segment is facing headwinds such as disruptions from the Rhode Island bridge closure—resulting in about $2 million in quarterly EBITDAR impact—and challenges in Atlantic City due to management turnover and VIP relationship issues, all of which could suppress revenue growth.
- Rising costs and integration issues in digital operations: The North America Interactive segment is incurring extra expenses while operating two technology stacks (White Hat PAM and proprietary Bally's PAM). This integration challenge could strain margins further, complementing the guidance of a continued annual loss of over $30 million.
- Execution and regulatory risks in growth projects: The ramp-up at the Chicago facility and subsequent development of the permanent casino face potential delays from the ongoing regulatory approval process and long lead times for construction materials. Additionally, uncertainty in international markets—exemplified by Japan’s weakened yen and subdued consumer sentiment—adds to the overall risk profile.
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Chicago Timeline
Q: How long for Chicago project approval?
A: Management is working with the city to expedite approvals without jeopardizing the target opening of September 2026, while running parallel processes with strong support from GLPI. -
Overall Headwinds
Q: What were overall headwinds' EBITDAR impacts?
A: Regional challenges in Rhode Island, Atlantic City, and Tropicana affected margins—with Rhode Island experiencing roughly 12–15% traffic impact and Tropicana incurring about $4 million EBITDAR hit—while Chicago continues to ramp its operations. -
Japan Impact
Q: How is Japan performing amid devaluation?
A: Demand in Japan has softened due to the yen’s devaluation and regulatory sentiment, though the business still converts revenue to EBITDA efficiently. -
Bridge Closure Impact
Q: What is the bridge closure EBITDAR cost?
A: The Rhode Island bridge disruption cost approximately $2 million in EBITDAR for the quarter, translating to about $0.5 million monthly. -
PA Development
Q: What’s next for Pennsylvania property?
A: With the casino license upheld, focus is now on obtaining approvals, with construction likely to begin in the first half of 2025. -
Interactive Update
Q: What about North America Interactive costs?
A: The team is streamlining operations by transitioning technology platforms in key states, aiming to reduce marketing expenses while refining their cost structure. -
Restricted Cash
Q: How much restricted cash at Chicago subsidiary?
A: Out of $171 million in restricted cash, $58 million was released shortly after final payments to Tribune, adjusting the balance accordingly. -
Non-Core Assets
Q: Any non-core assets in strategy?
A: Management confirmed that all current assets are integral to their strategy, with nothing deemed non-core.