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HO

Hall of Fame Resort & Entertainment Co (HOFV)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 revenue was $4.70M, down 23% year over year due to event mix; adjusted EBITDA loss improved to $4.21M vs $6.15M in Q2 2023 as operating efficiencies reduced event-related and compensation expenses .
  • Net loss attributable to shareholders was $15.75M (EPS $(2.41)), impacted by higher net interest ($6.5M) and depreciation; cash and restricted cash ended at $6.44M .
  • FY 2024 guidance cut: revenue now $20–$22M vs $24–$27M prior; adjusted EBITDA loss still “mid-teens millions” (maintained) .
  • Financing progress: restructured $21M of local loans, secured $9.9M Constellation EME financing for energy efficiency and waterpark, and awarded $9.8M state grant; management emphasized balance-sheet optimization and capital stack nearing completion for Gameday Bay Waterpark and Tapestry Hotel .

What Went Well and What Went Wrong

What Went Well

  • Adjusted EBITDA improved materially YoY (Q2: $(4.21)M vs $(6.15)M) on lower event and compensation costs; management: “we closed the gap towards profitability” via smarter event models, bundling, and procurement discipline .
  • Diversified programming drove campus synergies (hotel, F&B, rides, gaming) and >70 hours of national TV coverage (ESPN/NBC), enhancing brand reach without major marketing spend .
  • Balance sheet actions: $21M of local/community debt restructured to longer maturities, plus new financing and grants to advance Phase 2 assets (waterpark, hotel) .

What Went Wrong

  • Revenue declined 23% YoY to $4.70M due to event mix and fewer owned/operated gate events; the team prioritized higher-margin rental/partner models over top-line volume .
  • Interest expense rose to $6.5M amid higher debt balances and lower capitalized interest as assets entered service; net loss widened to $15.8M .
  • Guidance was lowered on slower stabilization, restrictive credit markets, and delayed waterpark/hotel financing timing; presales begin ahead of openings but revenue impact shifts into 2025 .

Financial Results

Consolidated Results vs prior periods

MetricQ4 2023Q1 2024Q2 2024
Revenue ($USD Millions)$6.10 $4.19 $4.70
Net Loss Attributable ($USD Millions)$(20.16) $(14.89) $(15.75)
Diluted EPS ($USD)$(3.19) $(2.30) $(2.41)
Loss from Operations ($USD Millions)$(15.30) $(7.09) $(8.39)
Adjusted EBITDA ($USD Millions)$(1.89) $(2.93) $(4.21)
Interest Expense, Net ($USD Millions)$4.70 $6.52 $6.48

Margins (computed from reported figures)

MetricQ2 2023Q1 2024Q2 2024
Adjusted EBITDA Margin %(−6.154 / 6.127) = −100.4% (−2.933 / 4.191) = −70.0% (−4.208 / 4.700) = −89.6%
Net Loss Margin % (Attributable)(−13.554 / 6.127) = −221.2% (−14.888 / 4.191) = −355.4% (−15.755 / 4.700) = −335.5%

Revenue Mix (Q2 2023 vs Q2 2024)

Category ($USD Millions)Q2 2023Q2 2024
Sponsorships (net of activation)$0.69 $0.63
Event, rents, restaurant & other$3.41 $2.19
Hotel revenues$2.03 $1.88
Total$6.13 $4.70

KPIs and Balance Sheet

KPI ($USD Millions unless noted)Q1 2024Q2 2024
Cash$2.71 $1.46
Restricted Cash$4.17 $4.99
Cash + Restricted Cash$6.88 $6.44
Notes Payable, Net$221.65 $229.18
Financing Liability$65.87 $67.76
Accounts Payable & Accrued$23.36 $26.67
Weighted Avg Shares (Basic/Diluted)6.49M 6.53M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2024$24M–$27M (Q1 call) $20M–$22M (Q2 call) Lowered
Adjusted EBITDAFY 2024Loss in mid-teens millions (Q1 call) Loss in mid-teens millions (Q2 call) Maintained
Revenue (context)FY 2024$27M–$30M (Q4 2023 deck) $20M–$22M (Q2 call) Lowered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2023, Q1 2024)Current Period (Q2 2024)Trend
Macro/consumer trendsBuilding diversified events; record Q4 revenue Experiences remain resilient; consumer pullback in big-ticket goods noted Neutral-to-cautious macro; experiences supportive
Operational efficiencyMaterial OpEx reductions; procurement discipline (Q1) Bundling, packaging, and campus OS to drive efficiency Improving efficiency
MediaMore content in distribution vs history (Q1) ~50% more projects in pipeline; monetization via production, sponsorships, sales; Perfect 10 second window Positive momentum
GamingExpanded tournaments; nontraditional events (Q1) Gridiron Gateway launched; Fantasy Football Expo; retail sportsbook de-emphasized, mobile stronger Growing; focus on mobile/experiential
Balance sheetExtended ~$49M IRG debt (Q1) Restructured $21M local loans; grants/EME financing received De-risking maturities
Phase 2 assets (Waterpark/Hotel)Capital stack identified; 44%+ waterpark build; target mid-’25 “Very close” on final capital stack; funding targeted by end Q3/Q4; openings mid-to-late ’25 Progressing; timing extended

Management Commentary

  • “While revenue was down...due to operational efficiencies and getting smarter at the types of events...we closed the gap towards profitability.” — Michael Crawford .
  • “We restructured 5 of our local community loans totaling $21 million...longer-term debt...more manageable as we stabilize revenue and grow towards profitability.” — Michael Crawford .
  • “Over 70 hours of nationally televised event coverage...companies our size can’t buy marketing value like that.” — Michael Crawford .
  • “We are revising our revenue expectations to be in the range of $20 million to $22 million and reiterating...adjusted EBITDA loss in the mid-teens millions range.” — John Van Buiten .

Q&A Highlights

  • Attendance: Management expects 2024 attendance to be up YoY; bundling and value offerings aim to sustain foot traffic despite macro headwinds .
  • Media monetization: Multi-pronged monetization via production partnerships, sponsorships, and content sales; expectation to show near-term profitability in Media .
  • Guidance rationale: Lowered on event stabilization, sponsorship timing, and delayed waterpark opening; upside exists but not promised .
  • Financing timing: $9.8M state grant approved in Q2 and cash received in Q3; $9.9M Constellation EME funding received to backfill energy-efficient equipment purchases; remaining capital needs in “tens of millions” with focus on hotel senior loan and waterpark TDD bonds; targeted closing by end Q3/Q4 .
  • Retail sportsbook: Economics challenging (97% bets mobile); emphasis shifts to experiential offering with potential F&B/merch partnerships; ongoing license/partner discussions .

Estimates Context

  • Wall Street consensus estimates via S&P Global were unavailable in this session due to data access limits; therefore, we cannot assess Q2 2024 revenue/EPS versus consensus or FY 2024 estimate context at this time. Values would ordinarily be retrieved from S&P Global*.
  • Implication: Given the guidance cut and interest expense trajectory, Street models may need to adjust FY revenue lower and incorporate higher interest burden until Phase 2 assets drive synergies .

*Values retrieved from S&P Global

Key Takeaways for Investors

  • Event strategy pivot toward rentals/partnered models is compressing losses despite lower reported revenue; focus is on profitability per event, not just top-line growth .
  • Balance-sheet actions and incremental financing/grants reduce near-term maturity risk and support Phase 2 completion; watch for simultaneous closing of hotel/waterpark capital stacks as a major catalyst .
  • Guidance reset to $20–$22M signals slower stabilization and timing slippage; near-term trading could be sensitive to execution on Q3/Q4 event calendar and capital stack milestones .
  • Interest expense remains elevated ($6.5M in Q2), keeping net loss margins deeply negative; operating leverage requires asset completion (waterpark/hotel) and continued OpEx discipline .
  • Media pipeline expansion and second-window sales (e.g., Perfect 10) offer upside optionality with modest capital intensity; monitor monetization updates in H2 .
  • Retail sportsbook de-prioritized economically; experiential integration with F&B/retail likely better ROI vs standalone sportsbook build-out .
  • Near-term catalysts: NFL events, large concerts/festivals, beer/entertainment fall events; mid-term (2025) catalysts from waterpark/hotel opening driving package sales and stay-length synergies .