Bally’s Corporation — FY2023 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2023. This is an annual report; the supplied filing text does not provide a separate Q4 income statement or standalone quarterly results. Amounts below are in U.S. dollars.
Business context
Bally’s operates land-based casinos, resorts, a racetrack and a golf course, alongside online casino, bingo and sports-betting businesses. Its three reportable segments are Casinos & Resorts, International Interactive and North America Interactive. At year-end, the company reported 16 land-based casinos across 10 states, as well as one racetrack and one golf course.
Financial results and liquidity
| Metric | FY2023 | FY2022 |
|---|---|---|
| Total revenue | $2,449.1 million | $2,255.7 million |
| Income (loss) from operations | $104.0 million | $(293.0) million |
| Net loss | $(187.5) million | $(425.5) million |
| Diluted loss per share | $(3.51) | $(7.32) |
| Adjusted EBITDA (non-GAAP) | $527.3 million | $548.5 million |
| Operating cash flow | $188.6 million | $271.0 million |
| Capital expenditures | $311.5 million | $212.3 million |
- Revenue rose 8.6%. Gaming revenue increased 7.9% to $1,992.0 million; hotel revenue rose 30.5% to $200.7 million. Operating income improved substantially, but included a $374.3 million sale-leaseback gain.
- Operating margin was approximately 4.2%, compared with a negative 13.0% in 2022. Net loss margin improved to approximately 7.7% from 18.9%.
- Adjusted EBITDA declined 3.9%. Segment Adjusted EBITDAR was $429.0 million for Casinos & Resorts, $343.6 million for International Interactive and a loss of $55.7 million for North America Interactive.
- Interest expense, net, increased to $277.6 million from $208.2 million. Cash and cash equivalents were $163.2 million; restricted cash was $152.1 million. The company reported $315.3 million in combined cash and restricted cash.
- Gross long-term debt, including current maturities, was $3.73 billion at year-end, including $335.0 million drawn on a $620.0 million revolver; approximately $256.1 million remained available. The company said it was in compliance with applicable debt covenants and expected to remain compliant over the next 12 months.
- Operating lease liabilities were $1.20 billion; undiscounted future minimum operating lease payments totaled $2.31 billion. Stockholders’ equity was $635.9 million.
Material changes and unusual items
- The $374.3 million gain from the sale-leaseback of the Tiverton and Hard Rock Biloxi real estate was a major contributor to the year-over-year improvement in operating results. The transaction generated $625.4 million in consideration, while adding $48.5 million to minimum annual master-lease payments.
- General and administrative expense increased $288.3 million to $1,114.0 million. Drivers included a $144.9 million non-cash Diamond Sports Group liability, higher lease expense, Interactive restructuring costs and costs associated with acquisitions and new operations.
- Impairment charges were $149.8 million, including $76.7 million on three casino gaming licenses and $54.0 million on an International Interactive trademark. In 2022, impairment charges were $464.0 million, including substantial North America Interactive impairment.
- The company recorded $31.0 million in employee-related restructuring charges and $5.7 million in technology impairment associated with restructuring its Interactive businesses.
- International Interactive revenue increased to $973.2 million; North America Interactive revenue increased to $112.6 million. North America Interactive remained loss-making on an Adjusted EBITDAR basis, although its loss narrowed year over year.
Outlook, risks and contingencies
- Management expected 2024 capital expenditures, excluding the permanent Chicago development, to be relatively flat with 2023. It estimated $100–$200 million of Chicago project spending in 2024, primarily for demolition and site preparation, and targeted completion of the permanent resort by the end of 2026. No consolidated revenue or earnings guidance is provided in the supplied filing text.
- The temporary Chicago casino opened in September 2023. The permanent project carries a minimum $1.34 billion design, construction and outfitting commitment, and the company provided a performance guaranty to the City of Chicago. The company also paid $135.3 million in Illinois gaming license fees upon opening the temporary casino.
- Tropicana Las Vegas was scheduled to cease operations on April 2, 2024, ahead of site redevelopment. Bally’s expected $15–$20 million of severance charges and approximately $80 million of accelerated depreciation in Q1 2024.
- Key risks include substantial debt and interest costs, variable-rate borrowing, large lease obligations, significant construction spending, gaming regulation and licensing, competition, consumer discretionary spending, foreign-exchange exposure, and the ability to integrate acquisitions and grow online operations. Management cited inflation and labor costs as potential pressures.
- Internal control over financial reporting was ineffective at December 31, 2023 because of material weaknesses involving accounting expertise and review of complex matters, journal-entry segregation of duties, and account reconciliations and analyses in International Interactive. The auditor issued an adverse opinion on internal controls, while issuing an unqualified opinion on the financial statements. Management described remediation efforts, but said they were not yet complete.
- Diamond Sports Group litigation was settled after year-end; the bankruptcy court approved the settlement on March 1, 2024. Bally’s naming-rights payment obligation ended, and the company recorded the $144.9 million non-cash liability described above.
- On March 11, 2024, Standard General proposed to acquire shares it did not own for $15 per share. The proposal was conditional; the filing states there was no assurance a transaction would result.
- Other notable obligations include $135.0 million of sports sponsorship commitments through 2036 and $55.4 million of minimum commitments under Interactive technology and market-access agreements through 2028. The company did not pay dividends and said it did not expect to do so in the foreseeable future.
Most important facts for investors to verify
- How much recurring operating improvement remains after excluding the sale-leaseback gain and other unusual items, and why Adjusted EBITDA declined despite revenue growth.
- Debt maturities, interest expense, revolver availability and covenant headroom, together with the cash demands from leases and planned capital spending.
- Chicago project financing, construction costs and schedule, and the economic impact of the Tropicana closure and redevelopment.
- Progress in remediating the disclosed material weaknesses and whether additional accounting adjustments or impairments arise.
- Performance and cash generation in North America Interactive, and the assumptions supporting the International Interactive goodwill valuation.
- Final status and terms, if any, of Standard General’s acquisition proposal and the Diamond settlement’s ongoing financial effects.