Bally's Corporation

Good morning and welcome to Valley's second quarter 2021 earnings conference call. All participant lines have been placed on a listen-only mode to prevent any background noise. After the speaker's remarks, there will be a question and answer session. I'll now turn the call over to Bobby Levan, Senior Vice President, Finance and Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining us on today's call. By now, you should have received a copy of our Q2 earnings release, which we issued early this morning. If you haven't, the earnings release and presentation that accompany this call are available in the investor relations section of our website at www.valleys.com. With me on today's call are George Papinier, our President and Chief Executive Officer, Steve Kapp, our Chief Financial Officer, Craig Eaton, our General Counsel, and Adi Dandamia, our Senior Vice President of Strategy and Interactive. Before we begin, we would like to remind everyone that comments made by management today will contain forward-looking statements. These forward-looking statements include plans, expectations, estimates, and projections that involve significant risks and uncertainties. These risks are discussed in the company's earnings release and SEC filing. Actual results may differ materially from the results discussed in these forward-looking statements. In addition, during today's call, management will refer to certain non-GAAP financial measures. Reconciliation to most comparable GAAP financial measures are included in the schedules contained in our earnings release. We do not provide a reconciliation of forward-looking non-GAAP financial measures due to our inability to project special charges within certain expenses. Today's call is also being broadcast live on our investors' site and will be available for replay shortly after the completion of this call. Prior to turning it over to George, Please note in our quarterly filing materials, we revised our reporting segment to better align with our strategic growth initiative, primarily our focus on the high-value, high-growth North American interactive business and the pending acquisition of GameSys. As of June 30, 2020, the company now operates under three segments. Our each segment is comprised of following brick-and-mortar locations, Twin River Casino Hotel, Tiverton Casino Hotel, Silver Downs, Valley's Atlantic City, and Tropicana Evansville. Our West segment includes Hard Rock Deluxe, Casino Vicksburg, Kansas City, Valley's Blackhawk, El Dorado Resort Casino, Shreveport, Valley's Lake Tahoe Casino Resort, and Jumers Casino Hotel. The other businesses consist primarily of our interactive businesses, including Scorecaller, Monkey Knife Sites, VetWorks, AVP, and our mobile and online sports betting operations, as well as Mile High. I will now turn the call over to George.

Thanks, Bobby. Good morning, everyone, and thank you for joining us. During the quarter, improved consumer confidence, minimal capacity restrictions, and our discipline operating strategy all contributed to extremely strong numbers across the board. This quarter, we have safely welcomed back many of our loyal patrons, across our brick and mortar locations and are confident that we will continue to benefit from rebounding demand as we approach and exceed historical operating levels across our land-based portfolio. Total consolidated revenue for the second quarter was approximately $267.7 million. We also achieved record adjusted EBITDA for the second consecutive quarter of approximately $83.8 million. Similar to the first quarter, incremental revenues from recent acquisitions contributed to positive results. Our destination properties have outperformed and are above historical levels, including Biloxi, Shreveport, and Montpelier. Renewed focus and expansion of table games is accelerating our long-term plans in Kansas City. Our Lincoln property delivered more than $25 million of quarterly EBITDA, despite prolonged COVID limitations. which is in line with our expectations of performance post encore impacts. Pivoting continues to grow in line with our expectations. All other properties outperformed other than Atlantic City, which turned the corner in July and should continue to perform better as the property continues its planned capital investments into the property. I'm also happy to say that trends have continued in July and early days in August. Our each segment recorded revenue of approximately $132.4 million and adjusted EBITDA of $41.6 million. These increases were driven primarily by strong results at our Rhode Island properties, which combined contributed approximately $33 million in adjusted EBITDA for the second quarter. Our Dover Downs property also had strong results and adjusted EBITDA of approximately $10 million for the second quarter, even with rent starting in June. Our West segment recorded revenue of approximately $127.9 million in adjusted EBITDA of $52.1 million. These increases were driven primarily by the Shreveport and Kansas City acquisitions in the second half of 2020 and contributed a combined approximately $25 million in adjusted EBITDA for the second quarter of 2020. coupled with strong results at our Hard Rock Biloxi property, which contributed approximately $19 million in adjusted EBITDA for the second quarter. Now I'd like to provide a quick update on the brick-and-mortar acquisitions we completed this quarter. On April 7th, we acquired Bally's Lake Tahoe Casino Resort, formerly known as Montblanc Resort Casino and Spa, from Caesars for approximately $14 million. We believe this property represents a premier asset that expands our geographic reach while providing an attractive West Coast destination that Valleys will utilize to drive cross-marketing visitation to Lake Tahoe. On June 3rd, we acquired Tropicana Evansville from Caesars for $140 million. Importantly, through this transaction, we acquired the unencumbered rights to Indiana sports betting and iGaming skins, which will provide us with greater access to this growing gaming market. Additionally, given the structure of the transaction, no cash outlay was required at the closing. On June 14th, we acquired Joomers Casino and Hotel from Delaware North for $120 million. The transaction will also allow Bally to capitalize on lucrative sports betting opportunities by further expanding our geographic footprint into the rapidly growing Illinois gaming market. In addition, we have pending land-based acquisitions. Tropicana Las Vegas Casino, which we agreed to acquire from GLPI in April of this year. Importantly, the acquisition requires no cash outlay from Valley at closing and is expected to be accretive to Valley shareholders long-term as we expect EBITDA on the property to be in the mid-20s after short-term targeted CapEx and then grow from there. We're excited about the longer-term potential and the cross-market opportunities we have and will provide incremental information once we acquire the property. We continue to expect the acquisition to close in early 2022. Turning now to capital expenditures, we continue to make progress on our $40 million redevelopment initiative at Valley's Kansas City Casino, which includes a physical expansion of the property that will feature national restaurant plans in addition to new amenities and retail offerings located in the expansion facility. We also recently kicked off the property's formal rebranding by changing its name from Casino KC to Valley's Kansas City Casino, replacing its exterior signage and implementing our new Valley Rewards Player Club program. In Lake City, we continue to execute our $100 million redevelopment projects, which will occur over the next five years. In addition to reopening the permanent FanDuel sportsbook location within the property, we have also incorporated and planned vibrant new restaurant concepts, which we expect will contribute to the overall guest experience and drive increased visitation. As for Rhode Island, On June 11th, the governor signed into law legislation that aims to preserve and enhance Rhode Island's gaming revenue. The legislation allows for the formation of a 20-year joint venture between Bally's and IGP that will create a licensed VLT provider to supply all gaming machines to the Rhode Island Division of Lotteries with Bally's Twin River Casino Hotel and Tiberian Casino Hotel. As a licensed VLT provider, Bally's now owns and leases 23% of the gaming floor machines to the Rhode Island Division of Lotteries in exchange for 7% of net terminal income. Beginning January 1, 2023, Bally's will own and lease 40% of the gaming floor machines, subject to further increases based on machine efficiency in exchange for 7% of net terminal income. We expect to spend up to $15 million this year on purchasing VLTs in Rhode Island, which is immediately accretive and provides us more control of our slot floors. Lastly, we kicked off this summer with the rebranding initiative and investments in order to create a single national customer database. For the next 12 months, All of our casinos, other than Hard Rock Biloxi, will be rebranded to Bally's, increasing the awareness of the brand and providing the company opportunities to send local customers to our destination casinos, as well as a national player database and incentive program. With that, I'll now turn it over to Addy to provide an update on our interactive business.