Bally's Corporation

Good day and thank you for standing by. Welcome to the Bally's Corporation first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. In order to ask a question during the session, please press star followed by the one key, that is star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to turn the call over to Bobby Levan, Chief Financial Officer of Bally's. Please go ahead, sir.

Good morning, everyone, and thank you for joining us on today's call. The earnings released that accompany this call is available in the investor relations section of our website. With me on today's call are Lee Fenton, Chief Executive Officer, George Papineer, President Retail, and Robeson Reeves, President 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. Reconciliations to the 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 investor site and will be available for replay shortly after the completion of the call. Turning it over to Lee.

Thank you, Bobby. Hello, everyone. Good to be with you today. It has not been that long actually since we last reported, but in that short time there has been some change and we have achieved one very important milestone. The momentum we saw in casinos and resorts in late February continued through April. Atlantic City was positive in March and April, which is an exciting turn for that property. The removal of mask mandates and the return of smoking in Rhode Island drove the highest performance there since early 2019. On the interactive side, on a constant currency basis, the business was off 1% year on year, which was driven by a balance of some weakness in the UK and continued strength in Asia. In the UK, the consumer wallet has shrunk due to inflationary pressure, and we need to reset our operating structure to accommodate the change. We've already started to remove some lower performance marketing spend and we will execute on efficiencies from our larger global portfolio. Structurally, we have the tailwinds of a long-term pathway on growth in Asia, as well as the high growth opportunity set to invest in in North America. During the quarter, North America Interactive was in ramp-up mode. Valley iCasino in New Jersey continues to build, and Virgin iCasino transferred to the Valley's license during this quarter. We launched Live Dealer in New Jersey, and additional proprietary games are being deployed, including Bally's Blackjack. Bally's has now overtaken Virgin in terms of actives and revenue. Additionally, we will wind down providing B2B services to Tropicana this quarter, and that will free up resources and accelerate our B2C business. The New Jersey business is tracking well, and we view that lower cost of acquisition with circa $200 CPA and streamlined infrastructure to be our model as we roll out additional states over the coming months and years. We launched in Arizona yesterday with our foundational 2.0 product and New York will follow later this quarter. This is a significant milestone for us and represents a huge effort by the team and I'm proud of all the work that's been done to bring our technology stacks together. Arizona is a key market for us with our groundbreaking WNBA partnership, marketing spend with the Diamondbacks, and our media partnership with Sinclair. In New York, we will be cautious as we keep a keen eye on marketing spend and how to navigate a high-tax environment in sports betting. We're on track to launch in Ontario in the summer. In the second half, we will focus on states where there are iCasino opportunities or where we expect there to be iCasino opportunities in the near term. In April, we signed our partnership with the Cleveland Browns for market access in Ohio, taking our market access footprint to 18 states. Jumping into some of the segment details, casinos and resorts reported an 85 million EBITDA at 30.4% EBITDA margin. This includes 5.6 million of Atlantic City losses of which more than 3 million were in January. Excluding AC, EBITDA was 91 million compared to 89 million in 1Q19. 1Q19 is pre-Boston Encore opening, so our comps get easier as the year progresses. There was approximately 5 million of weather impact in an unusual January. AC delivering positive EBITDA in March is proof that the new rooms and heightened amenities can bring that property back toward historical performance levels. More than 700 rooms will be completed for Memorial Day, approximately $60,000 per key. A new lobby bar and outdoor beer hall will revitalize the property. We started a Bally's AC launch campaign that will bring awareness to the property and our iCasino which will help drive customer acquisition efficiencies for the omnichannel experience. A list of mass mandates and smoking bans drove Lincoln's monthly profitability in March to the highest level since early 2019. There, we are currently operating significantly above our long-term forecast and we're cautiously optimistic for the full year potential of our marquee property. Most of our properties continued their momentum in April, but we're watching the lower income consumer very carefully, and we're aligning resources accordingly. Moving to international interactive. On a constant currency basis, the overall business was down 1%, which includes the wind down in non-core geographies. Our UK business was down 9%, offset by our Asia business, which was ahead 16%. The rest of the world business was flat, which on an overall basis is slightly below our expectations. Top line performance in the UK continues to be challenging, as we lacked tough comps. We delivered a 30% growth in Q1 of 21. The Q1 slowdown was ARPU rather than ACTIVS driven, as we saw some tightening in consumer spending. A combination of UK consumer weakness, market friction in front of new regulations, and a significantly weaker FX lowers our top line expectations for our business in the UK. We will align and redirect resources accordingly to maintain our earnings levels from the business. As a note, FX impacts top line but actually has a de minimis impact on earnings. Asia continues its double digit growth path. Our new Ugado brand continues to take share Slots consolidated their position as our largest product segment, even when you combine live and R&G casino, and we believe this demonstrates wider adoption of the online gaming in the market. We're a first mover out there. I can say that the data is pointing us to tremendous opportunities in both short and long term. We will be launching sports betting in June that offers us another opportunity to accelerate the business. We continue to expect Asia to deliver double-digit growth that throughout the year will help offset any slowdown in the UK. On an EBITDA basis, Spain and rest of the world performed in line. We will continue to profitably wind down the non-core market. Moving on to North America Interactive. We've made good progress in the business leading up to a full launch calendar. New Jersey had 600,000 in revenues In January, it jumped to $1.5 million in March, which is a great ramp. Sportcaller, Telescope, and our various B2B businesses continue to provide low-cost acquisition opportunities while we wind down Bet.Works business with the score that will come to an end in July. Our new bespoke front end combined with the Game Assist PAM and data analytics is a big step forward for the business. Throughout the year, we will launch sports integrations with our Sinclair partnership and multiple iterations to our sportsbook products. In the quarter, EBITDA loss for North America Interactive was $19 million as we accelerated development costs to make our state-by-state rollout more scalable. Now I will turn you back to Bobby for some more details on financial performance.