Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Second quarter revenues increased by 3% year over year, reaching $622 million.
- North America interactive segment saw a substantial 95% revenue growth.
- UK business generated a 9% revenue growth increase.
- Adjusted EBITDA margins improved by approximately 130 basis points year over year.
- Secured $940 million in strategic construction and financing arrangement for the Chicago casino project.
Negative Points
- International interactive segment saw a 7% revenue decline due to non-UK operations.
- Rhode Island properties were impacted by the Providence bridge disruption, affecting traffic and visitation.
- Atlantic City faced challenges due to turnover in the relationship marketing team.
- Adjusted EBITDA for the Casino & Resorts segment decreased by 10% year over year.
- North America interactive segment incurred an adjusted EBITDA loss of approximately $7 million.
Q & A Highlights
Q: Are there any assets that you deem non-core to your existing strategy?
A: Robeson Reeves, CEO: We don't consider any of our current assets as non-core. Regarding the merger agreement, it's too early to discuss synergies. We need to respect the regulatory process and complete the proxy before commenting further.
Q: How are you thinking about developing the Pennsylvania property following the Supreme Court's decision to uphold your casino license?
A: George Papanier, President: With the lawsuits behind us, we're focused on obtaining the necessary approvals. Construction is likely to start in the first half of 2025. We are also arranging financing for the project.
Q: Can you quantify the impact of headwinds in Rhode Island, Massachusetts, and Atlantic City on your Casino & Resorts segment?
A: Marcus Glover, CFO: In Rhode Island, the traffic impact due to the bridge disruption is around 12-15%. In Atlantic City, we are redefining our VIP relationships and revitalizing the property. The Tropicana had about a $4 million year-over-year EBITDA impact.
Q: Can you provide more color on the challenges in Japan and their impact on your international interactive business?
A: Robeson Reeves, CEO: The challenges are largely driven by sentiment and the devaluation of the yen, which has made it more expensive for players. This has led to a decline in demand. However, we are still able to convert revenue to EBITDA efficiently.
Q: What is the current status of your North American interactive business, and what are your plans for customer acquisition and state launches?
A: Robeson Reeves, CEO: We recently launched in Maryland and have more sports launches planned for the year. We are transitioning to a single technology stack, which will simplify operations and reduce costs. We expect to launch in additional states and continue to grow our customer base.
Q: Why did you reduce your CapEx spend for the year?
A: Marcus Glover, CFO: The reduction is due to reevaluating some small expansion projects and spending more time on the operational team's thought process. This allows us to better stage these projects before bringing them online.
Q: What are the revenue and EBITDA run rates for your Chicago property?
A: George Papanier, President: The Chicago property is generating around $13 million in GGR. We are focused on growing the database, which has doubled since December to 100,000 players. We are not disclosing the EBITDA run rate at this time.
Q: How much is the bridge closure in Rhode Island costing the company in terms of EBITDA?
A: Robeson Reeves, CEO: The bridge closure is costing us about $2 million in EBITDA on a quarterly basis.
Q: What are your expectations for the approval process for the Chicago project, and could it impact the target opening date?
A: George Papanier, President: The new design has resonated well with the city, and we are doing everything we can to parallelize tasks to stay on track. We still expect to open by September 2026.
Q: How much of the restricted cash is allocated to the Chicago subsidiary?
A: Marcus Glover, CFO: $58 million of the restricted cash was released five days later, with $15 million for the final payment to the Tribune and $8 million accumulated cash.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
