Q1 2023 Bally's Corp Earnings Call
Hello.
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Good day and thank you for standing by welcome to the Bally's Corporation first quarter 2023 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 the star key followed by the number one on your telephone.
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I'd now like to turn the call over to Jeff Charlson VP of corporate development and strategy for Bally's. Please go ahead Sir.
Good morning, and thank you for joining us on today's call the earnings release and presentation that accompany this call are available on our website in the Investor Relations section at Www Dot Dot Com with me on today's call are Chief Executive Officer, Robeson Reeves George Puffing.
He is president Bob 11, outgoing Chief Financial Officer, and happy to welcome Marcus Glover incoming Chief Financial Officer pending regulatory approval. In addition, we are joined by Jamie Patel, Vice Chairman 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 filings 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.
The earnings release, we do not provide a reconciliation of forward looking non-GAAP financial measures due to our inability to project nonrecurring expenses and one time items. Today's call is also being broadcast live on our investors website and will be available for replay shortly after the completion of this call. Let me hand, the call over to Robert.
Yes.
Thank you, Jeff and Hello, everyone before diving into our quarterly results I'd like to address this morning's press release announcing a number of changes to our senior management team.
Well, we live on our executive Vice President and CFO , leaving bodies to explore another opportunity.
I'd like to thank Bob for all his contributions you will truly be missed.
At the same time I am pleased to welcome Marcus Glover as valleys incoming executive Vice President and Chief Financial Officer pending regulatory approval.
Markets will lead us in the next stage of backward drawing on its deep operational gaming experience and financial acumen.
Would you like to say a few words.
Yes, Thank you Roxanne.
Tom to joined Bally's I've spent roughly two decades between Caesars and MGM holding leadership roles across all functional areas.
We have a great group of professionals at Bally's and I look forward to leveraging my experience and partnering with our team as we build upon the foundation that is in place. Thank you and back to Europe .
Marcus Thank you.
I'm excited about what we can do together.
Uh-huh Charles <unk> will be joining as senior Vice President finance and corporate Treasurer reporting into Marcus also pending regulatory approval.
Rounding out these organizational changes Jamie Patel, well regarded gaming veteran and current board member of Bally's was appointed Vice Chairman and will chair the operational integration Committee, which is a newly created board committee that will focus on strengthening global processes with streamlining operations and reducing costs.
As well as the creation of a global coordinated corporate center.
With that said I am extremely pleased to report a very strong quarter for the company overall and discuss our achievements since I took over as CEO .
As you know we announced several months since my tenure and I've had a chance to review each aspect of our business using the data driven analytical approach I promised when I became CEO .
I've also had gotten to know as shareholders and stakeholders on a deeper level.
While we are never satisfied and can always be stronger I continue to be wholly impressed with our team globally.
My excitement for the progress we have made towards the integration of Valley's internal systems and three our pricing businesses has never been greater.
Over the past two weeks there have been several positive material changes to our business operations.
First as I'm sure you are all aware.
April 27th.
K Cup released its white paper view, but 2005 gambling Act.
After four years of ongoing consultation. We're pleased this has been released and we hope it will bring some clarity to UK gambling operators.
We continue to review these proposed measures will work constructively with the government and gambling commission to find an effective solution, which.
Which ensures the reforms are pro.
Print and guarantee a safe and sustainable future.
We are in a strong position.
We have been preparing our business strategy and compliance we have already implemented several voluntary changes that's sort of in line with the white paper, including betting limits and so on.
The regulatory framework in the U K has created a dynamic where smaller players are unable to compete leading some to exit allowing larger players who are already highly compliance to consolidate the market and gain share.
We have highlighted before and which we believe will continue into the future.
We embrace regulation and recognize that gaming is a public private partnership.
Secondly, on Tuesday may 2nd we announced partnership agreements with Cambium White-hot gaming fulfilling our promise to partner with best in class technology providers to drive North America sports betting platform.
The North America infrastructure, we have in place for sports was inefficient.
Isn't that.
With these new partnerships in place our cash burn and development costs will go down sharply.
Our spend will be performance driven.
In the future as the sports product scales, we have the opportunity to acquire a license to a limited path can be online and retail technology source code.
Akshay.
We will evaluate this is that north American sports betting business grows.
These partnerships will leverage can be white has proven technology integration and track record of executing quick launch it's to support the expansion and enhancement of filings online them retail sports books, driving further customer engagement with the <unk> brand.
Kennedy will provide its suite of omnichannel products trading capabilities content solutions and liability management to deliver online retail sports betting entertainment.
Well white hat will supply its Pam solution, which includes its proprietary cashier multiple rgs integrations.
Its travelling wallets.
Valleys intends to derive deal synergies by integrating these technologies with our state of the data and marketing technology stacks playing to our strengths.
As a result, we will significantly reduce the fixed costs associated with hiring valley bets OSB platforms by transitioning to a variable cost model based on a percentage of net gaming revenue generated.
These cost savings coupled with driving further engagement and the bally's brands will better position the company to deliver near and long term results for investors, while simultaneously reducing got economic risk.
Importantly, as mentioned above we have also reserve the rights to acquire license to a limited positive candidates online retail technology source code.
Some performance metrics are achieved in the future.
By the end of 'twenty to 'twenty three.
As anticipated these partnerships will provide omnichannel support to power <unk> platform across seven states.
For retail gaming locations.
It is our intention to also leverage these partnerships globally as we consider launching OSB in the UK and Europe as well.
Post OSB relaunch.
Back on a path to diversify our revenues and EBIT <unk> streams with ample cross sell opportunities between our retail and digital businesses.
This in turn will support our vision of becoming a premier full service vertically integrated casinos and resorts online sports betting and gaming company.
Land is to leverage our valleys brand globally.
Turning to our operating segments.
The casinos and resorts segment continues to show its strength, despite certain markets being severely impacted by inclement weather such as Lake Tahoe, which was unprecedented.
Unprecedented snowfall.
Evansville, which was impacted by tornadoes late in March as George and his team continued to execute an extra ordinary level.
In fact, we generated record <unk> revenues of $329 million.
Up nine 4% year on year.
And the EBITDA $105 million.
We're starting to see the full benefits of the casino assets, we acquired last year being integrated into our business and property improvements and cost controls we have been implementing throughout the portfolio taking hold.
Importantly, as we discussed earlier this year, our portfolio's near term Capex cycle has peaked several of our growth projects have come too or are nearing completion.
This includes the upgrade of our flagship Twin River Casino in Lincoln, Rhode Islands, which was finished in April .
And Kansas.
Kansas City expansion spend comes to an end this summer our progress in Atlantic City.
Also be noted.
We are certainly on our way to delivering consistently strong operating performance for the foreseeable future.
We look forward to the opening but Chicago temporary casino in late summer 2023, which is on track to generate $50 million plus EBITDA in 2024.
We will also.
Advancing the full Bill Valley, Chicago permanent facility, which is expected to open in 2026, which has an estimated run rate in excess of $250 million EBITDA.
We believe there is unquestionable pent up consumer demand for this project and we couldnt be more excited to begin producing results.
Our core casino and resort customer remains highly resilient, despite rising economic headwinds with trends in April remaining consistent with the <unk> results I'll talk outside of a slight calendar shifts.
Well, we're keeping a close eye on spending trends and the health of the consumer generally we haven't seen any signs of material impact on our business.
International Interactive had a strong start to the year with continued content marketing and optimization is taking place.
The UK business has remained strong.
Nine 6% in the first quarter on a constant currency basis, well ahead of the market.
The formula of all threw up Ftes up while CPI significantly down it's playing out and we'll drive performance throughout the rest of the yet.
April results up 13% year on year.
In Asia. The changes we have implemented over the past several months continued to produce results with trends remaining positive in the quarter despite facing difficult comparisons.
Note comparisons do get easier from here.
While international interactive margins settled in the low mid teens from the record 39% we generated in fourth Q. We believe we can sustain margins at or above these levels as the changes we have implemented all structural.
This is inclusive of our plans to reinvest in our core U K, including launching the <unk> brand and OSB and <unk> businesses.
We also see great opportunities in rest of Europe , Asia, and rest of world, including Brazil.
Turning back to North America, and attractive we continue to be like any fast.
We are executing well in new Jersey.
Yes, the past, 4% in February well on our way to achieving our 6% to 8% longer term check all.
Ontario continues to progress and we're excited to launch in Pennsylvania in May.
Overall, our gaming business is generating positive returns and we are very optimistic about this.
We also look forward to potential gaming legislation in Rhode Island as it Bill was recently introduced into the legislature.
In summary, our goals for the remainder of 2023 include.
Opening the Chicago temporary casino on time and on budget. This summer.
North America interact in a profitable way.
<unk> increasingly gaining market share.
Launch OSB in certain states and in markets outside North America.
Harness omnichannel data capabilities and grow the <unk> brand globally.
It is important to note that in addition to the above initiatives, we remain keenly focused on growing our revenues and EBITDA.
Sure.
Core casinos and results.
International Interactive segments.
Before turning to Bobby.
I would once again like to thank him for his leadership and contributions wish him well in his next endeavor.
Bobby over to you for a review of our financial results.
Thanks Robison.
Moving to the segment details.
For the quarter.
He used to have achieved strong results across all three of our segments casinos and resorts International Interactive and North American interactive.
We generated revenues of $598 7 million.
Plus nine 2% year over year, adjusted EBITDA of $126 4 million, plus 10, 2% year over year, despite higher rent in the corner and adjusted EBITDAR of $157 million after accounting for rent expense of $31 2 million.
Our adjusted EBITDA margin was 21, 1% versus 29% from <unk> 22, and our adjusted EBITDA margin was 26, 3%.
Casinos and resorts reported $105 1 million of EBITDAR.
This includes negative 800000 of EBITDAR for Atlantic City.
Excluding Atlantic City, Tropicana, which are lower margin properties.
EBITDAR margins were 37, 8% for the core portfolio.
EBITDAR margins with 32% compared to <unk> 22, EBITDA margins of 29, 1% for all casino resorts.
Additionally, while most of the portfolio performed well with strength in our Rhode Island properties Wayne City, Kansas City.
Our results were negatively impacted by material weather disruption from Tahoe.
Similarly towards the end of March our Evansville property was negatively impacted by tornadoes, which truck area.
We move to the effective Tahoe Evansville caused a $3 5 million shortfall at those two properties.
Including the impact of bonds, we are still pleased with how casinos resort segment performed for the quarter.
Okay.
International Interactive generated $80 2 million of EBITDA at a 32, 6% margin.
The UK was plus nine 6% year over year and international as a whole was up seven 2% on a constant currency basis.
Performance was driven by continued revenue strength in the UK. In addition to content marketing jackpot optimization is taking place.
As we mentioned in our last earnings call, we continue to invest in the business at.
This includes launching the valleys brand across Europe .
Inclusive of this incremental spending our long term international interactive EBITDAR margin targets remain in excess of 30%.
Okay.
North American interactive generated a negative $10 5 million of EBITDA.
We continue to be I gaming first and are very pleased with the performance year to date in New Jersey.
<unk> is contributing over $1 million of profit contribution of month and growing as we scale into certain variable cost service providers lots of momentum here.
Ontario continues to progress, but we're still tweaking certain aspects of the business and we'll be launching Pennsylvania Bank overall, our I gaming business is generating positive contribution margins, which we anticipate will continue to strengthen.
Turning back to sports betting as we announced on May 2nd and as Robert talked about earlier, we've partnered with Cambium Whitehead gaming to power online and retail sports betting business value bet.
Valleys intends to integrate these technologies into our proprietary database and marketing technology stacks.
Transitioning to our leased based partnership model.
Our fixed costs and we will now.
Under a much more economical variable cost structure based on a percentage of net gaming revenue generated.
This is more efficient model and better position the company to manage our risk by limiting our expenses, while preserving our upside earnings potential.
Additionally, our restructuring program, we announced in January has gone deeper and there are cloud and infrastructure costs that we have not cut yet, but we can reduce we've been signing can be.
<unk> is expected to relaunch across seven states for retail gaming locations by the end of 2023, beginning in the very near term. We will also leverage these partnerships in the UK and Europe as well.
We continue to focus on profitability and cost cuts to our business segments, having incurred $16 8 million restructuring charges and $1 23.
The cuts were implemented quicker and deeper than originally anticipated, we announced a restructuring plan for international and North American interactive businesses earlier this year to.
To date, we haven't seen any material change in consumer spending patterns that are casino resort outside of the specific weather impacts called out from <unk> and a slight calendar shifts in April .
We do begin to witness a material change we have a handful of levers we can pull to maintain a strong profile.
So turning to guidance.
With all of the previous spoken we are upgrading our guidance to tighten the range to $665 million to 700 million of EBITDAR.
This reflects FX rates and our confidence in the strength of our business globally.
Also considers our belief that the white paper released by the U K government wont have an impact on our international interactive financial results.
Corporate expense for the quarter came in $3 5 million higher and our expertise expectations due to onetime costs and some carryover from 2022, we do not expect this to be the run rate and you should look at the run rate back down to $13 million to $14 million.
We are reducing our 2023 capital expenditure guidance from $170 million to $160 million with maintenance capex at the casinos that $50 million gross capex at the casinos that $70 million and we are lowering our software development cost projections for the year to $40 million.
We continue to evaluate our software development costs and expect that to continue to shrink throughout the year.
During the quarter, we repurchased 1 million common shares for an aggregate purchase price of $19 8 million separately. We also went into the market and repurchased $15 million of face value 2023.
2031 bond for $10 6 million.
At quarter's end shares outstanding were $45 8 million and we have incremental warrants options and other dilution of $38 8 million shares 15th.
<unk> $59 5 million shares outstanding is the right way to look at our capital structure.
We have more than $344 million of cash on our balance sheet and 3 billion of net debt as at the end of the quarter.
Ample liquidity to fund all of our announced projects and we will invest with care in North America.
Our long term commitment is to be sub five times debt to EBITDA, which we continue to expect to hit in mid 2024.
Lastly, as announced this morning, I will moving moving on for another opportunity.
I believe in the value of the value story, particularly Chicago.
<unk> growth trajectory and a unique way, we look at sports and growth in the international Interactive segment not to mentioned the untapped real estate value in our portfolio.
Thank you for your time and consideration and I look forward to supporting market and the rest of the team from the sidelines.
Open the call up to Q&A operator.
Yeah.
At this time, if you would like to ask a question. Please press star one on your Touchtone phone you.
You may remove yourself from the queue at any time by pressing star to once again that is star one to ask a question, we will pause for a moment to allow questions to queue.
Our first question comes from Barry Jonas with Trust Securities. Please go ahead.
Thank you.
I'm going to start with the management transition first off Bobby.
Been a pleasure best best of luck.
Welcome Markus I guess I'm just curious what was most appealing about this role for you and with that robust and why it was mark is the right person for the CFO role.
Yeah, I'll jump in Robeson and share my enthusiasm and excitement and then pass it to you.
Look I think the best way to describe it is yeah.
Spent considerable amount of time in the industry working with some of the larger companies.
Looking at the Valley story, the entrepreneurial spirit of the company.
We're still we're still a speed boat right now and so we can take advantage of opportunities by being a little more nimble.
But I expect to come in and continue building upon the foundation that Bobby has put in place in.
Look to bring the right mix of financial discipline and operational experience as well as corporate leadership during an important juncture for our company. So exciting times and look forward to working with royalties and in the team and George and being a strategic partner as we look to move forward and advance our strategies.
Thanks, Marcus and my response I want to say, thank you again for Bobby for everything he has done without his support we wouldn't have been able to make it through the transition and combination of these companies.
Im very excited.
What's it about Marcus joining what I truly value in his abilities. His deep understanding of all the levers that you can pull within the casino operation, which can grow our business combining that with his financial acumen and wide ranging knowledge I see him is driving growth across all areas of our business could see.
Resorts and the attractive so I'm delighted that he is onboard and part of it too.
That's great and then just as a follow up I wanted to maybe talk a little bit more about the white paper.
I think the guidance.
The low end of the guidance improvement.
To some degree relates to the white paper, but curious to get your thoughts maybe short term long term, what you see as the financial implications for valley here.
Well the short term, it's worth thinking about when the.
Consultations will close so actually changes are likely to only.
Two the propositions that we deploy in the UK in 2024 that will be a short term impact on how players can engage.
With our offerings, but actually.
While the economic impact on the competitive landscape will keep them moving smaller operate operates as a way. So I see this as a short term tiny tiny impact low low single digits, but actually we're already gaining share by people's sentiment from other operators almost pulling back in the market.
Today, the long term this means the biggest operators will continue to grow.
And I'm very I'm excited about getting the clarity of the Whitepaper I've said many times.
The only way you consult for growth despite knowing all your variables in the formula from having a few constants. We've been provided with those constants. When we have clarity. So I'm excited about what the Whitepaper brings for us in the medium and long term.
Great. Thanks, everyone.
Yeah.
The next question comes from Jeff <unk> with Stifel. Please go ahead.
Hey, good morning, everyone I'll start by echoing Barry's commentary and extend our congratulations to both Bobby end markets on the respective new roles.
Maybe starting off on.
On guidance, you talked about some tailwind FX some greater conviction in kind of the direction business trends are heading in can you just frame out a bit more of the decision to raise the low end of guidance, but believe the high end intact with.
Those drivers that.
But you discussed earlier.
Yes, I mean, Jeff we we only gave our full year guidance at the end of.
February right.
It's only may.
Trends are moving in the right direction.
Well, we're just going to take a more.
Our conservative approach to upgrades earlier in the year, but we are feeling very good with where things stand.
Understood that makes sense, thanks, Bobby and then moving to the North American interactive side of things.
Our restructuring efforts it sounds like they're pacing quite nicely.
Can you talk to some targets for go lives on our new partnership with <unk> seven states by year end with all of this in mind. Just curious if you have any thoughts so far on what you think losses might look like next year should we expect a pretty significant step down from the 40 to 50 guided for this year.
As you shift more towards variable and away from fixed cost structure, just any kind of color there on what you're expecting.
The new strategy it would be helpful. Thanks.
Yes.
Yes.
Sorry go ahead.
No Bobby you closed this one.
As we've said.
24, we expect to close the gap.
So so.
Casino is moving.
Faster than we thought.
It's really going to come down to how much are we willing to invest in customer acquisition on sports, which as of right. Now we are looking at a very conservative basis.
Understood. That's helpful. Thanks, Bobby I'll pass it on.
The next question comes from Chad Beynon with Macquarie. Please go ahead.
Good morning, Thanks for taking my question and best wishes to Bobby and welcome Mark is looking forward to working with you.
Firstly I wanted to ask about Tropicana, given the news that we've heard about.
Some movement out there with.
Okay, Oakland athletics potentially moving to a different site off the strip.
Given that formula one a number of other kind of non gaming things how does tropicana fit into.
Your strategy either from an omnichannel standpoint, or just an asset value standpoint. Thank you.
Sure I'll take I'll take maybe the first part of that question. So.
Hey, Chad So the story is going to play itself out.
But the way we view the properties, we have low hanging fruit that.
That we can execute that's going to allow this property to pay for itself. So it kind of gives us the luxury to consider all types of development options, including adding development partners long term.
We sit on a 35 acre site.
We view it as one of the busiest quarter of the Las Vegas strip, So theres a lot of interest in.
Central outside investment.
We're disciplined company.
So again, we have a long term view on this investment.
Be patient about looking for the right project with the appropriate returns and in the meantime, we do view this as a benefit to our regional casinos, where theres an opportunity to drive some cost traffic or cost per cross business to the property.
Great. Thank you and then from a capital allocation standpoint, so you have essentially higher free cash flow estimates for the year with the higher EBITDA range in the lower <unk>.
Capex it sounds like.
The projects are kind of as expected in terms of cost or maybe even a little bit lighter so as it relates to the repurchasing of the million shares in the first quarter and the.
The five and five eight.
I'm, sorry, $5, 7% bonds, how should we think about further repurchases as we kind of move throughout the year, given where the debt and equity is currently trading.
Yes, I mean.
We will continue to evaluate.
The best allocation of capital priorities from our perspective are.
Buying back shares buying back debt.
And Chicago.
And so right now we believe that the way that those three are set up we can do all three.
From a balanced approach, but we'll always continue to evaluate the market.
On a month to month basis.
Thanks, Bobby I appreciate it all best of luck.
Okay.
Okay.
The next question comes from Dan Pulitzer with Wells Fargo. Please go ahead.
Hey, good morning, everyone and Mark is welcome and Bobby with you wish you best of luck on your next endeavor.
First question North America Interactive just wanted to delve a little bit deeper there.
How do we think how should we think about the opportunity for labor efficiencies as you transition part of the tech stack that can be in white hat.
And maybe in terms of timing or any anecdotes or data points. You can provide there and then further breaking the 2024.
How should we think about I guess the.
The guidance is effectively unchanged today, but as we think about rolling through this year and maybe upside in 2024 can you maybe help us think about the revenue upside as well as the cost component of it.
That could drive.
Higher profitability than where we're thinking today.
Thanks, Dan.
I look at North American proactive, we are taking that sort of double and triple and view here.
Lastly, I am going to touch on sports. So we have reduced from a fixed cost model. So really a variable cost model, they're awesome minimums that as Bob indicated earlier, but we are now passing through so now it's fully variable costs with.
Can be why escalation in the good way to model. It is to think about our cost being in the mid teens of NGL.
For sports.
Gaming also we are throwing off positive gross profits.
Currently plus a million and will continue to grow.
I see us moving significantly forward in that as Bob said, it's not gift exactly what.
Estimates for our losses in 2023, and then moving into 2024.
It's all about getting the balance of revenue.
<unk> loss, we will make these judgments as we go.
Everything is going to be performance space. If it means that we should be spending more money now to grow the revenues for longer term profitability, we will do that and we will analyze this deeply.
I believe that we should constantly be assessing.
Our structure is now in the right place. So that we can actually rent before we have the option to buy as we made clear without academy deal. We have the option to bring that technology in house when we reach sufficient scale. So we can continuously maintain good margins.
Our revenue into a profitable business.
Hopefully that gives you some of the guidance that that you asked them.
Yeah, Let me let me just.
You can put some numbers around it so Dan if you look in New Jersey.
We've gone from zero to $5 million of NCR and about 15 months.
Monthly.
Ontario, just crossed $1 billion we.
We launch in Pennsylvania.
And so those are kind of the.
Three sort of primary I casino states for us.
Those businesses continue to grow New Jersey.
Is generating more than $1 million profit per month.
And the cost base to that its fairly fixed.
On the sports side right now we're still burning.
Million on sort of sports infrastructure before even access.
So the faster we rollout can be the faster we can shut down one point out because one point out it takes a significant amount of legacy cloud costs. There are some people costs that we have been restructured yet there is some just office space things like that so the faster that can be rolled out and the faster that the ice.
Casino grows.
The gap closes very quickly and so you can go and do the math.
We're on a 4% market share in New Jersey.
We're projecting that we'll get to six to eight.
Some of that to Pennsylvania in Ontario, and you can get to our casino numbers through 'twenty four.
Got it that's really helpful. I appreciate the color and just for a follow up on.
In Illinois on the brick and mortar side there has been.
Some some reports that there.
There could be a possibility of bgc's demo down the road I mean, if you can kind of frame out how.
How do you think about the likelihood of that legislation or the impact that the temporary versus permanent casino and maybe if there was any kind of provisions in your contract there that would would.
Give you a little bit of cushion.
Sure Dan I'll take that it's George.
Well in our opinion.
It would not make economic sense for the city from a tax perspective.
Certainly not a job creator and could argue would have <unk>.
Negative effect, one union jobs, but but in any event, it's something the new administration really needs to evaluate.
The distinguishing factor is we're building a fully integrated destination casino and they are completely.
Totally different experience.
From a Chicago temporary impact.
Not an imminent thing, it's not happening overnight, so we will be able to ramp up that operation.
Significant database in the market.
What are the unique differences between.
Our casino and <unk> as they are not really allowed to capture.
We use <unk>.
Database to market.
It's really a completely different different type of experience.
We don't think it's the same customer at all.
Got it I appreciate all the color. Thanks.
Okay.
The next question comes from Lance Vitanza with TD Cowen. Please go ahead.
Alright, Thanks, guys. Most of my questions have been have been addressed but congratulations on the quarter I guess just to sort of return to the question of the balance sheet and.
You repurchased stock at close to $20 per share, which I appreciate but the stocks below 16. This morning, you finished the quarter with a lot of cash and you said you have more than enough liquidity to fund. Your planned expenditures you beat on the quarter you improve your guidance and yet the stock is down again. So the question is why would <unk>.
He is not be in the market this morning buying more shares.
Okay.
Well Theres a technicality on why we're not in the market. This morning.
You have a blackout window to a certain point in time, but we will continue to buy back shares buyback debt invest in Chicago as directed by the board.
Yes.
Okay, and then maybe just back on the Tropicana and Las Vegas, how would you describe the status of that property today and from the standpoint of cash flow investment et cetera, I know obviously the future is up in the air but what's going on there today.
Yes. So this is this is Georgia, Atlanta, So I think I touched on that a little bit when we view the property.
Based on the current rate of cash flow and there is some low hanging fruit that we've kind of been in a little bit of the suspense speak to see the see how the eight story plays out that we could we could literally fun.
Fund carrying the carrying cost of that property. So from that perspective, that's where I went back to talking about the luxury of time to really develop this thing right.
And we're going to look at the right project with the rate.
Parents.
Could you could you help us quantify those carrying costs that you mentioned.
Sure Bob you could correct me, if I'm wrong, but it's.
About $20 million.
Thank you.
The next question comes from Jordan Bender with JMP Securities. Please go ahead.
Great. Thanks for taking my question I wanted to start on the release from last night, just on the potential for an IPO in Chicago is there anything to kind of share on that you can share and would that impact the ability to sale leaseback that property or I guess any other properties with the airport.
Thank you.
Yeah.
So.
I don't want to get in front of it there's a term gun jumping.
So we'll be quiet on the IPO, but we have said publicly that we would IPO at 25% of valleys Chicago.
The nothing restrict sale leaseback, we actually we already have a sale leaseback.
On Chicago.
And we do believe once the Chicago project is up and running we could evaluate a significant sale leaseback.
To bring the whole balance sheet too.
<unk>.
Okay.
And then just my follow up.
Timeline on the 6% to 8% market share in New Jersey, I guess, how should we think about.
The bridge between your current share and that long term sure. Thank you.
I think that we should consider the 6% to 8% is where we will we will get to over the next 12 to 18 months.
Great I appreciate it thanks guys.
The next question comes from Ricardo Chinchilla with Deutsche Bank. Please go ahead.
Hey, guys. Thank you so much for taking my question I was wondering if you could provide the regulatory EBITDA and regulatory leverage at quarter end and if you could please comment a little bit more on your willingness to buy back bonds versus stock.
Acknowledging that there is.
Cash and leave me they'd received payments capacity and both require you know they use so.
Appreciate your payment capacity and cash seats you guys.
Previously you mentioned that you were spending 100 million in share repurchases is now.
That amount you know going to remain do you guys think that it makes more economic sense to buyback that any color on you know.
Willingness to.
Are you on those buybacks would be very helpful.
Okay.
The regulatory EBITDA of $673 million again 340.
Six.
Gross debt.
As we said we continue to evaluate our book.
Regularly we.
We think that there is a balanced approach to repurchasing shares.
<unk> debt and.
And investing in Chicago.
Thank you and moving to the North American Interactive segment now do you have in place that.
No deal with Cambium with why head does this mean that you guys eventually would stop developing your.
Your own.
One technology solution or is it just.
Do you contemplate into the future you know using developing this technology any any color you know what would be the best way going forward would be helpful.
So cambium white hat will provide us with a platform sports betting solution. There is still a requirement to deliver fantastic I casino marketing data.
The biggest opportunity I see is actually harnessing our omni capabilities across both retail.
Interactive so we will definitely be investing in that space, because I see that as the pure accelerant to bring all of our operating businesses together, So we'll invest in making sure that we become omnichannel.
But we won't have to invest in sports when it costs a lot.
It should be on the variable cost structure or in the patent to get live into many states before the revenues really start flowing.
But yes, we will continue to invest in technology technology will allow us to grow in the long term.
Perfect. Thank you so much for taking my questions and best of luck to you Bobby.
It appears we have no further questions at this time I will now turn the program back over to CEO Robeson Reeves. Please go ahead.
Thank you everyone for your time, we will speak to you all very soon and all the best to Bobby and I'm glad we had a strong quarter. So thank you for listening bye bye.
This does conclude today's program. Thank you for your participation you may disconnect at any time.
Okay.
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