Q3 2023 Bally's Corp Earnings Call

Good day and welcome to the Valley Corporation's third 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 this session. Please press. These starkey followed by the number one on your telephone. Please be advised that today's conference is being recorded if you would.

Acquire any further assistance. Please press Star then zero.

I'd now like to turn the call over to Charlie deal Senior Vice President Finance and corporate Treasurer. Please go ahead Sir.

Good morning, and thank you for joining us on today's call Dr.

The earnings release and presentation that accompany this call are available on our website in the Investor Relations section.

E W. W Dot.

Valleys Dot com.

With me today.

The chairman of the Board Soo Kim.

Our Chief Executive Officer Robeson Reeves.

At least president George happened here.

Marcus Glover.

Our Chief Financial Officer.

And Jamie Patel, our vice chairman of the board.

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.

Our 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 schedules contained in our earnings release we.

We do not provide a reconciliation of forward looking non-GAAP financial measures due to our inability to project nonrecurring expenses and one time costs.

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 Bruce.

Thank you Charlie and Hello, everyone. We are pleased to present, our third quarter results, where we continued to grow market share with a tight control of costs.

Our operations performed well and competitive and mature markets, we have solid operating performance across our three business segments with consolidated revenues rising by nine 4% and consolidated adjusted EBITDA, increasing by six 4% year over year.

We also reached several significant project milestones strengthening our foundation for 2024 and beyond.

Notably we achieved a successful soft launch of our Chicago temporary casino the Medina Temple on September 9th, culminating in a formal ribbon cutting ceremony on October 30 <unk>.

Concurrently, we completed that Kansas City property transformation redevelopment also in September within budget.

We see both the investments and I see in all segment paying off in 2024 and growth and profit contribution as these investments bear fruit.

Our bodies International Interactive Division continues its impressive operating momentum in the U K, where we also successfully launched the police branded casino App.

We believe the Bally's brand will drive revenue and profit growth and build brand equity in the U K market.

In North America interactive, we rolled out the new Bally bet OSB out in four states five retail locations on the Camby I'm white hat platforms.

Well all year and our goal is for the rollout, but I believe that app and at least seven states in North America.

Turning now to our operating fundamentals are first tonne it to George to discuss our cool casinos and resorts performance. Thank.

Thank you Robin.

Well, we've had a very productive third quarter and casino resorts successfully opening a temporary casino at the Medina Temple in Chicago.

Delivered that project.

Inside of budget, including a three months delay.

Due to regulatory sign off we also took over the concession to operate the valleys golf links that very point in the Bronx.

For competitive reasons, we are limited in the information that we can share today, we can we can disclose that the golf course operates profitably.

EBITDA and cash flow perspectives.

Further details regarding our plans for the site will be disclosed in the future.

Casino resorts customer base remained resilient in the quarter as revenues increased nine 3% year over year, which includes a full quarter contribution from the trop at approximately three weeks from Chicago.

Our portfolio is well positioned and we continue to take market share in our respective markets.

As can be seen in the state's monthly gaming data.

And we outperformed in most states.

Our Rhode Island, and the Kansas City casinos were once again revenue standouts Blackhawk.

Black Hawk in Quad cities were also strong.

While we are closely monitoring customer spending outside of the three very specific instances, we haven't seen major shifts in behavior you.

We did see a shift in behavior at.

At the Trop Las Vegas, Bally's Atlantic City, both destination markets, which are a hyper competitive.

As highlighted last quarter Evansville continues to be impacted by a newer.

Newer HHR facilities across the Kentucky border.

My team and I continue to take proactive measures to preserve our margins and profit performance across the portfolio.

Marketing perspective, our efforts will be to continue finding ways to motivate our higher tier customer segment, the strategy, which has proven to yield solid results overtime.

As for the Trump. The next milestone is major league baseballs vote on the A's relocation plans scheduled for mid November.

Off on announcements of any reinvestment plans until after the outcome is known.

We're excited about the unique value enhancing development project and the strategic opportunities that it presents for our company.

Turning to the Chicago, Tampa, we're seeing increasing volumes on a week over week basis, while operating only 20 hours per day, and a soft opening environment.

We expect to start operating 24 hours per day soon pending regulatory approval.

Johnson, we plan to implement implement our core marketing campaign to increase frequency of visits that will capitalize on a rapidly growing database.

Continued ramping of this property, we remain confident in our financial expectations to generate approximately 50 million plus of annual adjusted EBITDA.

Importantly, last week, we received approval from the <unk>.

To operate the terms for an additional year.

We're three years total until September 2026, while we expect a permanent casino to be completed for opening.

Regarding the Chicago permanent facility by the end of 2023, we will have accounted for the majority of the soft costs outlined in the budget shared when the project was announced in 2022, we expect construction of the permanent facility to commence in the second half of 2024 once the tribute company who's the prime.

Mrs In July.

With an anticipated property opening in September 2026.

That's where financing the hard costs of the permanent facility, which under the host community agreement calls for spending of $1 $3 billion, we will communicate our plans once detailed construction plans are finalized and financing commitments are in place.

It's important to note that the art cost in 2024 or earmarked for demolition and site preparation, which represents finite expenses as a result, our capital requirements for the Chicago permanent Casino project in 2024 are limited, but the bulk of construction expected expenses expected to ramp in <unk>.

Thousand 25 and 2026.

Our core portfolio's near term Capex cycle has peaked as our growth projects have reached completion and we are now focused on driving increased profitability in our core casinos in 2024.

Ramping up the Chicago Tim.

Communicating a concrete timeline for the truck to bring clarity to our employees guests and our company and preparing to submit our bid to operate a casino in New York at our February point location.

Now I'll turn it back to Bruce.

Thank you George.

Valleys International Interactive continues to show strength, particularly in the U K, where net revenues increased by an impressive 13, 1% year over year and our reported financial results.

Operator: Good day, and welcome to the Bally Corporation's third quarter 2023 earnings conference call. At this time, all participants aren't a listen-only mode. After the speaker's presentation, there will be a question and an answer session. In order to ask a question during the session, please press the star key, followed by the number one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then zero.

Continued to gain incremental market share due to our timely adaptations in response to regulatory policy changes in the U K market.

Our strategy and our pricing formula of increasing access.

Revenue per user or first time depositors, while reducing cost per acquisition continues to yield positive results.

Charlie Diao: I now let it turn to call over to Charlie Diao, Senior Vice President, Finance and Corporate Treasurer. Please go ahead.

In North America Interactive, we remain focused on expanding our I gaming footprint maintained positive momentum.

Charlie Diao: Good morning and thank you for joining us on today's call. The earnings release and presentation that accompanied this call are available on our website in the Investor Relations section at www.bally's.com. With me today are the Chairman of the Board, Sue Kim. Our Chief Executive Officer, Robeson Reeves, Bally's President, George Papinear, Marcus Glover, our Chief Financial Officer, and Jamin Patel, our Vice Chairman of the Board.

I share in New Jersey continues to gradually increase and we.

We remain on track to achieve our medium term market share goal of 6% to 8%.

Early results in Pennsylvania remain encouraging since our launch in June 2023.

Ontario remains an opportunity as we build out play a database.

Overall I gaming business is already generating positive returns and we're optimistic of its continued growth and contribution.

We are all hands on deck and preparing for market launch of I gaming in Rhode Island in March 2024, and look forward to introducing gaming in a state where we have a deep database and significant brand presence.

Charlie Diao: 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 violence. Actual results may differ materially from the results discussed in these forward-looking statements.

We are committed to growing I believe that OSB business with prudent.

Financial approaches and disciplined marketing investments given our belief that OSP is the path to I gaming.

In terms of our near term outlook.

As you saw in our press release, we have updated our full year 2023, adjusted EBITDA guidance range for the remainder of the year.

This reflects the later opening by Chicago temporary facility and then expected sustained cold back at the trough.

Charlie Diao: In addition, during today's call, management will refer to certain non-GAP financial measures. Reconciliation to the most comparable GAP financial measures are included, the schedules contained in our earnings release. We do not provide a reconciliation of forward-looking GAP financial measures due to our inability to project non-recurring expenses and one-time costs. Today's call is also being broadcast live on our Investor's website and will be available for replay shortly after the completion of this call.

As project ramps up.

We're also considering potential foreign exchange headwinds at Bally's International Interactive Despite continued operating momentum due to the recent strengthening of the U S dollar.

Our three operating segments are well positioned heading into 2024, and we will be focused on execution to realize a future that is very bright.

And casinos and resorts, we will benefit from a full year of growth Capex investment projects that we completed in 2023 at twin rivers and Kansas City.

Robeson Reeves: Let me hand the call over to Robeson.

Robeson Reeves: Thank you, Charlie, and hello, everyone. We are pleased to present our third-quarter results, where we continue to grow market share with a tight control of costs. Our operations perform well in competitive and mature markets. We have solid operating performance across our three business segments. We're consolidated revenues rising by 9.4% and consolidated adjusted EBITDA, increasing by 6.4% year-over-year. We also reach several significant project milestones, strengthening our foundation for 2024 and beyond.

Next as George pointed out we are beginning to build momentum in Chicago as we recently received regulatory approvals to expand our marketing initiatives.

Consumer feedback from our patrons has been positive and we have begun to build and leverage our database.

Further we should continue to gradually benefit from a full year of the smoking ban reversal in Shreveport recall revenues fell significantly when the smoking ban was first implemented and we're now starting to build that back.

We expect international interactive topline two remains solid on a constant currency basis, driven by a robust underlying market share trends in the U K O casino and the launch of valleys OSP offering in the U K in 2024.

Robeson Reeves: Notably, we achieved a successful soft launch of our Chicago temporary casino at the Medina Temple on September 9th, culminating in a formal ribbon-cutting ceremony on October 3rd. Concurrently, we completed our Kansas City property transformation and redevelopment also in September within budget. We see both investments in our CNR segment paying off in 2024 in growth and profit contribution as these investments bear fruit. Our Bally's international interactive division continues its impressive operating momentum in the UK, where we also successfully launched the Bally's branded iCocino app. We believe the Bally's brand will drive revenue and profit growth and build brand equity in the UK market.

In Asia, we continue to look for market stabilization after several months of increased volatility.

We have implemented changes to tighten marketing investment and are working diligently to realize financial efficacy from these operations.

In North America Interactive, we're gearing up to launch I gaming in Rhode Island, alongside the continued rollout of the Bally bet OSP app in multiple jurisdictions.

In gaming across New Jersey, Pennsylvania, and Ontario G. G. R is annualizing at a $100 million with 18 months of operations in New Jersey, and more recent launches in P E and Ontario.

Robeson Reeves: In North America Interactive, we rolled out the new Bally Bet OSB app in four states and five retail locations on the Canvy and White Hat platforms. By year end, our goal is for the roller of our Bally Bet app in at least seven states in North America.

We have the experience to take share in mature markets.

Although some additional costs or anticipated in half 124 operations are expected to improve financially as we continue to grow and scale the North America interactive business.

George Papanier: Turning now to our operating fundamentals, I'll first turn it to George to discuss our core casinos and results performance. Thank you, Rosen. Well, we've had a very productive third quarter in casino and resorts, successfully opening our temporary casino at the Medina Temple in Chicago, and we've delivered that project inside of budget including its three month delay due to regulatory strinal. We also took over the concession to operate the Bally's golf links at very point in the Bronx.

To this point, we have initiated a reduction about tech organization as we will be shifting our time in North America to white sack for both our gaming and OSP given our successful experience with it to date.

Yeah.

This is a major step towards our goal of creating a seamless customer experience.

We'll also ensure better operational focus is on North America teams won't have to deal with the complexity of managing two separate customer support processes.

George Papanier: While for competitive reasons, we are limited in the information that we can share today, we can we can disclose that the golf course operates profitably from Epida and cash flow perspectives. Further details regarding our plans for the cycle will be disclosed in the future. The casino resorts customer base remains resilient in the quarter as revenues increase 9.3% in year over year, which includes a full quarter contribution from the truck at approximately three weeks from the Chicago Temple.

Cross, our I gaming and valley back platforms.

Given the revenue share nature of the <unk> agreement, we expect success based scaling of certain operating costs, which is an important consideration when we drive towards a profitable North American business.

We will lose $60 million at the EBITDA level this year.

30 million next year and expect to break even in 2025.

George Papanier: Our portfolio is well positioned and we continue to take market share in our respective markets, which can be seen in the state's monthly gaming data and we outperform in most states. Our Rhode Island and Kansas City casinos were once again revenue standouts, while the Black Hawk and Quad cities were also strong. While we are closely monitoring customer spending outside of the three very specific instances, we haven't seen major shifts in behavior.

Turning to copper we are working on centralizing support functions and shared services procurement and supply chain consolidation and implementing best practices to manage our cost structure and realize improved operation operating efficiencies.

Earnings aside I'd like to dig deeper into our growth pipeline.

<unk> on our announced strategic development projects.

George Papanier: We did see a shift in behavior at the top in Las Vegas at Bally's Atlantic City, both destination markets, which are a type of competitive. Additionally, as highlighted last quarter, Evansville continues to be impacted by newer H-H-R facilities across the Kentucky border. My team and I continue to take proactive measures to preserve our margins and profit performance across the portfolio. On marketing perspective, our efforts will be to continue finding ways to motivate our higher tier customer segment, the strategy which is through many yield solid results over time.

As previously communicated and as George just spoke to.

We are highly anticipating next steps in tons about Oakland A's relocation plans to our Las Vegas Tropicana site.

Mlb's vote is scheduled for November.

Strategic opportunities. This development presents for our company are highly compelling and we are excited by the value that this transaction has created for us.

Remember, we bought the trough for $150 million in cash with a 50 year lease.

Now, we have to as investing $1 $5 billion, including $380 million of public funds into this land.

George Papanier: As for the truck, the next milestone is major league baseball's vote on the age relocation plans scheduled for mid-November. We'll hold off on announcement of any reinvestment plans until after the outcome is known, but we're excited about the unique value in enhancing development project and the strategic opportunities that it presents for our company. Earning to the Chicago Temp, we're seeing increasing volumes on a week-over-week basis while operating only 20 hours per day in a soft opening environment.

Although we have some short term pain. This is an extremely valuable asset.

Regarding the Chicago permanent facility. It's George as also mentioned, we are continuing to make progress with our plans and expect the construction process to commence in the second half of 'twenty four with an anticipated September 2026 opening.

I also want to reiterate that our obligations in 2020 for a limited primarily to them.

George Papanier: We expect to start operating 24 hours per day soon pending regulatory approval. In conjunction, we plan to implement our core marketing campaigns to increase frequency of visits that will capitalize on a rapidly growing database. If we continue to ramping this property, we remain confident in our financial expectations to generate approximately 50 million plus of annual adjusted EBITDA. And importantly, last week, we received approval from the IGB to operate the Temp for an additional year, for three years total until September 2026 when we expect our permanent casino to be completed for opening.

Site preparation.

Which have finite costs.

We have to meet our host community agreement for the permanent facility, which means we will spend a total of <unk> three 4 billion on project costs, we have $1 2 billion remaining.

All of which is expected to ramp in 2025 and 2026.

We will remain extremely tight with costs I'm scope as we will be spending to that number.

We will also be communicating additional details about our plans regarding police golf links are very point as we prepare a formal bid.

George Papanier: Regarding the Chicago permanent facility, by the end of 2023, we will have the count and put the majority of the soft costs outlined in the budget shared when the project was announced in 2022. We expect construction of the permanent facility to commence in the second half of 2024 once the tribute accomplished to the premises in July. With an anticipated property opening in September of 2026, that's for financing the hard costs of the permanent facility, which under the host community agreement calls for spending of $1.34 billion.

Under the New York request for applications process, which is ongoing.

Remember everyone wants New York, but we are the only one with local community support behind us.

Regarding valleys international interactive and the U K specifically.

<unk> continued to gain incremental share and are excited for the rollout of online sports betting and 24.

International Interactive segment margins remain robust having stabilized in the low to mid thirties, and we're confident in our ability to sustain or exceed these levels.

George Papanier: We will communicate our plans once detailed construction plans are finalized and financing commitments are in place. It's important to note that the hard costs in 2024 or earmarked for demolition and site preparation, which represents finite expenses. As a result, our capital requirements for the Chicago permanent casino project in 2024 are limited, but the bulk of construction expenses expected to ramp in 2025 and 2026. Our core portfolios near-term capex cycle has peaked as our growth projects have reached completion and we are now focused on driving increased profitability in our core casinos in 2024.

This includes in our plans to reinvest in our core U K and Asia businesses as we pursue selective growth opportunities in the <unk>.

National markets that fit our return criteria.

Turning back to North America and attractive.

Eagerly anticipating I gaming launch from Rhode Island, which holds the potential to be transformative because the development for us along with the continued rollout of Bally bet online sports betting across many states.

Through 2024.

Following the <unk> rollout, we hope to leverage a common technology platform to cross sell between our retail and digital businesses.

George Papanier: Ramping up the Chicago temp, communicating a concrete timeline for the truck to bring clarity to employees, guests and our company, and preparing to submit or bid to operate a casino in New York at our ferry point location.

This in turn supports our vision of becoming a premier full service multi faceted company in the casinos and resorts.

Robeson Reeves: I'll now turn it back to Wilson. Thank you George. Valley's international interactive continues to show strength, particularly in the UK, when net revenues increased by an impressive 13.1% year over year in our reported financial results. We continue to gain incremental market share due to our timely adaptations in response to regulatory policy changes in the UK market. Our strategy and operating formula of increasing active average revenue per user of first-time depositors, while reducing cost per acquisition continues to yield positive results.

Ming and OSB sectors, allowing us to leverage the <unk> brand in.

In a converged marketplace.

In summary, our goals heading into 2020 for encompass building upon the momentum that Chicago temporary casino.

Growing North America interactive one.

<unk> market share profitably.

Rolling out valley bets across multiple states.

And growing the bally's brand globally, including launching our SP in the U K market, where we have a scaled market presence and a deep database of patrons.

In addition to our growth initiatives. It is important to underscore that our team remains committed to increasing revenues and adjusted EBITDA for our core casinos and resorts and valleys international segments.

Robeson Reeves: In North America interactive, we remain focused on expanding our eye-gaming footprint and maintained positive momentum. Asher and New Jersey continues to gradually increase and we remain on track to achieve our medium-term market share goal of six to eight percent. Early results in Pennsylvania remain encouraging since our launch in June 2023. Ontario remains an opportunity as we build our player database. Overall, our eye-gaming business is already generating positive returns and we are optimistic of its continued growth and contribution.

As discussed earlier this year our core portfolios.

Near term Capex cycle has peaked.

Expansion projects have reached completion.

Before handing to Marcus I would like to reiterate how pleased I am with what the team is doing for me.

Markus over to you and thank you all again.

Thanks Robison.

As Robeson pointed out our immediate focus remains closing out a strong 2023, which saw a company grow and evolve as we executed our growth initiatives.

Robeson Reeves: We are all hands-on deck in preparing for market launch of eye-gaming in Rhode Island in March 2024 and look forward to introducing eye-gaming in a state where we have a deep database and significant brand presence. We are committed to growing our Bally Bet OSB business with prudent, financial approaches and disciplined marketing investments given our belief that OSB is path to eye-gaming.

Moving into 2024, we are equally excited as the foundational elements are in place to foster continued growth across all three of our operating business segments.

We remain committed to streamlining and enhancing our operational and financial performance, while managing our development pipeline.

Although our company is young our outlook is promising and we're excited about the many opportunities that lie ahead.

Robeson Reeves: In terms of our near-term outlook, as you saw in our press release, we have updated our full year 2023 adjusted EBITDAF guidance range for the remainder of the year. This reflects the later opening of our Chicago temporary facility and then expected sustained pullback of the TROP that the A's project ramps up. We are also considering potential foreign exchange headwinds at Bally's international interactive despite continued operating momentum due to the recent strengthening of the US dollar.

For the third quarter, we generated approximately $633 million.

An increase of 9% year on year in.

And adjusted EBITDAR of $173 million, which is an increase of 6% year on year after accounting for rent expense of $32 million.

Our cash generating segments of casino and resort and international Interactive our adjusted EBITDAR margin was 33% and 35% respectively.

Our casino and resort portfolio demonstrated solid top line results characterized by year over year organic growth in Rhode Island, Kansas City <unk>.

Robeson Reeves: Our three operating segments are well-positioned heading into 2024 and will be focused on execution to realize a future that is very bright. In casinos and resorts, we will benefit from a full year of growth capex investment projects that we completed in 2023 at Twin Rivers and Kansas City. Next, as George pointed out, we are beginning to build momentum in Chicago as we recently received regulatory approvals to expand our marketing initiatives. Consumer feedback from our patrons has been positive and we have begun to build and leverage our database.

Blackhawk and Quad cities, which helped offset continued.

Countered in Atlantic City, Evansville and Tropicana.

As George mentioned during his earlier commentary you made the decision not to implement operational changes at the Tropicana until it after major League baseball both on the A's relocation plans.

As communicated before Chicago experienced a several week opening delay.

We are working diligently on the revenue ramp having recently begun marketing to our database, which isn't which is building nicely.

Admissions over the first 30 days of the soft launch were very impressive at 157000 emissions.

Overall casino and resort reported revenues of $359 million, a 9% year over year increase and a $118 million of adjusted EBITDAR, including a full quarter contribution from the Tropicana and three weeks from the Chicago Tim.

Robeson Reeves: Further, we should continue to gradually benefit from a full year of the smoking ban reversal in tree ports. Recall revenue fell significantly when the smoking ban was first implemented and we are now starting to build that back. We expect international interactive's top line to remain solid on a constant currency basis driven by robust underlying market share trends in the UK Icasino and the launch of Bally's OSB offering in the UK in 2024.

Excluding Atlantic City Tropicana in the Chicago, Tim EBITDA margins were solid at 38% for the core portfolio.

Including these properties EBITDA margins were approximately 33%.

Valleys international or active generated revenues of $244 million, which is an increase of 7% year on year and $85 million of adjusted EBITDA, 12% increase year on year at a 35% margin.

Robeson Reeves: In Asia, we continue to look for market stabilisation after several months of increased volatility in implemented changes to tights and marketing investment and are working diligently to realize financial efficacy from these operations. In North America Interactive, we're gearing up to launch eye gaming in Rhode Island alongside the continued roll-out of the Bally Bet OSB app in multiple jurisdictions. In eye-gaming across New Jersey, Pennsylvania and Ontario, GGR is annualising at $100 million, with 18 months of operations in New Jersey and more recent launches in PA and Ontario.

Earnings were once again, driven by an impressive strength in the U K business, which was a robust 13% for the quarter that's in United States dollar.

A result of our content and marketing optimization continuation.

Looking ahead as we previously discussed we are committed to continued investment in our business.

We see potential for responsible growth and extending the reach of the valleys brand in the valleys bet OSB capabilities. We took our first step this past quarter and we launched the <unk> brand in the U K.

Our long term target for the valleys International interactive segments, adjusted EBITDA margin remains north of 30%.

Robeson Reeves: We have the experience to take share in mature markets. Although some additional costs are anticipated in half-124, operations are expected to improve financially as we continue to grow and scale the North America Interactive Business. To this point, we have initiated a reduction of our tech organisation as we will be shifting our PAM in North America to White Hat for both eye-gaming and OSB, given our successful experience with it to date. This is a major step towards our goal of creating a seamless customer experience and will also ensure better operational focus as our North America teams won't have to deal with the complexity of managing two separate customer support processes across our eye-gaming and valley-bet platforms. Given the revenue share nature of the White Hat Agreement, we expect success-based scaling of certain operating costs, which is an important consideration when we drive towards a profitable North America business.

North America interactive generated revenues of $30 million and a negative $18 million of adjusted EBITDA.

And I gaming, we gained incremental market share in New Jersey, Pennsylvania has performed well since our June launch and we are building the business prudently.

Early results have increased our excitement for the upcoming launch of I gaming in Rhode Island, where we will be the sole provider.

Turning to <unk>, we successfully rolled out our new App in four states and launched sports and five retail locations. Our marketing efforts will be measured as we look at OSB as a funnel for future high gaming growth opportunities and as an additional way to reach our core casino and resort customers.

The U S domestic rollout schedule remains full heading through the fourth quarter will be live in OSB in the UK in 2024.

As <unk> mentioned earlier, we remain laser focused on managing cost effectively.

We will grow the business prudently and as we more fully transition to a variable cost model now, including consolidating our U S. Pam onto the Whitehead platform for I gaming and Valley bet.

Robeson Reeves: We will lose $60 million at the EBITDA level this year, $30 million next year and expect to break even in 2025. Turning to corporate, we are working on centralising support functions and shared services, procurement and supply chain consolidation and implementing best practices to manage our cost structure and realise improved operating efficiencies.

This will lead to a better user experience for our customers as well as create internal operations operating efficiencies.

Corporate expenses for the third quarter came in at just under $13 million as we mentioned last quarter, we are managing our controllable and remain focused on continuing our integration efforts and centralizing resources to support our operating segments where advantageous.

We are confident in our expense management measures moving forward.

Turning to guidance.

Robeson Reeves: Turning to side, I would like to dig deeper into our growth pipeline to provide updates on our announced strategic development projects. As previously communicated and as George just spoke to, we are highly anticipating next steps in terms of our Oakland A's relocation plans to our Las Vegas Tropicana site. MLB's vote is scheduled for November. The strategic opportunities this development presents for our company are highly compelling and we are excited by the value that this transaction has created for us.

On an operating basis, we are keeping a close eye on consumer spending patterns and general economic conditions for impacts to our core casino and resort customers.

Robeson Reeves: Remember, we bought the TROP for $150 million in cash with the 50-year lease. Now we have the A's investing $1.5 billion, including $380 million of public funds into this land, which although we have some short-term pain, this is an extremely valuable asset. Regarding the Chicago permanent facility, George has also mentioned, we are continuing to make progress with our plans and expect the construction process to commence in the second half of 24, with an anticipated September 2026 opening.

July indicators demonstrate headwinds, we will act swiftly and engage in actions to minimize profitability exposure and maintain our strong margin profile.

With that said for the company overall, we are tweaking our fourth quarter outlook.

As you saw in our press release, our updated full year revenue forecast is $2 4 billion to $2 5 billion of.

Revenue in our adjusted EBITDA guidance range of $640 million to $655 million.

These changes contemplate the delayed opening of our Chicago facility the decision not to reinvest in the Tropicana and consider the strengthening of the U S dollar impacting our FX exposure.

While we don't take this change to our guidance lightly our confidence heading into 2024 remains high.

This begins with the full year benefits of our growth projects completed in 2023 at twin River in Kansas City, and the ramp of our database at the Chicago facility would think casino resorts.

We will also benefit from a full year of smoking ban reversal in Shreveport.

Additionally, we expect valleys international interactive to remain strong on an operating basis, particularly in the U K, where we are taking share in our North America interactive loss is expected to be reduced by half.

Robeson Reeves: I also want to reiterate that our obligations in 2024 are limited primarily to the demo by preparation, which have finite costs. We have to meet our host community agreement for the permanent facility, which means we will spend a total $1.34 billion on project costs. We have $1.2 billion remaining, bulk of which is expected to ramp in 2025 and 2026. Alex, we will remain extremely tight with costs and scope as we will be spending to that number.

We are maintaining our 2023 capital expenditure guidance of $160 million, excluding Chicago in aggregate as we complete our capex expansion cycle.

At quarter end shares outstanding were approximately $45 6 million and we have incremental warrants options other dilution of approximately $13 1 million shares.

58, 7 million shares outstanding is the right way to look at our capital structure.

We have more than $178 million of cash on our balance sheet and $3 3 billion of net debt.

I reiterate my enthusiasm for 2024 and beyond.

Robeson Reeves: We will also be communicating additional details about our plans regarding Bally's goal flings at Fairy Point as we prepare a formal bid under the New York request for applications process, which is ongoing. Remember everyone wants New York, but we are the only one with local community support behind us. Regarding Bally's international interactive and the UK specifically, we continue to gain incremental share and are excited for the rollout of online sports betting in 24. International interactive segment margins remain robust, having stabilized in the low to mid-30s and we're confident in our ability to sustain or exceed these levels.

It's quite exciting to be part of the valley team at such an important <unk>.

Along our journey.

We will continue to grow with six but with approximately $650 million of EBITDAR accounting for rent of $126 million roughly interest expense of about $265 million capex on a run rate of about $120 million a year.

Exclusive of all development costs and projects, we are in the range of generating a robust pre tax cash flow of between $150 million to $175 million in our core business.

The pipeline of projects ahead of us in all three of our operating segments is highly compelling and align with our strategic direction and focus on growth.

Casino and resort development and expansion anchored by our Chicago project.

Robeson Reeves: This includes in our plans to reinvest in our core UK and Asia businesses as we pursue selective growth opportunities in international markets that fit our return criteria. Turning back to North America Interactive, eagerly anticipating our eye-gaming launch in Rhode Island, which holds the potential to be transformative as a development for us, along with the continued rollout of Bally bet online sports betting across many states through 2024. Following the Bally bet rollout, we hope to leverage a common technology platform to cross-sell between our retail and digital businesses.

The enhanced value, we created in Las Vegas, and the exploration of the New York RSA.

Our domestic <unk> gaming growth, driven by New Jersey, Pennsylvania, and the expected launch in Rhode Island.

The strengthen our bally's international interactive business, particularly in the U K, where we continue to gain shares.

And continued focus on our balance sheet management addressing the untapped real estate value in our portfolio.

Thank you all for listening and now we will open up to Q&A, operator, I'll pass it back over to you.

Thank you Sir at this time, if you would like to ask a question. Please press the star and one on your telephone keypad.

They remove yourself from the queue by pressing star to once again that is star one to ask a question, we'll pause for a moment to allow questions to queue.

Robeson Reeves: This in turn supports our vision of becoming a premier full-service multi-faceted company in the casinos and resorts, eye-gaming and OSB sectors, allowing us to leverage the Bally's brand in a converged marketplace. In summary, our goals heading into 2024 encompass building upon the momentum at our Chicago temporary casino, growing North America Interactive, eye-gaming market share proftedly, rolling out Bally bet across multiple states and growing the Bally's brand globally, including launching OSB in the UK market where we have a scaled market presence and a deep database of patrons.

Our first question comes from Barry Jonas True Securities.

Hey, guys good morning.

Can you maybe walk us through the path could.

Could you maybe walk us through the path of ramp you expect in Chicago for the rest of this year and next year. Thanks.

Yeah, Hey, Barry I'll I'll, let George start off with that question.

Hey, Barry how are you doing.

No Barry let me just first start with that we delivered the construction in Chicago early and we waited for regulatory approval and then we opened it inside of both budget.

Robeson Reeves: In addition to our growth initiatives, it is important to underscore that our team remains committed to increasing revenues and adjusted EBITDA for our core casinos and resorts and Bally's international segments. As discussed earlier this year, our core portfolios near-term capex cycle has peaked expansion projects have reached completion.

So we're effectively in a soft opening environment.

And only operating 20 hours per day, we anticipate <unk> approval to go to 24 hours hopefully, we see that by year end.

Uh huh.

Our business is ramping.

It's showing week over week growth.

<unk> has grown from zero to 27000 customers in under two months and.

They've not been marketed to at this point because marketing requires RGB approval as well so.

Robeson Reeves: Before handing to Marcus, I would like to reiterate how pleased I am with what the team is doing for me.

We submitted a pretty robust marketing plan to the IBD and have received approval to launch in the first week in November so.

Marcus Glover: Marcus, over to you and thank you all again. Thanks, Rosen. As Rosen pointed out, our immediate focus remains closing out a strong 2023, which saw our company grow and evolve as we executed our growth initiatives.

Early GDR results reflect strong table games business already.

We already ranked second in the state and total win and Thats growing rapidly.

That's without any marketing associated with it.

Marcus Glover: News. Moving into 2024, we are equally excited as the foundational elements are in place to foster continued growth across all three of our operating business segments. We remain committed to streamlining and enhancing our operation with financial performance while managing our development pipeline. Although our company is young, our outlook is promising and we're excited about the many opportunities that lie ahead. For the third quarter, we generated approximately 633 million, which is an increase of 9% year on year, an adjusted EBIDAR of 173 million, which is an increase of 6% year on year after accounting for an expense of 32 million.

So I expect to continue to ramp this business for the first six months of operations.

And based on early results.

How positive the customers reacted to the property.

I'm feeling pretty good about achieving that.

An annual run rate of about $50 million plus EBITDAR.

Got it got it and do you think I mean, you previously talked about 50 to 60 for 2024 is that still possible I think that we communicated last quarter or is that still.

A reasonable outcome.

Yes, after the first quarter, we should be on that.

Plus.

Marcus Glover: For our cast generating segments of casino and resource and international interactive, our adjusted EBIDAR margin was 33% and 35% respectively. Our casino and resource portfolio demonstrated solid top-line results characterized by year-over-year organic growth in Rhode Island, Kansas City, Black Hawk and Quad Cities, which helped offset continue to be counted in Atlantic City, Evansville, and Tropicana. As George mentioned during his earlier commentary, we made the decision not to implement operational changes at the Tropicana until after major league baseball goals on the A's relocation plans.

Our next question comes from Chad Beynon Macquarie.

Good morning, Thanks for taking my question.

Wanted to ask about the guidance.

I understand you kind of kept the same bracket from a revenue perspective, bringing it down by $100 million, but in terms of the two point for kind of the low end for the year that would imply year over year negative growth versus Q4 'twenty. Two since then you've added you know trough you've added the Tam.

You have some projects.

<unk> is actually a positive from year over year perspective.

So it sounds like the quarter actually went pretty well I understand.

Marcus Glover: As communicated before, Chicago experienced a several-week opening delay. We are working diligently on the revenue ramp, having recently begun marketing to our database, which is building nicely. Admissions of the first 30 days of the soft launch were very impressive at 157,000 emissions. Overall, casino and resource reported revenues of 359 million, a 9% year-over-year increase, and 118 million of adjusted EBIDAR, including a full quarter contribution from the Tropicana and three weeks from the Chicago 10th.

The temp was a little bit late in terms of opening but can you just kind of help us think of a scenario where revenues would come in at that low end or was that just kind of a simple bracket down and that might be very conservative. Thank you.

Yeah, Yeah, Yeah, just a couple a couple of things and then I'll allow my colleagues to opine as appropriate couple of things come into play one is obviously the FX exposure we have on some of the currency, but also if you think about where we are.

Marcus Glover: Excluding Atlantic City, Tropicana and the Chicago 10th, EBIDAR margins were a solid 38% for the core portfolio, including these properties EBIDAR margins were approximately 33%. Valley's international interactive generated revenues of 244 million, which is an increase of 7% year-on-year, and 85 million of adjusted EBIDAR, 12% increase year-on-year, at a 35% margin. Earnings were once again driven by an impressive strength in the UK business, which was a robust 13% for the quarter, best in United States dollar.

In terms of some of our respective markets. There are some competitive pressures we are experiencing that we're going to market our way through where it makes sense.

And so that has some application, but you also got to take into account a little bit of what's going on with Tropicana, where we had it last year for a full quarter with some of the noise around Oakland A's and the implications of what we may do with that property and the lack of investment until we find out the Oakland A's announcement, there could be a little bit of <unk>.

You, there, but we feel feel pretty confident that there's some opportunity to minimize that impact on the lower end and make it more towards the middle or the high end of that range and so we still feel pretty confident we have some some some items at our disposal to minimize that impact.

Marcus Glover: A result of our content and marketing optimization continuation. Looking ahead, as we previously discussed, we are committed to continuing investment in our business. We see potential for responsible growth and extending the reach of the Valley's brand and the Valley's bet OSB capabilities. We took our first step this past quarter and we launched the Valley's brand in the UK. Our long-term target for the Valley's international interactive segments suggested EBIDAR margin remains north of 30%.

Okay. That's helpful. I appreciate that and then just in terms of capital allocation you know good good free cash flow.

Kind of forecast for next year on the on the core business and it sounds like a lot of the the permanent Chicago Capex will be in 'twenty five 'twenty six is there availability to buy back some stock here given the dislocation in the market or is the cash on hand kind of earmarked.

Marcus Glover: North American interactive generated revenues of 30 million and a negative 18 million of adjusted EBIDAR. In eye-gaming, we gained incremental market share in New Jersey, Pennsylvania has performed well since our June launch and we are building the business prudently. The early results have increased our excitement for the upcoming launch of eye-gaming in Rhode Island, where we will be the sole provider, chair. Turning to Bally bet, we successfully rolled out our new app in four states and launched sports and five retail locations.

Marked for.

Standard Cage cash working capital and some of the near term.

Thank you.

Chad Best way I'll answer that is look we're always our free cash that we have we're always assessing the best use of that cash we understand where the market is pricing our equity right now and it's a very attractive price.

Marcus Glover: Our marketing efforts will be measured as we look at OSB as a funnel for future eye gaming growth opportunities and as an additional way to reach our core casino and resource customers. The U.S, domestic rollout schedule remains full, heading through the fourth quarter, and will be live with OSB in the UK in 2024. As Robeson mentioned earlier, we remain laser focused on managing cost effectively. We will grow the business pruningly and as we more fully transition to a variable cost model, now including consolidating our U.S, panel through the wide-at platform for eye gaming and Bally bet.

Our next question comes from Dan <unk> Wells Fargo.

Hey, good morning, everyone and thanks for taking my questions.

So one of the areas we get the most.

Inbounds on it it's obviously Chicago and I think you guys laid out some had some comments on financing kind of TBD, but if theres any way to just kind of help us think about or frame potential avenues that might be possible, where you could maybe access additional capital just as we think about that capex ramp.

Marcus Glover: This will lead to a better user experience for our customers as well as creating internal operation operating efficiencies. Corporate expenses for the third quarter came in at just under 13 million. As we mentioned last quarter, we are managing our controllables and remain focused on continuing our integration efforts in centralizing resources to support our operating segments where advantages. We are confident in our expense management measures moving forward.

It sounds like second half of 'twenty, 'twenty, four and 'twenty 'twenty five as the bulk of that remaining $1 $2 billion of spend. So you know as you think about the opening is there any way to do a phased opening or are kind of have that not be so chunky in terms of that relatively short time frame.

Yeah.

Yeah, I'm going to let Charlie Dou answer that on our team.

Marcus Glover: Turning to guidance. On an operating basis, we are keeping a close-out on consumer spending patterns in general economic conditions for impacts to our core casino and resource customers. To our indicators demonstrate headwinds, we will act swiftly and engage in actions to minimize profitability exposure and maintain our strong margin profile. With that said, for the company overall, we are tweaking our fourth quarter outlook. As you saw in our press release, our updated four-year revenue forecast is 2.4 billion, and the 2.5 billion of revenue and our adjusted EBD guidance range is $640 million to $655 million.

As you know we had a we have a.

$500 million facility with Blue al on the land lease of which 200 was to make the purchase of <unk>.

Land.

$300 available to draw.

Obviously, we have not.

Analysis, yet relative to our construction of our path to construction financing but be assured.

That's what we're focused on when we have something to announce but we show.

And you can expect a substantial portion of the rest of the one point too will be yes.

There's 300 and blew out there'll be some significant amount for construction financing blew out.

Marcus Glover: These changes contemplate the delayed opening of our Chicago Account Facility, the decision not to reinvest in the drop of Canada, and considers the strengthening of the U.S, dollar impacting our ethics exposure. While we don't take this change to our guidance lightly, our confidence heading into 2024 remains high. This begins with the four-year benefits of our growth projects completed in 2023 at Twin River in Kansas City, and the ramp of our database at the Chicago 10th Facility within casino and resource.

Facilities only for the land so the the security for construction and progress with before the construction lender.

Got it thanks for the detail there and then just pivoting in terms of the the regional portfolio and this is probably a question for George.

Relates to the margins I think you guys called.

Called out.

It's possible uptick in marketing spend at some of your properties just given the competitive pressures how do you think about broadly your opex structure as it relates not just in marketing, but maybe some of the other <unk>.

Marcus Glover: We will also benefit from a four-year of smoking ban reversal and tree port. Additionally, we expect valleys in our national interactive to remain strong on an operating basis, particularly in the U.K, where we are taking share in our North America interactive laws and expected to be reduced by half. They are maintaining our 2023 capital expenditure guidance of 160 million excluding Chicago and aggregate as we complete our Catholic expansion cycle. At the quarter-hand, shares outstanding were approximately $45.6 million, and we have incremental war and options at the other dilution of approximately $13.1 million shares.

Or is that some of your peers have called out whether it's labor insurance utilities et cetera.

Sure will.

Well first let me let me just tell you that.

Very careful with their fixed cost we focus on variable costs to meet demand.

So when you look at it without Chicago AC in Trop.

Over 38% when comparing the last year in total and our total portfolio.

And I remember the trough was acquired mid Q3.

Marcus Glover: 58.7 billion shares outstanding is the right way to look at our capital structure. We have more than $178 million cash on our balance sheet in 3.3 billion of net debt. I reiterate my enthusiasm for 2024 and beyond. It's quite exciting to be part of the valley team as such an important point along our journey. We will continue to grow with the approximately 650 million of EBDAR, accounting for rent of 126 million, roughly interest expense of about 260 5 million.

So.

Any additions to staff were in variable positions in our targeted revenue generation opportunities, which is really the way we measure. It is based on a return on that on that.

On that investment so we know how to operate we've been able to sustain margins as a matter of fact, we've improved 10 basis points and more in Q2 without Chicago and drop through.

Other than other than labor costs.

We're still seeing.

The market <unk> been pretty rational from a marketing perspective, although in some markets. There are starting to become a little bit more aggressive, but we really focus on one spending for return.

Marcus Glover: CapEx, on a run rate of about 120 million a year, is exclusive of all development cost and projects. We are in the range of generating a robust pre-tax cash flow between 150 to 175 million in our core business. Williams. The pipeline of projects ahead of us in all three of our operating segments is highly compelling and aligned with our strategic direction and focus on growth. Casino and Resort development and expansion anchor by our Chicago project, the enhanced value we created in Las Vegas and the exploration of the New York RFA, our domestic eye gaming growth driven by New Jersey, Pennsylvania, and the expected launching road island, the strengthen our values and our national and our active business, particularly in the UK where we continue to gain shares and continue focus on our balance sheet management addressing the untapped real estate value in our portfolio.

Okay.

Our next question comes from Jordan Bender J M P Securities.

Great. Thanks for taking my question I wanted to stick with the regional portfolio. It seems like the regional consumers is sticking in there just based off of kind of your commentary there is some.

A phrase in the slide deck here, calling out some.

Sector softness I was wondering is that more specific to some of these properties Atlantic City trough that you were calling out or is there anything within the overall sector that youre starting to see kind of pull back.

Yeah, I mean, it is it is sector by sector I mean listen when you look at the market, we certainly seen softness overall in all the markets.

Operator: Thank you all for listening and now we're open up to Q&A operator, I'll pass it back over to you. Thank you, sir. This time if you would like to ask a question, please press the star and one on your telephone keypad. You may remove yourself from the queue by pressing star two. Once again, that is star one to ask a question. We'll pause for a moment to allow questions to queue.

However, we're up in 10 of those 13 markets that we operate in from a problem area.

On a market share perspective, and we're seeing a little bit of a customer shift.

We tend to focus a little bit more on the higher higher customer segments of our business.

We're seeing a better return on that but we're certainly getting some softness and the lower lower 50 minus type segments.

All of our customer base.

Barry Jonas: Our first question comes from Barry Jonas, true of securities. Hey guys, good morning. Can you maybe walk us through the path? Can you maybe walk us through the path or ramp you expect in Chicago for the rest of this year and next year? Thanks. Hey Barry, I'll let George start off with that question. Hey Barry, how you doing?

Okay and then just for my follow up in Rhode Island, where you guys have the database.

I mean, just being a higher spend stickier customer I presume that should be in EBITDAR contribution positive state within 24 is that kind of the right way to think about your guidance that you just gave for your losses within 24.

George Papanier: So Barry, let me just first start with that we delivered the construction of Chicago 10th early and we waited for regulatory approval and then we opened it inside of budget. So, you know, we're effectively in a soft opening environment and only operating 20 hours per day. We anticipate IGB approval to go to 24 hours. Hopefully we see that by year end. You know, our business is ramping. It's showing week over week growth and our base is going from zero to 27,000 customers in under two months.

Rhode Island will be a positive Oi gaming.

<unk> generates.

Just one thing on our guidance range the way I look at it is although we talk about our guidance. This is the $60 million of North America interactive loss that won't go to zero, we will make sure that goes to zero. So I look at it with a $60 million swing in that.

Well, yes, Rhode Island, we're very excited by the opportunity it will be.

Good profit contributor for us.

George Papanier: And you know, they they've they've not been marketed to at this point because marketing requires IGB approval as well. So we submitted a pretty robust marketing plan to the IDB and have received approval launch for the first week in November. So, you know, early GDR results reflect strong table games business already. We already ranked second in the state until the win and that's growing rapidly and that's without any marketing associated with it.

Our next question comes from Jonathan Novartis.

T D Cohen.

Great. Good morning. Thank you this is Jonathan on France.

My first question is with respect to casino resorts in the third quarter.

Margins decreased about 220 bps year over year, despite the record June quarter revenue.

And could you just walk us through the puts and takes of dose dose headwinds that led to a decrease at all as if they.

George Papanier: So I expect to continue to ramp this business for the first six months of operations and based on early results and how positive the customers react to the property. Don't feeling pretty good about achieving an annual run rate of about 50 million plus in the dark. Got it. And you think you previously talked about 50 to 60 for 2024. Is that still possible? I think that was communicated last quarter. Is that still a reasonable outcome? Yeah, after the first quarter, we should be on an added greater 50 plus.

You are temporary in nature, how long can we expect them to last for.

Hey, Jonathan This is this is George so you're referring to a consolidated margin.

Just spoke recently just briefly I just spoke of a minute ago about how you take out the trop and you take out of Chicago and as well as.

Atlantic City and we're at we're at the levels that we've always guided guided the market to so.

We're going to have to see what happens with the trial with the announcement of the <unk>. So that's that's continued to be to be seen what happens there and as far as Atlantic city's concern there are pressures in.

There are pressures in that market and that's one of the markets that I talked about there was a little uptick in marketing spend.

Chad Beynon: Our next question comes from Chad Bannon. Four. Thanks for taking my question. I wanted to ask about the guidance. I understand you kind of kept the same bracket from a revenue perspective, bringing it down by 100 million. But in terms of the 2.4 kind of the low end for the year, that would imply year over year, negative growth versus Q422. Since then you've added, you've added the temp, you have some projects, FX is actually a positive from year over year perspective.

Not going to chase that but it does cause us to react a little bit from there.

From a customer incentive perspective.

Understood.

In your slides you called out that balance is taking share from from personal care markets and can you maybe give us. Some examples of what the company is doing in those markets that are driving that top market.

<unk>.

Well I'm not going to I'm, not going to give or any way any marketing secrets, but.

Marcus Glover: So it sounds like, you know, the quarter actually went pretty well, I understand, you know, the temp was a little bit late in terms of opening, but can you just kind of help us think of a scenario where revenues would come in at that low end or was that just kind of a simple bracket down, and that might be very conservative. Thank you.

Discussed this in previous calls.

We're seeing a better opportunity at the higher end of our customer database and we're taking advantage of that.

Our next question comes from Jeff substantial.

Stifel.

Hi, great. Good morning, everyone and thanks for taking my questions.

Marcus Glover: Yeah, yeah, yeah, a couple of things, and then I'll allow my colleagues to open as appropriate. A couple of things coming to play. One is obviously the FX exposure we have on some of the currency, but also if you think about where we are, in terms of some of our respective markets, there are some competitive pressures. We're experiencing that. We're going to market our way through where it makes sense. And so that has some implication, but you also got to take into account a little bit of what's going on.

Maybe starting out here just on the guidance revisions so full year EBITDAR lowered 25 million at the low end $45 at the high end if I'm hearing you correctly it sounds like the only real true incremental changes here, our timing for the Chicago opening and the ramp the changes at the Tropicana ahead of the Aes and FX My question.

First of all am I correct in saying. These three are are really the only true incremental changes from the last time, you updated guidance and if so I was hoping you were wondering if you could sort of bucket them off in terms of how much each are sort of contributing to your guidance revisions.

Marcus Glover: We had it last year for a full quarter with some of the noise around Oakland A's and the implications of what we may do with that property and the lack of investment until we find out the Oakland A's announcement. There could be a little bit of pressure there, but we feel pretty confident that there's some opportunity to minimize that impact on the lower end and make it more so toward the middle or the high end of that range. And so we still feel pretty confident. We have some items that are disposed or to minimize that impact.

Yeah.

You are dead on with your assessment well get into buckets, but just to just to keep in perspective for you.

The Chicago, we again feel very very good about continuing to build upon that the trough year on year.

It's one of those things, where we just made a decision until we get more clarity on what the age is going to do are going to do it's very difficult to put any more investment and operational change to minimize that impact and so therefore youre seeing some of the revenue shortfall, but you're dead on with your assessment of those those primary things contributing to the difference between our last guidance.

Marcus Glover: Okay, that's helpful. Appreciate that. And then just in terms of capital allocation, you know, good free cash flow, kind of forecast for next year on the core business. And it sounds like a lot of the permanent Chicago capax will be in 2526. Is there availability to buy back some stock here, given the dislocation in the market or is the cash on hand kind of earmarked for, you know, kind of standard cage cash working capital and some of the near-term things.

We currently are.

Issue today in our earnings.

Okay. Great. That's helpful. Thank you Mark you're thinking a longer term view here in Chicago, you walk through sort of the path and some of the expected phasing of the construction spend Tropicana and New York longer term subject to decision, making processes, where the regulatory or amongst.

Marcus Glover: Thank you. Yeah, best way I'll answer that is look, we're always a free cash that we have. We're always assessing the best use of that cash. We understand where the market is pricing our equity right now. And it's a very attractive price.

Yeah that'll be that are sort of outside of your hands, but I guess my question is this you know, let's say all three projects.

Sorry to Tropicana you you end up go through it with some sort of a development project in the New York to win the license how much should we expect spend to be I guess overlap between multiple projects or do you think there could be a scenario, where theres basically no overlap timing wise with any of the spending for the three various parties recognize there's a lot of <unk>.

Daniel Politzer: Our next question comes from Dan Pulitzer. Well, Fargo.

George Papanier: Hey, good morning, everyone. And thanks for taking my questions. So one of the areas we get the most in-balance on is obviously Chicago. And I think you guys laid out some, had some comments on, on financing kind of TBD. But if there's any way to just kind of help us think about or frame potential avenues, that might be possible where you could maybe access additional capital and just as we think about that CapEx ramp, it sounds like, you know, second half of 2024 and 2025 is the bulk of that remaining $1.2 billion spend.

Bill is here, but let me know if that.

Sort of makes sense the way I laid it out.

So this is seeking the chairman so maybe.

Mark has asked me to take this one obviously we have three.

Large exciting.

Since the project and we're going to need to make sure that we balance all of them.

Look our highest priority is Chicago.

But the nice thing is that I think what what might be missing in People's analysis is that we're actually we actually have a number to choose to hit in terms of our spend.

George Papanier: So, you know, as you think about the opening, is there any way to do a phase opening or kind of, you know, have that not be so chunky in terms of that relatively short timeframe? had a 500 million dollar facility with Blueow on the land lease of which 200 was to make the purchase of the land and 300 are available to draw. Obviously, we have not announced this yet, well, to our construction, our path to construction financing.

Is one spot three 4 billion of which we've already spent almost $200 million.

And so the amendment that numbers here.

And then I think Charlie walked through a little bit of the various ways to to to find out that there is you know obviously, we have our land bank. We have the S. One still so we're going to bring in minority investors.

There's.

Multiple levers for us to.

Continued to find financing there, but but at the end of the day I think there's a generalized I belief that we're going to be subject to unlimited inflation, that's actually almost the opposite.

George Papanier: But be assured, that's what we're focused on. When we have something to announce, we shall, and you can expect this substantial portion of the rest of the 1.2 will be, you know, there's 300 from Blueow, they'll be some significant amount for construction financing. Blueow facilities only for the land, so the security for construction and progress would be forward, the construction lender. Got it, thanks for the detail there.

Dominion, we hit our number we fulfilled the content that's the main.

Substantive point and the host community agreement with the city.

And therefore, we are allowed to open that facility and let me tell you we will make sure that that you know.

4000 gain position.

Cody opened on time and on budget. So that's the that's the main or at the trough is actually sort of an interesting.

George Papanier: And just pivoting, in terms of the regional portfolio, this is probably a question for George. As it relates to the margins, I think you guys, you know, called out, you know, it's possible uptake in marketing spend at some of your properties, just, you know, given the competitive pressures. How do you think about broadly your back structure, as it relates, not just the marketing, but maybe some of the other pressures that some of your peers have called out, whether it's labor or insurance utilities, et cetera?

Situation.

In the sense that again I think as Mark has alluded it's actually caused Ah.

The good news has been in the very near term bad news because.

As we've lost.

We now know that at some point, we will redevelop the site.

That.

That where we when we first purchased it was operating at a EBITDAR.

George Papanier: You know, first, let me just tell you that, you know, very careful with their fixed costs. We focus on variable costs to meet the man. So when you look at without Chicago, AC and TROP, you know, we're, we're over 38% in comparing the last year total and our total portfolio. And that's, you know, remember to TROP as a fireman with Q3. So, you know, any additions to staff or a variable positions and, and, or targeted for revenue generation opportunities, which is really the way we measure it is based on the return on that, on that balance, on that investment.

Hum Decently positive and then we had the rent and so it was a.

It was a carry positive asset.

As the debate can believe frankly EBITDA has declined as as bookings.

Bookings are harder to manage because people don't know when it's going to close and also frankly, our employees are starting to leave.

As there are new properties opening in the area and they don't know when we're going to redevelop so.

The very near term actually caused a hit to our financials, but obviously again as mark has spoken to we believe that the asset value. We have here has gone up.

George Papanier: So, you know, we know what, operate, and we've been able to sustain margins to the matter of fact, we've improved 10 basis points and more margins from Q2 without Chicago and TROP. So, you know, other than other than labor costs, you know, we're still seeing the market green being pretty rational, of a marketing perspective. All of them in some markets there, they're starting to become a little bit more aggressive, but, you know, we really focus on one spending clue return.

A reasonable amount so look we just have to decide.

You know based on what we think the financing and partnership picture is here.

You know how you know how we're going to go and so I'm about to say, Hey, look, we're well aware of where our shares trade.

We're well aware of what we think the return on capital is and and properties like Chicago and New York.

Jordan Bender: Our next question comes from Jordan Binder, J. M. P. Securities. Great, thanks for taking my question. I want to stick with the regional portfolio. It seems like the regional consumers is sticking in there. I'm just based off with kind of your commentary. There is some, you know, phrase in the slide deck here, calling out some sector softness.

And on the biggest mobile spend.

We'll prioritize correctly and make sure that we allocate capital to what we think is the most attractive and obviously.

<unk>.

You know.

Force rank that capital so it's not like we're going to run out of capital spending on everything.

George Papanier: I was wondering, is that more specific to some of these properties that land a city drop that you were calling out, or is there anything within the overall sector that you're starting to see kind of pull back? Yeah, I mean, it is sector by sector. I mean, listen, when you look at the market, it was certainly seeing softness overall and all the markets. However, we're up in 10 of those 13 markets that we operate in from a market share perspective. And, you know, we're seeing a little bit of a customer shift.

And then obviously if there are projects that we think forced rank lower than you know, we would look to find partners or defense even offload.

Offload them. So look I think you have to believe.

Believe that the board and the shareholders of this company that can be rational about.

How are we.

How do we allocate our capital on New York.

Really the most speculative because obviously, it's something that is just an RFP, that's continuing but again as George pointed out we happen to have the only site that currently has our local.

George Papanier: You know, we tend to focus a little bit more on the higher customer segments of our business, to where we're seeing a better return on that, but we're certainly getting some softness in the lower 50 minus type segments of our customer base. Okay, and then just so my follow-up in Rhode Island, you guys have the database, eye gaming, just being a higher spend, stick your customer. I presume that should be in EBITDA or a contribution positive state within 24.

We elected in support things could change, but that's a pretty obviously surprised that's pretty much every gaming company in some way shape or form is competing for so I guess the I guess the question would be if we were to win the prize.

Would we be able to find the right kind of financing and in partnership to get that developed again that's.

A little further out.

Yeah.

But I think you can make the assumption that we will make.

George Papanier: Is that kind of the right way to think about your guidance that you just gave for your losses within 24? Rhode Island will be a positive eye gaming margin generator. Just one thing on our guidance range, the way I look at it, is although we talk about our guidance, this has the $60 million of North America interactive loss. That will go to zero. We will make sure that goes to zero. So I look at it with a $60 million swing in that. But yeah, Rhode Island, we're very excited by that opportunity. It will be a good profit contribution for us.

Prudent decisions.

Our next question comes from branded Montara Barclays.

Yes.

Good morning, everybody. Thanks for taking my question.

In Las Vegas.

The lease you you hold where the trough is currently.

That leases.

Arguably a much more valuable today.

Day with the A's pending decision is there a world in which you would you would sell that lease to to create liquidity to fund the other projects buyback debt or buy back equity.

Just curious how you look at that balance at.

Jonnathan Navarrete: Our next question comes from Jonnathan Navarrete, PD Cohen.

That cost benefit.

George Papanier: Great, good morning. Thank you. This is Jonnathan, our friend. My first question is with respect to customer resources in the third quarter. Margin's decrease of about 220 bips year-a-year despite the record is due quarter revenue. And could you just walk us through the puts and takes of those other ones that led to the decrease as well as, you know, if they are temporary nature how long can we expect them to last more?

Yeah, I guess, the best way to answer that is I think for the right price, we'd probably unload anything but if you think about the nature of that transaction.

We traded into that deal with a couple of our properties and got a lease that is very attractive and it is traded into a value.

That is enormous for us right now and so whether we develop that ourselves or whether someone presents us an offer.

That at a minimum valued at 9 million an acre yeah, we absolutely entertain that.

George Papanier: Jonathan, this is this is where so you're referring to a consolidated margin. You know, I just spoke just briefly, I just spoke a minute ago about, you know, how you take out the trap and you take out Chicago and as well as Atlantic City and we're at, we're at the levels that we've always guided, guided the market to. So, you know, we're going to have to see what happens with the trap, you know, with the announcement of the A's.

We have no plans at this moment, but it's just someone approach us we would absolutely entertain them.

Divesting of it.

Okay, great. Thanks for that and then.

On.

Our international interactive in the prepared remarks, and I hope I caught this correctly.

Uh huh.

There's a sort of target a target margin of low to mid thirties, and I think you guys mentioned <unk>.

George Papanier: So that's that's continued to be to be seen what happens there. And as far as Atlantic City's concern, there are pressures in there are pressures in that market and that's one of the markets that I talked about. There's a little uptick in the marketing spend. We're not going to chase that, but you know, it does cause us to react a little bit from a customer incentive perspective. Honestly, in your slide, you called out that balance is taking share from peers from certain markets and can you make give us some examples of what the company is doing in those markets that are driving that market take.

Reinvesting or sort of ramping back ramping up investments in Asia, and maybe another locale.

And I guess the question is is there.

Maybe not but is there a subtle sort of strategy shift I mean, I think the story had been sort of cutting marketing margins had been going up quarter on quarter for the last three quarters.

So and I think you guys did 35% this quarter so yes.

Is that are you going back on offense, there and end and what would you how would you respond to that.

Yeah. Thank you wrote something here.

We will spend where the ROI stacks up.

We have enough as we've been showing you we've got real control in real grip on these businesses. So you've got your revenues and we'll pull the levers to make sure that we extract the right EBITDA.

George Papanier: Well, I'm not going to, I'm not going to give her any away any marketing secrets, but I, but I've discussed this in previous calls is that we're seeing a better opportunity at the higher end of our customer database and we're taking advantage of that.

Yeah, I think well holds mid thirties.

But if opportunities come we will spend for growth, we want to get the right growth, but we want to get the right EBITDAR out of that.

Jeffrey Stantial: Our next question comes from Jeff Stanchel. Stiefel. Hi, great.

Marcus Glover: Good morning, everyone. Thanks for taking our questions. Then he's starting out here just on the guidance revisions, so full year, even our lower 25 million to low end, 45 million to high end, if I'm hearing you correctly, it sounds like the only real true incremental changes here are timing for the Chicago opening in the ramp. The changes at the tropicana that had the ease and effects. My question is, is first of, am I correct in saying these three are really the only true incremental changes from the last time you updated guidance.

I'm very happy with where international interactive business.

We should remember that these are highly competitive mature markets and we continued to grow share I believe theres many mature markets in the world out there, where we're showing that we can also grow shifts such as new Jersey, such as Pennsylvania.

I am very very positive with where we are and we're really showing that we have a grip on our cost structures.

Just just to add that.

<unk>.

We announced the head count reduction because we are getting confidence with white can be providing a platform for us in North America, which will be a better product offering and the long term for us.

Marcus Glover: And if so, I was hoping you're wondering if you could sort of bucket them off in terms of how much each are sort of contributing to your guidelines revisions. Yeah, you're dead on with your assessment, won't get into bucketing, but just to keep in perspective for you, the Chicago wheat, again, feel very, very good about continuing to build upon that, the trot year on year, you know, it's one of those things where we just made a decision until we get more clarity on what the A's is going to do, our going to do is very difficult to put any more investment in operational change to minimize that impact.

That will result in approximately a 300 person headcount reduction.

That will mean.

This a stronger company, but also improve our margins too.

Our next question comes from Ricardo Chinchilla Deutsche Bank.

Hey, guys. Good morning, and thank you so much for taking my question.

I was wondering if you could provide some color regarding the funding of the hog costs for the Chicago project in 2025, perhaps including detailed all of them are needed, although being a rough estimate the alternatives that the company has identified like you know doing additional sale leaseback transaction that the restricted group's sending the money looking for a REIT partner you know what's the.

Marcus Glover: And so, therefore, you're seeing some of the revenue shortfall, but you're dead on with your assessment of those primary things contributing to the difference between our last guidance and what we currently issue today in our earnings. Okay, great. That's that's double. Thank you, Marcus. It'd be taking a longer term view here, British Chicago, you walked through sort of the path and some of the expected phasing of the construction spend, drop a can in New York, longer term, subject to decision making processes where the regulatory or amongst the MLB that are sort of out side of your hand.

Refer funding source at the company at this point identify and perhaps some color on the timing for a financing transaction and if you could also please confirm that if the company decides to raise money at the restricted group do you guys plan to your evolving as you do that do you have enough.

Marcus Glover: But I guess that question is this, you know, if let's say all three projects, you know, you're sorry, you know, drop a can and you end up go through with some sort of development project and then New York doing the license, how much should we expect spend to be, I guess, overlap between multiple projects or do you think, you know, there could be a scenario where there's basically no overlap timing wise with any of the spend for the three various projects, you know, recognize there's a lot of variables here, but let me know if that question sort of makes sense. Well, let me know.

No restricted payment capacity and investment in capacity to send money to the onrushing did stop Ah you know is.

Is that capacity in excess of like 300 million.

Uh huh.

This is Charlie.

I think you asked about.

15 questions.

But the fundamentally is yes, we know what our covenants are we know what our contractual obligations are and to the degree that we are actually.

Marcus Glover: So this is as you can determine, so maybe Marcus asked me to take this one. Obviously, we have three large exciting physical project and we're going to need to make sure that we balance all of them. Those are highest priority Chicago. But the nice thing is that I think what might be missing in people of analysis is that we're actually, we actually have a number to hit in terms of our spend, which is one spot three four billion of which we were spent almost 200 million.

<unk>.

Leverage.

Below a certain level, we have unlimited to distribute cash.

However, if.

If we get more Levered, obviously, there are certain limitations in terms of the capital plan. We told you that we had a $300 million committed unused from the existing facility we.

Marcus Glover: And so the minute that number is hit and I think Charlie walked through a little bit of the various ways to to finance that there's, you know, obviously we have our land bank, we have the S1 still, so we're going to bring into my minority investors. There's multiple levers for us to continue to find financing there. But at the end of the day, I think there's a generalized belief that we're going to be subject to unlimited inflation, it's actually almost the opposite.

We also explained that 2024 is pretty limited in terms of just.

Yeah, the munitions site prep that 2025 and 2026. This was your question in terms of the phasing is where we do the.

The construction above ground and and then in terms of construction financing.

You can take certain ratios and so forth.

The rights are very valuable partners with us in terms of in our sector and you say man that you won't provide.

Different farms construction financing.

Because ultimately we think the Chicago is an asset that everybody would aspire to own in the REIT world. So.

Marcus Glover: We hit our number, we fulfill the content, you know, that that's the main substantive point in the host community agreement with the city. And therefore, we're allowed to open the facility and let me tell you, we will make sure that that, you know, four thousand game physician facility opens on time and on budget. So that's the, that's the main of it. The tropics actually sort of an interesting situation in the sense that, again, I think as Marcus alluded, it's actually caused the good news has been in the very near-term values, because as we've lost, as we now know that at some point we will redevelop the site, that where when we first purchased the, it was operating at a, even though, you know, decently positive and then we had the rent and so it was, it was a very positive asset, as the, you know, to be completely friendly, even though it's declined as, you know, bookings are harder to manage, because people don't know when it's going to close, and also, frankly, our employees are starting to leave, as, you know, as there are new properties opening in the area, and they don't know when we're going to redevelop.

I think you've got the hints in terms of where different sources of financing in.

In addition, we do have a land bank within our existing a state of <unk>.

Probably one one to 1.3 billion are in.

In value, depending on when we choose to monetize that.

So we have that's.

As Sue mentioned before we have a lot of levers so but.

We don't really need the money until 2025 2023 and then in addition, we also have.

Minority equity raise that probably sometime in the first quarter first or second quarter.

There are a lot of pieces that will fall into place.

Unfortunately, you just have to be patient.

Okay.

Understood. Thank you and if I may go with a follow up can you. Please provide the covenant adjusted EBITDA for the quarter and the Ritchie T-group leverage for the LTM period.

No, but we.

Yeah, I think what we said we are in the fours.

Marcus Glover: So, in the very near term, actually, it's called the hit to our financial, but obviously, again, as, as Marcus has spoken to, we believe that the, the value we have here has gone up a reasonable amount. So, look, we just have to decide, you know, based on, you know, what we think, the financing and partnership picture is here, you know, how, you know, how we're going to go. And so, it means that we'll just say, we're well aware of where our shares trade, we're, we're well aware of what we think to return on capitalism in properties like Chicago, New York, and, and the figures, and we will send, we will prioritize correctly, and make sure that we allocate capital to what we think is the most attractive and obviously.

We have no further questions at this time I would now like to turn the call back over to the speakers for any additional or closing remarks.

Okay. Thank you everyone for all your questions today.

We will speak to you again soon.

Your apprised of any significant movements coming up in the future I'm very happy with that performance.

Keep pushing forward.

Thank you.

This does conclude today's program. Thank you for your participation you may disconnect at any time.

Hum.

[music].

Marcus Glover: You know, you know, forest rank, that capital is not like we're going to run out of capital spending on everything. And then, you know, obviously, if there was projects that we think forest rank lower, then, you know, we would look to, you know, find partners or spend even offload offload them. So, okay, I think you have to, I believe that there's the board and the shareholders as a company, you're going to be rational about, you know, how we.

Okay.

Hum.

Hum.

[music].

Mhm.

Hum.

Marcus Glover: How we allocate capital on on New York, you know, probably that the most effective, because obviously, it's something that is just in our pee that's continuing. But again, as George pointed out, we happen to have the only site that currently has our local. Elected in support things could change, but that's pretty, and obviously the prize that's pretty much every gaming company in some way, shape performance competing for so I guess that I guess the question would be if we were to win the prize.

Marcus Glover: Would we be able to, you know, find the right kind of financing and partnership to get that developed again that's a little further out. But I think you can make the assumption that we won't make prudent decisions.

Brandt Montour: Our next question comes from branded Mont-Tour, Barclays. Good morning, everybody. Thanks for taking my question. In Las Vegas, you know, you're the least you you hold where the drop is currently. That leases is arguably much more valuable today with the A's and decision. Is there a world in which you would, you would sell that leased to create liquidity to fund the other projects by back debt or by back equity. Just curious how you look at that very balanced that cost benefit.

Brandt Montour: Yeah, I guess the best way to answer that is I think for the right price. We probably unload anything. But if you think about the nature of that transaction, we trade it into that deal with a couple of our properties and got a lease that is very attractive and it's traded into a value. That is enormous for us right now. And so whether we develop that ourselves or whether someone presents us and offer that at a minimum value that 9 million an acre, you know, we absolutely entertain them. Yeah, we have no plan at this moment, but it's just, I want to approach us. We'd absolutely entertain Diao Besting of it. Okay, great. Thanks for that.

Robeson Reeves: And then on our International Interactive in the Prepared remarks, and I hope I caught this correctly, there's a sort of target margin of low to mid 30s, and I think you guys mentioned reinvesting or sort of ramping back up investments in Asia and maybe another locale. And I guess the question is, is there a, maybe not, but is there a subtle sort of strategy shift? I mean, I think the story had been sort of cutting marketing margins had been going up quarter on quarter for the last three quarters.

Robeson Reeves: And so, and I think you guys did 35% this quarter. So guys, is there, are you going to do that? Yeah, thank you. Road's in here. We will spend where the ROI stacks up. We have enough, as we've been showing you, we've got real control and real grip on these businesses. So, you've got your revenues and we'll pull the leathers to make sure that we extract the right EBITDA. Yeah, I think we'll hold mid 30s.

Robeson Reeves: But if opportunities come, we'll spend the growth. We want to get the right growth, but we want to get the right EBITDA at the back. I'm very happy with where international interactive is. We should remember that these are highly competitive mature markets and we continue to grow share. I believe there's many mature markets in the world out there where we're showing that we can also grow share, such as New Jersey, such as Pennsylvania.

Robeson Reeves: I'm very, very positive with where we are. And we're really showing that we have a grip on our cost structures. Just, just to add there, we announced the headcount reduction because we've gained confidence with White Hat and Canvy providing a platform for us in North America, which will be a better product offering in the long term for us. That will result in approximately a 300 person headcount reduction. That will make this a stronger company, but also improve our margins, too.

Ricardo Gentilla: Our next question comes from Ricardo Gentilla, Deutsche Bank. Hey guys, good morning. Thank you so much for taking my question.

Charlie Diao: I was wondering if you could provide some color regarding the funding of the hard cost for the Chicago project in 2025, perhaps including the total amount needed, although, you know, being a rough estimate. The alternatives of the company has identified, like, you know, doing additional savings, section of the research groups and in the money, looking for a repartner, you know, what the prefer funding sort that the company at this point has identified and perhaps some color on the timing for a financing transaction.

Charlie Diao: And if you could also please confirm that if the company decides to raise money at the restricted group, you guys plan to do that, that you have enough restricted payment capacity and investment capacity to send money to the unrestricted sub, you know, is that capacity in excess of like 300 million?

Charlie Diao: And this is Charlie Diao. I think you asked about 15 questions in that list. But the fundamentally is, yes, we know what our governance are, we know what our contractual obligations are and to the degree that we are actually leveraged below a certain level. We have unlimited to distribute cash. However, if we get more levered, obviously there are certain limitations. In terms of the capital plan, we told you that we have 300 million committed unused from the existing facility.

Charlie Diao: We also explained that 2024 is pretty limited in terms of just, you know, diminishing site prep that 2025 and 2026. This was your question in terms of phasing, is where we do the construction above ground. And then in terms of construction financing, you know, you can take certain ratios and so forth. The REITs are very valuable partners with us in terms of in our sector. And you see many of them provide, you know, different forms of construction financing.

Charlie Diao: Because ultimately, we think the Chicago is an asset that everybody would aspire to own in the REIT world. So I think you've got the hints in terms of where different sources of financing. In addition, we do have a land bank within our existing estate of probably 1.1 to 1.3 billion in value, depending on when we choose to monetize that. So we have, as you mentioned before, we have a lot of levers.

Charlie Diao: But we don't really need the money until 2025. This is 2023. And then in addition, you know, we also have a minority equity raised, that probably sometimes in the first quarter, first or more like second quarter. So there are a lot of pieces that will fall into place. Unfortunately, you just have to be patient. Understood. Thank you.

Charlie Diao: And, you know, if I may go with a follow-up, can you please provide the Covenant Adjusted Evita for the quarter? And there is the Group leverage for the LTM period? No, but we, you know, I think we said we are in the forest. We have no further questions at this time.

Robeson Reeves: I will now turn to call back over today speakers for any additional or closing remarks. Okay. Thank you, everyone, for all your questions today. We'll speak to you again soon, and we'll keep you apprised as any significant movements coming up in the future. I'm very happy with that performance, and we'll keep you posted forward. Thank you.

Operator: This does conclude today's program. Thank you for your participation. You may disconnect at any time.

David Katz: David Katz, David