Caesars Entertainment Reports Financial Results for the Second Quarter of 2019

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PR Newswire

LAS VEGAS, Aug. 5, 2019

LAS VEGAS, Aug. 5, 2019 /PRNewswire/ -- Caesars Entertainment Corporation (NASDAQ: CZR) ("CEC," "Caesars," "Caesars Entertainment," or the "Company") today reported second quarter of 2019 results as summarized in the discussion below, which highlights certain GAAP and non-GAAP financial measures on a consolidated basis.

Caesars Entertainment Corporation logo.

Second Quarter Highlights

Net revenues increased 4.9% to $2.22 billion.
Income from operations decreased 4.6% to $269 million.
Net loss attributable to Caesars was $315 million. Basic loss per share totaled $0.47.
Non-GAAP hold adjusted net revenues increased 5.6% to $2.22 billion.
Non-GAAP adjusted EBITDAR increased 1.3% to $631 million.
Non-GAAP hold adjusted EBITDAR increased 4.1% to $633 million.

Tony Rodio, CEO of Caesars Entertainment, said, "Caesars delivered solid financial results in the second quarter driven by the contribution from Centaur and strength from our Las Vegas hotel and food and beverage businesses. Our Las Vegas performance was the result of strong group and leisure demand, which produced an all-time quarterly record for hotel cash revenue and occupancy for the second consecutive quarter. These results were partially offset by competitive pressures in Atlantic City and other parts of our regional portfolio as well as unfavorable hold predominately at Caesars Palace.

"As we work toward successful completion of the proposed merger with Eldorado Resorts, the management team and I remain focused on improving the company's operations and financial profile through incremental revenue opportunities and operating efficiencies. I'm confident that the proposed transaction will create an industry leading platform poised to succeed in our dynamic industry."

Proposed Merger with Eldorado Resorts, Inc.

On June 24, 2019, Caesars and Eldorado Resorts, Inc. ("Eldorado Resorts" or "Eldorado") announced that their boards of directors unanimously approved a definitive agreement (the "Merger Agreement") pursuant to which Eldorado will acquire all of the outstanding shares of Caesars common stock in a cash and stock transaction (the "Merger"). Caesars stockholders will receive total value per share equal to $8.40 per share in cash consideration and 0.0899 shares of Eldorado common stock (valued as of the completion of the Merger based on Eldorado's 10-trading day volume weighted average price per share) for each share of Caesars common stock they own. Caesars stockholders will be offered a consideration election mechanism to receive such value in either cash or shares of Eldorado common stock that is subject to proration pursuant to the Merger Agreement. Following the completion of the Merger, Eldorado and Caesars stockholders will hold approximately 51% and 49% of the combined company's outstanding shares of common stock, respectively. The combined company's board will, subject to certain exceptions described in the Merger Agreement, consist of 11 directors, five of whom will be selected by Eldorado from the board of directors of Caesars as of the time of mailing the joint proxy statement for the Merger. Completion of the Merger is subject to approval of the stockholders of Eldorado and Caesars, the approval of applicable gaming authorities, the expiration of the applicable Hart-Scott-Rodino waiting period and other customary closing conditions, and is expected to be consummated in the first half of 2020.

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Strong Second Quarter Results in Las Vegas

Las Vegas delivered solid performance in the second quarter driven by healthy consumer demand and strength across the hotel and food and beverage verticals. Hotel strength came from solid growth in cash hotel revenue, up 6.3% year over year, a 370 basis point year over year increase in occupancy, and a 6.2% year over year increase in RevPAR. Food and beverage benefitted from the increase in occupancy with Caesars Palace representing most of the strength due to strong performance at Hell's Kitchen, Vanderpump Cocktail Garden, and banquets.

Regional Sports Betting Expansion

Favorable legislative decisions allowed Caesars to further expand its sports betting presence across its portfolio in the second quarter. In the Midwest, the company is currently designing seven sports books across its Indiana properties, and will look to add new sports books in both Illinois and Iowa. Caesars opened two sports books for the Oneida Indian Nation in New York. The company also opened a sports book in Pennsylvania.

Gaming Legislation Updates

During the second quarter of 2019, Caesars was impacted by legislative changes in Indiana, Louisiana, and Illinois. In May, the State of Indiana approved gaming legislation that enables the Company to offer table games at its Centaur properties beginning January 1, 2020. Additionally, the legislation allows Caesars to operate sports betting at its casinos and off-track-betting facilities in Indiana. On June 7, 2019, the governor of the State of Louisiana signed into effect legislation that would enable a 30-year extension -- to 2054 -- of the Harrah's New Orleans operating contract upon certain conditions being met by Caesars, including an investment of $325 million in the property by 2024 to improve the facility, add new restaurants, and construct a new hotel. In June, the State of Illinois enacted legislation significantly expanding gaming operations throughout the state, which is expected to adversely affect the Company's existing Illinois and Northern Indiana properties.

Basis of Presentation

Certain additional non-GAAP financial measures have been added to highlight the results of the Company. On July 16, 2018, Caesars completed the acquisition of Centaur Holdings, LLC ("Centaur"). "2018 Data Excluding Centaur" removes the post-acquisition results of Centaur from Caesars' consolidated results. "Hold adjusted" results are adjusted to reflect the hold we achieved compared to the hold we expected. See the tables at the end of this press release for the reconciliation of non-GAAP to GAAP presentations.

Financial Results

Caesars views each property as an operating segment and aggregates such properties into three regionally-focused reportable segments: (i) Las Vegas, (ii) Other U.S. and (iii) All Other, which is consistent with how Caesars manages the business. The results of each reportable segment presented below are consistent with the way management assesses these results and allocates resources, which is a consolidated view that adjusts for the effect of certain transactions between reportable segments within Caesars. We recast previously reported segment amounts to conform to the way management assesses results and allocates resources for the current year. "All Other" includes managed, international and other properties as well as parent and other adjustments to reconcile to consolidated Caesars results.

*Net Revenues*
	Three Months Ended June 30,
*(Dollars in millions)*	2019		2018		$ Change		% Change
Las Vegas	$	1,002	$	992	$	10	1.0%
Other U.S.	1,064		982		82		8.4%
All Other	156		145		11		7.6%
Caesars	$	2,222	$	2,119	$	103	4.9%

Net revenues increased $103 million driven primarily by an $82 million increase in Other U.S. net revenues due to the post-acquisition results of Centaur. Excluding Centaur, Other U.S. net revenues were $935 million for the second quarter of 2019, a decrease of $47 million from 2018 primarily due to increased competition in Atlantic City and Southern Indiana, and to a lesser extent in Iowa and Pennsylvania. Las Vegas net revenues increased $10 million primarily due to higher hotel and food and beverage revenues. This was partially offset by unfavorable hold predominately at Caesars Palace and weak table game volumes, excluding baccarat. Las Vegas hotel strength came from solid year over year growth across the following metrics: hotel cash revenue increased 6.3%, Las Vegas ADR increased 2.2%, and RevPAR increased 6.2%. Las Vegas occupancy was 97.5% in the quarter, up from 93.9% in 2018. Las Vegas food and beverage revenue growth benefitted from the increase in occupancy with Caesars Palace driving most of the strength due to strong performance at Hell's Kitchen, Vanderpump Cocktail Garden, as well as banquets. All Other net revenues increased $11 million year over year. Across all of our casino properties, hold had an unfavorable impact of $12 million to $17 million compared to the prior year and was $1 million to $4 million above our expectations.

*Income/(Loss) from Operations*
	Three Months Ended June 30,
*(Dollars in millions)*	2019		2018		$ Change		% Change
Las Vegas	$	265	$	246	$	19	7.7%
Other U.S.	158		131		27		20.6%
All Other	(154)		(95)		(59)		(62.1)%
Caesars	$	269	$	282	$	(13)	(4.6)%

Income from operations decreased $13 million primarily due to a $50 million impairment charge related to gaming rights at Caesars Entertainment UK properties offset by an increase in Income from operations in Other U.S. region driven by the post-acquisition results of Centaur, which contributed $28 million to income from operations in 2019. Income from operations in Las Vegas region increased $19 million primarily as a result of the increase in net revenues as discussed above as well as a decrease in depreciation as a result of assets that incurred depreciation in the second quarter of 2018 which were fully depreciated before the second quarter of 2019.

Net Income/(Loss) Attributable to Caesars

Three Months Ended June 30,

(Dollars in millions)

2019

2018

$ Change

% Change

Las Vegas

184

164

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