Caesars Entertainment Corporation (NASDAQ: CZR) today reported the following financial results for the second quarter of 2012:
Horseshoe Cleveland celebrates successful opening
Caesars announces agreement to sell Harrah’s St. Louis for $610.0 million
County approval received for construction of the High Roller observation wheel in Las Vegas, part of the $550 million Linq project
Maryland Commission grants Baltimore VLT license to Caesars-Rock Gaming alliance
?The table below highlights certain GAAP and non-GAAP financial measures:
|
Quarter Ended June 30, |
Percent Favorable/ (Unfavorable) |
Six Months Ended June 30, |
Percent Favorable/ (Unfavorable) |
||||||||||||||||||
|
(Dollars in millions, except per share data) |
2012 |
2011 |
2012 |
2011 |
|||||||||||||||||
|
Net revenues |
$ |
2,165.7 |
$ |
2,161.7 |
0.2 |
% |
$ |
4,374.1 |
$ |
4,277.8 |
2.3 |
% |
|||||||||
|
Income from operations |
81.8 |
231.6 |
(64.7) |
% |
138.3 |
426.2 |
(67.6) |
% |
|||||||||||||
|
Loss from continuing operations, net of income taxes |
(255.9) |
(165.6) |
(54.5) |
% |
(548.6) |
(321.9) |
(70.4) |
% |
|||||||||||||
|
Income from discontinued operations, net of income taxes |
14.1 |
12.5 |
12.8 |
% |
25.7 |
24.0 |
7.1 |
% |
|||||||||||||
|
Net loss attributable to Caesars |
(241.7) |
(155.5) |
(55.4) |
% |
(522.3) |
(302.9) |
(72.4) |
% |
|||||||||||||
|
Diluted loss per share?(1) |
(1.93) |
(1.24) |
(55.6) |
% |
(4.17) |
(2.42) |
(72.3) |
% |
|||||||||||||
|
Property EBITDA?(2) |
518.3 |
541.8 |
(4.3) |
% |
1,074.8 |
1,026.7 |
4.7 |
% |
|||||||||||||
|
Adjusted EBITDA?(3)?? |
512.4 |
526.1 |
(2.6) |
% |
1,035.6 |
995.1 |
4.1 |
% |
|||||||||||||
See footnotes following?Caesars Entertainment Operating Company, Inc.?results later in this release.
Management Commentary
“After a strong first quarter, difficult economic conditions led to lower visitation in several regions, impacting our core operating results in the second quarter,” said Gary Loveman, Caesars Entertainment Corporation’s chairman, chief executive officer and president. “While the economy may continue to pose challenges, we remain focused on controlling costs, investing in growth opportunities and our core brands and strengthening our capital structure.
“We made significant progress during the quarter in expanding our domestic distribution,” Loveman said. “Our alliance with Rock Gaming LLC opened Ohio’s first casino, Horseshoe Cleveland, and is ahead of schedule on construction of Horseshoe Cincinnati, which is expected to open early next year. Horseshoe Cleveland has drawn larger than expected crowds and enrolled more than 50,000 new members in our Total Rewards loyalty-program during the quarter.
“In New England, our alliance with the Suffolk Downs racetrack in East Boston announced plans to apply for a license to build a Caesars-branded property to serve the millions who live in or visit the historic region,” he said.
On July 31, the Maryland Video Lottery Facility Location Commission granted a license to a Caesars-Rock Gaming consortium to build and operate a 3,750 VLT facility in Baltimore. “We are pleased to have been awarded the license,” Loveman said, “and look forward to building a unique entertainment experience that will attract customers from across the country. The development of Harrah’s Baltimore is part of our plan to develop casinos in urban areas that integrate into and support the surrounding communities.
“In Las Vegas, we will begin taking reservations in October for the Nobu Tower at Caesars Place, and expect to announce soon some of the key anchor tenants for the $550 million Linq retail, dining and entertainment experience across from Caesars on the Las Vegas Strip,” Loveman said.
Financial Results
As previously disclosed, in May 2012, the Company entered into an agreement to sell its Harrah’s St. Louis casino to Penn National Gaming, Inc. for a purchase price of $610.0 million. The sale is expected to close in the second half of 2012 and the Company expects to use the net proceeds from the sale to fund CEOC capital expenditures or to repurchase certain outstanding debt obligations of CEOC. As a result of the transaction, the assets and liabilities of the Harrah’s St. Louis casino that are included in the sale are classified as held for sale in the consolidated summary balance sheets shown later in this release and the results of the Harrah’s St. Louis casino are presented as Discontinued Operations in the consolidated summary of operations for the second quarter and first half of 2012 and 2011, also shown later in this release.
Net revenues for the second quarter of 2012 were $2,165.7 million, up $4.0 million, or 0.2%, from the year-earlier period, due mainly to increased revenues from the Company’s international and online operations, including Playtika Ltd., which was acquired during 2011, that offset lower casino revenues in several U.S. regions, primarily Atlantic City. Casino revenues in the second quarter of 2012 have deteriorated from the first quarter of 2012 due to a softening of economic conditions which has negatively impacted the Company’s results.
For the second quarter of 2012, income from operations decreased $149.8 million, or 64.7%, to $81.8 million from $231.6 million in the prior-year quarter, due mainly to non-cash impairment charges of $101.0 million related to the Macau land concession and $33.0 million related to trademark intangibles as well as higher depreciation expense in the Las Vegas region associated with the 662-room Octavius Tower at Caesars Palace that opened to the public in January 2012.
Net loss attributable to Caesars for the second quarter of 2012 was $241.7 million, up $86.2 million, or 55.4%, from the second quarter of 2011. Higher net losses in the second quarter of 2012 reflect the decrease in income from operations described above, largely offset by lower interest expense and an increase in gains on early extinguishments of debt.
For the second quarter of 2012, Property EBITDA and Adjusted EBITDA declined modestly from 2011, primarily driven by weaker demand resulting in lower trips and spend per trip, and higher operating expenses in 2012.
Performance Metrics
The Company measures its performance in part through tracking of trips by rated customers, which means a customer whose gaming activity is tracked through its Total Rewards customer-loyalty system (“trips”), and by spend per rated customer trip (“spend per trip”).
The following table reflects the percentage increase/(decrease) in trips and spend per trip for the U.S. regions for the second quarter and first half of 2012, compared with the same periods in 2011.
|
Quarter Ended |
Six Months Ended |
||||||||||
|
Trips |
Spend per Trip |
Trips |
Spend per Trip |
||||||||
|
Consolidated Caesars |
(1.6) |
% |
(1.9) |
% |
(0.4) |
% |
(1.5) |
% |
|||
|
Las Vegas?region |
2.3 |
% |
(3.3) |
% |
3.8 |
% |
(2.9) |
% |
|||
|
Atlantic City?region: |
|||||||||||
|
Lodgers |
(10.9) |
% |
0.7 |
% |
(7.1) |
% |
(0.2) |
% |
|||
|
Non-lodgers |
(8.2) |
% |
(0.7) |
% |
(4.2) |
% |
1.0 |
% |
|||
|
All other regions |
2.1 |
% |
(2.7) |
% |
1.2 |
% |
(2.6) |
% |
|||
On a consolidated basis, in 2012 compared to 2011, trips in the second quarter decreased 1.6%. Trip increases were reflected in several of the U.S. regions in the second quarter of 2012; however, they were unable to offset the declines in the Atlantic City region overall. The declines in spend per trip were led by the VIP segment, with the retail segment showing gains in some regions.
On a consolidated basis in 2012 compared to 2011, second quarter cash average daily room rates increased from $92 to $95 and total occupancy percentage remained flat.
Source: Caesars Entertainment (Full Article)