Caesars Entertainment, the debt-saddled operator of many of the Strip’s most iconic resorts, reported its third quarter earnings today.
Company: Caesars Entertainment Corp. (NASDAQ: CZR)
Revenue: $2.2 billion, up 6 percent from the third quarter of 2013.
Loss: $908.1 million, up 19.3 percent from the same quarter last year.
Loss per share: $6.29, up 4.3 percent from the same period last year.
What it means: Caesars has begun formal discussions with some creditors as it seeks to “improve the financial condition” of the company, CEO Gary Loveman said in prepared remarks to analysts. The company is trying to get a handle on its debt of more than $20 billion. Loveman could provide few details becasue the negotiations are ongoing.
Loveman said he was “encouraged” by improvements in important Las Vegas tourism indicators, such as Strip hotel occupancy and convention attendance. Caesars properties on the Strip saw 2 percent growth in lodging revenue, but encountered some setbacks, he said.
One of those was room closures associated with the former Quad’s transformation into the Linq Hotel, which Loveman said resulted in a $7 million to $10 million hit on revenue, as about half the property’s rooms were closed. Nonetheless, the casino there fared well: slot and table game volumes increased by 26 percent and 22 percent, respectively.
Caesars Palace had an especially rough quarter, Loveman said.
Celine Dion had to cancel many of her shows to focus on her husband’s health, resulting in an unfavorable impact on hospitality revenues. Furthermore, Caesars Palace suffered about $35 million in unfavorable hold.
Beyond Las Vegas, Loveman said, the opening of Caesars’ new Maryland casino, Horseshoe Baltimore, has been a success. That helped drive a 0.3 percent increase in Caesars’ casino revenue.
In Atlantic City, Caesars had to ramp up marketing expenses following its closure of the Showboat earlier this year. The increased marketing was aimed at retaining guests at its other Atlantic City properties: Harrah’s Resort Atlantic City, Caesars Atlantic City and Bally’s Atlantic City.
Caesars Interactive, the company’s digital gaming wing, boasted a strong performance for the quarter. Its revenue increased 105 percent, with social and mobile games recording a 103 percent revenue increase from the same period last year.
The company also announced this afternoon that Chief Financial Officer Donald Colvin is retiring effective Dec. 31. He will be replaced by Eric Hession, the company’s senior vice president and treasurer, pending regulatory approval.
Quote: “Our third quarter results reflect strength in the interactive business, stabilizing trends regionally, and generally good performance in Las Vegas...Moving forward, we see several dynamics that bode well for our future, including signs of improvement in regional markets given limited supply growth and greater traction from our investments in hospitality and entertainment offerings across our network. We expect progress on these fronts to yield a positive effect on our business, as we continue capital structure initiatives intended to reduce leverage at (Caesars’ operating company).” — CEO Gary Loveman