Caesars Entertainment, which is the process of being acquired by Eldorado Resorts, told investors Tuesday the company lost $1.2 billion in 2019 due to a variety of financial calculations. A year earlier, the casino giant reported a net loss of $1.5 billion.
Still, Caesars’ net revenues increased 4.2% to $8.74 billion in 2019.
Reno-based Eldorado is acquiring Caesars in $17.3 billion merger that expected to be completed in the first half of this year. The deal was announced last June. Eldorado’s executive team will assume management of the combined company, which will retain the Caesars Entertainment name.
The combined company will operate some 60 casinos in 18 states, more than 30 of which are currently controlled by Caesars. So far, regulatory agencies in five states have approved the transaction which also needs the go-ahead from the Federal Trade Commission.
In the quarter that ended Dec. 31. Caesars grew revenues 2.6% to $2.17 billion, fueled primarily by 4.2% revenue increase from the company’s Las Vegas properties.
Caesars currently operates nine Strip-area resorts and Eldorado executives have discussed selling one or two of the properties as part of the merger.
In December, Caesars sold the off-Strip Rio Hotel-Casino to New York-based Dreamscape Companies for $516.3 million. Caesars will continue to operate the Rio under a two-year lease agreement, paying Dreamscape $45 million in annual rent.
On a conference call with analysts, Caesars CEO Tony Rodio said the company has had “active discussions” with parties looking to acquire any of Caesars Strip properties. Rodio said the company had a “solid operating performance” during the fourth quarter.
“Caesars’ results were largely driven by the strong demand at our Las Vegas properties, excellent cost controls, and the addition of sports betting in several states which drove increased visitation,” Rodio said. “In addition, our focus on costs and operating efficiencies across the company contributed to the excellent performance.”
Following the earnings announcement, Jefferies gaming analyst David Katz told investors the fourth quarter “continued to reflect management’s positioning” of the company ahead of the Eldorado merger, citing a refined portfolio, a lower cost base, and sport betting.
“We maintain our view that the business continues to evolve positively ahead of the merger and has considerable opportunity post-closing,” Katz said.
So far in 2020, Rodio said Caesars seen good results so far on the Strip
“We’re pleased and pleasantly surprised because there has been no business impact from coronavirus,” Rodio said. “We’re watching things closely and we have contingency plans in place. Our bigger concern going forward will be if we start seeing cancelation of domestic travel to Las Vegas because of fears from coronavirus.”
Caesars’ stock, like the shares of all publicly traded gaming companies, has taken a hit over the last few days over fears of coronavirus spreading to the U.S. The Dow fell nearly 900 points Tuesday following Monday’s 1,000-point decline.
Caesars shares, traded on the Nasdaq, closed at $13.31, down 5.06% or 71 cents. Caesars shares were off 3.28% on Monday.
In the fourth quarter that ended Dec. 31, the company grew revenues 2.6% to $2.17 billion, but Caesars lost $304 million in the three-month period.
Rodio said there are plenty of highlights for the company moving forward.
The $375 million Caesars Forum Conference Center, which opens in the spring and will be the central site for the central NFL Draft in April, had already booked conferences and meetings that will cover 240,000 hotel room nights in the first year.
#exclusive – Caesars net loss in 2019 tops $1.2 billion as company’s sale to Eldorado progresses. –@howardstutz, CDC Gaming Reports. https://t.co/bXHqMaxw1Y @CaesarsEnt @ElDoradoResorts #CDCgaming
— CDC Gaming Reports (@CDCNewswire) February 26, 2020
Rodio said the company’s sports betting operations outside Nevada contributed roughly $6 million in increased food and beverage menu, including Biloxi, Mississippi, where and food and beverage revenue has climbed roughly 300%.
Caesars now has 29 sportsbooks in seven states – Nevada, New Jersey, Iowa, Indiana, Mississippi, Pennsylvania and New York – and expects to launch operations sometime this year at its two Harrah’s casinos in North Carolina.
Caesars had $8.47 billion in long term debt at the end of 2019. Rodio said the company has achieved $100 million in cost saving ahead the merger’s anticipated closing.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
