Caesars Entertainment CEO Tom Reeg is not in the habit of giving preliminary results during quarterly investors’ calls.
But Reeg made an exception Tuesday, highlighting trends in April that bode well for the gaming operator despite posting losses of $423 million in the first quarter of 2021.
“The numbers really don’t tell the story this quarter,” Reeg said. “ . . . What’s happening in our business is so different than the narrative I see out there, that I think in this quarter it makes sense to give you a lot of metrics about what’s going on.”
Tom Reeg, Caesars CEO
Net revenue for the first quarter was $1.7 billion, a decrease of 26.2% from the $2.3 billion brought in during the first quarter of 2020.
Reeg noted at the start of 2021, Caesars’ properties in Illinois and Pennsylvania were closed due to state-mandated health restrictions. There also were significant restrictions in other states including Nevada, which didn’t allow 50% capacity at casinos until two weeks were left in the quarter.
But revenues in March comprised almost half of all first-quarter revenues, and preliminary results indicate April exceeded expectations.
“The fear that’s been expressed to me is there’s going to be some diminution of demand as the world reopened,” Reeg said. “People who were coming to casinos, when other options opened up, they were going to go away. But what we said is the segments that are not coming were going to come back and swamp whatever business that we were losing. And that’s indeed been the case.”
Reeg said that in April, Caesars’ properties did more than $300 million of gross revenue, more than 25% ahead of the 2019 numbers for the same month. He added that the Silver Legacy in Reno had its third-best month ever in April despite the Easter holiday, which “is typically not a great month for the casino business.”.
Total occupancy at all Caesars’ properties for the quarter was 63%, according to Caesars President and COO Anthony Carrano. Weekend occupancy was 85%; the midweek occupancy rate was 52%. But March’s total occupancy was 77%, with an uptick in April to 84%.
“Weekends in Las Vegas are sold out for the foreseeable future,” Carrano added.
Reeg expressed optimism that Caesar’s pending acquisition of William Hill will pay dividends while acknowledging that the company needs to invest in “the tech and customer acquisition side. You should expect a significant shift from us as we close the transaction and move forward.”
The company’s sportsbooks and sports betting app will eventually be rebranded as Caesars’ Sports, with everything up and running by the start of football season this fall.
“I like the hand that guys like us and MGM have to play,” Reeg said. “We have the largest loyalty date base in the business, bar none. You shouldn’t expect us to be just throwing money away to buy market share, you should expect us to build this thoughtfully. But you should expect to see a significant increase in investment now that we’ve got all our ducks in a row.”
Reeg also said that there are “no active discussions” about possible sales of any properties in Las Vegas.
Shares of Caesars closed after hours at $103.25 on the NASDAQ Tuesday, up $7.72, or 8.08%.
