It wasn’t the usual Caesars Entertainment quarterly earnings conference call Wednesday.
Following a few brief introductory remarks, new CEO Tony Rodio turned the first quarter call over to Chief Financial Officer Eric Hession, who handled the discussion with analysts.
Tony Rodio, Caesars CEO
Other than financial information about the first quarter, an outlook on future quarters, and discussion concerning the company’s various regional markets, very little information was provided on the outside forces that have disrupted Caesars since December.
Carl Icahn, the 83-year-old corporate raider, now controls close to 20 percent of Caesars through stock acquisitions he completed between December and March. Icahn is pushing for the sale or merger of the company. Rodio was the CEO of Icahn’s seven-casino company that was sold last year and spent more than 30 years in Atlantic City.
Regional gaming giant Eldorado Resorts and Houston billionaire Tillman Fertitta, who owns the Golden Nugget casino chain, have been linked as parties interested in acquiring all or parts of Caesars.
Caesars Senior Vice President of Finance Joyce Arpin told analysts that Rodio, who will transition into the position over the next 30 days and officially begins on Monday, would not take questions.
Rodio briefly mentioned the board’s transaction committee, which was created to evaluate a potential sale or merger with another casino operator.
“I worked on two separate occasions at Harrah’s (Caesars’ predecessor company). I have a tremendous amount of respect for Caesars and its guests,” Rodio said.
Former CEO Mark Frissora’s last day with the company was Tuesday.
Analysts were quick to point out the Rodio’s arrival meant a new beginning for Caesars.
“We believe Mr. Rodio will work quickly to formulate and execute on a tactical plan to grow profitable market share,” SunTrust’s Barry Jonas said following the conference call.
Macquarie Securities gaming analyst Chad Beynon said Caesars management – based on its Las Vegas results – “sounded much more in control” of its market.
“Since bankruptcy emergence, Caesars has been a volatile name with several major events,” Beynon said. “As the company moves past this, we believe it remains a simpler execution story than given credit for.”
In the quarter that ended March 31, Caesars Entertainment recorded a quarterly loss of $217 million, compared to a net loss of $34 million a year ago. The company said a $322 million change in a portion of its $8.8 billion in long-term debt and other factors contributed to the net loss. Caesars lost 32 cents per share in quarter, compared to a loss of 5 cents a share in the 2018 first quarter.
However, Caesars’ overall net revenues grew 7.3 percent to $2.16 billion. The company’s nine Las Vegas resorts saw revenues increase 5.9 percent to $955 million.
In Las Vegas, Caesars said several factors led to the revenue increase, including favorable hold on wagering activity, improved play on slot machines, and higher hotel revenues. The average daily room rate at Caesars’ Las Vegas property increased 2.1 percent, while revenue per available room increased 4.9 percent.
Hession said the quarter included margin improvement, in addition to the revenue and cash flow growth.
“We realized strong contributions from the Las Vegas gaming and hotel businesses and (the two Indiana casinos), in addition to further operating and corporate efficiencies,” Hession said.
Caesars exceeded revenues of $1 billion in its non-Las Vegas domestic operations, due in part to two Indiana racetrack casinos that were acquired last year. However, minus the two Indiana casinos, the company’s other U.S. revenues were $884 million, a decrease of $42 million, due primarily to increased competition in Atlantic City and inclement weather in several regional markets that resulted in prolonged closures.
Company-wide, cashflow increased 8.5 percent to $562 million.
Caesars cited two highlights from the quarter. The company opened its fourth managed Indian casino in Northern California on Monday. Also, it now operates 17 sportsbooks in four states, including five outside Nevada. Two additional states, Iowa and Indiana, could allow sportsbooks later this year.
The company also reached an agreement in February with DraftKings market access for its online gaming products in states where Caesars has casinos. The agreement is subject to regulatory approvals.
Shares of Caesars closed at $9.10 on the Nasdaq Wednesday, down 26 cents or 2.78 percent. Company shares rose more than 3 percent in after hours trading following the earnings announcement.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
