Caesars Entertainment CEO Thomas Reeg admitted his most recent quarterly earnings conference call three months ago – accomplished from his cell phone while sitting inside his parked car – was under a much different set of circumstances.
“We’ve come a long way, and this is still an uncertain situation we’re dealing with,” Reeg said Thursday about the ongoing coronavirus pandemic, which shut down the gaming industry nationwide in mid-March.
When he made that call from his car in May, Reeg addressed the investment community as CEO of Eldorado Resorts. He had a new title Thursday, due to last month’s closing of the $17.3 billion merger between the Eldorado and Caesars.
COVID-19, however, continues to cloud the financial picture of the “new” Caesars Entertainment.
The regional casino giant – the combination of the two companies – said its net loss the second quarter was $100 million, compared to net income of $18.9 million a year ago.
The merger closed on July 20, more than a year after it was first announced, and created the largest casino company in the U.S. with 55 properties worldwide in 16 states. The new company retained the Caesars Entertainment name and stock symbol and is now overseen by the former Eldorado management.
Tom Reeg, Caesars CEO
In a statement, “new” Caesars said 51 of its properties nationwide have reopened, starting at the end of May.
“It was an odd quarter for us,” Reeg said.
During the quarter that ended June 30, the company produced revenues of $484 million, a decline of 82.7% compared with $2.8 billion a year ago. The company’s Las Vegas Strip resorts – three of nine were closed for the entire month of June – produced revenues of $109 million, down 89.1% from $1 billion last year.
Total cash flow was a net loss of $136 million, compared to a positive cash flow of $795 million a year ago.
Reeg spent a good part of the conference call discussing the Las Vegas properties the former Eldorado picked up in the merger. Las Vegas was the only major gaming market in the state where Eldorado didn’t own a casino. Now the company controls the operations of nine.
Reeg told analysts coronavirus impacted the timeline for the sale of at least one of the casinos Caesars controls.
“We still intend to sell a Las Vegas asset,” Reeg said. “Pre-COVID, it would have been in the first 12 months after the deal closed. Now, its more like 12 to 18 months.”
He didn’t hint any at which resort or resorts could be on the market and there are no immediate plans to reopen the three closed properties, Planet Hollywood, Cromwell, or the Rio, which Caesars manages for a New York investment firm.
Reeg said the company’s Las Vegas casinos are not as dependent on group meetings and convention business as the company’s Strip competitors. That business in Las Vegas has all but dried up during the pandemic.
Reeg said the company is moving forward on selling three of its five Indiana casinos, as ordered by state gaming regulators, but as a company with multiple properties, there can always be movement.
“Everything is for sale every day,” Reeg said, “We are economic animals. We’re always happy to be wowed by an offer.”
However, Reeg was bullish on Caesars’ regional casinos, all of which have reopened.
“We are encouraged by operating trends,” Reeg said. “There have been some misconceptions about the regional markets. Fear of spending in regional space is completely off the mark.”
Reeg added that since the merger’s closure, “operating teams are fully engaged with integrating the two companies and executing on the synergy plans. Our number one priority remains the safety and security of our team members and guests. Our COVID-19 operating plans for reopened properties are designed to ensure a safe and exciting environment for our guests. We remain optimistic regarding an eventual recovery of travel and tourism in the U.S. and especially Las Vegas.”
Following the merger, Caesars now has $14.7 billion of long-term debt and $1.7 billion of cash on hand.
“We have a strong liquidity position which will allow us to weather short term weakness due to COVID-19,” said Caesars CFO Bret Yunker.
Shares of Caesars closed at $37.55 on the Nasdaq Thursday, up $2.21 or 6.22%
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
