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US – Digital helps drive 7.8 per cent increase in Caesars’ quarterlies

By - 3 August 2016

Caesars Entertainment has reported that its second quarter 2016 results increased 7.8 per cent year-on-year to $1.2bn due to strong growth at Caesars Interactive Entertainment which increased 34 per cent as a result of greater real money experience offered in the social and mobile gaming sectors as well as growth in hospitality revenues in Las Vegas.

Mark Frissora, President and Chief Executive Officer of Caesars Entertainment, said: “We delivered solid operating performance in the second quarter, including an eight per cent increase in net revenue and strong income and margin results, excluding the impact of bankruptcy-related charges and CIE stock compensation expense. Our second-quarter performance was driven by strong results in Las Vegas lodging, exemplified by a 6.5 per cent increase in RevPAR, as well as entertainment and continued strength in the social and mobile games business. Additionally, our productivity efforts have improved our revenue per employee and marketing efficiency, as we drive further margin improvement and cash flow while maintaining high levels of employee and customer satisfaction.”

Net loss for Continuing CEC was $2bn compared to net income of $50m in the second quarter of 2015 and was largely driven by an accrual of $2bn related to the restructuring of CEOC and a year-over-year increase in stock-based compensation at CIE due to fair value estimates.

Adjusted EBITDA for Continuing CEC grew 11.8 per cent year-over-year to $388m.

Net revenues for CIE increased 33.9 per cent year-over-year to $249m driven by greater monetization of monthly unique paying users in the social and mobile games business. Net income declined $43m to a net loss of $4m mainly due to an expense of $66m for the quarter related to the fair value adjustment of CIE’s stock-based compensation awards. Adjusted EBITDA grew 42.9 per cent to $100m.
Cash ADR in Las Vegas was up 8.2 per cent due to increased resort fees, effective hotel yield management and improved pricing power due to room product enhancements.

Net revenue for Continuing CEC increased 7.8 per cent year-over-year to $1,230m primarily attributable to strength in CIE’s social and mobile games business and growth in hospitality revenues in Las Vegas. Income from operations decreased 11.8 per cent to $164m and Property EBITDA decreased 4.6 per cent to $335m mainly due to a $66m expense for the quarter related to the fair value adjustment of CIE’s stock-based compensation awards. Net income decreased $2,093m to a net loss of $2,043m mainly due to an accrual of $2.0 billion related to CEC’s estimate of the additional amount it will pay to support the restructuring of CEOC.

CERP owns and operates six casinos in the United States and The LINQ promenade, along with leasing Octavius Tower at Caesars Palace Las Vegas to CEOC and gaming space at The LINQ promenade to CGP.
Net revenues for the second quarter of 2016 were $562 million, down 0.7 per cent as higher hotel revenues were more than offset by lower gaming volumes in Las Vegas and Atlantic City and unfavorable year-over-year hold. CERP’s Las Vegas properties faced a tough year over year comparison due to a record month of hotel revenues in May of last year. Additionally, construction disruption affected revenues at Harrah’s Las Vegas as the property had over 10,000 room nights out of service due to renovations. Casino revenues were $287m, down four per cent from the prior year mainly due to a calendar shift in Las Vegas for the World Series of Poker, room inventory disruption at Harrah’s Las Vegas and lower slot volumes at Harrah’s Atlantic City. Room revenues rose 4.3 per cent in the quarter to $144m mainly due to resort fees and improved hotel yield, which drove an 8.1 per cent increase in cash ADR. Food and beverage revenues were $136m, down 0.7 per cent.

Income from operations decreased 11.9 per cent to $111m, net income decreased 52.9 per cent to $8m.. These declines were mainly due to lower gaming revenues, which more than offset the benefits from marketing efficiencies, improved hotel customer mix and better performance of The LINQ promenade. Hold was estimated to have a positive effect on operating income of approximately $0m to $5m in the quarter relative to our expectation and an unfavorable $0mto $5m effect when comparing to the prior year period.

CGP Casinos owns and operates six casinos in the United States, primarily in Las Vegas.

Net revenues for the second quarter of 2016 were $423m, an 8.5 per cent increase primarily attributable to gaming revenue growth at Horseshoe Baltimore, increases in entertainment revenue due to the Axis Theater at Planet Hollywood, higher hotel revenues, primarily at The LINQ Hotel & Casino and favorable year-over-year hold. Casino revenues were $259m, up 5.7 per cent from the prior year mainly driven by higher gaming volumes at Horseshoe Baltimore as volumes at the property were adversely affected in the prior year period by the civil unrest in the city at the end of April and into May. Room revenues increased 11 per cent to$91m mainly due to an increase in total rooms available at The LINQ Hotel & Casino and resort fees. Food and beverage revenues were $68m, up three per cent.
Income from operations increased 52.3 per cent to $67m, net income increased $21m to $19m and adjusted EBITDA increased 25.3 per cent to $114m.

CIE owns and operates one online games business providing social and mobile games, two regulated online real money gaming and three WSOP tournaments and brand.

Net revenues for the second quarter of 2016 were $249m, a 33.9 per cent increase primarily driven by the continued focus on conversion and monetization of users to increase revenue per user. Income from operations decreased 63 per cent to $20m and net income decreased $43m to a net loss of $4m mainly due to an increase in platform fees as a result of higher revenues and an expense of $66m for the quarter related to the fair value adjustment of CIE’s stock-based compensation awards. Adjusted EBITDA increased 42.9 per cent to $100m.

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