Operator News

US – Caesars’ shares rise 7.7 per cent after detailing strong demand on the Strip

By Lewis - 5 May 2021

Shares in Caesars Entertainment soared by 7.72 per cent in premarket trading after Caesars officials detailed how demand on the Las Vegas Strip and other regional casinos was coming back.

In the company’s operating results for the first quarter, Caesars has recorded net revenues of $1.7bn, an increase of 259.2 per cent on a GAAP basis and a decrease of 16 per cent on a same-store basis versus the comparable prior-year period.

Caesars President and Chief Operating Officer Anthony Carano said: “We are very pleased with our quarter. 13 of our properties had EBITDA records in Q1, ’19 had EBITDA margin records in Q1 and 20 properties had all-time EBITDA records in March, including four of our biggest properties. Turning to Las Vegas, we generated $161m of adjusted EBITDA in the quarter and $172m of property level EBITDA, excluding real rent payments. EBITDA improved on a quarterly sequential basis. March was our strongest month where we generated approximately $90m of EBITDA ex-real rent payments and an all-time EBITDA – EBITDAR margin records of 43 per cent.

“Total occupancy for Q1 was 63 per cent with weekend at 85 per cent and mid-week at 52 per cent. March total occupancy was 77 per cent and April was 84 per cent. Weekends in Las Vegas are sold out for the foreseeable future. Finally, casino mix as a percentage of our occupancy was approximately 40% during the quarter. Looking ahead, we remain encouraged by booking trends for the second half of the year,” he added.

Tom Reeg, Chief Executive Officer of Caesars Entertainment, added: “Despite that low table hold Vegas has set another record in EBITDA margin for the market at 43.5 per cent. If you adjust for hold in the quarter, Vegas EBITDA margin was almost 47 per cent. Our regional run rate EBITDA is now over $2.5bn just out of regions. The destination markets has been coming back. As an example, Reno had the third best month it’s ever had in April. And I should say when I talk about April, Easter fell in April, it’s typically not a great month for the casino business. So these numbers happen during that time.”

Caesars posted a net loss of $423m compared to a net loss of $176m in 2020. Same-store Adjusted EBITDA was $548m versus $410m the prior year.

Tom Reeg, Chief Executive Officer of Caesars Entertainment, commented: “Our first quarter results improved significantly versus the fourth quarter of 2020 as the pace of vaccinations across the country accelerated and consumers started to resume more normal behaviour.

“We are excited to see the dramatic improvement in operating efficiencies throughout our enterprise which we believe are sustainable going forward.”

Caesars closed the acquisition of William Hill acquisition last month and expanded its NFL relationship, becoming one of three official sports betting partners, while also extending Caesars exclusive casino and iGaming rights.

Jefferies Analyst David Katz said: “The quarter and commentary continue to support increasing value in the shares from multiple perspectives. The significantly enhanced synergy opportunities coupled with the demand environment post-COVID imply higher than anticipated earnings. Second, the closure and non-US divestiture of WMH present a fully-integrated digital gaming opportunity over the longer term.”

He also highlighted how Caesars will introduce a competitive sports app by the beginning of the NFL season.