Caesars Entertainment, Inc., (NASDAQ: CZR) yesterday reported operating results for the second quarter ended June 30, 2023.
Second Quarter 2023 and Recent Highlights:
- GAAP net revenues of $2.9 billion versus $2.8 billion for the comparable prior-year period.
- GAAP net income of $920 million compared to net loss of $123 million for the comparable prior-year period, with the increase primarily driven by a release of $940 million of valuation allowance against deferred tax assets associated with our REIT leases.
- Same-store Adjusted EBITDA of $1.0 billion versus $978 million for the comparable prior-year period.
- Same-store Adjusted EBITDA, excluding our Caesars Digital segment, of $996 million versus $1.0 billion for the comparable prior-year period.
- Caesars Digital same-store Adjusted EBITDA of $11 million versus $(69) million for the comparable prior-year period.
Tom Reeg, Chief Executive Officer of Caesars Entertainment, Inc., commented, “The second quarter of 2023 reflected continued strength in our business. Demand remains strong in both Las Vegas and our regional markets. Caesars Digital posted its first quarter of positive adjusted EBITDA since our rebranding to Caesars Sportsbook in the third quarter of 2021. Our capital investments are generating stronger than expected returns based on recent new property openings.”
Second Quarter 2023 Financial Results Summary and Segment Information
After considering the effects of our completed divestitures, the following tables present adjustments to net revenues, net income (loss) and Adjusted EBITDA as reported, in order to reflect a same-store basis:
| Net Revenues |
|
|
|
|
|
|
|
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| ||||||||
|
| Three Months Ended June 30, | ||||||||||||||||
| (In millions) |
| 2023 |
|
| 2022 |
|
| 2022 Adj.(a) |
| Adj. 2022 Total |
| % Change | |||||
| Las Vegas | $ | 1,128 |
| $ | 1,142 |
|
| $ | — |
|
| $ | 1,142 |
|
| (1.2 | )% |
| Regional |
| 1,461 |
|
| 1,455 |
|
|
| (1 | ) |
|
| 1,454 |
|
| 0.5 | % |
| Caesars Digital |
| 216 |
|
| 152 |
|
|
| — |
|
|
| 152 |
|
| 42.1 | % |
| Managed and Branded |
| 72 |
|
| 74 |
|
|
| — |
|
|
| 74 |
|
| (2.7 | )% |
| Corporate and Other |
| 2 |
|
| (2 | ) |
|
| — |
|
|
| (2 | ) |
| * | |
| Caesars | $ | 2,879 |
| $ | 2,821 |
|
| $ | (1 | ) |
| $ | 2,820 |
|
| 2.1 | % |
| Net Revenues |
|
|
|
|
|
|
|
|
| ||||||
|
| Six Months Ended June 30, | ||||||||||||||
| (In millions) |
| 2023 |
|
| 2022 |
| 2022 Adj.(a) |
| Adj. 2022 Total |
| % Change | ||||
| Las Vegas | $ | 2,259 |
| $ | 2,056 |
| $ | — |
|
| $ | 2,056 |
| 9.9 | % |
| Regional |
| 2,850 |
|
| 2,818 |
|
| (5 | ) |
|
| 2,813 |
| 1.3 | % |
| Caesars Digital |
| 454 |
|
| 99 |
|
| — |
|
|
| 99 |
| * | |
| Managed and Branded |
| 141 |
|
| 140 |
|
| — |
|
|
| 140 |
| 0.7 | % |
| Corporate and Other |
| 5 |
|
| — |
|
| — |
|
|
| — |
| * | |
| Caesars | $ | 5,709 |
| $ | 5,113 |
| $ | (5 | ) |
| $ | 5,108 |
| 11.8 | % |
| Net Income (Loss) |
|
|
|
|
|
|
| ||||||||||
|
| Three Months Ended June 30, | ||||||||||||||||
| (In millions) |
| 2023 |
|
|
| 2022 |
|
| 2022 Adj.(a) |
| Adj. 2022 Total |
| % Change | ||||
| Las Vegas | $ | 261 |
|
| $ | 313 |
|
| $ | — |
| $ | 313 |
|
| (16.6 | )% |
| Regional |
| 124 |
|
|
| 145 |
|
|
| 2 |
|
| 147 |
|
| (15.6 | )% |
| Caesars Digital |
| (22 | ) |
|
| (116 | ) |
|
| — |
|
| (116 | ) |
| 81.0 | % |
| Managed and Branded |
| 19 |
|
|
| (132 | ) |
|
| 156 |
|
| 24 |
|
| (20.8 | )% |
| Corporate and Other |
| 538 |
|
|
| (333 | ) |
|
| — |
|
| (333 | ) |
| * | |
| Caesars | $ | 920 |
|
| $ | (123 | ) |
| $ | 158 |
| $ | 35 |
|
| * | |
| Net Income (Loss) |
|
|
|
|
|
|
| ||||||||||
|
| Six Months Ended June 30, | ||||||||||||||||
| (In millions) |
| 2023 |
|
|
| 2022 |
|
| 2022 Adj.(a) |
| Adj. 2022 Total |
| % Change | ||||
| Las Vegas | $ | 554 |
|
| $ | 481 |
|
| $ | — |
| $ | 481 |
|
| 15.2 | % |
| Regional |
| 199 |
|
|
| 269 |
|
|
| 2 |
|
| 271 |
|
| (26.6 | )% |
| Caesars Digital |
| (54 | ) |
|
| (692 | ) |
|
| — |
|
| (692 | ) |
| 92.2 | % |
| Managed and Branded |
| 38 |
|
|
| (343 | ) |
|
| 385 |
|
| 42 |
|
| (9.5 | )% |
| Corporate and Other |
| 47 |
|
|
| (518 | ) |
|
| — |
|
| (518 | ) |
| * | |
| Caesars | $ | 784 |
|
| $ | (803 | ) |
| $ | 387 |
| $ | (416 | ) |
| * | |
| Adjusted EBITDA (b) |
|
|
|
|
|
|
|
| |||||||||
|
| Three Months Ended June 30, | ||||||||||||||||
| (In millions) |
| 2023 |
|
|
| 2022 |
|
| 2022 Adj.(a) |
| Adj. 2022 Total |
| % Change | ||||
| Las Vegas | $ | 512 |
|
| $ | 547 |
|
| $ | — |
| $ | 547 |
|
| (6.4 | )% |
| Regional |
| 508 |
|
|
| 513 |
|
|
| — |
|
| 513 |
|
| (1.0 | )% |
| Caesars Digital |
| 11 |
|
|
| (69 | ) |
|
| — |
|
| (69 | ) |
| * | |
| Managed and Branded |
| 19 |
|
|
| 22 |
|
|
| — |
|
| 22 |
|
| (13.6 | )% |
| Corporate and Other |
| (43 | ) |
|
| (35 | ) |
|
| — |
|
| (35 | ) |
| (22.9 | )% |
| Caesars | $ | 1,007 |
|
| $ | 978 |
|
| $ | — |
| $ | 978 |
|
| 3.0 | % |
| Adjusted EBITDA (b) |
|
|
|
|
|
|
|
| |||||||||
|
| Six Months Ended June 30, | ||||||||||||||||
| (In millions) |
| 2023 |
|
|
| 2022 |
|
| 2022 Adj.(a) |
| Adj. 2022 Total |
| % Change | ||||
| Las Vegas | $ | 1,045 |
|
| $ | 947 |
|
| $ | — |
| $ | 947 |
|
| 10.3 | % |
| Regional |
| 956 |
|
|
| 972 |
|
|
| — |
|
| 972 |
|
| (1.6 | )% |
| Caesars Digital |
| 7 |
|
|
| (623 | ) |
|
| — |
|
| (623 | ) |
| * | |
| Managed and Branded |
| 38 |
|
|
| 42 |
|
|
| — |
|
| 42 |
|
| (9.5 | )% |
| Corporate and Other |
| (81 | ) |
|
| (64 | ) |
|
| — |
|
| (64 | ) |
| (26.6 | )% |
| Caesars | $ | 1,965 |
|
| $ | 1,274 |
|
| $ | — |
| $ | 1,274 |
|
| 54.2 | % |
____________________
| *Not meaningful | |
| (a) | Adjustment for pre-disposition results of operations reflecting the subtraction of results of operations for Belle of Baton Rouge and discontinued operations of William Hill International prior to divestiture, for the relevant periods. Such figures are based on unaudited internal financial statements and have not been reviewed by the Company’s auditors for the periods presented. The additional financial information is included to enable the comparison of current results with results of prior periods. |
| (b) | Adjusted EBITDA is not a GAAP measurement and is presented solely as a supplemental disclosure because the Company believes it is a widely used measure of operating performance in the gaming industry. See “Reconciliation of GAAP Measures to Non-GAAP Measures” below for a definition of Adjusted EBITDA and a quantitative reconciliation of Adjusted EBITDA to net income (loss), which the Company believes is the most comparable financial measure calculated in accordance with GAAP. |
Balance Sheet and Liquidity
As of June 30, 2023, Caesars had $12.7 billion in aggregate principal amount of debt outstanding. Total cash and cash equivalents were $1.1 billion, excluding restricted cash of $205 million.
| June 30, 2023 |
| December 31, 2022 | |||
| Cash and cash equivalents | $ | 1,122 |
| $ | 1,038 |
|
|
|
|
| ||
| Bank debt and loans | $ | 3,475 |
| $ | 5,836 |
| Notes |
| 9,199 |
|
| 7,200 |
| Other long-term debt |
| 47 |
|
| 49 |
| Total outstanding indebtedness | $ | 12,721 |
| $ | 13,085 |
|
|
|
|
| ||
| Net debt | $ | 11,599 |
| $ | 12,047 |
As of June 30, 2023, our cash on hand and revolving borrowing capacity was as follows:
| (In millions) |
| June 30, 2023 | ||
| Cash and cash equivalents |
| $ | 1,122 |
|
| Revolver capacity (a) |
|
| 2,210 |
|
| Revolver capacity committed to letters of credit |
|
| (71 | ) |
| Available revolver capacity committed as regulatory requirement |
|
| (48 | ) |
| Total |
| $ | 3,213 |
|
___________________
| (a) | Revolver capacity includes $2.25 billion under our CEI Revolving Credit Facility, maturing in January 2028, less $40 million reserved for specific purposes. |
“On July 17th we permanently repaid the $250.0 million Baltimore Term Loan, priced at SOFR plus 4.0%, due July 2024, following our acquisition of the remaining 24% equity ownership in the property. Total net leverage under our bank credit facility was 4.2x as of June 30, 2023, and we expect to continue reducing debt and leverage in the second half of 2023,” said Bret Yunker, Chief Financial Officer.
Reconciliation of GAAP Measures to Non-GAAP Measures
Adjusted EBITDA (described below), a non-GAAP financial measure, has been presented as a supplemental disclosure because it is a widely used measure of performance and basis for valuation of companies in our industry and we believe that this non-GAAP supplemental information will be helpful in understanding our ongoing operating results. Management has historically used Adjusted EBITDA when evaluating operating performance because we believe that the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide a full understanding of our core operating results and as a means to evaluate period-to-period results. Adjusted EBITDA represents net income (loss) before interest income and interest expense, net of interest capitalized, (benefit) provision for income taxes, depreciation and amortization, (gain) loss on investments and marketable securities, stock-based compensation, impairment charges, equity in (income) loss of unconsolidated affiliates, (gain) loss on the sale or disposal of property and equipment, changes in the fair value of certain derivatives, and transaction costs associated with our acquisitions and divestitures such as (gain) loss on sale, sign-on and retention bonuses, severance expense, business integration and optimization costs, contract exit or termination costs, and certain litigation awards or regulatory settlements. Adjusted EBITDA also excludes the expense associated with certain of our leases as these transactions were accounted for as financing obligations and the associated expense is included in interest expense. Adjusted EBITDA is not a measure of performance or liquidity calculated in accordance with accounting principles generally accepted in the United States (“GAAP”). It is unaudited and should not be considered an alternative to, or more meaningful than, net income (loss) as an indicator of our operating performance. Uses of cash flows that are not reflected in Adjusted EBITDA include capital expenditures, interest payments, income taxes, debt principal repayments, payments under our leases with affiliates of GLPI and VICI Properties, Inc. and certain regulatory gaming assessments, which can be significant. As a result, Adjusted EBITDA should not be considered as a measure of our liquidity. Other companies that provide EBITDA information may calculate Adjusted EBITDA differently than we do. The definition of Adjusted EBITDA may not be the same as the definitions used in any of our debt agreements.
About Caesars Entertainment, Inc.
Caesars Entertainment, Inc. (NASDAQ: CZR) is the largest casino-entertainment company in the US and one of the world’s most diversified casino-entertainment providers. Since its beginning in Reno, NV, in 1937, Caesars Entertainment, Inc. has grown through development of new resorts, expansions and acquisitions. Caesars Entertainment, Inc.’s resorts operate primarily under the Caesars, Harrah’s, Horseshoe, and Eldorado brand names.
| CAESARS ENTERTAINMENT, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||||||||||
|
| Three Months Ended June 30, |
| Six Months Ended June 30, | ||||||||||||
| (In millions, except per share data) |
| 2023 |
|
|
| 2022 |
|
|
| 2023 |
|
|
| 2022 |
|
| REVENUES: |
|
|
|
|
|
|
| ||||||||
| Casino | $ | 1,584 |
|
| $ | 1,549 |
|
| $ | 3,169 |
|
| $ | 2,841 |
|
| Food and beverage |
| 435 |
|
|
| 422 |
|
|
| 862 |
|
|
| 761 |
|
| Hotel |
| 525 |
|
|
| 519 |
|
|
| 1,028 |
|
|
| 902 |
|
| Other |
| 335 |
|
|
| 331 |
|
|
| 650 |
|
|
| 609 |
|
| Net revenues |
| 2,879 |
|
|
| 2,821 |
|
|
| 5,709 |
|
|
| 5,113 |
|
| EXPENSES: |
|
|
|
|
|
|
| ||||||||
| Casino |
| 817 |
|
|
| 825 |
|
|
| 1,645 |
|
|
| 1,889 |
|
| Food and beverage |
| 258 |
|
|
| 242 |
|
|
| 509 |
|
|
| 444 |
|
| Hotel |
| 143 |
|
|
| 134 |
|
|
| 280 |
|
|
| 249 |
|
| Other |
| 111 |
|
|
| 105 |
|
|
| 218 |
|
|
| 193 |
|
| General and administrative |
| 499 |
|
|
| 517 |
|
|
| 1,008 |
|
|
| 1,016 |
|
| Corporate |
| 86 |
|
|
| 76 |
|
|
| 165 |
|
|
| 145 |
|
| Depreciation and amortization |
| 323 |
|
|
| 306 |
|
|
| 623 |
|
|
| 606 |
|
| Transaction and other costs, net |
| 33 |
|
|
| 14 |
|
|
| 49 |
|
|
| (21 | ) |
| Total operating expenses |
| 2,270 |
|
|
| 2,219 |
|
|
| 4,497 |
|
|
| 4,521 |
|
| Operating income |
| 609 |
|
|
| 602 |
|
|
| 1,212 |
|
|
| 592 |
|
| OTHER EXPENSE: |
|
|
|
|
|
|
| ||||||||
| Interest expense, net |
| (586 | ) |
|
| (559 | ) |
|
| (1,180 | ) |
|
| (1,111 | ) |
| Loss on extinguishment of debt |
| — |
|
|
| — |
|
|
| (197 | ) |
|
| — |
|
| Other income |
| 3 |
|
|
| 45 |
|
|
| 6 |
|
|
| 49 |
|
| Total other expense |
| (583 | ) |
|
| (514 | ) |
|
| (1,371 | ) |
|
| (1,062 | ) |
| Income (loss) from continuing operations before income taxes |
| 26 |
|
|
| 88 |
|
|
| (159 | ) |
|
| (470 | ) |
| Benefit (provision) for income taxes |
| 902 |
|
|
| (52 | ) |
|
| 951 |
|
|
| 55 |
|
| Income (loss) from continuing operations, net of income taxes |
| 928 |
|
|
| 36 |
|
|
| 792 |
|
|
| (415 | ) |
| Discontinued operations, net of income taxes |
| — |
|
|
| (157 | ) |
|
| — |
|
|
| (386 | ) |
| Net income (loss) |
| 928 |
|
|
| (121 | ) |
|
| 792 |
|
|
| (801 | ) |
| Net income attributable to noncontrolling interests |
| (8 | ) |
|
| (2 | ) |
|
| (8 | ) |
|
| (2 | ) |
| Net income (loss) attributable to Caesars | $ | 920 |
|
| $ | (123 | ) |
| $ | 784 |
|
| $ | (803 | ) |
|
|
|
|
|
|
|
|
| ||||||||
| Net income (loss) per share - basic and diluted: |
|
|
|
|
|
|
| ||||||||
| Basic income (loss) per share from continuing operations | $ | 4.27 |
|
| $ | 0.16 |
|
| $ | 3.65 |
|
| $ | (1.95 | ) |
| Basic loss per share from discontinued operations |
| — |
|
|
| (0.73 | ) |
|
| — |
|
|
| (1.80 | ) |
| Basic income (loss) per share | $ | 4.27 |
|
| $ | (0.57 | ) |
| $ | 3.65 |
|
| $ | (3.75 | ) |
| Diluted income (loss) per share from continuing operations | $ | 4.26 |
|
| $ | 0.16 |
|
| $ | 3.63 |
|
| $ | (1.95 | ) |
| Diluted loss per share from discontinued operations |
| — |
|
|
| (0.73 | ) |
|
| — |
|
|
| (1.80 | ) |
| Diluted income (loss) per share | $ | 4.26 |
|
| $ | (0.57 | ) |
| $ | 3.63 |
|
| $ | (3.75 | ) |
| Weighted average basic shares outstanding |
| 215 |
|
|
| 214 |
|
|
| 215 |
|
|
| 214 |
|
| Weighted average diluted shares outstanding |
| 216 |
|
|
| 215 |
|
|
| 216 |
|
|
| 214 |
|
| CAESARS ENTERTAINMENT, INC. RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO CAESARS TO ADJUSTED EBITDA (UNAUDITED) | |||||||||||||||
|
| Three Months Ended June 30, |
| Six Months Ended June 30, | ||||||||||||
| (In millions) |
| 2023 |
|
|
| 2022 |
|
|
| 2023 |
|
|
| 2022 |
|
| Net income (loss) attributable to Caesars | $ | 920 |
|
| $ | (123 | ) |
| $ | 784 |
|
| $ | (803 | ) |
| Net income attributable to noncontrolling interests |
| 8 |
|
|
| 2 |
|
|
| 8 |
|
|
| 2 |
|
| Discontinued operations, net of income taxes |
| — |
|
|
| 157 |
|
|
| — |
|
|
| 386 |
|
| (Benefit) provision for income taxes |
| (902 | ) |
|
| 52 |
|
|
| (951 | ) |
|
| (55 | ) |
| Other income (a) |
| (3 | ) |
|
| (45 | ) |
|
| (6 | ) |
|
| (49 | ) |
| Loss on extinguishment of debt |
| — |
|
|
| — |
|
|
| 197 |
|
|
| — |
|
| Interest expense, net |
| 586 |
|
|
| 559 |
|
|
| 1,180 |
|
|
| 1,111 |
|
| Depreciation and amortization |
| 323 |
|
|
| 306 |
|
|
| 623 |
|
|
| 606 |
|
| Transaction costs and other, net (b) |
| 46 |
|
|
| 44 |
|
|
| 74 |
|
|
| 25 |
|
| Stock-based compensation expense |
| 29 |
|
|
| 26 |
|
|
| 56 |
|
|
| 51 |
|
| Adjusted EBITDA | $ | 1,007 |
|
| $ | 978 |
|
| $ | 1,965 |
|
| $ | 1,274 |
|
____________________
| (a) | Other income for the three and six months ended June 30, 2022 primarily represents the net change in fair value of investments held by the Company, foreign exchange forward contracts, and changes in the fair value of a disputed claim liability. |
| (b) | Transaction costs and other, net for the three and six months ended June 30, 2023 primarily includes non-cash losses on the write down and disposal of assets, pre-opening costs in connection with new temporary facility openings and non-cash changes in equity method investments. Transaction costs and other, net for the three and six months ended June 30, 2022 primarily represents professional services for integration activities and various contract exit or termination costs partially offset by a gain resulting from insurance proceeds received in excess of the respective carrying value of damaged assets associated with the Lake Charles property. |