Caesars: Highly leveraged, loss per share $2.24

Caesars' net loss nearly doubles, but revenues rise
2 May 2012
By Howard Stutz


Caesars Entertainment Inc. doubled its net loss in the first quarter, but told investors the results were due largely to a noncash impairment charge covering a canceled casino project in Biloxi, Miss.

In Las Vegas, where Caesars operates 10 hotel-casinos on or near the Strip, revenues grew 6.2 percent to $771.6 million in the period ended March 31, while cash flow, reported as pretax earnings, increased 9.3 percent.

Caesars Entertainment Chairman Gary Loveman told analysts and investors on a Tuesday afternoon conference call that the company's Las Vegas figures will continue to improve.

"In Las Vegas, business from international visitors continued to drive growth in gaming revenues," Loveman said. "The theme of our quarter is that we were pretty strong in Las Vegas and other regions."

Caesars, which operates more than 50 properties nationwide, reported companywide net revenues of $2.271 billion in the quarter, an increase of 4.3 percent from a year ago. Caesars attributed the jump to higher revenues in the Las Vegas and the Louisiana-Mississippi regions, and from the company's international and online businesses. Revenues related to interactive social gaming business Playtika, acquired in 2011, partially offset a decline in net revenues from Atlantic City casinos.

Loveman compared the numbers from Playtika to his adolescent love life: "A lot of effort, not a lot of results."

He said Caesars was not ready to break out its online gaming revenues as a line item. The company, through a partnership with British-based 888 Holdings, operates legal online casinos in Europe.

Caesars' net loss was $280.6 million, up $133.1 million, or 90.2 percent, from the first quarter of 2011. The company took a $172 million charge in the quarter in Mississippi, of which $167.5 million is a noncash impairment related to a previously halted project in Biloxi.

The company, which went public in February, said its loss per share was $2.24.

Shares of Caesars closed Tuesday at $14.75, up 11 cents, or 0.75 percent, on the Nasdaq Global Select Market.

KDP Investment Advisors gaming analyst Barbara Cappaert said Caesars' first-quarter operating results seemed very good on the surface.

"But as always with Caesars, the devil is in the details," Cappaert said. "Caesars results were generally better, but we wish the noise could be removed from the numbers."

Cappaert said the operating company remains highly leveraged.

"However, the company's near-term liquidity remains good as a series of financing transactions over the past two years have bumped up cash and pushed out maturities," Cappaert said. "This gives Caesars some time to grow out of its debt, or so they say."

Caesars is opening Ohio's first casino, the Horseshoe Casino Cleveland, on May 14. The company owns 20 percent of the project and will manage the facility. Loveman said Caesars is also interested in Boston and Toronto, a city that he called "an attractive opportunity."

Also on Tuesday, Caesars Entertainment said the racetrack casino the company operates in Chester, Pa., will get a new name on May 12 - Harrah's Philadelphia, which better reflects its location.

Harrah's Philadelphia will soon add 200 slot machines, giving the casino 2,800 games, and three new restaurants.