Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Caesars Entertainment Inc (CZR, Financial) reported same-store consolidated net revenues of $2.9 billion and adjusted EBITDA of $1 billion for Q3 2024.
- The Las Vegas segment achieved record non-gaming performance, with hotel and F&B cash revenue driven by strong ADRs and 97.1% occupancy.
- Caesars Digital segment delivered a 41% year-over-year increase in net revenues, achieving an all-time quarterly adjusted EBITDA record of $52 million.
- The company completed significant capital projects, including the $435 million renovation of Caesars New Orleans, enhancing its property portfolio.
- Caesars Entertainment Inc (CZR) successfully executed a $1.1 billion senior unsecured bond issuance, reducing debt and improving financial flexibility.
Negative Points
- The regional segment faced a 13% year-over-year decline in adjusted EBITDA, impacted by new competition and construction disruptions.
- Las Vegas segment's adjusted EBITDA was down 2% year-over-year, primarily due to lower table hold compared to the previous year.
- The company continues to face competitive pressures in several regional markets, including Indianapolis, Tunica, and Chicago.
- Weather-related disruptions affected properties along the Gulf Coast and in Florida, impacting quarterly performance.
- Despite improvements, the digital segment's October performance was negatively impacted by adverse sports betting outcomes.
Q & A Highlights
Q: Eric, regarding the digital side, it seems like you reduced your promotional investment by about 300 basis points. With the launch of the second brand on the iCasino side, should we expect this reduction to continue? Can you also discuss the sports reinvestment strategy versus the iCasino promotional reinvestment strategy?
A: Eric Hession, President, Caesars Digital: On the sports side, our reinvestment levels are about half of the market average, which we believe is appropriate. We aim to maintain our market share with this strategy. On the casino side, we are in line with the market, investing at a higher rate to grow our business and market share. The launch of the Horseshoe brand will not change this strategy significantly.
Q: Tom, regarding the outlook for Las Vegas, can you provide any metrics or insights on the group side and city-wide perspective for 2025?
A: Brian Agnew, SVP of Finance, Treasury & IR: We expect higher group total revenues and EBITDA in 2025, driven by increased occupied room nights and rates. The group and convention segment is pacing to set another record, which is a positive indicator for the segment.
Q: Tom, after the World Series of Poker sale and the LINQ Promenade sale, are the other non-core asset sales you're working on smaller in size?
A: Thomas Reeg, CEO: The other non-core asset sales are more complex and have a longer timeline. They are in the range of $275 million to $500 million, similar to the Promenade and World Series sales, but with different complexities and probabilities.
Q: Eric, regarding the iCasino side, can you discuss the early performance of the Horseshoe launch and its impact on the existing Caesars Palace online performance?
A: Eric Hession, President, Caesars Digital: The early performance of the Horseshoe launch is positive, with win customers converting well. We are ramping up advertising and marketing, and the average worth of the customer is slightly higher than on the Caesars app. It's early, but the initial signs are promising.
Q: Tom, regarding the regional outlook, with the competitive pressures and new openings, do you expect regional gaming to grow next year?
A: Thomas Reeg, CEO: We anticipate a year that is slightly down to flat for regional gaming. While there are still more headwinds than tailwinds, we have opportunities to fight for customers in markets impacted by competition. The effectiveness of our strategies in these markets will determine if 2025 becomes a growth year for regional gaming.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
