Delaware | 001-10410 | 62-1411755 | ||
(State of Incorporation) | (Commission File Number) | (IRS Employer | ||
Identification Number) | ||||
One Caesars Palace Drive | ||||
Las Vegas, Nevada 89109 | ||||
(Address of principal executive offices) (Zip Code) |
CAESARS ENTERTAINMENT CORPORATION | ||||
Date: | May 2, 2018 | By: | /S/ KEITH A. CAUSEY | |
Keith A. Causey | ||||
Senior Vice President and Chief Accounting Officer |
Contact: | Media | Investors | ||
Stephen Cohen | Joyce Arpin | |||
(347) 489-6602 | (702) 880-4707 |
• | First quarter net revenue increased $1 billion, from $966 million to $1.97 billion, due to the inclusion of the results of CEOC, LLC (“CEOC”), which emerged from bankruptcy in the fourth quarter of 2017. |
• | Net loss improved $473 million, from $507 million to $34 million, due to restructuring charges in the prior year. |
• | Adjusted EBITDAR improved $243 million, from $275 million to $518 million, due to the inclusion of the results of CEOC. |
• | Same-store net revenues declined 2.0% or $40 million, from $2.01 billion to $1.97 billion. |
• | Same-store adjusted EBITDAR decreased 3.4% or $18 million to $518 million, driven primarily by unfavorable year-over-year hold and weather-related property closures. |
• | Las Vegas RevPAR decreased $2 to $142. Las Vegas Cash ADR decreased $1 to $173. |
• | CEC executed another $1 billion interest rate swap, increasing its fixed debt percentage to 47% excluding the convertible debt. |
Net Revenues | |||||||||||||||||||||
Three Months Ended March 31, | Percent Favorable/ (Unfavorable) | Same-Store (1) Three Months Ended March 31, | Percent Favorable/ (Unfavorable) | ||||||||||||||||||
(Dollars in millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||
Las Vegas | $ | 906 | $ | 674 | 34.4 | % | $ | 906 | $ | 930 | (2.6 | )% | |||||||||
Other U.S. | 926 | 280 | * | 926 | 937 | (1.2 | )% | ||||||||||||||
All Other | 140 | 12 | * | 140 | 145 | (3.4 | )% | ||||||||||||||
Caesars | $ | 1,972 | $ | 966 | 104.1 | % | $ | 1,972 | $ | 2,012 | (2.0 | )% |
Income from Operations (2) | ||||||||||||||||
Three Months Ended March 31, | Percent Favorable/ (Unfavorable) | Same-Store (1) Three Months Ended March 31, | Percent Favorable/ (Unfavorable) | |||||||||||||
(Dollars in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Las Vegas | $ | 148 | $ | 152 | (2.6 | )% | * | * | * | |||||||
Other U.S. | 86 | 29 | 196.6 | % | * | * | * | |||||||||
All Other | (109 | ) | (31 | ) | * | * | * | * | ||||||||
Caesars | $ | 125 | $ | 150 | (16.7 | )% | * | * | * |
Net Income/(Loss) Attributable to Caesars | ||||||||||||||||
Three Months Ended March 31, | Percent Favorable/ (Unfavorable) | Same-Store (1) Three Months Ended March 31, | Percent Favorable/ (Unfavorable) | |||||||||||||
(Dollars in millions) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Las Vegas | $ | 72 | $ | 147 | (51.0 | )% | * | * | * | |||||||
Other U.S. | (50 | ) | 23 | * | * | * | * | |||||||||
All Other | (56 | ) | (677 | ) | 91.7 | % | * | * | * | |||||||
Caesars | $ | (34 | ) | $ | (507 | ) | 93.3 | % | * | * | * |
Adjusted EBITDAR (1) | |||||||||||||||||||||
Three Months Ended March 31, | Percent Favorable/ (Unfavorable) | Same-Store (1) Three Months Ended March 31, | Percent Favorable/ (Unfavorable) | ||||||||||||||||||
(Dollars in millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||
Las Vegas | $ | 321 | $ | 239 | 34.3 | % | $ | 321 | $ | 339 | (5.3 | )% | |||||||||
Other U.S. | 216 | 52 | * | 216 | 201 | 7.5 | % | ||||||||||||||
All Other | (19 | ) | (16 | ) | (18.8 | )% | (19 | ) | (4 | ) | * | ||||||||||
Caesars | $ | 518 | $ | 275 | 88.4 | % | $ | 518 | $ | 536 | (3.4 | )% |
(In millions) | March 31, 2018 | ||
Cash and cash equivalents | $ | 2,485 | |
Revolver capacity | 1,200 | ||
Revolver capacity drawn or committed to letters of credit | (50 | ) | |
Total Liquidity | $ | 3,635 |
* | Not meaningful. |
(1) | See the Reconciliation of Net Income/(Loss) Attributable to Caesars Entertainment Corporation to Adjusted EBITDAR, which includes a reconciliation for Same-Store net revenues and adjusted EBITDAR. |
(2) | See the supplemental materials uploaded to the investor relations section of Caesars.com for the same-store reconciliation of income from operations. |
• | completion of the acquisition of Centaur Holdings, LLC (“Centaur”) is subject to receipt of regulatory approvals and other customary closing conditions, which may not be satisfied; |
• | we may not be able to realize the anticipated benefits of our proposed acquisition of Centaur; |
• | development of our announced convention center in Las Vegas and certain of our other announced projects are subject to risks associated with new construction projects, including those described below; |
• | the impact of our new operating structure following CEOC’s emergence from bankruptcy; |
• | the effects of local and national economic, credit, and capital market conditions on the economy, in general, and on the gaming industry, in particular; |
• | the effect of reductions in consumer discretionary spending due to economic downturns or other factors and changes in consumer demands; |
• | the ability to realize improvements in our business and results of operations through our property renovation investments, technology deployments, business process improvement initiatives and other continuous improvement initiatives; |
• | the ability to take advantage of opportunities to grow our revenue; |
• | the ability to use net operating losses to offset future taxable income as anticipated; |
• | the ability to realize all of the anticipated benefits of current or potential future acquisitions; |
• | the ability to effectively compete against our competitors; |
• | the financial results of our consolidated businesses; |
• | the impact of our substantial indebtedness, including its impact on our ability to raise additional capital in the future and react to changes in the economy, and lease obligations and the restrictions in our debt and lease agreements; |
• | the ability to access available and reasonable financing or additional capital on a timely basis, and on acceptable terms or at all, including our ability to refinance our indebtedness on acceptable terms; |
• | the ability of our customer tracking, customer loyalty, and yield management programs to continue to increase customer loyalty and same-store or hotel sales; |
• | changes in the extensive governmental regulations to which we are subject, and (1) changes in laws, including increased tax rates, smoking bans, regulations or accounting standards, (2) third-party relations and (3) approvals, decisions, disciplines and fines of courts, regulators and governmental bodies; |
• | compliance with the extensive laws and regulations to which we are subject, including applicable gaming laws, the Foreign Corrupt Practices Act and other anti-corruption laws, and the Bank Secrecy Act and other anti-money laundering laws; |
• | our ability to recoup costs of capital investments through higher revenues; |
• | growth in consumer demand for non-gaming offerings; |
• | abnormal gaming holds ("gaming hold" is the amount of money that is retained by the casino from wagers by customers); |
• | the effects of competition, including locations of competitors, growth of online gaming, competition for new licenses, and operating and market competition; |
• | our ability to protect our intellectual property rights and damages caused to our brands due to the unauthorized use of our brand names by third parties in ways outside of our control; |
• | the ability to timely and cost-effectively integrate companies that we acquire into our operations; |
• | not being able to realize all of our anticipated cost savings; |
• | the potential difficulties in employee retention, recruitment and motivation; |
• | our ability to retain our performers or other entertainment offerings on acceptable terms or at all; |
• | the risk of fraud, theft, and cheating; |
• | seasonal fluctuations resulting in volatility and an adverse effect on our operating results; |
• | any impairments to goodwill, indefinite-lived intangible assets, or long-lived assets that we may incur; |
• | construction factors, including delays, increased costs of labor and materials, availability of labor and materials, zoning issues, environmental restrictions, soil and water conditions, weather and other hazards, site access matters, and building permit issues; |
• | the impact of adverse legal proceedings and judicial and governmental body actions, including gaming legislative action, referenda, regulatory disciplinary actions, and fines and taxation; |
• | acts of war or terrorist incidents (including the impact of the recent mass shooting in Las Vegas on tourism), severe weather conditions, uprisings, or natural disasters, including losses therefrom, losses in revenues and damage to property, and the impact of severe weather conditions on our ability to attract customers to certain of our facilities; |
• | fluctuations in energy prices; |
• | work stoppages and other labor problems; |
• | our ability to collect on credit extended to our customers; |
• | the effects of environmental and structural building conditions relating to our properties and our exposure to environmental liability, including as a result of unknown environmental contamination; |
• | a disruption, failure, or breach of our network, information systems, or other technology, or those of our vendors, on which we are dependent; |
• | risks and costs associated with protecting the integrity and security of internal, employee and customer data; |
• | access to insurance for our assets on reasonable terms; and |
• | the impact, if any, of unfunded pension benefits under multiemployer pension plans |
Three Months Ended March 31, | |||||||
(In millions, except per share data) | 2018 | 2017 | |||||
Revenues | |||||||
Casino | $ | 983 | $ | 390 | |||
Food and beverage | 383 | 206 | |||||
Rooms | 367 | 247 | |||||
Other revenue | 172 | 123 | |||||
Management fees | 15 | — | |||||
Reimbursed management costs | 52 | — | |||||
Net revenues | 1,972 | 966 | |||||
Operating expenses | |||||||
Direct | |||||||
Casino | 562 | 222 | |||||
Food and beverage | 264 | 141 | |||||
Rooms | 114 | 80 | |||||
Property, general, administrative, and other | 427 | 231 | |||||
Reimbursable management costs | 52 | — | |||||
Depreciation and amortization | 280 | 102 | |||||
Corporate expense | 82 | 41 | |||||
Other operating costs | 66 | (1 | ) | ||||
Total operating expenses | 1,847 | 816 | |||||
Income from operations | 125 | 150 | |||||
Interest expense | (330 | ) | (147 | ) | |||
Restructuring and support expenses and other | 184 | (464 | ) | ||||
Loss before income taxes | (21 | ) | (461 | ) | |||
Income tax provision | (13 | ) | (47 | ) | |||
Net loss | (34 | ) | (508 | ) | |||
Net loss attributable to noncontrolling interests | — | 1 | |||||
Net loss attributable to Caesars | $ | (34 | ) | $ | (507 | ) | |
Loss per share - basic and diluted | |||||||
Basic and diluted loss per share | $ | (0.05 | ) | $ | (3.44 | ) | |
Weighted-average common stock outstanding | 697 | 147 |
(In millions) | March 31, 2018 | December 31, 2017 | |||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents ($58 and $58 attributable to our VIEs) | $ | 2,485 | $ | 2,558 | |||
Restricted cash | 115 | 116 | |||||
Receivables, net | 439 | 494 | |||||
Due from affiliates, net | 7 | 11 | |||||
Prepayments and other current assets ($5 and $2 attributable to our VIEs) | 235 | 239 | |||||
Inventories | 42 | 39 | |||||
Total current assets | 3,323 | 3,457 | |||||
Property and equipment, net ($67 and $57 attributable to our VIEs) | 15,975 | 16,154 | |||||
Goodwill | 3,817 | 3,815 | |||||
Intangible assets other than goodwill | 1,597 | 1,609 | |||||
Restricted cash | 42 | 35 | |||||
Deferred income taxes | 2 | 2 | |||||
Deferred charges and other assets ($30 and $0 attributable to our VIEs) | 395 | 364 | |||||
Total assets | $ | 25,151 | $ | 25,436 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities | |||||||
Accounts payable ($6 and $3 attributable to our VIEs) | $ | 239 | $ | 318 | |||
Accrued expenses and other current liabilities | 1,163 | 1,326 | |||||
Interest payable | 78 | 38 | |||||
Current portion of contract liabilities | 143 | 129 | |||||
Current portion of financing obligations | 10 | 9 | |||||
Current portion of long-term debt | 64 | 64 | |||||
Total current liabilities | 1,697 | 1,884 | |||||
Contract liabilities | 7 | 2 | |||||
Financing obligations | 9,388 | 9,355 | |||||
Long-term debt | 8,837 | 8,849 | |||||
Deferred income taxes | 589 | 577 | |||||
Deferred credits and other liabilities | 1,331 | 1,472 | |||||
Total liabilities | 21,849 | 22,139 | |||||
Stockholders’ equity | |||||||
Caesars stockholders’ equity | 3,210 | 3,226 | |||||
Noncontrolling interests | 92 | 71 | |||||
Total stockholders’ equity | 3,302 | 3,297 | |||||
Total liabilities and stockholders’ equity | $ | 25,151 | $ | 25,436 |
Three Months Ended March 31, | |||||||
(In millions) | 2018 | 2017 | |||||
Cash flows provided by operating activities | $ | 22 | $ | 119 | |||
Cash flows from investing activities | |||||||
Acquisitions of property and equipment, net of change in related payables | (85 | ) | (72 | ) | |||
Proceeds from the sale and maturity of investments | 16 | 5 | |||||
Payments to acquire investments | (14 | ) | (16 | ) | |||
Cash flows used in investing activities | (83 | ) | (83 | ) | |||
Cash flows from financing activities | |||||||
Debt issuance costs and fees | (1 | ) | — | ||||
Repayments of long-term debt and revolving credit facilities | (16 | ) | (54 | ) | |||
Proceeds from the issuance of common stock | 3 | 4 | |||||
Taxes paid related to net share settlement of equity awards | (12 | ) | (7 | ) | |||
Financing obligation payments | (2 | ) | — | ||||
Contributions from noncontrolling interest owners | 20 | — | |||||
Distributions to noncontrolling interest owners | — | (5 | ) | ||||
Other | 2 | — | |||||
Cash flows used in financing activities | (6 | ) | (62 | ) | |||
Net decrease in cash, cash equivalents, and restricted cash | (67 | ) | (26 | ) | |||
Cash, cash equivalents, and restricted cash, beginning of period | 2,709 | 4,658 | |||||
Cash, cash equivalents, and restricted cash, end of period | $ | 2,642 | $ | 4,632 | |||
Supplemental Cash Flow Information: | |||||||
Cash paid for interest | $ | 247 | $ | 75 | |||
Cash received for income taxes | (2 | ) | — | ||||
Non-cash investing and financing activities: | |||||||
Change in accrued capital expenditures | (2 | ) | (2 | ) |
Three Months Ended March 31, 2018 | Three Months Ended March 31, 2017 | ||||||||||||||||||||||||||||||
(Dollars in millions) | Las Vegas | Other U.S. | All Other (f) | CEC | Las Vegas | Other U.S. | All Other (f) | CEC | |||||||||||||||||||||||
Net income/(loss) attributable to company | $ | 72 | $ | (50 | ) | $ | (56 | ) | $ | (34 | ) | $ | 147 | $ | 23 | $ | (677 | ) | $ | (507 | ) | ||||||||||
Net loss attributable to noncontrolling interests | — | — | — | — | — | (1 | ) | — | (1 | ) | |||||||||||||||||||||
Income tax provision | — | — | 13 | 13 | — | — | 47 | 47 | |||||||||||||||||||||||
Restructuring of CEOC and other (a) | (2 | ) | (2 | ) | (180 | ) | (184 | ) | — | — | 464 | 464 | |||||||||||||||||||
Interest expense | 78 | 138 | 114 | 330 | 5 | 7 | 135 | 147 | |||||||||||||||||||||||
Depreciation and amortization | 142 | 121 | 17 | 280 | 79 | 21 | 2 | 102 | |||||||||||||||||||||||
Corporate expense | — | — | 82 | 82 | — | — | 41 | 41 | |||||||||||||||||||||||
Other operating costs (b) | 28 | 6 | 32 | 66 | 6 | 1 | (8 | ) | (1 | ) | |||||||||||||||||||||
Property EBITDAR | 318 | 213 | 22 | 553 | 237 | 51 | 4 | 292 | |||||||||||||||||||||||
Corporate expense | — | — | (82 | ) | (82 | ) | — | — | (41 | ) | (41 | ) | |||||||||||||||||||
Stock-based compensation expense (c) | 2 | 2 | 14 | 18 | 1 | — | 8 | 9 | |||||||||||||||||||||||
Other items (d) | 1 | 1 | 27 | 29 | 1 | 1 | 13 | 15 | |||||||||||||||||||||||
Adjusted EBITDAR | $ | 321 | $ | 216 | $ | (19 | ) | $ | 518 | $ | 239 | $ | 52 | $ | (16 | ) | $ | 275 | |||||||||||||
Net revenues | $ | 906 | $ | 926 | $ | 140 | $ | 1,972 | $ | 674 | $ | 280 | $ | 12 | $ | 966 | |||||||||||||||
Adjusted EBITDAR Margin (e) | 35.4 | % | 23.3 | % | (13.6 | )% | 26.3 | % | 35.5 | % | 18.6 | % | (133.3 | )% | 28.5 | % |
Same-Store | Three Months Ended March 31, 2017 | Three Months Ended March 31, 2017 | |||||||||||||||||||||||||||||
(Dollars in millions) | CEC | CEOC | Baltimore | Same-Store | Las Vegas | Other U.S. | All Other (f) | Same-Store | |||||||||||||||||||||||
Net income/(loss) attributable to company | $ | (507 | ) | $ | 103 | $ | 1 | $ | (403 | ) | $ | 213 | $ | 131 | $ | (747 | ) | $ | (403 | ) | |||||||||||
Net income/(loss) attributable to noncontrolling interests | (1 | ) | 2 | 1 | 2 | — | 2 | — | 2 | ||||||||||||||||||||||
Income tax provision | 47 | 14 | — | 61 | — | 1 | 60 | 61 | |||||||||||||||||||||||
Restructuring of CEOC and other (a) | 464 | — | — | 464 | — | — | 464 | 464 | |||||||||||||||||||||||
Interest expense | 147 | 57 | (7 | ) | 197 | 5 | 9 | 183 | 197 | ||||||||||||||||||||||
Depreciation and amortization | 102 | 95 | (8 | ) | 189 | 112 | 57 | 20 | 189 | ||||||||||||||||||||||
Corporate expense | 41 | 15 | — | 56 | — | — | 56 | 56 | |||||||||||||||||||||||
Other operating costs (b) | (1 | ) | — | — | (1 | ) | 7 | 2 | (10 | ) | (1 | ) | |||||||||||||||||||
Property EBITDAR | 292 | 286 | (13 | ) | 565 | 337 | 202 | 26 | 565 | ||||||||||||||||||||||
Corporate expense | (41 | ) | (15 | ) | — | (56 | ) | — | — | (56 | ) | (56 | ) | ||||||||||||||||||
Stock-based compensation expense (c) | 9 | — | — | 9 | 1 | — | 8 | 9 | |||||||||||||||||||||||
Other items (d) | 15 | 4 | (1 | ) | 18 | 1 | (1 | ) | 18 | 18 | |||||||||||||||||||||
Adjusted EBITDAR | $ | 275 | $ | 275 | $ | (14 | ) | $ | 536 | $ | 339 | $ | 201 | $ | (4 | ) | $ | 536 | |||||||||||||
Net revenues | $ | 966 | $ | 1,113 | $ | (67 | ) | $ | 2,012 | $ | 930 | $ | 937 | $ | 145 | $ | 2,012 | ||||||||||||||
Adjusted EBITDAR Margin (e) | 28.5 | % | 24.7 | % | 20.9 | % | 26.6 | % | 36.5 | % | 21.5 | % | (2.8 | )% | 26.6 | % |
(a) | 2018 amount primarily represents a change in fair value of our derivative liability related to the conversion option of the CEC Convertible Notes; 2017 amount primarily represents CEC’s costs in connection with the restructuring of CEOC. |
(b) | Amounts primarily represent costs incurred in connection with the development activities and reorganization activities, and/or recoveries associated with such items. |
(c) | Amounts represent stock-based compensation expense related to shares, stock options, and restricted stock units granted to the Company’s employees. |
(d) | Amounts represent add-backs and deductions from adjusted EBITDAR permitted under certain indentures. Such add-backs and deductions include litigation awards and settlements, costs associated with CEOC’s restructuring and related litigation, severance and relocation costs, sign-on and retention bonuses, permit remediation costs, and business optimization expenses. |
(e) | Adjusted EBITDAR margin is calculated as adjusted EBITDAR divided by net revenues. |
(f) | Amounts include consolidating adjustments, eliminating adjustments and other adjustments to reconcile to consolidated CEC and same-store property EBITDAR and adjusted EBITDAR. |
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