EX-99.2 3 d391361dex992.htm EX-99.2 EX-99.2

Exhibit 99.2

 

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Exhibit 99.2 Analyst Day—May 18, 2017


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Important Additional Information Pursuant to the Amended and Restated Agreement and Plan of Merger, dated as of July 9, 2016, between Caesars Entertainment Corporation (“CEC”) and Caesars Acquisition Company (“CAC”), as subsequently amended on February 20, 2017 (as amended, the “Merger Agreement”), among other things, CAC will merge with and into CEC, with CEC as the surviving company (the “Merger”). In connection with the Merger, on March 13, 2017, CEC and CAC filed with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 that includes a preliminary joint proxy statement/prospectus, as well as other relevant documents concerning the proposed transaction. The registration statement has not yet become effective. After the registration statement is declared effective by the SEC, a definitive joint proxy statement/prospectus will be mailed to stockholders of CEC and CAC. Stockholders are urged to read the registration statement and joint proxy statement/prospectus regarding the Merger and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information. You will be able to obtain a free copy of such joint proxy statement/prospectus, as well as other filings containing information about CEC and CAC, at the SEC’s website (www.sec.gov), from CEC Investor Relations (investor.caesars.com) or from CAC Investor Relations (investor.caesarsacquisitioncompany.com). Important Information About Projections The projections contained in this presentation represent projections for the CEC entity post-Merger and Emergence, or “New CEC” (the “New CEC Projections”). Upon the request of CEC and CAC, Caesars Enterprise Services (“CES”) management and personnel that provide corporate and management services to CEC’s and CAC’s respective properties (“CES Management”) prepared and developed the New CEC Projections, with input from CEC, Caesars Entertainment Operating Company, Inc. (“CEOC”), CAC, and others, as applicable, during the annual budgeting cycle in late 2016 and are consistent with the 2017 annual plan and corresponding long range plan. The New CEC Projections do not incorporate any impact or adjustments to projections based on current 2017 year-to-date performance. Additionally, the New CEC Projections reflect CES Management’s judgment (at the time the projections were prepared) of future operating and business conditions, which are subject to change. Although CES Management believes the assumptions disclosed herein to be reasonable, it is important to note that CEC and CAC can provide no assurance that such assumptions will be realized. Projections include a range of outcomes by their nature. For this presentation, the New CEC Projections were prepared to include projections that CES Management believed, at the time of preparation in 2017, to be the most likely case. CEC and CAC have not included nor does CEC or CAC anticipate including the associated ranges. The New CEC Projections include certain information that represents non-GAAP measures. CEC and CAC are unable to reconcile Adjusted EBITDAR, which is a forward-looking non-GAAP measure, to its nearest GAAP measure because the nearest GAAP financial measure is not accessible on a forward-looking basis, as described further below. The New CEC Projections did not include, among other things, the following material items:    Fair Value adjustments and the related income statement effects required as a result of the reacquisition of CEOC and its consolidation by CEC subsequent to CEOC’s Emergence from bankruptcy;                The effect of the adoption of ASU 2014-09, Revenue from Contracts With Customers (Topic 606), which CEC is required to adopt by January 1, 2018;                The effect of the adoption of ASU 2016-02, Leases (Topic 842), which CEC is required to adopt by January 1, 2019;                Depreciation expense on a GAAP basis as the New CEC Projections are prepared at a much higher level than GAAP would prescribe;                Stock compensation expense as the New CEC Projections do not include expected future grants; and                Adjustments that may be required if future changes are made to consolidation conclusions. Because the items noted above are expected to have a material effect on the GAAP results, the nearest GAAP financial measure, Net Income, is unavailable without an unreasonable effort. Although presented with numerical specificity, the above unaudited prospective financial information reflects numerous assumptions and estimates as to future events made by CES Management. The long range projections assume organic top line growth of 2.0%—3.0% across the New CEC portfolio, 1.75% per annum fixed cost increases, and renovation of hotel room product at many of CEC’s Las Vegas properties during the forecast period. Although acquisitions, divestitures, and development prospects are regularly evaluated by CEC and CAC, the projections do not include any costs or contributions from these inorganic opportunities due to the speculative nature of such prospects. The New CEC Projections included in this presentation are not fact and should not be relied upon as being necessarily indicative of future results, and readers of this information are cautioned not to place undue reliance thereon. Neither CEC’s independent auditors nor any other independent accountants have compiled, examined, or performed any procedures with respect to the New CEC Projections, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the New CEC Projections. The assumptions and estimates underlying the projected financial information are inherently uncertain and, though considered reasonable by CES Management as of the date of the projected financial information’s preparation, are subject to a wide variety of significant business, economic, and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the New CEC Projections. Accordingly, there can be no assurance that the New CEC Projections are indicative of the future performance of CEC or that actual results will not differ materially from those presented in the New CEC Projections. Inclusion of the New CEC Projections in this presentation should not be regarded as a representation by any person that the results contained in the New CEC Projections will be achieved.


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Historical Results Full Year ($ in millions) Historical Net Revenue 2014 2015 2016 Continuing CEC $                —$    3,929 $    3,877 CEOC                —                4,711                 4,694 Elimination and other adjustments                —                (312)                 (153) CZR Enterprise Wide $    7,967 $    8,328 $    8,418 Notes: —CEOC was consolidated during the entire 2014 reporting period.—Eliminations & other adjustments in 2015 includes adjustment of $158M for 15 days of CEOC financials included in CEC. —Source: CZR filings; Earnings Presentations; S4 filed March 13, 2017 Historical Adjusted EBITDA 2014 2015 2016 Continuing CEC $                —$    1,019 $    1,070 CEOC                —1,132 1,168 Elimination and other adjustments                —                (38)                 (7) Less:    Baluma S.A.‘s adjusted EBITDA                —                (29)                 (21) CZR Enterprise Wide $    1,462 $    2,084 $    2,210 EBITDA Margin 18% 25% 26% Hold Range (in millions) (30-35) 50-55 40-45 Notes: —CEOC was consolidated during the entire 2014 reporting period.—Eliminations & other adjustments in 2015 includes adjustment of $34M for 15 days of CEOC financials included in CEC. —Hold range represents EBITDA favorability/(unfavorability) as a result of variance from expected hold in the year. Excludes Punta del Este.—Excludes CIE SMG business—Source: CZR filing, Earnings Presentations and Calls, S4 filed March 13, 2017; CEOC filings    Historical Capital Expenditures 2014 2015 2016 Continuing CEC $                430 $                130 $                220    CEOC                —                 157                226 Elimination and other adjustments                —                (4)                 -Project Capital Expenditures                561                211                 —CZR Enterprise Wide $                991 $                494 $                446 Notes: —CEOC was consolidated during the entire 2014 reporting period.—Eliminations & other adjustments in 2015 includes adjustment of $4M for 15 days of CEOC financials included in CEC. —Project Capital Expenditures include LINQ Hotel, Cromwell, Baltimore and AC Convention Center developments.—Source: CZR filings, Earnings Presentations and Calls, S4 filed March 13, 2017 Page 3 of 13


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Historical Results By Quarter ($ in millions) Historical Net Revenue 2014 2015 2016 2017 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Continuing CEC7898388648811,085966957921 950992986949963 CEOC1,3731,3361,2531,1311,1581,2071,2231,1261,1631,1751,1651,1991,121 Elimination and other adjustments(245)(168)(56)(29)(200)(39)(38)(38)(40)(42)(38)(41)(38) CZR Enterprise Wide $    1,917 $    2,006 $    2,061 $    1,983 $    2,043 $    2,134 $    2,142 $    2,009 $    2,073 $    2,125 $    2,113 $    2,107 $    2,046 Notes: —CEOC was consolidated during the entire 2014 reporting period.—Eliminations & other adjustments in 2015 includes adjustment of $158M for 15 days of CEOC financials included in CEC. —Source: CZR filings, Earnings Presentations; CEOC filings    Historical Adjusted EBITDA 2014 2015 2016 2017 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Continuing CEC178190155144270277246226261290269250274 CEOC203213232171270303313246303310276279276 Elimination and other adjustments14——(31)(3)—(4)(2)(3)(1)(1)1 Less:    Baluma S.A.‘s adjusted EBITDA (21) (2) 2 (8) (13) (4) (1) (11) (19) 6 1 (9) 0 CZR Enterprise Wide $361 $405 $389 $307 $496 $573 $558 $457 $543 $603 $545 $519 $551 EBITDA Margin 19% 20% 19% 15% 24% 27% 26% 23% 26% 28% 26% 25% 27% Hold Range (in millions) (5-10) (0-5) (0-5) (15-20) 20-25 10-15 20-25 (5-10) 10-15 20-25 (5-10) 15-20 (5-10) Notes: —CEOC was consolidated during the entire 2014 reporting period.—Eliminations & other adjustments in 2015 includes adjustment of $34M for 15 days of CEOC financials included in CEC. -Hold range represents EBITDA favorability/(unfavorability) as a result of variance from expected hold in the year. Excludes Punta del Este. -Excludes CIE’s SMG business—Source: CZR filings; Earnings Presentations; CEOC filings Page 4 of 13

 


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CZR—Summary of Net Revenue, EBITDA, and Capex ($ in millions) Net Revenue by Entity 2016 2014 2015 2016 Mix % CEOC $    4,812 $    4,711 $    4,694 54.7% CERP                2,065                2,154                 2,195 25.6% CGP                1,319                1,620                 1,697 19.8% Other                (229)                (157)                 (168) CZR Enterprise Wide $    7,967 $    8,328 $    8,418 100.0% Source: CZR filings, Earnings Presentations; CEOC filings    Adjusted EBITDA by Entity 2016 2014 2015 2016 Mix % CEOC $                790 $    1,106 $    1,147 51.4% CERP                467                650                 670 30.0% CGP                214                348                 416 18.6% Other                (9)                (20)                 (23) CZR Enterprise Wide $    1,462 $    2,084 $    2,210 100.0% Notes:—Excludes CIE’s SMG business. Source: CZR filings, Earnings Presentations; CEOC filings    Net Revenue by Region 2016 2014 2015 2016 Mix % Las Vegas $    3,194 $    3,457 $    3,616 43.0% Non-Vegas Domestic                4,073                4,238                 4,165 49.5% Other                700                633                 637 7.6% CZR Enterprise Wide $    7,967 $    8,328 $    8,418 100.0% Source: CZR Management Adjusted EBITDA by Region 2016 2014 2015 2016 Mix % Las Vegas $                766 $    1,145 $    1,259 57.0% Non-Vegas Domestic                741                976                 980 44.3% Other                (45)                (37)                 (29) -1.3% CZR Enterprise Wide $    1,462 $    2,084 $    2,210 100.0% Notes:—Excludes CIE’s SMG business. Source: CZR Management Capital Expenditures By Region 2014 2015 2016 Las Vegas $                448 $                268 $                278 Non-Vegas Domestic                457                181                 104 Other                86                45                 64 CZR Enterprise Wide $                991 $                494 $                446 Source: CZR Management Page 5 of 13


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CZR—Summary of EBITDA ($ in millions) Historical Adjusted EBITDA 2014 2015 2016 CEC                1,462                 1,016                 1,070 CEOC                —                1,068                  1,140 CZR Enterprise Wide $                 1,462 $                2,084 $                2,210 Notes: (1) Includes eliminations and other adjustments Source: CZR filings, Earnings Presentations Historical Adjusted EBITDA Reconciliation 2014 2015 2016 Net income/(loss) attributable to company $                 (2,783) $                5,920 $                (3,569) Net income/(loss) attributable to noncontrolling interests                (83)                132                 822 Net (income)/loss from discontinued operations                143                (155)                 (3,380) Income tax provision/(benefit)                (596)                (119)                 27 Deconsolidation and restructuring of CEOC and other                95                (6,115)                  5,758 Interest expense                2,669                683                 599 Income/(loss) from operations                (555)                346                 257 Depreciation and amortization                658                374                 439 Impairment of tangible and other intangible assets                994                1                 -Other operating costs                203                152                 89 Corporate expense                232                174                 166 CIE stock-based compensation                49                31                 189 EBITDA attributable to discontinued operations                (7)                —                 —Property EBITDA $                 1,574 $                1,078 $                1,140 Corporate expense                (232)                (174)                 (166) Stock-based compensation expense                45                62                 40 Other                75                50                 56 Adjusted EBITDA (1) $                 1,462 $                1,016 $                1,070 CEOC Adjusted EBITDA (2)                —                1,068                  1,140 Adjusted EBITDA, CZR Enterprise Wide $                 1,462 $                2,084 $                2,210 Notes: —CEOC was consolidated during the entire 2014 reporting period.—Eliminations & other adjustments in 2015 includes adjustment of $34M for 15 days of CEOC financials included in CEC. -Excludes CIE’s SMG business (1) Excludes Baluma S.A’s Adjusted EBITDA (2) Includes eliminations and other adjustments Source: Company Reconciliations Page 6 of 13


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5 Year Projections Full Year ($ in millions) Projected Net Revenue 2017 2018 2019 2020 2021 New CEOC $    4,627 $    4,752 $    4,858 $    4,974 $    5,087 CERP 2,248 2,339 2,419 2,497 2,578 CGP 1,683 1,783 1,852 1,908 1,960 Other (1) (168) (168) (168) (168) (168) CZR Enterprise Wide 8,390 8,706 8,961 9,211 9,457 Notes: (1) Other reflects CEC and its various non-operating subsidiaries and excludes CERP, CES and CGP.—Source: S4 filed March 13, 2017 Projected Adjusted EBTIDAR 2017 2018 2019 2020 2021 New CEOC $    1,129 $    1,186 $    1,228 $    1,269 $    1,308 CERP 689 734 780 823 868 CGP 400 460 497 524 549 Other (1) (13) (13) (13) (13) (13) CZR Enterprise Wide 2,205 2,367 2,492 2,603 2,712 Notes: (1) Other reflects CEC and its various non-operating subsidiaries and excludes CERP, CES and CGP.—Source: S4 filed March 13, 2017 Projected Capital Expenditures 2017 2018 2019 2020 2021 New CEOC $                225 $                225 $                225 $                225 $                225 CERP 240 156 169 173 126 CGP 205 160 72 74 76 CZR Enterprise Wide 670 541 466 472 427—Source: S4 filed March 13, 2017 Page 7 of 13


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Pre-Tax Free Cash Flow Projections ($ in millions) As of March 31, 2017 CZR Enterprise Wide 2018 2019 2020 2021 Net Revenue $                8,706 $                8,961 $                9,211 $                9,457 Adjusted EBITDAR 2,367 2,492 2,603 2,712 PropCo Rent (641) (644) (648) (651) Capex (541) (466) (472) (427) Interest Expense (628) (638) (642) (644) Non-Operating (50) (50) (50) (50) Pre- Tax Free Cash Flow $                507 $                694 $                791 $                940 Assumptions:— The projections assume organic top line growth of 2.0%—3.0% across the portfolio, 1.75% per annum                fixed cost increases, and renovation of hotel rooms at various Las Vegas properties.—Although acquisitions, divestitures, and development prospects are regularly evaluated, the projections    do not include any costs or contributions from these inorganic opportunities due to their speculative nature. —Projections include repricing of CGPH and CERP loans. All other debt assumed to remain at current terms. Source: 8k of Analyst Day Decks filed May 18, 2017 Page 8 of 13


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New CEC Consolidated Debt As of May 10, 2017 Pro Forma for Merger and Restructuring ($ in millions) Amount Interest Rate Maturity New CEC Convertible Notes $                1,119 5.00% 2024 Total New CEC Debt $                1,119    New CEOC Revolving Credit Facility $                 —2022 Term Loan $                1,235 L + 2.50% 2024 Senior Secured Notes (1) $                330 9.25% 2020 Other Debt $                45 various 2037 Total New CEOC Debt $                1,610    CERP Revolving Credit Facility $                 —variable 2018 Term Loan (2) $                2,419 L + 3.50% 2020 First Lien Bonds $                1,000 8.00% 2020 Second Lien Bonds $                1,150 11.00% 2021 Other Debt $                 1 various to 2017 Total CERP Debt $                4,570    CGP CGPH Revolving Credit Facility $                 —variable 2019 CGPH Term Loan (2) (3) $                1,318 L + 3.00% 2021 CGPH Second Lien Bonds (3) $                675 9.38% 2022 Baltimore Credit Facility (4) (5) $                296 L + 7.00% 2020 Other Debt $                39 various to 2037 Total CGP Debt $                2,328    Total Consolidated Debt (6) $                9,627 Notes: (1) Notes relating to Harrah’s Philadelphia Casino and Racetrack, a casino racetrack property owned by Chester Downs & Marina LLC, an indirect subsidiary of CEOC. (2) Libor Floor of 1.00% (3) Credit facility and notes relating to CGPH, an indirect wholly owned subsidiary of CGP that serves as a holding company for various properties. April 25, 2017: CZR announced the repricing of the CGPH Term Loan, which absorbed the credit facility known as “The Cromwell,” which operate a boutique “lifestyle” hotel and casino in Las Vegas. (4) Credit facility relating to the Horseshoe Baltimore Casino. Horseshoe Baltimore is a joint venture for which certain indirect subsidiaries of CGP hold an approximate 40.9% interest. (5) Libor Floor of 1.25% (6) Excludes the finance obligations of approximately $5.03 billion primarily related to the real estate assets that will be transferred to PropCo and leased back to New CEOC. Source: S4 filed March 13, 2017; CZR Public Filings; CZR 10Q filed May 2, 2017 Page 9 of 13


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Cash Assumption Bridge ($ in millions) S-4 Pro Forma 12/31/16 Cash & Cash Equivalents $    1,357    Projected Cash Flow 8 Months of 2017 EBITDA                1,470 D&O Insurance Proceeds                126 NRF Settlement                (45) Non-Operating / Other¹                (50) 8 Months of 2017 Debt Repayment                (64) 8 Months of 2017 Cash Interest                (332) CEC + CEOC Cash Restructuring Expenses                (350) 8 Months of 2017 Capex                (447) Punta Sale Proceeds                180 8/31/17 Projected Cash & Cash Equivalents                1,845 Release of CIE Indemnity Escrow Cash                196 Pro Forma 8/31/17 Projected Cash & Cash Equivalents                2,041 Minimum Operating Cash 450-500 ¹Non-operating / Other includes one time cash flows and working capital seasonality Source: S4 filed March 13, 2017; CZR Public Filings; Lender Presentations; Management Estimates Page 10 of 13


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New CZR Equity Distribution As of March 31, 2017 CZR Shares Outstanding:                148,716,429 CACQ Shares Outstanding:                138,844,134 CZR Sponsor Shares:                 87,605,299 Merger Exchange Ratio:                1.625 CZR non-Sponsor Shares:                 61,111,130 CACQ Unvested & Unexercised Shares:                590,049 CZR Unvested & Unexercised Shares:                9,035,397 At Emergence Post-Conversion Shareholders Current (Post-Merger/Pre-Conversion) ($1.1bn convertible note) % % % w/ Unvested & w/o Unvested & w/o Unvested & Unexercised Unexercised Unexercised Shares % Shares Shares Shares Shares Shares CZR Shares Outstanding (non-Sponsors)                 61,111,130 38.7%                61,111,130 8.6% 8.7%                61,111,130 7.1% CZR Shares Outstanding (Sponsor)                 87,605,299 55.5%                 —                —                —                 —0.0% CZR Shares to Current CACQ Shareholders                —                —                 225,621,718 31.6% 32.1%                225,621,718 26.3% CZR Unvested & Unexercised Shares                9,035,397 5.7%                 9,035,397 1.3%                —                —                 -CACQ Unvested & Unexercised Shares                —                —                 958,830 0.1%                —                —                 -CEOC Creditors                —                —                 416,559,162 58.4% 59.2%                416,559,162 48.6% CZR Shares Underlying Convert                —                —                  —                —                —                 153,336,504 17.9% Total                157,751,826 100.0%                713,286,236 100.0% 100.0%                856,628,514 100.0% Convert Face Value: $                1,119,060,000 Implied Convert Strike Price: $                7. 30 Notes: Pre-Conversion and Fully Diluted scenarios assume a $1B buyback of CZR Common Equity at emergence. Share information as of 3/31/2017.Not previously disclosed in prior filings. Source: 8k
filed September 27, 2016; 8k filed February 21, 2017; CZR and CACQ 10Qs filed May 2, 2017; CZR Management Page 11 of 13


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Current Implied Trading Value—CZR Stock ($ in millions) 2017 2018 CZR Share Price (5/12/17) $11.20 $11.20 CZR shares of Non-Sponsor Holders (in millions) 61.1 61.1 Implied Market Capitalization $684 $684 Ownership for CZR Non-Sponsor Holders 8.7% 8.7% Shares Outstanding Equity Value $7,877 $7,877 Plus: Total Debt (1)                9,627                9,627 Less: Net Cash                2,041                2,041 Total Enterprise Value $15,463 $15,463 2017/2018E EBITDA (Pro Forma) 1,565 1,727 TEV/EBITDA Multiple 9.9X 9.0X Plus: Capitalized Rent Expense 5,030 5,030 Total Enterprise Value (+Capitalized Leases) $20,493 $20,493 2017/2018E EBITDAR (Pro Forma) 2,205 2,367 TEV/EBITDAR Multiple 9.3X 8.7X Notes: (1) Based on the pre-convert/post buy-back of $1 billion. (2) 2017E & 2018E EBITDA is assuming lease payment for full year 2017 & 2018 of $640M (3) Shares outstanding Equity Value is at Emergerce Source: S4 filed March 13, 2017; Management Estimates Page 12 of 13


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Key Performance Indicators Cash ADR/Occupany Mix Cash ADR Occupancy Region 2014 2015 2016 2014 2015 2016 Las Vegas $                118 $                130 $                140 91% 93% 94% Atlantic Coast                109                 135                 146 84% 84% 86% Cash ADR Occupancy 2014 2015 2016 2014 2015 2016 CZR Enterprise Wide $                113 $                127 $                137 88% 90% 91% Source: CZR Earnings Presentations Enterprise Wide Marketing Expense & Labor Revenue ($ in millions) 2014 2015 2016 Net Revenue $ 7,967 $ 8,328 $ 8,418 Marketing Expenses $ 2,252 $ 2,071 $ 2,036 Expense as a % of NR 28.3% 24.9% 24.2% Labor Productive FTEs                45,693                42,857                 41,339 Net Revenue/FTE $ 17,436 $ 19,432 $ 20,363 Source: CZR Earnings Presentations; CZR Management Page 13 of 13    013