Caesars Entertainment reported growth in net revenues and adjusted EBITDA for the first quarter of 2017 on Tuesday afternoon as it nears the end of the bankruptcy process it embarked on in 2014.
Revenues were up 1.4 percent to $963 million from the prior year quarter, adjusted EBITDA grew 5 percent to $274 million and EBITDA margin increased by 98 basis points to 28.5 percent.
The company incurred a net loss of $524 million for the quarter largely because of a $466 million accrual pertaining to the restructuring of Caesars Entertainment Operating Company. Diluted loss per share was $3.71, which compared to a loss of $2.12 in the first quarter of 2016.
Growth in revenues and EBITDA was driven by a strong showing in Las Vegas, where average daily rates at the company’s newly-renovated hotel rooms rose 10 percent for the quarter from $143 to $159. The improvement was attributed to resort fees, improved hotel yield management and improved pricing.
“Caesars Entertainment delivered another quarter of successful execution, highlighted by strong growth in hotel revenues fueled by a double-digit percentage increase in Las Vegas Cash ADR. These gains reflect the positive impact of our investments in property renovations,” said Mark Frissora, President and Chief Executive Officer of Caesars Entertainment.
“Rising hotel revenues combined with increased operating efficiency drove higher EBITDA and supported our continued margin expansion. The conclusion of CEOC’s restructuring is on track for the second half of the third quarter and represents an important milestone that will allow us to expand the range of growth opportunities available to us,” he added.
Total hotel room revenue for the quarter grew from $229 million to $243 million. Caesars is currently undergoing renovations at Caesars Palace and Planet Hollywood and, by the end of 2017, will have upgraded more than half of its Las Vegas portfolio.
“Our Las Vegas investments continue to be an excellent use of capital representing low risk and high return opportunities,” said Frissora.
A strengthening southern Nevada tourism industry should put continued wind in the company’s sails moving ahead.
“We remain bullish on Las Vegas and Caesars’ ability to grow Las Vegas EBITDAR (55 percent of enterprise) by 8-10 percent after including renovation benefits, parking fees and general improvements,” wrote Chad Beynon of Macquarie in a note.
The strong performance at Vegas hotels was offset in part lower casino revenues – down to $532 million from $538 million – across the enterprise, which management attributed to unfavorable hold percentage and lower gaming volume. Food and beverage revenues were also down slightly from $201 million to $196 million.
The company’s regional properties posted less than optimal results, putting a downward pressure on total earnings for the quarter.
“Regional markets as a whole underperformed Las Vegas, reflecting a generally weaker regional economic environment. The first quarter had one fewer day and one less weekend than the year ago quarter, negatively impacting the year-over-year comparison,” said Frissora.
At this time, Caesars Entertainment Corporation remains a holding company with no employees, independent operations or debt in issuance. As of the end of the first quarter, its only assets were $115 million in cash and cash equivalents and ownership stakes in Caesars Entertainment and Operating Corporation, Caesars Entertainment Resort Properties and Caesars Growth Partners.
Across the entire Caesars enterprise, net revenues were down 1 percent to $2 billion for the quarter while adjusted EBITDA was up 1 percent to $551 million. EBITDA margin for the enterprise was 26.9 percent, marking a substantial jump from 2014 when it registered 18.4 percent.
Caesars operates 47 casinos across 13 U.S. states and five countries under the Caesars, Harrah’s and Horseshoe brand names.
