LAS VEGAS, Aug. 2, 2016 — Caesars Entertainment Corporation (NASDAQ: CZR) today reported second quarter 2016 results as summarized in the discussion below, which highlights certain GAAP and non-GAAP financial measures on a consolidated basis.
Highlights
- Net revenues for Continuing CEC increased 7.8% year-over-year to $1.2 billion primarily attributable to strength in Caesars Interactive Entertainment's ("CIE") social and mobile games business and growth in hospitality revenues in Las Vegas.
- Net loss for Continuing CEC was $2.0 billion compared to net income of $50 million in the second quarter of 2015 and was largely driven by an accrual of $2.0 billion related to the restructuring of CEOC and a year-over-year increase in stock-based compensation at CIE due to fair value estimates.
- Adjusted EBITDA for Continuing CEC grew 11.8% year-over-year to $388 million.
- Net revenues for CIE increased 33.9% year-over-year to $249 million driven by greater monetization of monthly unique paying users in the social and mobile games business. Net income declined $43 million to a net loss of $4 million mainly due to an expense of $66 million for the quarter related to the fair value adjustment of CIE's stock-based compensation awards. Adjusted EBITDA grew 42.9% to $100 million.
- Cash ADR in Las Vegas was up 8.2% due to increased resort fees, effective hotel yield management and improved pricing power due to room product enhancements.
"We delivered solid operating performance in the second quarter, including an 8% increase in net revenue and strong income and margin results, excluding the impact of bankruptcy-related charges and CIE stock compensation expense," said Mark Frissora, President and Chief Executive Officer of Caesars Entertainment. "Our second-quarter performance was driven by strong results in Las Vegas lodging, exemplified by a 6.5% increase in RevPAR, as well as entertainment and continued strength in the social and mobile games business."
"Additionally, our productivity efforts have improved our revenue per employee and marketing efficiency, as we drive further margin improvement and cash flow while maintaining high levels of employee and customer satisfaction," concluded Frissora.
Summary Financial Data
The results of CEOC and its subsidiaries are no longer consolidated with Caesars subsequent to CEOC and certain of its United States subsidiaries (the "Debtors") voluntarily filing for reorganization under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") on January 15, 2015.
In the table below, "Continuing CEC" represents CERP, CGP Casinos, CIE, other non-operating subsidiaries and associated parent company and elimination adjustments that represent the Caesars consolidated reporting entity as of June 30, 2016, and for subsequent periods.
Supplemental materials have been posted on the Caesars Entertainment Investor Relations website at http://investor.caesars.com/financials.cfm.
Three Months Ended June 30,
Change %
(Dollars in millions, except per share data)
2016
2015
Casino revenues
$
545
$
543
0.4%
Net revenues
1,230
1,141
7.8%
Income from operations
164
186
(11.8)%
Deconsolidation and restructuring of CEOC and other
(2,026)
7
*
Income/(loss) from continuing operations, net of income taxes
(2,043)
50
*
Net income/(loss) attributable to Caesars
(2,077)
15
*
Basics earnings/(loss) per share
(14.25)
0.10
*
Diluted earnings/(loss) per share
(14.25)
0.10
*
Property EBITDA (1)
335
351
(4.6)%
Adjusted EBITDA (1)
388
347
11.8%
Six Months Ended June 30,
Continuing
CEC
Change %
2016
2015
(Dollars in millions, except per share data)
Continuing
CEC (2)
Continuing
CEC (2)
CEOC (3)
Reported
CEC
Casino revenues
$
1,075
$
1,085
$
118
$
1,203
(0.9)%
Net revenues
2,398
2,237
158
2,395
7.2%
Income from operations
318
321
9
330
(0.9)%
Deconsolidation and restructuring of CEOC and other
(2,263)
7,096
—
7,096
*
Income/(loss) from continuing operations, net of income taxes
(2,317)
6,932
(78)
6,854
*
Loss from discontinued operations, net of income taxes
—
—
(7)
(7)
—%
Net income/(loss) attributable to Caesars
(2,385)
6,872
(85)
6,787
*
Basics earnings/(loss) per share
(16.39)
—
—
46.89
—
Diluted earnings/(loss) per share
(16.39)
—
—
46.27
—
Property EBITDA (1)
671
660
31
691
1.7%
Adjusted EBITDA (1)
737
648
34
682
13.7%
___________________
See "Footnotes to Tables" following Balance Sheet and Other Items later in this release.
Second Quarter 2016 Financial Results
We view each casino property and CIE as operating segments and currently aggregate all such casino properties and CIE into three reportable segments based on management's view of these properties which aligns with their own ownership and underlying credit structures: CERP, Caesars Growth Partners Casino Properties and Developments ("CGP Casinos"), and CIE. CGP Casinos is comprised of all subsidiaries of CGP excluding CIE. CIE is comprised of the subsidiaries that operate CGP's social and mobile games operations, regulated online real money gaming, and the World Series of Poker ("WSOP"). CEOC was a reportable segment until its deconsolidation effective January 15, 2015.
Segment results in this release are presented consistent with the way Caesars management assesses these results and allocates resources, which is a consolidated view that adjusts for the impact of certain transactions between reportable segments within Caesars, as described below. Accordingly, the results of certain reportable segments presented in this filing differ from the financial statement information presented in their stand-alone filings. "Other" includes parent, consolidating, and other adjustments to reconcile to consolidated Caesars results. All comparisons are to the same period of the previous year.
Net Revenues
Three Months Ended June 30,
Percent Favorable/ (Unfavorable)
Six Months Ended June 30,
Percent Favorable/ (Unfavorable)
(Dollars in millions)
2016
2015
2016
2015
CERP
$
562
$
566
(0.7)%
$
1,090
$
1,095
(0.5)%
CGP Casinos (4)
423
390
8.5%
839
780
7.7%
CIE (5)
249
186
33.9%
477
363
31.7%
Other (6)
(4)
(1)
*
(8)
(1)
*
Total Continuing CEC
1,230
1,141
7.8%
2,398
2,237
7.2%
CEOC (3)
—
—
—%
—
164
*
Other (6)
—
—
—%
—
(6)
*
Total CEOC
—
—
—%
—
158
*
Total Reported CEC
$
1,230
$
1,141
7.8
%
$
2,398
$
2,395
*
Income/(Loss) from Operations
Three Months Ended June 30,
Percent Favorable/ (Unfavorable)
Six Months Ended June 30,
Percent Favorable/ (Unfavorable)
(Dollars in millions)
2016
2015
2016
2015
CERP
$
111
$
126
(11.9)%
$
189
$
233
(18.9)%
CGP Casinos (4)
67
44
52.3%
130
208
(37.5)%
CIE (5)
20
54
(63.0)%
74
95
(22.1)%
Other (6)
(34)
(38)
10.5%
(75)
(215)
65.1%
Total Continuing CEC
164
186
(11.8)%
318
321
(0.9)%
CEOC (3)
—
—
—
—
9
*
Other (6)
—
—
—
—
—
—
Total CEOC
—
—
—
—
9
*
Total Reported CEC
$
164
$
186
(11.8)%
$
318
$
330
*
Net Income/(Loss)
Three Months Ended June 30,
Percent Favorable/ (Unfavorable)
Six Months Ended June 30,
Percent Favorable/ (Unfavorable)
(Dollars in millions)
2016
2015
2016
2015
CERP
$
8
$
17
(52.9)%
$
(8)
$
20
*
CGP Casinos (4)
19
(2)
*
32
114
(71.9)%
CIE (5)
(4)
39
*
17
65
(73.8)%
Other (6)
(2,066)
(4)
*
(2,358)
6,733
*
Total Continuing CEC
(2,043)
50
*
(2,317)
6,932
*
CEOC (3)
—
—
—%
—
(85)
*
Other (6)
—
—
—%
—
—
*
Total CEOC
—
—
—%
—
(85)
*
Total Reported CEC
$
(2,043)
$
50
*
$
(2,317)
$
6,847
*
To view full financial release and corresponding tables please click the PDF icon or visit: http://investor.caesars.com/releasedetail.cfm?ReleaseID=982449
