Caesars Entertainment Inc. – the new name for the combined Caesars Entertainment Corporation and Eldorado Resorts business – has reported a $1.17bn net loss for the first half of the year.
Eldorado Resorts completed its acquisition of the Caesars Entertainment Corporation business shortly after the end of the reporting period in a deal worth $17.3bn. The combined business now has a portfolio of more than 55 casino properties around the world.
According to a filing with the US Securities and Exchange Commission (SEC), combined revenue for the two businesses in the six months to June 30 amounted to $2.79bn, down 50.3% from $5.61bn in the same period last year, due to the impact of closures enforced by the novel coronavirus (Covid-19) pandemic.
Legacy Eldorado revenue amounted to $599.5m, which was 52.9% lower than $1.27bn in the same period last year, while legacy Caesars revenue was down 43.8% from $1.66bn to $931m.
Like all other casino operators in the US, Caesars and Eldorado were forced to shut their locations from mid-March, in line with state orders to combat the spread of Covid-19 and did not start to reopen its facilities until late May and early June.
As such, combined revenue from operations in Las Vegas, Nevada, was down 52.4% year-on-year to $931m, while regional revenue fell 50.5% from $3.34bn to $1.66bn. However, other revenue was up slightly from $11m to $14m during the first half.
Though combined expense figures were not published, the SEC filing did show that the joint operation posted a net loss of $1.17bn for the first half, compared to a loss of $476m in the previous year, based on the two legacy companies’ combined results from 2019.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for the combined business was also down 82.7% year-on-year from $1.54bn to $266m.
Caesars’s chief executive Tony Reeg said that the Caesars-Eldorado combination will help the business to recover from the impact of the Covid-19 closures in the second half and beyond.
“Now that the merger has closed, our operating teams are fully engaged with integrating the two companies and executing on the synergy plans,” Reeg said. “Our number one priority remains the safety and security of our team members and guests.
“Our Covid-19 operating plans for reopened properties are designed to ensure a safe and exciting environment for our guests. We remain optimistic regarding an eventual recovery of travel and tourism in the US and especially Las Vegas.”
Though full results for the legacy Caesars business were not published, figures for the legacy Eldorado operations were made public.
For the first half, casino and pari-mutuel commissions revenue fell 52.5% to $928m in the first half, while food and beverage revenue also dropped 58.3% to $63m and hotel revenue 60.0% to $57m. Other revenue was also down by 25.5% to $38m.
Looking at geographical performance and casinos in western US were the most successful in the half, posting $135m in revenue, down 44.9% on last year.
Revenue from eastern US casinos dropped 51.4% to £129m, while southern US casino revenue also fell 48.8% year-on-year to $128m. Legacy Eldorado US revenue was down 50.9% to $119.6m, while Midwest casinos revenue fell 43.0% to $84m. However, corporate and other revenue edged up 11.2% to $4m.
In terms of spending, legacy Eldorado was able to reduce its operating costs by 26.5% from $1.06bn to $779m. Casino and pari-mutuel commissions expenses were the main outgoing, but these expenses more than halved to $203m.
Food and beverage costs were slashed by 48.7% to $62m, while hotel spend was down 42.4% to $28m. Elsewhere, marketing spend was cut by 53.3% to $30m, general and administrative costs lowered from $237m to $157m, and corporate costs by 22.0% to $30m.
Though legacy Eldorado also saw expenses related to depreciation and amortisation fall 13.0% to $99m, it was hit by a jump in impairment charges, which rocketed from $958,000 to $160m.
When taking into account certain other costs, including $22m in transaction expenses, this left legacy Eldorado with an operating loss of $202m for the first half, compared to a profit of $226m at the same point last year.
Other expenses, such as $135m in interest costs and $10m in unrealised loss on investments and marketable securities, amounted to $145m, which pushed legacy Eldorado’s loss before tax to $347m, a sharp contrast to the $78m in profit at the end of H1 2019
There was some relief with $70m in tax benefits, but the operator still posted a net loss after tax of $276m for the period, compared to a profit of $57m last year.
Looking more closely at the second quarter – the period where the combined business was most impacted by the closures – and total net revenue for the three months to June 30 came in at $484m, down 83.1% from last year.
Net loss for the combined business in Q2 stood at $1.17bn, compared to $296m in the same period last year, while adjusted EBITDA for the business was down from $809m to a loss of $136m.
Breaking down these results to legacy Caesars and Eldorado, and the legacy Caesars business saw revenue plummet 83.9% to $357m. Net loss widened from $315m to $1.08bn, while adjusted EBTIDA fell from $631m to a loss of $125m.
In terms of legacy Eldorado, revenue in Q2 came in at $126.5m, down 78.2% last year. Operating costs were down 63.7% to $190.6m, but after certain other expenses were taken into account, legacy Eldorado posted an operating loss of $78.3m, compared to a profit of $102.6m last year.
After taking into account a further $55.3m in other costs, this left legacy Eldorado with a loss before tax of $133.7m. Though the operator received $33.7m in tax benefits, this did not stop it posting a net loss after tax of $100.0m, a stark contrast to the $18.9m in profit it experienced in the same period last year.
“Our second quarter operating trends were negatively impacted as the majority of our properties remained closed during April and May 2020,” Reeg said. “Our properties began to reopen in late May and early June.
“All of the combined new Caesars Entertainment, Inc. regional properties are now reopened and we are encouraged by operating trends.”