The strong performance of its Caesars Entertainments’ Las Vegas properties helped to boost total revenue for the second quarter of 2019, in-line with analyst estimates.
Said revenue rose 4.9 percent year-on-year, reaching $2.22 billion, with management attributing the results to contribution from Centaur and strength in its Las Vegas hotel and food beverage businesses.
“Our Las Vegas performance was the result of strong group and leisure demand, which produced an all-time quarterly record for hotel cash revenue and occupancy for the second consecutive quarter,” said Caesars CEO Tony Rodio.
Despite the revenue growth, the company swung into a net loss of $315 million for the quarter, down from a profit of $29 million in the prior-year period.
Caesars said this was due mainly to a $323 million year-over-year change in the fair value of the derivative liability related to the conversion option of CEC’s 5.00 percent convertible senior notes maturing in 2024.
The company also noted competitive pressures in Atlantic City and other parts of our regional portfolio as well as unfavorable hold predominately at Caesars Palace, which put a dampening on revenue in the quarter.
In June this year, Caesars and Eldorado Resorts announced they had reached a $17.3 billion merger agreement in a deal which will create the largest US IR operator.
Under the deal, Eldorado’s management team will take control of the new company, but it will continue to operate under the Caesars name. Eldorado and Caesars’ shareholders will hold approximately 51 percent and 49 percent, respectively, of the combined company’s shares.
Rodio said the company will be focusing on improving the company’s operational and financial profile to ensure a successful merger.
“As we work toward successful completion of the proposed merger with Eldorado Resorts, the management team and I remain focused on improving the company’s operations and financial profile through incremental revenue opportunities and operating efficiencies. I’m confident that the proposed transaction will create an industry-leading platform poised to succeed in our dynamic industry.”
Analysts from Bernstein said they expect the transaction to close in spring 2020.