Pressure mounts on Caesars despite solid financial results

The release of unexpectedly positive financial results on February 21 did nothing to calm speculation around the future of Caesars Entertainment, as the company’s single-largest shareholder, Canyon Partners, joined investor Carl Icahn and others in calling for the company to be sold.

“Canyon’s current view is that shareholder value would be best served and enhanced by an open sale process that will be presented to shareholders for a vote thereon,” the company said in a statement on the day following the publication of the Caesars financial results. Canyon owns more than a 10 percent share of Caesars’ stock.

Other investors are also calling on Caesars not to name a successor to outgoing President and CEO Mark Frissora until the future ownership status of the company is sorted out. Frissora is scheduled to leave at the end of April.

However, the financial results issued by Caesars for the final quarter and the full year of 2018 came in above expectations and were generally quite solid. Full-year net revenues were put at $8.39 billion, including the results of some group companies. Full-year net income improved from a loss of $368 million the previous year to a profit of $303 million over the course of 2018.

Frissora commented, “Caesars’ solid performance is due in part to further labor productivity improvements and, in 2018, over $140 million of marketing efficiencies. Our casino properties, including in Las Vegas and Indiana, performed well, partially offset by the impact of new competition in Atlantic City.”

While Caesars is one of the giant IR operators inside the United States, its lack of a Macau operation has been its major handicap vis-a-vis its main competitors from a financial point of view. Neither the financial announcement nor the investor conference call drew any attention to the company’s efforts in Asia, in South Korea or Japan.