Caesars Entertainment Financial Results for the First Quarter of 2016

Caesars Entertainment Corporation, one the largest gaming companies in the world, have released their financial results for the first quarter of 2016.

The highlights of the report included net revenues of $1.2 billion for Continuing CEC, a 6.7% year-over-year increase; the increase was attributed to the growth in Caesars Interactive Entertainment's (CIE) – social and mobile games business and their hospitality offerings. Adjusted Earnings before interest, taxes, depreciation and amortization (EBITDA) for Continuing CEC also grew by 15.9% from last year to $349 million.

Net revenues for CIE increased to $228 million, a 28.8% year-over-year growth; with adjusted EBITDA growing 41.3% to $89 million; this was mainly from organic growth in social and mobile games, resulting from greater monetization of monthly unique paying users.

Lastly, cash average daily rate (ADR) for hotel rooms increase by 9.4%, in Las Vegas; this increase was driven by higher resort fees, improved hotel yield and greater pricing power as a result of the recapitalization of room product.

Mark Frissora, President and CEO of Caesars Entertainment, said, “Enterprise-wide, including CEOC, we delivered all-time record adjusted EBITDA margins in the first quarter of 2016. Adjusted EBITDA margins improved over 200 basis points due to higher hospitality revenue growth and increased average revenue per user in Caesars Interactive Entertainment.  Additionally, we continue to demonstrate improved execution discipline and to deliver quantifiable savings on our efficiency initiatives.”

He also added, “Our focus on driving margin and cash flow improvements while maintaining high levels of customer satisfaction and employee engagement has enhanced our financial performance. As we continue to execute on our cornerstone initiatives, we believe this provides a solid foundation to create long-term value for our stakeholders.”

First Quarter 2016 Financial Results

In their financial reports, Caesars have considered each casino property and CIE as operating segments and have aggregate the data into three reportable segments based ownership and underlying credit structures: Caesars Entertainment Resort Properties (CERP), Caesars Growth Partners, LLC (CGP) and Caesars Interactive Entertainment, Inc. (CIE), which is comprised of the subsidiaries that operate CGP's social and mobile games operations. CEOC is no longer a reportable segment, due to their deconsolidation on January 15, 2015.

CERP

Caesars Entertainment Resort Properties (CERP), which owns and operates six casinos in the USA and The LINQ promenade reported net revenues for the first quarter of 2016 at $528 million, which showed no change in number from the year before. Casino revenues were reported at $272 million, showin a 3.9% year-over-year decrease, attributed mainly by lower slot volumes that were offset by the growth in hotel revenues, which rose 5.4% to $136 million in the quarter and other revenue increases, such as food and beverage revenues which were up by 1.5% to $134 million.

Operations income was reported at $78 million and adjusted EBITDA decreased 2.5% to $158 million; this was mainly due to lower gaming revenues and higher labour costs, which overshadowed all benefits from marketing efficiencies and improved hotel customer service.

CGP Casinos

Caesars Growth Partners, LLC (CGP) Casinos, which also owns and operates six casinos in the USA reported net revenues of $416 million, for the first quarter of 2016, a 6.7% increase; this can primarily be attributed to the strong hotel revenues from The LINQ Hotel & Casino. Casino revenues were reported to be $258 million, with almost no change compared to the prior year, mainly due to lower gaming volumes at Harrah's New Orleans, which was affected by the citywide smoking ban. Room revenues increased 25.7% to $93 million, mainly due to the addition of extra rooms at The LINQ Hotel. Food and beverage revenues were also up by 5.9% to $72 million.

Operations income was reported at $63 million, with an adjusted EBITDA of $105 million, a 23.5% increase, which was credited to the increases in net revenue and efficiency initiatives.

CIE

Caesars Interactive Entertainment, Inc. (CIE), which owns and operates an online games business providing social and mobile games, regulated online real money gaming and the WSOP tournaments and brand reported net revenues of $228 million in the first quarter, a 28.8% year-over-year increase. Operations income was also reported, at $54 million and adjusted EBITDA at $89 million, which reflected a massive 41.3% increase; this was achieved with continued focus on conversion and monetization of users to increase revenue per user.

About Caesars

Caesars Entertainment is the world's most diversified casino-entertainment provider and the most geographically diverse U.S. casino-entertainment company. Since their beginning in 1937, they have grown to build a portfolio which includes 49 casinos in 14 states and five countries; with CERP and CGP operating a total of 12 casinos. They mainly operate under the brand names of Caesars, Harrah's and Horseshoe; the CEOC portfolio also includes the Caesars Entertainment UK family of casinos.

The Caesars system of properties is focused on building loyalty and value with its guests through a unique combination of great service, excellent products, operational excellence and leadership in technology. The Company is committed to system-wide environmental sustainability and energy conservation.

 Forward Looking Information

The release also included “forward-looking statements,” which listed “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations.” However, the Investors have been cautioned that forward-looking statements are not guarantees of future performances and involve risks and uncertainties that cannot be predicted or quantified ahead of time and consequently, the actual performance could differ from those expressed or implied.

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