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Caesars Entertainment (CZR)

Participants
Joyce Arpin Senior Vice President, Finance and Treasure
Tony Rodio Chief Executive Officer
Eric Hession Chief Financial Officer
Carlo Santarelli Deutsche Bank
Shaun Kelly Bank of America
Dan Politzer JP Morgan
Harry Curtis Instinet
David Katz Jefferies
Barry Jonas SunTrust
Call transcript
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Operator

Hello and welcome to today’s webcast. My name is Christina, and I will be your event specialist today. All lines have been placed on mute to prevent any background noise.

We will be taking questions via the phone lines. [Operator Instructions]

pleasure Vice today’s Treasure. President my Joyce over now Senior Arpin, of is to program turn to It Finance and floor is The yours.

Joyce Arpin

Corporation afternoon. the XXXX Good welcome conference fourth Entertainment earnings you. full-year quarter Thank call. and And Caesars to

Tony from Eric Officer; Financial are Chief Chief Executive Joining me Entertainment Rodio, today Officer. Caesars and Hession,

prior the of earnings call that presentation of Form in the this our our available please file are at to investor and Also the Form copy in and X-K furnished of A section we slides press release, relations website caesars.com. XX-K. will to a this a replay earnings their call, of the not copy SEC release

statements underway, to could the would like under results get Federal today’s Safe remind Harbor we forward-looking provisions conference from Law. materially I in results we’re contain actual that those The company’s statements. of making that Before anticipated forward-looking the Securities differ you call will

XX refer we may and certain addition, In slides Safe non-GAAP GAAP Harbor which tables and measures forward-looking XX definitions reconciling slide discuss that figures. non-GAAP disclaimers of include and measures. Please which includes XX, statements, to to through non-GAAP XX

to turn will call I over the now Tony.

Tony Rodio

and Thanks, joining. for thanks Joyce, everyone

developments results we’re discuss believe turning really to is recent We detail. I’ll have what the we share Eric good excited story call greater to our it a overview before a full-year of and and performance and quick to over provide everybody. with in fourth quarter

with Caesars and Eldorado of First, companies. our merger Eldorado. November both on from approved an On update the XXth, merger the stockholders two

approval months. are in jurisdictions coming making from approvals regulatory from Additionally, we received of number the and progress jurisdictions obtaining other toward a

expect the the first continue integration in on XXXX. planning progress the We to make close and half of transaction to

operating with and in across Vegas X.X% to billion, Indiana the strength starting the results, opening fourth strong regions, driven revenues net sportsbooks. primarily $X.X Iowa of year-over-year all delivered Las and performance, the growth up quarter, totaled new year of by Caesars another Now in due

primarily in a customer within demand and consumer revenue, saw segment, in mix Hotel higher an prior increase cash our Solid versus the year as Las we Vegas occupancy. in resulted higher

$XXX Adjusted and up payroll, driven and in expense services professional growth by corporate expenses. reductions revenue legal was EBITDA year-over-year, million, X.X%

totaled sale of margins X% year-over-year million, Rio, up the Excluding XX%. adjusted expanded EBITDA Adjusted $XXX basis EBITDA year-over-year. to points XX

the a adjusted $X.X For driven billion, X.X% were Adjusted by X.X%. $X.XX enterprise EBITDA hold net Hold performance Centaur totaled over results. favorite revenues billion, $X.X and and year. the year-over-year, billion, was full-year, full-year wide EBITDA strong prior in Las up up of X.X% up Vegas

Our domestic XX-basis-point marketing revenue costs gross were costs represented XX.X% gross a revenue improvement reflecting XX-basis-point labor while improvement. of XX% of a year-over-year, reflecting

controls, a of the cost result of approximately expenses removed As XXXX. on we’ve annualized start our since of million $XXX focus

close that deliver we’re pleased very that We’re results these year able XXXX. strong the to

will Harrah’s We January, also million dreamscape have and sale Las VICI XX% the split Investments the announced and net Caesars December of closed announced In Rio cash. we which CAI previously XX% received to Vegas of companies be million the in sale $XXX Reno $XX in proceeds, for of to in the

three new games In made projects. addition tracking by gaming have paid have Centaur revenue at results good Indiana’s well from XX% few Since we’ve to based gross as our we’re and land off property. these capital over to-date, increased properties the installing of investments last Southern opening seeing ahead years various expectations. table both All

March, exceeded expectations in about excited which Caesars in opening of revenue Vegas and here also to-date. Las bookings has the We’re forum

$XXX For room million in its operation Forum full-year XXX,XXX first booked of already Caesars and over revenue. has night

in room million through $XXX representing $X.X revenue nights far million than more so XXXX. book also We

now have made We quarter across and states. the we’ve year. branded pleased across are seasons progress over the also business XX with We betting sportsbooks sports continue to the grow seven our past

As in in Mississippi. a buying Indiana, visitation, increase and food we and beverage seen particularly engraving of result Iowa, these have an installations,

have to first approved We value of to anticipate We launch this licenses Indiana course our time. being Pennsylvania, plan company do betting the a reiterate and footprint to to subject the half of of the this over year mobile our in over for regulatory markets as sports and expanding Iowa, sports approval. driver view key betting and more

in seeing see XXXX. As acceleration demand. we of we that we customer we non-gaming as XXXX, first generating exceeding performance is solid gaming January, quarter X% the very expectations, our the strong volume performing to continue strong an and with performance Las are looked at Vegas up in of saw

our In to addition due sports investments addition mentioned of and regional properties focus well, and I on earlier, controls. continue the to cost betting capital perform

the will turn I over Eric. to Now call

Eric Hession

Thank you, Centaur consolidated our unless stated. that Tony. Please results otherwise note include

we we Tony the million, business again $XXX saw strength and customer revenue totaled year-over-year As up to mentioned, quarter. generated Net Vegas as Las across all results demand. strong favorable in fourth due verticals, X.X%

$X nights prior due to higher of to customers the in increased year Despite points year-over-year, hotel Vegas increased primarily the Las X.X% increased the XX,XXX X.X% or hotel XX.X% and RevPAR occupancy revenue of while available Gaming $XXX.X. basis mix million XXX year. revenue the compared versus this cash addition more year. to X.X% prior room to increased

demand double-digit more our group segment. year-over-year from customer our and experienced growth segment FIT We within

we remain a and continue Vegas environment consumer to healthy Las today, strong. As in demand of hotel expect see to

Caesars the levels Kitchen primarily banquet performed and Food enhancements generating almost X.X% higher year-over-year, new our revenues largest occupancy Hell’s since well in opening, an revenue the to or offerings. mix. increased extremely as increase has revenue and $XX well million of in XXXX alone. Cocktail higher in as Kitchen, driven hotel by due saw to Beverage the due million Palace $X Hell’s and Garden Group Vanderpump Hotel increase

the year-over-year, sales newly at Flamingo. revenue also due entertainment shows prices ticket Caesars to higher mostly at Palace, Other revenues renovated $XX for increase at an grew and million from and in the Colosseum

a X.X% to EBITDA rent Rio the Las an by up expense operating basis. offset to year-over-year, million. due in totaled hold X.X% $X.X revenues was or The expense performance up million, Vegas increase equal related -- the in $XXX to adjusted X.X% increase on sorry,

to of nature to operating obligation. interest an lease our instead financing as the will as payments expense Due expense recognized for be agreement an rent short-term of manage Rio the

the As the rent annual or approximately a Rio is quarter reminder, forward. for per going $XX million million $XX.XX

year-over-year. Rio, $XXX the Las Excluding Vegas EBITDA million, X.X% up totaled

gaming by Turning to Iowa due which Indiana markets. the Tony driven to other generated across billion, in sportsbooks $X our and drove higher all visitation, translated turn solid as up performance year-over-year U.S. that mentioned, new segments, revenues totaled higher net X.X% Notably, strength volumes. primarily into

land million, in December also the excellent cost due whole new Other a revenue we up property controls. X.X% on strong increased opened due and and increased in increase saw asset. to an Indiana X.X% EBITDA normalized Our basis to $XXX or based southern to revenues gaming for demand U.S. to

basis expenses. properties $X.X with to verticals year Atlantic City The higher improved EBITDA points revenues over margins XX%. million improved across prior the improved EBITDA XXX coupled operating by due to

segments all properties our managed other includes CIE corporate our expenses, unallocated The and operations. international

other segments decreases due down revenues to all primarily properties. that million X.X% international volumes or year-over-year, $X Our million, in $XXX are net totaled

a international a to offset All in due of $XX $XX expenses loss $XX a that investments, all end million corporate. properties, labor a primarily in in million of and our and CIE other $XX $X high sports which million loss $X EBITDA were million by a betting performance increase to partially our increase million increase and consulting at increased reduction partnership million

is indicators the our way. remains ahead, Las with growth improving in and positive Vegas on the based Looking environment today the the results regional outlook demand today. of believe seen markets as the We non-gaming and leading demand continued in overall we’ve

continue in Center, March. is a by the led for open strong We Vegas to Las XXXX anticipate Forum scheduled Caesars Convention which in

the a expect the boost and for Las of the continuing March, Raiders forward be the bring draft Raiders April, the in the NFL, Caesars in of meaningful as to look We to provide also they strong in with the visitation forum, addition the within our Vegas. to We the home the partnership activate hosting to in games Draft front NFL fall which Conference will CON/AGG and city.

From a ended with of we perspective, cash. liquidity $X.X year approximately billion the unrestricted

total of revolver end capacity December, was of As our the $X.X billion.

quarter, $XXX and consisting sportsbooks. of maintenance forum for the million fourth development $XX we Caesars million CapEx and spend spent primarily the in and CapEx During

Before we merger filings purpose note questions, look the Well, performance. any quarter SEC. to of fourth the the Please with our more to discuss please proposed questions our for that refer call we about answering open regarding to Caesars today’s for with Eldorado. the have call forward is you information

Now, we’ll questions. the open call for

Operator

Deutsche [Operator from comes Instructions] Carlo Bank. first Your Santarelli question from

is Your line open.

Carlo Santarelli

Tony. Hi. thank Thank for you, the color. you Eric,

I ask a just front today in of mine kind for several part of of, question. perspective clearly, Just everyone market Coronavirus, to wanted and terms unfortunately from yesterday

as out international bookings visitation, from anything for in seen periods, further trends kind from in there issues? anything the then lastly, impacted seeing guys to it to pertains safeguard few you are you booking further that changed any property at at doing the are your level present behavior guys is has regions? namely you’ve or what weeks starters, For potentially And, of last change and

Tony Rodio

pleased the you surprised we’ve question, top we Thank and Yeah. of seen business is that for say pleasantly no it whatsoever. obviously impact mind. To-date, everybody’s are on

trips had quite They was great up come Asian bit XXXX fact, do And to take strong number each quarter December a a off business cultivating they marketing that thought Gary to teed I a be of and a spent that from VVIP segment matter that what they we’re credit real of of time our job They of in year to from Asia. business. his and in and fruition. that they and there As has going a start great first from Selesner team.

on have seen a a metrics we that have yet. Going to dashboards again, to we get number any precursor report and downturns. items of to that in not basis forward, And we we a daily I’m see if happy that track

affect here, We the far, should situation good. so but are plans, contingency again, working so begin to business on

Carlo Santarelli

follow with maybe million or books could and this year, year associated of hotel I room sorry, if I think, up post convention opening. Tony, associated on XXX,XXX $XXX then, the the room And mentioned not the in this center year you with revenue nights events, on,

Tony Rodio

Yeah.

Carlo Santarelli

that… much How of

Tony Rodio

Go am ahead. sorry. I

Carlo Santarelli

ask what was on of is venues just to some going or of venues? that how previously you’d kind was contemplated your $XXX of I stuff at other in doing maybe No. top million that of that relative revenue incremental be of incremental much just other is to

Tony Rodio

that of have that I exact can majority I don’t vast percentage, incremental. tell but the you is the

follow seen We a little individual we up a booking the we’re at still well what forecasts. there property a collectively spaces, seeing at we’re of have convention properties. our But are the bit above what and between

Eric Hession

million revenue is and revenue room the that the both bank Carlo The only thing the that includes of revenue $XXX component.

Carlo Santarelli

Great. Thank guys. it. Thanks, appreciate I Eric. you,

Tony Rodio

you. Thank

Operator

Your next America. question comes Bank Shaun Kelly from from of

open. is line Your

Shaun Kelly

question. metrics my give thinking business, think, piece the of taking to play, the for sort you would you Could the ballpark high-end build about now. thank Any the think International kind the as us kind color Palace, I I of and us business think for would investors maybe a little Maybe think or across pretty anything to little of Caesar’s afternoon doing Tony, exposures Good quantify exposure and exposure of kind mentioned helpful? you be like, I in of bit right VVIP this well sounds exceptionally of on bit a about give on or at knowing to that But off or Vegas helpful. be question business. Great. Hi. Asian Las more of same more as a concentrated both well is large company high-end the you it for

Tony Rodio

quarter, from to to company going business our I’m if in off VVIP the me wrong, that, a start great Asia. the it’s having around believe I so for her whole going correct I’m I the say said uptake first there. through X% And overall in profitability from XXXX, comes that to would it’s to get But but it’s

Eric Hession

So exposure. a not it’s huge

to-date, interacting and Vegas to Our in again, we Coronavirus clientele, of not Vegas. cases the here bigger depending with Coronavirus upon we have of see but travel this any haven’t to of If forward had the obviously, going fear goes. seen for domestic Las Asian we cancellations which concern Las way that start the

Shaun Kelly

bounce Great. our with this then I piece maybe growth. beyond bit other But Sure. these operating And well regional looks quarter can expense Vegas the properties is versus on broader like, did little landscape. my the very I slimmer. quarter-to-quarter. at think least The market a is expectations margins Las probably question numbers mean, around

you also have maybe, on Eric, to margin just Tony, out much call room how broader just the operational of growth. and or a bit improvements the beginning of on more environment? labor earlier cost So did your it year little the What at thoughts some the he of drive kind

professional expenses stuff I done like that? some you’ve and things think on

Tony Rodio

that components on in of think as that that or corporate entities it’s we’ve have we the of $XX operated -- the well call, has feel today, our the mean, as as costs about of look, good I margins there’s don’t lion’s gotten although taken the improved and and come business, that participation the I we marketing million real million the talked markets where our I efficiency. individual we our good as Yeah. slot efficiency, reducing taken labor made I $XXX of in regional games particularly out share results out the impacted by mentioned $XX well. from businesses major the I operating structure, we’ve think we’ve that million our

a off at taking second of floor. looking actually those we’re the phase more games of So

of down attrition. We Japan. we’re of number just a working doing efforts a think we’ve controlling pursue much better of that -- severance And terms need we our it’s scaled actively of and a we We to we’re a corporate, what at from IT projects voluntary our eliminated really through and come that areas functions license I did on. plan. In number pursuit in job looking of

So quite by reduce us a that’s contract to bit. labor allowed our

through harvested. we and the or share attrition to it -- evaluate the But at say, been So I between opportunities already continue lion’s would here and of corporate. merger, now is all

Shaun Kelly

Great. Thank you much. very

Operator

Dan from comes question from next Morgan. JP Our Politzer

open. is line Your

Dan Politzer

my taking kind looks your assets guys. pool buyer inbounds Good on level for there? broadly that the gaming and on of like thanks maybe getting you still Can talk just you’re and the questions. about afternoon some Hey, of what strip, maybe the of specifically

Tony Rodio

and phones and it frankly, if take no Quite as script have call, evaluate willing script business right discussions calls, inquiries. where get a open a we if decision. sense no strategic would and properties to inbound a were pretty for from now, we is non-existent, are the had it much makes there certainly inbound our But for see standpoint, active to

Dan Politzer

And increased more and and Okay. I what a EBITDA know in tell properties, seeing impact been million you driven at by function of is directly extent crossover just to versus you can maybe that Iowa us Indiana, out but about being mentioned to pivoting sports guess across additional betting the of being sports visitation play? you you’ve then I maybe called betting, $XX

Tony Rodio

want Yeah. of $X itself first betting Las the from all, not me, a generated was the have the why themselves. don’t outside of of the Well, is number sports million within or say, Vegas I -- sportsbooks and that range profit I to with

driven incremental and seen gaming visitations However, is that revenue. food we’ve increases in incremental significant beverage revenue and

sales we’ve know it in opened. increase I Mississippi, Biloxi, have seen example, particular -- XXX% we’ve crazy cash sounds seen in beverage for the a sportsbooks since

all everybody think I impact into what having on own the and plus mix and verticals exactly traffic properties doing positive it’s the a anticipated its through well. EBITDA as the increasing So foot adding

Dan Politzer

one even just there VICI on the sale have or on leaseback for last inbounds REITs. Centaur. update conversations the you to any Is Then any started have with from timing Okay. and maybe other maybe

Tony Rodio

update No. timing there the discussions. no No active and on

Dan Politzer

All Thanks much, so right. Great. guys.

Tony Rodio

Thanks.

Operator

Your from question from Instinet. next comes Curtis Harry

Your open. line is

Harry Curtis

afternoon, Good everybody.

that taking? on It’s health your it’s strength but follow-up fact are given what question play. precautions the inbound tough to of a Asian comment ask, a the Just contagious, about you so

Tony Rodio

the and thing right that’s at contingency Well, looking I plans plans now. operational we’re mentioned,

speak. here agencies, we plans embarking can’t with looking together everything that government now, we as have on the work we right and out well I actually We’re tell market, types as those are in of to but collectively ironed you as

Harry Curtis

if follow is expenses And was of is, I’m up what -- -- contract you. union you’re related offset the is, taken my that expenses net just to a question increase you have so costs in coming expenses savings out? annual the seeing million the it interested out. elsewhere? that $XXX is your Thank What in

Tony Rodio

for I me typically Well, increase whole X% Number of again, and increases across basis, right, million annual mean, have salaries portfolio, for a an $XXX net complete union exactly not on is and come under in savings happened all, the correct those we that one. you regardless. Eric, the X% we budget would that. the to first I’m two, I including because Number tell would if

don’t if I is as we know that as of So broken far have a out how much union?

Eric Hession

from we has of pricing, We but going energy as Yeah. with to we we the When just the business that which information wages, together, include offset those to associated try the budget provide look generally other things cost don’t running estimate benefits lot areas. more and aggregate other it and expenses savings and find recently extra costs, it a them through perspective. as way, in we then been the our is like and and at a well put other ways

Harry Curtis

much. Thank very Okay. great. you That’s

Tony Rodio

Thank you.

Eric Hession

Thanks.

Operator

Jefferies. Your Katz next David question comes from from

Your open. line is

David Katz

And Hi. I but you you have around which topic Good carefully some to was go earlier that Do touched around back the of whichever to beginning to in growth increase at GGR. wanted or you around on is are fundamentally Tony, afternoon, out? the been members increases, somewhat yet? a sports have GGR that I betting sports that are my in or everyone. betting. follow-up, to rolling any F&B on background in the statistics a specific listening substantial, from different commentary an as total result sports improvement engaging And rewards measure betting any in any loyalty of able of

Tony Rodio

that people were rewards that encouraging of betting people number jurisdictions that’s and those Yes. in previously. sports been the that inactive. is engaging been in have are customers thing a The one South really Midwest She’s

reactivation also to in giving other are they we’ve lot and of addition seen customers, of that. so us a gaming And work those

traffic in a how properties it’s weather is improvements of books. are or to betting of else it we related that to the XX% If about GGR, foot this through sports see I increase it’s say roughly what so seen so hard uplift can’t -- much an have is in marketing in hard sports dissect. to how initiatives much well, relating to year-over-year. and other We’ve

if Centaur we’ve incredible had look particularly properties in major investments Indiana, you results. there Southern And and capital at, we seen

lot there’s So a noise. of

properties. we’re hard traffic your But exactly tell can finger typically more So more in seeing on these to I GGR. XX% that it’s how you, it’s put around much foot

David Katz

GGR And towards if, share as I as can mean, it’s away from pocket betting, far sports you certainly any and taking in way not tell?

Tony Rodio

not. No. it’s GGR wager. been definitely incremental that again, those in make they to past properties, that, we’re come back from to that lot Definitely the the No. -- getting where a people accretive the customers our We the we’re that of coming markets customers are now into seeing have in particularly to had

David Katz

Great. Thank much. you so

Operator

Your from next comes SunTrust. question from Barry Jonas

Your line open. is

Barry Jonas

Great. with results Thanks. start I for I’d guess quarter. the Vegas

than better lighter were result side? bit out we overall had there anything through but the than we’d modeled, on was through flow think I perhaps little expected a call flow you’d

Tony Rodio

that that or themselves think a had the don’t a put year would number repeat in came quarter of necessarily of we items the the that pressure on We last little flow-through. bit

shows in of question beverage. I casino volatility more is and it’s a Vegas, there the the to the it up food whether mix flow-through think, Las the here the revenue, in per due or or Shaun’s hotel as earlier, in

XX.X% we approximately the points margin margins achieve year, and Las in for XXX up were our And Vegas. here basis

great as whole for So, year, flow-through may we and would volatility look year, some flow next the between into again -- is year again. I we there for but speaking, we the broadly quarters, through expect good be think, the

Eric Hession

would other people cost going lot the Yeah. the those mentioned I the of company really exit that add until we voluntary end a year. of the And XXXX, program get is savings thing severance full the initiatives, didn’t earlier, like the I lot of into the didn’t a

get not and XXXX as higher seeing million transaction. the it’ll the closer of we’re full that to creep until benefit think closer whole So than I we the $XXX and

Barry Jonas

you was mean, think Okay. be I that of to just recognized guess, million I in XXXX do how actually much clear? $XXX

Eric Hession

of number. second head, half $XX a probably But get a we measure until the million, got don’t year. -- I really yeah. say of room mean, people to I I shaking I $XX started if had in their number the the have million, the I’d guess didn’t $XX that million.

So that’s good I estimate. think a

Barry Jonas

Tony, then And you about Great. participation footprint. Great. to the talked reductions

and Just the… any what I curious, while it, curious offsetting at if you���re that you’re was guess purchases slot

Tony Rodio

Yeah. really results replace it’s new we us newly we’re for product games What participation as well as the at doing, worked new the the we’ve getting games. when the is acquired seen with is almost and participation and product as product that

us couple that the number because a and competitive, couple of There’s results negative. locations adding is up, it’s that to but it then where more we’re positive to go where of to we’ve think been little back, isolated a and a bit hurt we seen going much situations due more continue net

Barry Jonas

then Great. new is when that, than just setup. Great. last about curious it strong to your thoughts beyond venues after are longer-term how Vegas curious properties just going online that, be think for and more setup a one, coming entertainment you to And clear several gets medium- XXXX, but

Tony Rodio

Vegas Well, Center A more MSG think, all argue going going Event help or that for boats, I exactly catalysts Center. help going mean, rising look, mean, but I lifts -- create to coming the when even is to, -- could Convention the would is more in mean, I even traffic the I tide you’ve sure more expansion am argue of additional I not everybody. traffic though only it’s the to online, resorts the interest and Las city I into got that’s were

view all them I as So positive.

Barry Jonas

you guys. Thank Great. so much,

Tony Rodio

you. Thank

Operator

now may Have our Thank We us for participants you great today. presentation disconnect. informative. to hope this day. webcast found and joining concludes all webcast This our a you you