Caesars Entertainment has published its financial results for the second quarter of 2022, with CEO Tom Reeg expressing optimism about the operator’s digital segment, which improved “dramatically” over the previous quarter.
CFO Bret Yunker also commented on the recently completed sale of non-US assets of William Hill to 888 Holdings Plc.
In its Q2 results, Caesars declared net revenues of $2.8bn, a 10.6% year-over-year improvement on the $2.5bn reported in Q2 2021. The operator also suffered a net loss of $123m compared to a net income of $71m during the same period in the previous year.
Adjusted EBITDA for the operator during the quarter came in at $978m, a 3.3% YoY drop (2021: $1bn). Excluding Caesars Digital, adjusted EBITDA came in at $1.05bn, a 3.9% improvement on the previous year (2021: $1.01bn).
Per segment, Las Vegas continued its upward trend from Q1, reporting $1.1bn in revenue, a 33.6% YoY increase (2021: $855m), and a 24.9% growth on the previous quarter (Q1: $914m).
The segment also achieved a 70.1% YoY uptick in net income to $313m (2021: $184m), alongside quarterly adjusted EBITDA of $547m, a 29.3% YoY change (2021: $423m).
Caesars Digital, meanwhile, saw YoY improvements in Q2, rising by 29.9% to $152m (2021: $86m). However, the segment suffered a net income loss of $116m (2021: $22m loss), as well as an adjusted EBITDA loss of $69m (2021: $2m).
Regional revenues declined YoY by 4.1% to $1.46bn (2021: $1.49bn), as well as a 38% loss in net income to $145m (2021: $251m). The segment reported an adjusted EBITDA of $513m, a 15.1% decline YoY (2021: $604m).
Commenting on the results, CEO Reeg noted that Caesars is pleased with the dramatic improvements it has made in its digital operations compared to Q1 and that the operator is “optimistic” for this segment for the rest of the year.
“Our second quarter results reflect a consolidated EBITDA record for our brick and mortar properties led by an all-time quarterly EBITDA record in Las Vegas and continued strength in our regional markets when compared to 2019,” commented Reeg.
“Operating results in our digital segment improved dramatically versus the first quarter and we are optimistic regarding trends in this segment for the balance of the year.”
Brand awareness growing Caesars Digital
Speaking on Caesars’ Q2 earnings call, Reeg stated that he doesn’t expect the operator’s digital segment to record a $100m quarterly EBITDA loss again, with EVP Eric Hession explaining how brand awareness has contributed to this forecast.
Hession said: “As Tom previewed on our last earnings call, our strong gains in unaided brand awareness have allowed us to scale back our brand-related marketing spend. That reduction in combination with the reduced promotional investment environment translated into steadily improving results throughout the quarter.
“As we look to the back half of the year, we expect a number of significant product enhancements for our customers in key areas such as cash out speed, customer service and parlay and alternative line offerings.”
Caesars also believes all its branded apps and sportsbooks will be converted to the Liberty tech stack by the end of the year, further driving the customer experience.
“We continue to believe that scale is important for our digital sports betting and icasino and poker offerings and pending regulatory approvals plan to expand into states and jurisdictions where allowed,” Hession added.
“As a result, we will continue to remain focused on growth through new state launches, investing from a tech perspective on product enhancements and remaining acutely focused on our expenses.”
Providing an update on its current projects being undertaken, Caesars remarked that a potential Las Vegas sale is a “discretionary trade for us,” with Reeg stating the operator will go ahead with a trade if it makes sense, but they’re fine if one doesn’t occur.
Elsewhere, Horseshoe Lake Charles in Louisiana is expected to open in December, and additional holdings in New Orleans are said to be “progressing well”.
During Q3, groundbreaking is expected to occur on Caesars Danville in Virginia, Harrahs’ Columbus in Nebraska, and a casino expansion for Harrah’s Hoosier Park.
President and COO Anthony Carano added: “These are all exciting projects that will generate a meaningful return on the investment for our company. As we look to the remainder of ’22, we remain optimistic about our business as consumer trends remain healthy, especially versus 2019.”
In its Q2 report, Caesars also stated that, as of July 2022, it has repaid “approximately $770m of outstanding debt on a year-to-date basis, including a $630m repayment of the Caesars Resort Collection Term B-1 Loan and $100m of open market repurchases of our outstanding notes”.
Caesars completes non-US assets sale with 888
Last month, the operator also completed the sale of the non-US assets of William Hill to 888 Holdings Plc for an agreed valuation of between £1.95bn and £2.05bn ($2.55bn and $2.68bn).
Following the repayment of debt and other working capital adjustments, Caesars received net proceeds of $730m, which the operator intends to use to reduce outstanding indebtedness.
Commenting on the deal, CFO Yunker said: “We successfully closed the William Hill non-US sale on July 1st and have applied $730m in net proceeds to debt reduction as of July 22nd. We continue to invest in our brick & mortar and digital platforms across the US using ample free cash flow.”