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Howard Stutz
 

Caesars considers other ways to grow results

30 July 2013

LAS VEGAS -- Caesars Entertainment Inc. is looking at other ways to grow results after reporting another quarterly net loss.

The casino operator, which has more than 50 gambling properties across the U.S. and Canada, including 10 on or near the Strip, is developing new resorts with an emphasis on nongaming amenities. The company also hopes to soon launch a real money online poker website in Nevada.

Caesars said Monday it lost $212.2 million in the quarter that ended June 30. The loss translated into a loss per share of $1.69. A year ago, Caesars said it lost $241.7 million, or $1.93 cents per share.

The company has not reported a positive quarter since going public in February 2012.

Revenues for Caesars declined less than 1 percent to $2.158 billion.

Analysts polled by FactSet Research expected Caesars to report a net loss of $1.40 per share.

“Overall second quarter results were slightly weaker than our expectations and missed the consensus estimate by more,” RBC Capital Markets gaming analyst John Kempf told investors. “Las Vegas, Atlantic City and Lousiana-Mississippi led the declines and were the primary reason for the variance to our numbers.”

In Las Vegas, Caesars said net revenues fell 4.5 percent to $745.9 million.

Caesars said construction activities associated with the $550 million Linq development, renovation of the Quad and the renovation-related closure of Bill’s Gamblin’ Hall caused a decline in revenues.

In the Atlantic City division, which includes Caesars’ four Atlantic City hotel-casinos and a Philadelphia racetrack casino, total revenues fell 8.3 percent.

Caesars said gaming revenues companywide declined 7.5 percent in the quarter. Company Chairman Gary Loveman said nongaming revenues might soon replace the diminishing casino numbers.

“While challenging conditions in the gaming industry impacted our gaming revenues during the second quarter, we are beginning to observe positive underlying trends resulting directly from the investments we’ve made to enhance our hospitality footprint, particularly in Las Vegas,” Loveman said in a statement. “Our performance also reflects our focus on managing operating expenses without sacrificing service.”

During a conference call with analysts, Loveman pointed out the company’s development projects, including the Linq, which is expected open later this year.

When asked by an analyst about the nongaming Linq taking customers out of casinos, Loveman said the development’s restaurants and clubs are meant to attract younger Las Vegas visitors.

“I’m trying to pull customers out of our competitors’ casinos,” Loveman said. “Linq is a sound investment in a favorable location with a very unique offering.”

The Quad, formerly the Imperial Place, has completed renovation of 40 percent of its casino floor. The $180 million Gansevoort Las Vegas, which is replacing Bill’s, is expected to open in the second quarter next year.

Also on the Strip, Caesars is renovating more than 700 rooms at Bally’s Las Vegas.

Caesars broke ground earlier this month on the $400 million Horseshoe Casino Baltimore, which is expected to open in 2014, and a $125.8 million convention center at Harrah’s Atlantic City. The 250,000-square-foot facility will have 125,000 square feet of space for corporate meetings, complementing the Atlantic City Convention Center, which targets conventions and tradeshows.

Loveman said the company expects to launch a World Series of Poker branded website in Nevada following final state regulatory approval.

Eilers Research gaming analyst Adam Krejcik estimated Caesars’ revenues from its social gaming endeavors, including the Playtika site on Facebook, were $71.4 million, up 44 percent from a year ago.

Caesars said its total long term companywide debt was $23.7 billion as of June 30.

The company reported earnings after the close of trading on the stock markets. Shares of Caesars Entertainment rose 10 cents to $15.58, a 0.65 percent increase on the New York Stock Exchange.
Caesars considers other ways to grow results is republished from Online.CasinoCity.com.