Caesars delivers growth across all primary segments in Q3

Caesars Palace in Las Vegas
Image: Kobby Dagan/Shutterstock

Caesars Entertainment has reported growth across the board in the third quarter of 2023, with new records accomplished in consolidated adjusted EBITDA.

CEO Tom Reeg noted that the operator achieved year-over-year growth in adjusted EBITDA across all three primary operating segments.

Caesars’ growth across all primary segments

Publishing its Q3 results, Caesars reported $3bn in net revenue, a 3.7 per cent increase YoY (Q3 2022: $2.9bn) with Las Vegas, regional and Caesars digital segments seeing improvements in comparison to the previous year.

Las Vegas revenue rose by four per cent YoY to $1.12bn (2022: $1.07bn), regional revenue improved by 2.3 per cent to $1.57bn (2022: $1.53bn) and digital revenue grew by 1.4 per cent to $215m (2022: $212m).

During Caesars’ earnings call, President and Chief Operating Officer Anthony Carano attributed the performance of the Las Vegas segment to “higher occupancy and higher ADRs, which drove record cash hotel revenues, record gaming revenues and record food and beverage revenues”.

In addition, Carano noted that the regional segment benefited from “stable guest demand, combined with excellent performance” from completed capital projects and newly opened facilities, and a “diversified portfolio” across the US offsetting “competitive pressures” in a few markets.

As for digital, President of Caesars Sports and Online Gaming Eric Hession claimed that while online sports betting handle increased by 14 per cent and icasino handle improved by 38 per cent, revenue was “negatively impacted by lower year-over-year hold” in both segments, which the operator believes to be temporary.

Meanwhile, managed and branded revenue rose by 40 per cent YoY to $98m (2022: $70m) while corporate and other revenue dropped by 100 per cent to a $4m loss (2022: $2m loss).

Caesars declared a net income of $74m for Q3, a 42.3 per cent increase in comparison to the previous year (2022: $52m) but only digital saw YoY improvements despite suffering a net loss.

Las Vegas operations recorded an income of $238m, down 2.9 per cent YoY (2022: $245m), regional income dropped by 16.6 per cent to $176m (2022: $211m) and while digital improved by 54 per cent, it still suffered a net loss of $29m (2022: $63m net loss).

Elsewhere, managed and branded net income improved by 104.5 per cent YoY to $45m (2022: $22m), while corporate and other suffered a net loss of $356m, up 1.9 per cent (2022: net loss of $363m).

All-time adjusted EBITDA record

Caesars’ consolidated adjusted EBITDA for Q3 came in at $1.04bn, up 3.1 per cent YoY, and as previously mentioned, growth was seen across Las Vegas, regional and digital segments.

“During the third quarter of 2023, the company achieved an all-time consolidated adjusted EBITDA record,” commented Reeg.

“We experienced adjusted EBITDA growth year-over-year in all three of our primary operating segments including Las Vegas, regional and Caesars digital. Our regional segment achieved an all-time quarterly adjusted EBITDA record as we harvest the recent portfolio investments within this segment.”

Las Vegas adjusted EBITDA improved by 0.4 per cent YoY to $482m (2022: $480m), while regional adjusted EBITDA rose by 0.9 per cent to $575m (2022: $570m).

While digital remained consistent as the same period the previous year, the figure moved out of the loss column, recording an adjusted EBITDA of $2m (2022: $38m loss).

Elsewhere, managed and branded adjusted EBITDA dropped by 9.1 per cent YoY to $20m (2022: $22m), while corporate and other adjusted EBITDA fell by 63.6 per cent to a $36m loss (2022: $22m loss).

As of September 30, Caesars had $12.5bn in aggregate principal amount of debt outstanding, and total cash and cash equivalents were $841m, excluding restricted cash of $174m.

Bret Yunker, Chief Financial Officer at Caesars, added: “We continued to simplify our capital structure through the repayment of our $250m Baltimore Term Loan during the third quarter, bringing aggregate debt reduction to over $600m year to date, and reducing total net leverage under our bank credit facility to 3.9x as of September 30, 2023.”

Q4 & beyond

Looking ahead, Carano noted in the earnings call that Caesars was “excited” by future events planned for the Las Vegas area, including the F1 race in November and the Super Bowl next February, stating that the area “continues to benefit from one of the strongest event calendars” in the US.

In Q4, Caesars expects to open the Harrah’s Hoosier Park property expansion and the new Versailles Tower rooms in Vegas, while in 2024, the operator expects to complete permanent facilities in Danville, Virginia and Columbus, Nebraska, as well as a new hotel tower and completely remodelled Caesars New Orleans project.

Reeg noted that Caesars is also “accruing for the anticipated expenses that will come with the new union contract” with the culinary union, to which he is “optimistic” that a solution will soon be reached.

As for digital, following on from the launch of Caesars Palace Online icasino app and new product features for online sports betting, Hession believes both digital segments are “significantly improved from prior periods and quite competitive” with more enhancements to come including the continued rollout of its propriety TAM and shared wallet. 

Carano added: “We are looking forward to a strong finish to 2023. Consumer demand remains strong, and our capital projects are winding down. We will continue to remain focused on operating cost efficiencies, harvesting returns on project capital and driving long-term EBITDA growth.”