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Caesars Entertainment Corp
Wynn Resorts Ltd
Las Vegas Sands Corp
Penn National Gaming Inc
Caesars Entertainment Corp. (CZR), the largest owner of U.S. casinos, reported a net loss for the second quarter that was double what analysts estimated after a writedown in Macau and shrinking results at home.
Caesars’ loss widened to $241.7 million, or $1.93 a share, from a loss of $155.5 million, or $1.24, a year ago, the Las Vegas-based company said yesterday in a statement (CZR). Analysts had projected (CZR) a 96-cent loss, the average of four estimates compiled by Bloomberg. Revenue was little changed at $2.17 billion, also missing projections of $2.29 billion.
“Results were below our expectations, particularly in Las Vegas,” said John Kempf, an analyst at RBC Capital Markets in New York who has an underperform rating on the stock. “It’s clear to us that Las Vegas is not immune to economic weakness being seen in other regional markets.”
Expectations were low given recent monthly reports of shrinking gambling revenue in Nevada and Atlantic City, New Jersey, along with individual results from Wynn Resorts Ltd. (WYNN) and Las Vegas Sands Corp. (LVS) according to Susan Berliner, a JPMorgan Chase & Co. debt analyst.
“I think the world since April or May has gotten more difficult,” Gary Loveman, Caesars’ chairman and chief executive officer, said yesterday on a conference call. “There’s a trepidation on the part of consumers to spend at the rate they have historically.”
Revenue declined almost 1 percent at Caesars resorts in Las Vegas and 8.6 percent in Atlantic City, the company said.
Caesars fell as much as 4 percent to $8.13 in extended trading. The stock rose 1.8 percent to $8.47 yesterday at the close in New York and had fallen 5.9 percent since the company’s initial public offering in February.
Earnings before interest, taxes, depreciation and amortization fell to $512.4 million, less than the $565 million analysts had been expecting. Income from operations decreased 65 percent to $81.8 million, due mainly to a $101 million impairment charge on a land concession in Macau.
Caesars has $19.9 billion in long-term debt as of June 30, the result of a 2008 leveraged buyout led by Apollo Global Management LLC and TPG Capital. They continue to own (CZR) about 70 percent of the company, according to data compiled by Bloomberg.
Loveman announced this year the company would sell some properties to invest in new jurisdictions and online gambling.
The company announced the sale of Harrah’s St. Louis to Penn National Gaming Inc. (PENN) in May for $610 million. In July, Caesars was awarded a license with Rock Gaming to operate a casino in Baltimore under the Harrah’s brand. Opening is targeted for the second quarter of 2014.
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