Caesars Entertainment reported Thursday that revenues totaled $2.19 billion in the third quarter, and net income was $110 million, or 14 cents per share. A year ago, the 3Q saw investors lose $2.90 a share on a net loss of $433 million.
The financial turnaround would presumably be reason to celebrate Caesars CEO Mark Frissora, but instead the chief executive announced his departure effective February 8, 2019. Activist investors have recently sought to replace Frissora, and with their wishes fulfilled and the better-than-expected financial report, the stock is soaring.
Traded on NASDAQ, Caesars stock jumped nearly 10 percent in after-hours trading. The company released its 3Q report at 2:30 pm PT on Thursday, 90 minutes after trading closed in New York.
We executed well during the quarter despite a challenging operation environment in Las Vegas and Atlantic City, and we are optimistic about the opportunities ahead,” Frissora told investors.
It’s a far different tune than the CEO had during the 2Q report when he cautioned shareholders that the company was seeing a “softening in demand” in Las Vegas. Frissora’s comments sent Caesars’ stock plummeting as much as 24 percent, prompting NASDAQ to halt its trading.
Caesars did indeed report a softening, as Las Vegas occupancy was 92.8 percent during the quarter, down from 96.1 percent in 2017. It was a difficult three-month comparable due to the Floyd Mayweather and Conor McGregor August 2017 boxing spectacle, and what MGM Resorts CEO Jim Murren called “an exceptionally strong event calendar.”
Frissora announced ahead of the quarterly release that he would be leaving the company in February after three years. The executive came from Hertz and brought the casino operator out of bankruptcy, but under his leadership Caesars shares have lost 20 percent of their value.
More recent decisions, which includes Caesars paying $1.7 billion for two horse racetrack casinos in Indiana, have caused many investors to question his financial wherewithal in leading the company forward.
“The Caesars shareholders want something to happen,” a gaming analyst told the New York Post last week. “Frissora knows he can’t ignore them.”
Ignore them he won’t.
“I have been privileged to lead this iconic company and am proud of all that our team has accomplished,” Frissora said in his resignation. “I am confident that the company is well positioned to thrive and grow in the future.”
Caesars says its four-member compensation and management development committee will work with an outside search firm to find Frissora’s replacement.
Caesars Entertainment finally confirmed that it has indeed received an offer from billionaire Tilman Fertitta for a reverse takeover that would see Caesars acquire all of his Golden Nugget casinos and associated restaurants, hospitality, and entertainment. In exchange, Fertitta would obtain a significant minority stake in Caesars and become its CEO.
Caesars said its board and legal and financial advisors considered the proposal and deemed it fell outside of the company’s plans to “create and enhance shareholder value over the long term.”
There are also rumblings that MGM Resorts is interested in uniting the two gaming companies, but no mention was made in the 3Q filing.