Caesars Entertainment (NASDAQ:CZR) investors may be hoping that the old maxim of “it takes money to make money” comes to pass. That’s because the gaming operator said its third-quarter revenue more than doubled, while reporting a whopping per-share loss.
The largest casino company in the US as measured by number of venues said sales surged to $1.37 billion from $663 million, confirming the benefits of one of the largest acquisitions in industry history. However, that figure missed Wall Street forecasts by $360 million, as the operator notched a loss of $6.09 per share, far worse than the loss of $2.03 analysts projected.
In Las Vegas, revenue slipped 60 percent, while adjusted property earnings before interest, taxes, depreciation and amortization (EBITDA) declined 83 percent. Five of the company’s nine Sin City venues were open for the entirety of the September quarter.
Regional markets continued to outperform destination markets, and we remain optimistic regarding an eventual recovery of travel and tourism in the US and especially in Las Vegas,” said CEO Tom Reeg in a statement.
One bright spot was overall adjusted property EBITDA checking in at $463 million, compared with the consensus forecast of $322.4 million.
Over the course of the coronavirus pandemic, analysts widely said Macau and regional US markets will rebound before Las Vegas due to Sin City’s dependence on convention business and drive-in traffic, namely from neighboring Arizona and Southern California.
There are indications things are starting to perk up in the largest domestic gaming center. Earlier today, executives from Wynn Resorts (NASDAQ:WYNN) said they are seeing “encouraging” trends in Las Vegas, and that higher-end gamblers are visiting more and gambling higher amounts. Caesars echoed those sentiments, noting weekday Strip occupancy in the September quarter was in the mid-50 percent areas, before vaulting to the mid-90s on the weekends.
Caesars executives added that off-Strip Rio is expected to open before the end of this year, and the operator has no plans to close or limit availability of Las Vegas venues during the current quarter.
Reeg said that once COVID-19 is vanquished, pent-up demand for Sin City is going to be “beyond your wildest dreams.”
Caesars is in the process of purchasing British bookmaker William Hill (OTC:WIMHY) for $3.69 billion, and in the last quarter, the buyer raised cash via an equity sale and procured bank financing to pay for the deal.
On the conference call, management said the Caesars brand will be retained for sportsbooks at properties with similar branding, namely those on the Strip and on the Atlantic City Boardwalk, while books at its other venues will bear the William Hill name.
As of Sept. 30, Caesars had $16.2 billion in liabilities, one of the industry’s largest debt burdens, and $1 billion in cash. Last month, $2 billion of $2.7 billion in restricted capital was released to the operator, upping its cash stockpile.