Eldorado Resorts Posts Q1 Loss as Revenue Slides 25.6 Percent Amid Coronavirus Closures
Posted on: May 11, 2020, 02:16h.
Last updated on: May 11, 2020, 02:43h.
Eldorado Resorts (NASDAQ:ERI) joins a lengthy list of gaming companies reporting first-quarter losses and sagging revenue due to property closures forced by the coronavirus outbreak. The company said operating income tumbled in the first three months of the year.
The regional gaming company reported an operating loss of $123.2 million for the January through March period compared with operating income of $123.6 million a year earlier. On the basis of generally accepted accounting principles (GAAP), Eldorado lost $175.6 million in the quarter, as revenue plunged 25.6 percent.
Echoing a refrain frequently heard throughout the industry this earnings season, ERI said business was brisk in January and February, only to be hammered by the COVID-19 shutdown that went into effect across the country in mid-March.
We were encouraged by the strength of the consumer and the pace of revenue growth for this two-month period,” said CEO Tom Reeg in a statement. “However, the strength in January and February was offset by COVID-19 related weakness due to the mandated closure of all our properties by March 18, 2020.”
On a per share basis, ERI lost $2.42, far worse than the loss of 17 cents analysts expected. Revenue of $473.07 million was $69.38 million lighter than Wall Street estimates.
Focusing on Caesars Marriage
Reeg reiterated that ERI is focusing on wrapping up its $17.3 billion acquisition of Caesars Entertainment (NASDAQ:CZR), something that is rumored to be happening in June.
“We remain actively engaged in satisfying the remaining steps to complete the Caesars transaction,” said the Eldorado boss. “Our teams also remain focused on the integration process, and we remain excited about the long-term opportunity to create value for stakeholders of both companies.”
In the statement, Reeg didn’t specify a date on which the Caesars deal could close.
Today, Caesars said its first-quarter operating loss was $66 million, as revenue declined $13.6 million to $1.83 billion. In its earnings statement, Caesars revealed a host of social distancing protocols aimed at moving its gaming properties toward reopening. Those new rules include limiting the number of players at table games and in slot areas.
“Non-gaming offerings, including entertainment, restaurants, and bars, will likely be reopened on a phased basis with limited capacity,” according to the company. “Spaces where guests or employees queue, including check-in, elevator lobbies, taxi lines, employee break rooms and cafeterias, will be clearly marked for appropriate social distancing.”
As gaming stocks plunged in March, speculation swirled about ERI’s cash position and its ability to bring the Caesars deal across the finish line.
The operator finished the first quarter with cash and cash equivalents of $671.7 million, a number that could increase in the current quarter as ERI finalizes some previously announced asset sales worth $230 million.
Eldorado has $3 billion in debt, but that number is expected to swell because it’s taking on $8.8 billion in Caesars liabilities.
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