Caesars' 1st Quarter Results Fall Short of Predictions due to Subpar Performance at Local Casinos and Sports Wagering
Caesars Entertainment's (NASDAQ: CZR) stock plummeted in Tuesday's after-hours trading, deepening its losses after suffering a 4.66% decrease during regular trading hours. The reason for this decline? The casino operator's inaugural quarter results fell drastically short of analysts' projections.
Caesars reported a 73-cent-per-share loss on revenues totaling $2.74 billion - a mere fraction of the expected $2.83 billion sales and profits of $0.08. While the company blamed the unexpectedly low numbers on the outcome of the Super Bowl and the NCAA Tournament, industry experts will likely scrutinize Caesars' Las Vegas and regional casino earnings.
The company's revenue in Las Vegas, where it occupies second place among operators, shrank to $1.03 billion from $1.11 billion in the previous year's quarter. Caesars' adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in Vegas casinos dropped to $440 million from $533 million in the same period.
This decline could raise concerns about dwindling Strip activity after several years of improving demand resulting from coronavirus closures.
Underwhelming Regional Results Combined with Industry Woes
In the March quarter, Caesars' regional casinos reported $443 million in first-quarter adjusted EBITDA on revenue of $1.37 billion - a far cry from the $448 million and $1.39 billion over the same period last year.
These results aren't surprising given that several other operators have noted subpar performance at their regional venues due to bad weather in January that dampened visitation to gaming locations in Reno/Tahoe and the Midwest.
Emerging indicators also point to reduced spending by lower-level gamblers at Southern casinos. In the Midwest and the South, some establishments have experienced declines, with six of the nine Atlantic City casinos reporting profit decreases in 2023.
"Moving beyond the first quarter hurdles, we are hopeful for improving performance throughout the rest of the year," said CEO Tom Reeg in a statement.
Meager Advances in Debt Reduction
Heading into this year, analysts and investors were eager to see Caesars making substantial headway in reducing its significant debt load. Although the multibillion-dollar company displayed modest strides, there's still much work to be done. As of March 31, the company had a whopping $12.436 billion in outstanding debts, only slightly lower than the previous year's $12.439 billion.
With $726 million in cash and cash equivalents at the end of the quarter, not including $139 million in restricted funds, the executive team stated their plan to allocate $800 million on capital expenditures for the current year. Moreover, they expect to utilize the free cash flow to continue paying off debts.
CFO Bret Yunker made this announcement in a recent press release.
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Source: www.casino.org
