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Caesars Entertainment Inc. shares spiked in after-hours trading Tuesday after the casino company revealed another big loss in the first quarter, but outlined a strong rebound in the works in Las Vegas.
Caesars
CZR,
revealed a loss of more than $400 million in the first three months of the year Tuesday, an improvement from starker losses earlier in the COVID-19 pandemic. But executives outline positive trends late in the quarter and early in the current period on a conference call later in the day.
“Total occupancy for Q1 was 63%, with weekends at 85% and mid-week at 52%. March total occupancy was 77% and April was 84%,” President and Chief Operating Officer Anthony Carano said on the call, with Chief Executive Tom Reeg later adding that Caesar’s expects the 84% occupancy rate in April to improve in May and June.
“Weekends in Las Vegas are sold out for the foreseeable future,” Carano added.
“If you look at April — obviously, these are preliminary results on May 4th [and] frankly, they tend to typically move up after our preliminary results — but in April, we did over $300 million of consolidated Ebitda as a company,” Reeg said. “That was more than 25% ahead of 2019 numbers.”
Shares had gained about 1% in after-hours trading after the numbers first hit, then jumped to gains of more than 8% after the executives spoke early in the call. They did not provide a full outlook for the current quarter, but the color appeared to say enough.
“I’m not a guidance guy, but here’s a few things I expect will happen as we move forward,” Reeg said. “Absent a change in the public health situation, I would expect us to print a quarter of at least $1 billion of Ebitda in 2021. I’d expect us in 2022 to be at worst below five times gross lease adjusted leverage, with a reasonable possibility of being below four times.”
For the first quarter, Caesars reported losses of $423 million, or $2.03 a share, on Tuesday, an improvement from a loss of $2.52 a share a year ago for Eldorado Resorts, which subsequently closed a merger with the former Caesars and renamed itself. Net revenue was $1.7 billion, up from $473 million in sales a year ago for Eldorado.
Analysts on average expected sales of $1.71 billion, according to FactSet. Not enough analysts provided GAAP earnings estimates for a worthwhile consensus, while Caesars did not provide any non-GAAP per-share earnings to match the analysts’ consensus on that metric.
“Our first-quarter results improved significantly versus the fourth quarter of 2020 as the pace of vaccinations across the country accelerated and consumers started to resume more normal behavior,” Reeg said in a prepared statement Tuesday. Caesars lost $555 million on sales of $1.5 billion in the fourth quarter, and reported a loss of more than $900 million in the third quarter of last year, after the merger with Eldorado.
Caesar’s has walked a twisted road in the past couple of decades. After merging with Harrah’s in 2005, the company went through a large leveraged buyout by private-equity firms just before the Great Recession, and struggled with the debt even after returning to the public markets in 2012. After filing for bankruptcy protection in 2015, the company merged with Eldorado last year and then agreed to acquire bookmaker William Hill in a deal that closed last month.
After all those moves, Caesar’s appears to be popular with investors again, despite the COVID-19 pandemic wreaking havoc on casinos. The stock was added to the S&P 500 index
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in March, along with fellow gambling concern Penn National Gaming Inc.
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Shares have gained 400% in the past year, as the S&P 500 has increased 47.5%.
