Caesars Entertainment (CZR) Q4 2024 Earnings Call February 26, 2025 03:44 AM ET Company Participants Brian Agnew - Senior Vice President of Corporate Finance, Treasurer & Investor RelationsAnthony Carano - President & COOEric Hession - President, Caesars Sports & Online GamingBret Yunker - Chief Financial OfficerThomas Reeg - CEODavid Katz - Managing DirectorSteven Wieczynski - Managing DirectorBarry Jonas - Managing DirectorJohn Decree - Director - Equity ResearchStephen Grambling - Managing DirectorSam Sh ...

Caesars Entertainment, Inc. (NASDAQ:CZR) Q4 2024 Earnings Conference Call February 25, 2025 5:00 PM ET Company Participants Brian Agnew - SVP, Corporate Finance, Treasury and IR Anthony Carano - President and COO Eric Hession - President, Caesars Sports and Online Gaming Bret Yunker - CFO Thomas Reeg - CEO Conference Call Participants Carlo Santarelli - Deutsche Bank David Katz - Jefferies Brandt Montour - Barclays Daniel Politzer - Wells Fargo Steven Wieczynski - Stifel Barry Jonas - Truist John DeCree - C ...

Caesars Entertainment (CZR) reported $2.8 billion in revenue for the quarter ended December 2024, representing a year-over-year decline of 0.9%. EPS of $0.05 for the same period compares to -$0.34 a year ago.The reported revenue represents a surprise of -0.40% over the Zacks Consensus Estimate of $2.81 billion. With the consensus EPS estimate being -$0.15, the EPS surprise was +133.33%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations t ...

Core Viewpoint - Caesars Entertainment reported quarterly earnings of $0.05 per share, surpassing the Zacks Consensus Estimate of a loss of $0.15 per share, and showing improvement from a loss of $0.34 per share a year ago [1] - The company posted revenues of $2.8 billion for the quarter ended December 2024, slightly missing the Zacks Consensus Estimate by 0.40% and down from $2.83 billion year-over-year [2] Financial Performance - The earnings surprise for the recent quarter was 133.33%, while the previous quarter saw a surprise of -119.05% with an expected earnings of $0.21 per share but resulting in a loss of $0.04 [1][2] - Over the last four quarters, Caesars has only surpassed consensus EPS estimates once [2] Stock Performance and Outlook - Caesars Entertainment shares have increased approximately 4.9% since the beginning of the year, outperforming the S&P 500's gain of 1.7% [3] - The company's current consensus EPS estimate for the upcoming quarter is $0.07 on revenues of $2.86 billion, and for the current fiscal year, it is $1.13 on revenues of $11.64 billion [7] Industry Context - The Leisure and Recreation Services industry, to which Caesars belongs, is currently ranked in the top 20% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5][6]

Employment and Team Members - Approximately 50,000 Team Members are employed across the organization, excluding tribal partnerships[65] - 22,000 Team Members, or 44%, are covered by collective bargaining agreements, with key agreements expiring between 2026 and 2029[66] - The company has invested in professional training and development, safety, health, and wellbeing programs for Team Members[65] - Caesars has contributed to responsible gaming initiatives, training tens of thousands of Team Members annually to assist guests in need[75] - In 2024, the Caesars Foundation contributed $3.4 million to community projects across the United States, with Team Members volunteering over 93,000 hours[84] Environmental Initiatives - Caesars has established multi-year targets for greenhouse gas emissions reduction as part of its PEOPLE PLANET PLAY strategy[74] - Caesars updated its Scope 1 and 2 GHG emission reduction goals to align with a 1.5-degree Celsius limit, aiming for a 46.2% reduction by 2030 from a 2019 baseline[81] - Between 2019 and 2023, Caesars achieved a 20.7% reduction in absolute Scope 1 and 2 GHG emissions[81] - Caesars set a target for a 37.5% reduction in Scope 3 emissions by 2035 against a 2022 baseline[81] - The company scored a B for both water security and climate change in its participation in the CDP[83] - Caesars has contracts for solar energy projects expected to be operational by the end of 2025, including developments in Atlantic City and Nevada[82] - The company reported a total waste diversion from landfills of 44% in 2023[83] - Caesars is engaged in long-term initiatives to manage risks and opportunities associated with climate change[62] Financial Performance and Risks - The company is subject to significant state and local taxes and fees, which are subject to increase at any time, impacting overall financial performance[59] - As of December 31, 2024, Caesars had a total long-term debt of $12.3 billion, with $5.9 billion in variable-rate borrowings[344] - Assuming a 100 basis-point increase in Term SOFR, Caesars' annual interest cost would increase by approximately $59 million based on outstanding amounts[346] - Caesars' average interest rate for fixed-rate long-term debt is 4.3%, while the average for variable-rate debt is 6.4%[346] Corporate Social Responsibility - Caesars' CSR strategy is guided by a CEO-level external CSR Advisory Board, reflecting its commitment to corporate social responsibility[72] - The company is required to maintain a current stock ledger and submit detailed financial and operating reports to gaming authorities[64] - Caesars maintains a comprehensive risk-based Bank Secrecy Act and Anti-Money Laundering program to comply with applicable regulations[54]

Financial Performance - Fourth quarter GAAP net revenues were $2.80 billion, a decrease of 1.0% from $2.83 billion in the prior year[4] - Full year GAAP net revenues totaled $11.2 billion, down 2.5% from $11.5 billion in the previous year[4] - Fourth quarter GAAP net income was $11 million, compared to a net loss of $72 million in the same quarter last year[4] - Full year GAAP net loss was $278 million, a significant decline from a net income of $786 million in the prior year, primarily due to a $940 million release of valuation allowance against deferred tax assets in the previous year[4] - Same-store Adjusted EBITDA for the fourth quarter was $882 million, down 4.6% from $924 million in the prior year[4] - Adjusted EBITDA for the three months ended December 31, 2024, was $882 million, down from $924 million in the same period of 2023, reflecting a decrease of 4.6%[24] - Total operating expenses for the year ended December 31, 2024, were $8,941 million, a decrease of 1.3% from $9,056 million in 2023[23] - Interest expense for the year ended December 31, 2024, was $2,366 million, slightly higher than $2,342 million in 2023[23] Debt and Cash Management - As of December 31, 2024, total outstanding debt was $12.3 billion, with cash and cash equivalents at $866 million[11] - The company reduced debt by $500 million during the fourth quarter and repurchased $50 million of common stock[12] - The company expects significant free cash flow in 2025, which will be used to further reduce leverage[3] - Capital expenditures for 2025 are forecasted at $600 million, excluding any remaining spend on Caesars Virginia[12] Digital Growth and Market Strategy - Caesars Digital Adjusted EBITDA for the full year increased to $117 million, compared to $38 million in the previous year, reflecting a strong growth in iGaming[4] - The company anticipates continued growth in its digital betting and iGaming platform user base, despite competitive pressures[19] - Caesars Entertainment is focused on expanding its market presence through new acquisitions and property developments[19] - The company plans to enhance its operational efficiency and technology leadership to improve guest experiences and loyalty program engagement[17] Risks and Forward-Looking Statements - Forward-looking statements indicate potential risks including economic trends and cybersecurity breaches that may impact future performance[19]

Core Viewpoint - Caesars Entertainment, Inc. (CZR) is expected to report its fourth-quarter 2024 results on February 25, with a consensus estimate indicating a loss per share of 15 cents and revenues of $2.81 billion, reflecting a slight decline from the previous year [1][3]. Financial Performance Expectations - The Zacks Consensus Estimate for CZR's loss per share has widened from 10 cents to 15 cents over the past week, compared to a loss of 34 cents per share in the same quarter last year [3]. - The expected revenue of $2.81 billion indicates a year-over-year decline of 0.5% [3]. Factors Influencing Performance - Revenue decline is attributed to increased competition, construction-related disruptions, adverse weather conditions, and shifts in visitor travel patterns [4]. - The Regional segment's net revenues are projected to be $1.33 billion, down 2.8% from the previous year, while Manage and Branded revenues are expected to remain flat at $68 million [5]. Positive Influences on Performance - CZR is likely to benefit from improved occupancy rates, average daily rate (ADR) trends, renovations, and increased sports-betting volumes [6]. - The total Las Vegas revenues are estimated at $1.09 billion, a slight increase of 0.3% from the prior year, and total Caesars Digital revenues are expected to reach $326 million, reflecting a 7.2% increase [7]. Revenue Growth Areas - Growth in retail sports betting and property development projects are anticipated to enhance the company's top line, with total casino revenues estimated at $1.62 billion, indicating a 2.7% increase from the previous year [8]. Cost Pressures - The bottom line may be impacted by inflationary pressures in food, beverage, and hotel expenses, along with increased property openings and ongoing investments in new projects [9]. Earnings Prediction Model - The Zacks model predicts an earnings beat for CZR, supported by a positive Earnings ESP of +0.87% and a Zacks Rank of 3 (Hold) [10][11].

Core Insights - Caesars Entertainment (CZR) is expected to report a quarterly loss of $0.10 per share, marking a 70.6% increase in losses compared to the same period last year [1] - Revenue forecasts stand at $2.82 billion, reflecting a slight decrease of 0.1% year over year [1] - Over the past month, the consensus EPS estimate has been revised downward by 52.8%, indicating a significant reassessment by analysts [1][2] Revenue Estimates - Analysts predict 'Net Revenues- Las Vegas' to be $1.09 billion, showing a year-over-year increase of 0.3% [4] - The estimated 'Net Revenues- Regional' is projected at $1.33 billion, indicating a decline of 2.8% from the previous year [4] - 'Net Revenues- Caesars Digital' is expected to reach $326.08 million, reflecting a growth of 7.3% compared to the year-ago quarter [4] EBITDA Estimates - 'Adjusted EBITDA- Las Vegas' is forecasted to be $486.48 million, slightly down from $489 million in the same quarter last year [5] - Analysts estimate 'Adjusted EBITDA- Regional' at $412.19 million, down from $431 million reported in the previous year [6] - The consensus for 'Adjusted EBITDA- Caesars Digital' stands at $28.36 million, compared to $29 million a year ago [6] - 'Adjusted EBITDA- Managed and Branded' is expected to be $18.62 million, a slight increase from $18 million in the same quarter last year [7] Stock Performance - Over the past month, Caesars Entertainment shares have increased by 12.5%, outperforming the Zacks S&P 500 composite, which rose by 2.6% [8] - The company holds a Zacks Rank of 3 (Hold), suggesting that its performance is likely to align with the overall market in the near term [8]

Core Insights - Caesars Entertainment, Inc. (CZR) has launched its first branded online casino live dealer studio in Pennsylvania, developed in collaboration with Evolution Gaming [1][2] - The initiative aims to enhance digital gaming presence and drive player engagement and revenue growth, reinforcing CZR's leadership in both physical and digital casino markets [2][4] Online Casino Developments - The Philadelphia-based studio features five blackjack tables (including one VIP exclusive), one roulette table, and one baccarat table, all with custom branding [3] - The platform integrates with Caesars Rewards, allowing players to earn credits for exclusive experiences across over 50 Caesars destinations in North America [4] Sports Betting Performance - In Q3 2024, net sports betting revenues increased by 36% year over year, driven by a hold rate of 8.6%, which rose approximately 210 basis points year over year [5] - As of September 30, 2024, CZR operated sports betting in 32 jurisdictions, with 26 offering mobile sports betting, and enhancements to the app have improved customer engagement [6] Marketing and Retention Strategies - The company has observed better retention rates in both iCasino and Sports, supported by targeted marketing campaigns, with 40 active campaigns as of Q3 2024 [7] - Further refinements to these campaigns are expected to drive additional gains in retention as the company approaches 2025 [7] Stock Performance - Over the past six months, shares of Caesars Entertainment have declined by 12.6%, contrasting with the industry's rise of 16.9% [9]

Group 1: Caesars Entertainment Inc - Caesars Entertainment reported third-quarter losses of 4 cents per share, missing analysts' expectations of a profit of 12 cents per share [1] - Revenue also fell short of estimates due to construction-related disruptions in New Orleans during a $435 million renovation [1] - Shares of Caesars Entertainment are down 9.2% at $41.13, with a year-to-date decline of 12.2% [1][3] Group 2: Analyst Insights - The 12-month consensus price target among 18 analysts for Caesars Entertainment is $53.56, indicating a roughly 30% premium to current levels [2] - Options trading activity has increased significantly, with five times the average daily volume, particularly at the January 2026 50-strike call [2] Group 3: Competitor Performance - Wynn Resorts Ltd has seen its stock rise 8.1% since the start of the year, although it has recently stalled after a 24.7% jump in September [4] - Wynn received the first commercial gaming operator license in the UAE, which brought attention to the company [4] - Las Vegas Sands Corp shares are down 0.4% at $53.17, facing pressure at the $54 level, but are up 8% since the beginning of 2024 [5]