Caesars Entertainment(US:CZR)2019-03-01 11:08Company Overview - As of December 31, 2018, Eldorado Resorts owned 28 gaming facilities across 13 states, featuring approximately 30,000 slot machines and video lottery terminals, 800 table games, and 12,600 hotel rooms[7]. - The total approximate casino square footage across all properties is 1,434,300 square feet[11]. - The company completed several acquisitions, including Isle of Capri Casinos, Inc. in May 2017, adding 13 gaming properties, and Tropicana Entertainment, Inc. in October 2018, adding seven properties[8]. - The total number of slot machines and video lottery terminals across all properties is 29,813, with 843 table and poker games[11]. - The company has plans to sell Lady Luck Casino Nemacolin, with the sale expected to close in the first quarter of 2019[11]. - As of December 31, 2018, the company had approximately 18,700 employees and 21 collective bargaining agreements covering about 3,400 employees[80]. - The company had $3.3 billion in total indebtedness as of December 31, 2018, including $956.8 million under a term loan facility and $600 million in senior notes due 2026[155]. - The company had $2.4 billion in goodwill and other intangible assets as of December 31, 2018, subject to annual impairment testing[150]. - The company operates 28 gaming facilities across 13 states, featuring approximately 30,000 slot machines and 800 table games[206]. Financial Performance - Net operating revenues for 2018 were $2,056,007, an increase of 39% from $1,480,798 in 2017[198]. - Operating income rose to $310,103 in 2018, compared to $94,810 in 2017, reflecting a significant improvement in profitability[198]. - Net income attributable to the Company was $95,235 in 2018, up from $73,380 in 2017, indicating a year-over-year growth of 29.7%[198]. - Total assets increased to $5,911,462 in 2018, a 67% rise from $3,546,472 in 2017[198]. - Total debt reached $3,261,735 in 2018, up from $2,190,193 in 2017, representing a 49% increase[198]. - Cash and cash equivalents improved to $230,752 in 2018, compared to $134,596 in 2017, showing a 71% increase[198]. - Basic net income per common share was $1.23 in 2018, compared to $1.09 in 2017, reflecting a 12.8% increase[198]. Acquisitions and Joint Ventures - The company announced a joint venture with the Cordish Companies to develop a mixed-use entertainment and hospitality destination adjacent to Isle Casino Racing Pompano Park[30]. - A joint venture with Cordish was established to develop a mixed-use entertainment and hospitality destination at the Pompano property, with initial cash contributions of $250,000 each[63]. - In 2018, the Company incurred transaction expenses of $20.8 million related to acquisitions, including Isle, Elgin, and Tropicana[203]. - The Company issued $600 million of senior notes in 2018 to fund the Tropicana acquisition, alongside a $246 million interest-only mortgage note[203]. - The company anticipates that acquisitions of Tropicana and Elgin will be accretive to earnings per share in 2019, based on estimates and expected synergies[140]. Regulatory and Compliance - The company is subject to extensive gaming regulations, which could impose additional costs or restrictions that may adversely affect operations[65]. - The company is required to maintain a current stock ledger that may be examined by gaming authorities at any time[70]. - The company must periodically apply to renew many of its licenses and registrations, and failure to maintain these could have a material adverse effect[103]. - The company is subject to significant control by gaming authorities, which could result in sanctions if any securities holders are deemed unsuitable[104]. - The company is required to pay initial annual rent payments of at least $87.6 million under the Master Lease, which is subject to annual escalation[100]. - The company pays significant revenue-based taxes and fees, which are subject to increase, potentially affecting financial results[111]. Market and Competition - The gaming industry is highly competitive, with various forms of gaming operations competing for customer discretionary spending[64]. - The company faces challenges from competitors, including large gaming companies with greater financial resources and lower tax burdens[64]. - The company competes with Native American gaming operations, particularly in California, which could impact its customer base[95]. - The expansion of legalized gaming in various states could increase competition and adversely affect the company's operations[94]. - The company faces significant competition in the hotel and casino industry, competing with various gaming operations and other forms of entertainment for discretionary spending[93]. Operational Challenges - The company has a diversified portfolio with no single property accounting for more than 14% of net revenues for the year ended December 31, 2018[58]. - The company faces challenges in attracting and retaining qualified employees, which could adversely affect operations[119]. - The company is subject to various environmental regulations that could impose significant liabilities for cleanup and compliance[79]. - The company is exposed to risks from natural disasters and may not have sufficient insurance coverage to mitigate potential losses[125]. - The reliance on computer systems and software poses risks of data loss or corruption, which could materially impact financial performance[129]. - Seasonal variations historically affect the company's operations, with the strongest results typically occurring in the second and third quarters[135]. - The company may incur additional costs due to the concentration of the slot machine manufacturing industry, which limits the availability of popular games[136]. - Increased competition may necessitate substantial capital expenditures to maintain and enhance the competitive positions of the company's properties[96]. Strategic Initiatives - The company has implemented changes to marketing strategies to reach more potential customers through targeted direct mail and electronic communications[58]. - The company operates a One Club player loyalty program, allowing players to earn and redeem rewards across its portfolio[57]. - The company has a strong focus on customer satisfaction and delivering superior guest experiences in a clean and safe environment[57]. - The company is pursuing expansion opportunities, including joint ventures in jurisdictions where casino gaming is not currently permitted[139]. - Forward-looking statements indicate expectations for future development and acquisitions, but actual results may vary due to numerous uncertainties[81].