Caesars Entertainment(CZR) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Unaudited Financial Statements This section presents the Company's unaudited consolidated condensed financial statements and detailed notes for Q1 2025 and 2024 Consolidated Condensed Balance Sheets | (In millions) | March 31, 2025 | December 31, 2024 | | :------------ | :------------- | :---------------- | | Total assets | $32,398 | $32,590 | | Total liabilities | $28,119 | $28,214 | | Total stockholders' equity | $4,279 | $4,376 | Consolidated Condensed Statements of Operations | (In millions, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Net revenues | $2,794 | $2,742 | | Operating income | $488 | $485 | | Net loss | $(98) | $(142) | | Net loss attributable to Caesars | $(115) | $(158) | | Basic loss per share | $(0.54) | $(0.73) | Consolidated Condensed Statements of Comprehensive Income (Loss) | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------ | :-------------------------------- | :-------------------------------- | | Net loss | $(98) | $(142) | | Comprehensive loss | $(98) | $(143) | | Comprehensive loss attributable to Caesars | $(115) | $(159) | Consolidated Condensed Statements of Stockholders' Equity | (In millions) | Balance, December 31, 2024 | Balance, March 31, 2025 | | :------------ | :------------------------- | :---------------------- | | Total Stockholders' Equity | $4,376 | $4,279 | | Net income (loss) attributable to Caesars | $(115) | $(158) (for 2024) | Consolidated Condensed Statements of Cash Flows | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $218 | $80 | | Net cash used in investing activities | $(206) | $(264) | | Net cash used in financing activities | $(19) | $(94) | | Decrease in cash, cash equivalents and restricted cash | $(7) | $(278) | | Cash, cash equivalents and restricted cash, end of period | $1,009 | $865 | Notes to Consolidated Condensed Financial Statements This section provides detailed explanations of the Company's accounting policies, asset valuations, debt, revenue, and segment information - Caesars Entertainment, Inc. (CZR) is a diversified gaming and hospitality company, founded in 1973, that has grown through a series of acquisitions including Caesars Entertainment Corporation (2020) and William Hill PLC (2021)[26] - The Company owns, leases, brands, or manages 53 domestic properties in 18 states, with primary revenue from gaming operations, including retail and online sports betting and online gaming[27] - Caesars Digital segment operates retail and online sports wagering in 32 North American jurisdictions (26 online), and iGaming in five jurisdictions, including the Caesars Sportsbook, Racebook, and Palace/Horseshoe Online Casino apps[28] - On December 12, 2024, the Company sold the LINQ Promenade for $275 million, which was previously part of the Las Vegas segment[30] - Unaudited financial statements are prepared in accordance with GAAP for interim financial information, not including all information required for complete financial statements[31] - The Company consolidates subsidiaries where it has a controlling financial interest and Variable Interest Entities (VIEs) where it is the primary beneficiary[33] - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[39] - Advertising costs are expensed as incurred, totaling $60 million in Q1 2025 and $64 million in Q1 2024, primarily within Casino expense for Caesars Digital[41] | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------ | :-------------------------------- | :-------------------------------- | | Interest expense, net | $574 | $590 | - New accounting pronouncements (ASU 2024-03 and ASU 2023-09) are not expected to have a material impact on the financial statements[43][44] | (In millions) | March 31, 2025 | December 31, 2024 | | :------------ | :------------- | :---------------- | | Total property and equipment, net | $14,666 | $14,812 | | Depreciation expense (3 months ended March 31) | $324 (2025) | $291 (2024) | | (In millions) | March 31, 2025 | December 31, 2024 | | :------------ | :------------- | :---------------- | | Goodwill | $10,601 | $10,601 | | Total amortizing and non-amortizing intangible assets other than Goodwill, net | $4,100 | $4,133 | | Amortization expense (3 months ended March 31) | $33 (2025) | $36 (2024) | - The Company is party to various legal proceedings, with estimated losses accrued when probable and estimable, not material to consolidated financial condition[52] - Sports sponsorship/partnership obligations totaled $398 million as of March 31, 2025, with contracts extending through 2040[54] - Self-insurance liability for workers compensation, health, and general liability was $208 million as of March 31, 2025[55] | (In millions) | March 31, 2025 | December 31, 2024 | | :------------ | :------------- | :---------------- | | Total debt | $12,167 | $12,154 | | Current portion of long-term debt | $110 | $109 | | Long-term debt | $12,046 | $12,033 | - Annual maturities of long-term debt are estimated at $84 million for 2025, $110 million for 2026, and $656 million for 2027; estimated interest payments are $580 million for 2025[59] - The Company was in compliance with all applicable financial covenants as of March 31, 2025[82] - The CEI Revolving Credit Facility had $2.1 billion of available borrowing capacity as of March 31, 2025[71] | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------ | :-------------------------------- | :-------------------------------- | | Net Revenues: | | | | Las Vegas | $1,003 | $1,028 | | Regional | $1,388 | $1,365 | | Caesars Digital | $335 | $282 | | Managed and Branded | $67 | $68 | | Corporate and Other | $1 | $(1) | | Adjusted EBITDA: | | | | Las Vegas | $433 | $440 | | Regional | $440 | $433 | | Caesars Digital | $43 | $5 | | Managed and Branded | $16 | $18 | | Corporate and Other | $(48) | $(43) | - Contract and contract related liabilities (outstanding chip liability, Caesars Rewards, customer deposits) decreased from $728 million at Jan 1, 2025 to $606 million at March 31, 2025[89] - Hotel lease revenue was $482 million in Q1 2025, down from $493 million in Q1 2024; real estate lease revenue was $29 million in Q1 2025, down from $35 million in Q1 2024[90][92] | (In millions, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss attributable to Caesars | $(115) | $(158) | | Basic loss per share | $(0.54) | $(0.73) | | Diluted loss per share | $(0.54) | $(0.73) | | Weighted average basic shares outstanding | 212 | 216 | - Total stock-based compensation expense was $26 million in Q1 2025, up from $25 million in Q1 2024[97] - In Q1 2025, the Company granted 2.2 million RSUs ($75M fair value), 232 thousand PSUs ($6M fair value), and 348 thousand MSUs ($16M fair value)[98][99][100] - The Board authorized a $500 million common stock repurchase program on October 2, 2024; no repurchases were made in Q1 2025, but approximately 4.2 million shares were repurchased for $100 million in April 2025[106] | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------ | :-------------------------------- | :-------------------------------- | | Loss before income taxes | $(87) | $(127) | | Provision for income taxes | $(11) | $(15) | | Effective tax rate | (12.6)% | (11.8)% | - The income tax provision differed from the federal tax rate of 21% primarily due to an increase in federal and state valuation allowances against deferred tax assets for excess business interest expense[113] - The Company leases land for Eldorado Resort Casino Reno from C. S. & Y. Associates (CSY), a general partnership where the Executive Chairman's family has an interest; annual rent is $0.6 million[115] - The Company holds a 50.0% variable interest in CVA Holdco, LLC (Caesars Virginia joint venture) and is the primary beneficiary, consolidating its operations; distributions to the partner totaled $10 million in Q1 2025[116] - The Company holds a 50% variable interest in the Pompano Joint Venture but is not the primary beneficiary, accounting for it using the equity method; distributions from this JV totaled $23 million in Q1 2025[117][118] - The Company operates in four reportable segments: Las Vegas, Regional, Caesars Digital, and Managed and Branded, plus Corporate and Other; Adjusted EBITDA is the primary metric used by the CEO (CODM) to assess segment performance and allocate resources[119][122] - Total capital expenditures were $223 million in Q1 2025, down from $264 million in Q1 2024[132] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the Company's financial condition and operational results for Q1 2025 vs Q1 2024, covering performance, liquidity, and capital resources Overview This section provides a general overview of the Company's business, properties, and recent divestitures - Caesars is a diversified gaming and hospitality company with 53 domestic properties in 18 states, generating primary revenue from gaming operations, including retail and online sports betting and iGaming[140] - As of March 31, 2025, the Company owned 22 casinos and leased 24, including 18 from VICI Properties L.P. and 6 from GLP Capital, L.P.[141] - Caesars Digital operates retail and online sports wagering in 32 North American jurisdictions (26 online) and iGaming in five jurisdictions[143] - Recent divestitures include the World Series of Poker (WSOP) Trademark for $500 million (October 2024) and The LINQ Promenade for $275 million (December 2024)[147] Investments and Partnerships This section details the Company's joint venture interests and related distributions - The Company has a 50% variable interest in the Pompano Joint Venture with Cordish Companies, accounted for using the equity method, and received $23 million in distributions in Q1 2025[150][151] Reportable Segments This section outlines the Company's four primary reportable operating segments - Operating segments are aggregated into four reportable segments: Las Vegas, Regional, Caesars Digital, and Managed and Branded, plus Corporate and Other[152] Key Performance Metrics This section identifies the key metrics used to evaluate the Company's operational and financial performance - Key performance metrics include volume indicators (drop/handle), win/hold percentages (slot win 9-11%, table games hold 16-23%, sports betting hold 7-11%, iGaming hold 3-5%), and hotel occupancy[156] - Adjusted EBITDA and Adjusted EBITDA margin are key metrics for profitability and performance[156] Significant Factors Impacting Financial Results This section discusses economic and financial factors influencing the Company's financial outcomes - Economic factors impacting discretionary spending (inflation, interest rates, global hostilities) influence customer behavior[158] - Debt transactions, including a $4.4 billion refinancing in Q1 2024, resulted in a $48 million loss on extinguishment of debt[158] Consolidated Financial Performance This section analyzes the Company's overall financial results, including revenues, net loss, and Adjusted EBITDA | (Dollars in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Variance | Percent Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :------- | :------------- | | Net revenues | $2,794 | $2,742 | $52 | 1.9% | | Net loss | $(98) | $(142) | $44 | 31.0% | | Adjusted EBITDA | $884 | $853 | $31 | 3.6% | | Net loss margin | (3.5)% | (5.2)% | 1.7 pts | | | Adjusted EBITDA margin | 31.6% | 31.1% | 0.5 pts | | - Consolidated net revenues increased due to significant iGaming handle and improved iGaming/sports betting hold in Caesars Digital, and increased revenues in Regional segment from new development projects[159] - Operating expenses increased by 2.2% to $2,306 million, primarily due to increased food & beverage and hotel expenses from new facility openings and higher wages, partially offset by decreased promotional costs in Las Vegas[160][161] - Depreciation and amortization increased by 9.2% to $357 million due to recently completed construction projects[164] - Interest expense, net, decreased by 2.7% to $574 million due to debt reduction and refinancing efforts[167] Segment Performance Analysis This section provides a detailed analysis of the financial performance for each of the Company's reportable segments - Las Vegas Segment: Net revenues decreased by 2.4% to $1,003 million, and Adjusted EBITDA decreased by 1.6% to $433 million, primarily due to lower hotel occupancy and room rates compared to Q1 2024 (Super Bowl impact); Adjusted EBITDA margin improved by 0.4 pts to 43.2% due to efficiency focus[170] - Regional Segment: Net revenues increased by 1.7% to $1,388 million, and Adjusted EBITDA improved by 1.6% to $440 million, driven by positive results from Caesars Virginia and Caesars New Orleans development projects; Net income declined due to increased depreciation expense from completed construction projects[173] - Caesars Digital Segment: Net revenues increased by 18.8% to $335 million, and Adjusted EBITDA significantly improved to $43 million (from $5 million), primarily due to higher iGaming handle (up 28.3% to $4,488M) and improved iGaming (up 0.3 pts to 3.6%) and sports betting hold (up 0.6 pts to 7.3%); Adjusted EBITDA margin increased by 11 pts to 12.8%[175][176] - Managed and Branded Segment: Net revenues decreased by 1.5% to $67 million, and Adjusted EBITDA decreased by 11.1% to $16 million[179] Adjusted EBITDA Reconciliation This section defines Adjusted EBITDA and reconciles it to the Company's net loss - Adjusted EBITDA is a non-GAAP measure defined as net income (loss) before interest, taxes, depreciation, amortization, stock-based compensation, debt extinguishment loss, impairment, other income/loss, noncontrolling interests, transaction costs, and non-cash equity method changes[182] | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------ | :-------------------------------- | :-------------------------------- | | Net loss attributable to Caesars | $(115) | $(158) | | Adjusted EBITDA | $884 | $853 | Liquidity and Capital Resources This section assesses the Company's cash position, available liquidity, and future funding requirements - As of March 31, 2025, cash and cash equivalents were $884 million, with total available liquidity (including revolver capacity) of $2,994 million[187] - Operating activities generated $218 million in cash inflows in Q1 2025, up from $80 million in Q1 2024[187] - Estimated debt service (principal and interest) for the remainder of 2025 is $664 million, and lease payments to VICI and GLPI are approximately $1.0 billion[190] - Capital expenditures totaled $223 million in Q1 2025, with an estimated range of $445 million to $570 million for the remainder of 2025[192][193] - The Company expects current liquidity to be sufficient to fund operations, capital requirements, and debt service for the next twelve months and beyond[197] Debt and Master Lease Covenant Compliance This section confirms the Company's adherence to financial covenants under its debt agreements and master leases - The Company was in compliance with all applicable financial covenants under its debt agreements and master leases as of March 31, 2025[202] - Key covenants include a maximum net total leverage ratio of 6.50:1 and a minimum fixed charge coverage ratio of 2.0:1 for CEI Revolving Credit Facility and Term Loan A[199] - GLPI Leases require a minimum adjusted revenue to rent ratio of 1.20:1[200] Share Repurchase Program This section provides an update on the Company's common stock repurchase program - The $500 million common stock repurchase program authorized in Oct 2024 had $450 million remaining as of March 31, 2025[203] - No repurchases were made in Q1 2025, but $100 million worth of shares were repurchased in April 2025[203] Critical Accounting Policies and Estimates This section confirms no material changes to critical accounting policies and estimates since the prior fiscal year-end - No material changes to critical accounting policies and estimates since December 31, 2024[206] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section outlines the Company's exposure to market risks, primarily interest rate fluctuations on variable-rate debt, with no material changes reported - The Company is exposed to interest rate risk from variable rate long-term debt[208] - As of March 31, 2025, variable-rate borrowings totaled $5.9 billion (48% of consolidated long-term debt), with weighted average interest rates of 6.56% for variable and 6.34% for fixed rate debt[209] - No material quantitative changes in market risk exposure or management from prior reports[211] Item 4. Controls and Procedures This section confirms the effectiveness of disclosure controls and reports no significant changes in internal controls over financial reporting Evaluation of Disclosure Controls and Procedures This section states the CEO and CFO's conclusion on the effectiveness of disclosure controls and procedures - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2025[213] Changes in Internal Controls This section reports on any material changes in the Company's internal controls over financial reporting - No significant changes in internal control over financial reporting during Q1 2025[214] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 5 of the financial statements for details on the Company's legal proceedings - Refer to Note 5 of the Consolidated Condensed Financial Statements for discussion of legal proceedings[217] Cautionary Statements Regarding Forward-Looking Information This section warns that the report contains forward-looking statements subject to significant risks and uncertainties, advising against undue reliance - The report contains forward-looking statements subject to known and unknown risks and uncertainties, many beyond the Company's control[219] - Key risks include sensitivity to consumer spending, economic trends, debt covenant compliance, capital availability, regulatory impact, cybersecurity, competition, and reliance on key personnel[221] - The Company does not intend to publicly update forward-looking statements except as required by law[222] Item 1A. Risk Factors This section confirms no material changes to the Company's risk factors during Q1 2025 from those in the 2024 Annual Report - No material changes to risk factors during Q1 2025 from those disclosed in the 2024 Annual Report[226] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section updates on the common stock repurchase program, noting no Q1 2025 repurchases but $100 million in April 2025 - The $500 million common stock repurchase program authorized in Oct 2024 had $450 million remaining as of March 31, 2025[227] - No repurchases were made in Q1 2025, but $100 million worth of shares were repurchased in April 2025[227] Item 3. Defaults Upon Senior Securities This section confirms that there were no defaults upon senior securities during the reporting period - None[228] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the Company's operations - Not applicable[229] Item 5. Other Information This section confirms no other material information or Rule 10b5-1 trading arrangement changes in Q1 2025 - No other information to report under this item[230] - No directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements in Q1 2025[231] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including corporate documents and certifications - Lists various exhibits filed with the report, including corporate documents, certifications, and XBRL documents[233] Signatures This section contains the official signatures of the CEO and CFO, certifying the report filing on April 29, 2025 - The report was signed by Thomas R. Reeg (CEO) and Bret Yunker (CFO) on April 29, 2025[237]