Caesars Entertainment (CZR) Q2 2025 Earnings Call July 29, 2025 05:00 PM ET Company ParticipantsBrian Agnew - SVP - Corporate Finance, Treasurer & IRAnthony Carano - President & COOEric Hession - President - Caesars Sports & Online GamingBret Yunker - CFOTom Reeg - CEODaniel Politzer - Executive Director, Equity Research - Gaming and LodgingBrandt Montour - Director - Equity ResearchDavid Katz - Managing DirectorLizzie Dove - VP - Equity ResearchSteven Wieczynski - Managing DirectorBarry Jonas - Managing Di ...

Caesars Entertainment Investor Presentation July 29, 2025 Forward Looking Statements Certain information in this presentation constitutes forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts and by the use of words such as "will," "may," "expect," "project," "positioned," or the negative or other variations thereof or comparable terminology. In part ...

Financial Data and Key Metrics Changes - Adjusted net income for the second quarter of 2025 was $149 million, with adjusted earnings per diluted share of $3.15, excluding a $10 million post-tax impact from debt repurchase expenses [5] - Return on average tangible common equity was 22.7% for the quarter [5] - Revenue decreased by 1% year over year to $929 million, primarily due to lower finance charges and late fees [13] - Average loans decreased by 1% to $17.7 billion, influenced by macroeconomic challenges and elevated gross credit losses [12] Business Line Data and Key Metrics Changes - Credit sales grew by 4% year over year, driven by new partner growth and higher general purpose spending [6] - Non-interest income increased by $3 million, primarily due to recent paper statement pricing changes [14] - Total non-interest expenses increased by $12 million or 3% year over year, mainly due to debt extinguishment costs [13][15] Market Data and Key Metrics Changes - Direct to consumer deposits increased to $8.1 billion at quarter end, up 12% year over year [9] - Delinquency rate improved to 5.7%, down 30 basis points year over year [21] - Net loss rate was 7.9%, down 70 basis points year over year [22] Company Strategy and Development Direction - The company is focused on technology modernization, digital advancement, and product innovation to drive future growth [9] - A multi-year extension of the relationship with Caesars Entertainment was announced, securing top programs until at least 2028 [10] - The company aims to optimize its balance sheet and maintain a strong capital position while delivering value to shareholders [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of consumer health and spending trends, despite mixed economic data [28][30] - The full-year net loss rate guidance was adjusted to a range of 7.8% to 7.9%, reflecting better-than-expected improvements in credit metrics [25] - Management remains cautious about potential macroeconomic impacts on consumer spending and employment [30][90] Other Important Information - The company completed a $150 million share repurchase program and a $150 million tender offer for senior notes [9] - The total loss absorption capacity was reported at 25.7% of total loans, indicating a strong margin of safety [21] Q&A Session Summary Question: Health of the customer regarding credit sales and loan growth - Management noted that consumer health remains stable, with a positive trend in credit sales growth continuing into July [28][30] Question: Capital plans and buybacks - Management indicated that capital priorities remain unchanged, focusing on responsible growth and potential buybacks when appropriate [36][38] Question: Top line view and NII progression - Management acknowledged that improved delinquency rates and lower late fees are impacting top line NII, with expectations for variability in revenue [43][46] Question: Growth prospects and capital utilization - Management emphasized ongoing investments in the business and maintaining a balance between growth and shareholder returns [49][52] Question: Trends in applications and approval rates - Management reported strong application flows and appropriate approval rates based on current economic conditions [76][78] Question: Impact of BNPL and new client conversations - Management confirmed that BNPL is part of their product offerings and highlighted a robust pipeline for future growth opportunities [93][96] Question: Competitive renewal processes and risk-adjusted returns - Management described the competitive nature of the market and their proactive approach to partner renewals, ensuring alignment with hurdle rates [100]

Financial Data and Key Metrics Changes - Bred Financial reported adjusted net income of $149 million and adjusted earnings per diluted share of $3.15, excluding a $10 million post-tax impact from debt repurchase expenses [4] - Return on average tangible common equity was 22.7% for the quarter, reflecting strong operational performance [4] - Revenue for the quarter was $929 million, down 1% year over year, primarily due to lower finance charges and late fees [12] Business Line Data and Key Metrics Changes - Credit sales grew 4% year over year, driven by new partner growth and higher general purpose spending [5] - Average loans decreased by 1% to $17.7 billion, impacted by macroeconomic challenges and elevated gross credit losses [11] - Direct to consumer deposits increased to $8.1 billion, up 12% year over year, indicating strong growth in this segment [7] Market Data and Key Metrics Changes - The net loss rate improved to 7.9%, down 70 basis points year over year, reflecting better credit metrics [20] - Delinquency rate decreased to 5.7%, down 30 basis points from last year, indicating improved consumer credit health [19] - The reserve rate for credit losses was 11.9%, a 30 basis point improvement year over year, due to better credit metrics [21] Company Strategy and Development Direction - The company is focused on technology modernization, digital advancement, and product innovation to drive future growth [7] - A multi-year extension of the partnership with Caesars Entertainment was announced, securing top programs until at least 2028 [8] - The company aims to optimize its balance sheet and maintain disciplined capital allocation while investing in growth opportunities [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of consumer health and spending, despite mixed economic signals [28] - The outlook for the net loss rate was adjusted to a range of 7.8% to 7.9%, reflecting better-than-expected credit metrics [24] - Management remains cautious about macroeconomic uncertainties but optimistic about gradual consumer improvement [30] Other Important Information - The company completed a $150 million share repurchase program and a $150 million tender offer for senior notes, enhancing shareholder value [7] - Total liquid assets and undrawn credit facilities were $7.7 billion, representing 35% of total assets, indicating a strong liquidity position [16] - The company anticipates higher marketing and employee-related costs in 2025 due to typical seasonality [14] Q&A Session Summary Question: Health of the customer and credit sales growth - Management noted that consumer health remains stable, with a 4% growth in credit sales and positive trends continuing into July [27][30] Question: Capital plans and buybacks - Management indicated that capital priorities remain unchanged, focusing on responsible growth and potential buybacks as capital ratios improve [34][36] Question: Top line revenue outlook - Management explained that improved delinquency rates and lower late fees are pressuring top line revenue, but they expect gradual improvements [42][44] Question: Growth prospects and credit actions - Management highlighted ongoing efforts to manage credit strategies dynamically, with a focus on improving loss rates and consumer engagement [66][68] Question: Trends in applications and approval rates - Management reported strong application flows and appropriate approval rates based on current economic conditions, emphasizing customer engagement post-approval [78][80] Question: BNPL and new product offerings - Management confirmed that BNPL is part of their product set, allowing flexibility to meet market demands and partner needs [97][100] Question: Competitive renewal processes and retail partner penetration - Management discussed proactive renewal strategies with partners and emphasized the importance of deepening relationships to drive growth [104][106]

Core Insights - Caesars Entertainment is launching a new premium credit card, the Caesars Rewards Prestige Visa Signature, in partnership with Bread Financial, aimed at enhancing customer experience and loyalty [1][2][3] Group 1: Credit Card Features - The Caesars Rewards Prestige Visa Signature credit card has a $149 annual fee and offers up to $450 in annual value through various perks [1][2] - Cardmembers can earn rewards on everyday purchases and unlock exclusive benefits in travel, entertainment, dining, and gaming [2][3] - The card includes a complimentary hotel night upon anniversary (up to $300), $50 Slot Play, and $100 Caesars dining credit [4] Group 2: Tier Credits and Bonuses - New cardholders can earn up to 25,000 additional Tier Credits in their first year, accelerating their progress in the Caesars Rewards loyalty program [2][5] - The card provides multiple opportunities for earning Tier Credits, including bonuses for spending outside Caesars Rewards destinations [5] Group 3: Company Background - Caesars Entertainment is the largest casino entertainment company in the U.S., operating under various brand names and offering a wide range of gaming and hospitality services [7] - The company focuses on enhancing guest value through its Caesars Rewards loyalty program and a commitment to operational excellence and technology leadership [7] Group 4: Partner Company Overview - Bread Financial is a tech-forward financial services company that provides personalized payment and lending solutions, enhancing customer experiences in various sectors [8]