Caesars Entertainment(US:CZR)2021-11-03 01:13Financial Data and Key Metrics Changes - The company reported $1.4 billion of adjusted EBITDA for Q3 2021, excluding Caesars Digital, marking a record for Brick and Mortar properties [8][9] - Las Vegas segment achieved an all-time quarterly record of $500 million in adjusted EBITDA, with a 44% improvement compared to Q3 2019 and a margin increase of 1,400 basis points to 50% [9][10] - Total occupancy for Q3 was 89%, with weekend occupancy at 97% and mid-week occupancy at 86% [10] Business Line Data and Key Metrics Changes - In regional markets, adjusted EBITDA, excluding New Orleans, Lake Tahoe, and Lake Charles, increased by 35% compared to 2019, with margins improving by 860 basis points to 38% [12] - Caesars Digital segment generated over $3 billion in volume, $96 million in net revenue, and an adjusted EBITDA loss of $164 million, with sports betting and iCasino handle split roughly 55%/45% [13][14] Market Data and Key Metrics Changes - The company’s national market share for sports betting reached 17% through September, with a handle of over $1.7 billion for Q3 and over $1.3 billion in October [15][38] - The company is now offering sports betting in 20 jurisdictions, with 14 being mobile [16] Company Strategy and Development Direction - The company plans to invest over $1 billion in the digital segment, anticipating cash-on-cash EBITDA returns at maturity exceeding 50% [28] - A significant focus is on scaling the digital business through aggressive customer acquisition, particularly in states where the Liberty platform is operational [14][30] - The company is also pursuing a strategy of asset sales, with expectations to generate over $5 billion in cash for deployment in 2022, primarily for debt reduction [50][51] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about visitation gains as COVID fears subside and expects a gradual recovery in group and convention revenues [20][106] - The company anticipates significant cash flow generation in 2022, with expectations to reduce cash interest expense significantly by the end of the year [50][51] Other Important Information - The company announced an agreement to sell the non-U.S. assets of William Hill for approximately $1.2 billion, expected to close in Q1 2022 [43][46] - Capital expenditures for 2021 are projected to be between $350 million and $400 million, with a portion allocated to Caesars Digital [46] Q&A Session Summary Question: When do you believe the sports betting business could start to see positive EBITDA contribution? - Management expects this to occur by the football season of 2023 [53] Question: Is there anything special about the first half of next year that would prompt aggressive action regarding asset sales? - Management indicated that they want to market based on the EBITDA generated from the property [55] Question: How sustainable is the current OpEx run rate in Las Vegas? - Management believes the current OpEx is sustainable but would like to see it increase as staffing improves [57] Question: What is the expected incremental investment in iCasino games? - Management stated that the investment is built into the overall guidance and is tied to the timing of game approvals [62] Question: How does the company view ROI in digital markets with higher tax rates? - Management prefers lower tax jurisdictions but acknowledges that high-velocity states can still be profitable [77] Question: How is the company performing in competitive states like New Jersey and Pennsylvania? - Management reported gaining market share in states where they launched later, with positive trends observed [86] Question: Can you quantify the impact of Caesars Rewards on new sign-ups? - Management noted that Caesars Rewards members account for about a quarter to a third of first-time deposits [92]