Caesars Entertainment(US:CZR)2020-02-26 03:37Financial Data and Key Metrics Changes - For Q4 2019, net revenues totaled $2.2 billion, up 2.6% year-over-year, driven by strength in Las Vegas and growth in Iowa and Indiana due to new sportsbooks [9][10] - Adjusted EBITDA was $586 million, up 3.4% year-over-year, with adjusted EBITDA margins expanding 20 basis points to 27% [10] - For the full year, net revenues were $8.7 billion, up 4.2% year-over-year, and adjusted EBITDA totaled $2.42 billion, up 4.7% [11][12] Business Line Data and Key Metrics Changes - Las Vegas net revenue totaled $989 million, up 4.2% year-over-year, with gaming revenue increasing 1.4% and hotel revenue increasing 3.2% [19][20] - Other U.S. segments generated net revenues of $1 billion, up 1.8% year-over-year, with EBITDA increasing 7.8% to $248 million [25][26] - All other segments saw net revenues of $148 million, down 2.6% year-over-year, primarily due to decreases in international property volumes [27] Market Data and Key Metrics Changes - Strong consumer demand in Las Vegas led to higher occupancy rates, with occupancy increasing 120 basis points to 95.1% [20] - The opening of new sportsbooks in Indiana and Iowa drove higher visitation and gaming volumes [25] - The company has seen a 300% increase in cash beverage sales in Biloxi, Mississippi, since the sportsbooks opened [50] Company Strategy and Development Direction - The merger with Eldorado is progressing, with stockholder approvals received and regulatory approvals expected in the first half of 2020 [8] - The company is focusing on expanding its sports betting business, with plans to launch mobile sports betting in Pennsylvania, Indiana, and Iowa [16] - The opening of Caesars Forum in Las Vegas is anticipated to drive significant revenue, with over 240,000 room nights booked and $119 million in revenue expected [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the Las Vegas market, noting strong performance in January 2020 with gaming volume up 9% [17] - The company is monitoring the impact of the Coronavirus but has not seen any business impact to date [34][35] - The overall demand environment is improving, with expectations for continued non-gaming growth [29] Other Important Information - The company has removed approximately $100 million of annualized expenses since the start of 2019, contributing to strong financial results [12] - The company ended the year with approximately $1.8 billion of unrestricted cash and a total revolver capacity of $1.2 billion [31] Q&A Session Summary Question: Impact of Coronavirus on visitation and booking trends - Management reported no business impact from Coronavirus to date and noted strong VVIP business from Asia [34][35] Question: Incremental revenue from Caesars Forum - The majority of the $100 million in hotel room revenue is considered incremental, with bookings exceeding forecasts [37][38] Question: Exposure to high-end Asian clientele - The overall profitability from the VVIP business in Asia is around 1%, with no significant exposure [42] Question: Labor cost environment and operational improvements - The company has improved marketing and labor efficiency, with significant cost savings achieved [45][46] Question: Inbound interest for gaming assets on the Strip - There is currently no inbound interest for Strip properties, with no active discussions [48] Question: Impact of sports betting on visitation and revenue - Sports betting has led to increased visitation and food and beverage revenue, with a 300% increase in cash beverage sales in some locations [50] Question: Update on Centaur sale leaseback - No updates on timing or discussions regarding the Centaur sale leaseback [51] Question: Health precautions related to Asian clientele - The company is developing contingency plans and working with government agencies regarding health precautions [55] Question: Annual increase in union contract costs - The $100 million in cost savings is net, as increases would have occurred regardless [56]