Caesars Entertainment(CZR) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported same-store consolidated net revenues of $2.9 billion and adjusted EBITDA of$1 billion for Q3 2024, driven by record non-gaming performance in Las Vegas and an all-time quarterly EBITDA record in the Digital segment [6][9] - Consolidated EBITDA margins remained flat at 35% year-over-year [7] - Adjusted EBITDA for the Regional segment was $498 million, down 13$1 billion with adjusted EBITDA of $472 million, a 2$303 million, up 41% year-over-year, with adjusted EBITDA reaching $52 million compared to$2 million a year ago [13] - The iGaming segment saw an 83% growth rate in net revenue, while the Sports Betting segment experienced a 36% increase [14][15] Market Data and Key Metrics Changes - Las Vegas segment EBITDAR margins were approximately 44.4%, remaining flat year-over-year [8] - The company noted competitive pressures in various markets, particularly in Reno and New Orleans, which affected performance [9][21] - The opening of Caesars New Orleans is expected to provide significant revenue opportunities due to favorable tax structures [25] Company Strategy and Development Direction - The company is focusing on reducing debt and has executed a $140 million share buyback, with plans for further buybacks as free cash flow increases [39][40] - Future capital expenditures are expected to decrease significantly, with a budget of approximately$600 million for 2025 [39][40] - The company is optimistic about the performance in 2025, anticipating tailwinds from new openings in New Orleans and Virginia [28][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding operating trends for the fourth quarter and into 2025, driven by strong occupancy and average daily rates [9][30] - The company acknowledged challenges from new competition and construction disruptions but remains confident in its ability to adapt and grow [21][22] - Management highlighted the importance of digital growth, expecting significant contributions from the digital segment moving forward [99] Other Important Information - The company completed the sale of the World Series of Poker brand for $250 million in cash and a$250 million note [18] - The LINQ Promenade sale was also announced, with an EBITDA multiple of approximately 14 times [38] - The company is actively exploring additional non-core asset sales, although these may be more complex and take longer to execute [42] Q&A Session Summary Question: Digital promotional investment strategy - Management indicated a different strategy for Sports and iCasino, with lower reinvestment levels in Sports while maintaining market alignment in iCasino [46][48] Question: Las Vegas group business outlook - Management expects higher group total revenues and EBITDA in 2025, pacing to set new records [49] Question: Non-core asset sales - Management clarified that while other non-core asset sales are in discussion, they are more complex and have longer timelines compared to recent sales [52] Question: iCasino early launch performance - Early results from the Horseshoe brand launch have been positive, with a good conversion of Wynn customers [54][56] Question: October OSB performance - Management noted that October was challenging due to poor sports betting outcomes, but this does not affect the long-term structural story [60] Question: Danville property transition - The transition to the permanent facility in Danville is expected to be seamless, with no significant EBITDA dislocation anticipated [75][78] Question: Competitive landscape in regional gaming - Management expects regional gaming to be slightly down to flat in 2025 due to ongoing competitive pressures [91][92] Question: Legal outlook for sports betting - Management expressed a desire to see OSB and iGaming legalized in every jurisdiction, emphasizing the importance of a structured approach [94] Question: Customer engagement in iGaming - Management reported an increase in crossover between brick-and-mortar and online customers, leading to higher customer value [96]