weather icon Clear

Caesars Palace gaming revenue boost helps parent company

A 10.4 percent improvement in gaming revenue at Caesars Palace helped Las Vegas-based Caesars Entertainment endure a third-quarter loss, company officials reported Wednesday.

Earnings were affected by $472 million in restructuring costs as the company’s operating unit emerged from Chapter 11 bankruptcy protection on Oct. 6.

The company reported a loss of $468 million, $3.14 a share, on revenue of $986 million for the quarter that ended Sept. 30. In the same quarter a year earlier, the company reported a loss of $643 million, $4.38 a share, on revenue of $986 million.

The emergence from bankruptcy has left the company with $2 billion cash on hand which executives have said would be used for improvements to existing properties, the development of acreage near The Linq Hotel and for possible mergers and acquisitions.

In addition to the cash on hand, Caesars has reduced annual fixed charges by $1.6 billion a year, has reduced annual interest obligations by about $290 million a year and has reduced the cost of debt to 4.5 percent.

In Wednesday’s conference call with investors, executives had no specifics on potential acquisition targets or whether any existing properties would be sold. They reiterated plans to build a conference center on land east of The Linq. The company also is in the midst of renovating 6,000 hotel rooms, 4,500 of them in Las Vegas.

“We’re actively working on deals that are core to our strategy and to look for opportunities domestically,” said Caesars President and CEO Mark Frissora said during the call.

He said the company would leverage its strong Total Rewards loyalty program in any acquisition it makes.

Frissora also told investors that he expects the company to get more bang for its buck in marketing with the recent hiring of Chris Holdren as chief marketing officer. Holdren has had marketing and analytics roles with Handy, a high-growth technology startup, Starwood Hotels & Resorts Worldwide and The Walt Disney Company.

Frissora said the company would continue to monitor the potential effects of the Oct. 1 shooting on future bookings. The company is anticipating a fourth-quarter revenue drop as a result of the tragedy.

Officials have said they don’t expect a long-term impact on revenue, although Frissora said earlier this month that the company has seen a slowdown in play by Asian gamblers. He said the pace in variations in bookings and room cancellations has steadily declined in the days following the shooting incident.

Asked by analysts about recently approved legislation expanding gaming in Pennsylvania, Frissora and Chief Financial Officer Eric Hession said they were neutral about prospects there. They said they are happy about the state embracing internet gambling, but leery of the 54 percent tax rate.

Caesars shares closed unchanged at $12.95 a share Wednesday, but gained 1 cent a share in aftermarket trading with more than twice the average volume traded.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.

Don't miss the big stories. Like us on Facebook.