Caesars reports 17.4 percent revenue increase, reverses net loss

Caesars Entertainment Corp. said Tuesday its net revenue increased 17.4 percent in the second quarter, crediting the openings of The Cromwell on the Strip and the Horseshoe Baltimore and the $223 million renovation of The Linq hotel-casino for the boost in results.

The Las Vegas-based company, which operates more than 50 resorts nationwide, said its net income for the quarter that ended June 30 was $15 million, or 10 cents per share, reversing a net loss from a year ago. Total revenue for the quarter was $1.1 billion.

Caesars changed the way it reports quarterly results after January's bankruptcy filing of its largest operating division. The properties under Caesars Entertainment Operating Co. have been removed from the quarterly reports, and results for the division are reported separately through Securities and Exchange Commission filings and the bankruptcy court.

Adding the results of Caesars Entertainment Operating Co., which includes Caesars Palace, Caesars Atlantic City, Harrah's Reno and more than a dozen regional properties, Caesars' net revenue would have increased 8 percent, to $2.3 billion.

Caesars CEO Mark Frissora, in his first earnings report since replacing Chairman Gary Loveman, said in a statement the company-wide results were the best cash-flow margins for the casino operator since 2007. At the outset of the conference call, Frissora said he would not answer questions about the bankruptcy proceedings.

"We are focused on growing the business, continually improving efficiency and expanding margins," Frissora said. "These results demonstrate our ability to deliver growth while driving operational efficiencies."

Caesars said its cash flow for the quarter increased 55.6 percent, to $347 million. If Caesars Entertainment Operating Co. results were added, cash flow would have improved 42 percent, to $647 million.

Frissora said that since joining the company in February, he has visited many Caesars casinos in different markets. He officially took over as CEO on July 1.

The company said marketing and operational efficiencies, a favorable year-over-year hold percentage in the casinos, and a higher spending in hotel and food and beverage outlets helped boost the second-quarter results.

On a conference call with analysts, Frissora said most of the company's operating markets had stabilized across the United States with a few exceptions. In New Orleans, a city ban on smoking in public buildings cut into revenue produced at Harrah's New Orleans. Business at Horseshoe Baltimore experienced slight disruptions because of civil unrest in the city in late April and early May.

"We delivered the highest margins on the Strip of public casino company in the second quarter," Frissora said.

As for the bankruptcy, Frissora called it a "fluid process" and "a topic on everyone's minds."

Caesars announced over the weekend that its largest creditors have agreed to an amended restructuring support agreement. The bankruptcy is seeking to trim almost $10 billion of debt from Caesars Entertainment Operating Co., which carried $18.4 billion of the company's $22.8 billion in long term debt. The company wants to convert it into a real estate investment trust.

On Tuesday, the Wall Street Journal reported that a federal judge in Chicago would quickly consider Caesars Entertainment Operating Co.'s request to shield Caesars Entertainment from creditor lawsuits. The bankruptcy judge overseeing the case last week said the company could not pursue a fast appeal of his ruling that allows bondholder lawsuits to proceed.

Caesars wants to overturn the ruling, saying four lawsuits by bondholders in New York and Delaware could push the entire Las Vegas-based company into bankruptcy.

Shares of Caesars fell 6 cents, or 1.11 percent, on the Nasdaq on Tuesday to close at $5.34. Caesars shares have declined 66 percent since the beginning of the year.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.