The top executive for Reno-based Eldorado Resorts said it isn’t likely a Las Vegas Strip property would be sold until after the company’s $17.3 billion acquisition of Caesars Entertainment Corp. closes.
Eldorado CEO Thomas Reeg, in a second-quarter earnings call for the company Tuesday morning, also said investors should expect the blockbuster deal announced in June would probably conclude closer to Jan. 1, 2020, than June 30, 2020, as the company has indicated it would close in the first half of next year.
Reeg said the company already has made initial contact with gaming regulators in the states they operate and with the Federal Trade Commission, which could force the company to divest some properties due to antitrust concerns.
Eldorado announced that it is likely that at least one Strip asset would be sold and analysts have speculated about which property, what buyer, the price and when a transaction would occur. Reeg gave no more clues about which of Caesars Entertainment’s nine Las Vegas properties would go and who is interested in buying, but he said “operators not on the Las Vegas Strip that want to be on the Las Vegas Strip” have expressed interest.
Reeg said he has met with the Caesars team and is more confident than ever that his company will be able to achieve revenue synergies of $500 million a year and boost cash flow by $4.5 billion.
Reeg acknowledged that Caesars could sell assets on its own and that Eldorado has no control over influencing that because the company must operate under the assumption that it will continue to operate alone.
Eldorado, a regional gaming powerhouse that operates 26 casinos in 12 states, missed analysts’ revenue and earnings projections because of what Reeg described as “a lot of headwinds in the quarter,” some foreseen and some unforeseen.
For the quarter that ended June 30, the company reported revenue of $637.1 million, a 39.5 percent increase over the second quarter of 2018, and record cash flow of $178.7 million. But net income fell 48.7 percent to $18.9 million.
Reeg said the company expected a rough quarter at its Black Hawk, Colorado, properties with construction disruptions and its downtown Reno properties faced a tough comparison from 2018 when the city hosted a major women’s bowling tournament.
Reeg said the Black Hawk construction is over and the company is increasing its marketing efforts to inform customers.
The company’s Circus Circus Reno property in downtown Reno will benefit from an agreement with UNR to house students at its 902-room Sky Tower through May — a total 270,000 room nights. Two residence halls on campus were damaged and became uninhabitable following a July natural gas explosion. Reeg said the university would handle security in the building and the agreement will enable the company to assist the university while generating revenue.
The company didn’t anticipate flooding in the Midwest during the quarter that limited access to casinos in Iowa, Missouri and Mississippi.
Eldorado shares closed down 3 percent, $1.26, Tuesday and was unchanged in after-hours trading, ending at $40.45 a share on volume about twice the daily average.
Eldorado Resorts Inc.
Second-quarter revenue and earnings for Reno-based Eldorado Resorts Inc., operators of the Silver Legacy and Circus Circus in Reno and Tropicana in Atlantic City and Laughlin. (NYSE: ERI)
2Q 2019: $637.1 million
2Q 2018: $456.8 million
2Q 2019: $18.9 million
2Q 2018: $36.8 million
Earnings per share
2Q 2019: 24 cents
2Q 2018: 47 cents