Las Vegas casinos help Caesars reduce quarterly losses

For Caesars Entertainment Corp., the second quarter was all about Las Vegas.

The privately held casino giant -- which has publicly owned debt -- narrowed its net loss in the quarter that ended June 30, thanks in large part to results from its 10 Strip-area casinos.

The company is considered the world's largest casino operator with more than 50 properties in six countries. Officials said Tuesday the company lost $155.5 million in the quarter, compared with a loss of $274 million in the same quarter last year. Both quarters included early debt extinguishment gains of $9.5 million and $12.1 million, respectively.

Caesars officials said customers were spending more on their casino visits, but their trips were less frequent.

In a conference call with analysts following the earnings release, Caesars Chairman and CEO Gary Loveman said there were positive results across its portfolio of Strip-area resorts, which include Caesars Palace, Planet Hollywood, Harrah's Las Vegas and the off-Strip Rio.

Net revenue for the company was up 0.4 percent, to $2.23 billion. Revenues from the Strip grew 10.3 percent, to $786.4 million.

Loveman said cost-cutting efforts, which saved about $86 million in the quarter, and measures to redesign the company's operating structure paid off.

"Our second-quarter results clearly indicate that the organizational and strategic changes we've made to meet the challenges of the recession are improving our performance and paving the way for accelerated growth when the economy improves," Loveman said in a statement.

While Las Vegas casinos carried the company, revenues from four casinos in Atlantic City fell 2.2 percent in the quarter. The entire New Jersey market has lost day-trip business to casinos in Pennsylvania and New York. But Loveman told analysts Atlantic City has stabilized.

KDP Investment Advisors gaming analyst Barbara Cappaert said Caesars may be on an upward-trending path if the company's Las Vegas casinos continue to shine.

"We are certainly pleased with Caesars performance, particularly if Atlantic City can truly stabilize," Cappaert said in a research note. "Results in Las Vegas exceeded our expectations. As we saw with other Strip operators, good demand and higher room rates helped to boost performance for Caesars."

The company said trips by its best-rated players fell 9.2 percent overall during the quarter. Visits to Las Vegas by those players were up 0.2 percent, but declined 4.1 percent to Atlantic City and 15 percent to the company's casinos elsewhere. Overall spending per rated-player trip increased 5.6 percent.

The company has growth plans in Las Vegas. Construction is expected to be completed by December on 662 unfinished hotel rooms in the Octavius Tower at Caesars Palace. Also, Caesars expects to unveil more details next week on Project Linq, a $500 million retail, dining and entertainment district on the Strip anchored by a 550-foot tall London Eye-style Ferris wheel.

Caesars' overall revenue growth was hurt because five of the company's casinos in the South and Midwest temporarily closed during the quarter because of flooding of the Ohio and Mississippi rivers.

"Caesars experienced stabilization across many of their markets," Deutsche Bank gaming analyst Andrew Zarnett told investors. "Despite the loss of revenues from the temporary closure of properties, results were up on year-over-year basis thanks to cost savings realized during the latest quarter."

Even though Caesars is not publicly traded, Loveman was asked by analysts if the recent plunges by the stock market might hurt business. He said the company's forward-looking indicators haven't changed.

"We're not anticipating any pullback from our group bookings," Loveman said. "So far, it's steady as she goes."

Caesars, known as Harrah's Entertainment until the end of last year, shelved plans for an initial public offering in November. The company, which has more than $19.5 billion in long-term debt, was taken private in 2008 in a leveraged buyout by private-equity firms Apollo Management LP and TPG Inc.

Caesars owns the World Series of Poker, which drew a record number of participants in June and July at the Rio and generated a record prize pool of more than $190 million. Loveman told analysts that debate in Washington D.C., has seemingly "turned an important corner on Internet poker."

He said members of Congress now view the legalization of Internet poker "as inevitable. It will happen. It's just a matter of when and to which piece of legislation it will be attached."

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