Caesars Entertainment Corp. probably thought that their first quarter figures, when they lost $280 million despite a 4.3% revenue rise, would be a sign of better of things to come. Unfortunately for them, all that hoping turned out to be as fleeting as the 72-day Kardashian-Humphries marriage.
The casino operator announced that their latest financial figures suffered another hit, with losses reaching $241.7 million – $1.93 per share – in the second quarter of 2012. Compared to last year’s loss of $155.5 million – $1.24 per share – Caesar’s business is sinking further and further down the proverbial quick sand.
The disappointing results also reached Wall Street when the company’s shares fell more than 3 percent in aftermarket trading.
According to a press release, the second quarter figures ballooned as a result of expensive non-cash impairment charges of $101.0 million related to the Macau land concession and another $33.0 million related to trademark intangibles Further contributing to these disappointing numbers include the higher depreciation expense with the 662-room Octavius Tower at Caesars Palace and lower visitation numbers in a number of their casinos.
As a result, Caesars’ net loss for the second quarter of 2012 spiked to $86.2 million, a number that represents a 55.4% increase from their figures during the same time period last year. In Vegas alone, Caesars reported decreased net revenues of $5.7 million from 2011, a drop of 0.7%. Second-quarter net revenues in the Las Vegas region decreased $5.7 million, or 0.7%, in 2012 from 2011.
“After a strong first quarter, difficult economic conditions led to lower visitation in several regions, impacting our core operating results in the second quarter,” said Gary Loveman, Caesars’ chairman, chief executive and president. “There were 1.6 percent fewer trips to Caesars’ casinos during the quarter than in the same period last year, and spending per trip fell 1.9 percent.”
The land concession in Macau alone, which cost a total of $134 million in non-cash charges, severely cut into the company’s income from operations to $81.8 million, signifying a cut in income of 65%. In addition, the higher net losses in the second quarter of 2012 is also reflected in the decrease in income from these operations while getting largely offset by lower interest expense and an increase in gains on early extinguishments of debt.
Despite the disappointing second quarter figures, Caesars was still able to report a 2% increase in revenue to $2.17 billion from $2.16 billion, crediting improved growth in its international and online operations. Yet the bottom line is that the company still fell short of its forecast revenue of $2.29 billion.
With casino revenue falling between the first and second quarter as the economy continues to struggle, Caesars can only hope that they can quell the bleeding in order to post better numbers in the latter of the year.