CASINO

Eldorado Resorts profit dips ahead of Caesars merger vote

TAGs: Caesars Entertainment, Eldorado Resorts

eldorado-resorts-casino-profit-dipsCasino operator Eldorado Resorts says it expects to seal its deal to merge with rival Caesars Entertainment by the first quarter of 2019.

On Wednesday, the Reno-based Eldorado reported revenue of $663.2m in the three months ending September 30, a 36.1% rise over Q3 2018’s figure. However, on a ‘same-store’ basis, which imagines that Eldorado’s recent major acquisitions were fully contributing to Q3 2018, revenue was actually down 4.1% year-on-year.

It was a different story when comparing the $124.9m in operating income, which was up 36.1% on a statutory basis and up 36.5% on the same-store basis, while net income dipped 1.7% to $37m.

For the year-to-date, revenue is down 4.9% (same-store) to $1.94b and operating income is up nearly 22% to $351m.

Eldorado CEO Tom Reeg hailed his company’s adjusted earnings hitting a record $197.8m in Q3 as margins rose 330 basis points to a record 29.8%. The company also repaid $70m in debt during the quarter, boosting its year-to-date debt repayments to over $300m.

Reeg has previously praised the ongoing rollout of legal sports betting across the US for helping Eldorado’s properties in legal betting states to bring in a newer, younger breed of customer.

The quarter saw Eldorado launch betting at six properties in Iowa, Indiana and Mississippi, bringing the total number of Eldorado casinos offering wagering to 13, or half of the company’s total venue portfolio. Eldorado operates two casinos in Colorado, so the company will be pleased by that state’s recent sports betting legalization news.

As for Eldorado’s pending merger with Caesars, investors in both companies are scheduled to vote on the proposed union next week. Reeg told analysts that the merger is still on track to close in H1 2020, but “if I were to place a bet today, I’d be betting on a first quarter close versus a second quarter close.”

Reeg said Eldorado’s senior management has now “had the opportunity to visit every domestic Caesars asset” and somehow remained “excited about the opportunity to combine best practices from each company.” No doubt they’ve also had time to identify the dogs among Caesars portfolio that will be swiftly unloaded following regulatory approval of the merger.

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