Casino operator Caesars Entertainment Corporation closed out 2019 with another nine-figure net loss, in yet another example of what the struggling company’s chief exec calls a ‘solid’ performance undone by the pesky need to service its debt.
On Tuesday, Caesars reported revenue rising 2.6% year-on-year to $2.17b in the final three months of 2019, while operating income rose 77% to $177m. However, the company booked a net loss of $304m in Q4 versus a net profit of $198m in Q4 2018.
For the year as a whole, revenue rose 4.2% to $8.74b while operating income fell 16.4% to $618m and the company booked a net loss of $1.2b versus a $303m profit in 2018.
In what has become something of a tradition, CEO Tony Rodio said the numbers showed “another quarter of solid operational performance,” which makes one wonder if a teenage Rodio was similarly adept at spinning a failing grade on a book report to his parents. “When you think of it, Dad, an ‘F’ is only five letters from an ‘A’ but it’s 20 letters from a ‘Z’!”
At any rate, Rodio credited the full-year revenue gains to contributions from Caesars’ acquisition of two Centaur Gaming properties in Indiana, strong results in Las Vegas and a better than expected hold at the company’s gaming tables that boosted revenue by as much as $65m.
Caesars’ Vegas division reported revenue rising 4.2% to $989m in Q4, while the ‘Other US’ unit gained 1.8% to $1.03b. The ‘All Other’ segment slipped 2.6% to $148m, in part due to declining gaming volume at Caesars’ high-end UK casinos.
Rodio echoed the views of other casino operators regarding the positive side-effects of legal sports betting, which Caesars currently offers at 17 casinos outside Nevada. Rodio said betting has enticed formerly dormant customers of the company’s Total Rewards program to come check out the sportsbooks, boosting revenue at non-betting amenities in the process.
Caesars’ net losses were attributed to – what else – costs associated with juggling the company’s prodigious debt, which continues to stick around long after the company’s bankruptcy and restructuring few years ago. Caesars paid $1.37b in interest alone on its debt last year while impairment charges on land and buildings and gaming rights rose by $406m.
More challenges may lie ahead if Vegas starts reporting coronavirus cases. While no guests have yet to report exposure to the virus, Rodio expressed concern that domestic travelers could decide to give Vegas a wide berth “for the fear of interacting with Asian clientele.”
Caesars continues to make progress toward its planned merger with rival Eldorado Resorts later this year but Rodio declined to speculate on rumors that Eldorado CEO Tom Reeg would look to unload some of Caesars’ Vegas properties post-merger. Eldorado will release its own financial report card on Wednesday.