Casino operator Eldorado Resorts says its “100% focused” on completing its acquisition of rival Caesars Entertainment, which could explain why its operating income fell nearly one-third in Q4.
On Wednesday, the Reno-based Eldorado reported that its revenue in the final three months of 2019 fell nearly 12% year-on-year to $592m, while operating income dipped 32% to $59m and the company booked a net loss of $13.2m for the quarter. All five of the company’s geographic regions were in negative growth mode in Q4, with the biggest declines in the East and South.
On a same-store basis, which ignores Eldorado’s constantly shifting asset portfolio, Q4 revenue was down 4.4%, adjusted earnings improved 0.4% to $146.2m and operating income slumped 32.2%.
Full-year revenue was up 23% to $2.52b, operating income rose 32.2% to $410m, adjusted earnings gained 35% to $697.5m but net income fell 15% to $81m.
Eldorado CEO Tom Reeg called 2019 “an extremely active and productive year” for his company, which included the launch of sports betting operations in Iowa and Indiana. The company also closed the sale of multiple properties last year for a total of $564m.
This divestment spree continued through Q4 and into the new year, in part to assuage regulatory concerns over ownership concentration ahead of the Caesars merger. Eldorado is also said to be keen to sell off some of Caesars’ Las Vegas Strip properties once their union is complete.
Speaking of, Reeg told analysts that he expects to close the Caesars deal “early second quarter of this year.” Reeg said there was “absolutely zero risk on the financing side” and the transaction was “going to be a home run for all of our stakeholders.”
Reeg joked with analysts regarding which Caesars assets he might be considering unloading, saying he had to “wait for the next Bloomberg article … to see what I’m doing there.”
Reeg did say that some Eldorado properties would undergo rebranding post-merger due to the strength of the Caesars brands. The actual Caesars name would likely adorn Eldorado’s “highest end properties, but I would expect to see a lot of our assets change into Horseshoe or Harrah’s over time.”
In terms of new sports betting offerings in legal wagering states, Reeg said Eldorado’s experience echoed that of its rivals, in that “every property that has a sportsbook that did not before has seen increased visitation and volumes.”
Eldorado signed an exclusive betting and iGaming deal with UK bookmaker William Hill prior to the Caesars acquisition, and Reeg was asked how Hills’ operations will be married with Caesars’ existing sports betting operations. Reeg said “we’re not driven by the ego of who controls it,” thus the priority is “to be thoughtful and put it together in the right fashion.”
