The operator introduces the Caesars Entertainment Inc. First Quarter 2024 Earnings Call and reminds participants that the call is being recorded. Brian Agnew, Senior Vice President of Corporate Finance, Treasury and Investor Relations, welcomes everyone and introduces the other speakers. He also mentions that the company may make forward-looking statements and discuss non-GAAP financial measures. Anthony Carano, President and COO, then gives an overview of the company's first quarter results, including a 1% decline in net revenues and a 10% decline in adjusted EBITDAR compared to the previous year.

During the quarter, the company faced various challenges, such as low table hold in Las Vegas and bad weather in the regional segment, as well as a loss on the launch of sports betting in North Carolina. However, there were also positive developments, including record occupancy in Las Vegas and strong growth in net gaming revenue in the digital segment. Despite the headwinds, the Las Vegas segment still delivered strong financial results, and the regional segment showed improvement each month. The company expects to finish several construction projects in 2024, which will lead to an elevated CapEx cycle and drive growth in the regional segment.

The speaker thanks the team for their hard work and introduces Eric Hession to discuss the first quarter performance in the digital segment. Caesars Digital saw a 19% increase in net revenues, driven by strong momentum in online sports betting and iCasino. Despite less favorable results in retail and other segments, the increase in hold and higher parlay mix give confidence in continued improvement. The success of the Caesars Palace Online app has led to record numbers in active customers, volume, GGR, and net gaming revenue. iCasino remains a critical component of the digital growth strategy, and mobile sports wagering was successfully launched in North Carolina during the quarter.

The company is pleased with the early results of their new state launch and has signed up new customers at a faster pace. They are focused on several key priorities for the rest of the year, including implementing a proprietary TAM for shared wallet functionality and improving their product on the sports betting and iCasino sides. They have also made progress on the capital market side, refinancing debt and securing a new financing for their Danville property. They anticipate continued profitable growth in the years ahead and plan to use strong free cash flow to repay debt and reduce leverage.

The company had a difficult quarter due to various factors such as lower hold in Las Vegas, bad weather, and losses from the launch of North Carolina in digital. These one-time negatives accounted for over $75 million. Despite the low EBITDA, the business operated fundamentally flat. In Vegas, the table hold was 500-800 basis points below the normal range and this was not due to a few players winning, but rather a consistent trend throughout the quarter. Slot volumes remained relatively unchanged.

The first quarter of the year was a record-breaking one for Hotel and F&B, despite increased union costs. However, the company did not hold, resulting in negative operating leverage. The impact of rescheduled events in the fourth quarter was minimal. Looking forward, the market is forecasted to have high occupancy rates and cash rates, indicating continued strength in Vegas. The company expects to see growth in Vegas for the remaining quarters of the year. Regionals were down due to weather, but the company remains optimistic about the second half of the year and expects growth overall.

Anthony discussed the addition of New Orleans and Danville to the company's portfolio, which will start generating cash flow in the next few weeks. The temporary facility in Danville is currently operating at high margins, but the permanent facility will have lower margins. However, the opening of the permanent facility will result in a significant increase in gaming revenue without additional gaming taxes for the first $75 million. Regional EBITDA has shown improvement over the past few months and the company is optimistic about the rest of the year. The company's digital platform has also had a successful launch in North Carolina.

In the recent quarter, the launch of our business in North Carolina was very successful, with a market share of almost 9%. However, this launch resulted in negative net revenue and EBITDA. Our digital business, which was not impacted by North Carolina, saw significant growth, with OSB revenue up 33% and iCasino up 54%. Our efforts to increase hold percentage have been successful, despite poor sports outcomes. Our Caesars Palace online launch has been successful, and we plan to launch a second brand before the end of the year. This, along with other factors, should help us reach our goal of $500 million in net revenue by 2023.

The company reported $40 million in EBITDA for the fourth quarter, and the industry is expected to grow at 30% this year. The company's iGaming sector is growing even faster than the market, and their flow through was over 50% for the quarter. Based on these numbers, the company is projected to reach $1.7 billion in revenue and over $400 million in EBITDA by 2025. This does not include any potential benefits from partnerships that will roll off in 2024 and 2025. The company is confident in reaching their $500 million target in 2025, and they believe they will continue to surpass it. They have also met their projected markers for digital growth since launching in August 2021. The company is currently spending a lot of capital this year.

The speaker discusses the company's recent capital spending and plans for the future. They mention the completion of a project in New Orleans and the opening of a new location in Danville. They also mention a decrease in capital spending and an increase in free cash flow in the coming years, which will allow the company to potentially pursue growth opportunities. The speaker acknowledges that the current quarter's results are not typical for the company and expects to return to normal in the next quarter. They then open the floor for questions from participants.

The speaker is asking about the difference between implied Las Vegas GGR and net casino revenue. They want to understand if this is due to changes in promotions or occupancy rates. The speaker also asks about the percentage of cash rates versus comp rates and if there have been any changes in promotional strategy. The speaker suggests that the removal of the Rio may have had a small impact on the decline in table game drop and slot handle. The company's CEO confirms that there have been no changes in promotional strategy and that slot handle was only down 2% and table drop was down 7% when excluding the Rio.

The company's net revenue was down 4.5% in the first quarter, mostly due to table hold. They expect to generate attractive free cash flow and use it for debt paydown. They also have non-core assets that could be monetized in 2024 to further reduce leverage. On the regional front, OpEx was flat year-over-year, but there may have been one-time savings from January weather.

Tom Reeg explains that the company is constantly looking for ways to improve margins and become more efficient. They do not just eat the increased costs from inflation, but instead strive to deliver growth. Eric Hession adds that the target for digital is 8.5%, and they are well on their way there due to an increase in parlays and more people making them. They would have seen even more growth if not for two large event outcomes.

During a conference call, an operator introduces a question from a participant, Steven Wieczynski, who asks about the impact of weather-hold losses in North Carolina and Las Vegas. The CEO, Tom Reeg, clarifies that the total impact of these losses is over $75 million and mentions other smaller factors. Reeg also mentions that the company plans to focus on external growth opportunities, but the most attractive opportunity is investing in their own stock. Another participant, Daniel Politzer, then asks a question.

During a conference call, Daniel Politzer asks about the non-gaming side of Las Vegas, specifically the lagging nongaming revenues. Tom Reeg responds by mentioning that hotel revenues are up and food and beverage revenue was up 14%, excluding Rio. Politzer asks about non-cash flow producing assets and Reeg mentions that Centaur is not part of it, but there are other assets with real value that may be put on the board in 2024. The next question comes from Barry Jonas about the potential impact of interest rates on these assets.

In this paragraph, Barry Jonas asks about the consumer and regional trends in Las Vegas, specifically regarding visitation and spending. Tom Reeg responds by stating that all volume indicators were healthy in the quarter, with hotel occupancy, revenue, and food and beverage numbers remaining strong. He also mentions that they are operating under the assumption that VICI will exercise its call option for Centaur, but it ultimately depends on accretion/dilution math. The next question from David Katz focuses on the Digital business, with the implication that it will grow to nearly $400 million of EBITDA and the possibility of significant cost savings from deals rolling off.

Tom Reeg, CEO of Caesars Entertainment, discusses the company's growth projections and partnerships during a conference call with analysts. He notes that the partnerships will have a significant impact on growth, and while there may be some debate about the exact timing, the company is on track to meet its goals. He also mentions that they are constantly monitoring key performance indicators and are always focused on cost control.

The speaker discusses their company's plans to continue to grow despite the challenges of the current market. They mention a program to tighten costs and increase revenue, with initiatives in the nine figures. They also mention that they are prepared for any potential decline or growth in the future. The speaker then addresses discrepancies in digital growth numbers and explains that they may be related to brick-and-mortar sports book and the Super Bowl.

The executives discuss discrepancies in the sports betting numbers between the OSB side and the disclosed volumes, which were slightly down. They also mention that retail sportsbook hold was negative for the entire quarter, which affected revenue. The executives then move on to discuss the Las Vegas volumes and market share, with Tom Reeg emphasizing the focus on EBITDA rather than GGR share. He also mentions strong international business and VVIP volumes, but notes that they did not hold.

In the paragraph, the speaker discusses the performance of baccarat in the first quarter and how it compares to the previous year. They mention that January did not start off well, but February and March were strong, resulting in similar volumes for the quarter compared to the previous year. They also mention that group and convention bookings are expected to increase in 2024 and that the pace for the remaining quarters looks good. The speaker also briefly mentions the use of external capital.

Tom Reeg, CEO of Caesars Entertainment, believes that domestic mergers and acquisitions could provide opportunities for the company to increase EBITDA growth, but these opportunities would require equity as part of the transaction. Reeg also mentioned that the company is limited by the number of skins it has for its digital brands, but they have enough to launch in every iCasino state. In terms of margins, Reeg previously stated that the company needs to grow revenue by 5% in certain markets to maintain margins.

In response to a question about whether the company can maintain flat margins, Tom Reeg states that they can grow slightly lower than their target of 5%. There are no immediate plans for similar projects to the successful Harrah's expansion in Pompano. The company is targeting both revenue and expense opportunities and intends to address them through small efforts.

Tom Reeg thanks everyone for their participation and concludes the conference. The operator thanks the participants and ends the call.

This summary was generated with AI and may contain some inaccuracies.