Business Context and Reporting Period
Caesars Entertainment, Inc. filed a Form 8-K on September 9, 2021, disclosing preliminary unaudited operating trends for the two-month period ended August 31, 2021, compared to the same period in 2019. The filing also announces a strategic divestiture and a partial debt redemption.
Key Financial Metrics
The following metrics represent estimated ranges for the two months ended August 31, 2021, unless noted otherwise.
| Metric | 2021 Estimate (Low/High) | 2019 Actual |
|---|---|---|
| Total Net Revenues | $1,799M - $1,845M | $457M |
| Total Adjusted EBITDA | $676M - $744M | $136M |
| Net Income | $23M - $69M | $43M |
| Depreciation & Amortization | $188M - $200M | $34M |
| Interest Expense | $377M - $393M | $48M |
Segment Performance (2021 Estimate vs. 2019 Actual):
- Las Vegas: Net Revenues $670M-$684M (vs. $0M in 2019); Adjusted EBITDA $342M-$364M (vs. $0M in 2019).
- Regional: Net Revenues $1,032M-$1,052M (vs. $451M in 2019); Adjusted EBITDA $407M-$435M (vs. $141M in 2019).
- Caesars Digital: Net Revenues $53M-$59M (vs. $5M in 2019); Adjusted EBITDA $(58)M-$(48)M (vs. $2M in 2019).
Material Changes
Revenue and profitability have rebounded significantly compared to the 2019 period, driven primarily by the reopening of Las Vegas properties which were closed during the 2019 comparison period. Total Net Revenues are estimated to be approximately 390% higher than the 2019 actuals. Adjusted EBITDA is estimated to be approximately 400% higher. Interest expense has increased substantially to a range of $377M-$393M compared to $48M in 2019, reflecting higher debt levels and refinancing activities.
Guidance, Outlook, and Material Events
William Hill Non-US Asset Sale: Caesars agreed to sell 100% of the equity interests of William Hill Cayman Holdings Limited (non-US assets) to 888 Holdings Plc for approximately £2.2 billion. After debt repayment and working capital adjustments, Caesars expects net proceeds of approximately £835 million ($1.2 billion). The transaction is expected to close in Q1 2022, subject to regulatory and shareholder approvals.
Debt Redemption: Caesars announced a partial redemption of $500 million of its 5.25% Senior Notes due 2025. The redemption price is 101.313% of the principal amount, payable on October 15, 2021. As of June 30, 2021, $1.7 billion of these notes remained outstanding.
Forward-Looking Statements: Management cautions that the operating trends are preliminary estimates, unaudited, and subject to change. The company does not intend to update interim results. Adjusted EBITDA is a non-GAAP measure and should not be considered a substitute for net income or a measure of liquidity.
Investor Verification Checklist
- Verify the final closing of the William Hill non-US asset sale and the actual net proceeds received in Q1 2022.
- Confirm the execution of the $500 million partial redemption of the 5.25% Senior Notes due 2025 on October 15, 2021.
- Review the upcoming audited quarterly financial statements to reconcile the preliminary Adjusted EBITDA and Net Income estimates to GAAP figures.
- Monitor the impact of the divestiture on future revenue recognition and the reduction of interest expense following the debt repayment.
- Assess the sustainability of the Las Vegas and Regional segment recovery trends in subsequent reporting periods.