Have you invested money into Caesars Entertainment stocks? The famous casino company is coming back, but profits are still not back! (Photo by NeONBRAND on Unsplash)
Losses for Caesars Entertainment are still mounting up but the casino’s revenue is back on the mend. While it may still be a way to go before the casino’s books fall back into the green increase, revenues are surging back. The new losses reported were $352 million for the first half of 2021 which by all accounts isn’t bad considering half of that time the casino was still closed. Incredibly, the gaming powerhouse saw an increase in revenue of 615.7% when comparing to last year. From 1st January to 30th June of 2021, Caesar’s total revenue was recorded as $4.29 billion. For the comparative period last year, total revenue was $600 million.
The main factor for the vast improvement was that Caesars casinos were able to operate almost at full strength for the entire 6-month period in 2021, whereas in 2020, they were forced to shut the doors mid-way through March, because of the impact of the Covid-19 pandemic situation. At that time, the government’s requests were to limit crowd interaction, and so the casinos closed temporarily in order to follow the rules. However, this year, casinos have been allowed to open back up with only a few protective measures enforced.
This years first half has shown that Caesars has amassed a large portion of their revenue from Parimutuel commissions and casinos, with total revenue skyrocketing 534.5% up to $2.8 billion. Food and hospitality also showed an expected increase with the food and beverage returning $450 million, which is up by 28.6%. Hotel Revenue of $611 million showed enormous improvements as expected, however, an increase of 971.9% was perhaps above expectation, and various other revenues contributed a further $435 million to the first-half results, which represents an increase of 1015.4%.
During this time period, Ceasars also sold off its EMEA division, which managed 2 casinos in Egypt, 1 in South Africa, and another 7 casinos in the UK with 3 of those in London. Since the move, the purchasing investment company overseeing the sale of these land-based establishments has managed to sell off all the African based casinos and some of the UK based casinos.
Caesars Entertainment Performance Segments Broken Down
Looking at performances by segment, Regional Caesars casino operations were front runners with first-half revenues of $2.68 billion, which beat Las Vegas operations which produced $1.35 billion. $125 million came from Caesars Digital operation, along with a further $127 million from international and managed operations. There was also a $9 million contribution from a collective effort from corporations and other business activities.
Looking at the expenditure breakdown, the cost of operations showed a 334.9% increase than that of the first half of 2020. The total operating expenses came out at $3.49 billion, however, the adjusted earnings pre-EBITDA showed gains up to $1.54 billion in 2021 after only being up by $1 million in 2020. Caesars Entertainment reported an additional $1.20 billion in other expenditures. Caesars got hit with a $1.12 billion interest expense, which left the company with a loss of $395 million before tax, around $48 million bigger loss than the $347 million in the first half of 2020.
There were $77 million received in benefits related to tax for Caesars, which meant net losses from their continuing operations stood at $318 million, which is wider than the $276 million in 2020.
Second Quarter Performance Analysis Contribute Smaller Losses for Caesars Entertainment
Looking into the second quarter, revenue showed an improvement of 1,870.1% when compared to the same period last year. That same period last year was also the hardest hit period as a result of Covid-19. Parimutuel commissions and casino revenue showed an improvement of 1455.5% to a total of $1.57 billion. Hotel revenue improved 4,300%, up to $396 million. There was an increase of 3914.3% in food and beverages service, to a total of $281m, and a reported 2,440% increase in other revenue, totalling $254 million. $1.49 billion made up regional revenue, with $855 million in Las Vegas revenue, $86 million in Caesars Digital, international and managed revenue of $66 million, and finally, $5 million in revenue from corporate and others. Operating costs saw a steep increase to $1.91 billion, representing a 828.2% increase. This increase meant that adjusted EBITDA moved into positive territory of $1 billion, compared to a $5 million loss last year.
There were $489 million in other expenses, which left a pre-tax profit of $101 million, compared to $134 million loss for the same period in 2020. After $1 million in tax benefits, continuing operations profits stretched to $102 million. After considering $30 million losses in discontinued operations, plus a $1 million cost from non-controlling business interests, Caesars Entertainment finished the quarter showing net profit of $71 million, outperforming last years $100 million loss during the same period. During the second quarter, Caesars successfully acquired British Gambling giant, William Hill. The deal saw Caesars agree to ownership for a price of £2.9 billion; purchasing 1.08 billion William Hill shares for 272 pence per unit.
Caesars stated at the time of purchase that they made the acquisition for the purpose of obtaining William Hill’s betting business in the United States, as well as their technology. The remaining assets will be sold off if the right offer comes in. Caesars have since launched a new Sportsbook app. Already live across 8 states, including, New Jersey, Michigan, West Virginia, Virginia, Tennessee, Iowa, Indiana and Colorado; the app is using the Will Hill acquired Liberty platform. Caesars now have plans in place to release the app to the States of Arizona, Louisiana and Maryland.
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