Caesars inventory drops after shocking loss, however recovers after transferring up plans to promote a Vegas on line casino


Caesars Entertainment Inc. reported a surprise loss on Tuesday that sent shares down in after-hours trading, but the stock rebounded after executives outlined plans to reduce a massive debt burden that included the sale of a casino on the Las Vegas Strip.

Caesars CZR, -0.29% reported a loss of $ 233 million, or $ 1.10 per share, for the third quarter on Tuesday, after posting a loss of $ 6.09 a year ago. Net sales were $ 2.69 billion compared to $ 1.38 billion a year ago. According to FactSet, analysts expected an average profit of 16 cents per share on net sales of $ 2.66 billion.

Shares fell as much as 8% in after-hours trading immediately after the results were released, but rebounded later in the extended session when executives held a conference call. The stock closed at $ 111.74, down 0.3%, hovering between break-even and a loss of about 2% towards the end of the extended session.

Caesars has grown since the beginning of the COVID-19 pandemic thanks to its merger with Eldorado Resorts and the acquisition of William Hill, but that has left the company with debt. Caesars is addressing some of these concerns with plans to sell William Hill’s non-U.S. Business for approximately $ 3 billion and also to sell shares in NeoGames SA NGMS, -0.05%, which is also part of the William Hill- Transaction.

Executives explained that cash was received during a Tuesday afternoon conference call, while moving up the schedule for the sale of one of its properties on the Las Vegas Strip. Caesars executives said in August they planned to sell a property in 2022, but moved that schedule to “early 2022” on Tuesday while planning to restructure some debt.

“If you add all of that together, we should have well over $ 5 billion in cash by 2022,” Independent Director David Tomick said on the conference call. “Part of that is invested in the digital business, part of it is spent on capital projects that drive forward [return on investment] in the portfolio. But the vast majority of that cash will be used to pay off debt, where we may be able to remove nearly half of our traditional debt and reduce our cash interest expense to $ 300 million, or $ 400 million, by the end of 2022. Dollars per year less than when the transaction was closed. “

In early September, Caesar’s released preliminary results for the first two months of the quarter, July and August, showing net sales of $ 1.8 billion to $ 1.85 billion and adjusted Ebitda of $ 676 million to $ 744 million. However, analysts were concerned that the price would change in the third month of the quarter.

“While we believe many of Caesars’ markets were strong in September, one-off events (e.g. Tahoe forest fires and New Orleans floods), along with increased interactive investment, likely had a significant impact on the quarter,” wrote Truist analysts in an October 22nd preview of casino and gambling winnings reports.

Executives admitted the natural disasters affected business in the quarter on Tuesday.

“If Ida hadn’t hit New Orleans and we hadn’t had the fire in Tahoe, we would have made $ 1.1 billion in stationary Ebitda this quarter,” said Tomick. “We had an extremely strong quarter, demand remains particularly robust, and in terms of New Orleans and Tahoe, Tahoe has recovered from 2019 levels pretty quickly, not quite as strong as before the fire, but still on the rise. “

Truist analysts raised their price target on Caesars stock from $ 125 to $ 140 and maintained a buy rating despite pre-press concerns. “Beyond any one-offs in the quarter, we see Caesars with their strong omni-channel positioning as a potential interactive winner,” they wrote.

Caesars stock is up as customers returned to casinos last year, rising nearly 140% over the past 12 months, while the S&P 500 Index SPX + 0.37% rose 39.4%.

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