Caesars sees profit soar as CEO Frissora announces departure

Caesars sees profit soar as CEO Frissora announces departure

Monday, November 5, 2018 Posted by News Team
Casino
Chief executive to step down in February 2019

Caesars Entertainment has reported strong growth in revenue and profit in its results for the third quarter of 2018, though will lose its chief executive Mark Frissora in February next year. 

The operator saw revenue more than double to $2.19bn, up from $0.99bn in Q3 2017. The company benefitted from the inclusion of results from Caesars Entertainment Operating Company (CEOC), which emerged from bankruptcy in Q4 2017, and the impact of Indiana-based casino operator Centaur Holdings, which was acquired during the reporting period.

While the inclusion of CEOC results boosted Caesars’ Las Vegas business, which reported a 32% year-on-year increase in revenue to $910m, the biggest growth was seen in its non-Vegas casino operations. This division saw revenue soar from $284m to $1.13bn, though the operator noted that it was impossible to make a meaningful comparison due to the scale of the CEOC business being included in Q3 2018. 

Caesars said that on a like-for-like basis, including CEOC’s results for Q3 2017 and excluding Centaur Holdings, revenue from the non-Vegas business was down due to increased competition in Atlantic City. 

The Las Vegas business also suffered on a like-for-like basis, with revenue falling due to a lack of conventions and weaker leisure demand. Hotel room occupancy for the period fell to 92.8%. 

The consolidation of CEOC’s results and Centaur Holdings also contributed to a 176% increase in net profit to $232m. CEOC contributed $104m to the total, with a further $22m coming from Centaur. 

This was offset in part by a $6m decline resulting from the deconsolidation of Horseshoe Baltimore’s results after August 31st, 2017. 

"We executed well during the quarter despite a challenging operating environment in Las Vegas and Atlantic City, and we are optimistic about the opportunities ahead," Caesars president and CEO Mark Frissora said of the company’s performance. 

“Our results demonstrated continued broad-based strength across our regional properties and momentum in our operational efficiency efforts. Our performance this quarter shows the benefits of our portfolio approach and the balance between destination and regional assets.”

Looking ahead, Frissora said: "We are making important progress against our growth strategy with the integration of Centaur, expansion of our US sports betting business and the creation or renewal of partnerships with six professional sports organisations. 

“We have the right strategies in place and are confident in our ability to create value for shareholders over the long-term, as evidenced by our repurchase of $311 million in shares year to date."

However Frissora will not be around in the long-term, after announcing that he would step down from his role as of February 8th, 2019. 

He joined the company in July 2015, and during his tenure completed the operational and financial translation that was begun by his predecessor Gary Loveman. 

"The board of directors thanks Mark for his instrumental role in leading the company through a challenging period and setting Caesars on a course for sustained, long-term growth and value creation," Caesars chairman Jim Hunt said. 

"Under Mark's leadership, the company has significantly improved margins and profitability while simultaneously increasing customer and employee satisfaction. We are grateful for his leadership and numerous contributions and are optimistic for the future.”

Frissora added: "I have been privileged to lead this iconic company and am proud of all that our team has accomplished. Together, we navigated a complex restructuring process. We have improved our margins significantly and created enterprise value which enabled the successful reorganization of our Caesars Entertainment Operating Company subsidiary. 

“I am confident that the company is well positioned to thrive and grow in the future. I am committed to maintaining stability and operating discipline during this transition.”

The search for his replacement is now underway, with the board’s compensation and management development committee to work alongside Hunt and a recruitment company to select a successor.

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