What drove Caesars’ strongest quarter in almost a decade?

What drove Caesars’ strongest quarter in almost a decade?

Tuesday, November 10, 2015 Totally Gaming
Mark Frissora described a "strong" Q3 performance

Caesars Entertainment Corporation (CEC) has reported its best quarterly profit margins in almost a decade thanks to new resorts, strong performance and online expansion.

The company, which owns Caesars Entertainment Resort Properties (CERP) and has majority ownership of Caesars Entertainment Operating Company (CEOC), said that net revenues for its continuing operations in the three months to September 30 increased 12.4 per cent year-over-year to $1.1bn (€1.02bn). It said this rise was mainly due to a full quarter of Horseshoe Baltimore results, the expansion of resort fees, favourable hold, and continued strong performance at Caesars Interactive Entertainment (CIE).

Adjusted operating profit for continuing CEC grew 51.0 per cent year-over-year to $317m, which it said was primarily driven by marketing and operational efficiencies and hotel customer mix improvement resulting in strong flow through from top-line growth.

Mark Frissora, president and chief executive of CEC, said that performance in Las Vegas helped to drive performance.

“We are pleased with our continued strong performance system-wide in the third quarter, delivering our third consecutive quarter of operating profit growth as well as our highest quarterly operating profit margins since 2007, and industry-leading Las Vegas strip margins,” said Frissora.

“The enterprise had solid fundamental business improvement driven by Las Vegas revenue performance and increased marketing and operational efficiencies.

“We remain focused on a balanced agenda of growth and efficiency initiatives to continue to fuel margin expansion and cash flow, supplemented by targeted capital investments to drive higher room rates in the Las Vegas region.”

CIE, which operates in Nevada, New Jersey and other regulated territories, saw net revenues for the third quarter of $195m, which was a 20.4 per cent increase.

Income from operations was $43m and adjusted operating profit increased 39.6 per cent to $74m. The company said that the increase in revenue and adjusted operating profit was driven primarily by strong organic growth in the social and mobile games business due to the continued focus on conversion and monetisation.

Frissora added: “We are confident that our strategy will increase value for our stakeholders over the long-term.”

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