Caesars earnings suffer big-time despite Linq boost

An exterior view of Caesars Palace on Thursday, June 6, 2013.

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Gary Loveman, CEO of Caesars Entertainment

Caesars Entertainment, the Las Vegas-based casino and resort giant, announced its second-quarter earnings today.

Company: Caesars Entertainment Corp. (NASDAQ: CZR)

Revenue: $2.18 billion, up 3 percent from the second quarter of last year. Social and mobile gaming revenue increased, and the company’s newly opened Linq and High Roller attractions on the Strip contributed new revenue. But those were partially offset by a decline in casino revenue.

Earnings: A loss of $466.4 million, more than twice the $212.2 million loss the company recorded in the second quarter of 2013. Among the factors driving the loss, the company said, were a reduction in tax benefits and a pre-tax interest expense increase of $113.7 million.

Earnings per share: A loss of $3.24, up from last year’s $1.69.

What it means: In prepared remarks to shareholders, CEO Gary Loveman said Las Vegas spending and visitation trends are encouraging. The company recorded modest increases of 2 percent and 7 percent in slot and table volumes, respectively, while lodging revenues for Las Vegas increased by 5 percent.

Loveman said the company was pleased with the performance of the High Roller observation wheel, which has drawn more than 500,000 riders since its opening in March. The wheel and the Linq shopping and entertainment area are bringing in more traffic to Caesars properties nearby, he said.

Partially offsetting these gains, however, was a 1.9 percent decline in casino revenue, largely stemming from low volume and visitation in Atlantic City and other regional markets. The company hopes construction of a meeting facility near Harrah’s in Atlantic City will help diversify the economy there.

Quote: “As we look ahead, we are excited about further expanding and enhancing our network with the opening of Horseshoe Baltimore and the potential development of an integrated resort in South Korea. We believe the advances we are making across the enterprise coupled with ongoing capital structure initiatives aimed at reducing leverage at CEOC [Caesars Entertainment Operating Co.] will produce a positive impact on our business.” — CEO Gary Loveman

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