CAESARS ENTERTAINMENT, INC. LAS VEGAS, May 5, 2016 /PRNewswire/ -- Caesars Acquisition Company (NASDAQ: CACQ) today reported the following results for Caesars Growth Partners, LLC ("CGP LLC") for the first quarter 2016. Caesars Acquisition Company ("CAC") was formed to make an investment in CGP LLC, owns 100% of the voting membership units of CGP LLC and accounts for its investment under the equity method.
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-- Achieved another strong quarter in the Interactive Entertainment
business unit with net revenues and Adjusted EBITDA up 29.0% and 42.7%
for the three month period ended March 31, 2016 as compared to the
three-month period ended March 31, 2015.
-- Recorded consistent growth in the Casino Properties and Developments
business unit with net revenues and Adjusted EBITDA up 6.6% and 19.5%
for the three month period ended March 31, 2016 as compared to the
three-month period ended March 31, 2015.
Operating Results of CGP LLC
Three Months Ended Percent Favorable/
March 31, (Unfavorable)
--------- ------------
(In millions) 2016 2015
------------ ---- ----
Interactive
entertainment net
revenues $227.8 $176.6 29.0%
Casino properties
and developments
net revenues 415.8 389.9 6.6%
Total net revenues 643.6 566.5 13.6%
Income from
operations 115.9 204.7 (43.4)%
Net income 36.9 144.1 (74.4)%
Adjusted EBITDA(1) 194.6 148.0 31.5%
_____________________________________________________
(1) Adjusted Earnings before Interest Income/
Expense, Income Taxes, Depreciation and
Amortization ("EBITDA") is a non-GAAP
financial measure that is reconciled to
its most comparable GAAP measure later in
this release.
Financial Results
Net revenues for the first quarter of 2016 were $643.6 million as compared to $566.5 million for the respective period in 2015, which was an increase of $77.1 million, or 13.6%. The increase in revenue for Caesars Interactive Entertainment, Inc. ("Caesars Interactive," "Interactive Entertainment" or "CIE") was primarily driven by strong organic growth in the social and mobile games operating unit due to the continued focus on conversion and monetization. The increase in revenues for Casino Properties and Developments was primarily due to the availability of rooms and increased room rates as a result of renovations at The LINQ Hotel & Casino which was substantially completed and available to guests in early May 2015 and an increase in entertainment revenues at Planet Hollywood offset by lower revenues at Harrah's New Orleans as a result of the April 2015 smoking ban.
Income from operations for the first quarter of 2016 was $115.9 million as compared to $204.7 million for the same period in 2015, which was a decrease of $88.8 million, or 43.4%. The decrease in income from operations was primarily driven by the change in the fair value of contingently issuable non-voting membership units recognized in the prior year with no change in the fair value of contingently issuable non-voting membership units recognized subsequent to December 31, 2015 offset by the income impact of increased revenues. Excluding the impact of the change in fair value of contingently issuable non-voting membership units, income from operations increased by $28.7 million primarily due to the year over year growth in CIE and Horseshoe Baltimore as well as the availability of rooms and increased room rates as a result of renovations at The LINQ Hotel & Casino.
Adjusted EBITDA for the first quarter of 2016 was $194.6 million as compared to $148.0 million for the same period in 2015, which is an increase of $46.6 million, or 31.5%, driven primarily by the income impact of increased revenues at CIE and The LINQ Hotel & Casino.
Business Units Operating Results
Interactive Entertainment
Three Months Ended Percent Favorable /
March 31, (Unfavorable)
---------
(In
millions) 2016 2015
---------- ---- ----
Net
revenues $227.8 $176.6 29.0%
Income
from
operations 53.4 40.6 31.5%
Net
income 24.8 27.3 (9.2)%
Adjusted
EBITDA(1) 89.3 62.6 42.7%
_____________________________________________________
(1) See Reconciliation of Net Income/
(Loss) to Adjusted EBITDA later in
this release.
Interactive Entertainment net revenues increased by $51.2 million, or 29.0%, in the first quarter of 2016 as compared to the same period in 2015, resulting primarily from strong organic growth in CIE's social and mobile games due to the continued focus on conversion and monetization. Income from operations increased by $12.8 million, or 31.5%, in the first quarter of 2016 as compared to the same period in 2015, primarily driven by the income impact of increased revenues, partially offset by increases in stock-based compensation and sales and marketing expenses. Adjusted EBITDA increased by $26.7 million, or 42.7%, in the first quarter of 2016 as compared to the same period in 2015, driven by the income impact of increased revenues and reduced marketing expenses for real money online gaming.
Performance Metrics - Interactive Entertainment
The table below shows the results of CIE's business based upon the financial metrics for the periods presented.
For the Three Months Ended
--------------------------
(In
millions) Mar. 31, 2016 Dec. 31, 2015 Sept. 30, 2015 Jun. 30, 2015 Mar. 31, 2015
---------- ------------- ------------- -------------- ------------- -------------
Revenues
Social and
mobile
games $218.2 $198.8 $183.5 $175.4 $167.6
WSOP and
online real
money
gaming 9.6 10.4 11.0 10.8 9.0
--- ---- ---- ---
Total $227.8 $209.2 $194.5 $186.2 $176.6
====== ====== ====== ====== ======
Adjusted
EBITDA(1) $89.3 $77.9 $72.7 $69.5 $62.6
===== ===== ===== ===== =====
_____________________________________________________
(1) See Reconciliation of Net Income/
(Loss) to Adjusted EBITDA later in
this release.
The table below shows the results of CIE's social and mobile games business using operating metrics for the periods indicated. User statistics are presented in thousands of users and average revenue per user is presented in dollars.
For the Three Months Ended
--------------------------
Mar. 31, 2016 Dec. 31, 2015 Sept. 30, 2015 Jun. 30, 2015 Mar. 31, 2015
------------- ------------- -------------- ------------- -------------
Average
Daily
Active
Users(1) 6,758 6,351 6,144 6,132 6,061
Average
Monthly
Active
Users(1) 22,262 19,783 19,324 19,177 19,044
Average
Monthly
Unique
Users(1) 20,539 18,960 18,657 17,918 17,803
Average
Monthly
Unique
Payers(1) 922 858 860 796 762
Average
Revenue
Per User $0.35 $0.34 $0.33 $0.31 $0.31
_____________________________________________________
(1) CIE systems cannot always
distinguish unique individuals
playing games in multiple sessions
in the same day or in a 30-day
period ending with the measurement
date, playing the same game across
multiple platforms, or playing
different titles offered by CIE.
Thus, users who play multiple
titles or multiple platforms may be
counted as more than one user
within the respective operating
metrics.
During the first quarter of 2016, CIE's social and mobile games business had approximately 922 thousand Average Monthly Unique Payers, or 4.5% of Average Monthly Unique Users on the social and mobile platforms, purchase virtual goods, which was an increase of approximately 20.9 basis points from the first quarter of 2015.
Casino Properties and Developments
Three Months Ended Percent Favorable
March 31,
---------
(In
millions) 2016 2015
---------- ---- ----
Net
revenues $415.8 $389.9 6.6%
Income
from
operations 63.9 50.5 26.5%
Net
income 13.0 3.4 282.4%
Adjusted
EBITDA(1) 106.7 89.3 19.5%
_____________________________________________________
(1) See Reconciliation of Net Income/
(Loss) to Adjusted EBITDA later in
this release.
Casino Properties and Developments revenues were impacted primarily by the following:
-- Increases in all categories of revenues during the first quarter of 2016
when compared to the first quarter of 2015 for The LINQ Hotel & Casino,
which was substantially completed and available to guests in early May
2015;
-- Decreases in visitation and gaming revenues as a result of the April
2015 smoking ban in New Orleans; and
-- Continued enhancement of entertainment options at Planet Hollywood
positively impacted other revenues.
Net revenues for the first quarter of 2016 increased by $25.9 million, or 6.6%, when compared to the same period in 2015. Total trips decreased approximately 5.3% during the first quarter of 2016 when compared to the same period in 2015. Gross casino hold saw a positive variance of 11.8% for the quarter ended March 31, 2016 from 11.6% for the quarter ended March 31, 2015.
Cash average daily room rates for the first quarter of 2016 increased to approximately $136, or 7.1%, when compared to approximately $127 for the same period in 2015. Average daily occupancy was 93.7% and 91.6% for the first quarter of 2016 and 2015, respectively. Revenue per available room for the first quarter of 2016 and 2015 was $125 and $115, respectively, or an increase of 8.7%.
Income from operations for the first quarter of 2016 increased by $13.4 million, or 26.5%, when compared to the same period in 2015 and Adjusted EBITDA increased by $17.4 million, or 19.5%, when compared to the same period in 2015 primarily driven by the income impact of increased revenues at The LINQ Hotel & Casino.
Liquidity and Capital Resources
CGP LLC and its subsidiaries' primary sources of liquidity include currently available cash and cash equivalents, cash flows generated from its operations and borrowings under the Caesars Growth Properties Holdings, LLC ("CGPH," an indirect, wholly-owned subsidiary of CGP LLC) Revolving Credit Facility which is intended to satisfy CGPH's short-term liquidity needs.
At March 31, 2016 and December 31, 2015, CGP LLC had cash and cash equivalents totaling $950.5 million and $901.7 million, respectively. Third-party debt outstanding at CGP LLC was $2,303.5 million as of March 31, 2016 and $2,337.3 million at December 31, 2015. This amount includes debt of the consolidated subsidiary CGPH of $1,986.1 million and $2,018.3 million as of the respective dates. Net CGPH repayments under the Revolving Credit Facility during the first quarter of 2016 were $30.0 million.
Recent Developments for CGP LLC
Pursuant to the terms of the transaction agreement related to the formation of CGP LLC, CGP LLC was obligated to issue additional non-voting membership units to Caesars Entertainment Corporation ("CEC" or "Caesars Entertainment") to the extent that the earnings from a specified portion of CIE's social and mobile games business exceeded a predetermined threshold amount in 2015. In April 2016, CGP LLC issued approximately 31.9 million Class B non-voting units pursuant to the terms of the October 21, 2013 transactions. As a result, CAC's economic ownership of CGP LLC decreased to approximately 38.8% in April 2016 from approximately 42.6% at March 31, 2016.
In April 2016, CIE repurchased shares of its outstanding common stock for a total net consideration of $13.5 million.
About Caesars Acquisition Company
Caesars Acquisition Company was formed to make an equity investment in Caesars Growth Partners, LLC, a joint venture between CACQ and Caesars Entertainment Corporation (NASDAQ: CZR), the world's most diversified casino entertainment provider and the most geographically diverse U.S. casino-entertainment company. CACQ is CGP LLC's managing member and sole holder of all of its outstanding voting units. For more information, please visit www.caesarsacquisitioncompany.com.
About Caesars Growth Partners, LLC
Caesars Growth Partners, LLC is a casino asset and entertainment company focused on acquiring and developing a portfolio of high-growth operating assets and equity and debt investments in the gaming and interactive entertainment industries. Through its two businesses, Interactive Entertainment and Casino Properties and Developments, CGP LLC focuses on acquiring or developing assets with strong value creation potential and leveraging interactive technology with its well-known online and mobile game portfolio and leading brands. Assets include Caesars Interactive Entertainment, Inc. (with its social and mobile games, the World Series of Poker and regulated online real money gaming businesses), Planet Hollywood, Bally's Las Vegas, The Cromwell, The LINQ Hotel & Casino, Harrah's New Orleans and Horseshoe Baltimore. Through its relationship with Caesars Entertainment, CGP LLC has the ability to access Caesars Entertainment's proven management expertise, brand equity, Total Rewards loyalty program and structural synergies. For more information, please visit www.caesarsacquisitioncompany.com.
Forward Looking Information
This release contains or may contain "forward-looking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements contain words such as "may," "will," "project," "might," "expect," "believe," "anticipate," "intend," "could," "would," "estimate," "continue," or "pursue," or the negative of these words or other words or expressions of similar meaning that may identify forward-looking statements and are found at various places throughout this release. These forward-looking statements, including, without limitation, those relating to future actions, new projects, strategies, future performance, the outcome of contingencies such as legal proceedings, and future financial results, wherever they occur in this release, are based on our current expectations about future events and are estimates reflecting the best judgment of CAC and CGP LLC's management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements.
Investors are cautioned that forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that cannot be predicted or quantified, and, consequently, the actual performance of CAC and CGP LLC may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors, as well as other factors described from time to time in CAC's reports filed with the Securities and Exchange Commission (including the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained therein):
-- CAC and CGP LLC's dependence on Caesars Entertainment and its
subsidiaries, including Caesars Enterprise Services ("CES"), to provide
support and services, as well as CGP LLC's dependence on Caesars
Entertainment's and CES' senior management's expertise and its
participation in Caesars Entertainment's Total Rewards loyalty program;
-- the effects of a default by Caesars Entertainment or CEOC on certain
debt obligations;
-- the ability of CEC to meet its financial obligations in light of its
limited cash balances;
-- Caesars Entertainment's interests may conflict with CAC and CGP LLC's
interests and Caesars Entertainment may possibly keep all potential
development opportunities for itself;
-- the adverse effects due to the bankruptcy filing of CEOC and certain of
its subsidiaries;
-- the effects if a third-party successfully challenges Caesars
Entertainment or its affiliates' ownership of, or right to use, the
intellectual property owned or used by subsidiaries of Caesars
Entertainment, which CIE and CGP LLC license for use in its businesses;
-- CIE's reliance on subsidiaries of Caesars Entertainment to obtain online
gaming licenses in certain jurisdictions, such as New Jersey;
-- the difficulty of operating CGP LLC's business separately from Caesars
Entertainment and managing that process effectively could take up a
significant amount of management's time;
-- CGP LLC's business model and short operating history;
-- CGP LLC's ability to realize the anticipated benefits of current or
potential future acquisitions, and the ability to timely and
cost-effectively integrate assets and companies that CGP LLC acquires
into its operations;
-- the effects of any lawsuits against CAC, CGP LLC or CGPH related to the
October 21, 2013 transactions, the May 2014 asset purchase transactions
and the proposed CAC and Caesars Entertainment merger transaction;
-- the proposed merger between CAC and Caesars Entertainment may not be
consummated on the terms contemplated or at all;
-- the adverse effects if extensive governmental regulation and taxation
policies, which are applicable to CGP LLC, are enforced;
-- the effects of local and national economic, credit and capital market
conditions on the economy in general, and on the gaming industry in
particular;
-- the sensitivity of CGP LLC's business to reductions in discretionary
consumer spending;
-- the rapidly growing and changing industry in which CGP LLC operates,
such as CIE's social and mobile games business and internet gaming
business;
-- any failure to protect CGP LLC's trademarks or other intellectual
property, such as CIE's ownership of the WSOP trademark;
-- abnormal gaming holds ("gaming hold" is the amount of money that is
retained by the casino from wagers by customers);
-- the effects of competition, including locations of competitors and
operating and market competition, particularly the intense competition
CGP LLC's casino properties face in their respective markets;
-- the uncertainty surrounding whether CIE's games, such as Slotomania,
will retain their popularity;
-- CIE's reliance on a small portion of its total players for nearly all of
its revenue from its social and mobile games;
-- CAC's ability to expand into international markets in light of
additional business, regulatory, operational, financial and economic
risks associated with such expansion;
-- evolving regulations concerning the social and mobile games industry as
well as data privacy, including, but not limited to, the effect of U.S.
and foreign laws, some of which are unsettled and still developing;
-- the low barriers to entry and intense competition of the social and
mobile games industry could have adverse effects on CIE and CGP LLC;
-- evolving U.S. and foreign laws could subject CIE to claims and prevent
CIE from providing its current games to players or the ability to modify
its games;
-- the effect on CGP LLC's business strategy if online real money gaming is
not legalized in states other than Delaware, Nevada or New Jersey in the
United States, is legalized in an unfavorable manner or is banned in the
United States;
-- political and economic uncertainty created by terrorist attacks and
other acts of war or hostility; and
-- the other factors set forth under "Risk Factors" in Part II, Item 1A of
the CAC Quarterly Report on Form 10-Q for the quarter ended March 31,
2016.
Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. CAC and CGP LLC disclaim any obligation to update the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated or, if no date is stated, as of the date of this release.
CAESARS ACQUISITION COMPANY
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
(In millions, except per share data)
Three Months Ended March 31,
----------------------------
2016 2015
---- ----
Revenues $ - $ -
Operating expenses 6.6 7.1
Loss from operations (6.6) (7.1)
Income from equity method
investment in Caesars Growth
Partners, LLC 24.4 24.2
---- ----
Income before provision for
income taxes 17.8 17.1
Provision for income taxes (8.6) (8.4)
---- ----
Net income 9.2 8.7
Other comprehensive income,
net of income taxes - -
--- ---
Comprehensive income $9.2 $8.7
==== ====
Earnings per share
Basic $0.07 $0.06
Diluted $0.07 $0.06
Weighted average common shares outstanding
Basic 137.3 136.4
Diluted 137.5 137.2
CAESARS GROWTH PARTNERS, LLC
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In millions)
Three Months Ended March 31,
----------------------------
2016 2015
---- ----
Revenues
Interactive Entertainment
Social and
mobile games $218.2 $167.6
WSOP and online
real money
gaming 9.6 9.0
--- ---
227.8 176.6
----- -----
Casino Properties and
Developments
Casino 258.0 259.0
Food and
beverage 72.3 68.3
Rooms 93.0 74.3
Other 45.6 36.2
Less: casino
promotional
allowances (53.1) (47.9)
----- -----
415.8 389.9
Net revenues 643.6 566.5
----- -----
Operating expenses
Interactive Entertainment -
Direct
Platform fees 63.6 48.7
Casino Properties and
Developments -Direct
Casino 141.0 142.2
Food and
beverage 30.8 30.6
Rooms 22.4 18.7
Property,
general,
administrative
and other 210.3 181.4
Write-downs,
reserves, and
project
opening costs,
net of
recoveries 0.6 3.1
Management fees
to related
parties 12.3 13.5
Depreciation
and
amortization 46.7 41.1
Change in fair
value of
contingently
issuable non-
voting
membership
units - (117.5)
Total operating
expenses 527.7 361.8
----- -----
Income from
operations 115.9 204.7
Interest
expense, net
of interest
capitalized (50.9) (48.2)
Other expense,
net - (1.0)
--- ----
Income from
operations
before
provision for
income taxes 65.0 155.5
Provision for
income taxes (28.1) (11.4)
----- -----
Net income 36.9 144.1
Less: net
(income)/loss
attributable
to non-
controlling
interests (3.5) 0.1
---- ---
Net income
attributable
to Caesars
Growth
Partners, LLC $33.4 $144.2
===== ======
CAESARS GROWTH PARTNERS, LLC
SUPPLEMENTAL INFORMATION
RECONCILIATION OF NET INCOME/(LOSS) TO
ADJUSTED EBITDA
(UNAUDITED)
Adjusted Earnings before Interest income/
expense, Income Taxes, Depreciation and
Amortization ("EBITDA") is a non-GAAP
financial measure that is included
because management believes that Adjusted
EBITDA provides investors with additional
information that allows a better
understanding of the results of
operational activities separate from the
financial impact of capital decisions
made for the long-term benefit of CGP
LLC. Because not all companies use
identical calculations, the presentation
of CGP LLC's EBITDA and Adjusted EBITDA
may not be comparable to other similarly
titled measures of other companies.
For the Three Months Ended March 31, 2016
-----------------------------------------
(In millions) Interactive Casino Other Total
Entertainment Properties and
Developments
--- ------------
Net income/(loss) $24.8 $13.0 $(0.9) $36.9
Provision for income
taxes 28.1 - - 28.1
---- --- --- ----
Income/(loss) before
income taxes 52.9 13.0 (0.9) 65.0
Interest expense, net
of interest
capitalized 0.5 50.9 (0.5) 50.9
Depreciation and
amortization 7.5 39.2 - 46.7
--- ---- --- ----
EBITDA 60.9 103.1 (1.4) 162.6
Write-downs,
reserves and project
opening costs, net
of recoveries(1) - 0.6 - 0.6
Stock-based
compensation(2) 28.0 1.3 - 29.3
Other(4) 0.4 1.7 - 2.1
Adjusted EBITDA $89.3 $106.7 $(1.4) $194.6
===== ====== ===== ======
For the Three Months Ended March 31, 2015
-----------------------------------------
(In millions) Interactive Casino Other Total
Entertainment Properties and
Developments
--- ------------
Net income $27.3 $3.4 $113.4 $144.1
Provision for income
taxes 11.4 - - 11.4
---- --- --- ----
Income before income
taxes 38.7 3.4 113.4 155.5
Interest expense, net
of interest
capitalized 1.9 47.1 (0.8) 48.2
Depreciation and
amortization 7.8 33.3 - 41.1
--- ---- ---
EBITDA 48.4 83.8 112.6 244.8
Other expense, net - - 1.0 1.0
Write-downs,
reserves and project
opening costs, net
of recoveries(1) - 3.1 - 3.1
Change in fair value
of contingently
issuable non-voting
membership units(3) - - (117.5) (117.5)
Stock-based
compensation(2) 13.1 0.9 - 14.0
Other(4) 1.1 1.5 - 2.6
Adjusted EBITDA $62.6 $89.3 $(3.9) $148.0
===== ===== ===== ======
Interactive Entertainment
-------------------------
Three Months Ended
------------------
(In millions) December 31, 2015 September 30, 2015 June 30, 2015
------------ ----------------- ------------------ -------------
Net income $35.5 $25.7 $39.2
Provision for income
taxes 16.0 20.7 13.8
---- ---- ----
Income before income
taxes 51.5 46.4 53.0
Interest expense, net
of interest
capitalized 0.9 1.1 1.3
Depreciation and
amortization 7.2 7.0 7.8
--- --- ---
EBITDA 59.6 54.5 62.1
Other income/
(expense), net 0.1 (5.0) -
Write-downs,
reserves and project
opening costs, net
of recoveries 0.1 - -
Stock-based
compensation(2) 17.2 22.6 6.6
Other(4) 0.9 0.6 0.8
Adjusted EBITDA $77.9 $72.7 $69.5
===== ===== =====
_____________________________________________________
(1) Amounts primarily represent
development costs related to the
construction of The Cromwell and
Horseshoe Baltimore and the
renovation of The LINQ Hotel &
Casino.
(2) Amounts represent stock-based
compensation expense related to
stock options, restricted stock and
restricted stock units.
(3) Amounts represent the change in fair
value of contingently issuable
membership units associated with
the CIE earn-out calculation
related to the transactions
establishing CGP LLC.
(4) Amounts represent other add-backs
and deductions to arrive at
Adjusted EBITDA but not separately
identified, such as acquisition and
integration costs and lobbying
expenses.
Source: Caesars Acquisition Company; CACQ
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SOURCE Caesars Acquisition Company
