Caesars profit soars

By Liz Benston (contact)

Thursday, April 22, 2004 | 10:43 a.m.

Profit at Caesars Entertainment Inc. rose 93 percent in the first quarter as the company, along with its major casino competitors reporting earnings this week, benefited from the improving U.S. economy and stronger business trends in Las Vegas.

Caesars Entertainment executives said today the company will aggressively pursue contracts to manage casinos for Indian tribes, saying officials expect to announce two separate deals with tribes in the San Diego and Fresno areas, respectively. The company also is exploring other opportunities for casinos in Pennsylvania, Minnesota, Asia and the United Kingdom, which is expected to open its market to more casinos and slot machines, they said.

Caesars Entertainment shares traded up 1 cent to $14.33 this morning.

The company reported profit of $79 million or 25 cents per share compared with $41 million or 14 cents per share in the same quarter of last year, helped by record first-quarter results at its flagship Caesars Palace hotel-casino in Las Vegas.

Not counting one-time costs and income, the company reported profit of $71 million or 23 cents per share compared with $41 million or 14 cents per share a year earlier. Analysts had expected the company to earn only 18 cents in the first quarter. Those figures don't include the sale of the Las Vegas Hilton this year and promotional costs associated with the debut of the Celine Dion show at Caesars Palace last year.

Officials said the company continues to focus on paying down its large debt load as well as to scout for opportunities for major new casinos.

The company has paid down about $829 million in debt since January 2002 -- a total that will rise to more than $1 billion after the expected sale of the Las Vegas Hilton for $280 million in the second quarter, officials said.

Revenue for the first quarter rose 10 percent to $1.2 billion. Cash flow rose 17 percent to $312 million.

The company's western region -- driven by gains in Las Vegas -- reported the largest year-over-year gains.

Revenue at the company's Nevada casinos rose 20 percent to $535 million. Cash flow rose 42 percent to $149 million.

Caesars Palace reported $172 million in revenue, a 41 percent jump from a year ago. Cash flow at that property rose 74 percent to $47 million. Table game play rose 20 percent and slot play jumped 31 percent from last year. The amount Caesars won from table players rose 32 percent and its win from slot gamblers rose 46 percent.

The Celine Dion and Elton John shows at the Colosseum theater at Caesars Palace, in addition to last fall's opening of 30,000 square feet of gaming, entertainment and retail space at Caesars, continue to produce incremental revenue of more than $100,000 per day, executives said. Further upgrades to the property including a Roman-theme plaza that will open to Las Vegas Boulevard are expected to boost results this year and next, they said.

Goldman, Sachs & Co. analyst Steven Kent said the company's Las Vegas properties and Caesars Palace in particular performed better than expected and is further evidence of the "continued strength of the Las Vegas market," The company's Atlantic City properties also did better than expected, an indication that the opening of the Borgata resort last year didn't have as negative an effect on the company's major properties there, Kent wrote in a research note today.

Revenue at Paris Las Vegas rose 22 percent to $116 million and cash flow rose 65 percent to $43 million. Revenue at Bally's rose 6 percent to $75 million and cash flow rose 17 percent to $21 million. Revenue at the Flamingo grew 20 percent to $91 million and cash flow rose 25 percent to $30 million.

Average daily rates at all of the company's Las Vegas hotels rose in the first quarter. Average rates at Caesars Palace rose to $160 from $149 a year ago. Rates at Paris grew to $146 from $134 and rates at Bally's jumped to $114 from $103. Flamingo rates rose to $92 from $83.