Release Date: February 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: How do you foresee the expense side for both Las Vegas and the regionals in 2025? A: Anthony Carano, President and COO, stated that the team did a fantastic job managing a $50 million increase this year, and there will be a smaller increase in the contract for 2025 in Las Vegas and Atlantic City. With efficient operations, they expect to be in a good position on expenses in 2025.
Q: How are you thinking about ways to monetize and/or unlock some of the value within the digital segment? A: Thomas Reeg, CEO, acknowledged that the digital business trading at a blended brick-and-mortar multiple leaves dollars on the table. While operationally it makes sense to keep everything together, they are open to exploring strategic options to allow investors a path to invest in the digital business on a pure-play basis if market dynamics remain the same.
Q: Can you discuss the balance between stock buybacks and leverage reduction? A: Thomas Reeg emphasized that their priority is to get lease-adjusted leverage toward four times. Share buybacks have been executed in asset sale transactions where they traded assets at significant premiums. The majority of free cash flow in 2025 is expected to go toward debt repayment.
Q: What are the main drivers behind the improved hold rate in New York sports betting? A: Eric Hession, President of Caesars Digital, explained that the improved hold rate is due to a combination of factors, including more legs per wager on the parlay side and a higher percentage of cash out. The reinvestment strategy in New York is different due to the high tax rate, contributing to the improved hold percentage.
Q: How do you view the potential impact of state tax increases on your $500 million digital EBITDA target? A: Thomas Reeg stated that while tax changes could potentially delay the target by a month or two, they are confident in reaching the $500 million EBITDA goal. They believe that if competitors hit their estimates, Caesars will exceed the $500 million target.
Q: Can you provide insights into the regional market outlook and any potential headwinds? A: Thomas Reeg noted that regional performance has been better than expected, with competitive impacts being less severe and newly opened properties performing strongly. They anticipate regional EBITDA to be flat to slightly up, with competitive threats abating and new properties continuing to grow.
Q: What are the key metrics you use to judge success in battleground markets? A: Thomas Reeg explained that they assess the relative strength of their properties versus competitors, investment returns in specific counties, and share gains. They focus on markets where they can gain traction and are aggressive in reclaiming market share.
Q: How is the Versailles tower performing, and are there other high ROI investment opportunities in Las Vegas? A: Anthony Carano reported that the Versailles tower continues to improve with significant increases in cash ADR. Other projects include new food and beverage outlets and a new pool at Flamingo, all expected to deliver exceptional returns.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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