LOS ANGELES/CHICAGO – Caesars Entertainment Inc. (CZR) Thursday reported its second-quarter profit more than tripled as Nevada casinos hummed, Atlantic City slowed and the company booked a solid gain from the sale of the Las Vegas Hilton (search).
Boosted by an $87 million gain from the hotel sale, Caesars quarterly net profit rose to $148 million, or 47 cents per diluted share, from $41 million, or 14 cents per share, in the year earlier quarter.
Excluding the sale, adjusted profit rose to $60 million, or 19 cents per diluted share, beating the Wall Street consensus estimate of 17 cents, according to Reuters Estimates.
Las Vegas-based Caesars, the largest casino operator which last week agreed to be bought by slightly smaller rival Harrah's Entertainment Inc. (HET) for $5 billion, owns Caesars Palace, Bally's and a host of other resorts in Las Vegas, Atlantic City and across the United States.
Revenue rose slightly to $1.16 billion from $1.14 billion.
Shares dropped less than one percent in a choppy market.
Analysts gave the company credit for beating expectations despite a losing streak by the house at Caesars Palace, where the percent of winnings, or hold, dropped to 13.7 percent from 18.4 percent in the second quarter last year.
"Caesars Palace would have done close to $40 million in EBITDA had they played normally lucky in the quarter. They hit our estimate of 19 cents despite Atlantic City being a bit weaker than we expected and poor luck at Caesars Palace," said Banc of America analyst J. Cogan.
Caesars also raised its guidance slightly, forecasting third-quarter earnings between 19 cents and 21 cents per share and full-year 2004 earnings of 69 cents to 71 cents per share.
It had previously estimated its full-year profit at 64 cents to 68 cents per share. Wall Street on average expects earnings of 20 cents a share for the third quarter and 69 cents a share for the year, according to Reuters Estimates.
Caesars' western region, which is comprised of seven casinos primarily in Las Vegas, saw a 39 percent increase in earnings before interest, taxes, depreciation, and amortization (EBITDA) to $124 million from $89 million a year ago.
The gain resulted from strong room rates, higher occupancy and an increase in slot machine wins on the Las Vegas strip.
Revenue per available room for resorts on the Las Vegas strip rose 12 percent and revenue from slot machines rose 22 percent.
In the company's eastern region, chiefly Atlantic City, EBITDA fell to $102 million from $122 million for the second quarter of last year, largely because of competition from the Borgata casino which opened last July.
That drop just exceeded the company forecast of a fall of 10 percent to 15 percent.
The company's seven casinos in Indiana, Mississippi, and Louisiana reported a second quarter EBITDA of $63 million, flat with the same quarter of last year.
Caesars' shares were down 5 cents, or 0.3 percent, at $14.90 in mid-afternoon trading on the New York Stock Exchange. Analysts say the stock will be closely tied to Harrah's until the takeover closes.