Caesars Acquisition Company Reports Second Quarter 2016 Results

LAS VEGAS, Aug. 2, 2016 /PRNewswire/ — Caesars Acquisition Company (NASDAQ: CACQ) today reported the following results for Caesars Growth Partners, LLC (“CGP LLC”) for the second 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.

Operating Results of CGP LLC

Financial Results

Second Quarter 2016 results compared with Second Quarter 2015

Net revenues for the second quarter of 2016 were $673.6 million as compared to $576.2 million for the respective period in 2015, which was an increase of $97.4 million, or 16.9%. 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 an increase in casino revenues at Horseshoe Baltimore, an increase in entertainment revenues at Planet Hollywood Resort and Casino (“Planet Hollywood”), and increases in all categories of revenues as a result of renovations at The LINQ Hotel & Casino which was substantially completed and available to guests in early May 2015.

Income from operations for the second quarter of 2016 was $90.3 million as compared to $98.4 million for the same period in 2015, which was a decrease of $8.1 million, or 8.2%. The decrease in income from operations was primarily due to increased stock-based compensation expense at CIE offset by the income impact of year over year revenue growth at CIE and Horseshoe Baltimore and increased revenues as a result of renovations at The LINQ Hotel & Casino.

Net income for the second quarter of 2016 was $24.3 million as compared to $37.0 million for the same period in 2015, which was a decrease of $12.7 million, or 34.3%. The decrease in net income was primarily due to the factors discussed for the decrease in income from operations as well as increases in interest expense and the provision for income taxes.

Adjusted EBITDA for the second quarter of 2016 was $213.3 million as compared to $160.4 million for the same period in 2015, which is an increase of $52.9 million, or 33.0%, driven primarily by the income impact of increased revenues at CIE, Horseshoe Baltimore, Planet Hollywood, and The LINQ Hotel & Casino.

Six Months Ended June 30, 2016 results compared with June 30, 2015

Net revenues for the six months ended June 30, 2016 were $1,317.2 million as compared to $1,142.7 million for the respective period in 2015, which was an increase of $174.5 million, or 15.3%. The increase in revenue for CIE was primarily driven by strong organic growth in CIE’s 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 an increase in casino revenues at Horseshoe Baltimore, an increase in entertainment revenues at Planet Hollywood, and increases in all categories of revenues as a result of renovations at The LINQ Hotel & Casino. These increases were partially offset by lower revenues at Harrah’s New Orleans as a result of the April 2015 smoking ban.

Income from operations for the six months ended June 30, 2016 was $206.2 million as compared to $303.1 million for the same period in 2015, which was a decrease of $96.9 million, or 32.0%. The decrease in income from operations is primarily attributable to the change in the fair value of contingently issuable non-voting membership units recognized in the prior year with no comparable change recognized subsequent to December 31, 2015, and increased stock-based compensation expense at CIE. Excluding the impact of the change in fair value of contingently issuable non-voting membership units and the increase in stock-based compensation expense at CIE, income from operations for the six months ended June 30, 2016 increased by $92.0 million when compared to the same period in 2015 due to the income impact of year over year revenue growth at CIE and Horseshoe Baltimore and increased revenues as a result of renovations at The LINQ Hotel & Casino. These increases were partially offset by lower revenues at Harrah’s New Orleans as a result of the April 2015 smoking ban.

Net income for the six months ended June 30, 2016 was $61.2 million as compared to $181.1 million for the same period in 2015, which was a decrease of $119.9 million, or 66.2%. The decrease in net income was primarily due to the factors discussed for the decrease in income from operations as well as increases in the provision for income taxes and interest expense.

Adjusted EBITDA for the six months ended June 30, 2016 was $407.9 million as compared to $308.4 million for the same period in 2015, which is an increase of $99.5 million, or 32.3%, driven primarily by the income impact of increased revenues at CIE, Horseshoe Baltimore, The LINQ Hotel & Casino, and Planet Hollywood offset by a decrease at Harrah’s New Orleans as a result of the April 2015 smoking ban.

Business Units Operating Results

Interactive Entertainment

Second Quarter 2016 results compared with Second Quarter 2015

Interactive Entertainment net revenues increased by $63.2 million, or 33.9%, in the second 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 decreased by $33.1 million, or 61.0%, in the second quarter of 2016 as compared to the same period in 2015, primarily driven by increases in stock-based compensation and sales and marketing expenses offset by the income impact of increased revenues. Net income decreased by $35.0 million, or 89.3%, in the second quarter of 2016 as compared to the same period in 2015, primarily driven by the factors discussed for the decrease in income from operations as well as an increase the provision for income taxes. Adjusted EBITDA increased by $29.7 million, or 42.7%, in the second quarter of 2016 as compared to the same period in 2015, driven by the income impact of increased revenues, partially offset by an increase in sales and marketing expenses.

Six Months Ended June 30, 2016 results compared with June 30, 2015

Interactive Entertainment net revenues increased by $114.4 million, or 31.5%, during the six months ended June 30, 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 decreased by $20.3 million, or 21.4% during the six months ended June 30, 2016 as compared to the same period in 2015, primarily driven by increases in stock-based compensation, sales and marketing, and research and development expenses offset by the income impact of increased revenues. Net income decreased by $37.5 million, or 56.4%, during the six months ended June 30, 2016 as compared to the same period in 2015, primarily driven by the factors discussed for the decrease in income from operations as well as an increase the provision for income taxes. Adjusted EBITDA increased by $56.4 million, or 42.7%, during the six months ended June 30, 2016 as compared to the same period in 2015, driven by the income impact of increased revenues partially offset by increases sales and marketing and research and development expenses.

Performance Metrics – Interactive Entertainment

The table below shows the results of CIE’s business based upon the financial metrics for the periods presented.

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.

During the second quarter of 2016, CIE’s social and mobile games business had approximately 891 thousand Average Monthly Unique Payers, or 4.6% of Average Monthly Unique Users on the social and mobile platforms, purchase virtual goods, which was an increase of approximately 15.1 basis points from the second quarter of 2015.

Casino Properties and Developments

Second Quarter 2016 results compared with Second Quarter 2015

Casino Properties and Developments revenues were impacted primarily by the following:

Net revenues for the second quarter of 2016 increased by $34.2 million, or 8.8%, when compared to the same period in 2015. Total trips decreased by approximately 1.8% during the second quarter of 2016 when compared to the same period in 2015. Gross casino hold increased to 12.5% for the quarter ended June 30, 2016 from 12.0% for the quarter ended June 30, 2015.

Cash average daily room rates for the second quarter of 2016 increased to $129, or 8.4%, when compared to $119 for the same period in 2015. Average daily occupancy was 96.0% and 94.9% for the second quarter of 2016 and 2015, respectively. Revenue per available room for the second quarter of 2016 and 2015 was $122 and $113, respectively, or an increase of 8.0%.

Income from operations for the second quarter of 2016 increased by $15.7 million, or 28.6%, when compared to the same period in 2015, Net income for the second quarter of 2016 increased by $13.6 million, or 176.6%, when compared to the same period in 2015, and Adjusted EBITDA increased by $17.0 million, or 17.3%, when compared to the same period in 2015 primarily driven by the income impact of increased revenues at Horseshoe Baltimore, Planet Hollywood, and The LINQ Hotel & Casino.

Six Months Ended June 30, 2016 results compared with June 30, 2015

Casino Properties and Developments revenues were impacted primarily by the following:

Net revenues for the six months ended June 30, 2016 increased by $60.1 million, or 7.7%, when compared to the same period in 2015. Total trips decreased by approximately 3.6% during the six months ended June 30, 2016 when compared to the same period in 2015. Gross casino hold increased to 12.2% for the six months ended June 30, 2016 from 11.8% for the six months ended June 30, 2015.

Cash average daily room rates for the six months ended June 30, 2016 increased to $133, or 8.1%, when compared to $123 for the same period in 2015. Average daily occupancy was 94.8% and 93.3% for the six months ended June 30, 2016 and 2015, respectively. Revenue per available room for the six months ended June 30, 2016 and 2015 was $123 and $114, respectively, or an increase of 7.9%.

Income from operations for the six months ended June 30, 2016 increased by $29.1 million, or 27.6%, when compared to the same period in 2015, Net income for the six months ended June 30, 2016 increased by $23.2 million, or 209.0%, when compared to the same period in 2015, and Adjusted EBITDA for the six months ended June 30, 2016 increased by $34.4 million, or 18.3%, when compared to the same period in 2015 primarily driven by the income impact of increased revenues at Horseshoe Baltimore, The LINQ Hotel & Casino, and Planet Hollywood offset by a decrease at Harrah’s New Orleans as a result of the April 2015 smoking ban. The increase for Net income was also offset by an increase in interest expense.

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) $150.0 million revolving credit agreement (“Revolving Credit Facility”) which is intended to satisfy CGPH’s short-term liquidity needs.

At June 30, 2016 and December 31, 2015, CGP LLC had cash and cash equivalents totaling $1,029.2 million and $901.7 million, respectively. Third-party debt outstanding at CGP LLC was $2,284.2 million as of June 30, 2016 and $2,337.3 million at December 31, 2015. This amount includes debt of the consolidated subsidiary CGPH of $1,968.3 million and $2,018.3 million as of the respective dates. Net CGPH repayments under the Revolving Credit Facility during the six months ended June 30, 2016 were $45.0 million. As of June 30, 2016, no amounts were outstanding under the Revolving Credit Facility.

About Caesars Acquisition Company

Caesars Acquisition Company was formed to make an equity investment in Caesars Growth Partners, LLC, a joint venture between CAC and Caesars Entertainment Corporation (“Caesars Entertainment” or “CEC”) (NASDAQ: CZR), the world’s most diversified casino entertainment provider and the most geographically diverse U.S. casino-entertainment company. CAC 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):

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.

 

 

 

 

 

 

Source: Caesars Acquisition Company; CACQ

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SOURCE Caesars Acquisition Company

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