Earnings extra: Caesars Q4 pre-release

Caesars positive on Las Vegas and digital, VICI’s analyst thumbs up, Michigan data +More

Jan 23, 2023

Good evening.

In this earnings extra, Caesars gives an early sight of its Q4 EBITDA numbers as part of a new debt announcement.
VICI gets a vote of confidence from analysts at CBRE.
Michigan data for December shows BetMGM on top.

Caesars pre-announcement

Caesars says Q4 digital losses will be down to less than a tenth of last year’s figure, with Las Vegas ahead of EBITDA consensus.

Driving the news: Digital adj. EBITDA is expected to come in ahead of consensus at losses of $4m-$6m, while Las Vegas operating profits will be ahead at $534m-540m or over 11% at midpoint. The earnings pre-announcement comes as Caesars announced an offer for $1.25bn of new bonds and a new $1.75bn debt facility.

The digital adj. EBITDA loss tumbles from losses of $360m in Q421. Digital revenues are expected to more than double to between $236m and $238m.
Total adj. EBITDA is expected to come in at $947m-$967m, or 65% at midpoint.
Analysts suggested regionals will miss consensus with adj. EBITDA of between $440m and $446m.
In Las Vegas, Truist noted that Caesars said occupancy in Las Vegas was 95.5% in the three months to December, up on Q419.

If not for the Mack: Analysts pointed out the digital performance could have been even better if it wasn’t for the amount paid out to Mattress Mack over the quarter. Ex-his antics, they estimated Caesars would have been in positive territory.

The team at B Riley now thinks Caesars FY digital EBITDA could be flat this year compared to a consensus of losses of ~$50m.

Allaying fears: On the new debt, Wells Fargo suggested the new money should “help appease equity investors concerned about the 2024/25 maturity stack”. Together the $3bn of new debt will replace the $3.24bn 2024 term loan. Deutsche Bank said the proactive extension of maturities “should help to eliminate a topical discussion amongst investors”.

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Datalines – Michigan

Sports-betting GGR rose 40.6% to $50.4m, with $48.8m coming from mobile. Net revenue came in at $30.8m, up 181% YoY, after $18m of promotions were taken into account. Promotions accounted for 37% of total GGR. iCasino GGR was up 25.5% YoY to $152.8m.

Sports-betting leaders by GGR: FanDuel led with 43.3% followed by BetMGM (23.2%), DraftKings (18.2%), Caesars (6.7%) and Barstool (2.8%).
iCasino leaders: BetMGM led with 35.6%, followed by FanDuel (19.0%), DraftKings (17.1%), Caesars (4.7%), WynnBet (3.3%) and Barstool (2.8%).

Analyst takes – VICI

Mission improbable: The gaming REIT has had a busy start to the year with five new investments totaling $3.66bn and a $1bn equity raise, which the analysts at CBRE noted came “in spite of challenging economic and capital market conditions”.

Indeed, the analyst said that since inception VICI has raised over $20bn of equity in more than a dozen transactions “each at a better price than the previous”.
It’s an “impressive (and improbable) task given the global pandemic and current macroeconomic headwinds”.
Wait for it: The track record highlights, according to CBRE, “one of the most critical components of VICI's flywheel” (there it is).
This gives the company “access to continuous and permanent capital”.
King Kong: They noted VICI now has “dominant scale”, apparent since the MGM Growth Properties deal.
“VICI's growing tenant network offers greater visibility and better information flow that helps build a larger and more sustainable growth pipeline.”

Calendar

Jan 25: Las Vegas Sands
Jan 26: Rank, BetMGM
Feb 1: Entain
Feb 2: Evolution, Penn Entertainment, Boyd Gaming

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