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CE

Caesars Entertainment, Inc. (CZR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $2.80B, down 0.9% y/y; GAAP diluted EPS was $0.05 vs $(0.34) a year ago, and same‑store Adjusted EBITDA was $882M vs $924M, reflecting stable Las Vegas, regional competition, and low sportsbook hold offset by 65% iGaming growth .
  • Management expects 2025 to deliver significant free cash flow driven by lower cash interest expense, lower capex (~$600M, excl. Caesars Virginia), a more constructive regional outlook (now “flat to slightly up” 2025 EBITDA vs “down slightly to flat” previously), and continued Digital growth toward a $500M EBITDA target over time .
  • Las Vegas remained resilient despite tough F1 comps; occupancy was 96% in Q4 and Las Vegas segment EBITDA margin was 44.4% as renovated room product and high‑limit investments contributed; slot coin‑in hit an all‑time record .
  • Capital recycling and liability management continued: $500M of debt repaid using WSOP and LINQ Promenade proceeds and $50M of buybacks; year‑end cash was $866M, net debt $11.4B; 2024 refinancings push nearest maturity to 2027 and are set to lower 2025 cash interest expense .

What Went Well and What Went Wrong

  • What Went Well

    • Las Vegas held firm: “Margins in Las Vegas were 44.4%… Occupancy… was 96%,” with improved hotel ADRs, strong group mix, and all‑time slot coin‑in; high‑limit slot and pit upgrades at Caesars Palace are performing well .
    • Digital iGaming strength: Q4 iGaming net revenue +65% y/y; Digital set all‑time records in 2024 (net revenue $1.2B, EBITDA $117M) and is on track for another year of growth in 2025; single‑wallet rollout and proprietary content pipeline are catalysts .
    • Balance sheet progress: $500M term loan paydown from WSOP and Promenade sales; 2024 refinancings extend the nearest maturity to 2027 and should reduce 2025 cash interest expense; management targets deleveraging with the “vast majority” of ~2025 FCF .

  • What Went Wrong

    • Sports betting hold: “Customer friendly outcomes in October and December” pressured Digital; absent low hold, Q4 Digital would have been ~$370M net revenue and ~$60M EBITDA vs reported $303M/$20M .
    • Regional competition: Q4 regional net revenue -1% and EBITDA -5% y/y as localized competition weighed, partially offset by late‑quarter contributions from New Orleans (opened Oct. 22) and Danville (opened Dec. 17) .
    • Impairments and investment cycle: 2024 included regional segment impairments tied to localized competition and a trademark impairment; management noted 2024 concluded an intensive capex cycle that will taper in 2025 .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Net Revenues ($B)$2.825 $2.830 $2.874 $2.799
Diluted EPS ($)$(0.34) $(0.56) $(0.04) $0.05
Same‑Store Adjusted EBITDA ($B)$0.924 $1.000 $1.001 $0.882
Same‑Store EBITDA Margin (%)32.7% 35.3% 34.8% 31.5%

Segment revenue and EBITDA (Q4 2024 vs Q4 2023, same‑store):

  • Net Revenues ($M)
SegmentQ4 2023Q4 2024
Las Vegas$1,083 $1,077
Regional$1,363 $1,343
Caesars Digital$304 $302
Managed & Branded$68 $68
Corporate & Other$(1) $3
Caesars Total$2,817 $2,793
  • Adjusted EBITDA ($M)
SegmentQ4 2023Q4 2024
Las Vegas$483 $478
Regional$431 $410
Caesars Digital$29 $20
Managed & Branded$18 $17
Corporate & Other$(37) $(43)
Caesars Total (Same‑Store)$924 $882

KPIs and balance sheet highlights:

  • Las Vegas occupancy (Q4): 96%
  • Las Vegas segment EBITDA margin (Q4): 44.4%
  • Digital iGaming net revenue growth (Q4): 65% y/y
  • Digital “absent low hold” (Q4): Net revenue ≈ $370M; EBITDA ≈ $60M
  • Cash and cash equivalents (12/31/24): $866M; Total debt: $12.294B; Net debt: $11.428B
  • 2024 buybacks: 5.1M shares for $190M at ~$37 avg; plus $50M in Q4; debt reduced by $500M in Q4 using WSOP and Promenade proceeds .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Capital ExpendituresFY 2025N/A~$600M (ex‑Caesars Virginia) New
Regional EBITDA OutlookFY 2025Slightly down to flat (last call) Flat to slightly up Raised
Digital SegmentFY 2025Growth expected (qualitative)“Another year” of net revenue and EBITDA growth Maintained
Cash Interest ExpenseFY 2025“Set the stage for significant savings in 2025” (Q3) “Significant reductions in 2025” (post‑refi) Maintained/Refined
Free Cash FlowFY 2025N/A“Significant free cash flow,” majority to debt reduction New
Las Vegas OutlookQ1 2025N/AAbout flat y/y as normal table hold offsets lack of Super Bowl rooms New
Digital Long‑Term TargetEarly 2026+$500M EBITDA target communicated historicallyOn track; partner roll‑offs in early 2026 to help reach target Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
Las Vegas fundamentalsQ2: record same‑store LV revenue/ADR; Q3: record Q3 hotel/F&B/banquet Flat y/y vs F1; occupancy 96%; 44.4% margin; all‑time slot coin‑in; high‑limit investments driving Stable to slightly improving mix/yield
Regional competitionQ2: competition partially offset by Danville/Columbus ; Q3: “negatively impacted by new competition” Outlook upgraded to flat‑to‑slightly‑up ’25 EBITDA; New Orleans/Danville early strength Improving trajectory
Digital growth & holdQ2: record Q2 EBITDA; Q3: record quarterly EBITDA; +40% net revenues iGaming +65% in Q4; low OSB hold hurt; mix/pricing driving structural hold toward >10% over time Positive, with near‑term OSB volatility
Balance sheet & capital returnsQ2: >$100M term loan repay; 2024 capex guide $800M (ex‑Danville JV) ; Q3: refi sets up 2025 interest savings $500M debt repaid; $50M buybacks in Q4; 2025 capex ~$600M (ex‑Virginia); focus on deleveraging Deleveraging, lower outflows
Strategic value of DigitalNot emphasized in Q2/Q3 releasesConsidering avenues to unlock Digital value if multiple discrepancy persists; operationally best together Optionality acknowledged
Regulatory/taxN/A in Q2 releases; Q3 not a focusMixed state actions expected; iCasino legalization likely biggest revenue lever; reinvestment adjusts to tax rates Balanced risk/opportunity

Management Commentary

  • “Excluding customer‑friendly outcomes in our digital segment in October and December, consolidated EBITDA in Q4 would have been flat year‑over‑year” .
  • “Absent low hold in Q4, our Digital segment would have generated approximately $370 million of net revenues and approximately $60 million worth of EBITDA” .
  • “We are expecting another year of strong net revenue and Adjusted EBITDA growth in our Digital segment… 2025 is expected [to] deliver significant free cash flow which we expect will be used to further reduce leverage” .
  • “I’d expect regional instead of being down slightly to flat year in EBITDA should be flat on the left side of the range and up slightly on the right” .
  • “Our 2024 refinancings have positioned the company to benefit from significant reductions in cash interest expense in 2025 and have extended our closest maturity to 2027” .
  • “We continue to forecast 2025 full year capital expenditures of $600 million excluding any remaining spend on Caesars Virginia” .

Q&A Highlights

  • Leverage and buybacks: Majority of 2025 FCF ($1B illustrative discussion) to debt paydown; buybacks opportunistic and non‑leveraging; long‑term lease‑adjusted leverage goal ~4x remains priority .
  • Digital value unlock: If Digital trades at brick‑and‑mortar multiples, company will evaluate paths to unlock value; operational synergy argues for keeping together, but shareholder value will drive decisions .
  • Regional outlook shift: Better‑than‑feared competitive impacts and strong New Orleans/Virginia results led management to raise 2025 view to flat‑to‑slightly‑up EBITDA vs prior “down slightly to flat” .
  • iGaming/sportsbook KPIs: Structural hold trending higher via SGPs, cash‑out, product; reinvestment reduced for unprofitable segments and high‑end sharps; handle down where mix was pruned; normalization expected post Q2 anniversary .
  • Capex pipeline: Tahoe (Harvey’s tower and public areas) under way (~$160M total; split 2025/2026); ongoing LV F&B and high‑limit investments supporting yield .

Estimates Context

  • S&P Global (Capital IQ) consensus for Q4 2024 EPS, revenue, and EBITDA could not be retrieved due to an SPGI daily request limit error; as a result, we cannot present quantitative beat/miss vs consensus at this time. We can re‑run and update once access resets.
  • Actual results for comparison once consensus is available: Revenue $2.80B; Diluted EPS $0.05; Same‑store Adjusted EBITDA $882M .

Key Takeaways for Investors

  • Las Vegas resilience and mix/pricing initiatives continue to underpin cash generation, with occupancy at 96% and strong slot performance; 2025 and 2026 group calendars are tailwinds .
  • Regional trajectory improved: management now sees flat‑to‑slightly‑up 2025 EBITDA as competitive headwinds abate and New Orleans/Danville contribute a full year .
  • Digital remains a growth engine despite OSB volatility; iGaming scaling rapidly (+65% in Q4) with product, content, and tech upgrades; structural hold initiatives underpin a >10% long‑term goal .
  • Balance sheet actions (asset sales, refinancings) position 2025 for lower cash interest and significant FCF; capital allocation priority remains deleveraging, with selective buybacks .
  • Optionality on Digital value unlock is on the table if multiple disparity persists, while preserving Caesars Rewards linkages and tech stack remains a key strategic consideration .
  • Watch near‑term catalysts: confirmation of Digital momentum in Q1/Q2 (post mix anniversary), realized interest savings, and ongoing share stabilization in battleground regional markets .

Appendix: Additional Q4 2024 Context and Events

  • Caesars New Orleans $435M transformation completed Oct. 22, 2024 (LV‑style integrated upgrades) .
  • Caesars Virginia permanent resort opened Dec. 12, 2024 (≈1,500 slots, 79 table games, 320‑room hotel) .
  • WSOP brand sale ($500M, $250M cash + $250M note) and LINQ Promenade sale ($275M) executed to fund deleveraging .

Notes:

  • Non‑GAAP: Adjusted EBITDA is a non‑GAAP measure; see company reconciliations .
  • All figures are company‑reported unless otherwise noted and include same‑store adjustments where indicated .