Market Overview

Caesars Acquisition Company Reports Second Quarter 2016 Results

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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.

Caesars Acquisition Company Logo.
  • Achieved another strong quarter in the Interactive Entertainment business unit with net revenues and Adjusted EBITDA up 33.9% and 42.7% for the three-month period ended June 30, 2016 as compared to the three-month period ended June 30, 2015.
  • Recorded consistent growth in the Casino Properties and Developments business unit with net revenues and Adjusted EBITDA up 8.8% and 17.3% for the three-month period ended June 30, 2016 as compared to the three-month period ended June 30, 2015.

Operating Results of CGP LLC




Three Months Ended
June 30,


Percent Favorable/ (Unfavorable)


Six Months Ended
June 30,


Percent Favorable/ (Unfavorable)

(In millions)

2016


2015



2016


2015


Interactive entertainment net revenues

$

249.4



$

186.2



33.9%



$

477.2



$

362.8



31.5%


Casino properties and developments net revenues

424.2



390.0



8.8%



840.0



779.9



7.7%


Total net revenues

673.6



576.2



16.9%



1,317.2



1,142.7



15.3%


Income from operations

90.3



98.4



(8.2)%



206.2



303.1



(32.0)%


Net income

24.3



37.0



(34.3)%



61.2



181.1



(66.2)%


Adjusted EBITDA(1)

213.3



160.4



33.0%



407.9



308.4



32.3%









(1)

Adjusted Earnings before Interest Income/Expense, Income Taxes, Depreciation and Amortization ("EBITDA") is a non-GAAP financial measure that is reconciled to its most comparable generally accepted accounting principles ("GAAP") measure later in this release.

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


Three Months Ended
June 30,


Percent
Favorable /
(Unfavorable)


Six Months Ended
June 30,


Percent
Favorable /
(Unfavorable)

(In millions)

2016


2015



2016


2015


Net revenues

$

249.4



$

186.2



33.9%



$

477.2



$

362.8



31.5%


Income from operations

21.2



54.3



(61.0)%



74.6



94.9



(21.4)%


Net income

4.2



39.2



(89.3)%



29.0



66.5



(56.4)%


Adjusted EBITDA(1)

99.2



69.5



42.7%



188.5



132.1



42.7%









(1)

See Reconciliation of Net Income/(Loss) to Adjusted EBITDA later in this release.

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.


For the Three Months Ended

(In millions)

Jun. 30, 2016


Mar. 31, 2016


Dec. 31, 2015


Sept. 30, 2015


Jun. 30, 2015

Revenues










Social and mobile games

$

237.4



$

218.2



$

198.8



$

183.5



$

175.4


WSOP and online real money gaming

12.0



9.6



10.4



11.0



10.8


Total

$

249.4



$

227.8



$

209.2



$

194.5



$

186.2


Adjusted EBITDA(1)

$

99.2



$

89.3



$

77.9



$

72.7



$

69.5








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