Caesars Entertainment returned to net profitability in the second quarter of 2021, backed by strong hotel occupancy in Las Vegas, CEO Tom Reeg said during the company's quarterly earnings call on Tuesday.
After reporting a net loss of $423 million in the first quarter, Caesars reported net income of $71 million for the second quarter.
Caesars' Las Vegas occupancy for the second quarter was 89%, with occupancy reaching 99% during weekends. During the first three months of the year, the company reported 63% occupancy in Las Vegas, with 85% occupancy on weekends.
"It's an outstanding Las Vegas segment result despite operating with capacity and social-distancing restrictions for the first two months-plus of the second quarter," Reeg said. "We remain encouraged by the booking trends for the second half of 2021 and into 2022."
Caesars reported same-store adjusted earnings before interest, taxes, depreciation and amortization of $1 billion, a quarterly record for the company. The metric is not part of generally accepted accounting practices and includes adjustments by the company for one-time costs and other factors, but is frequently used to compare companies across an industry. The figure was touted by Reeg as a sign of a faster-than-predicted recovery.
"I think I said on the last earnings call I expected to hit $1 billion, but I didn't expect to hit it in the second quarter," he said. "I expected it in the [third quarter]. So, we're a little ahead of schedule."
Positive outlook despite delta variant
Nevada imposed an indoor mask mandate regardless of vaccination status at the end of July for areas with high Covid-19 case rates. The measure includes Clark County, where the Las Vegas Strip is located. Still, Reeg believes the recovery will continue in the coming months.
"I fully expect to remain in the low- to mid-90s in occupancy in Vegas through this current situation with delta variant," he said.
Caesars Entertainment was bought by Eldorado Resorts in 2019 and the two companies completed a merger in July 2020. Reeg said operating efficiencies executed by the new management team have helped increase margins.
"We operate with less labor than the historical company operated with at both the property and the corporate level," Reeg said. "But it's really the attention to detail, the focus on every P&L. I'll give you an example. This quarter we were operating income-positive in food and beverage for the first time in the history of Caesars. On a quarter-over-quarter basis, that's an over $60 million cash swing."
Moving forward, the company has a handful of property-improvement projects underway and is investing heavily in the roll-out and marketing of its sports betting operation.
In April, Caesars Entertainment announced the completion of a $4 billion purchase of the sportsbook William Hill. As of Aug. 2, the operation has been rebranded as Caesars Sportsbook and the company is launching a widespread media campaign, kicking off nationally with a commercial during the Olympic basketball game between the U.S. and Australia on Thursday.
The Caesars Sportsbook serves as both the physical location at casinos as well as a digital application available to customers where sports betting is legal. Over the next two-and-a-half years the company expects to invest $1 billion in the marketing and customer acquisition efforts for the sportsbook.
After suffering damage during Hurricane Laura in August 2020, Isle of Capri Casino Hotel in Lake Charles, La., is under renovation and is expected to reopen in the second half of 2022. The Indiana Grand Casino is undergoing an expansion and is scheduled for completion in January 2022. Additionally, work has started on a multimillion dollar renovation to the main entryway of Caesars Palace.
Caesars Entertainment's companywide revenue in the second quarter totaled $2.5 billion, up from $1.7 billion in the first three months of the year.