Caesars Entertainment Corp., the casino operator whose largest division declared bankruptcy in January, reported its best profit margin since before the financial crisis as it cut promotional costs while sales rose.
The owner of the most casinos in the U.S. generated a 28 percent margin measured by earnings before interest, taxes, depreciation and amortization across all of its units during the second quarter, according to a presentation filed Tuesday. That was the best Ebitda-to-sales ratio since 2007, Mark Frissora, chief executive officer of Caesars, told investors on an earnings call.
“These results demonstrate our ability to deliver growth while driving operational efficiencies,” Frissora, who took the job July 1, said in a statement Tuesday. “We are focused on growing the business, continually improving efficiency and expanding margins.”
Caesars’ results underscore a broader rebound in the U.S. gambling business this year, following the slump brought on by the 2008 recession. MGM Resorts International reported higher-than-expected profits Tuesday because of its domestic resorts.
“This quarter, we delivered the highest margins in the Las Vegas strip of any public casino company,” Frissora said on a conference call Tuesday.
Net revenue rose 7.9 percent to $2.3 billion in the quarter as customers spent more on hotel rooms and on the casino floor, according to the presentation. Caesars took in more money from all of its business segments while it slashed by nearly half what it spent on casino marketing in the quarter, compared with last year. The sales figure subtracts promotional spending.
Caesars and its private-equity majority owners, Apollo Global Management LLC and TPG Capital, have made some progress in the last month in rallying support from creditors for its bankruptcy plan. Some first-lien bondholders signed an amended restructuring plan over the weekend, and Caesars said it reached an agreement in late July with some members of a bondholder class that have been among its fiercest opponents.
The company struggled under the load of $30.7 billion of debt taken on in its 2008 leveraged buyout. It plans to eliminate about half of the operating unit’s $19.9 billion of borrowings in court and turn it into a real estate investment trust. Chief Financial Officer Eric Hession said on the call that managers wouldn’t discuss the restructuring or negotiations with creditors.