Caesars sees 13.6% revenue drop amid coronavirus shutdown

Caesars Entertainment reported on Monday first quarter of 2020 results, which reflect significant revenue declines from the mandated property closures due to the COVID-19 pandemic.

"The public health emergency caused by COVID-19 has created extraordinary challenges and is impacting all aspects of society, including our business. While we posted our best operating performance since 2008 in the first two months of the quarter, circumstances changed dramatically in March as we temporarily shut-down all of our casino properties, consistent with directives from various governmental and tribal bodies," said CEO Tony Rodio. "Our first-quarter performance reflects the significant revenue declines we experienced as a result of the closures and stable year over year labor costs in March as we continued to provide pay and benefits to our team members for the first two weeks of the closure period."

Net revenues decreased $287 million primarily due to government or tribe-mandated property closures across our network. Performance in the first two months of the quarter was very strong with net revenue through February up 12% year over year driven by increases in all verticals across all regions, highlighted by strength in Las Vegas and Indiana. However, revenue in the month of March was approximately half that of the prior year due to the temporary property closures. As a result, first-quarter net revenues in Las Vegas and Other U.S. declined year over year with decreases in gaming, hotel, food and beverage and other revenues. All Other net revenues decreased $18 million year over year, primarily due to lower gaming volumes in the UK as a result of property closures. Across all of the company's casino properties, hold had a favorable impact of $17 million to $22 million this quarter compared to the prior year, and was $23 million to $28 million above their expectations.

Coronavirus impact

On March 17, 2020, the Company announced the temporary shutdown of all its owned properties in North America, consistent with various government or tribe-mandated directives, due to the public health emergency caused by COVID-19. The Company's properties remained closed as of March 31, 2020, and as a result, COVID-19 continues to impact the business significantly. Given the uncertain duration of these closures, the Company also took steps to begin operating with a smaller, targeted workforce focused on maintaining basic operations and announced furloughs affecting approximately 90% of our employees at our domestic, owned properties in North America as well as our corporate employees. Caesars paid furloughed employees for the first two weeks of the closure period, after which employees were able to use their available paid time off. The company is paying 100% of medical insurance premiums for each furloughed employee enrolled in the Caesars health benefit plans, through the earlier of June 30, 2020 and the date that such employee returns to work.

Proposed Sale of Bally's Atlantic City

On April 24, 2020, Caesars Entertainment announced an agreement to sell Bally's Atlantic City Hotel & Casino for approximately $25 million in cash. VICI Properties Inc. will receive approximately $19 million from the sale, while Caesars will receive approximately $6 million. The transaction is subject to regulatory approvals and other closing conditions.

"We are taking steps to prepare for reopening, when appropriate, with the health and safety of our employees and guests in mind. We are also aggressively managing all of our operating levers to strengthen our financial position and enhance our ability to reopen and recover, including making the difficult but necessary decision to furlough the majority of our team members. We look forward to welcoming back employees and guests at the appropriate time, and we believe our deep connection with our guests and the geographic diversity of our network positions us well when that time arrives," Rodio added.