Q2 2020 Caesars Entertainment Inc Earnings Call
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It is now my pleasure that turns today's program over too.
Ryan like new.
Nice precedent of finance and Investor Relations, Sir the floor is yours.
Thank you Michelle and good afternoon to everyone on the call and welcome to the first earnings call for the New Caesars Entertainment to discuss our second quarter 2020 earnings.
This afternoon, we issued a press release announcing our second quarter financial results for the period ended June 30, 2020, a copy of the press releases available in the Investor Relations section of our web site at Investor Adult Caesars Dot com.
Joining me on the call today or Tom read our Chief Executive Officer, Anthony Carano, Our President and Chief operating Officer, and Brett younger our Chief Financial Officer.
Before I turn the call over to Tom I would like to remind you that during today's conference call. We made we may make certain forward looking statements.
The company's performance.
Such forward looking statements are not guarantees of future performance and therefore, one should not place undue reliance on them.
Forward looking statements are also subject to the inherent risks and uncertainties that couldn't costs that cause actual results to differ materially from those expressed for additional information concerning factors that could cause actual results to differ from those discussed in our forward looking statements you should refer to the cautionary statements contained in our press release.
As well as the risk factors contained in the company's filings with the Securities Exchange Commission.
Caesars Entertainment undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances that occur after today's call.
Also during today's call the company may discuss certain non-GAAP financial measures measures as defined by FCC regulation G. The GAAP financial measures most directly comparable to each non-GAAP financial measure disgusting and the reconciliation of the differences between each non-GAAP financial measure in the <unk> and the comparable gap.
Financial measure can be found on the company's website at Investor Day, Caesars Dot com by selecting the press release regarding the company's 2022nd quarter financial results.
And finally, while our press release today, and our 10-Q cover the operations of legacy Eldorado for the second quarter of 2020, the company posted supplemental financial information for the combined new Caesars to our website. This afternoon covering the period January 1st 2019 to June 30, 2020, which we will.
Discussed today on the call I will now turn the call over to Tom.
Thanks, Brian Good afternoon, everybody and thanks for joining us.
Huh.
In a totally different world than.
The last time, we spoke to you on an earnings call.
At that point.
No every casino in the country on both sides was closed.
The Caesars deal had not.
The Caesars transaction did not close.
And I was sitting in a car parking lot of a grocery store addressing you to that I have to sell signal. So we've we've come a long way since then.
I want to think the.
These are his management team and he alright team.
For the extraordinary effort to get.
Yes, 50, plus properties reopened as the world reopened in me May June timeframe.
I want to take most of all our front line employees that are dealing with customers every day.
As everyone knows this is Andrew.
This is an uncertain situation that we're dealing with their our.
Scary reports out there are costar our employees came back at.
Better than a 95% clip in terms of being called back to work.
We've got about 50% of a back we're very happy that that's the case.
We were saying for the work that they have put in to make our reopening as successful as it's been.
On our last calls.
Yeah, I talk to you about.
Things that I saw that.
Plus reports in the Investor community that I software.
In error.
Most notably pointed to you should expect to see a significant margin surprise on the regional side I think you've seen that.
Across the sector.
I think there's some misconstrue conception still.
Around particularly the regional business that I'll address as we get to that point of the call.
In terms of results as Brian told you. This is an odd quarter for us in that we file financials just for the Eldorado side. So we took the step of this supplemental filing that gives you.
Pro forma.
Well go results.
The same layout that we intend to report on going forward. So you should be able to building.
To your models.
Seamlessly as you can in something that this big in terms of.
Transaction.
For the quarter on a consolidated basis, we're just shy of 500 million of revenue.
We lost 136 million on me EBITDA line.
Obviously that was due to most of the portfolio being closed.
For the first two months of the year nine you already saw our reopening results when we did our financing.
In June so I'm sorry in July. So you you know that regionals were quite strong.
Destination markets have flagged.
And Anthony will get into.
Specifics of the numbers, there, but that would be.
Our experience has been the same going into this quarter you had.
A settlement.
What I would describe as media fear mongering over what might happen fourth of July weekend that I say commuted visitation across the country.
But other than that weekend.
Our results across the board have been similar to what we reported in the reopening period.
Uh-huh as discussed we closed.
The Caesars transaction on July 20-F.
Prior to that we did.
Some significant job be raising both debt and equity and Brett will take you through specifics of that.
Hi.
Being too.
Our.
Operating segments in Las Vegas, we are running and have been running midweek occupancy.
Around 50% and starting to climb again.
We're running weekend occupancy.
To our caps, which are now in the high Seventys we've kept occupancy.
In Las Vegas.
Because of limitations on what the customers can be offered in the non gaming area.
Well in food and beverage limitations no bars, most recently and.
Social dispensing at pools, when it's a 110 degrees.
We want to keep our <unk>.
We want to keep control of the health and safety situation for both customers and employees. So Caesars was capping.
Occupancy as properties reopened at 80% and was wanting that on weekends.
They pulled back to 70% as cases rose in Nevada.
We started to move that back up since we took over.
We're pushing almost 60% of our rooms, our casino rooms, so effectively our prior.
Casino block.
And.
Do you still represent convention business of 14, 15% has combined into one casino room blocks, that's very different than our peers in Las Vegas as I'm sure you're aware as you listen to these comments.
We are putting customers into rooms.
Well were supremely confident as to how much.
Revenue, we're going to get from that room during the visit.
Were far less dependent on.
The random Guy who books through that GA and you really don't know what you're going to get.
And it has shown us and should show you the power of Caesars Awards, that's clearly a very different mix and occupancy level than our competition here.
And keep in mind that those numbers are prior to the Eldorado customers coming into the Caesars database. So we think that's going to continue to get yes.
As you look at Vegas going forward.
Yeah, Here's what I think you should consider or the following one.
The.
The numbers relative to the virus have been gradually improving.
From the Spike a few weeks ago.
If you bring unless you presume that that's going to reverse and we're going to go in the wrong direction.
We and all of our appears in Las Vegas shouldn't be doing is what it says we're going to do right now and I. Just told you the levels that were doing.
We are significantly EBITDA positive in Las Vegas every property that is open.
Every hotel that's opened his EBITDA positive.
And we feel we're going to build from there. If you think about a stable virus situation or improving virus situation.
The next steps in Las Vegas would be.
Borrowers would come back, which we think is a reasonable possibility.
Relatively soon.
And then you'd be looking at Oh socially doesn't distance entertainment as a possibility.
Where are unique in our mix of entertainment in that we are not.
Well as dependent on headliners and serve as the rest of the market. We have a lot of shows that are smaller venues multiple times a day.
And it wouldn't be profitable at typical social distance guidelines, so as those come online.
We should have a mix of entertainment that he is unmatched in the market just because of the structure of how.
That said our peers have tackled entertainment historically.
And then the big pieces that group business. So group business we had.
Very strong with.
Quarter of booking new group business.
Group business as you book it in a quarter is typically for six to 24 months out.
And.
Our booking levels were dramatically in excess of last year, but what's happening in the meantime is existing group business.
In the near term is canceling.
We've got a.
In addition on groups North of 50 in Las Vegas, Nevada, I'll stay I guess in particular until those caps are lifted.
I don't think you're going to see group business return.
And those groups, where I know that group as a sort of return will return.
And particularly are larger groups. Those are those require a lot of forward planning. So it's not surprising to us that you start to see first quarter.
Conferences start to cancel when the 50% Cabot is still in place.
Yes, as you start to see bars reopen you start to see socially distance entertainment and ultimately you see.
Groups more than 50, and importantly, we get out of the.
Cool season, where they were such heavy and for that product, we would expect to lift our cabs and we'd expect to fill to those caps in Las Vegas. So.
We're extremely pleased with.
The way that Las Vegas reopened.
Yes, Gary's Lesnar leads our team out here as regional President and he and all of the G M.
And leaders in Las Vegas market did a fantastic job under.
Incredibly trying circumstances to get us off and running and we're excited for where we'll go from here.
On the regional side.
We are seeing continued strength, we have drags in.
Atlantic City, Reno, and New Orleans, where we're generating.
Positive EBITDA.
But at levels that are comparable to the declines that we've seen in Las Vegas in terms of year over year numbers.
Basically because those customers come from beyond an hour or to drive and in Reno. For example, we've only got about half of our rooms open.
Atlantic City, you can't serve.
Food and restaurants, you can't serve alcohol, you've got 25% access to your casino floor see of structural limitations that are drags on those.
Properties results, but even with that.
In the regional space, we are approaching prior year levels in EBITDA, we're still not quite there, but we're getting pretty close so the regional markets continue to improve.
And in terms of what I'm seeing a narrative that I disagree with.
We've seen tremendous margin improvement.
As we detailed and Anthony will go into detail in his remarks.
We expect that to continue.
It's not going to.
Continue 100% because you are going to bring in.
Pieces of the business like lower limit table games that will be profitable, but are dilutive to that margin number as you move forward and are able to do that.
But.
I think the fear of return of promotional spending in the regional space is completely off the mark.
The.
We have a for a very long time have looked at or ahead have been I've talked to you about the.
Yeah, the subsidies in the business were unnecessary.
All of US everybody in the sector has gotten a look now as to what their business looks like without those subsidies.
And.
It's impossible to argue with the results that.
We're seeing I just saw a pen. This morning, you know super strong quarter and just the latest in a line of them.
You should not expect.
People running back to promotions that are dilutive to.
EBITDA.
You know for on the one hand, if you believe that you believe the people that run the business is in this sector or more airlines because they can see what the business looks like without them.
Two.
The actors that he would have been worried about in the past in that area have largely been absorbed by companies like us and Penn and Boyd and others.
And those that are left that couldn't behave in that fashion don't have enough scale to where somebody like us would need to react to it.
So I think the I read a lot about.
Your fears or hear questions I fear of promotional return.
I think you guys are way off base.
The other point I think is off is the fear that.
This this level of business is on sustainable.
It is undoubtedly true that we have benefited from.
Customers that have no other entertainment or little in a way of other entertainment options coming to visit our properties over it since reopening.
That.
As those.
Options movie theaters cruise lines sporting events as those come online do you have more options.
Some of those will go away.
Some of them, we'll keep.
But our softest segment is 55 plus.
Which coincides with.
Our most value if not our most valuable among our most valuable segments and those are generally people that are fearful of leaving their whole house at this point.
So.
Logically, we're seeing some softness there despite that we're putting up the numbers that we're putting out.
And I don't see a scenario where those other entertainment options are opening so we're losing some of that new business.
And the health situation has an improved to the point, where that 55 plus group is coming back.
So I think you're you're also off base there.
Our unrated business is up substantially.
Since reopening.
And really has replaced.
The lag in 55, plus I like I said, I think we're going to keep some of that unrated business and I think the 55 plus will come back.
I think regional is.
Very strong now and going to get stronger.
And then I would conclude my.
Opening remarks with.
Sports and online is.
As a hot topic of conversation these days with.
Anybody I talk to on the phone.
Yes, I'll tell you again.
We want to.
Come to a permanent solution for this business for us we bring.
The William Hill partnership.
We bring.
Our Internet gaming business Caesars brings its own internet gaming business and its sports business and its sports partnerships and we see the same.
Oh valuations that you see in this space as we sit here today.
But I will tell you as shareholders, we're not going to react.
In a knee jerk fashion to those valuations and do something that's not the bright solution for the business over the long haul.
So we're going to.
Prosecute that opportunity I would still expect that we'll have something comprehensive to talk to you about inside of this calendar year.
But you shouldn't expect us to be printing something right around the corner.
And just to give you an idea of.
What this business looks like if you look at.
The combination of what we bring.
Into the William Hill partnership.
We believe that next year, we're in the range of $6 million to $700 million of revenue in this area, which as you know is.
Similar to others out there the differences were making money. So if you look at just 2020 high gaming revenues.
Which we own 100% of.
We're pacing to 125 million of revenue in just New Jersey.
And margins are mid to high Thirtys on that business. So we think we have an extraordinary opportunity very and there're I'll say it again there is room for multiple success stories in this space. This is the the most exciting growth opportunity that I.
I've seen in over 25 years in around this space.
There is going to be multiple players that succeed I'm, 100% convinced we're going to be wanted.
And with that I'm going to turn it to Anthony to go into operating detail.
Thank you Tom and good afternoon, everyone on the call.
I'd like to take a few minutes to provide you with from operational highlights for the combined new Caesars reopen properties during the second quarter.
Our first regional property began reopening on May 18 week by week, we're able to continue reopening additional properties throughout the quarter.
As of today 51 of our 54 owned leased and managed properties in the U.S. have reopen it.
All of our regional properties have successfully reopened and fix of our nine assets in Las Vegas every open.
Currently reopen in Hollywood and Cromwell remain close.
As disclosed in our 8-K from July 15th the Caesars, let legacy regional property that reopen during the second quarter reported strong operating results.
Through June Thirtyth. These properties achieved revenue growth of 9% to 11% year over year, and EBITDA growth of 70% to 80%.
Margins for the reopen Redrew regional properties increased approximately 1800 basis points.
Additionally, the reopen legacy theaters designation properties reported revenue declined 40% to 50% and EBITDA declined to 55% to 60% both on a hold adjusted basis.
Margins for legacy fees is that nation properties decreased approximately 1500 basis points.
On the legacy Eldorado side revenues for the reopened regional properties decreased approximately 9%.
EBITDA increased 16% and margins expanded by 920 basis points year over year.
Legacy Eldorado destination properties. The reopen during Q2 generated revenue declined to 42% and EBITDA declined 29%.
Margins expanded by 500.
540 basis points.
Overall, our immediate actions to reduce operating expenses that are reopen properties contributed to a leaner cost structure that we believe will contribute to sustainable EBITDA margin expansion.
I'm extremely proud of our team members and their commitment to deliver great that's experiences and the very difficult times.
All of our team members have contributed to our ability to successfully reopener property.
And to deliver the strong operational results.
With that I'll now turn the call over to Brett for some additional insights on the second quarter and detailed on our balance sheet and capital structure right.
Thanks, Anthony as everyone. On this call is aware, we had a very active second quarter from a financial perspective, which was highlighted by our historic doesn't equity executions that were successfully placed in late June and yielded us $8.8 billion of proceeds to finalize the merger financing.
In conjunction with our capital markets extra execution, we also announced $700 million of incremental liquidity through transactions with BG and our banks that we expect to be effective by the end of September.
The driving logic behind our capital raises was to put an abundance of liquidity on the balance sheet that will allow us to navigate through various operating scenarios that we understand will evolve alongside the ongoing health crisis.
Pro forma for the full redemption of the Caesars convertible note and closing of the aforementioned transactions will have access to $2.2 billion of Undrawn revolving credit facilities, just under $1 billion of operating cash and approximately $600 million of excess cash on the balance sheet.
Based on current operating trends and the execution of incremental cost savings, we expect to end the year with the bulk of that excess cash on hand at zero balance on the revolvers.
Given the number of properties in our system and short booking windows being experienced in our destination markets. This is the most dynamic modeling scenario we've ever encountered.
Well, we know sitting here today is that our regional portfolio in large part is performing hadn't really on a year over year basis.
The strip of will remain challenged until we see a meaningful return of group business and other non gaming forms of entertainment and we will continue to execute on our original plan to drive merger related revenue and expense synergies.
Our approach to maintenance and growth capital investment will be focused and disciplined.
We're learning more every day about the Cesar portfolio and are excited by many of the investment opportunities being brought to us by both our corporate and property level leadership teams and the potential for cash flow savings in areas, where capital resources had been previously misdirected.
In terms of modeling over the next 12 month, we expect to spend approximately $350 million on capex, excluding any Atlantic City Capex. There was escrowed when we closed the merger.
With that I'll turn it back to Tom.
Thanks, Brett.
With that we'll open it up to questions from the group.
At this time, even like to take any questions you might have for us today to ask a question over the phone press Star then a number one on your telephone keypad to the judge your question fast Uptown Keith.
Your first question comes from the line have Carlo Santarelli from Deutsche Bank.
Your line is now open.
Thank you hey, thanks, everybody for taking my questions. Thanks for your comments.
You spoke a little bit about the to Q group booking pace for Las Vegas, and I just wanted to confirm because I wasn't entirely clear when you talk about the group productivity.
Over the next six to 18 months could you experience to Q is that I don't want say organic but you need to stuff that you're not talking about stuff that might have been canceled earlier. It was we booked those are kind of incremental things out for it wasn't stuff that was cancelled in the near term and push out to 2021 or 2022 or whatever it was is that correct.
Yes, so to give you Carlo specifics, we booked almost $200 million worth of business.
Versus a $120 million in last year's quarter.
About.
15% of that business was rebooking.
So 85% as new business.
Okay. That's very specific thanks I appreciate it.
[laughter] just in terms of out of how you guys are thinking about I know obviously, there's just a couple of divestitures here that are already ticket they've been targeted theres a couple of that you're still works through I thought there's no Las Vegas strip asked I took the terms oh, the cadence out though.
Forward, what are you kind of thinking in terms of timelines for somebody Indiana stop as as well as.
They actually happened in Las Vegas.
Yeah, So Karl you had some.
Smaller.
Operating that had process is ongoing.
Before and through the mood merger process, so to the extent that any of that resolves itself.
Soon you could see some activity there, but that would be largely immaterial to the size of the business. If you look at what's coming.
Obviously, we had divestiture requirements coming out of Indiana that have a relatively near term timeline associated with them you should expect ad.
We are working on those in will be.
Be looking to get something done relatively quickly in Las Vegas.
We still intend to sell the Las Vegas asset.
I would say.
Pre co bid we were talking about a deal within the first 12 months post closing it's possible that now that's first 12 to 18 months, but.
Yes, as soon as you get to.
The other side of the virus and more normalize.
Business levels, you should expect will be thinking about that as well.
And then.
Brad.
This is maybe I saw that the Q was just filed but I don't believe it.
As it pertains to pro formats teach any catch to provide cash and debt for the combined company as of June 30, potentially.
Yeah. The round numbers are about $14.7 billion of traditional.
Debt and roughly 1 billion Sevenish of total cash so 13 billion of net debt, which if you look back to last year's merger announcement that you would have landed at 13 and a half in a billion. So 12.5. The difference is really the ticking fees and some of the escrowed cash for Capex.
Understood. Thanks, Thanks, very much guys.
Yes. Thanks.
Your next question comes from the line of Steve Rusckowski from the company Siphon off your line is now open.
Hey, guys good afternoon.
Tom I guess, given everything you've gone through the last couple of months I think you know you might maybe I'm crazy, but to me almost some more optimistic than ever on the long term health of the the regional and I'd, even say maybe strip gave me markets.
With all the cost that you have taken out of the business you know I guess, how do you maybe envision.
EBITDA flow through what does that get a look like a couple of years down the road.
Yeah, So Steve as you know normally we'd be telling you.
Yeah, Here's what the synergies realized where the first day, here's where we are versus our target.
Thats been slipped on its here you've got about.
Ability a little over a billion a quarter of cost that is not back in the business.
And at closing Caesars said.
Execute it out about 200 million of the original 400 million of cost savings.
So to hit our.
800 million dollar target.
The 400 original in the 400, we announced in the financing.
About half of that would stay offline.
That's certainly seems.
Eminently achievable and that would put our margins in the mid thirtys versus 28% number if you use the same revenue number as.
29 team.
But obviously had a lower revenue number that margins going to be higher I think that as you look out.
Past, what's going on with the virus and getting into a normal environment. I think you should be thinking about this consolidated business.
As at least high Thirtys of EBITDA margin, if not a four handle.
Okay.
That's very very helpful.
I I guess the second question would be you talked about the sports betting opportunity and I think you said six to 700 million in revenues I don't know if that was I think you said next year.
But can you maybe help us break that down a little bit in terms of how you're getting to that range.
That's what we're bringing to the party.
And what William Hill, you asked does combined so we've got an ownership piece.
And.
William Hill, you asked switches predominantly our.
Piece of our the partnership that they have with us.
Plus our igaming stuff that's outside of that partnership.
We think total revenue will be $6 million to $700 million next year.
Okay Gotcha. Thanks, guys appreciate it.
Your next question concerns lineup Thomas Allen from Morgan Stanley. Your line is now open.
Okay.
Tom as Sean popular taken out of your break.
Oh I'm sorry can you hear me now yes, now you are good.
Correct Cygnus sports. Thank you just talked about what you're seeing the sportsbook since the major league three launched.
[noise] I mean, you see.
Anecdotally I tell you see significant activity because there's really.
Not a lot else that so but right now if you're in.
In Vegas your AD.
Hey gaming tables.
And you are you're at a pool.
Sure in your room, and now you've got sports books, as well you're seeing more.
More than normal levels of activity.
Five in the retail Sportsbook.
Okay, perfect and then thinking longer term you know in New Jersey, I think you have a little bit over 20, as a market share and I gaming.
And decent Sharron sports betting, let's talk a little bit about the cross sell between those products did your plan doing.
Yes, clearly that's going to be key single wallet solution.
Particularly one that is tied to our rewards database and what we can offer we think is going to be.
Powerful and as I said, we're already significantly.
EBITDA positive in that business. So we don't have the.
Same customer acquisition costs as others that we're competing with nor do we have the.
The access fees as well so it should be.
That's why we think we can be so well positioned in this space, but as I said.
I expect multiple winners here.
I'm not I'm sure, you're but July EBITDAR for the combined company.
No.
Thanks for the question.
Yes.
Hi, good try [laughter].
Uh huh.
Your next question comes from the line up then follow through from Jpmorgan. Your line is now open.
Everyone. Good afternoon, thank for taking my questions.
Hi can do you have you got a lot of assets and there's still more plan I guess, how should we think about the free cash flow algorithm that maybe you laid out when you first announced the deal 1.5.
I I asked that acknowledging that it's a much different operating environment, but assuming.
At some point what.
[music].
We laid out a.
We thought there was a path to $10 a free cash flow per share when we announced the transaction. We still think there was a path to $10 a free cash flow per share.
And does that assume a recovery.
Strip in full or.
Do you get above prior peak season that scenario.
From a revenue standpoint, it's a recovery to something resembling 2019, but not.
Yeah, we're not.
Presuming a peak beyond that.
Alright, Thanks, and then on sports betting and I gaming.
Can you maybe talking about how you think about growing your share there and you know we've looked at we've seen numbers you Jersey, we'd also.
I guess what are the difference is what's going on in the states.
Just a matter of.
Caesars hadn't really ramped it's product there or.
Something that you guys are looking to grow share.
Future.
It's a function of the former that Caesars is not ramped.
Its product in.
Pennsylvania and it has in Jersey.
And then how do you think about your long term charities sports betting and.
And the opportunity.
You know as you know that we're going to we're not going to be the guy that's out there buying share we think the combination of.
All of the assets that we can bring to bear there and me rewards database should put us among the leaders in the space.
And.
I think that leaders in the space are going to be.
Call it somewhere between 15 and 30% market share.
Got it makes so much.
<unk>.
Thanks, Dan.
<unk>.
Your next question comes from the line up John degree of Union Gaming. Your line is now open.
Hi, Rob Thanks for taking my questions and I'll second that congratulations on getting the transaction over the finish line.
Sure.
Tom I wanted to ask about the casino mix in Las Vegas, I think in your prepared remarks, you had mentioned, 60% or so right. Now curious if you could put a little context around that as to what Oh, former Caesars kind of casino mix in Las Vegas had been and where do you think the opposite optimal mix is going.
Forward in Las Vegas is things hopefully begin to normalize.
We were AD is 43 prior Caesars was at 40%.
What about 15% of group business.
Sure like that group business back, but as I said thats going to take a little bit of time.
Bringing me Eldorado, bringing in the the piece that you want to.
Take from is the OTI a piece just because there's nothing wrong with OTA is it's just that customer is the lease predictable in terms of what they spend outside the room.
And so to the extent that we can by bringing our customers into the Caesars database, increasing the opportunity set by 20%.
We can go we can cause some more share in casino play at the expense of OTI, a that's a good trade for us.
Casino expense for right I'm, sorry Casino segment for group segment is not as good of a trade, but it's far better than.
Yes.
Replacing group business with either an empty rumor and OTN customer.
Got it that's helpful. It's in the last one other quick follow up on Las Vegas, B properties that have not yet reopened.
Mentioned, you're kind of seeing a little bit of occupancy build and made some restrictions are lifted you could build its occupancy up at the open properties. How do you think about the reopening of health what's left a general guidelines, obviously tough to predict how things will play out over the next couple of weeks, but what should we look for as you contemplate reopening additional rooms and initial properties.
Well, we look at Las Vegas, as the city right. So if we can open a property.
And it's additive to incremental EBITDA citywide, that's when we'll pull the trigger.
Right. Thank you and thanks for the Reg FD filing with the pro Formas that's very helpful.
Yes.
Thanks, Joe.
Your next question comes from the line as Barry Jonas from cost. Your line is now open.
Thank you.
How how important is having.
Any channel strategy. When you think about digital and there are there any limits to execute against that strategy. If your land based digital businesses would somehow separate entities.
Well you wanted to be as I said.
In answer to Thomas' question.
You want a single wallet strategy, that's integrated into your player database and takes advantage of all the offerings that we have on the physical side. So you shouldn't expect us to do a deal.
That gets in a way of that outcome.
Got it got it and then.
Maybe I missed this as well but.
After Indiana.
And.
That's the one asset in Vegas are there and are you thinking about any more divestitures or or trends are there any holes that we'd like to fill any markets.
[noise] everything's for sale everyday Barry.
Were entirely economic animals in terms of.
We are looking at the divestiture that you listed as well our what we're considering.
But.
We're always happy to be wild by an offer for one of our assets.
In terms of holes in me.
System I really don't.
Look at the map and say I've got to I got to figure out a way to be and some particular city and.
You shouldn't expect us to do be doing anything on the international front anytime soon.
Got it and just if I caught one more we heard a little bit today about cashless technology.
Slate.
Their introduction.
Any thoughts there.
Oh about introducing that to your properties and potentially a meaningful that that could be.
I think its long overdue in the space.
I think the.
You know this.
Entire.
Public health situation has been.
Awful across the board.
Thats among the handfuls of silver linings that.
The handling of cashing in this business is.
Yes, antiquated most of the rest of the World is now moving to cashless are already there.
And I think that.
Because of what's happened with the virus I would expect the pace of the ability to get there.
To quicken and that's a big.
Yes, that's a big cost savings for us that's.
Additional liquidity, it's a whole it hits a lot of different areas that you might not be thinking of as you think of that transition.
That would be.
Big win for the entire space.
Great really appreciate the commentary thanks guys.
Thanks Barry.
Your next question comes from the line of Chad Beynon of Macquarie. Your line is now open.
Hi, good afternoon. Thanks for taking my question and congrats on the acquisition.
<unk>, Tom you answered the synergy question already but I wanted to ask it in a slightly different way I guess the way that we had been thinking about it before just thinking about the original buckets. So I think youve noted that labor or I guess in totality is around 3 billion on an annual basis and.
You mentioned that now you're back to roughly 55% so when the Rio planet Hollywood Chrome, while our open I guess, where does this put you and then more importantly, realistically where do you think this this number gets through and then in the next six to 12 months on a percentage basis. Thanks.
So I'd say, we're 55% in terms of bodies.
In terms of.
<unk> expenses that have come back we'd be higher than that.
Most of what is furloughed are.
Frontline employees you just in terms of absolute volumes. So there's more costs that has come back then the 55%.
But you know, that's where you think about areas that.
Our likely go on forever like.
Hi.
I'm used to hear the rest of the space now talk about the phase like I've been talking about them with you for.
Four or five years, Chad where.
I don't really understand why we would.
Lose as much money as we did in that business historically, while now everybody seems to have come to that conclusion and from a health and safety standpoint.
Frankly does matter, whether we came that conclusion are now you can opener.
So.
Areas like that you're going to see.
Significant cost not come back when we raised our synergy hasn't like $400 million post coated and no significant piece of that is areas like that that don't come back and then.
Marketing that doesn't come back where.
Yes, as I said, everybody in the space has gotten.
And as the answer a key to the test.
And I don't expect a lot of that to come back.
Great. Thanks, Yeah, you're definitely a trend setter and then regarding the.
William Hill relationship.
I believe that moved pretty fast on the strip from a retail standpoint, I think their books are now alive at Paris link and maybe even Caesars palace, but on the online branding side should we still expect that they'll be running with Caesars sports and William Hill as the brands to customer.
As online and is there anything.
With the CBS partnership that customers will be able to see in the near term now that sports are open.
Well the CBS partnership really is access to a from a business standpoint, its access to a database.
That should drive business.
From a.
A rollout.
The standpoint, our books here are.
What is it William Hill Caesars.
In terms of what the brand is online.
Two brands William Hill and Caesars.
Okay great.
Thanks I appreciate it.
Thanks, Chad.
Your next question comes from the line, it's David Katz from Jefferies. Your line is now one thing.
Hi, good afternoon, everyone.
And thanks for taking my question, you're covered a lot as usual.
Brent I Hope you don't mind me asking you to just repeat the very last sentence of the remark around.
Thanks.
For the next 12 months and help us with some carriers and send any color you might be able to give us beyond that just since you know we're modeling a bit longer than that it would help thanks.
No problem, David I spoke about $350 million looking out over the next 12 months of Capex across the portfolio, Excluding Atlantic City specific Capex, which we escrowed for the day, we closed the merger.
And so the 350 it is that.
Inclusive of maintenance and growth or is that yes. Its total not.
But having this expo.
Got it because I can recall you know talking about numbers that were a little higher obviously pretty pandemic.
That may have started with a six are you deferring some of that or.
My mixing it up on an orange.
A little bit above.
We've got a compression of the portfolio, obviously with a number of divestitures. So besides the portfolio comes down so it isn't the cadence of Capex.
There's a little bit of remaining room remodel capex in Las Vegas that was traditionally in that run rate number that you would see by Caesars.
Historically.
So we've got a little bit of both we expect that as you know everything comes back online.
Some of the lower returning capital projects will will get turned on if you get passed this next 12 months and I'd add David that.
That 300 million doesn't include the capital that will be spent in Atlantic city, because for our purposes. The 400 million is already in escrow, it's already been spot.
Thank you.
Your next question comes from the line of Shaun Kelley of Bank of America. Your line is now open.
Hi, good afternoon, and thanks for taking my question.
Just werent really one question or kind of clarification is already spoken about the but I'm just interested in the casino Max with the 60% number that you spoke of in the prepared remarks I'm. Just curious how does that trended as you kind of reintroduce are open new properties that number stayed.
Pretty stable for you and you know is that an optimal number you know when you kind of think about going forward. If you could get the group mix back you want to keep dot casino makes high or.
Are you actually more profitable if you make send a you know more you know kind of let's call. It a traditional hotel in leisure guests, but this is he was available right now.
So like I said, you you want the group business back.
I'd like to you'd like and expect that to grow as before on comes online with groups coming back.
So that would eat into or that would grow higher the casino mix, we expected it to go higher.
Post transaction, because we're introducing me Eldorado player database in but that would have been the at the expense.
Although T.K. and in terms of.
Experience at properties as we have reopen it's been pretty steady throughout its been very heavy.
Casino mix, which again speaks to the power of that database.
And Tom <unk>, just to clarify you haven't yet I mean or are you at the place yet where you have introduced this at all to the Eldorado database or I mean, I would assume with the how quickly the mergers close you haven't even gotten to that point yet.
So day, one we are able to link your account if you were a.
Whether you were on the Eldorado side or the Caesars side similar to win.
Two airlines mergers and you have both frequent flyer programs.
So you can effectively transfer your status its a bit clunky by the middle of September.
It will have rolled out.
On may not fully functional but functional four month and often enough for most of the customer base.
Throughout the Eldorado portfolio.
And then there's another level of.
Fully integrated like it was a caesars property all along.
That starts in December and that will probably take another six months or so to roll through the entire portfolio.
So yes, that's the mechanics, but in terms of.
The impact on the business.
Until you get to mid September and you've rolled it out across the enterprise system.
You are really you have the people that are really paying attention.
That are taking advantage now.
It should be let's step function in the middle of September.
Thank you very much.
Your last question comes from the line of Kids should try and a false research. Your line is now open.
Hi, good afternoon, everyone. Thanks for squeezing me in here, taking my question.
Tom If I could just go back to your comments on sports and I Gaming. You said you will have something comprehensive did talk about inside of this calendar year are you specifically, referring to a separation or is it maybe a restructured agreement with William Hill can you just help me understand that comment and then if you were two separate this business would you still.
I want to have majority ownership.
So the answer to what happens before year end is.
I'll comprehensive strategy that describes how we are going to.
Prosecutor sports opportunity that could include.
Any number of what you.
Laid out it word or more.
We are looking for.
The greatest return for our shareholders I'm not trying to solve for.
How much of an entity I need to own but I'd also say the.
As I said in my opening remarks. This is the biggest growth opportunity I've seen in this space since riverboats were being legalized in the early nineties, we want to own a loss. So we're we're looking for what's the best Pat.
Operationally just in terms of running the business and we've had some questions are dealt with that.
And then what makes the best sense for our shareholders and the marriage of that will produce.
What we're.
Hoping to be able to announced by the end of year.
Got it okay. Thank you and then just as an unrelated follow up going back to Vegas. Appreciate all the commentary pretty impressive just given the circumstances, but can you give us a sense for what the Vegas strip. The it in the month of June on revenue and EBITDA on it I know in your July update you gave us the.
Nation properties.
But I'm not sure if that's fair to extrapolate to do they get strip just given your periodically reopening properties throughout the month and then whatever that that number is for June is is it fair to extrapolate that out to July and what you're seeing so far to date.
So I guess did about a 100 million of revenue in June and about 25 million of EBITDA.
And in terms of four were in terms of July you would have been softer than that pace for the first week.
And pretty much back at that pace after that.
All right that's very helpful. Thank you very much.
Thanks, Jeremy.
That's not that's that's what the momentum please continue.
Alright. Thanks.
Time, right and we look forward to say, we hope you saw this success presentation informative. This concludes our lot cats and you may now disconnect.
Thanks very much.
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