Q4 2023 Caesars Entertainment Inc Earnings Call
Okay.
Okay.
Good day and thank you for standing by welcome to the Caesars Entertainment, Inc, 2023 fourth quarter and full year earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session. Please press star one one.
On your telephone and wait for your name to be announced to withdraw. Your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Brian Agnew Senior Vice President of corporate Finance Treasury and Investor Relations.
Brian Matthew Agnew: Thank you, Josh and good afternoon to everyone on the call and welcome to our conference call to discuss our fourth quarter and full year 2023 earnings.
This afternoon, we issued a press release announcing our financial results for the period ended December 31 2023.
A copy of those results are available in the Investor Relations section of our website at Investor <unk> Caesars Dot com.
As usual joining me on the call today are Tom Reeg, our CEO, Anthony Carano, our president and Chief operating Officer, Bret Yunker, our CFO, Eric <unk>, President and Caesars sports and online gaming and Chourico Crumbly from Investor Relations before I turn the call over to Anthony I would like to remind you that during today's conference call.
We may make certain forward looking statements under safe Harbor Federal Securities laws and these statements may or may not come true also during today's call. The company may discuss certain non-GAAP financial measures as defined by SEC regulation G. Please visit our press releases located at our Investor Relations website.
For a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure I will now turn the call over to Anthony.
Thank you, Brian and good afternoon to everyone on the call.
Anthony: We generated consolidated net revenue growth and stable year over year adjusted EBITDA in the fourth quarter results were driven by significant year over year growth in revenues and adjusted EBITDA in our digital segment.
Anthony: As previously disclosed in our pre announced results during January our Las Vegas segment experienced several one time headwinds during the quarter that negatively impacted results, which Tom will quantify in more detail.
Anthony: For the full year on a consolidated same store basis, Caesars generated 7% revenue growth and 22% adjusted EBITDA growth.
All of our operating segments delivered revenue growth in 2023, and our brick and mortar properties delivered stable EBITDA.
Caesars digital produced a breakout year was 77% revenue growth and $38 million of full year adjusted EBITDA.
Despite the headwinds in Las Vegas during the quarter, our Las Vegas segment delivered $489 million of adjusted EBITDA in Q4, and $2 billion for the full year up from $1 4 billion in 2019 on a same store basis.
2023 in Las Vegas for the year, driven by record occupancy and record ADR throughout our portfolio strong arc in occupancy and ADR led to records in cash hotel revenues and food and beverage results. Our group segment set another adjusted EBITDA record in 2023 and increased occupied room night.
Anthony: To 17% of our mix in Las Vegas.
While we clearly had a strong year in Las Vegas, we remain optimistic for 'twenty four and beyond.
Forward occupancy and ADR to remains strong and the outlook for group and convention remains encouraging.
<unk> calendar in Las Vegas remains robust and we expect to build upon 2023 momentum for several key events.
And our regional segment in Q4, we delivered $431 million of adjusted EBITDA down 3% versus last year, driven by new competition in a few markets. We have discussed before and construction disruption in New Orleans, and Harrah's Hoosier Park, partially offset by new openings in Danville, Virginia, and Columbus, Nebraska.
For the full year, our regional segment delivered $5 8 billion in revenues and $1 96 billion and adjusted EBITDA similar to Q4 annual results were driven by new property openings offset by new competition in certain markets construction disruption at a few properties and the negative impact of poor weather.
In 2024 wheel finished several construction projects that we expect to generate strong returns and we will complete an elevated capex cycle for the company.
Anthony: The permanent facility in Columbus, Nebraska should be opened by mid year construction in New Orleans should finish by Labor day, and the permanent facility in Danville is expected to open by year end.
All three of these projects will deliver strong returns on capital to drive growth in our regional segment.
I want to thank all of our team members for their hard work in 2023, our strong results are a reflection of their dedication to delivering exceptional guest service.
Anthony: And with that I will now turn the call over to Eric for some insights on the fourth quarter and full year performance in our digital segment. Thanks.
Thanks Anthony.
On our Q4 call last year I talked about how the benefits of scaling net revenues in our digital segment will drive improved profitability given the high flow through nature of the business. This transpired as strong revenue growth in Q4 and for the whole year of 2023 led to several notable records within our digital business net revenues for Q4.
<unk> grew 28% to a new quarterly record of $304 million and the segment generated $29 million of adjusted EBITDA also a record on a hold adjusted basis. We estimate that the segment would have delivered close to $60 million of adjusted EBITDA during Q4.
Sports betting volumes during the quarter grew over 12% with a hold rate of six 4% up year over year, but negatively impacted by November hold coming in below our expected range.
Our gaming growth accelerated throughout the quarter and delivered over 50% growth in volume led by Caesars Palace online, which contributed to our first quarter of $100 million in <unk> for the segments.
For the full year of 2023, our digital segment achieved 78% net revenue growth to $973 million, a new annual record and $38 million of full year. Adjusted EBITDA also an annual record.
On the sports betting side during 2023, we continue to focus our product and technology improvements on the overall experience for our customers. They responded favorably to improve same game parlay product enhancements in game wagering improvements and streaming technology. So the percentage of customers, making parlay wagers continues to improve and the app.
Bridge legs per wager also continues to steadily increase giving us confidence in our ability to improve hold throughout 2024 on the casino side, we introduced our new Caesars Palace online App in August of 2023 results to date are very encouraging as we've seen active customer account and volume growth.
Sequentially each month, a core I casino slot customers responded positively to our significantly improved offering and we're pleased that the new product and brand resonate much better with our Caesars rewards database and our casino associated with the sports book I Gaming remains a critical component of our digital growth strategy for 2024 and beyond.
In support of that strategy. After the market closed we announced an agreement with the <unk> Marine tribe chip.
Chippewa Indians and Wynn resorts to enable a second gaming brand in Michigan, which we plan to launch before the end of the year pending regulatory approvals.
When operations have been averaging approximately $3 million.
And we will work with their team to transition the customer base to our newly branded product. When we launch following regulatory approvals, we will have secured market access for our second brand in every jurisdiction, where we currently offer the Caesars Palace online casino, which allows our new brand to benefit fully from the scale.
We now offer sports betting 31, North American jurisdictions, 25 of which offer mobile wagering.
I am very pleased with the progress we made in 2023, if you recall our objective was to drive a solid return on investment for our shareholders as our business grew and matured over time, our thesis was grounded on a reasonable Tam and early efforts to build brand awareness and harvesting the benefits of a very scalable business with a high portion of fixed costs are.
Performance in 2023 sets the stage for continued profitable growth in the years ahead and keeps us on our path towards achieving $500 million of adjusted EBITDA I'll now pass the call over to Brett for additional comments on Q4 and the full year.
Thanks, Eric.
To put a bow on 2023, we ended the year with net debt of $11 4 billion and net leverage of under four times 2023, Capex spend excluding AC and our Danville joint venture came in at $900 million.
In January we refinanced our 2025 debt stack and eliminated the CRC credit entity, pushing $4 4 billion of maturities into 2031 and beyond at highly attractive interest rates.
No forum for that transaction roughly half of our debt is now floating rate, which will benefit our free cash flow as the rate cycle turns to cuts going forward.
'twenty four capex, excluding Danville, which was funded at the JV level is expected to be $800 million over to Tom.
Thanks, Brad.
To touch briefly on the fourth quarter results I know, we pre released.
About a month ago, so they've been out there.
If you look at the data.
The.
Caesars specific items that were going on in the quarter to get toward what is our.
Where do we come run rate.
Run rating out of the quarter.
We had it in Vegas recall that we were.
Crewing for the new Union contract that was signed in the fourth quarter.
Accruals that we had put in place since June 1st we're not quite at the level, where they are the contract ultimately landed so there is a catch up payment in there.
Their site tower that we were transforming at horseshoe into her <unk> Paris, those rooms were entirely offline in the quarter. So we had 65000 fewer room nights at over $200 million $200 ADR.
Away from US November hold was historically and players favor, we quantified that to about $20 million in our prerelease in EBITDA.
And we had construction disruption as Anthony says in.
Indiana and New Orleans in the quarter, if you put all of that ended up blender.
And figure out where we came out I have said 975 million to a $1 billion of run rate EBITDA in the fourth quarter.
We had.
Stronger hold last year in Vegas than we did this year both within our normal range, we were more middle of the range. This year high end of the range last year, that's not in those numbers that I gave you, but if you look at Vegas on any volume indicator.
Revenue was up despite the fewer room nights food and beverage revenue was up double digits.
Slot handle was up table drop was flat for us.
As youll recall in prior quarters, we talked about the past one is a big stimulators the band for US we had been talking about.
5% lift in EBITDA in the quarter for the half one our actual experience was about a 4% lift so pretty close to what we were expecting.
The.
It was a huge lift for the high end properties in the market as you've seen including Caesars Palace in Paris for US It was less so for mass market properties, but generally speaking it was a phenomenal event.
For the market it needs to get.
That was the first year of the Grand Prix in Las Vegas, It was a gargantuan effort too.
Paul I'll say rates at all.
As with anything of that scale.
You launch it.
Alert.
What I do differently as we move forward.
We know as Caesars that this will be a better event when more of the city is energized not just for.
Four of five buildings that.
That garnered the brunt of the.
Benefit so we're working with our part with our partners in the city and with F. One to make sure that it is it is a.
More.
Broadly successful.
Event next year, then even the success that it was this year.
I was thinking about this.
Year as we look forward now.
January.
He was a debacle from a weather standpoint.
I think that's well understood across the market you had about three of the four weeks that were <unk>.
Significantly weather impacted so we.
Everybody else starts in January hold what's good about that is January is a seasonally slower months to begin with I expect even with what what went on in January we'd expect growth from each of our three segments I expect growth in Vegas in EBITDA.
And regionals in EBITDA and in digital with digital being the most dramatic in my expectation. If you look at what's going on.
In digital we are particularly excited with what's happening and I Casino I know, we've talked about high casino for.
A very long time, we're seeing the fruits of our labor, there, Eric and Matt Sunderland and their team have done.
Fantastic job.
Anthony: Sorry.
Fourth quarter handle and revenue was up 50% plus we continue to grow on a month over month basis from there. So we're accelerating from there at Caesars Palace online as Eric said.
Launched second half of the third quarter, it's already to the point, where its about the same level of revenue as the business that preceded it.
Caesars and it has created the shifts that we anticipated to.
More slot play more skewed towards female.
In line with our Caesars rewards database, that's a higher hold business as well so our I casino numbers are ramping very very quickly and continuing to accelerate keep in mind that in the digital business.
The casino is a.
Anthony: A higher margin business than OSB, so that bodes well for us this year.
In terms of capital free cash flow recall that.
When we.
Finished when we completed the merger with Caesars, we had a number.
Big ticket items that were either committed to as part of the merger like this 400 million dollar of spend.
In Atlantic City or had been committed to by either the Caesar cider Eldorado side. Prior we were rebuilding the lake Charles property.
We had.
We.
Extended the lease in New Orleans, and we're pursuing an expansion there that was tied to that lease extension.
And we had been awarded the license in Danville, which has been a home.
Run out of the box, but chunky capital projects with really not much discretion involved with them, but I'm pleased to say that we're reaching the other side of that in 'twenty for Atlantic City is in the rearview mirror as as Lake Charles.
The.
The C. There I'm sorry, the Caesars New Orleans project should open late third quarter and the Danville project should open by the end of the year. So as we look to by the time the Danville project opens and we have a significant reduction in <unk>.
Backs as we move forward free cash flow should be continuing to improve both from growth in EBITDA reduction in capex.
And as Brad said our lab.
Our financing that we executed in January if you think about this is the second consecutive January <unk>.
Brad and his team have executed a $4 5 billion dollar financing for us nobody really would have set up.
A balance sheet with 9 billion in 2025 maturities, but that's what the market allowed us to do when we came to finance Caesars in the middle of the pandemic. So that's what we dealt with last year when rates were going up we did $4 5 billion and shifted our.
Fixed to floating interest ratio of 275% fixed 25% floating as rates rose.
This year, we reversed that did before in a half billion now, we're 50% floating 50% fixed so as we pay down debt and the fed moves into the rate cutting regime that they are telegraphing free cash flow further improves for us. So we're very pleased with.
2023, I'd add my thank.
And congratulations to our team members, who delivered an unbelievable year for us.
Just shy of $4 billion of EBITDA lift of over $700 million from <unk>.
2022, and we're excited for what 24 2024 holds for us and with that I'll open for questions.
Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Our first question comes from Joe Greff with JP Morgan you May proceed.
Joe Greff your line is now open.
Yes.
Hi, there.
Thanks for taking my questions.
Tom.
Going back to your comments on F. One Ken one.
Anthony: Via successful non high end event can it be.
Pretty good growth driver at the mid price point properties, how do you position market.
The rooms at these properties.
Currently in 2024 and beyond.
To drive growth.
I think a key piece is the pricing of the actual event Joe that.
The lowest stem ticket was.
Pricey by any definition as you looked at it last year, we're working with.
<unk> and I would expect there is a there will be.
More approachable participation.
Now at the very highest end of the market that's going to be helpful. For you know properties that maybe didn't get to participate as much.
This year.
We at.
At Caesars, certainly and I know in my discussions with <unk>.
MGM and win.
Everybody is aware of that.
If only a few buildings in the market benefit from this it's not going to be a super long term event as I said this was.
Basically a full sprint to get their race in position near what <unk> accomplished in terms of building the paddock.
In the time that they did was just extraordinary.
And now we all get to look at what went well what didn't go well and that's a piece of what we think we can improve going forward and I would expect it to be even better in 'twenty four.
Great and then just to get a sense of are in Las Vegas.
What type of operating expense growth you are anticipating and maybe we can kind of think about it this way and level setting.
Revenue is growing.
At a flat pace in 24 versus 23, and I heard your comments about growth in the market and I'm sure the <unk> with the Super Bowl.
And then overall revenue growth is in positive territory year over year, but if we assume for full year 'twenty for that revenues are flat how would you expect opex growth to.
To perform.
Michel our Opex growth is going to be mid single digits in terms of.
Largely the lift from labor expenses, we believe that in our portfolio revenues will largely keep pace with that so we would expect to see margins in the same ZIP code as we go through 'twenty four.
Great. Thank you so much.
Thank you.
One moment for questions.
Our next question comes from Carlo Santarelli with Deutsche Bank You May proceed.
Hey, Thank you everyone.
Eric I was hoping I could ask obviously you did a nice job pretty youre fairly comprehensive job highlighting kind of the digital business to date, but if we're looking at you know simply on the casino side, you guys have seen acceleration in handle acceleration in GTR in each quarter over 2023.
Obviously, you've rolled out some new things how should we think about kind of framing the the growth in handle G. G or however, you want to think about it in 2024 and what are some of the incremental add ons that you guys will have for 24 to kind of continue to drive the story there.
Yes, thanks, Thanks Carla.
We've been very impressed with the performance that we've realized so far on the Caesars Palace online Standalone casino.
When you think about it it was launched in August and so it's really it's kind of in its sixth or seventh month at this point and to Tom's earlier comments, it's already 50% of our overall I casino business. So we're still measuring that business on a month over month basis as we see.
Double digit growth in.
Actives in gaming revenue and gross gaming revenue and volume and so I don't have.
Any concerns at this point that the pace of growth on that particular business should slow we keep getting great responses from the customers in terms of what we have coming.
We're still early in our direct integration phase so we have.
Just a couple of vendors from salt products that are directly integrated we're going to continue that throughout the year, we're going to do at least three direct integrations a quarter and that really helps with our game mix and the stability of the system. We also have a CRM product that we're putting in place.
At the end of this quarter.
That will really help us do some segmented marketing even further than what we're able to do right now and then another exciting thing that we announced today is the second.
Branded product that we'll be able to launch our expectation is that it'll be a unique brand and all of the markets, where we operate and we'll launch that towards the end of the year.
And it will provide a alternative for some of our customers to use.
They prefer that brand over the Caesars palace online or are they just prefer to mix things up and go back and forth between the brands. So between those three key drivers, we really expect the performance of the casino business to continue the trends that it's on.
Great. Thank you for that and then Tom if I could just kind of follow up on something Joseph.
As you as you think about Las Vegas in 2024, and clearly from a margin perspective last year moving parts. There are certainly moving parts in the comparison this year.
You'll have five months of kind of the incremental labor expense.
The superbowl, obviously in the first quarter.
Last year kind of lapping conagra et cetera.
How do you think about kind of the ability to keep margins flat or do you just simply believe that that's almost entirely reliant on revenue.
No.
Hello.
We're never standing still Sean Mcburney Anthony.
And their team have.
Yes.
Items that we're working on both from a revenue and expense standpoint that are accretive.
Both from an EBITDA and margin standpoint, so we just don't know.
Frankly improve our margins from here, we're really not thinking about.
Degradation in margins and we understand that the.
Cost of the new Union contract.
Or a headwind there, but we are comfortable that we should be at.
Moreover, in absolute EBITDA and <unk>.
On a similar footing in terms of margins in 'twenty four.
Understood. Thank you both.
Thank you.
One moment for questions.
Anthony: Our next question comes from Steve <unk> with Stifel. You May proceed.
Yeah, Hey, guys. Good afternoon. So so Tom look I fully understand you don't give you guys don't give guidance for the full year, but given given everything you've kind of talked about in your prepared remarks and kind of the first two questions here in the Q&A.
I guess the question is is it possible to grow.
EBITDA this year.
In Vegas, and the Regionals segment.
Yes, we expect to do both.
Okay, that's very clear.
Thank you for that and then.
Then second question, Tom Obviously, you guys continue to generate.
A good bit of free cash flow here.
So just wondering if we can get your updated thoughts on deploying that free cash flow given just now where the debt markets are versus versus where your current stock prices.
We continue to want to.
Use our free cash flow to reduce our debt.
As we get to.
The inflection point in our capital cycle at that point, we will look at where we are from a leverage standpoint, where the stock prices I can tell you.
That is if it has a four handle I would expect it.
Would be a buyer of our stock at that point.
Okay very clear thank you very much.
Thank you.
Yeah.
One moment for questions.
Our next question comes from.
Sam Poser with Wells Fargo you May proceed.
Hey, good afternoon, everyone.
I wanted to touch a bit more on regionals.
Mike over the course of the fourth quarter trends kind of start to evolve and get a little bit better and I recognize January you've touched on weather was certainly a headwind, but maybe kind of coming out of January February to date trends can you give us a little bit more detail there and maybe.
Is that kind of jives with your expectation for EBITDA to be up year over year with regionals.
Yeah, I'd say when you.
In the brief periods when you could get a clear look.
Without weather impact the regional business remains firm, we feel good about where we're headed obviously we've got.
<unk>.
We only had about six months of Danville last year will have a full year. This year that you can see the revenue numbers.
That property is doing.
And if you look at kind of the.
Let's say April to December period from last year.
Regional revenue was really nothing to write home about so I don't think you've got a particular difficult, particularly.
Difficult comp and regionals are generally for the bulk of.
<unk> 24, and we feel good about what we can deliver.
Got it thanks, and then just to.
Just switching to free cash flow.
You've done this big refi, maybe maintenance Capex and cash taxes are shifting around but could you just kind of remind us of that bridge.
Think about 2025.
From from EBITDA down to free cash flow.
Yeah, I mean, we're 4 billion now with.
Digital doing.
Hi.
De Minimis EBITDA C U E.
By 'twenty five we would expect to be in the neighborhood of half a billion dollars of digital EBITDA, we expect some growth from brick and mortar.
We've got about.
2 billion between interest expense and lease expense today that should be coming down both because of rate and because of reduction in leverage.
Maintenance capital is about $400 million a year.
Speaker Change: And any any assumption for cash taxes, and Theyre, just along with that and that's it for me.
Yes, we will start being a cash taxpayer in 2025.
We don't have an estimate for you it depends on how.
The assumptions you just used to get to free cash flow, but we'll start being a taxpayer next year.
Understood. Thanks, so much.
Thank you.
One moment for questions.
Our next question comes from Brent <unk> with Barclays. You May proceed.
Hey, good evening, everybody. Thanks for taking my question.
So in Las Vegas, you gave the <unk>.
Convention group mix for the even through the fourth quarter and full year, where do you see that mix going.
For this year and you can maybe you could give us there.
An update on sort of how attrition is going and how your April if you're getting any incremental benefits on your revenue management yield side from the increase in mix and convention.
Bret brand as Anthony mentioned Youre right Convention had a record in 2023 occupied room nights were 17%. We continue to expect growth into 2024, we'd expect the occupied room night mix to grow to the high teens over time forward pace looks encouraging for group and the convention.
Business.
Speaker Change: And Youre right from a mix perspective, having that group and convention on the books is very helpful to the leisure side. So that's what's been driving the cash ADR is on the leisure side as well.
Okay. That's super helpful. And then maybe a question to follow up maybe with Eric on on that.
The agreement with a win back could you just talk about the sort of.
Pros and cons of coming out with a second brand.
Obviously, there is some it's additive to a certain extent I am just curious how you weigh that against.
Eric: The scale of having our marketing budget right that that can can go can get maybe more bang for their buck if if it's going towards.
Towards one brand, but I guess, maybe youre thinking about having two brands going for a different customer. So maybe you could just flesh that out for us.
Eric: Sure.
Liking it a lot to the Las Vegas strip, where a customer that comes to town theyre going to stay at one property, but theyre going to visit multiple properties just because they want a different feel they want a different experience maybe it changes that are locked or whatever the reason is and we think that customers have that same behavior tendency.
<unk> online, we see that in New Jersey, where we run multiple brands today and so a company like ours that has multiple well known brand. We thought it's only logical to have a second offering for those customers in terms of the brand building it'll be a very well known brand to everybody. So we're not going to spend.
The amount of money marketing the brand what we will spend money on his acquisition and just like today, we will do.
<unk> acquisition costs versus the lifetime value of the customer and as a result, we feel like this is going to be a very incremental.
Action for us to do we don't think there'll be cannibalization between the two.
Eric: And then in addition, because we'll be using the same platform and a lot of the same.
Game content and integrations.
Cost to launch a second brand will be much lower than it cost to have a single brand in the market.
Very clear thanks al.
Thank you.
One moment for questions.
Our next question comes from David Katz with Jefferies. You May proceed.
Hi afternoon.
Do you use your adjective chunky any temptation.
Or any thoughts about revisiting the notion of a strip asset.
And like in the portfolio to that end and puts and takes there.
Yes, David as we discussed in terms of asset sales.
Everything's for sale every day in a public company.
But we're not anticipating doing anything actively on our end.
Understood and with respect to digital.
I can just follow up on the sports betting side.
Doing so nicely on the I gaming and sports betting is a lot of talk about your product advancement.
Same game, parlays et cetera, and in play as a vehicle for growth could you just update us on your strategies, there to sort of keep up with the leaders.
Sure.
This year I would say that.
Predominantly.
Where we've invested has been on the feature side. So when we entered the year there were a number of products that our customers wanted that we either didn't deliver very well or didn't deliver in the whole mess in terms of the breadth of markets that our competitors did and so throughout the year, we invested heavily in getting those products up to.
<unk>.
Yes.
Where the market is.
In doing so the stability of the apps some of the buggy Miss there are a few features that need to be enhanced and so that's really where this year. The predominant effort is going to be on the sports betting side. So it's basically making the app.
Very functional from the customer perspective, given that we feel like we closed a lot of.
Aspect and feature gaps that were there in the year before and so that's kind of what you will see this year as we made the enhancements throughout to the app throughout the year.
Thank you very much.
Thank you.
Eric: Yeah.
One moment for questions.
Our next question comes from Barry Jonas with choice you May proceed.
Hey, guys can you talk a little bit more about New Orleans, maybe the timing there and your ROI expectations.
So curious to hear about what you think the ramp is going to be with and without next year's Super Bowl.
Sure.
Yeah, Barry as you know that's a pretty dramatic transformation of that property if you recall.
When it was first opened there were restrictions on what you could offer.
Protections in place for both F&B and hotel in the city. So the the current hotel at Harrah's is across the Street you have to go.
Either across the street or go below through a tunnel to get to the property.
Food and beverage.
Offerings were.
Fairly pedestrian it a little bit limited and so this transforms into.
Directly into the middle of the casino floor.
The casino floor is entirely redone as.
If you were to go there today, we've got about a third of the.
Casino floor, that's under construction.
<unk> at a time and it's a rolling for the next.
Six months or so it's a stark difference in terms of what the the new casino looks like versus the old.
Basically at an entirely new property, we've got restaurant product.
From Emerald, that's already open have we've announced the others.
Yes, so we've got <unk> coming.
And keep in mind.
Four seasons as a brand new property across the Street Windsor Court is across the Street Lowe's is across the street. So you've got a lot of the convention hotels in New Orleans are directly adjacent to our property and we will feed into the venue in knees.
F&B outlets it should be.
Run for us so we're expecting that this property will be.
Among our largest regional properties.
Once we're complete and that would be $200 million a year neighborhood of EBITDA.
Great and then just.
Sorry to hit on.
Super Bowl the Super Bowl is in New Orleans and NEC.
Next February which is.
Very well timed for us in terms of launching the product New Orleans as a city has been slower to come back from a group standpoint.
And then other convention cities, we would expect the Super Bowl will be a catalyst for that as well.
Awesome.
And just as a follow up obviously, New York is still ongoing but I believe there are a number of regional land based opportunities that have either come up more recently are being debated curious if theres any new expansion opportunities that interest you at the moment.
Nothing that's on the front burner.
We're constantly approached with would you do this would you do that.
We're pretty focused on the projects that we have.
Underway and are really looking forward to it.
Kind of a break in the capital intensity Circ Capex capex cycle that we've seen.
Eric: Since we closed the merger.
We're focusing on driving free cash flow for the next year.
A year or two.
Great. Thanks, Paul.
Thank you.
One moment for questions.
Our next question comes from Stephen Grambling with Morgan Stanley You May proceed.
Alright, thank you.
Think about the path to $500 million in EBITDA, and digital which I realize you basically reiterated that.
Each call. This year, what has surprised you to the upside into the downside as we think about <unk>.
Market size share structural hold marketing et cetera from when you first put out that target.
Yes, I would say the.
The size of the market has consistently.
Exceeded our expectations of growth in <unk>.
<unk> markets.
Set of add OSB.
OSB for a while or gaming continue to grow at a steady clip. So I would say legalization has been met.
There's been no real surprises there in terms of jurisdictions that did or didn't legalize.
Our performance in I casino since we launched Caesars Palace online, we had pretty aggressive XP.
The expectations and they've exceeded those and it continues to accelerate.
Obviously, I didn't foresee the pan ESPN transaction, which allowed us to.
Terminated.
An agreement that was profitable for us so those are kind of.
Big picture, what's changed since we first started this.
And where do you think structural hold should be in the online sports betting business as we think about longer term.
Yes, we said around seven 5% to 8% for us.
We do have a lot of.
Larger players that we know from the casino side that straight.
That kind of bring down that average, but as I mentioned in the prepared remarks, our percentage of parlays and the percentage of <unk>.
Legs per car law do continue to be growing we grew hold by about a 100 basis points. This year and it was fairly consistent throughout adjusting for kind of one off.
<unk>.
So just to be clear that the seven five to eight would be.
We'd have to get there through increased parlay mix from here that wouldn't be additive.
Okay.
Sure.
Yes in order to get there, we're going to need to continue to increase our parlay mix or change the number of legs for people that are already betting existing parlays combination of those two should drive us up to that seven 5% to 8%.
Great. Thanks, I'll jump back in the queue.
Speaker Change: Thank you.
One moment for questions.
Our next question comes from Julie Hoover with Bank of America, You May proceed.
Speaker Change: Hi, everyone, it's Shaun Kelley on for Hunter Julie.
Just a.
Two questions if I could first.
On the regional side.
Tom you've been calling out for a while.
Some some extra competition and a handful of markets.
We screen the data that seems to be in.
In markets that are.
Particularly overlap with Caesars properties. So just kind of curious has that settled down at all or is that something that you kind of lap and expect to not deteriorate further or just how do you underwrite that and because of it.
Is a little different than stability, we've seen I think more broadly across the whole landscape, but again, we do see it in the numbers.
Yeah, the biggest impact that we saw last year was in tunica property.
Property that opened closer to Memphis in Arkansas.
We've lapped that so we don't expect to see.
Continued impact, obviously youre continuing to compete with them but.
We're fairly steady state now and can build back share.
Chicago had.
Additionally, in the last 12 months, there's more to come.
But we've managed that pretty well in terms of <unk>.
Exposure you had.
The spectacle property.
Moving to the highway we've lapped that as well in hand and that impacted Hammond.
And then.
Speaker Change: Nebraska, we have.
<unk> is a Lincoln properties online the almost all properties are expected to come online towards the end of this year. So there's still impact and the council bluffs market to come but from in terms of what we've been referencing the bulk of that we've lapped at this point.
Great. Thank you very much and then as my follow up for you or for Eric just how should we think about let's call. It EBITDA flow through as we think about sort of the change in revenue to the change in EBITDA moving forward in digital.
I think traditionally what we've talked to many other operators, we think anywhere in the range of 40% to 60% depending on the state depending upon whether or not it's hauled.
Related or not but there is still a decent on a variable cost.
The question is can add.
That's the right formula for Caesars can it be any better than that as you add some of those marketing agreements roll off and as.
Is there any different especially on the casino side.
So a good rule of thumb for us was 50% flow through so we sit here today, if I casino continues to gain momentum you should expect to see that improve.
Speaker Change: The run off of the.
<unk>.
Contracts will be helpful, but thats fairly lumpy.
So.
I would expect we'd be at the mid point of year number towards the higher end of some of these things happen.
Thank you very much.
Thank you.
One moment for questions.
Our next question comes from John Decree with CBRE you May proceed.
Good afternoon, everyone. Thanks for taking my questions.
Maybe to go back to the regional markets, Tom I apologize if I missed it and I think he may have answered it with your growth commentary about the <unk>, but absent the weather or after the weather in January.
What you've seen in February was what's a typical resumed to normal is that fair.
That's fair.
Thanks, and then I guess, one other kind of housekeeping item and Vegas the room disruptions that you cited in.
For Q are there.
Are they both complete and are there any kind of notable disruptions that we should think about in 2024, particularly in Las Vegas, I think you talked about some of the bigger ones in the regional market. So so really just Las Vegas.
No those rooms are back online world, We're building a bridge that connects.
That tower too.
<unk>.
The old horseshoe to Paris, but that shouldn't have any disruption.
Great. Okay. That's it for me just as housekeeping months. Thanks, Tom.
Thank you.
One moment for questions.
Our next question comes from Chad Beynon with Macquarie You May proceed.
Afternoon, Thanks for taking my question.
With respect to the North Carolina launch. This one seems kind of a fair is as it gets you a a database with the Cherokee property and it sounds like Eric the features are pretty much almost there.
So how should we think about.
You know what an expectation should be for you guys, whether it's market share or profitability or customer acquisition should this look different in terms of share versus other states.
No is the short answer.
Look at what Michigan, just reported I think our peers were three to four X our promo to handle I would expect that to look similar in North Carolina.
Yes.
Thank you Tom.
Then a follow up to the last question just in terms of the Vegas portfolio. So following the Versailles tower and some of these F&B refreshes that youre doing I know theres nothing else near term, but how are you thinking about other.
Maybe transformative or kind of larger projects in Vegas, and how does the outcome of the Oakland A's situation.
Speaker Change:
Change.
What youre thinking from a timing standpoint. Thanks.
For the second question the outcome of the Oakland A's situation.
It doesn't impact what we will be pursuing at all.
Hum.
What we're doing this year in addition to finishing.
Si connector is.
Work at Flamingo in terms of improving the strip frontage there is.
A number of outlets that are.
Sub par and sub standard in terms of what they generate relatively relative to other similarly positioned spaces on the strip. These are not huge dollar numbers, but there they should be able they should help transform that properties should be.
Very high ROI.
But you should be thinking about in Vegas.
Speaker Change: Capital projects are.
10, 20 $25 million for.
Couple of things that we're doing in a building not.
100 million like their side.
Thank you I appreciate it.
Thank you.
One moment for questions.
Our next question comes from Daniel Guglielmo with capital One Securities You May proceed.
Hello, everyone. Thank you for taking my questions.
Just around labor at the properties you guys have a good band.
The U S. With the portfolio makeup has turnover from a labor perspective has it been similar this year to last year is there anything youre seeing.
Within the different regions that would be helpful.
Yeah, I would say.
Nothing, particularly informative it.
The.
Period post reopening after Covid was.
As chaotic from.
And employment turnover standpoint, as we've seen that stabilize kind of in 'twenty, three and it's been stable for a little while now so it feels.
More like pre pandemic in that area than it had immediately post opening.
Okay, great. Thank you and then we've talked a lot about the capital flexibility.
In 2025, and just just thinking about the <unk> option for the Centaur properties.
Outside of the share repurchases and then I think you had said that focus is there anything else you're kind of.
Can you bring that forward looking at when thinking out two years.
No obviously vinci has that option that <unk>.
Expires at the end of <unk>.
24, they have indicated an intention to exercise it and yes there is.
Regulatory process that they need to go through.
Speaker Change: You should not expect us to exercise.
Our option, but we do anticipate that they'd like to exercise theirs.
Thank you.
Yes.
Thank you.
One moment for questions.
Our next question comes from Jordan Bender with citizens JMP you May proceed.
Great. Thanks for taking my question with the new up you mentioned a shift into more slot play and not that hold shouldnt move much for I gaming, but is there any upside to I gaming hold as you shift away from lower margin table play.
Yes, that's been a big lift for us.
Alright gaming.
That table dominant player.
That we had.
Is typically 100 to 150 basis points, lower and hold them to slot dominant player that we find.
And Caesars Palace online so that's helped us in our momentum as well.
Okay, and then just a follow up I assume you pick up the the wind database in the state as well how should we just think about that customer mix versus what you currently have.
Thank you.
Yes, we do pick up the database and we'll work closely with win as we transition to move their customers.
Over so they can trial our app.
The database is different from ours, but in terms of the customers, but it is very similar in terms of what we're trying to.
Accomplished with the apps that we're launching so it's it's a slot.
Centric customer at a slightly higher end and then from a table perspective. It's also on a slightly higher end from what from what we normally have in our database. So we're.
We're excited to introduce those customers to the product that we have.
Great. Thank you very much.
Thank you I would now like to turn the call back over to Tom Reeg for any closing remarks.
Thanks, everybody for your time.
We'll see you next quarter.
Sure.
<unk>.
Thank you for your participation you may now disconnect.
Okay.
[music].
Okay.
[music].
Okay.
[music].
Yeah.
No.
Speaker Change: Hum.
[music].
Yeah.
[music].
Okay.
[music].
Okay.
[music].
Yeah.
Yes.
[music].
Hum.
[music].
Okay.
[music].
Yes.
[music].
Yeah.
[music].
Yes.
[music].