Caesars Acquisition Company Reports Second Quarter 2015 Results

Caesars Acquisition Company Reports Second Quarter 2015 Results
Caesars Acquisition Company Reports Second Quarter 2015 ResultsLAS VEGAS, Aug. 4, 2015 /PRNewswire/ – Caesars Acquisition Company (NASDAQ: CACQ) today reported the following results for Caesars Growth Partners, LLC (“CGP LLC”) for the second quarter 2015. Caesars Acquisition Company (“CAC”) was formed to make an investment in CGP LLC, owns 100% of the voting membership units of CGP LLC and accounts for its investment under the equity method. Operating Results of CGP LLCIn May 2014, subsidiaries of CGP LLC acquired Bally’s Las Vegas, The Cromwell, The LINQ Hotel & Casino and Harrah’s New Orleans from subsidiaries of Caesars Entertainment Operating Company, Inc. (“CEOC”). Because these acquisitions were accounted for as transactions among entities under common control, the financial information herein includes the financial results for these properties as if those businesses were combined into the CGP LLC reporting entity through the May 2014 acquisition dates and consolidated into CGP LLC after the May 2014 acquisition dates. Therefore, the financial information contained herein provides comparable results for the periods presented.Management Commentary”Caesars Growth Partners, LLC reported another great quarter driven by growth in both of our business units,” said Mitch Garber, chief executive officer of Caesars Acquisition Company. “Our Interactive Entertainment business continues to record stellar results, primarily from our market leading social and mobile games business. During the second quarter, we completed the room renovation at The LINQ Hotel & Casino and are thrilled with the operating performance to date. We will continue to focus on these businesses to yield strong growth and we remain encouraged by the performance of our assets.”Financial ResultsSecond Quarter 2015 results compared with Second Quarter 2014Net revenues for the second quarter of 2015 were $576.2 million as compared to $438.7 million for the respective period in 2014, which was an increase of $137.5 million, or 31.3%. The increase in revenue for Caesars Interactive Entertainment, Inc. (“Caesars Interactive” or “CIE”) was primarily driven by strong organic growth in the social and mobile games operating unit. The increase in revenues for Casino Properties and Developments was primarily a result of the openings of The Cromwell in May 2014 and Horseshoe Baltimore in August 2014, and renovations at The LINQ Hotel & Casino, partially offset by lower revenues at Harrah’s New Orleans as a result of the smoking ban that went into effect in New Orleans in April 2015.Income from operations for the second quarter of 2015 was $98.4 million as compared to $45.0 million for the same period in 2014, which was an increase of $53.4 million, or 118.7%. Adjusted EBITDA for the second quarter of 2015 and 2014 was $160.4 million and $105.5 million, respectively, which is an increase of $54.9 million, or 52.0%. The increases in Income from operations and Adjusted EBITDA were driven primarily by the income impact of increased revenues and improved marketing and operating expenses, partially offset by increased expenses resulting from the openings of The Cromwell and Horseshoe Baltimore.Six Months Ended June 30, 2015 results compared with June 30, 2014Net revenues for the six months ended June 30, 2015 were $1,142.7 million as compared to $854.9 million for the respective period in 2014, which was an increase of $287.8 million, or 33.7%. The increase in revenue for CIE was primarily driven by strong organic growth in CIE’s social and mobile games, as well as the inclusion of six months of activity from Pacific Interactive in 2015 as compared to four months of activity in 2014. The increase in revenues for Casino Properties and Developments was primarily a result of the openings of The Cromwell in May 2014 and Horseshoe Baltimore in August 2014, and renovations at The LINQ Hotel & Casino, partially offset by lower revenues at Harrah’s New Orleans as a result of the April 2015 smoking ban.Income from operations for the six months ended June 30, 2015 was $303.1 million as compared to $9.0 million for the same period in 2014, which was an increase of $294.1 million. The increase in income from operations is primarily attributable to the decrease in the fair value of contingently issuable non-voting membership units. Excluding the impact of the change in fair value of contingently issuable non-voting membership units from both periods, income from operations for the six months ended June 30, 2015 increased by $130.8 million when compared to the same period in 2014 due to year over year growth in CIE as well as the openings of The Cromwell and Horseshoe Baltimore.Adjusted EBITDA for the six months ended June 30, 2015 and 2014 was $308.4 million and $207.4 million, respectively. The increase of $101.0 million, or 48.7%, from the prior period was driven primarily by the income impact of increased revenues and improved marketing and operational expenses, partially offset by increased expenses resulting from the openings of The Cromwell and Horseshoe Baltimore.Business Units Operating ResultsInteractive EntertainmentSecond Quarter 2015 results compared with Second Quarter 2014Interactive Entertainment net revenues increased by $41.6 million, or 28.8%, in the second quarter of 2015 as compared to the same period in 2014, resulting primarily from strong organic growth in CIE’s social and mobile games due to the focus on conversion and monetization. Income from operations increased by $58.7 million in the second quarter of 2015 as compared to the same period in 2014, primarily driven by the increase in revenues partially offset by an increase in the change in fair value of contingent consideration recognized during the second quarter of 2014. Adjusted EBITDA increased by $24.9 million, or 55.8%, in the second quarter of 2015 as compared to the same period in 2014, driven by the income impact of increased revenues and reduced real money gaming marketing expenses.Six Months Ended June 30, 2015 results compared with June 30, 2014Interactive Entertainment net revenues increased by $94.0 million, or 35.0%, during the six months ended June 30, 2015 as compared to the same period in 2014, resulting primarily from strong organic growth in CIE’s social and mobile games, as well as the inclusion of six months of activity from Pacific Interactive in 2015 as compared to four months of activity in 2014. Income from operations increased by $94.0 million during the six months ended June 30, 2015 as compared to the same period in 2014, primarily driven by the increase in revenues. Adjusted EBITDA increased by $56.4 million, or 74.5%, during the six months ended June 30, 2015 as compared to the same period in 2014, driven by the income impact of increased revenues and reduced real money gaming marketing expenses.Performance Metrics – Interactive EntertainmentThe table below shows the results of CIE’s business based upon the financial metrics for the periods presented.The table below shows the results of CIE’s social and mobile games business using operating metrics for the periods indicated. User statistics are presented in thousands of users and average revenue per user is presented in dollars.During the second quarter of 2015, CIE’s social and mobile games business had approximately 796 thousand Average Monthly Unique Payers, or 4.4% of Average Monthly Unique Users on the social and mobile platforms, purchase virtual goods, which was an increase of approximately 123.3 basis points from the second quarter of 2014.Casino Properties and DevelopmentsSecond Quarter 2015 results compared with Second Quarter 2014Casino Properties and Developments net revenues for the second quarter of 2015 increased by $95.9 million, or 32.6%, when compared to the same period in 2014 primarily due to the openings of The Cromwell in May 2014 and Horseshoe Baltimore in August 2014, and renovations at The LINQ Hotel & Casino, partially offset by lower revenues at Harrah’s New Orleans as a result of the April 2015 smoking ban. Total rated trips increased approximately 59.6% during the second quarter of 2015 when compared to the same period in 2014, primarily driven by a 66.6% increase for non-lodgers, and 9.2% increase for lodgers. Spend per trip decreased due to a decrease in spend per trip by lodgers. Gross casino hold also saw a positive variance, increasing from 11.4% for the quarter ended June 30, 2014 to 12.2% for the quarter ended June 30, 2015.Room revenues for the second quarter of 2015 and 2014 were $82.5 million and $64.9 million, respectively. Cash average daily room rates for the second quarter of 2015 increased to approximately $120, or 11.1%, when compared to approximately $108 for the same period in 2014 primarily due to upgraded rooms at The LINQ Hotel & Casino. Average daily occupancy was 94.9% and 92.8% for the second quarter of 2015 and 2014, respectively. Revenue per available room (“RevPar”) for the second quarter of 2015 and 2014 was $113 and $102, respectively, or an increase of 10.8%.Food and beverage revenues for the second quarter of 2015 and 2014 were $66.0 million and $57.1 million, respectively. The increase of $8.9 million, or 15.6%, in food and beverage revenue was driven largely by new offerings that opened in 2014 across the portfolio including various new venues at The Cromwell and Horseshoe Baltimore.Other revenues for the second quarter of 2015 were $42.8 million, as compared to $38.6 million for the same period in 2014. The increase of $4.2 million, or 10.9%, was primarily due to the openings of The Cromwell and Horseshoe Baltimore.Income from operations for the second quarter of 2015 increased by $27.4 million, or 100.0%, when compared to the same period in 2014. The income impact of increased revenues was partially offset by the combination of operating expenses incurred after the openings of The Cromwell and Horseshoe Baltimore and management fee expenses incurred after the May 2014 acquisitions. Adjusted EBITDA for the second quarter of 2015 increased by $31.9 million, or 47.9%, when compared to the same period in 2014 primarily driven by increased revenues, partially offset by operating expenses incurred after the openings of The Cromwell and Horseshoe Baltimore.Six Months Ended June 30, 2015 results compared with June 30, 2014Casino Properties and Developments net revenues for the six months ended June 30, 2015 increased by $193.8 million, or 33.1%, when compared to the same period in 2014 primarily due to openings The Cromwell in May 2014 and Horseshoe Baltimore in August 2014, and renovations at The LINQ Hotel & Casino, partially offset by lower revenues at Harrah’s New Orleans as a result of the April 2015 smoking ban. Total rated trips increased approximately 60.7% during the six months ended June 30, 2015 when compared to the same period in 2014, primarily driven by a 69.0% increase for non-lodgers, and 3.5% increase for lodgers. While spend per trip for lodgers and non-lodgers increased, the shift to non-lodgers who typically spend less caused combined spend per trip to decline. For the six months ended 2015, gross casino hold also saw a positive variance, increasing from 11.3% for the six months ended June 30, 2014 to 11.8% for the six months ended June 30, 2015.Room revenues for the six months ended June 30, 2015 and 2014 were $156.8 million and $134.6 million, respectively. Cash average daily room rates for the six months ended June 30, 2015 increased to approximately $123, or 15.0%, when compared to approximately $107 for the same period in 2014 primarily due to upgraded rooms at The LINQ Hotel & Casino. Average daily occupancy was 93.3% and 91.3% for the six months ended June 30, 2015 and 2014, respectively. RevPar for the six months ended June 30, 2015 and 2014 was $114 and $100, respectively, or an increase of 14.0%.Food and beverage revenues for the six months ended June 30, 2015 and 2014 were $134.3 million and $114.0 million, respectively. The increase of $20.3 million, or 17.8%, in food and beverage revenue was driven largely by new offerings that opened in 2014 across the portfolio including various new venues at The Cromwell and Horseshoe Baltimore.Other revenues for the six months ended June 30, 2015 and 2014 were $79.0 million and $68.9 million, respectively. The increase of $10.1 million, or 14.7%, was primarily due to Drai’s at The Cromwell and the opening of Horseshoe Baltimore.Income from operations for the six months ended June 30, 2015 increased by $42.1 million, or 66.6%, when compared to the same period in 2014. The income impact of increased revenues was partially offset by the combination of operating expenses incurred after the openings of The Cromwell and Horseshoe Baltimore and management fee expenses incurred after the May 2014 acquisitions. Adjusted EBITDA for the six months ended June 30, 2015 increased by $49.6 million, or 35.9%, when compared to the same period in 2014 primarily driven by increased revenues, partially offset by operating expenses incurred after the openings of The Cromwell and Horseshoe Baltimore.Liquidity and Capital ResourcesCGP LLC’s primary sources of liquidity include currently available cash and cash equivalents, cash flows generated from its operations and borrowings under the Caesars Growth Properties Holdings, LLC (“CGPH,” an indirect, wholly-owned subsidiary of CGP LLC) term loan.At June 30, 2015 and December 31, 2014, CGP LLC had cash and cash equivalents totaling $890.6 million and $944.1 million, respectively. Third-party debt outstanding at CGP LLC was $2,366.1 million as of June 30, 2015 and $2,311.3 million at December 31, 2014. This amount includes debt of the consolidated subsidiary CGPH of $2,045.8 million and $1,992.1 million for the respective periods. Related party debt outstanding includes CIE’s credit facility with Caesars Entertainment reflected in Current portion of long-term debt to related parties of $20.0 million at June 30, 2015, Long-term debt payable to related parties of $19.8 million at June 30, 2015 and $39.8 million at December 31, 2014.Recent Developments for CGP LLCOn July 8, 2015, CIE repaid $20.0 million of revolver borrowings on its credit facility with Caesars Entertainment.On July 15, 2015, CGPH repaid $15.0 million of revolver borrowings on its $150.0 million revolving credit agreement (“Revolving Credit Facility”).About Caesars Acquisition CompanyCaesars Acquisition Company was formed to make an equity investment in Caesars Growth Partners, LLC, a joint venture between CACQ and Caesars Entertainment Corporation (NASDAQ: CZR), the world’s most diversified casino entertainment provider and the most geographically diverse U.S. casino-entertainment company. CACQ is CGP LLC’s managing member and sole holder of all of its outstanding voting units. For more information, please visit www.caesarsacquisitioncompany.com.About Caesars Growth Partners, LLCCaesars Growth Partners, LLC is a casino asset and entertainment company focused on acquiring and developing a portfolio of high-growth operating assets and equity and debt investments in the gaming and interactive entertainment industries. Through its two businesses, Interactive Entertainment and Casino Properties and Developments, CGP LLC focuses on acquiring or developing assets with strong value creation potential and leveraging interactive technology with its well-known online and mobile game portfolio and leading brands. Assets include Caesars Interactive Entertainment (with its social and mobile games, the World Series of Poker and regulated online real money gaming businesses), Planet Hollywood, Bally’s Las Vegas, The Cromwell, The LINQ Hotel & Casino, Harrah’s New Orleans and Horseshoe Baltimore. Through its relationship with Caesars Entertainment, CGP LLC has the ability to access Caesars Entertainment’s proven management expertise, brand equity, Total Rewards loyalty program and structural synergies. For more information, please visit www.caesarsacquisitioncompany.com.Forward Looking InformationThis release contains or may contain “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements contain words such as “may,” “will,” “project,” “might,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “estimate,” “continue,” or “pursue,” or the negative of these words or other words or expressions of similar meaning that may identify forward-looking statements and are found at various places throughout this release. These forward-looking statements, including, without limitation, those relating to future actions, new projects, strategies, future performance, the outcome of contingencies such as legal proceedings, and future financial results, wherever they occur in this release, are based on our current expectations about future events and are estimates reflecting the best judgment of CAC and CGP LLC’s management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements.Investors are cautioned that forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that cannot be predicted or quantified, and, consequently, the actual performance of CAC and CGP LLC may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors, as well as other factors described from time to time in CAC’s reports filed with the Securities and Exchange Commission (including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein):Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. CAC and CGP LLC disclaim any obligation to update the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated or, if no date is stated, as of the date of this release.    Logo – http://photos.prnewswire.com/prnh/20131118/LA19470LOGO 

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