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Caesars Entertainment’s newly appointed CFO
Eric Hession has been appointed CFO of CZR, effective January 1, 2015. Hession currently serves as Senior Vice President of Finance and Treasurer, in which capacity he is responsible for financial planning, treasury, and investor relations.
REITs generate income by collecting rent and pay out at least 90% of taxable income in the form of dividends to shareholders. By converting CEOC into a REIT, the beneficial holders of CEOC’s senior secured credit facilities would receive a 100% recovery in cash and debt.
The market reaction may have been caused by what CZR’s share price could be based on its standalone capacity, after it becomes detached from its highly leveraged unit, CEOC. Offloading the unit could serve as a boon to CZR’s profits after interest expenses, and possibly boost its earnings per share.
Based on the stock’s average trading volume, short-interest ratio determines how many days it would take for the short sellers to cover their positions. The higher the ratio, the longer it will take to buy back the borrowed shares.
CZR expects negative operating cash flows for the remainder of 2014 and the foreseeable future. CEOC doesn’t believe that its cash flows from operations, combined with existing liquidity sources, will be sufficient to repay its indebtedness.
Reportedly, the company’s in talks with creditors about its debt restructuring plan and a possible mid-January bankruptcy filing for its largest operating unit. CZR’s debt has risen to considerable levels as it continues to burn through cash.
CZR’s estimated total capital spending for 2014 is expected to be between $990.0 million and $1,105.0 million. Future capital spending will be primarily related to renovations for The LINQ Hotel.
Caesars Entertainment employs ~68,000 people worldwide. In Nevada, the company employs more than 20,000 people. Layoffs will affect fewer than 680 people across the entire company and its divisions.
Caesars Entertainment Corporation’s (CZR) property EBITDA declined 12.9% year-over-year to $445 million. Lower volumes were mostly attributed to a lower number of VIP players.
Direct costs refer to the expenses that are directly attributable to the specific product or output from which a company generates revenues. Indirect costs, such as depreciation or administrative expenses, are difficult to assign to a specific product or output.
Caesars Entertainment Corporation (CZR) derives ~36% of its revenues from non-gaming operations including hotel, food and beverage, entertainment, and other non-gaming amenities.
Revenue per available room is considered the most important of all the performance metrics because it captures both room rates and occupancy levels. In short, RevPAR is actually the occupancy rate multiplied by the ADR.
Caesars Entertainment Corporation’s (CZR) casino revenues contribute ~63% to the total revenues generated by the company. Overall visitation in 3Q14 decreased 12.7% compared to the previous year.
Net revenues increased 6.0% year-over-year to $2,212 million in 3Q14, primarily due to growth in the social and mobile gaming business of Caesars Interactive Entertainment.
Caesars Entertainment has grown through the development, expansion, and acquisition of resorts. The company now operates 50 casinos in 13 US states and five countries.
According to ICSC-Goldman estimates, the lower fuel or gasoline prices we’ve seen recently saved consumers $90 billion annually. The Johnson Redbook index came in 3.9% higher year-over-year.
Higher fuel costs put pressure on operating costs, and can squeeze profit margins. The demand side also takes a hit. When gas prices are high, consumers tend to economize on transit by eliminating unnecessary trips.
In September 2014, the price index for meat stood at 267.7 compared to 264.3 in August. This index has been increasing sharply since the beginning of 2014.
According to the NRA, restaurant operators had a mixed outlook toward business conditions over the next six months. About 20% of operators expected business conditions to improve over the next six months, and about 19% of restaurant operators felt that business conditions would decline.
The six-month outlook for capital expenditures as of August 2014 was 100.7, and has been above the 100 level for the past twelve months. If this is true, the restaurant industry is on an uptrend.