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Caesars Entertainment (CZR)
Q3 2012 Earnings Call
October 31, 2012 5:00 p.m. ET
Jacqueline Beato - Director of Investor Relations
Gary Loveman - CEO
Eric Hession - Senior VP, Finance and Treasurer
Shaun Kelley - Bank of America Merrill Lynch
Susan Berliner - JP Morgan
Richard Hightower - ISI Group
Greg Roselli - UBS
Kevin Coyne - Goldman Sachs
Peter Dalena - Citigroup
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Thank you. Good afternoon, and welcome to the Caesars Entertainment third quarter results conference call. Joining me today are Gary Loveman, chief executive officer; and Eric Hession, senior vice president of finance and treasurer of Caesars.
Following our prepared remarks this morning, we will turn the call over for your questions. A copy of our press release and a replay of this conference call will be available in the Investor Relations section of our website at caesars.com.
Before I turn the call over to Gary, I would like to call your attention to the following information. The Safe Harbor disclaimer in our public documents covers this call and the simultaneous live webcast at caesars.com. The forward-looking statements made during this conference call reflect the opinion of management as of the date of this call. There are risks and uncertainties with such statements, which are detailed in our filings with the SEC.
Please be advised that developments subsequent to this call are likely to cause these statements to become outdated with the passage of time. We do not intend, however, to update the information provided today prior to our next quarterly conference call.
Further, today we are reporting third quarter results and first 9 months' results. These results are not necessarily indicative of results in future periods. Also, please note that prior to this call, we furnished a Form 8-K of this afternoon's press release to the SEC.
Property EBITDA and adjusted EBITDA are non-GAAP financial measures. Reconciliations of net loss to property EBITDA and net loss to adjusted EBITDA can be found in the tables in our press release.
This call, the webcast, and its replay are the property of Caesars. It is not for rebroadcast or use by any other party without the prior written consent of Caesars. If you do not agree with these terms, please disconnect now. By remaining on the line, you agree to be bound by these terms.
I would like to turn over the call to our CEO, Gary Loveman. Gary?
Thank you Jacqueline and thanks to everyone for joining us this afternoon. Before turning to the third quarter, I’d like to take a few moments on recent hurricane Sandy at our properties and colleagues in Atlantic City.
As you know, Atlantic City was hit quite hard by this powerful storm, causing substantial flooding and damage. First and foremost, I’d like to report that all of my colleagues there are accounted for and safe, and I’d like to express my gratitude for the efforts of all of our people who worked diligently to evacuate our guests in a safe and orderly manner and to secure and protect our properties.
The Atlantic City properties were closed on Sunday afternoon in preparation for the storm and in compliance with the state’s evacuation order. While we’re still completing a full evaluation of the condition of the properties, I’m pleased to report that none of them appear to have suffered extensively.
The major infrastructure in Atlantic City also appears to be intact, and we’re optimistic that it will be able to reopen in the next several days. In Pennsylvania, Harrah’s Philadelphia was closed on Monday afternoon and it reopened uneventfully this morning.
Our insurance coverage in Atlantic City carries a single, $25 million deductible and covers both property damage and business interruption across our footprint. Based on what we know at the moment, we do not expect to exceed the deductible.
Let me turn now to the third quarter. In the third quarter, strong growth in our interactive businesses increased customer spend per trip here in Las Vegas and year over year EBITDA growth in Atlantic City. On the positive, we were offset by softer results in other regional markets.
We attribute these regional results to challenging macroeconomic conditions that negatively influenced guest behavior at these markets, as well as the impact of some new competitors in certain jurisdictions.
During the quarter, we made significant progress on the execution of our strategy, the strategy I’ve described to you on prior calls, which is designed to position the company for growth, particularly when economic conditions improve, and to take advantage of the liberalization of policies related to gaining domestically and internationally.
Specifically, this strategy is focused on the expansion of our distribution network and focusing our capital deployment into growth markets, both online and on land; leveraging our scale to drive efficiency in the way we run our business and attract best in class talent; investing in our core business, our leading marketing capabilities, and brands; and strengthening our capital structure and improving our balance sheet.
Each of these points is illustrated by our efforts in Las Vegas, where we’re dually focused on serving our longtime customers and upgrading our facilities, as well as developing innovative new experiences such as The Linq to attract new customers to Vegas and our properties here on the Strip.