Shares of Caesars Entertainment (NYSE:CZR) and merger partner Harrah's Entertainment (NYSE:HET) are up slightly after Caesars reported improved results across its three domestic operating regions.
For the third quarter, Caesars' revenue rose 4.3% to $1.12 billion. As a result, EBITDA (earnings before interest, taxes, depreciation, amortization, and one-time gains and charges) increased 11.8% to $293 million. Meanwhile, net income rose 21% to $58 million, though diluted earnings per share gained only a couple of pennies to $0.18.
Excluding one-time events and earnings from properties to be sold, adjusted net income climbed 51% to $68 million, or to $0.22 per share from $0.15 per share last year.
The biggest gains came from the Western region, where EBITDA jumped 25% to $115 million. Like MGM Mirage (NYSE:MGG) yesterday, Caesars' four Las Vegas Strip properties carried the results with a 31% gain in EBITDA to $105 million, similarly driven by strong room rates. On the other hand, the company's three Nevada properties outside of Las Vegas reported a combined 17% decline in EBITDA to $10 million.
Adjusted for the pending sale of the Atlantic City Hilton, the Eastern region reported a modest EBITDA gain of 3% to $110 million, a positive result in the first quarter-on-quarter comparison since MGM Mirage and Boyd Gaming's (NYSE:BYD) Borgata debuted last summer. Impressively, in the Mid-South region -- Indiana, Mississippi, and Louisiana -- EBITDA climbed 11% to $62 million (excluding results from Bally's Tunica), despite losing three days of business at Gulf Coast casinos because of Hurricane Ivan.
Back in July, Caesars agreed to be acquired by Harrah's Entertainment in a merger that would create the world's largest casino operator (see No Quick Win in Casino Merger). The considerable overlap between the two companies' operations is the source of trade concerns, leading Harrah's and Caesars to begin unloading properties to facilitate the merger. Last month, the two companies announced the sale of four properties to an affiliate of Colony Capital for $1.24 billion (see Smooth Sale for Harrah's? and Harrah's/Caesars Expects Payoff).
Last week, Caesars also announced its first move into Europe in a joint venture to build a $600 million casino resort in London, near the Wembley National Stadium and adjacent to Wembley Arena.
In all, it was a pretty positive third quarter for Caesars Entertainment, the best part of which was getting Harrah's to pay up and get involved. Yesterday, Harrah's reported results bolstered by its acquisition of Horseshoe Gaming (see Horseshoe, Vegas Boost Harrah's). Looking ahead, Caesars' forecast of $0.04 to $0.06 in fourth-quarter earnings is short of the $0.09-per-share analyst estimate.
Fool contributor Jeff Hwang owns none of the companies mentioned above.
