CAESARS ENTERTAINMENT, INC. The following discussion and analysis of the financial position and operating results ofCaesars Entertainment, Inc. , aDelaware corporation, and its consolidated subsidiaries, which may be referred to as the "Company," "CEI," "Caesars," "we," "our," or "us," for the three months endedMarch 31, 2022 and 2021 should be read in conjunction with the unaudited consolidated condensed financial statements and the notes thereto and other financial information included elsewhere in this Form 10-Q as well as our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2021 ("2021 Annual Report"). Capitalized terms used but not defined in this Form 10-Q have the same meanings as in the 2021 Annual Report. We refer to (i) our Consolidated Condensed Financial Statements as our "Financial Statements," (ii) our Consolidated Condensed Balance Sheets as our "Balance Sheets," (iii) our Consolidated Condensed Statements of Operations and Consolidated Condensed Statements of Comprehensive Income (Loss) as our "Statements of Operations," and (iv) our Consolidated Condensed Statements of Cash Flows as our "Statements of Cash Flows." References to numbered "Notes" refer to Notes to Consolidated Condensed Financial Statements included in Item 1, "Unaudited Financial Statements." The statements in this discussion regarding our expectations of our future performance, liquidity and capital resources, and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties. Our actual results may differ materially from those contained in or implied by any forward-looking statements. See "CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS" in this report.
Objective
This Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") is intended to be a narrative explanation of the financial
statements and other statistical data that should be read in conjunction with
the accompanying financial statements to enhance an investor's understanding of
our financial condition, changes in financial condition and results of
operations. Our objectives are: (i) to provide a narrative explanation of our
financial statements that will enable investors to see the Company through the
eyes of management; (ii) to enhance the overall financial disclosure and provide
the context within which financial information should be analyzed; and (iii) to
provide information about the quality of, and potential variability of, our
earnings and cash flows so that investors can ascertain the likelihood of
whether past performance is indicative of future performance.
Overview
We are a geographically diversified gaming and hospitality company that was founded in 1973 by the Carano family with the opening of theEldorado Hotel Casino inReno, Nevada . Beginning in 2005, we grew through a series of acquisitions, including the acquisition ofMTR Gaming Group, Inc. in 2014,Isle of Capri Casinos, Inc. ("Isle" or "Isle of Capri") in 2017 andTropicana Entertainment, Inc. in 2018. OnJuly 20, 2020 , we completed the merger withCaesars Entertainment Corporation ("Former Caesars") pursuant to which Former Caesars became our wholly-owned subsidiary (the "Merger") and our ticker symbol on theNASDAQ Stock Market changed from "ERI" to "CZR". OnApril 22, 2021 , we completed the acquisition ofWilliam Hill PLC for £2.9 billion, or approximately$3.9 billion (the "William Hill Acquisition"). We own, lease or manage an aggregate of 52 domestic properties in 16 states with approximately 54,300 slot machines, video lottery terminals and e-tables, approximately 2,900 table games and approximately 47,700 hotel rooms as ofMarch 31, 2022 . In addition, we have other domestic and international properties that are authorized to use the brands and marks ofCaesars Entertainment, Inc. , as well as other non-gaming properties. Our primary source of revenue is generated by our casino properties' gaming operations, our retail and online sports betting, as well as our online gaming, and we utilize our hotels, restaurants, bars, entertainment, racing, retail shops and other services to attract customers to our properties. As ofMarch 31, 2022 , we owned 20 of our casinos and leased 26 casinos in theU.S. We lease 18 casinos fromVICI Properties L.P. , aDelaware limited partnership ("VICI") pursuant to a regional lease, aLas Vegas lease and a Joliet lease. In addition, we lease seven casinos fromGLP Capital, L.P. , the operating partnership of Gaming and Leisure Properties, Inc. ("GLPI") pursuant to aMaster Lease (as amended, the "GLPI Master Lease") and a Lumière lease (together with the GLPI Master Lease, the "GLPI Leases"). Additionally, we lease theRio All-Suite Hotel & Casino from a separate third party.
We also operate and conduct sports wagering across 23 states and domestic jurisdictions, 16 of which are mobile for sports betting, and operate regulated online real money gaming in five states. Our recently launched Caesars Sportsbook app operates on the Liberty platform, which we acquired in the William Hill Acquisition, along with other technology platforms that we
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intend to migrate to the Liberty platform in the future, subject to required
approvals. The map below illustrates Caesars Digital's presence as of March 31,
2022 :
[[Image Removed: czr-20220331_g1.jpg]]
Subsequent to March 31, 2022 , we launched mobile sports betting and iGaming on
our Liberty platform in Ontario, Canada on April 4, 2022 . We are also in the
process of expanding our Caesars Digital footprint into other states in the near
term.
We periodically divest of assets in order to raise capital or as a result of a
determination that the assets are not core to our business. We also divested
certain assets in connection with obtaining regulatory approvals related to the
closing of the Merger. A summary of recently completed and planned divestitures
of our properties as of March 31, 2022 is as follows:
Segment Property Date Sold Sales Price
MontBleu Casino Resort & Spa
Regional ("MontBleu") April 6, 2021 $15 million
Regional Tropicana Evansville ("Evansville") June 3, 2021 $480 million
Belle of Baton Rouge Casino & Hotel
Regional ("Baton Rouge") N/A *
Discontinued operations:
Regional Harrah's Louisiana Downs November 1, 2021 $22 million (a)
Regional Caesars Southern Indiana September 3, 2021 $250 million
N/A Emerald Resort & Casino July 16, 2021 *
N/A Caesars Entertainment UK July 16, 2021 *
N/A William Hill International N/A £2.0 billion
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*Not meaningful.
(a)The proceeds of this sale were split between the Company and VICI.
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--------------------------------------------------------------------------------Merger and Acquisitions Related Activities
Acquisition of William Hill
OnSeptember 30, 2020 , we announced that we had reached an agreement withWilliam Hill PLC on the terms of a recommended cash acquisition pursuant to which we would acquire the entire issued and to be issued share capital (other than shares owned by us or held in treasury) ofWilliam Hill PLC , in an all-cash transaction. OnApril 22, 2021 , the Company completed the acquisition for £2.9 billion, or approximately$3.9 billion . In connection with the William Hill Acquisition, onApril 22, 2021 , a newly formed subsidiary of the Company entered into a Credit Agreement (the "Bridge Credit Agreement") with certain lenders party thereto and Deutsche Bank AG,London Branch, as administrative agent and collateral agent, pursuant to which the lenders party thereto provided the Debt Financing (as defined below). The Bridge Credit Agreement provides for (a) a 540-day £1.0 billion asset sale bridge facility, (b) a 60-day £503 million cash confirmation bridge facility and (c) a 540-day £116 million revolving credit facility (collectively, the "Debt Financing"). The proceeds of the bridge loan facilities provided under the Bridge Credit Agreement were used (i) to pay a portion of the cash consideration for the acquisition and (ii) to pay fees and expenses related to the acquisition and related transactions. The proceeds of the revolving credit facility under the Bridge Credit Agreement may be used for working capital and general corporate purposes. The £1.5 billion Interim Facilities Agreement ("Interim Facilities Agreement") entered into onOctober 6, 2020 with Deutsche Bank AG,London Branch andJPMorgan Chase Bank, N.A ., and amended onDecember 11, 2020 , was terminated upon the execution of the Bridge Credit Agreement. OnMay 12, 2021 , the Company repaid the £503 million cash confirmation bridge facility. OnJune 14, 2021 , the Company drew down the full £116 million from the revolving credit facility and the proceeds, in addition to excess Company cash, were used to make a partial repayment of the asset sale bridge facility in the amount of £700 million. Outstanding borrowings under the Bridge Credit Agreement are expected to be repaid upon the sale of William Hill's non-U.S. operations including theUK and international online divisions and the retail betting shops (collectively, "William Hill International "), all of which are held for sale and reflected within discontinued operations. Certain investments acquired have been excluded from the held for sale group. OnSeptember 8, 2021 , we entered into an agreement to sellWilliam Hill International to 888 Holdings Plc for approximately £2.2 billion. OnApril 7, 2022 , the Company amended the agreement to sell the non-US assets of William Hill to 888 Holdings Plc for a revised enterprise value of approximately £2.0 billion. The amended agreement reflects a £250 million reduction in consideration payable at closing and up to £100 million as deferred consideration to be paid to the Company, subject to 888 Holdings Plc meeting certain 2023 financial targets. As a result of the revised sales agreement, the Company recorded an impairment to assets held for sale of$329 million within discontinued operations during the three months endedMarch 31, 2022 . After repayment of the outstanding debt under the Bridge Credit Agreement, described above, and other working capital adjustments, the Company expects to receive approximately £585 million, or$785 million , subject to any permitted leakage, which is customary for sale transactions in theUK . In order to manage the risk of changes in the GBP denominated sales price and expected proceeds, the Company has entered into foreign exchange forward contracts. The sale is subject to satisfaction of customary closing conditions, including receipt of the approval of shareholders of 888 Holdings Plc and regulatory approvals, and is expected to close in the second quarter of 2022. We recognized acquisition-related transaction costs of less than$1 million and$5 million for the three months endedMarch 31, 2022 and 2021, respectively, excluding additional transaction cost associated with sale ofWilliam Hill International . These costs were associated with legal and professional services and were recorded in Transaction and other operating costs, net in our Statements of Operations.
Consolidation of
OnAugust 26, 2021 , we increased our ownership interest inCBAC Borrower, LLC ("Horseshoe Baltimore"), a property which we also manage, to approximately 75.8% for cash consideration of$55 million . We were subsequently determined to have a controlling financial interest in Horseshoe Baltimore and have consolidated the results of operations of the property following our change in ownership.
Investments and Partnerships
NeoGames
The acquired net assets of William Hill included an investment in publicly
traded common stock of NeoGames S.A. ("NeoGames"), a global leader of iLottery
solutions and services to national and state-regulated lotteries, and other
investments. On September 16, 2021 , the Company sold a portion of its shares of
NeoGames common stock for $136 million which decreased its ownership interest
from 24.5% to approximately 8.4%. Additionally, on March 14, 2022 , the Company
sold its
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remaining 2 million shares at fair value for $26 million and recorded a loss on
the change in fair value of $34 million during the three months ended March 31,
2022 , which is included within Other income (loss) on the Statements of
Operations.
Pompano Joint Venture
InApril 2018 , the Company entered into a joint venture with Cordish Companies ("Cordish") to plan and develop a mixed-use entertainment and hospitality destination expected to be located on unused land adjacent to the casino and racetrack at the Company's Pompano property. As the managing member, Cordish will operate the business and manage the development, construction, financing, marketing, leasing, maintenance and day-to-day operation of the various phases of the project. Additionally, Cordish will be responsible for the development of the master plan for the project with the Company's input and will submit it for the Company's review and approval. InJune 2021 , the joint venture issued a capital call and we contributed$3 million , for a total of$4 million in cash since inception of the joint venture. OnFebruary 12, 2021 , the Company contributed 186 acres to the joint venture with a fair value of$61 million . Total contributions of approximately 206 acres of land have been made with a fair value of approximately$69 million and the Company has no further obligation to contribute additional real estate or cash as ofMarch 31, 2022 . We entered into a short-term lease agreement inFebruary 2021 , which we can cancel at any time, to lease back a portion of the land from the joint venture. While the Company holds a 50% variable interest in the joint venture, it is not the primary beneficiary; as such the investment in the joint venture is accounted for using the equity method. The Company participates evenly with Cordish in the profits and losses of the joint venture, which are included in Transaction and other operating costs, net on the Statements of Operations. Our investment in the joint venture is recorded in Investment in and advances to unconsolidated affiliates on the Balance Sheets.
Reportable Segments
Segment results in this MD&A are presented consistent with the way our management reviews operating results, assesses performance and makes decisions on a "significant market" basis. Management views each of the Company's casinos as an operating segment. Operating segments are aggregated based on their similar economic characteristics, types of customers, types of services and products provided, and their management and reporting structure. Prior to the William Hill Acquisition, our principal operating activities occurred in three regionally-focused reportable segments:Las Vegas , Regional, and Managed, International, CIE, in addition to Corporate and Other. The William Hill Acquisition and rebranding of our interactive business (formerly,Caesars Interactive Entertainment "CIE" and now, inclusive of William Hill US, "Caesars Digital") expanded our access to conduct sports wagering and iGaming operations. As a result, the Company has made a change to the composition of its reportable segments. TheLas Vegas and Regional segments are substantially unchanged, while the former Managed, International and CIE reportable segment has been recast for all periods presented into two segments: Caesars Digital and Managed and Branded. Accordingly, our principal operating activities occur in four reportable segments: (1)Las Vegas , (2) Regional, (3) Caesars Digital, and (4) Managed and Branded, in addition to Corporate and Other. See Item 2. "Properties" for listing of properties by segment.
Presentation of Financial Information
The financial information included in this Item 2 for the periods after our acquisition of William Hill onApril 22, 2021 and the increase in our ownership percentage and subsequent consolidation of Horseshoe Baltimore onAugust 26, 2021 , is not fully comparable to the periods prior to the acquisitions. In addition, the presentation of financial information herein for the periods after the Company's sales of various properties is not fully comparable to the periods prior to their respective sale dates. See "Reportable Segments" above for a discussion of changes to the Company's reportable segments. This MD&A is intended to provide information to assist in better understanding and evaluating our financial condition and results of operations. Our historical operating results may not be indicative of our future results of operations because of the factors described in the preceding paragraph and the changing competitive landscape in each of our markets, including changes in market and societal trends, as well as by factors discussed elsewhere herein. We recommend that you read this MD&A in conjunction with our unaudited Financial Statements and the notes to those statements included in this Quarterly Report on Form 10-Q.
Reclassifications
Certain reclassifications of prior year presentations have been made to conform to the current period presentation. InJune 2021 , theIndiana Gaming Commission amended its order that previously required the Company to sell a third casino asset in the state
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of
Key Performance Metrics
Our primary source of revenue is generated by our gaming operations, our retail and online sports betting, as well as our online gaming. Additionally we utilize our hotels, restaurants, bars, entertainment venues, retail shops, racing and other services to attract customers to our properties. Our operating results are highly dependent on the volume and quality of customers visiting and staying at our properties and using our sports betting and iGaming applications. Key performance metrics include volume indicators such as drop or handle, which refer to amounts wagered by our customers. The amount of volume we retain, which is not fully controllable by us, is recognized as casino revenues and is referred to as our win or hold. Slot win percentage is typically in the range of approximately 9% to 11% of slot handle for both theLas Vegas and Regional segments. Table game hold percentage is typically in the range of approximately 14% to 23% of table game drop in theLas Vegas segment and 18% to 21% of table game drop in the Regional segment. Sports betting hold is typically in the range of 5% to 9% and iGaming hold typically ranges from 3% to 4%. In addition, hotel occupancy, which is the average percentage of available hotel rooms occupied during a period, is a key indicator for our hotel business in theLas Vegas segment. See "Results of Operations" section below. Complimentary rooms are treated as occupied rooms in our calculation of hotel occupancy. The key metrics we utilize to measure our profitability and performance are Adjusted EBITDA and Adjusted EBITDA margin.
Significant Factors Impacting Financial Results
The following summary highlights the significant factors impacting our financial
results for the three months ended
Acquisitions and Transaction Costs
•Acquisition of William Hill - OnApril 22, 2021 , the Company consummated its previously announced acquisition of the entire issued and to be issued share capital (other than shares owned by the Company or held in treasury) ofWilliam Hill PLC , in an all-cash transaction of £2.9 billion or approximately$3.9 billion . We recognized acquisition-related transaction costs of less than$1 million and$5 million for the three months endedMarch 31, 2022 and 2021, respectively, excluding additional transaction costs associated with sale ofWilliam Hill International . •Consolidation of Horseshoe Baltimore - OnAugust 26, 2021 , the Company increased its ownership interest in Horseshoe Baltimore to approximately 75.8%. Prior to the purchase, the Company held an interest in Horseshoe Baltimore of approximately 44.3% which was accounted for as an equity method investment. Subsequent to the change in ownership, the Company was determined to have a controlling financial interest and has begun to consolidate operations of Horseshoe Baltimore. As discussed in the section above, the operations post consolidation are not fully comparable to the prior periods prior to the acquisition.
Divestitures and Discontinued Operations
•Divestitures and Discontinued Operations - See "Overview" section above for detail on properties divested or held for sale, including related discontinued operations. Other Significant Factors •COVID-19 Public Health Emergency - InJanuary 2020 , an outbreak of a new strain of coronavirus ("COVID-19") was identified and spread throughout much of the world, including theU.S. All of the Company's casino properties were temporarily closed for the period frommid-March 2020 throughmid-May 2020 due to orders issued by various government agencies and tribal bodies as part of certain precautionary measures intended to help slow the spread of COVID-19. The Company has resumed operations at all of its properties with the exception ofLake Charles which was severely damaged by Hurricane Laura in August of 2020. Although the resurgence of the Omicron variant of COVID-19 continued to impact the beginning of the quarter, most of our properties experienced positive trends during the three months endedMarch 31, 2022 including higher hotel occupancy, particularly inLas Vegas , and increased gaming and food and beverage volumes as mandates and restrictions on maximum capacities and amenities available were eased. Future variants, mandates or restrictions imposed by various regulatory bodies are uncertain and could, once again, have a significant impact on our future operations.
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•Weather and Construction Disruption - In late August 2020 , our Regional segment
was negatively impacted by Hurricane Laura, causing severe damage to Lake
Charles , which will remain closed until the fourth quarter of 2022 when
construction of a new land-based casino is expected to be complete. During the
three months ended March 31, 2022 , the Company reached a final settlement
agreement with the insurance carriers for $128 million , before our insurance
deductible of $25 million . The Company has received $94 million related to
damaged fixed assets, remediation costs and business interruption. We expect to
receive an additional $9 million in the second quarter of 2022, which is
included in Accounts receivable, net. During the three months ended March 31,
2022 and 2021, the Company also recorded gains of $38 million and $8 million ,
respectively, which are included in Transaction and other operating costs, net
in our Statements of Operations, as proceeds received for the cost to replace
damaged property were in excess of the respective carrying value of the assets.
•Caesars Sportsbook Launch and Rebranding - In connection with the launch and
rebranding of the Caesars Sportsbook app, our Caesars Digital segment initiated
a significant marketing campaign with distinguished actors, former athletes and
other media personalities. As new states and jurisdictions have legalized sports
betting, we have made significant upfront investments which have been executed
through marketing campaigns and promotional incentives to acquire new customers
and establish ourselves as an industry leader. For example, in connection with
the launch of our app in the state of New York on January 8, 2022 and Louisiana
on January 28, 2022 , we experienced negative net revenue at the beginning of the
quarter resulting from a substantial amount of bonus cash and matched deposits
issued to customers as sign-on incentives, which exceeded our gaming win. Our
level of investment and types of incentives provided are discretionary and
negative net revenues are not expected to continue subsequent to the initial
launch period. A significant portion of our marketing and promotional costs are
variable and we continue to monitor and adjust our level of investment based on
jurisdiction specific conditions, customer behaviors, and results observed from
prior state launches.
Results of Operations
The following table highlights the results of our operations:
Three Months Ended March 31,
(Dollars in millions) 2022 2021
Net revenues:
Las Vegas $ 914 $ 497
Regional 1,363 1,191
Caesars Digital (53) 39
Managed and Branded 66 61
Corporate and Other (a) 2 4
Total $ 2,292 $ 1,792
Net loss $ (680) $ (424)
Adjusted EBITDA (b):
Las Vegas $ 400 $ 162
Regional 459 393
Caesars Digital (554) (2)
Managed and Branded 20 21
Corporate and Other (a) (29) (39)
Total $ 296 $ 535
Net loss margin (29.7) % (23.7) %
Adjusted EBITDA margin 12.9 % 29.9 %
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(a)Corporate and Other includes revenues related to certain licensing arrangements and various revenue sharing agreements. Corporate and Other Adjusted EBITDA includes corporate overhead costs, which consist of certain expenses, such as: payroll, professional fees and other general and administrative expenses.
(b)See the "Supplemental Unaudited Presentation of Consolidated Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")" discussion later in this MD&A for a definition of Adjusted EBITDA and a reconciliation of net income (loss) to Adjusted EBITDA.
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Consolidated comparison of the three months ended
Net Revenues
Net revenues were as follows:
Three Months Ended March 31,
(Dollars in millions) 2022 2021 Variance Percent Change
Casino and pari-mutuel commissions
$ 65 5.3 % Food and beverage 339 169 170 100.6 % Hotel 383 215 168 78.1 % Other 278 181 97 53.6 % Net Revenues$ 2,292 $ 1,792 $ 500 27.9 % Despite the resurgence of the Omicron variant during the beginning of 2022, consolidated net revenues increased for the three months endedMarch 31, 2022 primarily due to positive trends compared to the three months endedMarch 31, 2021 which was negatively impacted by the COVID-19 public health emergency. The Company's net revenues have benefited from reduced restrictive mandates and guidelines which has allowed for increased gaming capacity and hotel occupancy as well as decreased limitations on the operation of food and beverage outlets, live entertainment events and conventions. As ofMarch 31, 2022 , all of our properties have resumed operations with the exception ofLake Charles which was severely damaged by Hurricane Laura. Additionally, the consolidation of Horseshoe Baltimore onAugust 26, 2021 contributed to the increased in net revenues for the three months endedMarch 31, 2022 . These increases were offset slightly by negative gaming revenue in our Caesars Digital segment.
Operating Expenses
Operating expenses were as follows:
Three Months Ended March 31,
(Dollars in millions) 2022 2021 Variance Percent Change
Casino and pari-mutuel commissions $ 1,064 $ 587 $ 477 81.3 %
Food and beverage 202 108 94 87.0 %
Hotel 115 81 34 42.0 %
Other 88 69 19 27.5 %
General and administrative 499 380 119 31.3 %
Corporate 69 66 3 4.5 %
Depreciation and amortization 300 265 35 13.2 %
Transaction and other operating costs, net (35) 20 (55) *
Total operating expenses $ 2,302 $ 1,576 $ 726 46.1 %
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* Not meaningful.
Casino and pari-mutuel expenses consist primarily of salaries and wages
associated with our gaming operations, gaming taxes and marketing and promotions
costs attributable to our Caesars Digital segment. Food and beverage expenses
consist principally of salaries and wages and costs of goods sold associated
with our food and beverage operations. Hotel expense consists principally of
salaries, wages and supplies associated with our hotel operations. Other
expenses consist principally of salaries and wages, costs of goods sold and
professional talent fees associated with our retail, entertainment and other
operations.
Casino, food and beverage, hotel, and other expenses for the three months ended
March 31, 2022 increased year over year partially as a result of the William
Hill Acquisition and the consolidation of Horseshoe Baltimore. The reopening of
substantially all of our properties and the associated growth in customer volume
also drove the increase in expenses year over year. Higher advertising costs
consisting of television, radio and internet marketing campaigns directly
attributable to the launch and rebranding of our Caesars Sportsbook app also
contributed to the increase during the current period. These increases were
partially offset as the Company continues to identify more efficient methods to
manage marketing and promotional spend and reduce gaming expenses within our Las
Vegas and Regional segments, as well as focus on labor efficiencies. Moreover,
the Company has managed recent increases in food costs by focusing on
efficiencies within food and beverage venues and menu options.
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--------------------------------------------------------------------------------General and administrative expenses include items such as information technology, facility maintenance, utilities, property and liability insurance, expenses for administrative departments such as accounting, compliance, purchasing, human resources, legal and internal audit, and property taxes. General and administrative expenses also include other marketing expenses indirectly related to our gaming and non-gaming operations.
General and administrative expenses for the three months endedMarch 31, 2022 increased year over year as the result of the reopening of all of our properties combined with the aforementioned ease in mandates and restrictions, the William Hill Acquisition and the consolidation of Horseshoe Baltimore. Corporate expenses include unallocated expenses such as payroll, annual bonus plans, stock-based compensation, professional fees, and other various expenses not directly related to the operations of our properties. For the three months endedMarch 31, 2022 compared to the same prior year period, corporate expense increased primarily due to stock-based compensation and other indirect costs related to the William Hill Acquisition.
For the three months ended
For the three months ended
Other income (expenses)
Other income (expenses) were as follows:
Three Months Ended March 31,
(Dollars in millions) 2022 2021 Variance Percent Change
Interest expense, net $ (552) $ (579) $ 27 4.7 %
Other income (loss) 4 (133) 137 *
Benefit for income taxes 107 76 31 40.8 %
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* Not meaningful.
For the three months ended March 31, 2022 , interest expense, net decreased year
over year as a result the extinguishment of 5% Convertible Notes in June 2021 ,
partial repurchase of the CEI Senior Notes completed in October 2021 , and the
repricing of CRC Incremental Term Loan in September 2021 . Additionally, on
September 24, 2021 , the Company issued $1.2 billion in aggregate principal
amount of 4.625% Senior Notes due 2029. Proceeds from the issuance of the Senior
Notes, as well as cash on hand, was used to repay the $1.7 billion aggregate
principal amount of 5.25% CRC Notes. These decreases were offset slightly by the
consolidation of debt held by Horseshoe Baltimore.
For the three months ended March 31, 2022 , other income (loss) primarily
consisted of a gain related to the resolution of a portion of disputed claims
liability related to Former Caesars' bankruptcy and a change in the fair value
of foreign exchange forward contracts, offset by the change in fair value of
investments. For the three months ended March 31, 2021 , other income (loss)
primarily consisted of a loss on the change in fair value of a derivative
liability, offset by a foreign exchange transaction gain.
The income tax benefit for the three months ended March 31, 2022 differed from
the expected income tax benefit based on the federal tax rate of 21% primarily
due to nondeductible expenses and state income taxes.
The income tax benefit for the three months ended March 31, 2021 differed from
the expected income tax benefit based on the federal tax rate of 21% primarily
due to nondeductible expenses related to the convertible notes liability.
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Segment comparison of the three months ended
Las Vegas Segment
Three Months Ended March 31,
(Dollars in millions) 2022 2021 Variance Percent Change
Revenues:
Casino and pari-mutuel commissions $ 291 $ 226 $ 65 28.8 %
Food and beverage 220 84 136 161.9 %
Hotel 266 115 151 131.3 %
Other 137 72 65 90.3 %
Net Revenues $ 914 $ 497 $ 417 83.9 %
Table game drop $ 801 $ 580 $ 221 38.1 %
Table game hold % 21.9 % 20.1 % 1.8 pts
Slot handle $ 2,488 $ 1,762 $ 726 41.2 %
Hotel occupancy 82.9 % 60.4 % 22.5 pts
Adjusted EBITDA $ 400 $ 162 $ 238 146.9 %
Adjusted EBITDA margin 43.8 % 32.6 % 11.2 pts
Net income (loss) attributable to Caesars $ 168 $ (67) $ 235 *
___________________
* Not meaningful.
For the three months ended March 31, 2022 , the Las Vegas segment's net revenues
and Adjusted EBITDA increased year over year primarily due to reduced mandates
and restrictions at our properties in accordance with easing of the governmental
regulatory guidelines combined with pent up customer demand. Despite the
negative impact of the resurgence of the Omicron variant of COVID-19 on the
beginning of the quarter, including cancellations and postponements of
significant entertainment offerings, events and conventions, the Las Vegas
segment experienced positive trends year over year including increases in hotel
occupancy and higher gaming and food and beverage volumes. For the three months
ended March 31, 2022 , slot win percentage in the Las Vegas segment was within
our typical range.
Regional Segment
Three Months Ended March 31,
(Dollars in millions) 2022 2021 Variance Percent Change
Revenues:
Casino and pari-mutuel commissions $ 1,070 $ 967 $ 103 10.7 %
Food and beverage 119 84 35 41.7 %
Hotel 117 100 17 17.0 %
Other 57 40 17 42.5 %
Net Revenues $ 1,363 $ 1,191 $ 172 14.4 %
Table game drop $ 1,057 $ 977 $ 80 8.2 %
Table game hold % 22.2 % 20.9 % 1.3 pts
Slot handle $ 10,411 $ 9,942 $ 469 4.7 %
Adjusted EBITDA $ 459 $ 393 $ 66 16.8 %
Adjusted EBITDA margin 33.7 % 33.0 % 0.7 pts
Net income attributable to Caesars $ 124 $ 65 $ 59 90.8 %
Regional segment's net revenues, Adjusted EBITDA and margin increased for the
three months ended March 31, 2022 compared to the same prior year period
partially as a result of the consolidation of Horseshoe Baltimore. Although our
Regional
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properties' performance was affected by a resurgence of the Omicron variant of
COVID-19 in the beginning of the quarter, the Regional segment subsequently
experienced positive results due to pent up demand combined with increased
capacities and food and beverage offerings as restrictive mandates and
guidelines were eased. As of March 31, 2022 , all of our properties in our
Regional segment have reopened, with the exception of Lake Charles which closed
due to severe damage from Hurricane Laura in August 2020 . Lake Charles will
remain closed until the fourth quarter of 2022 when construction of a new
land-based casino is expected to be completed. Table game hold percentage in the
Regional segment for the three months ended March 31, 2022 was slightly higher
than our typical range. Slot win percentage in the Regional segment for the
three months ended March 31, 2022 was within our typical range.
Caesars Digital Segment
Three Months Ended March 31,
(Dollars in millions) 2022 2021 Variance Percent Change
Revenues:
Casino and pari-mutuel commissions $ (69) $ 34 $ (103) *
Other 16 5 11 *
Net Revenues $ (53) $ 39 $ (92) *
Sports betting handle (a) $ 4,690 $ 13 $ 4,677 *
iGaming handle $ 2,177 $ 1,069 $ 1,108 103.6 %
Adjusted EBITDA $ (554) $ (2) $ (552) *
Adjusted EBITDA margin * (5.1) % *
Net loss attributable to Caesars $ (576) $ (8) $ (568) *
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* Not meaningful.
(a)Caesars Digital generated an additional $343 million of sports betting
handle, which is not included in this table for the three months ended March 31,
2022 for select wholly-owned and third-party operations for which Caesars
Digital provides services and we receive all, or a share of, the net profits.
Sports betting handle includes $13 million for the three months ended March 31,
2022 , related to horse racing and pari-mutuel wagers.
Caesars Digital includes Caesars' operations for retail and mobile sports
betting, online casino, and online poker, including operations acquired in the
William Hill Acquisition. Caesars Digital's sports betting handle and iGaming
handle increased significantly for the three months ended March 31, 2022
compared to the same prior year period due to the William Hill Acquisition, the
launch of our new sportsbook app in 2021, and the expansion of sports betting
into additional states subsequent to the acquisition. However, net revenues for
the three months ended March 31, 2022 were negatively impacted by costs
associated with significant promotions offered with the launch of our Caesars
Sportsbook, particularly in New York and Louisiana , which included cash bonuses
and matched deposits to new customers as sign-on incentives.
During significant promotional periods, such as entering new jurisdictions with
our Caesars branded retail sportsbooks, or our Caesars Sportsbook app and
iGaming applications, we may deploy a significant level of marketing spend to
build brand awareness and acquire and retain customers. As sports betting and
online casinos expand through increased state legalization and customer
adoption, growth in marketing and promotional costs in highly competitive
markets may negatively impact Caesars Digital net revenues, Adjusted EBITDA and
margin in comparison to prior periods. Such activity could result in negative
net gaming revenue as experienced for the three months ended March 31, 2022 .
These periods are not expected to be long in duration as we use our discretion
to determine the level of investment for a particular jurisdiction. Sports
betting and iGaming hold percentage for the three months ended March 31, 2022
was within our typical range.
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Managed and Branded Segment
Three Months Ended March 31,
(Dollars in millions) 2022 2021 Variance Percent Change
Revenues:
Food and beverage $ - $ 1 $ (1) (100.0) %
Other 66 60 6 10.0 %
Net Revenues $ 66 $ 61 $ 5 8.2 %
Adjusted EBITDA $ 20 $ 21 $ (1) (4.8) %
Adjusted EBITDA margin 30.3 % 34.4 % (4.1) pts
Net income (loss) attributable to Caesars $ (211) $ 15 $ (226) *
___________________
* Not meaningful.
We manage several properties and license rights to the use of our brands. These
revenue agreements typically include reimbursement of certain costs that we
incur directly. Such costs are primarily related to payroll costs incurred on
behalf of the properties under management. The revenue related to these
reimbursable management costs has a direct impact on our evaluation of Adjusted
EBITDA margin which, when excluded, reflects margins typically realized from
such agreements. The table below presents the amount included in net revenues
and total operating expenses related to these reimbursable costs.
Three Months Ended March 31,
(Dollars in millions) 2022 2021 Variance Percent Change
Reimbursable management revenue $ 46 $ 40 $ 6 15.0 %
Reimbursable management cost 46 40 6 15.0 %
Managed and Branded segment's net revenues increased as properties were fully
reopened for the three months ended March 31, 2022 , except for temporary closure
from January 5, 2022 through January 31, 2022 at Caesars Windsor, and
experienced positive results from pent up demand. Additionally, in connection
with the closing of the sale of Caesars Southern Indiana on September 3, 2021 ,
the Company and the Eastern Band of Cherokee Indians ("EBCI") extended their
existing relationship by entering into a 10-year brand license agreement for the
continued use of the Caesars brand and Caesars Rewards loyalty program at
Caesars Southern Indiana. Caesars Southern Indiana was previously reported
within the Regional segment and subsequent to the sale, as a result of the
license agreement, is reported within the Managed and Branded segment. The
increase was slightly offset by the consolidation of Horseshoe Baltimore
beginning in the third quarter of 2021. The operations of the property are
included in the Regional segment and management revenue is eliminated upon
consolidation.
Corporate & Other
Three Months Ended March 31,
(Dollars in millions) 2022 2021 Variance Percent Change
Revenues:
Other $ 2 $ 4 $ (2) (50.0) %
Net Revenues $ 2 $ 4 $ (2) (50.0) %
Adjusted EBITDA $ (29) $ (39) $ 10 25.6 %
Supplemental Unaudited Presentation of Consolidated Adjusted Earnings Before
Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") for the Three
Months Ended March 31, 2022 and 2021
Adjusted EBITDA (described below), a non-GAAP financial measure, has been
presented as a supplemental disclosure because it is a widely used measure of
performance and basis for valuation of companies in our industry and we believe
that this non-GAAP supplemental information will be helpful in understanding our
ongoing operating results. Management has historically used Adjusted EBITDA when
evaluating operating performance because we believe that the inclusion or
exclusion of certain recurring and non-recurring items is necessary to provide a
full understanding of our core operating results and as a means to evaluate
period-to-period results. Adjusted EBITDA represents net income (loss) before
interest income or interest expense, net of interest capitalized, (benefit)
provision for income taxes, (gain) loss on investments and marketable
securities, depreciation
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and amortization, stock-based compensation, impairment charges, transaction
expenses, severance expense, selling costs associated with the divestitures of
properties, equity in income (loss) of unconsolidated affiliates, (gain) loss on
the sale or disposal of property and equipment, (gain) loss related to
divestitures, changes in the fair value of certain derivatives and certain
non-recurring expenses such as sign-on and retention bonuses, business
optimization expenses and transformation expenses, certain litigation awards and
settlements, contract exit or termination costs, and certain regulatory
settlements. Adjusted EBITDA also excludes the expense associated with certain
of our leases as these transactions were accounted for as financing obligations
and the associated expense is included in interest expense. Adjusted EBITDA is
not a measure of performance or liquidity calculated in accordance with
accounting principles generally accepted in the United States ("GAAP"). It is
unaudited and should not be considered an alternative to, or more meaningful
than, net income (loss) as an indicator of our operating performance. Uses of
cash flows that are not reflected in Adjusted EBITDA include capital
expenditures, interest payments, income taxes, debt principal repayments,
payments under our leases with affiliates of GLPI and VICI. and certain
regulatory gaming assessments, which can be significant. As a result, Adjusted
EBITDA should not be considered as a measure of our liquidity. Other companies
that provide EBITDA information may calculate Adjusted EBITDA differently than
we do. The definition of Adjusted EBITDA may not be the same as the definitions
used in any of our debt agreements.
The following table summarizes our Adjusted EBITDA for the three months ended
March 31, 2022 and 2021, respectively, in addition to reconciling net income
(loss) to Adjusted EBITDA in accordance with GAAP (unaudited):
Three Months Ended
March 31, 2022
(In millions) CEI
Net loss attributable to Caesars $ (680)
Discontinued operations, net of income taxes 229
Benefit for income taxes (107)
Other income (a) (4)
Interest expense, net 552
Depreciation and amortization 300
Transaction and other operating costs, net (b) (35)
Stock-based compensation expense 25
Other items (c) 16
Adjusted EBITDA $ 296
Three Months Ended March 31, 2021
Pre-Cons. Pre-Acq. WH US Less: Divestitures
(In millions) CEI Baltimore (d) (e) (f) Total (g)
Net income (loss) attributable to Caesars $ (423) $ 1 $ (11) $ (13) $ (446)
Net loss attributable to noncontrolling interests (1) - - -
(1)
Discontinued operations, net of income taxes 4 - - (4) - Benefit for income taxes (76) - (2) - (78) Other loss (a) 133 - - - 133 Interest expense, net 579 3 - - 582 Depreciation and amortization 265 4 6 - 275 Transaction and other operating costs, net (b) 20 2 - -
22
Stock-based compensation expense 23 - - - 23 Other items (c) 11 - - - 11 Adjusted EBITDA$ 535 $ 10$ (7) $ (17)$ 521 ____________________ (a)Other income for the three months endedMarch 31, 2022 primarily represents the net change in fair value of investments held by the Company, foreign exchange forward contracts, and the changes in the disputed claims liability related to Former Caesars' bankruptcy. Other loss for the three months endedMarch 31, 2021 primarily represents a loss on the change in fair value of the derivative liability related to the 5% Convertible Notes, slightly offset by gains on foreign currency exchange and investments held by theCompany. (b) Transaction and other operating costs, net for the three months endedMarch 31, 2022 primarily represents a gain resulting from insurance proceeds received in excess of the respective carrying value of the assets atLake Charles . Transaction and other operating costs, net for the three months endedMarch 31, 2021 primarily represents costs related to the William Hill Acquisition and the Merger, various contract or license termination exit costs, professional services, other acquisition costs and severance costs.
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--------------------------------------------------------------------------------(c)Other items primarily represent certain consulting and legal fees, rent for non-operating assets, relocation expenses, retention bonuses, and business optimization expenses.
(d)Represents results of operations for Horseshoe Baltimore for periods prior to the consolidation resulting from the Company's increase in its ownership interest onAugust 26, 2021 . Such figures are based on unaudited internal financial statements and have not been reviewed by the Company's auditors and do not conform to GAAP. (e)Pre-acquisition William Hill US represents results of operations for William Hill prior to the acquisition. Such figures are based on unaudited internal financial statements and have not been reviewed by the Company's auditors and do not conform to GAAP. (f)Divestitures for the three months endedMarch 31, 2021 include results of operations for MontBleu and Tropicana Evansville and discontinued operations of the Harrah's Louisiana Downs,Caesars Southern Indiana and Caesars UK Group . Such figures are based on unaudited internal financial statements and have not been reviewed by the Company's auditors and do not conform to GAAP. (g)Excludes results of operations from divestitures as detailed in (f) and includes results of operations of Horseshoe Baltimore for periods prior to the consolidation, and William Hill US prior to the acquisition for the relevant period. Such presentation does not conform to GAAP or theSecurities and Exchange Commission rules for pro forma presentation; however, we believe that the additional financial information will be helpful to investors in comparing current results with results of prior periods. This is non-GAAP data and should not be considered a substitute for data prepared in accordance with GAAP, but should be viewed in addition to the results of operations reported by the Company.
Liquidity and Capital Resources
We are a holding company and our only significant assets are ownership interests in our subsidiaries. Our ability to fund our obligations depends on existing cash on hand, contracted asset sales, cash flows from our subsidiaries and our ability to raise capital. Our primary sources of liquidity and capital resources are existing cash on hand, cash flows from operations, availability of borrowings under our revolving credit facilities, proceeds from the issuance of debt and equity securities and proceeds from completed asset sales. Our cash requirements may fluctuate significantly depending on our decisions with respect to business acquisitions or divestitures and strategic capital and marketing investments. As ofMarch 31, 2022 , our cash on hand and revolving borrowing capacity was as follows: (In millions) March 31, 2022 Cash and cash equivalents $ 814 Revolver capacity (a) 2,030 Revolver capacity committed to letters of credit
(90)
Available revolver capacity committed as regulatory requirement (48) Total$ 2,706 ___________________
(a)Revolver capacity includes
During the three months endedMarch 31, 2022 , our operating activities generated operating cash outflows of$246 million , as compared to operating cash inflows of$61 million during the three months endedMarch 31, 2021 due to the results of operations described above. In addition, as a result of our strengthened financial position and recent repayments of debt and reduction in our borrowing rates, our interest rate payments have been reduced. OnSeptember 30, 2020 , the Company announced that it had reached an agreement withWilliam Hill PLC on the terms of a recommended cash acquisition pursuant to which the Company would acquire the entire issued and to be issued share capital (other than shares owned by the Company or held in treasury) ofWilliam Hill PLC , in an all-cash transaction. OnApril 22, 2021 , the Company completed the acquisition ofWilliam Hill PLC for £2.9 billion, or approximately$3.9 billion . In connection with the William Hill Acquisition, onApril 22, 2021 , a newly formed subsidiary of the Company (the "Bridge Facility Borrower") entered into a Credit Agreement (the "Bridge Credit Agreement") with certain lenders party thereto and Deutsche Bank AG,London Branch, as administrative agent and collateral agent, pursuant to which the lenders party thereto provided the Debt Financing (as defined below). The Bridge Credit Agreement provides for (a) a 540-day £1.0 billion asset sale bridge facility, (b) a 60-day £503 million cash confirmation bridge facility and (c) a 540-day £116 million revolving credit facility (collectively, the "Debt Financing"). The proceeds of the bridge loan facilities provided under the Bridge Credit Agreement were used (i) to pay a portion of the cash consideration for the acquisition and (ii) to pay fees and expenses related to the acquisition and related transactions. The proceeds of the revolving credit facility under the Bridge Credit Agreement may be used for working capital and general corporate purposes. The £1.5 billion Interim Facilities Agreement (the "Interim Facilities Agreement") entered into onOctober 6, 2020 with Deutsche Bank AG,London Branch andJPMorgan Chase Bank, N.A ., and amended onDecember 11, 2020 , was terminated upon the execution of the Bridge Credit Agreement. OnMay 12, 2021 , we repaid the £503 million cash confirmation bridge facility. OnJune 14, 2021 , the Company drew down the full £116 million from the revolving credit facility and the proceeds, in addition to excess Company cash, were used to make a partial repayment of the asset sale bridge facility in the amount of £700 million. Outstanding borrowings under the Bridge
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Credit Agreement are expected to be repaid upon the sale of William Hill
International , all of which are held for sale as of the date of the closing of
the William Hill Acquisition and are reflected within discontinued operations.
Certain investments acquired have been excluded from the held for sale asset
group. On September 8, 2021 , the Company entered into an agreement to sell
William Hill International to 888 Holdings Plc for approximately £2.2 billion.
The Company amended the agreement to sell the non-US assets of William Hill to
888 Holdings Plc for a revised enterprise value of approximately £2.0 billion.
The amended agreement reflects a £250 million reduction in consideration payable
at closing and up to £100 million as deferred consideration to be paid to the
Company, subject to 888 Holdings Plc meeting certain 2023 financial targets. As
a result of the amended sales agreement, the Company recorded an impairment to
assets held for sale of $329 million within discontinued operations during the
three months ended March 31, 2022 . After repayment of the outstanding debt under
the Bridge Credit Agreement, described above, the Company expects to receive
approximately £585 million, or $785 million , subject to any permitted leakage,
which is customary for sale transactions in the UK . In order to manage the risk
of changes in the GBP denominated sales price and expected proceeds, the Company
has entered into foreign exchange forward contracts. The sale is subject to
satisfaction of customary closing conditions, including receipt of the approval
of shareholders of 888 Holdings Plc and regulatory approvals, and is expected to
close in the second quarter of 2022.
We expect that our primary capital requirements going forward will relate to the
expansion and maintenance of our properties, taxes, servicing our outstanding
indebtedness, and rent payments under our GLPI Master Lease, the VICI Leases and
other leases. We make capital expenditures and perform continuing refurbishment
and maintenance at our properties to maintain our quality standards. Our capital
expenditure requirements for the remainder of 2022 are expected to increase
compared to prior periods as a result of increased expansion projects, the
rebranding of certain properties, implementation and migration of our Caesars
Sportsbook and iGaming applications in certain states to our Liberty platform
and continued investment into new markets with our Caesars Sportsbook and
iGaming applications in our Caesars Digital segment. In addition, we may, from
time to time, seek to repurchase our outstanding indebtedness. Any such
purchases may be funded by existing cash balances or the incurrence of debt. The
amount and timing of any repurchase will be based on business and market
conditions, capital availability, compliance with debt covenants and other
considerations.
We continue to expand into new markets with projects such as Caesars Virginia,
which is expected to be a $500 million premier destination resort casino. The
property plans to include a 500 room hotel and casino including slot machines,
table games, WSOP Room and Caesars Sportsbook. Additionally, Caesars announced
the plans to expand into Nebraska with a $75 million development of a Harrah's
casino and racetrack.
In 2020, we funded $400 million to escrow as of the closing of the Merger and
have begun to utilize those funds in accordance with a three year capital
expenditure plan in the state of New Jersey . This amount is currently included
in restricted cash in Other assets, net. As of March 31, 2022 , our restricted
cash balance in the escrow account was $240 million for future capital
expenditures in New Jersey .
As a condition of the extension of the casino operating contract and ground
lease for Harrah's New Orleans , we are also required to make a capital
investment of $325 million in Harrah's New Orleans by July 15, 2024 . The capital
investment will include a renovation and full interior and exterior redesign,
updated casino floor, new culinary experiences and a new 340 room hotel tower as
we are also in the process of rebranding the property as Caesars New Orleans.
Renovations are expected to be substantially complete during the second half of
2024.
On August 27, 2020 , Hurricane Laura made landfall on Lake Charles as a Category
4 storm severely damaging the Isle of Capri Casino Lake Charles . During the
three months ended March, 31, 2022, the Company reached a final settlement
agreement with the insurance providers for $128 million , before our insurance
deductible of $25 million , of which $94 million has been received by the Company
related to damaged fixed assets and remediation costs. The remaining $9 million
is included in Accounts receivable and is expected to be received in the second
quarter of 2022. The property will remain closed until the fourth quarter of
2022 when construction of a new land-based casino is expected to be complete.
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Cash spent for capital expenditures totaled $210 million and $65 million for the
three months ended March 31, 2022 and 2021, respectively. The following table
summarizes our capital expenditures for the three months ended March 31, 2022 ,
and an estimated range of capital expenditures for the remainder of 2022:
Three Months Ended
Estimate of
March 31, 2022 Expenditures for 2022
(In millions) Actual Low High
Atlantic City $ 57 $ 185 $ 205
Indiana racing operations 2 - 5
Total estimated capital expenditures from
restricted cash 59 185 210
Growth and renovation projects 83 520 670
Caesars Digital 32 85 105
Maintenance projects 36 250 300
Total estimated capital expenditures from
unrestricted cash and insurance proceeds 151 855 1,075
Total $ 210 $ 1,040 $ 1,285
A significant portion of our liquidity needs are for debt service and payments
associated with our leases. Our estimated debt service (including principal and
interest) is approximately $593 million for the remainder of 2022. We also lease
certain real property assets from third parties, including VICI and GLPI. We
estimate our lease payments to VICI and GLPI to be approximately $898 million
for the remainder of 2022.
The Company periodically divests assets that it does not consider core to its
business to raise capital or, in some cases, to comply with conditions, terms,
obligations or restrictions imposed by antitrust, gaming and other regulatory
entities. We expect to divest of William Hill International in the second
quarter of 2022, as described above.
On December 1, 2020 , the Company entered into a definitive agreement to sell the
operations of Baton Rouge to CQ Holding Company, Inc. The transaction has
received regulatory approvals and is expected to close in the second quarter of
2022, subject to other customary closing conditions.
If the agreed upon selling price for future divestitures does not exceed the
carrying value of the assets, we may be required to record additional impairment
charges in future periods which may be material.
We expect that our current liquidity, cash flows from operations, availability
of borrowings under committed credit facilities and proceeds from the announced
asset sales will be sufficient to fund our operations, capital requirements and
service our outstanding indebtedness for the next twelve months. However, we
cannot be certain that the COVID-19 public health emergency will not adversely
affect our business, financial condition and results of operations or cause
disruption in the financial markets that could adversely affect ability to
access additional capital.
Debt and Master Lease Covenant Compliance
The CRC Credit Agreement, the CEI Revolving Credit Facility, the Baltimore Term Loan and the indentures related to the CEI Senior Secured Notes, the CEI Senior Notes, the CRC Senior Secured Notes and the Senior Notes contain covenants which are standard and customary for these types of agreements. These include negative covenants, which, subject to certain exceptions and baskets, limit our ability to (among other items) incur additional indebtedness, make investments, make restricted payments, including dividends, grant liens, sell assets and make acquisitions. The CRC Revolving Credit Facility and the CEI Revolving Credit Facility include a maximum first-priority net senior secured leverage ratio financial covenant of 6.35:1, which is applicable solely to the extent that certain testing conditions are satisfied. The Baltimore Revolving Credit Facility includes a senior secured leverage ratio financial covenant of 5.0:1. Failure to comply with such covenants could result in an acceleration of the maturity of indebtedness outstanding under the relevant debt document.
The GLPI Leases and VICI Leases contain certain covenants requiring minimum capital expenditures based on a percentage of net revenues along with maintaining certain financial ratios.
The Bridge Credit Agreement associated with the planned divestiture ofWilliam Hill International , which is presented within liabilities held for sale, includes a financial covenant requiring the Bridge Facility Borrower to comply with a maximum total net leverage ratio of 10.50 to 1.00. The borrowings under the Bridge Credit Agreement are guaranteed by the Bridge Facility Borrower and the Bridge Facility Borrower's material wholly-owned subsidiaries (subject to exceptions), and are secured by a
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pledge of substantially all of the existing and future property and assets of
the Bridge Facility Borrower and the guarantors (subject to exceptions).
Additionally, no financial covenants are related to the $918 million of debt
from the two trust deeds assumed in the William Hill Acquisition, which are also
held for sale.
As of
Share Repurchase Program
InNovember 2018 , our Board of Directors authorized a$150 million common stock repurchase program (the "Share Repurchase Program") pursuant to which we may, from time to time, repurchase shares of common stock on the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions. The Share Repurchase Program has no time limit and may be suspended or discontinued at any time without notice. There is no minimum number of shares of common stock that we are required to repurchase under the Share Repurchase Program. As ofMarch 31, 2022 , we have acquired 223,823 shares of common stock under the program at an aggregate value of$9 million and an average of$40.80 per share. No shares were repurchased during the three months endedMarch 31, 2022 and 2021.
Contractual Obligations
The Company assumed various long-term debt arrangements, financing obligations and leases, previously described, associated with Former Caesars as result of the consummation of the Merger and William Hill related to the William Hill Acquisition. We also consolidate additional debt related to Horseshoe Baltimore. See Note 2 for a description of the Merger, the William Hill Acquisition and the consolidation of Horseshoe Baltimore. See Note 8 for additional contractual obligations. There have been no other material changes during the three months endedMarch 31, 2022 to our contractual obligations as disclosed in Part II, Item 7 of our Annual Report on Form 10-K for the year endedDecember 31, 2021 .
Other Liquidity Matters
We are faced with certain contingencies, from time to time, involving litigation, claims, assessments, environmental remediation or compliance. These commitments and contingencies are discussed in greater detail in "Part II, Item 1. Legal Proceedings" and Note 8 to our unaudited Financial Statements, both of which are included elsewhere in this report. In addition, new competition among retail and online operations may have a material adverse effect on our revenues and could have a similar adverse effect on our liquidity. See "Part I, Item 1A. Risk Factors-Risks Related to Our Business" which is included elsewhere in our Annual Report on Form 10-K for the year endedDecember 31, 2021 .
Critical Accounting Policies
Our critical accounting policies disclosures are included in our Annual Report on Form 10-K for the year endedDecember 31, 2021 . There have been no material changes sinceDecember 31, 2021 . We have not substantively changed the application of our policies and there have been no material changes in assumptions or estimation techniques used as compared to those described in our Annual Report on Form 10-K for the year endedDecember 31, 2021 .
Off-Balance Sheet Arrangements
We do not currently have any off-balance sheet arrangements.
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