Hello and welcome to today's webcast. My name is Jen and I'll be your web event specialist. All lines have been placed on mute to prevent any background noise. Please note that today's webcast is being recorded. During the presentation, we will have a question-and-answer session. [Operator Instructions] It is now my pleasure to turn today's program over to Joyce Arpin, Assistant Treasurer. Joyce, the floor is yours.

Thank you. Good afternoon, and welcome to Caesars Entertainment’s Second Quarter 2017 Results Conference Call. Joining me today from Caesars Entertainment Corporation are Mark Frissora, President and Chief Executive Officer; and Eric Hession, Chief Financial Officer. A copy of our press release, earnings presentation slides, and a replay of this conference call are available in the Investor Relations section on our website at caesars.com. The slides are available for download and will accompany Mark and Eric's prepared remarks for those of you on the phone that would like to follow along. Also, please note that prior to this call, we furnished a copy of this afternoon's press release to the SEC in a Form 8-K and will shortly file our most recent Quarterly Report on Form 10-Q for the second quarter of 2017. Before we get underway, I would like to call your attention to certain statements and information on Slides 2 through 4, which we incorporate by this reference. The forward-looking statement Safe Harbor disclaimers in our public documents cover this call and a simultaneous webcast at caesars.com. This call, the webcast, and its replay are the property of Caesars Entertainment Corporation. It is not for rebroadcast or use by any other party without the prior written consent of Caesars Entertainment Corporation. If you do not agree with these terms, please disconnect now. By remaining on the line, you agree to be bound by these terms. Today's call will include discussion of certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA margin, adjusted EBITDAR, property EBITDA and certain supplemental financial information. Definitions of these non-GAAP measures, reconciliations to their nearest GAAP measures, and the reasons management believe these measures provide useful information for investors can be found on Slide 3 and in the appendix to this presentation beginning…

Okay, thank you Joyce. Caesars Entertainment delivered second quarter results in-line with our expectations, despite considerable headwinds. As we anticipated and described on our last call, second quarter results were impacted by inflationary cost pressures, inventory disruptions from room nights off the market for renovation and a difficult competitive environment in Baltimore. We also have significantly favorable hold results in our Caesars Palace baccarat business in the second quarter of 2016, which did not repeat in 2017 further affecting year-on-year comparisons. Despite all of these factors, the underlying health of our business continued to improve, and we were able to offset some of these items with volume growth across the majority of our properties, early successes from new revenue growth initiatives and our constant focus on operational efficiencies. Our room innovation plan is moving forward with significant momentum. Our entertainment offerings are expanding with the opening of Caesars Entertainment Studios and we made two senior leadership appointments to repel the further growth of our company beyond its existing footprint. All of this progress positions Caesars Entertainment well to take advantage of additional opportunities following the conclusion of CEOC's restructuring. At CEC, which excludes CEOC, second quarter net revenues increased 1% year-over-year to $1 billion and adjusted EBITDA was relatively flat year-over-year at $289 million. Adjusted EBITDA margin narrowed by 39 basis points to 28.8%. CEC recorded a net loss before the effect of non-controlling interest of $1.4 billion, a $617 million improvement relative to the prior year's comparable period, driven by lower accruals related to the restructuring of CEOC. Eric will get into the details of the operating performance at CEC later in the call. On an enterprise-wide basis, which adds CEOC to CEC, second quarter net revenues were down 1.7% to $2.1 billion, strong slot volume performance was offset…

Thank you, Mark. I’ll start with a review of CEC's results followed by a review of the company's reportable segments and supplemental information, which will include CEOC's performance as well. Slide 21 summarizes CEC's results, which did not include CEOC as it is not consolidated, nor CIE’s social mobile and games business as it was sold in September 2016. As Mark mentioned earlier, CEC realized net revenues of approximately $1 billion for the second quarter of 2017, a 1% improvement against the prior year's corresponding period. Higher gaming volumes across most properties and incremental revenues from our operational initiatives were partially offset by performance in Baltimore, which reflects the presence of a new competitor this year. Net loss attributable to CEC was $1.4 billion in the quarter, compared to a net loss of $2.1 billion in the second quarter of 2016, which resulted in a net loss of $9.68 per share, compared with the net loss of $14.25 per share in the year ago period. Adjusted EBITDA was relatively flat year-over-year at $289 million with adjusted EBITDA margin down 39 basis points to 28.8%, primarily driven by the one-time settlements related to insurance claims. Hold was estimated to have a favorable impact on operating income of between $5 million and $10 million for the quarter relative to our expected hold and no impact when compared to the prior-year period. Turning to Slide 22, Caesars Entertainment Resort Properties delivered solid second quarter performance. Net revenues rose 1.4% year-over-year to $570 million, due to higher revenues associated with operational initiatives, higher gaming volumes and increased total cash revenues. Gross gaming revenues were flat year-over-year, despite unfavorable hold. Hotel performance improved with results from Harrah's Las Vegas and Paris, which helped drive a 2.8% year-over-year increase in hotel revenues and higher cash ADR.…

Thanks Eric and please turn to Slide 28. To recap, we continue to make headway on our cornerstone initiatives with new total reward partnerships, room product investments, including the Phase 1 renovation of the Flamingo, continuous business improvement projects, and further recognition for our customer service focus. We are optimistic that all approvals required for CEOC to emerge from bankruptcy will be received this quarter, and then we will begin operating under the new company structure in early October. As CEOC’s restructuring comes to a conclusion, we will focus on revenue growth and efficiency initiatives to further improve our margins and cash flow. Once again, we want to reiterate that we feel good about our core business and we expect to exceed our full-year EBITDA projection. I’d like to thank everyone for joining us today for our second quarter 2017 financial and operational results quarter. We’ll now open the line for Q&A and we ask that you please keep your questions focused on the business performance. Operator.

[Operator Instructions] Your first question comes from Chad Beynon with Macquarie. Your line is open.

Hi great, thanks for taking my questions. First, wanted to start on the guidance, Eric, Mark you both kind of touched on some of the positives in terms of why you are raising the guidance and Mark you just summarized saying that the core business is maybe a little bit stronger than expected, could you just kind of help us think about where you’re seeing that strength, is it just revenue growth and the flow through is so strong that if you continue to see the revenue growth, you know that will go right to the bottom line or is there really just a combination of a lot of things that you put into place this year that are taking hold? Any additional color there would be helpful? Thanks.

I will take a stab at it. We’re seeing stronger revenue growth year-over-year in our core gaming business, we were seeing stronger occupancy rates in our hotels. All regions are pretty much showing stronger growth obviously with the exception of Baltimore, and we had some one-offs and Caesars Palace both on a whole basis and also on the baccarat business which is very sporadic and seasonal. So the VVIP players that didn't show up this year in the second quarter, I expect to show up in the back half of the year. So the median business is strong for us in the back half of the year so that’s another - that will be another boost of profitability. So we expect the RevPAR and ADR to improve at least at a lot of higher level than what they did in the second quarter. Eric, please add anything else.

Yes, the only other thing Chad is, we do have additional visibility into a lot of the initiatives that we’ve been putting in place, and as those gain traction we get more and more confident and the ability to have those deliver. As we’ve discussed before, we put a number of initiatives in place and then we discount those values based on probability of success, and as those again demonstrate their ability to gain traction then we get more confidence and build them into our forecast and that’s partially what you're seeing here as well.

Okay great. Thank you. On the inorganic growth side, there’s been a lot of headlines out there with respect to Australia and Japan lately, and I know you’ve talked about Toronto, could you just update us on those key markets the opportunities and if anything else has really changed in terms of your excitement towards those markets since the last time you’ve presented in a public forum? Thank you.

Yes not much has changed. I think that we’re continuing to be in the hunt so to speak in Japan. We feel good about our prospects there, and we continue to stay involved as required if you will through that process, and here in the Toronto and again that’s a process where we are not sure when there will be a formal announcement, we continue to think our prospects are good. In terms of other activity that’s going on around the world and there’s a lot of things that are starting. On Brazil, we’re still waiting to see that we’re active there. We are waiting to see when legislation will be put in place, so that we have an opportunity to pursue their. Eric, please add anything.

Nothing more.

Okay.

Thank you both very much. Appreciate it. Best of luck.

Thank you.

Your next question comes from John DeCree with Union Gaming. Your line is open.

Hi guys thanks again for the questions. Just wanted to follow-up on Chad's comment and may be digging a little deeper on the gaming volume growth that you had discussed seeing that pretty much broad-based geographically, I was wondering if you could comment on Las Vegas may be beyond and what you see on the VIP side, and then maybe regionally a little bit about what you're seeing kind of in the mid or lower tiers database?

Yes, sure. We - if you back out Caesars Palace and you back out Baltimore then we saw about 2% gaming growth across the enterprise. As Mark mentioned some regions where stronger than others, so we saw some traction in the Louisiana Mississippi region this quarter, which if you recall has been a challenge for us for probably the past four to five quarters. Atlantic City was also reasonably strong. The other markets in the Midwest were up a few percent to down a few percent, and then the balance of Las Vegas, again backing out Caesars Palace was also up year-over-year. So broadly speaking, we feel reasonably encouraged by the performance of the business backing out those two, kind of externalities. From a segment perspective, our spend per trip across the enterprise was up 3.5%. VIP trips were up approximately 2%, and then our VVIP trips were up about 7%. So again, pretty good performance on the side of the gaming broadly speaking and it was really just a couple of properties that were isolated in terms of the fairly large contractions.

That's helpful thanks Eric. And taking a look at 3Q, two big fights obviously in Las Vegas, was wondering if some of the bookings that you’re seeing or some of the trips being pulled forward to maybe 3Q on the VIP side or even further down the segments of customers, is this typically what you see when there is big events and anything unusual or kind of upside surprise to help 3Q is looking?

Yes there is no question that having a marquee boxing or MMA or other event certainly helps our performance from an ADR perspective. When the city regardless of where the event is, draws a significant amount of people, it creates compression and we’re all able to raise our rates. So, I think if you were to go look at the published rates during the Mayweather-MacGregor week fight, you would see a sizable increase relative to what they were before the fight announced. So that’s very positive for us. From a higher gaming standpoint, we’ll have do see in terms of what types of customers come in. Broadly speaking it does provide a positive for the quarter, but there are a lot of days and it fills up the weekend, but there are other positive aspects that are going on in the quarter that led us to have the confidence to increase our estimates.

Great, thanks a lot guys.

Thank you.

Your next question comes from the line of Jared Shojaian from Wolfe Research. Jared, the line is open.

Hi everybody. Thanks for taking my question. So just to ask that revenue question a little bit differently, if you were to sort of neutralize for all the headwinds you called out, the one-time comp noise, how much do you think revenue would have been up in the quarter and I realize some of these are hard to quantify, but I’m really just trying to get some clarity on what the go forward number would look like relative to your 3% annual targets?

I mean, we are seeing growth at this point anyways in the third quarter on a year-on-year basis; it’s much stronger than 3%. So, I would just say that our confidence to increase the estimate and understand what’s happening in the back half of the year in third quarter and fourth quarter is high given what we see what our bookings are, our understanding how that impacts gaming revenues as well, what cash business we have versus non-cash. So we have pretty good visibility for at least the next three months, and then actually when we look at meetings, schedules, and as well as kind of what we’re seeing as a trend in the business, we’re feeling very good year-on-year given what we did in the second half of last year. So our increase in the second half of this year will be significantly higher than what the first half was on a year-on-year basis. The best thing I could say is just significantly higher. So higher than let's say an ongoing 3% number for the second half of this year.

Okay that’s really helpful, and so that - at least 3% for the third quarter and Mark did I hear you correctly in your prepared remarks, I think you said fourth quarter was going to accelerate from the third quarter year-over-year growth rate as well as that right?

I don't [indiscernible] didn’t see that, but so at this point I wouldn't predict that, but I mean third quarter again will be a better growth rate then what we experienced certainly in the second quarter and first quarter.

Got it. Okay. And then last one for me, can you just elaborate on some of the softness you called out for the Vegas market in the press release was that just entirely renovations related or did you see core demand softness and if so, has demand since return back to normal levels?

No, I would say that in May and June, we saw that the meetings schedules were unusually light, and that drove some softness in midway demand for example in the hotel business, and obviously that also impacts our gaming revenue. We had, if you exclude Caesars Palace, we had growth of about 1.4% on gaming revenue, if you exclude Caesars Palace for This Strip. So in general it wasn't bad for a moment, we saw a slight improvement, which is always good as it relates to just the core gaming business at large. So we feel pretty good about the demand that was there. If we exclude certain kind of one-time issues, you know when you look at this baccarat issue it has a bigger impact for us on share and it was a big year-over-year decrease, and it was driven by a list of maybe 15 to 20 customers, which, you know they show-up in different intervals, and this is a very highly kind of volatile and cyclical demand pattern for these customers and so they’re all planning visits with us in the second half of the year. They didn't have visits as they did in the second quarter. In fact, they didn't have visits in the second quarter of this year. So that’s what drove that particular weakness.

Got it. Very helpful. Thank you very much.

Thanks.

Your next question comes from the line of David Farber from Credit Suisse. David your line is open.

Hi guys, how are you?

Good, how are you?

Good. I wanted to touch on Las Vegas for a moment. You mentioned that in some of your prepared remarks, but you were seeing some mixed results out of the market in the second quarter, and I guess, I’m curious on a couple of things. First, how do you guys see the competitive environment there, you touched on that briefly? Second, how is ADR trending on the new hotel product from where you thought it would be? And then finally if you could share with us any updated thoughts on the seven acres of undevelopable land in front of Caesars Palace that’d be helpful, and then I have one follow-up. Thanks.

Sure. So, I think in terms of the broad hotel performance in the market, as Mark mentioned, the May and June period was slightly weaker and that was due to the cyclical nature of the group business pulling back and a few other factors as we look towards the second half of the year though based on the bookings, we think that that’s coming back and the back half of the year will be relatively strong from an ADR perspective. From a renovations perspective however, we continue to see the same $20 to $30 improvement per room night on a renovated room, it’s just when the overall market is either up or down, that variant still persists, but the absolute numbers that we get in terms of the total ADR is somewhat reflective of how the market is doing. So, we continue to believe that investing in our room product is the right decision, and we continue to believe that we’ll be able to drive additional ADR relative to the overall market, given the fact that the market does go up and down in terms of having certain swings.

Okay, and then just what’s the latest timing expectation perhaps, you mentioned October for the combined entities, but can you just remind us, what your latest expectations are for potential refinancing opportunities that you talked about in the past either on the growth side or the service side, any remaining gaiting factors we could think about? And that’s it from me, thanks.

Sure. As we said in the document related to the merger and we referenced in the conference call, we’d expect that this point based on all of the indications that we have from the regulators to complete getting all of the approvals by the end of September, and then now it will allow us to ultimately close the transaction in early October, and again that’s based on all the information that we have at this point. From a refinancing perspective, as you referenced, we clearly believe that there’s an opportunity to reduce our interest expense through refinancing of both CERP and CGP and particularly the bonds that are still priced based on when they were put in place pre-restructuring and pre - the performance of the business over the last two years. Because those are in two different companies, the timing of that has to ultimately be post emergence. So given the step down that occurs in October - early October, our goal would be to complete that refinancing as soon as possible and save the interest expense as quickly as we can.

Make sense, very good, thanks.

Thanks. Operator

Thanks.

Your next question comes from the line of Ian Zaffino from Oppenheimer. Ian, you like is open.

Hi guys, this is Mark on for Ian. Thanks for taking my question. I just wanted to follow-up with you guys in terms of your cost savings and your efficiency initiatives, I just wanted to see if there is a any way you could help us to possibly identify and quantify some key areas that you see a lot of potential in, and if there is anything we could have in mind for dollar expectations that would be terrific. Thank you.

I would say that we continue to forecast that for the rest of the year that we will improve our marketing efficiency, we’ve been pretty much beating our business plan on marketing efficiency every quarter, including the second quarter. So marketing as a percent of sales from an efficiency standpoint we believe will continue to improve in the back half of the year. And the same thing will be true of our labor efficiency. So we’ve got obviously a fairly large labor number of around 2.3 billion as our spend on labor as a company, and so we will do see - I think revenue per employee, gross revenue per employee continue to go up, so we will continue to have productivity from a label standpoint. We have a number of initiatives on a revenue generation that with the increased revenue that we’re going to see in the third and fourth quarter, coupled with tight operating controls around in our first - the labors piece and the marketing piece, we showed again demonstrate some nice efficiency improvements for both marketing and labor. And then we've got some new technology coming on board as well. I know that we went live with Oracle on the financial ledger project and that project has so far has gone well, we would like to see the closing - the first closing, but we anticipate no hiccups there and with that project, we have significant savings so Wisconsin has to run that system roughly $12 million to $13 million a year, that now has gone down to $2.5 million a year approximately. So, again that efficiency will start ticking in as well in the third and fourth quarter.

Okay got it, that’s very helpful. And then I guess like is there anything, I guess like in terms of our EBITDA improvement from cost initiatives that we could think about?

Well, I mean, I don't know what we’ve said so far, but we had a significant number of improvements that our plan in 2011 [ph] come in the back half of the year. So we haven’t given a forecast on that so I guess maybe as we give later in the quarter we maybe give some estimates on what those initiatives generate, but at this point it would be premature to do that.

Yes, I would add. We haven't provided any specific guidance in terms of specific dollars of initiatives. However, they are reflected in our projections that we’ve provided. The improvement of $40 million over the initial projections do reflect our current estimate of those initiatives, as well as the core revenue growth in the market.

Okay great, thank you guys very much. That was very helpful.

Thank you.

Thanks.

Your next question comes from the line of Mike Pace from JP Morgan. Mike your line is open.

Hi thanks, good afternoon. Bunch of my questions have already been asked and answered. So, one quick one, can you just remind us, why Baltimore is being deconsolidated? So that’s the first one, and then a bigger picture for Mark, I know emergence is right around the corner, are you able to participate in any M&A activity prior to that, and how quickly do you think you can be up and running on the M&A front once you emerge? That would be helpful.

Again on the M&A front, you obviously, we were anticipating emergence in October and yes we are participating in - I must say M&A activity that’s going on in the industry right now. So, where it makes sense. Where do that we think there is value. So, yes we’re participating [indiscernible]. Our current situation is not preventing us from participating in the types of projects that we see domestically. Eric.

Yes that’s right. Mike as you know the process of acquiring something going through the diligence and closing in the regulatory period, I would certainly extend past our target emergence date, so from that standpoint, if something is available or something that we see is interesting where we started to work on those in anticipation of emergence. To address your first question with respect to Baltimore, as you know we own 41% of the equity in Baltimore and manage the facility. It is traded under the accounting principles as variable interest entity, and as such there are certain rules that allow you to either consolidate it or require you to not-consolidate it, due to a change in the board governance rules that were negotiated at the time that the JV was put in place that those would change three years after reopened. The accounting determination is that those tie-breaker rules no longer fall in one direction and instead fall in the other direction thus requiring us to deconsolidate it. As I mentioned in our prepared remarks, that does not impact any cash flow to the entity, it’s purely a presentation on the income statement and balance sheet, but our cash generated by the entity and the operations of the entity don't change at all.

Great. And if I could just follow-up, Mark or Eric on M&A, I guess just your general thoughts about the M&A marketplace domestically? I know you talked about stuff internationally earlier, but just your thoughts there, what you think about valuations and then for Eric, just on the refinancing question from earlier are there swing variables in order for you to do that other than emergence, do you need gaming commission approvals and can that happen in lockstep with an approving - any emergence plans? Thank you.

Sure. I’ll take them in sequence. From an M&A perspective, when we look at our portfolio there are number of different targets that might make sense to us. We could either look at targets where we would improve our position in a particular market, or we could look at targets where we would get exposure and distribution of the total awards network to a market where we currently don't exist. I think in both those cases, we have a compelling reason beyond the strategic reason of upgrading our property or distributing the total awards card, in the sense that from a financial perspective, we believe you will get an increase in revenues due to the introduction of the total awards card. And then we will also have significant synergies due to the centralized nature of our operating structure, which is becoming even more beneficial as we introduce new systems that are cloud-based. As Mark referenced, for example, the GL that’s a cloud-based GL system that’s put in place, our seats are basically purchased and so the inclusion of an additional property into that GL, but the marginal cost of that is almost to 0. So, as we move to more of these types of systems the ability for us to include another property into our system would improve from an efficiency perspective and thus drive even more synergies. So from that standpoint, we think that there are a number of compelling opportunities domestically that would allow us to grow our total awards database and get great financial returns right after that. With respect to your second question of the refinancing, there are some regulatory approvals that need to happen. And so we’re working with our regulatory team to figure out the best timing on that. As you saw with the repricings, we closed a portion of the CERP repricing into escrow that’s always an option, so that we don't take market risk. We’ll have to evaluate that versus the cost of closing certain things into escrow versus not, and evaluate how quickly we can get to market. There’s no question though from our standpoint. There is an opportunity that significantly reduces our interest expense, and we recognize that we run the risk of taking interest rate risk if there is some dislocation in the market. So, we want to do it as quickly as possible, but there are certain timelines that we have to adhere to.

We have run out of time, thank you for joining.

Thanks everyone.

Thanks everybody.