Hello and welcome to today's webcast. My name is Sarah and I will be your event specialist. All lines have been placed on mute to prevent any background noise. Please note that today's webcast is being recorded. [Operator Instructions] It is now my pleasure to turn today's program over to Steven Rubis, Vice President of Investor Relations for Caesars Entertainment Corporation. Mr. Rubis, the floor is yours.

Thank you Sarah. Good afternoon and welcome to the Caesars Entertainment fourth quarter 2018 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 the press release, earnings presentation slides, and a replay of this conference call are available in the Investor Relations section of our website at caesars.com. Also, please note that prior to this call, we furnished a copy of the earnings release to the SEC in a form 8-K and we'll also file our Form 10-K. Before we get underway, I would like to remind you to reference slides 2 through 4, which include forward-looking statements, Safe Harbor disclaimers, and definitions of certain non-GAAP measures. Our comments today will include forward-looking statements as defined by the Private Securities Litigation Reform Act. Forward-looking statements reflect our expectations as of today's date and we have no obligation to update or revise them. Actual results may differ materially from those projected in any forward-looking statements due to unanticipated hold fluctuations, weather or other unforeseen circumstances that we do not control. There are certain risks and uncertainties, including those disclosed in our filings with the SEC that may impact our results. In addition, Caesars Entertainment Operating Company, or CEOC, emerged from bankruptcy on October 6, 2017, and Caesars Entertainment Corporation completed its merger with Caesars Acquisition Company, or CAC, on that date. We also deconsolidated the results of the Horseshoe Baltimore in the third quarter of 2017 and closed on the acquisition of Centaur Holdings in the third quarter of 2018. Therefore, U.S. GAAP results do not include CEOC for the first six days of Q4 2017, do not include Horseshoe Baltimore in Q4 2017, and do not include Centaur Holdings prior to the acquisition in Q3 2018 unless otherwise stated. Enterprise-wide results include CEOC in the prior year and include Centaur Holdings in the current year post acquisition and exclude the Horseshoe Baltimore in both years unless otherwise stated. And enterprise-wide hold-adjusted results reflect hold versus our expectation. You can find reconciliations of GAAP and non-GAAP figures starting on slide 26. I will now turn the call over to Mark. Please turn to Slide 6.

Thank you, Steve. And I'll provide a high level overview of our performance in the fourth quarter and full year of 2018 and then give a few updates on our business before turning the call over to Eric to discuss our results in greater detail. First, I'd like to address the recent 13D filing from entities affiliated with Carl Icahn disclosing ownership of 9.78% of Caesars outstanding shares. We regularly engage with our shareholders and consider their ideas and input regarding shareholder value. The board and management have engaged in discussions with Mr. Icahn and his representatives, and we expect to continue a constructive dialogue. We intend to carefully evaluate Mr. Icahn’s suggestions, including his request for board representation and will provide updates in due course. Now turning to the results. Caesars Entertainment delivered another year of solid operating performance driven by our ongoing focus on continuous improvement programs and the realization of benefits from our growth initiatives. This resulted in full-year adjusted EBITDAR growth of 4.6% and the highest quarterly enterprise adjusted EBITDAR margin in over a decade at 27.5%. Key highlights in 2018 include closing the acquisition of Centaur Holdings, announcing high profile sports entertainment partnerships, and expanding our sports betting business to new jurisdictions. We also began construction of the new Caesars Forum Convention Center on the Las Vegas Strip and introduced several new Caesars branded resorts as part of our asset light strategy. For the full year, enterprise-wide net revenues were 8.4 billion, up 2.7% year over year driven by the acquisition of Centaur. Excluding Centaur, net revenues were flat as growth in Las Vegas was offset by declines in Atlantic City due to competitive pressures and unfavorable year-over-year hold at our international properties. The competitive environment in Atlantic City remains challenging due to increased promotional…

Thank you, Mark. I'll discuss our enterprise wide fourth quarter 2018 results in more detail. As a reminder, our commentary include CEOC results and Centaur, but excludes Horseshoe Baltimore from the prior year period unless otherwise stated. For the fourth quarter, our Las Vegas net revenue totaled 949 million, up 7.8% year over year due to strong results in our hotel, favorable year over year hold, and lower prior year performance due to the tragedy. Las Vegas’ fourth quarter performance benefited from strength in nearly every vertical including higher gaming volumes, growth in food and beverage, and growth in the hotel segment. Gaming volumes were driven by 3% increase in Baccarat slots and table games. Hotel cash revenue was up 8% year over year. Our RevPAR was $139, up 11% year over year. Cash ADR was $164, up 6% year over year and hotel occupancy was 93.8%, a 4-point improvement year over year. Food and beverage revenue also grew in the fourth quarter driven by the opening of several new outlets including Hell's Kitchen and Pronto by Giada. Our Las Vegas adjusted EBITDAR was 351 million, up 18.2% year over year or up 8.9% when adjusting for hold. Our Las Vegas properties overall performance in the fourth quarter reinforces a story of stability, despite the temporary third quarter results. In 2019, we continue to expect modest growth in Las Vegas, which I'll discuss in greater detail later on the call. We were quite pleased with our Las Vegas performance in both the fourth quarter and the full year 2018. Our Las Vegas results outperformed our peers in net revenue growth, adjusted EBITDAR growth and adjusted EBITDAR margins for both the fourth quarter and in the full year. Other US net revenues totaled $1.0 billion, up 9.3%, including Centaur or down…

[Operator Instructions] Our first question is going to come from Chad Beynon with Macquarie.

Mark, just wanted to start with your agreement to remain in your role through the end of April. In the press release, you announced that the process of replacement is still ongoing. Wondering if you or Eric could provide a little bit more commentary in terms of kind of where we are in the process, if there's anything else that you can provide outside of what was in the release? Thank you.

Yeah, I think the best way to characterize it was we’re far along in the process, I mean we've gotten through obviously interviewing candidates and have a very good list of potential candidates for this position. So I think committee would say that feel comfortable with -- that we're far enough along the process that we will be in good shape for the transition to ensure a seamless transition here with me.

Okay, great. And then on the Centaur acquisition, it looks like that was a bright spot here. The EBITDAR that you generated in the fourth quarter was better than I think most were expecting. Eric, you gave some commentary in terms of what you're expecting for 2019. But given that, this multiple appears to be lower than maybe even what you thought at the beginning, does this improve, I guess, your chances on doing more M&A or how should we think about the balance of share repurchase that pay down and M&A going forward. Thank you.

Yeah. We are pleased with how Centaur is performing. As you can see, the EBITDAR was up significantly and a little bit faster in terms of realizing those synergies than we had anticipated. The revenues were generally flat because the marketing programs hadn't yet kicked in and so that should happen in 2019 as we move forward. So we're pleased with how it's worked out. It's very consistent with the model, consistent with what we've said before. We're leaning towards prioritizing debt reduction at this point. However, we are always open for accretive transactions and should those be available and should they make sense from a domestic bolt-on acquisition perspective, we'd certainly look at them and pursue them.

Thank you. And our next question is going to come from Dan Politzer from JPMorgan.

So the first one on Las Vegas, can you give an update on what you're seeing as it relates to leisure and transient demand and I guess have you seen much stabilization over the past six or eight months or has it still been kind of ebbing and flowing with the calendar, the citywide calendar?

I think I mean, Eric and I can both maybe answer this. It's certainly stabilized since the third quarter. So I think it's clear in our demand that we're getting for the business has stabilized and declined and even the rate decline is completely dissipated. But, I wouldn't characterize it as a strong demand pattern, but I would say that it's stable. Eric?

Yeah, I agree. We continue to be able to, as we demonstrated, backfill with casino hotel rooms in periods of weak demand from an occupancy perspective. But I would say echoing Marks commentary that the ability to really drive price is somewhat limited, at least in the fourth quarter and into the first quarter.

And then -- and a question on your rooms in Las Vegas. I guess before you activated the database, your casino block was roughly I think, 40% or so. So, I guess, how did 4Q makes compare with that historic level? And going forward, how should we think about the mix? And is there any expected seasonality with how you activate the database running in certain quarters?

Yeah. There is seasonality and fourth quarter is on the higher end of the normal edge of the casino mix. We ran about 52.5% casino mix in the fourth quarter, which was up from the prior year. To put that in perspective, we had about 62,000 more casino rooms in the fourth quarter than in the prior year period, and that certainly contributed to the 4 points of incremental occupancy that we are able to achieve. Ultimately, we think it was a good strategy as it drove X incremental EBITDAR. And so, as I mentioned, as we head into this year, we'll still be able to use that to backfill on periods of weak demand where we don't think we'll fill the hotel. During the first quarter, however, the group demand across the city and in-house is stronger than it was in the fourth quarter. So, we don't necessarily believe we'll have to comp as many incremental rooms to still achieve occupancy growth.

Got it. And then I guess, one last quick one. Centaur has been obviously tracking better than expected. How should we think about the timing or, I guess, your appetite for still monetizing the real estate there and how should we think about tables playing into that decision?

Yeah. I think it's still probably too early, as we talked about before in an environment where we have some -- the table games potentially coming online and an acceleration of our performance, we would either be selling the property at a very low coverage ratio and growing into it or selling at a price that's not necessarily optimal. So, I think at this point, we are still waiting until we see some more stability in the property because we don't want to sell it at a point where it's growing so quickly.

Thank you. Our next question is going to come from Cameron McKnight from Credit Suisse.

Eric, would you mind giving some more detail on what you're seeing on the cost side and how does that differ between Las Vegas and the regional markets?

Sure. I guess, I'll look at it on our two primary categories of expense, which is labor and marketing. On the labor side, we're definitely seeing incremental labor cost pressures at a higher level than we have in the past years. Company-wide, we're estimating about an $80 million increase and that's associated with simply union wage increases, merit wage increases for non-union employees, 401(k) returning to a normalized match and then health benefits. And in aggregate, it's about 80 million, which as I mentioned is higher than in prior years. So, we have efforts to try to offset that through productivity, but that's definitely a headwind that we'll have to work through this year. From a marketing standpoint, as I mentioned, we do anticipate to have additional comped hotel rooms in the Las Vegas area over the course of the full year. And so we don't anticipate as much of a marketing reduction there. In the regional markets, we continue to believe that there's opportunity to reduce marketing spend. We have a number of programs that we will be launching and affecting second and third quarter and onward. In particular, our sales force application became live earlier in the year. And so those marketing efforts will start to hit the customers in the April and May timeframe, which will help drive down the ultimate marketing costs in the second and into the third quarter.

Okay. Perfect. Thanks. And then on the room side in Las Vegas, there were lot of rooms that were off the market in the fourth quarter. How should we think about those rooms coming back on through the course of 2019 and how should we think about available room nights, just generally speaking in '19 versus '18?

So yeah, for the first quarter, we're going to expect to have about 25,000 incremental room nights available companywide. We'll have fewer available on Atlantic City because we're renovating our hotel tower there, and we'll have about 35,000 more available in Las Vegas in the first quarter. The impact of that is about $4 million to $5 million benefit here in Las Vegas from the incremental room nights available. And then as we go through the years, a year, we will also have fewer -- or sorry, we'll have more room nights available because we're only planning to do two hotel towers this year, hotel tower Paris and hotel tower Harrah's, now that we have caught up on our accelerated room renovation program.

Thank you. And our next question comes from Thomas Allen from Morgan Stanley.

Hey. Thank you. So, just going back to the 2019 guidance you discussed, I think, I checked the transcript and you said that you expect fiscal year results to be relatively stable. Can you elaborate on that? So, you just did $2.3 billion of EBITDA. Should we imply you telling us, you're basically going to do similar in 2019?

I think -- I apologize if the script wasn't clear. We were talking more about the volatility between quarters that if you look at it on a full year basis, it's generally stable. And a great example of that is, if you do a two-year stack of our Las Vegas EBITDAR, it's very consistent within 1% or 2% change every single quarter. So, you can see that a lot of it's affected by holidays and different events like that. What we meant was that our -- we anticipate in Las Vegas that our revenues are going to be roughly consistent with the same growth rates that we saw from this year.

Okay. Helpful. And then for regionals, I mean, you talked about the promotional side of things, can you just talk about how you think about the health of the regional consumer? Thank you.

Yeah. I think the regional consumer from our perspective seems fine right now. In the fourth quarter, we didn't pursue any activities with respect to buybacks or deleveraging because we wanted to be cautious, so that we headed into the New Year with all the signals that you can get from the macroeconomic perspective, but our customers seem generally healthy across the board. We do have the incremental competition that we talked about, which I think is probably the most important factor weighing on our business next year. But otherwise, we would expect these regional markets to be performing at about the same levels in terms of year-over-year improvement as we did this year.

Thank you. Our next question is going to come from Harry Curtis from Instinet.

Hi. Just a couple of quick ones. So, following up on again, the guidance in Vegas. If you have an $80 million labor pressure headwind, I mean, as a practical matter, doesn't that suggest that your EBITDAR in Vegas to -- I mean you're going to need, what, 3% RevPAR growth just to stay flat in Vegas?

The headwind is definitely more significant than we've seen in the past, let's say, four years and it's really a result of, you’re right, Vegas, Harry, that's a big driver. But we had two other markets too that we had to renegotiate labor contracts, so a total of three markets for us, regional markets. And for us, anyways, we think that the first half of the year, because of that headwind, it will be more difficult to get the kind of flow through we normally get out of our business model. But in the second half of the year, we have initiatives in place on labor and in marketing that will help us get better productivity numbers out in the second half of 2019 and be helpful at offsetting that.

And just to clarify, Harry, the 80 million we mentioned was companywide, not just Las Vegas.

All right. And my second question. Going back to the CEO search, can you just talk about some of the attributes that the Board is looking for that are desirable in 2019 and as we look ahead for the next five years, maybe what are the characteristics that are important do you think?

I think the Board has stated that they would like to see someone who's a seasoned executive, someone who has certainly managed through turbulent times, adversity and been able to be tested, if you will, that's an important trait, someone that has experience in hospitality/gaming and related verticals that we participate in, someone that would have a great reputation with investors, someone who would have staying power and be here for the long haul. So, I think those are all traits that we're looking for. And again, feel like the Caesars brand and the opportunity here is big enough, it's attracting a good talent pool for us.

Our next question comes from Carlo Santarelli from Deutsche Bank.

I just want to clarify something. One of the comments you made was that Las Vegas for the year, you expected to deliver top line growth that was similar to your 2018 result. I think it was kind of what -- how you phrased it. So are you -- you're effectively saying, you think 2019, you can grow revenue in and around the neighborhood of 2.5%, which was the revenue growth rate in 2018. Is that correct?

Yeah, I would just say that we should be able to do that or hopefully, we can do a little better.

Okay. So, my question is how much of that do you believe is just overall kind of strip growth and how much of that do you believe relates to your own initiatives and maybe some of the segments of the business that you're levered to? And maybe more specifically, how much of that is based on kind of what you mentioned with respect to your group business, which I think you said was up mid-single digits for the year and obviously, the first quarter being up a little bit?

Yeah, I think certainly having the group base up for both our in-house business as well as the city-wide business on a year-over-year basis helps. As we saw, having the city-wide business certainly helps the environment for all the casinos and allows you to price a little bit better. We also feel that our initiatives that we did in the fourth quarter with respect to the casino database will be effective throughout the year in terms of driving additional improvements. And then, as you know, we always have incremental initiatives both on the cost and revenue side. A lot of them now focused on gaming. We think, again, that there are some innovative products that's coming out, that we're trying on the floor. The sports book that we have at the LINQ is doing quite well. The food and beverage we mentioned before is doing quite well, particularly when the occupancy in the hotel goes up in correlation to the cash spending in the hotels -- sorry, in the food and beverage. And so all of that taken together, gives us the confidence that we should be able to have a top line performance in that range that we talked about.

Okay. Great. And then if I -- so, I guess, if I just ask it a little bit differently. Last year, as you kind of entered 2018, I think you guys talked about, hey, tell me what the rate of growth in the market is going to be and we are going to do X basis points better. You still believe in 2019, there's going to be an outpacing of whatever the market growth looks like based on some of the internal initiatives, is that correct?

I think it's difficult to predict that. I don't -- I'm not saying it won't happen. But as we continue to test and learn with our marketing initiatives and look at making sure that every dollar revenue we get is a profitable dollar revenue, a lot of that comes into play in the mix and in our growth rate. So kind of a, I don't mean to be a long-winded question, but it's a complicated equation for us to predict outperformance without more visibility into the year.

Thank you. Our next question comes from David Katz from Jefferies.

I wanted to go back to the capital allocation discussion and just make sure that I'm taking the information clearly because, Eric, in your commentary, you talked about leaning toward deleveraging but leaving the door open for other options as well. And in the past, you've talked about a longer-term leverage target. What would you have us think about for '19 and '20 in terms of a leverage range, either lease adjusted or non-lease adjusted?

We haven't provided the specific year-end targets, it’s just the end of the 2021 at 4.5 times. We do plan to put that together and discuss it with the new CEO and the Board, and we'll make a decision at that point, probably in Investor Day or some other forum to provide more detail on that throughout the years.

Got it. And in terms of just the appetite for acquisitions in the near term or any pipeline of things that you're looking at? Is it a more or less active pipeline than it was, say, 9 months ago or 12 months ago?

I would say, of the properties that we're specifically interested in, I would say it's a little less active than it was before. A lot of properties have traded hands and then some people have elected not to sell that might have been interested before.

Thank you. Our next question is going to come from Barry Jonas from SunTrust.

Just starting with Vegas. I'm curious if you have any updated thoughts around resort, parking or other fees and an impact on visitation. Maybe what direction do you think those fees will move going forward? Thanks.

I think that at this point, we don't have any current plans on changing the structure that we have in place. And we certainly are sensitive to the fact that we could hurt our own profitability and revenue growth if we get exuberant or if we do things that have no value to them. We tried to -- probably resort fees are actually tied to a lot of services we provide guests at no charge. So the idea is anything that would be incremental, it would be some kind of value that we created as a result of it for the customer. But I think, Eric, your feelings on it, I think were similar. But any comments from you?

Nothing else.

Okay.

Great. And then just touching base on New Jersey and I know it's early days, but maybe can you comment on your sports betting market share in Jersey? Maybe how do you see that ramping going forward? Thanks.

Our sports betting market share, I want to make sure I heard that right. You asked if our share would go up.

Yeah, I think he was talking about market share currently. Yeah. Right now, we don't have any of our books completed. They are under construction. We're optimistic that these are going to be great experiences and we'll take a lot of what we have at the LINQ property here and port those over to Atlantic City. The one thing I would say is that market share right now for us is not necessarily the way that we're going. It could cause significant reinvestment levels to take significant market share. We are profitable with our operations, and we think that we can increase and decrease marketing to try to optimize that. But we're pleased with how we are leading off, being profitable and making money throughout our sports betting intervals.

And I would add that -- in addition to Eric's comments that our plan long-term is to have our fair share of the market through partnerships in some cases. So, at this point in time, we have not completed all of our partnerships. People that, let's say, would have more aggressive marketing directly tied to us, say sports betting that we may or -- and then they may not have access to markets like we have. So, we're looking for partnerships, and we'll continue to do that in order for us to gain our fair share of the market with these partnerships and alliances that were formed.

Thank you. And presenters, you have the floor.

Thank you. With that, we'll wrap up the call. Thank you and we look forward to giving you an update at the first quarter. Thank you.

Thank you to all participants for joining us today. We hope you found this webcast presentation informative. This concludes our webcast. You may now disconnect. Thank you and have a good day.