Jackpot Quarter for Harrah's

Harrah's Entertainment ( HET) hit the jackpot in the second quarter, announcing record sales and earnings while matching Wall Street estimates.

Harrah's, which launched a $5.2 billion cash-and-stock bid for Caesars Entertainment ( CZR) last week, announced record second-quarter net income of $90.2 million, up 17.6% from the $76.7 million it had in the year-ago quarter. The company said income from operations came in at a record $202.4 million, or 79 cents a share, up 10.4% from last year's $183.3 million, or 69 cents a share.

Using property EBITDA on an adjusted basis, which is how Wall Street views the company, Harrah's said it earned a record $301.1 million, or 79 cents a share, in line with analyst estimates and up 6.2% from the $283.6 million, or 74 cents a share, it had a year ago.

"The second quarter proved the effectiveness of our unique loyalty strategy, which is focused on the delivery of superior service and recognition to more customers in more markets than any other casino operator," said Gary Loveman, Harrah's president and CEO. "We plan to apply these same capabilities to the properties we will add to our portfolio when we close on the Caesars transaction."

Revenue came in at a record $1.13 billion, narrowly beating the $1.11 expected by analysts and 4.5% better than last year's quarter. Revenue from stores that were open at this time a year ago rose by 4.6%, driven by an 8.5% jump in revenue from members of Harrah's Total Rewards customer-loyalty program.

The company's business was especially strong in Las Vegas, where revenue from southern Nevada came in at a record $272.7 million, up 23.2% year over year. Overall, revenue from the West, which includes properties in Lake Tahoe and California, came in at a record $384.5 million, about a third of Harrah's total revenue, a gain of 17.3% from last year.

In the East, Harrah's results suffered due to increased competition from the Borgata, a joint-venture between MGM Mirage ( MGG) and Boyd Gaming ( BYD). The company said that Atlantic City revenue came in at $193.9 million, down 5.9% year over year.

The company's other gaming properties in the Midwest and South fared well, showing marginal to moderate year-over-year growth. Revenue from Harrah's north central region, which includes properties in Illinois, Iowa and Missouri, came in at $344.8 million, up slightly from last year, while revenue from its south central region, which includes properties in Louisiana and Mississippi, came in at $187 million, up 3.8% year over year.

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