Century Casinos, Inc. Announces Second Quarter 2019 Results

Net (loss) earnings attributable to Century Casinos, Inc. shareholders and Adjusted EBITDA for the three and six months ended June 30, 2019 compared to the three and six months ended June 30, 2018 were impacted by $1.0 million and $0.9 million, respectively, in non-recurring expenses related to the write-down of assets and receivables related to the Company's ship-based casino onboard Glory Sea. Net (loss) earnings attributable to Century Casinos, Inc. shareholders for the 2019 periods also was impacted by $0.8 million in costs related to the Acquisition (as defined below).

Net (loss) earnings attributable to Century Casinos, Inc. shareholders and Adjusted EBITDA for the three and six months ended June 30, 2019 compared to the three and six months ended June 30, 2018 were impacted by $1.0 million and $0.9 million, respectively, in non-recurring expenses related to the write-down of assets and receivables related to the Company's ship-based casino onboard Glory Sea. Net (loss) earnings attributable to Century Casinos, Inc. shareholders for the 2019 periods also was impacted by $0.8 million in costs related to the Acquisition (as defined below).

The consolidated results for the three and six months ended June 30, 2019 and 2018 are as follows:

For the six months
ended June 30,

On June 17, 2019, the Company entered into a definitive agreement to acquire the operations of Isle Casino Cape Girardeau, Lady Luck Caruthersville and Mountaineer Casino, Racetrack and Resort from Eldorado Resorts, Inc. ("Eldorado Resorts") for approximately $107.0 million (the "Acquisition"), which it expects to finance through a new credit facility. Simultaneous with the closing of the Acquisition, VICI Properties Inc. ("VICI") will acquire the real estate assets of the three properties for approximately $278.0 million and the Company will enter into a triple net lease agreement with VICI for the three casino properties. The lease will have an initial annual rent of approximately $25.0 million and an initial term of 15 years, with four five-year renewal options. The transaction, which is expected to close in early 2020, is subject to approvals of the Missouri Gaming Commission and the West Virginia Lottery as well as other customary closing conditions.

"We are pleased with the results of the second quarter. Excluding non-recurring expenses related to the write-down in connection with the Glory Sea casino, Adjusted EBITDA for the quarter was $7.6 million, or 62% higher than in the second quarter of last year. The newly opened Century Mile Racetrack and Casino is performing to our expectations and we look forward to the continuing ramp-up of that property," Erwin Haitzmann and Peter Hoetzinger, Co-Chief Executive Officers of Century Casinos remarked. "We also look forward to completing our pending acquisition of three US casinos from Eldorado Resorts. This acquisition is transformational and will be a big milestone for Century," Haitzmann and Hoetzinger concluded.

Reportable Segment Results*

The table below shows the Company's operating segments that are included in each of the Company's reportable segments as of June 30, 2019:

The Company's net operating revenue increased by $12.8 million, or 32%, and by $17.8 million, or 22%, for the three and six months ended June 30, 2019, compared to the three and six months ended June 30, 2018. Following is a summary of the changes in net operating revenue by reportable segment for the three and six months ended June 30, 2019, compared to the three and six months ended June 30, 2018:

The Company's earnings from operations increased by $1.6 million, or 161%, and by $1.8 million, or 42%, for the three and six months ended June 30, 2019, compared to the three and six months ended June 30, 2018.  Following is a summary of the changes in earnings (loss) from operations by reportable segment for the three and six months ended June 30, 2019, compared to the three and six months ended June 30, 2018:

Net earnings (loss) attributable to Century Casinos, Inc. shareholders decreased by ($0.9) million, or (278%), and by ($0.7) million, or (60%), for the three and six months ended June 30, 2019, compared to the three and six months ended June 30, 2018. Following is a summary of the changes in net earnings (loss) attributable to Century Casinos, Inc. shareholders by reportable segment for the three and six months ended June 30, 2019, compared to the three and six months ended June 30, 2018:

Items deducted from or added to earnings from operations to arrive at net earnings (loss) attributable to Century Casinos, Inc. shareholders include interest income, interest expense, gains (losses) on foreign currency transactions and other, income tax expense and non-controlling interests.

The Company's Adjusted EBITDA** increased by $2.0 million, or 44%, and by $2.2 million, or 20%, for the three and six months ended June 30, 2019 compared to the three and six months ended June 30, 2018. Following is a summary of the changes in Adjusted EBITDA** by reportable segment for the three and six months ended June 30, 2019 compared to the three and six months ended June 30, 2018:

Balance Sheet and Liquidity

As of June 30, 2019, the Company had $47.0 million in cash and cash equivalents and $72.5 million in outstanding debt on its balance sheet compared to $45.6 million in cash and cash equivalents and $59.5 million in outstanding debt at December 31, 2018. The outstanding debt as of June 30, 2019 included $52.6 million related to the Company's credit agreement with the Bank of Montreal, $2.8 million of bank debt related to Casinos Poland, $2.2 million of bank debt related to Century Casino Bath, and $14.9 million related to a long-term land lease for Century Downs Racetrack and Casino ("CDR"), net of $0.4 million in deferred financing costs. Capital leases are no longer included in outstanding debt, due to the Company's adoption of Accounting Standards Update 2016-02, Leases (Topic 842), as of January 1, 2019.

Conference Call Information

Today the Company will post a copy of its quarterly report on Form 10-Q filed with the SEC for the quarter ended June 30, 2019 on its website at https://www.cnty.com/investor/financials/sec-filings/. The Company will also post a presentation on the second quarter results on its website at https://www.cnty.com/investor/presentations/.

The Company will host its second quarter 2019 earnings conference call today, Thursday, August 8^th, at 8:00 am MDT; 4:00 pm CEST, respectively. U.S. domestic participants should dial 1-844-244-9160. For all international participants, please use 330-931-4670 to dial-in. Participants may listen to the call live at https://centurycasinos.adobeconnect.com/earningsrelease or obtain a recording of the call on the Company's website until August 31, 2019 at https://www.cnty.com/investor/financials/sec-filings/.

Gains and losses on foreign currency transactions are added back to net earnings in the Company's Adjusted EBITDA** calculations. As such, there is no foreign currency impact to Adjusted EBITDA** when calculating Constant Currency* results.

*  The impact of foreign exchange rates is highly variable and difficult to predict.  The Company uses a Constant Currency basis to show the impact from foreign exchange rates on current period revenue compared to prior period revenue using the prior period's foreign exchange rates. In order to properly understand the underlying business trends and performance of the Company's ongoing operations, management believes that investors may find it useful to consider the impact of excluding changes in foreign exchange rates from the Company's net operating revenue, earnings from operations and net earnings (loss) attributable to Century Casinos, Inc. shareholders. Constant currency results are calculated by dividing the current quarter or year to date local currency segment results, excluding the local currency impact of foreign currency gains and losses, by the prior year's average exchange rate for the quarter or year to date and comparing them to actual U.S. dollar results for the prior quarter or year to date. The average exchange rates for the current quarter and the prior year second quarter are reported in Item 1 of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019. Constant currency information is not a measure of financial performance under generally accepted accounting principles in the United States of America (GAAP) and should not be considered a substitute for net operating revenue, earnings from operations or net earnings (loss) attributable to Century Casinos, Inc. shareholders as determined in accordance with GAAP.

**  The Company defines Adjusted EBITDA as net earnings (loss) attributable to Century Casinos, Inc. shareholders before interest expense (income), net, income taxes (benefit), depreciation, amortization, non-controlling interest net earnings (loss) and transactions, pre-opening expenses, acquisition costs, non-cash stock-based compensation charges, asset impairment costs, (gain) loss on disposition of fixed assets, discontinued operations, (gain) loss on foreign currency transactions and other, gain on business combination and certain other one-time items, such as acquisition and disposition costs and gain or loss. Intercompany transactions consisting primarily of management and royalty fees and interest, along with their related tax effects, are excluded from the presentation of net earnings (loss) attributable to Century Casinos, Inc. shareholders and Adjusted EBITDA reported for each segment. Not all of the aforementioned items occur in each reporting period, but have been included in the definition based on historical activity. These adjustments have no effect on the consolidated results as reported under GAAP. Adjusted EBITDA is not considered a measure of performance recognized under GAAP. Management believes that Adjusted EBITDA is a valuable measure of the relative performance of the Company and its properties. The gaming industry commonly uses Adjusted EBITDA as a method of arriving at the economic value of a casino operation. Management uses Adjusted EBITDA to compare the relative operating performance of separate operating units by eliminating the above-mentioned items associated with the varying levels of capital expenditures for infrastructure required to generate revenue and the often high cost of acquiring existing operations. Adjusted EBITDA is used by the Company's lending institution to gauge operating performance. The Company's computation of Adjusted EBITDA may be different from, and therefore may not be comparable to, similar measures used by other companies within the gaming industry. Please see the reconciliation of Adjusted EBITDA to net earnings (loss) attributable to Century Casinos, Inc. shareholders above.

*** The Company defines Adjusted EBITDA margin as Adjusted EBITDA divided by net operating revenue. Adjusted EBITDA margin is a non-GAAP measure. Management uses this margin as one of several measures to evaluate the efficiency of the Company's casino operations.

Century Casinos, Inc. is an international casino entertainment company that operates worldwide. The Company owns and operates Century Casino & Hotels in Cripple Creek and Central City, Colorado, and in Edmonton, Alberta, Canada; and the Century Casino in Calgary and St. Albert, Alberta, Canada and in Bath, England; the Century Mile Racetrack and Casino ("CMR") in Edmonton, Alberta, Canada and Century Bets! Inc. ("CBS"). CBS and CMR operate the pari-mutuel off-track horse betting networks in southern and northern Alberta, respectively. Through its Austrian subsidiary, Century Resorts Management GmbH ("CRM"), the Company holds a 66.6% ownership interest in Casinos Poland Ltd., the owner of eight casino licenses throughout Poland, seven of which are currently operating; and a 75% ownership interest in CDR in Calgary, Alberta, Canada. The Company operates five ship-based casinos under agreements with TUI Cruises. The Company, through CRM, also owns a 7.5% interest in, and provides consulting services to, Mendoza Central Entretenimientos S.A., a company that provides gaming-related services to Casino de Mendoza in Mendoza, Argentina. The Company's pending acquisition of three casinos from Eldorado Resorts is expected to close in early 2020. The Company continues to pursue other projects in various stages of development.

Century Casinos' common stock trades on The Nasdaq Capital Market® under the symbol CNTY.

For more information about Century Casinos, visit our website at www.cnty.com.

This release may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of the management of Century Casinos based on information currently available to management. Such forward-looking statements include, but are not limited to, statements regarding future results of operations, operating efficiencies, synergies and operational performance, the prospects for and timing and costs of new projects, projects in development and other opportunities, including the Acquisition, plans to refinance our credit facility through a new credit facility, the Bermuda project, debt repayment, investments in joint ventures, outcomes of legal proceedings, changes in our tax provisions or exposure to additional income tax liabilities, and plans for our casinos and our Company. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, among others, the risks described in the section entitled "Risk Factors" under Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2018 and in subsequent periodic and current SEC filings we may make. Century Casinos disclaims any obligation to revise or update any forward-looking statement that may be made from time to time by it or on its behalf.

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