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Century Casinos, Inc. Announces Third Quarter 2016 Results
Operating results were primarily impacted by decreased net operating revenue at the Century Casino & Hotel in Edmonton ("CRA") due to an extensive refurbishment and remodel of the casino floor and food and beverage outlets for the three months ended September 30, 2016 compared to the three months ended September 30, 2015 .
In October 2016 , the Company's subsidiary, Century Casino St. Albert Inc. ("CSA"), acquired 100% of the issued and outstanding shares and related land of entities operating the Apex Casino in suburban Edmonton, Alberta, Canada . Century Casino St. Albert, formerly Apex Casino, is a 34,500 square foot casino facility located on approximately seven acres of land that includes 382 slot machines, 11 live table games, a restaurant, a bar, a lounge and a banquet facility that can accommodate up to 175 guests.
In June 2016 , the Company began operating the ship-based casinos onboard the Mein Schiff 5, a new 2,500 passenger cruise ship, and the TUI Discovery, a 2,067 passenger cruise ship. Under an agreement with Diamond Cruise International Co., Ltd., the Company began operating the ship-based casino onboard Glory Sea, a 1,200 passenger cruise ship, in July 2016 . Glory Sea operates in the Chinese cruise market with three and four-day trips between China , South Korea and Japan . The Glory Sea casino has 50 slot machines and 17 table games. Under an amended concession agreement with TUI Cruises, the Company also plans to operate the ship-based casino onboard Mein Schiff 6, a new 2,500 passenger cruise ship that is expected to begin operations in the third quarter of 2017.
In September 2016 , the Company was selected as the successful applicant by Horse Racing Alberta to own, build and operate a horse racing facility in the Edmonton market area, which the Company will operate as Century Mile. Century Mile will be a one-mile horse racetrack and multi-level racing and entertainment center, which will include a gaming floor with slot machines as well as food and beverage outlets. The proposed location is on Edmonton International Airport land and close to the city of Leduc , just south of Edmonton and positioned off Queen Elizabeth II Highway. The Company estimates that the project will cost approximately CAD 50.0 million and be completed by the end of 2018.
The consolidated results for the three and nine months ended September 30, 2016 and 2015 are as follows:
"Operating results and Adjusted EBITDA were impacted by extensive refurbishment and remodeling at the Century Casino & Hotel in Edmonton , our largest property. However, we are very happy with the new gaming floor, restaurant, bar, poker room and the beautiful new VIP gaming areas," Erwin Haitzmann and Peter Hoetzinger, Co Chief Executive Officers of Century Casinos, said. "We opened another three shipboard casinos this year and are particularly excited about the newest addition to our portfolio of casinos, the Century Casino St. Albert in the greater Edmonton metropolitan region, which we acquired on October 1, 2016 . Finally, we are thrilled to have been chosen by Horse Racing Alberta to develop and operate a new horse racing and gaming entertainment facility in South Edmonton ," they continued.
The table below shows the Company's operating segments that are included in each of the Company's reportable segments as of September 30, 2016 :
The Company's net operating revenue increased by $1.0 million , or 3%, and by $0.5 million , or 0%, for the three and nine months ended September 30, 2016 , compared to the three and nine months ended September 30, 2015 . Following is a summary of the changes in net operating revenue by segment for the three and nine months ended September 30, 2016 , compared to the three and nine months ended September 30, 2015 :
The Company's earnings from operations decreased by ($0.2) million , or (6%), and by ($2.3) million , or (16%), for the three and nine months ended September 30, 2016 , compared to the three and nine months ended September 30, 2015 . Following is a summary of the changes in earnings from operations by segment for the three and nine months ended September 30, 2016 , compared to the three and nine months ended September 30, 2015 :
Net earnings (loss) attributable to Century Casinos, Inc. shareholders decreased by ($0.8) million , or (31%), and by ($5.1) million , or (46%), for the three and nine months ended September 30, 2016 , compared to the three and nine months ended September 30, 2015 . Following is a summary of the changes in net earnings (loss) attributable to Century Casinos, Inc. shareholders by segment for the three and nine months ended September 30, 2016 , compared to the three and nine months ended September 30, 2015 :
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 following are segment results for net operating revenue, earnings from operations, net earnings (loss) attributable to Century Casinos, Inc. shareholders and Adjusted EBITDA**.
* Amounts presented are rounded. As such, rounding differences could occur in period over period changes and percentages reported.
** Adjusted EBITDA and Adjusted EBITDA Margin are Non-GAAP financial measures. See discussion and reconciliation of Non-GAAP financial measures in Supplemental Information below.
*** The Company defines book value per share as total Century Casinos, Inc. shareholders' equity divided by outstanding common shares.
As of September 30, 2016 , the Company had $33.0 million in cash and cash equivalents and $58.4 million in outstanding debt on its balance sheet compared to $29.4 million in cash and cash equivalents and $36.5 million in outstanding debt at December 31, 2015 . The $58.4 million in outstanding debt as of September 30, 2016 includes $42.5 million related to the Company's Bank of Montreal credit agreement, $0.9 million related to capital leases for Century Resorts Alberta and Century Downs Racetrack and Casino ("CDR"), $14.9 million related to a long-term land lease for CDR and $0.5 million related to Casinos Poland, Ltd., net of $0.4 million in deferred financing costs.
Today the Company will post a copy of its quarterly report on Form 10-Q filed with the SEC for the quarter ended September 30, 2016 on its website at http://corporate.cnty.com/investor-relations/sec-filings. The Company will also post a presentation on the third quarter results on its website at http://corporate.cnty.com/investor-relations/presentations-and-interviews.
Century Casinos will host its third quarter 2016 earnings conference call today at 7:00 am MDT ; 2:00 pm CET , 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 November 30, 2016 at http://corporate.cnty.com/investor-relations/sec-filings .
* The impact of foreign exchange rates is highly variable and difficult to predict. The Company uses a 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, net earnings (loss) attributable to Century Casinos, Inc. shareholders and Adjusted EBITDA. Constant currency results are calculated by dividing the current quarter or year to date local currency segment results by the prior year's average exchange rate for the quarter or year as reported in Item 1 of the Company's Quarterly Report on Form 10-Q and comparing them to actual U.S. dollar results for the prior quarter or year.
** The Company defines as net earnings (loss) attributable to Century Casinos, Inc. shareholders before interest expense (income), net, income taxes (benefit), depreciation, amortization, non-controlling interest (earnings) losses 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. 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) 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 accounting principles generally accepted in the United States of America ("US GAAP"). Adjusted EBITDA is not considered a measure of performance recognized under US 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 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.
**** The table below presents the Company's operating results and constant currency* results for the nine months ended September 30, 2016 compared to the nine months ended September 30, 2015 without the impact of the $3.4 million in earnings received from the termination agreement with Norwegian (the "Termination Agreement") in the second quarter of 2015. Earnings from the Termination Agreement did not impact Adjusted EBITDA**.
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 in St. Albert, Alberta, Canada . Through its Austrian subsidiary, Century Casinos Europe GmbH ("CCE"), the Company holds a 66.6% ownership interest in Casinos Poland Ltd., the owner and operator of eight casinos in Poland . The Company, through CCE, also holds a 75% ownership interest in both Century Downs Racetrack and Casino, which began operations in the north metropolitan area of Calgary, Alberta, Canada in April 2015 , and Century Bets! Inc., which began operating the pari-mutuel off-track horse betting network in southern Alberta, Canada in May 2015 . The Company operates 13 ship-based casinos with four cruise ship owners. The Company manages the operations of the casino at the Hilton Aruba Caribbean Resort and Casino. The Company, through CCE, 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 continues to pursue other international 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.