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Century Casinos, Inc. Announces Fourth Quarter and Year Ended 2013 Results
The period over period increases in net operating revenue and Adjusted EBITDA relate to the inclusion of operating results from Casinos Poland Ltd. (CPL) beginning in the second quarter of 2013. In April 2013 , the Company completed the purchase of an additional 33.3% ownership interest in CPL. The Company owns a 66.6% ownership interest in CPL and consolidates CPL financial information as a majority-owned subsidiary for which the Company has a controlling financial interest. Prior to the acquisition of this additional interest in CPL, the Company owned 33.3% of CPL and accounted for the CPL ownership interest as an equity investment.
On November 29, 2013 , our subsidiary Century Casinos Europe GmbH finalized credit and management agreements with United Horsemen of Alberta , Inc. (UHA) in connection with the development of a Racing Entertainment Center (REC) project in the north metropolitan area of Calgary, Alberta, Canada . The project will include a horse race track and other gaming, restaurant and entertainment facilities. Under the agreements, we acquired 15% of UHA, control the UHA board of directors and will manage the development and operation of the REC project. As of November 29, 2013 , we began consolidating UHA as a minority owned subsidiary for which we have a controlling financial interest. While unaffiliated shareholders currently own the remaining 85% of UHA, we have the right to convert $11 million (that we will provide out of a total of $24 million for the development of the REC project) into a 60% ownership stake in UHA, bringing our total to 75%. We account for and report the current 85% UHA ownership interest that we do not own as a non-controlling financial interest.
Net operating revenue increased by $11.7 million , or 66%, and increased by $32.8 million , or 46%, for the three months and year ended December 31, 2013 compared to the three months and year ended December 31, 2012 . Following is a summary of the changes in net operating revenue by property or category for the three months and year ended December 31, 2013 compared to the three months and year ended December 31, 2012 :
Earnings from operations decreased by ($0.9) million , or (102%), and decreased by ($0.3) million , or (5%) for the three months and year ended December 31, 2013 compared to the three months and year ended December 31, 2012 . Following is a summary of the changes in earnings from operations by property or category for the three months and year ended December 31, 2013 compared to the three months and year ended December 31, 2012 :
Net earnings (loss) decreased by ($0.8) million , or (134%), and increased by $2.1 million , or 51% for the three months and year ended December 31, 2013 compared to the three months and year ended December 31, 2012 . Following is a summary of the changes in net earnings (loss) by property or category for the three months and year ended December 31, 2013 compared to the three months and year ended December 31, 2012 :
Items deducted from or added to earnings from operations to arrive at net earnings include gain on business combination related to the acquisition of the additional ownership interests in CPL and UHA, interest income, interest expense, gains on foreign currency transactions, income tax expense and non-controlling interest.
The following are property and category results for net operating revenue and Adjusted EBITDA.
As of December 31, 2013 , the Company had $27.4 million in cash and cash equivalents and $34.1 million in outstanding debt on its balance sheet compared to $24.8 million in cash and cash equivalents and $3.6 million in debt obligations at December 31, 2012 . The $34.1 million in outstanding debt includes $6.5 million in outstanding debt related to CPL, $18.3 million in outstanding debt related to a long-term land lease of UHA and $9.3 million in outstanding debt related to our Bank of Montreal credit agreement as of December 31, 2013 . On February 21, 2013 , the Company borrowed $7.2 million from its Bank of Montreal credit agreement to pay for the additional 33.3% investment in CPL, which closed on April 8, 2013 . The Bank of Montreal credit agreement has a term of five years and is guaranteed by the Company. Once repaid, amounts cannot be reborrowed. As of December 31, 2013 , the Company had approximately $16.0 million available for borrowing under the Bank of Montreal credit agreement.
Today the Company will post a copy of the annual report on Form 10-K filed with the SEC for the year ended December 31, 2013 on its website at http://corporate.cnty.com/investor-relations/sec-filings.
Century Casinos will host its fourth quarter 2013 earnings conference call today at 8:00 am MDT ; 4:00 pm CET , respectively. U.S. domestic participants should dial 1-888-299-7212. For all other international participants, please use +1-719-234-0008 to dial-in. Participants may also listen to the call live or obtain a recording of the call on the Company's website until April 11, 2014 at http://corporate.cnty.com/investor-relations/sec-filings.
*Amounts presented are rounded. As such, rounding differences could occur in period over period changes and percentages reported.
**Adjusted EBITDA is a Non-GAAP financial measure. See discussion and reconciliation of Non-GAAP financial measures in Supplemental Information below.
*** The Company defines book value per share as total Century Casinos shareholders' equity divided by outstanding common shares.
* The Company defines as net earnings (loss) before interest, income taxes (benefit), depreciation, amortization, pre-opening expenses, non-cash stock based compensation charges, asset impairment costs, (gains) losses on disposition of fixed assets, discontinued operations, realized foreign currency (gains) losses, 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 and Adjusted EBITDA reported for each property. 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. EBITDA (Earnings before interest, taxes, depreciation and amortization) 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) above.
** The Company defines as Adjusted EBITDA divided by net operating revenue. 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 owns and operates Century Casino & Hotels in Cripple Creek and Central City, Colorado , and in Edmonton, Alberta, Canada and the Century Casino in Calgary, Alberta, Canada . The Company also operates casinos aboard twelve luxury cruise vessels (Regatta, Nautica, Marina, Riviera, Mein Schiff 1, Mein Schiff 2, Wind Surf, Wind Star, Wind Spirit, Seven Seas Voyager, Seven Seas Mariner and Seven Seas Navigator). Through its Austrian subsidiary, Century Casinos Europe GmbH, the Company holds a 66.6% ownership interest in Casinos Poland Ltd., the owner and operator of nine casinos in Poland . The Company also manages the operations of the casino at the Radisson Aruba Resort, Casino & Spa in Aruba , Caribbean . The Company is currently developing a project in the north metropolitan area of Calgary, Alberta, Canada that will include a horse race track and other gaming, restaurant and entertainment facilities. Century Casinos, Inc. continues to pursue other international projects in various stages of development.
For more information about Century Casinos, visit our website at www.centurycasinos.com. Century Casinos' common stock trades on The NASDAQ Capital Market® and the Vienna Stock Exchange under the symbol CNTY.