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Century Casinos, Inc. Announces Fourth Quarter 2018 Results
The consolidated results for the three months and year ended December 31, 2018 and 2017 are as follows:
The Tax Cuts and Jobs Act (the "Tax Act"), enacted on December 22, 2017 , increased the Company's income tax expense by $5.4 million during the fourth quarter of 2017 due to the tax law changes that were effective for the 2017 tax year. The increased income tax expense increased net loss attributable to Century Casinos, Inc. shareholders for the fourth quarter of 2017 and decreased net earnings attributable to Century Casinos, Inc. shareholders for the year ended December 31, 2017 . See Note 11 to the Company's Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data", of the Company's Annual Report on Form 10-K for the year ended December 31, 2018 for a discussion of the impact of the Tax Act.
"This quarter we continued to see revenue growth in each of our segments and ended the year growing revenue by 10%. We are pleased with this growth, especially with the longer-than-expected casino closures in Poland due to licensing delays, which we estimate negatively impacted net operating revenue by $9.8 million ," Erwin Haitzmann and Peter Hoetzinger, Co-Chief Executive Officers of Century Casinos remarked. "We are excited for the upcoming year with the opening of Century Mile Racetrack and Casino on April 1 and a Grand Opening celebration planned for April 28 , the first day of live horse racing," Messrs. Haitzmann and Hoetzinger concluded.
The table below shows the Company's operating segments that are included in each of the Company's reportable segments as of December 31, 2018 :
The Company's net operating revenue increased by $5.8 million , or 15%, and by $14.9 million , or 10%, for the three months and year ended December 31, 2018 , compared to the three months and year ended December 31, 2017 . Following is a summary of the changes in net operating revenue by reportable segment for the three months and year ended December 31, 2018 , compared to the three months and year ended December 31, 2017 :
The Company's earnings from operations increased by $0.3 million , or 16%, and decreased by ($5.2) million , or (35%), for the three months and year ended December 31, 2018 , compared to the three months and year ended December 31, 2017 . Following is a summary of the changes in earnings (loss) from operations by reportable segment for the three months and year ended December 31, 2018 , compared to the three months and year ended December 31, 2017 :
Net earnings (loss) attributable to Century Casinos, Inc. shareholders increased by $5.8 million , or 110%, and decreased by ($2.9) million , or (46%), for the three months and year ended December 31, 2018 , compared to the three months and year ended December 31, 2017 . Following is a summary of the changes in net earnings (loss) attributable to Century Casinos, Inc. shareholders by reportable segment for the three months and year ended December 31, 2018 , compared to the three months and year ended December 31, 2017 :
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 $0.4 million , or 7%, and decreased by ($2.7) million , or (10%), for the three months and year ended December 31, 2018 compared to the three months and year ended December 31, 2017 . Following is a summary of the changes in Adjusted EBITDA** by reportable segment for the three months and year ended December 31, 2018 compared to the three months and year ended December 31, 2017 :
As of December 31, 2018 , the Company had $45 .6 million in cash and cash equivalents and $59.5 million in outstanding debt on its balance sheet compared to $74 .7 million in cash and cash equivalents and $56.7 million in outstanding debt at December 31, 2017 . The outstanding debt as of December 31, 2018 included $40.5 million related to the Company's credit agreement with the Bank of Montreal , $2.6 million of bank debt related to Casinos Poland, $2.4 million of bank debt related to Century Casino Bath, $0.2 million related to capital leases for Century Resorts Alberta, Century Casino Calgary, Century Casino St. Albert, Century Downs Racetrack and Casino ("CDR") and Century Mile Racetrack and Casino, and $14.3 million related to a long-term land lease for CDR, net of $0.5 million in deferred financing costs.
Today the Company will post a copy of its Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2018 on its website at https://www.cnty.com/corporate/investor-relations/sec-filings. The Company will also post a presentation on the year end results on its website at https://www.cnty.com/corporate/investor-relations/presentations-and-interviews.
The Company will host its fourth quarter 2018 earnings conference call today, Monday, March 11 , at 8:00 am MDT ; 3:00 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 March 31, 2019 at https://www.cnty.com/corporate/investor-relations/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 basis to show the impact from foreign exchange rates on current period financial information compared to prior period financial information 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 and prior year are reported in Note 2 to the Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of the Company's Annual Report on Form 10-K. The average exchange rates for the three months ended December 31, 2018 and 2017 are presented below.
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 as net earnings (loss) attributable to Century Casinos, Inc. shareholders before interest expense (income), net, income taxes (benefit), depreciation and amortization, non-controlling interests 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, cost recovery income 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) 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 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 . Through its Austrian subsidiary, Century Resorts Management GmbH ("CRM"), formerly Century Casinos Europe GmbH, the Company holds a 66.6% ownership interest in Casinos Poland Ltd., the owner of eight casino licenses throughout Poland , seven of which are operating. The Company, through CRM, also holds a 75% ownership interests in CDR, which operates in the north metropolitan area of Calgary, Alberta, Canada ; a 75% ownership interest in Century Bets! Inc., which operates the pari-mutuel off-track horse betting network in southern Alberta, Canada ; and a 51% ownership interest in Golden Hospitality Ltd., a company that manages a hotel and entertainment and gaming club in Vietnam . The Company operates 10 ship-based casinos under agreements with three cruise ship owners. 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 is also developing Century Mile Racetrack and Casino in Edmonton, Alberta, Canada . 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.
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