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Century Casinos, Inc. Announces Third Quarter 2018 Results
The consolidated results for the three and nine months ended September 30, 2018 and 2017 are as follows:
During the third quarter of 2017, the Company released its $5.1 million U.S. valuation allowance on its U.S. deferred tax assets, resulting in a tax benefit and increased net earnings attributable to Century Casinos, Inc. shareholders.
"This quarter we had broad-based revenue growth in the United States , Canada and Poland . With the reopening of two casinos in Poland in the latter half of the quarter we anticipate strong Adjusted EBITDA performance will return to that segment," Erwin Haitzmann and Peter Hoetzinger, Co-Chief Executive Officers of Century Casinos remarked. "Although operations in Bath have ramped up slower than expected, which impacted Adjusted EBITDA for the third quarter, we look forward to a strong finish to the year for the company," they continued. "We are excited for the 2019 outlook with the Century Mile project continuing to trend on-time and on-budget for an April 2019 opening," 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 September 30, 2018 :
The Company's net operating revenue increased by $2.5 million , or 6%, and by $9.1 million , or 8%, for the three and nine months ended September 30, 2018 , compared to the three and nine months ended September 30, 2017 . Following is a summary of the changes in net operating revenue by reportable segment for the three and nine months ended September 30, 2018 , compared to the three and nine months ended September 30, 2017 :
The Company's earnings from operations decreased by ($1.5) million , or (32%), and by ($5.4) million , or (42%), for the three and nine months ended September 30, 2018 , compared to the three and nine months ended September 30, 2017 . Following is a summary of the changes in earnings (loss) from operations by reportable segment for the three and nine months ended September 30, 2018 , compared to the three and nine months ended September 30, 2017 :
Net earnings (loss) attributable to Century Casinos, Inc. shareholders decreased by ($6.0) million , or (79%), and by ($8.7) million , or (75%), for the three and nine months ended September 30, 2018 , compared to the three and nine months ended September 30, 2017 . Following is a summary of the changes in net earnings (loss) attributable to Century Casinos, Inc. shareholders by reportable segment for the three and nine months ended September 30, 2018 , compared to the three and nine months ended September 30, 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** decreased by ($1.2) million , or (16%), and by ($3.1) million , or (15%), for the three and nine months ended September 30, 2018 compared to the three and nine months ended September 30, 2017 . Following is a summary of the changes in Adjusted EBITDA** by reportable segment for the three and nine months ended September 30, 2018 compared to the three and nine months ended September 30, 2017 :
As of September 30, 2018 , the Company had $46.8 million in cash and cash equivalents and $53.3 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 September 30, 2018 included $33.3 million related to the Company's BMO Credit Agreement, $2.3 million of bank debt related to Casinos Poland, $2.6 million of bank debt related to Century Casino Bath, $0.3 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 $15.1 million related to a long-term land lease for CDR, net of $0.3 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, 2018 on its website at https://corporate.cnty.com/investor-relations/sec-filings. The Company will also post a presentation on the third quarter results on its website at https://corporate.cnty.com/investor-relations/presentations-and-interviews.
The Company will host its third quarter 2018 earnings conference call today, Wednesday, November 7 , at 8:00 am MST ; 4:00 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, 2018 at https://corporate.cnty.com/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 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 third quarter are reported in Item 1 of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 . 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 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, 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) 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 75% ownership interests in both CDR, which operates in the north metropolitan area of Calgary, Alberta, Canada ; 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 international entertainment and gaming club in Vietnam . The Company operates 11 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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