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Century Casinos, Inc. Announces Record Third Quarter Results Driven by Acquired US Casinos
The Company's third quarter 2020 results were significantly impacted by the acquisition of Mountaineer Casino, Racetrack & Resort, Century Casino Cape Girardeau and Century Casino Caruthersville (the "Acquired Casinos") in December 2019 .
In late 2019, an outbreak of COVID-19 was identified in China and has since spread throughout much of the world. Between March 13, 2020 and March 17, 2020 , the Company closed all of its casinos, hotels and other facilities to comply with quarantines issued by governments to contain the spread of COVID-19. The Company's Polish locations reopened on May 18, 2020 and its North American operations reopened between June 1, 2020 and June 17, 2020 .
Although the Company's results of operations and cash flow improved significantly in the third quarter of 2020, the COVID-19 pandemic has had an adverse effect on the Company's results of operations and financial condition for the nine months ended September 30, 2020 , and the Company expects this situation will continue to have an adverse impact on its results for the remainder of 2020 and perhaps into 2021. The duration and ultimate impact of the COVID-19 pandemic otherwise remains uncertain.
The Company's casinos have varied their operations based on the governmental health and safety requirements in the jurisdictions in which they are located. In Colorado , each city has different gaming floor restrictions. In Cripple Creek , the full slot floor is open but table games are expected to remain closed through 2020. In Central City , the casino is currently operating approximately 65% of the slot machines and table games are reopened, with the exception of craps and roulette which closed in October 2020 . For both Colorado cities there are capacity restrictions within the casinos and alcohol sales must stop at midnight but the casinos are able to operate 24/7. In Missouri , the full gaming floor is open, hours of operation are reduced, and food outlets that have reopened have limited operating hours. In West Virginia , the majority of the gaming floor has reopened, the gaming floor is limited to machines that are six feet apart or with barriers, food and beverage outlets have reopened with limited hours of operation, the convention space remains closed and is anticipated to remain closed through 2020, hours of operation are limited to 10:00 a.m. to 2:00 a.m. , there are capacity restrictions within the casino, and the hotel is operating with limited rooms available. In Canada , the gaming floors are currently operating approximately 60% of the total gaming machines, hours of operation are limited to 9:30 a.m. to 3:00 a.m. , there are restrictions on spectators at the racetracks, and the hotel and showroom in Edmonton remain closed. In Poland , the gaming floors are fully reopened, alcohol sales are currently suspended and there are capacity restrictions within the casinos.
The consolidated results for the three and nine months ended September 30, 2020 and 2019 are as follows:
"Following the reopening of our casinos in June 2020 , our results of operations and cash flow improved significantly in the third quarter of 2020. We are very pleased to report all-time records in quarterly net operating revenue and Adjusted EBITDA driven by our recent acquisition of the Eldorado properties. The record results confirm the transformational nature the acquisition has had on the Company, with 79% of our Adjusted EBITDA coming from operations in the United States ," Erwin Haitzmann and Peter Hoetzinger, Co-Chief Executive Officers of Century Casinos remarked. "In the third quarter, we also continued to focus on streamlining our cost structure and were able to achieve additional operational efficiencies, resulting in significant operating margin expansion," Haitzmann and Hoetzinger concluded.
The table below shows the Company's reporting units and operating segments that are included in each of the Company's reportable segments as of September 30, 2020 :
The Company's net operating revenue increased by $42.8 million , or 81%, and by $68.5 million , or 45%, for the three and nine months ended September 30, 2020 , compared to the three and nine months ended September 30, 2019 . Following is a summary of the changes in net operating revenue by reportable segment for the three and nine months ended September 30, 2020 , compared to the three and nine months ended September 30, 2019 :
The Company's earnings from operations increased by $11.5 million , or 331%, and decreased by ($28.4) million , or (298%), for the three and nine months ended September 30, 2020 , compared to the three and nine months ended September 30, 2019 . Following is a summary of the changes in earnings (loss) from operations by reportable segment for the three and nine months ended September 30, 2020 , compared to the three and nine months ended September 30, 2019 :
Net earnings (loss) attributable to Century Casinos, Inc. shareholders increased by $3.3 million , or 678%, and decreased by ($55.7) million , or (5655%), for the three and nine months ended September 30, 2020 , compared to the three and nine months ended September 30, 2019 . 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, 2020 , compared to the three and nine months ended September 30, 2019 :
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.
Adjusted EBITDA** increased by $15.1 million , or 213%, and by $9.5 million , or 47%, for the three and nine months ended September 30, 2020 compared to the three and nine months ended September 30, 2019 . Following is a summary of the changes in Adjusted EBITDA** by reportable segment for the three and nine months ended September 30, 2020 compared to the three and nine months ended September 30, 2019 :
As of September 30, 2020 , the Company had
$62 .1 million in cash and cash equivalents and $184.1 million in outstanding debt on its balance sheet compared to
$54 .8 million in cash and cash equivalents and
$179.0 million in outstanding debt at December 31, 2019 . The outstanding debt as of
September 30, 2020 included
$168.7 million related to the Company's credit agreement with Macquarie Capital ("Macquarie"),
$1.5 million of bank debt related to Casinos Poland,
$8.9 million of bank debt related to Century Resorts Management GmbH ("CRM"), and
$14.6 million related to a long-term land lease for Century Downs Racetrack and Casino ("CDR"), net of
$9.7 million in deferred financing costs. The Company also has a
$277.9 million long-term financing obligation under its triple net master lease for the three Acquired Casino properties ("Master Lease"), which has an initial annual rent of approximately
$25.0 million .
* 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-US GAAP financial measures. See discussion and reconciliation of Non-US 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.
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, 2020 on its website at www.cnty.com/investor/financials/sec-filings/. The Company will also post a presentation of the third quarter results on its website at www.cnty.com/investor/presentations/.
The Company will host its third quarter 2020 earnings conference call today, Friday, November 6 , at 8:00 am MST . 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 centurycasinos.adobeconnect.com/earningsrelease or obtain a recording of the call on the Company's website until November 30, 2020 at 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.
Adjusted EBITDA Margins ***
* 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 (loss) 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, 2020 . Constant currency information is not a measure of financial performance under generally accepted accounting principles in the United States of America (US 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 US 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 transactions. Expense related to the Master Lease and CDR land lease is included in the interest expense (income), net line item. 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 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-US 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 a casino entertainment company. The Company owns and operates Century Casino & Hotels in Cripple Creek and Central City, Colorado , and in Edmonton, Alberta, Canada ; the Century Casino in Cape Girardeau and Caruthersville, Missouri , in Calgary and St. Albert, Alberta, Canada ; Mountaineer Casino, Racetrack & Resort in New Cumberland, West Virginia ; 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, CRM, the Company holds a 66.6% ownership interest in Casinos Poland Ltd., the owner and operator of eight casinos throughout Poland ; and a 75% ownership interest in Century Downs Racetrack and Casino in Calgary, Alberta, Canada . The Company operates four ship-based casinos. 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 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.
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