Century Casinos Earnings Call: Mixed Sentiments and Future Prospects

Century Casinos ((CNTY)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call for Century Casinos presented a mixed sentiment, reflecting both optimism and challenges. The company reported strong growth in regions like Missouri and Alberta, with positive developments in electronic table games and sports betting. However, these gains were tempered by difficulties in Poland and Reno, as well as a decline in lower-end customer segments and financial adjustments due to goodwill impairment.

Strong Revenue Growth in Missouri

Century Casino and Hotel Caruthersville in Missouri showcased impressive growth, with a 29% increase in gaming revenue and a 35% rise in EBITDA. The high-value customer segment was particularly robust, showing an 82% increase, highlighting the region’s potential for sustained growth.

Positive Performance in Alberta, Canada

Alberta reported a 5.8% increase in slot coining and a 1.6% rise in total revenue, alongside an 11.1% increase in EBITDA. This success was attributed to disciplined cost management and strategic upgrades, underscoring the effectiveness of the company’s operational strategies.

Successful Transition to Electronic Table Games

In Colorado, Century Casinos successfully transitioned from live table games to electronic lounges. This move maintained revenue levels while significantly reducing costs, demonstrating the company’s adaptability and focus on efficiency.

Promising Outlook with Sports Betting in Missouri

The upcoming launch of sports betting in Missouri on December 1 is anticipated to open new revenue streams for Century Casino and Hotel Cape Girardeau. This development is expected to bolster the company’s financial performance in the region.

October Performance Boost

Preliminary results for October indicate a more than 20% increase in EBITDAR compared to the previous year. This boost was driven by improved play from core and retail customers, signaling a positive trend for the company’s future performance.

Weakness in Poland Operations

The Poland segment faced significant challenges, including license delays and relocations, notably the closure of the Wrocław Hilton Casino. These issues negatively impacted EBITDA, highlighting the operational hurdles in this region.

Nugget Casino Resort Challenges

Despite achieving a record EBITDAR in August, the Nugget Casino Resort in Reno Sparks struggled with weaker overall performance. This was due to suboptimal concert bookings and reduced convention business, affecting the resort’s profitability.

Decline in Lower-End Customer Segments

While there was an 8% growth in high-value segments, a 9% decline in lower-end segments resulted in flat overall rated GGR. This shift underscores the need for strategies to engage lower-end customers.

Debt and Cash Challenges

Century Casinos reported net debt of $261 million with a net debt-to-EBITDA ratio of 6.9x. Cash reserves decreased from $85 million to $78 million over the quarter, indicating financial pressures that need addressing.

Goodwill Impairment Issue

An error in impairment testing for goodwill necessitated the restatement of financial statements, impacting net loss figures. This highlights the importance of accurate financial reporting and its implications.

Forward-Looking Guidance

Peter Hoetzinger provided a comprehensive outlook for Century Casinos, highlighting solid third-quarter results with a net operating revenue of $154 million. Despite regional weaknesses, the company anticipates continued growth, driven by positive customer trends and a promising October performance. The absence of significant CapEx for the current year and no debt maturities until 2029 further strengthen the company’s financial position.

In summary, Century Casinos’ earnings call painted a picture of both opportunities and challenges. While certain regions and segments showed strong growth, others faced operational and financial hurdles. The company’s forward-looking guidance remains optimistic, with expectations of continued positive trends and strategic initiatives aimed at overcoming current challenges.