A continued boost from three December 2019 casino acquisitions helped Century Casinos offset some of the pain of the pandemic in the fourth quarter. Earnings per share surged and topped Wall Street forecasts; revenue also rose but missed them.
In a statement Friday, Century Casinos, which owns three hotel-casinos and a racetrack in Canada, five in the United States, one in England and, through a subsidiary, a two-thirds stake in Casinos Poland, said its net income was $6.7 million, or 22 cents per diluted share, for the three months ended Dec. 31, reversing a year-earlier loss of $20.1 million, or 68 cents per diluted share, a year earlier.
The latest result smashed the 2-cent loss-per-share average forecast of analysts surveyed by Seeking Alpha.
Investors sent Century Casinos shares up on the news. The shares rose 87 cents, or 9.43 percent, to close at $10.10 on the Nasdaq Friday. The shares kept surging after hours, rising 94 cents, or 9.31 percent, to reach $11.04.
Adjusted earnings before interest, taxes, depreciation and amortization, a tax flow measure excluding one-time costs, rose 86.7% to $18.3 million from $9.8 million. Co-Chief Executive Officers Erwin Haitzmann and Peter Hoetzinger said the company’s U.S. holdings generated 82% of the quarter’s adjusted EBITDA.
Revenue rose 26.2% to $84.8 million from $67.2 million but missed the $82.3 million forecast of Seeking Alpha-polled analysts.
Macquarie Securities gaming analyst Chad Beynon said the message from Century’s management was similar to other regional casino operators. The year-to-date results have picked up following the “deceleration” in November and December.
“Century’s near-term results will experience a small setback, but strong spending trends, (including) higher spend per visit and longer playing time, and permanent cost cuts will lead to an overall improved margin structure,” Beynon told investors.
Century Casinos on Dec. 10 closed the sale of the casino operations of Century Casino Calgary to Alberta Ltd. for $7.5 million, plus a three-year quarterly earnout. The deal was announced on Aug. 5.
The company said the December 2019 acquisitions — the casino operations of the Mountaineer in New Cumberland, West Virginia; Century Cape Girardeau in Cape Girardeau, Missouri; and Century Caruthersville in Caruthersville, Missouri bought for $107 million from Eldorado Resorts — boosted company EBITDA by a combined 26% when they reopened in June after imposed coronavirus shutdowns.
Upward trends in business that started in the summer continued throughout the fourth quarter, including increased spend per visit and more time spent on device, Hoetzinger said in a conference call with analysts.
“With a somewhat reduced capacity on our casino floors and limited amenities for our guests, overall visitation to our properties was down a little compared to last year,” he said. “But being selective with our amenities, keeping strong controls on the promotional environment, and staying focused on the high-margin areas of our business bring expense reductions and new efficiencies resulting in significantly higher operating margins.”
Century Casinos said it expects the pandemic’s dampening effects to linger, especially given that its casinos in Edmonton, Alberta, and Poland remain closed. To mitigate these effects, the company said it will continue to cut marketing and operating expenditures where possible. Also, the company said it will evaluate planned capital expenditure projects and postpone until 2022 if necessary and permitted under its agreements.
In March 2020, Century Casinos borrowed an additional $9.95 million on its revolving credit facility with Macquarie Capital and $7.4 million on its credit agreement with UniCredit Bank Austria.
For the full year ended Dec. 31, Century Casinos had a net loss of $48 million, or $1.62 per share, compared with a net loss of $19.2 million, or 65 cents per share, a year earlier. Twelve-month revenue rose 39.4% to $304.3 million from $218.2 million.
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