Century Casinos said revenue was growing at the company’s three Canadian casinos and that three U.S. casinos the company agreed to acquire in June will boost future growth.
Although third-quarter revenue rose from a year earlier, earnings sank, and both missed Wall Street forecasts.
In a statement Monday, Colorado Springs, Colorado-based Century said it had net income of $482,000, or 2 cents per diluted share, for the three months ended Sept. 30, down from net income of $1.6 million, or 5 cents per share, a year earlier.
The latest results for Century missed the 8 cents per share consensus forecast of analysts surveyed by Zacks Investment Research. Century owns three hotel-casinos and a racetrack in Canada, two casinos in the U.S., one casino in England and, through a subsidiary, a two-thirds stake in Casinos Poland.
Zacks noted that Century, which also operates five ship-based casinos under agreements with TUI Cruises of Hamburg, Germany, has missed Wall Street earnings-per-share forecasts for four consecutive quarters.
Adjusted earnings before interest, taxes, depreciation and amortization, a cash flow measure that excludes one-time costs. rose 10.9 percent to $7.1 million from $6.4 million.
Revenue rose 21.3 percent to $52.9 million from $43.6 million, boosted by revenue growth at the Century Casino in Edmonton, Alberta (up 1 percent) and at Century Casino St. Albert, Alberta (up 3 percent).
But the result missed the $53.8 million estimate of Zacks-polled analysts.
Century CEO Peter Hoetzinger, in a statement, said his company stands poised to capitalize if Colorado voters approve online sports betting in Tuesday’s elections. He said the company was negotiating with sports betting companies, none of which he named, to deliver service to bettors.
In June, Century spent $107 million to buy the operations of the Mountaineer Casino Racetrack and Resort in New Cumberland, West Virginia; Isle Casino Cape Girardeau in Cape Girardeau, Missouri; and Lady Luck Casino Caruthersville in Caruthersville, Missouri, from Eldorado Resorts.
Las Vegas-based VICI Properties bought the properties’ land for $278 million and Century Casino signed a 15-year lease agreement with VICI for annual rent of $25 million.
Hoetzinger said the three-casino deal, which is expected to close by year’s end given Missouri regulators’ approval, will give the company five U.S. casinos; five Canadian casinos and eight smaller casinos in Europe, with a collective 7,200 gaming machines, 270 gaming tables, 430 hotel rooms, and three horse racetracks. He expects the expanded company to generate $415 million in net operating revenue and $58 million in adjusted EBITDA.
“These numbers do not include any synergy effects at all and going forward we expect revenue and EBITDA to grow further,” he said. “(The June deal is) already exciting as more than doubling our revenues and EBITDA. So, therefore, it’s pretty surprising to me that our stock prices not reacted more positively to it yet.”
TheStreet.com rates the company’s stock C or “hold”
Century Casinos shares rose 9 cents, or 1.14 percent, Monday, to close at $8 on the Nasdaq. The share price has risen 11.3 percent in 2019.
Stifel Financial gaming analyst Brad Boyer told investors “the current share price fails to properly factor in” Century’s pending acquisition of the three Eldorado properties.
“Furthermore, although margins were softer than expected in the quarter, we continue to believe the macroeconomic backdrop in each of the company’s operating markets creates the potential for outsized top-line growth for the foreseeable future,” Boyer said in a research note.
Follow Matthew Crowley on Twitter @copyjockey
