Increased spend per visit and time spent on the device, and the steady post-coronavirus shutdown return of core customers lifted Century Casinos in the third quarter. Earnings per share and revenue both rose from a year earlier and topped Wall Street forecasts.
Century Casinos officials suggested the company, 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, may look to sell off some non-U.S. assets in the coming months and eye U.S. targets for acquisition.
Century Casinos on Aug. 5 sold the casino operations of Century Casino Calgary to 2267166 Alberta Ltd. for $7.5 million, plus a three-year quarterly earnout.
In a Friday, Colorado Springs, Colorado-based Century Casinos said its net income was $3.7 million, or 13 cents per share, for the three months ended Sept. 30, up from net income of $482,000, or 2 cents per share, a year earlier. Analysts surveyed by Seeking Alpha had, on average, expected 6 cents in earnings per share.
Adjusted earnings before interest, taxes, depreciation, and amortization, a cash flow measure that excludes one-time costs, more than tripled to $22.2 million from $7.1 million.
Revenue rose 80.9% to $95.7 million from $52.9 million and topped the $76.5 million average forecast of Seeking Alpha-polled analysts.
Century Casinos said the December 2019 acquisitions of the Century Casino New Cumberland in New Cumberland, West Virginia; Century Cape Girardeau in Cape Girardeau, Missouri; and Century Caruthersville in Caruthersville, Missouri, from Eldorado Resorts had boosted overall results. Century paid $107 million to buy the casinos’ operations.
Despite the strong results, officials at Century warned of the coronavirus pandemic’s lingering effects.
The virus has shrunk capacity in varying ways, Century said. For example, in Cripple Creek, Colorado, the full slot floor is open in the company’s casino, but table games are expected to remain closed through year’s end. In Central City, Colorado, the casino is operating at reduced capacity — 65% of the slot machines and table games are reopened, but craps and roulette closed in October.
“We have little visibility regarding the impact the corona pandemic will have on our markets going forward,” CEO Peter Hoetzinger said in a conference call with analysts and journalists. “Yet we see continued upside when the older demographics and the oftentimes more valuable feel comfortable returning to our casinos in higher numbers. We also expect some of the newer, younger customers will convert to regular visitors.”
Hoetzinger suggested the company has put nonessential capital expenditure projects on hold for now but hopes to return to more normalized capital spending next year, reinvesting about 3% to 4% of net revenue.
“We are off to a very strong start after reopening,” he said, “and we make sure we stay focused on maintaining a disciplined approach throughout our business and avoiding unnecessary costs and inefficiencies. … We fully intend to keep the focus on a more efficient, higher-margin business in place after the crisis is over.”
Hoetzinger suggested Century may look to follow to sell off more non-U.S. operations and invest more in U.S. operations. During the conference call’s question-and-answer period, Hoetzinger told Roth Capital Partners analyst David Bain that the company probably will look to sell the Century Calgary’s real estate and that the company European operations had shifted to “non-core” importance.
“You may assume that we are thinking of trying to get a good deal for these assets in Poland,” he Hoetzinger told Bain. “We’ve now shown that we can successfully negotiate a contract, close, and then integrate a large transaction. And so I think that makes us a good buyer for some more of these midsize assets and so yes, we are out looking already.
“So, I think next year will be a very, very busy M&A situation in the U.S.”
Century Casinos shares closed at $5.46 Friday on the Nasdaq, unchanged from a day earlier. The stock price has fallen by 33.1% in 2020.
Follow Matthew Crowley on Twitter @copyjockey
