Century Casinos said Friday that recent acquisitions helped boost the regional casino company’s fourth-quarter cash flow.
During a conference call with analysts, the Colorado Springs, Colorado-based company said its U.S. and Canadian operations have not been hurt by the coronavirus outbreak.
However, a write off of the company’s $16.5 million investment in the Century Casino Bath in the United Kingdom triggered a loss for the quarter that ended Dec. 31.
Because of the loss, the company missed Wall Street’s fourth-quarter earnings forecasts, although revenue topped them
Century reported a net loss of $20.1 million, or 68 cents per share, for the fourth quarter, reversing net income of $506,000, or 2 cents per share, a year earlier. Analysts surveyed by Yahoo Finance had expected, on average, earnings of 4 cents per share.
Adjusted earnings before interest, taxes, depreciation, and amortization, a cash flow measure that excludes one-time costs, rose 69% to $9.8 million from $5.8 million.
Revenue rose 48.9% to $67.2 million from $45.2 million, topping the $60.4 million forecast of Yahoo Finance-polled analysts. Century’s U.S. segment revenue tripled to $23.9 million. In Canada, revenue in the company’s Edmonton, Alberta, segment rose 58%, mostly thanks to recently added Century Mile Racetrack and Casino.
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. The deal closed this past January.
Co-CEO Peter Hoetzinger said the deal doubled Century’s size and boosted the adjusted EBITDA results. The Missouri casinos, he said, will be rebranded as Century properties.
Macquarie Securities gaming analyst Chad Beynon said the newly acquired casinos added $3.9 million of cash flow in just three weeks of ownership.
“Management hit the ground running, upgrading facilities and swapping out underperforming gaming machines,” Beynon said in a research note. “As a reminder, Century purchased the three assets for 3.5-times cash flow, one of the lowest multiples paid for gaming assets ever.”
Century owns three hotel-casinos and a racetrack in Canada, five casinos in the U.S., one property in England and, through a subsidiary, a two-thirds stake in Casinos Poland
The company said in its statement that the market in Poland has been weakening by about 10% because of the coronavirus but added that because its properties have little convention business and few fly-in patrons, the virus’s effect may be tempered.
In a conference call, Hoetzinger said Century is carefully monitoring the situation and is following and promoting the federal Centers for Disease Control and Prevention’s safety recommendations.
“The entire situation is unpredictable,” he said. “Our management teams are prepared to control what they can control. … We are in constant communication with our employees to reinforce our sanitization, safety procedures in both guest-facing and back-of-house areas. We are sanitizing high-traffic public areas at an increased frequency.”
Century said it wrote off the Bath investment because the casino had lost money from the start, and forecasts portended continued losses because of England’s casino regulations. The company didn’t specify what in the regulations was so troublesome.
Hoetzinger said the company entered an exclusivity and confidentiality agreement with a potential buyer in an effort to unload the Bath property.
“We should know more about the outcome in one or two months from now,” he said.
Meanwhile, Hoetzinger said, the company is eyeing other properties for acquisition. In the question-and-answer period, he said the company might be active again come summer.
For the 12 months ended Dec. 31, Century’s net loss was $19.2 million, or 55 cents per share, reversing year-earlier income of $3.4 million, or 10 cents per share.
Twelve-month revenue rose 29.2% to $218.2 million from $168.9 million.
Century Casinos shares fell 21 cents, or 5.98%, Friday to close at $3.30 on the Nasdaq. The stock price has fallen 57.8% over the past month.
Follow Matthew Crowley on Twitter @copyjockey
