‘Resilient’ Century Casinos tops Wall Street second quarter forecasts

August 10, 2020 11:29 AM
  • Matthew Crowley, CDC Gaming Reports
August 10, 2020 11:29 AM
  • Matthew Crowley, CDC Gaming Reports

As it did for many casino companies, the coronavirus pandemic turned the big earnings report arrows upside down (or sent them further down) in the second quarter for Century Casinos. The loss widened, cash flow and revenue fell, and the company recorded $1.2 million in impairment to goodwill and intangible assets in the quarter from the infection curve-flattening COVID-19 closures.

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However, the Colorado Springs, Colorado-based casino company still pleased Wall Street, topping forecasts for loss per share and revenue. Company leaders acknowledged though the pandemic remains, they’d learned lessons and cost management had blunted the pain.

Century also said earlier in the week that it would sell Century Casino Calgary to 2267166 Alberta Ltd. for $7.5 million U.S. plus a three-year quarterly earn-out.

Stifel Financial gaming analyst Brad Boyer told investors he expects to see continued resilience in Century’s operations.

“We are hard-pressed to find another company in our regional operator coverage better built to endure in a post-COVID world,” Boyer said in a research note. “Century’s assets are predominantly located in markets with few competing entertainment options and derive the vast majority of revenues from their slot floors.”

In a Friday morning statement, Century said its net loss was $12.6 million, or 43 cents per share, for the three months ended June 30, compared with a net loss of $565,000, or 2 cents per diluted share, a year earlier. The latest results topped the 48-cents-per-share loss average forecast of analysts surveyed by Seeking Alpha.

Adjusted earnings before interest, taxes, depreciation, and amortization, a cash flow measure that excludes one-time costs, were a negative $1.7 million, reversing a positive $6.7 million a year earlier.

Revenue fell 31.1% to $36.1 million from $52.4 million but topped the $20.7 million average forecast of Seeking Alpha-polled analysts.

Century Casinos’ shares fell 11 cents, or 2.29% to close at $4.69 Friday on the Nasdaq. The share price is down 40.1%, for 2020.

In a Friday afternoon conference call with analysts, Century Casinos co-CEO Peter Hoetzinger said the company reacted quickly to March’s mandated casino closures, temporarily laying off and furloughing approximately 90% of staff and having executives take voluntary pay cuts. When reopenings were allowed, he said, company properties returned to business quickly, applying sanitization, physical distancing, and safety precautions.

Hoetzinger said Century, 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, also used the shutdown to reflect on how 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, acquired in 2019 for $107 million from Eldorado Resorts, will continue to integrate into the overall business.

All three properties were rebranded to include the Century name.

“We have used the time during the closures to build upon the progress we have started last year, when we closed the acquisition of three properties from Eldorado, to improve on controlling expenses and realizing efficiencies in marketing, staffing, and (general and administrative),” Hoetzinger said.

“We are off to a very strong start. And while the pandemic is not behind us, we make sure we stay focused on maintaining a disciplined approach throughout our business, avoiding unnecessary costs,” he added. “We fully intend to keep the focus on a more efficient, higher-margin business in place after this crisis is over.”

Hoetzinger said the reopenings have brought incremental positive flashes. The aforementioned Missouri properties opened June 1 and are generating “record-breaking” cash flow even with just 80% of table game positions open. He didn’t enumerate the cash flow improvement.

At the Mountaineer in West Virginia, lines formed around the block for the June 5 reopening, Hoetzinger said, and adjusted EBITDA was up 57% and revenue was up 7% from a year earlier even with half of its gaming positions and hotel rooms open.

The company’s two Colorado properties reopened in mid-June, without table games but almost all slots in operation in Cripple Creek and about two thirds in Central City. June adjusted EBITDA for the Colorado properties was at a combined 51% year-over-year, and July revenue and adjusted EBITDA almost doubled from 2019, the company said.

During the quarter, Century positioned itself to gain from sports betting. In February, Circa Sports, led by Derek Stevens, partnered with Century Casinos to launch a mobile sports betting app in Colorado.

Follow Matthew Crowley on Twitter @copyjockey