Earnings Call: Century Casinos Reports Mixed Results in Q3 2024

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Earnings Call: Century Casinos Reports Mixed Results in Q3 2024

Century Casinos, Inc. (NASDAQ: CNTY) reported a slight decline in net income and adjusted EBITDA for the third quarter of 2024. Net income decreased by 3% year-over-year to $156 million, while adjusted EBITDA fell by 1% to $32.9 million. Despite these declines, the company saw an improvement in EBITDA margin and remains optimistic about future growth, particularly with the reopening of its casino in Poland and the opening of a new casino in Missouri.

Key Points:

  • Net income decreased by 3% year-over-year to $156 million.
  • Adjusted EBITDA decreased by 1% to $32.9 million.
  • EBITDA margin improved slightly from 20.6% to 21.1%.
  • The reopening of the casino in Poland is expected to contribute between $10 million and $12 million to annual EBITDA.
  • The new casino and hotel in Missouri, located in Caruthersville, opened with record revenue.
  • Revenue from the East segment increased by 7%, while the Midwest segment remained stable.
  • At the end of the third quarter, cash and debt stood at $119 million and $340 million, respectively.
  • Capital expenditures for 2023 are projected to be $38 million, decreasing to $16 million in 2024.
  • The company is exploring share buybacks, with the current decision allowing for a $15 million stock repurchase.
  • An optimistic outlook for 2025 anticipates EBITDA of $150 million.

Company Outlook: Century Casinos expects that the majority of the EBITDA growth in 2025 will come from recent openings and operational efficiencies. Free cash flow for the upcoming year is projected to be between $25 million and $30 million, with $80 million available for debt repayment and share buybacks. The company anticipates significant contributions to 2025 EBITDA from locations in Caruthersville, Cape Girardeau, and Reno.

Negative Points:

  • The decline in revenue is attributed to the temporary closure of the casino in Poland and competition in the Canadian market.
  • Revenue from the Midwest segment remained stable.

Positive Points:

  • The East segment saw a 7% increase in revenue.
  • Nugget Casino in Reno experienced a sequential 40% revenue increase.
  • Optimism regarding future growth through operational efficiencies and improved event planning.

Shortcomings:

  • A decrease in Canadian revenue due to the closure of a major event and nearby casino competition.

Q&A Highlights: The company discussed its stock buyback plans and the positive impact of the reopening of the casino in Poland. Management provided guidance for an expected EBITDA of $150 million for 2025. Buyback activities are expected to commence by the end of this year or early next year.

As Century Casinos continues to navigate the competitive gaming industry landscape and leverage strategic growth opportunities, it remains committed to providing updates in early 2025.

InvestingPro Forecasts: Century Casinos' recent earnings report reveals a complex financial landscape illuminated further by data from InvestingPro. Despite the slight declines in net income and adjusted EBITDA, the company's stock has performed strongly in recent months. InvestingPro data shows a total price return of 45.1% over the past month and 38.58% over the last three months, indicating investor optimism about the company's future prospects.

However, this optimism is balanced by some challenging financial metrics. One InvestingPro Tip highlights that Century Casinos is "rapidly consuming cash," indicated by the company's reported $119 million cash position against $340 million in debt. This cash consumption rate could impact the company's ability to execute growth plans and stock repurchase initiatives.

Another InvestingPro Tip notes that the company operates with "significant debt burden." This is particularly relevant when considering potential stock buybacks and the projected free cash flow of $25 million to $30 million for the upcoming year. The company’s ability to balance debt management with shareholder returns will be crucial for its financial health.

It is important to note that InvestingPro provided 11 additional tips for Century Casinos, offering a more comprehensive analysis for investors seeking a deeper understanding of the company's financial condition.