Century Casinos, Inc. Announces Fourth Quarter 2018 Results

Century Casinos, Inc. Announces Fourth Quarter 2018 Results

PR Newswire

COLORADO SPRINGS, Colorado, March 11, 2019

COLORADO SPRINGS, Colorado, March 11, 2019 /PRNewswire/ -- Century Casinos, Inc. (Nasdaq Capital Market®: CNTY) today announced its financial results for the three months and year ended December 31, 2018.

Century Casinos Logo (PRNewsfoto/Century Casinos, Inc.)

Fourth Quarter 2018 Highlights*

2018 Highlights*

The consolidated results for the three months and year ended December 31, 2018 and 2017 are as follows:























Amounts in thousands,
except per share data

For the three months

ended December 31,


For the year

ended December 31,

Consolidated Results:



2018



2017


% Change




2018



2017


% Change

Net Operating Revenue


$

45,106


$

39,293


15%



$

168,938


$

154,069


10%

Earnings from Operations



1,976



1,706


16%




9,459



14,615


(35%)

Net Earnings (Loss) Attributable to Century Casinos, Inc. Shareholders


$

506


$

(5,334)


110%



$

3,394


$

6,259


(46%)



















Adjusted EBITDA**


$

5,801


$

5,408


7%



$

23,377


$

26,086


(10%)



















Earnings (Loss) Per Share:


















Basic


$

0.02


$

(0.20)


110%



$

0.12


$

0.25


(52%)

Diluted


$

0.02


$

(0.19)


111%



$

0.11


$

0.24


(54%)

The Tax Cuts and Jobs Act (the "Tax Act"), enacted on December 22, 2017, increased the Company's income tax expense by $5.4 million during the fourth quarter of 2017 due to the tax law changes that were effective for the 2017 tax year. The increased income tax expense increased net loss attributable to Century Casinos, Inc. shareholders for the fourth quarter of 2017 and decreased net earnings attributable to Century Casinos, Inc. shareholders for the year ended December 31, 2017. See Note 11 to the Company's Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data", of the Company's Annual Report on Form 10-K for the year ended December 31, 2018 for a discussion of the impact of the Tax Act.

"This quarter we continued to see revenue growth in each of our segments and ended the year growing revenue by 10%. We are pleased with this growth, especially with the longer-than-expected casino closures in Poland due to licensing delays, which we estimate negatively impacted net operating revenue by $9.8 million," Erwin Haitzmann and Peter Hoetzinger, Co-Chief Executive Officers of Century Casinos remarked. "We are excited for the upcoming year with the opening of Century Mile Racetrack and Casino on April 1st and a Grand Opening celebration planned for April 28th, the first day of live horse racing," Messrs. Haitzmann and Hoetzinger concluded.

Reportable Segment Results*
The table below shows the Company's operating segments that are included in each of the Company's reportable segments as of December 31, 2018:



Reportable Segment

Operating Segment

Canada

Century Casino & Hotel - Edmonton

Canada

Century Casino St. Albert

Canada

Century Casino Calgary

Canada

Century Downs Racetrack and Casino

Canada

Century Bets!

Canada

Century Mile Racetrack and Casino

United States

Century Casino & Hotel – Central City

United States

Century Casino & Hotel – Cripple Creek

Poland

Casinos Poland

Corporate and Other

Cruise Ships & Other

Corporate and Other

Century Casino Bath

Corporate and Other

Corporate Other

The Company's net operating revenue increased by $5.8 million, or 15%, and by $14.9 million, or 10%, for the three months and year ended December 31, 2018, compared to the three months and year ended December 31, 2017. Following is a summary of the changes in net operating revenue by reportable segment for the three months and year ended December 31, 2018, compared to the three months and year ended December 31, 2017:


























Net Operating Revenue



For the three months







For the year








ended December 31,







ended December 31,






Amounts in thousands


2018


2017


$ Change


% Change


2018


2017


$ Change


% Change

Canada


$

15,678


$

15,247


$

431


3%


$

61,361


$

57,732


$

3,629


6%

United States



7,938



7,671



267


4%



33,483



32,154



1,329


4%

Poland



19,514



15,414



4,100


27%



68,209



59,796



8,413


14%

Corporate and Other



1,976



961



1,015


106%



5,885



4,387



1,498


34%

Consolidated


$

45,106


$

39,293


$

5,813


15%


$

168,938


$

154,069


$

14,869


10%

The Company's earnings from operations increased by $0.3 million, or 16%, and decreased by ($5.2) million, or (35%), for the three months and year ended December 31, 2018, compared to the three months and year ended December 31, 2017.  Following is a summary of the changes in earnings (loss) from operations by reportable segment for the three months and year ended December 31, 2018, compared to the three months and year ended December 31, 2017:


























Earnings (Loss) from Operations



For the three months







For the year








ended December 31,







ended December 31,






Amounts in thousands


2018


2017


$ Change


% Change


2018


2017


$ Change


% Change

Canada


$

3,675


$

4,012


$

(337)


(8%)


$

14,633


$

14,608


$

25


United States



1,033



1,041



(8)


(1%)



5,882



5,599



283


5%

Poland



460



(648)



1,108


171%



145



2,587



(2,442)


(94%)

Corporate and Other



(3,192)



(2,699)



(493)


(18%)



(11,201)



(8,179)



(3,022)


(37%)

Consolidated


$

1,976


$

1,706


$

270


16%


$

9,459


$

14,615


$

(5,156)


(35%)

Net earnings (loss) attributable to Century Casinos, Inc. shareholders increased by $5.8 million, or 110%, and decreased by ($2.9) million, or (46%), for the three months and year ended December 31, 2018, compared to the three months and year ended December 31, 2017. Following is a summary of the changes in net earnings (loss) attributable to Century Casinos, Inc. shareholders by reportable segment for the three months and year ended December 31, 2018, compared to the three months and year ended December 31, 2017:


























Net Earnings (Loss) Attributable to Century Casinos, Inc. Shareholders



For the three months







For the year








ended December 31,







ended December 31,






Amounts in thousands


2018


2017


$ Change


% Change


2018


2017


$ Change


% Change

Canada


$

2,077


$

1,751


$

326


19%


$

7,715


$

7,681


$

34


United States



767



646



121


19%



4,373



3,469



904


26%

Poland



179



(704)



883


125%



(153)



1,280



(1,433)


(112%)

Corporate and Other



(2,517)



(7,027)



4,510


64%



(8,541)



(6,171)



(2,370)


(38%)

Consolidated


$

506


$

(5,334)


$

5,840


110%


$

3,394


$

6,259


$

(2,865)


(46%)

Items deducted from or added to earnings from operations to arrive at net earnings (loss) attributable to Century Casinos, Inc. shareholders include interest income, interest expense, gains (losses) on foreign currency transactions and other, income tax expense and non-controlling interests.

The Company's Adjusted EBITDA** increased by $0.4 million, or 7%, and decreased by ($2.7) million, or (10%), for the three months and year ended December 31, 2018 compared to the three months and year ended December 31, 2017. Following is a summary of the changes in Adjusted EBITDA** by reportable segment for the three months and year ended December 31, 2018 compared to the three months and year ended December 31, 2017:


























Adjusted EBITDA**



For the three months







For the year








ended December 31,







ended December 31,






Amounts in thousands


2018


2017


$ Change


% Change


2018


2017


$ Change


% Change

Canada


$

4,991


$

4,930


$

61


1%


$

19,522


$

18,171


$

1,351


7%

United States



1,582



1,622



(40)


(3%)



8,061



8,005



56


1%

Poland



1,733



987



746


76%



4,890



6,406



(1,516)


(24%)

Corporate and Other



(2,505)



(2,131)



(374)


(18%)



(9,096)



(6,496)



(2,600)


(40%)

Consolidated


$

5,801


$

5,408


$

393


7%


$

23,377


$

26,086


$

(2,709)


(10%)

 

*

Amounts presented are rounded. As such, rounding differences could occur in period over period changes and percentages reported.

**

Adjusted EBITDA and Adjusted EBITDA margin are Non-GAAP financial measures. See discussion and reconciliation of Non-GAAP financial measures in Supplemental Information below.

***

The Company defines book value per share as total Century Casinos, Inc. shareholders' equity divided by outstanding common shares.

Balance Sheet and Liquidity
As of December 31, 2018, the Company had $45.6 million in cash and cash equivalents and $59.5 million in outstanding debt on its balance sheet compared to $74.7 million in cash and cash equivalents and $56.7 million in outstanding debt at December 31, 2017. The outstanding debt as of December 31, 2018 included $40.5 million related to the Company's credit agreement with the Bank of Montreal, $2.6 million of bank debt related to Casinos Poland, $2.4 million of bank debt related to Century Casino Bath, $0.2 million related to capital leases for Century Resorts Alberta, Century Casino Calgary, Century Casino St. Albert, Century Downs Racetrack and Casino ("CDR") and Century Mile Racetrack and Casino, and $14.3 million related to a long-term land lease for CDR, net of $0.5 million in deferred financing costs.

Conference Call Information
Today the Company will post a copy of its Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2018 on its website at https://www.cnty.com/corporate/investor-relations/sec-filings. The Company will also post a presentation on the year end results on its website at https://www.cnty.com/corporate/investor-relations/presentations-and-interviews.

The Company will host its fourth quarter 2018 earnings conference call today, Monday, March 11th, at 8:00 am MDT; 3:00 pm CET, respectively. U.S. domestic participants should dial 1-844-244-9160. For all international participants, please use 330-931-4670 to dial-in. Participants may listen to the call live at https://centurycasinos.adobeconnect.com/earningsrelease or obtain a recording of the call on the Company's website until March 31, 2019 at https://www.cnty.com/corporate/investor-relations/sec-filings.

CENTURY CASINOS, INC. AND SUBSIDIARIES

FINANCIAL INFORMATION – US GAAP BASIS

Condensed Consolidated Statements of Earnings (Loss)















For the three months

For the year


ended December 31,

ended December 31,

Amounts in thousands, except for per share information


2018


2017


2018


2017

Operating revenue:













Net operating revenue


$

45,106


$

39,293


$

168,938


$

154,069

Operating costs and expenses:













Total operating costs and expenses



43,152



37,587



159,502



139,454

Earnings from equity investment



22





23



Earnings from operations



1,976



1,706



9,459



14,615

Non-operating income (expense), net



(1,053)



(122)



(3,536)



(2,164)

Earnings before income taxes



923



1,584



5,923



12,451

Income tax provision



(133)



(6,614)



(1,917)



(4,560)

Net earnings (loss)



790



(5,030)



4,006



7,891

Net earnings attributable to non-controlling interests



(284)



(304)



(612)



(1,632)

Net earnings (loss) attributable to Century Casinos, Inc. shareholders


$

506


$

(5,334)


$

3,394


$

6,259














Earnings (loss) per share attributable to Century Casinos, Inc.:













  Basic


$

0.02


$

(0.20)


$

0.12


$

0.25

  Diluted


$

0.02


$

(0.19)


$

0.11


$

0.24














Weighted average common shares













  Basic



29,439



26,863



29,401



25,068

  Diluted



29,861



27,479



29,962



25,559

 

CENTURY CASINOS, INC. AND SUBSIDIARIES

FINANCIAL INFORMATION – US GAAP BASIS

Condensed Consolidated Balance Sheets







(Amounts in thousands)









December 31,


December 31,



2018


2017

Assets







Current assets


$

54,974


$

84,321

Property and equipment, net



187,017



152,778

Other assets



36,834



37,777

Total assets


$

278,825


$

274,876








Liabilities and Equity







Current liabilities


$

50,020


$

34,438

Non-current liabilities



45,422



53,120

Century Casinos, Inc. shareholders' equity



176,321



179,897

Non-controlling interests



7,062



7,421

Total liabilities and equity


$

278,825


$

274,876

 

CENTURY CASINOS, INC. AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

Constant Currency* Results (unaudited)




















For the three months




For the year





ended December 31,




ended December 31,



Amounts in thousands



2018



2017


% Change



2018



2017


% Change

Net operating revenue as reported (GAAP)


$

45,106


$

39,293


15%


$

168,938


$

154,069


10%

Foreign currency impact vs. 2017



1,600








(2,985)






Net operating revenue constant currency (non-GAAP)*


$

46,706


$

39,293


19%


$

165,953


$

154,069


8%


















Earnings from operations (GAAP)


$

1,976


$

1,706


16%


$

9,459


$

14,615


(35%)

Foreign currency impact vs. 2017



151








27






Earnings from operations constant currency (non-GAAP)*


$

2,127


$

1,706


25%


$

9,486


$

14,615


(35%)


















Net earnings (loss) attributable to Century Casinos, Inc. shareholders as reported (GAAP)


$

506


$

(5,334)


110%


$

3,394


$

6,259


(46%)

Foreign currency impact vs. 2017



79








90






Net earnings (loss) attributable to Century Casinos, Inc. shareholders constant currency (non-GAAP)*


$

585


$

(5,334)


111%


$

3,484


$

6,259


(44%)

Gains and losses on foreign currency transactions are added back to net earnings in the Company's Adjusted EBITDA** calculations. As such, there is no foreign currency impact to Adjusted EBITDA** when calculating Constant Currency* results.

Adjusted EBITDA Margins *** (unaudited)







For the three months

For the year


ended December 31,

ended December 31,


2018

2017

2018

2017

Canada

32%

32%

32%

31%

United States

20%

21%

24%

25%

Poland

9%

6%

7%

11%

Corporate and Other

(127%)

(222%)

(155%)

(148%)

Consolidated Adjusted EBITDA Margin

13%

14%

14%

17%

 

CENTURY CASINOS, INC. AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

Reconciliation of Adjusted EBITDA ** to Net Earnings (Loss) Attributable to Century Casinos, Inc. Shareholders by Reportable Segment.


















For the three months ended December 31, 2018

Amounts in thousands


Canada


United States


Poland


Corporate and Other


Total

Net earnings (loss) attributable to Century Casinos, Inc. shareholders


$

2,077


$

767


$

179


$

(2,517)


$

506

Interest expense (income), net



1,084





50



65



1,199

Income taxes (benefit)



435



266



280



(848)



133

Depreciation and amortization



779



548



1,025



402



2,754

Net earnings attributable to non-controlling interests



174





89



21



284

Non-cash stock-based compensation









255



255

(Gain) loss on foreign currency transactions, cost recovery income and other



(95)





(138)



94



(139)

Loss on disposition of fixed assets



4



1



27



23



55

Pre-opening expenses



533





221





754

Adjusted EBITDA


$

4,991


$

1,582


$

1,733


$

(2,505)


$

5,801


















For the three months ended December 31, 2017

Amounts in thousands


Canada


United States


Poland


Corporate and Other


Total

Net earnings (loss) attributable to Century Casinos, Inc. shareholders


$

1,751


$

646


$

(704)


$

(7,027)


$

(5,334)

Interest expense (income), net



942





34



(4)



972

Income taxes



1,308



395



510



4,401



6,614

Depreciation and amortization



898



581



1,045



91



2,615

Net earnings (loss) attributable to non-controlling interests



655





(351)





304

Non-cash stock-based compensation









250



250

Gain on foreign currency transactions and cost recovery income



(644)





(137)



(26)



(807)

Loss on disposition of fixed assets



4





278





282

Acquisition costs









6



6

Pre-opening expenses



16





312



178



506

Adjusted EBITDA


$

4,930


$

1,622


$

987


$

(2,131)


$

5,408


















For the Year ended December 31, 2018

Amounts in thousands


Canada


United States


Poland


Corporate and Other


Total

Net earnings (loss) attributable to Century Casinos, Inc. shareholders


$

7,715


$

4,373


$

(153)


$

(8,541)


$

3,394

Interest expense (income), net



3,895



1



206



12



4,114

Income taxes (benefit)



2,536



1,508



595



(2,722)



1,917

Depreciation and amortization



3,211



2,178



3,065



945



9,399

Net earnings (loss) attributable to non-controlling interests



722





(75)



(35)



612

Non-cash stock-based compensation









868



868

(Gain) loss on foreign currency transactions and cost recovery income



(235)





(428)



2



(661)

Loss on disposition of fixed assets



10



1



1,054



25



1,090

Pre-opening expenses



1,668





626



350



2,644

Adjusted EBITDA


$

19,522


$

8,061


$

4,890


$

(9,096)


$

23,377


















For the Year ended December 31, 2017

Amounts in thousands


Canada


United States


Poland


Corporate and Other


Total

Net earnings (loss) attributable to Century Casinos, Inc. shareholders


$

7,681


$

3,469


$

1,280


$

(6,171)


$

6,259

Interest expense (income), net



3,487



2



105



(25)



3,569

Income taxes (benefit)



3,008



2,128



1,388



(1,964)



4,560

Depreciation and amortization



3,427



2,405



2,747



366



8,945

Net earnings attributable to non-controlling interests



996





636





1,632

Non-cash stock-based compensation









669



669

(Gain) loss on foreign currency transactions and cost recovery income



(564)





(822)



24



(1,362)

Loss on disposition of fixed assets



83



1



535



3



622

Acquisition costs



28







327



355

Pre-opening expenses



25





537



275



837

Adjusted EBITDA


$

18,171


$

8,005


$

6,406


$

(6,496)


$

26,086

CENTURY CASINOS, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
*  The impact of foreign exchange rates is highly variable and difficult to predict.  The Company uses a Constant Currency basis to show the impact from foreign exchange rates on current period financial information compared to prior period financial information using the prior period's foreign exchange rates. In order to properly understand the underlying business trends and performance of the Company's ongoing operations, management believes that investors may find it useful to consider the impact of excluding changes in foreign exchange rates from the Company's net operating revenue, earnings from operations and net earnings (loss) attributable to Century Casinos, Inc. shareholders. Constant currency results are calculated by dividing the current quarter or year to date local currency segment results, excluding the local currency impact of foreign currency gains and losses, by the prior year's average exchange rate for the quarter or year to date and comparing them to actual U.S. dollar results for the prior quarter or year to date. The average exchange rates for the current and prior year are reported in Note 2 to the Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of the Company's Annual Report on Form 10-K. The average exchange rates for the three months ended December 31, 2018 and 2017 are presented below.











For the three months






ended December 31,




Average Rates


2018


2017


% Change


Canadian dollar (CAD)


1.3218


1.2708


(4.0%)


Euros (EUR)


0.8763


0.8491


(3.2%)


Polish zloty (PLN)


3.7668


3.5922


(4.9%)


British pound (GBP)


0.7773


0.7534


(3.2%)


Source: Pacific Exchange Rate Service
















Constant currency information is not a measure of financial performance under generally accepted accounting principles in the United States of America (GAAP) and should not be considered a substitute for net operating revenue, earnings from operations or net earnings (loss) attributable to Century Casinos, Inc. shareholders as determined in accordance with GAAP.

**  The Company defines Adjusted EBITDA as net earnings (loss) attributable to Century Casinos, Inc. shareholders before interest expense (income), net, income taxes (benefit), depreciation and amortization, non-controlling interests net earnings (loss) and transactions, pre-opening expenses, acquisition costs, non-cash stock-based compensation charges, asset impairment costs, (gain) loss on disposition of fixed assets, discontinued operations, (gain) loss on foreign currency transactions, cost recovery income and other, gain on business combination and certain other one-time items, such as acquisition and disposition costs and gain or loss. Intercompany transactions consisting primarily of management and royalty fees and interest, along with their related tax effects, are excluded from the presentation of net earnings (loss) and Adjusted EBITDA reported for each segment. Not all of the aforementioned items occur in each reporting period, but have been included in the definition based on historical activity. These adjustments have no effect on the consolidated results as reported under GAAP. Adjusted EBITDA is not considered a measure of performance recognized under GAAP. Management believes that Adjusted EBITDA is a valuable measure of the relative performance of the Company and its properties. The gaming industry commonly uses Adjusted EBITDA as a method of arriving at the economic value of a casino operation. Management uses Adjusted EBITDA to compare the relative operating performance of separate operating units by eliminating the above mentioned items associated with the varying levels of capital expenditures for infrastructure required to generate revenue and the often high cost of acquiring existing operations. Adjusted EBITDA is used by the Company's lending institution to gauge operating performance. The Company's computation of Adjusted EBITDA may be different from, and therefore may not be comparable to, similar measures used by other companies within the gaming industry. Please see the reconciliation of Adjusted EBITDA to net earnings (loss) attributable to Century Casinos, Inc. shareholders above.

*** The Company defines Adjusted EBITDA margin as Adjusted EBITDA divided by net operating revenue. Adjusted EBITDA margin is a non-GAAP measure. Management uses this margin as one of several measures to evaluate the efficiency of the Company's casino operations.

CENTURY CASINOS, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
About Century Casinos, Inc.:
Century Casinos, Inc. is an international casino entertainment company that operates worldwide. The Company owns and operates Century Casino & Hotels in Cripple Creek and Central City, Colorado, and in Edmonton, Alberta, Canada and the Century Casino in Calgary and St. Albert, Alberta, Canada and in Bath, England. Through its Austrian subsidiary, Century Resorts Management GmbH ("CRM"), formerly Century Casinos Europe GmbH, the Company holds a 66.6% ownership interest in Casinos Poland Ltd., the owner of eight casino licenses throughout Poland, seven of which are operating. The Company, through CRM, also holds a 75% ownership interests in CDR, which operates in the north metropolitan area of Calgary, Alberta, Canada; a 75% ownership interest in Century Bets! Inc., which operates the pari-mutuel off-track horse betting network in southern Alberta, Canada; and a 51% ownership interest in Golden Hospitality Ltd., a company that manages a hotel and entertainment and gaming club in Vietnam. The Company operates 10 ship-based casinos under agreements with three cruise ship owners. The Company, through CRM, also owns a 7.5% interest in, and provides consulting services to, Mendoza Central Entretenimientos S.A., a company that provides gaming-related services to Casino de Mendoza in Mendoza, Argentina. The Company is also developing Century Mile Racetrack and Casino in Edmonton, Alberta, Canada. The Company continues to pursue other international projects in various stages of development.

Century Casinos' common stock trades on The Nasdaq Capital Market® under the symbol CNTY.

For more information about Century Casinos, visit our website at www.cnty.com.

CENTURY CASINOS, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
This release may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of the management of Century Casinos based on information currently available to management. Such forward-looking statements include, but are not limited to, statements regarding future results of operations, operating efficiencies, synergies and operational performance, the prospects for and timing and costs of new projects, projects in development and other opportunities, including the Century Mile, Bermuda and Vietnam projects, debt repayment, investments in joint ventures, outcomes of legal proceedings, changes in our tax provisions or exposure to additional income tax liabilities, and plans for our casinos and our Company. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, among others, the risks described in the section entitled "Risk Factors" under Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2018 and in subsequent periodic and current SEC filings we may make. Century Casinos disclaims any obligation to revise or update any forward-looking statement that may be made from time to time by it or on its behalf.

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