Century Casinos, Inc. Announces Preliminary Fourth Quarter 2023 Financial Results and Operational Updates
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Insights
The preliminary financial results from Century Casinos, Inc. indicate a significant increase in net operating revenue from $104 million in Q4 2022 to a range of $140 million - $145 million in Q4 2023. This growth is a strong indicator of the company's operational expansion and could be a positive sign for investors. However, the estimated net loss widening from $4 million in Q4 2022 to between $10 million and $14 million in Q4 2023 raises concerns about the company's profitability in the short term. It is critical to assess the underlying factors contributing to this loss, such as potential one-time expenses related to acquisitions or increased operational costs and whether these factors are likely to persist.
The repurchase of part of its term loan at a discount could be a strategic move to manage debt efficiently, potentially reducing interest expenses in the future. Furthermore, the successful repayment of the revolving facility and the availability of the full amount for future borrowing provide the company with financial flexibility. The cash position has improved considerably, which is a positive sign for liquidity and financial health. This could potentially lead to a more favorable view from credit rating agencies and investors alike.
Century Casinos' strategic moves in the international market, particularly in Poland, indicate a focus on maintaining and expanding its global footprint. The reopening of the casinos in Poland could contribute to a diversified revenue stream and mitigate risks associated with market concentration. The successful acquisition of new licenses and the planned reopening of casinos are positive developments that could bolster the company's market position in the region.
In the US market, the ongoing construction projects in Missouri represent a significant capital investment that is expected to contribute to long-term growth. The timely and on-budget progress of these projects is crucial for maintaining investor confidence and ensuring that the anticipated benefits are realized. The partnership with VICI Properties Inc. for financing the Caruthersville project demonstrates the company's ability to leverage strategic partnerships to fund growth initiatives without overextending its balance sheet.
Adjusted EBITDAR is a critical metric in the casino and gaming industry as it provides a clearer view of operational performance by excluding non-operational expenses such as interest, taxes and depreciation. The slight increase in Adjusted EBITDAR from $22 million in Q4 2022 to between $24 million and $26 million in Q4 2023 suggests an improvement in the core operations despite the reported net loss. This metric is particularly relevant for companies like Century Casinos, which operate under triple net leases, as it gives insight into the company's ability to generate earnings before accounting for the structure of its lease agreements.
The estimated $15 million of interest expense related to the Master Lease underscores the impact of such agreements on the company's financials. Stakeholders should consider how these lease obligations might affect future cash flows and the company's ability to sustain and grow its operations, especially in the context of the company's capital expenditure plans and its strategic initiatives for 2024 and beyond.
Preliminary fourth quarter 2023 (unaudited) estimates are:
- Approximately
$171 million $102 million - Approximately
$140 million $145 million $104 million - Approximately
( –$10) million ( in net loss attributable to Century Casinos, Inc. shareholders (compared to$14) million ( in fourth quarter 2022); and$4) million - Approximately
$24 million $26 million $22 million
As reported in the Company's third quarter filings, the
The Company has agreed to buy back
In
In
"We expect 2024 to be a transitional year for the Company as we continue to integrate the Nugget and Rocky Gap operations into our portfolio and complete our two large construction projects in
PRELIMINARY RESULTS:
Our audited consolidated financial statements for the year ended December 31, 2023 are not yet available; however, certain of our estimated preliminary unaudited financial results for the three months ended December 31, 2023 are set forth above and in the reconciliations below. With respect to certain presented results, we have provided ranges, rather than specific amounts, because these results are preliminary estimates and subject to change. These results are based on the information available to us as of the date of this release. Our actual results may vary from the estimated preliminary results presented in this release, including due to the completion of our financial closing and other operational procedures, final adjustments, and other developments that may arise between now and the time the Company releases its financial results for the fourth quarter and year ended December 31, 2023, which is currently scheduled for March 14, 2024. These estimates should not be viewed as a substitute for our full interim or annual financial statements prepared in accordance with US generally accepted accounting principles ("GAAP"). Further, our preliminary estimated results are not necessarily indicative of the results to be expected for any future period. Accordingly, undue reliance should not be placed on this preliminary data.
SUPPLEMENTAL INFORMATION:
* Adjusted EBITDAR. We define Adjusted EBITDAR as net earnings (loss) attributable to Century Casinos, Inc. shareholders before interest expense (income) (including interest expense related to the Company's triple net lease with VICI (the "Master Lease")), net, income taxes (benefit), depreciation, amortization, non-controlling interests net earnings (losses) and transactions, pre-opening expenses, acquisition costs, non-cash stock-based compensation charges, asset impairment costs, loss (gain) 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 transactions. The Master Lease is accounted for as a financing obligation. As such, a portion of the periodic payment under the Master Lease is recognized as interest expense with the remainder of the payment impacting the financing obligation using the effective interest method. 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) attributable to Century Casinos, Inc. shareholders and Adjusted EBITDAR 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 EBITDAR is used outside of our financial statements solely as a valuation metric and is not considered a measure of performance recognized under GAAP. Adjusted EBITDAR is an additional metric used by analysts in valuing gaming companies subject to triple net leases such as our Master Lease since it eliminates the effects of variability in leasing methods and capital structures. This metric is included as supplemental disclosure because (i) we believe Adjusted EBITDAR is used by gaming operator analysts and investors to determine the equity value of gaming operators and (ii) financial analysts refer to Adjusted EBITDAR when valuing our business. We believe Adjusted EBITDAR is useful for equity valuation purposes because (i) its calculation isolates the effects of financing real estate, and (ii) using a multiple of Adjusted EBITDAR to calculate enterprise value allows for an adjustment to the balance sheet to recognize estimated liabilities arising from operating leases related to real estate.
Adjusted EBITDAR should not be construed as an alternative to net earnings (loss) attributable to Century Casinos, Inc. shareholders, the most directly comparable GAAP measure, as indicators of our performance. In addition, Adjusted EBITDAR as used by us may not be defined in the same manner as other companies in our industry, and, as a result, may not be comparable to similarly titled non-GAAP financial measures of other companies. Consolidated Adjusted EBITDAR should not be viewed as a measure of overall operating performance or considered in isolation or as an alternative to net earnings (loss) attributable to Century Casinos, Inc. shareholders, because it excludes the rent expense associated with our Master Lease and several other items.
A reconciliation of the estimated net loss attributable to Century Casinos, Inc. shareholders to estimated Adjusted EBITDAR is presented below.
(Unaudited) For the three months ended | |||||||||
December 31, 2023 | December 31, 2022 | ||||||||
in millions | Low | High | Actuals | ||||||
Net loss attributable to Century Casinos, Inc. shareholders | $ | (13.6) | $ | (9.8) | $ | (4.0) | |||
Interest expense (income), net | 25.5 | 24.5 | 17.0 | ||||||
Income tax benefit | (5.0) | (3.0) | 0.5 | ||||||
Depreciation and amortization | 12.0 | 11.0 | 6.8 | ||||||
Net earnings attributable to non-controlling interests | 3.0 | 2.0 | 0.9 | ||||||
Non-cash stock-based compensation | 1.0 | 0.8 | 0.7 | ||||||
Loss (gain) on foreign currency transactions, cost recovery income and other | 0.4 | 0.2 | (0.7) | ||||||
Loss on disposition of fixed assets | 0.3 | 0.1 | 0.1 | ||||||
Acquisition costs | 0.4 | 0.2 | 0.4 | ||||||
Adjusted EBITDAR | $ | 24.0 | $ | 26.0 | $ | 21.7 | |||
The Company estimates that approximately
ABOUT CENTURY CASINOS, INC.:
Century Casinos, Inc. is a casino entertainment company. In
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.
This release may contain certain "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 2023 results, debt repurchases, timing for opening certain casinos in
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SOURCE Century Casinos, Inc.
FAQ
What were Century Casinos, Inc.'s preliminary financial results for the fiscal fourth quarter of 2023?
What construction projects is Century Casinos, Inc. working on?
What is the estimated capital expenditure for Century Casinos, Inc. in 2024?
How does Century Casinos, Inc. define Adjusted EBITDAR?
When will Century Casinos, Inc. release its financial results for the fourth quarter and year ended December 31, 2023?
