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Century Casinos, Inc. Announces Second Quarter 2022 Results
Since the inception of the COVID-19 pandemic in March 2020 , the Company's casinos have varied their operations based on the governmental health and safety requirements in the jurisdictions in which they are located. The COVID-19 pandemic impacted the Company's results of operations in the first half of 2021 because of closures at the Company's Canada and Poland properties during this period. Currently the Company's operations have no health and safety requirements for entry and few other COVID-19 related restrictions. The duration and ultimate impact of the COVID-19 pandemic otherwise remains uncertain.
On April 1, 2022 , the Company purchased 50% of the membership interest in Smooth Bourbon, LLC ("PropCo") for approximately $95.0 million (the "PropCo Acquisition"). Pursuant to a definitive agreement and subject to approval from the Nevada Gaming Commission, the Company will purchase 100% of the membership interests in Nugget Sparks, LLC ("OpCo") for $100.0 million (subject to certain adjustments) (the "OpCo Acquisition" and together with the PropCo Acquisition, the "Acquisition"). The OpCo Acquisition is expected to occur within one year of the PropCo Acquisition. OpCo owns and operates the Nugget Casino Resort in Sparks, Nevada , and PropCo owns the real property on which the casino is located and leases the real property to OpCo for an annual rent of $15.0 million .
On April 1, 2022 , the Company also entered into a Credit Agreement with Goldman Sachs Bank USA (the "Goldman Credit Agreement"). The Goldman Credit Agreement provides for a $350.0 million term loan (the "Term Loan") and a $30.0 million revolving credit facility (the "Revolving Facility"). The Company drew $350.0 million under the Term Loan and used the proceeds as well as $29.3 million of cash on hand to fund the PropCo Acquisition, to repay approximately $166.2 million outstanding under the Company's credit agreement with Macquarie ("Macquarie Credit Agreement"), to fund a $100.0 million escrow fund that will be used to purchase OpCo, and for related fees and expenses. The Goldman Credit Agreement replaces the Macquarie Credit Agreement. The Company did not draw on the Revolving Facility on the closing date of the PropCo acquisition.
The consolidated results for the three and six months ended June 30, 2022 and 2021 are as follows:
"We achieved the highest net operating revenue and Adjusted EBITDA during a second quarter in the history of the Company. We are pleased with the strong contribution from our operations in Canada which have continued to improve after Alberta removed COVID-19 restrictions," Erwin Haitzmann and Peter Hoetzinger, Co-Chief Executive Officers of Century Casinos remarked. "As we announced in April, we have completed the first portion of our acquisition of the Nugget Casino Resort. We are excited to enter the growing Reno / Sparks Nevada market with this transaction," Messrs. Haitzmann and Hoetzinger concluded.
The table below shows the Company's reporting units and operating segments that are included in each of the Company's reportable segments as of June 30, 2022 :
The Company's net operating revenue increased by $18.9 million , or 21%, and by $49.6 million , or 30%, for the three and six months ended June 30, 2022 , compared to the three and six months ended June 30, 2021 . Following is a summary of the changes in net operating revenue by reportable segment for the three and six months ended June 30, 2022 , compared to the three and six months ended June 30, 2021 :
The Company's earnings from operations increased by $2.7 million , or 15%, and by $7.5 million , or 28%, for the three and six months ended June 30, 2022 , compared to the three and six months ended June 30, 2021 . Following is a summary of the changes in earnings (loss) from operations by reportable segment for the three and six months ended June 30, 2022 , compared to the three and six months ended June 30, 2021 :
Net earnings attributable to Century Casinos, Inc. shareholders increased by $2.0 million , or 29%, and by $3.6 million , or 67%, for the three and six months ended June 30, 2022 , compared to the three and six months ended June 30, 2021 . Following is a summary of the changes in net earnings (loss) attributable to Century Casinos, Inc. shareholders by reportable segment for the three and six months ended June 30, 2022 , compared to the three and six months ended June 30, 2021 :
Items deducted from or added to earnings from operations to arrive at net earnings attributable to Century Casinos, Inc. shareholders include interest income, interest expense, gains (losses) on foreign currency transactions and other, income tax (benefit) expense and non-controlling interests. Items that impacted net earnings attributable to Century Casinos, Inc. shareholders for the three and six months ended June 30, 2022 included a write-off of $7.3 million in deferred financing costs to interest expense related to the prepayment of the Macquarie Credit Agreement and the release of a $10.2 million US valuation allowance, resulting in an income tax benefit.
Adjusted EBITDA** increased by $4.5 million , or 18%, and by $13.6 million , or 34%, for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021 . Following is a summary of the changes in Adjusted EBITDA** by reportable segment for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021 :
As of June 30, 2022 , the Company had
$96 .2 million in cash and cash equivalents compared to
$107.8 million in cash and cash equivalents at December 31, 2021 . Cash and cash equivalents as of
June 30, 2022 do not include restricted cash, which includes
$100.0 million in escrow to fund the OpCo Acquisition. As of
June 30, 2022 , the Company had
$369.9 million in outstanding debt compared to $189.2 million in outstanding debt at
December 31, 2021 . The outstanding debt as of
June 30, 2022 included $349.1 million related to the Term Loan under the Goldman Credit Agreement (including
$100.0 million borrowed and in escrow to fund the OpCo Acquisition),
$0.1 million of bank debt related to Casinos Poland,
$5.5 million of bank debt related to Century Resorts Management GmbH ("CRM"), and
$15.1 million related to a long-term land lease for Century Downs Racetrack and Casino ("CDR"). The Company also has a
$283.0 million long-term financing obligation under its triple net master lease ("Master Lease") of its
West Virginia and
Missouri properties.
Today the Company will post a copy of its quarterly report on Form 10-Q filed with the SEC for the quarter ended June 30, 2022 on its website at www.cnty.com/investor/financials/sec-filings/. The Company will also post a presentation of the second quarter results on its website at www.cnty.com/investor/presentations/.
The Company will host its second quarter 2022 earnings conference call today, Friday, August 5 , at 10:00 am EDT / 8:00 am MDT . U.S. domestic participants should dial 800-920-5564. For all international participants, please use 415-226-5355 to dial-in. Participants may listen to the call live at cc.callinfo.com/r/1ocsahbwizouj&eom or obtain a recording of the call on the Company's website until August 31, 2022 at www.cnty.com/investor/financials/sec-filings/.
* 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-US GAAP financial measures. See discussion and reconciliation of Non-US GAAP financial measures in Supplemental Information below.
* The Company defines 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, 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. Expense related to the Master Lease and CDR land lease is included in the interest expense (income), net line item. 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 EBITDA reported for each segment. Non-cash stock-based compensation expense is presented under Corporate and Other as the expense is not allocated to reportable segments when reviewed by the Company's chief operating decision makers. 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 US GAAP. Adjusted EBITDA is not considered a measure of performance recognized under US 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 as Adjusted EBITDA divided by net operating revenue. Adjusted EBITDA margin is a non-US GAAP measure. Management uses this margin as one of several measures to evaluate the efficiency of the Company's casino operations.
Century Casinos, Inc. is a casino entertainment company. The Company owns and operates Century Casino & Hotels in Cripple Creek and Central City, Colorado , and in Edmonton, Alberta, Canada ; the Century Casino in Cape Girardeau and Caruthersville, Missouri , and in St. Albert, Alberta, Canada ; Mountaineer Casino, Racetrack & Resort in New Cumberland, West Virginia ; and the Century Mile Racetrack and Casino in Edmonton, Alberta, Canada . Through its Austrian subsidiary, CRM, the Company holds a 66.6% ownership interest in Casinos Poland Ltd., the owner and operator of eight casinos throughout Poland ; and a 75% ownership interest in Century Downs Racetrack and Casino in Calgary, Alberta, Canada . Through its United States subsidiary, Century Nevada Acquisition, Inc., the Company owns a 50% membership interest in PropCo, which owns the land and building of OpCo in Sparks, Nevada . The Company has an agreement to purchase 100% of the membership interests in OpCo. The Company also has an agreement to operate one ship-based casino. The Company continues to pursue other 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.
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