Century Casinos, Inc. (CNTY) Q1 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call indicates several positive factors: a successful new casino opening with strong revenue growth, a focus on operational efficiency, and a solid shareholder return plan via stock buybacks. Despite some year-over-year declines in EBITDAR and visitor volume, the company's strategic initiatives and optimistic outlook, particularly in Missouri, suggest potential for growth. The Q&A revealed management's proactive revenue strategies and continued cost optimization efforts, though some uncertainty remains regarding the Polish asset divestment. Overall, the positives outweigh the negatives, suggesting a positive stock price movement.

Key Financial Performance

Revenue $130.4 million, no year-over-year change mentioned.

EBITDAR $20.2 million, down approximately $2 million year-over-year due to weather impacts, one less operating day, and loss of sports betting income in Colorado.

Carded gaming revenue Increased 1% year-over-year.

Uncarded gaming revenue Decreased 2.5% year-over-year.

Total visitor volume Down 3% year-over-year.

Spend per trip Increased 4% year-over-year.

Missouri properties revenue Total gaming revenue up 17% or $2.1 million compared to Q1 of last year.

Caruthersville property revenue Revenue and EBITDAR up 25% and 31% respectively in the first six months of operation.

EBITDAR margin for Caruthersville 43%, with expected further improvement.

EBITDAR margin for Century Casino & Hotel in Cape Girardeau 36%.

Colorado properties EBITDAR Significantly impacted by loss of sports betting income, approximately $0.5 million.

Nugget Casino EBITDAR Positive $700,000 this quarter, turnaround from negative last year.

Cash and cash equivalents $85 million.

Total principal amount of debt outstanding $340 million.

Net debt $255 million.

Net debt to EBITDA ratio 6.9 times, expected to decrease to below 6 times by year-end.

CapEx for growth projects Expected to be $4 million.

Maintenance CapEx Expected to be $14 million.

Free cash flow Expected to improve significantly compared to last year.

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Operating Highlights

New Casino Hotel in Caruthersville: The new Caruthersville property produced strong results, with carded gaming revenue growing 12% and total gaming revenue up 17% compared to Q1 of last year.

New Sports Brand Launch in Canada: A new sports brand launch concept was introduced in Canada with great initial feedback and results.

Second Casino License in Wroclaw, Poland: The company has been awarded a second casino license in Wroclaw, Poland, with plans to open in Q4 of this year.

Market Expansion in Missouri: The new Caruthersville property saw a 34% increase in patrons living 75+ miles away, and a 20% increase from those within 75 miles.

Increased Visitation in Cape Girardeau: The Century Casino & Hotel in Cape Girardeau saw a 5% increase in patrons and a 2% increase in trips.

Growth in Younger Demographics: The number of trips from guests under 50 increased by 14% in Cape Girardeau.

Operational Efficiencies in Caruthersville: The new facility allows for significantly more efficient operations, with a current EBITDAR margin of 43%.

Cost-Cutting Measures at Nugget Casino: Cost-cutting measures at Nugget Casino resulted in a turnaround of EBITDAR from negative to positive $700,000.

Elimination of Table Games: Table games were eliminated at both Colorado properties, expected to save close to $1 million per year.

Focus on Operational Discipline: The company is focusing on operational discipline and efficiency to improve EBITDAR and cash flow.

Share Buyback Program: Plans to buy back stock in the coming weeks due to a solid cash position of around $85 million.

Divestment of Poland Operations: The company is committed to divesting its Poland operations, with two interested parties emerging.

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Risk or Challenges

Weather Impact: Significantly more weather-impacted days throughout North America affected operations, leading to an estimated EBITDAR impact of around $2 million compared to Q1 of last year.

Sports Betting Revenue Loss: Loss of two-thirds of sports betting income in Colorado, amounting to approximately $0.5 million for the quarter, negatively impacted overall revenue.

Visitor Demographics: Total visitor volume decreased by 3%, primarily due to a reduction in visits from the 50-plus age group, which could indicate a shift in customer demographics.

Economic Uncertainty: Acknowledgment of economic uncertainty affecting consumer behavior and spending patterns, although there are signs of improvement since mid-March.

Competitive Pressures: No significant competitive supply impacting the business is anticipated for this year or next, which could pose a risk if market conditions change.

Operational Challenges: Transitioning challenges in Central City, Colorado, with multiple cleanup initiatives affecting performance, although optimism remains for future quarters.

Cost Management: Higher costs of goods sold and staff costs impacting profitability, particularly in the hotel segment, necessitating ongoing operational discipline.

Debt Levels: Net debt of $255 million with a high net debt to EBITDA ratio of 6.9 times, which the company aims to reduce below 6 times by year-end.

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Guidance & Outlook

New Casino and Hotel in Caruthersville: The new Caruthersville property produced strong results, with carded gaming revenue growing 12% and total gaming revenue up 17% compared to Q1 of last year. Revenue and EBITDAR are up 25% and 31%, respectively, in the first six months of operation.

Sports Betting in Missouri: The company is finalizing partnership agreements for sports betting going live in Missouri towards the end of the year, which is expected to deliver incremental high-margin EBITDAR.

Operational Efficiency: The company is focusing on operational discipline and efficiency, with expected savings of close to $1 million per year from eliminating table games and revamping restaurant concepts.

Expansion in Poland: The company plans to open a second casino in Wroclaw, Poland, in Q4 of this year, while also committing to divesting its Poland operations.

Revenue Expectations: Despite challenges in Q1, the company is optimistic about upcoming quarters, with initial estimates showing an increase in EBITDAR of 5% over last year's April.

CapEx Projections: The company expects to spend $4 million for growth projects and about $14 million in maintenance CapEx this year, indicating a significant reduction in CapEx.

Debt Management: The company anticipates a reduction in net debt to EBITDA ratio to well below 6 times by the end of the year.

Share Buyback: The company plans to buy back stock in the coming weeks, taking advantage of the dislocated share price of CNTY.

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Shareholder Return Plan

Share Buyback Program: The company plans to buy back stock in the coming weeks, taking advantage of the dislocated share price of CNTY.

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Key Q&A

Q:Have you started to notice any softening in the consumer for your Canadian assets, whether that be from uncertainty related to the trade war or else derivative impact from energy prices starting to come in?

A:We think that we don't really see any of the reasons that you mentioned as significant. It's more -- the lower revenue is not that significant, and it's also due to weather and the one day gaming -- one less gaming day. So, we're not concerned.

Q:Can you give us an update on some of the growth initiatives at Rocky Gap? What strategies are currently in place or else being planned to help sort of broaden the encampment area and attract some more higher net worth overnight guests?

A:We've completed the renovations in the F&B area, and we have -- we're also ready with a great beach access, that investment was finalized late last year. So, we feel we have a better product for our hotel and resort guests right now.

Q:What has changed over that time, what you're seeing that maybe the year-end outlook just doesn't look as good as it did two months ago?

A:We currently see since mid-March for the last six, seven weeks, we see a clearly positive trend, but it's too short of a timeframe to project that out -- to the full remainder of 2025, and that's why we are a little bit more cautious.

Q:Are you looking for ways to monetize your casino database with any potential partners that might be interested in that?

A:The only thing that we potentially could see at the moment is that we partner up with the Alberta Gaming Commission with regard to sharing a database. I wouldn't see any other opportunity in that context.

Q:Are you trying to reach out to more of these 75-mile and further out customers, maybe push a little bit more on marketing and promotions at this time just to grow the overall pie? Or are you managing to a bottom-line result in the near-term?

A:We proactively and aggressively want to push the revenue up. And as you correctly said, an interesting segment is the 75-plus mile customer base. We think we've got more opportunity there.

Q:With the increased interest on the Polish assets, do we still think this could come to a conclusion in 2025?

A:As we sit here today, we believe so, but we were wrong already once. Late last year, when we said that we think it's going to happen in '24, we had -- we were already drafting some documents and then the Board of the other side said no.

Q:Can you help us think about how much you would be willing to or have the capacity to buy back maybe on a quarterly basis?

A:We think we'll start between now and our next earnings release in early August, we'll start with a single-digit million dollar value -- volume.

Q:Is that impacting either good or bad in the process?

A:The potential changes you are mentioning, they currently have not led to any new or additional significant interest.

Q:Is there any optimization you can do on the cost side in either of those properties?

A:Yeah, definitely. We are constantly working on that. And I think we've achieved some things and there's certainly more that's possible.

Q:Review of Unclear Management Responses

A:Management appeared to avoid giving a direct answer when asked about the timeline for the Polish assets, stating they were wrong previously about the timeline and expressing uncertainty.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

CNTY Transcript

Century Casinos, Inc. (CNTY) Q3 2025 Earnings Call Transcript

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The earnings call shows mixed signals: strong performance in specific casinos and regions, but weaknesses in others like Poland. Positive elements include record EBITDAR in some areas and strategic partnerships, while negatives involve vague management responses and challenges in Poland. The Q&A highlights cautious optimism but also uncertainty, particularly regarding consumer trends and capital allocation. Considering these factors and the market cap's unavailability, the stock price is likely to remain neutral in the short term.

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Positive8-8

The earnings call indicates strong financial performance in several areas, including impressive growth in Poland and improvements in cash flow and debt ratio. The strategic plan highlights new partnerships and operational efficiencies, with an optimistic outlook on upcoming quarters. The Q&A reveals positive sentiment from analysts, with explanations for lower stock repurchases and strategic responses to market trends. The company's share buyback plan and positive EBITDAR growth further support a positive sentiment, likely leading to a stock price increase of 2% to 8%.

Century Casinos, Inc. (NASDAQ:CNTY) Q1 2025 Earnings Call Transcript

Positive5-13

The earnings call highlights strong financial performance in Missouri, with significant revenue growth and improved EBITDAR margins. The company is focused on operational efficiency and expects improved cash flow and EBITDAR in 2025. Despite some uncertainty in guidance and vague responses on Polish asset divestment, the overall sentiment is positive due to strong revenue growth, successful new casino openings, and a proactive market strategy. The Q&A section did not reveal significant negative trends. Therefore, the stock price is likely to experience a positive movement in the short term.

Century Casinos, Inc. (CNTY) Q1 2025 Earnings Call Transcript

Positive5-12

CNTY Slides

Century Casinos Q1 2025 slides: Widening losses despite stable revenue

2025-05-12

Century Casinos Q2 2025 slides: Revenue growth amid strategic review process

2025-08-07

CNTY Report

CENTURY CASINOS INC /CO/ 10-Q

10-Q

2024-11-04

CENTURY CASINOS INC /CO/ 10-Q

10-Q

2024-08-08

CENTURY CASINOS INC /CO/ 10-Q

10-Q

2024-05-09

CENTURY CASINOS INC /CO/ 10-K

10-K

2024-03-14

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