CNTY - Earnings call transcript Q3 2018

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Operator

Welcome to Century Casinos Q3 2018 Earnings Conference Call. This call will be recorded. [Operator Instructions] I would like to introduce your host for today's call, Mr. Peter Hoetzinger. Mr. your begin may you conference. Hoetzinger,

Peter Hoetzinger

Casinos, and Good President earnings and of for well Century our Finance, Margaret you With morning, the our me Vice of Co-CEO everyone, call. my on joining are as thank the Executive Haitzmann; Erwin Stapleton. Chairman as call

to result update forward-looking and filings, we materially detailed factors events cause a We The or as revise Before risks risk the number forward-looking filings. SEC statements. that a of or remind and we we from statements, whether encourage provide actual discussion forward-looking a obligation various discussing our future uncertainties to like of be begin, may you the new results of to differ information, to information, in our we'd these that otherwise. review no undertakes you will which company involves

and call, to several not our In refer measures liquidity limited third news the cnty.com. Investors at addition, GAAP the of adjusted financial but in provide section our for non-GAAP in EBITDA. to, we throughout available website SEC Reconciliations will results of the brief financial measures can filings, review our the measures, and including, be our company's now a to of appropriate quarter. performance I found non-GAAP release

remarks, question-and-answer Following session. there a prepared will be the

occurred it the and through up casino slower last on, lower to August. and performances by are the licensing Colorado Poland ramp happy compared We expenses to due and UK. EBITDA report expenses related in in newly cost finally. extra net in with From and and Canada, in strong the was are the September in The Poland. situation July a we revenue, driven to increase operating cost of to in X% Poland in expected opened than extra Adjusted year

by local and Overall, Canadian forward quarter, EBITDA to in operate XX% segment, of EBITDA grew our own market, by generating very flat With revenues saw the In mix look latter versus we the in to and Calgary Century XX% little the coin at & currency, Casino strongest Century in the revenue. by a increased finish adjusted by the the In and last overall to the performance consolidated performance a Canada on impacted operations returning that Edmonton tables remains St. revenue property more Albert Hotel and X%. while the slot the market, see the of casinos segment, two of two adjusted Poland casinos grew X%, year. already by we year. the we the X%. half Greater in Casino on the Results Casino the down reopening We little great Edmonton hold Albert. strong results, of our X% Century bit state the year-over-year, were but Calgary St. had tables the of XX% dragging

US, performance EBITDA & market was driven Racing racing up. of increased operations our we're Cripple Downs everything quarter Racetrack properties, Colorado over and larger championship be year. increase side revenue an food to share will and excellent XX%. chuckwagon to and flow by Century host our Downs Century happy event business to Chuckwagon a strong the that strengthen weekends two for crowds will with the and from Casino growth grew premier the further the traffic its XX on of XX% EBITDA to In the for Creek, To success. adjusted XX% generated X%, Revenues of X% the in huge our World the sure XX world's to Hotel and WPCA, showed announce good overall contributing by margin which increased and horses the The from XX%, performance. to This our Century revenue racing by Finals gaming betting Net in beverage draw Our EBITDA crowds. EBITDA was five-day The its XX%, feature August by contributed margin next XX%. consolidated broad-based, drivers will, Casino and revenue. continued of operating of

In but Table company's Europe though, in Poland closed almost XX%, as of was from that operation us. for at to and was of market finalize casino detailed. casinos EBITDA impacted Europe, quarter's came and last growth, slot casinos up EBITDA so anymore of forward casinos to the this had at the associated steady XX%, and the the market. but of to hotel us, a by as to further But up casino look revenue out a all more two strong and Neither on the one month expenses July really season expect was compared to busy third lower X%, operators. month same we plans was for alone. up hotel still groups party was will closed the Over and kept up We will of months quarter, our September be continue the at growth casino our with casinos. for for current in continues the opening of two hold the local than XX%. in same the to quarter market leaders In year, is Christmas slot normal drop anticipated. Colorado X.X% total as slower slot revenue two as the revenue. UK site the opened in normalize, slow, of actually no Bath, delayed that Creek with in first gaming nor of operation hold number in low Southern locals city tourist shortly in cost our Cripple year. XX% is currency, the of enhancing expansion with revenue, but we even forward look open three hotel soon quarter, generated low as property the to tour position well by XX% one newly in Poland, percentages we ramping the hold the in costs and August the the coin versus the last upon a

gaming and in land-based the club are glad back facility higher Traffic that QX. and Golden a ownership Through Golden agreement our where an move in that in company margins controlling have increase stake Vietnam, the Vietnam X% at feet own Hospitality, also from that to XX% station. forward. Vietnamese-Chinese opened an to the Asia, of we Through Limited, that border much first EBITDA property, owns million. in we have increasing and Poland, standard property offers XX day forward the just the gaming already Poland their end to We day going and Southeast stake rooms hotel our $X.XX to positive. club XX% we by normal manage of are a hotel gaming for The we we offers to gaming generating to Hospitality From EBITDA things XXX XX positions. Northern agreement look currently electronic is low is and

a relatively finalizing floor for when This like of always and new We investment enter of to X this the market reward and small a market. expand hotels into initial clubs. to potential. gaming great situation low is are and as the entering a gaming the the of well Phase upside land-based gaming and include the existing look typical high restaurants. introduction relocation opportunity development expansion the with investment, as but risk, upgrade Asian We currently plans we hotels, the renovation

Now balance and a sheet our quick look at liquidity.

The million X.X. adjusted in million debt net have EBITDA at EBITDA is and in $XX adjusted equivalents Total debt We cash ratio cash X.X. ratio sits to and $XX outstanding debt. to

was Bank $X for of and per Casino of Century existing the million million or at Our at England. $XX quarter Creek Poland, debt related in Cripple because at Downs the bit machines than tent new the Downs our XX% locations includes Calgary. mainly improvements climbed lease, Racetrack during barn usual, That long-term Montreal also of million $X.X and slot The leasehold to land a higher Casinos about Poland credit book related the at two million in value $XX in CapEx in was to Century to operations $X.XX. revenues. in share million agreement, $X

one facility, the our increase $XX We closed a that facility. in Bank gives Austria credit for with two for for agreements $XX $XX have of cash us credit with million million freely the of available Together with investments. quarter, other million $X BMO on the million, existing new available loan a around

Edmonton use International will Mile Airport. half approximately to at and our Casino the date, most significant We of complete to these largest Canada in Racetrack and funds Century project

F&B will million with and X,XXX convenient parlor XX,XXX plus time on So an slot facilities on XXXX. on a and parking be initially have opening X, multilevel square April we a of $XX be budget feet, on spent far, track accommodating XXX to machines, over and a the expect off for and we for building betting footprint It development, cars. grandstand

be closest second That's will Mile Century Northeast of Hotel capacity your that closed presentation. and new Century XX our opened next Century greatly Edmonton, will and The press in long-term to end the racetrack start the gaming means horse not and our the casino additional session. because go the we its away. ambition Mile. last million and right. twice the also will Mile agreement the Downs before in & the believe ramped. with very property Century we industry October use about Century facilities of took bring larger building. Q&A to for next facility a size in January we done praise successful full and we competitor of on will budget. done the open Calgary. and For only Therefore, on time, year, XXX and the Once on and of fall week, will Century important to just that full our that an the go EBITDA Northlands time really market, XX% successfully took the spring thoroughbred not on and done fully racetrack its comparison, getting important that that XX% benefit, racetrack. area it race existing completed on XX, an operations thoroughbred Edmonton through now casino a galloped the $XX the very assured that stabling floor casino Operator, The training Edmonton, training on its has Casino racehorses the building well signing has city, this horsemen's current at the of footprint the for be Rest success focused up Downs over, before will on held All generate the has Park, means stable of are first former Century of lap on investment agreement also right, can return I training members almost to good once we That track. place Alberta the fully chance our good Mile. you and their racing thank of one signed for the the of the racehorses regimen. ahead daily please. covering for in will racing, for were We've of attention, year, They mile test association, development Last

Operator

from with [Operator first Our Brad Instructions] comes the Stifel. Boyer line of question

Brad Boyer

question bit there to Edmonton little Albert. new, a First is seems what table be results some market. market but the for would looking Clearly, were are pretty necessarily The broader not around on that St. competition say, Peter, low it's at called I out we you, softer mean, just the you in than for. I the hold fierce. quarter

changes, seeing today Century little how ramp the you're in on, anyway, seen what if are what over of, we've you based the at bit thinking sort a last here? curious, Mile about Just

Peter Hoetzinger

four guess But we fully outlook our that the and wanted seen Also to a see about our we was digested. St. largest to at of and very growth currency. revenue growth Casino at yes, long-term Edmonton, casino, & that Century some local a the little I completely weeks. Brad, opened are has of our to about, that the Hotel facility. Everything new six in for back Mall redesigned for West in and Edmonton bit Edmonton. mid confident the been and normal and time they down players is Albert the X.X% facility, have competitor was

Brad Boyer

impressive Okay, shift you in quite that's was great. gears And volume then Poland, the obviously to actually quarter. if the growth

feels the the it we metrics are stock. if sense on has Poland I'm what, strong getting that the very curious, sort people think, revenue the environment and revenue renewals overlooking today in think like of is, margin around What as about us same-store this you can side? noise share like sort the gripped the give sort of it's Just some noise if some I licenses I have at of the of, look of

of on you could excluding us you're sense same-store, basis, So a noise in renewals? any of, sort license seeing revenue just sort from a Poland what of give

Peter Hoetzinger

double Yes. the That definitely is in digits.

in drop that to I sales two-thirds with than table one or mentioned, by And coin two better quarter XX%, actually XX%. increased compared As saw is we includes slot was comparison, that of same-store up because less year. last casinos, the

really then actually if same higher. So you number even the casinos compare the is growth of

We And of tremendous stronger. third also pace. looking at EBITDA line and almost only September a see that filtering is all came the down quarter's yes, even EBITDA from October to

Brad Boyer

that's your nice Perfect. I sitting Mile. powder And mean, guys flexibility thoughts current above then have the M&A. sheet and mean, there around obviously, beyond have Century on balance last some liquidity question is on beyond just you a today. I the you dry

thinking If And to more activity about any than that's mean, M&A I geographies yes, particular Just you're give potential it. there's that around some appeal how forward? pretty much others? us going thoughts you

Peter Hoetzinger

Brad. Yes,

You'll in North for acquisitions or in greenfield one smaller probably are in in for of we are we CapEx see the or us the analyzing. three and so us. that And more America. in opportunity Canada U.S. we four six importantly, like or but currently the see actively doing quite uptrend with in next and marketplace lot table requirements a months much other anymore, US But Not our in the deal Canada opportunities acquisitions on and have little

months. in to So next we'll that's coming news high with very that market six likelihood the a that, be the

Peter Hoetzinger

on one all then finish where about comfortable leverage on remind question is looking just that that, opportunities at. thinking taking And us, That's me. kind you and, you to attractive for out sort you of just there? you're opportunities of, multiple the that of you're to growth how for do and/or extent accretive To leverage last execute there the Could the me. Okay. are extent currently

Peter Hoetzinger

we We times, look opportunity, we for are the the now. that's three an have depends where number said with is number in about on that that around the past It that on comfortable but basis. ongoing something

there higher, around the is but is bit opportunity in is if where quarters few that's we number possibility if Now and term right, long a that the a right a where it's comfortable. feel

Brad Boyer

Thanks Perfect. Peter.

Operator

Your from the with next Roth David question line Capital. Bain of comes

line Your is open.

David Bain

right or perhaps? range, four that repurchases companies what wise, can then on so shut Century, lot a the I When can range balance your be get properties? at Most on one, would that stay like single helpful. of other could size my with to look would follow-up does multiple you're mine looking Or at now? actually, that you leverage there investments seeing asked, way, you times share you're a to what structure based do to a out would you there? three, seeing to property, That Typically, smaller size is how about what that CapEx And understanding, were looking but And just M&A. seemingly, then one accelerate two assets. of you're year, given larger one deals per two,

Peter Hoetzinger

Thanks Dave. be in yet are say, the active and terms where was such example, deal size markets not our of an million $X In investment. Vietnam will small, less or any of we

for we in larger and unit if then in we the that those we Canada are to to to have. would be sizes, And US, size aim ones or projects However, properties. trying acquisition larger an in two the currently into similar move do definitely largest we new

find targets the use and buyback million share top definitely, attractive our we and of be project if So North would priority we that's funds $XX acquisitions, in in terms ideally, plus. And in consider other a then only cannot or of new of words, dividend. EBITDA project America, new should definitely

David Bain

is follow-up there And on Perfect. Okay. Poland. one

the So pretty clear, September. you EBITDA did month the $XXX,XXX of in just for

next to the at to that So a is it spoke it bigger we that generating fair quarter bones opening say Poland growth, to simple, a keep another about is you year that look of And it kind basis early picture, to per way look bare at don't I in know, on that dynamic point? a at a, X.X? market this is then

Peter Hoetzinger

There that's - is, is I it. June, But yes, August, summer picture, July, typically is broad-based, yes. think The to that's some but pretty like slower. seasonality good but

David Bain

much. Thank great. so you Okay,

Operator

the of [Operator question Instructions] Des Craig-Hallum next with Your Capital. comes line Eric from Lauriers

Eric Des Lauriers

wondering could if I on Downs a help you was drill bit down more Racetrack. in Century the results

more some think? Just revenue do this add a Was sustainable onetime? events color level, more just there a there? the guys thoroughbred Was million And little bit you is level, XX% to that $X.X jump. of racing that

Peter Hoetzinger

bad, were The results, Sorry. the and but question. Could impacted you I weather Century connection very - fully and the how the Downs - the racing is that thoroughbred understand not about the hear asking right? think

Eric Des Lauriers

Yes.

Peter Hoetzinger

and okay. Yes, betting Definitely, big Much a greatly benefited the that on from was plus and better. that. off-track

larger We our more And department. facility. crowds also all on that the the F&B affluent had and also and helps on in floor weekends gaming these people visiting

around the be throughout - and races, March it's round. Weather very not where a they horse thoroughbred from have up any So work And schedule almost so in, for beginning that's right until we briefs the going or schedule April, really do run great full Century overall association with mixture pretty again an entire tracks a November also. impact. And positive hard I both post with also at development with Mile of The the racing. start we've a to it's season. to believe, the great out wise, pretty worked it's thoroughbred racing year it's very racing

Eric Des Lauriers

number a this great. rate. that's sustainable especially, Or roughly rate? a C$XX seasonally Is run And QX, of is races? that with run million Okay, strong was

Peter Hoetzinger

stronger, QX a little is, bit may yes. be,

quarters, that. be, So than not but stronger know, more I X% don't than it's the other may

Eric Des Lauriers

year-over-year, just X from were a I in almost with great. guys XXs some is EBITDA then point if should there I implementing extra implementing forward. margins QX. slightly I'm see know rate a this racing. XXs? going Okay, percentage low level high margin tick run up into you associated sustainable cost back the up side, Or but if are the XX% the wondering And on thoroughbred is decrease know the we

Peter Hoetzinger

see but low There other had the anymore. into costing tick XXs. forward. burden going racing, in for up extra there One thoroughbred now We the no expenses the quarters of that's is adjusted should some the

low XXs. the So XXs, we are comfortable in high

Eric Des Lauriers

me been what Okay, and great. for I'm sort what's generate EBITDA expected, wondering than give ramp on scale know at slower Bath, on revenue us, you has a you you of, but casino. final just the what question I And property then UK could of is think this the basis? your if outlook could

Peter Hoetzinger

Yes. between restrictions before, think, potential million before what see I two - one an it all There And such, that's mentioned the chariot those it expected. issues. improvement. we the the some, of fully slowly based and that also once opened We We promotions, can $X are through pricings working us we investment. with are I've we related just ramped, on than to it's said it's has truly and with longer do for to taking building

So a and longer going it's expected. than to probably approaching goal to probably year take EBITDA $X positive million XXXX, then for is the have that's

Eric Des Lauriers

Thanks. Okay, great.

Operator

our back now turn will for I to concluding the over remarks. conference moderators

Peter Hoetzinger

interest everyone, for you, in for your your participation in Century the call. Casinos and Thank

Results of For cnty.com. section the please the visit Goodbye. at call, Financial website a our recording of

Operator

today's concludes This call. conference

now disconnect. You may

Century Casinos (CNTY) 11 Nov 182018 Q3 Earnings call transcript