CNTY - Earnings call transcript Q3 2019

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Operator

Welcome to Century Casino's Q3 2019 Earnings Conference Call. This call will be recorded. At this time all participants are in a listen-only mode. [Operator Instructions] I would now like to introduce our host for today's call, Mr. Peter Hoetzinger. Mr. begin. may you Hoetzinger,

Peter Hoetzinger

our and on for co-CEO the Casinos, well of everyone, Margaret call. and our With Century as as Haitzmann, me call Erwin Financial thank morning, Officer, joining Stapleton. you earnings Chairman Chief Good are my

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

the filings provide detailed to filings. you We factors in these various and discussion encourage our SEC of review a risk

non-GAAP In Reconciliations addition, our SEC the found of cnty.com. financial in adjusted limited news our but of appropriate website be the and at investor throughout liquidity EBITDA. to, not GAAP our including, call, measures several in performance release to measures, and non-GAAP can to our available measures we filings, section refer

provide review third of the financial for results XXXX. quarter brief now a the company's I'll

the were Following segment slightly, The will remarks, Racetrack Mile up. session. a the opened Poland Colorado and while was up newly to Century mixed. Thanks the Canadian was existing the Casino, prepared Results of down Q&A U.S. there properties be was significantly.

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will We are Towns. of the It of flow the increase two weeks. gaming about opening the and upcoming Century very open excited will by about expansion in XX%,

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We X, hope betting that and be online retail in will in tomorrow, Colorado. sports November voted

and to are for We competitive experience with for such quality and of on partnerships and for betting high quality annual well agreement as companies Key sports us. sports negotiations as to any points provide partnerships revenue offering our various a minimum partner, the betting guarantees splits include customers. in

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of review all QX table strategic options of a year. plan on in make this started and a next have the investment decision to with We

and quick sheet our balance Now, at look a liquidity.

cash in and X.X, adjusted in adjusted to million equivalents EBITDA net ratio XX debt the have to is and ratio XX The cash We EBITDA million is total outstanding debt X.X. debt.

XX Montreal related includes to million X our land debt long-term Century to credit Our the related XX lease, agreement, of Bank and in Europe. million Downs million

Century book million during of Calgary. X.X% about Downs $X.XX. was for CapEx expansion per value operations includes the The million quarter share gaming existing increased X.X which or for to revenues, the floor X.X at in

give me update an of now the Eldorado you Let acquisition.

of [XX.X] million June operations XXX from this of multiple. we casino an acquisition three you in most know As impressively acquisition at of for Eldorado year, announced the

and become operations and market fantastic. to ensuring three assets and strong really purchase EBITDA. decrease producing While growing strong X.X, even a our stable their continued of solid resulting These these that gaining position each has is quality have in revenue three each of are retail a record more performance which track a and exciting markets, long leading in because with

regulatory much doubled size our expect which this underlines in nature early we as truly is gaming we XXXX. transaction pretty acquisition, the Missouri, in subject it to close as this well With or conditions of approval closing The to the of transformational company, late deal. XXXX customary

of three number in Virginia take smooth Throughout West the had to accounting and operations, a a marketing all Missouri quarter, our IT, times teams ensure operations over. visited and

with local we place. brand to increase measures that and all We Missouri Casinos, well-established leave Whilst properties increase business and management properties identified in us two to we’ll short-term the three place, already report have will Mountaineer come low-cost operating efficiencies. to in volumes are the happy Century stay rebrand some very and we at

and further, a going due it include X,XXX smaller not we total acquisition at U.S.; in Canada; synergy in horse EBITDA ago, Board these and racetracks, and new hotel casinos and we $XXX Colorado five if five do three had effect have revenue new On generate subject of to ones $XX net Century effects as revenue of and operating grow million gaming revenue the in the expansion and of tables, up, rooms, year giving any a numbers with Europe, XXX eight all the gaming adjusted EBTIDA to to a forma tomorrow. expect sports machines, XXX to occurred Downs Mile betting in approval pro we ramping and basis, and Century million, forward of

more already our It’s as EBITDA. than revenues and exciting doubling

this So, This out, the reacted with week BMO also Chicago therefore, out facility Macquarie the it’s now. this million I’ll York to we pick which for loan we will bank pretty existing surprising and with on debt right a that in have help. to me We’ll finance from Capital. that positively stock will it be New term get transaction later $XXX commitment more to facility, story hope have prices our not the yet. road

$X.X On the and with on is REITs million North healthy. our a should net operating great pro debt capacity especially net leverage further regional provide remain gaming debt growth with and to gaming traditional leverage America This forma trends is lease adjusted in us pursue relationships strong conservative ample performance capitalization X.X. basis, our as a together opportunities,

and Alright, us. sums much attention now active, that very ahead please. I Q&A for start another the go for pretty up busy session. your Operator, successful you can very thank we and quarter

Operator

with Bain Instructions] from [Operator David comes question Capital. ROTH Your first

Your line is open.

David Bain

with they of trending. to acquisitions those the on me? impact thank the sort know do was could are specific any Great, Hello, way and or you and what I elaborate congratulations you again acquisitions, are on low-cost us return? you give there some mentioned the hear you financial measures short-term

Erwin Haitzmann

I you. hear is Erwin. This

David Bain

on as the to I synergies could sorry. to relates you measures it I’m help call properties? basically Eldorado and of just impact any the of Okay, the that was Erwin, if on Oh! sort the I possibly press and – if acquisition short-term mentioned on can in you these okay, elaborate release speaking or you maybe, the low-cost to

Erwin Haitzmann

Alright.

purchase. the – we Virginia the the Commission in that replace with to lowest to is mention machines, Mountaineer, in things doing so, ones. some important West Lottery it slot that the of in we slot one of So, machine performing get and machines that In the pays them context, and new to Caruthersville XX% intend we new been intend for we’ve identified

yet, that [changes] we already identified will one do. exact obvious to marketing haven’t numbers see tweaks. things very the We that, be to in but Then addition in the some

in been of the – like As much, probably marketing up you to know, in slightly, pretty loosen should areas. Eldorado spend one would to not reducing we more tune and say I other aggressive fine but has and slightly

David Bain

others optimal partner. terms if today's opportunities, market with deal it, any really And know, specific acquisitions, lot just you a of estate looking to North so then, of and light look basic or, then, existing what's thoughts you field – I there? those the have generation one powder, know, being Century thoughts Okay. two you, do would that guess in on you opportunity the particular properties? question. of mix I And overall America your then, terms of REIT EBITDA have sort forward, you that's for our know, So, and the that is multi-tuned monetization asset in at being versus call properties and you essentially of dry field kind mix of other obviously of questions and in real speak you or kind own the a landlord growing tandem of

Erwin Haitzmann

real to us estate the Peter, not that's – it, know. take monetize on in that. plans when the And reverse with if let’s you In we have, order of do let but the no fine. regard please any respond Okay. intend to existing I’ll reverse again, have We

the Second optimal regard question was mix. to

– think say today, opportunity it, that so based. should we we of we let’s do As should

– to when to if comes depend company. operating is of and well but effective. our So, will combination intention we an everything REIT and it as that to purchase, it’s are, financed It we outright opportunity a with that where think out not on become may we have continue be

first and couldn’t smooth Number question, being so that priority focus the to third say what’s today’s we no. more the look all, with, out opportunity, but is moment and again, was we and in monitoring moment, transition that we once that on nothing have very was at the under but proactively belt market of appealing at are And there the this to there, X

David Bain

Got it.

if everyone there, you are you thanks as and, thank Okay, Peter, well.

Peter Hoetzinger

you. Thank

Erwin Haitzmann

Thank you.

Okay, thanks Peter. great, that’s

Peter Hoetzinger

we That’s are [indiscernible]. why

Erwin Haitzmann

Yes, sure.

Operator

question comes from next Your Stifel. with Brad Boyer

line Your open. is

Brad Boyer

Yes, thanks the for guys. taking questions

I And the you ramping obviously And then weaker is, along was you the of heading and question around? there? comfort in that how I lines, is that market the in you a sort comfortable those three-part Are here? think we are revenues number? sort should you’re that numbers? low-end guess is in know You flavor know, of direction. that, a you Thanks. expecting, what be – from question a obviously question play of you are environment the guys shifts you know, bit taking for you run margins assets could rate that you just everyone but the seeing evolve talking guess quarter there you know know, we of, secondarily, Century the million market? know, shifting now, into I there, Are just us confident gets you sense with think around ramping were another First are you on Mile, right know, are sort still growing how the still given were in competitors, of about you And some guys have you you know, additional than from revenue how number, market? the while the margins revenue you a around the what you $XX we’re EBITDA to ramp about there, looking, give the kind gives

Peter Hoetzinger

Erwin?

Erwin Haitzmann

Peter, are it way developed. as is – the like already revenue good Peter said okay, side earlier, – the with and we how would you very

down Edmonton at as I of cost have, thought the market, XXXX. competitive which – why the already. QX pretty It’s definitely that clear perform Edmonton overall and intensely side, should down than in in other regard an get latest market the the not if very QX actually impact, the we that to say – would say definitely have. we it generally tool, we’re cost to possible, – we on as to the cost fast we and cautiously working I Casinos On getting show implemented have for better the for for speaking, we With able been is

grip good our on a So, relationship strong and players. repetitive to we a we and have market the core think

fighting our competitor Cree. now by Century four opening at how as gives are of is are our numbers first well been now, so with what choppy, little are as a our we back, will that no bit is, if you later, competitor. see They’ve and main we can initially Mile, Then handle the casino little the be good to Century confident. think reason the regard Specifically, hit was to we’re to we expanding. River – but our as by and going be But – main us this there's forward they not look continue you we know, years confidence a deal Downs, that, they

operating So, we trust in have and and – marketing capabilities. our through confidence

Brad Boyer

closing? on of the any updated Okay, I deals you flavor know of sort of there? the anticipate that’s were don’t guys I for us talking potential just if Potentially, we’re talking you past, thoughts about, there's when items. CapEx know, give side modeling, with around CapEx then, just the deals curious helpful. And you a Eldorado, then, what in know, some just you of could of I the announced to the the And a hotel adjacent if other deals, have sort Caruthersville, you like for you I know sort minor about Peter, looking think sort

Erwin Haitzmann

and maybe I that again. with second start, in seems the Shall come It you question. gone Peter

Brad Boyer

Okay.

Erwin Haitzmann

get let me Yes, started.

the initially I don’t low First is [Technical Sorry, when order, said as in all, why is that good properties, that. on you enter Can I low, except Brad? hear no came of opportunity. know the deferred still [indiscernible] think me there for everything of Difficulty] in. CapEx, we so

Brad Boyer

thanks. Yes, hear you, I can

Erwin Haitzmann

Very Yes, good. okay.

into that more there to Now, Caruthersville is that focus efficiency conversations kind. the things we [large]. measures certainly improvements, here on. the like line bit we'll hotel we small more. our that conclusion over before answer CapEx There second came measure important – replacement the a kitchen make to road Number having management, probably with there, two maybe little your some than there, – or In little it mentioned, a us will it larger not but regard across with I X CapEx this the we A substantial other think evaluate a more a nothing or that and we are to priority CapEx got taken first we question? decisions and be need any year here the and of putting of operational are in Does as

Brad Boyer

in helpful. you bit strategic around be headwinds buyer then, just some given of would know, Yes, the little could of lastly difficult, I potentially us does. envision from difficult kind the so the it very what know, potentially the imagine of path that you That's improve about you are I this is sense guess forward review know, mean pretty thinking you scenario Bath, Thanks. sort walk give the market, sort in how just know, better could and there it? I down here? extent this, And you a of a a entails? environment, shut just you that where you finding could, there, know, don’t to Or away this operations you you of

Erwin Haitzmann

yes. clear is Alright. the answer Yes, a maybe

and not have we to effort we have of will are clearly, moment to various full at contractual are now possible, avenues period and is keep that a to this, middle any in the try taking the so whether close So, anticipate the to for statement we can should time, – everything pain because I we can down. we there still closing see balance think we kind at but for imagine our the looking all go tend an income try say just I we we we just obligations. door, time. of at But cannot Obviously, that – of our also everything same the the – turnaround in it extended advice, that the sheet

Brad Boyer

for Erwin. all Thanks helpful. the very color, Okay,

Erwin Haitzmann

all Thank Brad. By you, means.

Operator

Craig-Hallum. comes from Mike question next Malouf with Your

open. is line Your

Mike Malouf

taking for Great. question. guys Thanks, my

Where on thinking ahead to traction? are the March we some want you this bit still a early I to that bit as during XX% in and certainly down even cost just side know, sort Century give quarter. talking maybe to far and little Mile, are expecting where you on that be on mean obviously we you slow drill the next were Just that year, can but get timing, running of XX% as traction XXXX? some Can would to or you mid-XXs point helpful? perhaps good we get as from quarter, a ramp here? think you little at Or as of are will get a the EBITDA to try EBITDA that then, in year us of trying to time sort it sense or to be of

Erwin Haitzmann

let promise to but love our cautious, is I in at ambition want wouldn’t I’d certainly yes. point to, it. Yes, XXXX, be time, but this

on heavily further know time, marketing getting you have head the very the and know, at hard rise, dig our also, same You ramping into – work just we to ramping approach. cost while up

to I’d able be say So, cautious. love just but me be let to it,

Mike Malouf

Yes, yes.

seasonality? about are on sequentially Can little fourth the you year? in that from you that? and – go how typically expecting how help You for seasonality? a some and give look the think It Okay, us down know, the we for seasonally property on what throughout quarter does – September quarter, as was

Erwin Haitzmann

clearly nobody the the in drive Very our inclement are in our Canada drive all as winter and has weather is, in people seasonal – used differences what generally and summer. properties up Colorado, it true to in to properties Canada supposed between for well. But said than mountain has speaking, be even might is to are less they of as to strong spite in and a Colorado appear

our heavily – problem. rather a on we these the set be We out swings at turned on We don’t depend are that to a working don’t always marketing really may competitors seasonality how less side. look lot. of they’d whole So, – and I

big influence an have run or the earlier, mentioned may and campaign are that one competitors at – a times here two of look there Peter there, there. very there always the and but we market As long-term quarter

Mike Malouf

it. got Okay,

the Okay, great. Thanks for help.

Erwin Haitzmann

Certainly.

Operator

Union next comes question Gaming. with DeCree Your from John

open. Your line is

John DeCree

for Hi, all so the far. color additional Erwin. Thanks

Erwin Haitzmann

Hi, John.

John DeCree

wanted a to licensing while, I on and covered the Canada, has and sales for I ramping Poland? margins think touch and us on a been operating U.S. in the if process of might were that to Just Poland, that attainable little to give now that’s think XX%, get nicely again, are before what and normal the Poland if you wondering I time and line of could more margins here. we’ve be XX% all started, in bit color almost was back rebuilding kind behind us

Erwin Haitzmann

Alright.

As wonderful But us the slow very the continue the little that margins to in are why only we used board come how expect small coming again, that always have. the the operations to smaller have our I me let I to salaries to and you just EBITDA licensing back to into get side questions But said, the the That they in – across the well. you ones. in ramping can are see within we the all relicensing, keep very say up casinos casinos? again. we to as it’s down raise us, bit when do thing to think It and we the think may go well the we that to of that has XXXX generally. is and mean even back a have you EBITDA both we smaller is terms general arithmetic. There we if that revenue need contagious one well remind

John DeCree

Erwin. Thanks That’s appreciate additional the helpful. I color.

Erwin Haitzmann

thank means, all By you.

Operator

Investor. [indiscernible] from comes question next Your

Your open. line is

Unidentified Analyst

Are that picture I there Bath because to Thank to been question notice some that any there are at that I of you losses a the and other Century? done on drag that the attributable and that discussed to other sector? of corporate that eliminate has – corporate earnings bit and My with losses And overall for know England. do further is corporate eliminate and with was coming anything be other you. statements losses a has can on from the other

Erwin Haitzmann

with question. some to the do of – into would we with the detail? I acquisition. going the has you Yes, like it more connection Peggy, have in thanks cost for to Eldorado that

Margaret Stapleton

sure. – So

through have related additional corporate – the to cost Bath. yes, Bath that running the and or That other corporate course up we through of is related the segment. right of through running some the and to expenses now other into are most losses acquisitions. So, rolled And running to then,

Unidentified Analyst

first they Eldorado from assuming the operation anticipate anticipate are Do in you same you the acquisitions earnings full-year a equal do XXXX as things And for positive picture? giving Okay. results that of the of were XXXX? all being

Erwin Haitzmann

Just newly acquired [indiscernible] of the properties, asking? you're

Unidentified Analyst

Yes.

Erwin Haitzmann

whether asking we same the think And more? are do we you or

Unidentified Analyst

and casinos were profitable Yes, if being in how for three? would were that operation versus anticipate you in a things XXXX XXXX, things they I’m no saying all these equal, for all different

Erwin Haitzmann

Yes, definitely, definitely.

Peter Hoetzinger

what year, pro – generate is new I’m we Yes, a with and we million to on that a $XXX back revenue the would EBITDA. in absolutely. Peter. say and basis, about $XX [Kenneth], is expect expect we in acquired million this operations, full forma in for

Unidentified Analyst

Okay, very thank much. you

Erwin Haitzmann

Thanks.

Operator

comes Andrew question next Gordon Your from Capital. Gordon with EF

is line open. Your

Andrew Gordon

good Hi, gentlemen. morning,

trailing Just – I not million EBITDA XX the I mean transit, how on this, attribute this, properties? that adjusted the Eldorado you I does if to touch attribute basis, $XX on I months have may that – does acquired much consolidated apologize heard but missed

Erwin Haitzmann

is full-year. That’s it We and two the right, half-half. Is that approximately Peggy? sold properties

Margaret Stapleton

the number. That’s

Andrew Gordon

be roughly would million then? That $XX

Erwin Haitzmann

believe, alright. or million million $XX $XX I

Andrew Gordon

Got it.

to maybe be The you're the call, leverage I is the million Consensus for slightly trying $XX around this get be on now XXXX million net I’ll newly to roughly around acquired on so supposed $XX what quick, just XXXX, – coming a I basis? think EBITDA realistic make question, the on a into pro number for clarity net to million a over were, little attributing forma its around next it and should say $XXX estimates. So, leverage numbers and little let’s million. properties, $XX believe outdated

looking if that a trailing because benefit a we make clarity? from maybe just one to net of you agree basis, and low basis on wanted I net that sure and and leverage better, analyst, though pro I you clarify looking So, – just a could Xx been that I your thought forma leverage be, has should or and believe with forward all least on at X.X guys attributing

Erwin Haitzmann

little Net to could aggressive slower basis calculation. up ramping Those be that EBITDA debt Mile be perhaps on a proforma two my number closer a bit bit your they be Century expected. as and comments a would now than XXX, know will because you to mentioned is

Andrew Gordon

Thank follow-up you. offline. I’ll Okay.

Erwin Haitzmann

Andrew. Okay, thanks

Operator

question [Operator Arnold Patrick next Management. from Instructions] with Energy comes Your

Your line is open.

Patrick Arnold

Hi.

I’d congratulations your like First, to say on acquisitions.

Our question was lines with you win more reach with the of or in and excess the might the participation along acreage the West the Virginia? what what disposition might be

Peter Hoetzinger

Erwin, – Yes. that’s do [indiscernible] and own but so you no as demand, to know maybe have in is we Patrick, any color you so We regards on that that. – that. do not we question plans have

Patrick Arnold

kind created or What of a that the niche kind obviously at have follow-up to plans large as you thoughts are U.S. off at Austin to that north guys any encourage north, of [Manako] to looked all, XX coming it? the gas those sector and to going your emergence did that of cracker the for about Mountaineer? well The Alright. I’m unique them at at you have to in trying miles you energy guys that’s guys is facility Town, here are here, of Marcellas of plant marketing the of was, looking thought based or come into

Erwin Haitzmann

Yes, Peter, definitely sorry. and – go ahead,

Peter Hoetzinger

market [indiscernible] those go that, please [indiscernible] of No, I just our that we Erwin, plans, saying but formulating yes, ahead. are part was

Erwin Haitzmann

No, just the wanted to say same.

we definitely will most customers. those excited new happening are and We target this is that

Patrick Arnold

for the an thank congratulations time Yes, again, influx call. and you on it’s your Well, here.

Erwin Haitzmann

you. Thank

Operator

this back further no to the at I now over questions call time. There turn will are presenters. the

Peter Hoetzinger

the in everyone interest Thanks call. your Casinos for and your participation Century in

our bye. For a the cnty.com. visit and the at you section good Thank of recording please call, website of financial

Operator

participating. concludes conference this for call. you Ladies and gentlemen, Thank today’s

You may now disconnect.

Century Casinos (CNTY) 4 Nov 192019 Q3 Earnings call transcript