Century Casinos (CNTY) Misses Q1 EPS by $1.60, Revenues Miss

Century Casinos (NASDAQ: CNTY) reported Q1 EPS of ($1.55), $1.60 worse than the analyst estimate of $0.05. Revenue for the quarter came in at $87.7 million versus the consensus estimate of $100.6 million.

First Quarter 2020 Highlights*

• Net operating revenue was $87.7 million, compared to $45.6 million for the three months ended March 31, 2019, an increase of 92%.
• Loss from operations was ($31.8) million, compared to earnings of $3.4 million for the three months ended March 31, 2019, a decrease of (1022%).
• Net loss attributable to Century Casinos, Inc. shareholders was ($45.9) million, compared to net earnings attributable to Century Casinos, Inc. shareholders of $1.1 million for the three months ended March 31, 2019, a decrease of (4394%).
• Adjusted EBITDA** was $9.6 million, compared to $6.7 million for the three months ended March 31, 2019, an increase of 44%.
• Loss per share was ($1.55).
• Book value per share*** at March 31, 2020 was $3.54.

The Company's first quarter 2020 net operating revenue and Adjusted EBITDA were significantly impacted by the acquisition of Mountaineer Casino, Racetrack & Resort, Century Casino Cape Girardeau and Century Casino Caruthersville (the "Acquired Casinos") in December 2019. The coronavirus (COVID-19) pandemic discussed below significantly impacted the Company's first quarter 2020 results of operations, which included a $33.0 million impairment of goodwill and casino licenses.

COVID-19 Update

In late 2019, an outbreak of COVID-19 was identified in China and has since spread throughout much of the world. The COVID-19 pandemic has had an adverse effect on the Company's first quarter 2020 results of operations and financial condition, and we expect this situation will have an adverse impact on our second quarter 2020 results. The trends below are not the only items that could impact the Company's future performance, and the views of management are preliminary based on currently available information. Between March 14, 2020 and March 17, 2020, the Company closed all of its casinos, hotels and other facilities to comply with quarantines issued by governments to contain the spread of COVID-19. The Company anticipates a phased approach to reopening will be recommended by government officials in the jurisdictions where it operates, which could include reduced levels of gaming space, social distancing at slot machines and table games or reduced capacity within the casino, limited restaurant operating hours or continued closure of restaurants, requirements to wear face masks, including the potential to require guests to wear face masks, increased frequency of disinfecting surfaces and other measures to account for varying levels of demand. The Company's casinos rely on a local customer base and, as such, the Company anticipates that its operations could resume at a quicker rate than those of casinos at destination resorts. The timing for reopening the Company's closed locations will depend on determinations by governments in each jurisdiction. The Company reopened its Poland casinos on May 18, 2020. Based on information currently available, the Company is anticipating reopening most of its other locations beginning in June 2020 and no later than August 2020. However, the Company cannot predict how quickly customers will return to its casinos. The Company permanently closed Century Casino Bath in March 2020 and four of the ship-based casinos that the Company operated prior to their closures in March 2020 will not reopen due to expiration of the Company's concession agreements for those casinos.

Due to the temporary closures of its casinos, hotels and other facilities, the Company has taken actions to reduce operating costs, including furloughing most of its personnel and implementing reduced work weeks for other personnel. During the closures, the Company will continue to pay benefits to its United States and Canadian employees, inclusive of part time employees, through May 2020. In Poland, all employees were paid reduced salaries based on local employment laws. In March 2020, as a proactive measure to increase its cash position and preserve financial flexibility in light of the uncertainty resulting from the COVID-19 pandemic, the Company borrowed an additional $17.4 million on its revolving credit facility with Macquarie Capital ("Macquarie") and its credit agreement with UniCredit Bank Austria AG ("UniCredit"). The Company has no remaining availability under these credit facilities. As of April 30, 2020, the Company had $50.0 million in cash on hand. The Company currently is not generating any revenue from its properties, and estimates that the net cash outflow during the time the operations continue to be fully suspended will be, on average, approximately $8.0 million per month. Management estimates that the Company will need approximately $19.8 million to reopen operations and cover short-term cash needs at the casinos.

During the first quarter of 2020, the Company concluded that the COVID-19 pandemic and associated closure of its casinos were triggering events that could indicate possible impairment of its goodwill and indefinite-lived intangible assets. The Company performed a quantitative and qualitative impairment analysis and determined that goodwill and casino licenses related to certain reporting units were impaired. As a result, the Company recorded $33.0 million to impairment – goodwill and intangible assets on its condensed consolidated statement of (loss) earnings for the three months ended March 31, 2020.

For earnings history and earnings-related data on Century Casinos (CNTY) click here.

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