Century Casinos(CNTY) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported net revenue of $146 million for Q2 2024, a 7$27 million, down 6% year-over-year, impacted by construction disruptions and temporary closures in Poland [3][4] - Traditional net leverage stood at 4.6x, while lease adjusted net leverage was 6.5x, elevated due to recent acquisitions and investments [13] Business Line Data and Key Metrics Changes - The Midwest segment, including Missouri and Colorado, saw a 4% increase in revenue, but EBITDAR decreased by 5% due to construction disruptions [5] - The East segment, which includes the newly acquired Rocky Gap Casino Resort, experienced a 60% increase in revenue and nearly doubled EBITDAR [8] - The West segment, particularly the Nugget Casino Resort in Reno, faced a disappointing 23% revenue decline, attributed to renovation disruptions and lower slot hold [9][10] Market Data and Key Metrics Changes - Revenue in Canada grew by 5% with EBITDAR up 7%, supported by strong performance in Alberta [11] - Two casinos in Poland remained closed during the quarter, significantly impacting revenues, but are expected to reopen in October [12] - The company noted a 10% decline in non-rated play across its portfolio, primarily due to macroeconomic factors affecting lower-end customers [4] Company Strategy and Development Direction - The company is focused on operational discipline and efficiency improvements, particularly at the Nugget, while also planning to generate cash for potential stock buybacks and deleveraging [15][27] - A new land-based facility in Caruthersville is set to open in mid-November, expected to enhance operational efficiencies and increase revenue [6][14] - The company is considering entering the online gaming space to capture players lost to iGaming states [36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future performance, anticipating improved cash flow and revenue growth from upcoming casino openings in Poland and Caruthersville [15][16] - The management acknowledged the challenges faced in the current economic environment but believes the worst is behind them, with expectations for consumer sentiment to improve as interest rates decrease [30][31] - The company is reassessing its portfolio, particularly regarding the sale of Polish operations, and is open to divesting underperforming assets [32][34] Other Important Information - The company ended the quarter with $123 million in cash and cash equivalents, and$342 million in outstanding debt, resulting in net debt of $219 million [12] - CapEx for the quarter was approximately$13 million, with expectations to decrease to about $12 million next year, which will enhance free cash flow [14] Q&A Session Summary Question: Can you walk through the changes to the 2024 and 2025 revenue and margin expectations? - Management indicated that the primary driver for revisions was the performance of the Nugget Casino and market conditions in Poland [18][19] Question: Is the unrated decline weakening, and when do easier comps begin? - Management believes the worst is behind them but is awaiting interest rate reductions to improve consumer sentiment [30][31] Question: What is the outlook for the convention business at the Nugget? - Management stated it is too early to provide specific numbers but indicated a friendly outlook for future bookings [41] Question: What is the current state of the Reno market? - The Reno market is highly competitive, with recent weakness in the hotel market attributed to the economic situation [43] Question: What is the company's strategy regarding acquisitions and improvements? - The company focuses on acquiring undervalued properties and improving them, as demonstrated by past successes [44][45]