Century Casinos(US:CNTY)2024-05-12 00:03Financial Data and Key Metrics Changes - The company reported net revenue of $136 million for Q1 2024, a 25% increase compared to Q1 2023, driven by the addition of the Nugget and Rocky Gap properties, alongside strong Canadian operations [14] - Adjusted EBITDA was $21 million, down 18% year-over-year, with U.S. operations flat and Canada up, while Poland and the Corporate segment saw declines [28] - Traditional net leverage stands at 3.5x, with adjusted net leverage at 4.3x, elevated due to recent acquisitions and investments, expected to decrease to around 2x traditional and 4x adjusted by next year [2] Business Line Data and Key Metrics Changes - In the Canadian segment, revenue grew by 11% and EBITDA increased by 13%, indicating strong performance across all properties [1] - The East segment, including Mountaineer and Rocky Gap, saw a revenue increase of 44% and EBITDA up 23%, despite challenges from weather in January [31] - The Midwest segment's revenue was flat year-over-year, with EBITDA down 9%, attributed to weather and construction disruptions [16] Market Data and Key Metrics Changes - In Cripple Creek, the company outperformed the market, with April showing double-digit growth despite increased competition from a new property [10] - The Nugget in Reno-Sparks experienced mixed results, with average spend per trip up 4% but trips down 8%, indicating a shift in customer behavior [19] - In Poland, three casinos were closed for part of the quarter, significantly impacting revenues, but two have since reopened, with expectations of returning to normal levels quickly [46] Company Strategy and Development Direction - The company is focused on generating cash to deleverage and plans to opportunistically buy back stock later this year and next [6] - Ongoing upgrades to properties and facilities are aimed at attracting higher-value customers and enhancing competitiveness [4][51] - The company anticipates a significant increase in free cash flow as it nears the end of its elevated CapEx cycle, with expectations of reaching approximately $700 million in revenue with a 24% EBITDA margin by 2025 [35][52] Management's Comments on Operating Environment and Future Outlook - Management noted that January's performance was heavily impacted by severe winter weather, but February and March showed normal gaming volumes and improved operating margins [29][56] - The company remains optimistic about the second half of the year, expecting to see improvements in performance as all properties will be operational and construction disruptions will cease [36] - There is a cautious outlook regarding the retail customer segment, which remains economically sensitive, but core customers are showing strength [34] Other Important Information - The company has $137 million in cash and cash equivalents and $342 million in outstanding debt, with no debt maturities until 2029 [47][49] - The CapEx program is nearing completion, with expectations of generating a 25%+ EBITDA return from completed projects [50] - The new permanent land-based facility in Caruthersville is expected to enhance operational efficiencies and customer convenience [11] Q&A Session Summary Question: Regarding the performance of the Rocky Gap property - Management acknowledged integration challenges and noted that regional peers also experienced weakness, but they are optimistic about future performance as integration issues are resolved [40][42] Question: Changes in promotional strategy due to consumer behavior - Management indicated that they are analyzing previous strategies and testing new marketing approaches to optimize customer engagement [44] Question: Performance in Poland and expected revenue recovery - Management expressed confidence in returning to normal EBITDA levels of $11 million to $12 million as properties reopen and customer traffic increases [46][73]