Q2 2020 Century Casinos Inc Earnings Call
Welcome century casinos Q2, 2020 earnings conference call. This call will be recorded at this time all participants are in listen only mode. Later, we'll conduct a question and answer session.
Introduce your host for today's call Mr., Peter Misery you may begin.
Good morning, everyone and thank you for joining all earning score.
With me on the call on my co CEO and the chairman of century casinos urban Heitzman.
It's been it's our Chief Financial Officer Margaret Stapleton.
It's always before we begin we would like to remind you that can be discussing <unk> interim information.
She wants to know if risks and uncertainties that may cause actual results could differ materially from all forward looking statements.
The company undertakes no obligation to update or revise to forward looking statements, but as a result, this new information future events, but otherwise.
We provide detailed discussion of various risk factors not wait to see filings in the current choose to review deciding.
In addition throughout all colder refer to several non-GAAP financial measures, including but not limited to adjusted EBITDA.
Reconciliations of non good performance and liquidity measures to the appropriate GAAP measures.
Can be found in our news release and they see filing.
Basically and Investor section of our website that she and T y Dot com.
I would not provide an overview of the company's status quo and reviews, our financial results for the second quarter Twentytwenty.
After that there could be a question answer session.
Following the temporary closure if all properties in mid March.
We took immediate steps to reduce operating costs and to ensure that our company procedure its financial flexibility to manage through the shutdown.
We reduced expenses throughout the company.
Temporarily laid off and photos approximately 90% of thought team members.
Except for Poland, where all employees continue to be paid requeue salaries based on local employment laws.
We continue to pay benefits to our U.S. and Canadian employees, including part time employees.
If you executive management degree to voluntary pickup.
When it first reopening scenarios in merchant.
Oh focus from day, one has been to health and safety, if I'm employees and I guess.
Well, I mean, picky and I think all thought team members for their hard work to get all properties reopened in just the middle stage.
Dealing with many new procedure, especially regarding safety socialist this sensing and extra sanitation.
They're competitive enthusiasm and friendliness.
Has created an atmosphere and feeling of safety and comfort, which is very much appreciate the old okay.
If used the time during the closest to build upon a progress we had started last year. When we closed the acquisition of three properties from Eldorado.
Okay proof on controlling expenses and realizing efficiencies in marketing staffing and Chin day.
You're off to a very strong stop and why the pandemic is not behind us.
Your next will be stay focused on maintaining a disciplined approach throughout our business.
Avoiding unnecessary cost inefficient practices to creep back in.
What do you think to keep the focus on a more efficient I imagine piece that's in place. After this crisis is over.
The first casinos, we reopened where they want to Europe Colin on May 18.
The casinos in the smaller cities around the country, which grow mostly from locus are doing very well actually a little bit better than doing the same time last year.
But the results of the two lots of casinos in the capital city of Warsaw a softer.
Because of the Deco tourists and business travelers.
Overall, we're down about 25% compared to last year.
As you know Poland constitutes about 10% of our total consolidated EBITDA.
Most importantly, however, the operation already is cash flow positive.
Next in line to be open, but it to me sort of properties on June one.
Mr who is our most important markets in terms of cash flow generation.
And what a success the reopening walls and still is.
Even though we have only half of the paper gain position and about 80% of this lots in operation.
That's where a record breaking.
In June with limited competition from Illinois.
Keep share, though was a pool, 40% on revenues and more than doubled adjusted EBITDA and absolute request for that property.
Carotid speed was up 8% <unk> revenues and up 40% on adjusted EBITDA.
Huge success and the tremendous achievement by our management team.
The mountains to life.
Competition from you didn't go up and running continues with who's had significantly stronger than last year.
Keep t. almost starboard EBITA Corrado spin is up about 30%.
So it goes without saying there's also this market has very quickly tons Castro positive for us.
Then on two five we reopened all mountaineer resorts invested shenya two huge crowds forming long lines around the building.
Proximately half about any positions and hotel rooms are open.
In June revenue was up 7%, an adjusted EBITDA was up 57% compared to June of last year.
Sure lies in itself, but I don't compare to last year, mostly due to the newly introduced temporary smoking ban Endesa Chile.
Fortunately last week he has been allowed to introduce slim Brexit class areas between slot machines.
Lets us increased the number of available slots from the current 500 to over 800.
To that the positive impact right away.
In the middle of Q.
Our two Colorado properties reopened without table games, but almost all slots in operation in Cripple Creek in about two thirds in central City.
Even though we had less lots in operation Enfa only half of demand.
Adjusted EBIT thinking was up the combined 51% year over year.
Truly remarkable.
Nice even better.
Revenue and adjusted EBITDA, almost doubled compared to last year.
In July our Cripple Creek property recorded its highest gaming revenue and EBITDA in over 10 years.
And of course, the properties are producing positive cash flow.
Circus Circus sports one of our sports betting partner has started its all let offering already producing some revenue share for us already.
Also in the middle of June.
We reopened awesome casinos and to restrict casinos in Canada in Edmonton and Calgary.
Favorite Catherine remain close.
And do the only allowed to open with 28% up the slot machines.
Adjusted EBITDA for true, it's only been down by 31% compared to June of last year.
In July we could increase the slots available to pay to 50% and life horse racing recipient with up to 200 spectators into April.
Like racing has been particularly strong at the new century might racetrack and casino.
July produced a couple of days with record wagering handle.
The recycling across all our Canadian properties are great adjusted EBIT stuff, which light is higher than in July of last year.
So I'm happy to report that all saw Canada segment is cash flow positive already.
Now, let's look behind the strong performances and discuss what drives the revenue and hobby managed to expand side of our businesses.
Oh geographic diversity and all locations in hyper local markets certainly played a big Robert.
All our casinos predominantly rely on a very locally and very loyal customer base.
And as such our operations ramped up at the quicker rates think casinos that destination resorts.
Oh, the casinos have from the Pittsburgh Nipping at convention business and very few of our customers if any trevor by air to visit us.
In addition, we offer a comparative <unk> expenses gaming experience.
One that is still afforded Britain economical it difficult time.
The number of PC. This has not yet fully recovered to pre cobiz levers.
But average length of claims as well as spend per visit has been very encouraging.
It's the current situation limits us from an amenities perspective.
We see Murphy pure Gamer high quality customer comes off the Cds.
Since every openings of our casinos.
We have a trusted the levels of surfaces and staffing inline with the guidelines put forth by the health and political authorities.
We have limited seeping in our restaurants.
And we have not reopened our poker rooms are smaller hotels, the showroom spinco drones and spine repaid facilities.
Being selective with our amenities keeping strong controls on the promotional environment and staying focused on the high margin areas of our business, Besides an expense reductions and new efficiencies.
Which means we are operating at significantly higher margins.
Oh this led to a record consolidated results for the month of choosing the amount of tune alone.
Revenue was 32.5 million, which is up 82% Europe a year.
And the adjusted EBIT that wasn't a record pain point 8 million for demand.
Modest folks poor fault.
We achieved that was most casinos not even open again time I'm fine not at full capacity.
And what's even more important the preliminary two line numbers show that the strong performance continues.
Revenue of 30 million to generated adjusted EBITDA of about seven point Fourmillion almost three times to EBITDA of two like last year.
And in a true like for like comparison.
Comparing that to live decides to the pre Corona My early this year January February.
Which are ready to get the three properties acquired from Eldorado, We also think better.
[noise] diesel understand that when we give you this year over year comparison.
Do you want to give you some color on kind of trends on the performance of the most recent months.
But we're not providing guidance.
As of June 30, we had 52 million in cash.
Net debt was 852 million.
Last week, the paid off 10 million revolver with Macquarie down to zero.
Okay.
And as you have seen from our recent news release, you just announced the sale of the casino operation It century Calgary.
The fall smaller Canadian properties.
For about 7 million U.S. dollars net.
Last year, which was a strong year.
Casino operation generated approximately 600000 QST in adjusted EBITDA.
If you continue to own the real estate indicate the proximity three entered and 50000 to U.S. dollar per year in rent income from the buy off the casino operation.
The actual annual cash flow, we are selling is only around $250000.
On top of that you get a percentage of their revenue over certain threshold for the next three years.
That's already received 100% of the purchase price as a nonrefundable deposit.
You keep operating a century sports operation that is a sports bar with boating and entertainment facilities, which last year generated 600000 dressed to listen to EBITDA.
So as you can imagine you're very happy with it transaction the sales price not to be huge indeed immediately strengths is our liquidity position.
Isn't decided to stay revolver pay down and to Calgary Sane.
As focused five.
We had approximately 48 million in cash and net debt if only hundred 47 million.
We do not foresee any substantial capex in the short and mid term all our properties are in good shape.
He's put all large non essential capex projects on hold for now.
So with that on behalf of the company's management and sport like to thank our team members, our guests and I'll stop quotas for their continued loyalty and to be as soon as he managed businesses can this challenging times.
Thank you for your attention and we can now start to question and answer session.
Oh practical hippies.
Ladies and gentlemen.
A question.
Our first question.
<unk>.
Yeah.
Thanks. Good morning, this the Jordan vendor on for Chad football as well what did you seen a with retail sports studied and how should we think at bell your opportunity with Igaming its sports betting in your markets look the legal it's probably not.
Sure. The we have three sports betting licenses for all our Colorado properties.
We have entered into two agreements one with us so for sports, which are which just launched a they are the F.
Recently and in other agreement be spent 365 Davy launch later.
And with one more license available and have.
Interest from a handful of providers and we are negotiating that a deal as we speak.
In the other markets in West Virginia.
We have sports betting and I gaming already legalized.
We are partnering with William Hill, and they've told us that before the end of Tcl be go live with both both sports betting and I gaming.
And in Missouri.
Has not been legalized yet but.
We have I think there's strong indication that it will get legalize tune.
And we look forward also to a working with William Hill.
In Missouri.
Okay, and then you obviously added a few somewhat assets it between at the end of 2018.
And now they're moving up in Canada.
During the week last week.
Do you think you rightsize your portfolio at this time or you do you still have more they go on getting but instead of your non core assets.
No I think we're happy with our portfolio that we have strong Q2, very strong performing racinos up there are one in Edmonton and Calgary.
And the other casinos on in in very good locations and strong spots and.
I don't see any significant change as of today.
Okay, and then if they get one more here.
Can you update us on the Colorado knock that when it that's coming up on the ballot here in November I mean, do you guys have any thoughts around what that could possibly due for the business obviously.
That where the palace that would be.
Something positive for the company here.
Yeah, but.
No weve if.
It's it's tough to say, it's too early to say the we don't have any like official guidance that we that we.
Maybe to keep up with regard to that.
Well I mean, what do you like to comment further.
No I think it's exactly what he said.
Okay.
Thank you guys I'll pass it off.
That's true.
I guess.
Hey, good morning, guys.
Thanks for for all the additional color on the quarter very helpful.
My first questions just around the the preliminary July metrics that you guys presented.
How are you thinking about those numbers in the context of sort of a go forward basis.
See you know, there's a lot of moving parts right now.
You're obviously getting the benefit of some favorable revenue mix and and some operating efficiencies, but and then at the same time on the flip side your operating with limited capacity. So you know how are you thinking about you know what those numbers might look like.
A couple of months down the road do you think that sort of some of the margin performance. So you're producing today is sustainable do you expect margins to compress sort of was more of the business comes back online just any color you can provide around that.
<unk>.
Yeah.
I think for the short term like next one or two months, we we don't see any significant change as I'm, assuming the situation with regard to Colby.
Gets better.
Dan.
Our competitors and also has been in most likely.
Opened some of the other many piece.
That will most likely means that overall and absolute revenue will grow but as these other him entities have lower operating margins you will see higher revenue on the one side, but the operating matches with probably not be as high as the Oh, It's Dick.
Currently our.
And with regard to the promotional environment, Yeah, I think everybody is watching each other to see.
Everybody States.
Conservative and relatively quiet the wife somebody.
Jumps out and stopped some aggressive companion, which we don't see at the moment.
That's my first take on it or when would you like to add to that.
Yeah, Yeah, actually focus and I would like to actually we have a little bit the friendly with regard to measure that we can take on the floor to give the Atlantic salmon, we have received approval in west Virginia to make.
Nor a smoking again, so as of today than when they had a 118 slot machines in a smoking area and that is something that would help.
Well at the same time, we still a good working on getting more slot machines in total open a in order to cross or Canada. So hopefully get from piece to this into a higher percentage of slots actually being an operation. So on the revenue size I think there's still some room to grow.
It's in a shorter term.
Okay. That's all very helpful. And then you know I guess, obviously, just you know what do you guys being a little bit closer to the Poland and I know you know over the last couple of months. Peter you provided some good perspective on that market.
Could you just give us an update sort of you know where things stand with with respect to.
Business getting back to quote unquote kind of normal in Poland, I know sort of the pizzino of Kobin recovery, what have you maybe a little bit different in Europe, or just any color around that and sort of how that plays into maybe you know Warsaw sort of getting back on on track here.
Most of the travel restrictions I call now and.
I wanted to come back.
But obviously as we go as we are in the summer months July August.
Mid September was always to slow appears time in Poland, because many points for wafer summer vacation and business to commutations enforcing it.
But it is getting better but there is getting high occupancy like week by week now that helps us.
Okay, and then last one just you know could you give us a little bit an update as to where your appetite stands for you know growing the portfolio at this point I mean, obviously you know there are some some U.S. speech the assets that.
Or be a sort of publicly shopped at the moment, just any thoughts around your desire to.
Kind of continue to grow the the portfolio at this point.
Yes.
Watching that.
Very closely and.
And tried to position ourselves right.
Two.
To possibly.
Yeah look look at its very very seriously towards the end of this year over the next.
And.
As you have seen we're trying to look at all.
Liquidity position and see where we can.
Getting to get right position to to make a move if an opportunity is good for us. So that's certainly something that yeah.
Looking at.
Perfect. Thanks, Peter.
<unk>.
Okay.
[laughter].
Hi, good. Thank you for interest in century casinos and your participation in the core play recording of the core business. He did financial results section of our website that seemed to buy dotcom.
That's our best wishes spoken Ted Thanks again, good bye.
This concludes today's conference call.
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