Century casinos posted year-over-year declines in net income, adjusted EBITDA and earnings per share for the third quarter, the company announced Tuesday morning.
Net operating revenue increased by 3 percent to $34.5 million yet fell short of analyst estimates by $1.63 million. Earnings from operations fell by 6 percent to $3.8 million – with $1.9 million attributable to shareholders.
EBITDA fell by 7 percent to $6.3 million and earnings per share fell from $0.11 to $0.08 – $0.02 short of the $0.10 consensus estimate.
On a conference call with investors, Century emphasized that the shortfall was due to ongoing renovations at its flagship property in the Canadian province of Alberta and not a cause for ongoing concern.
“Operating results and Adjusted EBITDA were impacted by extensive refurbishment and remodeling at the Century Casino & Hotel in Edmonton, our largest property. However, we are very happy with the new gaming floor, restaurant, bar, poker room and the beautiful new VIP gaming areas,” Erwin Haitzmann and Peter Hoetzinger, co-Chief Executive Officers of Century Casinos, said on a call with investors, noting that the project is now complete and that a strong finish to 2016 is expected.
The co-CEOs also touted the opening of a new property in Alberta and an ongoing expansion of the company’s cruise ship-based casinos, including two new vessels in Germany and a 1,200 passenger ship based in Shanghai that operates in the Chinese market with three and four day trips between China, South Korea and Japan.
“We opened another three shipboard casinos this year and are particularly excited about the newest addition to our portfolio of casinos, the Century Casino St. Albert in the greater Edmonton metropolitan region, which we acquired on October 1, 2016,” they said.
Century was also awarded a license in September 2016 by Alberta to build, own and operate a racino on the outskirts of the Edmonton International Airport in an area seen as a relatively untapped market.
The company now owns and operates a total of five casino and racino properties in Alberta, two in Colorado and 12 on cruise ships. It also holds a 66 percent stake in Casinos Poland, which operates has properties in the eastern European nation and represented Century’s strongest source of earnings and revenue growth for the quarter with revenues up 11 percent and adjusted EBITDA up 18 percent.
The third quarter results must be assessed in the context of an economic downturn driven by declining oil prices in Alberta, which is Century’s bread and butter market comprising 43 percent of total adjusted EBITDA.
Oil prices have halved from over $100 just two years ago to the $50 range today, but despite the short-term energy hit and questions over the long-term price of oil, Alberta’s economy has made efforts to diversify and is expected to growth by around 1 percent this year.
A similar scenario is playing out in Colorado, which comprises roughly a quarter of Century’s adjusted EBITDA. The state is another energy-heavy market that has weathered low prices through diversification efforts and has posted a 2.55 percent overall gaming growth this year.
