Century Casinos (CNTY) Q2 2024 earnings summary

Executive summary

• Net operating revenue for Q2 2024 rose 7% year-over-year to $146.4 million, driven by US segment growth, new property contributions, and strong performance in Canada, but offset by operational challenges and temporary closures in Poland.

• Adjusted EBITDAR for Q2 2024 was $27.4 million, down 6% year-over-year, mainly due to higher expenses, construction disruptions, and competitive pressures.

• Net loss attributable to shareholders was $41.6 million, impacted by a $23.8 million tax expense from a valuation allowance on US deferred tax assets and higher interest expense.

• April was notably weak and accounted for the entire EBITDAR decline, while May rebounded and June was nearly flat.

• Leadership changes and cost-cutting initiatives are underway at the Nugget Casino Resort; management remains focused on growth projects and property upgrades.

Financial highlights

• Q2 2024 net operating revenue: $146.4 million (+7% YoY); Adjusted EBITDAR: $27.4 million (down 6% YoY); net loss: $41.6 million, primarily due to a $23.8 million tax expense.

• Cash and cash equivalents at quarter-end were $123.2 million; total principal debt: $341.6 million; net debt: $218.4 million.

• For the six months ended June 30, 2024, net operating revenue increased 15% year-over-year to $282.5 million; Adjusted EBITDAR for the six months was $48.7 million, down 12% year-over-year.

• Interest expense for Q2 rose to $25.1 million from $18.2 million year-over-year, mainly due to additional properties under the Master Lease and higher rates.

• Q2 consolidated net income margin was -28%; Adjusted EBITDAR margin was 19%.

Outlook and guidance

• 2024 revenue projected at $602 million and Adjusted EBITDAR between $105 million and $115 million; 2025 revenue expected between $650 million and $675 million, with Adjusted EBITDAR of $150 million to $160 million.

• Free cash flow and net cash generation are expected to improve significantly in 2025 as CapEx drops and key properties reopen.

• Capital expenditures projected at $12.6 million for the remainder of 2024 and $12.0 million in 2025.

• The Caruthersville land-based casino and hotel is expected to open ahead of schedule in mid-November 2024, increasing gaming positions and hotel rooms by 50%.

• Renovations in Wroclaw, Poland, continue with expected casino opening in October 2024; license renewals for Krakow and LIM Center casinos remain uncertain.