Century Casinos, Inc. (CNTY)
Q4 2012 Earnings Conference Call
March 28, 2013, 10:00 AM ET
Peter Hoetzinger - Vice Chairman, Co-CEO and President
Erwin Haitzmann - Chairman and Co-CEO
Margaret Stapleton - EVP of Finance
Chris Armbruster - B. Riley & Company
Russ Silvestri - Skiritai Capital
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I would like to introduce our host for today's call, Mr. Peter Hoetzinger. Mr. Hoetzinger, you may begin.
Thank you, Clint. I'm happy to have all of you join us for this call following the release of our fourth quarter and full year 2012 earnings a couple of hours ago. We are, as usual, Erwin Haitzmann, Co-CEO and Chairman of the company and Margaret Stapleton, Executive Vice President of Finance. Following our prepared remarks, we will then jump over the call to your questions.
Before we begin, I need to remind you that in our remarks today we will be discussing forward-looking information which involves a number of risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. The company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. We provide a detailed discussion of the various risk factors in our SEC filings and we encourage you to review these filings.
In addition, throughout our call, we may refer to several non-GAAP financial measures, including but not limited to adjusted EBITDA. Reconciliations of our non-GAAP performance and liquidity measures to the appropriate GAAP measures can be found in our news release and in the 10-K and 10-Q filings, all of which are available in the Investor section of our website at cnty.com.
During 2012, we made significant progress with the implementation of our strategy to increase shareholder value and improve our financial flexibility. We executed this strategy against the backdrop of ongoing uncertainty in the macroeconomic picture and consumer weakness in pretty much all markets we operate in.
The recovery of the gaming industry has been protracted and rather difficult, but despite these challenges we've acted aggressively to improve our performance and position our company for further growth.
In the fourth quarter, we've managed to increase net operating revenues by 1% and net earnings by 6% compared to the fourth quarter of 2011. But as business levels softened in the latter part of the year, adjusted EBITDA fell 9% in the year-over-year comparison.
Our Century Casino and Hotel, Edmonton in Canada again led all properties with excellent results and an EBITDA margin of 33%. We also continued to strengthen our balance sheet, which as of December 31, 2012, showed 24.8 million in cash and cash equivalents and only 3.6 million in debt obligations for a net cash position of 21.2 million with net cash of $0.88 per share and an increase of 32% compared to the net cash position at the same time a year ago.
That strong balance sheet together with our 27 million in credit agreement with Bank of Montreal puts us in a great position to continue the pursuit of new development and the acquisition opportunities in the regulated market worldwide.
Total cash CapEx in the quarter was 1.2 million or approximately 6.5% of revenues, but mainly on projects such as the refurbishment of hotel rooms in Cripple Creek, improvements to the Calgary property and gaming equipment for ship casinos.
Book value per share as of December 31 was $4.89, but we believe the most exciting news may have been today is the pending acquisition of the two-thirds majority of Casinos Poland Limited. We have received the approvals from the other shareholder as well as from the Ministry of Finance and are just a few administrative steps away from closing which we expect around mid-April.
With the closing of this deal, we intend to consolidate Casinos Poland with our 2012 financials and based on the 2012 results, this will increase our reported revenues, EBITDA and net earnings significantly.
With that, I will now quickly highlight the quarter results of each individual property. Our largest casino, the Century Casino and Hotel, Edmonton in Canada which now has grown to 758 gaming machines and 35 gaming tables is our strong performance. Revenue is up 3% and EBITDA was up 6% year-over-year, mostly driven by 17% increase in cash drop at the gaming tables.
It seems that our focus on Asian via [TPlay] supported by theme events, concerts and buffets is paying off very well. Hotel and F&B revenues were also up nicely, 9% and 2% respectively. This probably accounted for 37% of the company's total revenues which we exclude Casinos Poland. Including Casinos Poland, company share of total revenues would be 21%.
The Players Cup, the Loyalty Program grows steadily and we continue to market the showroom with live entertainment, events, concerts and various catering functions to drive traffic to the casino.
In Calgary, revenues declined 7% because of lower slot coining and the lower tablet [hold] percentage. EBITDA which was negative in Q3 turned to a positive $150,000. Obviously that's still not satisfying, but business volumes were not too bad with table top up 10% quarter-over-quarter.
We've added another easy (inaudible) to capitalize on the increased backdrop action. We're making good progress on the non-gaming revenue generated as well, bowling up 20% and 1,100-seat showroom around third-party events only with no financial risks to us.