CENTURY CASINOS INC /CO/ SEC 10-K Report — TradingView News

Century Casinos, Inc., a prominent casino entertainment company founded in 1992 and incorporated in Delaware, has released its 2024 Form 10-K report. The report provides a comprehensive overview of the company’s financial performance, business operations, strategic initiatives, and the challenges it faces in the competitive gaming industry. Century Casinos operates gaming establishments, lodging, restaurants, horse racing, and entertainment facilities primarily in North America, with a strategic focus on expanding its market presence and enhancing its property portfolio.

Financial Highlights

• Net Operating Revenue: $575.9 million, an increase of 4.7% from 2023, driven by higher gaming and food and beverage revenue.
• Earnings from Operations: $4.3 million, a significant decrease of 93.3% from 2023, primarily due to goodwill impairment and increased operating costs.
• Net (Loss) Earnings Attributable to Century Casinos, Inc. Shareholders: ($128.2) million, a substantial decline from 2023, influenced by increased interest expense, goodwill impairment, and valuation allowance on deferred tax assets.
• Basic (Loss) Earnings Per Share Attributable to Century Casinos, Inc. Shareholders: ($4.19), reflecting a significant decline from 2023 due to the factors affecting net income.
• Diluted (Loss) Earnings Per Share Attributable to Century Casinos, Inc. Shareholders: ($4.19), consistent with basic EPS, indicating no dilution effect.

Business Highlights

Company Overview: Century Casinos, Inc. develops and operates gaming establishments, lodging, restaurants, horse racing (including off-track betting), and entertainment facilities primarily in North America. The company aims to grow its business by pursuing new gaming opportunities and reinvesting in existing operations.

Operations and Segments: The company operates in three reportable segments based on geographical locations: United States, Canada, and Poland. Each region is viewed as a separate operating segment, with each casino or operation within those markets considered a reporting unit. Additional business activities, including corporate and management operations, are reported as Corporate and Other.

United States Operations: The company operates several casinos in the United States, divided into three regions: East, Midwest, and West. Key properties include Mountaineer Casino, Resort & Races in West Virginia, Rocky Gap Casino, Resort & Golf in Maryland, Century Casino & Hotel in Caruthersville and Cape Girardeau in Missouri, and Nugget Casino Resort in Reno-Sparks, Nevada.

Canada Operations: Century Casinos operates four properties in Alberta, Canada: Century Casino & Hotel in Edmonton, Century Casino St. Albert, Century Mile Racetrack and Casino, and Century Downs Racetrack and Casino. These properties offer a mix of gaming, lodging, dining, and entertainment facilities.

Poland Operations: The company holds a 66.6% ownership interest in Casinos Poland, which operates six casino licenses throughout Poland. The casinos are primarily located in hotels in major cities, and the company relies on these locations to attract customers.

2024 Business Developments: In 2024, Century Casinos opened a new land-based casino with a 38-room hotel in Caruthersville, Missouri, and a 69-room hotel called The Riverview at the Cape Girardeau location. The Caruthersville project cost approximately $51.9 million, funded through financing provided by VICI PropCo. The Cape Girardeau project cost approximately $30.5 million, financed with cash on hand.

Geographical Performance – United States: In the East region, net operating revenue increased due to the acquisition of Rocky Gap, although West Virginia operations saw a decrease in gaming, hotel, and food and beverage revenue, partly due to inclement weather and competition from Ohio’s legalized sports betting. In the Midwest, revenue increased due to new developments at Cape Girardeau and Caruthersville, while the West region saw revenue increases due to the acquisition of the Nugget in April 2023.

Canada Performance: The Canadian segment saw an increase in gaming and food and beverage revenue at all locations except Century Downs, which experienced a decrease in food and beverage revenue due to a non-recurring event in 2023. The increase in gaming revenue was primarily due to an additional 2% slot machine net sales retained starting April 1, 2023. Operating costs and expenses decreased due to one-time costs related to the Canada Real Estate sale in 2023, decreased utility costs, and decreased marketing expenses at Century Downs.

Poland Performance: The Polish segment experienced a decrease in net operating revenue primarily due to licensing-related closures at locations in Bielsko-Biala, Katowice, and Wroclaw during the first nine months of 2024, as well as the closures of locations in Krakow and the LIM Center casino in Warsaw. Operating costs and expenses decreased due to reduced marketing and gaming-related expenses, offset by increased payroll costs due to termination costs for employees at the Krakow casino.

Seasonality in the United States: The company’s casinos in Colorado attract more customers during the warmer months from May through September. In West Virginia, customer visits peak from March to August during the racing season. Missouri casinos see the highest business volumes in February and March, while Nevada and Maryland properties attract more customers in the summer months due to outdoor events and activities.

Seasonality in Canada: Canadian casinos generally experience a steady influx of customers throughout the year, with additional visitors during the summer months of the racing season at Century Downs and Century Mile. Off-track betting parlors see increased activity during the peak racing season from May through August.

Regulatory Environment: Century Casinos operates under extensive state, local, foreign, provincial, or federal regulations, requiring gaming licenses in each jurisdiction. Changes in laws that restrict, prohibit, or permit gaming operations could materially affect the company’s financial position and operations. The company is currently in compliance with all applicable gaming and non-gaming regulations.

Employee and Human Capital: As of December 31, 2024, Century Casinos employed 3,181 full-time and 886 part-time employees. The company emphasizes employee development and a positive work environment, offering training and development programs to provide opportunities for career advancement. Some employees in Poland, West Virginia, and Rocky Gap are part of trade unions, with collective bargaining agreements in place at Mountaineer and Rocky Gap.

Strategic Initiatives

Strategic Initiatives: The company has been actively pursuing strategic acquisitions to expand its operations, including the acquisition of the Nugget and Rocky Gap casinos. These acquisitions are part of the company’s strategy to enhance its geographical footprint and diversify its revenue streams. Additionally, the company has completed construction projects in Caruthersville and Cape Girardeau, which include new casino and hotel facilities, to increase its market presence and customer offerings.

Capital Management: The company has been managing its capital through a combination of debt financing and strategic partnerships. It has a Goldman Credit Agreement that includes a $350 million term loan and a $30 million revolving facility. The company also engaged in a sale and leaseback transaction with VICI PropCo to fund its Caruthersville project. Furthermore, the company has a stock repurchase program with $14.7 million remaining, although no shares were repurchased in 2024. The company has not declared any dividends, focusing instead on reinvestment and debt management.

Future Outlook: Looking ahead, the company plans to continue its strategic focus on expanding its casino operations and enhancing its property portfolio. It intends to utilize available cash for capital projects, including maintenance and growth capital expenditures, and may consider repurchasing common stock or increasing the stock repurchase program. The company is also exploring additional gaming projects and acquisition opportunities to drive future growth. Additionally, the company has a shelf registration statement to issue up to $100 million in securities, providing flexibility for future capital raising activities.

Challenges and Risks

Business Environment and Competition Risks:

• Our success is heavily dependent on discretionary consumer spending, which is influenced by economic conditions, geopolitical tensions, pandemics, and other factors. Adverse conditions could lead to decreased demand for our casino resorts and amenities.
• We face intense competition from larger casinos with greater resources. New or expanded operations by competitors could adversely impact our business.
• Changes in gaming laws in our operating regions could increase competition and negatively affect our operations. For instance, the legalization of sports betting in neighboring states has already impacted our gaming revenue in West Virginia.
• Capital expenditures are necessary to maintain competitiveness. If we face capital constraints, our facilities may become less attractive, impacting our business negatively.
• Our expansion strategy involves risks, including the potential failure to identify attractive opportunities, generate expected returns, or successfully integrate new acquisitions.
• The licensing process for new gaming opportunities is costly and time-consuming, with no guarantee of success. Political factors may complicate the process, and failure to obtain licenses could result in significant financial losses.

Credit and Liquidity Risks:

• We have significant financial obligations under our indebtedness and Master Lease, which could limit our financial flexibility and expose us to interest rate risks.
• Our ability to meet debt service and rent obligations is critical. If cash flows are insufficient, we may need to reduce investments, sell assets, or seek additional capital, which may not be successful.
• A majority of our casinos are on leased properties. Defaulting on leases or failing to renew them could result in losing possession of these properties, adversely affecting our operations.

Operational Risks:

• Our operations are vulnerable to disruptions from severe weather, natural disasters, terrorism, and disease outbreaks, which could negatively impact our business and financial results.
• Insurance coverage may not be adequate to cover all potential losses, and increasing insurance costs or reduced coverage could adversely affect our operations.
• The use of AI in our business poses risks, including potential cybersecurity incidents, ethical issues, and regulatory compliance challenges.
• Cybersecurity breaches of our information systems could harm our reputation and result in legal liability.

Legal, Regulatory and Compliance Risks:

• We face extensive regulation from gaming and other authorities, which could limit our operations or result in significant expenses.
• Changes in gaming laws, such as the expansion of legalized gaming in nearby states, could increase competition and adversely affect our operations.
• We depend on agreements with horsepersons and pari-mutuel clerks. Failure to renew or modify these agreements could adversely affect our operations.
• Potential changes in US taxation of international business activities or other tax reform laws could materially affect our financial position.
• We are subject to significant gaming taxes and fees, which could increase and adversely affect our results of operations.

Future Outlook and Management Strategies:

• We plan to partner with sports betting operators to conduct sports betting at our Missouri facilities or through online apps, with sports betting expected to begin in Missouri in late 2025.
• We continue to explore additional potential gaming projects and acquisition opportunities, despite the associated risks.
• We are aware of the potential impact of climate change and severe weather on our operations and are monitoring these risks.
• We are committed to corporate social responsibility and sustainability, recognizing the importance of meeting stakeholder expectations and regulatory requirements.

SEC Filing: CENTURY CASINOS INC /CO/ [ CNTY ] – 10-K – Mar. 12, 2025