Century Casinos has unveiled its financial results for the second quarter of 2023, showcasing a record revenue of $136.8 million. This strong figure marks a significant 23% increase compared to the same period in the previous year.
Analysts and industry insiders attribute a large portion of this growth to the company’s $100 million acquisition of Nugget Casino in Reno, Nevada (pictured), which has shown strong growth throughout the year.
“We are pleased with the results of this quarter, generating record revenue due to the addition of the Nugget Casino Resort, partially offset by construction disruption at our Missouri properties” said Century Casinos joint CEOs Erwin Haitzmann and Peter Hoetzinger in a company earnings call to discuss the Q2 results.
A Golden Nugget
The acquisition of Nugget Casino has undeniably played a pivotal role in Century Casinos’ recent success.
The purchase, which was finalized earlier this year, has already started to pay dividends.
“We are more excited than ever with that acquisition. The first three months under our ownership, we increased revenue by 16% over Q2 of last year,” said Hoetzinger.
“And I’m happy to report that debt grade revenue trend has continued into July as well. The steep increase in revenue was driven by a strong conventional hotel business and improvements in slot revenue with 120 new slot machines on the gaming floor, which we added during the quarter.”
However, while the revenue figures are impressive for Century overall, the company’s earnings before interest, tax, depreciation, and amortization (EBITDA) experienced a slight dip.
The adjusted EBITDA for the quarter stood at $17.1 million, a decrease from the previous year. This decline is attributed to operational adjustments and expenses related to the Nugget Casino acquisition.
Operational Challenges
Despite record revenues, it wasn’t all smooth sailing for Century Casinos. The company faced some headwinds in the form of increased operational costs and the expenses associated with the integration of new acquisitions.
Those acquisitions included underperforming Maryland casino venue Rocky Gap Casino Resort, which joins the Mountaineer Casino Resort in West Virginia as Century’s operations in the eastern U.S.
“Revenue was down 5%, EBITDA down 20%. Revenue in April and May was down 9% due to a decrease in the number of trips and spend across the lower end of the database, mostly during the week,” Hoetzinger said of the eastern market.
In regard to Rocky Gap, Century doesn’t expect a huge improvement in revenues to come straight away.
“Increasing costs for wages and payroll benefits, as well as for insurance, will pose quite a challenge to keep EBITDA to where it currently is,” Hoetzinger said.
Optimism for Further Growth
The company’s focus on expanding its portfolio and diversifying its operations suggests a proactive approach to navigating the complex landscape of the gaming industry.
The company’s balance sheet is also fairly healthy, with $167 million coming in from the sale of the land under its Canadian casinos via a lease-buyback deal with VICI Properties.
It intends to use that cash to pay off some its debt pile.
“As of June 30, we had $109 million in cash and cash equivalents and $364 million in outstanding debt,” Hoetzinger said in the earnings call.
