Century Casinos reported net operating revenue of $161.2m (£131.1m/€150.6m) in the third quarter, but that wasn’t enough to prevent the operator from making a net loss following a series of acquisitions recorded.
Sales rose 43.2% year-over-year in the third quarter, surpassing the previous record set in the second quarter. According to Century Casinos, this was due to the acquisitions of Nugget Casino Resort and Rocky Gap Casino.
However, while revenues continue to rise, the costs associated with the acquisitions more than offset this increase. Ultimately, this led to Century reporting a net loss for the third quarter.
Looking back on the quarter, the two CEOs, Erwin Haitzmann and Peter Hoetzinger, were apparently unimpressed by this loss. They attributed the loss to one-time expenses and said costs will soon return to more consistent levels in the fourth quarter.
“With our acquisitions of Nugget Casino Resort and Rocky Gap Casino, we achieved record high net operating revenue and adjusted EBITDA,” said Haitzmann and Hoetzinger
“One-time charges related to the Rocky Gap acquisition and sale-leaseback transaction in Canada negatively impacted our operating income and net loss for the quarter. Looking forward, we expect revenue and operating expense trends to remain in line with recent quarters.”
For Century, there is clear US growth in the third quarter
If you take a closer look at the Q3 figures, the impact of the acquisitions on the US business can be clearly seen. U.S. revenue increased 65.4% to $116.9 million due to the new casino expansions.
Elsewhere, revenue in Canada rose 4.3% to $20.9 million and in Poland revenue also rose 7.7% to $23.4 million.
However, the acquisitions also came with higher costs: operating costs increased by 56.7% to $146.7 million.
Century also recorded non-operating expenses of $31.0 million. This resulted in a pre-tax loss of $16.5 million, compared to a profit of $5.1 million in the third quarter last year.
Century received $3.1 million in tax benefits but deducted $709,000 in profits from its non-controlling assets. Thus, the net loss in the third quarter amounted to $14.2 million, in contrast to the previous year’s profit of $2.9 million.
However, adjusted EBITDA rose 18.5% to $33.3 million.
Year-to-date sales exceed $400 million
As for the third quarter’s impact on Century’s year-to-date performance, revenue increased 24.4% to $406.5 million. However, this was accompanied by a 29.4% increase in operating expenses to $356.1 million.
Century earned $1.1 million in revenue from equity investments but also reported $62.9 million in non-operating costs. This resulted in a pre-tax loss of $11.4 million, compared to a profit of $8.6 million last year.
The operator received a tax benefit of $1.3 million but took profits from non-controlling interests worth $7.3 million. As a result, the company ended the reporting period with a net loss of $17.4 million, in contrast to the previous year’s profit of $12.0 million.
There was some good news on the earnings front, however, with adjusted EBITDA rising 8.6% to $88.7 million.