Century Casinos, Inc. (CNTY) Q1 2013 Earnings Report, Transcript and Summary

Howard Rosencrans - Value Advisory Justin Ruissi - Sidoti & Company

Welcome to Century Casinos' Q1 2013 earnings conference call. (Operator Instructions) I would now like to introduce today's host for the call, Mr. Peter Hoetzinger. Mr. Hoetzinger, you may begin.

Good morning, everyone, in North America and good afternoon to all our European listeners. I'm happy to have all of you join us for this call following the release of our first quarter 2013 earnings. With me on the call today are, Erwin Haitzmann, Co-CEO and Chairman of the company; and Margaret Stapleton, Executive VP of Finance. 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 our Investor Section of our website at cnty.com. Century Casinos' posted excellent results in the first quarter, remarkably it was the 13th consecutive quarter we see the revenue or net earnings growth. We continue to make good progress across the organization in enhancing operating efficiencies and maintaining a disciplined approach to marketing and demonstrated by the over proportional increases in earnings from operations and net earnings. We managed to increase revenues by 2% year-over-year, EBITDA by 17%, earnings from operations were up 30%, and net earnings were up by 47%. Earnings per share jumped from $0.05 to $0.07 for the quarter. The markets with higher revenue…

(Operator Instructions) We'll go first to (Peter Carmack).

As I am going through the numbers, first of all EBITDA numbers are clearly good and if you annualize that out excluding the CPL consolidation that will happen here in Q2. That market cap on the equity side at $75 million net cash of $22 million, which means you've got a total enterprise value of roughly $53 million, divide that out by your annualized EBITDA and you are trading at roughly four times and also had 66% of tangible book value per share. Got the repurchase program in place since forever and it's been sitting there unused essentially and I am curious, number one, why are no share repurchases occurring. And number two, what would have to happen to make you guys start repurchasing shares that what seems to me to be a ridiculously cheap price.

We had consistently said over the last couple of quarters that we are considering to use cash either to possibly pay dividend of purchased stock, in case we don't find interesting, exciting and compelling new projects. The Casinos Poland acquisitions certainly is such a project and we believe that the other place that we are currently evaluating and doing the due diligence on such exciting projects as well and therefore I think we have better carried the above the timing of this and whether or not the current situation, we will look at the use of funds and make decisions then accordingly.

Let me just follow up with one more point. Why not instead of an either/or proposition, why wouldn't it be a both hand proposition. In other words, you guys have a limited share volume. You can't go out and buy unlimited number of shares, but why aren't you buying anything? I mean it's not like that would work into your cash too much. You should be doing something when you have got to return that you know better than any other project out there that gives you essentially a very high internal net return that you don't have to have any risk with because it's already stuff that you already know about.

It was all about improving cash management, but we'll certainly look into it.

We'll go next to Howard Rosencrans with Value Advisory.

Do you feel like there is much seasonality in your business I mean channel is kind of cold, and wonder if your vision is that subsequent quarters will be better?

Well, with two casinos in Colorado and two similar size in Canada, the seasonality has pretty much been taken out of the equation. If it all then the second and third quarter would be a little bit stronger than the first and the fourth, but it's not very much.

In terms of Warsaw property you mentioned, give us an idea what you're thinking about there or how significant I guess the Warsaw market is vis-à-vis the other markets that you're presently in? And remind us as if you would, how many properties do you have in Poland presently?

Warsaw is obviously the biggest gaming market there in this country club. On the other hand it's pretty saturated already, so we start to open the second property and will mark out all the desks in few months, it certainly need to rank up fit, and we don't expect too much in the first quarter. But ultimately it should be a strong contributor, but it needs some time.

We'll go to Justin Ruiss with Sidoti & Company. Justin Ruiss - Sidoti & Company: I just was wondering if you could comment a little further on just the traffic levels in Colorado thus far. Are you going to see anything just maybe in the coming quarters? Are you going to see major growth coming from their or has this just kind of been business as usual?

In short, no we don't see any major changes in traffic patterns. The markets are solid to the extent, solid I should say. But overall there has not been really any significant growth. So it's quite a competitive business. We have to basically get the growth by taking it from the other in that sense. But it seems already than we think it will continue to be. Justin Ruiss - Sidoti & Company: And actually plays into my next question, is there anybody out there that competitively maybe taking market share out of maybe from you or are you seeing anybody that's new on the horizon that could be a potential competitor, what you think of the landscape so far?

No, we don't see anybody taking from us. And we don't see anybody new that where we would think that they would or could impact us.

It appears that there are no further questions at this time. Mr. Hoetzinger, I would like to turn the conference back to you for any closing remarks.

Thanks, everybody, and for you interest in Century Casinos and your participation in the call. For recording of the call, please visit the Financial Results section of our website at cnty.com.