New Era for Century Casinos: Shareholders Speak Out
Shareholders pose questions about the company's financial performance during a Century Casinos conference call.
Century Casinos found itself in the midst of an unusual earnings call last Thursday. Two investors didn't hesitate to voice their concerns about the company's decisions, causing a bit of a stir.
The first investor, known as Mike, was unimpressed with the stock's performance. He lamented, "It's rare that this stock goes up. We need a new CEO who understands the American market, someone who can turn this ship around. It's been one disappointment after another, quarter after quarter. There's no confidence that this company can change its course."
The investors' passion was palpable, and Century executives seemed taken aback. They confirmed that a change in leadership was an option they were considering.
Co-CEO Peter Hoetzinger spoke up, "It's true that for a long time, Canada and Poland had a positive impact on our business, but let's not forget that those assets have already been sold. As for Canada, a withdrawal is definitely under consideration."
Getting out of Poland was a more complex matter due to a joint-ownership agreement. Hoetzinger also mentioned the impact of the war in Ukraine on business, with a Wroclaw casino just starting to gain traction, while they had to close the Cracow casino after license renewal was denied.
Mike was followed by an investor called J.T., who suggested that strong insider buying of the stock might be good for shareholders. Co-CEO Erwin Haitzmann responded that while it was an interesting idea, they were limited by insider laws and rules.
Earlier, Hoetzinger shared with Wall Street analysts that the fundamentals beneath Century remained stable, with upper-tier customers spending more. However, he highlighted the results at new Century Caruthersville, which had seen a significant increase in revenue and cash flow since reopening.
Moving forward, Hoetzinger predicted "further margin improvements over time." He also noted that Century was in talks with a potential sports betting operator for Missouri, to be announced soon.
Back in Colorado, Hoetzinger admitted to mixed results, with carded play up 12 percent but uncarded play down. He suggested that it might be because casual, uncarded players were heading to nearby rival Chamonix, but admitted he had no concrete data.
Future plans for Cripple Creek and Cape Girardeau seem promising, with steady revenue and occupancy growth for the expanded Cape Girardeau hotel. The co-CEOs remained optimistic about the impact of Missouri sports betting and the potential for new partnerships.
Hoetzinger was confident that, despite some challenges in West Virginia and Maryland, investments in the property portfolio were already showing results, with casinos looking better than ever. And despite concerns over Alberta tariffs and slot bans in Canada, he expected only a minor impact on business.
As for the question of capital allocation between stock repurchases and debt paydown, Hoetzinger admitted it was difficult to forecast, given the uncertainty surrounding consumer sentiment. He emphasized that retiring debt would be beneficial but advised caution due to the state of the economy.
Insights from the Enrichment
In similar scenarios, companies often face shareholder pressure leading to strategic changes such as leadership transitions and assets realignment focused on more profitable markets. In Century Casinos' case, the push for new leadership and divestment of international assets might signal a shift towards reinvesting in U.S. properties. This strategy is common in industries looking to capitalize on local market growth and regulatory stability.
Erwin Haitzmann, one of the co-CEOs, suggested that a shift towards reinvesting in U.S. properties could be on the horizon, following shareholder pressure for new leadership and the potential divestment of international assets. The company's future earnings could be influenced by this strategy, as it aims to capitalize on local market growth and regulatory stability in the casino-and-gambling industry. Additionally, Century Casinos is in talks with a potential sports betting operator for Missouri, which could boost earnings if successful.
