Century Casinos (NASDAQ:CNTY) is a small gaming company with a history of successful bolt-on acquisitions. It operates eleven casinos, two in its home state of Colorado. Others are in Missouri, West Virginia, and some international locations.
Century looks ahead
Century purchased Mountaineer Casino Racetrack and Resort in West Virginia and the Isle Casino Cape Girardeau and Lady Luck Casino (both in Missouri) from Eldorado Resorts last year, confirming its penchant for smaller but accretive transactions.
It may be on the hunt for deals in 2021. What are the desired targets? It seeks prospects for industry consolidation. According to co-CEO, Peter Hoetzinger, the company is looking for deals.
We’ve now shown we can successfully negotiate contract, close, and integrate a
large transaction…that makes us a good buyer for more of these mid-size assets and, yes, we are out looking…next year will be a very busy M&A situation in the US.”
Century’s 2020 Q3 operating revenue and earnings surged 81 percent and 331 percent, respectively, certainly something rare in the gaming industry. Kudos go to the Mountaineer Casino and the two Show-Me State properties. Meanwhile, its rivals report major losses in the third quarter.
Century could be the next big industry winner. It is likely to pursue those smaller regional assets missed by its larger competitors. Hoetzinger pointed out that some regional operators are getting bigger and “are somewhat less interested in some of the properties that would be very important for us.”
However, he did not mention specific regions for any upcoming purchases, nor did he reveal the individual companies from which Century could acquire venues. Speculation has it that Las Vegas is the place of interest given the depressed values of gaming properties due to the pandemic. Other regions are facing the same issues and could well enter the race for acquisition.
Century is certainly in position to make a move. As of the end of Q3, the company has $62.1 million in cash and cash equivalents despite $184.1 million in outstanding debt. Earlier in 2020, it sold its venue in Calgary, Canada for $7.5 million. It still retains title of the real estate but intends to sell of the land eventually.
In addition, the operator has stakes in nine properties in Poland. Its European operations now account for four percent of Century’s overall earnings, before interest, taxes, depreciation and amortization (EBITDA). This means that Century could well redeem its earned chips elsewhere. Per Hoetzinger,
“That has moved to a very interesting and important part of our business a
couple of years ago to being in non-core. Therefore, you may assume we
are thinking of getting a good deal for these assets in Poland.”