Century Casinos’ (NASDAQ: CNTY) fourth-quarter earnings conference call took a contentious turn as two shareholders voiced their frustration with management, highlighting the stock’s prolonged decline.
The discontent among investors is understandable. Shares of the regional casino operator plummeted 21.40% on volume more than 11 times the daily average after the company reported disappointing results for the October through December period and warned of softness among lower-tier consumers.
“I’ve seen the stock go down. Very rarely does it go up,” said a shareholder identified as Mike. “It’s disappointment after disappointment, quarter after quarter. There’s no confidence that this company can turn it around.”
The stock’s recent performance has been particularly concerning. After more than doubling from August through December, the shares have erased all of those gains and more. With today’s close at $1.91, Century stock is at its lowest level since March 2020, when its gaming venues were shuttered due to the COVID-19 pandemic.
Investor Calls for Asset Sales and CEO Change
Mike’s dissatisfaction extended beyond the stock price, as he also called for management to sell its Canadian and Polish casinos and consider hiring a new CEO with experience in the US gaming market. The company has previously indicated it is open to selling its two-thirds stake in Casinos Poland, but Co-CEO Peter Hoetzinger noted that the transaction is complicated by the Russia/Ukraine war and the fact that Century doesn’t fully own the Poland entity.
“CNTY continues to engage in discussions with potential acquirers, though somewhat complicated by Poland Airports S.A. 33.3% ownership,” wrote Stifel analyst Jeffray Stantial in a note earlier today. “We continue to see it likely CNTY monetizes the assets during the current window in between licensing cycles, though translating to limited balance sheet impact given the low-multiple nature of the Poland assets (likely <5x) and only 66.6% pro-rata ownership. Strategically, however, focusing on core North American markets should help simplify the thesis for U.S. investors and allow for greater focus on U.S. operations.”
Century has previously monetized some of its Canadian property holdings, and executives reiterated that divestments of its international assets remain under review.
Another Investor Pushes for Insider Buying
Another investor, identified as J.T., urged Century management to increase insider buying of the stock to demonstrate confidence to other shareholders.
Co-CEO Erwin Haitzmann acknowledged the suggestion but pointed out that “we’re pretty much restricted by the insider laws and rules.” This response may be accurate, as Century insiders already own 15% of the stock.
Regarding capital allocation, Hoetzinger mentioned that current consumer sentiment and the broader economy present forecasting challenges, making it unclear whether Century will prioritize debt reduction or share repurchases this year.
