HIGHLIGHTS

• Sales in 2Q:16 declined 7.1% compared to the same quarter last year, due to extraordinary items, namely, termination of concession agreements. Excluding these items, sales grew 2%.
• Profit margins improved 2.5 percentage points over the prior quarter on better coverage of fixed costs by higher sales levels. We believe this bodes well for overall earnings in the balance of the year and beyond.
• Our earnings model has been updated to reflect 2Q:16 results. The model still reflects top-line growth of 5.7% in FY:16 and 12.5% in FY:17, but we now anticipate earnings in FY:16 down to $0.42, and then strong growth in FY:17 to $0.57.
• The second quarter reflected good local currency revenue performances from the Company’s three operating segments. Canada was up 4%, Poland was up 10% and the U.S. was up 7%,
  reflecting underlying strength and stability in its geographically diverse portfolio of casino assets.
• Century Casinos successfully converted 16% of sales in 2Q:16 to operating cash flow. We expect continue strong cash flow generation in FY:16.
• Total debt outstanding was $37 million at the end of June 2016, a reduction of $7.7 million from 12 months earlier.
• In June 2016, the Company entered into an agreement to acquire the Apex casino in St. Albert, Edmonton, Canada. Apex is a 34,500 square foot facility that includes 382 slot machines and 11 live table games. The acquisition is expected to close in the fourth quarter of 2016.
• We continue to view CNTY as undervalued based on valuation of the stock through comparisons to a large group of casino managers. Our price target remains $9.25.