Good day everyone and welcome to today’s Century Casinos Q3 2024 Earnings Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. Please note, this call is being recorded and I will be standing by, if you should need assistance. It is now my pleasure to turn the conference over to Peter Hoetzinger. Please go ahead, sir.

Good morning everyone and thank you for joining our earnings call. We would like to remind you that we will be discussing forward-looking information, which involves risks and uncertainties that may cause actual results to differ 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 discussion of the risk factors in our SEC filings and encourage you to review these filings. Throughout our call, we refer to several non-GAAP financial measures, including, but not limited to, adjusted EBITDAR. Reconciliations of our non-GAAP measures to the appropriate GAAP measures can be found in our news releases and SEC filings available in the Investors section of our website at cnty.com. After our prepared remarks, we will open the call for your questions. My co-CEO, Erwin Haitzmann; and our CFO, Margaret Stapleton, will join me for that. Our third quarter results were released this morning. We delivered net revenue of $156 million, a small decrease of 3% compared to Q3 of last year. Adjusted EBITDAR was $32.9 million, down just 1%. Consolidated EBITDAR margin increased from 20.6% to 21.1%. The main reason for the small revenue decline was the temporary closure of one of our casinos in Poland. I'm happy to report that in the meantime, 10 days ago, that casino has successfully reopened, and Poland is back to a normal run rate of around $10 million to $12 million in annual EBITDAR. We had another important opening recently; last Friday, on November 1, we opened the brand new land-based casino and hotel in Caruthersville, Missouri. It was a fantastic opening weekend there; more about it a little later. Throughout our portfolio, the underlying customer trends remain stable in the third quarter. I'm sure you have heard the same from our gaming peers and from other consumer discretionary businesses. The retail customer, as well as the low-end customers, are still relatively weak but stable at least. We see that more or less in all our markets; while rated play was flat, non-rated play was down throughout our portfolio. We believe this is mostly due to macroeconomics and wallet softness in our markets. To dig a little deeper into the quarter, let's look at segment results. Starting with the East, which includes the Mountaineer Casino Resort in West Virginia, and the Rocky Gap Casino Resort in Maryland. Revenue of that segment was up 7%, EBITDAR up 5%. At both properties, the low-end consumer produced fewer trips while the spend per trip remained pretty flat. The mid and upper levels of the database also visited less often, but the spend per trip increased versus last year. The performance of the hotels at Mountaineer and Rocky Gap has been improving; cash rooms increased while comp rooms went down. We did put a bit more marketing dollars to work to drive revenue and get more brand exposure. For Mountaineer in the Ohio and Pennsylvania feeder markets, and for Rocky Gap in the D.C. and Baltimore metro areas. Continuing to the Midwest with Missouri and Colorado; revenue of the segment was essentially flat. EBITDAR was down 5%, which is a respectable result considering the disruption we experienced at Caruthersville from the development of the new land-based facility. As mentioned, the new property opened last Friday with a total of 74 hotel rooms and over 660 gaming positions, which is a 20% increase in gaming positions compared to the old riverboat and a 50% increase compared to the temporary location. And I can tell you, I was there; it was a fantastic opening weekend. Right from the beginning on the very first day, the new facility set an all-time record for coin-in and daily revenue, even though we did not have all slots in operation yet. The entire team in Missouri and all of us are really excited about the bright prospects the new property offers. It provides significant operational efficiencies, is much more convenient for our customers, and increases our catchment area. The new property transitions the Caruthersville operation from an old riverboat and small temporary location to a modern land-based facility, adding significantly enhanced non-gaming amenities, expanded gaming options, and convenient parking for our guests. We expect a strong uplift in results, and should see that on the revenue side fairly soon. The impact on EBITDA will probably take a quarter or two until we have worked out the initial growing pains and figured out the most efficient staffing levels. Our other property in Missouri and Cape Girardeau saw a positive revenue trend in the quarter, up 7%, driven by the new hotel, as well as food and beverage sales. The hotel we opened earlier this year is ramping up nicely with a steady incline in occupancy and revenue, and that continued into Q4 with a strong start in October. Additionally, we have been seeing a lot of multi-night stays recently, which is a nice surprise. The hotel is also driving meaningful growth in food and beverage sales, offset by higher cost of goods sold and staff costs. The team continues to fine-tune operational expenses to further increase profitability. Those efforts showed during the quarter; we saw gradual improvements with higher revenue and lower expenses month after month, and we expect that to continue into Q4. In Colorado, our property in Cripple Creek continues to benefit from the new 300-room hotel that opened directly across the street from us earlier this year. Coin-in was up, table drop was up, and food and beverage revenue was up as well, all because there is a higher volume of visitors in town. However, all of that was partly offset by a lower slot total this quarter, and the loss of some of our sports betting revenue. As you know, we had three sports betting providers using our licenses in Colorado; two ceased operations recently, namely, Serve and Tipico. The one remaining is bet365. Overall, the Missouri and Colorado segment did a great job in maintaining operating efficiencies with some property-level margins at 39% during the quarter. Next is the West segment with the Nugget Casino Resort in Reno, Nevada. After a quite disappointing first half of the year, the Nugget showed good sequential growth. Sequential revenue was up 40%, and EBITDAR doubled compared to Q2 but still a bit behind last year's third quarter. Gaming revenue was flat compared to last year, but hotel and food and beverage declined significantly due to fewer group room nights. We've mentioned that in recent investor meetings already; the group and convention volumes are down this year. The reason for this lies two years back before we took over the operations. Anyway, I'm happy to say that it's looking much better going forward. New top management successfully focused on cost control, total expenses went down by 9%. We remain focused on operational efficiencies to help offset rising labor costs. Locals play was strong in the quarter, up 20% compared to last year, and we also saw a significant uptick in the number of visits from the younger age groups. The Nugget has completed its CapEx program in the casino for this year, but we need to spend between $3 million and $4 million on elevators next year, which will increase our estimate for total company-wide CapEx from $12 million to $16 million in 2025. A few words about our smaller operations in Canada and Europe. In Canada, we grew EBITDAR by 6%, mainly through better cost control. Consumer trends appear pretty stable at all four locations we have in Alberta. In Poland, two casinos were still closed during that quarter, one of which is a very important one in the city of Roslov, which resulted in a significant drop in revenues. In an apples-to-apples comparison of the undisturbed properties, both revenue and EBITDAR grew compared to last year. We have reopened that casino in Roslov 10 days ago; the business volumes are great. With that reopening, we expect Poland to get back to normal levels quite quickly, which is between $10 million and $12 million in annual EBITDAR. The sales process is also progressing well. We are hopeful to get it done within the next couple of months. Now let's discuss our balance sheet and liquidity position. We ended the quarter with $119 million in cash and cash equivalents, and $340 million in outstanding debt, resulting in net debt of $221 million. This traditional net leverage is 4.7 times, and least adjusted net leverage is 6.6 times. Of course, the leverage is elevated because of our recent acquisitions and investments. Now that we have the casinos in Poland and the new land-based facility in Caruthersville open, it should ramp down quite quickly as we look to deliver to 3 times traditional and around 5 times lease adjusted for next year. We have no debt maturities until 2029, and we can reprice or refinance our entire term loan at any time without penalty. As soon as the window opens, we want to act on it and improve our terms. Turning to CapEx. During the quarter, we remained committed to investing and offering new amenities to our guests in order to drive future incremental visitation as well as spend. As of today, we are pretty much done with it; just $2 million to go in Canada and Colorado. Total CapEx for this year will amount to around $38 million. For next year, we expect it to come down sharply to about $16 million, setting the stage for a substantial increase in free cash flow. But that significant cash flow growth is not only driven by the reduction in CapEx, the most recent casino openings in Poland and Caruthersville, and the new spirit of optimism at the Nugget in Reno will contribute significantly to much better results in 2025 than in 2024. The presentation posted on our website shows you the bridge from negative cash flow this year to the positive cash generation in 2025. As we look ahead, we are confident in our business projects moving forward. On the expense and labor side, we will continue to focus on operational discipline and look for ways to become even more efficient. As we said in our last earnings call, this year is a transitory period for us, but we see a clear path forward to generating cash and to deliver significantly. In addition, on an opportunistic basis, we also plan to buy back stock. All right, that concludes our prepared remarks. We'll now open the call for Q&A. Paul, please go ahead.

And our first question comes from Jordan Bender of Citizens JMP.

I want to start in Poland. Peter, can you just kind of help us understand what those two licenses? Are they outstanding? Were they denied? Or should we expect them to come back? I guess, I want to start there.

Peter, you want to answer?

Yes, Paul. We had a few licenses that expired, and the officials in charge did not start the relicensing process in time, and that's why we had to close some of the casinos earlier this year, or actually late last year. The important licenses are really crucial; I mean, those that generate significant revenue and EBITDAR for us have been granted again. The last one of those was the one in Roslov, and we opened that 10 days ago. We did not manage to relicense two smaller ones, but that does not have any meaningful impact on the revenue or EBITDAR. As I said, we still anticipate a $10 million to $12 million run rate. So for all intents and purposes, Poland is back to normal with that opening that we had 10 days ago.

Okay, perfect. And then, if I can follow up on that. Does the closing or the lack of relicensing at those two properties change the mindset at all of your willingness to sell those properties, or can you just kind of update us on where you stand with that process?

No, not at all. Over the years, the Casinos in Poland have always had between six and eight licenses. Sometimes you don't get small ones; a small one sometimes you can get back from a competitor; there's always a little bit of fluctuation. But our core operations are fully intact, and there's no change in our plans to sell, nor is there any change from the investors that are interested in buying because of one or two small licenses, more or less, no change.

Great. And congrats on opening the property last week. Thank you very much.

Our next question comes from Jeffrey Stantial of Stifel.

Maybe starting off here on the Nugget Casino; encouraging performance there during the quarter. Peter or Erwin, can you just add some color on the month-by-month performance at the property through Q3 and, I guess, into October? And as you look further out into 2025 and beyond, what are some of the operational levers still left here that you can pull to help drive further sequential improvement and try to close that gap to, we'll call it, 2019 type profitability levels?

Thanks. Good question. I'll take that. I think what is a good question to ask because in the third quarter, what we saw is that the negative impact was basically coming almost 100% from the first month, maybe from July. August and September were really getting stronger and stronger, and in the year-over-year comparison, it's super encouraging; and we see the same trend continuing into October. So, we think that we're really on a very good track there. As Peter said, everybody is very optimistic. Concerning the next year or years, we think there are still operational efficiencies to be found, and there are still opportunities regarding growing revenue as well. In particular, we are fine-tuning the selection of concerts that we're doing; we’ve made some good progress there already, and we also put a lot of focus on getting more group business. The only difficulty with the business is that most of that is planned two or three years ahead. So we only have a certain portion of the market that is planning with a horizon of less than six months; but we are strongly pursuing those.

That's helpful. Thank you for all that color, Erwin. And then for my follow-up, turning to your Canadian assets. It looks like revenues were down year-on-year after a handful of quarters of some really strong growth. Peter or Erwin, can you just expand a bit on what's driving that? And more broadly, as you think about sort of post-COVID performance in that market relative to your U.S. assets, do you anticipate some mean reversion in consumer spend, similar to what we've seen in the last year or two in U.S. regional markets? Just any thoughts there would be great. And that's all from us. Thanks.

Sure. The decrease in net operating revenue is basically due to one casino, namely, Century Downs, where the decrease is rounded numbers, now about $1 million less than net operating revenue. That has two reasons; the first one is that around $300,000 of that can be attributed to the fact that in 2024 we did not have a large event called Chuckwagon Racing. The last time we had it was in 2023, and we had that for three years in a row. But it turned out not to be profitable anymore, so we decided not to do it in 2024. So while we lost some revenue, it certainly had a very good impact on EBITDAR. The remaining $700,000 were due to the fact that our competitor, the Airport Casino, opened earlier in 2023; while it had a smaller impact on us in Q3 2023, it had a stronger negative impact on us in Q3 2024. Having said that, we feel that now the market has stabilized, and the market shares have stabilized, we don't expect any further deterioration. Rather, we think that it's possible to come back a little bit more. With regard to the revenues of the other casinos, we increased net operating revenue in the Fort Road Casino, which is down by $0.5 million, and we had small decreases of $140,000 and $100,000 in Century Casinos St. Albert and in Century Mile. On the EBITDAR side, however, while revenues overall were decreasing by $650,000, EBITDAR increased by $180,000. So the operational efficiencies kicked in, and we're not unhappy at all with the numbers. With regard to the trends, we think from here on out, it will only be mildly positive upwards.

Great, that's very helpful. Thank you, Erwin. I'll pass it on.

Our next question comes from Chad Beynon of Macquarie Group.

Good morning, Erwin and Peter. And congrats on the Caruthersville opening. Wanted to start with the illustrative guidance for 2025 in your investor deck. As we think about the EBITDAR bridge from 2024 to 2025, obviously, most of this will come from the Caruthersville opening and Cape Girardeau ramp; then, I guess, Reno improvement. But has anything changed in terms of how you're thinking about this $150 million of EBITDAR? You mentioned some comments in terms of a ramp of the margin in Caruthersville. So should we think about more of this growth to come in the back half of 2025 or should it be linear? Thank you.

Why don't you take that, please.

Yes, Chad. Thanks for the questions. As with most property openings, this was essentially a new opening at Caruthersville. Yes, it will take a little bit of time for us to see the full potential, also on the EBITDAR line. In terms of the Nugget, it's a bit more immediate. Generally speaking, it's probably more from the second half or second quarter of 2025 that we see that run rate.

Okay, perfect. Thank you. And then you mentioned share repurchases could be something that continues as you're past the CapEx cycle, you have more capacity to execute on this, and the stock remains at low levels. What's the total availability in terms of repurchases? And how should we think about when you could start to execute a little bit more on that strategy? Thank you.

Peter?

Yes. We will not disclose any absolute dollar amounts. But from that page in the presentation, you see that we expect to generate free cash flow between $25 million and $30 million next year. On top of that, we have over $100 million on our balance sheet. We do, however, need roughly $40 million to $45 million of the cash in the casinos. So, the real available cash if we include next year, is probably around $80 million or so. We will not use all of it, but a good portion of it; and we'll split that for our debt paydown and stock buyback. In terms of timing, it's opportunistic as we have said, and it probably starts either late this year or early next.

Okay. Thanks, Peter. What is the current amount available for repurchases?

There's an existing resolution that has also $15 million, but that can, of course, be changed.

Awesome. Thank you, both. Appreciate it.

There don't seem to be any further questions. And it appears that we have no further questions at this time. I will now turn the program back to our presenters for closing remarks.

Thanks, everybody. We appreciate you joining our call today. We talk again early next year. Until then, thank you and goodbye.

Thank you. This does conclude today's Century Casinos Q3 2024 earnings call. Thank you for your participation. You may disconnect at any time.