Good day, everyone, and welcome to today's Century Casinos Q2 2025 Earnings Call. Please note this call is being recorded. 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 everyone that we will be discussing forward-looking information under the safe harbor provisions of the U.S. federal securities laws. The company undertakes no obligation to update or revise the forward-looking statements, and actual results may differ from those projected. 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 questions from analysts. My co-CEO, Erwin Haitzmann, and our Chief Financial Officer, Mrs. Margaret Stapleton, will join me for that. We announced strong second quarter results this morning. Both revenue and adjusted EBITDA were all-time records for a second quarter. Revenues were $150.8 million, driven by strength in Missouri, Canada, and Poland. EBITDAR came in at $30.3 million, a 50% sequential increase and a 10% increase over Q2 of last year. The strong EBITDAR growth was broad-based with every region except Nevada contributing positive growth. Our results were supported by continued strength in play from our core customers as well as improving trends among retail and lower-end customers. More color and granularity on the individual properties and markets will come from Erwin shortly. It was a busy quarter for us. In addition to the strong operational performance, let me point out a few of the other highlights. In May, we announced a partnership with BetMGM to operate an online and mobile sports betting application under our license in Missouri. The agreement includes a percentage of net gaming revenue payable to us with a guaranteed minimum as well as retail sportsbook options to be exercised at our discretion. Sports betting is expected to go live in Missouri in December of this year, so we expect to see meaningful contributions from BetMGM in our financials in 2026. Also in Missouri, the new property in Caruthersville continues to perform really well. The increase in net operating revenue and EBITDAR since the opening of the new casino and hotel on November 1 last year is 26% and 31%, respectively. In Poland, we were notified in June that we have not received a new license for a second casino in Warsaw. However, the license for our flagship casino operation in Warsaw at The Presidential Hotel, formerly the Marriott, runs through 2028. For Poland's third largest city, Wroclaw, we have been awarded an additional license, and we expect to open that casino in the fourth quarter of this year. We are still committed to divesting our Poland operations. In fact, we do expect to sign a letter of intent with an Eastern European gaming group next week. So we'll be under exclusivity on our Poland business shortly. We will provide updates on the Poland divestment process in the coming months as appropriate. And with that, over to you, Erwin.

Thank you, Peter, and good morning, everyone. I will provide an overview of the performance of our assets for the second quarter, starting with Missouri. Our new Caruthersville Casino and Hotel property, which we opened on November 1, 2024, continues to be very successful in the second quarter. Total revenue grew 24% and operating expenses and the comps were tightly controlled. This resulted in a 30% increase in EBITDA from $4.7 million in Q2 '24 to $6.1 million in Q2 '25 and a healthy 43% margin. These growth numbers are driven by double-digit percentage increases in the properties' customer base across all segments, specifically the high-value customers, all age groups, particularly those aged 30 to 39, and all distance ranges with special mention of the 75-plus mile distance range, which increased by 41%. The number of visitors increased by 20% quarter-over-quarter. Caruthersville is situated in the Missouri Bootheel, approximately 95 miles north of Memphis. Tennessee customers contribute about 50% of the revenue, with the remainder split among customers from Missouri, Arkansas, and other states. The property is conveniently accessible by car with ample parking, and the new hotel and amenities are drawing patrons from longer distances. The project cost of $51.9 million was funded through financing provided by VICI through our master lease. As a result, rent due to VICI increased by approximately $1.1 million per quarter. The property's EBITDAR after subtracting the VICI rent was up over 10% compared to Q2 of last year prior to the increase in rent. The transition from the old riverboat was partly driven by our desire to provide significantly improved entertainment and hospitality experiences to our customers, and partly by the necessity of moving off the Mississippi River onto the protected side of the floodwall. So far, the property has exceeded our expectations, and therefore, we couldn't be more pleased with our new Century Casino & Hotel Caruthersville and the continued growth we expect at the property. Now on to our Century Casino & Hotel Cape Girardeau. This property was built to high standards in 2012. We purchased the operating company in late 2019, and VICI acquired the underlying real estate at the same time. In 2022, we decided to build a hotel to complement the property's amenities and to prepare for an incoming competitor in Illinois. The Riverview hotel opened in April 2024. In the second quarter of '25, the hotel continued to grow its cash revenue, which more than doubled compared to the same quarter in 2024. The hotel drove incremental food and beverage revenue; F&B cash revenue grew 31%. And most importantly, it increased associated gaming revenue, which was $556 per comped hotel guest in the second quarter. The ADR for retail customers was $151. We are very pleased with the results of the hotel as we have absorbed the new competition by expanding the reach of the property with patrons from outside of 75 miles increasing by 28% since the hotel opened. We continue to refine our strategy with the hotel and believe we have ample room to grow, given our current occupancy rates and the value of gaming customers who stay at the hotel. Overall, gaming revenue remained slightly behind last year. Severe storms and tornado activity in April heavily impacted the property. A total of 9 days were affected, 5 weekdays and 4 weekend days, with much of the Illinois market blocked off due to flooding on those days. However, because of well-controlled expenses, the property's EBITDAR increased by 3% to $6.5 million, resulting in a margin of 37% in the quarter. Looking ahead, we are particularly excited about our partnership with BetMGM. We plan to launch online sports betting in Missouri at the end of this year and have begun preparing for a fantastic BetMGM-branded retail sportsbook. This will enhance the property's appeal as a prime regional entertainment destination, driving further revenue and profitability growth. Continuing with the Midwest segment, let's review the performance of our operations in Colorado. Century Casino Cripple Creek had an excellent second quarter. EBITDAR was $1.9 million compared to $2.4 million in Q2 of '24. The $2.4 million, however, includes a breakage fee from the termination of a sports betting agreement in May of '24, amounting to $850,000. Therefore, on a comparable basis, EBITDA was up 23% in the quarter. As you will recall, we eliminated live table games at our Colorado properties in Q1 2025. The cost-saving effects from eliminating live table games far exceed the lost revenue. The all-new prominently located electronic table games lounge, the first in this gaming market, proved to be a popular alternative for our customers. Although we saw a decline in trips and visitors in this quarter, the average spend per trip was up by 28%, with our higher-value segments performing very well. I should also mention that we finished a complete redesign of the main entrance to the casino in this quarter. Previously, this corner was somewhat tucked away and difficult to access from the sidewalks. Now we have a wide entrance on 2 sides, newly designed and levee stairs connecting to the sidewalk, and the prominent Century Casino sign above the entrances. We believe that this project, along with the numerous minor improvements we have made to the property over the last 12 months, contributes to the property's continued success. To sum it up, we are very pleased with this asset in our portfolio, which we have fully owned and operated for over 30 years. As for Century Casino Central City, we reported on the Q1 earnings call that Q1 was a transitional quarter for Central City with multiple cleanup initiatives started and completed. We are pleased to report that these efforts began to yield results in the second quarter. EBITDAR was $910,000, which is flat to the same quarter of last year when adjusted for $200,000 less revenue from sports betting. The EBITDAR margin at this property was just below 20% compared to 40% at Century Casinos Cripple Creek based on very similar net operating revenues. The difference is due to significantly higher gaming and property taxes, as well as the higher marketing spend due to the strong competition from Black Hawk. This property traditionally had a fair amount of play from retail customers who preferred not to join the property's loyalty club. The retail segment decreased during that period, while carded revenue remained almost flat. We maintained our focus on driving continuous improvement and increasing revenue and profitability at this property. We have owned and operated Century Casino Central City for almost 20 years, during which time we have seen competitors come and go in the Central City gaming market. Now let's take a look at the performance of our East segment. Our Mountaineer Casino Resort in West Virginia had an excellent second quarter. EBITDAR was $4.1 million compared to $3.6 million in Q2 of '24, an increase of 12%. Total revenue was up 3%, driven by a 39% increase in iGaming revenue, which offset a 6% decline in table games revenue. Operating expense savings of 7% were achieved through improvements and efficiencies pronounced in procurement and internal processes. In this quarter, we completed the full remodel of the facade and porte-cochère of the property's main casino entrance, which now provides a much improved sense of arrival and excitement. Following a strong Q1, despite some weather disruptions, first half year EBITDAR in Mountaineer is up close to 10%, and we expect continued strong performance at the property going forward, noting there will be some noise in the Q3 numbers from one-time impacts in Q3 of last year. Let's move on to Rocky Gap Casino Resort in Maryland. Rocky Gap's second quarter was again challenged by significant weather events, including a total of 9 storms and flooding incidents. Although the weather was not helpful for a full reversal of EBITDAR declines in this quarter, we have seen significant improvement since the first quarter. Overall, carded gaming revenue increased by 7%, and the average spend per trip increased by 9%. Specifically, the month of June marked a clear turnaround. Even with one fewer Saturday compared to last year, we saw slot revenue increase by 9% compared to the same period in '24. Importantly, retail and lower-end play started to improve in June, driven by upward trends in the local economy and consumer confidence and our new direct mailer strategy. As a result, in June, revenue grew 7% and EBITDAR grew 21%. July is trending positively as well with slot revenue up 8%. Given these trends, we are optimistic about Rocky Gap for the remainder of this year and moving the property back to its prior levels of profitability. Moving on to the West segment with the Nugget Casino Resort in Reno-Sparks. We are not yet where we want to be with the Nugget. EBITDAR for the quarter was $2.3 million, representing a decrease of approximately $550,000 from the same quarter last year. What did not work out in this quarter were the concerts at the property's 8,500-seat outdoor event center, which did not yield the expected returns due to a lack of ticket sales. Fewer visitors at the concerts created a ripple effect on gaming, food, beverage, and hotel revenues. To further expand the resort's amenities, we introduced the Karma Nightclub and also welcomed Magique, an acclaimed attraction show, which performs on Saturday nights at our iconic Celebrity Showroom. We are continuing to work diligently on expanding our market share among both local and nonlocal customers. We continue to scrutinize the resort's cost structure and marketing program, making significant progress towards a streamlined operation, and we look forward to upcoming events such as the Rib Cook Off, which will take place in late August and early September. Now some updates about our operations in Alberta, Canada and Poland, Europe. In Canada, slot coin-in was up 6% and EBITDAR grew 2.8% from $5.4 million to $5.6 million year-over-year. Almost half of the growth was driven by Century Casino St. Albert, which has been performing exceptionally well since the completion of the exterior modernization of the building in April. This came after the modernization of the interior of the building last year. We have other renovation projects across our Canadian portfolio that we expect to yield similar positive results. In Poland, the year-over-year comparison is not meaningful because the number of casinos in operation was not the same. Operational breaks have impacted the last quarters due to delays in license renewals. There is no license expiration scheduled until 2028, so no operational interruptions or downtimes are expected. We continue to successfully redirect guests from our recently closed casino at the Warsaw Hilton to our flagship casino at The Presidential Hotel in Warsaw, previously known as the Warsaw Marriott. While the ramp-up of the relocated Wroclaw Casino is well on track, we will open our second Wroclaw casino in Q4 of this year, which will further strengthen our position in the Wroclaw market. In Q2, total revenue grew 23% year-over-year, resulting in a 306% increase in EBITDAR from $0.5 million in Q2 of '24 to $1.8 million in Q2 of '25. With the second part of the Hilton closing costs to be digested in Q2, we expect to return to normalized results starting in Q4 of this year. As Peter mentioned, we remain committed to divesting our Polish operations and will provide further updates as appropriate. With that, back to you, Peter.

Thank you, Erwin, and we're moving on to cover a few balance sheet and capital items. I'm happy to report that we turned cash flow positive in the quarter. Our cash and cash equivalents at the end of the quarter were $85.5 million compared to $84.7 million at the end of Q1, and that includes $5.8 million in CapEx and $1 million we spent on the share buyback program. The total principal amount of debt outstanding was $338.1 million, resulting in net debt of $252.5 million. At the end of the quarter, our net debt-to-EBITDA ratio improved from 6.9x 3 months ago to 6.2x. On a lease-adjusted basis, the ratio came down from 7.6x to 7.3x. And we expect these ratios to go down further in the second half of the year. And let me also note that we have no debt maturities until 2029. The recent investments in our property portfolio are evident, and our properties have never looked better. There is no need for significant CapEx this year or next. We expect to spend no more than $20 million in total for growth and maintenance projects this year, of which we have spent $10 million already in the first half. As predicted in our last earnings calls, the returns on our investments, together with the reduction in CapEx this year and next, produced meaningful improvements in free cash flow compared to last year. As we look ahead, we are confident in our business prospects. Last year was a transitory period for us, but now we see a clear path forward to higher EBITDA and cash flow for 2025 and beyond. Now it is all about harvesting what we have invested last year. We are encouraged by the recent trends in our business. And while we recognize the level of economic uncertainty, we are more confident in the long-term prospects of our company than we were at any point last year. Since mid-March, our unrated and lower-tier database customers have returned to growth, and that consumer strength continued into July. While a few months don't quite make a trend, we are cautiously optimistic about the outlook. We feel that optimism will be further supported by the anticipated improvements in consumer sentiment and spending power from the One Big Beautiful Bill, specifically the benefit from no tax on tips as well as an uplift from the increased deductions for seniors, considering seniors make up about one-third of our customer base. It's also worth noting that we do not anticipate any new significant competitive supply impacting us this year and next. And we are not directly impacted by tariffs hardly at all. We just don't see it in our business. In our last earnings call, we announced a share buyback program, and I'm happy to report that we repurchased 428,734 shares at an average price of $2.12 per share during Q2. We feel good about the direction of the business overall. We have a solid cash position of around $85 million and believe CNTY is one of the best investments with high growth potential out there. Hence, we are considering continuing the stock buyback program in the coming weeks if and when legally permitted. As you have seen in our earnings release, we have initiated a comprehensive strategic review of our operations, capital structure, and strategic growth options. The trigger for it was the high number of third-party inquiries about potential asset sales and strategic partnerships we received over the last few months. We want to put all that into a structured process and see what's out there in terms of interest and possibilities. This proactive review will explore a range of potential strategic alternatives aimed at enhancing shareholder value and supporting long-term growth. These alternatives may include opportunities to unlock value within our existing property portfolio, optimize the company's capital structure, evaluate potential mergers, strategic partnerships or the sale of the entire company, and analyze potential divestments of assets or other asset level transactions. In connection with this process, we have engaged Macquarie Capital as well as the law firm of Faegre Drinker to assist in the evaluation. The strategic review follows our recent substantial CapEx program and solid operational performance reflects the company's proactive approach to positioning it for future success in an evolving market landscape with a clear focus on optimizing shareholder value. At this stage, no decisions have been made, and there can be no assurance that the review will result in any transaction or particular change. The company does not intend to make further public comments on the process unless and until the company's Board of Directors approves a specific course of action. With that, I ask for your understanding that we will not take questions on this topic in our Q&A session as we cannot share any incremental information at this time. All right. That concludes our prepared remarks. We'll now open the call for Q&A with the analysts.

If we do not get to your question, please reach out to the company using the Investor Relations page at cnty.com. And our first question comes from Jeff Stantial from Stifel.

Maybe starting off on the East segment and specifically at Rocky Gap, really strong margin performance there in the quarter up year-on-year. I mean Erwin, you talked about pretty significant weather disruption, and with that, that usually comes high flow-through and negative margin impact. So can you just unpack that a little bit further for us? I guess, what's driving that improvement in margins? Where is the cost containment and cost improvement coming from? Just any extra color there would be helpful.

Certainly. Thanks, Jeff. First of all, we see that a little movement in the lower end. So we see some comeback of the lower-end customers as we went into the end of the second and beginning of third quarter. And secondly, we are now detailing in a much more granular fashion our marketing strategy. We see more slot revenue. We see higher hotel revenue, particularly also higher cash hotel revenue, and a mix of the improved and more fine-tuned marketing concept together with our also improved product. As you know, we have a very nice integration connecting the hotel leads to higher occupancy, both in the hotel and the casino.

Great. That's helpful. And then maybe shifting gears over to capital allocation. Peter, you repurchased $1 million of stock during the quarter. If I recall correctly, I believe at Q1, you had mentioned potentially buying a slightly larger amount between Q1 and Q2 earnings. So if my memory is accurate there, is the shortfall or the lower amount repurchase just attributable to blackouts? Or is there sort of another reason maybe why you decided not to repurchase as much stock as initially expected? And then more thematically, looking forward, I'd love to just get your updated thoughts on allocating capital towards repurchases versus debt paydown, just given we seem to be in a bit of an interesting dynamic right now where, to your point, unrated and some of the regional fundamentals continue to improve or get better, but at the same time, some of the macro data is starting to move in the wrong direction for the first time. So just any thoughts there would be great.

Yes. Indeed, we've aimed for a higher dollar amount. But we are doing the repurchases under a 10b5-1 plan, and that has certain limits to it, volume limits, timing limits and that resulted in basically us not having the opportunity to spend all the money that we have allocated for it. And yes, going forward, we'll balance between stock buybacks on a limited scale. And we're also looking at the interest rate environment and what we can do with the debt refinancing from our side possible at any time. As soon as the window opens, we want to do that. And in terms of using a larger cash amount to buy back our debt, the significance will kick in once we are talking about $10 million, $20 million, $30 million. And so I think that for that, we will look for a positive outcome of our Poland divestment. And I think before that, we will probably not do a very large repurchase.

And our next question comes from Ryan Sigdahl from Craig-Hallum Capital.

This is Will on for Ryan. First, I wanted to touch on Poland. You saw some nice year-over-year growth there. Is that just attributed to kind of the timing of licenses and openings? Or is that something we should see continue? And then on the divestment process there, is this a talk with a different party than you've been having discussions with, or is it a new one?

Peter?

Yes, I covered the divestments. It's with a new party. And then turning to operational strength, yes, back to Erwin for that one.

Could you be kind to repeat the operational question?

Yes. Just in terms of your year-over-year growth in Poland, we saw a bit of an uptick here. Is that just a timing thing with the licenses and openings? Or what can that be attributed to?

When all licenses opened in the past, we made significantly higher both revenue and EBITDA. And yes, it is true that it has to do with the fact that in the comparative Q2 of last year, we had less casinos open simply due to the fact that the licensing process got delayed. But what you start seeing now is the start of the comeback to the old numbers, which we hope we can start to achieve again in Q4, as I mentioned in the prepared remarks.

Great. And then my last one, just on the regional environment in general. It seems like we've been seeing a trade down at least among peers, kind of maybe it's people staying home from Vegas, maybe it's just a trade down in general. But curious if you're seeing any of those benefits. It sounds like you are kind of in July, and if we should expect those improvements to continue at your regional properties going forward.

Yes, definitely. We saw it in June, starting with we saw it in July, and it also continues in August. So we are between cautiously and normally optimistic about a change in the consumer sentiment, and that change is starting to show nicely in our revenues in the various sectors already.

And our next question comes from Chad Beynon from Macquarie Group.

I wanted to start with the West region. In the prepared remarks, you talked about some of the items in Reno that were headwinds related to some of the conference calendar issues. It appears that the market grew pretty well in the second quarter. So can you just talk about how the outlook maybe for the conference center for conferences and for concerts kind of looks in the back half of the year? And if you think this will help you get back to some of the market share levels from prior years?

Regarding the conferences, we are optimistic about the years 2026, 2027, and 2028, and we believe we can return to previous levels before we took over. For the year 2025, our options are limited since we can only plan short-term events, and conference planning generally requires a lead time of 2 to 3 years. This means we expect less conference business this year compared to last year. However, we are feeling positive about the booking trends at the Nugget. Both comp and retail rooms for July were up about 2%, marking a reversal from the declines seen in the second quarter. For August, we project retail rooms will be significantly up, around 32%, which is encouraging. Comp rooms, typically booked closer to the date, also seem to follow this positive trend. There’s a lot of rate activity in the market, and we are adjusting our pricing to increase market share and maximize occupancy. This month, we are looking forward to the West Nugget Rib Cook Off from August 27 to September 1, which is our largest event. Ticket sales for this year’s Rib Cook Off look promising, and we hope to surpass last year’s revenues. On the marketing front, we launched the new loyalty club at the beginning of the second quarter, offering competitive point multipliers, tier level multipliers, and an additional food and beverage comp bucket alongside regular cash back. We are introducing new initiatives and rewards to enhance our competitiveness in the market and plan to do more in the upcoming quarters.

And then on the Big Beautiful Bill, Peter, you outlined some of the benefits for your consumers. But as it relates to Century, whether it's accelerated depreciation or lower cash taxes, are you expecting any benefit this year or more importantly, in '26 and '27 as the business grows and maybe the cash tax outflow could be greater. Could you see a benefit from some of the changes that are being proposed?

Peggy, can you help us there?

The depreciation from the Big Beautiful Bill won't significantly impact us, and we don't expect major cash tax effects because we have deferred tax assets that we are continuing to carry forward. Any benefits from that bill will essentially be offset by the losses we will be utilizing.

And our next question comes from Jordan Bender from Citizens Bank.

I want to start on Canada. So nice results returned to growth there, kind of beating our expectations. I know that's kind of more of a local market, but are you seeing any strength or benefit from people not making trips into Las Vegas? I mean that's been a pretty big topic among some of the strip players that Canadian travel is down. So are you seeing any of your players kind of staying closer to home, which is benefiting you?

Thanks for the question, Jordan. It's difficult for us to assess whether fewer people are traveling to Vegas. However, we have noted an expanded reach, which is attributed to our improved capacity, enhanced product offerings, and more hotel rooms. Additionally, individuals who previously traveled from 75, 80, or 90 miles are now visiting. It seems that these individuals might prefer to drive rather than fly to Vegas.

Right. And then just to follow up on sports betting in Missouri with BetMGM, it's a nice agreement. Can you provide any insights into the potential positive revenue impact or conceptually explain what this means for your business once the agreement starts on December 1?

Peter, do you want to talk about the economic impact that we're expecting? I could certainly mention that the retail we do in Cape Girardeau will be great for operations.

Yes, we haven't disclosed detailed numbers. You may recall that in Colorado, we approached $1 million per license. It will be slightly less in Missouri.

And our next question comes from Connor Parks from CBRE.

Big picture one for me. You've mentioned in the past a path or at least a long-term goal to reach $150 million of EBITDAR in the past. Sitting here today, is this still a reasonable target now that we're a handful of quarters into seeing returns from recent CapEx in Missouri? And I guess, have ROI expectations changed at all in Missouri sitting here today versus a handful of quarters ago?

I would say, yes, the $150 million is a reasonable target. Peter, would you like to add to that?

Yes. I believe our properties are in excellent condition following an extensive capital expenditure program we've undertaken over the last 18 months. In this regard, I think our properties can achieve the $150 million target. We need the retail and lower-end customer segment to continue returning. Additionally, some positive shifts in interest rates would certainly benefit these customers. If we receive a bit of support on that front, our property portfolio is well-positioned for $150 million EBITDAR.

Great. And just one follow-up for me. Good color in Colorado and the 2 properties there. Maybe focusing in on Cripple Creek, newer competitor across the street. Just thoughts on the overall impact to the market and specifically to your property there with the new entrants to that market.

Sure, thanks for the question, Connor. We have noticed that the new competitor has been beneficial for our business, and we believe we are receiving some overflow business from them. As you know, we are directly across the street, and there is a good mutual benefit. They have excellent facilities, as you may be aware, but despite that, our room occupancy primarily consists of cash business. On weekends, we typically reach full occupancy even though we have fewer than 30 rooms compared to their 300 rooms. The emergence of the new competitor in Chamonix has been positive for us. We are also maintaining a good relationship with their management, and we believe that together, we could explore ways to further develop the intersection of Bennett Avenue and 2nd Street, which interestingly, was the center of Cripple Creek in the 1900s due to the layout of Bennett Avenue. Overall, things are looking good.

And at this time, there are no further questions. I'd like to turn the call back over to our presenters for closing remarks.

Very well. Thanks, everybody. We appreciate you joining our call today. We'll talk again in early November. Until then, thank you, and goodbye.

This does conclude today's Century Casinos Q2 2025 Earnings Call. Thank you for your participation. You may now disconnect.