CENTURY CASINOS INC /CO/ Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Q3 net revenue $156 million, down 3% y-o-y. Adjusted EBITDAR $32.9 million, down 1%. Consolidated EBITDAR margin increased to 21.1%.
• Revenue decline due to temporary closure of Poland casino, which reopened 10 days ago, back to normal run rate.
• Opened new land-based casino and hotel in Caruthersville, Missouri, with fantastic opening weekend.
• East segment hotels improving, Midwest Cape Girardeau hotel ramping up, Colorado Cripple Creek hotel driving growth.
• Balance sheet: Ended Q3 with $119 million in cash and cash equivalents, $340 million in outstanding debt, net debt $221 million. Leverage expected to decrease.
• CapEx: $38 million in 2024, expected $16 million in 2025, leading to free cash flow growth. Plan to buyback stock opportunistically.

Segment Performance

• East Segment: Includes Mountaineer Casino Resort (West Virginia) and Rocky Gap Casino Resort (Maryland). Revenue up 7%, EBITDAR up 5%. Hotels at both properties improving, with cash rooms increasing and comp rooms decreasing. Marketing dollars invested to drive revenue.
• Midwest Segment: Missouri and Colorado. Revenue essentially flat, EBITDAR down 5%. Caruthersville new land-based casino opened with 74 hotel rooms and over 660 gaming positions, set an all-time record for coining and daily revenue. Cape Girardeau property saw 7% revenue growth driven by new hotel and F&B sales. Colorado Cripple Creek property benefited from new 300-room hotel, but slot totals and sports betting revenue affected.
• West Segment: Nugget Casino Resort (Reno, Nevada). Sequential revenue up 40%, EBITDAR doubled from Q2 but behind Q3 last year. Gaming revenue flat, hotel and F&B declined due to fewer group room nights. Focus on cost control, locals play strong, and younger age group visits up. CapEx for elevators next year to increase company-wide CapEx estimate.
• Canada: EBITDAR grew 6% due to better cost control. Revenue down at one casino due to absence of large event and competition from new casino. Market stabilized, expecting mild positive trend.
• Europe: Poland had casinos closed due to license issues, but Roslov casino reopened 10 days ago, back to $10-12M annual EBITDAR. Two smaller licenses not relicensed, but no major impact on overall results.

Guidance

• Expected EBITDAR bridge from 2024 to 2025, with Caruthersville and Cape Girardeau ramping up, and Reno improving.
• CapEx to drop sharply in 2025, leading to significant free cash flow growth.
• Plan to buyback stock when opportunistic, with expectation of using a portion of available cash for this purpose.

Risks

• Temporary closure of Poland casino due to license issues, though key licenses regranted.
• Macro-economic factors and wallet softness affecting customer trends in all markets.
• License relicensing issues in Poland for some smaller casinos, with no major impact on overall results.

Question and Answer

Q: Jordan Bender asks about Poland licenses.

A: Peter Hoetzinger explains some licenses expired, but key ones regranted, and two smaller licenses not relicensed with no major impact on revenue and EBITDAR.

Q: Jeffrey Stantial inquires about Nugget performance and Canadian assets.

A: Erwin Haitzmann talks about Nugget's sequential growth and month-by-month improvement, and Canadian market dynamics including revenue decline at one casino due to specific factors but market stabilization expected.

Q: Chad Beynon asks about 2025 EBITDAR guidance and share repurchases.

A: Peter Hoetzinger discusses EBITDAR ramp timing with Caruthersville expected to show full potential later in 2025 and plan to buyback stock opportunistically using available cash