CENTURY CASINOS INC /CO/ Q4 FY2024 earnings call

Management Statement and Operational Highlights

• New Casino Opening: Caruthersville, MO opened Nov 1, 2024; in 4 months, revenue and EBITDA up 27% and 32% respectively, exceeding initial expectations; saw growth across demographic segments, with stronger gains from 70+ miles away.
• Missouri Properties: Cape Girardeau, MO had strong quarter with revenue up 11% and EBITDA up 7% due to new hotel and F&B; Caruthersville performing well with increased customer visits from further away.
• Colorado Operations: Carded revenue up 12%, uncarded down 30% due to I-70 construction; sports betting revenue down as two providers ceased operations; Cripple Creek working on new main entrance for better customer flow.
• East Segment Challenges: Rocky Gap and Mountaineer facing lower-end customer weakness; Rocky Gap casino revenue down but other profit centers up; Mountaineer uncarded revenue down 10% midweek.
• West Segment (Nugget): Gaming revenue down 10% but EBITDA up 46% due to cost cuts; slot floor changes showing promising initial results.
• Canada and Poland: Canada revenue/EBITDA down due to lower table hold and FX; Poland casino reopening in Wroclaw with slow ramp-up; divestment of Polish operations ongoing.

Segment Performance

• Consolidated: Q4 2024 revenue $137.8M, down 4% y/y; adjusted EBITDA $21.1M, down 17% y/y.
• U.S. Operations: Revenue down 3%, EBITDA down 8%. Caruthersville, MO (opened Nov 1, 2024): In 4 months, revenue up 27%, EBITDA up 32%; monthly breakdown: Nov revenue +47%, EBITDA +64%; Dec revenue +23%, EBITDA +32%; Jan revenue +27%, EBITDA +29%; Feb revenue +12%, EBITDA +12%; Mar revenue +20%+. Cape Girardeau, MO: Revenue up 11%, EBITDA up 7% due to new hotel and F&B. Colorado: Carded revenue up 12%, uncarded down 30%, overall revenue down 7% due to I-70 construction and sports betting loss. East segment (Mountaineer, WV and Rocky Gap, MD): Revenue down 7%, EBITDA down 29%; Rocky Gap casino revenue down, but other profit centers up; Mountaineer carded revenue flat, uncarded down 10% midweek. West segment (Nugget Casino Resort, NV): Gaming revenue down 10%, but EBITDA up 46% due to cost cuts. Canada: Revenue down 7%, EBITDA down 17% due to lower table hold and FX. Poland: Reopened Wroclaw casino, but ramp-up slow; Krakow license not awarded; divestment process ongoing.

Guidance

• 2025 Outlook: Project significant EBITDA and cash flow improvements; easier comps in 2025; no new significant competition expected.
• Caruthersville: Initial 4-month results exceeded expectations; 4 million incremental EBITDA target still in play but timing adjusted due to lower-end consumer weakness; expected to kick in from summer 2025 to summer 2026.
• General: Anticipate EBITDA and cash flow improvements in 2025 over 2024, reaping returns from recent growth capital initiatives.

Risks

• Macroeconomic Factors: Low-end consumers squeezed by inflation, impacting retail and low-end customers' visits and spend.
• Construction Impact: Interstate I-70 construction in Colorado significantly affected uncarded play at Central City casino.
• Sports Betting: Loss of two sports betting providers in Colorado led to a two-thirds decline in sports betting revenue.
• Divestment Challenges: Poland divestment process affected by war in Ukraine and minority ownership issues; Canada operations facing uncertainty with potential impacts on financials.

Question and Answer

• **Q: Jordan Bender asks about lower 2025 estimates due to lower-end customer weakness A: Peter Hoetzinger responds that the weaker outlook is primarily due to the lower end of the database, as some properties have a large portion of revenue from that segment
• **Q: Ryan Sigal asks about Nugget revenue decline, conference pipeline, Alberta gaming machine suspension, and Caruthersville rent deferral A: Peter Hoetzinger addresses Nugget revenue decline related to hotel revenue, positive conference outlook for 2026+, minimal impact from Alberta gaming machine suspension, and confirms rent deferral has always been the case
• **Q: Jeff Stantial asks about Caruthersville performance, capital allocation, and Mountaineer midweek vs weekend play A: Peter Hoetzinger discusses Caruthersville exceeding initial expectations, challenges in capital allocation due to economic uncertainty, and explains Mountaineer midweek vs weekend play is due to customer behavior preference for weekends
• **Q: Chad Beynon asks about online gaming/sports betting strategy and 2025 guidance A: Peter Hoetzinger states uncertainty around online gaming/sports betting in Canada, active negotiations for sports betting in Missouri, and 2025 guidance adjusted due to lower-end consumer weakness and economic volatility
• **Q: Mike Krowitz questions company's endgame and need for new CEO A: Peter Hoetzinger mentions divestment of non-US properties is under consideration, and management is aligned with shareholders
• **Q: J.T. Waters inquires about insider views on stock buybacks A: Peter Hoetzinger states management is interested in buybacks but restricted by insider laws and blackout periods