NASDAQ:CNTY Century Casinos Q3 2023 Earnings Report $2.11 +0.07 (+3.43%) Closing price 05/28/2025 04:00 PM EasternExtended Trading$2.10 -0.01 (-0.43%) As of 04:05 AM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast Century Casinos EPS ResultsActual EPS-$0.47Consensus EPS $0.15Beat/MissMissed by -$0.62One Year Ago EPSN/ACentury Casinos Revenue ResultsActual Revenue$161.18 millionExpected Revenue$161.10 millionBeat/MissBeat by +$80.00 thousandYoY Revenue GrowthN/ACentury Casinos Announcement DetailsQuarterQ3 2023Date11/9/2023TimeN/AConference Call DateThursday, November 9, 2023Conference Call Time10:00AM ETUpcoming EarningsCentury Casinos' Q2 2025 earnings is scheduled for Thursday, August 14, 2025, with a conference call scheduled on Thursday, August 7, 2025 at 7:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Century Casinos Q3 2023 Earnings Call TranscriptProvided by QuartrNovember 9, 2023 ShareLink copied to clipboard.There are 7 speakers on the call. Operator00:00:00Good day, everyone, and welcome to the Century Casinos Q3 2023 Earnings Call and Webcast. Enter full screen mode, hover over the slide and click the full screen icon in the center of the viewer. To exit full screen mode, click the X in the upper right hand corner of the If you require technical assistance during today's event, you can reference the help link at the top of your screen. Please note today's call will be recorded. It is now my pleasure to turn the conference over to Peter Hettinger. Operator00:00:42Please go ahead. Speaker 100:00:46Good morning, everyone, and thank you for joining our earnings call. We would like to remind you that 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, But 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 EBITDA. Speaker 100:01:28Reconciliations of our non GAAP measures to the appropriate GAAP measures can be found in our news release and SEC filings available in the Investors section of our website at cnty.com. I will now provide an overview of the results of the Q3 After that, Co CEO, Erwin Haitzmann and CFO, Margaret Stapleton, will join me for a Q and A session. We delivered a record 3rd quarter net revenue of 161,000,000 an increase of 43% over Q3 of last year. The increase came from the additions of the Nugget in Nevada and Rocky Gap in Maryland and offset to some extent by weaker retail customer and a bit of construction disruption at both Missouri properties. We also delivered a record 3rd quarter adjusted EBITDA of $33,000,000 up 19% over last year. Speaker 100:02:32These results reflect the value of our strategic focus on our core customers and the benefits of our recent M and A activities. In addition, our multichannel business model With revenue streams from casinos, hotels, groups and conventions, racetracks, on and offline sports betting as well as iGaming provides great diversity and stability. With the Rocket Gap and Market Acquisitions, we operate a U. S. Casino portfolio that reaches from East to West. Speaker 100:03:0882% of our EBITDA this quarter was generated in the U. S, 13% in Canada And less than 5% in Europe. Overall, customer trends remained stable during the quarter. No dramatic moves whatsoever. We continued to see growth in core customer volumes, offset by weaker retail play. Speaker 100:03:34Business from retail customers and from the low end of our database has remained at lower but consistent levels since the beginning of the year. We also saw the continued return of the 60 plus demographic and moderate growth in spend per visit trends, which helped to offset softness in the lower ADT segments. Similar to what you have heard from other operators, Cost pressures impacted the margin performance in all regions during the quarter. We expect this will continue into next year at similar levels. Consistent with what we experienced last quarter, Major expense categories that increased year over year were wages, utilities and insurance. Speaker 100:04:25On top of that, we are in a particularly transitional stage with lots going on at the same time, triggering extraordinary legal compliance and consulting costs and expenses. Our local management teams carry burdens with the 2 construction projects in Missouri as well as the integration of Nugget and Rocky Gap. So overall, while we see no signs of softening in underlying consumer demand, it's a mixed picture in terms of property margins. Relative to the Q2, margins decelerated in Missouri and Nevada, but improve in Colorado and West Virginia. Looking at segment results, We first discussed the Midwest segment with our Colorado and Missouri operations. Speaker 100:05:17Revenue was flat year over year. EBITDA was down 4%. Not a bad result at all considering construction going on at both Missouri properties As well as construction on both roads, that's U. S. 6 and I-seventy from Denver to Central City, Colorado. Speaker 100:05:36The EBITDA margin of the segment was 38%, comparing to 39% in Q3 of last year. Number of trips as well as the spend per trip of our top tier segment increased meaningfully during the quarter, offset by weakness in the lower segments. In Caraboswell, Missouri, structure of the new permanent land based hotel and casino development is progressing according to budget and schedule. We plan to open in Q4 of next year. The topping out ceremony was held 2 weeks ago on October 25, when the final beam of the steel portion of the project was put in place. Speaker 100:06:18The new property will have a total of 74 hotel rooms, 12 gaming tables and over 600 slot machines, which is a 20% increase in gaming positions compared to the older boat. Most importantly, it will provide significant operational efficiencies, it will be much more convenient for our customers, and it will increase our catchment area. We are more excited than ever about this permanent move to land based. What we see now as we operate in a small temporary land based pavilion is very encouraging. Table drop in Q3 was up 26%, Slotcoin up 6%, F and B revenue up 31%. Speaker 100:07:05We can't wait until we open the new facility in less than 12 months from now. Project is fully funded by VICI at an 8% cap rate. Staying in Missouri, but moving on to Centric About an hour and 15 minutes away, a new casino opened in Southern Illinois in August. We saw a small decline in revenue the 1st 2 weeks, but volumes have bounced back and leveled out throughout the end of the quarter. Our hotel project in Cape Girardeau is on budget and on track for opening in April We'll transform the property into full resort destination, offering gaming, dining, conferences, concerts, events and more. Speaker 100:07:51Total project cost is €31,000,000 which we fund with cash on hand. As of September 30, we spent Approximately $17,000,000 The balance will be spent between now and the Q2 of next year. Our East segment includes the Mountaineer Casino Resort in West Virginia and the newly acquired Rocky Cab Casino Resort in Maryland. Because of that new acquisition, revenue of the segment was up 45%, EBITDA was up 60%. The EBITDA margin increased by 2 percentage points. Speaker 100:08:32Mountaineer is still battling with staffing challenges, leading to limitations in hours of hotel and F and P operations during the week. Table games continue to be impacted by Ohio sports betting. The majority of that decline was experienced from guests in the lowest AP segment. And we have started to work with our sports betting partners on joint promotions to increase retail sports book traffic with the goal of attracting back some of the lost stable crossover play. On the positive side, slot volumes were up year over year, driven by more visits and higher spend per visit from the top tiers. Speaker 100:09:14Rocky Gap, which we started operating at the end of July, was affected in the lower tiers of the database as well, but the substantial non gaming revenue generators Show resilience and maintain similar volumes to prior year. Just yesterday, we successfully completed the conversion of gaming system and Players Club to Aristocrat systems. That puts us in a better position and provides much more granularity to offer flexible and high yielding promotions throughout the database. With a strong focus on player development and focused efforts In major theater markets like Baltimore, Pittsburgh and Washington, D. C, we'll be able to migrate players to higher tiers and grow the overall database in 2024. Speaker 100:10:04We are also planning several growth CapEx initiatives at Rocky Gap from upgrades to restaurants, various interior renovations to more slot machine purchases. Continuing to the waste segment, which includes the Nugget Casino Resort in Nevada. Our focus has been and still is on driving revenue, increasing the database and earning market share. Since we took over on April 3 this year, revenue has grown by 9% compared to the same period of last year. And that growth is broad based. Speaker 100:10:40Gaming, S and P and ticket revenue all increased substantially. The number of rated players increased, trips were up and spend per trip increased as well. From an ADT standpoint, All segments were either flat year over year or saw increases. Looking at the age demographic. The under 30 group showed the largest increase in the number of players and trips. Speaker 100:11:09The renovations of the facade and signage are almost done, and it really looks great. More improvements are coming, including further gaming floor upgrades as well as the addition of a spa and an upscale restaurant and upgrades with 2 existing restaurants. In the Canada segment, All four properties in Edmonton and Calgary saw revenue grow by 4% in the quarter. EBITDA was down 8%. Access to our property in Edmonton continues to be impacted by road construction, which will continue throughout the winter season. Speaker 100:11:48We just opened a sports bar there, and believe it will do great, especially during hockey season. Century Mile at the airport also continues to grow business volumes with slot revenue up by 7%. Same as in the U. S, the customer continues to be strong and stable, but inflationary pressures, Higher operating costs and expenses led to an EBITDA decline. As reported, during the quarter, we closed under real estate transaction with VICI and our Canadian casinos have now been added to our existing master lease with annual rent of approximately 13,000,000 With that, let's have a quick look at our balance sheet. Speaker 100:12:35As of September 30, We had $189,000,000 in cash, cash equivalents and $348,000,000 in outstanding debt. Net debt is down to $159,000,000 With funds received from VG for the Canadian sale leaseback transaction, We paid back $30,000,000 of debt, which we had borrowed under our revolver to close the Rovi Gap acquisition. As a result, traditional net leverage is 2.2x and lease adjusted net leverage is now down to 4.2x. Our lease obligations to VICI totaled approximately $14,000,000 per quarter. That amount already includes Rocky Gap in Canada. Speaker 100:13:24Once we open the new land based facility in Carradosville towards the end of next year, It will go up by approximately $1,000,000 per quarter. Speaker 200:13:33So as Speaker 100:13:33a rough run rate for 2025, Total lease payments to VG will be around $15,000,000 per quarter. As you know, We report these legal obligations to VICI as a financial lease, and it's included in the same line item as the interest payments on our debt in the line item called interest expense. Interest payments on our Term Loan B Currently, at around €11,000,000 per quarter. Also, please note that we have no near term debt maturities until 2029, and we have additional borrowing capacity of €30,000,000 under our revolver. In the next 18 to 24 months, we are planning to invest a total of approximately $35,000,000 into our properties, And that's over and above the normal maintenance and replacement CapEx of around SEK 25,000,000 per year. Speaker 100:14:34These are attractive value creation CapEx projects with projected EBITDA returns of 20% or higher. On the other hand, we do not plan any M and A activity for the remainder of this year and for next year. We remain fully focused on our existing operations, on the integration of NAKET and Rocky Gap and the delivery of the 2 Missouri construction projects. All of those will significantly improve customer experience and cash flow generation to further strengthen our balance sheet. Going into the Q4, we expect the trends among both core customers and retail players will remain consistent with the last several quarters. Speaker 100:15:21We also expect that overall expenses should be sequentially consistent with the levels we saw in the In other words, while some inflationary pressure appears to be moderating, we don't expect our overall expense structure to be increasing disproportionately going forward. Overall, we are pleased with the strength and resilience of our properties. The stability of our operations and the performance this quarter highlights the benefits of our geographically diverse portfolio. Looking ahead, we have positioned our company for strong growth for years to come with the new acquisitions and our 2 Missouri development projects, all of which we expect to drive material increases in revenue, EBITDA and cash That is a very strong pipeline of great new operations and projects that just joined our portfolio, all will come online next year. And we can't wait for 2025, which will be the 1st full year showing the full earnings potential of everything we're working on today. Speaker 100:16:29So on behalf of the company's management and Board, I'd like to thank our team members, our guests and our stockholders for their continued loyalty and enthusiasm. I thank you for your attention. And operator, we can now start the Q and A session. Speaker 300:17:07Good morning. Nice results, Peter. Thanks for all the prepared remarks. Wanted to start with Nugget. It appears that the business is going really well now that you've kind of had your hands on that property for a couple of quarters. Speaker 300:17:24Could you just talk about anything else In terms of market trends, maybe bookings at the conference center, I believe you said that the high end continues to do well everywhere. But at Nugget, I think you said all segments were up or flat. So Are you taking market share? Are you growing the property? Just trying to get a sense of how this continue to grow. Speaker 300:17:49Thanks. Speaker 200:18:02Very competitive and continues to be. And but we can hold our ground from everything we can see, and We certainly see potential to increase our market share. Bookings for 2024 are solid and stable. And so for the hotel service and also it is for the conference center as well. We track to shows in our In our outdoor venue for the total 8,500 visitors, where we have booked About half of the shows that we plan to do with the other half probably coming on during the next month. Speaker 200:18:40These bookings are not dependent on us alone. They are much dependent on the itineraries of the various artists and as they How well they can fit Reno into their traveling schedule. Speaker 300:18:53It's great. Appreciate it. Thanks, Erwin. And then Just going back to your comments on the retail or the low end customer, I think you said it hasn't changed. It has been a little bit of a drag across the portfolio. Speaker 300:19:10But wanted to ask what percentage Your business is made up of this group of customers. And do you expect For it to kind of flatten out, is there anything changes in changing in terms of promotions towards that lower And do you believe at some point this can start to be flat from a year over year perspective based on what you're seeing in the trends? Thank you. Speaker 200:19:39I think in the simplified version, we are taking a 2 pronged approach. The first one is that we focus on the higher end of the market and then that's really where the majority of our focus lies, I think for good reason. And the second part That would be to keep incentivizing the lower end of the market and testing which things we can do there. What makes sense and what doesn't make sense? So it's obviously much more sensitive on the lower end because the head So once again, the focus Number one focus is on the higher end, and we try to maintain as much as possible on the lower end. Speaker 200:20:30And probably with the lower end will Only change when the economy trends like inflation go the other way. Speaker 300:20:39Okay. And what's rated as a percentage of the database Roughly. Speaker 200:20:45It depends very much on where you draw the line. I know that's a little bit subjective, but You mean now in Speaker 100:20:51the Speaker 200:20:51number of customers or in revenue? Speaker 300:20:56Either or, I guess, in customer base. Speaker 200:21:01In account number, I would say it's probably anywhere between 30% 50% In web and So I think Speaker 100:21:10your question was how much of our place is rated? Speaker 200:21:14Yes. Oh, that's a different question. That's a different question, sorry. In the nugget, our chemist, we have 69% rated and that compares to pre COVID of 67%. Okay. Speaker 200:21:31So, ready play has actually gone up. During COVID in Q3 Operator00:21:45We'll take our next question from Jordan Bender. Jordan, your line is now open. Speaker 400:21:52Great. Thanks for taking my question. Just looking at the balance sheet, you guys, as we sit here today, you have plenty of cash sitting here. We've kind of gone through what might be the best uses of cash for the business. But with your debt now over about 11% It seems like you have the cash on hand to get through most of these projects that you've talked about in the call. Speaker 400:22:15I was wondering, Is it makes sense to start paying down debt more rapidly here, to kind of generate that free cash flow? Speaker 100:22:27Certainly, as we said in the call, we have about $25,000,000 maintenance CapEx on an annual basis. And on top of that, we intend to spend about 35,000,000 for projects throughout our properties, including Nugget Between 10 15. So that's already 60 there. And then We'll see how it goes in the next couple of quarters. But Like until the Q1, don't expect any major debt repayment. Speaker 100:23:10We'll reinvest in our properties first. Speaker 400:23:14Understood. And then switching to Poland, it looks like you have maybe 2 licenses that have expired. Just thinking back a couple of years when that happened, the machines get turned off, but you continue to pay your employees. So Was there any impact at least during the Q3 from kind of that? And maybe just any update around the process Speaker 500:23:38of kind of getting those licenses back online and any Speaker 400:23:38timeline there? Thank you. Speaker 200:23:45No, there was no intake from Go ahead. I would want to say there was no impact out of that in Q3 because the By law, those licenses should have been awarded already. There hasn't been yet. It could happen any day, any week now, but we really don't know. Speaker 100:24:16Yes. Richard, they had elections in Poland and there is no new government has been formed That's holding the process up. It's unfortunate, but it has to do with those Speaker 400:24:38And just to confirm, while those assets are closed, you still continue to have to pay those employees, correct? Speaker 200:24:46Yes. The label also in Poland has differed significantly from the label also in the United States or in North America For that matter. And it's basically the only option to just keep paying them. Okay. Operator00:25:08We'll take our next question from Jeff substantial. Jeff, your line is now open. Jeff has disconnected. We will take our next question from C. K. Operator00:25:39Dahl. C. K, your line is now open. Speaker 600:25:43Yes. Hi. I have a strategic question. I missed the first part of your presentation. But The strategic question in my mind is, have you taken on a lot of this new capacity and acquisition During the period when interest rates were very low and now you are faced with a seemingly For a long period of operating losses based on the very high level of debt that you've taken on. Speaker 600:26:15Is that Could you possibly address that so that I could understand it better? Speaker 100:26:27We have acquired 3 properties at the end of 2019, and we have taken on that at that time. And then we made another major acquisition, which we Signed in February of 'twenty two. And at that time, when we entered into that transaction, We closed it a year later, but when we entered into the transaction in February 22, We entered into a new loan facility with Goldman Sachs. And that is what we are faced with now. On the one hand, In a way, we were fortunate to get it done at the end of February 22 because A few weeks later, if you recall, in March end of March, the debt markets pretty much closed for some time because of the Russians invading the Ukraine. Speaker 100:27:31But we could get it done and so we could close that transaction after licensing a year later, but now we are faced with those terms. We are free to repay the term loan Anytime as soon as we find something better out there. But for now, we are faced with Operator00:28:08We will now take our next question from Jeff stands full. Jeff, your line is now open. Speaker 500:28:14Great, thanks. Can you guys hear me this time? Speaker 100:28:18Yes. Speaker 500:28:19Okay, perfect. Apologies for the technical difficulties there. Anyway, starting off here, I just wanted to fill the margins a bit more, specifically focusing on the U. S. Segment. Speaker 500:28:28Peter or Erwin, can you just disclose for us what same store margins were year on year for the U. S. Region in aggregate? And then Kind of unpacking that decline, I was hoping you could just frame out in your mind, whether qualitatively or putting some numbers behind it, how much is Some of the structural inflationary pressures you called out, labor and utilities versus how much is more kind of one time headwinds with the new assets and the construction? Speaker 200:28:57So In the United States, in Q3 of 2022, we had a margin EBITDA margin of 30%. And in Q3 of 2023, our margin was 26.1%. And the margins differ from casino to casino. With regard to separate on the cost side, we clearly had integration Costs for the 2 new properties, Nougat and Rocky Gap. We still have some kind of Construction disruption, which also leads to some either lower revenues and costs. Speaker 200:29:41And as you know, the hotel will be opening in Q2 of next year and Carrabba's will in Q4 of next year. So that will be is gone. And all of that will be digested and then hopefully the synergies start to kick in step by step. With regard to labor costs, utilities, insurance, so the more structured ones, as Peter said earlier, we don't think that there will be any further increase in those. Speaker 500:30:15Okay, great. That's helpful. Thank you, Erwin. And then As a corollary to that, Peter, I wanted to kind of follow-up on one of your comments towards the end of the prepared remarks. I think you noted you think OpEx or margins will be roughly stable from Q3 moving forward. Speaker 500:30:32Inflationary pressures are moderating, though still impactful. So I guess Is the net net of that, that inflationary pressures continue to kind of pressure margins, but conversely, some of the one time headwinds are going to roll off and those dynamics We offset each other. Am I thinking about things the right way? Or can you just expand on that a bit further? Speaker 100:30:53Kevin, please. Speaker 200:30:56I think it's I would say I think you're on the right track thinking that we see it the same way. Speaker 500:31:03Okay, perfect. That's helpful. Thank you, Arun. And then if I could just squeeze in one more. I wanted to follow-up on one of Chad's questions earlier. Speaker 500:31:10We did hear 1 of your peers that operates in Reno talked to some elevated promotional activity from a couple competitors in that market, some higher free play, more aggressive room comps, things of that nature. Are you seeing Similar to that factor in your results during the quarter, just any thoughts on that dynamic? Speaker 200:31:35Yes, we see some of that, in particular from 1 or 2 of the so called smaller operators that don't have a They'll attach some of them go quite proactive, if not to say aggressive into the market. And we just have to we're just observing that. We are not going very aggressive. Speaker 500:32:00Okay, understood. That's helpful. Thank you very much. I'll pass it on. Speaker 100:32:18All right. Thanks, everybody. We appreciate you joining our call today. We will talk again after the Q1, But I'm sure we'll see each other at some conferences between now and then. Thank you. Speaker 100:32:29Goodbye.Read morePowered by Key Takeaways Record Q3 net revenue of $161 million, up 43% YoY, driven by the acquisitions of the Nugget in Nevada and Rocky Gap in Maryland, partially offset by weaker retail play and construction disruptions in Missouri. Record Q3 adjusted EBITDA of $33 million, up 19% YoY, with 82% of EBITDA generated in the U.S., 13% in Canada and less than 5% in Europe. Margin pressures arose from higher wages, utilities, insurance and extraordinary legal and compliance costs, with construction and integration activities expected to keep expenses elevated into next year. Major development projects remain on schedule and budget, including a new land-based casino resort in Caruthersville, Missouri (opening Q4 2024) and a full-service hotel resort in Cape Girardeau (opening April 2024), alongside ongoing upgrades at Nugget and Rocky Gap. Balance sheet strength highlighted by $189 million in cash, net debt of $159 million (2.2x net leverage), no debt maturities until 2029, $30 million of revolver capacity and $35 million of planned value-creation CapEx with no new M&A through 2024. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallCentury Casinos Q3 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Century Casinos Earnings HeadlinesCentury Casinos strikes a deal for sports betting in MissouriMay 27 at 6:07 PM | msn.comCentury Casinos, Inc. (NASDAQ:CNTY) Q1 2025 Earnings Call TranscriptMay 13, 2025 | msn.comURGENT: Someone's Moving Gold Out of London...People who don’t understand the gold market are about to lose a lot of money. Unfortunately, most so-called “gold analysts” have it all wrong… They tell you to invest in gold ETFs - because the popular mining ETFs will someday catch fire and close the price gap with spot gold. May 29, 2025 | Golden Portfolio (Ad)Q1 2025 Century Casinos Inc Earnings CallMay 13, 2025 | finance.yahoo.comCentury Casinos Inc (CNTY) Q1 2025 Earnings Call Highlights: Strong Caruthersville Performance ...May 13, 2025 | gurufocus.comQ1 2025 Century Casinos Inc Earnings Call TranscriptMay 13, 2025 | gurufocus.comSee More Century Casinos Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Century Casinos? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Century Casinos and other key companies, straight to your email. Email Address About Century CasinosCentury Casinos (NASDAQ:CNTY) operates as a casino entertainment company in the United States, Canada, and Poland. It develops and operates gaming establishments, as well as related lodging, restaurant, and horse racing including, off-track betting; and entertainment facilities. The company was founded in 1992 and is based in Colorado Springs, Colorado.View Century Casinos ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Bullish NVIDIA Market Set to Surge 50% Ahead of Q1 EarningsAdvance Auto Parts: Did Earnings Defuse Tariff Concerns?Booz Allen Hamilton Earnings: 3 Bullish Signals for BAH StockAdvance Auto Parts Jumps on Surprise Earnings BeatAlibaba's Earnings Just Changed Everything for the StockCisco Stock Eyes New Highs in 2025 on AI, Earnings, UpgradesSymbotic Gets Big Earnings Lift: Is the Stock Investable Again? 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There are 7 speakers on the call. Operator00:00:00Good day, everyone, and welcome to the Century Casinos Q3 2023 Earnings Call and Webcast. Enter full screen mode, hover over the slide and click the full screen icon in the center of the viewer. To exit full screen mode, click the X in the upper right hand corner of the If you require technical assistance during today's event, you can reference the help link at the top of your screen. Please note today's call will be recorded. It is now my pleasure to turn the conference over to Peter Hettinger. Operator00:00:42Please go ahead. Speaker 100:00:46Good morning, everyone, and thank you for joining our earnings call. We would like to remind you that 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, But 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 EBITDA. Speaker 100:01:28Reconciliations of our non GAAP measures to the appropriate GAAP measures can be found in our news release and SEC filings available in the Investors section of our website at cnty.com. I will now provide an overview of the results of the Q3 After that, Co CEO, Erwin Haitzmann and CFO, Margaret Stapleton, will join me for a Q and A session. We delivered a record 3rd quarter net revenue of 161,000,000 an increase of 43% over Q3 of last year. The increase came from the additions of the Nugget in Nevada and Rocky Gap in Maryland and offset to some extent by weaker retail customer and a bit of construction disruption at both Missouri properties. We also delivered a record 3rd quarter adjusted EBITDA of $33,000,000 up 19% over last year. Speaker 100:02:32These results reflect the value of our strategic focus on our core customers and the benefits of our recent M and A activities. In addition, our multichannel business model With revenue streams from casinos, hotels, groups and conventions, racetracks, on and offline sports betting as well as iGaming provides great diversity and stability. With the Rocket Gap and Market Acquisitions, we operate a U. S. Casino portfolio that reaches from East to West. Speaker 100:03:0882% of our EBITDA this quarter was generated in the U. S, 13% in Canada And less than 5% in Europe. Overall, customer trends remained stable during the quarter. No dramatic moves whatsoever. We continued to see growth in core customer volumes, offset by weaker retail play. Speaker 100:03:34Business from retail customers and from the low end of our database has remained at lower but consistent levels since the beginning of the year. We also saw the continued return of the 60 plus demographic and moderate growth in spend per visit trends, which helped to offset softness in the lower ADT segments. Similar to what you have heard from other operators, Cost pressures impacted the margin performance in all regions during the quarter. We expect this will continue into next year at similar levels. Consistent with what we experienced last quarter, Major expense categories that increased year over year were wages, utilities and insurance. Speaker 100:04:25On top of that, we are in a particularly transitional stage with lots going on at the same time, triggering extraordinary legal compliance and consulting costs and expenses. Our local management teams carry burdens with the 2 construction projects in Missouri as well as the integration of Nugget and Rocky Gap. So overall, while we see no signs of softening in underlying consumer demand, it's a mixed picture in terms of property margins. Relative to the Q2, margins decelerated in Missouri and Nevada, but improve in Colorado and West Virginia. Looking at segment results, We first discussed the Midwest segment with our Colorado and Missouri operations. Speaker 100:05:17Revenue was flat year over year. EBITDA was down 4%. Not a bad result at all considering construction going on at both Missouri properties As well as construction on both roads, that's U. S. 6 and I-seventy from Denver to Central City, Colorado. Speaker 100:05:36The EBITDA margin of the segment was 38%, comparing to 39% in Q3 of last year. Number of trips as well as the spend per trip of our top tier segment increased meaningfully during the quarter, offset by weakness in the lower segments. In Caraboswell, Missouri, structure of the new permanent land based hotel and casino development is progressing according to budget and schedule. We plan to open in Q4 of next year. The topping out ceremony was held 2 weeks ago on October 25, when the final beam of the steel portion of the project was put in place. Speaker 100:06:18The new property will have a total of 74 hotel rooms, 12 gaming tables and over 600 slot machines, which is a 20% increase in gaming positions compared to the older boat. Most importantly, it will provide significant operational efficiencies, it will be much more convenient for our customers, and it will increase our catchment area. We are more excited than ever about this permanent move to land based. What we see now as we operate in a small temporary land based pavilion is very encouraging. Table drop in Q3 was up 26%, Slotcoin up 6%, F and B revenue up 31%. Speaker 100:07:05We can't wait until we open the new facility in less than 12 months from now. Project is fully funded by VICI at an 8% cap rate. Staying in Missouri, but moving on to Centric About an hour and 15 minutes away, a new casino opened in Southern Illinois in August. We saw a small decline in revenue the 1st 2 weeks, but volumes have bounced back and leveled out throughout the end of the quarter. Our hotel project in Cape Girardeau is on budget and on track for opening in April We'll transform the property into full resort destination, offering gaming, dining, conferences, concerts, events and more. Speaker 100:07:51Total project cost is €31,000,000 which we fund with cash on hand. As of September 30, we spent Approximately $17,000,000 The balance will be spent between now and the Q2 of next year. Our East segment includes the Mountaineer Casino Resort in West Virginia and the newly acquired Rocky Cab Casino Resort in Maryland. Because of that new acquisition, revenue of the segment was up 45%, EBITDA was up 60%. The EBITDA margin increased by 2 percentage points. Speaker 100:08:32Mountaineer is still battling with staffing challenges, leading to limitations in hours of hotel and F and P operations during the week. Table games continue to be impacted by Ohio sports betting. The majority of that decline was experienced from guests in the lowest AP segment. And we have started to work with our sports betting partners on joint promotions to increase retail sports book traffic with the goal of attracting back some of the lost stable crossover play. On the positive side, slot volumes were up year over year, driven by more visits and higher spend per visit from the top tiers. Speaker 100:09:14Rocky Gap, which we started operating at the end of July, was affected in the lower tiers of the database as well, but the substantial non gaming revenue generators Show resilience and maintain similar volumes to prior year. Just yesterday, we successfully completed the conversion of gaming system and Players Club to Aristocrat systems. That puts us in a better position and provides much more granularity to offer flexible and high yielding promotions throughout the database. With a strong focus on player development and focused efforts In major theater markets like Baltimore, Pittsburgh and Washington, D. C, we'll be able to migrate players to higher tiers and grow the overall database in 2024. Speaker 100:10:04We are also planning several growth CapEx initiatives at Rocky Gap from upgrades to restaurants, various interior renovations to more slot machine purchases. Continuing to the waste segment, which includes the Nugget Casino Resort in Nevada. Our focus has been and still is on driving revenue, increasing the database and earning market share. Since we took over on April 3 this year, revenue has grown by 9% compared to the same period of last year. And that growth is broad based. Speaker 100:10:40Gaming, S and P and ticket revenue all increased substantially. The number of rated players increased, trips were up and spend per trip increased as well. From an ADT standpoint, All segments were either flat year over year or saw increases. Looking at the age demographic. The under 30 group showed the largest increase in the number of players and trips. Speaker 100:11:09The renovations of the facade and signage are almost done, and it really looks great. More improvements are coming, including further gaming floor upgrades as well as the addition of a spa and an upscale restaurant and upgrades with 2 existing restaurants. In the Canada segment, All four properties in Edmonton and Calgary saw revenue grow by 4% in the quarter. EBITDA was down 8%. Access to our property in Edmonton continues to be impacted by road construction, which will continue throughout the winter season. Speaker 100:11:48We just opened a sports bar there, and believe it will do great, especially during hockey season. Century Mile at the airport also continues to grow business volumes with slot revenue up by 7%. Same as in the U. S, the customer continues to be strong and stable, but inflationary pressures, Higher operating costs and expenses led to an EBITDA decline. As reported, during the quarter, we closed under real estate transaction with VICI and our Canadian casinos have now been added to our existing master lease with annual rent of approximately 13,000,000 With that, let's have a quick look at our balance sheet. Speaker 100:12:35As of September 30, We had $189,000,000 in cash, cash equivalents and $348,000,000 in outstanding debt. Net debt is down to $159,000,000 With funds received from VG for the Canadian sale leaseback transaction, We paid back $30,000,000 of debt, which we had borrowed under our revolver to close the Rovi Gap acquisition. As a result, traditional net leverage is 2.2x and lease adjusted net leverage is now down to 4.2x. Our lease obligations to VICI totaled approximately $14,000,000 per quarter. That amount already includes Rocky Gap in Canada. Speaker 100:13:24Once we open the new land based facility in Carradosville towards the end of next year, It will go up by approximately $1,000,000 per quarter. Speaker 200:13:33So as Speaker 100:13:33a rough run rate for 2025, Total lease payments to VG will be around $15,000,000 per quarter. As you know, We report these legal obligations to VICI as a financial lease, and it's included in the same line item as the interest payments on our debt in the line item called interest expense. Interest payments on our Term Loan B Currently, at around €11,000,000 per quarter. Also, please note that we have no near term debt maturities until 2029, and we have additional borrowing capacity of €30,000,000 under our revolver. In the next 18 to 24 months, we are planning to invest a total of approximately $35,000,000 into our properties, And that's over and above the normal maintenance and replacement CapEx of around SEK 25,000,000 per year. Speaker 100:14:34These are attractive value creation CapEx projects with projected EBITDA returns of 20% or higher. On the other hand, we do not plan any M and A activity for the remainder of this year and for next year. We remain fully focused on our existing operations, on the integration of NAKET and Rocky Gap and the delivery of the 2 Missouri construction projects. All of those will significantly improve customer experience and cash flow generation to further strengthen our balance sheet. Going into the Q4, we expect the trends among both core customers and retail players will remain consistent with the last several quarters. Speaker 100:15:21We also expect that overall expenses should be sequentially consistent with the levels we saw in the In other words, while some inflationary pressure appears to be moderating, we don't expect our overall expense structure to be increasing disproportionately going forward. Overall, we are pleased with the strength and resilience of our properties. The stability of our operations and the performance this quarter highlights the benefits of our geographically diverse portfolio. Looking ahead, we have positioned our company for strong growth for years to come with the new acquisitions and our 2 Missouri development projects, all of which we expect to drive material increases in revenue, EBITDA and cash That is a very strong pipeline of great new operations and projects that just joined our portfolio, all will come online next year. And we can't wait for 2025, which will be the 1st full year showing the full earnings potential of everything we're working on today. Speaker 100:16:29So on behalf of the company's management and Board, I'd like to thank our team members, our guests and our stockholders for their continued loyalty and enthusiasm. I thank you for your attention. And operator, we can now start the Q and A session. Speaker 300:17:07Good morning. Nice results, Peter. Thanks for all the prepared remarks. Wanted to start with Nugget. It appears that the business is going really well now that you've kind of had your hands on that property for a couple of quarters. Speaker 300:17:24Could you just talk about anything else In terms of market trends, maybe bookings at the conference center, I believe you said that the high end continues to do well everywhere. But at Nugget, I think you said all segments were up or flat. So Are you taking market share? Are you growing the property? Just trying to get a sense of how this continue to grow. Speaker 300:17:49Thanks. Speaker 200:18:02Very competitive and continues to be. And but we can hold our ground from everything we can see, and We certainly see potential to increase our market share. Bookings for 2024 are solid and stable. And so for the hotel service and also it is for the conference center as well. We track to shows in our In our outdoor venue for the total 8,500 visitors, where we have booked About half of the shows that we plan to do with the other half probably coming on during the next month. Speaker 200:18:40These bookings are not dependent on us alone. They are much dependent on the itineraries of the various artists and as they How well they can fit Reno into their traveling schedule. Speaker 300:18:53It's great. Appreciate it. Thanks, Erwin. And then Just going back to your comments on the retail or the low end customer, I think you said it hasn't changed. It has been a little bit of a drag across the portfolio. Speaker 300:19:10But wanted to ask what percentage Your business is made up of this group of customers. And do you expect For it to kind of flatten out, is there anything changes in changing in terms of promotions towards that lower And do you believe at some point this can start to be flat from a year over year perspective based on what you're seeing in the trends? Thank you. Speaker 200:19:39I think in the simplified version, we are taking a 2 pronged approach. The first one is that we focus on the higher end of the market and then that's really where the majority of our focus lies, I think for good reason. And the second part That would be to keep incentivizing the lower end of the market and testing which things we can do there. What makes sense and what doesn't make sense? So it's obviously much more sensitive on the lower end because the head So once again, the focus Number one focus is on the higher end, and we try to maintain as much as possible on the lower end. Speaker 200:20:30And probably with the lower end will Only change when the economy trends like inflation go the other way. Speaker 300:20:39Okay. And what's rated as a percentage of the database Roughly. Speaker 200:20:45It depends very much on where you draw the line. I know that's a little bit subjective, but You mean now in Speaker 100:20:51the Speaker 200:20:51number of customers or in revenue? Speaker 300:20:56Either or, I guess, in customer base. Speaker 200:21:01In account number, I would say it's probably anywhere between 30% 50% In web and So I think Speaker 100:21:10your question was how much of our place is rated? Speaker 200:21:14Yes. Oh, that's a different question. That's a different question, sorry. In the nugget, our chemist, we have 69% rated and that compares to pre COVID of 67%. Okay. Speaker 200:21:31So, ready play has actually gone up. During COVID in Q3 Operator00:21:45We'll take our next question from Jordan Bender. Jordan, your line is now open. Speaker 400:21:52Great. Thanks for taking my question. Just looking at the balance sheet, you guys, as we sit here today, you have plenty of cash sitting here. We've kind of gone through what might be the best uses of cash for the business. But with your debt now over about 11% It seems like you have the cash on hand to get through most of these projects that you've talked about in the call. Speaker 400:22:15I was wondering, Is it makes sense to start paying down debt more rapidly here, to kind of generate that free cash flow? Speaker 100:22:27Certainly, as we said in the call, we have about $25,000,000 maintenance CapEx on an annual basis. And on top of that, we intend to spend about 35,000,000 for projects throughout our properties, including Nugget Between 10 15. So that's already 60 there. And then We'll see how it goes in the next couple of quarters. But Like until the Q1, don't expect any major debt repayment. Speaker 100:23:10We'll reinvest in our properties first. Speaker 400:23:14Understood. And then switching to Poland, it looks like you have maybe 2 licenses that have expired. Just thinking back a couple of years when that happened, the machines get turned off, but you continue to pay your employees. So Was there any impact at least during the Q3 from kind of that? And maybe just any update around the process Speaker 500:23:38of kind of getting those licenses back online and any Speaker 400:23:38timeline there? Thank you. Speaker 200:23:45No, there was no intake from Go ahead. I would want to say there was no impact out of that in Q3 because the By law, those licenses should have been awarded already. There hasn't been yet. It could happen any day, any week now, but we really don't know. Speaker 100:24:16Yes. Richard, they had elections in Poland and there is no new government has been formed That's holding the process up. It's unfortunate, but it has to do with those Speaker 400:24:38And just to confirm, while those assets are closed, you still continue to have to pay those employees, correct? Speaker 200:24:46Yes. The label also in Poland has differed significantly from the label also in the United States or in North America For that matter. And it's basically the only option to just keep paying them. Okay. Operator00:25:08We'll take our next question from Jeff substantial. Jeff, your line is now open. Jeff has disconnected. We will take our next question from C. K. Operator00:25:39Dahl. C. K, your line is now open. Speaker 600:25:43Yes. Hi. I have a strategic question. I missed the first part of your presentation. But The strategic question in my mind is, have you taken on a lot of this new capacity and acquisition During the period when interest rates were very low and now you are faced with a seemingly For a long period of operating losses based on the very high level of debt that you've taken on. Speaker 600:26:15Is that Could you possibly address that so that I could understand it better? Speaker 100:26:27We have acquired 3 properties at the end of 2019, and we have taken on that at that time. And then we made another major acquisition, which we Signed in February of 'twenty two. And at that time, when we entered into that transaction, We closed it a year later, but when we entered into the transaction in February 22, We entered into a new loan facility with Goldman Sachs. And that is what we are faced with now. On the one hand, In a way, we were fortunate to get it done at the end of February 22 because A few weeks later, if you recall, in March end of March, the debt markets pretty much closed for some time because of the Russians invading the Ukraine. Speaker 100:27:31But we could get it done and so we could close that transaction after licensing a year later, but now we are faced with those terms. We are free to repay the term loan Anytime as soon as we find something better out there. But for now, we are faced with Operator00:28:08We will now take our next question from Jeff stands full. Jeff, your line is now open. Speaker 500:28:14Great, thanks. Can you guys hear me this time? Speaker 100:28:18Yes. Speaker 500:28:19Okay, perfect. Apologies for the technical difficulties there. Anyway, starting off here, I just wanted to fill the margins a bit more, specifically focusing on the U. S. Segment. Speaker 500:28:28Peter or Erwin, can you just disclose for us what same store margins were year on year for the U. S. Region in aggregate? And then Kind of unpacking that decline, I was hoping you could just frame out in your mind, whether qualitatively or putting some numbers behind it, how much is Some of the structural inflationary pressures you called out, labor and utilities versus how much is more kind of one time headwinds with the new assets and the construction? Speaker 200:28:57So In the United States, in Q3 of 2022, we had a margin EBITDA margin of 30%. And in Q3 of 2023, our margin was 26.1%. And the margins differ from casino to casino. With regard to separate on the cost side, we clearly had integration Costs for the 2 new properties, Nougat and Rocky Gap. We still have some kind of Construction disruption, which also leads to some either lower revenues and costs. Speaker 200:29:41And as you know, the hotel will be opening in Q2 of next year and Carrabba's will in Q4 of next year. So that will be is gone. And all of that will be digested and then hopefully the synergies start to kick in step by step. With regard to labor costs, utilities, insurance, so the more structured ones, as Peter said earlier, we don't think that there will be any further increase in those. Speaker 500:30:15Okay, great. That's helpful. Thank you, Erwin. And then As a corollary to that, Peter, I wanted to kind of follow-up on one of your comments towards the end of the prepared remarks. I think you noted you think OpEx or margins will be roughly stable from Q3 moving forward. Speaker 500:30:32Inflationary pressures are moderating, though still impactful. So I guess Is the net net of that, that inflationary pressures continue to kind of pressure margins, but conversely, some of the one time headwinds are going to roll off and those dynamics We offset each other. Am I thinking about things the right way? Or can you just expand on that a bit further? Speaker 100:30:53Kevin, please. Speaker 200:30:56I think it's I would say I think you're on the right track thinking that we see it the same way. Speaker 500:31:03Okay, perfect. That's helpful. Thank you, Arun. And then if I could just squeeze in one more. I wanted to follow-up on one of Chad's questions earlier. Speaker 500:31:10We did hear 1 of your peers that operates in Reno talked to some elevated promotional activity from a couple competitors in that market, some higher free play, more aggressive room comps, things of that nature. Are you seeing Similar to that factor in your results during the quarter, just any thoughts on that dynamic? Speaker 200:31:35Yes, we see some of that, in particular from 1 or 2 of the so called smaller operators that don't have a They'll attach some of them go quite proactive, if not to say aggressive into the market. And we just have to we're just observing that. We are not going very aggressive. Speaker 500:32:00Okay, understood. That's helpful. Thank you very much. I'll pass it on. Speaker 100:32:18All right. Thanks, everybody. We appreciate you joining our call today. We will talk again after the Q1, But I'm sure we'll see each other at some conferences between now and then. Thank you. Speaker 100:32:29Goodbye.Read morePowered by