Century Casinos, Inc.

Good day, everyone, and welcome to today's Century Casino's Q4 2024 earnings call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. You may register to ask a question at any time by pressing the star and 1 on your telephone keypad. Please note this call is being recorded, and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Peter Hotzinger, Please go ahead.

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 US federal security 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 referred to several non-GAAP financial measures including but not limited to adjusted EBITDA. Reconciliations of our non-GAAP measures to the appropriate GAAP measures can be found in our news releases and SEC filings, available in the investor section of our website at cmpy.com. After our prepared remarks, we will open the call for your questions. My co-CEO, Erwin Heitzman, and our CFO, Margaret Stapleton, will join me for that. We released fourth quarter and full year 2024 results this morning. On a consolidated basis, our fourth quarter revenue was $137.8 million, down 4% from the prior year's fourth quarter. Our adjusted EBITDA was $21.1 million, down 17%. Looking more closely at the U.S. operations, revenue was down 3% and EBITDA down 8%. Broadly speaking, the underlying customer trends remain stable in the quarter, with retail customers as well as low-end customers still being weak. This is mostly due to macroeconomic factors and wallet softness in our markets, as low-end consumers continue to be squeezed by inflationary pressures. We do, however, see the mid and upper tiers performing quite well, with their number of visits as well as the spend per visit up slightly compared to last year. We achieved an important milestone in the fourth quarter with a successful opening of the land-based facility in Carouseville, Missouri on November 1st. While unfortunately we had to close the temporary casino for some time before the new opening, resulting in lost revenue and EBITDA in October, the new casino is off to a great start. In the four months since opening, revenue and EBITDA are up 27% and 32%, respectively, which has exceeded our initial expectations. To be more granular, here is how it has been performing monthly since opening. In November, revenues were up 47%, EBITDA up 64%. In December, revenues up 23%, EBITDA up 32%. January, revenues plus 27%, EBITDA up 29%. In February, with some serious weather issues and one day less compared to last year, revenue up 12%, EBITDA up 12%. And in March, so far, revenues up by over 20%. We are seeing increases in nearly all demographic segments, with the strongest growth rate coming from the higher end of the database. From a distance standpoint, customer visits increased by 20% from all mileage ranges, but greater percentage gains were seen from 70-plus miles. That's a promising sign that the new casino is drawing more customers from further away, expanding our overall catchment area just as we planned it. The new casino offers a total of over 660 gaming positions, which is a 20% increase compared to the older boat and a 50% increase compared to the temporary location. The property is much more convenient for our customers and allows for significantly more efficient operations. We are very happy with the strong and immediate uplift on the revenue side. The full impact on EBITDA will probably take two or three quarters until we have worked out the initial growing pains and figured out the most efficient staffing levels. Typically, when you open a new property, you're looking at a three- to six-month ramp to start creating those efficiencies. You obviously open up, you always over-hire a little bit, knowing that there will be turnover, and you spend a little bit more on marketing. So further margin improvement is a question of time, and we couldn't be more pleased with the start of the new facility at Corrado Street. Our other property in Missouri, the Central Casino and Hotel Cape Girardeau, also had a strong quarter. Revenue was up 11% and EBITDA was up 7%, driven by the new hotel as well as solid food and beverage sales. The new hotel continues to ramp up nicely and definitely expands the reach into new markets, bringing in new and diverse group of players. Revenue increased 82% from patrons living in states other than Missouri, Illinois, and Kentucky. We are seeing more visits from guests living 75 plus miles from the property as they increased 21% compared to an increase of just 1% from guests living within 75 miles. The hotel is also driving meaningful growth in F&B sales, which is somewhat offset by higher cost of goods sold and staffing costs. The team continues to fine-tune operational expenses to further increase profitability. The hotel has experienced steady growth in occupancy and revenue, which has continued into this year. Overall, our two Missouri properties couldn't make us happier. Even though we had serious weather impacts, February still produced the highest revenue in the history of our two Missouri properties. And March is off to a great start as well. We also look forward to sports betting going live in Missouri towards the end of the year. And we are finalizing partnership agreements as we speak, which will deliver incremental high margin EBITDA to our properties. Continuing with the Midwest segment, let's review the performance of our operations in Colorado. have experienced significantly different results when comparing the performance of carded revenue versus un-carded revenue. Carded revenue showed strong growth of 12%, while un-carded revenue decreased by 30%, resulting in a 7% overall revenue decline. In the quarter, heavy construction on interstate I-70 impacted uncargeted play at our central city significantly more than carpet play. And in Cripple Creek, it's possible that Chamonix is taking some of the casual uncargeted play, although we do not yet have any firm data to back that up. Both our properties saw noticeable strong results from the younger customer base. However, much of that was offset by the loss of two-thirds of our sports betting revenue. As you know, we have three sports betting providers using our licenses, but two ceased operations recently, the Misurka and Tipico. The one remaining is Bet365. In Cripple Creek, we are putting the finishing touches on the construction of a new main entrance directly facing Chamonix. It is wider, more convenient, and more inviting than the small doors we had before, so ready to bring in more business. Overall, the Missouri and Colorado segment did a great job in maintaining operating efficiencies with property level margins between 35% and 40% during the quarter. The East segment, which includes the Mountaineer Casino in West Virginia and the Rocky Gap Casino Resort in Maryland, we had a more challenging quarter. Revenue of the segment was down 7%, EBITDA down 29%. Both properties have a higher portion of their business from lower-end customers, and that lower-end customer produced significantly less trips compared to Q4 of last year. Again, the same picture, the higher end of the database performed well, generating more trips and 1% revenue growth. At Rocky Gap, the revenue decline was purely on the casino side. While gaming revenue was down, all other profit centers like hotel, F&B, and golf were up. Disciplined cost management helped to reduce operating expenses by 18%. And it will continue to focus on the cost structure and on improving revenue performance at Rocky Gap. At Mountaineer, total carded revenue was flat to last year, but uncarded revenue decreased by 10%. And almost all the decline happened during the weekdays. Our volume on weekends were fine, and we are digging deeper to find ways to strengthen midweek play. Moving to the West segment with the Nugget Casino Resort in Nevada. Gaming revenue was down 10%. It was impacted by low slot hold. With a normalized slot hold, revenue would have been down 6%. We did see an increase of 5% in local carded play, as well as an increase in younger players compared to last year. We reduced total expenses by 12%, mostly through a reduction in staff and overtime work, as well as lower hotel and F&B complementaries. Due to that strict cost discipline, EBITDA at the property increased by 46% year-over-year. And we've made further changes to the slot for late last year, with initial results looking promising, resulting in double-digit EBITDA growth in January and February.

A few words about the small operations in Canada and Europe.