Century Casinos, Inc. Q2 FY2025 earnings call

• Partnership with BetMGM to operate online and mobile sports betting application in Missouri, expected to go live in December 2025 and contribute meaningfully in 2026.
• Caruthersville Casino and Hotel in Missouri continues to perform well, net operating revenue and EBITDAR increased 26% and 31% respectively since opening.
• In Poland, awarded additional license for Wroclaw casino, expected to open in Q4 2025; committed to divesting Poland operations and expect to sign letter of intent with Eastern European gaming group next week.
• In Colorado, Century Casino Cripple Creek eliminated live table games, introduced electronic table games lounge; Century Casino Central City focused on continuous improvement.
• Mountaineer Casino Resort in West Virginia completed full remodel of main casino entrance facade and porte - cochère; Rocky Gap Casino Resort in Maryland saw improvement since first quarter with carded gaming revenue and average spend per trip increasing.
• Canada casinos had renovation projects, Century Casino St. Albert performing exceptionally well after exterior modernization.

In Missouri, the new Caruthersville Casino and Hotel property opened on November 1, 2024. Total revenue grew 24%, EBITDA increased from $4.7 million in Q2 '24 to $6.1 million in Q2 '25, a 30% increase. Cape Girardeau Casino Hotel's hotel cash revenue more than doubled compared to Q2 2024, F&B cash revenue grew 31%, and EBITDAR increased 3% to $6.5 million. In Colorado, Century Casino Cripple Creek had EBITDAR of $1.9 million, with EBITDA up 23% on a comparable basis. Century Casino Central City had EBITDAR of $910,000, flat to same quarter last year when adjusted for revenue from sports betting. East segment: Mountaineer Casino Resort in West Virginia had EBITDAR $4.1 million, up 12%, total revenue up 3% driven by 39% increase in iGaming revenue. Rocky Gap Casino Resort in Maryland had carded gaming revenue up 7%, average spend per trip up 9%. West segment: Nugget Casino Resort in Reno-Sparks had EBITDAR $2.3 million, a decrease from last year. Canada: Slot coin in was up 6%, EBITDAR grew 2.8% from $5.4 million to $5.6 million. Poland: Total revenue grew 23% year - over - year, EBITDAR increased from $0.5 million in Q2 '24 to $1.8 million in Q2 '25.

• Expect higher EBITDA and cash flow for 2025 and beyond as harvest of previous investments.
• Sports betting in Missouri with BetMGM expected to contribute meaningfully in 2026.
• Consider continuing the stock buyback program in the coming weeks if legally permitted.
• Anticipate continued strong performance at Mountaineer Casino Resort and improvement at Rocky Gap Casino Resort going forward.

• Operational breaks in Poland due to delays in license renewals previously impacted last quarters.
• Weather events impacted some regions' operations, e.g., severe storms and tornadoes affected Cape Girardeau.
• Economic uncertainty poses risks to the business.

Q: 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?

A: 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 [indiscernible] integrating the hotel leads to higher occupancy, both in the hotel and the casino.

Q: 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.

A: 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 -- for a larger investment into our Terminal B, we look for a positive outcome of our Poland divestment. And I think before that, we will probably not do a very large Terminal B repurchase.

Q: 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 kind of to 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 in? Or is it a new one?

A: 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 because 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 -- we achieve again in Q4, as I mentioned in the prepared remarks. Peter? Yes, I covered the divestments. It's with a new party. It's with a new party.

Q: I want to start on Canada. So nice results returning 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 the home, which is benefiting you?

A: Thanks for the question, Jordan. I think we can -- it's hard for us to judge how people go less -- whether or not they go less to Vegas or not. But we certainly see, as we also indicated that we have a larger reach now. So that is on the one hand, due to our better capacity, better product, more and better hotel rooms, but people that have not been coming before from 75, 80, 90 miles are now coming. And it may well be that these people say, well, we'd rather sit in the [ current drive ] as opposed to flying to Vegas.

Q: 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?

A: I would say, yes, the $150 million is a reasonable target. Peter, would you like to add to that? Yes. What we need to -- I think our properties are in great shape after extensive CapEx program that we have done over the last 18 months. So from that point of view, there are properties -- the properties, I think, can do the $150 million. We need the retail and lower - end customer to come back -- to continue to come back. And I think what goes a little bit hand - in - hand with that is some positive movement on the interest rate front because that certainly helps the retail and lower - end customers. And if we have a little bit of help, a little bit of tailwind on that side, then our property portfolio is good for $150 million EBITDAR.

Q: 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.

A: Sure. Thanks for the question, Connor. We have seen that the new competitor has been very helpful for our business. And we -- I think we get some overflow business from them. As you know, we are exactly diagonally across the street, and we see a good [ mutual fertilization ], I might say. It's -- they have excellent stickers, as you may know, they have excellent rooms. And in spite of that, our room occupancy is basically most of it cash business. And on the weekends, we are typically sold out in spite of the fact that we only have less than 30 rooms, and there are 300 rooms across the street. So this -- the advent of the new competitor of the Chamonix has been nothing but good for us. And we also are in good communications with the management there. And we think that jointly looking into the future, they and us might think about ways to further develop that intersection of Bennett Ave and [ 2nd ], which interestingly, in the past in the 1900s has been the center of Cripple Creek due to the fact that the way Bennett goes all the way down from the east to the intersection and then goes up the hill on the west. So all looks good.