Welcome to Century Casinos Q4 2021 earnings conference call. This call is being recorded. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. I would now like to introduce our host for today's call, Peter Hoetzinger. Mr. Hoetzinger, you may begin. Good morning, everyone, and thank you for joining our earnings call. With me on the call are my Co-CEO and the Chairman of Century Casinos, Erwin Haitzmann, as well as our Chief Financial Officer, Margaret Stapleton. As always, before we begin, we would like to remind you that we will be discussing forward-looking information, which involves a number of risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. The company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events, or otherwise. We provide a detailed discussion of various risk factors in our SEC filings, and we encourage you to review these filings. In addition, throughout our call, we refer to several non-GAAP financial measures, including, but not limited to, adjusted EBITDA. Reconciliation of our non-GAAP performance and liquidity measures to the appropriate GAAP measures can be found in our news release and SEC filing available in the investor section of our website at cnty.com. I will now provide an overview of the results of the Q4, and after that, there will be a question-and-answer session. Our Q4 results continued the streak of record-breaking performances that we have shown throughout the year. Revenues exceeded the same period of last year by 27%. Adjusted EBITDA was 36% higher. Most of the EBITDA growth came from our casinos in the U.S., but also from Poland. Despite our record performance, it could have been even better. Canada had a difficult quarter because proof of vaccination was required to enter the casinos, and we were not allowed to serve liquor after 11:00 P.M., which slowed traffic down significantly. Thankfully, these restrictions have now been lifted, and we are already seeing a nice rebound. Our other operations were also impacted by the Omicron variant and COVID-19-related restrictions, as well as some supply and labor shortages. Our team successfully navigated through all of that and delivered great results. Our stronger performance is the result of a disciplined operating philosophy and effective targeted marketing to our high-value customers. Our cost structure is more streamlined, and our marketing and promotional investments are more targeted, which translates into increased spend per visit, especially from our most valuable players. The promotional environment in all our markets remains disciplined and rational, and while labor is tight in some markets, we've been able to maintain our high standards of guest experience. Our business is largely gaming-centric. Only a minority of our revenue is coming from non-gaming amenities, and we will only open more non-gaming amenities or expand their opening hours as demand picks up further so that it grows in a profitable way. The geographic diversity of our portfolio, with locations in hyperlocal, drive-to markets with a loyal customer base, has proven extremely resilient in light of the pandemic. We will continue focusing on the right customer, enhancing customer convenience, building loyalty, streamlining processes, and reinforcing our operating efficiency through new initiatives and technology. Sports betting and iGaming both are profitable for us and have been profitable for us since day one. Early on, we decided not to participate in the costly rat race for customers and market share. We took a zero investment and zero risk approach, meaning we simply provide our license to specialized sports betting companies. They pay us a revenue share with a minimum annual guarantee, and what we get from them goes straight to our bottom line. We have no cost against it. Our two properties in Colorado, in Cripple Creek and Central City, increased EBITDA by 14%. The EBITDA margin was 35%. Two out of the three sports betting licenses we have in Colorado are in operation already. The third one, with bet365 as a partner, is anticipated to go live next quarter. In Missouri, which is our most important market in terms of EBITDA and cash flow generation, we grew EBITDA by 23%. The EBITDA margin increased from 42% to 45%, even though we increased some wages on top of the hourly minimum wage to stay competitive in the southeast Missouri area and help attract and retain high-quality team members. Marketing spend continues to remain significantly below pre-COVID-19 levels and is expected to continue at its current run rate moving forward. Reductions in advertising, direct mail, and promotional expense appear to be sustainable and have not had any negative impact on gaming volumes. We have announced two important developments at our Missouri properties. We plan to bring the Century Casino Caruthersville, which is the last remaining riverboat casino on open water in Missouri, on land, to a non-floating facility, and we plan to build a hotel at our property in Cape Girardeau. Caruthersville, the new facility will include a newly designed casino with approximately 20% more gaming positions and 75 hotel rooms in total. The new development will provide significant operational efficiencies. The savings on insurance alone will be around $500,000 per year. It will also be significantly more convenient for our customers. It will increase our catchment area and also give us the chance to win back customers who didn't like the old riverboat style when they paid us a first visit. We plan to open that new facility in early 2024. In Cape Girardeau, we're developing a 75-room hotel that will transform the property to a full resort destination with gaming, various bars and dining venues, as well as conference, concert, and event spaces. That hotel is slated for opening at the end of next year. Another opportunity for growth in Missouri is sports betting. It has not been legalized yet, but there's a good chance it will this year, which obviously would be very beneficial for us. In West Virginia, our Mountaineer Casino, Racetrack & Resort had a great quarter. EBITDA was up 34% over Q1 2022 last year. We continue to make incremental investment in the property, such as refurbishing some of the F&B outlets and upgrading the grand entrance experience. We also reconfigured several areas of the slot floor and introduced new and additional slot product, as well as a new VIP gaming area. Hotel enhancements include new windows, new bathrooms, new and bigger TVs for the hotel suites to attract high-worth players, and also the total rebuild of the outside pool. Internationally, our operations in Poland generated excellent results. Revenue was up 67%, and EBITDA turned to a positive $3.2 million for the quarter. All our casinos over there are doing well, even without any meaningful business tourism. In fact, revenue over the last couple of weeks was at an all-time high. In Canada, we operated with severe restrictions during the quarter, as I already mentioned. All guests needed to provide proof of vaccination, everybody was required to wear face masks, and casinos were not allowed to serve liquor after 11:00 P.M. As a result, adjusted EBITDA was down 15%. As mentioned, these restrictions have been lifted last week actually, and as a direct consequence, results are on the up again. Actually, they are up by more than 20% in just the first couple of days. Let's now cover our balance sheet and liquidity. As of the end of December 2021, we had $108 million in cash and cash equivalents and $189 million in outstanding debt on our balance sheet, resulting in net debt of $81 million. A year earlier, our net debt was $130 million, meaning we generated $49 million in free cash in the last 12 months. Our strong free cash flow generation is driven by efficient and prudent CapEx spending programs at our properties and by favorable regulatory regimes in West Virginia and Alberta, Canada, that the state or respectively the province pays for 1/2 or even all of the slot machine investments. Overall, we have a well-maintained asset base that requires minimum levels of maintenance CapEx to sustain the current levels of profitability. We've always had a conservative leverage profile, and we anticipate remaining conservative in the future. Now to the most recent news, the most exciting news, our announcement to acquire the Nugget Casino Resort in Reno-Sparks, Nevada. Two weeks ago, we entered into a definitive agreement to acquire 50% of the Nugget Property Company and 100% of the Nugget's operating company for a combined total purchase price of $195 million. In addition, we have a five-year option to purchase the remaining 50% of PropCo for $105 million +2% per year. In connection with that transaction, we have received a firm commitment letter from Goldman Sachs for a $350 million senior secured term loan and a $30 million senior secured revolving credit facility. We expect to close the purchase of 50% of the property company next month in April. From that time on, we will receive $7.5 million in rent, which is our 1/2 of the annual rent payment that flows from the operating company to the property company. We will close the operating company purchase as soon as we get the Nevada gaming license, which is expected to take nine months-12 months. From then on, we will get all the EBITDA, and we will pay as the operating company rent to the property company, 1/2 of which we obviously pay to ourselves. In 2021, the Nugget did $33 million in EBITDA on revenues of $100 million. We see upside to these numbers, mainly for three reasons. First, during the H1 of the year, 2021, there were no conventions or concerts, which normally are a very profitable part of Nugget's business. Secondly, we anticipate to create synergy effects when we integrate the Nugget into our portfolio of North American operations. Thirdly, we already have identified various opportunities to improve the operations, mainly on the slot floor, the most profitable area of ours. We have some key data of the Nugget resort. 50,200 sq ft of casino floor. 869 slots and 29 tables. 1,382 rooms and suites in two hotel towers. A variety of casual and fine dining restaurants. 110,000 sq ft convention space, and a very popular amphitheater with 8,565 seats. With the Nugget being directly adjacent to I-80 and with direct highway on and off ramps, ample parking, both surface and in parking garage, it is perfectly located for customers coming by car. The traffic count at the nearby intersection is an amazing 260,000 cars per day. Here are the top 10 reasons why we love the Nugget. First of all, we purchased an existing operation with a long operating history. That means we have no development risk, no risk of construction delays, and no risk of cost overruns. Secondly, the Nugget is in a great location. Located directly on I-80, the property gets an exposure that is unparalleled in the Reno-Sparks market. The combination of hotel rooms and convention space with 110,000 sq ft, the Nugget has the largest convention facilities of any hotel casino resort in the market, and it has sufficient rooms to support large conventions. Fourth, the previous owner, the Marnell Companies, have invested more than $90 million since 2016, upgrading all hotel rooms, most public areas, added a top-notch steakhouse, upgraded or replaced back-of-house equipment where necessary, and they right-sized the operation. Therefore, we do not expect any extraordinary or meaningful replacement CapEx in the next years. There's a brand-new 8,565+ seat amphitheater. It provides us with excellent marketing opportunities. The Nugget gaming floor provides opportunities for improvement and growth. We can further improve the slot mix, further improve the traffic flow, and increase the square footage. The Nugget has a database of 80,000 active players that we will be able to market in a highly efficient manner. The acquisition offers great potential for synergy effects as we integrate the standalone property into our portfolio of 17 casinos. The transition support of the seller, Anthony Marnell III and his team, is perfect. We are grateful for their partnership. Last but not least, the tenth reason why we love the Nugget is management. Management of the Nugget is excellent. We want them to stay and continue the growth ahead with us. We have communicated this to management in person on the day we signed the deal. In terms of the broader market dynamics, there's substantial economic growth in the Reno-Sparks region. Companies like Tesla, Google, Switch, Amazon or Apple are coming to the area with the capacity to hire tens of thousands of employees. Consequently, the population growth is outpacing the national average, and the personal income per capita, already at over $72,000 in 2021, is expected to grow further with a CAGR of 4%. Not surprisingly, the unemployment rate is only 2.9%. What we also love about the Nugget transaction is that it significantly increases our scale. Our revenue is expected to grow by over 25%. Not only that, it also increases our geographic diversity, which substantially reduces our reliance on any one market or property. Pro forma for the Nugget transaction, we generate our cash flows from 18 properties in seven different markets and regions across North America and Europe, and no single property contributes more than 25% of our total EBITDA. That is something we always aim for, and that is part of our overall strategy. No reliance on any one market or property. Our team has an excellent track record of improving the performance of properties we have acquired. In fact, we've improved the results of each and every property we have purchased within the first six months-12 months of acquisition. When we acquired the three casinos from Eldorado Resorts, a company with a reputation of being very disciplined and efficient operators, we increased revenue and EBITDA almost immediately. That was before COVID-19. That had nothing to do with stimulus payments or any other COVID-19 related effects. We did that by listening to local management and focusing the operations on the more profitable revenue centers and driving additional value. After the very successful acquisition and integration of these three acquired properties over the last couple of years, all of us are very excited about doing the same all over again, if not better, with the Nugget transaction. In conclusion, the Q4 was another great performance of our company and the entire team. Our diversified portfolio continues to generate robust EBITDA growth and our operating strategy and tight focus on the right customer are producing strong and sustainable margins. We will continue to execute on our business plan by growing organically and by identifying and acquiring undermanaged assets in stable drive-to markets in the U.S. In our M&A strategy, we will remain prudent with pricing and valuation. We will continue to dedicate resources to capture synergies and provide time to digest the acquisition and recognize value. With that discipline in our strong balance sheet, we are confident to find further opportunities to deploy capital in a manner that consistently builds shareholder value. 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 as we manage our business during these challenging times. I thank you for your attention, and we can now start the Q&A session. Operator, go ahead, please. Ladies and gentlemen, at this time, we will conduct a question-and-answer session. If you would like to ask a question, please press star one on your phone now and you will be placed in the queue in the order received. If you find your question has been answered, you may remove yourself from the queue by pressing the pound key. We are now ready to begin the Q&A session. Your first question comes from the line of David Bain with B. Riley. Please state your question. Great. Thank you and congratulations on the latest acquisition. I think it's a great market. Very exciting milestone for Century. Peter, you did a good job of sort of outlining the structure. If we can just take a second to review. You take over 50% of PropCo next month, and you'll begin to receive about $1.9 million per quarter in rent, like directly to EBITDA, really flowing all the way through. Upon Nevada approval, you know, beginning of next year, let's call it, you get the whole EBITDA trailing twelve $33 million, less $7.5 million in rent. That doesn't include certain shows, events that you outlined that weren't in there. Probably, you know, some benefits from structural upgrades and certain cost synergies and other performance enhancers that you've executed on previous mergers. Does that kinda summarize things just so I can get it right? Yes, absolutely, David. That's the right picture. Okay, perfect. It looks like there's a lot of growth and synergies that, you know, are identified, revenue and cost-wise. I know you're not quantifying it today per se, but are you seeing, you know, material potential increases versus that $33 million, you know, at this point? Or is there anything more that you can give us there? Erwin, can you comment on that? Yeah. I think the short answer would be, yes, we see material possibilities and upside. To give just two examples, as Peter mentioned already, the slot floor we think provides significant upside potential. The average age of machines is rather old, let me say. We know that bringing new product will just help the revenues immensely. The second thing that we want to do is when you look at the evening of the five large properties, the five large resorts in Reno, there is only one which is not lit very well at night, and that's the Nugget. We think that with the number of cars that Peter mentioned before, 260,000 cars a day, it just makes a lot of sense to invest into a well-lit facade with good signage and good light. Very interesting. Two examples, and of course we could go on, but just to give you a first feel. Right. My second follow-up, if I could, you know, and I know you've addressed this, Erwin, in the past, and Peter, but just given the macro or geopolitical environment, are you still not seeing any pockets where rising oil costs could have a material impact in really either direction, throughout the portfolio? If I may take that. No. Oil prices have been going up and down over the years, and when the oil prices went up, we haven't really seen a negative impact on the business. Conversely, when they went down again, it wasn't the other way around either. The one thing that could be said is with regard to our facilities in Alberta, Canada. In that area, higher oil prices are obviously a booster for the economy, so it would even be good. Okay, very good. Thanks, guys. Appreciate it. Thanks, David. Your next question comes from the line of Chad Beynon with Macquarie. Please state your question. Hi, good morning. Thanks for taking my question. Peter, I wanted to start with Poland. You said that the fourth quarter obviously was very strong, and you even said the past couple weeks revenues have continued without any international inbound. Just wondering how we should think about this given the current situation in Ukraine and Russia. Obviously, that could affect the international inbound. Just wanted to get a better sense of what you're kinda seeing on the ground and what your consumers are thinking from a day-to-day standpoint. Thanks. Yeah, it's in a way unfortunate, but we see only positive impact so far. There's more people in Poland than before. I don't know if that has something to do with it, but the impact is positive. Erwin, do we know exactly what's behind the uptick in revenues? I think it's mainly just the pent-up demand. You know, we had so many restrictions for such a long time, and people are just so happy that they finally can go unrestricted again. That's wonderful. Maybe I would like to mention also, all of our casinos are in Warsaw and west of Warsaw, so we are quite far away from the border to the Ukraine. Okay, thanks. Also on Poland, is there any additional thought in terms of how we're thinking about the Warsaw license, which I believe is up for renegotiation or rebidding in 2022? Is that something, given the Nugget acquisition and some of the other cash needs in the United States, how are you thinking about you know, rebidding in that market? Chad, when we Well, When we apply for new licenses in Poland, there is absolutely no investment necessary. It's all done on qualitative criteria. We would simply continue paying rent at the properties, at the hotels where we have our casinos. Right, Erwin, do you want to add something? No. Absolutely, I was about to say the same. Yeah. There's no investment associated with getting a new license. Okay, great. And then lastly, just to follow up to David's question on the PropCo, OpCo, Nugget calculus. Can you just explain why the 50% made sense and, you know, how we should think about kind of the likelihood of you taking everything in-house or if the opportunity would be more for, I guess, taking that rent off of your balance sheet? That's all for me. Thank you very much. Well, thanks, Chad. You know, ultimately there was the outcome of a negotiation, and we very much like that structure because it gives us a lot of flexibility. We control the entire resort. We can close on that option to acquire the remaining 50% at any time at a fixed price. We don't have to. What that means for us is like in terms of CapEx, we continue to look for interesting M&A opportunities, and if you find one, we can then evaluate our cash position, the funds we have available at that time. We then decide whether we wanna use the funds for the new acquisition or for acquiring the other 50%. Theoretically, we could also sell our 50% in the Nugget and just keep the OpCo. As of today, we like the Nugget very much, and as of today, our intention is to also acquire the remaining 50%. Okay, great. Thanks. Congrats on the acquisition. Thank you. Your next question comes from the line of Jeffrey Stantial with Stifel. Please state your question. Hey, good morning, Peter Hoetzinger, Erwin Haitzmann. It's great to hear from you guys. Thanks for taking our questions. You know, I just wanted to start the two projects in Missouri. It did look like the total project cost ticked up a bit since the last time we spoke. Can you just talk to your degree of comfort that this should be where things shake out ultimately or should we kind of expect that target to potentially continue to drift up a bit, you know, from here on out? Erwin, do you have something on that? Was the question whether we think it's going to be more expensive? Yeah, we have. I think the last time we gave the numbers, they were about 5% lower. I think we added some facilities. We changed a little bit the design of the Missouri hotel tower. So those numbers that we provided now are the most recent ones, and we have high confidence in those numbers. Right? Yeah. Right. Okay. Just to be clear, it's more just a function of design plans as opposed to kind of inflationary pressures. Yes. We changed the design of the. Just made it nicer here and there. Mm-hmm. Okay, perfect. That's really helpful. Then switching gears, you know, on the margins front, looked encouragingly stable here in the U.S. quarter-over-quarter, aside from, you know, just some seasonality in Colorado. Can you just frame the puts and takes here into 2022? Sounds like you highlighted some potential for lower margin, but EBITDA rate of non-gaming revenues to tick back up. It does sound like the labor market remains tight in some of these markets. I think you called out Missouri, but just curious to get your thoughts there on how we should think about, you know, the margin profile entering this year. Uh- Erwin? All in all, we think we can keep it like it was in 2021. We can also say that while it's not been easy with the labor market, but we think the worst is over. We were fine within most departments except maybe in food and beverage and housekeeping. In essence, that is not such an urgent question anymore. Okay, great. Perfect. Very helpful and encouraging. Thanks, guys. Thank you, Jeffrey. Thank you. Your next question comes from the line of Edward Engel with Roth Capital. Please state your question. Hi. Thank you for taking my question. Just back to Poland, do you think the geopolitical kind of issues in that part of the world could impact your timing or the ability to maybe divest, some of those assets? We don't know yet. We have two companies that are looking at that. They are seeing that the results are very strong and actually getting stronger day by day. As of now, we don't see the picture changing. Great. On to St. Louis, are there any benchmarks or hearing that we should kind of think about or put on our radar to maybe track the progress of that lawsuit? I do not know that exactly. I can come back to you on that. What I do know is that there's two avenues that our people are going. One is that we are opposing what the city of St. Louis wants to do. Separately from that, we are also we've introduced with the help of broad support of political parties, a separate bill that would only deal with our project, like bringing the riverboat on land because it's much safer for everybody. That bill has a lot of support from all political sides, and it's moving now through the committees. We will see by the end of the session in May what kind of progress we're making. Great. Thanks again. Congrats on the Reno transaction. Thank you. At this time, there are no further questions. I would now like to turn the call back to Mr. Hoetzinger for any additional or closing remarks. Thank you, and thank you everyone for joining our call today. For a recording of the call, please visit the financial results section of our website at cnty.com. Stay well, everyone, and goodbye. This concludes today's conference call. Thank you for attending.