Good day everyone, and welcome to today's Century Casinos third quarter 2022 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 questions at any time by pressing the star and one on your touchtone phone. You may withdraw yourself from the queue by pressing star two. 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 call over to Peter Hoetzinger. Please go ahead. 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 certain 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 the various risk factors in our SEC filings and 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. The considerations of our non-GAAP performance and liquidity measures to the appropriate GAAP measures can be found in our news feeds 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 third quarter, and after that there will be a Q&A session. Our third quarter results were up against the record performance of last year, which was fueled by lifted COVID restrictions and lots of pent-up demand. Thus, while on a sequential basis, revenues were up, compared to last year, revenue and adjusted EBITDA were down 4% and 15% respectively. A large part of the decline is due to the extremely dry weather conditions affecting the water level of the Mississippi River. Low water level issues at our Caruthersville, Missouri operation started in August and triggered additional expenses for dredging and caused serious issues for access, the steepness of the access bridges, and the transition from the barge to the old riverboat. In addition, the dry weather kept farmers, which are a large part of our customer base, busy on their fields and farmlands for much longer than usual. As a result, the Caruthersville casino's revenues declined 14% compared to Q3 of last year, and that alone was responsible for around half of the company-wide revenue decline during the quarter. In addition, we incurred considerable costs in connection with preparing to integrate the soon to be our Nevada and Maryland operations. With the headwinds in the economy, we also saw some evidence of slight changes in our customers' behavior as the lower ADT segment has cut down on the number of trips across all our North American properties. Importantly, spend per trip from our mid and higher ADT segments held steady. That play from our core customers is the foundation of our success, and this segment in particular continues to grow. It also helped to offset year-over-year declines in spend from retail customers, which was at elevated levels last year due to the stimulus payments. On the expense side of the business, our teams are effectively managing the overall cost structure while dealing with the inflationary pressures that exist today. The promotional environment across all our markets remains relatively stable. It's pretty disciplined and rational for the most part. Not much has changed in the last several quarters. Total marketing spend continues to remain below pre-COVID levels. Of our U.S. operations, Colorado was leading the way with revenue growth of 8% and EBITDA growth of 6% compared to last year. We've not seen any effect on revenues due to inflation. However, we are affected on the expense side with higher costs for utilities, repair and maintenance, as well as operating supplies. Cripple Creek increased in all carded play analytics, with the exception of average number of trips decreasing slightly. This may be due to high gas prices. However, spend per trip has increased. The Cripple Creek market continues to remain flat year-over-year, but due to our consistency in marketing and continued emphasis on customer service, we continue to gain market share. In Central City, average spend per trip remains flat, and we are not seeing any inflationary effects on patron spending. In West Virginia, our Mountaineer Casino, Racetrack & Resort saw a slight revenue decline compared to Q3 of last year. The number of trips to the casino was down, especially from younger customers in the lower ADT segment. Sequentially, however, looking at the last three quarters, the trend is up. We grew from Q2 over Q1, and again Q3 over Q2 in both revenue and EBITDA. We've experienced some staffing challenges at Mountaineer, resulting in some limitations to hours of operation and availability of hotel rooms. Moving to Missouri, where coin-in volumes remained strong during July and early August, but began dropping off during the second half of the quarter. There, it was especially the older demographic, 70+, and the lower ADT segment, which cut down on trips. Economic and inflationary factors may play a role here. The dangerous water level issues at the Caruthersville boat and the dry weather around the farmlands this year didn't help either. We saw revenue decline compared to the record quarter we had last year. Since last month, in early October, we actually had to close the part of the casino that sits on the riverboat, and we operate with a limited number of slots and tables on the barge only. The good news for Caruthersville is the fact that we did receive approval from the Missouri Gaming Commission a couple of weeks ago to relocate the casino operation from the barge to an existing land-based pavilion, which is not affected by water levels and is protected by a flood wall. We are allowed to operate the casino in that pavilion until the new land-based hotel and casino development is complete, which we expect in the second half of 2024. The pavilion provides much easier access to the casino for customers, and we anticipate it will also bring operating efficiencies and cost savings. We expect to move the operations from the barge to the pavilion next month. Last week, we also opened a small 36-room hotel. We call it The Farmstead Hotel, which we bought last year and completely refurbished. It is conveniently located close to the pavilion and the parking. In our quarterly presentation of the results, you find a description as well as a site plan and pictures for better understanding. For the new land-based hotel and casino development in Caruthersville, construction began two weeks ago on the new 27,000 sq ft casino and 30-room hotel. The total budget increased by 10% from $47 million- $52 million. Once the new casino hotel will be completed, the temporary casino in the pavilion will move to the new casino and the new Century Casino Caruthersville will then have a total hotel room count of 74 rooms in two hotels, one directly connected to a casino and the other one, the standalone opposite the pavilion. The new casino will have 20% more gaming positions and provide significant operational efficiencies. It will be much more convenient for our customers, and it will also increase our catchment area. At Century Casino Cape Girardeau, the larger of our two Missouri casinos, we have started construction of a 69-room, 6-story hotel building. The project is expected to cost $31 million and be completed in the first half of 2024. This development will transform the property to a full resort destination, providing ample reasons for individual and group multi-day visits for many different purposes, such as gaming, dining, conferences, concerts, and more. Moving north to Canada, the Century Casino and Hotel in Edmonton had revenues decline by 7% due to construction works on the main road fronting the casino and due to lower slot hold. Both of our racetrack casinos in Alberta, Century Mile and Century Downs, saw solid revenue growth of 9% and 4%, respectively. Utility costs are up 17%. The cost of goods increases could only be partially mitigated by price increases. Q4 has started really strong for Century Mile and Century Downs, with both properties posting all-time record results for the month of October. Our casinos in Poland continued their great performance, with revenue up 25% and EBITDA up 34%. Results in Poland are consistently strong, which also helps the selling process and has led to renewed interest from smaller European casino groups and private equity investors. Anyway, there's no time pressure on our side, as we have an excellent management team in place at Casinos Poland, and there's no need for any CapEx or investment from us. Quite the opposite, cash is flowing from Poland to us. A quick look at our balance sheet and liquidity shows that we have $100 million in cash and cash equivalents, plus the $100 million which we keep in escrow for the closing of the Nugget OpCo transaction once the Nevada license agreement is complete. Outstanding debt totals $367 million, which includes $348 million under the Goldman Sachs credit agreement, of which $100 million is in escrow for the Nugget, and $14 million related to a long-term land lease for Century Downs in Canada. During the quarter, we were also very busy on the M&A front. In August, we announced the acquisition of the operations of Rocky Gap Casino Resort in Maryland for $56 million. Simultaneously with the closing of that transaction, VICI Properties will acquire the real estate assets, and we will amend our master lease with VICI to add the Rocky Gap property. The initial annual rent for the Rocky Gap Casino will be $15.5 million. The purchase price for the casino operation represents an implied 2021 EBITDA multiple of 4.9x. This multiple excludes any potential cost synergies and operational improvements. We can deduct annual rent for the regional lease from EBITDA. This acquisition is expected to be immediately accretive to our earnings. What we get is a full-service resort less than a twohour drive from the Baltimore and Washington, D.C. metro areas, and includes an 18-hole golf course designed by Jack Nicklaus, a 5,000-sq ft event center, several meeting spaces, a spa, and several outdoor activities. The property consists of over 25,000 sq ft of gaming floor, 630 slot machines, 16 table games, 198 hotel rooms, and five food and beverage venues. The transaction is expected to close mid-2023, subject to regulatory and governmental approvals and customary closing conditions. In Nevada, we already invested $95 million and now own half of the Nugget Casino's real estate. We will close on the purchase of 100% of the operating company as soon as licensing is complete, and that'll cost another $100 million. We continue to be very excited about the Nugget transaction, and we see considerable upside once we operate it. With the Nugget, we purchase an existing operation with a long operating history. We do not expect any extraordinary replacement CapEx for the first year. Some upgrading parts of the slot floor and improvements to the facade. The acquisition also offers good potential to generate synergy effects as we integrate that standalone property into our portfolio of 17 casinos. With the pending Rocky Gap and Nugget acquisitions, we will oversee a portfolio that reaches from east to west in North America. On a pro forma basis, after giving effect to the two acquisitions, we expect to generate approximately 95% of our EBITDA from our North American casinos. With these opportunities for growth throughout next year and beyond, we are confident our company is very well-positioned for continued long-term success. We will continue to execute on our business plan by growing organically and by identifying and acquiring promising assets in stable drive-through 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 acquisitions and recognize value. On behalf of the company's management and board, I'd like to thank our team members, our guests, and our stockholders for continued loyalty and their enthusiasm. I thank you for your attention, and we can now start the Q&A session. Operator, go ahead, please. Thank you. At this time, if you would like to ask a question, please press star and one on your touchtone phone. You may withdraw your question at any time by pressing star two. Once again, to ask a question, please press star and one on your touchtone phone. We will take our first question from Jeff Stantial. Please go ahead. Your line is open. Great. Thanks. Good morning to you, Erwin. Thanks for taking our questions. I wanted to start with some of the commentary in the prepared remarks on the lower worth demographic that it sounds like softened a bit more recently in the quarter. You know, you talked about the impact across the broader North American portfolio. Is there differences in terms of how much you're noticing that asset by asset? And then can you just talk about the timing there? When did you start to notice some softening there? And, you know, has anything changed, you know, with the October trends? Erwin, can you give some color? Yeah. We do see some differences, not exactly the same everywhere. That softening started in the third quarter. In the meantime, for the fourth quarter, we are doing things trying to mitigate. To give you an example, for example, in Mountaineer, we increased the number of hotel room giveaways for the weekend. We count more, we have customers where we clearly see that they are worth being counted, also in that, in the upper range of that lower bracket. Also we are doing a car giveaway, something that we haven't done before. Indications are that this is very well received from what we see from the October numbers. Okay, great. That's helpful. Thank you. Moving to Missouri. The budgets for both projects came up a decent bit. Can you just frame where you're seeing the most cost pressures and if you think the revised budget should prove ultimately to be the right number? Just how are you thinking about the return profile now with the total budgets ticking up a bit? Yeah, they went up about 10%, 10%-11%. It came from pretty much all sides. But we are extremely confident now that it's also. We have also that in writing. We have agreements with our contractors and developers that are locked in. In terms of return, Cape Girardeau hotel return between the low teens% and Caruthersville around 15%. That's where we are, where we see it coming. Great. That's helpful. Thank you, Peter. If I can just squeeze in one more on the disruption with the low water levels in Caruthersville. Peter, you gave some context for how to think about the impact to revenues at the property. You know, can you provide similar way to think about the cost impacts? You know, you talked about some higher operating expenses, but just any way for us to quantify and think about how impactful that was during the quarter and maybe any thoughts on how impactful it should improve in Q4 as well. Thanks. We don't have an exact number on the EBITDA side there. Do we have it? It's like more than half. Is that what we believe, right? Yeah. In that range. Yeah. Yeah. Great. Understood. Very helpful. Thank you both. I'll pass it on. Thanks, Chad. We will move next with Chad Beynon. Please go ahead. Your line is open. Hi, good morning. Thanks for taking my question. Wanted to ask, I guess, kind of a medium or long-term question. You guys have been successful and you're currently in process of building the portfolio. Where do you think the portfolio can get to in the next couple of years? Or I guess asked another way, you know, are there still opportunities out there and given your arrangements with, you know, your REIT partners, should we continue to expect, you know, maybe one acquisition per year to kind of build, you know, the free cash flow levels, where you start to gain even greater scale? Thanks. Hi, Chad. Hi, Beynon. We do see quite a number of interesting properties out there that would fit very well into our portfolio of assets. In that range of say $15 million-$50 million in EBITDA, there are not too many buyers out there because it's way too small for the larger groups. We believe we are in a very good niche. Yes, we do have a very good partner in VICI. Let me also say that other property or real estate investors are also knocking on our doors. There is, we believe, for the next two, three, four years a great deal of M&A activity ahead of us. Whether it be once a year or two every other year, that's, we look at this a little bit on an opportunity basis. That's the great opportunity out there. Great. Thanks, Peter. Related to that, how are you thinking about the optimal debt leverage or lease-adjusted leverage, particularly during times like this when interest rates have risen? Yeah. At the moment, I think we are at the leverage level that is okay. As we said, we are in the process of selling our Polish assets. We can use that to pay down debt. We believe that that's the right move. We also do own Colorado assets. We own the Canadian assets. Not to say that there's any need to do anything with those, but we could if we wanted to. Currently our net debt to adjusted EBITDA ratio is 3.4, and lease-adjusted net leverage, if you use an 8x multiplier, it's 5.5. We believe with the projects that we have on hand in Missouri and also Mountaineer and Rocky Gap, we will be able to bring that ratio down and we feel quite comfortable with that. Sounds great. Thank you very much, Peter. Best of luck. Thank you, Chad. Thank you. We will move next with Jordan Bender. Please go ahead. Great. Thanks. Thanks for taking my question. In Poland, in local currency, it actually looks like your margin was one of the best in maybe the last six or so years. I was just kind of wondering, you know, what's kind of driving that strength? Looking forward, should we expect, I guess, a low double-digit margin within that segment? I think we see no signs that these numbers would not be sustainable. We think they are sustainable and everything points to us being able to keep those numbers, and we also see potential to increase them further. It's hard to pinpoint the reasons down to one. It's a multitude of reasons. I think overall what can be said is finally the very strong local management that we have there, all their efforts came to fruition, and then just show better than it's just a year where we could compete even better than before with all those local competitors. We're really happy with the team, and as we said, we think this can continue and go further up. Great. Turning to Canada, kind of a similar question. You know, coming out of COVID, I guess margins were choppy, just kinda given, you know, COVID reopening and then reclosing and reopening again. As we think about, I guess, the business in 2023, I guess where should we think about margin levels maybe being sustainable or where should they be trending as we think out into next year? You have some color on them? I would say, in very general terms, we should be able to sustain the current margins and in various properties for good reason be able to increase them. For example, in Missouri, as we talked about the changes there and the improvements to the properties that should improve and increase our margins relative to 2022 back to old levels. In Colorado, probably, it's where we're, so to speak, margined out. We are doing very well already there. I think, again, we consider this to be very sustainable. Again, excellent management there. Mountaineer, we're working hard on crawling up step by step. It's harder in Mountaineer because the gaming tax is very high, so this cannot be compared to a low tax environment. Again, we feel solid. We have a very solid base, and we should be able to increase there as well. Okay. Just to follow up on that, just to confirm, I mean, you historically have done below 30% EBITDA margin. You think getting back to that level is achievable over the next couple of years in Canada? Yeah, I think that's not unrealistic to assume. Okay. Great. Thank you. In Canada, one thing that works for us is that the energy, like, the oil prices are high, and with a certain time delay that always is then reflected in the entire economy. Okay. Thank you. Thank you. Once again, it is star and one on your touch-tone phone if you would like to join the queue. We will move next with Ed Engel. Please go ahead. Your line is open. Hi. Thanks for taking my question. Just wanted to follow up on that last one, just regarding margins and I guess, cost inflation. Just on the overall cost inflation side, whether it's utilities or labor, I guess I wonder what you've kind of seen over the past couple months? It looks like generally OpEx across your properties is flattish quarter-over-quarter, minus maybe Canada. Just kind of wanting to wonder what you're seeing in terms of increases in OpEx. OpEx does indeed increase, definitely. So far, also across the board, I think our management has been very skillful in finding ways for this by trying to find even further ways to save in other areas. With regard to staffing, as Peter also earlier mentioned, it can be challenging, like at Mountaineer, for example. Again, I mean, this won't go on forever. We were able to operate well even on, say, higher salaries but slightly lower staffing levels. Great. Thank you. Thank you. We will move next with Daniel Hong. Please go ahead. Hi. Thanks for taking the question. Just a quick one on the Caruthersville and Cape Girardeau projects. Is that intended to be funded entirely out of cash on hand, or do you have financing lined up for those projects? The hotel project in Cape Girardeau, we finance with cash at hand. For the one in Caruthersville, we have not made the final decision, but it will be several like cash on hand and financing sources. Thanks. Thank you. We will move next with Chris Stoll. Please go ahead. Your line is open. Yes. Hi. Could you please focus and simplify? I'd like you to identify the one, two, three critical variables that we should monitor for corporate earnings modeling in the fourth quarter and then going into next year. Thank you for answering my question. Yeah. I would say that the progress in Missouri is an important one to watch as we've seen in Q3 what kind of an impact that has. Continued success in Colorado is very important. West Virginia is sequentially on a great path as you said, and we would like to see that continue. We watch those two markets with high interest because they are very critical to our success. Are you providing any guidance with regard to sales or really any of the key parameters of the corporate results? Oh, no. We historically the company has not provided guidance. We have a handful of excellent research reports that are out there on CNTY, and I would encourage you to get a hold of one or more, and read through. Okay. Thank you. It appears that we have no further questions at this time. I would like to turn the call back over to Peter Hoetzinger for any closing remarks. 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. If you have any follow-up questions, please feel free to reach out to us. Stay well, and goodbye. This does conclude today's program. Thank you for your participation. You may disconnect at any time.