Good day, everyone, and welcome to the Century Casinos Q2 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 questions at any time by pressing the Star and one on your telephone keypad. You may withdraw your question by pressing Star two. Please note this is being recorded and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Peter Hoetzinger. Please go ahead. Good morning, everyone, and thank you for joining our earnings call. After our prepared remarks, we will open the call for your questions. My co-CEO, Erwin Haitzmann, and our CFO, Margaret Stapleton, will join me for that. Before we get started, we would like to remind you that we'll 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, whether 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 EBITDAR. 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 cnty.com. Our 2024 second quarter results were released this morning. We delivered net revenue of $146 million, an increase of 7% over Q2 of last year. The increase came from the addition of Rocky Gap in Maryland, as well as a good performance in Canada, offset by construction disruption, the poor performance of the Nugget in Reno, and the temporary closure of two casinos in Poland. Adjusted EBITDAR was $27 million, down 6% from last year. That is disappointing, but the results were also impacted by one-time transitory issues, namely the construction disruption at some U.S. properties and the temporary closure in Poland. As you've surely seen and heard from our gaming peers and from other consumer discretionary businesses, the retail customer, as well as the customers from the lower end of the database, are still relatively weak. Unrated play was down 10% throughout our portfolio. We believe this is mostly due to macroeconomics and wallet softness in our markets. We would anticipate as inflation comes down and relief in credit markets is coming, this will begin to shift back to entertainment spend versus need spend. To dig a little deeper into the quarter, we've seen months that are not as strong as others. April was pretty bad. In fact, April was responsible for all of the quarterly year-over-year EBITDAR decline. May was up almost 20%. June was down just a little, close to flat. Looking at segment results, we start with the Midwest, which includes Missouri and Colorado. Revenue of that segment was up 4%, EBITDAR was down 5%. With the disruption we experienced at Caruthersville in Missouri from the development of the new land-based facility, the team delivered another strong quarter. I'm happy to report that construction is progressing on budget and ahead of schedule, with plans to soft open in mid-November already. The new property will have a total of 74 hotel rooms and over 660 gaming positions, which is a 20% increase compared to the old riverboat and a 50% increase compared to our current temporary location. Our new facility will transition the Caruthersville operation from an old riverboat and small temporary location to a modern-style, land-based facility, adding significantly enhanced non-gaming amenities, expanded gaming options, and convenient parking for our guests. It will provide significant operational efficiencies and will increase our catchment area. We expect a strong uplift on the overall performance from that property, both in revenue and EBITDAR. Cape Girardeau saw a positive revenue trend based on an increased player count and a higher visitation rate. The hotel we opened at the beginning of the quarter continues to ramp. The number of occupied room nights increased sequentially throughout the quarter, with an ADR higher than budgeted. The team is in the process of fine-tuning operational expenses for the hotel and F&B operations to further increase profitability. In Colorado, our property in Cripple Creek continues to benefit from the new 300-room hotel that opened directly across the street from us earlier this year. Coin-in was up, table drop was up, and F&B revenue was also up significantly, all because there's higher volume of visitors in town. Central City, on the other hand, suffered a bit from the hotel renovation works, which we finished in June, and from a lower spend per trip. Our East segment includes the Mountaineer Casino Resort in West Virginia and the newly acquired Rocky Gap Casino Resort in Maryland. Because of that new acquisition, revenue of the segment was up 60%, EBITDAR almost doubled. At Mountaineer, the lower end of the database produced less trips as well as lower spend per trip. In addition, slot hold was down year-over-year. The good news is that staffing is no longer a significant challenge. We managed to keep all amenities open without labor, labor limitations. Results at Rocky Gap have been impacted by reduced number of trips, as well as a noticeable decrease in unrated play. We believe this is a combination of metro and local economics, as well as the continued growth of iGaming in Pennsylvania and West Virginia. However, we do see first benefits from our efforts to attract previously untapped feeder markets, such as the D.C. metro area. The property has also done a good job of capturing into our Winners' Zone database. It increased by 16% year-over-year. As the economy improves, that will be a great upside potential. Continuing to the West segment, which includes the Nugget Casino Resort in Reno, Nevada. The Nugget was the disappointment of the quarter, there's no way around it. We knew we had to deal with disruptions from renovation and refurbishment works on and around the gaming floor, but we did not forecast a 23% revenue decline. Yes, the hold on slots and tables was significantly lower compared to last year, but that would only explain a small portion of that decline. So we've made some tough decisions. Nugget has undergone a leadership change and is implementing right-sizing and cost-cutting initiatives to improve its performance. We have appointed Eric Rose as Senior VP and General Manager of the property. Eric is a 32-year veteran in gaming and hospitality, and previously served as our VP of Operations in Colorado. His career actually began in Nevada and includes leadership roles in F&B, marketing, and as general manager. Throughout his career, Eric has proven himself as a leader, dedicated to evolving outstanding hospitality, paired with exceptional financial discipline in highly competitive casino markets. With the appointment of Eric Rose to the Nugget's top leadership role, we are finalizing their transition and integration of that property and setting it up for future success. We've also upgraded the property with more than 120 new slot machines, a high-limit room, refreshes of two restaurants, a repaint of the exterior, as well as exterior and interior signage and display packages. Most of the transitional extraordinary expenses, as well as most CapEx and the disruption that comes with it, are behind us now. The property's entertainment and special events calendar for the next 12 months looks great. All of that makes us optimistic that next year we'll see substantial improvement and show the Nugget's full potential. Moving to Canada. Revenue in Canada grew by 5%, and EBITDAR was up 7%. All four of our operations in Alberta delivered a solid performance in line with our expectations. During the quarter, we saw strength from our core customer segment and continued stability in retail play across the Edmonton and Calgary regions. In Poland, two casinos were still closed during the quarter, one of which is a very important one in the city of Wrocław, which resulted in a significant drop in revenues. That casino in Wrocław has been re-licensed already, and will be up and running again in October. As indicated in our last earnings call, after the reopening, we expect to get back to normal levels quite quickly, and that's around $12 million in annual EBITDAR. The sales process is also progressing well. There's new momentum, with additional parties having expressed serious interest over the last couple of months. With that, let's discuss our balance sheet and liquidity position. We ended the quarter with $123 million in cash and cash equivalents, and $342 million in outstanding debt, resulting in net debt of $219 million. The main reasons for the decrease in our cash position versus the end of last year are the cash payments of $12 million for taxes on our Canada real estate sale, a $4 million one-time principal paydown of debt, as well as a $34 million investment in property and equipment. Traditional net leverage is 4.6x, and lease-adjusted net leverage is 6.5x. The leverage is elevated because of our recent acquisitions and investments. It will stay above the long-term range until we have the casinos in Poland and the land-based facility in Colorado still open. But from then on, it should ramp down quite quickly as we look to delever to about 3x traditional and less than 5x lease-adjusted for next year. We have no debt maturities until 2029, and we have additional borrowing capacity of $30 million under our revolver. We can reprice or refinance our entire term loan at any time without penalty, and as soon as the window opens, we want to act on it and improve our terms... Turning to CapEx. During the quarter, we remained committed to strategically investing and offering new amenities to our guests at our existing locations in order to drive future incremental visitation and spend. I'm glad to report that we are nearing the end of our elevated CapEx program, as we are finishing several projects in the second half of this year for approximately $13 million. We expect these to be solid investments over the medium and long term, and look forward to moving beyond the disruption challenges the properties had to deal with. For next year, we expect total CapEx to come down sharply to about $12 million, setting the stage for a substantial increase in free cash flow. We'll see that increase in cash flow from the casino reopening in Poland in October and the Caruthersville opening in mid-November onwards. Cash flow will be improving substantially from revenue growth due to the improved facilities, as well as from the major reduction in CapEx. The presentation posted on our website today shows you the bridge from negative cash flow this year to the positive cash generation of $1 per share in 2025. Shifting our outlook for the remainder of this year and next. Given the performance in the first half of this year, we are now projecting 2024 revenues of $602 million and Adjusted EBITDAR in a range of $105 million-$115 million. For 2025, we see revenues between $650 million and $675 million and Adjusted EBITDAR between $150 million and $160 million. As we look ahead, we are confident in our business prospects moving forward. On the expense and labor side, we will focus on operational discipline and continue to look for ways to become more efficient, especially at the Nugget. Again, we are still in a transitory period, but we have a clear plan to focus on generating cash to deleverage and opportunistically also buy back stock later this year and next. I want to reiterate our enthusiasm, especially for next year. We see results and free cash flow improving significantly once we have the Polish casinos and Caruthersville will open in just a few months from now. That concludes our prepared remarks. We'll now open the call for Q&A. Operator, go ahead, please. Thank you. At this time, if you would like to ask a question, please press star and one on your telephone keypad. You may withdraw your question by pressing star two. Once again, to ask a question, please press star and one on your telephone keypad. I will take our first question from Jeff Stantial with Stifel. Please go ahead. Hey, good morning, everyone. Thanks for taking our questions. Maybe starting off here on the revisions to 2024 and 2025 revenue and margin expectations, Peter, that you just walked through towards the end there. You know, can you just spend a minute sort of walking through some of the changes to the assumptions? It sounds like based on your commentary, that Nugget Casino and some of the stabilization work under there is a primary driver, but if you can just kind of walk through, you know, each of the drivers and maybe how much they contributed to the revenue revisions, that would be helpful as well. Thanks. Thanks, Jeff. Peter, can you say something to that, or would you like me to try and- Yeah, it's mostly Nugget and Poland, but as well, but the others as well, and with that back to you, Erwin. Yeah. I mean, we don't have it property by property, in terms of margin improvements. I don't know. Would you like us to go through it property by property, or how would- what exactly are you looking for? I think rank order of which properties are lagging our expectations and how that contributes to the forecast revisions would be great. If not, we could also follow up offline. Okay. Now, let's maybe start like that, Alberta is performing exceptionally well, and we're totally happy with it. We expect it to continue both for the remainder of this year as well as for next year. In Poland, which you cannot see the numbers, we're also very comfortable. Let me just give you one number here. If we're looking at same-store sales comparison of the EBITDAR of Marriott, Hilton, and the Łódź Casino for Q2, then if you only take those three casinos and compare Q2 of 2024 with Q2 of 2023, EBITDAR is up +71%. As I say, you don't see that because some of the casinos are closed, but once we're open again, and like Peter said earlier, we expect it to contribute with $12 million in EBITDAR again, like it did in the past. Moving maybe from east to west, geographically, at Rocky Gap, we did a few things that we think are very beneficial for the, again, for the coming quarters and for next year. One of them is that we, we have introduced a beach. We got the permission to use a part of, of the, of the lake in front of our hotel, as a beach, and we have a few cabanas, and that just, rounds up the... ...The product of the hotel casino resort very well. In Rocky Gap, we are mainly waiting for a cutting interest rate and for a change in the economic in the consumer's attitudes. The reason why we were hurt in the Rocky Gap mainly is because we lost the revenue mainly in our uncarded play, and the uncarded players typically are coming from a reach between 20 miles or so. And there is, you have to know that the average household income of the area there is about half of the average household income of Maryland. And that's something that I'm sure you've heard before from others, that in the lower end of the database this is where we're typically suffering. Mountaineer is a similar picture. The erosion came from the Ohio market and also from the mid-end and mid-tier and below. When it comes to Cape Girardeau and Caruthersville, we had increases in revenue, 6.7% in Cape Girardeau and 0.4% in Caruthersville, in spite of the fact that we're still in this very tight and small interim casino, just waiting to open the new one. We see that with the hotel that we open in Cape Girardeau and with the one that we will open in Caruthersville, we will be able to expand our reach, and that will be certainly beneficial for the numbers we are convinced to see in the second half of 2024 as well as in 2025. As far as Cripple Creek is concerned, on the top line side, we think that that's the most difficult one with regard to upside. As it stands, we're the only ones that drive the market here in Central City. There is nobody really that is helping the traffic there. But we think that, due to the fact that we have the prime position, together with our parking garage right in the center of Central City, this will be a market where we will be able to hold a stable $4 million-$5 million in EBITDA. Coming to Cripple Creek, on the other hand, the effect of the new 300-room hotel, as Peter mentioned, has been positive. We have very positive spillover effect, and we think that will continue also for the foreseeable future. Which leaves us coming back to the Nugget, where I think it's really this is the place where we have made and will continue to make the most significant changes. We believe there is still a lot of upside in the detail, and we are fully motivated together with the new GM, Eric Rose, to put that into action, from now on, hopefully seeing results soon. One thing to know is when you look at the Nugget second quarter, is that, we, the main reason for the significant reduction in revenues is that last year, we had significantly more conventions and exhibitions booked. So our group sales in 2024 was significantly less than last year. Now, with conventions and exhibitions, this is not something that you can plan, or work on for the next year, because most of the conventions and exhibitions are planned two, three years ahead. So, what you, the weak calendar of this year was not a result of our work, because when we came in, the plans, the sales were in 2026-2027 or so on. So we had to live with what we inherited, so to speak. Is that something like, an overview that you-that is helpful for you? That was extremely helpful and thorough. Thank you, Erwin, for all of that color. If I could just ask one more question, maybe for Peter with this one. You know, I heard your commentary towards the end regarding some potential opportunistic buyback as CapEx rolls off and we get into the back half and into early 2025. You know, at the same time, Peter, you know, there are rumors, we'll see how credible, but there are rumors of potential large-scale M&A amongst some of your competitors. Were those to materialize, that would likely result in some potential divestitures to satisfy antitrust. I guess, how do you think about, you know, balancing continued balance sheet improvement and getting to the point where you could be opportunistic if something came along versus, you know, taking advantage of some of the dislocation in the stock, as we're, you know, staring at $2.30 today? Any color there would be great. Thank you. Go ahead, Peter. I mean, it's pretty simple for us at this stage, depending on where the stock price is, but if it's around the area where it is these days, then we simply do not see any better casino investment out there for us than CNTY. Our focus clearly for the next 12-18 months is to focus on what we have, generate as much cash as we have, and then decide whether we use that cash for stock buyback or de-leveraging or a combination thereof. And at these levels, we don't see any better investment than our own stock. That's perfect. We agree as well over here. Thank you, Peter. Thank you, Erwin. I'll pass it on. Thank you. Next question comes from, Chad Beynon with Macquarie. Please go ahead. Hi, good morning. Thanks for all that commentary. You mentioned that April was, I think, most, if not all, of the EBITDA decline, which would, you know, tell us that maybe there was a little bit of an anomaly, and it sounds like you have measures in place to kind of fix certain issues. But maybe kind of getting back to the core of the business, is that unrated decline weakening? When do we start to face easier comps with that? And I think you talked about, you know, June looking better. You know, we're seeing some of the July numbers that are out that seem to be pretty stable. Is that unrated business weakening, which could hurt some near-term margins in the third quarter, or do you think the worst is behind us and most of that was felt in April? Thank you. I think it's fair to say we think that the worst is behind us. However, we are eagerly awaiting the first reduction in interest rate, which subsequently, hopefully, changing the consumer sentiment. Okay, thanks. So you think that that could be a catalyst for that consumer? Yeah, we think so, because on the higher end, we're doing fine, and the higher end is not so concerned with that. But on the lower end, where people even save with food costs, that's the area where the improvement is needed in the sentiment. Okay, thanks. And then as we think about the portfolio as it stands, given the revised guidance, has anything changed in terms of just urgency or view on potentially divesting something in the portfolio? Or do you still think that the current portfolio makes the most sense when you kinda come out of this and start driving free cash flow in 2025? Yeah, Peter, why don't you take that? Yeah, Chad, as you've said, we are in the process of selling our Polish operations, and we'll then reassess. But certainly, we have some operations that are today a bit problematic. We have initiatives going on to improve, and depending on the outcome in the next six months or so, we will reassess our portfolio. And I don't want to exclude really anything, so, but Poland first. Okay. Poland could be, you know, given the strength of the same store results and some of the renewals, could that be something in the next 6-12 months? Yes. Great. Okay. Thank you both. Appreciate it. Thank you. Thank you. Our next question, Jordan Bender, with Citizens JMP. Please go ahead. Hey, good morning, everyone. I kinda wanna continue that last conversation. For the Polish assets, I think the lease duration term sits the longest that they can go as we sit today. Have you seen any uptick just in terms of interest? You know, I know it's been maybe for sale for a couple of years now, but with that duration, have you seen more potential buyers kind of enter the picture now that we're kinda hitting that sweet spot with the leases? Peter? Yes. Yes, we have. We have, Jordan. It is a result of what you just said, the lease terms are pretty favorable right now. It is also, because, as Erwin said, the results of the casinos that have been open last year and as are open this year, this April to April comparison is very favorable. And also, the other interested parties have finally realized that the war in the Ukraine just doesn't have an impact on, not on players or suppliers or employees. And all of those things together has resulted in almost a handful of new parties that came to the table recently. Got it. Thank you. And then you kind of mentioned that you, you could be losing some customers to some of the iGaming states. You know, and this is a totally different direction, you know, for the company that you're kind of currently ongoing. But, you know, could you see yourself potentially like white label, some form of online gaming platform, very low cost, just to kind of capture some of those players around the edges, you know, whether in West Virginia, or even, you know, sports betting in Colorado, just to, you know, again, capture some of those players that you think you might be losing? Peter, you want to go? That's something that we are considering every now and then, and, and that, it's certainly in the cards, yeah. It's certainly in the cards. Got it. Okay. Thanks, everyone. Thank you. Thanks, Jordan. ... And once again, that is star and one for your questions. We will move next with J.P. Waters, Private Investor. Please go ahead. Hey, good morning, everyone. Thanks for taking my call. I think it was Peter, you mentioned the convention business at the Nugget, that's forward-looking 2-3 years out, and that we kinda had a gulf there with nothing, which hurt the results. Can you give us any kind of outlook as, you know, since it is so forward-looking, what does that look like for the really, for the next 2-3 years as far as bookings go? And then I have a follow-up question. It was me, Erwin, who said that. At the moment, it's too early to give you an outlook. I can say it looks friendly, but we couldn't give the numbers at this point in time. Okay, great. And then just, Oh, go ahead. Sorry. Yeah. I want to say what you could add is, in addition to the convention and exhibition business, another driving factor is also the concerts that we're having either in our outdoor venue with 8,555 seats, and also indoors in winter, with 2,000 to 2,500 seats maximum. And we are very actively working also on having a significant, a more condensed schedule of concerts. And some of that is happening already for the remainder of the year and also more next year. A reason for that being because these are events that can be planned with a much shorter lead time. Great. Thank you. And then just I have two questions, and I'll just listen. So just, if you can, give kind of a commentary on the Reno market as a whole, and obviously, we weren't pleased with our quarter at the Nugget, but, you know, what does the market look like in Reno as a whole? And then also just an overview question. I've been a shareholder, gosh, off and on, really, since you guys became public, believe it or not. And I still have a hard time... If you can just kind of speak to your ethos of, you know, what are we good at, right? Do you guys look for undervalued properties, where we can put some CapEx into it and improve it? Or, you know, kind of give me just what is our moat, what is Century Casinos good at, if you will, and I'll, I'll listen. Thank you, guys. Okay. I'll answer the first question, and I hand over the second to Peter. The Reno market is a highly competitive market with very experienced operators in the market. And it's to an extent has to be seen not only as the call it half a million people that living in the Greater Reno area, but also in the catchment area mainly people mainly coming from the northern part of California, Sacramento, San Francisco. And quite recently, the hotel market has been really weak, and we and I think probably our colleagues would also attribute that to the economic situation at this point in time. Peter, maybe you want to take the second question. Yes, thanks, thanks for the second question. Over the many years, we have started mostly with developing our casinos from the ground up. We've did that in Colorado, we did that in Canada. Smaller properties, though. And as we move into larger units, as we move into bigger size, bigger markets, we have focused on trying to find value acquisitions, properties that are a bit neglected by the current ownership, and then try to improve. We've started that process in 2019, when we bought three casinos from Eldorado, which is now Caesars, and that was exactly what we were looking for. Those three properties were a bit missing the love and attention from ownership because ownership, previous ownership had bigger fish to fry. And so we took them over, and that was a success from day one. All three properties increased revenue and EBITDA under our operation, even though Eldorado was, at that time, and I think still are considered to be very, very good operators. So it was an excellent success. And then we had to close because of COVID. After opening, it was even a greater success. We tried to do similar things with the Nugget and Rocky Gap recently. We still think those two properties have the same upside potential. It's the problem is that, as you may know, in order to acquire the Nugget, we took out the Term Loan B, and we did that a few weeks before Russia invaded Ukraine. And, yeah, and then interest rates went up, and that did not only hurt our interest expense, but also, as Erwin mentioned already, a good portion of our customers are suffering from high interest rates. So that was a bit of a double problem for us, both at Nugget and Rocky Gap. In any case, we still believe in the potential of these properties. It will just take us a bit longer to create the same success story as we did from 2019 with the other three properties in Missouri and West Virginia. Got it. it. Thank you. Thank you. We show no further questions at this time. I will turn the call back to management for closing remarks. All right. Thanks, everybody. We appreciate you joining our call today. We'll talk again after the third quarter. Until then, thank you and goodbye. This does conclude today's program. Thank you for your participation. You may disconnect at any time.