Century Casinos (CNTY) 5 Aug 222022 Q2 Earnings call transcript

Greetings, and welcome to Century Casinos' Q2 2022 Earnings Conference Call. This call will be recorded. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. I would now like to introduce our host for today's call, Mr. Hoetzinger. Peter Mr. begin. may you Hoetzinger,

well morning, everyone, call. Co-CEO joining earnings Haitzmann; you the Margaret Financial Stapleton. and me on thank as Erwin With Casinos, my of for our the Chief Chairman Officer, our Century Good as call and are

to update forward-looking we discussion and we in the company provide or would revise to result factors that uncertainties The of statements, filings, always, detailed a or forward-looking no otherwise. will encourage actual whether remind you results we materially like new of may a events you from statements. risk SEC and before As as discussing several the to forward-looking risks to various obligation information, review that differ our future our be undertakes filings. information begin, we which involves cause We these

and refer the call, Reconciliations adjusted non-GAAP In to measures non-GAAP we measures, throughout SEC our filing be can to, at After of section to site, there addition, quarter. Web limited but provide EBITDA. in found the a release I'll be session. of including, appropriate the Q&A measures several our in will now results our GAAP overview liquidity not and our cnty.com. of an financial performance that Investors second of available the news

two impacted net shareholders last the were per for to XX% compared quarter that EBITDA. last adjusted quarter results this year. quarter quarter to generated We year. record throughout our recognized Basic We was that grew performances record second and the shown second earnings adjusted second Our attributable quarter. of revenue EBITDA have continued the record-breaking second up earnings streak we quarter and $X.XX. XX%, share items of Revenue

rate July, on run and also not oil be to drive-through August. meaningful expenses behavior continuing. and of XX% with loyal markets has customer only not In into margin. payments, [Ph] we've [bail] considering valuation price trends comparing to Macquarie moving government this our impact volumes. and Not the continued benefit. and to XX%. not resilient had core a managed The to First, structure streamlined extremely interest it now up at U.S. adjusted to costs are momentum expected first-half basis, pre-COVID the spend even The due part. and margins, million locations from heavily a below to to continue rational, has contributed proven X%, EBITDA quarters. macroeconomic quarters. changed performance call its direct noticed resulting challenges, facing gaming in so, base, the fueled deferred some And for of remain in prepayment any negative off we disciplined year QX The I'd resilient, operating promotional focus in year's much several compared have continues On so spite the financing higher still $X.X EBITDA stimulus quarter and strong the last shift $XX.X in look expense. secondly, hyperlocal a changes experienced diversity in forwards. to considering CPI. portfolio, sustainable last up was was million customer and the maintain allowance at us an in continue released with geographic was revenue a credit agreement, as on we seem income stable, The we cost customer Marketing to second but we same promotional be year, wrote of and our costs the of we we and all Even most tax by customer appear any the is results environment advertising, and our Reductions year, our last of allowed and levels, current across in in the remains relatively previous sequential markets to the to pandemic,

We behavior; not has underlying two have since we ago. reopened confidence of trends it years changed high our in customers' the

Virginia, operations results, U.S. saw Missouri X% payments of over is this in reason The decline Missouri. and greatly Our main Colorado, year. in supported which the last West received an QX last revenue stimulus customers our for last year's year, particularly

properties closer Missouri While most we better than year, last at a results reveals when that other fair Missouri pre-COVID to look comparing current if with compare our casinos results have the times. better done

were unable stimulus the early-'XX. Missouri year. to XXXX and benefit or Therefore, released into normalized Missouri in last maximum Our Those over carry generate did revenues casinos time, the because numbers the volumes little with increased Most in money operations at limited, and COVID extraordinary or exhausted, locations also year government this last throughout COVID from year. restrictions restrictions late-XXXX Illinois saw last Through continued payments, the that stimulus with the money casinos revenue and by as growth our not our year entire the And was XXXX. this were ended, growth of record-breaking other of therefore year. continued were properties, that in casinos restrictions casinos and these significant impacted less 'XX. stimulus

year. performed in differently casinos all So, all, regional last

compared new their is our XX% they generated about What's compared year, a spend came that and increased Missouri. X% overall properties, an to We not winter increase, we interesting of some that half the but revenue this the year, the in by year. from visit year, with year last most larger has see also checks. and actually did to about all experienced the headcount the retain XXXX from who very growth last our is others While others still stimulus we were of keep to last regulars we decline from last experienced to casinos able patrons to

of third hotel from July year restriction higher up, during as impact continues strong The COVID and in revenue. last the betting, so the mutual] continues outlook seems after to is numbers. EBITDA as iGaming, came Other quite Adjusted upside the patron sports project almost had it and prior revenue levels. and quarter year the of reached the is four been August, [Ph], So, a else [para for And XXXX second-half revenue compared to the revenue, the beginning to F&B than including there for stimulus Canada, that QX [Indiscernible] positive. remain year. do year. lifted. operations everything and to it good so some per quarter strongly had back these we all far of heavy off last In in as tapered well normalize gaming was

potential and of couple staying keen last while to of the the which many shutdown not in full yet years. of outdoor because festivals have travel out home, We couple a of attend were events, [Ph] after seen [opera] years are people

Our casinos in over Poland continued XX% XXXX. to XX% EBITDA with revenue great and up performance

difficult in I investment issue in strong, consistently find need to for the opposite right there from most management excellent is is the us it’s Casinos timing offering And CapEx as we really Poland Poland any at have no Ukraine. results place cash Anyway flowing buyer us, the are or quite from Poland. now said important team price is us. While for not as the attractive the to an a of war because an further, in

Let’s look liquidity. our now at balance and sheet

now long to Nugget OpCo escrow $XXX are in and of on $XX million in million and a which which, Missouri million commentary some growth we Racetrack Downs Credit working licensing is Century related reported. once Nugget Canada. debt equivalent $XXX our Outstanding escrow our and for And projects, for term totals expanding $XXX agreement. in includes million already million in both plus cash We on have cash as which the closing Goldman lease the for the is million keep land Nevada transaction complete. $XX operations we Casino under Of $XXX

a more significant into governor open it During Senate It will be on efficiencies, as newly convenient on casino a casino and the Missouri. effectively hotel. remaining us The development catchment quarter area. passed provide XX% will increase bring in new casino much on with positions is and operational to XXX customers, Missouri water Toronto our a city June well our include riverboat gaming for utilizing as will law designed more allowing would riverboat non-floating the the last structure. land signed Toronto X, Bill

preparations with of the complete minimize budget order in timeline chain $XX construction are the optimizing project a While to challenges. sustainably considering million, for we supply are

construction. own $XX the on principles actually Cape the intent Girardeau. preparations to hotel Planning, are key budget and million of investment Nevada, Our based in and on to decision high a at discipline same now the final high return is real deliver In of when Nugget on is Casino’s design, estate. the this a finished. half commence already investment. invested we return and guiding casino our project A substantially are in project with It

We operating under of XXX% company. [indiscernible] will close of the

will As be $XXX we million soon in have as escrow already. another that licensing is complete which

We are it. see excited upside can and the very transaction operate considerable about Nugget we once we

any is than With also synergy no history, no other the replacement as risk [Ph]. next of expect [Ph] casinos. integrate into the improvements the standalone good that, generate is Deposition to development parts like and portfolio extraordinary XX existing property risk [slope there anything repurchase Nugget no potential or some there reps] effect in means upgrading construction CapEx to the and cost of long that we risk, do operation of operating years We delays that [or floor] offers our of facade. and

company next long opportunities are beyond, we year our for growth well is these With confident for term and continued success. positioned throughout very

our another was performance company team. entire quarter of great and Second the

growth. generate sustainable robust uncertainty headwinds had showing facing tight near of across our the period record focus Our continued benefit from We customers are Unemployment lows our well. is EBITDA country. there positive a recognized continue are we producing operating strategy diversified And spend are strong and our to growth. But on Consumers strong to And continues entertainment. some right signals with wage portfolio the business. on willingness economic customer margins. and to a as

far quarter Our the continues customer Especially remains perform database, in three the end with to so customer well. and the centric of truly gaming August high what the over second consistent at July we the seen last into in trends quarters. and have very

these gas Our chop cost both prices wages management our good chain costs, to the they issues, in for job managing are teams through signs growing services it, strong supply an are said Having market deliver and done us to excellent are of expenses, higher continue labor and have customers, increases a results. our is also utility increased customers. impacting and mean and and encouraging, all our there flipside they that, strong but challenges, local a goods

the the higher year across this are Our of second margins business. QX from increased last same during experiencing despite even quarter stayed we and as companywide the year cost the

growing by markets our acquiring and plan will business pricing and and in stable U.S. prudent by the identifying asset organically will drive and remain We we execute strategy, regulation. through to continue on our promising with In M&A

dedicate to digest We our deploy to resources synergies are to to find acquisitions capital strong and will capture and value. recognize the our consistently manner opportunities time provide discipline to value. build in and we shareholder sheet, With balance further continue confident to a

of thank behalf go like our session. the stockholders loyalty now our team Board, members, Operator, I company’s enthusiasm. for to would the Q&A On can management please. the you attention our and and ahead and for I your we their and thank continued start guests,

ahead, this time, go Ladies your is conduct open. [Operator Stifel. first question-and-answer is gentlemen, Jeff the now with Stantial will at question session. you. line and from Our Please Instructions] Thank we

top good I month-by-month as everyone. April sequential was any quarter. the in versus bit Starting Poland? with on nice either Any morning, through just [indiscernible] in directions notable June, congrats, well, changes day, progressed through Hey, breaking and U.S. results respect a on of to Good off, more versus the drill hoping margins, as Thanks. line helping to cadence the here. of set into out everyone, you either and or Canada color

that, do Erwin, any on we quarter Erwin? have the how data progressed?

is qualitative fine have the numbers hand. on if as High-level well you don't

to states, if shall we question through I but [indiscernible] for by into know I then all with, them you the of property, don't numbers, the you? go them? the all how property more is much begin have group to Why would -- if that's like into go and by I fine

things up, makes by and then -- that get I -- it progressed kind pressures of more is fine, by feel quarter, did more better it get just was qualitatively, consumer, worse, off, the wondering drop how picked the the cost Yes, just did sense. or like through qualitatively region if

sure, Yes, sure.

we $XX.X that $X.X Virginia, in $X.X $X.X million, moving million, Canada on went to north $X.X million, and million and million went in Poland, net for $X $XX from In million April, July, April, so made we taken million; for in in around rather, of So, $XX.X revenue; $X.X $X or and million; enough May, in in million May, and $X.X with is and -- million. $X operating made is in then we further June, and that's from in good $X.X West of in you we million. million, operating $X.X $X.X million, and and June, million. $XX.X to in in 'XX -- $X Missouri, in And always $X.X net $X.X of again, million and north In April, in than in million, being significantly July June, Canada, around of $X That from XXXX, more revenue. Is $X July. July, million, million million far? May, July in million million north for this $X.X of million,

we it encouraging into Yes, top trends the could on July, there really leave specifically. line, Yes.

-- Moving

Jeff Thank -- you,

Moving yes, on to thank my you, follow-up Erwin. --

to at Could are Peter, Cape it two things do is the raw -- get the into Girardeau. the of projects? wanted over the [indiscernible] are Caruthersville you're hedge talk the projects, pressure of extent pressures just it, of points the on change what of to to Moving the a you from drill exploring once hotel on materials, the and some chain right and comments where as call what nimble end pressure further things follow-up, supply kind potentially about it are perspective, at your your staying the now the labor, I at certain points is help, moment, on my inflationary started, course what's to kind and you different the

of already. a not material, clearly and point not -- the the the is pressure both available not maybe even available, necessarily The availability something not them it's The but for Right. speak, one, two Labor price. would to be more suppliers time -- go, is of pressure may bit see where the with regard is all week-to-week our an the ready to but little a think is then so from the come we challenges then going to making down higher think of going, the diligent is material and the approach we assessment is prices sort when seen to at the that a waiting really And not we high-cost right but on price. the and are peak we price And assessment chain problem, here. supply [indiscernible], we week-to-week look have time, of and so start. already, then

thank squeeze you. Perfect, then, if helpful, could more. that's I very one And in just

of clearly On the was the assets M&A of back the the in public or terms on sellers appetite stable? of expectations you M&A early and feel Would U.S. all feel collapse at whether COVID, seen on sales some has at number direct environment in a there's of do things you through sellers at in flowed present, go that the the from fairly the or market? does say like going there that, number Thanks. that markets to table if we've markets, that consequence came the year-to-date a the pressures it of

Just it's do mean thing, I the the very fairly stable, very, namely holding see the regional up holding, customer nicely. operators trends all are that still same

trends underlying -- because So, come sales there not out multiples also sorry, there. are the has no down solid. Marching significantly prior are very

out us. So, properties compared there. three there to stable It's not or very ago. a But we it's out pretty two environment. three see years too two, quieter a There's do for much bit interesting

both. Perfect, you encouraging. helpful and Thank

Jeff. Thanks,

Thank you.

go Engel question Capital. Edward the ROTH with from is Next ahead. line Please of

open. is line Your

for taking you my thank Hi, question.

your full that has timeline maybe you expecting expect did. what Because the other guess Canada early or markets progression? as vacation been as happened slow quickly as you a from to that are normalized get back when as would some of for I to kind mentioned kind get people of completely You it fall strength? of

ahead. go Sorry, [Multiple speakers] -- may start I Erwin,

No, no.

I the of is delays is and these of think Okay, yes, situation chance absolutely it's in assessment protect, that QX But QX. there we a back difficult come high markets very to Peter, agree. our that

ask because so or go outdoors onwards either then, in entertainment I or it Yes, to in vacation as getting on as months, wanted they the into is weather from so stay the people then Alberta to can, And is, October nice. tend high summer that long indoor activities. typically say September for to onwards, seasons

is the effect And if country well development as the the may of Alberta may possible you general oil that Alberta have know, a add I positive to economy. that, this they that may on in be oil prices

was noticed Helpful. down then, chunk a I the quarter. expense during your Thank reporting, corporate you. And on good the

to line share of rental item? your netting that confirm, you in are equity Just income

right. Yes,

Yes, we are. It is an equity investment.

the just It share your wouldn't proceeds. the is that And be cash, cash income. of the

cash. That the between is the difference right,

okay. Perfect, you. Thank

you. Thank

the with go Our line Please next question of is Bender Jordan from JMP Securities. ahead.

Your line is open.

seeing question. the for my Good in was Arkansas? thanks either from taking new properties down if morning, wondering any expansion eight year guess I Missouri I impact you're

that bit with for we overlapping the see are area customers casinos. catchment think a both an the little We impact of in that

then for license update in Is any the it like Casino? for next your month. looks comes the there and Okay, Hilton out bid that relicensing on Warsaw

we but pretty expect to Not yet, hear soon.

FX in impacted seems there the quarter then based to maybe FX either and Poland more one just call the financials, in in have Okay, out sneak Canada anything is move? off here. or to

that? on Can you comment

call No, I this there's to anything out at don't think point.

Okay, thank you.

Thanks, Jordan.

you. Thank

the ahead. Beynon of from with Chad line go Please question Next Macquarie. is

is open. line Your

that to trend the wanted question. Last touch talked Chad. of is demographic. to back. were continue this how Thanks. levels? close return Did you and quarter, on Aaron pre-pandemic how on the getting that for Thanks the back about the older demographic Hi, is for to coming taking I they

much it's across and normal pretty above X% X%, in to continues that. pretty for it like answering back the So some border, areas -- it's that even all

Okay, higher little got and into margins you facing it. looks a you also XQ. to were that like noted costs strong In remain your maintain remarks, heading prepared despite able volumes

So, XX% is be this it fair that range? to margins at maintained can think

assessment. Would be our

Okay, thanks.

Thanks, Aaron.

you. Thank

it is [Rovonowitz] [Ph] question go of a next Our the Investor, is from Kenneth line Private please ahead.

I've much Hi, value back years. I seven guess, your of companies the price good is going it's think worth. morning, eight And not steadily. be it And reflect growing does I see as watching been see up. book your is I really And I or for stock the guys. should

have is because do you they is? about it. to were really I you a and that can noticed Can other, doing corporate However, would they I bit. ask corporate some what earnings I you you show one Can would there, explain what and losses do of define other about weren't you're consistently where bump like loss? observation your on and that what those there if come something up sort that? really, from you they quite and Is

Margaret, please.

Kenneth. Hi,

corporate to have at extremely really It's streams the part. and flowing compliance, and other an top. lean human have overhead most expense, do have So, your doesn't revenue resources, to the for accounting, into organization have we executive corporate run you have it, management, you

So, there's not a whole lot that flows through there.

see our there do Macquarie You of for loan. well expense large coming out interest as

And all costs and and reporting it the the exchange auditors does like the for stock also include everything?

expenses. those exchange, Auditors, of stock all

from I see. casinos Does come of that ship zone, too? the running the

but very casino to number. ship. is, a one a It We're that's just on material down

Okay.

go watch of it. accounting, It's that the one for that word of just right? your expenses unnecessary the suppose, expect things kind in would have would of I the I It's you there. that one be those So, hading good dustbin

That's correct.

be And your happy doing to your was see still I better. Okay. holding I'll stock. company

thank much. you very So,

you. Thank

Thank you.

Kenneth. you, Thank

are it closing And At I'll any Hoetzinger turn remarks. you. questions. Mr. no moment, back to you. Thank Thank there further this for

joining today. for everyone you, our call Thank

our And out reach questions, us. section call, visit the please you follow-up financial Stay cnty.com. any goodbye. free have results of recording a well feel please the For if website at of to to and

that your gentlemen. That Have please call. a and We lines. disconnect today's thank ladies your you you, and you ask Thank does conclude participation good day. for