Century Casinos, Inc. (NASDAQ:CNTY) Q3 2025 Earnings Call Transcript

Century Casinos, Inc. (NASDAQ:CNTY) Q3 2025 Earnings Call Transcript November 11, 2025

Peter Hoetzinger: Good morning, everyone, and thank you for joining our earnings call. We would like to remind everyone that we will be discussing forward-looking information under the safe harbor provisions of the U.S. federal securities laws. The company undertakes no obligation to update or revise the forward-looking statements, and actual results may differ from those projected. Throughout our call, we will refer to several non-GAAP financial measures, including, but not limited to, adjusted EBITDA. Reconciliations of our non-GAAP measures to the appropriate GAAP measures can be found in our news releases and SEC filings available in the Investors section of our website at cmty.com. With me today are my co-CEO, Erwin Haitzmann; and our Chief Financial Officer, Margaret Stapleton.

After our prepared remarks, we’ll open the call for questions from analysts. We announced solid third quarter results yesterday afternoon. Net operating revenue was $154 million, driven by strength in the East and Midwest regions as well as in Canada, offset by weakness in the West region and in Poland. The quarter started out really well. EBITDAR in July was up 7%. August was even better with EBITDAR up 22%, but September saw a sharp year-over-year decline due to the following onetime effects. In September of last year, Colorado received a $1 million breakup fee from Tipico. Also in September of last year, Mountaineer had a bonus accrual for $0.5 million reversed. In this September, Poland had extra costs but no revenue from a closed casino.

As such, you can attribute the EBITDAR decline in Q3 all to Poland and the onetime effects in September I just mentioned. Adjusting for those, Q3 EBITDAR would have increased by about 5%, beating consensus estimates and demonstrating the continued operating momentum across various segments of our business. Not bad at all, definitely better than it looks at first sight. During the third quarter, play from our high value and core customers continued its long-term growth trend, but we did not see further improvements from our low-end customers. The upper customer segments continued to perform well, showing 8% growth, helping to offset a 9% decline in the lower-end segments. Therefore, total rated GGR was essentially flat. Retail play increased by 4%, resulting in a 2% GGR increase across the U.S. portfolio.

Visitation statistics show a similar picture, visits by high value and core customers increased 4%, while visits from low segment players declined. Before I hand it over to Irwin, let me come back to Poland for a second. From now on, no license expirations are coming up for at least 3 years. So Poland should be at its normalized EBITDAR run rate for many quarters to come. In any case, however, we remain committed to divesting our Poland operations and we’ll provide updates on the divestment process in the coming months as appropriate. Now over to Erwin for more color on our individual properties and markets.

Erwin Haitzmann: Thank you, Peter, and good morning, everyone. Let me start with our results for the third quarter beginning in Missouri. Our Century Casino and Hotel Caruthersville, which just celebrated its first anniversary, continues to exceed expectations. Gaming revenue grew strongly across all segments. High Value up 82%, core, up 29% and retail up 22%. In total, gaming revenue was 29% higher than last year, and EBITDA increased 35% to $6.1 million, up from $4.5 million. Rent expense rose about $1.1 million, reflecting the VICI lease that funded the new property and operating margins remain high. It is worth noting that with our new land-based facilities, we’re now reaching new markets. This is particularly evident in the significant increase in customers leaving 75-plus miles from Colorado Springs.

Q&A Session

Colorado Springs has been an outstanding success, modern, efficient and exceptionally well received by our guests. Our thanks to the entire team for a fantastic first year. Now to Century Casino and Hotel Cape Girardeau. Cape delivered $6.1 million in EBITDA, only slightly below last year’s record quarter. The property continues to perform very well against competition from Illinois. Sports betting launches in Missouri on December 1. And in partnership with BetMGM, we will open a BetMGM branded sportsbook-owned property and BetMGM will launch its online sportsbook using our skin. We expect sports betting to elevate Cape’s profile and create new revenue streams for the property. Now moving to Colorado. At Cripple Creek, EBITDA was $1.8 million, flat year-over-year.

In the quarter, our high-value and core segments grew while pace in retail declined. Retail play now represents about 30% of total gaming revenue. We believe that Chamonix may capture a larger share of the retail market still driven by the novelty effect. At Central City, rated play was up 6%, but total revenue was down 4%, again, due to fewer retail players. EBITDAR came in at $1.2 million, up 20% on a comparable basis as last year’s EBITDA of $2 million included a $1 million onetime payment from Tipico. At both Colorado properties, we have replaced live table games with electronic table lounges, which generate about the same revenue at significantly lower cost. That’s a solid win for both operations. Now to the East. At Mountaineer in West Virginia, EBITDAR was $4.4 million, flat to last year.

Apples-to-apples, though, EBITDAR was up $0.5 million as last year’s EBITDAR was inflated by the reversal of a $0.5 million bonus accrual. Performance across the board was steady and parimutuel handle rose 26%, driven by improved scheduling and race mix. At Rocky Gap in Maryland, EBITDAR increased 7% to $4.9 million as we expected our first clean quarter without weather disruptions since the beginning of the year. Growth came from high-value players, while other segments held steady. Now to the West and the Nugget Casino Resort in Reno Sparks. While the Nugget had a standout August, mainly due to our signature Best in the West Nugget Rip Cookoff, overall, the quarter was still challenging. We experienced a record EBITDAR for August of $4.1 million, the highest single month result in nearly 3 years, but that was offset by a weaker July and September.

Throughout the quarter, we enhanced marketing programs to grow both local and destination play. We are also building out our 2026 concert season. Tickets for Brooks and Dan in April are already selling extremely well. We began converting unused space into an additional 11,000 square feet of convention space, a 10% increase in square footage to be completed by year-end. The additional space will first be used by a major group event that is booked for January 2026. At the Nugget, we’re executing on a clear repositioning strategy, shifting away from low ADP players who are no longer profitable and focusing on core players in Reno Sparks and Northern California. In sync with the enhanced marketing to play in the core segment, we are working on further improving the F&B offerings.

It takes time, but we are seeing — we are starting to see the results already. Now to Canada and Europe. In Alberta, slot coining was up 5.8%, total revenue up 1.6% and EBITDA up 11.1% to $5.4 million. Growth was broad-based, supported by disciplined cost management. Century Downs in St. Albert led the way with St. Albert benefiting from this year’s upgrade of the facade. In Poland, we’re nearing the end of a challenging period marked by license delays and relocations. The main headwind this quarter was the closure of our Wrocław Hilton Casino, which contributed an EBITDA of $1.3 million last year versus a negative $0.5 million this quarter. Our relocated Wrocław Casino is ramping up well and the second Wrocław location will open in January 2026, further strengthening our position there.

All current licenses, as said before, are valid through 2028, so we expect stable operations going forward. With that, back to you, Peter.

Peter Hoetzinger: Thank you. And before we cover a few balance sheet and capital items, let me explain what led to the filing delay of a couple of days. As described in the 8-K we filed with the SEC yesterday, we discovered an error during impairment testing for goodwill and ROCE GAAP that required us to restate our 2024 10-K and the 10-Qs for the first 2 quarters of this year. The correction of the error will reduce our goodwill balance with an offsetting increase in net loss less the tax impact. The estimated impacts are described in the 8-K. This does not change our revenue or adjusted EBITDA for any of the periods being restated. We are finalizing our review of the amended financial statements and anticipate filing these with the SEC within the next 5 business days.

All right. Now back to the balance sheet. Our cash and cash equivalents at the end of the quarter were $78 million compared to $85 million at the end of Q2. That includes $5 million we spent in CapEx and $1.5 million we spent on the share buyback program. We also paid the annual table games license fee of $2.5 million in West Virginia as well as about $1 million in closing costs in Poland. So all in, we were about flat in cash from operations. Total principal amount of debt outstanding was $339 million, resulting in net debt of $261 million. At the end of the quarter, our net debt-to-EBITDA ratio was 6.9x. On a lease-adjusted basis, the ratio was 7.6x. Let me also note here that we have no debt maturities until 2029. And there is no need for significant CapEx this year or next.

This year, we’ll spend a total of $18 million, of which we have spent $15 million already. As we look ahead, we are very confident in our business prospects. Last year was a transitory period for us, but now we see a clear path forward to higher EBITDAR and cash flow for 2026 and beyond. Now it’s all about harvesting what we have invested last year. When you sort through the noise I mentioned at the beginning of the call, we are encouraged by the trends in our business. While we recognize the level of economic uncertainty, we are more confident in the long-term prospects of our company than we were at any point last year. While the fourth quarter has just started, it’s worth noting that the positive customer trends have continued into October, including improved play from both core and retail customers.

Preliminary results for October show EBITDAR up well over 20% compared to last year. And as we head into next year’s tax season, we believe that our core customers around the country will benefit from the tax bill passed by Congress this summer, including new deductions for tips and overtime and an additional deduction for seniors as well as larger standard deduction for all taxpayers. As you know, we are in the midst of a comprehensive strategic review process. At this stage, no decisions have been made, and there can be no assurance that the review will result in any transactions or particular change. We do not intend to make further public comments on the process unless and until the company’s Board of Directors approves a specific course of action, which we do not expect before Q1 of next year.

With that, I ask for your understanding that we will not take questions on this topic in our Q&A session as we cannot share any incremental information at this time. All right. That concludes our prepared remarks. We’ll now open the call for Q&A with the analysts. Operator, go ahead, please.[ id=”-1″ name=”Operator” /> [Operator Instructions] And our first question will come from Jeff Stantial with Stifel.

Daryl Young: This is Don Young on for Jeff Stantial. Maybe starting off on the strong results in your Canada portfolio. Can you sort of expand a bit on what’s driving that broad-based growth? And as you continue to evaluate the broader portfolio, do you view these as more noncore with the increasing U.S. exposure? Or do you see real synergies with the broader portfolio?

Erwin Haitzmann: Thank you. I think I’ll take that question. Starting the other way around. With regard to your second question, we see a little bit of synergy, but it’s more incremental. So it is probably to be seen as a stand-alone conglomerate of operations the Canadian properties that we have. Concerning the drivers, we have — the one visible driver is that St. Albert, where we redid the facade outside completely, and that had a really good impact. And the rest of it is just, I think, very motivated management that’s really continuing to sharpen the pencil, looks on the cost side, looks on the revenue side. And we have recently been up there. We have a very motivated crew that is really eager to perform well. It’s good to see. And I think we have some more upside also given the macroeconomic situation in Canada, which seems quite far less impacted or has been impacted than in the United States.

Daryl Young: Great. That’s helpful. Turning to the Nugget. Can you give us an idea of how you’re thinking about timing for the group and convention business to normalize? And to sort of put some numbers around it, how many more room nights can this add? And then on some of the new entertainment programming, can you help us think about how you’re underwriting that uplift and how confident you are that this will attract those visits and corresponding gaming revenues that you’re underwriting? And then that’s all from us.

Erwin Haitzmann: Okay. So you’re asking about the timing of the improvements as we see it, the impact it will have on room nights and the impact and the progress of the consult, correct?

Daryl Young: Yes.

Erwin Haitzmann: Yes. Okay. With regard to the timing, it’s hard to say. But as I mentioned earlier and Peter mentioned as well, we already see in October that a number of the things that we’ve been fine-tuning on the marketing side is starting to take effect. And we are confident that we should see the full impact of what we are continuing to refine — I mean already now, but certainly going into 2026 as well. And we’re looking on the one hand, on the revenue side of the casino — but combined, but also independent from that, we are also focusing on the retail side of the hotel business as a separate exercise because there continue to be — there’s a market segment that comes to the Nugget just to stay in the hotel, and they may not — may or may not be gambling at all.

It’s not necessarily connected. And in that same context, also, as mentioned earlier, we have decided that we continue to focus more intensely on the F&B side, possibly expand the offer, but certainly also continue to work on upgrading at least 1 or 2 of our outlets. It’s hard to quantify with regard to room nights, but it’s — let’s put it like that. We have 3 segments for the hotel. The one is the casino side, which is mainly comped and that is intertwined with what we do with our overall comping program and how much we give back to our customers. The second one is the convention and group business. And we said earlier that smaller groups, we can do short term, but the larger groups have quite a long lead time. We’re now talking about as far as 2030, 2031 with some of the larger groups.

As it looks now, we think that the group business in 2026 will be either the same or better than in 2025. And the third one is the retail business, which we market also separately, and we have seen an increase in the retail segment already in ’25, and we believe that more can be done in 2026. Concerning the concerts, we have learned that to give you numbers last year in 2024, the concert stand-alone made a profit of around $850,000. This year, the concerts are making a loss of about $300,000. So the reason for that is twofold. First of all, we just couldn’t book what we wanted to book. It’s not so easy. It depends when you target an act. It depends on what their route is and whether they are in that part of the United States, whether you can book them at the price that one would be willing to pay.

But oftentimes, it’s not even a price question, they are just not there. And obviously, I’m not willing to travel east-west without intelligent planning. So we’ve not been very successful and lucky in that respect. The second thing is that — so that led to the result that we couldn’t get as many country acts as we wanted to. In 2026, we think that will be better. And the second thing that we have learned is that we thought in order to reduce the risk of the — which is quite high in the concerts when you cannot sell the tickets, we rather book acts that cost a little bit less than, for example, Stew so. And that probably was not a good decision. So we are now turning back into trying to book maybe fewer acts, but very good acts like books and done.

So with that, we think we can fix the concert side. And we see that — our goal is that the concepts stand on their own. But from at least half of the concepts, we see a very positive overflow into the hotel, casino and F&B business. [ id=”-1″ name=”Operator” /> Our next question today will come from Jordan Bender with Citizens.

Jordan Bender: You’re seeing — it sounds like you’re seeing some pretty good success from the ETGs that you put in Colorado. Do you think this strategy — if a strategy you would look to implement across any of your other U.S. assets, just given the cost side helps margins at the end of the day?

Erwin Haitzmann: Yes. However, not necessarily by replacing — completely replacing table games with ETGs. So we do have ETGs in other casinos are parallel to those. We still keep the nice game. But in Colorado, it was just a question of the — it was just so obvious that it’s smaller operations, it wasn’t worth keeping the few tables. But in the larger casinos, we do have ETGs on the one hand and table games on the other hand. And as we see it now, we’ll keep that also.

Jordan Bender: Great. And on the follow-up, I think you mentioned you bought shares back in the quarter. I’m just curious where your balance sheet sits today, where the cash balance sits, how do you kind of think about buying back shares here versus continuing to pay down debt as we head into ’26?

Erwin Haitzmann: Absolutely. Peggy, why don’t you take that question, please?

Margaret Stapleton: We’re currently analyzing the stock buyback versus paying back debt and have not made any real decisions on how to proceed into 2026. [ id=”-1″ name=”Operator” /> We’ll take our next question from Ryan Sigdahl with Craig-Hallum Group.

Ryan Sigdahl: 20% or greater than that EBITDAR growth in October, improved play from the core and retail players, if I caught that right in the prepared remarks. Can you elaborate, I guess, on specifically, is that pretty broad-based across the portfolio? And then as you look to November and December, are there any weird comps or anything to be aware of on the plans for this year where that’s not a good assumption to kind of continue throughout the rest of the quarter?

Erwin Haitzmann: We don’t see anything that — anything unusual that would impact the one or the other way the fourth quarter. But with regard to the customer trends that Peter mentioned that led to the 20% plus in October, we just hope that the consumer sentiment continues to improve because that has impacted us negatively in the lower end of the database in anybody’s guess, but I think there is at least a hope that the consumer sentiment will improve during the next, hopefully, remaining 2 months of this year. Peter, would you like to add to that?

Peter Hoetzinger: Yes. I think the one and only difference we’ll see is that last year, in the first week of November, we did open the Caruthersville land-based — the new land-based facility. So in the year-over-year comparison, that one property from the first week of November on will probably not have the same growth rates that we have seen over the last 12 months. But with all other properties, also I don’t see any abnormalities.

Ryan Sigdahl: Great. Then just on the Nugget, July, September were weaker. Curious, I guess, think going back year 2, it was the convention business was building. It was going to really be inflecting kind of middle to late this year into ’26. I guess, is there a reason did you have any cancellations? Or curious, I guess, the weakness in July and September as my view, I guess, could have been partially incorrect, but was that the convention business was going to really start to ramp up here?

Erwin Haitzmann: Yes. The weakness in September mainly came from the fact that we — as I mentioned earlier also that in ’24, we had 2 powerful, very good concepts. One of them was Chase and Eldion and in September, we didn’t have any. Then also in September, we had what is called a bingo blow a large bingo event in September, which now — which we didn’t have this September. And with regard to the conference business, there was also less conference business in July and September of ’25 as compared to ’24. But that was — that couldn’t be changed in the short term. [ id=”-1″ name=”Operator” /> And we’ll move next to Chad Beynon with Macquarie Group.

Chad Beynon: I wanted to ask about Caruthersville. You touched on the growth that you continue to see in the operating leverage of that property. Are you still on track to hit the returns that you originally laid out on the construction CapEx? And then secondarily, where do you expect most of the growth to come from? Will it be that further out customer in the neighboring states? Or are there still opportunities in the closer in catchment area?

Erwin Haitzmann: Yes, we — first question, yes, we are on track with regard to what we expected. And secondly, we think that growth will come both from the geographically closer and further away group of people with more potential in the 75-plus miles. We think that we can reach out even more into that segment than we did so far. So more growth from the more distant areas, but still growth from the closer areas as well.

Chad Beynon: Okay. Great. And then going back to the weakness that you saw in the retail customer, which it appears based on the 20% growth in October, that’s abated. Do you know why this — is there any evidence in terms of that this will remain stable? Anything else to point to in terms of why it fell off during the period? Was it — could it have been weather-related, comparable related, local CPI or unemployment? Just any evidence that will give us confidence that retail could improve here in Q4 and beyond?

Erwin Haitzmann: Yes, it’s hard to say, but we believe that it has to do with the insecurity around tariffs and the impacts that tariffs may possibly have to the consumers. And that is a worry that typically is more prevalent in the lower end of the database. And we see that also in places like Rocky Gap, for example, where the household income of the catchment area is significantly lower than in other markets that we are active in, that certainly has a strong effect. I’m not as good as others to speculate about the increasing consumer sentiment going forward. But if we had to say something, we would think it looks — there is a friendly outlook, but you probably could make a better judgment on that.

Chad Beynon: Okay. Great. And are there initiatives or cost improvements that you could make if this customer remains volatile?

Erwin Haitzmann: There’s always a possibility to look for more and tighten the be further. But I think if it’s not — I don’t think that it will get any worse than it was in the worst month of this year. And we’ve maneuvered through them well. And I think if necessary, we could do that again. There is always, as I said, if you keep looking and then there’s always a way to save more. The danger always is that you don’t go too far in what you are doing. [ id=”-1″ name=”Operator” /> Our next question comes from Connor Parks with CBRE.

Connor Parks: Maybe another capital allocation one, maybe separate from the debt paydown versus share repo discussion. Just in the context of the cash on the balance sheet and some of the EBITDAR growth you’ve seen this year with all the CapEx rolling off to Missouri. I guess, how are you weighing the reinvestment plan at this point? Is there anything maybe outside of nugget you mentioned that you would like to build or reinvest in or any low-hanging fruit type projects in Missouri again that you’re weighing at this point in time?

Erwin Haitzmann: Yes. Let me start out and then hand over to Peter and Peggy. We will — we’re thinking about doing a little bit of facade upgrade also in the Canadian — 2 of the Canadian properties. That is not a large CapEx item, but there is some CapEx. And as I said earlier in St. Albert, it was very beneficial for the revenues and for the business there. We may spend a little bit of money in connection with food and beverage at the Nugget. And that would be probably it apart from the routine upkeep and then investment into mainly slot products of our properties. Peter, can I hand over to you? Maybe you would continue want to expand on that some more.

Peter Hoetzinger: Yes, sure. Connor. We don’t expect any significant or large moves, not on the stock buyback front and also not on the paydown of the debt currently because, as you know, we are in the midst of the strategic review process. And it will depend on the outcome of that. We could sell something, then we would have significant amounts of money to pay down the debt. We could do some other transaction that is still up in the air. So until we have concluded that process, you won’t — you will not see any significant stock buybacks or pay down of debt.

Connor Parks: Great. And then maybe as my follow-up, you’ve mentioned in this quarter and in prior quarters, the expected uplift potential in regional gaming around the benefits from the upcoming tax season. I guess have you provided any barriers or try to quantify any of these benefits around customer bases, spending habits or anything of that matter for any of the areas of which you operate in?

Erwin Haitzmann: I wouldn’t have to make a guess here. It’s hard to say. Peter back over to you, do you think you could quantify?

Peter Hoetzinger: No, not really see it. As Erwin said before, mostly the low ADT players, the lower segments of our database are impacted by that. And depending on which property, it’s about maybe 15% to 20%, 25% of our customers are in that lower segment. But in general, we are making steps to move away from that and to move towards mid-tier and upper tier customers in our marketing approach and in everything we are doing. So that should lessen that impact. But I agree, we don’t want to quantify that not enough hard facts that we have [ ever ]. [ id=”-1″ name=”Operator” /> And that is all the time we have. If we did not get to your question, please reach out to the company using the Investor Relations page at cnty.com. I will now turn the call back to Mr. Hoetzinger for closing remarks.

Peter Hoetzinger: Yes. Thanks, operator, and thanks, everybody. We appreciate you joining our call today. I will talk again when we present the 2025 full year results. Until then, thank you, and goodbye. [ id=”-1″ name=”Operator” /> This does conclude today’s conference. Thank you for attending.