Q4 2023 ECentury Casinos Inc arnings Call
Operator: Good day, everyone, and welcome to today's Century Casinos Q4 2023 earnings call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions, and during the question and answer session, you may register to ask a question at any time by pressing star 1 on your telephone keypad. You may withdraw yourself from the queue by pressing star 2.
Good day, everyone and welcome to today's century casinos Q4 2023 earnings call. At this time all participants are in a listen only mode.
You know you'll have the opportunity to ask questions. During the question and answer session. You May Register to ask a question at any time by pressing star one on your telephone keypad, you may withdraw yourself from the queue by pressing star two.
Operator: Please note that this call 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.
Please note that this call 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 Ho singer. Please go ahead.
Peter Hoetzinger: Good day, everyone, and thank you for joining our earnings call. We would like to remind you that we will be discussing forward-looking information, which involves risks and uncertainties that may cause actual results to differ from our expectations. The company undertakes no obligation to update or revise the forward-looking statements, but as a result of new information, future events may be, We provide a discussion of the risk factors in our SSE filings and encourage you to review these filings. In our call, we refer to several non-GAAP financial measures, including but not limited to adjusted EBITDA.
Good day, everyone and thank you for joining our earnings call.
I would like to remind you that we will be discussing forward looking information, which in dogs risks certainties that may cause actual results to differ from our forward looking statements.
The company undertakes no obligation to update or revise the forward looking statement, but as a result of new information future events or otherwise.
Can you provide a discussion of the risk factors in our <unk>.
Fittings and encourage you to review these filings.
From our callers.
Please refer to several non-GAAP financial measures, including but not limited to adjusted EBITDAR.
Peter Hoetzinger: 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 cngy.com. I will now provide an overview of the fourth quarter 2023 result, as well as our view of how this and next year could evolve. After that, my co-CEO Erwin Haitzmann and our CFO Margaret Davidson will join me for a Q&A session. For the quarter, we delivered net revenue of $144 million, an increase of 39% over Q4 of last year. The increase came from the additions of The Nugget in Nevada and Rocky Gap in Maryland, as well as good performances from our Canadian operations, offset by a weaker retail customer, construction disruption at a few properties, and the temporary closures of three casinos in Poland. Adjusted EBITDA was $25 million, up 17% over last year. Canada grew EBITDAR by 50%, while Poland obviously saw a substantial decline.
Reconciliations of all non-GAAP measures to the appropriate GAAP measures can be found in our news releases and there's a few filings.
Liberty in the Investor section of all upset at CMT Vitals Com.
I will now provide an overview of the fourth quarter 2023. Besides.
As all of you how this next year cookie bars.
After that my co CEO urban high spending Dallas default Margaret Stapleton joined me for the Q&A session.
Yeah.
For the quarter.
We delivered net revenue of 144 million.
An increase of 39% over Q4 of last year.
The increase came from the addition of the market in Nevada, and Croaky Gifting Merrill Lynch.
It's well it's good performance each of our Canadian operations.
Set by weaker retail customer construction disruption at a few properties and the temporary closures of three casinos in Poland.
Adjusted EBITDA was $25 million up 17.
Percent over last year.
Ken I think of what you'd be down by 50%.
Poland, obviously saw a substantial decline.
Yeah.
Peter Hoetzinger: We did, like everyone else in regional casinos, experience market softness during the back half of 2023, especially at the lower end of our customer database and in the retail sector. Coupled with higher costs and expenses across the board, margins suffered quite a bit. We are in a transitional period and also in a transitional process at our company with lots going on at the same time. Our local management teams carry extra burdens with two major construction projects in Missouri, as well as the integration of Nugget and Rocky Gap. Remember, we acquired Nugget and Rocky Gap less than a year ago, meaning we are still early in the process of managing everything as one cohesive portfolio. Considering all that, it was a solid operating performance in the fourth quarter and full year of 2023, with strong growth prospects going forward. Looking at segment results for the quarter, let's start with the Midwest, which includes our Colorado and Missouri operations. Revenue was up 8% year-over-year. EBITDA was up 5%. However, in Colorado, the results of our Cripple Creek property were flat year-over-year.
We like everyone else in regional casinos experience market softness during the back half of 2023.
Especially at the lower end of our customer database and the retail segment.
Coupled with higher costs and expenses across the board marching suffered quite a bit.
You are in a transitional period and also in their traditional process at our company.
What's going on at the same time.
Good management teams carry extra burdens with two major construction projects in Missouri.
As long as the integration of market and Rocky gap.
Remember why isn't that going to drop you get less than a year ago.
Meaning we are still early in the process of managing everything as one cohesive portfolio.
Considering all that it wasn't solid operating performance in the fourth quarter and full year of 2023.
With strong growth prospects going forward.
Looking at segment results for the quarter, let's start with the Midwest, which includes how Colorado, Missouri operations.
Revenue was up 8% year over year.
EBITDA was up 5%.
In Colorado. The response, so far at Cripple Creek property reflect year over year due one in central city was down a bit across the major roadworks on both high base that lead to central city from the main feeder markets.
Peter Hoetzinger: The one in Central City was down a bit, caused by major roadworks on both highways that led to Central City from the main feeder market. In Cripple Creek, a competing property opened across the street from our casino right after Christmas. By now, they have their 300 rooms open, as well as some of the FB outlets. January saw a 17% increase in gaming revenue for the entire cryptocurrency market.
Cripple Creek competing property opened across the street from our casino right After Christmas.
I know they have to have 300 rooms open and certainly some of the b outlets.
January saw a 17% increase in gaming revenue for the entire Cripple Creek market.
Peter Hoetzinger: We grew by 14%, an early indication that we benefit from the hotel rooms and our proximity to their property. In Missouri, both properties posted revenue and EBITDA growth, as well as better operating margins than in Q4 a year ago. This was a strong and encouraging result, considering construction going on at both locations. The number of trips of our top tier segment increased meaningfully during the quarter while the overall span of the trip was flat.
We grew by 14% and early indication that we benefit from that hotel rooms into our proximity to that property.
I'm sorry.
Both properties posted revenue and EBITDA growth as well as better operating margins than in Q4, a year ago.
Our strong and encouraging result, considering construction going on at both locations.
The number of scripts for top tier segment increased meaningfully during the quarter.
I'll spend per trip was flat.
Peter Hoetzinger: In Kuratorsville, construction of the new land-based hotel and casino is progressing according to budget and schedule, and it plans to open in Q4 of this year. The new property will have a total of 74 hotel rooms, 12 gaming tables, and over 600 slot machines, which is a 20% increase in gaming positions compared to the old Riverboat and a 50% increase in gaming positions compared to our current interim casino. Most importantly, the new property will provide significant operational efficiencies, it will be much more convenient for our customers, and it will increase our catchment area. We are more excited than ever about this permanent move to land-based. What we see now, as we operate in a small temporary pavilion, is very encouraging. The number of trips increased, and so did the spend per trip.
In Colorado, Sweden construct chefs to new land based hotel and casino is progressing according to budget and schedule.
We plan to open in Q4 this year.
The new properties at a total of 74 hotel rooms, 12 gaming tables and over 600 slot machines.
She is a 20% increase in gaming positions compared to the older adult and the 50% increase in gaming positions compared to our current interim casino.
Most importantly, the new property will provide significant operational efficiencies it will be much more convenient for our customers and it will increase our catchment area.
You're more excited than ever about this permanent moved to land based what we see now if you're operating a smaller temporary familiar is very encouraging.
On both trips increased and so did the spend per trip.
Peter Hoetzinger: So we really can't wait until the new facility will be open in just about eight months from now. That project is fully funded by VG at an 8% cap rate, and hence, it does not impact our liquidity position. The hotel construction in Cape Girardeau is also on budget and on time.
Well, we really can't wait until the new facility going to be opening just about eight months from now.
That's project is fully funded daiichi at an 8% cap rate.
Hence it does not impact our liquidity position.
Yeah.
The whole tank construction in Cape Girardeau is also on budget and on time.
Peter Hoetzinger: We are very excited about the grand opening three weeks from today, on April 4th. It will be great to see how adding a hotel will transform that property into a full resort destination offering gaming, dining, conferences, concerts, and more. The total project cost is $31 million, and we fund that with cash on hand. As of December 31, we had spent approximately $23 million already. The balance of $8 million will be spent in the first half of this year.
I'm very excited about the Grand opening in three weeks from today on April four.
It will be great to see how adding the hotel with transfer in that property.
Full resort destination offering gaming I think conferences concerts and more.
Total project cost of 31 billion and we found that Wisconsin Hank.
As of December 31, we had spent approximately 23 million already the.
The balance of <unk> 8 million was spent in the first half of this year.
Peter Hoetzinger: Our East segment includes the Mountaineer Casino Resort and Races in West Virginia and the newly acquired Rocky Gap Resort and Golf in Maryland. Because of that new acquisition, revenue of the segment was up 44%. EPTAR's modern tupperware At Mountaineer, hours of operation for the casino, available hotel rooms, and food outlets are still limited as a result of continued staffing challenges.
Our East segment includes the mountaineer casino resorts in grosses.
Ciena and Chameleon class Rocky gap resort and golf in Maryland.
Because of that new acquisition revenue of the segment was up 44%.
EBITDA more than doubled.
At Mountaineer, how is the preparation for the casino available hotel rooms, and food outlets are still going to quick as a result of continued staffing challenges.
Peter Hoetzinger: However, our participation in the J-1 visa program has greatly assisted us in improving our offerings. Flopcoin was flat in Q4, and paper games continued to be impacted versus prior year, which we believe is linked to sports betting in Ohio. You should get a better picture of that going into the first and second quarters of this year as we've just had the anniversary of Ohio sports betting. We plan to further enhance our entertainment offerings throughout the year to further diversify our portfolio, giving our guests more reasons to choose us for their entertainment. As an example, we recently had a very successful MMA boxing event in our ballroom there. Rocky Gap experienced small growth on the upper end of the database, offset by declines in the lower tiers.
However, our participation that shave on visa program has greatly assisted us in improving our offerings.
Slot coin in was flat in Q4 tapered gains continued to be impacted versus prior year.
She believes his team sports betting in Ohio.
We should get a better picture, that's going into the first and second quarters of this year.
Is this chest hit the anniversary of Ohio sports betting.
We plan to enhance our entertainment offerings throughout the year to further diversify our portfolio, giving our guests more reasons to choose us for their entertainment ethnic softer you recently had a very successful MMA boxing event in our boardroom deaths.
Yes.
Rocky gap experienced smaller growth coming in at the upper end of the database.
Offset by declines in the lower tiers.
Peter Hoetzinger: From an age standpoint, the oldest and youngest demographics increased, while the larger portion of the database, ages 40 to 70, decreased a bit. We plan to put strong focus on player development in the major feeder markets like Baltimore, Pittsburgh, and Washington, D.C., with the goal to migrate players to higher tiers and grow the overall database. As most of you know, Rocky Gap sits on a beautiful lake in Rocky Gap State Park, but up until now, the property did not have beach access for its customers.
From an age standpoint, the oldest and youngest demographics increased by the larger portion of the database to just 40 to 70 decreased a bit.
We plan to put strong focus on player development in the major feeder markets like Baltimore Pittsburgh in Washington D C.
We could go to migrate players to higher tiers and grow the overall database.
As most of you know bulky catch seats at a beautiful Lake and Rocky Gap State Park, but up to now the property did not have beach access for its customers.
Peter Hoetzinger: Recently, we got approval to develop a nice beach area, and we'll make sure we have it ready for our customers before this summer. It will be another great amenity that will help drive additional FIT and resort travel to the property and will also allow us to increase resort fees. Continuing to the west segment, which includes Nugget Casino in Nevada, the market saw mixed results during the quarter compared to the prior year. Overall, the number of trips to the casino decreased, and so did the amount spent per trip, with all declines coming from lower-level customers. However, the top of the database was very healthy, as theoretical win increased by 20%. From an age standpoint,
And recently, we got approval to develop a nice nice teachey area and just make sure we have it ready for our customers before the summer.
It will be another great amenity that will help drive additional key and resort travel to the property.
It will also allow us to increase resort fees.
Continuing to the West segment, which includes nugget casino.
In Nevada the.
Market saw mixed results during the quarter compared to prior year.
Overall, the number of trips to the casino decreased silty dispenser checked with all the clients coming from the lower level of customers.
The top of the database look very healthy.
S theoretically when increased by 20%.
From an age standpoint.
Peter Hoetzinger: The under 50 segment grew, with COWIN increasing by 10%, while the 60 plus demographic decreased by 3%. You're optimistic that the second half of this year will be strong when most of the transition extraordinary expenses, as well as most project capex, will be behind us. We have replaced a few key executive team members as some positions left the Nugget right after the sale closed last year, which led to a somewhat challenging initial period. The team is now in great shape and is working on remodeling three restaurants and bars and is also getting ready to upgrade the sportsbook. In addition, a new high-limit slots area will be going in. All of these high ROIC growth projects will be completed this summer.
And the <unk> segments grew with <unk>, increasing by 10%.
Well, the 50 plus demographic decreases.
3%.
Okay.
We're optimistic that the second half of this year will be strong and most of that transition extraordinary expenses instead of as most project capex will be behind us.
And have you placed a few key executive team Mendez.
Positions left in market right after the St Joe's last year.
Which led to assemble challenging initial period.
The team now is in great shape, and he's working on remodeling three restaurants and bars and it also is getting ready to upgrade the sports book.
In addition, a new high limit slot area will be going.
Honesty high Rois sequels projects will be completed this summer.
Peter Hoetzinger: On the marketing side, expect to go live with new marketing kiosks along with a new marketing component of our loyalty prayer tracking system also before this summer. Reno-Sparks is known as a player-friendly value market, so we want that improved flexibility with direct mail campaigns and improved marketing program. Renovations of the facade and signage are done already, and it really looks great.
On the marketing side expect to go live with new marketing kiosks, along with the new marketing component of our loyalty player tracking system also declared this summer.
Reno Sparks market is known as a play a friend in value market. So we want that improved flexibility with direct mail campaigns and improved marketing programs.
Yeah.
Renovations of the facade and signage has done already and it really looks great.
Peter Hoetzinger: Also, our entertainment and special events calendar is coming together nicely and points to a very busy summer season. www.larryweaver.com and the Canadian Signer. Our four properties in Edmonton and Calgary saw revenue growth of 17 percent, and EBITDA was up by a very strong 50 percent in the quarter. All four were up in slot revenue, in table revenue, as well as in EBITDA. However, access to our Central Casino & Hotel in Edmonton continues to be impacted by road construction, which will continue through April.
Also our entertainment and special events calendar is coming together nicely and points to a very busy summer season.
Sure.
The Canadian segment.
All of our properties in Edmonton Calgary saw revenue growth about 70% and EBITDAR was up by very strong 50% nickel water.
All four of our App in slot revenue to taper revenue S Medicine EBITDAR.
Access to our century casino and hotel at Edmonton continues to be impacted by road construction, which will continue through April.
Peter Hoetzinger: The new sports brand lounge at that property is driving traffic and F&B sales and also awareness in the community, especially now that the Edmonton Oilers are performing better. So overall, a very promising performance in Canada. To round out our segments, a quick look at Europe and our operations in Poland. The recent national elections triggered unanticipated licensing delays for three of our casinos, which caused quota results to decrease materially compared to the year before.
Can you spot spine launches that property is driving traffic and F. A D savings don't say awareness in the community.
Especially now that the Edmonton Oilers are performing better.
So overall, a very promising performance in Canada.
To round out our segments, if we look at Europe at our operations in Poland.
The recent national elections trigger.
Patent licensing delays for three of our casinos.
Each cost quarterly SaaS to decrease materially compared to get before.
Peter Hoetzinger: However, earlier this year, we were awarded all three licenses again, and we reopened one casino in February already. We anticipate reopening the second one next week, and the final one, which is the biggest of the three, in a new location in the third quarter of this year. So from about August onwards, we'll have all eight casinos in full operation again, and that should also give M&A discussions a boost. Still, our goal is to sell all our Polish operations. With that in mind, let's discuss our balance sheet and liquidity position. Our book value per share is $4. As of December 31st, we had $171 million in cash and cash equivalents, and $347 million in outstanding debt.
However, this earlier this year.
What is all three licenses again and he'd be opened one casino in February already.
We anticipate reopening the second one next week and the final one which is the biggest of the suite in a new location third quarter of this year.
So from about August song, we'll have all eight casinos in full operation again.
And that should also give EM and day discussion supposed.
Steve our goal is to sell or Polish operations.
With that let's discuss our balance sheet and liquidity position.
Our book value per share $4.
As of December 31st we had 171 billion in cash and cash equivalents.
And 347 million in outstanding debt.
Peter Hoetzinger: Net debt is down to $176 million. As a result, traditional net leverage is 2.7 times, and adjusted net leverage is now 4.9 times. We are okay with our leverage, as we don't judge our leverage just by a one-time snapshot but rather look at its development over a period of time. The leverage is elevated because of our recent significant acquisitions and investments. It will stay above the long-term range until we have fully integrated the acquisitions and until we have completed our CAPEX projects later this summer, around the third quarter. From then on, it should lower down to closer to two times traditional and four times these adjusted earnings next year. Our lease obligations to Fiji currently total approximately $15 million per quarter.
Net debt is down to $176 million.
As a result traditional net leverage is two seven times and.
These adjusted net leverage is now four nine times.
Yeah, Okay with our leverage as we don't charge our leverage just by just based on a one time snapshot I'd rather look at its development over a period of time.
The leverage is elevated because our recent significant acquisitions and investments.
You can stay basket longtime range until we have fully integrated the acquisitions and acute we have completed our capex projects later this summer around the third quarter.
From then on it just lowered down to closer to two times strategical and four times lease adjusted ex gear.
Our lease obligations to <unk> cheek currently total approximately 15 million per quarter.
Peter Hoetzinger: Once we open the new land-based facility in Corvadosville towards the end of this year, it will go up by approximately one million per quarter. So as a rough run rate for next year, for 2025, total lease payments to VG will be around $16 million per quarter.
Once we open the new land based facility in Colorado really towards the end of this year.
It could go up by approximately 1 billion per quarter.
So as a rough run rate for next year for 2025.
Total lease payments to H E B F 16.
$16 million per quarter.
Peter Hoetzinger: Interest rates on our Terminal B currently amount to around 10 million per quarter. Please note that we have no near-term debt maturities, it matures in 2029, and we have additional borrowing capacity of $30 million under our revolver. We can reprice or refinance the entire term loan at any time without penalty.
Interest payments on our term loan b.
The amount to around 10 million per quarter.
Please note that we have no near term debt maturities it matures matures in 2029.
And we have additional borrowing capacity of $30 million of works out.
We can reprice, our refinance the entire term loan at any time without penalty.
Peter Hoetzinger: So as soon as a window opens, we want to act on it and improve our terms. As our cat explains for this year, We are planning to invest a total of between $35 and $40 million in our properties, and that includes normal maintenance and replacement capex, as well as the improvements at The Nugget and in Canada and finishing the hotel in Cape Girardeau. All of these growth projects will help position our casinos for high-value customers, and we deliver attractive returns on capital to drive growth in their sectors. This elevated CapEx cycle will be completed between now and late summer. What's left then is the big move to land-based in Corradoville, but that is fully funded by VG. So by late summer, we will see a significant reduction in CapEx as we move forward. Free cash flow should be improving substantially, both from revenue growth due to the improved facilities and the better customer experience and from a reduction in cash back. And perhaps we'll see a first reduction in interest rates by the end of the year.
So as soon as the window opens we want to extend it can improve our trups.
Yeah.
S fall our Capex plans for this year.
Now paint best total of between 35 and $40 million to our properties and that includes normal maintenance and replacement Capex.
As well as the improvements at the market and in Canada, and finishing the hotel in Cape Girardeau.
All of these growth projects will help position our casinos.
The new customers and.
And we can deliver attractive returns on capital to drive growth in guest segments.
These innovative capex psyche will be completed between now and late summer.
What's left then is the peak moved to land based in Colorado, Sweden, but that is fully funded by Vinci.
So by late summer.
See significant reduction in Capex as we move forward.
Free cash flow should be pushing substantially both from revenue growth due to the improved facilities and the better customer experience and from a reduction in capex.
And to actually see a first reduction interest rates by day.
Peter Hoetzinger: Again, we are in a transitory period right now, but we have a clear plan to fully focus on generating cash to de-leverage and opportunistically also buy back stock later this year and next. We are fully focused on the projects that we have underway and are really looking forward to the end of this current intense capex cycle. In our view, the third quarter of this year will present kind of an inflection point for free cash flow generation, given the rolling off of the CapEx project. Speaking about our performance in operations this year. As we look forward now, mid-January and early February were terrible from a weather standpoint.
And we had it we had a transitory period right now that we have a clear plan to fully focus on generating cash to deleverage and Opportunistically also buyback stock later this year and next.
We are fully focused on the projects that we have underway and are really looking forward to the end of this current ethane skip excited.
Now I'll review the third quarter of this year will present kind of an inflection point for free cash flow generation, given the rolling off of the Capex projects.
Yeah.
Thinking about our performance and operations this year.
As you know call. It now meet Chenier and early February was terrible from a weather standpoint.
Peter Hoetzinger: I think that's well understood across the market. In the span of three to four weeks, most of the regional operators were significantly impacted by weather. So we, like everybody else, start in a January hole, as Tom Rickards put it. In mid-February, the weather was more back to normal, and we see that customer trends over the past two weeks have rebounded to fourth-quarter levels. We continue to keep a close eye on consumer spending patterns and general economic conditions for impacts on our casino and resort customers to share our outlook with you, with all properties being in great shape in 2025. We see us approaching $700 million in revenue in 2025, with EBITDA margins in the 24-25% range. Our CapEx in 2025 should come in at approximately 20 to 25 million.
I think that's well understood across the market in a span of three to four weeks most of the regional operators were significantly impacted by weather.
So we as everybody is starting to generally hold as Tom Rick wishes would put it.
And Mitch temporary but it was more back to normal.
He had customer trends over the past few weeks it rebounded to Columbus.
We continue to keep a close eye on consumer spending patents and general economic conditions, the impact Sinarquist, Andrew silica customers.
To share our outlook with you.
It's all properties being in great shape in 2025.
You see us approaching 700 million in revenue in 2025.
EBITDA margins into the 24% to 25% range.
Our capex in 2025 should come in at approximately 20 to 25 million.
Peter Hoetzinger: Operationally, we are proactive, assessing every aspect of our properties, striving for cost reductions and enhanced efficiency. In closing, I want to reiterate our enthusiasm for the second half of this year and for next year, from the third quarter onwards, and certainly 2025. Results in free cash flow should improve significantly for these reasons. Additionally, Q3 of this year will mark the end of our elevated capex cycle. By then, the Nucket and Rocky Gap acquisitions will be fully integrated.
Operationally, we are practice assessing every aspect of our properties striving for cost reductions and enhanced efficiencies.
In closing I want to reactivate our enthusiasm for the second half of this year and for next year.
From the third quarter on and certainly 2025.
Results in free cash flow should improve significantly so these reasons.
Q3 of this year marked the end of our elevated Capex psyche.
Hi, Dan and not get in Rocky get acquisitions will be fully integrated everything will be operated as one cohesive portfolio.
Peter Hoetzinger: Everything will be operated as one cohesive portfolio. Also, in Q3, all casinos in Poland will be up and running again. And in Q4, we'll open the brand new land-based facility in Corrado. And from then on, we'll have no more construction disruption, and all properties and operations across the entire portfolio will be in their best shape. The only other point I'm going to make is that, from a guidance perspective, as mentioned earlier, last year we had softness in the second half. We think that's an opportunity in the second half of this year since that comp is going to be a little easier to meet.
Also in Q3, all casinos in Poland will be up and running again.
And then in Q4, we opened a brand new land based facility in Colorado.
And from then on we will have no more construction disruption and all properties and operations across the entire portfolio in the best shape.
The only other point I'm going to make you said from a guidance perspective.
Mentioned earlier last year, we had softness in the second half.
We think that's an opportunity in the second half of this year since that comp is going to be a little easier to meet.
Operator: And that concludes our prepared remarks. We will now open the call for Q&A. Operator, go ahead, please. Thank you, and at this time, if you would like to ask a question, please press star 1 on your telephone keypad. You may remove yourself from the queue by pressing star 2.
And that concludes our prepared remarks, we will now open the call for Q&A. Operator go ahead. Please.
Thank you and at this time, if you would like to ask a question. Please press star one on your telephone keypad.
We remove yourself from the queue by pressing star Xu.
Operator: Once again, that is Star 1 to ask a question. And our first question will come from Jeff Stantial with Stiefel. Please go ahead.
Again that is star one to ask a question and our first question will come from Jeff <unk> with Stifel. Please go ahead.
Hey, great. Good morning, Peter Erwin Margaret Thanks for taking our questions.
Erwin Haitzmann: Hey, great. Good morning, Peter, Erwin, Margaret. Thanks for taking our question. Maybe starting off here on the U.S. business, Peter, you talked about broad-based softening in the low-income consumer, which started midway through 2023. Can you just expand a bit more on how that's trended directionally? Has the low-income consumer worsened, or stayed mostly stable?
Maybe starting off here on the U S. This is Peter you talked about broad the softening in the low income consumer which started midway through 2023 can you just expand a bit more on how that's trended directionally at the low income consumer worst in paid mostly stable and then for the more mid to high worth segments of you know.
Just any changes in behavior here sequentially across any of your markets.
Okay.
Okay.
Erwin Haitzmann: And then for the more mid- to high-worth segments, have you noticed any changes in behavior here sequentially across any of your markets? Okay, I'll take that question. We, this is, I think we have to look at it from a market by market perspective. In the east, our customers are visiting our properties as often as before, but they spend, likely, less per visit. Visitation declined in Rocky Gap and Mountaineer, and the unique customer count decreased accordingly.
I'll take that question.
Steve.
Okay.
This is a I think we have to look at it from that.
Oh on Matthew.
Market by market at the facility.
In the east our customers are visiting our properties as health next before.
Thanks, Bentley can play at V C.
Visitation decline in Rocky at Rocky gap in mountaineer, and the unique customer count decreased to call. It an <unk>.
Erwin Haitzmann: For Mountaineers, Ventrip is flat, and for Rocky Cap, it's up. In Missouri, our customers are healthy, they visit more often, and they spend the same as last year. Colorado visitation is also the same; people spend slightly less. The middle and lower tiers drive our business in Colorado. And in the Nugget, overall visitation is slightly down, and unique patron count is flat. The younger demographic, under 30 years of age, increased by 26 percent, which is interesting, and the amount spent per trip is flat.
For mountaineer and trip is flat and Philadelphia catheter.
Missoni a customer.
A healthy they visit more often they spend the same as last year.
Colorado Visitation is also the same 3% slightly less.
The Midland Lilah Tsi business in Colorado.
And then I think overall, the case and slightly down.
And that's unhealthy snacks the.
The younger demographic.
I understand he is increased by 26% which is interesting.
And spend per trip is flat.
Erwin Haitzmann: We don't think that inflation, at this point in time, needs to be a major concern for us. Okay, great. Thanks for all the granularity, Erwin. And for my follow-up, turning to the Canadian business, it looks like EBITDA margins were up nearly 7% quarter-on-quarter despite, and correct me if I'm wrong here, historically somewhat limited seasonality. Peter or Erwin, can you just expand a bit on what's driving this? Were there any one-time benefits in the quarter? Is this just sort of strong execution on the cost side of things? Just any thought there would be helpful. Thanks. Not just one time.
Overall.
We don't think that inflation at this point in time needs to be a major concern for us.
Okay, great. Thank her for all the granularity of it.
For my follow up turning to the Canadian business. It looks like EBIT margins were up nearly 7% quarter on quarter, Despite and correct me if I'm wrong here historically somewhat limited seasonality Peter Erwin can you just expand a bit on what's driving this were there any one time benefits in the quarter or is this just sort of strong execution.
On the cost side of things just any thought there would be helpful. Thanks.
Nook longtime that yet and we think it's strong in conclusion, we really have a fantastic management team there and it took an IDE for our tanks and 90 to catch on that knowledge has called on.
Erwin Haitzmann: We think it's strong execution. We really have a fantastic management team there. And it took a while for Century Mile to catch on, but now it has caught on.
Erwin Haitzmann: We were also able to find a solid customer base there, and we have every reason to believe that this will stay the same or get better. In fact, because again, going forward with the Edmonton Casino in a few months, there will be no more impediments due to traffic. And then we're also working on improving both the outside and the inside of the St. Albert Casino. So these are things that will be positive.
He was able to close some time before the customer base there and we have every reason to believe that this will stay the same or get better in fact it costs.
Again going forward.
The Edmonton Casino in a few months there will be no more.
Impediment.
And then we also.
They're working on including both the outside and the inside for the St. Albert Casino, but these are things that would be a positive and then.
Erwin Haitzmann: And then we look optimistically into the future in Canada. Okay, great. Thanks for that. Erwin, if I could just squeeze one more in quickly.
We look optimistically to the field say in Canada.
Okay, great. Thanks for that and if I could just squeeze one more in quickly it looks like to me apples to apples Capex guidance for 2024 was lowered.
Erwin Haitzmann: It looks like, apples to apples, CapEx guidance for 2024 was lowered a bit versus the 46 million that was cited in the press release when you reported preliminary Q4 results. Peter or Erwin, can you just talk about this decision a bit more? Are you delaying certain of the projects that you laid out for us in the Q3 presentation? And if so, what's the overall rationale?
Lowered a bit versus the 46 million that was cited in the press release. When you reported preliminary Q4 results Peter or when can you just talk to the decision a bit more are you delaying out certain of the projects that you laid out for us in the Q3 presentation and if so what's the overall rationale.
Yes.
Erwin Haitzmann: Thanks. Yeah, we just, so to speak, streamlined the investments a little bit as we, in particular, at The Nugget, obviously, that was a learning process or was indeed a learning process. And in that last time, we were, we thought we would do another, kind of almost upscale restaurant, but we've delayed it a little bit now. We think we're better off focusing on upgrading the existing restaurants for now.
Yeah, we just it's just so to speak screamed that investments a little bit Italy in particular.
At the Nugget Lee.
Opposite to that lesson learned of Olson Ethernet impulses and in debt.
Last time, we were.
We felt it.
Another.
Almost upscale restaurant, but at least be later, but now we think we're better off focusing on upgrading the existing way expense for now.
Erwin Haitzmann: That will take us a little time, and then we'll see how that goes, and then we will come back to the decision on what exactly we do with an additional restaurant. Okay, great. Perfect. That's all for me. Thanks for all the comments. Yeah.
It will take us even at a time and then we'll see how it goes and then come back to the decision on what exactly two within at least in the restaurant.
Okay, great perfect. That's all for me thanks for all the color.
Yeah.
Okay.
And our next question will come from Chad Beynon with Macquarie.
Please go ahead.
Hi, guys. This is Sam on for Chad. Thank you for taking our question.
Operator: And our next question will come from Chad Beynon with Macquarie. Please go ahead. Hi guys, this is Sam on behalf of Chad.
And we know it's still early days and there's a lot to be determined on how a sports betting or I gaming legalization might occur in Alberta.
Erwin Haitzmann: Thank you for taking our question. We know it's still early days and there's a lot to be determined on how sports betting or iGaming legalization might occur in Alberta, and now it looks like Maryland is the possibility. We're hoping to get your high-level thoughts on your online strategy for those regions, and ultimately, if or when they legalize it, it can be a net positive for your operations in those.
And now it looks like Maryland is the possibility I was hoping to get your high level thoughts on your online strategy for those region and ultimately if or when they legalized if it can be a net positive for your operations in those regions.
I'll take the first part and then hand over to Peter Oh I see.
And I gaming is already looking at that that is.
Erwin Haitzmann: I'll take the first part and then hand over to Peter. OSB and iGaming are already legal in Alberta. It's provided by the Alberta Gaming and Liquor Commission, and casino operators are not participating in that.
Provided the best gaming and liquor Commission and to casino operators.
And not participating in that.
Peter would you like to comment on Maryland, and and our overall strategy, which will probably keep as we have it now.
Erwin Haitzmann: Peter, would you like to comment on Maryland and our overall strategy, which we probably will keep as we have it now? Yes, in Maryland, they are discussing legalizing iGaming, and we certainly look forward to that with our license. The approach will be the same as we do in Colorado and in West Virginia, and in Nevada. We are providing our license to experienced and large online game operators. They pay us a percentage of the revenues they generate with our license, and that has a minimum annual guarantee included for us. Outside of Maryland, we also have hopes for Missouri to legalize online gambling.
Yes.
And make sure that they are discussing.
To legalize.
Aiming and.
We look forward to that.
With our license the approach will be the same as we do in Colorado and in this the ciena.
And in Nevada, we are providing our license to experienced.
That's.
Online gaming operators they pay us.
Percentage of their revenues they generate with our license is that there's a minimum annual.
Guarantee.
Included for Us.
Outside of Maryland, and we also have hopes on Missouri to legalize.
Peter Hoetzinger: Sports betting, hopefully, this year, because, as you know, we have two licenses there, and there's strong interest from the online operators. So that would provide us with quite a nice boost to our EBITDA in Missouri as well. We have no costs associated with these agreements, so everything that we receive goes to the bottom line.
Sports betting hopefully D C. It because as you know we have two licenses there and there is strong interest from the online operators.
So that will provide us.
Quite a nice boost to our.
EBITDAR in in Missouri as well.
We have no costs associated with disagreements so everything that we receive or it goes to that to the bottom line.
Peter Hoetzinger: And we certainly feel it's a net positive for us at all the locations where we have that strategy in place already. In West Virginia, as you know, it's not only sports betting but also iGaming. And we work with two providers there that work very well for us. Thank you for the color. And then a follow up. I wanted to ask about Poland and the ramp for the remainder of the year. Is it possible you guys could start running the double digit EBITDA that we saw in 22 this year? And then on the M&A front? Is that something discussion you guys plan on having right away? Or do you have to do it?
And we certainly feel it's a it's a net net positive for us all.
The locations, where it will behave.
That said she places already Mr. Ciena as you know, it's not only sports betting, but also ready I gaming and <unk>.
We work with to provide a standard drug southern cross.
Thank you for the color and then a follow up I wanted to ask about Poland and the ramp for the remainder of the year is it possible you guys could start run rating the double digit EBITDA that we saw in 'twenty. Two this year and then on the M&A front is that something discussions you guys plan on having right away or do you are you going to.
Erwin Haitzmann: Are you going to wait for properties to sort of ramp up? I'll answer part one and then hand over to Peter again. So the way I think about it is, casinos are successful, and we believe that at the latest, in 2025, we'll be back to what we could call normal in casino Poland, and that would mean two-digit EBITDA figures in USD. 2024 has started very well in spite of the fact that what's left is still closed. It's too early to say, we don't want to speculate, but it's developing in the right direction.
Wait for the property as to sort of ramp up to full capacity.
And then for Park, one and then we'll go to the <unk>.
So there's.
No concrete casinos, so successful and we didn't need the latest complaint. Thank you hi, good evening.
Back to.
So normally in casinos, Poland and that would mean two digit ebitdas ticketing USD.
'twenty 'twenty four and he started.
That's perfect.
He's skills.
It's too early to say, but we don't want to speculate but it's developing in the right direction.
Peter Hoetzinger: And Peter, maybe you want to talk about our plans for selling. Yes, as we have received all the three licenses again, we have now restarted the trading process, in the early stages, but we think this year, in the second half of this year, we should have a better chance than before to get a reasonable price for our operations. Great. Thanks a lot for the call. I appreciate it. And as a reminder, that is star number one to ask a question, and our next question will come from Jordan Bender with Citizens J&P Securities. Please go ahead. Hi, this is Eric Ross on behalf of Jordan.
And Peter maybe you want to talk about the plans for Chile.
Yes.
Since the only three licenses scan.
We have now reached optics that sales process.
Early stages, but we.
We think.
This year second half of this year, we have.
You should have a better chance than.
And then before took at a reasonable price for our operation staff.
Great. Thanks, a lot for the color appreciate it thanks Ann.
Yeah.
And as a reminder, that is star one to ask a question and our next question will come from Jordan Bender with citizens JMP Securities. Please go ahead.
Hi, This is Ross on for Jordan, Thanks for taking our questions.
Operator: Thanks for taking our questions. So, knowing that Reno has traditionally been a competitive gaming market, I was wondering if you could provide some details on the environment there nearly through the first quarter and what the group and convention outlook for the year looks like. Okay, so Nugget, obviously, Reno, which is a very competitive market, and I think everybody has seen pressure. Partly due to the pressure from the bad weather. As you know, part of our market is west of the Rocky Mountains, and whenever there is either an announcement of snow possibly coming or actually snow coming, we and all of Reno's Park are impacted. Concerning the conventions and events, 2024, in fact, is the most exciting calendar. We have an impressive lineup of bands, and we have outdoor events like the annual RIPCook-Off with the new reggae festival, Hot August Nights, and the new October Festival. Our 8,500-seat outdoor theater is a big draw, and it's, quite frankly, a unique feature at the Nugget.
So knowing that real has traditionally been a competitive market I was wondering if you could provide some details to the environment. There do you think through the first quarter.
What the group and convention outlook for the year looking like.
Okay. So.
Knock it obviously arena because of dairy.
Competitive market and I.
I think everybody has seen pressure.
Due to the coming from the bad weather.
As you know path market East West of the Rocky Mountains, and whenever they have right now.
And then announcement of snow.
Sibley Commingle action No company that where we ended the all stock.
Taxes are impacted.
Concerning the conveyance since any names.
Thank you. Thank you point Panties, then I think it has the most exciting calendar yet.
He has an impressive lineup of bands.
We had also mentioned that the annual with Coca.
The new radio Pescatarian Hot August nights, and then you won't overpay.
Our 8500 <unk> Alpha.
Nicole.
And it's quite a unique feature P check nugget.
Peter Hoetzinger: Okay, that sounds great. And just to follow up on the capital plans discussed, can you give us an update on your thinking about the remaining real estate for the Nugget? Would you ever consider going 100% off the grid there to help pay down debt?
Okay that sounds great and just to follow up with the capital plans discussed can you give us an update on your thinking about the remaining real estate for their nugget would you ever consider going at 100% outgrow there to help pay down debt.
Operator: Thanks. Could you be so kind as to repeat the question? I did not acoustically hear it.
Could you. Please repeat the question I think the acoustic and entertaining.
Operator: Yeah, so I was wondering if you were on the remaining real estate for the nugget, would you ever consider going 100% off code there and helping pay down debt? We don't consider that at this point in time, but we have some more time to make a final decision. Great, thank you. And again, that is star number one if you would like to ask a question.
Yeah, it's Doug.
I'm wondering if you would on the remaining real estate for the Nugget would you ever consider going 100% correct.
How can you pay down debt.
We don't we don't consider David this content time.
But we have some we have some more time to make a final decision.
Great. Thank you.
Yeah.
Okay.
And again that is star one if you would like to ask a question.
Operator: And it appears we have no further questions at this time. All right, very good. Thanks, everybody. We appreciate you joining our call today, and we will talk again after the first quarter. Till then, thank you, and goodbye. And this will conclude today's conference. Thank you for your participation, and you may now disconnect. Please Like, Subscribe, & Comment on where we head to next! www.larryweaver.com This video includes a paid advertisement
And it appears we have no further questions at this time.
Alright, very good thanks, everybody. We appreciate you joining our call today.
And we will talk again after the first quarter.
Well then thank you and goodbye.
And this will conclude today's conference. Thank you for your participation and you may now disconnect.
Okay.
Okay.
Uh-huh.
Hmm.
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