Welcome to Century Casinos, Q3 2021 Earnings Conference Call. This call will be recorded. At this time all participants will are in listen-only mode. Later we will conduct a question-and-answer session. I would like to introduce our host for today. Mr. Peter Hoetzinger. Please begin, sir.

Good morning, everyone. And thank you for joining our earnings call. With me on the call on my co-CEO and the Chairman of Century Casinos Erwin Haitzmann, as well as our Chief Financial Officer Margaret Stapleton. As always before we begin, we would like to remind you that we will be discussing forward-looking information, which involves a number of risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. We undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. We provide a detailed discussion of the various risks factors in our SEC filings and encourage you to review these findings. In addition, throughout our call, we refer to several non-GAAP financial measures, including but not limited to adjusted EBITDA. Reconciliations of our non-GAAP performance and liquidity measures to the appropriate GAAP measures can be found in our news release and SEC filing available in the investor section of our website at cmtvy.com. I will now provide an overview of the third quarter results. After that there will be a question-and-answer session. Our results for the third quarter has been truly outstanding. Revenues exceeded the third quarter of last year by 22% and they doubled compared to 2019. $817 million, we set the new all-time revenue records for the second consecutive quarter. Very strong flow through and the consolidated margin of 28%, resulting adjusted EBITDA of $33.1 million for the quarter or was a new all-time record for a company. That is 49% higher than the EBITDA of Q3 of last year. Sequentially, it is 31% higher than the EBITDA of the second quarter of this year. Considering yesterday's reaction to stock market, let me point out that our sequential revenue and EBITDA growth…

[Operator Instructions] First question is from Jeff Stantial.

Hey, good morning, Thanks for taking our questions and congrats on a nice set of results here. For my first question, we've talked a lot this earnings cycle about trends here in the U.S. So I wanted to focus on the international ops for a second. Can you talk a bit about the month-by-month cadence of performance for Canada and Poland? Has it been fairly stable since their respective reopening to the witness any acceleration or deceleration? Just curious to hear your thoughts there.

Yes. Pretty stable and very much in line with the various measures. So when we as Peter mentioned before, in Canada, we didn't have [indiscernible] and have restrictions. People have to wear a mask or produce a proof for vaccination. That of course, limits the speed of growth and the acceleration a little bit. However, we have also seen that across both vaccines and actually both important and in Canada, people are getting used to wearing -- that were being vaccinated to wearing a mask or to have to do a test. And more and more people have been vaccinated in the various jurisdictions, which also means that customers that may have been hesitant to visit us now feel safe. And then visitors more frequency and stay longer. So all in all, we can say that we see growth everywhere, with the only exception that the one or the other COVID restriction limits that growth -- the speed of the growth a little bit.

Okay, perfect. And then for my follow up, Peter, any update you can provide on the Poland sale? And then on the M&A environment you’ve talked about in the U.S., how does the seller expectations feel relative to kind of one last okay, Q2 earnings? And that's all for me, thanks.

In Poland, that sales process continues. It runs, but it runs quite slowly. Several parties are showing interest on and off basis. But we are finding ways. These operations are pretty valuable. They produce nice results. And overall they're getting like smaller and smaller relatively because they are now about 9% or less than 9% of our consolidated EBITDA. So that's the situation there. And on the M&A front in the U.S. I think it's slowly starting. I mean you you've heard Tom Rigg saying that they're interested to sell. It's starting always in Vegas. I mean, MGM is selling the Mirage. So it's starting. And yeah, in terms of valuation, you can talk about market buzz all day long. It always depends on you apply to -- to which EBITDA do you apply? So it's a combination of finding the right multiple. And agreeing on an EBITDA to apply to. But we see, slowly but surely more and more properties becoming available.

Okay, correct. Very helpful. Thank you both. I'll pass it on.

The next question. It's from David Bain.

Great. Thank you. Very nice quarter. A lot of the big questions were addressed. But maybe we can drill down a little bit on the eminent M&A environment that, Peter, you're just speaking to. Understanding valuations tightened a little bit, and you've always been sensitive on that front. It seems like through earnings season, the larger companies you mentioned, one of them being increasingly focused on sort of the virtual gaming world and spending larger amounts there. I mean, could that open up baskets of sellers more? Are you hearing of new product potential? Sounds like you were to that end. Can we see property baskets? I know you were looking at I believe 15 up to maybe $60 million of EBITDA, but given your cash accumulation, and some of the larger ones potentially looking to loosen their portfolios a little bit. We punch through that at the right price? Are you not seeing that type of product at this point?

Yeah, we're starting to see that. Absolutely. And, yeah, the only business does payroll. Because surely, most of the larger companies with a large footprint throughout the U.S., they do want to have at least one property in a state to secure an online license in that state. But should they have more than one in the state. And more likely some of those will become available? And yeah, and so this is what we're seeing from pretty much all of the larger companies.

Okay, great. And then I know this was somewhat addressed as well, but maybe just kind of reiterating or drilling down on Canada. Because that was a nice outperformance versus what we were anticipating. Maybe, looking at the U.S. reopening, has is sort of that reincarnated? And, are you seeing anything that would give you the sense that we wouldn't expect those same sort of tailwinds to be sustained like they have here? And maybe just a tad on energy prices for the portfolio in general, both domestic and Canada have that is something that's on the radar, is that typically not something that historically has caused too much volatility?

Erwin?

Yeah. I think I guess I tried to say earlier. Further growth will be fueled by easing the COVID restrictions, which obviously is no longer [indiscernible] and is the function of the development of the numbers there. But that means upside potential, because we would really think that these restrictions should be there forever. And so we feel very good about Canada and enter -- and the growth that growth potential it has and that we will be able to reunite it soon as restrictions are gone.

Anything on energy prices there in the U.S.?

It does not affect it. In Canada, that doesn't affect us significantly.

Okay. All right. Well, great quarter again. Thank you very much.

Your next question is from Kenneth [indiscernible].

Great quarter. I would like to just -- I think most of the question was answered. But I was wondering if you could put a percentage basis on the amount that social distancing still can restrict your ability to earn full amounts of money on all your casinos. Do you have a possible percentage that the business would increase if this was all gone?

Yeah. I have in mind. But I think it's problematic to speculate on that. It's really hard to say. I mean, one way to look at it is looking at our pre-COVID levels. And that's it, we look at the first goal is to look at revenue wise to come back to the pre-COVID levels and then gradually to surpass them. And at the same time, with the cost that’s all that’s already in place, keep the EBITDA and EBITDA margins.

And also, at some of our casinos, we do not have all tailgate positions open which on a on a busy weekend has a negative effect. But we do not have detailed ends in terms of percentages yet.

Okay, thank you very much.

[Operator Instructions]. Your next question is from Colin McDonnel [ph].

Hi guys. Thank you for taking my questions. A few weeks ago, one of your competitors Boyd provided an interesting statistic. And I don't know if you guys could do the same thing. But they said their labor force had been about 24,000 before COVID. And it was down about 14,000. And they expected that only 1,000 or 2,000 people would have to come back to run the casinos at a full pace. Do you guys have any -- can you provide any similar type of information just so we can think about the fixed cost structure of the casinos in the next year?

If we don't have that at hand, we could try to get it to you later.

Yeah, okay. I think that would be very helpful. And just, you know, the other thing just looking at -- I know, you guys don't have very many sell side analysts, but the street estimate on FactSet for this year is $66 million and for next year, it's $88 million. And I'm looking at your numbers. So you guys have done $91 million of EBITDA in the last 12 months. So what is -- is there something missing on the street or the communication -- it seems like you guys are going to blow the numbers out of the water. And I'm just trying to figure out if I'm missing something.

Yeah. I think they wanted to be conservative. I'm sure they will update and numbers after this quarter. And but other than that, call it we don't give guidance. So it's obviously we understand in there.

But is there any significant reason that Colorado or Missouri or West Virginia would have a worse year next year than this year?

No. We don't see any significant reason.

Okay. Very helpful.

We think that is upside.

Great. Okay. Well thank you for taking my question.

Thank you.

And next question is from Chad Beynon.

Good morning. This is Jordan Bender on the Chad today. If you look at M&A, would you look to use or continue to use a REIT to possibly go bigger? And I guess what would your optimal capital structure look like? And where would you want to bring leverage?

Our goal is to grow not only in absolute revenue in EBITDA numbers, but also in property size, yes. And scatter OpCo, currently, we have 3 in the U.S. that we acquired from Eldorado Caesars on an OpCo. 2 in Colorado is PopCo. Mostly Canada is also owned by us. So that's a good mix. And we can -- we don't have like a clear call that we don't go below a certain percentage. So I think we could easily add another OpCo or HoldCo. We're fine either way. We do not need to own the asset, but we’re comfortable owning some. It's really more on an opportunistic basis. For us, it's more important How we like the asset how we like the market, the competitive environment, the regulatory environment. The specific location asset, those are the things that are far more important to us then then whether we can by the HoldCo or other OpCo.

Okay, perfect. And then obviously Poland outperformed -- I guess at least our expectations in the quarter. Revenues were actually over 2019 levels. You talked about that your casinos outside of Warsaw with the ones that kind of outperform in the quarter. Can you kind of talk about where the casinos within Warsaw fit just kind of thinking about how the model in this segment looking into ’22?

Okay.

That’s two Warsaw at the Marriott and Hilton and the others outside of the country. And historically, the Warsaw market is in absolute numbers much stronger than the six outside of Warsaw combined. So any uptick of the Warsaw properties has a meaningful impact on the overall Poland numbers. Erwin?

Right. Anytime I think and if I'm accurate, we are looking at what is happening in the first quarter where we are very optimistic in that direction. We see that the business customers coming back the Marriott and the Hilton, both getting much higher occupancy and also guested on to come to our casinos. So we're confident that in the next day so to speak, Warsaw was a casinos will follow the same trend as the casinos on the countryside.

Awesome. Nice quarter. Thank you.

[Operator Instructions] And that question is from Daniel Lang [ph].

Hi, guys, nice quarter. I was just wondering if there's any update on the Poland strategic review processes. Is the company sort of committing to the region at this point or any discussions there?

We have said that Poland has become a non-core operation for us. It is -- as I've mentioned about 9% or less than 9% of our consolidated EBITDA and consists of 8 small operations. So whilst it is generating very solid EBITDA in cash flow for us and very high returns on our investment, we strategically do not have had Poland in our long-term plans. If we get a good to get a good offer -- so in other words, it has great value for us. If we get that value, then yes, we decide to dispose of it. If not, we're happy keeping.

At this time, there are no further questions.

Thank you everyone for joining our call today. For a recording of the call, please visit the financial results section of our website at cnty.com. Stay well and goodbye.

That concludes today's conference. You may now disconnect.