Good day, everyone, and welcome to the Century Casinos Q1 2023 Earnings Call Webcast. [Operator Instructions] Please note today's call will be recorded. [Operator Instructions]. It is now my pleasure to turn the call over to Peter Hoetzinger. Please go ahead, sir.

Good morning, everyone and thank you for joining our earnings call. With me on the call are my Co-CEO and the Chairman of Century Casinos, Erwin Haitzmann; as well as our Chief Financial Officer, Margaret Stapleton. As always, we would like to remind you that we will be discussing forward-looking information, which involves several risks and uncertainties that may actual -- that may cause actual results to differ materially from our forward-looking statements. The company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. We provide a detailed discussion of the various risk factors in our SEC filings and we encourage you to review these filings. [Audio Dip] 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 releases and SEC filings available in the Investors section of our website at cnty.com. I will now provide an overview of the results of the first quarter 2023. After that, there will be a Q&A session. We delivered record first quarter net revenue and record first quarter adjusted EBITDA. Net revenue was $108.5 million, an increase of 5%. Adjusted EBITDA was $26.1 million, a 9% increase. We are particularly pleased that each single one of our reportable segments showed revenue growth compared to Q1 of last year. So it was an excellent start to year for our company, once again demonstrating the strength of our business model and the resilience of our diversified portfolio. Our strategy of focusing on increasing play from our co-customers and managing our business efficiently has delivered record results. We generated solid business from our core customers especially in January and February. As you get lower in the database, we didn't…

Thank you. [Operator Instructions]. Our first question comes from Jeff Stantial.

Great. Thanks. Good morning everyone. Thanks for taking our questions. Helpful commentary earlier in the call regarding March and April trend, Peter or Erwin, whoever wants to take this, can you just frame out a bit more the pullback that you called out in some of the lower income demographics in the database. I guess what percentage of the database does this cohort constitute? Or even better, what percentage of your revenues? And then just sort of -- what sort of income band does this group fall into to the extent you have looked at things this way? Thanks.

It was, as you said, more on the lower end and it was -- I don't -- it's not a trend, because we saw it in the last few days in March and then going into the second week of April. But from -- like from the third week of April on, it came back. So we had -- it was about a three week period of softness. So far, we are not see continuing. Maybe it has to do with the tax refund season. We're hearing that the refunds are about 10% lower this year. So that maybe we'll have to do something with it. Erwin, do you have additional color on that?

We don't -- no, no, we don't have the details that we asked for at hand, we would have to look and then send later.

That's helpful. I appreciate that commentary. And I tend to agree with your points there, Peter, on some of the timing of tax refunds playing the role here. Perfect. And then moving to my follow-up question. It looks like margins were up for your Canadian assets really quite nicely quarter-on-quarter. Can you just expand a bit more on kind of what's driving that?

Erwin?

I think it's just a good management, right? And we see various things falling into place and it's nothing in particular. What might be mentioned is that in the year-over-year, COVID has been lifted only, I think it was the end of February last year. So that has been franchise well.

Okay. Perfect. Very helpful. Thank you both all. I'll pass it on. And congrats on the nice quarter.

Our next question comes from Chad Beynon.

Hi, good morning. Thanks for taking my question. I wanted to ask about just kind of the balance sheet and capital allocation. On recent calls, you've mentioned that there's really no need to monetize anything, whether it's selling operations or some land value, which you might not be getting credit for. But now that the Nugget has closed, how are you thinking about I guess, just really revisiting that question with some real estate either to build or sell on that? And then on the international operations with Poland, if that still makes sense to operate into the future. Seems like there's a disconnect with where the stock is trading versus what the business and the asset value is? Thank you.

Thanks, Chad. Yes, we are evaluating that constantly. Also in light of the high interest we're paying on our debt. And yes, you're right, we're sitting on real estate in Colorado and Canada, and also partly in the market. So there are some very interesting discussions going on. And it's something that it's pretty high on our list to make some very positions there in near future. The value -- the land value that we still have is I think it's fair to assume that this is -- even though it's only with this was more casinos in Canada and plus the Colorado is substantially higher than our current market captures from the point of view, it's intriguing.

That's great. Thanks Peter. And then just with the rare weather that we saw in the first quarter and even the fourth quarter in Reno. You hadn't assumed operations at that point. But wondering if those lost trips from over the mountain led to pent-up trips? Or were those just simply lost during the period and maybe when elsewhere? Trying to figure out if Q2 and maybe into the summer period could benefit from how bad the weather was prior to that? Thank you.

Margaret, can you address that?

Yes, absolutely. I mean nobody knows for sure, but our guess would be maybe half of the trips are lost and the other half to worth like pent-up demand, and then there were more people coming and that might well continue. But with regard to the numbers, I think it's important to point to what Peter said anyway during his presentation that with regard to group business, concessive conventions we expect 2024 to be a very strong year for the Nugget.

Good point. Thank you both very much.

2023, I'm sorry.

Okay. Got you. Thank you both very much. Appreciate it.

Thanks Chad.

Our next question comes from Edward Engel.

Hi, thanks for taking my question. The Caruthersville property had a nice bounce back in the first quarter. Just wondering, was that a steady trend throughout the quarter? And I guess, does that kind of put this property on track to maybe start growing revenue versus the order facility? And then is the cost base, it should it be generally a higher margin property too since it's been relocated to land?

Erwin?

I'm not sure, I understood the question well.

Could the property I mean -- yes, I guess since Caruthersville has been moved into the temporary pavilion facility, is it possible to see revenue and margins higher than it was when it was on the River?

Yes. Yes, it could be. One of the things is, for example, that it's now easier -- accessibility is easier. And I mean as a whole, is just no comparison. I mean, so let's say, we were told there wasn't a single customer that has missed the ship. It's just so much better even if it's only temporary.

Okay. Helpful. And then is it fair to assume that for the month of April, since you took over the Nugget, it's been a relatively clean month in terms of not many big snow storms or anything, I guess. If so, is it possible to give us maybe some sort of EBITDA margin that you're kind of seeing that property run rate at right now?

I think that's too early.

Got it. Thanks.

Our next question comes from Jordan Bender.

Great. Thanks for taking my question. You mentioned kind of the uptick in your properties in Colorado. One of your competitors in Cripple Creek is under going to renovation. How much of that is maybe just business you're taking from that property versus maybe structurally taking some of these people and building loyalty from those customers? Thank you.

This is Erwin again. We have a very strong customer -- a loyal customer base in Colorado. In Cripple Creek, in particularly with regard to the construction going on from our competitors. We think we get a little bit of that -- as a result of their slightly disturbed operations, but it's not substantial. I think we are standing on our own, even after the opened, we are very confident that we will continue to be doing very well.

Okay. Great. Thanks. And then on my follow-up, Peter, you kind of walked through some of the puts and takes in the margin within the quarter. Within the U.S. business, is this kind of the right way to think about that margin progressing through the rest of the year, just given some of the renovation and then some strength in some other properties as well?

Yes. I mean we're getting into some stronger quarters now, summer. So we would hope that the margins will go up a bit from here for the rest of the year.

Okay. Great. Thanks guys.

[Operator Instructions]. Our next question comes from David Bain.

Awesome. Thank you. Just a follow-up on that previous question. So if we were to look at year-over-year in '23, it looks like margins were off like 170 basis points or something just on a consolidated basis. Is that kind of year-over-year -- is that something to sort of look for that sort of trend? Or should we start from a new baseline of where we are and see margins sort of going down from 1Q?

Now it should not go down from 1Q, Dave. They should go up a little bit from this quarter as we're heading into the summer season. And yes, as the revenue grows. As I said, we had some hold impact on slot and table hold in Without that, we would have been at the same margin as last year. And going forward, a little bit higher from [indiscernible].

Okay. Perfect. And then just we're trying to refine our nugget model based on last year's $27 million. I'm trying to understand if there's a percentage weighting that's typical on a quarterly basis? And then I understand that the strength with the convention. I didn't hear much on the -- unless I missed it on the entertainment calendar and kind of the CapEx investments like the slot floor when that could take hold? And just your overall sort of cadence to ramp as we look at the next several quarters to even year, that would be really helpful.

And at Erwin take that, he is in Reno right now.

We have a strong entertainment calendar for the remainder of '23 and also a strong group business calendar. We will -- we ordered 100 new slot machines, and we expect most of them to come in starting mid-May. So that should have a positive impact on the second quarter. And then in addition to that, we are looking at a series of what we call on the floor to make things nicer to improve on the layout of the slot machines, how they are laid out. We do a lot of work on the slot floor, and there is, we think, quite some upside. A lot of ups had potentially, in fact, and so from many angles, it looks very good.

Okay. Great. And that -- those investments that you make, are those -- I mean, given the patronage, does it take a while for them to sort of understand that there's -- those improvements that have been made? Or will there be marketing? I'm just kind of trying to figure out, again, sort of on a year-over-year basis, how we...

Yes. first of all, I think everybody in the floor knows already that there is a new ownership, and we have nothing but positive and nice comments. But another thing that we are doing is we're about to order the build the outside of the building to be repainted. So pretty soon, they will start painting and then everybody will again see that something is happening. We put on new signage on the two towers. So we'll have for new signs, large ones, better we brightened the rate of the Nugget slightly. We made the font more eligible all of which will be coming in the next month, and we think that it just will signal the new spirit. Then we also completely revamped the marketing approach, and we're in the middle of working on that. We will continue what is there now. But we will, in addition, focus more on the local market, we think there is certainly upside as well.

Thank you, Erwin. Thank you Peter.

Thank you.

we have no further questions in the queue at this time. I would now like to turn the call back over to today's speakers.

We appreciate everybody joining our call today. For a recording of the call, please visit the financial results section of our website at cnty.com. And if you have any follow-up questions, please feel free to reach out to us. Thank you.

This does conclude today's program. Thank you for your participation. You may disconnect at any time.