Century Casinos Inc 2026 Q2 Earnings Call

Please go ahead, sir. Good morning, everyone, and thank you for joining our earnings call.

First, we would like to remind everyone that we will be discussing forward-looking information under the safe harbor provisions of the U.S. federal security laws. The company undertakes no obligation to update or revise the forward-looking statements, actual results may differ from those projected. Throughout our call, we refer to several non-GAAP financial measures, including but not limited to Adjusted EBITDAR. 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 cnty.com. With me today are my co-CEO, Erwin Haitzmann, our CFO, Margaret Stapleton, as well as our new Executive VP of U.S. operations, Lyle Randolph. After our prepared remarks, we'll open the call for questions from analysts.

I'm pleased to report that our diversified portfolio delivered a strong, solid quarter as net operating revenue came in at $152 million, a 1% increase over Q2 of last year. Adjusted EBITDAR was $31.7 million, a 5% increase. Both are all-time records for us. We've never had higher revenues and higher EBITDAR in the second quarter in the history of the company. Congrats to all staff members and management teams at our properties. The results reflect the continued benefits of our diversified business model, the success of our recent capital investment program, and growth in play across our casino portfolio. Poland spoiled the party a bit. That segment was underperforming due to the closure of the casino at the Hilton Hotel in Warsaw, as well as an unusually low hold on the gaming tables. We are hopeful and already see signs for improved performance over the next several quarters.

Moving away from Poland, I want you to focus on the North American operations, which had a great quarter and which generate around 90% of our total results. Going forward, the core operational metric that we will focus on will be U.S. plus Canada, plus corporate. That EBITDAR was up a strong 12% in Q2 and up 17% year to date. Every single property in our North American portfolio has grown revenue as well as EBITDAR year to date, with most properties growing EBITDAR by double digits year-over-year. In more detail, in the second quarter, U.S. revenue and EBITDAR were up 5% and 12%, respectively, Canadian revenue and EBITDAR were up 2% and 11%, respectively, quarter-over-quarter.

Highlights of the quarter were the tremendous performance at the Nugget, with revenue and EBITDAR up 16% and 93%, respectively, as well as strong performances in both Missouri and Colorado. We continued to increase operating efficiencies throughout the business, delivering higher property operating margins than last year. The average margin of the U.S. properties increased from 24% to 26%. In Canada, the margin grew from 28% to 30%. In the quarter, we benefited from growth across tour and retail customers, as well as from a predominantly local repeat customer base, our diversified portfolio, and limited exposure to new supply. As mentioned in our last call, we've been seeing solid customer trends since around December of last year, despite higher gas prices.

At most of our properties, the majority of our customers live within a 45-minute drive, and the overall economy, inflation, and especially employment, are more impactful than gas prices alone. I would say we also benefit from guests staying closer to home and spending their dollars closer to home for the last several quarters, especially as a result of the general economic factors, including high airfares and gas prices. Last but not least, we benefited from strong returns from the capital investments we made over the last two-plus years. These investments have finally entered the contribution phase, contributing to meaningful EBITDAR growth. With that, I'm very happy to introduce you to Lyle Randolph, our new Executive Vice President of U.S. operations. Lyle will provide more granularity and background on our U.S. properties, which drive approximately 75% of our total revenue and EBITDAR.

Lyle, go ahead, please. Thank you, Peter.

Good morning, everyone. Across our U.S. operations, a clear pattern continues to emerge. We are seeing a portfolio that is performing with greater consistency. We are seeing operational improvements translating into stronger financial results. Most importantly, we're seeing the operational work of the past several years begin to pay off. Across our seven U.S. properties, we have invested in our gaming floors, improved our marketing, strengthened our operations, and remained focused on creating a better guest experience. None of this happened overnight, but those efforts are coming together, and the second quarter provides another strong example. During Q2, our U.S. operations generated $111.6 million of net operating revenue, an increase of 5% over the prior year. Adjusted EBITDAR increased 12% to $28.9 million. Importantly, Adjusted EBITDAR grew more than twice as fast as revenue, demonstrating continued operating leverage across the portfolio.

That momentum extends beyond the quarter. Through the first six months of 2026, U.S. net operating revenue increased 5%, while Adjusted EBITDAR increased 16% over the first half of 2025. That is an increase of $7.2 million in Adjusted EBITDAR in the first half of the year from the U.S. properties. That consistency in growth is the real story. As we take a step back and look broadly across the portfolio, we're reminded that Century does not simply operate seven casinos. We operate seven unique destinations across five gaming jurisdictions, each with its own history, customer base, and competitive position. Together, they represent an important piece of America's regional gaming heritage.

From Rocky Gap, the only casino resort operating within a state park in America, to Mountaineer, where the world's first racino pioneered a new chapter of regional gaming, to the riverboat gaming history of Missouri, to Colorado's historic gold mining communities, and finally to the Nugget, one of northern Nevada's iconic gaming brands. Each property brings something different. Our strategy is to preserve what makes each one unique while applying a disciplined operating approach that drives stronger and more consistent results. Beginning in the West, the Nugget continues to demonstrate why we believe it represents one of the greatest opportunities within our U.S. portfolio. Net operating revenue increased 16%, while adjusted EBITDA increased more than 93%. More importantly, this was Nugget's third consecutive quarter of year-over-year adjusted EBITDA growth. The Nugget had a strong entertainment calendar in the second quarter.

The Brooks & Dunn concert in April sold more than 7,800 tickets, and the Keith Urban show in June contributed to over a quarter million dollars in incremental profit. The Nugget story is much broader than concerts. Slot coin-in increased approximately 6%. Hotel cash revenue increased more than 36%. Hotel occupancy increased 19%, and year-to-date retail room nights reached a three-year high. We are also making better use of the hotel during historically softer periods. Transient corporate room nights increased more than 300% during the quarter. We continue to improve the casino itself through gaming floor optimization, stronger marketing, player development, and a greater focus on the local customer. We are also seeing improvement in the quality of the business. The number of guests generating more than 400 in average daily theoretical increased approximately 20%.

The Nugget is an iconic brand with a significant hotel and convention operation and includes a major entertainment venue. Our opportunity continues to be to make all of those pieces work better together. The last three quarters of the Nugget tell us that the strategy is not only gaining traction, but we still believe there is still significant runway ahead. Moving on to the Midwest region, our Missouri properties continue to be consistent performers. Our Missouri properties combined have now delivered seven consecutive quarters of year-over-year adjusted EBITDA growth. Combined net operating revenue increased over 8% in the second quarter combined. Adjusted EBITDA increased 9.6% at Cape Girardeau and 5.5% at Caruthersville. Just as encouraging is the breadth across of that growth. Across Missouri, theoretical win increased across all of our broader player segments.

At Cape Girardeau, we continue to see the benefits of improving an established property and becoming more sophisticated in how we engage with our customers. The Riverview Hotel, our food and beverage amenities, our event center, our retail BetMGM Sportsbook provide additional reasons to visit and more opportunities to extend the customer relationship beyond the casino floor. At Caruthersville, the story is the continued maturing of our investment in that market. Second quarter net operating revenue increased nearly $1.2 million. Rated gaming revenue increased 32%, and unique guests increased 9%. More importantly, unique guests traveling more than 50 miles increased 15%. That tells us that the new property is not simply serving the existing local customer, it is expanding Caruthersville's geographic reach. During the quarter, Caruthersville generated its highest quarterly gross gaming revenue, net revenue, coin-in, and slot win in the property's history.