Welcome to the Century Casinos Q1 2020 Earnings Conference call. This call will be recorded. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. I would like to introduce our host for today's call, Mr. Peter Hoetzinger. Mr. Hoetzinger, you may begin.

Thank you, Ron. 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. We hope all of you, your friends and families are safe and in good health during these challenging times of the COVID-19 pandemic. 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. 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 encourage you to review these filings. In addition, throughout our call, we'll 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 earnings release and SEC filings available in the Investors section of our website at cnty.com. I'll now provide an overview of the company's status quo in light of the current crisis and then briefly review the financial results for the first quarter 2020. Following the prepared remarks, there will be a question-and-answer session. As with almost all casino companies, we closed our operations between March 14 and March 17 to comply with quarantines issued by governments to contain the spread of COVID-19. All of the closures are temporary, with the exception of the Casino in Bath, U.K. which remains permanently closed. In December of last year, we were in sale negotiations for the Bath Casino. However, in March, not…

Ladies and gentlemen, at this time, we will conduct a question-and-answer session. [Operator Instructions] And your first question comes from the line of David Bain with ROTH Capital.

Great, thank you, Peter, Erwin and Margaret. Hope you guys are well. As we reopen, are there some permanent or structural changes that you've identified that could allow for better flow-through or additional concepts that could carry more profitably generated revenue and can that carry forward to 2021? And if so, can you speak to the most significant differences as you open and target that?

Erwin, would you like to start that?

All right. Hi, David.

Hi, Erwin.

We haven't done any -- we have not done any structural changes apart from the fact that we used the time in Poland in our Marriott Casino, which is the busiest casino of all of Poland to completely revamp it, including redoing an air conditioner, which really needed it. And that was quite a job. So it kind of came in handy, if you want to say, and we used the time to completely redo that. And now well equipped for all temperatures that some might bring to give a pleasant experience to our guests. But other than that, we didn't do anything structural. However, we, like many other companies have once again re-thought our strategies and we definitely, more than ever, will focus on the value players -- on the upper end of the players. And that in itself, probably, say, is a good thing given the fact that we will have capacity limitations in all likelihood in most of our casinos. We, again, like others, will further push for digitization which should again bring some cost savings on the marketing side and, I guess, these are the main things that we have done from -- so far. Most of this is fluid and most of it we will have to play by ear and see how it develops. We are all ready to adapt quickly basically on a day-to-day basis depending on what the various jurisdictions will ask from us, so that we're able to react quickly.

Got it, okay. And then as a follow-up, can you break down sort of the larger pieces of the $19.8 million reopening costs? Is some of that earmarked as cached capital? I mean, just -- if you can give us what the larger buckets are, that would be helpful. And then just assuming the re-openings are on schedule or on the schedule that you gave us in the prepared remarks, it sounds like cash in June should still be $22 million, $23 million as cash flow begins to generate again. Is that kind of a fair estimate?

Margaret, please?

Yes. So, David, that $19.8 million is mostly cached cash and then some -- just some operating cash just based on the way cash flows for paying gaming taxes and things like that. And, yes, you're correct; we should be in the $22 million, $23 million range.

Okay, great. Thanks so much and congrats on the January, February results, particularly with the acquisitions. Thanks so much.

Okay.

And we do have another question. The next question comes from the line of Chad Beynon from Macquarie. Please state your question.

Good morning, thanks for taking my questions. Good to hear that you're well. Firstly on a normalized level of revenues to reach breakeven EBITDA, understanding that your properties have different cost structures and tax rates, is there kind of a range of what you need to get to, to get these properties to breakeven once they're open? Thanks.

On a property -- our property basis, that level is about 35% of pre COVID-19 revenues.

Okay, perfect. Thank you. And then just back on the liquidity situation. So, can you just kind of help us get comfortable with the cushion that you have here? If it's $20 million of cached cash, you're at $50 million at the end of April. That just leaves you a couple of months. Did you or are you exploring other sources of liquidity to maybe give you a little bit more cushion or are you just comfortable with, I guess, the timeline of openings and cash flow that you're projecting in the near term? Thank you.

We -- yes, we have plans in the upper draws, so to say. We have proposals, term sheets on the table for additional credit lines. We are also in ongoing discussions with VICI about other things that they can do to help us other than the CapEx requirement. And -- but we are, of course, also are seeing that the capital markets are open, should we want to do anything. And we also -- as you know, we also own 100% free and clear, many of our properties in Colorado, for example, also in Canada. So we could, if we wanted to do something with that real estate as well.

Okay, makes sense. Thanks, Peter. Best of luck.

Thank you.

And our next question comes from the line of Brad Boyer from Stifel. Please state your questions.

Yes, thanks for taking the questions, guys. First, was just around the monthly cash outflow number of $8 million. Could you tell us how much of that is just pure OpEx relative to everything else?

Do you have that, Peggy?

Brad, it's a little bit difficult to just come up with pure OpEx in this situation. We're dealing with paying -- the cash flow is mostly related to loan repayments and VICI and insurance payments, things like that.

Okay.

Yes, so, Brad, VICI and the interest and principal on the Macquarie loan, those two together is about $3.5 million already.

Okay, that's helpful. And then just second question is around CapEx. I assume you guys are embedding some incremental roll-back there in light of what we're -- how are you thinking about kind of CapEx for the remainder of the year at this point?

Just really is a minimum, Erwin. Yes? Would you like to comment?

Yes, it's a little [indiscernible] necessary.

We've redone our casinos in Girardeau are in great shape, as you know and just in the fourth quarter, we've opened an expansion at Century Downs. So, yes, we have -- so we've cut it back to the minimum and we don't have any things that are really necessary right now.

Okay. And then I realize it's a very, very short window. But could you provide any additional color around what you've seen in Poland thus far? And I think more importantly, have you seen any bifurcation in customer behavior with regard to slots relative to tables? Any color there would be helpful. Thanks.

Absolutely. Peter, it's fine if I respond to the question?

Please.

Now, first of all, we opened in the night from Sunday to Monday because at midnight from Sunday to Monday we were allowed to open and three minutes after opening across the eight casinos in Poland, we had already 100 [ph] guests in there although that's quite an unusual time of the day, I would say. And the results for the first day is obviously, this is very early on, have been produced against the backdrop of us not being able to market it all. You know, we have a strong marketing restrictions in Poland. So it's really word of mouth that was going there. And -- but I think I could say everything looks very good. We are not far away from -- after two days already, we're not far away from a cash flow breakeven. And from the customers, which is -- how do your customers feel, how do the employees feel. I think the employees are all used to wearing the mask, and wearing the gloves if they have to, or masks or shields they can wear. And the customers only have to wear their masks. But again everybody is used to that by now, because it's not, obviously, not only the casinos where you have to wear the masks. And with regard to the favors in slot. There is not too much of a shift, because as you may remember, due to the Polish gaming law, we can only have a maximum of 70 slot machines per casino license. So these slots that we have has been very well placed, they were already at 60% of playoff pre- COVID times in the first two nights and the tables are ramping up a little slower because of the seat reduction that we're having. But overall, the assessment of us and of our management there is very positive. They're really excited about the business that we could see in the first days.

Perfect, thanks for all the color, guys and good luck on getting things back on line here.

Thank you.

Thanks, Brad.

And we do have more questions. Our next question comes from John DeCree from Union Gaming. Please state your question.

Hi, everyone. Two questions. One, I wanted to ask a little bit more about the $8 million cash need per month and probably getting a little granular but with Poland reopened and some racing in Canada and West Virginia, should we think about the actual cash net outflow going forward from here being something less than $8 million, now that there is a little bit of revenue back in the system?

We should but can you quantify that, Peggy?

Probably too early, right? [Indiscernible] the $8 million if everything was still closed?

Yes, yes.

Yes.

Okay, that's helpful. And then...

But we think -- okay.

Go ahead, Erwin, I'm sorry.

No, I just wanted to say basically Poland we think is the [indiscernible] carrying it already probably in a week from now and the next months kicking in, we'll see how they will come along.

Good, very good. Okay. In Canada, with the volatility and kind of sharp drop in oil prices, has that or do you expect that to have any impact on your business when it reopens? And then any comments you can provide on the kind of continued ramp of your new property in Edmonton would be helpful.

In Alberta, we also have a lot of business from retired people. So they are not affected by the oil situation and also don't forget the recent decision on the expansion of the Trans Mountain oil pipeline that, up there, everybody's enthusiastic about it and it should lead to a very strong recovery. On top of that, now after the recent reduction in the provinces' corporate tax rate, Alberta has the lowest corporate tax rate of all provinces in Canada, 8%. So they are doing a lots of things to stimulate the economy and we actually -- we see pretty encouraging signs. In terms of ramping up of Century Mile, back to Erwin, please.

It's just a little too early to say. You know, it would be speculation. We have to open and see how it's going. The property is in perfect shape, everything's fine or the ancillaries are there, once we can start the racing again. We are ready, but I would not speculate at this point in time about how quickly we can ramp.

For January and February at Century Mile, have you seen kind of continued growth or margin improvement over the fourth quarter before COVID at Century Mile?

We have, but it's been pretty cold there so those two months certainly have been weather -- impacted by weather and again, it's not really representative of what we see over the whole year.

Got it. Fair enough. Thank you, everybody.

Thanks, John.

And we do have more questions. The next question comes from the line of Hana Wilmart [ph] from Centennial Research. Please proceed to state your question.

Hi, thanks for taking my question. I was just wondering if you guys see any opportunities to make acquisitions coming out of the current COVID environment.

We see it a little bit but it's surely not our main focus right now. Yes, it's too early, and whilst we are -- I think things are being brought to us, so we are aware of what's happening out there; we see some opportunities. But right now, it's definitely not -- not our main focus.

Okay, and just to follow-up on that. Is there any sort of environment when you'll feel comfortable starting to look more into those opportunities?

I think after the summer. After the summer we -- if we are in good shape as we believe we will be with the reopenings occurring throughout the month of June; that will be a very decent time for [indiscernible].

Great, thanks so much for the information.

Thank you.

And we do have another question online. This comes from the line of Alex Silverman from AWM Investment. Please state your question.

Hi, there. You are -- are there any states or provinces that are talking about temporarily reducing gaming taxes in order to help the casinos?

So indeed, Erwin?

Yes, there is discussion about it in Colorado and conversely, there is also in -- and in at Berta [indiscernible] there is also a discussion about that.

I'm sorry, Colorado and where?

In Berta, Canada.

And Alberta; got it.

Yes.

Second question; you said getting casinos back to 35% of pre-COVID revenue on a property level would be breakeven. I assume that's property level breakeven and you -- then on top of that there is the corporate expense?

That's correct. Yes. And I said 35%.

35%?

Yes. And that's on a property level.

Got it. And then last question; I know that different states are discussing, you know, requirements in terms of social distancing, and such; at your peak, whatever, Friday or Saturday night -- what kind of utilization do you typically have for your slots at your different facilities?

Erwin?

I would say it will -- depending on their circumstances between 45% and 60%. As to get an effect, it will -- yes, go ahead.

No, please go ahead. No, please.

I wanted to say that has to do with our policy that we always try to make sure that we have enough product available on the floor so that our customers always can choose and are not forced to play machine just because it's failed or it's not the one they really would like to play.

So, if a peak -- if a key level is 45% to 60%, requiring that you only have 50% of your machines operating in order to separate people shouldn't be that big of a stretch for you guys?

That's very correct, exactly that's how we see this one.

Okay, that's all I've got. Thank you.

At this time, there are no other -- there are no further questions. I'll now turn it back over to our host.

Thank you. And thanks everybody for your interest in Century Casinos and your participation in the call. For a recording of the call, please visit the financial results section of our website at cnty.com. You have our best wishes for good health. Thanks again, and goodbye.

This concludes today's conference call. Thank you for attending.