Welcome to the Century Casinos' Q3 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.

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, 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 news release and SEC filings available in the Investors section of our website at cnty.com. I will now provide an overview of the third quarter results and after that, there will be a question-and-answer session. If it wasn't for the Corona pandemic, we couldn't be more excited. On a consolidated basis, we've achieved all-time record numbers in the third quarter despite these challenging conditions. Net operating revenue of $95.7 million represents an 81% increase over Q3 of last year. Adjusted EBITDA was $22.2 million more than three times higher than in Q3 of last year. These fantastic results clearly reflect the successful integration of the three casinos we acquired late last year and the tremendous progress our local operating teams have made since we reopened all properties about five months ago. The strong trends we saw in June and July continue throughout the third quarter,…

[Operator Instructions] our first question comes from David Bain with ROTH Capital. Please state your question.

Thank you. Congratulations on the quarter. I was hoping we could discuss corporate strategy, first if it's okay. And potentially divesting or pruning some of the smaller maybe non-US portfolio how that makes sense for capital redeployment or if it does? Essentially, I guess kind of trading into heavier domestic EBITDA utilizing some of that lower rank non-US portfolio piece and potentially mitigating equity components as you get larger. Is that fair to think about or how you guys looking at that, at this point?

Yes, Dave. We have sold the casino operations in Calgary a couple of months ago and we still own the real estate but as you can imagine that's not really our intent to hold it for a very long time, so we will intend to sell that real estate in Calgary. And then the European operations now make up 4% of our total EBITDA, so that has moved to a very interesting and important part of our business a couple of years ago to being in non-core. And therefore, you may assume that we are thinking of trying to get a good deal for these assets in Poland. And on the acquisition front, yes absolutely, we see quite a lot of very interesting opportunities in the US. The regional players have become very, very big and naturally they are somewhat less interested in some of the properties that would be very important for us. We've now shown that we can successfully negotiate contract, close and then integrate a large transaction. And so I think that makes us a good buyer for some more of these mid-size assets and so yes, we are out looking already, so I think next year will be a very, very busy M&A situation in the US.

All right, fantastic. That's great color. And then if I could ask one more follow-up or one follow-up. We watched the gaming stocks move on COVID news almost seemingly daily. And I'm curious as to what you see on the ground in terms of the visitation or spend volatility in various markets? Or I'm not talking about the structural hurdles mandated by the agencies I'm talking about new spikes. Are you seeing any of that same volatility that we see in the market or is this has been a fairly even recovery and then just as kind of bifurcating component to that? Any 4Q events to be aware of that may have caused disruption. I don't know if like voting with the election or New Year's versus last year to kind of couple with that positive momentum that we see with West Virginia.

I don't see any of these events. Erwin, would you like to give your color on those two questions.

Yes, with regard to the volatility on recent events. We don't see that volatility in the US and Canada. But we see it in Poland. Again Peter said before not very important.

Great and then New Year and things like that shouldn't be really material as we look at this year versus last.

No. [Indiscernible].

Okay, great quarter again. Thank you.

Your next question comes from Chad Beynon with Macquarie.

Good morning, thanks for taking my question. Peter you ran through the - great detail with all of the segments. I wanted to dive into the sustainability of the margins and thinking about some cost that are currently out of the business, if they could come back. So in markets where your margins were really high and the number of positions were low and some of the non-gaming was low. Should we think that the margins will decline as some of these come back online and then the second part of that. Yes, how are you thinking about reinvestment rate and labor currently right now? Thanks.

Erwin, would you like to start?

Yes, happy to. We really would like to keep the margins and we think we have a realistic chance to do that. We'd be very hesitant to reintroduce number of the things that were there before. And when I say that we also - we hear that our competitors thinking exactly the same way and that is quite a good chance that everybody in any competitive market will have the same attitude and just not reintroduce. Most particularly on the lower end of what we gave away to the players with less volume. And that is also true with regard to the reinvestment rate. We feel comfortable with where we are and again, unless there is something really shattering happening, we want to hold on to our current strategy. Concerning labor, once again, what we have now is fine. If we should - but it could be that we have to add labor, I mean, naturally, we will have to add labor if and when we get table games reintroduced, where we don't have them yet and if we should widen the F&B of guest also, but it will all be very well thought through and it will be really zero budgeting so nothing would just be reintroduced because it was there before.

Great, thanks and then on Amendment 77 passing. How should we think about the opportunity? I believe you said that currently less than 15% of revenues come from tables and this will obviously increase that percentage. But do you believe that tables can climb up to more of a national average and then how should we think about the timing of when this can go into effect obviously notwithstanding other regulations going on with tables in Colorado?

Erwin?

Yes, the timing I think some time in end of Q1, early Q2 and with regard to the quantitative effect. It will be difficult to project but what I can say is that, in both our properties in Cripple Creek and in Central City. We have a number very nice hotel rooms, they are certainly competitive. So we have the tools to entertain. Well we think it's good to offer adequate hotel rooms to players that want to play higher volumes.

Thank you. Last quick one. Just on the free cash flow conversion from EBITDA. It looks like it was a little bit light and there were some working capital headwinds this quarter. How should we think about a normalized percentage of flow through to cash flow from operations and should that working capital start to swing back given you're in a more normal period, that's all from me. Thanks.

Can you give some comment to that?

Sure. Q3 we had some cash outflows catching up on things that were pushed off during the pandemic. We had a large payment on gaming license in West Virginia that was $2.5 million. So there was just a few higher cash flow items that you wouldn't see in EBITDA because they were in previous quarters and we expected it will normalize now in Q4.

Thanks, nice set of results.

Your next question comes from the line of John DeCree with Union Gaming.

Answered most of my questions already. But just one from me and I wanted to see if you could talk a little bit more about the older demographic that hasn't quite returned yet given the pandemic and something that your peers have talked about a little bit? I'm wondering if you can give us a sense of how important that segment is. If there's any kind of any way you could quantify this big piece of your database and how much has come back so far? It is been trailed other segments. But have come back less than that. Any kind of rough guidelines would be good given how important that segment is to the industry?

We see that Mountaineer as well as Colorado and in Missouri, Erwin do you have somewhat detail on that segment?

Not to answer exactly this question. We look at it from the volume of play just as much as from the age. But if I would have to guess, I would say more than half of the players are back and that is particularly true in the higher volume play.

Got it. And was that segment more frequent customer I guess as we kind of try to understand it, when you think about those segments. Are they coming more often? Do they generally spend more - I mean what kind of makes them a bit more valuable or important when you think about upside going forward?

Both. They come more often and they spend more, they stay longer and that's yes, that is already good enough, right?

Yes, it's great.

And in addition to that, they're purely interested in the gaming side of things. They're not so much interested in the other amenities that we offer. They're mostly pure gamers which makes them again higher margin people.

Yes, that's great and I guess that's kind of good segue into my follow-up question. I think you talked a little bit about marketing and labor. But in your prepared remarks you mentioned kind of being selective with the amenities that you bring back and you're kind of still attracting younger demographics that are going to convert hopefully into real customers. How do you think about bringing back amenities as the pandemic hopefully winds down in the not too distant future? Is there some amenities that are maybe going to away permanently? How do you think about bringing some of those back and what you might need or not need to bring back?

We have no intention to bring any of the phase back, so they are - I think they are gone permanently, whatever permanently means, but certainly, in any foreseeable future, we don't intend to have any of the phase back. And then when it comes to the other, you can take the food and beverage outlet, we would just take a step-by-step approach. For example, the Steakhouse in Mountaineer, that is not so much catering for the younger people, that is more, can I say, 40, 45 plus. As Peter mentioned earlier maybe not even that important, the Sports Bar restaurant in Mountaineer attracting younger people, yes, that probably comes on the weekends, probably move on with the next steps after - post-pandemic. But it will be a little bit of the trial and the error and that we will approach cautiously and with the attitude to rather err on the side of offering lower - too few than too many opening hours.

Thanks, Erwin. Congratulations on the quarter everybody.

There are no further questions at this time. Do you have any closing remarks Mr. Hoetzinger?

Yes, I would like to thank everybody for your interest in Century Casinos and for 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.