Welcome to Century Casinos Q4 2020 Earnings Conference Call. This call will be recorded. [Operator Instructions]. 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 we encourage you to review these filings. 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 cnty.com. I'll now provide an overview of the fourth quarter results. After that, there will be a question-and-answer session. Net operating revenue increased by 26% and adjusted EBITDA grew by 87% over Q4 of last year. Over 80% of EBITDA comes from our operations in the U.S., where 4 out of 5 properties posted strong gains in both revenue and EBITDA. We are pleased with the robust results for the quarter, even though our casinos in Canada and Poland were closed over the busy Christmas holiday season. In our disclosures, we estimate our EBITDA in Q4 would have been $20 million or more than double that of last year. This great performance is also the result of the successful integration of the 3 casinos we acquired a little over a…

[Operator Instructions]. Your first question here comes from Jeff Stantial from Stifel.

I want to start with your operations in the U.S., if possible. We've heard from several of your regional peers that generally, things started to pick up sequentially in January and February. Is this something you're seeing across any of your U.S. markets?

Yes, we've seen that with the exception that we have about 7 to 10 days in February, especially in the Midwest, where the ash winter storms, it has some impact. But other than that, Erwin, that's right. We see some good performance, right?

Definitely, yes. Definitely. Exactly as you said.

Okay. Great. And then moving on to the Canada closures and the potential upcoming Poland reclosures, can you help us frame what the EBITDA burn rate looks like for those assets? That's my understanding, it's more limited in Canada comparatively given some government subsidies. But just any parameters around that to help us think about our models would be great.

I think, Peggy, maybe you can elaborate on that. Sorry. Peggy you can give us the numbers and then also include the effects of the government subsidies that we get in Colorado -- in Canada.

So for Canada, net from a cash perspective, where you look at burn rate from a cash perspective, we're burning about $600,000 a month in cash. And that is we are getting subsidies back as well. For Poland, let's see. You can pretty much -- from an EBITDA perspective, Poland is going to burn, there's a -- it will be running negative EBITDA. Let me see. Poland probably will be a negative $300,000 or $400,000 in EBITDA every month.

Okay. Great. That's helpful. And just to be clear, on the Canada burn rate, any -- can you -- what sort of sits below EBITDA if you're thinking about from a cash perspective? I'm just trying to -- and if you don't have these numbers on that, we can take this offline.

Yes. I don't really have these numbers right in front of me, but we can pull them together.

Okay, perfect. Yes. Appreciate that. One other quick one, if you don't mind, lastly on Poland, I appreciate that you can't elaborate further on an outcome there, but I was wondering if you could just help frame for us how you're thinking about pricing those assets? And what I mean by that is, are you thinking about things on a multiple of 2019 EBITDA? Or kind of how is the potential buyer handicapping the recovery time line there? And that's all for me.

No, obviously, I mean, everybody talks about normalized EBITDA. But then again, it's difficult to say what normalized EBITDA means, not necessarily 2019 numbers. And so yes, it's probably going to be somewhere around the 2019 numbers and based on that, reasonably marketable. So yes. But difficult to say at this stage. I mean Poland has a unique situation, and it's extremely difficult for outsiders to enter the market. So it's a great place for the incumbents, and that means every license that you have there has a pretty high value on the one hand. On the other hand, the license has a life of 6 years. So it's -- yes, it's a difficult question how to put the value on it because our company, Casinos Poland, has had its licenses for the last 30 years, also always has been relicensed. Interesting discussions with the potential buyers, and we probably should know more about -- in about 4 to 6 weeks.

I really appreciate the color and congrats on a strong quarter.

Thanks, Jeff.

Your next question comes from the line of David Bain from B. Riley Financial.

And congratulations on another quarter of margin and I guess, just overall execution. My first would be broad based, just we've heard a lot of domestic operators speak to a greater mix of a younger demographic. And now with the vaccine rollout, that core older demographic seems to be returning. I guess, one, are you seeing that same dynamic? And then two, if so, have we captured maybe a broader demographic out of COVID? Or do you think the demographic will simply rebalance over time? Any kind of thoughts around that would be helpful.

Erwin, do you have any thoughts on that?

Yes, we don't really see that -- what you have described, David. We have -- our demographics now are pretty much the same as they've always been. And so in the -- as a percentage distribution of age, but what we expect is that as the restrictions ease up or the vaccinations progress further, that more of the lower-end players will come back. But that not necessarily has an impact on the change in demographics in our casinos.

Okay. Interesting. And then if we look at the Missouri and West Virginia acquisitions, I think you were able to implement some improvements that have had a positive impact with little CapEx. Just looking at the targets that you may be reviewing today, is that the same type of dynamic you look for, like small things that you can do immediately to drive margin or revenue? Or should we view the next acquisition a little differently in terms of potential CapEx? I guess trying to understand if the Missouri, West Virginia model is one we should look at going forward.

Yes. We think very similarly as we've done before. So not -- once we address something, the money that investment that you would have to put into it is not going to be huge, but we want to make a difference just by being able to focus much more on that operation. And then, for example, the previous owner has been able to create synergy effects by introducing the property into our portfolio and eliminate certain overhead that was there, plus a lot of other smaller operational improvements that you see the property in need.

Okay. Great. And just because my first one kind of fell through there. If I could ask one more on Cripple Creek, one of your competitors is spending an additional $180 million on kind of a higher end hotel and amenities. Does that make you change your strategy there with the table game change? And potentially relook at former hotel plans for spillover traffic or whatever? Or are you just going to watch everything unfold before making any strategic changes there?

Peter, if I may. For the moment, we just watch and see. We don't see a need to actually react immediately. I mean if this is happening, this is great. It will expand the market. It will certainly bring more people up to Cripple Creek, and that alone is good for us already. And we think that by the operating signs we have will bring us part of that additional number of guests over, even if they sleep at another property. As you know, we have ample land available and also we have plans in the drawer that have been -- that have progressed rather well. So if one day we'll decide there is attractive upside to be gained by building our own hotel or expanding the hotel rooms that we have, we could rather quickly do so. But at the moment, it's not a priority.

[Operator Instructions]. Your next question here comes from Chad Beynon from Macquarie.

Peter, I was wondering if you could elaborate, maybe just a little bit more on the Caruthersville stats. I think you said revenue per player was up 40% in the quarter. And then at the beginning, I know you mentioned higher spend per visit and more time on device. Do you believe that this was an anomaly? Was it just kind of a sharp peak during holiday periods in the fourth quarter? Or is it something that's really showing that this property and the customers around there could continue to play at higher levels, particularly post-reopening when more people come back to the property?

We're seeing that great performance since June, actually since we've reopened both properties in Missouri. So it certainly is not a onetime thing. It wasn't a onetime thing in Q4. It has been happening for over half a year now. Erwin, any additional color from you?

I can only underline what you said. We -- I mean we can't say too much, but we are -- I can say, we're really, really pleased with the numbers in Caruthersville also in Q1.

Okay. Great. Appreciate it. And then given your higher free cash flow, you guys have generated $40 million of EBITDA in the back half of '20 despite some of these restrictions and closures. How are you thinking about your current lease? I know when you originally announced the acquisition, you had about 2x coverage. Are there opportunities to maybe adjust for that, take advantage of the multiples that REITs are paying for this rental stream? Or are you more focused on just deleveraging your conventional debt at this point?

Deleveraging is one thing that we focus on. And the other one when it comes to rent and the lease agreements we agreed. So we want to address that perhaps in connection with a new project, a new M&A situation, new acquisition that we may want to do this year. That might be the right time to address that. For now, the focus is on deleveraging and finding another good target.

And are you still thinking that roughly 2x coverage is the right metric to use for new deals or maybe slightly lower, but something kind of in that ballpark?

Yes, in that ballpark. We don't want to go too aggressive. I mean I'd rather be more aggressive on the cap rate, but you know us for quite some time, we have been a little bit conservative and I'd rather pay a lower total amount of rent because you never know in the next -- these are long-term agreements. You never know what's coming in the next 3 or 5 years.

Okay. Great. Appreciate it. Congrats on the results and best of luck.

Okay. Thanks, Chad.

And there are no further questions in queue. I will now hand the call back over to Mr. Peter Hoetzinger for closing comments.

Good. Thank you 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.

Thank you. This concludes today's conference call. Thank you for attending. You may now disconnect.