Q3 2025 Earnings Call: Contradictions Emerge on Canadian Operations Synergy, Retail Growth, and Concert Recovery

Date of Call: November 11, 2025

Financials Results

• Revenue: $154 million net operating revenue; quarter driven by East/Midwest and Canada, offset by weakness in West and Poland; management said Q3 EBITDAR would have increased ~5% after adjusting for one-time September items and Poland impacts

Guidance:

• Company expects a clear path to higher EBITDAR and cash flow in 2026 and beyond.
• Preliminary October results: EBITDAR up well over 20% year-over-year; positive customer trends continued into October.
• No significant CapEx needs next year; total 2025 CapEx ~$18M (about $15M spent).
• Net debt-to-EBITDA ~6.9x (lease-adjusted 7.6x); no debt maturities until 2029.
• Strategic review underway; no actions expected or disclosed before Q1 next year.

Business Commentary:

* Regional Performance Variability: - Century Casinos reported net operating revenue of $154 million for Q3, driven by strength in East and Midwest regions as well as in Canada, offset by weakness in the West region and in Poland. - The decline in EBITDAR was attributed to onetime effects in September, such as a breakup fee and bonus accrual reversals, as well as extra costs in Poland from a closed casino.

• Customer Segmentation Trends:
• Play from high-value and core customers continued to grow, contributing to an 8% increase in the upper customer segments, while low-end customers experienced a 9% decline.

• The broad stability in rated GGR was due to increased retail play, especially in the U.S. portfolio, despite a decline in visits from low segment players.

• Strategic Growth and Investment:

• The Century Casino and Hotel in Caruthersville achieved gaming revenue growth of 29% year-over-year, with EBITDA increasing by 35% to $6.1 million.

• Growth was driven by the first anniversary of the new property, reaching new markets, and strong performance in high-value customer segments.

• Operational Challenges and Strategic Review:

• The company experienced a 20% increase in EBITDAR for October, reflecting improved play from both core and retail customers.

• The recovery was supported by ongoing strategic reviews and a focus on enhancing marketing programs, particularly in Reno, to shift towards core players and improve F&B offerings.

• Cash Position and Debt Management:

• Cash and cash equivalents at the end of Q3 were $78 million, with $5 million spent on CapEx and $1.5 million on a share buyback program.
• The company maintains a strong cash position while managing its debt, with no significant CapEx needs expected for the next year, and no debt maturities until 2029.

Sentiment Analysis:

Overall Tone: Positive

• Management: "we are very confident in our business prospects" and "clear path forward to higher EBITDAR and cash flow for 2026 and beyond." They cite "preliminary results for October show EBITDAR up well over 20% compared to last year" and say trends are "encouraged by the trends in our business."

Q&A:

• Question from Jeff Stantial (Stifel): What is driving the strong results in Canada, and do you view Canadian assets as noncore versus synergies with the U.S. portfolio?
  Response: Growth driven by a visible facade upgrade at St. Albert and disciplined, motivated local management; Canada viewed largely as standalone with only incremental synergies.

• Question from Jeff Stantial (Stifel): Timing for group/convention normalization at the Nugget, potential room-night uplift, and underwriting of new entertainment programming?
  Response: Expect improvements into 2026 with group business likely flat-to-better in 2026; concerts being retooled (fewer, higher-quality acts) to return to profitability.

• Question from Jordan Bender (Citizens JMP Securities): Will the ETG approach used in Colorado be rolled out across other U.S. assets to help margins?
  Response: ETGs will be used selectively—replace tables in smaller properties where obvious, but larger casinos will retain both ETGs and live table games.

• Question from Jordan Bender (Citizens JMP Securities): How are you weighing share buybacks versus paying down debt into 2026?
  Response: No decision made yet; management is analyzing buybacks versus debt paydown and will decide after/in the context of the strategic review.

• Question from Ryan Sigdahl (Craig-Hallum): Is the October >20% EBITDAR growth broad-based and are there any unusual comps for November/December?
  Response: October strength appears broad-based; no unusual quarter-wide comps expected, though last year's Caruthersville land-based opening in early November may mute YoY at that property.

• Question from Ryan Sigdahl (Craig-Hallum): Why were July and September weak at the Nugget—were there cancellations or conference timing issues?
  Response: Weakness driven by absence of a couple of strong prior-year events (e.g., major concepts and a large bingo event) and less conference business in those months, not one-off cancellations.

• Question from Chad Beynon (Macquarie): Is Caruthersville on track to deliver the returns outlined for construction CapEx, and where will growth come from?
  Response: Yes, on track to meet expected returns; growth will come from both nearby and more distant customers with outsized potential from 75+ mile catchment.

• Question from Chad Beynon (Macquarie): Any evidence retail customer weakness will stabilize—causes (weather, comps, CPI) and confidence retail will improve in Q4?
  Response: Management attributes retail weakness largely to consumer sentiment/tariff worries affecting lower-income customers; they view outlook as friendly but cannot guarantee sustained improvement.

• Question from Chad Beynon (Macquarie): If lower-end customer volatility persists, are there cost initiatives available?
  Response: Yes—there is scope to further tighten costs and find savings, but management will avoid over-cutting and believes they can maneuver if needed.

• Question from Connor Parks (CBRE): With CapEx rolling off, are you planning reinvestment outside the Nugget or other low-hanging projects?
  Response: Planned limited reinvestment: modest facade upgrades at two Canadian properties, some F&B upgrades at the Nugget and routine slot refreshes; no major capex while strategic review is ongoing.

• Question from Connor Parks (CBRE): Have you quantified expected tax-season benefits to regional gaming/customer spending?
  Response: No quantitative estimate provided; management expects low-segment customers (approx. 15–25% of database at some properties) could benefit but will not quantify the impact.

Contradiction Point 1

Strategy and Synergies with Canadian Operations

It involves the strategic classification and expected synergies of the Canadian operations, which can impact the company's growth and operational efficiency expectations.

Can you discuss the strong results in the Canada portfolio and whether they are considered non-core or synergistic with the broader portfolio? - Daryl Young(Stifel)

2025Q3: Strong growth in Canada is due to the revamped facade at St. Albert and motivated management. There is some synergy with the broader portfolio, but the Canadian operations can be seen as a separate conglomerate. Macroeconomic conditions in Canada are less impacted than in the U.S. - Erwin Haitzmann(CEO)

Can you explain the strong performance in your Canadian portfolio and whether it’s non-core or driven by synergies with the broader portfolio? - Aiden Young(Stifel)

2025Q3: The growth is incremental, and the Canadian operations are seen as a standalone conglomerate. The visible driver is the St. Albert facade renovation. General management motivation and cost management also contribute. - Erwin Haitzmann(CEO)

Contradiction Point 2

Retail Customer Growth and Economic Factors

It involves the causes and expected stability of retail customer growth, which are critical for understanding consumer behavior and business sustainability.

Can you explain the retail customer decline and its expected stability? - Chad Beynon(Macquarie Research)

2025Q3: Insecurity around tariffs affects lower-end players. If consumer sentiment improves, retail could stabilize. - Erwin Haitzmann(CEO)

What caused the decline in retail customer growth, and is it sustainable? - Chad Beynon(Macquarie Research)

2025Q3: We believe it was due to economic insecurity, especially impacting lower-end customers. We expect a friendly outlook but can't quantify the impact. - Erwin Haitzmann(CEO)

Contradiction Point 3

Canadian Operations Synergy and Market Impact

It involves differing perspectives on the synergy and market impact of Canadian operations, which could influence strategic decision-making and investor expectations.

Can you discuss the Canada portfolio's strong results and whether they are considered non-core or synergistic with the broader portfolio? - Daryl Young (Stifel)

2025Q3: Strong growth in Canada is due to the revamped facade at St. Albert and motivated management. There is some synergy with the broader portfolio, but the Canadian operations can be seen as a separate conglomerate. Macroeconomic conditions in Canada are less impacted than in the U.S. - Erwin Haitzmann(CEO)

Are Canadian properties benefiting from reduced Las Vegas travel? - Jordan Bender (Citizens Bank)

2025Q2: We're seeing increased travel from longer distances, potentially substituting for Vegas travel. - Erwin Haitzmann(CEO)

Contradiction Point 4

Concert and Convention Business Recovery

It pertains to the recovery timeline and expectations for the concert and convention business, which are crucial for revenue projections and strategic planning.

When will the group and convention business at the Nugget normalize, and how is the new entertainment programming funded? - Daryl Young (Stifel)

2025Q3: The impact of marketing improvements is already visible in October. Concerts need better booking and higher-priced acts. The goal is to have stand-alone profitable concerts with positive spillover into other businesses. - Erwin Haitzmann(CEO)

What's the outlook for Reno-Sparks, particularly regarding the conference center and concerts, and will it help regain market share? - Chad Beynon (Macquarie Group)

2025Q2: The conference calendar for this year is limited, but we expect future years to see a recovery. Current booking trends are positive, and we're introducing new initiatives to drive market share. - Erwin Haitzmann(CEO)

Contradiction Point 5

Impact of Tariffs on Retail Customers

It demonstrates conflicting statements on the impact of tariffs on retail customers, which affects revenue projections and strategic adjustments.

Can you explain the retail customer decline and its expected stability? - Chad Beynon (Macquarie Research)

2025Q3: Insecurity around tariffs affects lower-end players. If consumer sentiment improves, retail could stabilize. - Erwin Haitzmann(CEO)

Have you noticed any softening in consumer demand for your Canadian assets due to trade war uncertainty or energy price impacts? - Unidentified Analyst (Stifel)

2025Q1: We think that we don't really see any of the reasons that you mentioned is as significant. It's more -- the lower revenue is not that significant, and it's also due to weather and the one day gaming -- one less gaming day. So, we're not concerned. - Erwin Haitzmann(CEO)