Peter Hoetzinger - Vice Chairman of the Board, Co-Chief Executive Officer and President Erwin Haitzmann - Chairman of the Board and Co-Chief Executive Officer Margaret Stapleton - Executive Vice President, Finance.

Robert Labick - CJS Securities Alex Fuhrman - Craig-Hallum Capital Debra Fiakas - Singular Research.

Welcome to the Century Casinos Q3 2015 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 your call..

Good morning everyone, and thank you for joining Century Casinos’ third quarter 2015 conference call. We will get to the presentation of the results momentarily, but first I will review the safe harbor disclosure.

In today’s call, 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 may 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 from this morning and in the 10-Q filing, which is available in the Investor Section of our website at cnty.com.

I will now comment on our performance in the third quarter, followed by a Q&A session together with my co-CEO and chairman of the company, Erwin Haitzmann; as well as Margaret Stapleton, our Executive Vice President of Finance.

This was an exceptional quarter for our company as the positive trends that we have been seeing since the second half of last year continued to strengthen across every segment of our business. Net operating revenue increased 19% in the third quarter, marking our fourth consecutive quarter of top line growth.

We also continued to improve our cost structure, by driving additional efficiencies throughout our business. The combination of revenue growth and cost efficiencies allowed us to produce very strong flow through and increased profitability.

Companywide adjusted EBITDA increased 137%, our fourth consecutive quarter or double or triple digit EBITDA growth. Excluding exchange rate swings on a constant currency basis, the results are even better. Net operating revenue is up 37% and adjusted EBITDA is up 172%.

So I want to start my comments with a big thank you and congratulations to our very successful group of management executives with all our casino properties worldwide. Our bottom line was also very strong with net earnings of $2.7 million or $0.11 per share, beating analyst’s expectations.

In the quarter we saw all of our major operating segments significantly improve their performance on a year-over-year basis. In local currencies, the Canadian properties increased revenues by 77%, EBITDA doubled. Our operations in the US grew revenues by 10%, and EBITDA by 47%.

And in Poland, we managed to increase revenue by 43% and EBITDA by 709%, overall a truly remarkable achievement. Canada continues to be our strongest market, which generates 47% of our total consolidated EBITDA, followed by Colorado, where we get 26% of our EBITDA from, and Poland, which generated 22% of our total adjusted EBITDA.

As of the end of the quarter, we had $29.8 million in cash and cash equivalents and $39.8 million in outstanding debt compared to $24.7 million in cash and $38.3 million in outstanding debt at the end of last year.

The $39.8 million in total debt includes $21.7 million from our credit agreement with Bank of Montreal, $3.5 million related to Casinos Poland, and $14.6 million related to a long-term land lease by Century Downs in Calgary. Our net debt, including the $14.6 million long-term land lease amounts to only 0.4 times, our trailing 12 months EBITDA.

The book value per share increased to $5.04 at the end of the quarter. Without construction spending for Century Downs, total Capex in the quarter was $800,000, which equals 2.8% of revenues, and we spent that mostly on new gaming equipment for Poland, Colorado, and the ship casinos. The results on a property basis in local currency look as follows.

The Century Casino & Hotel in Edmonton showed 8% revenue growth and 13% EBITDA growth. EBITDA margin increased from 37% last year to 39% this year. Most of the growth was generated at the gaming tables, specifically at the baccarat.

The teams had mostly Asian baccarat players, and not affected by the economic impact of the low oil prices, whereas local slot players may well see this somewhat. An additional 25 gaming machines have been added to the gaming floor during the third quarter, bringing our total to 777 slots, 14 video lottery terminals, and 35 gaming tables.

The Century Casino in Calgary was the only property that had a little bit of a challenging quarter, with revenues up 3%, but EBITDA down 29%. The reasons for the low revenue growth were two-fold. The slot revenue was lower by 5% and probably we feel the impact of our very own Century Downs Casino, and secondly the low hold on the table games.

The hold percentage in the third quarter was 11.6% versus 19.3% last year. But the very good news is that the total drop on the gaming tables actually was up a whopping 80%. The lower revenue growth, as well as higher payroll costs and property taxes led to the lower EBITDA compared to last year.

Having said that, we are thrilled by the results of last month, October, which produced the highest ever revenue for the property driven by strong table play growth and the normalized hold percentage. Let us hope it continues like that for the rest of this fourth quarter.

At both properties, Edmonton and Calgary, we continue to market and grow the players' club loyalty program and to specifically focus on growing table games revenue. Our newest property and our third major casino investment in Canada, the Century Downs Racetrack and Casino in Calgary opened in April.

Following a fantastic start after opening, with revenues of $5.8 million and EBITDA of $2.5 million in its first three months, the stats are now more in-line with our expectations. Revenues in the third quarter, which is by the way typically the weakest quarter for casinos in Alberta were $5 million, EBITDA was $1.7 million.

As those figures ramps up after the initial hype around the opening, we are going to be very aggressive in driving promotions and advertising. It sometimes has a short-term impact on the margins, but we think it is the right thing for the successful long-term development and positioning of that casino.

The revenue per slot machine per day is already in the $180 range, which compares favorably to the $124, the slots of our other casino, Calgary generates on average per day. We are pushing our loyalty programs signups and continue to specifically target the markets of north and northwest Calgary, both of which do not have a casino.

Century Downs is the only horse racetrack in the Greater Calgary area. The Racing Entertainment Center includes a casino with 550 slots, and electronic table games, seven video lottery terminals, as well as food and beverage and off-track betting facilities.

This location offers huge potential, it is situated just north of Calgary, adjacent to the successful CrossIron Mills regional shopping mall that attracts 12 million people annually, and it has direct off-line access from the major highway connecting Calgary and Edmonton, the busiest highway in Western Canada.

In connection with Century Downs, we have also entered the off-track betting business through our 75% owned subsidiary Century Bets! We have agreements with close to 100 race tracks throughout North America and worldwide for the sourcing of common pool pari-mutuel wagering contract.

And we have contracts with 15 off-track betting parlors in Southern Alberta. We are providing pari-mutuel wagering content and live video to them. In return, we retained a handle from all bets placed on horse races, minus commission fees and expenses, and we are very pleased with the initial success of this venture.

It generated 1.4 million in revenues, and 0.5 million in EBITDA in the third quarter. Moving onto Colorado, where the great round of pub casinos continued. The economy and consumer sentiment in the Greater Denver metro area are very strong, and we see consumers growing more confident and showing a greater willingness to spend.

Coupled with our effective marketing programs and our outstanding execution by our management teams, we successfully generated strong revenue growth and even stronger EBITDA growth. Net operating revenue of the Century Casino and Hotel in Central City was up 9%, EBITDA was up 49%. In Cripple Creek, revenues were up 10%, EBITDA up 46%.

This was the fifth quarter in a row with EBITDA growth. At those properties in Colorado, slot and table revenues were up and we also saw nice increases in hotel revenues, driven by the implementation of online bookings through Expedia. In Cripple Creek, for example, we are the number one rated hotel on TripAdvisor.

|The Colorado gaming markets are very competitive and we continue our marketing and promotional campaigns with a focus on VIP player development. Over in Europe, Casinos Poland also had another great quarter. Net operating revenue was up 43%, EBITDA grew 8-fold, up 709%, and the EBITDA margin was 14%. Everything was up.

Table game revenue by 40%, F&B revenue up by 17%, but the strongest driver was the slot floor with slot machine revenue up 49%. Compared to the same quarter a year ago, we had 28 additional slot machines, and six additional table games in operation.

Also we completed the rollout of the slot player loyalty program, which is very successfully and certainly helped driving revenues.

We plan to further increase slot capacity before the end of the year, and with the additional higher-quality we have on offer, coupled with the further closing of non-casino slot arcades throughout the country, we anticipate continued solid growth in slot revenues in Poland.

The revenue generated by the segment consisting of cruise ship casinos and the management and consulting teams in Aruba in Argentina was down year-over-year, because we have sold casino concession agreements for eight ships to a Norwegian cruise line earlier this year.

But thanks to tight management, cost saving efforts, and a monthly consulting fee we are receiving from the Norwegian, EBITDA for this segment was up 13%.

Last month, we extended our agreement with two cruises to include the casinos onboard the Mein Schiff 5 and Mein Schiff 6, two new 2500 ships that was scheduled to begin operations in the second quarter of 2016 and 2017 respectively. In summary, Erwin and I are proud of what our management teams have achieved in the first nine months of the year.

We delivered strong results for our shareholders with significant revenue and EBITDA growth throughout the portfolio. We are very pleased with our overall progress. All operating segments are in good shape and still offer potential for further organic growth.

Given by the strong second and third quarter performance, and how Q4 has started out, we are ready optimistic for the remainder of the year. We have great momentum in our businesses across all the geographies and customer demographics, and we are certainly feeling much better for Century Casinos today than we ever have.

That concludes the presentation for our third quarter results. And thank you for your attention, and we can now start the Q&A session. Operator, go ahead please..

[Operator Instructions] And your first question comes from of Robert Labick from CJS Securities. Please state your question..

Good morning..

Good morning..

In Poland you had 14% EBITDA margins, which was great.

Could you just talk a little about what is left there to improve in terms of cost cutting or repositioning of any underperforming casinos, and maybe update us on your EBITDA margin target there?.

Somebody – the target is still in the mid to high teens. And I think it is mostly in the revenue because the incremental revenue brings a proportional rate of it to the EBITDA line. So our main focus is on driving the revenue side. And may I ask Erwin to chip in and maybe go into a little bit more detail on that if you can..

Yes, absolutely. The major chances for increased – for further increase is in the slot machines. We have seen that upsetting, slot machines and adding slot machines has been really beneficial to gross gaming revenue, to a certain extent even with a spillover effect to the tables.

So we will continue to add new slot machines and to replace older products and the [Indiscernible] we are confident that this should drive us high into the teens..

Great, thanks.

And can you give us a general update on Argentina, the possible growth prospects there and perhaps your thoughts on increasing your stake and the possible timing?.

As we have previously said, we will probably make a decision in the middle of next year whether to increase our stake or not.

By then we should have a much better picture of the additional opportunities we have there, as well as the standing and the position of the Argentinean politics and economy vis-à-vis the rest of the world, and when we have a better picture of all those things, which we believe we should have in about the middle of next year we will make that decision..

Great.

And my last question, just kind of looking at the big picture, I was hoping you could talk about your long-term strategy in cruise ships, to take advantage of scale are you going to try and double the amount of ships around, or is that not really a priority for you given opportunities elswwhere?.

Increasing the number of ship casinos is something that yes, we are trying to do, and it does not take away from our ability or our resources to do larger deals for land-based casinos. So we can do both and we want to do both..

I appreciate the color, thanks..

Thanks Robert..

And your next question comes from Alex Fuhrman from Craig-Hallum. .

Great. Thanks for taking my question and congratulations on another really strong quarter.

Wanted to talk about Canada, I think certainly with the tumble that oil has taken, I think a lot of people have been cautious on the outlook in Alberta, it sounds like if I am understanding you correctly the tourist games are doing really well, whereas maybe some of the games that the locals gravitate towards are not quite doing so well.

How does that then tend to look as we get into the winter quarters, presumably, I would imagine locals make up a bigger share of the market during the colder months of the year. So if you could kind of comment on what your outlook is in Alberta with that in mind for the Q4 and Q1? Thanks..

Thanks Alex. It is not so much tourist versus locals because almost all of our play comes from locals. But within the locals we have a segment that prefers table games, and within the table games, second we have quite a large group of Asian customers that play baccarat, and in that segment we have seen and we continue to see the strongest growth.

And with that I will turn it over to Erwin..

Yes, probably nothing much to add. I would have said exactly the same. We see the growth mainly in the baccarat segment, where we bend over backwards to please our customers with the goal to further increase our market share in the market of Calgary. We think we have been successful in the past. We think [Indiscernible] should be positive.

We are very excited about that growth there..

Great. That is really helpful, thanks.

And then can you share with us a little bit more about the early learnings of your loyalty program for slots, I mean, is it too soon for you to be able to see, how much playing activity has increased for people who have signed into the program, and do users have the ability to use the programming across your multiple properties.

I'm not sure if maybe that was part of the marketing benefit of the program.

If you could share with us a little bit more about your outlook for what that program could you that would be helpful?.

We have different programs. Please do, but I said in my presentation that we concluded the rollout in Poland, so I am not sure whether Alex refers to Poland only or to the – but maybe Erwin you can give an overview..

Yes, I think if you can share, how that compares to the roll out of your loyalty programs elsewhere?.

I think first of all we have to say it is not realistic to see things geographically across the board. If somebody plays in Poland, it is literally the likelihood to see that person [Indiscernible]. So, it is not like the program that initiated that across the United States with [Indiscernible].

So we – I think when we say loyalty programs, we think local, each of them local. Firstly, then secondly, there are huge differences in the loyalty programs depending on the share of gross gaming revenue that we receive.

Obviously in Central City and Cripple Creek in Colorado where our share is say between 90%, 97% depending on where we end up in the sizing scale of Texas, with 10% to this rounded numbers. Now 90% to us. It is one situation that the casinos in Edmonton and Calgary where we get 15% of the slot revenue on this, and 85% going to [Indiscernible].

That is of course, it doesn't allow the same generosity in the program. And then we have everything in between. Like in Poland, the gaming, the gross gaming revenue FX is 50%. So, that is the most important thing to say, I think.

And so, while having said that the second factor that influences what we do, can do and will do in the loyalty programs has to do with the competition. If I take the same casinos as examples in Colorado we have heavy competition in each of the markets. And the competitors are just like us, spend heavily on marketing across – north of 20%.

It is a result of [Indiscernible], whereas in Poland, for example, and also in Canada these are more, shall I say, kind of oligopolistic markets. It is different and so we again – if the competition gives away less, we give away less, both of us have less room.

But one thing that is certainly true for all of them with the slight exception of Poland is that additional data permit us to market more precisely, more specifically. Poland is [Indiscernible] easy because we have very strict restrictions on what we can market and what and how we can market. But in the other markets it is wonderful.

We have great data. We can do all kinds of things with those data and we do..

Terrific. That is very helpful. Thank you very much..

Thanks Alex..

And your next question comes from Jeremy Hellman from Singular Research..

Thank you. This is Debra filling in for Jeremy. We were hoping to learn a little bit more about the loyalty program just from the standpoint of how you drive those signups, is it a matter of advertising, I dig here in your remarks just now that the words marketing and advertising, or is it a matter of traffic conversion.

How do you build up those names on that loyalty program list?.

We try to – yes, we try to make people sign up once they are in our casino if they have not signed up yet. And we do this with all the usual tools, to say for example, [Indiscernible] somebody books into the hotel and is not a member yet, then we invite that guest to join because if they join the loyalty program then they get 10% off the hotel price.

If they order food as members same thing. If we – then we have programs like bring a friend and sign him up. Thursday, bring your friends for the Thursday, and then all of those things. So, that is mainly how we do it on the floor, on property.

Does that address your question?.

Yes, it does.

I was just going to add does that – is that the case really in each location or there are some differences between say Canada and the US, and Poland like you mentioned that there are some differences in those programs from one geography to the other?.

The differences are mainly in what we can give because with a smaller portion of the [revenue] we just can’t give much there. For example, we can give cash back in Colorado, we cannot do that in Calgary because it just is not economically viable. We don't do that in Poland either.

And also in Poland, we don’t have the hotels, and the restaurants that are maybe nearby are not ours. So again we don’t have the possibility there..

Okay, very good.

And then the other question I wanted to ask about was the slot machines, you mentioned that you were ordering or had ordered additional slot machines, and I wondered if the orders that you have made so far they are already included in your Capex spend that you reported in the first nine months of the year, and then, of course, the other part of this question is what is the expected capital expenditures in the fourth quarter?.

The numbers you see are those – go ahead Peter..

The routine maintenance Capex that we typically have is about 3% of revenues, and I think if you go with that for the fourth quarter roughly that should give you a good picture.

And I believe the additional slots Erwin was talking about are not included in the Capex, is that correct Erwin?.

Correct..

Okay, and so we will just see another 3% of sales approximately in the rest of the fourth quarter – the balance of the fourth quarter, and then one last final question, what were the number of machines, can you share that, just kind of give us an idea of the extent of the expansion that you were anticipating?.

In the future now the new ones in Poland?.

Yes, please..

Another 30 plus or minus..

Okay, thank you very much for your help. I appreciate it..

Thanks Debra..

And there are no further questions.

Do you have any concluding remarks?.

Thank you. Thank you everyone 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. Goodbye..

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