Churchill Downs Incorporated Announces Repurchase of One Million Shares for $123.75 per Share
- None.
- None.
Insights
The repurchase of one million shares by Churchill Downs Incorporated represents a significant capital allocation decision. At a price of $123.75 per share, the transaction underscores management's confidence in the intrinsic value of the company exceeding the repurchase price. This move will likely be accretive to earnings per share, as it reduces the number of shares outstanding, potentially leading to a rise in the stock price if market conditions remain favorable.
However, the use of both cash and borrowings raises questions about the balance between leveraging and maintaining liquidity. Investors should consider the company's debt-to-equity ratio post-transaction and the impact on financial flexibility. The timing of the repurchase, just ahead of a new fiscal year, may also signal strategic positioning for the upcoming quarters.
By choosing a privately negotiated transaction with an affiliate of The Duchossois Group, Inc., CDI is indicating a targeted approach to share repurchases. This method can offer advantages such as price certainty and minimal market disruption compared to open market repurchases. However, it's important to scrutinize the relationship with the affiliate to ensure the transaction is in the best interest of all shareholders.
Long-term effects of such buybacks include potential changes in shareholder composition and concentration of ownership, which could affect corporate governance dynamics. It's crucial for stakeholders to assess how this repurchase aligns with CDI's broader strategic objectives and capital allocation policies.
From a risk management perspective, the execution of a large-scale share repurchase using debt financing introduces additional financial risk to the company. The impact on CDI's creditworthiness and interest coverage ratios should be monitored closely. In the context of economic uncertainty, the ability to service new debt is paramount and the benefits of the share repurchase must be weighed against the potential increase in financial leverage.
Additionally, the repurchase could be seen as a signal that CDI views its stock as undervalued, which may be interpreted by the market as a positive indicator. However, it is essential to balance this view against broader market trends and sector performance to ensure a comprehensive risk assessment.
CDI Repurchasing One Million Shares from an Affiliate of The Duchossois Group, Inc. in a Privately Negotiated Transaction
LOUISVILLE, Ky., Dec. 18, 2023 (GLOBE NEWSWIRE) -- Churchill Downs Incorporated (“CDI” or the “Company”) (Nasdaq: CHDN) announced today that the Company has agreed to repurchase 1,000,000 shares of its common stock for
The repurchase transaction was authorized by the CDI Board of Directors and is separate from its existing share repurchase program.
About Churchill Downs Incorporated
Churchill Downs Incorporated (“CDI”, NASDAQ: CHDN) has been creating extraordinary entertainment experiences for nearly 150 years, beginning with the company’s most iconic and enduring asset, the Kentucky Derby. Headquartered in Louisville, Kentucky, CDI has expanded through the development of live and historical racing entertainment venues, the growth of the TwinSpires horse racing online wagering business and the operation and development of regional casino gaming properties. www.churchilldownsincorporated.com
This news release contains various “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by the use of terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “predict,” “project,” “seek,” “should,” “will,” and similar words or similar expressions (or negative versions of such words or expressions).
Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important factors, that could cause actual results to differ materially from expectations include the following: the occurrence of extraordinary events, such as terrorist attacks, public health threats, civil unrest, and inclement weather, including as a result of climate change; the effect of economic conditions on our consumers' confidence and discretionary spending or our access to credit, including the impact of inflation; additional or increased taxes and fees; the impact of any pandemics, epidemics, or outbreaks of infectious diseases, including the impact of any future developments related to COVID-19, and related economic matters on our results of operations, financial conditions and prospects; lack of confidence in the integrity of our core businesses or any deterioration in our reputation; loss of key or highly skilled personnel, as well as general disruptions in the general labor market; the impact of significant competition, and the expectation the competition levels will increase; changes in consumer preferences, attendance, wagering, and sponsorships; risks associated with equity investments, strategic alliances and other third-party agreements; inability to respond to rapid technological changes in a timely manner; concentration and evolution of slot machine and historical racing machine (HRM) manufacturing and other technology conditions that could impose additional costs; failure to enter into or maintain agreements with industry constituents, including horsemen and other racetracks; inability to successfully focus on market access and retail operations for our TwinSpires Sports and Casino business and effectively compete; online security risk, including cyber-security breaches, or loss or misuse of our stored information as a result of a breach including customers’ personal information could lead to government enforcement actions or other litigations; reliance on our technology services and catastrophic events and system failures disrupting our operations; inability to identify, complete, or fully realize the benefits of our proposed acquisitions, divestitures, development of new venues or the expansion of existing facilities on time, on budget, or as planned; difficulty in integrating recent or future acquisitions into our operations; cost overruns and other uncertainties associated with the development of new venues and the expansion of existing facilities; general risks related to real estate ownership and significant expenditures, including risks related to environmental liabilities; personal injury litigation related to injuries occurring at our racetracks; compliance with the Foreign Corrupt Practices Act or other similar laws and regulations, or applicable anti-money laundering regulations; payment-related risks, such as risk associated with fraudulent credit card or debit card use; work stoppages and labor problems; risks related to pending or future legal proceedings and other actions; highly regulated operations and changes in the regulatory environment could adversely affect our business; restrictions in our debt facilities limiting our flexibility to operate our business; failure to comply with the financial ratios and other covenants in our debt facilities and other indebtedness; increases to interest rates (due to inflation or otherwise), disruption in the credit markets or changes to our credit ratings may adversely affect our business; increase in our insurance costs, or inability to obtain similar insurance coverage in the future, and any inability to recover under our insurance policies for damages sustained at our properties in the event of inclement weather and casualty events; and other factors described under the heading “Risk Factors” in our most recent Annual Report on Form 10-K and in other filings we make with the Securities and Exchange Commission.
We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
| Investor Contact: Kaitlin Buzzetto | Media Contact: Tonya Abeln |
| (502) 394-1091 | (502) 386-1742 |
| Kaitlin.Buzzetto@kyderby.com | Tonya.Abeln@kyderby.com |
FAQ
What did Churchill Downs Incorporated (CDI) announce?
How many shares is CDI repurchasing and at what price?
What is the total cost of the repurchase transaction?
How will CDI finance the repurchase of shares?
When is the transaction expected to close?
