Churchill Downs Incorporated Reports 2024 First Quarter Results

Rhea-AI Summary

Churchill Downs Incorporated reported a record net revenue of $590.9 million for the first quarter of 2024, showing a 6% increase compared to the prior year quarter. The company recorded a net income of $80.4 million, a decrease of 48% from the previous year. Adjusted EBITDA reached $242.5 million, up by 9% compared to the prior year quarter. The company announced the opening of The Rose Gaming Resort in late September 2024 and development plans for Owensboro Racing & Gaming in the first quarter of 2025. The company repurchased shares under its share repurchase program and paid a dividend to shareholders, continuing its commitment to returning capital to shareholders.

Positive

• Record net revenue of $590.9 million, up by 6% compared to the prior year quarter.
• Net income of $80.4 million, down by 48% compared to the prior year quarter.
• Adjusted EBITDA of $242.5 million, up by 9% compared to the prior year quarter.
• Announcement of The Rose Gaming Resort opening in late September 2024.
• Development plans for Owensboro Racing & Gaming with a planned opening in the first quarter of 2025.
• Repurchase of shares under the share repurchase program and payment of a dividend to shareholders.

Negative

• Decrease in net income by 48% compared to the prior year quarter.
• Net bank leverage of 4.1x at the end of the first quarter of 2024.
• Decrease in revenue and Adjusted EBITDA in the Gaming segment.
• Decrease in Adjusted EBITDA for All Other segment driven by increased corporate compensation expenses.

Insights

Financial Analyst

The reported net revenue increase of 590.9 million represents a solid growth of 6 compared to the prior year, indicative of strong business performance, especially considering the broader economic context. However, the notable decrease in net income by 48 to 80.4 million warrants attention. A deeper dive into the company's expense management and operational efficiency is crucial, particularly in light of the record Adjusted EBITDA performance, up 9 year-over-year.

From an investor's standpoint, the growth in the company's Live and Historical and TwinSpires segments is commendable but contrasted by the decline in the Gaming segment's revenue and Adjusted EBITDA. This mixed performance could signal shifting consumer preferences or operational challenges that may affect the company's future revenue streams and profitability.

Churchill Downs Incorporated's capital management activities, including a share repurchase of 22.0 million and a consistent dividend payment, demonstrate a commitment to shareholder returns. Nevertheless, investors should consider the net bank leverage of 4.1x in conjunction with these activities, as it may reflect on the company's financial flexibility and ability to sustain capital return programs.

Market Research Analyst

The introduction of The Rose Gaming Resort and the Owensboro Racing & Gaming plans suggest strategic expansion, with the potential to drive future revenues and market share in the gaming and entertainment sector. These capital investments, totaling 460 million, highlight the company's forward-looking growth initiatives, which could appeal to investors seeking long-term value creation.

However, the sale of a 49 stake in United Tote Company to NYRA Content Management Solutions, LLC, while providing immediate capital, also indicates a partial divestiture from a subsidiary, which could alter the company's revenue structure and strategic positioning.

The company's mention of adverse weather conditions as a factor in reduced gaming revenue also highlights potential vulnerability to external, uncontrollable risks, which investors should factor into their assessment of the stock's resilience and the management's contingency planning.

Investment Strategist

The dichotomy between the record Adjusted EBITDA and declining net income could suggest larger macroeconomic factors at play or one-off expenses that impacted the bottom line. For investors, the important question is whether the decreased net income is a harbinger of a trend or merely a temporary setback. The underlying reasons for this decrease need to be understood in the context of the company's long-term strategy and operational execution.

Investors should also scrutinize the company's debt levels in relation to its EBITDA, as this leverage ratio could impact the company’s ability to withstand economic downturns or make additional investments. The current leverage level, while manageable, should be monitored for changes that could signal a shift in financial stability.

In the backdrop is the success of the TwinSpires segment, which may reflect positively on the burgeoning online sports betting market. This growth vector could represent a strategic pivot point for the company, offering a hedge against traditional gaming volatility.

LOUISVILLE, Ky., April 24, 2024 (GLOBE NEWSWIRE) -- Churchill Downs Incorporated (Nasdaq: CHDN) (the "Company", "CDI", "we") today reported business results for the first quarter ended March 31, 2024.

Company Highlights

• First quarter results:
  • Record net revenue of $590.9 million, up 6% compared to the prior year quarter.
  • Net income of $80.4 million, down 48% compared to the prior year quarter.
  • Record Adjusted EBITDA of $242.5 million, up 9% compared to the prior year quarter.
• Delivered record first quarter revenue and Adjusted EBITDA for both our Live and Historical and TwinSpires segments
  • Live and Historical revenue up 15% and Adjusted EBITDA up 23% compared to the first quarter of 2023
  • TwinSpires revenue up 18% and Adjusted EBITDA up 35% compared to the first quarter of 2023
• We announced The Rose Gaming Resort which is scheduled to open in late September 2024 with 500 additional HRMs for a total of 1,650 HRMs and $460 million total capital investment.
• We announced development plans for Owensboro Racing & Gaming with a planned opening in the first quarter of 2025, including 600 HRMs, a retail sportsbook, simulcast wagering, and multiple food and beverage offerings.
• We ended the first quarter of 2024 with net bank leverage of 4.1x and maintained our commitment to returning capital to shareholders:
  • We repurchased $22.0 million of shares under our share repurchase program in the first quarter of 2024.
  • On January 2, 2024, we closed on the previously announced repurchase of 1,000,000 shares for $123.75 per share from an affiliate of The Duchossois Group Inc.
  • On January 5, 2024, we paid a $0.382 per share dividend to shareholders of record which represents the thirteenth consecutive year of an increased dividend per share.

CONSOLIDATED RESULTS

		First Quarter
(in millions, except per share data)		2024			2023
Net revenue		$	590.9		$	559.5
Net income		$	80.4		$	155.7
Diluted EPS		$	1.08		$	2.05
Adjusted EBITDA(a)		$	242.5		$	222.9
(a) This is a non-GAAP measure. See explanation of non-GAAP measures below.

SEGMENT RESULTS

The summaries below present revenue from external customers and intercompany revenue from each of our reportable segments.

Live and Historical Racing

	First Quarter
(in millions)	2024			2023
Revenue	$	248.9		$	215.8
Adjusted EBITDA		100.8			82.1

Revenue for the first quarter of 2024 increased $33.1 million due to an $18.3 million increase attributable to growth at our Kentucky HRM properties, a $13.5 million increase attributable to growth at our Virginia properties and the opening of our Rosie's Emporia property in September 2023, and a $1.3 million increase at our other Live and Historical Racing properties.

Adjusted EBITDA for the first quarter of 2024 increased $18.7 million due to a $12.9 million increase attributable to growth at our Virginia properties, which includes $5.8 million of savings related to the Exacta Transaction, and an $8.5 million increase from our Kentucky HRM properties. These increases were offset by a $2.7 million decrease at Churchill Downs Racetrack driven by increased maintenance and promotional expenses in preparation for the 150th Kentucky Oaks and Derby. 

TwinSpires

	First Quarter
(in millions)	2024			2023
Revenue	$	114.1		$	96.3
Adjusted EBITDA		39.6			29.4

Revenue for the first quarter of 2024 increased $17.8 million due to a $14.3 million increase attributable to the Exacta Transaction, a $2.3 million increase attributable to our retail and online sports betting business, and a $1.2 million increase in Horse Racing revenue.

Adjusted EBITDA for the first quarter of 2024 increased $10.2 million due to a $9.4 million increase attributable to the Exacta Transaction and a $1.4 million increase attributable to our retail and online sports betting business, partially offset by a $0.6 million decrease in Horse Racing primarily driven by lower retail volume.

Gaming

	First Quarter
(in millions)	2024			2023
Revenue	$	243.2		$	251.6
Adjusted EBITDA		122.8			129.5

Revenue for the first quarter of 2024 decreased $8.4 million due to a $6.3 million decrease in Pennsylvania primarily due to our decision not to renew the management agreement at Lady Luck Casino Nemacolin ("Lady Luck") in June 2023 and a $2.1 million net decrease at our other gaming properties primarily due to inclement weather in January 2024.

Adjusted EBITDA for the first quarter of 2024 decreased $6.7 million primarily due to inclement weather in January 2024 at many of our gaming properties.

All Other

	First Quarter
(in millions)		2024				2023
Revenue	$	—			$	0.3
Adjusted EBITDA		(20.7	)			(18.1	)

Adjusted EBITDA for the first quarter of 2024 decreased $2.6 million driven primarily by increased corporate compensation related expenses and other corporate administrative expenses.

ACQUISITION / DISPOSITION UPDATE

United Tote Sale

On April 8, 2024, the Company closed on the sale of 49% of United Tote Company, a wholly-owned subsidiary of CDI, to NYRA Content Management Solutions, LLC, a subsidiary of the New York Racing Association, Inc.

CAPITAL MANAGEMENT

Share Repurchase Program

The Company repurchased 184,821 shares of its common stock at a total cost of $22.0 million based on trade date under its share repurchase program in the first quarter of 2024. We had $192.9 million of repurchase authority remaining under this program on March 31, 2024.

The Duchossois Group Share Repurchase

On January 2, 2024, the Company closed on the agreement, dated December 18, 2023, with an affiliate of The Duchossois Group to repurchase 1,000,000 shares of the Company’s common stock for $123.75 per share in a privately negotiated transaction for an aggregate purchase price of $123.75 million. This represented a 4.03% discount to the closing price on December 15, 2023 of $128.95. The repurchase of the shares was funded using available cash and borrowings under the senior secured credit facility and was made separately from and did not reduce the authorized amount under the Company’s common stock repurchase program.

NET INCOME

The Company's first quarter 2024 net income was $80.4 million compared to $155.7 million in the prior year quarter.

The following impacted the comparability of the Company's first quarter 2024 net income to the prior year quarter:

• an $86.2 million after-tax gain on the sale of our property in Arlington Heights, Illinois ("Arlington") in the prior year quarter; and
• a $4.4 million after-tax net increase in adjustments related to transaction, pre-opening and other expenses.

This was partially offset by:

• a $5.2 million after-tax increase in other recoveries, net, related to non-recurring insurance claim recoveries.

Excluding the items above, first quarter 2024 net income increased $10.1 million primarily due to the following:

• a $14.7 million after-tax increase driven by the results of our operations,
• partially offset by a $4.6 million after-tax increase in interest expense associated with higher outstanding debt balances and higher interest rates.

Conference Call

A conference call regarding this news release is scheduled for Thursday, April 25, 2024 at 9 a.m. ET. Investors and other interested parties may listen to the teleconference by accessing the online, real-time webcast and broadcast of the call at http://ir.churchilldownsincorporated.com/events.cfm, or by registering in advance via teleconference here. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. All participants are encouraged to dial-in 15 minutes prior to the start time. An online replay will be available by noon ET on Thursday, April 25, 2024. A copy of the Company’s news release announcing quarterly results and relevant financial and statistical information about the period will be accessible at www.churchilldownsincorporated.com. 

Use of Non-GAAP Measures

In addition to the results provided in accordance with GAAP, the Company also uses non-GAAP measures, including adjusted net income, adjusted diluted EPS, EBITDA (earnings before interest, taxes, depreciation and amortization), and Adjusted EBITDA.

The Company uses non-GAAP measures as a key performance measure of the results of operations for purposes of evaluating performance internally. These measures facilitate comparison of operating performance between periods and help investors to better understand the operating results of the Company by excluding certain items that may not be indicative of the Company's core business or operating results. The Company believes the use of these measures enables management and investors to evaluate and compare, from period to period, the Company’s operating performance in a meaningful and consistent manner. The non-GAAP measures are a supplemental measure of our performance that is not required by, or presented in accordance with, GAAP, and should not be considered as an alternative to, or more meaningful than, net income or diluted EPS (as determined in accordance with GAAP) as a measure of our operating results.

We use Adjusted EBITDA to evaluate segment performance, develop strategy, and allocate resources. We utilize the Adjusted EBITDA metric to provide a more accurate measure of our core operating results and enable management and investors to evaluate and compare from period to period our operating performance in a meaningful and consistent manner. Adjusted EBITDA should not be considered as an alternative to operating income as an indicator of performance, as an alternative to cash flows from operating activities as a measure of liquidity, or as an alternative to any other measure provided in accordance with GAAP. Our calculation of Adjusted EBITDA may be different from the calculation used by other companies and, therefore, comparability may be limited.

Adjusted net income and adjusted diluted EPS exclude discontinued operations net income or loss; net income or loss attributable to noncontrolling interest; changes in fair value for interest rate swaps related to Rivers Des Plaines; Rivers Des Plaines' legal reserves and transaction costs; transaction expense, which includes acquisition and disposition related charges, as well as legal, accounting, and other deal-related expense; pre-opening expense; and certain other gains, charges, recoveries, and expenses.

Adjusted EBITDA includes our portion of EBITDA from our equity investments.

Adjusted EBITDA excludes:

• Transaction expense, net which includes:
  • Acquisition, disposition, and property sale related charges;
  • Other transaction expense, including legal, accounting, and other deal-related expense;
• Stock-based compensation expense;
• Asset impairments;
• Gain on property sales;
• Legal reserves;
• Pre-opening expense; and
• Other charges, recoveries, and expenses.

As of December 31, 2021, our property in Arlington ceased racing and simulcast operations and the property was sold on February 15, 2023 to the Chicago Bears. Arlington's results and exit costs in 2023 are treated as an adjustment to EBITDA and are included in other expenses, net in the Reconciliation of Comprehensive Income to Adjusted EBITDA.

On June 26, 2023, the Company's management agreement for Lady Luck in Farmington, Pennsylvania expired and was not renewed. The Company completed the sale of substantially all its assets at Lady Luck for an immaterial amount.

For segment reporting, Adjusted EBITDA includes intercompany revenue and expense totals that are eliminated in the Consolidated Statements of Comprehensive Income. See the Reconciliation of Comprehensive Income to Adjusted EBITDA included herewith for additional information.

About Churchill Downs Incorporated

Churchill Downs Incorporated (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. More information is available at http://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,” “scheduled,” and similar words or similar expressions (or negative versions of such words or expressions), although some forward-looking statements are expressed differently.

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 possible new variants of 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 that 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 betting 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 litigation; 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.

CHURCHILL DOWNS INCORPORATED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
	Three Months Ended March 31,
(in millions, except per common share data)		2024				2023
Net revenue:
Live and Historical Racing	$	245.1			$	214.4
TwinSpires		106.6				94.8
Gaming		239.2				250.0
All Other		—				0.3
Total net revenue		590.9				559.5
Operating expense:
Live and Historical Racing		157.2				143.3
TwinSpires		67.9				65.7
Gaming		178.5				173.5
All Other		2.1				5.0
Selling, general and administrative expense		54.8				52.3
Transaction expense, net		4.1				(0.2	)
Total operating expense		464.6				439.6
Operating income		126.3				119.9
Other (expense) income:
Interest expense, net		(70.4	)			(64.7	)
Equity in income of unconsolidated affiliates		37.8				38.3
Gain on sale of Arlington		—				114.0
Miscellaneous, net		8.1				1.4
Total other (expense) income		(24.5	)			89.0
Income from operations before provision for income taxes		101.8				208.9
Income tax provision		(21.4	)			(53.2	)
Net income	$	80.4			$	155.7
Net income per common share data:
Basic net income	$	1.09			$	2.07
Diluted net income	$	1.08			$	2.05
Weighted average shares outstanding:
Basic		74.1				75.3
Diluted		74.7				76.1

CHURCHILL DOWNS INCORPORATED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)	March 31, 2024				December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	149.4			$	144.5
Restricted cash		72.6				77.3
Accounts receivable, net		115.0				106.9
Income taxes receivable		—				12.6
Other current assets		79.0				59.5
Total current assets		416.0				400.8
Property and equipment, net		2,668.5				2,561.2
Investment in and advances to unconsolidated affiliates		647.8				655.9
Goodwill		900.2				899.9
Other intangible assets, net		2,415.0				2,418.4
Other assets		19.3				19.3
Total assets	$	7,066.8			$	6,955.5
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	187.8			$	158.5
Accrued expenses and other current liabilities		423.3				426.8
Income taxes payable		4.1				—
Current deferred revenue		153.3				73.2
Current maturities of long-term debt		68.0				68.0
Dividends payable		0.7				29.3
Total current liabilities		837.2				755.8
Long-term debt, net of current maturities and loan origination fees		1,786.5				1,697.1
Notes payable, net of debt issuance costs		3,072.4				3,071.2
Non-current deferred revenue		11.8				11.8
Deferred income taxes		393.1				388.2
Other liabilities		138.9				137.8
Total liabilities		6,239.9				6,061.9
Commitments and contingencies
Shareholders' equity:
Preferred stock		—				—
Common stock		—				—
Retained earnings		827.8				894.5
Accumulated other comprehensive loss		(0.9	)			(0.9	)
Total shareholders' equity		826.9				893.6
Total liabilities and shareholders' equity	$	7,066.8			$	6,955.5

CHURCHILL DOWNS INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
	Three Months Ended March 31,
(in millions)		2024				2023
Cash flows from operating activities:
Net income	$	80.4			$	155.7
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		46.9				37.9
Distributions from unconsolidated affiliates		45.0				45.8
Equity in income of unconsolidated affiliates		(37.8	)			(38.3	)
Stock-based compensation		7.2				8.6
Deferred income taxes		4.9				33.2
Amortization of operating lease assets		1.4				2.2
Gain on sale of Arlington		—				(114.0	)
Other		1.7				0.8
Changes in operating assets and liabilities:
Income taxes		17.0				19.9
Deferred revenue		80.1				81.8
Other assets and liabilities		7.9				(17.7	)
Net cash provided by operating activities		254.7				215.9
Cash flows from investing activities:
Capital maintenance expenditures		(12.4	)			(11.8	)
Capital project expenditures		(142.6	)			(122.9	)
Proceeds from sale of Arlington		—				195.7
Other		1.6				(6.5	)
Net cash (used in) provided by investing activities		(153.4	)			54.5
Cash flows from financing activities:
Proceeds from borrowings under long-term debt obligations		355.5				615.5
Repayments of borrowings under long-term debt obligations		(266.7	)			(797.5	)
Payment of dividends		(28.6	)			(26.7	)
Repurchase of common stock		(141.7	)			(0.5	)
Taxes paid related to net share settlement of stock awards		(10.4	)			(11.3	)
Debt issuance costs		—				(2.5	)
Change in bank overdraft		(8.6	)			(14.2	)
Other		(0.6	)			(0.5	)
Net cash used in financing activities		(101.1	)			(237.7	)
Net increase in cash, cash equivalents and restricted cash		0.2				32.7
Cash, cash equivalents and restricted cash, beginning of period		221.8				204.7
Cash, cash equivalents and restricted cash, end of period	$	222.0			$	237.4

CHURCHILL DOWNS INCORPORATED SUPPLEMENTAL INFORMATION (Unaudited)
	Three Months Ended March 31,
(in millions, except per common share data)		2024				2023
GAAP net income	$	80.4			$	155.7
Adjustments, continuing operations:
Other charges and recoveries, net		(6.7	)			0.3
Transaction, pre-opening, and other expense		12.6				6.7
Gain on Dispositions		—				(114.0	)
Income tax impact on net income adjustments (a)		(1.6	)			25.9
Total adjustments		4.3				(81.1	)
Adjusted net income attributable to Churchill Downs Incorporated	$	84.7			$	74.6
Adjusted diluted EPS	$	1.13			$	0.98
Weighted average shares outstanding - Diluted		74.7				76.1
(a) The income tax impact for each adjustment is derived by applying the effective tax rate, including current and deferred income tax expense, based upon the jurisdiction and the nature of the adjustment.

	Three Months Ended March 31,
(in millions)	2024			2023
Total Handle
TwinSpires Horse Racing(a)	$	419.7		$	410.5
(a) Total handle generated by Velocity is not included in total handle from TwinSpires Horse Racing.

CHURCHILL DOWNS INCORPORATED SUPPLEMENTAL INFORMATION (Unaudited)
	Three Months Ended March 31,
(in millions)		2024				2023
Net revenue from external customers:
Live and Historical Racing:
Churchill Downs Racetrack	$	3.1			$	2.4
Louisville		53.7				44.0
Northern Kentucky		28.5				26.3
Southwestern Kentucky		38.6				36.5
Western Kentucky		6.8				4.8
Virginia		111.2				97.7
New Hampshire		3.2				2.7
Total Live and Historical Racing	$	245.1			$	214.4
TwinSpires:	$	106.6			$	94.8
Gaming:
Florida	$	26.1			$	26.1
Iowa		23.4				24.5
Louisiana		44.3				44.1
Maine		26.8				27.7
Maryland		21.6				23.3
Mississippi		26.0				27.5
New York		45.0				44.5
Pennsylvania		26.0				32.3
Total Gaming	$	239.2			$	250.0
All Other		—				0.3
Net revenue from external customers	$	590.9			$	559.5
Intercompany net revenues:
Live and Historical Racing	$	3.8			$	1.4
TwinSpires		7.5				1.6
Gaming		4.0				1.5
All Other		—				0.2
Eliminations		(15.3	)			(4.7	)
Intercompany net revenue	$	—			$	—

CHURCHILL DOWNS INCORPORATED SUPPLEMENTAL INFORMATION (Unaudited)
	Three Months Ended March 31, 2024
(in millions)	Live and Historical Racing			TwinSpires			Gaming			Total Segments			All Other			Total
Net revenue from external customers
Pari-mutuel:
Live and simulcast racing	$	11.0		$	79.8		$	10.6		$	101.4		$	—		$	101.4
Historical racing(a)		212.1			—			8.8			220.9			—			220.9
Racing event-related services		1.1			—			2.2			3.3			—			3.3
Gaming(a)		3.1			5.7			193.1			201.9			—			201.9
Other(a)		17.8			21.1			24.5			63.4			—			63.4
Total	$	245.1		$	106.6		$	239.2		$	590.9		$	—		$	590.9

	Three Months Ended March 31, 2023
(in millions)	Live and Historical Racing			TwinSpires			Gaming			Total Segments			All Other			Total
Net revenue from external customers
Pari-mutuel:
Live and simulcast racing	$	11.0		$	79.4		$	11.6		$	102.0		$	—		$	102.0
Historical racing(a)		185.3			—			6.0			191.3			—			191.3
Racing event-related services		1.0			—			1.9			2.9			—			2.9
Gaming(a)		2.6			4.4			205.5			212.5			—			212.5
Other(a)		14.5			11.0			25.0			50.5			0.3			50.8
Total	$	214.4		$	94.8		$	250.0		$	559.2		$	0.3		$	559.5
(a) Food and beverage, hotel, and other services furnished to customers for free as an inducement to wager or through the redemption of our customers' loyalty points are recorded at the estimated standalone selling prices in Other revenue with a corresponding offset recorded as a reduction in historical racing pari-mutuel revenue for HRMs or gaming revenue for our casino properties. These amounts were $13.4 million for the three months ended March 31, 2024 and $12.1 million for the three months ended March 31, 2023.

CHURCHILL DOWNS INCORPORATED SUPPLEMENTAL INFORMATION (Unaudited)
Adjusted EBITDA by segment is comprised of the following:
	Three Months Ended March 31, 2024
(in millions)	Live and Historical Racing				TwinSpires				Gaming				Total Segments				All Other				Eliminations				Total
Revenues	$	248.9			$	114.1			$	243.2			$	606.2			$	—			$	(15.3	)		$	590.9
Gaming taxes and purses		(65.0	)			(4.9	)			(80.5	)			(150.4	)			—				—				(150.4	)
Marketing and advertising		(9.3	)			(1.2	)			(7.8	)			(18.3	)			—				—				(18.3	)
Salaries and benefits		(26.8	)			(7.9	)			(38.0	)			(72.7	)			—				—				(72.7	)
Content expense		(1.3	)			(44.0	)			(1.8	)			(47.1	)			—				8.9				(38.2	)
Selling, general and administrative expense		(8.8	)			(4.5	)			(10.2	)			(23.5	)			(20.5	)			0.3				(43.7	)
Maintenance, insurance and utilities		(10.3	)			(1.0	)			(9.6	)			(20.9	)			—				—				(20.9	)
Property and other taxes		(2.7	)			(0.1	)			(3.4	)			(6.2	)			(0.2	)			—				(6.4	)
Other operating expense		(23.9	)			(10.9	)			(18.3	)			(53.1	)			—				6.1				(47.0	)
Other income		—				—				49.2				49.2				—				—				49.2
Adjusted EBITDA	$	100.8			$	39.6			$	122.8			$	263.2			$	(20.7	)		$	—			$	242.5

	Three Months Ended March 31, 2023
(in millions)	Live and Historical Racing				TwinSpires				Gaming				Total Segments				All Other				Eliminations				Total
Revenues	$	215.8			$	96.3			$	251.6			$	563.7			$	0.3			$	(4.5	)		$	559.5
Gaming taxes and purses		(56.5	)			(5.0	)			(83.6	)			(145.1	)			—				—				(145.1	)
Marketing and advertising		(8.2	)			(1.4	)			(8.6	)			(18.2	)			—				0.2				(18.0	)
Salaries and benefits		(21.8	)			(6.2	)			(34.5	)			(62.5	)			—				—				(62.5	)
Content expense		(1.5	)			(43.0	)			(1.8	)			(46.3	)			—				3.9				(42.4	)
Selling, general and administrative expense		(8.7	)			(2.3	)			(12.2	)			(23.2	)			(18.3	)			0.1				(41.4	)
Maintenance, insurance and utilities		(9.3	)			(0.9	)			(9.8	)			(20.0	)			—				—				(20.0	)
Property and other taxes		(1.2	)			—				(3.3	)			(4.5	)			—				—				(4.5	)
Other operating expense		(26.5	)			(9.1	)			(16.9	)			(52.5	)			(0.1	)			0.3				(52.3	)
Other income		—				1.0				48.6				49.6				—				—				49.6
Adjusted EBITDA	$	82.1			$	29.4			$	129.5			$	241.0			$	(18.1	)		$	—			$	222.9

CHURCHILL DOWNS INCORPORATED SUPPLEMENTAL INFORMATION (Unaudited)
	Three Months Ended March 31,
(in millions)		2024				2023
Reconciliation of Comprehensive Income to Adjusted EBITDA:
Net income and comprehensive income	$	80.4			$	155.7
Additions:
Depreciation and amortization		46.9				37.9
Interest expense		70.4				64.7
Income tax provision		21.4				53.2
EBITDA	$	219.1			$	311.5
Adjustments to EBITDA:
Stock-based compensation expense	$	7.2			$	8.6
Pre-opening expense		8.3				3.2
Other expenses, net		0.2				3.7
Transaction expense, net		4.1				(0.2	)
Other income, expense:
Interest, depreciation and amortization expense related to equity investments		10.3				9.8
Other charges and recoveries, net		(6.7	)			0.3
Gain on Arlington sale		—				(114.0	)
Total adjustments to EBITDA		23.4				(88.6	)
Adjusted EBITDA	$	242.5			$	222.9
Adjusted EBITDA by segment:
Live and Historical Racing	$	100.8			$	82.1
TwinSpires		39.6				29.4
Gaming		122.8				129.5
Total segment Adjusted EBITDA		263.2				241.0
All Other		(20.7	)			(18.1	)
Total Adjusted EBITDA	$	242.5			$	222.9

CHURCHILL DOWNS INCORPORATED SUPPLEMENTAL JOINT VENTURE FINANCIAL STATEMENTS (Unaudited)
Summarized financial information for our equity investments is comprised of the following:
	Summarized Income Statement
	Three Months Ended March 31,
(in millions)		2024				2023
Net revenue	$	216.9			$	220.6
Operating and SG&A expense		134.9				137.2
Depreciation and amortization		6.3				5.7
Total operating expense		141.2				142.9
Operating income		75.7				77.7
Interest and other expense, net		(11.0	)			(10.9	)
Net income	$	64.7			$	66.8

	Summarized Balance Sheet
(in millions)	March 31, 2024				December 31, 2023
Assets
Current assets	$	99.2			$	104.8
Property and equipment, net		336.4				339.4
Other assets, net		270.1				266.1
Total assets	$	705.7			$	710.3
Liabilities and Members' Deficit
Current liabilities	$	116.4			$	106.2
Long-term debt		845.6				847.2
Other liabilities		0.8				0.7
Members' deficit		(257.1	)			(243.8	)
Total liabilities and members' deficit	$	705.7			$	710.3

CHURCHILL DOWNS INCORPORATED SUPPLEMENTAL INFORMATION (Unaudited)
Planned capital projects for the Company are as follows:
(in millions)	Project	Target Completion	Planned Spend
Live and Historical Racing Segment
Churchill Downs Racetrack (Louisville, Kentucky)	Paddock Project	May 2024	$185-$200
	Jockey Club Suites	May 2024	$14
The Rose (Northern Virginia)	New Property	Late September 2024	$460
Owensboro Racing & Gaming (Western Kentucky)	New Property	First Quarter 2025	$100
New Hampshire HRM Facility	New Property	TBD	TBD
Gaming Segment
Terre Haute Casino Resort	New Casino	Opened April 5, 2024	Up to $290
	New Hotel	May 2024

Contact: Kaitlin Buzzetto
(502) 394-1091
Kaitlin.Buzzetto@kyderby.com

FAQ

What was Churchill Downs Incorporated's net revenue for the first quarter of 2024?

Churchill Downs Incorporated reported a record net revenue of $590.9 million for the first quarter of 2024.

What was the net income of Churchill Downs Incorporated in the first quarter of 2024?

The net income of Churchill Downs Incorporated for the first quarter of 2024 was $80.4 million, showing a decrease of 48% compared to the prior year quarter.

What is the Adjusted EBITDA reported by Churchill Downs Incorporated for the first quarter of 2024?

Churchill Downs Incorporated reported an Adjusted EBITDA of $242.5 million for the first quarter of 2024, up by 9% compared to the prior year quarter.

What new gaming resorts did Churchill Downs Incorporated announce?

Churchill Downs Incorporated announced The Rose Gaming Resort scheduled to open in late September 2024 and development plans for Owensboro Racing & Gaming with a planned opening in the first quarter of 2025.

How did Churchill Downs Incorporated return capital to shareholders in the first quarter of 2024?

Churchill Downs Incorporated repurchased shares under its share repurchase program and paid a dividend to shareholders in the first quarter of 2024.

What was the net bank leverage of Churchill Downs Incorporated at the end of the first quarter of 2024?

Churchill Downs Incorporated ended the first quarter of 2024 with a net bank leverage of 4.1x.

What segment showed a decrease in revenue and Adjusted EBITDA in the first quarter of 2024 for Churchill Downs Incorporated?

The Gaming segment of Churchill Downs Incorporated showed a decrease in revenue and Adjusted EBITDA in the first quarter of 2024.

Why did the All Other segment of Churchill Downs Incorporated experience a decrease in Adjusted EBITDA in the first quarter of 2024?

The All Other segment of Churchill Downs Incorporated experienced a decrease in Adjusted EBITDA primarily due to increased corporate compensation expenses.