Nasdaq:CHDN
Churchill Downs Incorporated Reports 2022 Second Quarter Results
LOUISVILLE, Ky., July 27, 2022 (GLOBE NEWSWIRE) — Churchill Downs Incorporated (Nasdaq: CHDN) (the “Company”) today reported business results for the second quarter ended June 30, 2022.
Second Quarter 2022 Highlights
- Record second quarter 2022 results:
- Record net revenue of $582.5 million compared to $515.1 million in second quarter 2021
- Record net income of $339.3 million compared to $108.3 million in second quarter 2021
- Record Adjusted EBITDA of $291.2 million compared to $233.3 million in second quarter 2021
- Our Live and Historical Racing segment delivered record revenue and Adjusted EBITDA, with Adjusted EBITDA up 67% compared to the second quarter of 2021
- Churchill Downs Racetrack ran the 148th Kentucky Derby with record Derby Week all-sources handle for Churchill Downs Racetrack, record Derby Week Adjusted EBITDA, and debuted the new Homestretch Club
- The TwinSpires segment delivered Adjusted EBITDA of $33.9 million, up 38% compared to the second quarter of 2021
- Closed on the sale of 115.7 acres of excess land near Calder Casino for $291 million
| CONSOLIDATED RESULTS | |||||
| Second Quarter | |||||
| (in millions, except per share data) | 2022 | 2021 | |||
| Net revenue | $ | 582.5 | $ | 515.1 | |
| Net income | $ | 339.3 | $ | 108.3 | |
| Diluted EPS | $ | 8.79 | $ | 2.76 | |
| Adjusted EBITDA(a) | $ | 291.2 | $ | 233.3 | |
| (a) This is a non-GAAP measure. See explanation of non-GAAP measures below. | |||||
Second Quarter 2022 Results
The Company’s second quarter of 2022 net income was $339.3 million compared to $108.3 million in the prior year quarter.
The following items impacted the comparability of the Company’s second quarter net income:
- $193.6 million after-tax gain on the sale of Calder land;
- $8.1 million after-tax charge related to the 2021 asset impairment at Churchill Downs Racetrack that did not recur in 2022;
- $4.7 million after-tax decrease in expenses related to our equity portion of Rivers Des Plaines’ legal reserves and transaction costs; and
- $0.3 million after-tax benefit increase related to our equity portion of the non-cash change in the fair value of Rivers Des Plaines’ interest rate swaps.
These increases were partially offset by:
- $2.8 million after-tax increase in expenses related to transaction, pre-opening and other expenses, net; and
- $2.3 million after-tax increase in legal reserves.
Excluding the items above, second quarter 2022 adjusted net income increased $29.4 million primarily due to the following:
- $38.6 million after-tax increase from the prior year quarter driven by the results of our operations and equity income from our unconsolidated affiliates,
- Partially offset by $9.2 million after-tax increase from the prior year quarter in interest expense associated with higher outstanding debt balances.
| SEGMENT RESULTS |
During the first quarter of 2022, we updated our operating segments to include the results of our United Tote business in the TwinSpires segment. Results of our United Tote business were previously included in our All Other segment.
The summaries below present net revenue from external customers and intercompany revenue from each of our reportable segments:
Live and Historical Racing
| Second Quarter | |||||
| (in millions) | 2022 | 2021 | |||
| Net revenue | $ | 275.9 | $ | 190.5 | |
| Adjusted EBITDA | 163.9 | 98.4 | |||
For the second quarter of 2022, net revenue increased $85.4 million due primarily to a $69.3 million increase at Churchill Downs Racetrack due to the running of the Kentucky Derby in 2022 without capacity restrictions that were in place in 2021, an $8.5 million increase at Oak Grove Racing, Gaming and Hotel (“Oak Grove”), a $4.3 million increase from Derby City Gaming, a $2.9 million increase at Newport Racing & Gaming (“Newport”), and a $0.4 million increase at Turfway Park. The historical racing machine (“HRM”) properties benefited from the elimination of the capacity restrictions that were in place during the second quarter of 2021 and overall continued growth in the businesses.
Adjusted EBITDA increased $65.5 million due to a $58.5 million increase at Churchill Downs Racetrack driven by the running of the Kentucky Derby in 2022 without capacity restrictions that were in place in 2021, a $4.0 million increase at Oak Grove, a $1.7 million increase at Derby City Gaming, and a $1.3 million increase at Newport, all of which were driven by increases in net revenue.
TwinSpires
| Second Quarter | |||||
| (in millions) | 2022 | 2021 | |||
| Net revenue | $ | 138.5 | $ | 142.6 | |
| Adjusted EBITDA | 33.9 | 24.6 | |||
For the second quarter of 2022, net revenue decreased $4.1 million from the prior year quarter primarily due to a decrease of $2.2 million from Sports and Casino and a $1.9 million decrease from Horse Racing. The decrease in Sports and Casino was driven by the decision to exit the direct online sports and casino business in the first quarter of 2022. Horse Racing net revenue decreased as a higher portion of our patrons returned to wagering at brick-and-mortar facilities instead of wagering online in the current quarter compared to the prior year quarter.
Adjusted EBITDA increased $9.3 million primarily due to a $10.8 million increase from our Sports and Casino business due to decreased online marketing and promotional activities. This increase was partially offset by a $1.2 million decrease from Horse Racing due to a reduction in net revenue and a $0.3 million decrease from United Tote.
Gaming
| Second Quarter | |||||
| (in millions) | 2022 | 2021 | |||
| Net revenue | $ | 184.5 | $ | 186.0 | |
| Adjusted EBITDA | 106.8 | 119.8 | |||
For the second quarter of 2022, net revenue decreased $1.5 million primarily due to a decrease of $4.6 million at Harlow’s and a $4.4 million decrease at Riverwalk as a result of the current economic conditions, competitive pressures, and a mask mandate at Harlow’s that was discontinued in early June 2022. These decreases were partially offset by a $4.8 million increase at Oxford due to the lifting of restrictions that were in place during the prior year quarter, a $2.1 million increase at Fair Grounds from the 2022 Jazz Festival that more than offset the decline in Fair Grounds Slots revenue due to current economic conditions and the ongoing closure of our Houma off-track betting facility (“OTB”), and a $0.6 million net increase in all other properties.
Adjusted EBITDA decreased $13.0 million driven by a $10.2 million decrease at our wholly-owned Gaming properties and a $2.8 million decrease from our equity investments. The decreases at our wholly-owned Gaming properties are the result of decreased revenue and increases in marketing and salaries expense. The decrease in our equity investments is also driven by increases in marketing and salaries expense.
All Other
For the second quarter of 2022, All Other Adjusted EBITDA decreased $3.9 million primarily driven by a $3.1 million decrease as a result of Arlington not conducting live racing in the second quarter of 2022 as we ceased racing and simulcast operations at the end of 2021. We are excluding Arlington’s operating results from Adjusted EBITDA in 2022 pending the sale of the property to the Chicago Bears, which we anticipate to close in the first quarter of 2023.
| ACQUISITION / DISPOSITION UPDATE |
Peninsula Pacific Entertainment LLC (“P2E”) Acquisition:
On February 18, 2022, the Company entered into a definitive purchase agreement to acquire substantially all of the assets of P2E for total consideration of $2.485 billion (the “P2E Acquisition”). The P2E Acquisition contemplates the Company acquiring the following properties: Colonial Downs Racetrack in New Kent, Virginia (“Colonial Downs”), six historical racing entertainment venues across Virginia, del Lago Resort & Casino (“del Lago”) in Waterloo, New York, and the operations of Hard Rock Hotel & Casino in Sioux City, Iowa (“Hard Rock Sioux City”).
The Company has obtained the acquisition of ownership interest approval for the Virginia properties from the Virginia Racing Commission. The P2E Transaction remains dependent on customary closing conditions, including the Company obtaining approvals from the New York State Gaming Commission and the Iowa Racing and Gaming Commission. The transaction is expected to close before the end of 2022.
Calder Land Sale:
On June 17, 2022, the Company closed on the previously announced sale of 115.7 acres of excess land near Calder Casino for $291.0 million (or approximately $2.5 million per acre) to Link Logistics, a Blackstone portfolio company. The Company received cash proceeds of $279.0 million which was net of $12.0 million of transaction costs. We recognized a gain of $274.6 million on the sale of the land, which is included in other income (expense) in the accompanying Condensed Consolidated Statements of Comprehensive Income.
The Company is planning on using certain proceeds of the sale to purchase property as part of the previously announced P2E acquisition and to invest in other replacement properties that qualify as Internal Revenue Code §1031 transactions to defer the federal income tax on the gain on the Calder land sale. The Company has identified two reverse like-kind exchange transactions for property acquired prior to the sale of the Calder land and a forward like-kind exchange transaction to acquire additional property for the Internal Revenue Code §1031 transactions.
The first reverse like-kind exchange involved our $9.9 million investment in real property for the Derby City Gaming Downtown facility in Louisville, Kentucky. This reverse like-kind exchange was completed in June 2022.
The second reverse like-kind exchange involves the Company’s investment in real property for the Queen of Terre Haute Casino Resort (“Queen of Terre Haute”) property in Terre Haute, Indiana. As of June 30, 2022, $10.0 million had been invested in real property for the Queen of Terre Haute. The Company plans to make additional investments in real property for the Queen of Terre Haute and expects to complete this reverse like-kind exchange in fourth quarter 2022.
The Company is planning on utilizing the remainder of the proceeds from the Calder land sale to execute a forward like-kind exchange transaction by purchasing property as part of the previously announced P2E Acquisition. The Company anticipates closing the P2E Acquisition prior to the end of 2022. If the acquisition of replacement property is not completed within 180 days of the Calder land sale, all applicable income taxes will be assessed on the remaining gain that was not deferred by acquiring replacement property.
Chasers Poker Room Acquisition:
On March 22, 2022, the Company entered into a definitive purchase agreement to acquire Chasers Poker Room (“Chasers”) in Salem, New Hampshire. Chasers is a charitable gaming facility located approximately 30 miles from Boston, Massachusetts, that offers poker and a variety of table games. Following the closing of the acquisition, the Company plans to develop an expanded charitable gaming facility in Salem to accommodate historical racing machines. The Company expects the total investment in Salem, inclusive of the Chasers purchase price to be approximately $150 million. The transaction is expected to close in the third quarter of 2022.
| CAPITAL MANAGEMENT |
Share Repurchase Program:
The Company repurchased 321,554 shares of its common stock at an average share price of approximately $191.37 based on trade date in conjunction with its publicly announced share repurchase program at a total cost of $61.5 million in the second quarter of 2022. We had approximately $359.1 million of repurchase authority remaining under this program as of June 30, 2022.
April 2022 Financing Transactions:
On April 13, 2022, the Company entered into the fourth amendment of its Credit Agreement (the “Fourth Amendment to the Credit Agreement”) to extend the maturity of its existing revolving credit facility to April 13, 2027 and to increase the commitments under the existing revolving credit facility from $700 million to $1.2 billion (the “Revolver”). The Fourth Amendment to the Credit Agreement also provides for a senior secured Delayed Draw Term Loan A credit facility due April 13, 2027 in the amount of $800 million (the “Delayed Draw Term Loan A”) which is part of the financing for the P2E Acquisition. The interest rate applicable to the borrowings on the Revolver and Delayed Draw Term Loan A will be SOFR plus a spread, determined by the Company’s total net leverage ratio. We also successfully closed into escrow the previously announced offering of $1.2 billion in aggregate principal amount of 5.75% senior notes due 2030. The proceeds from the senior notes offering will also be used for the financing for the P2E Acquisition.
Conference Call
A conference call regarding this news release is scheduled for Thursday, July 28, 2022, at 9 a.m. ET. Investors and other interested parties may listen to the teleconference by accessing the online, real-time webcast at http://ir.churchilldownsincorporated.com/events.cfm, or by registering in advance via teleconference at https://register.vevent.com/register/BIf86ecb99de9745e3b2767ca077994dac. 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 instructed to dial-in 15 minutes prior to the start time. An online replay will be available at approximately noon ET on Thursday, July 28, 2022, and will continue to be available for two weeks. 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 the Company’s portion of EBITDA from our equity investments.
Adjusted EBITDA excludes:
- Transaction expense, net which includes:
- Acquisition, disposition, and land sale related charges;
- Direct online Sports and Casino business exit costs; and
- Other transaction expense, including legal, accounting, and other deal-related expense;
- Stock-based compensation expense;
- Rivers Des Plaines’ impact on our investments in unconsolidated affiliates from:
- The impact of changes in fair value of interest rate swaps; and
- Legal reserves and transaction costs;
- Asset impairments;
- Gain on Calder land sale;
- Legal reserves;
- Pre-opening expense; and
- Other charges, recoveries and expenses.
As of December 31, 2021, Arlington ceased racing and simulcast operations given the pending sale of the property to the Chicago Bears. Arlington’s operating loss in the current year quarter was treated as an adjustment to EBITDA and is included in Other expenses, net in the Reconciliation of Comprehensive Income to Adjusted EBITDA.
For segment reporting, Adjusted EBITDA includes intercompany revenue and expense totals that are eliminated in the consolidated statements of comprehensive income. Refer to the Reconciliation of Comprehensive Income to Adjusted EBITDA included herewith for additional information.
About Churchill Downs Incorporated
Churchill Downs Incorporated is an industry-leading racing, online wagering and gaming entertainment company anchored by our iconic flagship event, the Kentucky Derby. We own and operate three entertainment venues with approximately 3,050 HRMs in Kentucky. We also own and operate TwinSpires, one of the largest and most profitable online wagering platforms for horse racing in the U.S. and we have eight retail sportsbooks. We are also a leader in brick-and-mortar casino gaming in eight states with approximately 11,000 slot machines and video lottery terminals and 200 table games. Additional information about Churchill Downs Incorporated can be found online at 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, among others, that may materially affect actual results or outcomes include the following: the receipt of regulatory approvals on terms desired or anticipated, unanticipated difficulties or expenditures relating to the proposed transaction, including, without limitation, difficulties that result in the failure to realize expected synergies, efficiencies and cost savings from the proposed transaction within the expected time period (if at all), our ability to obtain financing on the anticipated terms and schedule, disruptions of our or P2E’s current plans, operations and relationships with customers and suppliers caused by the announcement and pendency of the proposed transaction, our and P2E’s ability to consummate a sale-leaseback transaction with respect to the Hard Rock Sioux City on terms desired or anticipated, the impact of the novel coronavirus (COVID-19) pandemic, including the emergence of variant strains, and related economic matters on our results of operations, financial conditions and prospects; the occurrence of extraordinary events, such as terrorist attacks, public health threats, civil unrest, and inclement weather; 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 significant competition, and the expectation the competition levels will increase; changes in consumer preferences, attendance, wagering, and sponsorships; loss of key or highly skilled personnel; lack of confidence in the integrity of our core businesses or any deterioration in our reputation; 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 HRM manufacturing and other technology conditions that could impose additional costs; inability to negotiate 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; inability to identify and / or complete, or fully realize the benefits of acquisitions, divestitures, development of new venues or the expansion of existing facilities on time, on budget, or as planned; general risks related to real estate ownership and significant expenditures, including fluctuations in market values and environmental regulations; reliance on our technology services and catastrophic events and system failures disrupting our operations; 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; personal injury litigation related to injuries occurring at our racetracks; compliance with the Foreign Corrupt Practices Act or applicable money-laundering regulations; payment-related risks, such as risk associated with fraudulent credit card and debit card use; work stoppages and labor issues; 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; increase in our insurance costs, or obtain similar insurance coverage in the future, and inability to recover under our insurance policies for damages sustained at our properties in the event of inclement weather and casualty events; and risks in connection with Internal Revenue Code Section 1031 exchanges.
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 June 30, | Six Months Ended June 30, | ||||||||||||||
| (in millions, except per common share data) | 2022 | 2021 | 2022 | 2021 | |||||||||||
| Net revenue: | |||||||||||||||
| Live and Historical Racing | $ | 260.9 | $ | 175.9 | $ | 346.9 | $ | 239.1 | |||||||
| TwinSpires | 136.8 | 140.8 | 237.1 | 244.3 | |||||||||||
| Gaming | 184.3 | 186.0 | 361.6 | 338.0 | |||||||||||
| All Other | 0.5 | 12.4 | 1.0 | 18.0 | |||||||||||
| Total net revenue | 582.5 | 515.1 | 946.6 | 839.4 | |||||||||||
| Operating expense: | |||||||||||||||
| Live and Historical Racing | 121.4 | 100.3 | 189.1 | 155.0 | |||||||||||
| TwinSpires | 90.2 | 102.1 | 165.1 | 179.6 | |||||||||||
| Gaming | 128.8 | 121.0 | 254.0 | 227.3 | |||||||||||
| All Other | 2.8 | 11.7 | 5.9 | 20.5 | |||||||||||
| Selling, general and administrative expense | 38.4 | 33.4 | 74.3 | 63.6 | |||||||||||
| Asset impairments | — | 11.2 | 4.9 | 11.2 | |||||||||||
| Transaction expense, net | 1.2 | — | 6.2 | 0.1 | |||||||||||
| Total operating expense | 382.8 | 379.7 | 699.5 | 657.3 | |||||||||||
| Operating income | 199.7 | 135.4 | 247.1 | 182.1 | |||||||||||
| Other income (expense): | |||||||||||||||
| Interest expense, net | (35.1 | ) | (22.0 | ) | (56.4 | ) | (41.4 | ) | |||||||
| Equity in income of unconsolidated affiliates | 40.5 | 36.4 | 73.0 | 61.3 | |||||||||||
| Gain on Calder land sale | 274.6 | — | 274.6 | — | |||||||||||
| Miscellaneous, net | 0.2 | 0.1 | 0.2 | 0.2 | |||||||||||
| Total other income | 280.2 | 14.5 | 291.4 | 20.1 | |||||||||||
| Income from operations before provision for income taxes | 479.9 | 149.9 | 538.5 | 202.2 | |||||||||||
| Income tax provision | (140.6 | ) | (41.6 | ) | (157.1 | ) | (57.8 | ) | |||||||
| Net income | $ | 339.3 | $ | 108.3 | $ | 381.4 | $ | 144.4 | |||||||
| Net income per common share data: | |||||||||||||||
| Basic net income | $ | 8.91 | $ | 2.80 | $ | 9.98 | $ | 3.72 | |||||||
| Diluted net income | $ | 8.79 | $ | 2.76 | $ | 9.85 | $ | 3.66 | |||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 38.1 | 38.7 | 38.2 | 38.8 | |||||||||||
| Diluted | 38.6 | 39.3 | 38.7 | 39.4 | |||||||||||
CHURCHILL DOWNS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (in millions) | June 30, 2022 | December 31, 2021 | |||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 310.2 | $ | 291.3 | |||
| Restricted cash | 1,589.3 | 64.3 | |||||
| Accounts receivable, net | 65.4 | 42.3 | |||||
| Income taxes receivable | — | 66.0 | |||||
| Other current assets | 40.0 | 37.6 | |||||
| Total current assets | 2,004.9 | 501.5 | |||||
| Property and equipment, net | 1,130.1 | 994.9 | |||||
| Investment in and advances to unconsolidated affiliates | 658.7 | 663.6 | |||||
| Goodwill | 366.8 | 366.8 | |||||
| Other intangible assets, net | 352.8 | 348.1 | |||||
| Other assets | 23.4 | 18.9 | |||||
| Long-term assets held for sale | 82.9 | 87.8 | |||||
| Total assets | $ | 4,619.6 | $ | 2,981.6 | |||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 139.1 | $ | 81.6 | |||
| Accrued expenses and other current liabilities | 282.6 | 231.7 | |||||
| Income taxes payable | 87.6 | 0.9 | |||||
| Current deferred revenue | 12.1 | 47.7 | |||||
| Current maturities of long-term debt | 7.0 | 7.0 | |||||
| Dividends payable | — | 26.1 | |||||
| Total current liabilities | 528.4 | 395.0 | |||||
| Long-term debt, net of current maturities and loan origination fees | 665.8 | 668.6 | |||||
| Notes payable, net of debt issuance costs | 2,488.5 | 1,292.4 | |||||
| Non-current deferred revenue | 10.9 | 13.3 | |||||
| Deferred income taxes | 273.3 | 252.9 | |||||
| Other liabilities | 49.8 | 52.6 | |||||
| Total liabilities | 4,016.7 | 2,674.8 | |||||
| Commitments and contingencies | |||||||
| Shareholders’ equity: | |||||||
| Preferred stock | — | — | |||||
| Common stock | — | — | |||||
| Retained earnings | 603.8 | 307.7 | |||||
| Accumulated other comprehensive loss | (0.9 | ) | (0.9 | ) | |||
| Total shareholders’ equity | 602.9 | 306.8 | |||||
| Total liabilities and shareholders’ equity | $ | 4,619.6 | $ | 2,981.6 | |||
CHURCHILL DOWNS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| Six Months Ended June 30, | |||||||
| (in millions) | 2022 | 2021 | |||||
| Cash flows from operating activities: | |||||||
| Net income | $ | 381.4 | $ | 144.4 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 51.2 | 52.0 | |||||
| Distributions from unconsolidated affiliates | 77.9 | 47.5 | |||||
| Equity in income of unconsolidated affiliates | (73.0 | ) | (61.3 | ) | |||
| Stock-based compensation | 14.4 | 12.6 | |||||
| Deferred income taxes | 20.4 | 7.4 | |||||
| Asset impairments | 4.9 | 11.2 | |||||
| Amortization of operating lease assets | 2.7 | 2.7 | |||||
| Gain on Calder land sale | (274.6 | ) | — | ||||
| Other | 2.9 | 3.1 | |||||
| Changes in operating assets and liabilities: | |||||||
| Income taxes | 154.0 | 39.5 | |||||
| Deferred revenue | (37.9 | ) | (12.6 | ) | |||
| Other assets and liabilities | 56.5 | 87.8 | |||||
| Net cash provided by operating activities | 380.8 | 334.3 | |||||
| Cash flows from investing activities: | |||||||
| Capital maintenance expenditures | (23.0 | ) | (13.7 | ) | |||
| Capital project expenditures | (144.1 | ) | (15.9 | ) | |||
| Proceeds from Calder land sale | 279.0 | — | |||||
| Other | (7.3 | ) | (0.9 | ) | |||
| Net cash provided by (used in) investing activities | 104.6 | (30.5 | ) | ||||
| Cash flows from financing activities: | |||||||
| Proceeds from borrowings under long-term debt obligations | 1,200.0 | 780.8 | |||||
| Repayments of borrowings under long-term debt obligations | (3.5 | ) | (427.4 | ) | |||
| Payment of dividends | (25.7 | ) | (24.8 | ) | |||
| Repurchase of common stock | (84.5 | ) | (193.9 | ) | |||
| Taxes paid related to net share settlement of stock awards | (13.2 | ) | (12.6 | ) | |||
| Debt issuance costs | (11.4 | ) | (6.8 | ) | |||
| Change in bank overdraft | (3.0 | ) | (6.1 | ) | |||
| Other | (0.2 | ) | 1.4 | ||||
| Net cash provided by financing activities | 1,058.5 | 110.6 | |||||
| Cash flows from discontinued operations: | |||||||
| Operating activities of discontinued operations | — | (124.0 | ) | ||||
| Net increase in cash, cash equivalents and restricted cash | 1,543.9 | 290.4 | |||||
| Cash, cash equivalents and restricted cash, beginning of period | 355.6 | 121.0 | |||||
| Cash, cash equivalents and restricted cash, end of period | $ | 1,899.5 | $ | 411.4 | |||
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| (in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||
| GAAP net income | $ | 339.3 | $ | 108.3 | $ | 381.4 | $ | 144.4 | |||||||
| Adjustments, continuing operations: | |||||||||||||||
| Changes in fair value of interest rate swaps related to Rivers Des Plaines | (2.2 | ) | (1.8 | ) | (12.6 | ) | (6.0 | ) | |||||||
| Legal reserves and transaction costs related to Rivers Des Plaines | 0.2 | 6.7 | 0.5 | 8.0 | |||||||||||
| Other charges | — | — | 1.0 | — | |||||||||||
| Transaction, pre-opening, and other expense | 5.6 | 1.7 | 15.2 | 2.4 | |||||||||||
| Legal reserves | 3.2 | — | 3.2 | — | |||||||||||
| Asset impairments | — | 11.2 | 4.9 | 11.2 | |||||||||||
| Gain on Calder land sale | (274.6 | ) | — | (274.6 | ) | — | |||||||||
| Income tax impact on net income adjustments (a) | 79.1 | (5.0 | ) | 77.5 | (4.3 | ) | |||||||||
| Total adjustments | (188.7 | ) | 12.8 | (184.9 | ) | 11.3 | |||||||||
| Adjusted net income attributable to Churchill Downs Incorporated | $ | 150.6 | $ | 121.1 | $ | 196.5 | $ | 155.7 | |||||||
| Adjusted diluted EPS | $ | 3.90 | $ | 3.08 | $ | 5.08 | $ | 3.95 | |||||||
| Weighted average shares outstanding – Diluted | 38.6 | 39.3 | 38.7 | 39.4 | |||||||||||
(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 June 30, | Six Months Ended June 30, | ||||||||||
| (in millions) | 2022 | 2021 | 2022 | 2021 | |||||||
| Total Handle | |||||||||||
| Churchill Downs Racetrack | $ | 625.6 | $ | 529.4 | $ | 630.0 | $ | 533.2 | |||
| TwinSpires Horse Racing(a) | 610.6 | 620.4 | 1,005.5 | 1,063.5 | |||||||
(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 June 30, | Six Months Ended June 30, | ||||||||||||||
| (in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||
| Net revenue from external customers: | |||||||||||||||
| Live and Historical Racing: | |||||||||||||||
| Churchill Downs Racetrack | $ | 174.2 | $ | 105.2 | $ | 176.2 | $ | 107.2 | |||||||
| Derby City Gaming | 44.2 | 39.9 | 87.0 | 72.8 | |||||||||||
| Oak Grove | 34.1 | 25.6 | 64.5 | 45.0 | |||||||||||
| Turfway Park | 1.0 | 0.7 | 5.5 | 5.2 | |||||||||||
| Newport | 7.4 | 4.5 | 13.7 | 8.9 | |||||||||||
| Total Live and Historical Racing | 260.9 | 175.9 | 346.9 | 239.1 | |||||||||||
| TwinSpires: | |||||||||||||||
| Horse Racing | 130.6 | 132.4 | 220.6 | 228.9 | |||||||||||
| Sports and Casino | 6.2 | 8.4 | 16.5 | 15.4 | |||||||||||
| Total TwinSpires | 136.8 | 140.8 | 237.1 | 244.3 | |||||||||||
| Gaming: | |||||||||||||||
| Fair Grounds and VSI | 37.2 | 35.1 | 78.7 | 73.4 | |||||||||||
| Presque Isle | 30.3 | 30.5 | 57.5 | 54.3 | |||||||||||
| Ocean Downs | 27.4 | 27.0 | 48.7 | 47.0 | |||||||||||
| Calder | 27.9 | 27.4 | 54.9 | 48.3 | |||||||||||
| Oxford | 29.4 | 24.6 | 56.2 | 40.3 | |||||||||||
| Riverwalk | 14.0 | 18.4 | 28.4 | 32.8 | |||||||||||
| Harlow’s | 12.0 | 16.6 | 25.1 | 30.6 | |||||||||||
| Lady Luck Nemacolin | 6.1 | 6.4 | 12.1 | 11.3 | |||||||||||
| Total Gaming | 184.3 | 186.0 | 361.6 | 338.0 | |||||||||||
| All Other | 0.5 | 12.4 | 1.0 | 18.0 | |||||||||||
| Net revenue from external customers | $ | 582.5 | $ | 515.1 | $ | 946.6 | $ | 839.4 | |||||||
| Intercompany net revenue: | |||||||||||||||
| Live and Historical Racing | $ | 15.0 | $ | 14.6 | $ | 16.2 | $ | 16.1 | |||||||
| TwinSpires | 1.7 | 1.8 | 2.8 | 3.3 | |||||||||||
| Gaming | 0.2 | — | 2.1 | 2.0 | |||||||||||
| All Other | — | 2.4 | — | 4.0 | |||||||||||
| Eliminations | (16.9 | ) | (18.8 | ) | (21.1 | ) | (25.4 | ) | |||||||
| Intercompany net revenue | $ | — | $ | — | $ | — | $ | — | |||||||
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(Unaudited)
| Three Months Ended June 30, 2022 | |||||||||||||||||
| (in millions) | Live and Historical Racing |
TwinSpires | Gaming | Total Segments |
All Other | Total | |||||||||||
| Net revenue from external customers | |||||||||||||||||
| Pari-mutuel: | |||||||||||||||||
| Live and simulcast racing | $ | 46.5 | $ | 118.4 | $ | 5.5 | $ | 170.4 | $ | — | $ | 170.4 | |||||
| Historical racing(a) | 78.4 | — | 1.3 | 79.7 | — | 79.7 | |||||||||||
| Racing event-related services | 121.9 | — | 0.2 | 122.1 | — | 122.1 | |||||||||||
| Gaming(a) | — | 6.2 | 158.1 | 164.3 | — | 164.3 | |||||||||||
| Other(a) | 14.1 | 12.2 | 19.2 | 45.5 | 0.5 | 46.0 | |||||||||||
| Total | $ | 260.9 | $ | 136.8 | $ | 184.3 | $ | 582.0 | $ | 0.5 | $ | 582.5 | |||||
| Three Months Ended June 30, 2021 | |||||||||||||||||
| (in millions) | Live and Historical Racing |
TwinSpires | Gaming | Total Segments |
All Other | Total | |||||||||||
| Net revenue from external customers | |||||||||||||||||
| Pari-mutuel: | |||||||||||||||||
| Live and simulcast racing | $ | 39.6 | $ | 121.6 | $ | 4.4 | $ | 165.6 | $ | 9.5 | $ | 175.1 | |||||
| Historical racing(a) | 64.9 | — | — | 64.9 | — | 64.9 | |||||||||||
| Racing event-related services | 63.5 | — | 0.2 | 63.7 | 1.9 | 65.6 | |||||||||||
| Gaming(a) | — | 8.4 | 170.2 | 178.6 | — | 178.6 | |||||||||||
| Other(a) | 7.9 | 10.8 | 11.2 | 29.9 | 1.0 | 30.9 | |||||||||||
| Total | $ | 175.9 | $ | 140.8 | $ | 186.0 | $ | 502.7 | $ | 12.4 | $ | 515.1 | |||||
(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 $7.7 million for the three months ended June 30, 2022 and $5.2 million for the three months ended June 30, 2021.
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(Unaudited)
| Six Months Ended June 30, 2022 | |||||||||||||||||
| (in millions) | Live and Historical Racing |
TwinSpires | Gaming | Total Segments |
All Other | Total | |||||||||||
| Net revenue from external customers | |||||||||||||||||
| Pari-mutuel: | |||||||||||||||||
| Live and simulcast racing | $ | 52.1 | $ | 199.9 | $ | 18.4 | $ | 270.4 | $ | — | $ | 270.4 | |||||
| Historical racing(a) | 152.0 | — | 1.3 | 153.3 | — | 153.3 | |||||||||||
| Racing event-related services | 122.4 | — | 0.6 | 123.0 | — | 123.0 | |||||||||||
| Gaming(a) | — | 16.5 | 309.0 | 325.5 | — | 325.5 | |||||||||||
| Other(a) | 20.4 | 20.7 | 32.3 | 73.4 | 1.0 | 74.4 | |||||||||||
| Total | $ | 346.9 | $ | 237.1 | $ | 361.6 | $ | 945.6 | $ | 1.0 | $ | 946.6 | |||||
| Six Months Ended June 30, 2021 | |||||||||||||||||
| (in millions) | Live and Historical Racing |
TwinSpires | Gaming | Total Segments |
All Other | Total | |||||||||||
| Net revenue from external customers | |||||||||||||||||
| Pari-mutuel: | |||||||||||||||||
| Live and simulcast racing | $ | 45.5 | $ | 210.8 | $ | 16.1 | $ | 272.4 | $ | 14.6 | $ | 287.0 | |||||
| Historical racing(a) | 117.8 | — | — | 117.8 | — | 117.8 | |||||||||||
| Racing event-related services | 63.5 | — | 0.9 | 64.4 | 1.9 | 66.3 | |||||||||||
| Gaming(a) | — | 15.4 | 302.7 | 318.1 | — | 318.1 | |||||||||||
| Other(a) | 12.3 | 18.1 | 18.3 | 48.7 | 1.5 | 50.2 | |||||||||||
| Total | $ | 239.1 | $ | 244.3 | $ | 338.0 | $ | 821.4 | $ | 18.0 | $ | 839.4 | |||||
(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 $14.8 million for the six months ended June 30, 2022 and $8.9 million for the six months ended June 30, 2021.
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(Unaudited)
Adjusted EBITDA by segment is comprised of the following:
| Three Months Ended June 30, 2022 | |||||||||||||||||||||||||||
| (in millions) | Live and Historical Racing |
TwinSpires | Gaming | Total Segments |
All Other | Eliminations | Total | ||||||||||||||||||||
| Net revenue | $ | 275.9 | $ | 138.5 | $ | 184.5 | $ | 598.9 | $ | 0.2 | $ | (16.9 | ) | $ | 582.2 | ||||||||||||
| Taxes and purses | (59.6 | ) | (7.2 | ) | (68.2 | ) | (135.0 | ) | — | — | (135.0 | ) | |||||||||||||||
| Marketing and advertising | (6.4 | ) | (5.0 | ) | (3.7 | ) | (15.1 | ) | (0.1 | ) | — | (15.2 | ) | ||||||||||||||
| Salaries and benefits | (18.9 | ) | (6.9 | ) | (23.5 | ) | (49.3 | ) | — | — | (49.3 | ) | |||||||||||||||
| Content expense | (1.0 | ) | (68.1 | ) | (2.2 | ) | (71.3 | ) | — | 16.4 | (54.9 | ) | |||||||||||||||
| Selling, general and administrative expense | (3.0 | ) | (2.6 | ) | (6.7 | ) | (12.3 | ) | (13.5 | ) | 0.5 | (25.3 | ) | ||||||||||||||
| Other operating expense | (23.2 | ) | (14.8 | ) | (22.2 | ) | (60.2 | ) | — | — | (60.2 | ) | |||||||||||||||
| Other income | 0.1 | — | 48.8 | 48.9 | — | — | 48.9 | ||||||||||||||||||||
| Adjusted EBITDA | $ | 163.9 | $ | 33.9 | $ | 106.8 | $ | 304.6 | $ | (13.4 | ) | $ | — | $ | 291.2 | ||||||||||||
| Three Months Ended June 30, 2021 | |||||||||||||||||||||||||||
| (in millions) | Live and Historical Racing |
TwinSpires | Gaming | Total Segments |
All Other | Eliminations | Total | ||||||||||||||||||||
| Net revenue | $ | 190.5 | $ | 142.6 | $ | 186.0 | $ | 519.1 | $ | 14.8 | $ | (18.8 | ) | $ | 515.1 | ||||||||||||
| Taxes and purses | (50.8 | ) | (8.3 | ) | (70.0 | ) | (129.1 | ) | (3.9 | ) | — | (133.0 | ) | ||||||||||||||
| Marketing and advertising | (4.9 | ) | (16.7 | ) | (2.5 | ) | (24.1 | ) | — | — | (24.1 | ) | |||||||||||||||
| Salaries and benefits | (15.3 | ) | (6.8 | ) | (20.6 | ) | (42.7 | ) | (2.3 | ) | — | (45.0 | ) | ||||||||||||||
| Content expense | (0.8 | ) | (68.5 | ) | (1.3 | ) | (70.6 | ) | (1.8 | ) | 18.4 | (54.0 | ) | ||||||||||||||
| Selling, general and administrative expense | (3.1 | ) | (2.9 | ) | (5.9 | ) | (11.9 | ) | (13.4 | ) | 0.4 | (24.9 | ) | ||||||||||||||
| Other operating expense | (17.3 | ) | (14.8 | ) | (17.7 | ) | (49.8 | ) | (2.9 | ) | — | (52.7 | ) | ||||||||||||||
| Other income | 0.1 | — | 51.8 | 51.9 | — | — | 51.9 | ||||||||||||||||||||
| Adjusted EBITDA | $ | 98.4 | $ | 24.6 | $ | 119.8 | $ | 242.8 | $ | (9.5 | ) | $ | — | $ | 233.3 | ||||||||||||
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(Unaudited)
Adjusted EBITDA by segment is comprised of the following:
| Six Months Ended June 30, 2022 | |||||||||||||||||||||||||||
| (in millions) | Live and Historical Racing |
TwinSpires | Gaming | Total Segments |
All Other | Eliminations | Total | ||||||||||||||||||||
| Net revenue | $ | 363.1 | $ | 239.9 | $ | 363.7 | $ | 966.7 | $ | 0.3 | $ | (21.1 | ) | $ | 945.9 | ||||||||||||
| Taxes and purses | (86.4 | ) | (14.7 | ) | (135.5 | ) | (236.6 | ) | — | — | (236.6 | ) | |||||||||||||||
| Marketing and advertising | (9.3 | ) | (10.1 | ) | (7.2 | ) | (26.6 | ) | (0.1 | ) | — | (26.7 | ) | ||||||||||||||
| Salaries and benefits | (29.8 | ) | (13.6 | ) | (47.4 | ) | (90.8 | ) | — | — | (90.8 | ) | |||||||||||||||
| Content expense | (1.6 | ) | (111.2 | ) | (3.7 | ) | (116.5 | ) | — | 20.3 | (96.2 | ) | |||||||||||||||
| Selling, general and administrative expense | (6.3 | ) | (5.2 | ) | (13.3 | ) | (24.8 | ) | (28.0 | ) | 0.8 | (52.0 | ) | ||||||||||||||
| Other operating expense | (38.0 | ) | (27.1 | ) | (42.2 | ) | (107.3 | ) | (0.2 | ) | — | (107.5 | ) | ||||||||||||||
| Other income | 0.1 | — | 83.5 | 83.6 | — | — | 83.6 | ||||||||||||||||||||
| Adjusted EBITDA | $ | 191.8 | $ | 58.0 | $ | 197.9 | $ | 447.7 | $ | (28.0 | ) | $ | — | $ | 419.7 | ||||||||||||
| Six Months Ended June 30, 2021 | |||||||||||||||||||||||||||
| (in millions) | Live and Historical Racing |
TwinSpires | Gaming | Total Segments |
All Other | Eliminations | Total | ||||||||||||||||||||
| Net revenue | $ | 255.2 | $ | 247.6 | $ | 340.0 | $ | 842.8 | $ | 22.0 | $ | (25.4 | ) | $ | 839.4 | ||||||||||||
| Taxes and purses | (70.8 | ) | (14.7 | ) | (129.3 | ) | (214.8 | ) | (7.0 | ) | — | (221.8 | ) | ||||||||||||||
| Marketing and advertising | (7.0 | ) | (25.2 | ) | (3.9 | ) | (36.1 | ) | (0.1 | ) | — | (36.2 | ) | ||||||||||||||
| Salaries and benefits | (25.3 | ) | (13.0 | ) | (40.5 | ) | (78.8 | ) | (3.5 | ) | — | (82.3 | ) | ||||||||||||||
| Content expense | (1.4 | ) | (115.0 | ) | (2.3 | ) | (118.7 | ) | (3.1 | ) | 24.6 | (97.2 | ) | ||||||||||||||
| Selling, general and administrative expense | (6.1 | ) | (5.5 | ) | (11.9 | ) | (23.5 | ) | (26.0 | ) | 0.7 | (48.8 | ) | ||||||||||||||
| Other operating expense | (28.0 | ) | (26.5 | ) | (33.2 | ) | (87.7 | ) | (5.1 | ) | 0.1 | (92.7 | ) | ||||||||||||||
| Other income | 0.1 | — | 83.3 | 83.4 | 0.1 | — | 83.5 | ||||||||||||||||||||
| Adjusted EBITDA | $ | 116.7 | $ | 47.7 | $ | 202.2 | $ | 366.6 | $ | (22.7 | ) | $ | — | $ | 343.9 | ||||||||||||
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| (in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||
| Reconciliation of Comprehensive Income to Adjusted EBITDA: | |||||||||||||||
| Net income and comprehensive income | $ | 339.3 | $ | 108.3 | $ | 381.4 | $ | 144.4 | |||||||
| Additions: | |||||||||||||||
| Depreciation and amortization | 26.1 | 26.0 | 51.2 | 52.0 | |||||||||||
| Interest expense | 35.1 | 22.0 | 56.4 | 41.4 | |||||||||||
| Income tax provision | 140.6 | 41.6 | 157.1 | 57.8 | |||||||||||
| EBITDA | $ | 541.1 | $ | 197.9 | $ | 646.1 | $ | 295.6 | |||||||
| Adjustments to EBITDA: | |||||||||||||||
| Stock-based compensation expense | $ | 7.4 | $ | 7.1 | $ | 14.4 | $ | 12.6 | |||||||
| Legal reserves | 3.2 | — | 3.2 | — | |||||||||||
| Pre-opening expense | 2.6 | 1.5 | 4.7 | 2.1 | |||||||||||
| Other expenses, net | 1.8 | 0.2 | 4.3 | 0.2 | |||||||||||
| Asset impairments | — | 11.2 | 4.9 | 11.2 | |||||||||||
| Transaction expense, net | 1.2 | — | 6.2 | 0.1 | |||||||||||
| Other income, expense: | |||||||||||||||
| Interest, depreciation and amortization expense related to equity investments | 10.5 | 10.5 | 21.6 | 20.1 | |||||||||||
| Changes in fair value of Rivers Des Plaines’ interest rate swaps | (2.2 | ) | (1.8 | ) | (12.6 | ) | (6.0 | ) | |||||||
| Rivers Des Plaines’ legal reserves and transaction costs | 0.2 | 6.7 | 0.5 | 8.0 | |||||||||||
| Other charges | — | — | 1.0 | — | |||||||||||
| Gain on Calder land sale | (274.6 | ) | — | (274.6 | ) | — | |||||||||
| Total adjustments to EBITDA | (249.9 | ) | 35.4 | (226.4 | ) | 48.3 | |||||||||
| Adjusted EBITDA | $ | 291.2 | $ | 233.3 | $ | 419.7 | $ | 343.9 | |||||||
| Adjusted EBITDA by segment: | |||||||||||||||
| Live and Historical Racing | $ | 163.9 | $ | 98.4 | $ | 191.8 | $ | 116.7 | |||||||
| TwinSpires | 33.9 | 24.6 | 58.0 | 47.7 | |||||||||||
| Gaming | 106.8 | 119.8 | 197.9 | 202.2 | |||||||||||
| Total segment Adjusted EBITDA | 304.6 | 242.8 | 447.7 | 366.6 | |||||||||||
| All Other | (13.4 | ) | (9.5 | ) | (28.0 | ) | (22.7 | ) | |||||||
| Total Adjusted EBITDA | $ | 291.2 | $ | 233.3 | $ | 419.7 | $ | 343.9 | |||||||
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 June 30, | Six Months Ended June 30, | ||||||||||||||
| (in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||
| Net revenue | $ | 214.6 | $ | 197.9 | $ | 391.8 | $ | 336.6 | |||||||
| Operating and SG&A expense | 130.7 | 109.8 | 248.9 | 195.4 | |||||||||||
| Depreciation and amortization | 6.3 | 4.4 | 11.6 | 8.7 | |||||||||||
| Total operating expense | 137.0 | 114.2 | 260.5 | 204.1 | |||||||||||
| Operating income | 77.6 | 83.7 | 131.3 | 132.5 | |||||||||||
| Interest and other expense, net | (7.3 | ) | (19.7 | ) | (3.2 | ) | (24.3 | ) | |||||||
| Net income | $ | 70.3 | $ | 64.0 | $ | 128.1 | $ | 108.2 | |||||||
| Summarized Balance Sheet | |||||||
| (in millions) | June 30, 2022 | December 31, 2021 | |||||
| Assets | |||||||
| Current assets | $ | 88.4 | $ | 96.0 | |||
| Property and equipment, net | 349.0 | 312.3 | |||||
| Other assets, net | 263.6 | 264.1 | |||||
| Total assets | $ | 701.0 | $ | 672.4 | |||
| Liabilities and Members’ Deficit | |||||||
| Current liabilities | $ | 109.8 | $ | 95.3 | |||
| Long-term debt | 827.8 | 786.9 | |||||
| Other liabilities | — | 20.6 | |||||
| Members’ deficit | (236.6 | ) | (230.4 | ) | |||
| Total liabilities and members’ deficit | $ | 701.0 | $ | 672.4 | |||
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 | Turn 1 Experience | May 2023 | $90 | |
| Paddock / Under the Spires | May 2024 | $185 – $200 | ||
| Turfway Park | HRM Facility | September 2022 | $148 | |
| Derby City Gaming | Expansion and Hotel | Late 2022 / Second Quarter 2023 | $76 | |
| Derby City Gaming Downtown | Property Build Out | Second Half 2023 | $80 | |
| Oak Grove | Oak Grove Annex | TBD | TBD | |
| New Hampshire Charitable Gaming Facility | Acquisition and Property Build Out | 2022 / 2023 | Up to $150 | |
| Gaming Segment | ||||
| Managed Properties | ||||
| Queen of Terre Haute Casino Resort | Property Build Out | Late 2023 | Up to $260 | |
| Fair Grounds and VSI | HRMs in OTBs | First Quarter 2023 | $35 | |
Contact: Nick Zangari
(502) 394-1157
[email protected]
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$460 Million Investment Creates a Worldclass Entertainment Destination Resort Supporting Horse Racing and Agriculture Industry in Virginia
LOUISVILLE, Ky., Nov. 07, 2024 (GLOBE NEWSWIRE) — Churchill Downs Incorporated (“CDI” or “the Company”) (Nasdaq: CHDN) announced today the grand opening of The Rose Gaming Resort (“The Rose”) in Dumfries, Virginia. The worldclass entertainment resort includes 1,650 historical racing machines (“HRMs”), 8 bars and restaurants and a hotel with over 100 rooms and event space. The 175,000-square-foot entertainment venue has 2,500 parking spaces and 62 acres of greenspace with a 7-acre public park.
“Churchill Downs Incorporated is thrilled to deliver a destination resort that will be a major economic contributor to the Town of Dumfries and Northern Virginia,” said Bill Carstanjen, CEO of CDI. “Along with our local hiring commitments and strong family-supporting wages, we are committed to continued investment in Prince William County as we are proud to do for all of the communities in which we operate in Virginia.”
CDI invested $460 million in The Rose and has added approximately 500 permanent jobs. The development will contribute to the expansion of Thoroughbred horse racing in the Commonwealth of Virginia. As a result of the addition of the 1,650 HRMs, Colonial Downs Racetrack in New Kent Virginia will add 16 days of live racing to the 2025 racing season.
As part of a community partnership, the Company has committed $2 million to fund the design of a new community center to be built in Dumfries. Since 2021, CDI has also contributed $400,000 in cash and in-kind donations to area nonprofits through the Rosie’s Gives Back program.
About Churchill Downs Incorporated
Churchill Downs Incorporated (“CDI”) (Nasdaq: CHDN) has been creating extraordinary entertainment experiences for over 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,” “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, 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.
| Investor Contact: Sam Ullrich | Media Contact: Tonya Abeln |
| (502) 638-3906 | (502) 386-1742 |
| [email protected] | [email protected] |
Nasdaq:CHDN
Churchill Downs Incorporated Announces New HRM Entertainment Venue in Calvert City, Kentucky
LOUISVILLE, Ky., Oct. 23, 2024 (GLOBE NEWSWIRE) — Churchill Downs Incorporated (“CDI” or “the Company”) announced today the planned development of a $40 to $50 million historical racing machine (“HRM”) entertainment venue in Calvert City, Kentucky. CDI plans to open the new 23,000 square-foot facility with 250 HRMs, a sports bar and a sportsbook, and a simulcast center in early 2026. The new facility will serve as an extension of Oak Grove Racing, Gaming and Hotel (“Oak Grove”) and will be CDI’s eighth historical horse racing entertainment venue in the Commonwealth of Kentucky.
About Churchill Downs Incorporated
Churchill Downs Incorporated (“CDI”) (Nasdaq: CHDN) has been creating extraordinary entertainment experiences for over 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,” “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, 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.
| Investor Contact: Sam Ullrich | Media Contact: Tonya Abeln |
| (502) 638-3906 | (502) 386-1742 |
| [email protected] | [email protected] |
LOUISVILLE, Ky., Oct. 23, 2024 (GLOBE NEWSWIRE) — Churchill Downs Incorporated (Nasdaq: CHDN) (the “Company”, “CDI”, “we”) today reported business results for the third quarter ended September 30, 2024.
Company Highlights
- Third quarter results:
- Record net revenue of $628.5 million compared to $572.5 million in third quarter 2023
- Record net income attributable to CDI of $65.4 million compared to $61.0 million in third quarter 2023
- Record Adjusted EBITDA of $235.3 million compared to $218.2 million in third quarter 2023
- Delivered record third quarter revenue and Adjusted EBITDA across both our Live and Historical Racing and Gaming segments and record third quarter Adjusted EBITDA in our TwinSpires segment:
- Live and Historical Racing revenue up 12% and Adjusted EBITDA up 15% compared to the third quarter of 2023
- TwinSpires revenue up 6% and Adjusted EBITDA up 25% compared to the third quarter of 2023
- Gaming revenue up 10% and Adjusted EBITDA up 1% compared to the third quarter of 2023
- We opened The Rose Gaming Resort in Dumfries, Virginia on October 23, 2024, with 1,650 historical racing machines and a 102-room hotel.
- We ended the third quarter of 2024 with net bank leverage of 4.0x and maintained our commitment to returning capital to shareholders by announcing our Board’s approval of a $0.409 per share dividend to shareholders of record as of December 6, 2024 and payable on January 3, 2025. This represents the fourteenth consecutive year of increased dividend per share.
| CONSOLIDATED RESULTS | |||||||
| Third Quarter | |||||||
| (in millions, except per share data) | 2024 | 2023 | |||||
| Net revenue | $ | 628.5 | $ | 572.5 | |||
| Net income attributable to CDI | $ | 65.4 | $ | 61.0 | |||
| Diluted EPS attributable to CDI | $ | 0.86 | $ | 0.79 | |||
| Adjusted EBITDA(a) | $ | 235.3 | $ | 218.2 | |||
| (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
| Third Quarter | |||||||
| (in millions) | 2024 | 2023 | |||||
| Revenue | $ | 252.4 | $ | 225.5 | |||
| Adjusted EBITDA | 93.0 | 80.9 | |||||
Revenue for the third quarter of 2024 increased $26.9 million due to a $21.6 million increase attributable to growth at our Virginia properties and the opening of the Rosie’s Emporia property in September 2023, a $3.8 million increase attributable to growth at our Northern Kentucky properties, and a $1.5 million net increase at our other Live and Historical Racing properties.
Adjusted EBITDA for the third quarter of 2024 increased $12.1 million due to a $15.2 million increase attributable to growth at our Virginia properties, which includes $3.9 million related to Exacta savings, and a $3.2 million increase attributable primarily to growth at our Northern Kentucky and Southwestern Kentucky HRM properties. These increases were partially offset by a $4.1 million decrease attributable to our Louisville and Western Kentucky HRM properties, a $1.4 million decrease attributable to Churchill Downs Racetrack, and a $0.8 million decrease attributable to proceeds for business interruption insurance claims in the third quarter 2023 that did not reoccur.
TwinSpires
| Third Quarter | |||||||
| (in millions) | 2024 | 2023 | |||||
| Revenue | $ | 118.7 | $ | 112.4 | |||
| Adjusted EBITDA | 42.5 | 33.9 | |||||
Revenue for the third quarter of 2024 increased $6.3 million due to a $9.6 million increase attributable to Exacta and a $1.3 million increase attributable to our online sports betting market access agreements and our retail sports betting business. These increases were partially offset by a $4.6 million decrease primarily attributable to a decline in TwinSpires Horse Racing handle due to market access and shifts in race days at other tracks.
Adjusted EBITDA for the third quarter of 2024 increased $8.6 million due to a $7.5 million increase attributable to Exacta and a $1.1 million increase primarily attributable to our online sports betting market access agreements and our retail sports betting business.
Gaming
| Third Quarter | |||||||
| (in millions) | 2024 | 2023 | |||||
| Revenue | $ | 270.3 | $ | 244.9 | |||
| Adjusted EBITDA | 123.3 | 122.3 | |||||
Revenue for the third quarter of 2024 increased $25.4 million due to a $32.5 million increase attributable to the opening of the Terre Haute Casino Resort in April 2024 partially offset by a $7.1 million decrease primarily due to regional gaming softness and increased competition.
Adjusted EBITDA for the third quarter of 2024 increased $1.0 million due to a $12.4 million increase attributable to the opening of the Terre Haute Casino Resort in April 2024 partially offset by a $10.2 million decrease primarily due to regional gaming softness, increased competition, and higher labor and benefit expense, and a $1.2 million decrease attributable to proceeds for business interruption insurance claims in the third quarter 2023 that did not reoccur.
All Other
| Third Quarter | |||||||
| (in millions) | 2024 | 2023 | |||||
| Revenue | $ | 2.6 | $ | 0.2 | |||
| Adjusted EBITDA | (23.5 | ) | (18.9 | ) | |||
Revenue for the third quarter of 2024 reflects intercompany revenue related to the captive insurance company that was established in April 2024. All captive revenue is eliminated in consolidation.
Adjusted EBITDA for the third quarter of 2024 decreased $4.6 million driven primarily by increased corporate compensation related expenses and other corporate administrative expenses.
| CAPITAL MANAGEMENT |
Share Repurchase Program
The Company repurchased 67,139 shares of its common stock at a total cost of approximately $9.0 million based on trade date under its share repurchase program in the third quarter of 2024. We had approximately $170.9 million of repurchase authority remaining under this program on September 30, 2024.
Annual Dividend
On October 22, 2024, the Company’s Board of Directors approved an annual cash dividend on the Company’s common stock of $0.409 per outstanding share, a seven percent increase over the prior year. The dividend is payable on January 3, 2025, to shareholders of record as of the close of business on December 6, 2024, with the aggregate cash dividend paid to each shareholder rounded to the nearest whole cent. This marks the fourteenth consecutive year that the Company has increased the dividend per share.
| NET INCOME ATTRIBUTABLE TO CDI |
The Company’s third quarter 2024 net income attributable to CDI was $65.4 million compared to $61.0 million in the prior year quarter.
The following impacted the comparability of the Company’s third quarter 2024 net income to the prior year quarter:
- a $3.0 million increase in after-tax non-cash impairment costs.
This was partially offset by:
- a $1.7 million after-tax net decrease in transaction, pre-open and other expenses; and
- a $0.6 million after-tax decrease of other items.
Excluding the items above, third quarter 2024 net income increased $5.1 million primarily due to the following:
- a $10.5 million after-tax increase primarily driven by the results of our operations,
- partially offset by a $5.4 million after-tax increase in interest expense associated with higher outstanding debt balances.
Conference Call
A conference call regarding this news release is scheduled for Thursday, October 24, 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, October 24, 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 and the portion of EBITDA attributable to noncontrolling interest.
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 Heights, Illinois (“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.
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 (“CDI”) (Nasdaq: CHDN) has been creating extraordinary entertainment experiences for over 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. https://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, 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 September 30, | Nine Months Ended September 30, | ||||||||||||||
| (in millions, except per common share data) | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Net revenue: | |||||||||||||||
| Live and Historical Racing | $ | 247.5 | $ | 219.5 | $ | 957.3 | $ | 818.9 | |||||||
| TwinSpires | 111.3 | 108.5 | 369.6 | 340.7 | |||||||||||
| Gaming | 269.7 | 244.3 | 783.1 | 740.2 | |||||||||||
| All Other | — | 0.2 | 0.1 | 0.7 | |||||||||||
| Total net revenue | 628.5 | 572.5 | 2,110.1 | 1,900.5 | |||||||||||
| Operating expense: | |||||||||||||||
| Live and Historical Racing | 171.3 | 158.2 | 549.9 | 505.7 | |||||||||||
| TwinSpires | 72.3 | 73.4 | 229.5 | 219.8 | |||||||||||
| Gaming | 194.8 | 175.6 | 561.7 | 528.3 | |||||||||||
| All Other | 4.5 | 1.3 | 10.2 | 12.0 | |||||||||||
| Selling, general and administrative expense | 59.8 | 50.2 | 172.0 | 150.6 | |||||||||||
| Asset impairments | 3.9 | — | 3.9 | 24.5 | |||||||||||
| Transaction expense, net | (4.0 | ) | 1.5 | 0.7 | 1.8 | ||||||||||
| Total operating expense | 502.6 | 460.2 | 1,527.9 | 1,442.7 | |||||||||||
| Operating income | 125.9 | 112.3 | 582.2 | 457.8 | |||||||||||
| Other (expense) income: | |||||||||||||||
| Interest expense, net | (73.1 | ) | (67.9 | ) | (217.0 | ) | (197.8 | ) | |||||||
| Equity in income of unconsolidated affiliates | 33.4 | 33.3 | 108.9 | 110.4 | |||||||||||
| Gain on sale of Arlington | — | — | — | 114.0 | |||||||||||
| Miscellaneous, net | (0.1 | ) | 4.1 | 8.1 | 5.5 | ||||||||||
| Total other (expense) income | (39.8 | ) | (30.5 | ) | (100.0 | ) | 32.1 | ||||||||
| Income from operations before provision for income taxes | 86.1 | 81.8 | 482.2 | 489.9 | |||||||||||
| Income tax provision | (19.9 | ) | (20.8 | ) | (125.4 | ) | (130.2 | ) | |||||||
| Net income | 66.2 | 61.0 | 356.8 | 359.7 | |||||||||||
| Net income attributable to noncontrolling interest | 0.8 | — | 1.7 | — | |||||||||||
| Net income attributable to Churchill Downs Incorporated | $ | 65.4 | $ | 61.0 | $ | 355.1 | $ | 359.7 | |||||||
| Net income attributable to Churchill Downs Incorporated per common share data: | |||||||||||||||
| Basic net income | $ | 0.87 | $ | 0.81 | $ | 4.78 | $ | 4.78 | |||||||
| Diluted net income | $ | 0.86 | $ | 0.79 | $ | 4.73 | $ | 4.69 | |||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 73.9 | 75.2 | 74.0 | 75.3 | |||||||||||
| Diluted | 74.6 | 77.1 | 74.6 | 76.7 | |||||||||||
| CHURCHILL DOWNS INCORPORATED CONSOLIDATED BALANCE SHEETS (Unaudited) |
|||||||
| (in millions) | September 30, 2024 | December 31, 2023 | |||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 152.7 | $ | 144.5 | |||
| Restricted cash | 78.7 | 77.3 | |||||
| Accounts receivable, net | 93.2 | 106.9 | |||||
| Income taxes receivable | — | 12.6 | |||||
| Other current assets | 62.8 | 59.5 | |||||
| Total current assets | 387.4 | 400.8 | |||||
| Property and equipment, net | 2,805.5 | 2,561.2 | |||||
| Investment in and advances to unconsolidated affiliates | 650.2 | 655.9 | |||||
| Goodwill | 900.2 | 899.9 | |||||
| Other intangible assets, net | 2,411.7 | 2,418.4 | |||||
| Other assets | 17.5 | 19.3 | |||||
| Total assets | $ | 7,172.5 | $ | 6,955.5 | |||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 182.4 | $ | 158.5 | |||
| Accrued expenses and other current liabilities | 430.1 | 426.8 | |||||
| Income taxes payable | 7.1 | — | |||||
| Current deferred revenue | 26.8 | 73.2 | |||||
| Current maturities of long-term debt | 63.1 | 68.0 | |||||
| Dividends payable | 0.6 | 29.3 | |||||
| Total current liabilities | 710.1 | 755.8 | |||||
| Long-term debt, net of current maturities and loan origination fees | 1,695.7 | 1,697.1 | |||||
| Notes payable, net of debt issuance costs | 3,074.9 | 3,071.2 | |||||
| Non-current deferred revenue | 20.1 | 11.8 | |||||
| Deferred income taxes | 417.8 | 388.2 | |||||
| Other liabilities | 139.0 | 137.8 | |||||
| Total liabilities | 6,057.6 | 6,061.9 | |||||
| Commitments and contingencies | |||||||
| Redeemable noncontrolling interest | 17.9 | — | |||||
| Shareholders’ equity: | |||||||
| Preferred stock | — | — | |||||
| Common stock | 1.7 | — | |||||
| Retained earnings | 1,096.3 | 894.5 | |||||
| Accumulated other comprehensive loss | (1.0 | ) | (0.9 | ) | |||
| Total Churchill Downs Incorporated shareholders’ equity | 1,097.0 | 893.6 | |||||
| Total liabilities and shareholders’ equity | $ | 7,172.5 | $ | 6,955.5 | |||
| CHURCHILL DOWNS INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) |
|||||||
| Nine Months Ended September 30, | |||||||
| (in millions) | 2024 | 2023 | |||||
| Cash flows from operating activities: | |||||||
| Net income | $ | 356.8 | $ | 359.7 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 145.7 | 121.8 | |||||
| Distributions from unconsolidated affiliates | 113.8 | 126.6 | |||||
| Equity in income of unconsolidated affiliates | (108.9 | ) | (110.4 | ) | |||
| Stock-based compensation | 23.2 | 24.8 | |||||
| Deferred income taxes | 29.6 | 45.3 | |||||
| Asset impairments | 3.9 | 24.5 | |||||
| Amortization of operating lease assets | 4.1 | 4.8 | |||||
| Gain on sale of Arlington | — | (114.0 | ) | ||||
| Other | 9.1 | 6.5 | |||||
| Changes in operating assets and liabilities: | |||||||
| Income taxes | 17.1 | 6.0 | |||||
| Deferred revenue | (38.1 | ) | (10.8 | ) | |||
| Other assets and liabilities | 84.8 | 14.0 | |||||
| Net cash provided by operating activities | 641.1 | 498.8 | |||||
| Cash flows from investing activities: | |||||||
| Capital maintenance expenditures | (49.8 | ) | (52.4 | ) | |||
| Capital project expenditures | (367.8 | ) | (445.7 | ) | |||
| Acquisition of businesses, net of cash acquired | — | (241.3 | ) | ||||
| Proceeds from sale of Arlington | — | 195.7 | |||||
| Other | 1.8 | (5.8 | ) | ||||
| Net cash used in investing activities | (415.8 | ) | (549.5 | ) | |||
| Cash flows from financing activities: | |||||||
| Proceeds from borrowings under long-term debt obligations | 750.4 | 1,420.8 | |||||
| Repayments of borrowings under long-term debt obligations | (757.5 | ) | (1,297.1 | ) | |||
| Payment of dividends | (28.7 | ) | (26.8 | ) | |||
| Repurchase of common stock | (158.7 | ) | (35.8 | ) | |||
| Taxes paid related to net share settlement of stock awards | (10.6 | ) | (13.2 | ) | |||
| Debt issuance costs | (2.5 | ) | (12.3 | ) | |||
| Change in bank overdraft | (7.5 | ) | 1.4 | ||||
| Other | (1.6 | ) | 1.7 | ||||
| Net cash (used in) provided by financing activities | (216.7 | ) | 38.7 | ||||
| Cash flows from discontinued operations: | |||||||
| Operating activities of discontinued operations | 1.0 | 0.5 | |||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 9.6 | (11.5 | ) | ||||
| Cash, cash equivalents and restricted cash, beginning of period | 221.8 | 204.7 | |||||
| Cash, cash equivalents and restricted cash, end of period | $ | 231.4 | $ | 193.2 | |||
| CHURCHILL DOWNS INCORPORATED SUPPLEMENTAL INFORMATION (Unaudited) |
|||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| (in millions, except per common share data) | 2024 | 2023 | 2024 | 2023 | |||||||||||
| GAAP net income attributable to CDI | $ | 65.4 | $ | 61.0 | $ | 355.1 | $ | 359.7 | |||||||
| Adjustments, continuing operations: | |||||||||||||||
| Legal reserves and transaction costs related to Rivers Des Plaines | — | — | 0.3 | — | |||||||||||
| Other charges and recoveries, net | 0.1 | 0.9 | (6.7 | ) | — | ||||||||||
| Transaction, pre-opening, and other expense | 4.8 | 7.3 | 25.6 | 30.2 | |||||||||||
| Asset impairments | 3.9 | — | 3.9 | 24.5 | |||||||||||
| Gain on Dispositions | — | — | — | (114.0 | ) | ||||||||||
| Income tax impact on net income adjustments(a) | (2.1 | ) | (2.2 | ) | (6.3 | ) | 13.6 | ||||||||
| Total adjustments | 6.7 | 6.0 | 16.8 | (45.7 | ) | ||||||||||
| Adjusted net income attributable to CDI | $ | 72.1 | $ | 67.0 | $ | 371.9 | $ | 314.0 | |||||||
| Adjusted diluted EPS | $ | 0.97 | $ | 0.87 | $ | 4.99 | $ | 4.09 | |||||||
| Weighted average shares outstanding – Diluted | 74.6 | 77.1 | 74.6 | 76.7 | |||||||||||
| (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 September 30, | Nine Months Ended September 30, | ||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Total Handle | |||||||||||||||
| TwinSpires Horse Racing(a) | $ | 469.1 | $ | 507.2 | $ | 1,542.1 | $ | 1,554.1 | |||||||
| (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 September 30, | Nine Months Ended September 30, | ||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Net revenue from external customers: | |||||||||||||||
| Live and Historical Racing: | |||||||||||||||
| Churchill Downs Racetrack | $ | 11.7 | $ | 10.6 | $ | 242.8 | $ | 191.3 | |||||||
| Louisville | 50.3 | 48.9 | 157.1 | 138.2 | |||||||||||
| Northern Kentucky | 23.4 | 19.5 | 73.9 | 63.1 | |||||||||||
| Southwestern Kentucky | 39.3 | 37.6 | 118.1 | 111.7 | |||||||||||
| Western Kentucky | 9.8 | 11.6 | 22.7 | 25.8 | |||||||||||
| Virginia | 110.0 | 88.1 | 333.1 | 280.4 | |||||||||||
| New Hampshire | 3.0 | 3.2 | 9.6 | 8.4 | |||||||||||
| Total Live and Historical Racing | $ | 247.5 | $ | 219.5 | $ | 957.3 | $ | 818.9 | |||||||
| TwinSpires: | $ | 111.3 | $ | 108.5 | $ | 369.6 | $ | 340.7 | |||||||
| Gaming: | |||||||||||||||
| Florida | $ | 23.8 | $ | 24.4 | $ | 76.4 | $ | 76.5 | |||||||
| Iowa | 22.9 | 24.0 | 69.8 | 72.5 | |||||||||||
| Indiana | 32.4 | — | 66.3 | — | |||||||||||
| Louisiana | 32.0 | 32.2 | 113.4 | 110.1 | |||||||||||
| Maine | 27.7 | 30.9 | 81.3 | 88.1 | |||||||||||
| Maryland | 31.5 | 32.0 | 79.3 | 82.9 | |||||||||||
| Mississippi | 23.6 | 24.2 | 74.1 | 77.5 | |||||||||||
| New York | 46.8 | 46.2 | 138.3 | 135.3 | |||||||||||
| Pennsylvania | 29.0 | 30.4 | 84.2 | 97.3 | |||||||||||
| Total Gaming | 269.7 | 244.3 | 783.1 | 740.2 | |||||||||||
| All Other | — | 0.2 | 0.1 | 0.7 | |||||||||||
| Net revenue from external customers | $ | 628.5 | $ | 572.5 | $ | 2,110.1 | $ | 1,900.5 | |||||||
| Intercompany net revenues: | |||||||||||||||
| Live and Historical Racing | $ | 4.9 | $ | 6.0 | $ | 34.2 | $ | 30.4 | |||||||
| TwinSpires | 7.4 | 3.9 | 23.1 | 7.1 | |||||||||||
| Gaming | 0.6 | 0.6 | 4.8 | 4.2 | |||||||||||
| All Other | 2.6 | — | 4.4 | — | |||||||||||
| Eliminations | (15.5 | ) | (10.5 | ) | (66.5 | ) | (41.7 | ) | |||||||
| Intercompany net revenue | $ | — | $ | — | $ | — | $ | — | |||||||
| CHURCHILL DOWNS INCORPORATED SUPPLEMENTAL INFORMATION (Unaudited) |
|||||||||||||||||||||||
| Three Months Ended September 30, 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 | $ | 15.2 | $ | 82.7 | $ | 5.0 | $ | 102.9 | $ | — | $ | 102.9 | |||||||||||
| Historical racing(a) | 205.9 | — | 9.3 | 215.2 | — | 215.2 | |||||||||||||||||
| Racing event-related services | 5.0 | — | 1.4 | 6.4 | — | 6.4 | |||||||||||||||||
| Gaming(a) | 3.1 | 4.4 | 224.3 | 231.8 | — | 231.8 | |||||||||||||||||
| Other(a) | 18.3 | 24.2 | 29.7 | 72.2 | — | 72.2 | |||||||||||||||||
| Total | $ | 247.5 | $ | 111.3 | $ | 269.7 | $ | 628.5 | $ | — | $ | 628.5 | |||||||||||
| Three Months Ended September 30, 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 | $ | 16.0 | $ | 86.3 | $ | 5.1 | $ | 107.4 | $ | — | $ | 107.4 | |||||||||||
| Historical racing(a) | 179.9 | — | 7.5 | 187.4 | — | 187.4 | |||||||||||||||||
| Racing event-related services | 3.3 | — | 1.4 | 4.7 | — | 4.7 | |||||||||||||||||
| Gaming(a) | 3.1 | 5.3 | 203.0 | 211.4 | — | 211.4 | |||||||||||||||||
| Other(a) | 17.2 | 16.9 | 27.3 | 61.4 | 0.2 | 61.6 | |||||||||||||||||
| Total | $ | 219.5 | $ | 108.5 | $ | 244.3 | $ | 572.3 | $ | 0.2 | $ | 572.5 | |||||||||||
| (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 $14.2 million for the three months ended September 30, 2024 and $13.3 million for the three months September 30, 2023. |
| Nine Months Ended September 30, 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 | $ | 76.6 | $ | 277.9 | $ | 20.1 | $ | 374.6 | $ | — | $ | 374.6 | |||||||||||
| Historical racing(a) | 630.1 | — | 27.4 | 657.5 | — | 657.5 | |||||||||||||||||
| Racing event-related services | 182.1 | — | 5.0 | 187.1 | — | 187.1 | |||||||||||||||||
| Gaming(a) | 9.5 | 14.4 | 645.5 | 669.4 | — | 669.4 | |||||||||||||||||
| Other(a) | 59.0 | 77.3 | 85.1 | 221.4 | 0.1 | 221.5 | |||||||||||||||||
| Total | $ | 957.3 | $ | 369.6 | $ | 783.1 | $ | 2,110.0 | $ | 0.1 | $ | 2,110.1 | |||||||||||
| Nine Months Ended September 30, 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 | $ | 67.2 | $ | 283.2 | $ | 19.9 | $ | 370.3 | $ | — | $ | 370.3 | |||||||||||
| Historical racing(a) | 549.3 | — | 20.5 | 569.8 | — | 569.8 | |||||||||||||||||
| Racing event-related services | 141.0 | — | 4.8 | 145.8 | — | 145.8 | |||||||||||||||||
| Gaming(a) | 8.2 | 10.9 | 615.4 | 634.5 | — | 634.5 | |||||||||||||||||
| Other(a) | 53.2 | 46.6 | 79.6 | 179.4 | 0.7 | 180.1 | |||||||||||||||||
| Total | $ | 818.9 | $ | 340.7 | $ | 740.2 | $ | 1,899.8 | $ | 0.7 | $ | 1,900.5 | |||||||||||
| (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 $41.7 million for the nine months ended September 30, 2024 and $37.8 million for the nine months ended September 30, 2023. |
| CHURCHILL DOWNS INCORPORATED SUPPLEMENTAL INFORMATION (Unaudited) |
|||||||||||||||||||||||||||
| Adjusted EBITDA by segment is comprised of the following: | |||||||||||||||||||||||||||
| Three Months Ended September 30, 2024 | |||||||||||||||||||||||||||
| (in millions) | Live and Historical Racing |
TwinSpires | Gaming | Total Segments |
All Other | Eliminations | Total | ||||||||||||||||||||
| Revenues | $ | 252.4 | $ | 118.7 | $ | 270.3 | $ | 641.4 | $ | 2.6 | $ | (15.5 | ) | $ | 628.5 | ||||||||||||
| Gaming taxes and purses | (66.7 | ) | (5.5 | ) | (87.8 | ) | (160.0 | ) | — | — | (160.0 | ) | |||||||||||||||
| Marketing and advertising | (9.3 | ) | (1.4 | ) | (9.5 | ) | (20.2 | ) | — | — | (20.2 | ) | |||||||||||||||
| Salaries and benefits | (31.1 | ) | (8.0 | ) | (42.7 | ) | (81.8 | ) | — | — | (81.8 | ) | |||||||||||||||
| Content expense | (1.7 | ) | (45.9 | ) | (2.3 | ) | (49.9 | ) | — | 6.5 | (43.4 | ) | |||||||||||||||
| Selling, general and administrative expense | (9.4 | ) | (4.2 | ) | (11.9 | ) | (25.5 | ) | (23.1 | ) | 0.2 | (48.4 | ) | ||||||||||||||
| Maintenance, insurance and utilities | (12.8 | ) | (1.1 | ) | (11.7 | ) | (25.6 | ) | (2.6 | ) | 2.6 | (25.6 | ) | ||||||||||||||
| Property and other taxes | (1.9 | ) | (0.1 | ) | (4.0 | ) | (6.0 | ) | (0.3 | ) | — | (6.3 | ) | ||||||||||||||
| Other operating expense | (26.6 | ) | (10.0 | ) | (21.1 | ) | (57.7 | ) | — | 6.2 | (51.5 | ) | |||||||||||||||
| Other income | 0.1 | — | 44.0 | 44.1 | (0.1 | ) | — | 44.0 | |||||||||||||||||||
| Adjusted EBITDA | $ | 93.0 | $ | 42.5 | $ | 123.3 | $ | 258.8 | $ | (23.5 | ) | $ | — | $ | 235.3 | ||||||||||||
| Three Months Ended September 30, 2023 | |||||||||||||||||||||||||||
| (in millions) | Live and Historical Racing |
TwinSpires | Gaming | Total Segments |
All Other | Eliminations | Total | ||||||||||||||||||||
| Revenues | $ | 225.5 | $ | 112.4 | $ | 244.9 | $ | 582.8 | $ | 0.2 | $ | (10.5 | ) | $ | 572.5 | ||||||||||||
| Gaming taxes and purses | (62.0 | ) | (5.8 | ) | (81.4 | ) | (149.2 | ) | — | — | (149.2 | ) | |||||||||||||||
| Marketing and advertising | (7.6 | ) | (1.3 | ) | (8.9 | ) | (17.8 | ) | (0.1 | ) | — | (17.9 | ) | ||||||||||||||
| Salaries and benefits | (27.9 | ) | (7.0 | ) | (35.2 | ) | (70.1 | ) | — | — | (70.1 | ) | |||||||||||||||
| Content expense | (1.6 | ) | (49.4 | ) | (2.4 | ) | (53.4 | ) | — | 7.3 | (46.1 | ) | |||||||||||||||
| Selling, general and administrative expense | (7.4 | ) | (3.0 | ) | (9.9 | ) | (20.3 | ) | (19.0 | ) | 0.4 | (38.9 | ) | ||||||||||||||
| Maintenance, insurance and utilities | (12.5 | ) | (0.9 | ) | (10.3 | ) | (23.7 | ) | — | — | (23.7 | ) | |||||||||||||||
| Property and other taxes | (1.7 | ) | (0.2 | ) | (3.6 | ) | (5.5 | ) | — | — | (5.5 | ) | |||||||||||||||
| Other operating expense | (24.8 | ) | (10.9 | ) | (18.2 | ) | (53.9 | ) | — | 2.8 | (51.1 | ) | |||||||||||||||
| Other income | 0.9 | — | 47.3 | 48.2 | — | — | 48.2 | ||||||||||||||||||||
| Adjusted EBITDA | $ | 80.9 | $ | 33.9 | $ | 122.3 | $ | 237.1 | $ | (18.9 | ) | $ | — | $ | 218.2 | ||||||||||||
| Nine Months Ended September 30, 2024 | |||||||||||||||||||||||||||
| (in millions) | Live and Historical Racing |
TwinSpires | Gaming | Total Segments |
All Other | Eliminations | Total | ||||||||||||||||||||
| Revenues | $ | 991.5 | $ | 392.7 | $ | 787.9 | $ | 2,172.1 | $ | 4.5 | $ | (66.5 | ) | $ | 2,110.1 | ||||||||||||
| Gaming taxes and purses | (231.7 | ) | (17.7 | ) | (251.8 | ) | (501.2 | ) | — | — | (501.2 | ) | |||||||||||||||
| Marketing and advertising | (31.1 | ) | (7.5 | ) | (26.5 | ) | (65.1 | ) | (0.1 | ) | — | (65.2 | ) | ||||||||||||||
| Salaries and benefits | (94.4 | ) | (23.9 | ) | (121.0 | ) | (239.3 | ) | — | — | (239.3 | ) | |||||||||||||||
| Content expense | (5.1 | ) | (163.2 | ) | (6.7 | ) | (175.0 | ) | — | 42.6 | (132.4 | ) | |||||||||||||||
| Selling, general and administrative expense | (26.7 | ) | (13.0 | ) | (33.9 | ) | (73.6 | ) | (64.7 | ) | 0.8 | (137.5 | ) | ||||||||||||||
| Maintenance, insurance and utilities | (34.6 | ) | (3.1 | ) | (32.4 | ) | (70.1 | ) | (4.6 | ) | 4.4 | (70.3 | ) | ||||||||||||||
| Property and other taxes | (6.4 | ) | (0.2 | ) | (10.7 | ) | (17.3 | ) | (0.6 | ) | — | (17.9 | ) | ||||||||||||||
| Other operating expense | (88.8 | ) | (35.8 | ) | (59.8 | ) | (184.4 | ) | — | 18.7 | (165.7 | ) | |||||||||||||||
| Other income | 0.3 | — | 141.7 | 142.0 | — | — | 142.0 | ||||||||||||||||||||
| Adjusted EBITDA | $ | 473.0 | $ | 128.3 | $ | 386.8 | $ | 988.1 | $ | (65.5 | ) | $ | — | $ | 922.6 | ||||||||||||
| Nine Months Ended September 30, 2023 | |||||||||||||||||||||||||||
| (in millions) | Live and Historical Racing |
TwinSpires | Gaming | Total Segments |
All Other | Eliminations | Total | ||||||||||||||||||||
| Revenues | $ | 849.3 | $ | 347.8 | $ | 744.4 | $ | 1,941.5 | $ | 0.7 | $ | (41.7 | ) | $ | 1,900.5 | ||||||||||||
| Gaming taxes and purses | (203.9 | ) | (17.8 | ) | (246.7 | ) | (468.4 | ) | — | — | (468.4 | ) | |||||||||||||||
| Marketing and advertising | (27.9 | ) | (8.0 | ) | (26.5 | ) | (62.4 | ) | (0.2 | ) | 0.3 | (62.3 | ) | ||||||||||||||
| Salaries and benefits | (80.0 | ) | (20.7 | ) | (109.2 | ) | (209.9 | ) | — | — | (209.9 | ) | |||||||||||||||
| Content expense | (5.1 | ) | (161.1 | ) | (6.9 | ) | (173.1 | ) | — | 37.7 | (135.4 | ) | |||||||||||||||
| Selling, general and administrative expense | (23.4 | ) | (8.1 | ) | (32.4 | ) | (63.9 | ) | (54.1 | ) | 0.9 | (117.1 | ) | ||||||||||||||
| Maintenance, insurance and utilities | (31.9 | ) | (2.6 | ) | (29.7 | ) | (64.2 | ) | (0.3 | ) | — | (64.5 | ) | ||||||||||||||
| Property and other taxes | (4.4 | ) | (0.3 | ) | (9.9 | ) | (14.6 | ) | (0.2 | ) | — | (14.8 | ) | ||||||||||||||
| Other operating expense | (87.3 | ) | (33.1 | ) | (52.5 | ) | (172.9 | ) | — | 2.8 | (170.1 | ) | |||||||||||||||
| Other income | 1.1 | 1.1 | 144.6 | 146.8 | — | — | 146.8 | ||||||||||||||||||||
| Adjusted EBITDA | $ | 386.5 | $ | 97.2 | $ | 375.2 | $ | 858.9 | $ | (54.1 | ) | $ | — | $ | 804.8 | ||||||||||||
| CHURCHILL DOWNS INCORPORATED SUPPLEMENTAL INFORMATION (Unaudited) |
|||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Reconciliation of Comprehensive Income to Adjusted EBITDA: | |||||||||||||||
| Net income attributable to Churchill Downs Incorporated | $ | 65.4 | $ | 61.0 | $ | 355.1 | $ | 359.7 | |||||||
| Net income attributable to noncontrolling interest | 0.8 | — | 1.7 | — | |||||||||||
| Net income and comprehensive income | 66.2 | 61.0 | 356.8 | 359.7 | |||||||||||
| Additions: | |||||||||||||||
| Depreciation and amortization | 49.6 | 42.1 | 145.7 | 121.8 | |||||||||||
| Interest expense | 73.1 | 67.9 | 217.0 | 197.8 | |||||||||||
| Income tax provision | 19.9 | 20.8 | 125.4 | 130.2 | |||||||||||
| EBITDA | $ | 208.8 | $ | 191.8 | $ | 844.9 | $ | 809.5 | |||||||
| Adjustments to EBITDA: | |||||||||||||||
| Stock-based compensation expense | $ | 7.1 | $ | 8.1 | $ | 23.2 | $ | 24.8 | |||||||
| Arlington exit costs | — | 0.1 | — | 9.4 | |||||||||||
| Pre-opening expense | 7.8 | 5.0 | 23.6 | 11.4 | |||||||||||
| Other expenses, net | 1.0 | 0.7 | 1.3 | 7.6 | |||||||||||
| Asset impairments | 3.9 | — | 3.9 | 24.5 | |||||||||||
| Transaction expense, net | (4.0 | ) | 1.5 | 0.7 | 1.8 | ||||||||||
| Other income, expense: | |||||||||||||||
| Interest, depreciation and amortization expense related to equity investments | 10.6 | 10.1 | 31.4 | 29.8 | |||||||||||
| Rivers Des Plaines’ legal reserves and transaction costs | — | — | 0.3 | — | |||||||||||
| Other charges and recoveries, net | 0.1 | 0.9 | (6.7 | ) | — | ||||||||||
| Gain on sale of Arlington | — | — | — | (114.0 | ) | ||||||||||
| Total adjustments to EBITDA | 26.5 | 26.4 | 77.7 | (4.7 | ) | ||||||||||
| Adjusted EBITDA | $ | 235.3 | $ | 218.2 | $ | 922.6 | $ | 804.8 | |||||||
| Adjusted EBITDA by segment: | |||||||||||||||
| Live and Historical Racing | $ | 93.0 | $ | 80.9 | $ | 473.0 | $ | 386.5 | |||||||
| TwinSpires | 42.5 | 33.9 | 128.3 | 97.2 | |||||||||||
| Gaming | 123.3 | 122.3 | 386.8 | 375.2 | |||||||||||
| Total segment Adjusted EBITDA | 258.8 | 237.1 | 988.1 | 858.9 | |||||||||||
| All Other | (23.5 | ) | (18.9 | ) | (65.5 | ) | (54.1 | ) | |||||||
| Total Adjusted EBITDA | $ | 235.3 | $ | 218.2 | $ | 922.6 | $ | 804.8 | |||||||
| 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 September 30, | Nine Months Ended September 30, | ||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Net revenue | $ | 208.4 | $ | 208.9 | $ | 641.2 | $ | 648.2 | |||||||
| Operating and SG&A expense | 132.2 | 135.1 | 399.3 | 407.3 | |||||||||||
| Depreciation and amortization | 6.8 | 5.9 | 20.1 | 17.5 | |||||||||||
| Total operating expense | 139.0 | 141.0 | 419.4 | 424.8 | |||||||||||
| Operating income | 69.4 | 67.9 | 221.8 | 223.4 | |||||||||||
| Interest and other expense, net | (11.1 | ) | (11.1 | ) | (33.5 | ) | (32.7 | ) | |||||||
| Net income | $ | 58.3 | $ | 56.8 | $ | 188.3 | $ | 190.7 | |||||||
| Summarized Balance Sheet | |||||||
| (in millions) | September 30, 2024 | December 31, 2023 | |||||
| Assets | |||||||
| Current assets | $ | 93.9 | $ | 104.8 | |||
| Property and equipment, net | 330.7 | 339.4 | |||||
| Other assets, net | 270.1 | 266.1 | |||||
| Total assets | $ | 694.7 | $ | 710.3 | |||
| Liabilities and Members’ Deficit | |||||||
| Current liabilities | $ | 105.6 | $ | 106.2 | |||
| Long-term debt | 844.4 | 847.2 | |||||
| Other liabilities | 0.6 | 0.7 | |||||
| Members’ deficit | (255.9 | ) | (243.8 | ) | |||
| Total liabilities and members’ deficit | $ | 694.7 | $ | 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 | Starting Gate Pavilion and Courtyard | April 2025 | $80-90 | |
| Virginia |
The Rose Gaming Resort (HRM Venue) |
October 2024 | $460 | |
| Richmond HRM Expansion | December 2025 | $40-45 | ||
| Henrico HRM Venue | Fourth Quarter 2025 | $30-40 | ||
| Western Kentucky | Owensboro Racing and Gaming (HRM Venue) | First Quarter 2025 | $100 | |
| Southwestern Kentucky | Calvert City HRM Venue | First Quarter 2026 | $40-50 | |
| New Hampshire | Salem HRM Venue | TBD | TBD | |
Contact: Sam Ullrich
(502) 638-3906
[email protected]
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