Nasdaq:CHDN
Churchill Downs Incorporated Reports 2021 Fourth Quarter and Full Year Results
LOUISVILLE, Ky., Feb. 23, 2022 (GLOBE NEWSWIRE) — Churchill Downs Incorporated (Nasdaq: CHDN) (the “Company”, “we”, “us”, “our”) today reported business results for the quarter and full year ended December 31, 2021.
Company Highlights
- Record 2021 net revenue of $1,597.2 million, up 52% over the prior year
- 2021 net income(a) was $249.1 million, compared to net loss(a) of $81.9 million in the prior year
- Record 2021 Adjusted EBITDA of $627.0 million, up 119%, compared to $286.5 million in the prior year
- We had strong operating performance from our business segments:
- Churchill Downs successfully ran the 147th Kentucky Oaks and Derby with over 51,000 fans gathered in person and strong NBC viewership, sponsorship revenue, and margins
- Derby City Gaming delivered record net revenue and Adjusted EBITDA in 2021 and Oak Grove Racing, Gaming & Hotel (“Oak Grove”) delivered strong growth in net revenue and Adjusted EBITDA in its first full year of operation
- TwinSpires Horse Racing delivered Adjusted EBITDA of $119.0 million in 2021, down 6% from the prior year
- TwinSpires Horse Racing Adjusted EBITDA in 2021 was up 52% from 2019
- Our Gaming Segment delivered a record $411.9 million of Adjusted EBITDA, an increase of $238.8 million, or 138%, compared to 2020, despite restrictions at our properties during the year and disruption from Hurricane Ida at Fair Grounds and VSI
- Our wholly-owned casinos delivered record margins of 37% in 2021, up 11.1 points from 2020 and up 7.8 points from 2019
- We announced on February 22, 2022 definitive agreement to acquire substantially all of the assets of Peninsula Pacific Entertainment LLC (“P2E”) for total consideration of $2.485 billion
- We announced key strategic long-term organic growth investments:
- We announced three major multi-year capital investments at Churchill Downs Racetrack: the Homestretch Club, the Turn 1 Experience, and the Paddock and Under the Spires projects
- We announced plans to invest $76 million to expand Derby City Gaming for up to 450 additional historical racing machines (“HRMs”) and to build a new five-story hotel with 123 rooms including amenities to better serve and attract guests
- We continued building the new HRM and grandstand facility at Turfway Park Racing & Gaming (“Turfway Park”) and are on schedule to open the new entertainment venue
- We announced plans to open Derby City Gaming Downtown in downtown Louisville, Kentucky as a new entertainment venue with 500 HRMs
- We were selected to develop the Queen of Terre Haute Casino Resort in Vigo County, Indiana and plan to invest up to $260 million to build a new entertainment venue with 1,000 slot machines, 50 table games, and a 125-room luxury hotel
- We announced agreements to sell two properties:
- 326-acre property in Arlington Heights, Illinois for $197 million to the Chicago Bears
- 115.7 acres of land near Calder Casino for $291 million to Link Logistics
| CONSOLIDATED RESULTS |
| Fourth Quarter | Years Ended December 31, | |||||||||||
| (in millions, except per share data) | 2021 | 2020 | 2021 | 2020 | ||||||||
| Net revenue | $ | 364.8 | $ | 278.2 | $ | 1,597.2 | $ | 1,054.0 | ||||
| Net income (loss)(a) | $ | 43.3 | $ | 17.1 | $ | 249.1 | $ | (81.9 | ) | |||
| Diluted EPS(a) | $ | 1.11 | $ | 0.43 | $ | 6.35 | $ | (2.08 | ) | |||
| Adjusted EBITDA(b) | $ | 127.0 | $ | 79.2 | $ | 627.0 | $ | 286.5 | ||||
| (a) Reflects amounts attributable to Churchill Downs Incorporated. | ||||||||||||
| (b) These are non-GAAP measures. See explanation of non-GAAP measures below. | ||||||||||||
Fourth Quarter 2021 Results
The Company’s fourth quarter 2021 net income attributable to Churchill Downs Incorporated was $43.3 million compared to $17.1 million in the prior year quarter. The Company’s fourth quarter 2021 net income from continuing operations was $43.3 million compared to $16.4 million in the prior year quarter.
The following items impacted the comparability of the Company’s fourth quarter net income from continuing operations:
- $10.4 million tax benefit related to our net operating loss in 2020 that did not recur in the current year;
- $4.7 million after-tax increase in transaction, pre-opening, and other expenses from the prior year quarter;
- $3.0 million non-cash after-tax increase in asset impairments; and
- $0.9 million after-tax increase related to our equity portion of Rivers Des Plaines’ legal reserves and transaction costs;
Partially offset by:
- $2.3 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; and
- $1.9 million non-cash tax decrease related to the re-measurement of our net deferred tax liabilities that did not recur in the current year.
Excluding these items, fourth quarter 2021 net income from continuing operations increased $41.7 million primarily due to the following:
- $42.9 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 $1.2 million after-tax increase from the prior year quarter in interest expense associated with higher outstanding debt balances.
Full Year 2021 Results
The Company’s 2021 net income attributable to Churchill Downs Incorporated was $249.1 million compared to $81.9 million net loss attributable to Churchill Downs Incorporated in the prior year. The Company’s 2021 net income from continuing operations was $249.1 million compared to $13.3 million in the prior year.
The following items impacted the comparability of the Company’s full year net income from continuing operations:
- $18.9 million after-tax benefit related to our equity portion of the non-cash change in the fair value of Rivers Des Plaines’ interest rate swaps;
- $1.9 million non-cash tax decrease related to the re-measurement of our net deferred tax liabilities that did not recur in the current year; and
- $1.0 million non-cash after-tax decrease in asset impairments.
Partially offset by:
- $13.3 million tax benefit related to our net operating loss in 2020 that did not recur in the current year;
- $7.1 million after-tax increase related to our equity portion of Rivers Des Plaines’ legal reserves and transaction costs; and
- $0.4 million after-tax increase in transaction, pre-opening and other expenses.
Excluding these items, 2021 net income from continuing operations increased $234.8 million compared to the prior year primarily due to the following:
- $236.5 million after-tax increase from the prior year driven by the results of our operations and equity income from our unconsolidated affiliates;
- Partially offset by $1.7 million after-tax increase from the prior year in interest expense associated with higher outstanding debt balances.
| SEGMENT RESULTS |
The summaries below present net revenue from external customers and intercompany revenue from each of our reportable segments:
Live and Historical Racing
| Fourth Quarter | Years Ended December 31, | ||||||||||
| (in millions) | 2021 | 2020 | 2021 | 2020 | |||||||
| Net revenue | $ | 93.9 | $ | 58.3 | $ | 430.6 | $ | 188.8 | |||
| Adjusted EBITDA | 30.6 | 10.4 | 175.0 | 39.1 | |||||||
Fourth Quarter 2021
- Net revenue for the fourth quarter of 2021 increased $35.6 million from the prior year quarter due to a $16.9 million increase from Derby City Gaming from strong growth and certain capacity restrictions during the prior year quarter; a $14.4 million increase at Oak Grove from continued growth; a $2.4 million increase at Churchill Downs Racetrack as a result of attendance limitations during the prior year quarter; a $1.5 million increase at Newport Racing & Gaming (“Newport”) as a result of the facility expansion and improved floor layout in the fourth quarter of 2021; and a $0.4 million increase at Turfway Park due to increased handle.
- Adjusted EBITDA for the fourth quarter of 2021 increased $20.2 million from the prior year quarter due to a $10.2 million increase at Derby City Gaming, a $7.6 million increase at Oak Grove, and a $1.1 million increase at Newport, all of which were due to the increase in net revenue and increased operating efficiencies; and a $1.3 million increase at Churchill Downs Racetrack due to the increase in net revenue.
Total Year 2021
- Net revenue for 2021 increased $241.8 million from the prior year due to a $84.1 million increase at Oak Grove as a result of the opening of the HRM facility in September 2020 and the hotel in October 2020; a $74.8 million increase at Derby City Gaming from the temporary suspension of operations during the prior year and the completion of a second outdoor patio with an additional 225 HRMs in September 2020; a $66.9 million increase at Churchill Downs Racetrack as a result of running the 147th Kentucky Oaks and Derby with capacity restrictions in 2021 compared to the running of the 146th Kentucky Oaks and Derby in 2020 without spectators, a $14.8 million increase at Newport as a result of opening the facility in October 2020; and a $1.2 million increase at Turfway Park due to the temporary suspension of operations during the prior year.
- Adjusted EBITDA for 2021 increased by $135.9 million from the prior year due to a $52.1 million increase at Churchill Downs Racetrack as a result of running the 147th Kentucky Oaks and Derby with capacity restrictions in 2021 compared to running the 146th Kentucky Oaks and Derby in 2020 without spectators; a $47.1 million increase at Derby City Gaming from the increase in net revenue, increased operating efficiencies, and the temporary suspension of operations during 2021; a $33.2 million increase at Oak Grove as a result of the opening of the HRM facility in September 2020; a $2.8 million increase at Newport as a result of opening the facility in October 2020; and a $0.7 million increase at Turfway from the temporary suspension of operations during 2020.
TwinSpires
| Fourth Quarter | Years Ended December 31, | ||||||||||
| (in millions) | 2021 | 2020 | 2021 | 2020 | |||||||
| Net revenue | $ | 94.9 | $ | 97.3 | $ | 433.1 | $ | 416.0 | |||
| Adjusted EBITDA | 11.7 | 25.6 | 78.0 | 112.9 | |||||||
Fourth Quarter 2021
- Net revenue for the fourth quarter of 2021 decreased $2.4 million from the prior year quarter due to a $8.8 million decrease from Horse Racing that was partially offset by a $6.4 million increase from Sports and Casino. Horse Racing net revenue decreased as a result of lower handle as a portion of our patrons returned to wagering at brick-and-mortar facilities. Sports and Casino net revenue increased as a result of our expansion in additional states and marketing and promotional activities.
- Adjusted EBITDA for the fourth quarter of 2021 decreased $13.9 million from the prior year quarter due to a $9.5 million increase in the loss from Sports and Casino due to increased marketing and promotional activities and a $4.4 million decrease from Horse Racing due to the decrease in net revenue.
Total Year 2021
Comparison of 2021 to 2020
- Net revenue for 2021 increased $17.1 million from the prior year due to a $23.5 million increase from Sports and Casino driven by expansion in additional states and marketing and promotional activities. Horse Racing revenue decreased $6.4 million as a portion of our patrons returned to wagering at brick-and-mortar facilities in 2021 instead of wagering online.
- Adjusted EBITDA for 2021 decreased $34.9 million from the prior year due to a $27.1 million increase in the loss from Sports and Casino due to increased marketing and promotional activities and a $7.8 million decrease from Horse Racing primarily due to the decrease in net revenue.
Comparison of 2021 to 2019
- Net revenue for 2021 increased $136.4 million from 2019 due to a $107.2 million increase from Horse Racing as a result of higher handle as more wagering shifted online between 2019 and 2021 and a $29.2 million increase from Sports and Casino driven by expansion in additional states as well as marketing and promotional activities.
- Adjusted EBITDA for 2021 increased $8.7 million from 2019 due to a $40.6 million increase from Horse Racing due to the increase in net revenue that was partially offset by a $31.9 million increase in the loss from Sports and Casino as a result of increased marketing and promotional activities.
Gaming
| Fourth Quarter | Years Ended December 31, | ||||||||||
| (in millions) | 2021 | 2020 | 2021 | 2020 | |||||||
| Net revenue | $ | 172.8 | $ | 119.4 | $ | 698.4 | $ | 437.8 | |||
| Adjusted EBITDA | 99.0 | 52.3 | 411.9 | 173.1 | |||||||
Fourth Quarter 2021
- Net revenue for the fourth quarter of 2021 increased $53.4 million from the prior year quarter due to the temporary suspension of operations at certain properties during the prior year quarter as well as certain capacity restrictions on patrons and gaming during the prior year quarter.
- Adjusted EBITDA for the fourth quarter of 2021 increased $46.7 million from the prior year quarter driven by a $25.5 million increase from our equity investments due to the temporary suspension of operations at Rivers Des Plaines during the prior year quarter and a $21.2 million increase at our wholly-owned Gaming properties as a result of increased net revenue and increased operating efficiencies.
Total Year 2021
- Net revenue for 2021 increased $260.6 million from the prior year primarily due to the temporary suspension of operations and loss of revenue at all of our Gaming properties during 2020.
- Adjusted EBITDA for 2021 increased $238.8 million from the prior year driven by a $136.0 million increase at our wholly-owned Gaming properties and a $102.8 million increase from our equity investments, both of which are due to the temporary suspension of operations of all of our Gaming properties in 2020.
All Other
| Fourth Quarter | Years Ended December 31, | ||||||||||||||
| (in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||
| Net revenue | $ | 10.5 | $ | 11.0 | $ | 73.9 | $ | 46.4 | |||||||
| Adjusted EBITDA | (14.3 | ) | (9.1 | ) | (37.9 | ) | (38.6 | ) | |||||||
Fourth Quarter 2021
- Adjusted EBITDA for the fourth quarter of 2021 decreased $5.2 million from the prior year quarter primarily due to a $3.5 million decrease at Corporate primarily due to higher accrued bonus and salaries expense; a $1.0 million decrease at Arlington primarily due to a decrease in net revenue; a $0.6 million decrease at United Tote primarily due to increased accrued bonus; and a $0.1 million decrease from other sources.
Total Year 2021
- Adjusted EBITDA for 2021 increased $0.7 million from the prior year, primarily due to an $11.1 million increase at Arlington and $1.7 million increase at United Tote, both of which were due to the temporary suspension of operations in 2020, partially offset by a $12.1 million decrease at Corporate primarily due to an increase in accrued bonus in the current year.
| CAPITAL MANAGEMENT |
Share Repurchase Program
On September 29, 2021, the Board of Directors of the Company approved a common stock repurchase program of up to $500.0 million (“2021 Stock Repurchase Program”). The 2021 Stock Repurchase Program includes and is not in addition to any unspent amount remaining under the prior 2018 Stock Repurchase Program authorization. Repurchases may be made at management’s discretion from time to time on the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions. The repurchase program has no time limit and may be suspended or discontinued at any time.
The Company repurchased the following shares of its common stock in 2021:
- 245,132 shares under the 2018 Stock Repurchase Program at a total cost of $49.2 million
- 226,232 shares under the 2021 Stock Repurchase Program at a total cost of $54.4 million
We had approximately $445.6 million repurchase authority remaining under the 2021 Stock Repurchase Program as of December 31, 2021.
The Duchossois Group (“TDG”) Share Repurchase
On February 1, 2021, the Company repurchased 1,000,000 shares of its common stock for $193.94 per share from an affiliate of TDG in a privately negotiated transaction. The aggregate purchase price was $193.9 million. The Company repurchased the shares using available cash and borrowings under its senior secured credit facility. The transaction did not impact the Company’s remaining repurchase authority.
Annual Dividend
On October 26, 2021, the Company’s Board of Directors approved an annual cash dividend on CDI’s common stock of $0.667 per outstanding share, a 7 percent increase over the prior year. The dividend was paid on January 7, 2022, to shareholders of record as of the close of business on December 3, 2021, with an aggregate cash dividend paid to each stockholder rounded to the nearest whole cent. This marked the eleventh consecutive year that the Company increased the dividend.
Capital Investments
We have announced several project capital investments during the past year, including the following:
- Churchill Downs Racetrack: the Homestretch Club, the Turn 1 Experience, and the Paddock and Under the Spires projects
- Derby City Gaming expansion and hotel
- Derby City Gaming Downtown
- Turfway Park HRM facility and grandstand
- Louisiana HRMs in our OTBs
- Queen of Terre Haute Casino Resort
We are currently estimating that we will spend between $300 million and $350 million for project capital in 2022, although this amount may vary significantly based on the timing of work completed, unanticipated delays, and timing of payments to third parties. We plan to use our operating cash flows, cash on hand, and the proceeds from our anticipated land sales to fund our capital project expenditures.
Conference Call
A conference call regarding this news release is scheduled for Thursday, February 24, 2022 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 dialing (877) 372-0878 and entering the pass code 2463534 at least 10 minutes before the appointed time. International callers should dial (253) 237-1169. An online replay will be available at approximately noon ET on Thursday, February 24, 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 net income from continuing operations, 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, adjusted net income from continuing operations, 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; recapitalization costs related to the Rivers Des Plaines transaction; transaction expense, which includes acquisition and disposition related charges, Calder racing exit costs, as well as legal, accounting, and other deal-related expense; pre-opening expense; and certain other gains, charges, recoveries, and expenses.
Adjusted EBITDA includes our portion of EBITDA from our equity investments.
Adjusted EBITDA excludes:
- Transaction expense, net which includes:
- Acquisition, disposition, and land sale related charges; 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;
- Legal reserves;
- Pre-opening expense; and
- Other charges, recoveries and expenses
For segment reporting, Adjusted EBITDA includes intercompany revenue and expense totals that are eliminated in the consolidated statements of comprehensive income (loss). See the Reconciliation of Comprehensive Income (Loss) 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 pari-mutuel gaming entertainment venues with approximately 3,050 historical racing machines in Kentucky. We also own and operate TwinSpires, one of the largest and most profitable online wagering platforms for horse racing, sports and iGaming in the U.S. and we have nine retail sportsbooks. We are also a leader in brick-and-mortar casino gaming in nine 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; 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 expand our TwinSpires Sports and Casino business and effectively compete; difficulty in integrating recent or future acquisitions into our operations; inability to identify and / or complete 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; and 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.
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 (LOSS)
(unaudited except year ended 2021 and 2020 amounts)
| Three Months Ended December 31, |
Years Ended December 31, |
||||||||||||||
| (in millions, except per common share data) | 2021 | 2020 | 2021 | 2020 | |||||||||||
| Net revenue: | |||||||||||||||
| Live and Historical Racing | $ | 90.3 | $ | 54.4 | $ | 409.1 | $ | 169.6 | |||||||
| TwinSpires | 94.6 | 97.0 | 431.7 | 414.5 | |||||||||||
| Gaming | 172.1 | 118.6 | 695.4 | 435.3 | |||||||||||
| All Other | 7.8 | 8.2 | 61.0 | 34.6 | |||||||||||
| Total net revenue | 364.8 | 278.2 | 1,597.2 | 1,054.0 | |||||||||||
| Operating expense: | |||||||||||||||
| Live and Historical Racing | 71.6 | 57.1 | 288.9 | 179.0 | |||||||||||
| TwinSpires | 78.1 | 66.3 | 325.4 | 275.8 | |||||||||||
| Gaming | 121.3 | 92.1 | 476.3 | 357.9 | |||||||||||
| All Other | 10.4 | 10.5 | 60.5 | 47.8 | |||||||||||
| Selling, general and administrative expense | 38.8 | 29.5 | 138.5 | 114.8 | |||||||||||
| Asset impairments | 4.1 | — | 15.3 | 17.5 | |||||||||||
| Transaction expense, net | 5.8 | — | 7.9 | 1.0 | |||||||||||
| Total operating expense | 330.1 | 255.5 | 1,312.8 | 993.8 | |||||||||||
| Operating income | 34.7 | 22.7 | 284.4 | 60.2 | |||||||||||
| Other income (expense): | |||||||||||||||
| Interest expense, net | (21.6 | ) | (20.7 | ) | (84.7 | ) | (80.0 | ) | |||||||
| Equity in income of unconsolidated affiliates | 40.2 | 14.5 | 143.2 | 27.7 | |||||||||||
| Miscellaneous, net | 0.4 | 0.2 | 0.7 | 0.1 | |||||||||||
| Total other income (expense) | 19.0 | (6.0 | ) | 59.2 | (52.2 | ) | |||||||||
| Income from continuing operations before provision for income taxes | 53.7 | 16.7 | 343.6 | 8.0 | |||||||||||
| Income tax (provision) benefit | (10.4 | ) | (0.3 | ) | (94.5 | ) | 5.3 | ||||||||
| Income from continuing operations, net of tax | 43.3 | 16.4 | 249.1 | 13.3 | |||||||||||
| Income (loss) from discontinued operations, net of tax | — | 0.7 | — | (95.4 | ) | ||||||||||
| Net income (loss) before noncontrolling interest | 43.3 | 17.1 | 249.1 | (82.1 | ) | ||||||||||
| Net loss attributable to noncontrolling interest | — | — | — | (0.2 | ) | ||||||||||
| Net income (loss) and comprehensive income (loss) attributable to Churchill Downs Incorporated | $ | 43.3 | $ | 17.1 | $ | 249.1 | $ | (81.9 | ) | ||||||
| Net income (loss) per common share data – basic: | |||||||||||||||
| Continuing operations | $ | 1.13 | $ | 0.41 | $ | 6.45 | $ | 0.34 | |||||||
| Discontinued operations | $ | — | $ | 0.02 | $ | — | $ | (2.41 | ) | ||||||
| Net income (loss) per common share – basic | $ | 1.13 | $ | 0.43 | $ | 6.45 | $ | (2.07 | ) | ||||||
| Net income (loss) per common share data – diluted: | |||||||||||||||
| Continuing operations | $ | 1.11 | $ | 0.41 | $ | 6.35 | $ | 0.33 | |||||||
| Discontinued operations | $ | — | $ | 0.02 | $ | — | $ | (2.41 | ) | ||||||
| Net income (loss) per common share – diluted | $ | 1.11 | $ | 0.43 | $ | 6.35 | $ | (2.08 | ) | ||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 38.3 | 39.6 | 38.6 | 39.6 | |||||||||||
| Diluted | 39.0 | 40.2 | 39.2 | 40.1 | |||||||||||
CHURCHILL DOWNS INCORPORATED
CONSOLIDATED BALANCE SHEETS
December 31,
| (in millions) | 2021 | 2020 | |||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 291.3 | $ | 67.4 | |||
| Restricted cash | 64.3 | 53.6 | |||||
| Accounts receivable, net of allowance for doubtful accounts of $5.4 in 2021 and $4.9 in 2020 | 42.3 | 36.5 | |||||
| Income taxes receivable | 66.0 | 49.4 | |||||
| Other current assets | 37.6 | 28.2 | |||||
| Total current assets | 501.5 | 235.1 | |||||
| Property and equipment, net | 994.9 | 1,082.1 | |||||
| Investment in and advances to unconsolidated affiliates | 663.6 | 630.6 | |||||
| Goodwill | 366.8 | 366.8 | |||||
| Other intangible assets, net | 348.1 | 350.6 | |||||
| Other assets | 18.9 | 21.2 | |||||
| Long term assets held for sale | 87.8 | — | |||||
| Total assets | $ | 2,981.6 | $ | 2,686.4 | |||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 81.6 | $ | 70.7 | |||
| Accrued expenses and other current liabilities | 232.6 | 167.8 | |||||
| Current deferred revenue | 47.7 | 32.8 | |||||
| Current maturities of long-term debt | 7.0 | 4.0 | |||||
| Dividends payable | 26.1 | 24.9 | |||||
| Current liabilities of discontinued operations | — | 124.0 | |||||
| Total current liabilities | 395.0 | 424.2 | |||||
| Long-term debt (net of current maturities and loan origination fees of $6.2 in 2021 and $3.2 in 2020) | 668.6 | 530.5 | |||||
| Notes payable (net of debt issuance costs of $7.6 in 2021 and $12.2 in 2020) | 1,292.4 | 1,087.8 | |||||
| Non-current deferred revenue | 13.3 | 17.1 | |||||
| Deferred income taxes | 252.9 | 213.9 | |||||
| Other liabilities | 52.6 | 45.8 | |||||
| Total liabilities | 2,674.8 | 2,319.3 | |||||
| Commitments and contingencies | |||||||
| Shareholders’ equity: | |||||||
| Preferred stock, no par value; 0.3 shares authorized; no shares issued or outstanding | — | — | |||||
| Common stock, no par value; 150.0 shares authorized; 38.1 shares issued and outstanding in 2021 and 39.5 shares in 2020 | — | 18.2 | |||||
| Retained earnings | 307.7 | 349.8 | |||||
| Accumulated other comprehensive loss | (0.9 | ) | (0.9 | ) | |||
| Total shareholders’ equity | 306.8 | 367.1 | |||||
| Total liabilities and shareholders’ equity | $ | 2,981.6 | $ | 2,686.4 | |||
CHURCHILL DOWNS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31,
| (in millions) | 2021 | 2020 | |||||
| Cash flows from operating activities: | |||||||
| Net income (loss) | $ | 249.1 | $ | (82.1 | ) | ||
| Loss from discontinued operations, net of tax | — | (95.4 | ) | ||||
| Income from continuing operations, net of tax | $ | 249.1 | $ | 13.3 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 103.2 | 92.9 | |||||
| Equity in income of unconsolidated affiliates | (143.2 | ) | (27.7 | ) | |||
| Distributions from unconsolidated affiliates | 109.4 | 30.7 | |||||
| Stock-based compensation | 27.8 | 23.7 | |||||
| Deferred income taxes | 9.8 | 30.1 | |||||
| Asset impairments | 15.3 | 17.5 | |||||
| Amortization of operating lease assets | 5.3 | 5.0 | |||||
| Other | 5.3 | 4.5 | |||||
| Changes in operating assets and liabilities, net of businesses acquired and dispositions: | |||||||
| Income taxes | 12.9 | (34.6 | ) | ||||
| Deferred revenue | 10.7 | (8.3 | ) | ||||
| Other assets and liabilities | 53.9 | (3.9 | ) | ||||
| Net cash provided by operating activities | 459.5 | 143.2 | |||||
| Cash flows from investing activities: | |||||||
| Capital maintenance expenditures | (39.5 | ) | (23.0 | ) | |||
| Capital project expenditures | (52.3 | ) | (211.2 | ) | |||
| Other | (8.6 | ) | (5.2 | ) | |||
| Net cash used in investing activities | (100.4 | ) | (239.4 | ) | |||
| Cash flows from financing activities: | |||||||
| Proceeds from borrowings under long-term debt obligations | 780.8 | 726.1 | |||||
| Repayments of borrowings under long-term debt obligations | (430.9 | ) | (580.4 | ) | |||
| Payment of dividends | (24.8 | ) | (23.4 | ) | |||
| Repurchase of common stock | (297.5 | ) | (28.4 | ) | |||
| Cash settlement of stock awards | — | (12.7 | ) | ||||
| Taxes paid related to net share settlement of stock awards | (12.9 | ) | (18.7 | ) | |||
| Debt issuance costs | (6.9 | ) | (2.0 | ) | |||
| Change in bank overdraft | (10.5 | ) | 13.4 | ||||
| Other | 2.2 | 2.1 | |||||
| Net cash (used in) provided by financing activities | (0.5 | ) | 76.0 | ||||
| Cash flows from discontinued operations: | |||||||
| Operating activities of discontinued operations | (124.0 | ) | (1.3 | ) | |||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 234.6 | (21.5 | ) | ||||
| Cash, cash equivalents and restricted cash, beginning of year | 121.0 | 142.5 | |||||
| Cash, cash equivalents and restricted cash, end of year | $ | 355.6 | $ | 121.0 | |||
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(unaudited)
| Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
| (in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||
| GAAP net income (loss) attributable to Churchill Downs Incorporated | $ | 43.3 | $ | 17.1 | $ | 249.1 | $ | (81.9 | ) | ||||||
| Adjustments, continuing operations: | |||||||||||||||
| Changes in fair value of interest rate swaps related to Rivers Des Plaines | (4.9 | ) | (1.8 | ) | (12.9 | ) | 12.9 | ||||||||
| Legal reserves and transaction costs related to Rivers Des Plaines | 1.3 | — | 9.9 | — | |||||||||||
| Transaction, pre-opening and other expense | 7.8 | 1.5 | 13.9 | 13.0 | |||||||||||
| Asset impairments | 4.1 | — | 15.3 | 17.5 | |||||||||||
| Income tax impact on net income (loss) adjustments(a) | (2.2 | ) | 0.1 | (7.3 | ) | (12.2 | ) | ||||||||
| NOL Carryback | — | (10.4 | ) | — | (13.3 | ) | |||||||||
| Re-measurement of net deferred tax liabilities | — | 1.9 | — | 1.9 | |||||||||||
| Total adjustments, continuing operations | 6.1 | (8.7 | ) | 18.9 | 19.8 | ||||||||||
| Big Fish Games net (income) loss(b) | — | (0.7 | ) | — | 95.4 | ||||||||||
| Total adjustments | 6.1 | (9.4 | ) | 18.9 | 115.2 | ||||||||||
| Adjusted net income attributable to Churchill Downs Incorporated | $ | 49.4 | $ | 7.7 | $ | 268.0 | $ | 33.3 | |||||||
| Adjusted diluted EPS | $ | 1.27 | $ | 0.19 | $ | 6.83 | $ | 0.83 | |||||||
| Weighted average shares outstanding – Diluted | 39.0 | 40.2 | 39.2 | 40.1 | |||||||||||
| (a) | The income tax impact for each adjustment is derived by applying the effective tax rate, including current and deferred income tax expense, based upon the jurisdiction and the nature of the adjustment. |
| (b) | Due to the Big Fish Transaction, Big Fish Games is presented as a discontinued operation. |
| Three Months Ended December 31, | Years Ended December 31, | ||||||||||
| (in millions) | 2021 | 2020 | 2021 | 2020 | |||||||
| Total Handle | |||||||||||
| Churchill Downs Racetrack | $ | 147.5 | $ | 134.3 | $ | 732.0 | $ | 600.2 | |||
| TwinSpires Horse Racing(a) | 416.4 | $ | 455.5 | 1,961.8 | $ | 1,977.4 | |||||
| (a) | Total handle generated by Velocity is not included in total handle from TwinSpires Horse Racing |
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(unaudited except year ended 2021 and 2020 amounts)
| Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
| (in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||
| Net revenue from external customers: | |||||||||||||||
| Live and Historical Racing: | |||||||||||||||
| Churchill Downs Racetrack | $ | 13.5 | $ | 10.9 | $ | 128.1 | $ | 63.3 | |||||||
| Derby City Gaming | 41.3 | 24.3 | 154.3 | 79.5 | |||||||||||
| Oak Grove | 28.6 | 14.2 | 100.7 | 16.6 | |||||||||||
| Newport | 4.6 | 3.1 | 17.9 | 3.1 | |||||||||||
| Turfway Park | 2.3 | 1.9 | 8.1 | 7.1 | |||||||||||
| Total Live and Historical Racing | 90.3 | 54.4 | 409.1 | 169.6 | |||||||||||
| TwinSpires: | |||||||||||||||
| Horse Racing | 83.9 | 92.7 | 396.9 | 403.2 | |||||||||||
| Sports and Casino | 10.7 | 4.3 | 34.8 | 11.3 | |||||||||||
| Total TwinSpires | 94.6 | 97.0 | 431.7 | 414.5 | |||||||||||
| Gaming: | |||||||||||||||
| Oxford Casino | 27.7 | 12.5 | 99.8 | 44.9 | |||||||||||
| Riverwalk Casino | 13.9 | 11.7 | 61.2 | 46.3 | |||||||||||
| Harlow’s Casino | 12.2 | 11.0 | 56.1 | 40.7 | |||||||||||
| Calder | 25.8 | 17.8 | 100.0 | 51.8 | |||||||||||
| Fair Grounds and VSI | 35.4 | 27.0 | 133.6 | 97.6 | |||||||||||
| Lady Luck Nemacolin | 5.8 | 3.9 | 24.5 | 20.7 | |||||||||||
| Presque Isle | 29.4 | 16.7 | 119.6 | 73.1 | |||||||||||
| Ocean Downs | 21.9 | 18.0 | 100.6 | 60.2 | |||||||||||
| Total Gaming | 172.1 | 118.6 | 695.4 | 435.3 | |||||||||||
| All Other | 7.8 | 8.2 | 61.0 | 34.6 | |||||||||||
| Net revenue from external customers | $ | 364.8 | $ | 278.2 | $ | 1,597.2 | $ | 1,054.0 | |||||||
| Intercompany net revenues: | |||||||||||||||
| Live and Historical Racing: | |||||||||||||||
| Churchill Downs Racetrack | $ | 3.2 | $ | 3.5 | $ | 19.9 | $ | 17.8 | |||||||
| Turfway Park | 0.4 | 0.4 | 1.6 | 1.4 | |||||||||||
| Total Live and Historical | 3.6 | 3.9 | 21.5 | 19.2 | |||||||||||
| TwinSpires: | |||||||||||||||
| Horse Racing | 0.3 | 0.3 | 1.4 | 1.5 | |||||||||||
| Total TwinSpires | 0.3 | 0.3 | 1.4 | 1.5 | |||||||||||
| Gaming: | |||||||||||||||
| Fair Grounds and VSI | 0.6 | 0.8 | 2.6 | 2.3 | |||||||||||
| Presque Isle | 0.1 | — | 0.3 | 0.2 | |||||||||||
| Calder | — | — | 0.1 | — | |||||||||||
| Total Gaming | 0.7 | 0.8 | 3.0 | 2.5 | |||||||||||
| All Other | 2.7 | 2.8 | 12.9 | 11.8 | |||||||||||
| Eliminations | (7.3 | ) | (7.8 | ) | (38.8 | ) | (35.0 | ) | |||||||
| Intercompany net revenue | $ | — | $ | — | $ | — | $ | — | |||||||
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(unaudited except year ended 2021 and 2020 amounts)
| Three Months Ended December 31, 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 | $ | 13.1 | $ | 80.5 | $ | 7.2 | $ | 100.8 | $ | 2.5 | $ | 103.3 | |||||
| Historical racing(a) | 69.0 | — | — | 69.0 | — | 69.0 | |||||||||||
| Racing event-related services | 3.2 | — | 0.2 | 3.4 | 0.1 | 3.5 | |||||||||||
| Gaming(a) | — | 10.7 | 152.7 | 163.4 | — | 163.4 | |||||||||||
| Other(a) | 5.0 | 3.4 | 12.0 | 20.4 | 5.2 | 25.6 | |||||||||||
| Total | $ | 90.3 | $ | 94.6 | $ | 172.1 | $ | 357.0 | $ | 7.8 | $ | 364.8 | |||||
| Three Months Ended December 31, 2020 | |||||||||||||||||
| (in millions) | Live and Historical Racing | TwinSpires | Gaming | Total Segments | All Other | Total | |||||||||||
| Net revenue from external customers | |||||||||||||||||
| Pari-mutuel: | |||||||||||||||||
| Live and simulcast racing | $ | 11.5 | $ | 89.0 | $ | 6.7 | $ | 107.2 | $ | 3.3 | $ | 110.5 | |||||
| Historical racing(a) | 38.8 | — | — | 38.8 | — | 38.8 | |||||||||||
| Racing event-related services | 1.4 | — | 0.7 | 2.1 | — | 2.1 | |||||||||||
| Gaming(a) | — | 4.3 | 106.0 | 110.3 | — | 110.3 | |||||||||||
| Other(a) | 2.7 | 3.7 | 5.2 | 11.6 | 4.9 | 16.5 | |||||||||||
| Total | $ | 54.4 | $ | 97.0 | $ | 118.6 | $ | 270.0 | $ | 8.2 | $ | 278.2 | |||||
| (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 $5.9 million for the three months ended December 31, 2021 and $2.6 million for the three months ended December 31, 2020. |
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(unaudited except year ended 2021 and 2020 amounts)
| Year Ended December 31, 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 | $ | 64.0 | $ | 380.7 | $ | 28.2 | $ | 472.9 | $ | 29.7 | $ | 502.6 | |||||
| Historical racing(b) | 253.0 | — | — | 253.0 | — | 253.0 | |||||||||||
| Racing event-related services | 68.5 | — | 1.2 | 69.7 | 7.0 | 76.7 | |||||||||||
| Gaming(b) | — | 34.8 | 622.0 | 656.8 | — | 656.8 | |||||||||||
| Other(b) | 23.6 | 16.2 | 44.0 | 83.8 | 24.3 | 108.1 | |||||||||||
| Total | $ | 409.1 | $ | 431.7 | $ | 695.4 | $ | 1,536.2 | $ | 61.0 | $ | 1,597.2 | |||||
| Year Ended December 31, 2020 | |||||||||||||||||
| (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 | $ | 387.5 | $ | 22.9 | $ | 456.9 | $ | 18.2 | $ | 475.1 | |||||
| Historical racing(b) | 93.6 | — | — | 93.6 | — | 93.6 | |||||||||||
| Racing event-related services | 21.0 | — | 3.4 | 24.4 | 0.3 | 24.7 | |||||||||||
| Gaming(b) | — | 11.3 | 381.3 | 392.6 | — | 392.6 | |||||||||||
| Other(b) | 8.5 | 15.7 | 27.7 | 51.9 | 16.1 | 68.0 | |||||||||||
| Total | $ | 169.6 | $ | 414.5 | $ | 435.3 | $ | 1,019.4 | $ | 34.6 | $ | 1,054.0 | |||||
| (b) | 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 $20.9 million in 2021 and $13.1 million in 2020. |
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(unaudited except year ended 2021 and 2020 amounts)
Adjusted EBITDA by segment is comprised of the following:
| Three Months Ended December 31, 2021 | |||||||||||||||||||||||||||
| (in millions) | Live and Historical Racing | TwinSpires | Gaming | Total Segments | All Other | Eliminations | Total | ||||||||||||||||||||
| Net revenue | $ | 93.9 | $ | 94.9 | $ | 172.8 | $ | 361.6 | $ | 10.5 | $ | (7.3 | ) | $ | 364.8 | ||||||||||||
| Taxes and purses | (30.9 | ) | (7.9 | ) | (63.3 | ) | (102.1 | ) | (1.3 | ) | — | (103.4 | ) | ||||||||||||||
| Marketing and advertising | (3.0 | ) | (13.6 | ) | (4.3 | ) | (20.9 | ) | (0.1 | ) | 0.1 | (20.9 | ) | ||||||||||||||
| Salaries and benefits | (12.2 | ) | (4.0 | ) | (24.1 | ) | (40.3 | ) | (4.2 | ) | — | (44.5 | ) | ||||||||||||||
| Content expenses | (0.6 | ) | (44.5 | ) | (1.2 | ) | (46.3 | ) | (1.2 | ) | 6.7 | (40.8 | ) | ||||||||||||||
| Selling, general, and administrative expense | (3.6 | ) | (2.4 | ) | (8.9 | ) | (14.9 | ) | (15.4 | ) | 0.4 | (29.9 | ) | ||||||||||||||
| Other operating expense | (13.2 | ) | (10.8 | ) | (19.4 | ) | (43.4 | ) | (2.9 | ) | 0.2 | (46.1 | ) | ||||||||||||||
| Other income | 0.2 | — | 47.4 | 47.6 | 0.3 | (0.1 | ) | 47.8 | |||||||||||||||||||
| Adjusted EBITDA | $ | 30.6 | $ | 11.7 | $ | 99.0 | $ | 141.3 | $ | (14.3 | ) | $ | — | $ | 127.0 | ||||||||||||
| Three Months Ended December 31, 2020 | |||||||||||||||||||||||||||
| (in millions) | Live and Historical Racing | TwinSpires | Gaming | Total Segments | All Other | Eliminations | Total | ||||||||||||||||||||
| Net revenue | $ | 58.3 | $ | 97.3 | $ | 119.4 | $ | 275.0 | $ | 11.0 | $ | (7.8 | ) | $ | 278.2 | ||||||||||||
| Taxes & purses | (20.2 | ) | (5.9 | ) | (47.1 | ) | (73.2 | ) | (1.7 | ) | — | (74.9 | ) | ||||||||||||||
| Marketing and advertising | (2.0 | ) | (3.2 | ) | (1.2 | ) | (6.4 | ) | — | — | (6.4 | ) | |||||||||||||||
| Salaries and benefits | (11.2 | ) | (3.4 | ) | (18.3 | ) | (32.9 | ) | (4.1 | ) | — | (37.0 | ) | ||||||||||||||
| Content expenses | (0.5 | ) | (48.3 | ) | (0.9 | ) | (49.7 | ) | (1.4 | ) | 7.4 | (43.7 | ) | ||||||||||||||
| Selling, general, and administrative expense | (3.0 | ) | (1.8 | ) | (6.6 | ) | (11.4 | ) | (11.4 | ) | 0.3 | (22.5 | ) | ||||||||||||||
| Other operating expense | (11.1 | ) | (9.1 | ) | (14.9 | ) | (35.1 | ) | (1.7 | ) | 0.1 | (36.7 | ) | ||||||||||||||
| Other income | 0.1 | — | 21.9 | 22.0 | 0.2 | 22.2 | |||||||||||||||||||||
| Adjusted EBITDA | $ | 10.4 | $ | 25.6 | $ | 52.3 | $ | 88.3 | $ | (9.1 | ) | $ | — | $ | 79.2 | ||||||||||||
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(unaudited except year ended 2021 and 2020 amounts)
Adjusted EBITDA by segment is comprised of the following:
| Year Ended December 31, 2021 | |||||||||||||||||||||||||||
| (in millions) | Live and Historical Racing | TwinSpires | Gaming | Total Segments | All Other | Eliminations | Total | ||||||||||||||||||||
| Net revenue | $ | 430.6 | $ | 433.1 | $ | 698.4 | $ | 1,562.1 | $ | 73.9 | $ | (38.8 | ) | $ | 1,597.2 | ||||||||||||
| Taxes & purses | (126.3 | ) | (30.6 | ) | (264.4 | ) | (421.3 | ) | (13.2 | ) | — | (434.5 | ) | ||||||||||||||
| Marketing and advertising | (12.9 | ) | (49.4 | ) | (11.8 | ) | (74.1 | ) | (0.5 | ) | 0.1 | (74.5 | ) | ||||||||||||||
| Salaries and benefits | (48.4 | ) | (13.9 | ) | (87.1 | ) | (149.4 | ) | (20.9 | ) | — | (170.3 | ) | ||||||||||||||
| Content expenses | (2.5 | ) | (206.6 | ) | (4.7 | ) | (213.8 | ) | (5.7 | ) | 36.9 | (182.6 | ) | ||||||||||||||
| Selling, general, and administrative expense | (12.8 | ) | (9.2 | ) | (27.9 | ) | (49.9 | ) | (57.0 | ) | 1.4 | (105.5 | ) | ||||||||||||||
| Other operating expense | (53.0 | ) | (45.4 | ) | (72.3 | ) | (170.7 | ) | (15.0 | ) | 0.4 | (185.3 | ) | ||||||||||||||
| Other income | 0.3 | — | 181.7 | 182.0 | 0.5 | — | 182.5 | ||||||||||||||||||||
| Adjusted EBITDA | $ | 175.0 | $ | 78.0 | $ | 411.9 | $ | 664.9 | $ | (37.9 | ) | $ | — | $ | 627.0 | ||||||||||||
| Year Ended December 31, 2020 | |||||||||||||||||||||||||||
| (in millions) | Live and Historical Racing | TwinSpires | Gaming | Total Segments | All Other | Eliminations | Total | ||||||||||||||||||||
| Net revenue | $ | 188.8 | $ | 416.0 | $ | 437.8 | $ | 1,042.6 | $ | 46.4 | $ | (35.0 | ) | $ | 1,054.0 | ||||||||||||
| Taxes & purses | (64.1 | ) | (25.1 | ) | (171.6 | ) | (260.8 | ) | (7.5 | ) | — | (268.3 | ) | ||||||||||||||
| Marketing and advertising | (6.2 | ) | (16.5 | ) | (7.5 | ) | (30.2 | ) | (0.2 | ) | 0.2 | (30.2 | ) | ||||||||||||||
| Salaries and benefits | (32.5 | ) | (13.0 | ) | (75.9 | ) | (121.4 | ) | (17.4 | ) | — | (138.8 | ) | ||||||||||||||
| Content expenses | (1.5 | ) | (202.7 | ) | (3.5 | ) | (207.7 | ) | (3.7 | ) | 33.0 | (178.4 | ) | ||||||||||||||
| Selling, general, and administrative expense | (8.7 | ) | (8.8 | ) | (25.4 | ) | (42.9 | ) | (43.9 | ) | 1.5 | (85.3 | ) | ||||||||||||||
| Other operating expense | (36.8 | ) | (37.1 | ) | (59.7 | ) | (133.6 | ) | (12.3 | ) | 0.3 | (145.6 | ) | ||||||||||||||
| Other income | 0.1 | 0.1 | 78.9 | 79.1 | — | — | 79.1 | ||||||||||||||||||||
| Adjusted EBITDA | $ | 39.1 | $ | 112.9 | $ | 173.1 | $ | 325.1 | $ | (38.6 | ) | $ | — | $ | 286.5 | ||||||||||||
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(unaudited except year ended 2021 and 2020 amounts)
| Three Months Ended December 31, |
Years Ended December 31, |
||||||||||||||
| (in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||
| Reconciliation of Comprehensive Income (Loss) to Adjusted EBITDA: | |||||||||||||||
| Net income (loss) attributable to Churchill Downs Incorporated | $ | 43.3 | $ | 17.1 | $ | 249.1 | $ | (81.9 | ) | ||||||
| Net loss attributable to noncontrolling interest | — | — | — | 0.2 | |||||||||||
| Net income (loss) before noncontrolling interest | 43.3 | 17.1 | 249.1 | (82.1 | ) | ||||||||||
| (Income) loss from discontinued operations, net of tax | — | (0.7 | ) | — | 95.4 | ||||||||||
| Income from continuing operations, net of tax | 43.3 | 16.4 | 249.1 | 13.3 | |||||||||||
| Additions: | |||||||||||||||
| Depreciation and amortization | 25.3 | 26.4 | 103.2 | 92.9 | |||||||||||
| Interest expense | 21.6 | 20.7 | 84.7 | 80.0 | |||||||||||
| Income tax (benefit) provision | 10.4 | 0.3 | 94.5 | (5.3 | ) | ||||||||||
| EBITDA | $ | 100.6 | $ | 63.8 | $ | 531.5 | $ | 180.9 | |||||||
| Adjustments to EBITDA: | |||||||||||||||
| Selling, general and administrative: | |||||||||||||||
| Stock-based compensation expense | $ | 7.4 | $ | 6.4 | $ | 27.8 | $ | 23.7 | |||||||
| Other, net | — | 0.1 | 0.2 | 0.8 | |||||||||||
| Pre-opening expense and other expense | 2.0 | 1.4 | 5.8 | 11.2 | |||||||||||
| Transaction expense, net | 5.8 | — | 7.9 | 1.0 | |||||||||||
| Asset impairments | 4.1 | — | 15.3 | 17.5 | |||||||||||
| Other income, expense: | |||||||||||||||
| Interest, depreciation and amortization expense related to equity investments | 10.7 | 9.3 | 41.5 | 38.5 | |||||||||||
| Changes in fair value of Rivers Des Plaines’ interest rate swaps | (4.9 | ) | (1.8 | ) | (12.9 | ) | 12.9 | ||||||||
| Rivers Des Plaines’ recapitalization and transaction costs | 1.3 | — | 9.9 | — | |||||||||||
| Total adjustments to EBITDA | 26.4 | 15.4 | 95.5 | 105.6 | |||||||||||
| Adjusted EBITDA | $ | 127.0 | $ | 79.2 | $ | 627.0 | $ | 286.5 | |||||||
| Adjusted EBITDA by segment: | |||||||||||||||
| Live and Historical Racing | $ | 30.6 | $ | 10.4 | $ | 175.0 | $ | 39.1 | |||||||
| TwinSpires | 11.7 | 25.6 | 78.0 | 112.9 | |||||||||||
| Gaming | 99.0 | 52.3 | 411.9 | 173.1 | |||||||||||
| Total segment Adjusted EBITDA | 141.3 | 88.3 | 664.9 | 325.1 | |||||||||||
| All Other | (14.3 | ) | (9.1 | ) | (37.9 | ) | (38.6 | ) | |||||||
| Total Adjusted EBITDA | $ | 127.0 | $ | 79.2 | $ | 627.0 | $ | 286.5 | |||||||
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL JOINT VENTURE FINANCIAL STATEMENTS
(Unaudited)
Summarized financial information for our equity investments is comprised of the following:
| Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
| (in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||
| Net revenue | $ | 201.0 | $ | 93.5 | $ | 740.0 | $ | 386.3 | |||||||
| Operating and SG&A expense | 123.6 | 58.0 | 434.2 | 252.1 | |||||||||||
| Depreciation and amortization | 4.5 | 4.4 | 17.6 | 17.0 | |||||||||||
| Operating income | 72.9 | 31.1 | 288.2 | 117.2 | |||||||||||
| Interest and other expense, net | (3.9 | ) | (4.5 | ) | (38.6 | ) | (63.1 | ) | |||||||
| Net income | $ | 69.0 | $ | 26.6 | $ | 249.6 | $ | 54.1 | |||||||
| December 31, | |||||||
| (in millions) | 2021 | 2020 | |||||
| Assets | |||||||
| Current assets | $ | 96.0 | $ | 132.8 | |||
| Property and equipment, net | 312.3 | 267.5 | |||||
| Other assets, net | 264.1 | 244.9 | |||||
| Total assets | $ | 672.4 | $ | 645.2 | |||
| Liabilities and Members’ Deficit | |||||||
| Current liabilities | $ | 95.3 | $ | 133.5 | |||
| Long-term debt | 786.9 | 753.5 | |||||
| Other liabilities | 20.6 | 42.3 | |||||
| Members’ deficit | (230.4 | ) | (284.1 | ) | |||
| Total liabilities and members’ deficit | $ | 672.4 | $ | 645.2 | |||
CHURCHILL DOWNS INCORPORATED
PLANNED CAPITAL PROJECTS
(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 | Turf Course | Spring 2022 | $10 | |
| Home Stretch Club | May 2022 | $45 | ||
| Turn 1 Experience | May 2023 | $90 | ||
| Paddock / Under the Spires | May 2024 | TBD | ||
| 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 Quarter 2023 | $80 | |
| Oak Grove | Oak Grove Annex | TBD | TBD | |
| 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 | 2022 | $35 | |
| Equity Investments | ||||
| Rivers Des Plaines(a) | Expansion | Spring 2022 | $90 | |
| Miami Valley Gaming(a) | Outdoor Gaming Patio Expansion | Third Quarter 2022 | $12 | |
| (a) | Capital investments at Rivers Des Plaines and Miami Valley Gaming are funded through operating cash flow and debt facilities at the joint venture entity and are not funded by CDI. |
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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