Investor Presentation April 23, 2025 Forward-Looking Statements Certain statements made in this presentation contain 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 o ...

Core Points - Churchill Downs Incorporated (CDI) will release its second quarter 2025 financial results on July 23, 2025, after market close [1] - A conference call to discuss the quarterly results will take place on July 24, 2025, at 9 a.m. ET [1] - Investors can access the call via an online webcast or by registering for a teleconference [2] - An online replay of the call will be available by noon ET on July 24, 2025 [2] - A news release with financial and statistical information will be accessible on CDI's website [3] Company Overview - Churchill Downs Incorporated has been providing entertainment experiences for over 150 years, starting with the Kentucky Derby [4] - The company is headquartered in Louisville, Kentucky, and has expanded through acquisitions and operations in live racing, online wagering, and regional casino gaming [4]

Group 1 - Churchill Downs Incorporated (NASDAQ: CHDN) is initiated with a Strong Buy rating and a price target of $131, highlighting its position as a leading U.S. racing, online wagering, and gaming operator across three fast-growing segments: Live and Historical Racing, TwinSpires, and Gaming [1] - The Strong Buy rating is based on a structured, repeatable framework that identifies companies with durable business models, mispriced cash flow potential, and intelligent capital allocation [1] - Moretus Research emphasizes rigorous fundamental analysis combined with a high-signal, judgment-driven process, focusing on underappreciated companies undergoing structural change or temporary dislocation [1] Group 2 - Valuation methods used by Moretus Research are based on pragmatic, sector-relevant multiples tailored to each company's business model and capital structure, emphasizing comparability, simplicity, and relevance [1] - The research aims to provide professional-grade insights, actionable valuation, and a strong filter for what truly matters in modern equity analysis, reflecting a deep respect for capital, discipline, and long-term compounding [1]

Core Insights - Gabelli Funds will host its 17th Annual Media & Entertainment Symposium on June 5, 2025, at the Harvard Club in New York City, focusing on industry dynamics, current trends, and business fundamentals [1] - The symposium will include discussions on Sports Investing, Media & Telecom Regulatory issues, and Advertising Panels, providing a platform for attendees to engage with leading companies in the media ecosystem [1][3] - A webcast option will be available for those unable to attend in person, ensuring broader access to the discussions and insights shared during the event [1] Presenting Companies - Notable companies participating in one-on-one meetings include Atlanta Braves Holdings, AMC Networks, Lionsgate Studios, Churchill Downs, Nexstar Media Group, Genius Sports, Reservoir Media, Gray Television, Rogers Communications, Live Nation Entertainment, Sinclair Inc., Sportradar Group, TEGNA Inc., TKO Group, and The E.W. Scripps Company [2] Panel Discussions - The symposium will feature several panel discussions, including "Sports Investing: Ways to Play," a TV Bureau of Advertising (TVB) Panel, and a Media & Telecom Regulatory Expert Session led by former FCC Commissioner Rob McDowell [3]

Core Insights - Churchill Downs Incorporated (CDI) set new all-time records for wagering during the Kentucky Derby Day program and Derby Week, indicating strong growth in the betting segment [3][4][5] Wagering Records - Total wagering on Kentucky Derby Day reached $349.0 million, surpassing last year's record of $320.5 million [3] - Wagering on the Kentucky Derby race alone hit a record of $234.4 million, up from $210.7 million last year [3] - All-sources handle for Derby Week increased to $473.9 million, exceeding last year's $446.6 million [3] Performance of TwinSpires - TwinSpires, the official betting partner, recorded a new high of $108.0 million in wagering for the Kentucky Derby Day program, compared to $92.1 million last year [4] - TwinSpires' handle for the Kentucky Derby race was $73.0 million, up from $60.9 million in the previous year [4] Company Financial Expectations - CDI anticipates that Adjusted EBITDA for Derby Week will rank among the top two results in the company's history, although it is expected to be $2 to $4 million lower than last year's record [5] - The company expressed optimism about future growth following the successful 151st running of the Kentucky Derby [6] Company Overview - CDI has been a leader in entertainment experiences for over 150 years, primarily through the Kentucky Derby and has expanded into various gaming and wagering sectors [8]

Core Insights - Churchill Downs Inc. has paused a nearly $1 billion revamp of its racetrack facilities due to rising uncertainty surrounding construction costs influenced by tariffs and macroeconomic conditions [5][9][10] Group 1: Planned Projects - The company had initially planned to invest up to $920 million in capital projects to enhance and expand the Kentucky Derby racetrack, including the installation of 13,300 seats and new premium hospitality experiences [1][2] - Additional plans included constructing new permanent structures in the infield for premium ticket holders and general admission areas [4] Group 2: Economic Factors - The decision to halt the projects was attributed to significant inflation risks and unquantifiable cost increases in materials due to tariffs imposed by the U.S. government [7][9] - CEO Bill Carstanjen indicated that the evolving economic landscape would be assessed to determine the timing and sequencing of the multi-year projects [9][10] Group 3: Ongoing Investments - Despite the pause on the major revamp, Churchill Downs announced smaller renovations costing between $25 million to $30 million for existing facilities like the Finish Line suites and Trophy Room [11] - The company remains committed to long-term growth of the Kentucky Derby through prudent capital investments [10] Group 4: Economic Impact - The Kentucky Derby significantly contributes to the local economy, with an estimated economic impact of $400 million from last year's race [13]

Group 1: Company Performance - Churchill Downs Inc. reported record revenue of $642.6 million, representing a year-over-year increase of over 51% [2] - The earnings per share (EPS) was $1.07, which missed analysts' expectations of $1.16 and was lower compared to the previous year [2] Group 2: Renovation Project Update - The company announced a pause on a multi-year renovation project valued at $1 billion due to increasing uncertainty surrounding construction costs related to tariffs and trade disputes [3][5] - The renovation was expected to enhance the infield around the Kentucky Derby track and include a multi-story Sky Terrace, with funding backed by up to $1.2 billion in bond proceeds [4] - Despite the pause, Churchill Downs is proceeding with two smaller projects costing between $25 million and $30 million, expected to be completed by 2026 [6] Group 3: Stock Market Reaction - Following the announcement of the renovation pause, Churchill Downs' stock dropped more than 16% in after-hours trading [1] - The current stock price is $88.35, with a 12-month price target of $144.80, indicating a potential upside of 63.89% [7] - Analysts have noted that the stock is historically known for a "Kentucky Derby" lift, but the recent sell-off raises concerns about this pattern [7][8] Group 4: Market Sentiment and Analyst Views - The stock is currently viewed as oversold, with a Relative Strength Index of 27, suggesting potential for recovery [11] - While some analysts have lowered their price targets, there is no indication of a price close to the recent closing price of $88.06 [11] - Analysts believe that sports betting is recession-resistant, which may provide some stability for Churchill Downs amidst broader market concerns [10]

Financial Data and Key Metrics Changes - The company reported record first quarter net revenue of $643 million and adjusted EBITDA of $245 million, reflecting strong performance despite challenges such as weather events and economic uncertainty [11][12][39] - The live and historical racing segment increased revenue by nearly $28 million or 11% compared to the prior year quarter [40] - The company generated $234 million or $3.15 per share of free cash flow in the first quarter [47] Business Line Data and Key Metrics Changes - The live and historical racing segment delivered record first quarter revenue and adjusted EBITDA, primarily due to the opening of new venues [39][40] - Kentucky HRM properties increased adjusted EBITDA by $3.1 million or 6% compared to the prior year quarter [41] - Virginia HRM properties saw a decrease in adjusted EBITDA by $2.2 million or 3% compared to the prior year quarter, impacted by weather and competition [41][43] Market Data and Key Metrics Changes - The Northern Virginia HRM venues contributed nearly $10 million of adjusted EBITDA during the first quarter, up nearly $4 million from the prior year quarter [41] - The company experienced meaningful sequential growth in gross gaming revenues each month of the first quarter [25] - The Terre Haute Casino Resort in Indiana delivered nearly $12 million of adjusted EBITDA in the first quarter, performing well compared to regional gaming properties [46] Company Strategy and Development Direction - The company is committed to strategic investments in the Kentucky Derby and HRM businesses, with a focus on long-term shareholder value [14][17] - A $900 million multiyear project at Churchill Downs Racetrack has been temporarily paused due to economic uncertainties [16][17] - The company plans to continue exploring further development in key markets, including Virginia and Kentucky [25][29] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the hesitancy in consumer spending due to macroeconomic volatility but expressed confidence in the company's ability to manage through these challenges [56][58] - The leadership team remains committed to delivering excellent total shareholder return with consistent execution over the long term [38][51] - Management expects the upcoming Kentucky Derby to deliver results comparable to last year's record performance [35][63] Other Important Information - The company announced a new common stock repurchase program of up to $500 million and repurchased nearly 800,000 shares in the first quarter [49] - The company reduced its 2025 maintenance capital projection by $10 million to $90 to $100 million [48] Q&A Session Questions and Answers Question: About the softness seen in the quarter - Management noted some hesitancy in the lower-tiered play due to macroeconomic volatility, but overall performance has been consistent [56][58] Question: Impact on international visitation for the Derby - Management indicated no material change in international visitation, with expectations for strong demand for the Derby [62][64] Question: Long-term growth for the Derby - Management discussed the potential for growth in ticket pricing and experiences, with expectations for continued strong demand [70][72] Question: Implementation of electronic table games - Management highlighted regulatory and taxation challenges but expressed optimism about the rollout of electronic table games [77][79] Question: Growth opportunities at existing properties - Management emphasized organic growth in Kentucky properties and ongoing projects in Virginia, indicating a strong pipeline for future growth [91][92] Question: Trends in Virginia for existing assets - Management expressed confidence in the Virginia market, noting that it is still early in the maturity of these assets [99][101] Question: Capital allocation and buybacks - Management stated that capital allocation decisions are ongoing, with share buybacks being one of the options considered [112][114] Question: Changes for the Derby next year - Management indicated that adjustments would be based on customer feedback and data analysis post-Derby [120][122] Question: Comparability of Derby performance this year versus last year - Management acknowledged macroeconomic uncertainties but expressed confidence that these would not materially affect Derby performance [130][131]

Financial Data and Key Metrics Changes - The company reported record first quarter net revenue of $643 million and adjusted EBITDA of $245 million, reflecting strong performance despite various challenges [11][12] - The live and historical racing segment increased revenue by nearly $28 million or 11% compared to the prior year quarter [40] - The company generated $234 million or $3.15 per share of free cash flow in the first quarter [47] Business Line Data and Key Metrics Changes - The live and historical racing segment delivered record first quarter revenue and adjusted EBITDA, primarily due to the opening of new venues [39][40] - The Kentucky HRM properties increased adjusted EBITDA by $3.1 million or 6% compared to the prior year quarter [41] - The Virginia HRM properties saw a decrease in adjusted EBITDA by $2.2 million or 3% compared to the prior year quarter, impacted by weather and competition [41][43] Market Data and Key Metrics Changes - The Northern Virginia HRM venues collectively contributed nearly $10 million of adjusted EBITDA during the first quarter, up nearly $4 million from the prior year quarter [41] - The company experienced meaningful sequential growth in gross gaming revenues each month of the first quarter [26] - The Terre Haute Casino Resort in Indiana delivered nearly $12 million of adjusted EBITDA in the first quarter, performing well compared to regional gaming properties [46] Company Strategy and Development Direction - The company is committed to growing the Kentucky Derby through prudent timing of capital investments, pausing a $900 million multiyear project to reassess economic conditions [16][17] - Smaller projects at Churchill Downs Racetrack, costing approximately $25 to $30 million, are expected to deliver strong shareholder returns [19][20] - The company plans to implement electronic table games in existing HRM locations by the end of 2025, focusing on regulatory and taxation challenges [34][78] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased economic uncertainty and inflation risks due to tariffs, impacting cost assessments for projects [16][17] - The leadership team expressed confidence in navigating economic cycles and maintaining growth through strategic investments [37][51] - Management remains optimistic about the upcoming Kentucky Derby, expecting results comparable to last year's record performance [35][131] Other Important Information - The company has reduced its 2025 maintenance capital projection by $10 million to $90 to $100 million [48] - A new common stock repurchase program of up to $500 million was approved, with nearly 800,000 shares repurchased in the first quarter [49][50] - The bank covenant net leverage was 4.0 times at the end of the first quarter, expected to remain stable throughout the year [50] Q&A Session Summary Question: About softness in the quarter and its acceleration - Management noted hesitancy in the lower-tiered play due to macroeconomic volatility, but consistent performance in higher-tiered segments [56][58] Question: Impact on international visitation for Derby 151 - No material change in international visitation was observed, with expectations for strong attendance [62][64] Question: Long-term growth for the Derby and capital plans - Management indicated that the NBC contract will enhance growth, with expectations for pricing power in new areas introduced [70][72] Question: Implementation of electronic table games and tax rates - The rollout will be cautious due to regulatory and taxation challenges, with a focus on gradual acceptance [78] Question: Growth opportunities at existing properties amid macro uncertainty - Management emphasized organic growth in Kentucky properties and ongoing projects in Virginia, with a focus on managing costs [91][92] Question: Trends in Virginia for existing assets - Management expressed optimism about Virginia's market potential, despite recent challenges [100][101] Question: Consumer segment trends and performance - Management highlighted the importance of customer data for managing performance, particularly in less mature properties [106][108] Question: Capital allocation and buybacks - Management indicated that capital allocation decisions will be based on where the best returns can be achieved, including potential buybacks [112][114] Question: Changes for the Derby next year - Management plans to evaluate customer feedback and adjust offerings based on data collected post-Derby [120][122] Question: Comparability of Derby performance this year versus last year - Management acknowledged macroeconomic uncertainties but remains confident in strong demand for the event [130][131]

Core Viewpoint - Churchill Downs reported quarterly earnings of $1.07 per share, missing the Zacks Consensus Estimate of $1.08 per share, and down from $1.13 per share a year ago, indicating a negative earnings surprise of -0.93% [1] - The company posted revenues of $642.6 million for the quarter, which also fell short of the Zacks Consensus Estimate by 0.68%, but showed an increase from $590.9 million year-over-year [2] Financial Performance - Over the last four quarters, Churchill Downs has surpassed consensus EPS estimates two times [2] - The company has also topped consensus revenue estimates two times in the same period [2] - Year-to-date, Churchill Downs shares have declined approximately 22.9%, compared to a 10.1% decline in the S&P 500 [3] Future Outlook - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is $3.24 on revenues of $942.99 million, and for the current fiscal year, it is $6.58 on revenues of $2.94 billion [7] Industry Context - The Gaming industry, to which Churchill Downs belongs, is currently ranked in the bottom 42% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact the stock's performance [5][6]