LOUISVILLE, Ky., Oct. 22, 2025 (GLOBE NEWSWIRE) -- Churchill Downs Incorporated (Nasdaq: CHDN) (the "Company", "CDI", "we") today reported business results for the third quarter ended September 30, 2025. Company Highlights Third quarter 2025 financial results, as compared to the prior year quarter: Record third quarter net revenue of $683.0 million, up $54.5 million or 9%Net income attributable to CDI of $38.1 million, down $27.3 million or 42% driven by a one-time, non-cash impairment Adjusted net income a ...

Core Insights - Everi has entered a seven-year agreement with Churchill Downs Incorporated (CDI) to provide a range of FinTech solutions, including CashClub® services, across CDI's gaming properties [1][2] - The partnership aims to enhance financial technology capabilities, improve compliance with Title 31, and optimize operational efficiency for CDI [2] - The collaboration builds on existing relationships, leveraging Everi's BeOn™ Venue Platform and IGT's historical horse racing games [2][3] Company Overview - IGT is a leading global provider of gaming, digital, and financial technology solutions, formed from the merger of International Game Technology PLC's Gaming & Digital Business and Everi Holdings Inc. [4] - IGT's offerings include gaming machines, game content, iGaming, sports betting, cash access, and loyalty solutions, aimed at delivering integrated experiences across various environments [4] - Churchill Downs Incorporated has been a key player in entertainment for over 150 years, known for the Kentucky Derby and expanding into live and historical racing, online wagering, and regional casino gaming [5]

Churchill Downs Incorporated (NASDAQ:CHDN) ranks among the most undervalued NASDAQ stocks to buy now. On September 16, JMP Securities reiterated its Market Outperform rating for Churchill Downs Incorporated (NASDAQ:CHDN) along with a price target of $142. The firm maintained its optimistic outlook for the racecourse and casino company, saying that Churchill Downs Incorporated (NASDAQ:CHDN) is currently trading at 9.4x 2027 expected EBITDA, which is lower than its long-term average of 11.7x. JMP identifie ...

Core Viewpoint - Investors in the Gaming sector should consider Churchill Downs (CHDN) and Electronic Arts (EA) as potential undervalued stocks, with CHDN currently appearing to be the better option based on various valuation metrics [1]. Valuation Metrics - CHDN has a forward P/E ratio of 15.85, while EA's forward P/E is 20.39, indicating that CHDN may be undervalued compared to EA [5]. - The PEG ratio for CHDN is 1.82, compared to EA's PEG ratio of 1.91, suggesting that CHDN offers better value when considering expected earnings growth [5]. - CHDN's P/B ratio stands at 6.48, while EA's P/B ratio is 6.92, further supporting the notion that CHDN is a more attractive investment based on market value versus book value [6]. Earnings Outlook - CHDN has shown a stronger improvement in its earnings outlook compared to EA, contributing to its higher Zacks Rank of 2 (Buy) versus EA's 3 (Hold) [3][7]. - The overall valuation metrics and solid earnings outlook position CHDN as the superior value option in the current market [7].

Core Insights - Sin stocks, associated with industries like alcohol, tobacco, cannabis, weapons, and gambling, are often seen as morally controversial but have a history of delivering strong returns [2][3] - These stocks attract investors due to resilient demand, high profit margins, and strong cash flows, making them profitable even during economic downturns [3][4] Economic Defensiveness - Sin stocks benefit from persistent demand regardless of economic cycles, as people continue to engage in smoking, drinking, and gambling [4] - Companies in this sector often possess strong pricing power, brand loyalty, and consistent cash flows, appealing to investors focused on returns [4] Regulatory Moats - Many sin stocks enjoy regulatory barriers that deter new entrants, allowing established companies to dominate their markets [6] - Government oversight and compliance costs create high barriers, which, combined with aggressive marketing, help sustain profitability [6] Company Examples - Altria Group (MO) has maintained dividends and returns despite scrutiny and regulation, focusing on shareholder value through consistent payouts and buybacks [5] - Las Vegas Sands Corp. (LVS) operates in regions with entrenched gambling cultures, holding licenses and infrastructure that are difficult to replicate [7] Sector Trends - Consumer preferences are shifting, with alcohol companies benefiting from premiumization and tobacco firms pivoting to reduced-risk products [10] - The cannabis sector is expanding in legalized regions, presenting high-growth potential but also increased volatility [10] Regulatory Impact - Stricter regulations can limit operations, while favorable changes, such as new gambling legislation, can create new opportunities [11] - Global expansion into less restrictive markets enhances growth prospects for sin stocks [11] Investment Opportunities - Red Rock Resorts, Inc. (RRR) is positioned in the Las Vegas locals gaming market, benefiting from high barriers to entry and a strong loyalty program [14][15] - Churchill Downs Incorporated (CHDN) combines traditional racing with technology-driven platforms, focusing on disciplined capital deployment and innovation [17][18] - Anheuser-Busch InBev (BUD) leads in brewing with a strategy focused on premium segments and digital engagement, ensuring resilience across markets [19][20]

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Core Points - Churchill Downs Incorporated (CDI) will release its third quarter 2025 financial results after market close on October 22, 2025 [1] - A conference call to discuss the quarterly results will take place on October 23, 2025, at 8 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 October 23, 2025 [2] - A news release with financial and statistical information will be accessible on the company'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 and historical racing, online wagering, and regional casino gaming [4]

Core Viewpoint - Churchill Downs Incorporated (CDI) has completed the acquisition of a majority interest in a joint venture for Casino Salem, New Hampshire, which will allow the company to develop a charitable gaming, entertainment, and dining venue [1][2]. Group 1: Acquisition Details - The acquisition of Casino Salem was funded through the company's existing credit facility [2]. - The initial phase of Casino Salem opened on July 9, 2025, and future phases will include venue rebranding, gaming floor expansion, and new food and beverage concepts [2]. Group 2: Company Background - Churchill Downs Incorporated has over 150 years of experience in creating entertainment experiences, starting with the Kentucky Derby [3]. - The company has expanded through the acquisition and operation of live and historical racing venues, online wagering businesses, and regional casino properties [3].

Financial Data and Key Metrics Changes - The company reported all-time record net revenue of $934 million and adjusted EBITDA of $451 million for the second quarter of 2025, marking the fifth consecutive second quarter of record results [8][29] - Adjusted EBITDA for the Live and Historical Racing segment grew by $17 million or 6% compared to the prior year, driven primarily by HRM growth in Kentucky and Virginia [30] - The company generated $455 million or $6.29 per share of free cash flow in the first half of the year, with a reduction in maintenance capital projection by $10 million to $80 million to $90 million [35][36] Business Line Data and Key Metrics Changes - Churchill Downs Racetrack adjusted EBITDA was down $1 million, less than 1%, due to a high prior year comparison from the 150th Kentucky Derby [30] - All HRM properties in Kentucky delivered growth in the second quarter, with strong performance from Northern Kentucky and Louisville venues [31] - The Exacta business contributed over $3 million to adjusted EBITDA growth from third-party customers and HRM properties [32] Market Data and Key Metrics Changes - Wagering on the Derby race increased by 11% over last year's all-time high, with Derby Day wagering up 9% and Derby Week wagering rising 6% [15] - Virginia properties collectively delivered over $8 million of growth compared to the prior year, despite a higher handle tax rate [31] - The company expects to close the transaction for the Casino Salem project in New Hampshire in the third quarter, targeting a state-of-the-art gaming and entertainment destination [23] Company Strategy and Development Direction - The company aims to grow Derby Week through ticketing revenue, broadcast rights, wagering, sponsorships, and selective renovations [10][18] - A new seven-year contract with NBC is expected to provide a $10 million increase in adjusted EBITDA for 2026 [13] - Strategic investments in capital improvements are planned to enhance guest experiences and broaden appeal [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential in Virginia and Kentucky, with a strong focus on building customer relationships and brand awareness [21][92] - The company anticipates generating significant growth for Derby Week in 2026 based on various catalysts [20] - Management highlighted the importance of international marketing efforts to enhance the global presence of the Kentucky Derby [50] Other Important Information - The company announced a new common stock repurchase program of up to $500 million, reflecting confidence in future growth [36] - The federal tax bill is expected to reduce cash taxes by $50 million to $60 million in 2025, with similar benefits anticipated for 2026 [37][56] Q&A Session Summary Question: Expectations around pricing at the Starting Gate Pavilion - Management expects increased demand and pricing for the Starting Gate Pavilion due to positive word-of-mouth from last year's introduction [40] Question: Discussion on the New Hampshire market - Management indicated that the Salem location is strategically positioned to tap into both New Hampshire and Massachusetts markets, with a strong demographic outlook [44] Question: International attendance and marketing for the Derby - Management noted that thoroughbred racing is a global sport, and efforts are underway to build international connections and sponsorships [50] Question: Impact of the federal tax bill on future cash flow - Management expects similar cash tax savings for 2026 as in 2025, with a focus on strategic capital management and shareholder returns [56][58] Question: Growth potential for HRM properties in Kentucky and Virginia - Management believes there is substantial runway for growth in both states, with strong metrics supporting continued expansion [61] Question: Strategies for driving visitation to The Rose - Management emphasized the importance of building brand awareness and customer relationships in the Northern Virginia market [90]

Financial Data and Key Metrics Changes - The company reported all-time record net revenue of $934 million and adjusted EBITDA of $451 million for the second quarter of 2025, marking the fifth consecutive second quarter of record results [6][26] - Adjusted EBITDA for the Live and Historical Racing segment grew by $17 million or 6% compared to the prior year quarter, driven primarily by HRM growth in Kentucky and Virginia [27][29] - The company generated $455 million or $6.29 per share of free cash flow in the first half of the year, with a reduction in 2025 maintenance capital projection by $10 million to $80 million to $90 million [32][35] Business Line Data and Key Metrics Changes - Churchill Downs Racetrack experienced a slight decline in adjusted EBITDA by $1 million, less than 1%, due to a high prior year comparison from the 150th Kentucky Derby [27] - All HRM properties in Kentucky delivered growth in the second quarter, with particularly strong performance from Northern Kentucky and Louisville venues [28] - The Exacta business contributed over $3 million to adjusted EBITDA growth from both third-party customers and HRM properties [29] Market Data and Key Metrics Changes - Average viewership for the Kentucky Derby broadcast reached nearly 18 million, a 6% increase over 2024, with peak viewership climbing to almost 22 million, up 8% from last year [10] - Social media impressions during Derby Week totaled over 285 million, a 67% increase from 2024 [11] - Wagering on the Derby race was up 11% over last year's all-time high, with Derby Day wagering increasing by 9% [13] Company Strategy and Development Direction - The company plans to grow Derby Week through ticketing revenue, broadcast rights, wagering, sponsorships, and selective renovations [8][15] - A new seven-year contract with NBC will provide a $10 million increase in adjusted EBITDA for 2026, with prime-time coverage for the Kentucky Oaks race expected to enhance visibility and engagement [11][12] - Strategic investments in renovations and expansions at Churchill Downs Racetrack are aimed at elevating guest experiences and broadening appeal [16][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth in Derby Week driven by ticket revenue, strategic investments, and increased wagering [18][24] - The company is focused on building brand awareness and customer relationships in new markets, particularly in Virginia and New Hampshire [19][20] - Management highlighted the importance of capital management and disciplined allocation to support long-term growth [32][35] Other Important Information - The company is targeting to close the acquisition of 90% of the Casino Salem project in New Hampshire in the third quarter, with plans for a state-of-the-art gaming and entertainment destination [21] - The company has retained rights to the associated HRM license in Salem and is evaluating alternative uses for a second HRM license [22] - The company is working on implementing HRM-based electronic table games and has developed a new HRM roulette product [23] Q&A Session Summary Question: Expectations around pricing at the Starting Gate Pavilion - Management expects increased demand and pricing for the Starting Gate Pavilion due to positive reviews and word-of-mouth from last year [38] Question: Discussion around the New Hampshire market - Management indicated that further details will be shared post-transaction closure, emphasizing the strong market demographics and location advantages [41][44] Question: International attendance and marketing for the Derby - Management noted that thoroughbred racing is a global game and emphasized ongoing efforts to build international connections and sponsorships [49][50] Question: Federal tax bill impact on cash flow and capital allocation - Management expects similar cash tax savings for 2026 as in 2025, with a focus on strategic investments and share repurchases when stock value is not reflective of long-term potential [55][56] Question: Growth potential in Kentucky and Virginia HRM markets - Management believes there is substantial runway for growth in both states, with strong metrics supporting ongoing optimism [59] Question: Impact of prediction markets on horse racing - Management does not see prediction markets as a significant risk due to the nature of pari-mutuel wagering and existing legal protections [64][66] Question: Future M&A opportunities in New Hampshire - Management is focused on executing the Salem project but is open to evaluating future opportunities in the region [68] Question: Strategic goals for the Oaks schedule change - The change aims to enhance national visibility for the Oaks and drive attendance and wagering leading into the Derby [72][74] Question: Plans for the area between the First Turn and Sky Terrace - Management confirmed that this area will not disrupt the 2026 Derby and will be detailed in future communications [80] Question: Sponsorship relationships and growth - Management emphasized a strategic approach to sponsorships, focusing on building win-win partnerships and increasing international interest [86]