Financial Performance - Net revenue for the three months ended March 31, 2025, was $642.6 million, an increase of $51.7 million compared to $590.9 million in the same period of 2024[113]. - Operating income rose to $134.6 million, up $8.3 million from $126.3 million year-over-year, maintaining an operating income margin of 21%[113]. - Net income attributable to Churchill Downs Incorporated decreased by $3.7 million to $76.7 million compared to $80.4 million in the prior year[113]. - Adjusted EBITDA increased by $2.6 million to $245.1 million, driven by growth in the Live and Historical Racing and Wagering Services segments[113]. - Adjusted EBITDA for the three months ended March 31, 2025, was $245.1 million, an increase of $2.6 million compared to $242.5 million in the same period of 2024[125]. - The company experienced a decrease in net income to $77.2 million for the three months ended March 31, 2025, down from $80.4 million in the same period of 2024[128]. Revenue Segments - The Live and Historical Racing segment generated $276.4 million in revenue, up $27.5 million from $248.9 million in the previous year[117]. - The Gaming segment reported revenue of $267.2 million, an increase of $24.0 million from $243.2 million in the prior year[117]. - The Wagering Services and Solutions segment saw a slight increase in revenue to $115.8 million, up $1.7 million from $114.1 million[117]. - Live and Historical Racing revenue increased by $27.5 million, driven by an $18.2 million increase at Virginia HRM venues and an $8.9 million increase at Kentucky HRM venues[121]. Operating Expenses and Investments - Total operating expenses rose by $43.4 million, primarily due to the openings of Terre Haute Casino Resort and The Rose Gaming Resort[123]. - The company announced project capital investments expected to be between $250.0 million and $290.0 million in 2025, reflecting a temporary pause on certain projects[135]. Assets and Liabilities - Total assets increased by $71.2 million to $7,347.1 million as of March 31, 2025, primarily due to increased capital expenditures[129]. - Total liabilities increased by $81.4 million to $6,254.0 million, driven by increased current deferred revenue related to advance ticket sales[131]. Cash Flow and Debt - Cash flows from operating activities decreased by $8.2 million to $246.5 million for the three months ended March 31, 2025[133]. - Total debt decreased by $31.6 million to $4,907.1 million as of March 31, 2025[139]. - As of March 31, 2025, the Company had a total of $1.8 billion outstanding under its Credit Agreement, which includes a $1.2 billion revolving credit facility, $288.0 million senior secured term loan B-1, and $1.2 billion senior secured term loan A[140][153]. Interest Rates and Lease Obligations - The interest rate margin for the Term Loan B-1 was reduced by 0.25% to SOFR plus 175 basis points as of February 14, 2025[141]. - Minimum rent payable under operating leases was $34.1 million as of March 31, 2025, with $6.7 million due in the next twelve months[150]. - The Company is exposed to a potential $13.4 million reduction in net income and cash flows from operating activities for every one-percentage point increase in the SOFR rate[153]. Stock and Notes - A common stock repurchase program of up to $500.0 million was approved, with approximately $434.6 million of repurchase authority remaining as of March 31, 2025[136]. - The Company has $600.0 million in aggregate principal amount of 5.500% senior unsecured notes maturing on April 1, 2027[146]. - The Company has $700.0 million in aggregate principal amount of 4.750% senior unsecured notes maturing on January 15, 2028[147]. - The Company has $1.2 billion in aggregate principal amount of 5.750% senior unsecured notes maturing on April 13, 2030[148]. - The Company has $600.0 million in aggregate principal amount of 6.750% senior unsecured notes maturing on April 25, 2031[149].

Financial Performance - First quarter 2025 net revenue reached a record $642.6 million, an increase of $51.7 million or 9% compared to $590.9 million in the prior year[5] - Net income attributable to Churchill Downs Incorporated (CDI) was $76.7 million, down $3.7 million or 5% from $80.4 million in the prior year[5] - Adjusted EBITDA for the first quarter 2025 was $245.1 million, up $2.6 million or 1% from $242.5 million in the prior year[5] - Total net revenue for the three months ended March 31, 2025, was $642.6 million, an increase of 8.8% from $590.9 million in the same period of 2024[39] - Net income attributable to Churchill Downs Incorporated for Q1 2025 was $76.7 million, a decrease of 4.6% compared to $80.4 million in Q1 2024[39] - Adjusted net income attributable to Churchill Downs Incorporated for Q1 2025 was $79.9 million, down from $84.7 million in Q1 2024[45] - Basic and diluted net income per share for Q1 2025 was $1.02, compared to $1.09 for Q1 2024[39] - Operating income for Q1 2025 was $134.6 million, an increase from $126.3 million in Q1 2024[39] - Net income for the three months ended March 31, 2025, was $77.2 million, a decrease of 3.9% from $80.4 million in 2024[55] - Adjusted EBITDA for the same period was $245.1 million, up 1.1% from $242.5 million in 2024[55] - Total segment Adjusted EBITDA increased to $266.8 million in 2025 from $263.2 million in 2024, with Gaming segment contributing $123.5 million[55] Revenue Segments - Revenue from Live and Historical Racing segment increased to $276.4 million, up $27.5 million or 11% from $248.9 million in the prior year[8][9] - Revenue from Wagering Services and Solutions segment increased to $115.8 million, up $1.7 million or 1.5% from $114.1 million in the prior year[11] - Gaming segment revenue increased to $267.2 million, up $24.0 million or 9.9% from $243.2 million in the prior year[15][16] - Total Live and Historical Racing revenue reached $272.5 million in Q1 2025, up from $245.1 million in Q1 2024, reflecting an increase of 11.0%[51] - Total Gaming revenue increased to $263.2 million in Q1 2025, compared to $239.2 million in Q1 2024, marking a growth of 10.0%[51] - The company reported a total of $106.9 million in Wagering Services and Solutions revenue for Q1 2025, consistent with $106.6 million in Q1 2024[51] - Historical racing revenue was $236.4 million in Q1 2025, up from $212.1 million in Q1 2024, representing an increase of 11.4%[51] Shareholder Returns and Capital Management - A new $500 million share repurchase program was approved by the Board of Directors in March 2025, with $89.4 million of shares repurchased in the first quarter[5][22] - The company ended the first quarter of 2025 with net bank leverage of 4.0x and returned $119.5 million to shareholders through share repurchases and dividends[5] Assets and Liabilities - Total current assets increased to $452.4 million as of March 31, 2025, from $412.3 million at the end of 2024[41] - Total assets rose to $7,347.1 million as of March 31, 2025, compared to $7,275.9 million at the end of 2024[41] - Total liabilities increased to $6,254.0 million as of March 31, 2025, from $6,172.6 million at the end of 2024[41] - Cash and cash equivalents at the end of Q1 2025 were $271.2 million, up from $222.0 million at the end of Q1 2024[43] - Long-term debt as of March 31, 2025, was $816.5 million, down from $839.8 million at the end of 2024[57] - Total liabilities and members' deficit remained stable at $698.1 million as of March 31, 2025, compared to $693.6 million at the end of 2024[57] Expenses - The company’s marketing and advertising expenses were $23.4 million in Q1 2025, slightly higher than $18.3 million in Q1 2024[53] - Salaries and benefits expenses increased to $85.1 million in Q1 2025 from $72.7 million in Q1 2024, a rise of 17.0%[53] New Developments - The company opened Owensboro Racing and Gaming in February 2025, featuring 600 historical racing machines and a retail sportsbook[5] - Planned capital expenditures for 2025 are estimated between $250 million and $290 million, including $75-85 million for the Starting Gate Pavilion and Courtyard project[59] - The company plans to expand its Richmond HRM venue with a budget of $30-35 million, targeted for completion in Q3 2025[59] Other Financial Metrics - The company experienced a $6.7 million after-tax decrease in other recoveries, primarily driven by insurance claim proceeds recorded in the prior year quarter[24] - Net revenue from equity investments was $205.3 million, down 5.8% from $216.9 million in 2024[57] - Operating income from equity investments decreased to $68.8 million, a decline of 9.1% compared to $75.7 million in 2024[57] - Current assets increased to $103.5 million as of March 31, 2025, compared to $100.5 million at the end of 2024[57] - Pari-mutuel taxes and purses for Q1 2025 amounted to $90.9 million, compared to $81.9 million in Q1 2024, reflecting an increase of 11.0%[53] - The company reported equity in income of unconsolidated affiliates at $43.2 million for Q1 2025, compared to $47.5 million in Q1 2024[53]

Core Points - Churchill Downs Incorporated (CDI) announced renovations for the Finish Line Suites and The Mansion at Churchill Downs Racetrack, expected to be completed by April 2026 [1][3] - CDI has decided to pause the development of The Skye, Conservatory, and Infield projects due to uncertainties in construction costs and macro-economic conditions [1][4] - The renovations will enhance the existing 15 suites, increasing capacity to 750 guests, and will also improve the Trophy Room with updated finishes and a new feature bar [2][3] Financial Aspects - CDI plans to invest approximately $25-30 million in the renovation projects for the Finish Line Suites and The Mansion [3] Strategic Decisions - The decision to pause the Skye Terrace and Infield projects was made to maintain financial discipline in light of recent economic changes, despite the desire to meet fan expectations [4] - CDI remains committed to long-term growth and providing unique experiences for guests while ensuring best-in-class shareholder returns [4] Company Background - CDI has been creating entertainment experiences for over 150 years, with a focus on live and historical racing, online wagering, and regional casino gaming properties [7]

Company Highlights - Churchill Downs Incorporated reported record net revenue of $642.6 million for Q1 2025, an increase of $51.7 million or 9% compared to Q1 2024 [6][3] - Net income attributable to CDI was $76.7 million, down $3.7 million or 5% from the prior year [6][20] - Adjusted EBITDA reached a record $245.1 million, up $2.6 million or 1% year-over-year [6][3] Segment Results Live and Historical Racing - Revenue for Live and Historical Racing was $276.4 million in Q1 2025, up from $248.9 million in Q1 2024 [5][3] - Adjusted EBITDA for this segment was $102.0 million, slightly up from $100.8 million in the previous year [5][3] Wagering Services and Solutions - Revenue increased to $115.8 million in Q1 2025 from $114.1 million in Q1 2024 [9][3] - Adjusted EBITDA rose to $41.3 million, compared to $39.6 million in the prior year [9][3] Gaming - Gaming revenue increased to $267.2 million in Q1 2025, up from $243.2 million in Q1 2024 [12][3] - Adjusted EBITDA for the Gaming segment was $123.5 million, slightly up from $122.8 million [12][3] All Other - Revenue from All Other segments was $2.0 million in Q1 2025, compared to a loss of $21.7 million in Q1 2024 [16][3] - Adjusted EBITDA decreased to a loss of $21.7 million from a loss of $20.7 million in the previous year [16][3] Capital Management - The Board of Directors approved a new $500 million share repurchase program in March 2025 [18][19] - The company repurchased 798,250 shares at a total cost of $89.4 million in Q1 2025 [19][3] - As of March 31, 2025, the company had approximately $434.6 million of repurchase authority remaining under the 2025 Stock Repurchase Program [19][3] Financial Position - The company ended Q1 2025 with net bank leverage of 4.0x and returned $119.5 million of capital to shareholders through share repurchases and dividends [6][3] - The total assets of the company as of March 31, 2025, were $7,347.1 million, compared to $7,275.9 million at the end of 2024 [37][3]

Core Viewpoint - Churchill Downs (CHDN) is expected to report a quarterly earnings per share (EPS) of $1.08, reflecting a 4.4% decline year-over-year, while revenues are forecasted to increase by 9.5% to $647.14 million [1] Earnings Estimates - The consensus EPS estimate has been revised down by 0.1% over the last 30 days, indicating a collective reevaluation by analysts [2] - Changes in earnings estimates are crucial for predicting investor reactions, with empirical studies showing a strong correlation between earnings estimate revisions and short-term stock performance [3] Revenue Projections - Analysts estimate 'Revenue- Live and Historical Racing' to reach $278.47 million, a year-over-year increase of 13.6% [5] - The 'Revenue- Gaming' is projected at $268.62 million, reflecting a 12.3% increase compared to the previous year [5] Adjusted EBITDA Estimates - The consensus for 'Adjusted EBITDA- Gaming' is $123.70 million, slightly up from $122.80 million reported in the same quarter last year [5] - For 'Adjusted EBITDA- Live and Historical Racing', the estimate is $108.17 million, compared to $100.80 million from the previous year [6] Stock Performance - Shares of Churchill Downs have decreased by 9.6% over the past month, underperforming the Zacks S&P 500 composite, which declined by 5.6% [7] - The company holds a Zacks Rank 5 (Strong Sell), indicating expectations of underperformance in the near future [7]

Core Insights - The House Edge is recognized as a unique marketplace service in the casino, gaming, and online sports betting sectors, providing superior returns through in-depth research and industry insights [1][2] Company Insights - Howard Jay Klein, with 30 years of experience in major casino operations, leads The House Edge and focuses on value investing by assessing management quality [2] - Klein's background includes significant roles at Ballys, Trump Taj Mahal, Mohegan Sun, and Caesars Palace, contributing to his extensive knowledge of the industry [2] Industry Insights - The House Edge leverages a vast intelligence network across the US gambling and entertainment sectors, including insights from various levels of employees and management [2]

Group 1: Share Buyback Programs - Several major firms have announced significant new share buyback programs as Q1 2025 concludes, with three stocks having buyback capacity of 8% or more of their market capitalizations [1] - Applied Materials has authorized a $10 billion share buyback program, bringing its total buyback capacity to $17.6 billion, which is nearly 14% of its $126 billion market capitalization [1] - Churchill Downs has approved a $500 million share repurchase program, resulting in a total buyback capacity of $626 million, approximately 8% of its $8 billion market capitalization [6] - DICK'S Sporting Goods announced a $3 billion share buyback program, giving it a total buyback capacity of approximately $3.51 billion, equal to 22% of its nearly $16 billion market capitalization [11][12] Group 2: Dividend Increases - Applied Materials announced a significant dividend increase of 15%, raising the payment to $0.46 per share, with a yield of 1.2% [4] - DICK'S Sporting Goods also raised its dividend by 10%, planning to pay a total of $4.85 over the next four quarters, resulting in a dividend yield of 2.5% [14] Group 3: Financial Performance and Metrics - Applied Materials has repurchased $4.4 billion worth of shares over the last four quarters, but the timing of these purchases was not optimal as the current share price is 19% lower than the average repurchase price of $192 [2][3] - Churchill Downs has repurchased $216 million worth of shares in the last 12 months, which is moderately above its average repurchase pace of $187 million over the past decade [7] - DICK'S Sporting Goods spent $268 million on share buybacks in fiscal 2024, below its average annual buyback pace of $430 million over the past 10 years, with the current share price being 8% lower than the average price paid for shares [13]

Core Viewpoint - Churchill Downs Incorporated (CDI) will release its first quarter 2025 financial results on April 23, 2025, after market close, followed by a conference call on April 24, 2025, at 9 a.m. ET [1] Financial Results Announcement - The financial results will be accessible through a news release on CDI's website [3] - An online replay of the conference call will be available by noon ET on April 24, 2025 [2] 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]

Core Points - Churchill Downs Incorporated ("CDI") announced a new $500 million share repurchase program, replacing the previous program authorized in September 2021, which had an unused authorization of $125.6 million as of March 12, 2025 [1] - The new share repurchase program allows for repurchases at management's discretion, either in the open market or through privately negotiated transactions, and has no time limit [1] Company Overview - CDI has been creating entertainment experiences for over 150 years, with the Kentucky Derby being its most iconic asset [2] - 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 [2]

Financial Data and Key Metrics Changes - Churchill Downs Incorporated achieved record net revenue and adjusted EBITDA for 2024, with net revenue increasing by 11% and adjusted EBITDA rising by 13% compared to 2023 [11][42] - The company generated nearly $1.2 billion in adjusted EBITDA, with HRM venues in Virginia contributing 20% to this figure [31][44] - Free cash flow reached $688 million, representing a 33% increase per share over the prior year [50] Business Line Data and Key Metrics Changes - All three business segments reported record net revenue and adjusted EBITDA, with significant contributions from the Kentucky Derby and HRM properties [11][42] - The Wagering Services and Solutions segment, previously known as TwinSpires, saw adjusted EBITDA grow by nearly $34 million, primarily from the Exacta business [46][47] - The gaming segment's adjusted EBITDA grew by 4%, driven by the performance of the new Terre Haute property [48] Market Data and Key Metrics Changes - The Rose Gaming Resort opened in Virginia in late 2024, contributing to the growth of HRM operations in the state [31][44] - The company has 1,800 HRMs in the market, with plans to add an additional 400 games by mid-2025 [32][33] - The Owensboro HRM venue opened on February 12, 2025, and is performing well [36] Company Strategy and Development Direction - The company is focused on enhancing the Kentucky Derby experience through significant capital investments and renovations, including the Starting Gate Courtyard and Pavilion project [18][19] - Future projects aim to expand the Derby experience and improve hospitality offerings, with completion expected by 2028 [28][29] - The company plans to pursue disciplined growth in HRM opportunities in Virginia and Kentucky while maintaining a strong balance sheet [38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory of The Rose and the overall HRM market in Virginia, emphasizing the importance of customer education and marketing [34][70] - The company anticipates strong growth in adjusted EBITDA for 2025, driven by new projects and continued success in existing operations [46][50] - Management acknowledged challenges in the regional gaming market but remains focused on identifying growth opportunities [97] Other Important Information - The company repurchased over 160,000 shares in Q4 2024, returning over $218 million to shareholders through buybacks and dividends [53] - Bank covenant net leverage was reported at 4.0 times, with expectations for a decrease in the coming year [54] Q&A Session Summary Question: Thoughts on ROI from announced Derby projects - Management believes they can manage construction projects without disrupting the Derby experience and expects these projects to generate long-term shareholder returns [60][62] Question: The Rose's trajectory and ramp - Management is optimistic about The Rose's performance, noting the importance of patience as the market becomes educated about HRMs [70][72] Question: Five-year payback target for HRM investments - Management confirmed that a five-year payback is a reasonable target for HRM projects, including The Rose, and emphasized the importance of long-term performance [78][80] Question: Confidence in demand for premium Derby seats - Management highlighted trends in consumer behavior favoring experiential events and noted strong demand for premium seating, with plans to expand the customer base [87][90] Question: Future investment in regional gaming - Management evaluates regional gaming opportunities on a case-by-case basis, focusing on growth potential and market dynamics [96][98] Question: Gray market gaming enforcement in Kentucky and Virginia - Management reported progress in enforcing laws against gray market gaming, with ongoing efforts in both states [112][114] Question: Pricing power in a higher inflationary environment - Management indicated that current trends in wage growth and inflation have not significantly impacted pricing power across their businesses [120][121] Question: Trends in Virginia's HRM market - Management expressed confidence in the long-term growth of HRM properties in Virginia, despite short-term challenges [126][127]