Churchill Downs rporated(US:CHDN)2025-07-23 21:27Financial Performance - Net revenue for Q2 2025 increased by $43.7 million to $934.4 million, driven by a $45.2 million increase from the Live and Historical Racing segment due to new venue openings [124]. - Operating income for Q2 2025 decreased by $2.3 million to $327.7 million, primarily due to an $11.1 million decrease from the Gaming segment and increased SG&A expenses [127]. - Adjusted EBITDA for Q2 2025 was $450.9 million, reflecting a $6.1 million increase compared to Q2 2024 [124]. - The operating income margin for Q2 2025 was 35%, down from 37% in Q2 2024 [124]. - Net income attributable to Churchill Downs for Q2 2025 was $216.9 million, an increase of $7.6 million from Q2 2024 [124]. - For the first half of 2025, net revenue increased by $95.4 million to $1,577.0 million compared to the same period in 2024 [124]. - The company reported a $6.0 million increase in operating income for the first half of 2025, totaling $462.3 million [124]. - Net income attributable to Churchill Downs Incorporated increased by $7.6 million for the three months ended June 30, 2025, compared to the same period in 2024, primarily due to lower state tax expenses and operational results [129]. - Adjusted EBITDA rose by $6.1 million for the three months ended June 30, 2025, driven by a $17.3 million increase from the Live and Historical Racing segment, despite a $13.4 million decrease from the Gaming segment [129]. - Total Adjusted EBITDA for the six months ended June 30, 2025, was $696.0 million, reflecting an increase of $8.7 million compared to the prior year [138]. Revenue Segments - The cessation of HRM operations in Louisiana negatively impacted the Gaming segment, resulting in an $8.2 million revenue decrease [127]. - The company opened The Rose Gaming Resort in November 2024 and Owensboro Racing and Gaming in February 2025, contributing to revenue growth [127]. - Net revenue increased by $95.4 million for the six months ended June 30, 2025, with significant contributions from the Live and Historical Racing segment, which saw a $72.6 million increase [130]. - The Live and Historical Racing revenue increased by $50.7 million for the three months ended June 30, 2025, largely due to the opening of The Rose Gaming Resort and growth at Kentucky HRM properties [133]. - Gaming revenue decreased by $8.1 million for the three months ended June 30, 2025, primarily due to the cessation of HRM operations in Louisiana [133]. - The Wagering Services and Solutions revenue increased by $8.5 million for the three months ended June 30, 2025, mainly due to higher Derby Week wagering [133]. Operating Expenses and Income - Operating income increased by $6.0 million for the three months ended June 30, 2025, with notable increases from the Live and Historical Racing and Wagering Services segments [129]. - Total operating expenses increased by $46.0 million for the three months ended June 30, 2025, attributed to new openings and expansions, including the Terre Haute Casino Resort [136]. Impairments and Adjusted EBITDA - The company recorded a $2.4 million impairment charge related to obsolete HRMs in Virginia for the three months ended June 30, 2025 [136]. - Live and Historical Racing Adjusted EBITDA increased by $18.5 million, primarily driven by a $18.5 million increase from Kentucky HRM venues and a $1.0 million increase from Virginia HRM venues, partially offset by a $1.0 million decrease from Churchill Downs Racetrack [143]. - Wagering Services and Solutions Adjusted EBITDA increased by $3.5 million, attributed to a $7.1 million increase from Exacta due to incremental HRMs in Virginia and New Hampshire, partially offset by a $3.4 million decrease from TwinSpires Horse Racing [143]. - Gaming Adjusted EBITDA decreased by $12.7 million, with a $6.6 million decrease from wholly owned gaming properties and a $6.1 million decrease from equity investments [143]. Assets and Liabilities - Total assets increased by $99.8 million, driven by increased capital expenditures at Churchill Downs Racetrack and Virginia HRM locations [147]. - Total liabilities increased by $139.0 million, primarily due to an increase in the outstanding balance on the Revolver and increases in income taxes payable [147]. Cash Flows and Debt - Cash flows from operating activities increased by $14.4 million, driven by a decrease in cash paid for income taxes and interest [153]. - Cash flows used in investing activities decreased by $124.0 million, reflecting a decrease in capital expenditures in 2025 [153]. - Total debt increased by $94.9 million, with the Revolver balance rising to $504.0 million from $377.5 million [154]. - The company expects project capital investments to be approximately $250.0 to $290.0 million in 2025, subject to timing and potential delays [149]. Credit and Lease Obligations - As of June 30, 2025, the company had approximately $184.2 million of repurchase authority remaining under the 2025 Stock Repurchase Program [150]. - The Company closed the seventh amendment of the Credit Agreement, reducing the interest rate margin on Term Loan B-1 by 0.25% to SOFR plus 175 basis points [156]. - As of June 30, 2025, the Company had $686.9 million available borrowing capacity under the Revolver after considering $9.1 million in outstanding letters of credit [158]. - Estimated contractual payments under the Credit Agreement for the next twelve months are $178.0 million, assuming a weighted average borrowing rate of 6.0% [160]. - The Company has $1.9 billion outstanding under its Credit Agreement, with a potential $14.4 million reduction in net income from a one-percentage point increase in SOFR [168]. - Minimum rent payable under operating leases was $36.4 million as of June 30, 2025, with $7.1 million due in the next twelve months [165]. - The Company has $600.0 million in 5.500% senior unsecured notes maturing on April 1, 2027 [161]. - The Company has $700.0 million in 4.750% senior unsecured notes maturing on January 15, 2028 [162]. - The Company has $1.2 billion in 5.750% senior unsecured notes maturing on April 13, 2030 [163]. - The Company has $600.0 million in 6.750% senior unsecured notes maturing on April 25, 2031 [164]. - Other contractual obligations total $10.9 million, with $1.5 million due within the next twelve months [166].