Churchill Downs rporated(US:CHDN)2025-10-22 20:14Financial Performance - Net revenue for Q3 2025 increased by $54.5 million to $683.0 million compared to $628.5 million in Q3 2024, driven primarily by the Live and Historical Racing segment [132]. - Adjusted EBITDA for Q3 2025 was $262.3 million, up $27.0 million from $235.3 million in Q3 2024 [132]. - For the nine months ended September 30, 2025, net revenue increased by $149.9 million to $2,260.0 million compared to $2,110.1 million in the same period of 2024 [132]. - Adjusted EBITDA for the nine months increased by $35.7 million, driven by a $41.9 million increase from the Live and Historical Racing segment [137]. - Live and Historical Racing revenue increased by $53.3 million for the three months ended September 30, 2025, due to significant growth in Virginia and Kentucky HRM venues [142]. - Wagering Services and Solutions revenue increased by $8.5 million for the three months ended September 30, 2025, primarily from TwinSpires Horse Racing and Exacta [142]. Operating Income and Expenses - Operating income decreased by $27.9 million to $98.0 million in Q3 2025, impacted by a $41.2 million increase in impairment expense [135]. - Operating income for the nine months ended September 30, 2025, decreased by $21.9 million to $560.3 million [132]. - The operating income margin for Q3 2025 was 14%, down from 20% in Q3 2024 [132]. - Total operating expenses increased by $82.4 million for the three months ended September 30, 2025, primarily due to new property openings and expansions [144]. Net Income - Net income attributable to Churchill Downs decreased by $27.3 million to $38.1 million in Q3 2025 compared to $65.4 million in Q3 2024 [132]. - Net income attributable to Churchill Downs Incorporated decreased by $27.3 million for the three months ended September 30, 2025, primarily due to a $31.0 million after-tax increase in impairment charges [137]. - For the nine months ended September 30, 2025, net income decreased by $23.4 million, primarily due to a $33.0 million after-tax increase in impairment charges [137]. Segment Performance - The Live and Historical Racing segment contributed an increase of $52.5 million, attributed to the openings of The Rose Gaming Resort and Owensboro Racing and Gaming [135]. - The Wagering Services and Solutions segment saw a $6.7 million increase, primarily from TwinSpires Horse Racing and Exacta [135]. - The Gaming segment experienced a $4.7 million decrease due to the cessation of HRM operations in Louisiana [135]. - Live and Historical Racing Adjusted EBITDA increased by $41.9 million, driven by a $30.9 million increase from Kentucky HRM venues and an $11.8 million increase from Virginia HRM venues [150]. - Wagering Services and Solutions Adjusted EBITDA rose by $7.0 million, primarily due to a $9.9 million increase from Exacta attributable to incremental HRMs in Virginia and New Hampshire [150]. - Gaming Adjusted EBITDA decreased by $12.7 million, with a $7.0 million decrease from wholly owned gaming properties and a $5.7 million decrease from equity investments [150]. Assets and Liabilities - Total assets increased by $178.9 million, primarily due to the acquisition of gaming rights for Casino Salem and increased capital expenditures [154]. - Total liabilities rose by $203.1 million, mainly driven by an increase in the outstanding balance on the Revolver and increases in income taxes payable [154]. - Total debt increased by $194.1 million, reaching $5,132.8 million as of September 30, 2025 [162]. Cash Flow and Investments - Cash flows from operating activities increased by $32.7 million, attributed to a decrease in cash paid for income taxes and interest [161]. - The company expects project capital investments to be approximately $200.0 to $240.0 million in 2025, subject to timing and unforeseen delays [157]. Stock and Debt Management - The common stock repurchase program approved in July 2025 allows for up to $500.0 million in repurchases, with approximately $461.5 million remaining as of September 30, 2025 [158]. - As of September 30, 2025, the Company had a total of $2.0 billion outstanding under its Credit Agreement, which includes a $1.2 billion revolving credit facility, $286.5 million senior secured term loan B-1, and $1.1 billion senior secured term loan A [163][164][176]. - 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 [164]. - The Company had repayments of principal and interest on the Credit Agreement totaling $841.7 million during the nine months ended September 30, 2025 [168]. Future Obligations and Risks - Estimated contractual payments under the Credit Agreement for the next twelve months are $182.3 million, assuming a weighted average borrowing rate of 5.8% [168]. - The Company has $600.0 million in 5.500% senior unsecured notes maturing on April 1, 2027, and $700.0 million in 4.750% senior unsecured notes maturing on January 15, 2028 [169][170]. - Minimum rent payable under operating leases was $56.0 million as of September 30, 2025, with $7.0 million due in the next twelve months [173]. - A one-percentage point increase in the SOFR rate would reduce net income and cash flows from operating activities by $15.0 million [176]. - The Company is required to pay a commitment fee of 0.25% on the unused portion of the Revolver [167]. - The Company has other contractual obligations with commitments of $10.9 million, of which $1.5 million is due within the next twelve months [174].