Churchill Downs rporated(US:CHDN)2021-07-27 16:00Financial Performance - For the quarter ended June 30, 2021, net revenue increased to $515.1 million, up $330.0 million from $185.1 million in the same quarter of 2020[112]. - Operating income for the same period was $135.4 million, compared to a loss of $0.4 million in Q2 2020, reflecting a margin of 26%[112]. - Net income from continuing operations was $108.3 million, a significant increase from a loss of $23.6 million in the prior year[112]. - Adjusted EBITDA for the quarter reached $233.3 million, up from $30.1 million in Q2 2020, indicating a growth of $203.2 million[112]. - Net revenue increased by $330.0 million to $515.1 million for the three months ended June 30, 2021, compared to the same period in 2020, driven by increases in Live and Historical Racing, Gaming, and TwinSpires[113]. - Operating income increased by $135.8 million, resulting in a total operating income of $135.8 million for the three months ended June 30, 2021, primarily due to increased net revenue and operating efficiencies[113]. - Net income from continuing operations increased by $131.9 million, leading to a total net income of $131.9 million for the quarter, influenced by operational results and equity income from unconsolidated affiliates[115]. - Adjusted EBITDA rose by $203.2 million, totaling $203.2 million for the quarter, primarily due to increased operating efficiencies and the running of the 147th Kentucky Oaks and Derby[115]. - Net income attributable to Churchill Downs Incorporated increased by $227.1 million, totaling $227.1 million for the quarter, due to the increase in net income from continuing operations and a decrease in net loss from discontinued operations[115]. Revenue Segments - Live and Historical Racing revenue increased by $160.2 million, totaling $190.5 million for the quarter, largely due to the running of the 147th Kentucky Oaks and Derby[118]. - Gaming revenue increased by $148.7 million, totaling $186.0 million for the quarter, primarily due to the temporary suspension of operations in the prior year[119]. - TwinSpires revenue increased by $14.2 million, totaling $135.9 million for the quarter, driven by an increase in handle of $50.9 million, or 8.9%, in Horse Racing[119]. - Live and Historical Racing revenue increased by $195.8 million, driven by a $97.5 million increase at Churchill Downs Racetrack due to the running of the 147th Kentucky Oaks and Derby[120]. - TwinSpires revenue rose by $44.9 million, with Horse Racing net revenue increasing by $164.2 million, or 18.3%, attributed to a shift towards online wagering[120]. - Gaming revenue increased by $155.3 million, primarily due to the prior year's temporary suspension of operations across all Gaming properties[120]. Expenses and Costs - The company experienced a $17.1 million increase in selling, general, and administrative expenses, primarily due to an increase in accrued bonuses[116]. - Total expenses for the three months ended June 30, 2021, were $379.7 million, an increase of $194.2 million compared to the same period in 2020[122]. - Taxes and purses increased by $96.3 million, influenced by the temporary suspension of operations in the prior year and the opening of new facilities[122]. - Marketing and advertising expenses rose by $20.3 million, driven by increased marketing efforts related to the Kentucky Oaks and Derby[126]. - Salaries and benefits expense increased by $24.4 million, reflecting the impact of the temporary suspension of operations in the prior year and new facility openings[126]. - Other operating expenses increased by $23.2 million, primarily due to the temporary suspension of operations in the prior year and the running of the Kentucky Oaks and Derby[126]. - TwinSpires Adjusted EBITDA decreased by $9.1 million, primarily due to a $10.8 million increase in losses from the Sports and Casino business, offset by a $1.7 million increase in Horse Racing EBITDA[133]. - Gaming Adjusted EBITDA increased by $156.1 million, driven by a $93.9 million increase at wholly-owned Gaming properties and a $62.2 million increase from equity investments[133]. Assets and Liabilities - Total assets increased by $284.2 million to $2,970.6 million, primarily due to a $274.8 million increase in cash and cash equivalents[136]. - Total liabilities increased by $333.9 million to $2,653.2 million, driven by a $203.9 million increase in notes payable and a $143.9 million increase in long-term debt[136]. - Total debt increased by $347.6 million to $1,985.3 million, with significant increases in notes payable and long-term debt[142]. - Total shareholders' equity decreased by $49.7 million to $317.4 million, driven by $193.9 million in common stock repurchases[136]. Financing Activities - The Company completed an offering of $600.0 million in aggregate principal amount of 5.50% Senior Unsecured Notes maturing on April 1, 2027, with interest payable semi-annually[145]. - The net proceeds from the 2027 Senior Notes were used to repay the outstanding balance on the Revolver portion of the Credit Agreement[145]. - The Company issued $500.0 million in aggregate principal amount of 4.75% Senior Unsecured Notes maturing on January 15, 2028, with interest payable semi-annually[146]. - The net proceeds from the Existing 2028 Senior Notes were used to repay a portion of the $600.0 million 5.375% Senior Unsecured Notes[146]. - The aggregate principal amount outstanding of the 2028 Senior Notes, including Additional 2028 Notes, is $700 million[146]. Market and Economic Conditions - The Florida Legislature passed a tribal gaming compact allowing sports betting, which could impact Calder operations pending federal approval[107]. - Louisiana approved HRMs in off-track betting facilities, allowing up to 50 machines per location, enhancing the company's market presence[110]. - Maryland's legislation allows for retail sports betting, with a tax rate of 15%, expanding the company's operational landscape[111]. - The Company is exposed to market risks from adverse changes in general economic trends and consumer discretionary spending[151]. - The COVID-19 pandemic has resulted in significant disruptions in economic activity, affecting demand for entertainment and leisure activities[151].