Financial Data and Key Metrics Changes - The company reported a core EPS of $1.40, core return on assets of 1.40%, and core return on tangible common equity of 18.7%, all showing improvement compared to the second quarter [3][4] - Year-over-year, core net income increased by 21%, core PP&R grew by 6%, and core earnings per share rose by 30% [3][4] - Tangible book value per share increased by 12% [4] - Net interest margin expanded by two basis points to 3.91% quarter over quarter [4] Business Line Data and Key Metrics Changes - The wealth and trust business grew by 13% year over year [5] - Core fee revenue was flat quarter over quarter but grew by 5% when excluding strategic exits [4] - Client deposits increased by 1% linked quarter and by 5% year over year, with non-interest deposits growing by 12% year over year [5] Market Data and Key Metrics Changes - Total net credit costs were $8.4 million this quarter, down $5.9 million compared to the prior quarter [7] - Non-performing assets (NPAs) declined by over 30% to 35 basis points, with delinquencies down by 34% [7] Company Strategy and Development Direction - The company intends to maintain elevated levels of buybacks while adjusting the pace based on macroeconomic conditions and business performance [8] - The management is focused on organic growth and is actively recruiting talent in commercial and wealth sectors [52][54] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage margins through deposit repricing and hedging strategies despite potential rate cuts [9][56] - The company plans to provide a full-year 2026 outlook in January, indicating a commitment to high performance [9] Other Important Information - The company returned $56.3 million of capital, including buybacks of $46.8 million, representing 1.5% of outstanding shares [8] - The commercial pipeline remains strong at approximately $300 million [7] Q&A Session Summary Question: What is the base case scenario for achieving the CET1 target? - Management indicated that they are currently buying back approximately 100% of net income and have the capacity to continue this for the next two to three years [15] Question: How are reserve levels being managed amid macro volatility? - Management stated that they are conservatively maintaining reserves due to potential macroeconomic volatility, despite good asset quality trends [18] Question: What is the outlook for the wealth and trust business? - The wealth business is seeing growth in new accounts and transactions, with institutional services up 30% and The Bryn Mawr Trust Company of Delaware up 20% year over year [26][28] Question: How does Cash Connect revenue forecast with changing rates? - Management confirmed that while revenue may decrease with rate cuts, expenses would also reduce, leading to overall profitability benefits [36][37] Question: What is the expected pace of loan payoffs from the consumer partnership? - The company expects a runoff of approximately $15 million to $17 million per month from the Spring EQ portfolio, while home lending is experiencing double-digit growth [42][43]

Financial Data and Key Metrics Changes - The company reported a core EPS of $1.40, core return on assets of 1.40%, and core return on tangible common equity of 18.7%, all showing improvement compared to the second quarter [3] - Year-over-year, core net income increased by 21%, core PP&R grew by 6%, and core earnings per share rose by 30% [3] - Tangible book value per share increased by 12% [4] - Net interest margin expanded by two basis points to 3.91% quarter over quarter [4] Business Line Data and Key Metrics Changes - The wealth and trust business grew by 13% year over year [5] - Core fee revenue was flat quarter over quarter but grew by 5% when excluding strategic exits [4] - Client deposits increased by 1% linked quarter and grew by 5% year over year, with non-interest deposits up by 12% year over year [5] - Loans decreased by 1% linked quarter, but residential mortgage and WSFS-originated consumer loan portfolios saw increases of 5% and 3%, respectively [5][6] Market Data and Key Metrics Changes - The commercial pipeline increased to approximately $300 million, indicating strong demand [6] - Total net credit costs were $8.4 million, down $5.9 million compared to the prior quarter, with net charge-offs at 30 bps [6] Company Strategy and Development Direction - The company plans to maintain elevated buybacks while adjusting the pace based on macroeconomic conditions and business performance [7] - Management emphasized a focus on organic growth and potential acquisitions in both depositories and fee verticals to achieve medium-term CET1 targets [12][14] - The wealth and trust business is expected to continue growing, with a focus on new accounts and transaction activity [25][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage margins through deposit repricing and hedging strategies amid uncertain rate cuts [8][50] - The company plans to provide a full-year 2026 outlook in January, indicating a commitment to high performance [8] Other Important Information - The company returned $56.3 million of capital, including $46.8 million in buybacks, representing 1.5% of outstanding shares [7] - The company has a CET1 ratio of 14.39%, well above the medium-term target of 12% [7] Q&A Session Summary Question: What is the base case scenario for achieving the CET1 target? - Management indicated that they are currently buying back approximately 100% of net income and have the capacity to continue this for the next two to three years, depending on balance sheet dynamics and investment opportunities [12][14] Question: How are reserve levels being managed amid macro volatility? - Management noted that while there is capacity to release some reserves, they are maintaining conservative levels due to potential macroeconomic volatility [16][18] Question: What is the outlook for the wealth and trust business? - The wealth business is seeing growth in new accounts and transactions, with institutional services up 30% and The Bryn Mawr Trust Company of Delaware up 20% year over year [26][28] Question: How does the Cash Connect business forecast profitability amid rate changes? - Management confirmed that while fee revenue may decrease with rate cuts, expenses would also reduce, leading to overall profitability benefits [34][36] Question: What is the expected pace of consumer loan portfolio runoff? - The company expects the Spring EQ portfolio runoff to continue at a pace of $15 million to $17 million per month, while home lending is expected to grow positively [40][41]

Financial Data and Key Metrics Changes - Adjusted diluted earnings per common share was $1.36 compared to an adjusted loss per common share of $0.73 in the prior year quarter, primarily due to a lower net loss ratio, higher net premiums earned, net investment income, and commission revenue [4] - Core revenue reached $400 million, up 4.9% year over year, driven by higher net premiums earned, net investment income, and commission revenue [4] - Direct premiums written were $592.8 million, up 3.2% from the prior year quarter, with a notable 22.2% growth in other states, partially offset by a 2.6% decrease in Florida [4] - Net premiums earned increased to $359.7 million, up 4% from the prior year quarter, attributed to higher direct premiums earned [5] Business Line Data and Key Metrics Changes - The net loss ratio was 70.2%, down 21.5 points compared to the prior year quarter, reflecting the absence of hurricane activity in the current quarter [6] - The combined ratio improved to 96.4%, down 20.5 points from the prior year quarter, indicating better overall operational efficiency [6] - The net expense ratio was 26.2%, up one point compared to the prior year quarter, driven by a higher ceded premium ratio and increased policy acquisition costs [6] Market Data and Key Metrics Changes - The company experienced a 22.2% growth in direct premiums written in states outside Florida, indicating a successful expansion strategy [4] - Florida's market remains competitive with new players entering, but the company maintains a focus on rate adequacy and service quality [11][12] Company Strategy and Development Direction - The company is positioned to succeed in the improved Florida market, with a conservative reserving process aimed at enhancing balance sheet resilience [3] - The management emphasizes maintaining a conservative approach to reserving and capital management, with potential share repurchase activity as a priority [14] Management's Comments on Operating Environment and Future Outlook - Management noted a significant reduction in claims count and faster claims processing, contributing to a positive outlook for the future [9] - The competitive environment is described as highly competitive, particularly outside Florida, but the company remains committed to its established market strategies [11][12] Other Important Information - The company repurchased approximately 347,000 shares at an aggregate cost of $8.1 million, with $7.1 million remaining in the current share repurchase authorization program [7] - A quarterly cash dividend of $0.16 per share was declared, payable on August 9, 2025 [7] Q&A Session Summary Question: Insights on reserving and profit margins - Management indicated that they have come through a challenging period in the Florida market and are optimistic about their reserving philosophy moving forward [9][10] Question: Competitive environment in Florida - Management acknowledged the competitive nature of the Florida market with new entrants but emphasized their focus on rate adequacy and service quality [11][12] Question: Capital management priorities - Management expressed confidence in share repurchases as part of their capital management strategy, contingent on market conditions [14]

Financial Data and Key Metrics Changes - The company reported net income available to common shareholders of $20.1 million, or $0.99 per diluted share for Q3 2025, reflecting strong financial results [4] - Return on average assets (ROAA) and return on average equity (ROAE) improved to 132 basis points and 13.31% respectively, both up notably from previous periods [5] - Full-year 2025 guidance for ROAA was revised to exceed 115 basis points, up from 110 basis points, and ROAE to greater than 12%, up from 11.25% [5] Business Line Data and Key Metrics Changes - Loan growth was reported at 1.2%, driven by commercial lending, while total deposits increased by 3.9% [4] - Total commercial loans reached approximately $3 billion, reflecting a 1.6% increase from the previous quarter and an 8.3% increase year-over-year [6] - Consumer indirect loan balances increased by 0.6% from the previous quarter but were down 4.1% year-over-year [8] Market Data and Key Metrics Changes - The company experienced strong commercial growth in upstate New York, particularly in the Syracuse region due to Micron Technologies' investment [8] - Residential lending showed modest growth, with mortgage and home equity applications up 12% and 11% year-over-year respectively [9] Company Strategy and Development Direction - The company aims for profitable organic growth and anticipates raising profitability targets for 2026 [21] - A focus on maintaining a strong balance sheet and managing funding costs is evident, with expectations for incremental margin improvement in 2026 [15][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the opportunities ahead, citing strong performance and a healthy pipeline for future growth [21] - The company is preparing for potential rate cuts and expects to manage margins effectively in 2026 [24] Other Important Information - Non-interest income was reported at $12.1 million, up 13.6% from the previous quarter, driven by various revenue streams [16] - The efficiency ratio for the year-to-date was about 58%, indicating strong revenue growth relative to expenses [19] Q&A Session Summary Question: Outlook on margin and potential rate cuts - Management indicated that while margins may see a modest decline in Q4, they expect a recovery in 2026 as new loan production and cost management take effect [24][25] Question: Thoughts on share buyback activity - Management expressed satisfaction with the board's approval of the buyback, viewing it as a means to support share value [26] Question: Loan growth expectations for 2026 - Management conveyed optimism about achieving mid-single-digit growth rates in loans as they build their financial plan for 2026 [27]

Financial Data and Key Metrics Changes - Lending has grown 4.4% since year-end to £388 billion, consistent with an annual growth rate of over 4% over the past six years [3][6] - Income increased to $12.1 billion, a 12.5% rise compared to the first nine months of the previous year [5][6] - Costs rose by 2.5% to €5.9 billion, resulting in an operating profit of €5.8 billion and an attributable profit of €4.1 billion [5][6] - Return on tangible equity was reported at 19.5% [5][6] - Earnings per share grew by 32.4% year-on-year, and TNAV per share increased by 14.6% to 3.62p [7] Business Line Data and Key Metrics Changes - Mortgage lending increased by over £5 billion for the first nine months, with new offers for first-time buyers and family-backed mortgages [3][4] - Unsecured lending grew by £2.9 billion or 17.3%, aided by the integration of recently acquired Sainsbury's customers [3][4] - Commercial and institutional lending grew by €7.9 billion or 5.5%, particularly in infrastructure and sustainable finance [4][5] - Non-interest income rose due to higher fees from payments, cards, and strong performance in currencies and capital markets [5][10] Market Data and Key Metrics Changes - Deposits grew by 0.8% to $435 billion, reflecting a balance between volume and value in a competitive market [4][5] - Retail banking deposit balances decreased by £800 million, while private banking balances fell by £700 million due to shifts into investments [13][14] - Commercial institutional deposits saw a slight increase of £400 million [13] Company Strategy and Development Direction - The company is focused on disciplined growth, simplification, and effective balance sheet management [2][19] - A new share buyback of $750 million was announced, with 50% already executed [6] - The company aims to support customers while investing in business growth and delivering attractive returns to shareholders [6][19] Management's Comments on Operating Environment and Future Outlook - Management noted that despite inflation above the Bank of England's target, the economy is growing with low unemployment and high levels of savings [2] - Full-year income guidance was revised to around €16.3 billion, with expected returns greater than 18% [6][11] - The company remains confident in its ability to manage costs and maintain a healthy cost profile moving forward [41][42] Other Important Information - The CET1 ratio at the end of Q3 was 14.2%, with strong capital generation allowing for continued investment and shareholder returns [6][17] - The company expects to complete the buyback by the full-year results [6] Q&A Session Summary Question: Deposit momentum and non-interest income drivers - Management indicated that deposits are up around £3.5 billion year-to-date, with different trends across business lines [25][30] - Non-interest income showed strong momentum, particularly in cards, payments, and capital markets [30] Question: Cost growth expectations - Management reiterated cost guidance for the year, emphasizing ongoing simplification efforts and cost management [40][41] Question: Capital and CRD impact - Limited CRD4 impact was noted for Q3, with expectations for more material impacts in Q4 [44][45] Question: Loan growth sustainability - Management expressed confidence in maintaining strong loan growth, particularly in commercial and institutional sectors [72][73] Question: Future return expectations - Management will provide updated return targets in February, with ongoing discussions about capital requirements and growth [90][96]

Financial Data and Key Metrics Changes - Lending has grown 4.4% since the year-end to £388 billion, consistent with an annual growth rate of over 4% over the past six years [3][5] - Income increased to £12.1 billion, representing a 12.5% rise compared to the first nine months of the previous year [4][5] - Operating profit reached £5.8 billion, with attributable profit at £4.1 billion, and return on tangible equity was reported at 19.5% [5][6] - Earnings per share grew by 32.4% year-on-year, and TNAV per share increased by 14.6% to 362 pence [6] Business Line Data and Key Metrics Changes - Mortgage lending increased by over £5 billion for the first nine months, supported by new offers for first-time buyers and family-backed mortgages [3] - Unsecured lending grew by £2.9 billion, or 17.3%, with successful integration of recently acquired Sainsbury's customers [3] - Commercial and institutional lending grew by £7.9 billion, or 5.5%, particularly in infrastructure, social housing, and sustainable finance [3][4] - Deposits increased by 0.8% to £435 billion, reflecting a balance between volume and value in a competitive market [4][11] Market Data and Key Metrics Changes - The bank attracted an additional 70,000 new customers in the quarter, indicating strong customer activity [3] - Assets under management and administration grew by 14.5% to £56 billion, contributing to non-interest income growth [4] Company Strategy and Development Direction - The company is focused on disciplined growth, bank-wide simplification, and effective balance sheet and risk management [2] - A new share buyback of £750 million was announced, with 50% already executed [5] - The company aims to support customers while investing in the business and delivering attractive returns to shareholders [5][15] Management's Comments on Operating Environment and Future Outlook - Management noted that despite inflation being above the Bank of England's target, the economy is growing with low unemployment and wage growth exceeding inflation [2] - The company expects one further base rate cut this year, with rates projected to reach 3.75% by year-end [10] - Full-year income guidance has been revised to around £16.3 billion, with returns expected to exceed 18% [5][10] Other Important Information - The cost-income ratio improved by five percentage points to 47.8%, with operating expenses up 2.5% to £5.9 billion [5][12] - The CET1 ratio at the end of the third quarter was 14.2%, up 60 basis points from the previous quarter [13][14] Q&A Session Summary Question: Deposit momentum and non-interest income drivers - Management indicated that deposits are up around £3.5 billion year-to-date, with different trends across business lines. Retail fixed-term outflows were noted, but current account balances are up [17][18] - Non-interest income showed strong momentum, particularly in cards, payments, and capital markets, with a focus on maintaining this growth [20] Question: Cost growth expectations and capital management - Management reiterated cost guidance for the year, emphasizing ongoing simplification efforts and the potential for cost control despite inflationary pressures [23][24] - Capital management remains a priority, with expectations for CRD4 impacts in Q4 and a focus on maintaining a CET1 ratio above 13% [28][30] Question: Loan growth sustainability and income drivers - Management expressed confidence in maintaining loan growth above market levels, with a strong track record across all business lines [48][55] - Future income growth is expected to continue, supported by strong customer demand and effective capital deployment [37][41] Question: Non-interest income and market performance - The strong performance in NatWest markets is attributed to strategic integration and robust customer demand, with expectations for continued performance despite market volatility [44][46] Question: Liquidity management and deposit outflows - Management acknowledged a rotation in liquidity from cash to government bonds, with a focus on maintaining a balanced portfolio [79][82]

Financial Data and Key Metrics Changes - The company reported EPS of $0.91 and net income of $35 million for Q3 2025, with ROE and ROA at 1.42%, up 10 basis points from Q2 [6] - PPNR increased to 1.89%, up 16 basis points, aided by NIM expansion to 3.93%, which rose by five basis points [6][8] - Tangible book value grew by more than 3% this quarter, indicating strong capital levels and flexibility for acquisitions and share buybacks [5][15] Business Line Data and Key Metrics Changes - Total loan balances grew by $47 million or 2.3% annually, primarily driven by commercial real estate (CRE) activities, which saw an increase of $133 million [9] - Consumer loan activity grew by $37 million or approximately 6% annualized, while commercial and industrial (C&I) balances declined by $46 million due to higher payoffs and seasonal reductions [10][11] - Non-interest-bearing deposits represented 28% of total deposits, contributing to net interest income and margin improvements [5][8] Market Data and Key Metrics Changes - The company experienced a slight increase in non-performing assets (NPAs) to 62 basis points of total loans, which remains within an acceptable range [11] - The allowance for credit losses decreased by one basis point, indicating a stable credit risk environment [11] Company Strategy and Development Direction - The company aims for organic growth to exceed $10 billion in the coming quarters, focusing on enhancing its deposit franchise and managing asset sensitivity [5][6] - Strategic initiatives have been implemented to position the company for long-term success, including a focus on improving productivity and leveraging technology [4][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the current strong performance and future growth, despite some uncertainty in the market due to budget impasses [18][50] - The company anticipates mid-single-digit loan growth in Q4, supported by strong CRE activity and a focus on improving C&I growth [10][18] Other Important Information - The company has a share repurchase authorization in place for $50 million, indicating a commitment to returning value to shareholders [15] - Management highlighted the importance of maintaining a strong deposit mix and proactive pricing strategies in response to competitive pressures [28][53] Q&A Session Summary Question: Loan growth outlook and impact of paydowns - Management noted that paydowns were higher than expected, impacting overall loan growth, but CRE activity remains strong with expectations for better growth in Q4 [17] Question: Margin stability amid Fed cuts - Management believes they are well-positioned to handle potential rate cuts due to their funding mix and ability to adjust deposit rates [19] Question: M&A activity and geographic preferences - Conversations regarding M&A remain active, with interest in expanding into faster-growing areas beyond current markets [22][66] Question: Competition and deposit betas - Increased competitive pressure was noted following recent rate cuts, particularly on CDs, but management expects to stabilize margins through effective pricing strategies [27][28] Question: Credit quality and specific exposures - Management reassured that credit quality remains stable, with no significant concerns in specific asset classes or geographies [49][65]

Financial Data and Key Metrics Changes - Earnings per share increased by 30% year-over-year, with a return on tangible equity of 20% [3] - Net interest income rose to $600 million, up $22 million from the previous quarter, driven by a tax equivalent margin of 4.06% [6][8] - Charge-offs were reported at 27 basis points for the quarter, with year-to-date charge-offs at 12 basis points [4][8] Business Line Data and Key Metrics Changes - Loan production reached nearly $3.4 billion, with a 67% increase in loan production in Texas and Colorado since the first quarter [3] - Commercial and industrial lending saw a 9% linked quarter annualized growth, while residential growth was about 6% [19][20] - Non-interest income increased to $99 million from $87 million, with capital markets contributing significantly [36] Market Data and Key Metrics Changes - The company identified approximately $90 billion in overlapping deposits in the Southeast, Texas, and Colorado, indicating potential growth opportunities [5] - The loan pipeline in Texas grew from $800 million to $1.2 billion, with Florida and Atlanta also showing significant pipeline growth [20] Company Strategy and Development Direction - The company is focused on organic growth and recruiting efforts in response to market disruptions, rather than pursuing M&A opportunities [63] - Strategic planning is underway, considering deregulation and market opportunities, with a focus on enhancing the sales force [4][5] Management's Comments on Operating Environment and Future Outlook - Management anticipates mid-single-digit loan growth for the remainder of 2025, with potential acceleration into 2026 [19] - The company is optimistic about capitalizing on market disruptions and is focused on recruiting talented bankers [5][22] Other Important Information - The company redeemed $405 million in subordinated debt late in the quarter, which is expected to positively impact net interest margin [6][7] - The tangible book value per share increased to $54.48, reflecting strong capital levels despite the merger's dilutive impact [8] Q&A Session Summary Question: Margin dynamics and future rate cuts - Management discussed the impact of higher accretion and the expectations for future rate cuts, indicating a potential deposit beta of around 27% [11][12][43] Question: Loan growth environment - Management guided for mid-single-digit growth, with a focus on commercial and industrial lending as the primary growth driver [19][20] Question: Credit quality and charge-offs - A significant charge-off was attributed to a specific credit, with management expressing confidence in the overall portfolio quality [27][28] Question: Capital management and buyback strategy - The company is maintaining a CET1 ratio of 11.5% and is considering share repurchases as part of its capital management strategy [29] Question: Non-interest income outlook - Management provided insights into the strong performance of correspondent banking services and projected a more stable run rate for non-interest income [36][37] Question: Future expense guidance - The company expects expenses to remain in the $345 million-$350 million range for the fourth quarter, with a focus on cost control [71]

Financial Data and Key Metrics Changes - The company achieved record net revenue and record adjusted EBITDA for the third quarter of 2025, with the live and historical racing segment also reaching record levels [5][22] - The live and historical racing segment grew revenue by 21% and adjusted EBITDA by 25% compared to the prior year quarter, marking the 21st consecutive quarter of record growth for this segment [22] - Free cash flow generated was $166 million, or $2.34 per share, representing a 13% increase from the prior year quarter [25][26] Business Line Data and Key Metrics Changes - The regional gaming properties performed well, with adjusted EBITDA increasing over $3 million, and margins up 1.1 points compared to the prior year quarter [25] - The Rose gaming venue in Virginia showed significant growth, with gaming revenues increasing and a strong customer database being built [14][15] - The Exacta business benefited from the growth of HRM operations in Kentucky and Virginia, contributing to record adjusted EBITDA for the Wagering Services and Solutions segment [24] Market Data and Key Metrics Changes - The company is expanding its international reach with the addition of three new points races in Dubai and Saudi Arabia, enhancing the quality of the international pathway to the Kentucky Derby [10] - Virginia has proven to be a strong investment environment, with 4,875 HRMs deployed and continued growth in gaming revenue [15][16] Company Strategy and Development Direction - The company is focused on five key growth catalysts for the Kentucky Derby, including ticketing revenue, broadcast rights, wagering, sponsorships, and selective renovations [7][11] - A significant investment of $280 to $300 million is planned for the construction of a new venue called Victory Run, aimed at enhancing the guest experience during Derby Week [12][13] - The company is committed to maintaining a disciplined capital management strategy while balancing share repurchases and project investments [27][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of the Kentucky Derby and HRM properties, citing strong customer engagement and market expansion [20][22] - The company anticipates continued improvement in margins and performance as it drives better awareness and customer engagement in its venues [61] - Management acknowledged the challenges posed by illegal gaming machines in Virginia but noted strong enforcement and progress in addressing these issues [70][72] Other Important Information - The Board of Directors approved a 7% increase in dividends, marking the 15th consecutive year of increased dividends per share [27] - The company expects to spend $200 to $240 million on project capital in 2025, with a focus on strategic investments in its flagship assets [26][28] Q&A Session Summary Question: ROI targets for Victory Run - The company targets a 20% unlevered IRR focused on year three for the Victory Run project [32] Question: Prospective opportunity for ETGs - Management sees electronic table games as an important opportunity but is cautious about predictions due to regulatory factors [36][37] Question: Capital allocation and leverage - The company is committed to reducing leverage below 4 times next year while balancing share repurchases and capital investments [40] Question: Benefits of owning properties outright - Owning real estate provides stability and predictability, which management believes is not fully recognized in the market [42][43] Question: M&A environment - There has been a recent pickup in M&A activity, and the company remains flexible in its approach to acquisitions [46][48] Question: Emerging landscape of prediction markets - The company plans to approach prediction market operators to explain the legal framework governing horse racing wagering [66][67] Question: Illegal machines in Virginia - Management reported strong enforcement against illegal machines and believes the situation is under control [70][72]

Financial Data and Key Metrics Changes - The company reported record net revenue and record adjusted EBITDA for the third quarter of 2025, with the live and historical racing segment also achieving record net revenue and adjusted EBITDA, growing revenue by 21% and adjusted EBITDA by 25% compared to the prior year quarter [5][22][20] - Free cash flow generated was $166 million, or $2.34 per share, representing a 13% increase from the prior year quarter [25][26] - The bank covenant net leverage was reported at 4.1x, with expectations to remain at this level by year-end and drop below 4x in 2026 [28] Business Line Data and Key Metrics Changes - The live and historical racing segment achieved its 21st consecutive quarter of record growth in revenue and adjusted EBITDA [22] - The regional gaming properties performed well, with adjusted EBITDA increasing over $3 million, and margins up 1.1 points compared to the prior year quarter [25] - The Exacta business saw growth driven by the expansion of HRM operations in Kentucky and Virginia, as well as third-party relationships [18][24] Market Data and Key Metrics Changes - The company is expanding its HRM entertainment venues, with the eighth venue set to open in Calvert City in Q1 2026, and significant growth in Virginia's gaming revenues [14][15] - The Rose venue in Virginia showed strong growth, with gaming revenues increasing and a strong customer database being built [15][22] - The company completed the acquisition of a 90% interest in the Casino Salem project in New Hampshire, which is expected to enhance its market presence [16] Company Strategy and Development Direction - The company outlined five key growth catalysts for the Kentucky Derby, including ticketing revenue, broadcast rights, wagering, sponsorships, and selective renovations [7][9][11] - A significant investment of $280 million-$300 million is planned for the construction of a new venue called Victory Run, aimed at enhancing customer experience [12][13] - The company is focused on maintaining a disciplined capital allocation strategy while balancing share repurchases and project investments [40][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of the Kentucky Derby and HRM properties, citing strong customer engagement and market expansion [20][22] - The company is optimistic about the future of electronic table games (ETGs) as a growth opportunity, although regulatory approvals are still pending [36][37] - Management noted that the current economic environment, including government shutdown discussions, has not significantly impacted operations [60] Other Important Information - The Board of Directors approved a 7% increase in dividends, marking the 15th consecutive year of increased dividends per share [27] - The company anticipates a favorable impact on free cash flow due to recent tax revisions, estimating a reduction in cash tax payments of $50 million-$60 million in both 2025 and 2026 [28] Q&A Session Summary Question: ROI targets for Victory Run - The company targets a 20% unlevered IRR focused on year three for the Victory Run project [32] Question: Prospective opportunity for ETGs - Management acknowledged the importance of ETGs and is focused on regulatory approval, viewing it as a significant opportunity [36][37] Question: Capital allocation strategy - The company is committed to reducing leverage below 4x next year while balancing share repurchases and capital investments [40] Question: Benefits of owning properties outright - Owning real estate provides stability and predictability, which management believes is not fully recognized in the market [42][43] Question: M&A environment - Management noted a recent pickup in M&A activity and remains flexible in pursuing opportunities [46][48] Question: The Rose's margin ramp and government shutdown impact - Management is optimistic about The Rose's growth and does not foresee significant impact from the government shutdown discussions [60] Question: Illegal gaming machines in Virginia - Management reported strong enforcement against illegal machines and believes it has not materially affected their business [70][72]