March 3, 2026 Forward-Looking Statements Certain statements made in this presentation contain various "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by the use of terms such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "might," "plan," "predict," "project," "seek," "should," "will," "scheduled," and similar words or similar expressions ( ...

Core Insights - The company reported record net revenue and Adjusted EBITDA in 2025, surpassing previous highs set in 2024, driven by strong performance at the Kentucky Derby and expansion in historical racing machines and wagering technology [5][6][7] Regional Gaming Performance - Management noted resilience in the Regional Gaming segment despite challenges such as roadwork and local curfews in Mississippi, with same-store casino margins declining by 0.8 points compared to 2024, primarily due to Mississippi's performance [1] Wagering Services and Solutions - Adjusted EBITDA in the Wagering Services and Solutions segment increased by 7% in 2025, largely attributed to growth in the Exacta business, which was acquired in 2024 for vertical integration of HRM technology [1] Virginia and Kentucky HRM Performance - Virginia's HRM segment achieved record Adjusted EBITDA in 2025, with consistent growth in GGR per unit each quarter [2] - Kentucky's HRM also reached record Adjusted EBITDA in 2025, supported by the opening of Owensboro and strong overall property performance, with statewide gaming revenue growing at a double-digit rate year over year [2] Fourth Quarter Highlights - The fourth quarter of 2025 produced record net revenue and Adjusted EBITDA, marking nine consecutive years of record revenue and Adjusted EBITDA, excluding 2020 [3] CEO's Remarks - The CEO characterized 2025 as "another very strong year," highlighting record Adjusted EBITDA in both the Live and Historical Racing segment and the Wagering Services and Solutions segment [4] Capital Investments and Future Projects - The company is expanding its HRM and technology footprint, planning to invest $180–200 million in the Rockingham Grand Casino, expected to open in mid-2027 [6][12] - The 2025 Kentucky Derby achieved record handle and TV ratings, with expectations of generating an additional $15–20 million in Adjusted EBITDA in 2026 [6][10] Free Cash Flow and Shareholder Returns - Churchill Downs generated a record $700 million in free cash flow in 2025, equating to $9.75 per share, and returned over $456 million to shareholders through share repurchases and dividends [7][20] Regulatory Developments - The company received regulatory approval in Kentucky to introduce electronic table games based on historical horse racing, with initial rollout of roulette ETGs in early February [13] Consumer Trends - Management noted potential consumer tailwinds from federal tax law changes that could increase discretionary income for some customers, including the elimination of taxes on tips and overtime [21]

Financial Data and Key Metrics Changes - The company achieved record net revenue and record Adjusted EBITDA in 2025, surpassing previous records set in 2024 [5][6] - The company generated a record $700 million of free cash flow in 2025, equating to $9.75 per share, following a record year in 2024 [22][24] - The bank covenant net leverage at the end of December 2025 was 4.1 times, with expectations to decrease below 4 times during 2026 [24] Business Line Data and Key Metrics Changes - The Live and Historical Racing segment and the Wagering Services and Solutions segment both delivered record Adjusted EBITDA [6] - The HRM properties in Kentucky generated record Adjusted EBITDA in 2025, supported by the successful opening of Owensboro [18] - The Wagering Services and Solutions segment saw a 7% increase in Adjusted EBITDA in 2025, primarily driven by growth in the Exacta business [20] Market Data and Key Metrics Changes - In Kentucky, statewide GGR grew at a double-digit rate year-over-year, demonstrating strong underlying demand [19] - Virginia's HRM venues also delivered record Adjusted EBITDA, with The Rose showing sequential growth in GGR per unit in every quarter of 2025 [20] - The company expects the Derby to generate $15 million-$20 million of incremental Adjusted EBITDA in 2026 [18] Company Strategy and Development Direction - The company plans to continue growing the Kentucky Derby, with renovations and expansions aimed at enhancing guest experience [10][11] - There are plans to invest $180 million-$200 million to develop Rockingham Casino in Salem, New Hampshire, with an expected mid-2027 opening [13] - The strategy includes expanding the HRM portfolio and enhancing the Exacta technology business, both domestically and internationally [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong momentum entering 2026, driven by the Kentucky Derby and HRM initiatives [16] - The company anticipates a favorable operating environment due to recent federal tax legislation, which may provide a tailwind for both Regional Gaming and HRM businesses [22] - Management highlighted the importance of disciplined capital allocation and operational excellence to drive long-term shareholder value [24] Other Important Information - The company repurchased over 4.2 million shares and returned over $456 million through share repurchases and dividends in 2025 [24] - The company is focused on responsible growth and careful rollout of new products, such as electronic table games [75] Q&A Session Summary Question: Insights on early pricing and demand trends for Derby 152 - Management noted strong ticket sales and positive trends heading into the Derby, with expectations for strong sponsorships and wagering [29] Question: Growth perspective on Kentucky HRMs and ETGs - Management indicated that ETGs are just being rolled out and that the growth in Kentucky is driven by product evolution and market building [33] Question: Wagering growth outlook for the Derby - Management emphasized a gravitation towards larger events like the Derby and noted that they operate under a different legal framework than other wagering platforms [38] Question: Legislative updates on iGaming in Virginia - Management expressed concerns about iGaming legislation in Virginia, stating it is not favorable for the market [43] Question: Thoughts on vertical integration and portfolio synergy - Management discussed the focus on growth margins and how different parts of the portfolio fit together to drive improvements [47] Question: Future opportunities for historical racing in other states - Management highlighted the positive impact of HRMs in states where implemented and the potential for expansion into new states [51] Question: Implementation of AI in business processes - Management outlined two categories of AI implementation: enhancing customer experience and improving business operations [55] Question: International sponsorship opportunities for the Derby - Management noted increasing interest from international markets, particularly the Middle East, and plans to leverage this for sponsorship growth [77]

Financial Data and Key Metrics Changes - The company achieved record net revenue and record Adjusted EBITDA in 2025, surpassing previous records set in 2024 [5][6] - The company generated a record $700 million of free cash flow in 2025, equating to $9.75 per share, following a record year in 2024 [22][24] - The bank covenant net leverage at the end of December 2025 was 4.1 times, with expectations to decrease below 4 times during 2026 [24] Business Line Data and Key Metrics Changes - The Live and Historical Racing segment and the Wagering Services and Solutions segment both delivered record Adjusted EBITDA [6] - The HRM properties in Kentucky generated record Adjusted EBITDA in 2025, supported by the successful opening of Owensboro [18] - The Wagering Services and Solutions segment saw a 7% increase in Adjusted EBITDA in 2025, primarily driven by growth in the Exacta business [20] Market Data and Key Metrics Changes - The Kentucky Derby generated record handle and the highest television ratings in nearly 40 years, with expectations for continued growth [7][16] - The HRM venues in Virginia also delivered record Adjusted EBITDA, with The Rose showing sequential growth in GGR per unit in every quarter of 2025 [19][20] - Despite weather disruptions, statewide GGR in Kentucky grew at a double-digit rate year-over-year, indicating strong underlying demand [19] Company Strategy and Development Direction - The company plans to invest $180 million-$200 million to develop Rockingham Casino in Salem, New Hampshire, with an expected opening in mid-2027 [9][13] - The strategic plan includes five key priorities, such as growing the Kentucky Derby, expanding the HRM portfolio, and enhancing the TwinSpires horse racing business [10][15] - The company aims to maintain disciplined capital allocation while focusing on sustainable long-term growth aligned with core competencies [15][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for the upcoming Kentucky Derby, with positive trends in ticket sales and sponsorships [28][59] - The company anticipates that the new federal tax laws may provide a meaningful tailwind to both Regional Gaming and HRM businesses [21][22] - Management remains focused on operational excellence and delivering sustainable long-term shareholder value [24] Other Important Information - The company repurchased over 4.2 million shares and returned over $456 million through share repurchases and dividends in 2025 [24] - The company introduced electronic table games in Kentucky, with plans to expand offerings in the future [9][72] Q&A Session Summary Question: Insights on early pricing and demand trends for Derby 152 - Management noted strong ticket sales and positive trends, with expectations for strong sponsorships and wagering [28] Question: Growth potential of Kentucky HRMs and impact of ETGs - Management indicated that ETGs are just being rolled out and that the continued evolution of the product will drive growth in Kentucky [32] Question: Wagering growth outlook for the Derby - Management highlighted a trend towards larger events and emphasized the importance of quality content for wagering growth [36] Question: Legislative updates on iGaming in Virginia - Management expressed concerns about iGaming legislation in Virginia, emphasizing that it is not currently law and that they believe it would not benefit the state [41] Question: Integration of AI into business processes - Management discussed the implementation of AI tools to enhance customer experience and improve operational efficiency [51][55] Question: Opportunities for media rights and sponsorships - Management noted increasing interest from international markets, particularly the Middle East, and emphasized the potential for growth in sponsorships [75]

Company Overview - Churchill Downs is a diversified gambling and entertainment company with a national presence in live racing, online wagering, and casino operations across multiple U.S. states [4] - The company leverages iconic racing assets, proprietary technology, and a broad gaming portfolio to drive growth and maintain a leading position in the U.S. gaming industry [4] - As of February 6, 2026, the company's market capitalization is $6.57 billion, with a revenue of $2.88 billion and a net income of $403.4 million [3] Financial Performance - As of February 6, 2026, shares of Churchill Downs were priced at $93.55, reflecting a 23.8% decline over the past year, underperforming the S&P 500 by 37.76 percentage points [2] - The company generates most of its revenue from gaming operations, including casinos, historical racing venues, and online wagering through TwinSpires [8] - Gaming revenue is influenced by foot traffic, machine volumes, and spending per visit, while margins depend on property mix and operating efficiency [8] Investment Insights - Beck Bode, LLC established a new position in Churchill Downs by acquiring 154,871 shares valued at $17.62 million, representing 2.93% of its $601.19 million in reportable U.S. equity assets as of December 31, 2025 [1][2] - The company has been investing heavily to expand its regional footprint and add high-return gaming capacity, which may pressure near-term earnings but is intended to drive stronger cash flow over time [8] - Churchill Downs is recognized for hosting the Kentucky Derby, but its significant earnings power comes from regional casinos and historical horse racing terminals that generate recurring gaming revenue [6]

Group 1 - Churchill Downs Incorporated (NASDAQ: CHDN) is initiated with a Strong Buy rating and a price target of $131, highlighting its position as a leading U.S. racing, online wagering, and gaming operator across three fast-growing segments: Live and Historical Racing, TwinSpires, and Gaming [1] - The Strong Buy rating is based on a structured, repeatable framework that identifies companies with durable business models, mispriced cash flow potential, and intelligent capital allocation [1] - Moretus Research emphasizes rigorous fundamental analysis combined with a high-signal, judgment-driven process, focusing on underappreciated companies undergoing structural change or temporary dislocation [1] Group 2 - Valuation methods used by Moretus Research are based on pragmatic, sector-relevant multiples tailored to each company's business model and capital structure, emphasizing comparability, simplicity, and relevance [1] - The research aims to provide professional-grade insights, actionable valuation, and a strong filter for what truly matters in modern equity analysis, reflecting a deep respect for capital, discipline, and long-term compounding [1]

Core Insights - Churchill Downs Incorporated (CDI) set new all-time records for wagering during the Kentucky Derby Day program and Derby Week, indicating strong growth in the betting segment [3][4][5] Wagering Records - Total wagering on Kentucky Derby Day reached $349.0 million, surpassing last year's record of $320.5 million [3] - Wagering on the Kentucky Derby race alone hit a record of $234.4 million, up from $210.7 million last year [3] - All-sources handle for Derby Week increased to $473.9 million, exceeding last year's $446.6 million [3] Performance of TwinSpires - TwinSpires, the official betting partner, recorded a new high of $108.0 million in wagering for the Kentucky Derby Day program, compared to $92.1 million last year [4] - TwinSpires' handle for the Kentucky Derby race was $73.0 million, up from $60.9 million in the previous year [4] Company Financial Expectations - CDI anticipates that Adjusted EBITDA for Derby Week will rank among the top two results in the company's history, although it is expected to be $2 to $4 million lower than last year's record [5] - The company expressed optimism about future growth following the successful 151st running of the Kentucky Derby [6] Company Overview - CDI has been a leader in entertainment experiences for over 150 years, primarily through the Kentucky Derby and has expanded into various gaming and wagering sectors [8]

Financial Data and Key Metrics Changes - The company reported record first quarter net revenue of $643 million and adjusted EBITDA of $245 million, reflecting strong performance despite various challenges [11][12] - The live and historical racing segment increased revenue by nearly $28 million or 11% compared to the prior year quarter [40] - The company generated $234 million or $3.15 per share of free cash flow in the first quarter [47] Business Line Data and Key Metrics Changes - The live and historical racing segment delivered record first quarter revenue and adjusted EBITDA, primarily due to the opening of new venues [39][40] - The Kentucky HRM properties increased adjusted EBITDA by $3.1 million or 6% compared to the prior year quarter [41] - The Virginia HRM properties saw a decrease in adjusted EBITDA by $2.2 million or 3% compared to the prior year quarter, impacted by weather and competition [41][43] Market Data and Key Metrics Changes - The Northern Virginia HRM venues collectively contributed nearly $10 million of adjusted EBITDA during the first quarter, up nearly $4 million from the prior year quarter [41] - The company experienced meaningful sequential growth in gross gaming revenues each month of the first quarter [26] - The Terre Haute Casino Resort in Indiana delivered nearly $12 million of adjusted EBITDA in the first quarter, performing well compared to regional gaming properties [46] Company Strategy and Development Direction - The company is committed to growing the Kentucky Derby through prudent timing of capital investments, pausing a $900 million multiyear project to reassess economic conditions [16][17] - Smaller projects at Churchill Downs Racetrack, costing approximately $25 to $30 million, are expected to deliver strong shareholder returns [19][20] - The company plans to implement electronic table games in existing HRM locations by the end of 2025, focusing on regulatory and taxation challenges [34][78] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased economic uncertainty and inflation risks due to tariffs, impacting cost assessments for projects [16][17] - The leadership team expressed confidence in navigating economic cycles and maintaining growth through strategic investments [37][51] - Management remains optimistic about the upcoming Kentucky Derby, expecting results comparable to last year's record performance [35][131] Other Important Information - The company has reduced its 2025 maintenance capital projection by $10 million to $90 to $100 million [48] - A new common stock repurchase program of up to $500 million was approved, with nearly 800,000 shares repurchased in the first quarter [49][50] - The bank covenant net leverage was 4.0 times at the end of the first quarter, expected to remain stable throughout the year [50] Q&A Session Summary Question: About softness in the quarter and its acceleration - Management noted hesitancy in the lower-tiered play due to macroeconomic volatility, but consistent performance in higher-tiered segments [56][58] Question: Impact on international visitation for Derby 151 - No material change in international visitation was observed, with expectations for strong attendance [62][64] Question: Long-term growth for the Derby and capital plans - Management indicated that the NBC contract will enhance growth, with expectations for pricing power in new areas introduced [70][72] Question: Implementation of electronic table games and tax rates - The rollout will be cautious due to regulatory and taxation challenges, with a focus on gradual acceptance [78] Question: Growth opportunities at existing properties amid macro uncertainty - Management emphasized organic growth in Kentucky properties and ongoing projects in Virginia, with a focus on managing costs [91][92] Question: Trends in Virginia for existing assets - Management expressed optimism about Virginia's market potential, despite recent challenges [100][101] Question: Consumer segment trends and performance - Management highlighted the importance of customer data for managing performance, particularly in less mature properties [106][108] Question: Capital allocation and buybacks - Management indicated that capital allocation decisions will be based on where the best returns can be achieved, including potential buybacks [112][114] Question: Changes for the Derby next year - Management plans to evaluate customer feedback and adjust offerings based on data collected post-Derby [120][122] Question: Comparability of Derby performance this year versus last year - Management acknowledged macroeconomic uncertainties but remains confident in strong demand for the event [130][131]

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]