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]

Core Insights - Churchill Downs Inc. has paused a nearly $1 billion revamp of its racetrack facilities due to rising uncertainty surrounding construction costs influenced by tariffs and macroeconomic conditions [5][9][10] Group 1: Planned Projects - The company had initially planned to invest up to $920 million in capital projects to enhance and expand the Kentucky Derby racetrack, including the installation of 13,300 seats and new premium hospitality experiences [1][2] - Additional plans included constructing new permanent structures in the infield for premium ticket holders and general admission areas [4] Group 2: Economic Factors - The decision to halt the projects was attributed to significant inflation risks and unquantifiable cost increases in materials due to tariffs imposed by the U.S. government [7][9] - CEO Bill Carstanjen indicated that the evolving economic landscape would be assessed to determine the timing and sequencing of the multi-year projects [9][10] Group 3: Ongoing Investments - Despite the pause on the major revamp, Churchill Downs announced smaller renovations costing between $25 million to $30 million for existing facilities like the Finish Line suites and Trophy Room [11] - The company remains committed to long-term growth of the Kentucky Derby through prudent capital investments [10] Group 4: Economic Impact - The Kentucky Derby significantly contributes to the local economy, with an estimated economic impact of $400 million from last year's race [13]

Group 1: Company Performance - Churchill Downs Inc. reported record revenue of $642.6 million, representing a year-over-year increase of over 51% [2] - The earnings per share (EPS) was $1.07, which missed analysts' expectations of $1.16 and was lower compared to the previous year [2] Group 2: Renovation Project Update - The company announced a pause on a multi-year renovation project valued at $1 billion due to increasing uncertainty surrounding construction costs related to tariffs and trade disputes [3][5] - The renovation was expected to enhance the infield around the Kentucky Derby track and include a multi-story Sky Terrace, with funding backed by up to $1.2 billion in bond proceeds [4] - Despite the pause, Churchill Downs is proceeding with two smaller projects costing between $25 million and $30 million, expected to be completed by 2026 [6] Group 3: Stock Market Reaction - Following the announcement of the renovation pause, Churchill Downs' stock dropped more than 16% in after-hours trading [1] - The current stock price is $88.35, with a 12-month price target of $144.80, indicating a potential upside of 63.89% [7] - Analysts have noted that the stock is historically known for a "Kentucky Derby" lift, but the recent sell-off raises concerns about this pattern [7][8] Group 4: Market Sentiment and Analyst Views - The stock is currently viewed as oversold, with a Relative Strength Index of 27, suggesting potential for recovery [11] - While some analysts have lowered their price targets, there is no indication of a price close to the recent closing price of $88.06 [11] - Analysts believe that sports betting is recession-resistant, which may provide some stability for Churchill Downs amidst broader market concerns [10]

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 challenges such as weather events and economic uncertainty [11][12][39] - 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] - Kentucky HRM properties increased adjusted EBITDA by $3.1 million or 6% compared to the prior year quarter [41] - 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 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 [25] - 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 strategic investments in the Kentucky Derby and HRM businesses, with a focus on long-term shareholder value [14][17] - A $900 million multiyear project at Churchill Downs Racetrack has been temporarily paused due to economic uncertainties [16][17] - The company plans to continue exploring further development in key markets, including Virginia and Kentucky [25][29] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the hesitancy in consumer spending due to macroeconomic volatility but expressed confidence in the company's ability to manage through these challenges [56][58] - The leadership team remains committed to delivering excellent total shareholder return with consistent execution over the long term [38][51] - Management expects the upcoming Kentucky Derby to deliver results comparable to last year's record performance [35][63] Other Important Information - The company announced a new common stock repurchase program of up to $500 million and repurchased nearly 800,000 shares in the first quarter [49] - The company reduced its 2025 maintenance capital projection by $10 million to $90 to $100 million [48] Q&A Session Questions and Answers Question: About the softness seen in the quarter - Management noted some hesitancy in the lower-tiered play due to macroeconomic volatility, but overall performance has been consistent [56][58] Question: Impact on international visitation for the Derby - Management indicated no material change in international visitation, with expectations for strong demand for the Derby [62][64] Question: Long-term growth for the Derby - Management discussed the potential for growth in ticket pricing and experiences, with expectations for continued strong demand [70][72] Question: Implementation of electronic table games - Management highlighted regulatory and taxation challenges but expressed optimism about the rollout of electronic table games [77][79] Question: Growth opportunities at existing properties - Management emphasized organic growth in Kentucky properties and ongoing projects in Virginia, indicating a strong pipeline for future growth [91][92] Question: Trends in Virginia for existing assets - Management expressed confidence in the Virginia market, noting that it is still early in the maturity of these assets [99][101] Question: Capital allocation and buybacks - Management stated that capital allocation decisions are ongoing, with share buybacks being one of the options considered [112][114] Question: Changes for the Derby next year - Management indicated that adjustments would be based on customer feedback and data analysis post-Derby [120][122] Question: Comparability of Derby performance this year versus last year - Management acknowledged macroeconomic uncertainties but expressed confidence that these would not materially affect Derby performance [130][131]

Core Viewpoint - Churchill Downs reported quarterly earnings of $1.07 per share, missing the Zacks Consensus Estimate of $1.08 per share, and down from $1.13 per share a year ago, indicating a negative earnings surprise of -0.93% [1] - The company posted revenues of $642.6 million for the quarter, which also fell short of the Zacks Consensus Estimate by 0.68%, but showed an increase from $590.9 million year-over-year [2] Financial Performance - Over the last four quarters, Churchill Downs has surpassed consensus EPS estimates two times [2] - The company has also topped consensus revenue estimates two times in the same period [2] - Year-to-date, Churchill Downs shares have declined approximately 22.9%, compared to a 10.1% decline in the S&P 500 [3] Future Outlook - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is $3.24 on revenues of $942.99 million, and for the current fiscal year, it is $6.58 on revenues of $2.94 billion [7] Industry Context - The Gaming industry, to which Churchill Downs belongs, is currently ranked in the bottom 42% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact the stock's performance [5][6]

Financial Performance - Net revenue for the three months ended March 31, 2025, was $642.6 million, an increase of $51.7 million compared to $590.9 million in the same period of 2024[113]. - Operating income rose to $134.6 million, up $8.3 million from $126.3 million year-over-year, maintaining an operating income margin of 21%[113]. - Net income attributable to Churchill Downs Incorporated decreased by $3.7 million to $76.7 million compared to $80.4 million in the prior year[113]. - Adjusted EBITDA increased by $2.6 million to $245.1 million, driven by growth in the Live and Historical Racing and Wagering Services segments[113]. - Adjusted EBITDA for the three months ended March 31, 2025, was $245.1 million, an increase of $2.6 million compared to $242.5 million in the same period of 2024[125]. - The company experienced a decrease in net income to $77.2 million for the three months ended March 31, 2025, down from $80.4 million in the same period of 2024[128]. Revenue Segments - The Live and Historical Racing segment generated $276.4 million in revenue, up $27.5 million from $248.9 million in the previous year[117]. - The Gaming segment reported revenue of $267.2 million, an increase of $24.0 million from $243.2 million in the prior year[117]. - The Wagering Services and Solutions segment saw a slight increase in revenue to $115.8 million, up $1.7 million from $114.1 million[117]. - Live and Historical Racing revenue increased by $27.5 million, driven by an $18.2 million increase at Virginia HRM venues and an $8.9 million increase at Kentucky HRM venues[121]. Operating Expenses and Investments - Total operating expenses rose by $43.4 million, primarily due to the openings of Terre Haute Casino Resort and The Rose Gaming Resort[123]. - The company announced project capital investments expected to be between $250.0 million and $290.0 million in 2025, reflecting a temporary pause on certain projects[135]. Assets and Liabilities - Total assets increased by $71.2 million to $7,347.1 million as of March 31, 2025, primarily due to increased capital expenditures[129]. - Total liabilities increased by $81.4 million to $6,254.0 million, driven by increased current deferred revenue related to advance ticket sales[131]. Cash Flow and Debt - Cash flows from operating activities decreased by $8.2 million to $246.5 million for the three months ended March 31, 2025[133]. - Total debt decreased by $31.6 million to $4,907.1 million as of March 31, 2025[139]. - As of March 31, 2025, the Company had a total of $1.8 billion outstanding under its Credit Agreement, which includes a $1.2 billion revolving credit facility, $288.0 million senior secured term loan B-1, and $1.2 billion senior secured term loan A[140][153]. Interest Rates and Lease Obligations - 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[141]. - Minimum rent payable under operating leases was $34.1 million as of March 31, 2025, with $6.7 million due in the next twelve months[150]. - The Company is exposed to a potential $13.4 million reduction in net income and cash flows from operating activities for every one-percentage point increase in the SOFR rate[153]. Stock and Notes - A common stock repurchase program of up to $500.0 million was approved, with approximately $434.6 million of repurchase authority remaining as of March 31, 2025[136]. - The Company has $600.0 million in aggregate principal amount of 5.500% senior unsecured notes maturing on April 1, 2027[146]. - The Company has $700.0 million in aggregate principal amount of 4.750% senior unsecured notes maturing on January 15, 2028[147]. - The Company has $1.2 billion in aggregate principal amount of 5.750% senior unsecured notes maturing on April 13, 2030[148]. - The Company has $600.0 million in aggregate principal amount of 6.750% senior unsecured notes maturing on April 25, 2031[149].

Financial Performance - First quarter 2025 net revenue reached a record $642.6 million, an increase of $51.7 million or 9% compared to $590.9 million in the prior year[5] - Net income attributable to Churchill Downs Incorporated (CDI) was $76.7 million, down $3.7 million or 5% from $80.4 million in the prior year[5] - Adjusted EBITDA for the first quarter 2025 was $245.1 million, up $2.6 million or 1% from $242.5 million in the prior year[5] - Total net revenue for the three months ended March 31, 2025, was $642.6 million, an increase of 8.8% from $590.9 million in the same period of 2024[39] - Net income attributable to Churchill Downs Incorporated for Q1 2025 was $76.7 million, a decrease of 4.6% compared to $80.4 million in Q1 2024[39] - Adjusted net income attributable to Churchill Downs Incorporated for Q1 2025 was $79.9 million, down from $84.7 million in Q1 2024[45] - Basic and diluted net income per share for Q1 2025 was $1.02, compared to $1.09 for Q1 2024[39] - Operating income for Q1 2025 was $134.6 million, an increase from $126.3 million in Q1 2024[39] - Net income for the three months ended March 31, 2025, was $77.2 million, a decrease of 3.9% from $80.4 million in 2024[55] - Adjusted EBITDA for the same period was $245.1 million, up 1.1% from $242.5 million in 2024[55] - Total segment Adjusted EBITDA increased to $266.8 million in 2025 from $263.2 million in 2024, with Gaming segment contributing $123.5 million[55] Revenue Segments - Revenue from Live and Historical Racing segment increased to $276.4 million, up $27.5 million or 11% from $248.9 million in the prior year[8][9] - Revenue from Wagering Services and Solutions segment increased to $115.8 million, up $1.7 million or 1.5% from $114.1 million in the prior year[11] - Gaming segment revenue increased to $267.2 million, up $24.0 million or 9.9% from $243.2 million in the prior year[15][16] - Total Live and Historical Racing revenue reached $272.5 million in Q1 2025, up from $245.1 million in Q1 2024, reflecting an increase of 11.0%[51] - Total Gaming revenue increased to $263.2 million in Q1 2025, compared to $239.2 million in Q1 2024, marking a growth of 10.0%[51] - The company reported a total of $106.9 million in Wagering Services and Solutions revenue for Q1 2025, consistent with $106.6 million in Q1 2024[51] - Historical racing revenue was $236.4 million in Q1 2025, up from $212.1 million in Q1 2024, representing an increase of 11.4%[51] Shareholder Returns and Capital Management - A new $500 million share repurchase program was approved by the Board of Directors in March 2025, with $89.4 million of shares repurchased in the first quarter[5][22] - The company ended the first quarter of 2025 with net bank leverage of 4.0x and returned $119.5 million to shareholders through share repurchases and dividends[5] Assets and Liabilities - Total current assets increased to $452.4 million as of March 31, 2025, from $412.3 million at the end of 2024[41] - Total assets rose to $7,347.1 million as of March 31, 2025, compared to $7,275.9 million at the end of 2024[41] - Total liabilities increased to $6,254.0 million as of March 31, 2025, from $6,172.6 million at the end of 2024[41] - Cash and cash equivalents at the end of Q1 2025 were $271.2 million, up from $222.0 million at the end of Q1 2024[43] - Long-term debt as of March 31, 2025, was $816.5 million, down from $839.8 million at the end of 2024[57] - Total liabilities and members' deficit remained stable at $698.1 million as of March 31, 2025, compared to $693.6 million at the end of 2024[57] Expenses - The company’s marketing and advertising expenses were $23.4 million in Q1 2025, slightly higher than $18.3 million in Q1 2024[53] - Salaries and benefits expenses increased to $85.1 million in Q1 2025 from $72.7 million in Q1 2024, a rise of 17.0%[53] New Developments - The company opened Owensboro Racing and Gaming in February 2025, featuring 600 historical racing machines and a retail sportsbook[5] - Planned capital expenditures for 2025 are estimated between $250 million and $290 million, including $75-85 million for the Starting Gate Pavilion and Courtyard project[59] - The company plans to expand its Richmond HRM venue with a budget of $30-35 million, targeted for completion in Q3 2025[59] Other Financial Metrics - The company experienced a $6.7 million after-tax decrease in other recoveries, primarily driven by insurance claim proceeds recorded in the prior year quarter[24] - Net revenue from equity investments was $205.3 million, down 5.8% from $216.9 million in 2024[57] - Operating income from equity investments decreased to $68.8 million, a decline of 9.1% compared to $75.7 million in 2024[57] - Current assets increased to $103.5 million as of March 31, 2025, compared to $100.5 million at the end of 2024[57] - Pari-mutuel taxes and purses for Q1 2025 amounted to $90.9 million, compared to $81.9 million in Q1 2024, reflecting an increase of 11.0%[53] - The company reported equity in income of unconsolidated affiliates at $43.2 million for Q1 2025, compared to $47.5 million in Q1 2024[53]

Core Points - Churchill Downs Incorporated (CDI) announced renovations for the Finish Line Suites and The Mansion at Churchill Downs Racetrack, expected to be completed by April 2026 [1][3] - CDI has decided to pause the development of The Skye, Conservatory, and Infield projects due to uncertainties in construction costs and macro-economic conditions [1][4] - The renovations will enhance the existing 15 suites, increasing capacity to 750 guests, and will also improve the Trophy Room with updated finishes and a new feature bar [2][3] Financial Aspects - CDI plans to invest approximately $25-30 million in the renovation projects for the Finish Line Suites and The Mansion [3] Strategic Decisions - The decision to pause the Skye Terrace and Infield projects was made to maintain financial discipline in light of recent economic changes, despite the desire to meet fan expectations [4] - CDI remains committed to long-term growth and providing unique experiences for guests while ensuring best-in-class shareholder returns [4] Company Background - CDI has been creating entertainment experiences for over 150 years, with a focus on live and historical racing, online wagering, and regional casino gaming properties [7]

Company Highlights - Churchill Downs Incorporated reported record net revenue of $642.6 million for Q1 2025, an increase of $51.7 million or 9% compared to Q1 2024 [6][3] - Net income attributable to CDI was $76.7 million, down $3.7 million or 5% from the prior year [6][20] - Adjusted EBITDA reached a record $245.1 million, up $2.6 million or 1% year-over-year [6][3] Segment Results Live and Historical Racing - Revenue for Live and Historical Racing was $276.4 million in Q1 2025, up from $248.9 million in Q1 2024 [5][3] - Adjusted EBITDA for this segment was $102.0 million, slightly up from $100.8 million in the previous year [5][3] Wagering Services and Solutions - Revenue increased to $115.8 million in Q1 2025 from $114.1 million in Q1 2024 [9][3] - Adjusted EBITDA rose to $41.3 million, compared to $39.6 million in the prior year [9][3] Gaming - Gaming revenue increased to $267.2 million in Q1 2025, up from $243.2 million in Q1 2024 [12][3] - Adjusted EBITDA for the Gaming segment was $123.5 million, slightly up from $122.8 million [12][3] All Other - Revenue from All Other segments was $2.0 million in Q1 2025, compared to a loss of $21.7 million in Q1 2024 [16][3] - Adjusted EBITDA decreased to a loss of $21.7 million from a loss of $20.7 million in the previous year [16][3] Capital Management - The Board of Directors approved a new $500 million share repurchase program in March 2025 [18][19] - The company repurchased 798,250 shares at a total cost of $89.4 million in Q1 2025 [19][3] - As of March 31, 2025, the company had approximately $434.6 million of repurchase authority remaining under the 2025 Stock Repurchase Program [19][3] Financial Position - The company ended Q1 2025 with net bank leverage of 4.0x and returned $119.5 million of capital to shareholders through share repurchases and dividends [6][3] - The total assets of the company as of March 31, 2025, were $7,347.1 million, compared to $7,275.9 million at the end of 2024 [37][3]

Core Viewpoint - Churchill Downs (CHDN) is expected to report a quarterly earnings per share (EPS) of $1.08, reflecting a 4.4% decline year-over-year, while revenues are forecasted to increase by 9.5% to $647.14 million [1] Earnings Estimates - The consensus EPS estimate has been revised down by 0.1% over the last 30 days, indicating a collective reevaluation by analysts [2] - Changes in earnings estimates are crucial for predicting investor reactions, with empirical studies showing a strong correlation between earnings estimate revisions and short-term stock performance [3] Revenue Projections - Analysts estimate 'Revenue- Live and Historical Racing' to reach $278.47 million, a year-over-year increase of 13.6% [5] - The 'Revenue- Gaming' is projected at $268.62 million, reflecting a 12.3% increase compared to the previous year [5] Adjusted EBITDA Estimates - The consensus for 'Adjusted EBITDA- Gaming' is $123.70 million, slightly up from $122.80 million reported in the same quarter last year [5] - For 'Adjusted EBITDA- Live and Historical Racing', the estimate is $108.17 million, compared to $100.80 million from the previous year [6] Stock Performance - Shares of Churchill Downs have decreased by 9.6% over the past month, underperforming the Zacks S&P 500 composite, which declined by 5.6% [7] - The company holds a Zacks Rank 5 (Strong Sell), indicating expectations of underperformance in the near future [7]