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Churchill Downs rporated(CHDN) - 2025 Q1 - Earnings Call Transcript
CHDNChurchill Downs rporated(CHDN)2025-04-25 00:02
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Financial Data and Key Metrics Changes - The company reported record first quarter net revenue of 643millionandadjustedEBITDAof643 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 28millionor1128 million or 11% compared to the prior year quarter [40] - The company generated 234 million or 3.15pershareoffreecashflowinthefirstquarter[47]BusinessLineDataandKeyMetricsChanges−TheliveandhistoricalracingsegmentdeliveredrecordfirstquarterrevenueandadjustedEBITDA,primarilyduetotheopeningofnewvenues[39][40]−KentuckyHRMpropertiesincreasedadjustedEBITDAby3.15 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 2.2millionor32.2 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 4millionfromtheprioryearquarter[41]−Thecompanyexperiencedmeaningfulsequentialgrowthingrossgamingrevenueseachmonthofthefirstquarter[25]−TheTerreHauteCasinoResortinIndianadeliverednearly4 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 900millionmultiyearprojectatChurchillDownsRacetrackhasbeentemporarilypausedduetoeconomicuncertainties[16][17]−Thecompanyplanstocontinueexploringfurtherdevelopmentinkeymarkets,includingVirginiaandKentucky[25][29]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementacknowledgedthehesitancyinconsumerspendingduetomacroeconomicvolatilitybutexpressedconfidenceinthecompany′sabilitytomanagethroughthesechallenges[56][58]−Theleadershipteamremainscommittedtodeliveringexcellenttotalshareholderreturnwithconsistentexecutionoverthelongterm[38][51]−ManagementexpectstheupcomingKentuckyDerbytodeliverresultscomparabletolastyear′srecordperformance[35][63]OtherImportantInformation−Thecompanyannouncedanewcommonstockrepurchaseprogramofupto900 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 10millionto10 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]