Churchill Downs Inc

Previous wording

Churchill Downs Incorporated ("CDI" or the "Company") has been creating extraordinary entertainment experiences for nearly 150 years, beginning with the Company’s most iconic and enduring asset, the Kentucky Derby. Headquartered in Louisville, Kentucky, CDI has expanded through the development of live and historical racing entertainment venues, the growth of the TwinSpires horse racing online wagering business, expanded pari-mutuel content and technology services to B2C platforms, and the operation and development of regional casino gaming properties.

Current wording

Churchill Downs Incorporated ("CDI" or the "Company") has been creating extraordinary entertainment experiences for over 150 years, beginning with the Company’s most iconic and enduring asset, the Kentucky Derby. Headquartered in Louisville, Kentucky, CDI has expanded through the development of live and historical racing entertainment venues, the growth of the TwinSpires horse racing online wagering business, expanded pari-mutuel content and technology services to B2C platforms, and the operation and development of regional casino gaming properties.

Previous wording

We conduct our business through three reportable segments: Live and Historical Racing, TwinSpires, and Gaming. We aggregate our other businesses as well as certain corporate operations, and other immaterial joint ventures, in All Other.

Current wording

We conduct our business through three reportable segments: Live and Historical Racing, TwinSpires, and Gaming. We aggregate our other businesses as well as certain corporate operations in All Other.

Previous wording

Adjusted EBITDA includes our portion of EBITDA from our equity investments.

Current wording

Adjusted EBITDA includes our portion of EBITDA from our equity investments and the portion of EBITDA attributable to a noncontrolling interest.

Previous wording

The following table reflects our net revenue, operating income, net income, Adjusted EBITDA, and certain other financial information:

Current wording

The following table reflects our net revenue, operating income, net income attributable to Churchill Downs Incorporated, Adjusted EBITDA, and certain other financial information:

Previous wording

Arlington exit costs in 2023. Partially offsetting these increases to operating income was a $15.8 million decrease in the Gaming segment primarily due to inclement weather at many of our Gaming properties in January 2024, a $4.3 million increase in transaction expenses, and a $2.5 million increase in selling, general and administrative expenses.

Current wording

to the $24.5 million non-cash impairment of Presque Isle intangible assets in the second quarter of 2023 that did not recur; a $19.1 million increase from the Gaming segment primarily due to opening of the Terre Haute Casino Resort in April 2024, partially offset by inclement weather in April 2024; a $5.7 million increase in the TwinSpires segment primarily due to Exacta; and an increase in All Other income of $2.0 million primarily related to Arlington exit costs in 2023 that did not recur. Partially offsetting these increases to operating income was a $9.3 million increase in selling, general and administrative expenses and a $0.1 million increase in transaction expenses.

Previous wording

•Net income decreased $75.3 million. The following impacted the comparability of the Company's net income for the three months ended March 31, 2024 compared to the three months ended March 31, 2023: an $86.2 million after-tax gain on the sale of the Arlington property in the prior year quarter and a $4.4 million after-tax net increase in adjustments related to transaction, pre-opening and other expenses, partially offset by a $5.2 million after-tax increase of other recoveries, net related to non-recurring insurance claim recoveries. Excluding these items, net income increased $10.1 million primarily due to a $14.7 million after-tax increase primarily driven by the results of our operations, partially offset by a $4.6 million after-tax increase in interest expense associated with higher outstanding debt balances and higher interest rates.

Current wording

•Net income attributable to Churchill Downs Incorporated decreased $9.0 million. The following impacted the comparability of the Company's net income for the six months ended June 30, 2024 compared to the six months ended June 30, 2023: an $86.2 million after-tax gain on the sale of the Arlington property in the prior year, partially offset by an $18.5 million decrease in after-tax non-cash impairment costs, a $4.2 million after-tax increase of other recoveries, net related to non-recurring insurance claim recoveries, and a $1.3 million decrease of other items. Excluding these items, net income increased $53.2 million primarily due to a $63.6 million after-tax increase primarily driven by the results of our operations, partially offset by a $10.4 million after-tax increase in interest expense associated with higher outstanding debt balances and higher interest rates.

Previous wording

•Live and Historical Racing revenue increased $33.1 million due to an $18.3 million increase attributable to growth at our Kentucky HRM properties, a $13.5 million increase attributable to growth at our Virginia properties and the opening of our Rosie's Emporia property in September 2023, and a $1.3 million increase at our other Live and Historical Racing properties.

Current wording

•Live and Historical Racing revenue increased $82.2 million due to a $53.8 million increase at Churchill Downs Racetrack, which includes a $37.6 million increase due to a record-breaking Derby Week; a $17.4 million increase attributable to growth at our Virginia properties and the opening of the Rosie's Emporia property in September 2023; a $10.3 million increase attributable to growth at our Kentucky HRM properties; and a $0.7 million increase at our other Live and Historical Racing properties.

Previous wording

•All Other Adjusted EBITDA decreased $2.6 million driven primarily by increased corporate compensation related expenses and other corporate administrative expenses.

Current wording

•All Other Adjusted EBITDA decreased $4.2 million driven primarily by increased corporate compensation related expenses and other corporate administrative expenses.

Previous wording

•TwinSpires Adjusted EBITDA increased $10.2 million due to a $9.4 million increase attributable to the Exacta Transaction and a $1.4 million increase attributable to our retail and online sports betting business, partially offset by a $0.6 million decrease in Horse Racing primarily driven by lower retail volume.

Current wording

•TwinSpires Adjusted EBITDA increased $22.5 million due to a $19.5 million increase attributable to Exacta, and a $3.4 million increase attributable to our online sports betting market access agreements and our retail sports betting business, partially offset by a $0.4 million decrease in Horse Racing primarily from higher content and related expenses.

Previous wording

•Total assets increased $111.3 million driven by increased capital expenditures primarily at the Terre Haute Casino Resort, Churchill Downs Racetrack, and The Rose Gaming Resort in Dumfries, Virginia.

Current wording

•Total assets increased $214.6 million driven by increased capital expenditures primarily at the Terre Haute Casino Resort, Churchill Downs Racetrack, and The Rose Gaming Resort in Virginia.

Previous wording

•Cash flows provided by operating activities increased $38.8 million driven primarily by a decrease in cash used for working capital, an increase in operating income, and decreased interest paid in 2024. We anticipate that cash flows from operations and availability of borrowings under our credit facility over the next twelve months will be adequate to fund our business operations and capital expenditures.

Current wording

•Cash flows provided by operating activities increased $69.1 million driven primarily by an increase in operating income, partially offset by increased interest paid in 2024 and decreased distributions from our unconsolidated affiliates. We anticipate that cash flows from operations and availability of borrowings under our credit facility over the next twelve months will be adequate to fund our business operations and capital expenditures.

Previous wording

•Cash flows used in investing activities increased $207.9 million driven by $195.7 million proceeds from the Arlington sale in 2023 and an increase in capital project expenditures in 2024 primarily at the Terre Haute Casino Resort, Churchill Downs Racetrack, and The Rose Gaming Resort in Dumfries, Virginia.

Current wording

•Cash flows used in investing activities increased $171.1 million primarily driven by $195.7 million proceeds from the Arlington sale received in 2023 that did not recur in 2024.

Previous wording

•Cash flows used in financing activities decreased $136.6 million primarily driven by a net paydown of debt in the first quarter of 2023, partially offset by share repurchases in the first quarter of 2024.

Current wording

•Cash flows used in financing activities increased $125.8 million primarily driven by share repurchases in 2024.

Previous wording

We have announced several project capital investments, including the following: Churchill Downs Racetrack Paddock Project, Owensboro Racing & Gaming in Owensboro, Kentucky, a New Hampshire HRM facility, and The Rose Gaming Resort in Dumfries, Virginia. We currently expect our project capital to be approximately $450.0 to $550.0 million in 2024, although this amount may vary significantly based on the timing of work completed, unanticipated delays, and timing of payments to third parties.

Current wording

We have announced several project capital investments, including the following: Grandstand Club and Pavilion Renovation at Churchill Downs Racetrack, The Rose Gaming Resort in Northern Virginia, Owensboro Racing and Gaming in Western Kentucky, an Oak Grove HRM annex in Southwestern Kentucky, and a Salem HRM entertainment venue in New Hampshire. We currently expect our project capital to be approximately $450.0 to $550.0 million in 2024, although this amount may vary significantly based on the timing of work completed, unanticipated delays, and timing of payments to third parties.

Previous wording

On September 29, 2021, the Board of Directors of the Company approved a common stock repurchase program of up to $500.0 million (the "2021 Stock Repurchase Program"). The 2021 Stock Repurchase Program includes and is not in addition to the unspent amount remaining under the prior authorization. Repurchases may be made at management’s discretion from time to time on the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions. The repurchase program has no time limit and may be suspended or discontinued at any time. During the first quarter of 2024, we repurchased 184,821 shares of the Company's common stock under the 2021 Stock Repurchase Program for a total cost of $22.0 million. We had approximately $192.9 million of repurchase authority remaining under this program on March 31, 2024.

Current wording

On September 29, 2021, the Board of Directors of the Company approved a common stock repurchase program of up to $500.0 million (the "2021 Stock Repurchase Program"). The 2021 Stock Repurchase Program includes and is not in addition to the unspent amount remaining under the prior authorization. Repurchases may be made at management’s discretion from time to time on the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions. The repurchase program has no time limit and may be suspended or discontinued at any time. During the second quarter of 2024, we repurchased 93,874 shares of the Company's common stock under the 2021 Stock Repurchase Program for a total cost of approximately $13.0 million. We had approximately $179.9 million of repurchase authority remaining under this program on June 30, 2024, based on trade date.

Previous wording

At March 31, 2024, the Company’s senior secured credit facility (as amended from time to time, the “Credit Agreement") consisted of a $1.2 billion revolving credit facility (the "Revolver"), $300.0 million senior secured term loan B-1 due 2028 (the "Term Loan B-1"), $1.3 billion senior secured term loan A due 2027 (the "Term Loan A"), and $100.0 million swing line commitment.

Current wording

At June 30, 2024, the Company’s senior secured credit facility (as amended from time to time, the “Credit Agreement") consisted of a $1.2 billion revolving credit facility (the "Revolver"), $290.2 million senior secured term loan B-1 (the "Term Loan B-1"), $1.2 billion senior secured term loan A (the "Term Loan A"), and $100.0 million swing line commitment. On July 3, 2024, the Company closed an amendment of the Credit Agreement to (i) extend the maturity date of the Revolver and Term Loan A from 2027 to 2029 and (ii) amend certain other provisions to the Credit Agreement.

Previous wording

The Revolver and Term Loan A bear interest at SOFR plus 10 basis points, plus a variable applicable margin which is determined by the Company's net leverage ratio. As of March 31, 2024, that applicable margin was 150 basis points which was based on the pricing grid in the Credit Agreement. The Company had $841.9 million available borrowing capacity, after consideration of $5.1 million in outstanding letters of credit, under the Revolver as of March 31, 2024.

Current wording

The Revolver and Term Loan A bear interest at SOFR plus 10 basis points, plus a variable applicable margin which is determined by the Company's net leverage ratio. As of June 30, 2024, that applicable margin was 150 basis points which was based on the pricing grid in the Credit Agreement. The Company had $893.5 million available borrowing capacity, after consideration of $6.0 million in outstanding letters of credit, under the Revolver as of June 30, 2024.

Previous wording

The estimated contractual payments, including interest, under the Credit Agreement for the next twelve months are estimated to be $198.5 million assuming no change in the weighted average borrowing rate of 7.01%, which was in place as of March 31, 2024. During the three months ended March 31, 2024, we had repayments of principal and interest on the Revolver of $136.2 million.

Current wording

The estimated contractual payments, including interest, under the Credit Agreement for the next twelve months are estimated to be $209.4 million assuming no change in the weighted average borrowing rate of 7.04%, which was in place as of June 30, 2024. During the six months ended June 30, 2024, we had repayments of principal and interest on the Revolver of $577.7 million.

Previous wording

The Company leases certain real estate and other property. Most of our building and land leases have terms of 2 to 10 years and include one or more options to renew, with renewal terms that can extend the lease term from 1 to 5 years or more. Certain of our lease agreements include lease payments based on a percentage of net gaming revenue and others include rental payment adjustments periodically for inflation. As of March 31, 2024, minimum rent payable under operating leases was $24.4 million, with $5.9 million due in the next twelve months. As of March 31, 2024, minimum rent payable accounted for as financing obligations was $58.7 million, with $4.9 million due in the next twelve months.

Current wording

The Company leases certain real estate and other property. Most of our building and land leases have terms of 2 to 10 years and include one or more options to renew, with renewal terms that can extend the lease term from 1 to 5 years or more. Certain of our lease agreements include lease payments based on a percentage of net gaming revenue and others include rental payment adjustments periodically for inflation. As of June 30, 2024, minimum rent payable under operating leases was $29.6 million, with $5.9 million due in the next twelve months. As of June 30, 2024, minimum rent payable accounted for as financing obligations was $57.5 million, with $5.0 million due in the next twelve months.

Previous wording

The Company has other contractual obligations that consist primarily of minimum guarantees with commitments of $14.0 million, $1.5 million of which is due within the next twelve months.

Current wording

The Company has other contractual obligations with commitments of $12.4 million, $1.6 million of which is due within the next twelve months.