Churchill Downs Inc

Previous wording

Our consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles ("GAAP"). We also use non-GAAP measures, including EBITDA (earnings before interest, taxes, depreciation and amortization) and Adjusted EBITDA. We believe that the use of Adjusted EBITDA as a key performance measure of results of operations enables management and investors to evaluate and compare from period to period our operating performance in a meaningful and consistent manner. Our chief operating decision maker utilizes Adjusted EBITDA to evaluate segment performance, develop strategy, and allocate resources. Adjusted EBITDA is a supplemental measure of our performance that is not required by, or presented in accordance with, GAAP. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income (as determined in accordance with GAAP) as a measure of our operating r`esults.

Current wording

Our consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles ("GAAP"). We also use non-GAAP measures, including EBITDA (earnings before interest, taxes, depreciation and amortization) and Adjusted EBITDA. We believe that the use of Adjusted EBITDA as a key performance measure of results of operations enables management and investors to evaluate and compare from period to period our operating performance in a meaningful and consistent manner. Our chief operating decision maker utilizes Adjusted EBITDA to evaluate segment performance, develop strategy, and allocate resources. Adjusted EBITDA is a supplemental measure of our performance that is not required by, or presented in accordance with, GAAP. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income (as determined in accordance with GAAP) as a measure of our operating results.

Previous wording

Adjusted EBITDA excludes, as applicable in each period:

Current wording

Adjusted EBITDA excludes, as applicable:

Previous wording

In Louisiana, the 2021 Historical Horse Racing Act (the "2021 HHR Act") allows off-track betting facilities ("OTBs") to have up to 50 HRMs. On October 25, 2022, a number of individual plaintiffs associated with video poker and truckstops, filed a lawsuit in the 19th Judicial District Court in East Baton Rouge, Louisiana against certain racetracks in Louisiana, including our Fair Grounds Racecourse and Slots property, alleging that the 2021 HHR Act is unconstitutional to the extent it purports to permit historical racing in a parish without a referendum. On June 8, 2023, plaintiffs filed a motion for summary judgment on the constitutional issues raised in their complaint and a hearing was conducted on September 11, 2023.

Current wording

In Louisiana, the 2021 Historical Horse Racing Act (the "2021 HHR Act") allowed off-track betting facilities ("OTBs") to have up to 50 HRMs. On October 25, 2022, a number of individual plaintiffs associated with video poker and truck stops, filed a lawsuit in the 19th Judicial District Court in East Baton Rouge, Louisiana against certain racetracks in Louisiana, including our Fair Grounds Racecourse and Slots property, alleging that the 2021 HHR Act is unconstitutional to the extent it purports to permit historical racing in a parish without a referendum. On June 8, 2023, plaintiffs filed a motion for summary judgment on the constitutional issues raised in their complaint and a hearing was conducted on September 11, 2023.

Previous wording

On February 23, 2024, the judge issued a ruling in favor of plaintiffs granting summary judgment stating that: (i) historical horseracing is a new form of gaming not specifically authorized by law prior to 1996; (ii) historical horseracing may not be conducted in any parish of the state unless voters approve it through referendum; and (iii) the 2021 HHR Act that authorized historical horseracing is unconstitutional. The summary judgment, which was certified as final for purposes of appeal, was entered on March 18, 2024, and the Company, along with other interested parties including the Louisiana Racing Commission, filed a joint motion for a suspensive appeal, which was entered on March 26, 2024. The suspensive appeal allows the continued operation of HHR during the pendency of the appeal before the Louisiana Supreme Court. Oral arguments took place before the Louisiana Supreme Court on January 27, 2025, and an opinion was issued on March 21, 2025. The opinion affirmed the ruling of the District Court, which stated the 2021 HHR Act is unconstitutional, and that before historical horse racing is licensed or permitted to be conducted in a parish it first requires a voter referendum in an affected parish. The Company submitted an Application for Rehearing to the Louisiana Supreme Court on April 4, 2025. Should this request be denied, the opinion will become final and enforceable.

Current wording

On February 23, 2024, the judge issued a ruling in favor of plaintiffs granting summary judgment stating that: (i) historical horseracing is a new form of gaming not specifically authorized by law prior to 1996; (ii) historical horseracing may not be conducted in any parish of the state unless voters approve it through referendum; and (iii) the 2021 HHR Act that authorized historical horseracing is unconstitutional. The summary judgment, which was certified as final for purposes of appeal, was entered on March 18, 2024, and the Company, along with other interested parties including the Louisiana Racing Commission, filed a joint motion for a suspensive appeal, which was entered on March 26, 2024. The suspensive appeal allows the continued operation of HHR during the pendency of the appeal before the Louisiana Supreme Court. Oral arguments took place before the Louisiana Supreme Court on January 27, 2025, and an opinion was issued on March 21, 2025. The opinion affirmed the ruling of the District Court, which stated the 2021 HHR Act is unconstitutional, and that before historical horse racing is licensed or permitted to be conducted in a parish it first requires a voter referendum in an affected parish. The Company submitted an Application for Rehearing to the Louisiana Supreme Court, which was denied on May 8, 2025. The opinion became final and enforceable as of this date, at which time the Company discontinued its HRM operations in Louisiana.

Previous wording

Three Months Ended March 31, 2025, Compared to the Three Months Ended March 31, 2024

Current wording

•Net income attributable to Churchill Downs Incorporated increased $7.6 million. The following impacted the comparability of the Company's net income for the three months ended June 30, 2025 compared to the three months ended June 30, 2024: a $1.8 million after-tax impairment charge in the current year quarter related to a write-off of obsolete HRMs in Virginia, partially offset by a $0.4 million after-tax decrease in transaction, pre-open and other expenses. Excluding these items, net income increased $9.0 million due to an $11.4 million after-tax increase primarily driven by lower state tax expense and the results of our operations and a $0.3 million after-tax increase in equity income from our unconsolidated affiliates, partially offset by a $2.0 million after-tax increase in interest expense associated primarily with higher outstanding debt balances and a $0.7 million after-tax increase due to a portion of the Company's income from United Tote being recognized as income attributable to a noncontrolling interest.

Previous wording

•Net revenue increased $51.7 million driven by a $27.4 million increase from the Live and Historical Racing segment primarily due to the opening of The Rose Gaming Resort in November 2024 and the opening of Owensboro Racing and Gaming in February 2025, a $24.0 million increase from the Gaming segment primarily driven by the opening of the Terre Haute Casino Resort in April 2024, and a $0.3 million increase from all other sources.

Current wording

•Net revenue increased $95.4 million driven by a $72.6 million increase from the Live and Historical Racing segment primarily due to the opening of The Rose Gaming Resort in November 2024 and the opening of Owensboro Racing and Gaming in February 2025 and growth at our other HRM properties, a $15.8 million increase from the Gaming segment primarily driven by the opening of the Terre Haute Casino Resort in April 2024, partially offset by net decreases at our other wholly owned gaming properties, and a $7.0 million increase from the Wagering Services and Solutions segment primarily due to Exacta.

Previous wording

•Net income attributable to Churchill Downs Incorporated decreased $3.7 million. The following impacted the comparability of the Company's net income for the three months ended March 31, 2025 compared to the three months ended March 31, 2024: a $6.7 million after-tax decrease in other recoveries, net primarily driven by insurance claim proceeds recorded in the prior year quarter, partially offset by a $5.6 million after-tax decrease in transaction, pre-opening, and other expenses. Excluding these items, net income decreased $4.8 million primarily due to a $3.0 million after-tax decrease in equity income from our unconsolidated affiliates, a $2.0 million after-tax increase in interest expense, and a $0.5 million after-tax decrease due to a portion of United Tote's income being recognized as noncontrolling interest, partially offset by a $0.7 million after-tax increase primarily driven by the results of our operations.

Current wording

•Net income attributable to Churchill Downs Incorporated increased $3.9 million. The following impacted the comparability of the Company's net income for the six months ended June 30, 2025 compared to the six months ended June 30, 2024: a $5.5 million after-tax decrease in transaction, pre-open and other expenses and a $1.8 million after-tax impairment charge in the current year quarter related to a write-off of obsolete HRMs in Virginia. These were partially offset by a $6.3 million after-tax decrease in other recoveries, net primarily driven by insurance claim proceeds recorded in the prior year. Excluding these items, net income increased $4.9 million due to a $13.1 million after-tax increase primarily driven by lower state tax expense and the results of our operations, partially offset by a $4.8 million after-tax increase in interest expense associated primarily with higher outstanding debt balances, a $2.2 million after-tax decrease in equity income from our unconsolidated affiliates, and a $1.2 million after-tax increase due to a portion of the Company's income from United Tote being recognized as income attributable to a noncontrolling interest.

Previous wording

•Wagering Services and Solutions revenue increased $1.7 million due to a $3.1 million increase from Exacta due to incremental HRMs in Virginia and New Hampshire and a $0.8 million increase in TwinSpires Horse Racing. These increases were partially offset by a $2.2 million decrease from our sports betting business.

Current wording

•Wagering Services and Solutions revenue increased $10.2 million due to a $6.4 million increase from Exacta attributable to incremental HRMs in Virginia and New Hampshire and a $5.8 million increase in TwinSpires Horse Racing primarily due to Derby Week wagering. These increases were partially offset by a $2.0 million decrease from our sports betting business.

Previous wording

•All Other revenue increased $2.0 million due to intercompany revenue related to the captive insurance company that was established in April 2024. All captive revenue is eliminated in consolidation.

Current wording

•All Other revenue increased due to intercompany revenue related to the captive insurance company that was established in April 2024. All captive revenue is eliminated in consolidation.

Previous wording

Operating expenses increased $43.4 million for the three months ended March 31, 2025 compared to March 31, 2024 primarily due to the opening of Terre Haute Casino Resort in Indiana in April 2024 and the hotel in May 2024, and The Rose Gaming Resort in Virginia in November 2024.

Current wording

Operating expenses increased $46.0 million and $89.4 million for the three and six months ended June 30, 2025 compared to June 30, 2024 primarily due to the opening of Terre Haute Casino Resort in Indiana in April 2024 and the hotel in May 2024, The Rose Gaming Resort in Virginia in November 2024, and Owensboro Racing and Gaming in February 2025. Asset impairments for the three and six months ended June 30, 2025 include a $2.4 million write-off in the second quarter of 2025 of HRMs in Virginia that are no longer in use.

Previous wording

•Wagering Services and Solutions Adjusted EBITDA increased $1.7 million due to a $3.8 million from Exacta due to a $2.7 million increase primarily from incremental HRMs in Virginia and New Hampshire and $1.1 million decrease from lower compensation expense. These increases were partially offset by a $1.1 million decrease from our sports betting business and a $1.0 million decrease attributable to TwinSpires Horse Racing from increased legal expenses.

Current wording

•Wagering Services and Solutions Adjusted EBITDA increased $3.5 million due to a $7.1 million increase from Exacta attributable to incremental HRMs in Virginia and New Hampshire, partially offset by a $3.4 million decrease attributable to TwinSpires Horse Racing and a $0.2 million decrease from our sports betting business.

Previous wording

•All Other Adjusted EBITDA decreased $1.0 million driven primarily by increased corporate compensation related expenses and other corporate administrative expenses driven by enterprise growth.

Current wording

•All Other Adjusted EBITDA decreased $0.6 million driven primarily by increased corporate administrative expenses, offset by a reduction in corporate legal-related fees.

Previous wording

•Total assets increased $71.2 million driven by increased capital expenditures primarily at Churchill Downs Racetrack and Owensboro Racing and Gaming, and an increase in other current assets driven by prepaid insurance and information technology related items.

Current wording

•Total assets increased $99.8 million driven by increased capital expenditures primarily at Churchill Downs Racetrack, Owensboro Racing and Gaming, and at our Richmond and Henrico Virginia HRM locations. Current assets also increased, driven by restricted cash and accounts receivable.

Previous wording

payable due to the payment of the annual dividend, and decreased long-term debt primarily due to payments on the Revolver and Term Loan A.

Current wording

•Total liabilities increased $139.0 million driven primarily by an increase in the outstanding balance on the Revolver, which is included in long-term debt, and increases in income taxes payable and accounts payable. These increases were partially offset by decreased current deferred revenue due to the recognition of revenue related to the 151st Kentucky Derby, and a decrease in dividends payable due to the payment of the annual dividend.

Previous wording

•Total equity decreased $11.9 million driven by share repurchases, partially offset by net income.

Current wording

•Total equity decreased $42.0 million driven by share repurchases, partially offset by net income.

Previous wording

•Cash flows provided by operating activities decreased $8.2 million driven primarily a decrease in cash used for working capital and an increase in operating income, partially offset by increased interest paid and decreased distributions from our unconsolidated affiliates in 2025. 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 $14.4 million driven by a decrease in cash paid income taxes and interest, partially offset by 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 decreased $73.3 million primarily driven by decreased capital expenditures in 2025.

Current wording

•Cash flows used in investing activities decreased $124.0 million driven by a decrease in capital expenditures in 2025.

Previous wording

•Cash flows used in financing activities increased $46.8 million primarily driven by payments on the Revolver, increased payment of dividends, partially offset by decreased stock repurchases in 2025.

Current wording

•Cash flows used in financing activities increased $113.6 million primarily driven by share repurchases in 2025.

Previous wording

We have announced several project capital investments, including the following: Starting Gate Pavilion and Courtyard as well as enhancements to The Mansion and Finish Line Suites at Churchill Downs Racetrack; Marshall Yards Racing and Gaming in Southwestern Kentucky; expansion of the Richmond, Virginia HRM venue; and the Roseshire HRM entertainment venue in Henrico County, Virginia. We currently expect our project capital to be approximately $250.0 to $290.0 million in 2025, although this amount may vary significantly based on the timing of work completed, unanticipated delays, and timing of payments to third parties. The 2025 project capital range was reduced to reflect the temporary pause of The Skye, Conservatory, and Infield General Admission capital projects at Churchill Downs Racetrack.

Current wording

We have announced several project capital investments, including the following: Starting Gate Pavilion and Courtyard (completed in April 2025) as well as enhancements to The Mansion and Finish Line Suites at Churchill Downs Racetrack; Marshall Yards Racing and Gaming in Southwestern Kentucky; expansion of the Richmond, Virginia HRM venue; and the Roseshire HRM entertainment venue in Henrico County, Virginia. We currently expect our project capital to be approximately $250.0 to $290.0 million in 2025, 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 March 12, 2025, the Board of Directors of the Company approved a common stock repurchase program of up to $500.0 million (the "2025 Stock Repurchase Program"). The 2025 Stock Repurchase Program includes and is not in addition to any unspent amount remaining under the prior authorization. Share repurchases may be made at management's discretion from time to time in 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. We had approximately $434.6 million of repurchase authority remaining under the 2025 Stock Repurchase Program at March 31, 2025, based on trade date.

Current wording

On March 12, 2025, the Board of Directors of the Company approved a common stock repurchase program of up to $500.0 million (the "2025 Stock Repurchase Program"). The 2025 Stock Repurchase Program includes and is not in addition to any unspent amount remaining under the prior authorization. Share repurchases may be made at management's discretion from time to time in 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. We had approximately $184.2 million of repurchase authority remaining under the 2025 Stock Repurchase Program at June 30, 2025, based on trade date.

Previous wording

At March 31, 2025, 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"), $288.0 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.

Current wording

At June 30, 2025, 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"), $287.2 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, 2025, that applicable margin was 150 basis points which was based on the pricing grid in the Credit Agreement. The Company had $830.9 million available borrowing capacity, after consideration of $7.4 million in outstanding letters of credit, under the Revolver as of March 31, 2025.

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, 2025, that applicable margin was 150 basis points which was based on the pricing grid in the Credit Agreement. The Company had $686.9 million available borrowing capacity, after consideration of $9.1 million in outstanding letters of credit, under the Revolver as of June 30, 2025.

Previous wording

The estimated contractual payments, including interest, under the Credit Agreement for the next twelve months are estimated to be $170.4 million assuming no change in the weighted average borrowing rate of 5.95%, which was in place as of March 31, 2025. During the three months ended March 31, 2025, we had repayments of principal and interest on the Credit Agreement of $279.2 million.

Current wording

The estimated contractual payments, including interest, under the Credit Agreement for the next twelve months are estimated to be $178.0 million assuming no change in the weighted average borrowing rate of 6.0%, which was in place as of June 30, 2025. During the six months ended June 30, 2025, we had repayments of principal and interest on the Credit Agreement of $603.8 million.

Previous wording

As of March 31, 2025, we had $600.0 million in aggregate principal amount of 5.500% senior unsecured notes that mature on April 1, 2027 (the "2027 Senior Notes"). The 2027 Senior Notes were issued at par in a private offering to qualified institutional buyers, with interest payable in arrears on April 1st and October 1st of each year, commencing on October 1st, 2019. The Company may redeem some or all of the 2027 Senior Notes at redemption prices set forth in the 2027 Indenture.

Current wording

As of June 30, 2025, we had $600.0 million in aggregate principal amount of 5.500% senior unsecured notes that mature on April 1, 2027 (the "2027 Senior Notes"). The 2027 Senior Notes were issued at par in a private offering to qualified institutional buyers, with interest payable in arrears on April 1st and October 1st of each year, commencing on October 1st, 2019. The Company may redeem some or all of the 2027 Senior Notes at redemption prices set forth in the Indenture.

Previous wording

As of March 31, 2025, we had a total of $700.0 million in aggregate principal amount of 4.750% senior unsecured notes (the “2028 Senior Notes”) maturing on January 15, 2028. The 2028 Senior Notes consist of $500.0 million notes issued at par and $200.0 million notes issued at 103.25%. The 2028 Senior Notes were issued in a private offering to qualified institutional buyers, with interest payable in arrears on January 15th and July 15th of each year, commencing on July 15th, 2018. The 3.25% premium is being amortized through interest expense, net over the term of the notes. The Company may redeem some or all the 2028 Senior Notes at redemption prices set forth in the 2028 Indenture.

Current wording

As of June 30, 2025, we had a total of $700.0 million in aggregate principal amount of 4.750% senior unsecured notes (the "2028 Senior Notes") maturing on January 15, 2028. The 2028 Senior Notes consist of $500.0 million notes issued at par and $200.0 million notes issued at 103.25%. The 2028 Senior Notes were issued in a private offering to qualified institutional buyers, with interest payable in arrears on January 15th and July 15th of each year, commencing on July 15th, 2018. The 3.25% premium is being amortized through interest expense, net over the term of the notes. The Company may redeem some or all the 2028 Senior Notes at redemption prices set forth in the Indenture.

Previous wording

As of March 31, 2025, we had $1.2 billion in aggregate principal amount of 5.750% senior unsecured notes that mature on April 13, 2030 (the "2030 Senior Notes"). The 2030 Senior Notes were issued at par in a private offering to qualified institutional buyers, with interest payable in arrears on April 1st and October 1st of each year, commencing on October 1st, 2022. The Company may redeem some or all the 2030 Senior Notes at redemption prices set forth in the 2030 Indenture.

Current wording

As of June 30, 2025, we had $1.2 billion in aggregate principal amount of 5.750% senior unsecured notes that mature on April 13, 2030 (the "2030 Senior Notes"). The 2030 Senior Notes were issued at par in a private offering to qualified institutional buyers, with interest payable in arrears on April 1st and October 1st of each year, commencing on October 1st, 2022. The Company may redeem some or all the 2030 Senior Notes at redemption prices set forth in the Indenture.

Previous wording

As of March 31, 2025, we had $600.0 million in aggregate principal amount of 6.750% senior unsecured notes that mature on April 25, 2031 (the "2031 Senior Notes"). The 2031 Senior Notes were issued at par in a private offering to qualified institutional buyers, with interest payable in arrears on May 1st and November 1st of each year, commencing on November 1st, 2023. The Company may redeem some or all of the 2031 Senior Notes at any time prior to April 25, 2025, at redemption prices set forth in the 2031 Offering Memorandum.

Current wording

As of June 30, 2025, we had $600.0 million in aggregate principal amount of 6.750% senior unsecured notes that mature on April 25, 2031 (the "2031 Senior Notes"). The 2031 Senior Notes were issued at par in a private offering to qualified institutional buyers, with interest payable in arrears on May 1st and November 1st of each year, commencing on November 1st, 2023. The Company may redeem some or all of the 2031 Senior Notes at redemption prices set forth in the Indenture.

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, 2025, minimum rent payable under operating leases was $34.1 million, with $6.7 million due in the next twelve months. As of March 31, 2025, minimum rent payable accounted for as financing obligations was $53.8 million, with $5.1 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, 2025, minimum rent payable under operating leases was $36.4 million, with $7.1 million due in the next twelve months. As of June 30, 2025, minimum rent payable accounted for as financing obligations was $52.5 million, with $5.1 million due in the next twelve months.

Previous 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.

Current wording

The Company has other contractual obligations with commitments of $10.9 million, $1.5 million of which is due within the next twelve months.