Churchill Downs Incorporated Reports 2022 Second Quarter Results

LOUISVILLE, KY., (June 27, 2022) Churchill Downs Incorporated (Nasdaq: CHDN) (the "Company") today reported business results for the second quarter ended June 30, 2022.

Second Quarter 2022 Highlights

  • Record second quarter 2022 results:
    • Record net revenue of $582.5 million compared to $515.1 million in second quarter 2021
    • Record net income of $339.3 million compared to $108.3 million in second quarter 2021
    • Record Adjusted EBITDA of $291.2 million compared to $233.3 million in second quarter 2021
  • Our Live and Historical Racing segment delivered record revenue and Adjusted EBITDA, with Adjusted EBITDA up 67% compared to the second quarter of 2021
    • Churchill Downs Racetrack ran the 148th Kentucky Derby with record Derby Week all-sources handle for Churchill Downs Racetrack, record Derby Week Adjusted EBITDA, and debuted the new Homestretch Club
  • The TwinSpires segment delivered Adjusted EBITDA of $33.9 million, up 38% compared to the second quarter of 2021
  • Closed on the sale of 115.7 acres of excess land near Calder Casino for $291 million
CONSOLIDATED RESULTS
Second Quarter
(in millions, except per share data)20222021
Net revenue$        582.5$        515.1
Net income$        339.3$        108.3
Diluted EPS$        8.79$        2.76
Adjusted EBITDA(a)$        291.2$        233.3
(a) This is a non-GAAP measure. See explanation of non-GAAP measures below.

Second Quarter 2022 Results

The Company's second quarter of 2022 net income was $339.3 million compared to $108.3 million in the prior year quarter.

The following items impacted the comparability of the Company's second quarter net income:

  • $193.6 million after-tax gain on the sale of Calder land;
  • $8.1 million after-tax charge related to the 2021 asset impairment at Churchill Downs Racetrack that did not recur in 2022;
  • $4.7 million after-tax decrease in expenses related to our equity portion of Rivers Des Plaines' legal reserves and transaction costs; and
  • $0.3 million after-tax benefit increase related to our equity portion of the non-cash change in the fair value of Rivers Des Plaines' interest rate swaps.

These increases were partially offset by:

  • $2.8 million after-tax increase in expenses related to transaction, pre-opening and other expenses, net; and
  • $2.3 million after-tax increase in legal reserves.

Excluding the items above, second quarter 2022 adjusted net income increased $29.4 million primarily due to the following:

  • $38.6 million after-tax increase from the prior year quarter driven by the results of our operations and equity income from our unconsolidated affiliates,
  • Partially offset by $9.2 million after-tax increase from the prior year quarter in interest expense associated with higher outstanding debt balances.
SEGMENT RESULTS

During the first quarter of 2022, we updated our operating segments to include the results of our United Tote business in the TwinSpires segment. Results of our United Tote business were previously included in our All Other segment.

The summaries below present net revenue from external customers and intercompany revenue from each of our reportable segments:

Live and Historical Racing

Second Quarter
(in millions)20222021
Net revenue$275.9$190.5
Adjusted EBITDA163.998.4

For the second quarter of 2022, net revenue increased $85.4 million due primarily to a $69.3 million increase at Churchill Downs Racetrack due to the running of the Kentucky Derby in 2022 without capacity restrictions that were in place in 2021, an $8.5 million increase at Oak Grove Racing, Gaming and Hotel ("Oak Grove"), a $4.3 million increase from Derby City Gaming, a $2.9 million increase at Newport Racing & Gaming ("Newport"), and a $0.4 million increase at Turfway Park. The historical racing machine ("HRM") properties benefited from the elimination of the capacity restrictions that were in place during the second quarter of 2021 and overall continued growth in the businesses.

Adjusted EBITDA increased $65.5 million due to a $58.5 million increase at Churchill Downs Racetrack driven by the running of the Kentucky Derby in 2022 without capacity restrictions that were in place in 2021, a $4.0 million increase at Oak Grove, a $1.7 million increase at Derby City Gaming, and a $1.3 million increase at Newport, all of which were driven by increases in net revenue.

TwinSpires

Second Quarter
(in millions)20222021
Net revenue$138.5$142.6
Adjusted EBITDA33.924.6

For the second quarter of 2022, net revenue decreased $4.1 million from the prior year quarter primarily due to a decrease of $2.2 million from Sports and Casino and a $1.9 million decrease from Horse Racing. The decrease in Sports and Casino was driven by the decision to exit the direct online sports and casino business in the first quarter of 2022. Horse Racing net revenue decreased as a higher portion of our patrons returned to wagering at brick-and-mortar facilities instead of wagering online in the current quarter compared to the prior year quarter.

Adjusted EBITDA increased $9.3 million primarily due to a $10.8 million increase from our Sports and Casino business due to decreased online marketing and promotional activities. This increase was partially offset by a $1.2 million decrease from Horse Racing due to a reduction in net revenue and a $0.3 million decrease from United Tote.

Gaming

Second Quarter
(in millions)20222021
Net revenue$184.5$186.0
Adjusted EBITDA106.8119.8

For the second quarter of 2022, net revenue decreased $1.5 million primarily due to a decrease of $4.6 million at Harlow's and a $4.4 million decrease at Riverwalk as a result of the current economic conditions, competitive pressures, and a mask mandate at Harlow's that was discontinued in early June 2022. These decreases were partially offset by a $4.8 million increase at Oxford due to the lifting of restrictions that were in place during the prior year quarter, a $2.1 million increase at Fair Grounds from the 2022 Jazz Festival that more than offset the decline in Fair Grounds Slots revenue due to current economic conditions and the ongoing closure of our Houma off-track betting facility (“OTB”), and a $0.6 million net increase in all other properties.

Adjusted EBITDA decreased $13.0 million driven by a $10.2 million decrease at our wholly-owned Gaming properties and a $2.8 million decrease from our equity investments. The decreases at our wholly-owned Gaming properties are the result of decreased revenue and increases in marketing and salaries expense. The decrease in our equity investments is also driven by increases in marketing and salaries expense.

All Other

For the second quarter of 2022, All Other Adjusted EBITDA decreased $3.9 million primarily driven by a $3.1 million decrease as a result of Arlington not conducting live racing in the second quarter of 2022 as we ceased racing and simulcast operations at the end of 2021. We are excluding Arlington's operating results from Adjusted EBITDA in 2022 pending the sale of the property to the Chicago Bears, which we anticipate to close in the first quarter of 2023.

ACQUISITION / DISPOSITION UPDATE

Peninsula Pacific Entertainment LLC ("P2E") Acquisition:

On February 18, 2022, the Company entered into a definitive purchase agreement to acquire substantially all of the assets of P2E for total consideration of $2.485 billion (the “P2E Acquisition”). The P2E Acquisition contemplates the Company acquiring the following properties: Colonial Downs Racetrack in New Kent, Virginia ("Colonial Downs"), six historical racing entertainment venues across Virginia, del Lago Resort & Casino ("del Lago") in Waterloo, New York, and the operations of Hard Rock Hotel & Casino in Sioux City, Iowa (“Hard Rock Sioux City”).

The Company has obtained the acquisition of ownership interest approval for the Virginia properties from the Virginia Racing Commission. The P2E Transaction remains dependent on customary closing conditions, including the Company obtaining approvals from the New York State Gaming Commission and the Iowa Racing and Gaming Commission. The transaction is expected to close before the end of 2022.

Calder Land Sale:

On June 17, 2022, the Company closed on the previously announced sale of 115.7 acres of excess land near Calder Casino for $291.0 million (or approximately $2.5 million per acre) to Link Logistics, a Blackstone portfolio company. The Company received cash proceeds of $279.0 million which was net of $12.0 million of transaction costs. We recognized a gain of $274.6 million on the sale of the land, which is included in other income (expense) in the accompanying Condensed Consolidated Statements of Comprehensive Income.

The Company is planning on using certain proceeds of the sale to purchase property as part of the previously announced P2E acquisition and to invest in other replacement properties that qualify as Internal Revenue Code §1031 transactions to defer the federal income tax on the gain on the Calder land sale. The Company has identified two reverse like-kind exchange transactions for property acquired prior to the sale of the Calder land and a forward like-kind exchange transaction to acquire additional property for the Internal Revenue Code §1031 transactions.

The first reverse like-kind exchange involved our $9.9 million investment in real property for the Derby City Gaming Downtown facility in Louisville, Kentucky. This reverse like-kind exchange was completed in June 2022.

The second reverse like-kind exchange involves the Company’s investment in real property for the Queen of Terre Haute Casino Resort (“Queen of Terre Haute”) property in Terre Haute, Indiana. As of June 30, 2022, $10.0 million had been invested in real property for the Queen of Terre Haute. The Company plans to make additional investments in real property for the Queen of Terre Haute and expects to complete this reverse like-kind exchange in fourth quarter 2022.

The Company is planning on utilizing the remainder of the proceeds from the Calder land sale to execute a forward like-kind exchange transaction by purchasing property as part of the previously announced P2E Acquisition. The Company anticipates closing the P2E Acquisition prior to the end of 2022. If the acquisition of replacement property is not completed within 180 days of the Calder land sale, all applicable income taxes will be assessed on the remaining gain that was not deferred by acquiring replacement property.

Chasers Poker Room Acquisition:

On March 22, 2022, the Company entered into a definitive purchase agreement to acquire Chasers Poker Room ("Chasers") in Salem, New Hampshire. Chasers is a charitable gaming facility located approximately 30 miles from Boston, Massachusetts, that offers poker and a variety of table games. Following the closing of the acquisition, the Company plans to develop an expanded charitable gaming facility in Salem to accommodate historical racing machines. The Company expects the total investment in Salem, inclusive of the Chasers purchase price to be approximately $150 million. The transaction is expected to close in the third quarter of 2022.

CAPITAL MANAGEMENT

Share Repurchase Program:

The Company repurchased 321,554 shares of its common stock at an average share price of approximately $191.37 based on trade date in conjunction with its publicly announced share repurchase program at a total cost of $61.5 million in the second quarter of 2022. We had approximately $359.1 million of repurchase authority remaining under this program as of June 30, 2022.

April 2022 Financing Transactions:

On April 13, 2022, the Company entered into the fourth amendment of its Credit Agreement (the “Fourth Amendment to the Credit Agreement”) to extend the maturity of its existing revolving credit facility to April 13, 2027 and to increase the commitments under the existing revolving credit facility from $700 million to $1.2 billion (the “Revolver”). The Fourth Amendment to the Credit Agreement also provides for a senior secured Delayed Draw Term Loan A credit facility due April 13, 2027 in the amount of $800 million (the “Delayed Draw Term Loan A”) which is part of the financing for the P2E Acquisition. The interest rate applicable to the borrowings on the Revolver and Delayed Draw Term Loan A will be SOFR plus a spread, determined by the Company’s total net leverage ratio. We also successfully closed into escrow the previously announced offering of $1.2 billion in aggregate principal amount of 5.75% senior notes due 2030. The proceeds from the senior notes offering will also be used for the financing for the P2E Acquisition.

Use of Non-GAAP Measures

In addition to the results provided in accordance with GAAP, the Company also uses non-GAAP measures, including adjusted net income, adjusted diluted EPS, EBITDA (earnings before interest, taxes, depreciation and amortization) and Adjusted EBITDA.

The Company uses non-GAAP measures as a key performance measure of the results of operations for purposes of evaluating performance internally. These measures facilitate comparison of operating performance between periods and help investors to better understand the operating results of the Company by excluding certain items that may not be indicative of the Company's core business or operating results. The Company believes the use of these measures enables management and investors to evaluate and compare, from period to period, the Company’s operating performance in a meaningful and consistent manner. The non-GAAP measures are a supplemental measure of our performance that is not required by, or presented in accordance with, GAAP, and should not be considered as an alternative to, or more meaningful than, net income or diluted EPS (as determined in accordance with GAAP) as a measure of our operating results.

We use Adjusted EBITDA to evaluate segment performance, develop strategy and allocate resources. We utilize the Adjusted EBITDA metric to provide a more accurate measure of our core operating results and enable management and investors to evaluate and compare from period to period our operating performance in a meaningful and consistent manner. Adjusted EBITDA should not be considered as an alternative to operating income as an indicator of performance, as an alternative to cash flows from operating activities as a measure of liquidity, or as an alternative to any other measure provided in accordance with GAAP. Our calculation of Adjusted EBITDA may be different from the calculation used by other companies and, therefore, comparability may be limited.

Adjusted net income and adjusted diluted EPS exclude discontinued operations net income or loss; net income or loss attributable to noncontrolling interest; changes in fair value for interest rate swaps related to Rivers Des Plaines; Rivers Des Plaines' legal reserves and transaction costs; transaction expense, which includes acquisition and disposition related charges, as well as legal, accounting, and other deal-related expense; pre-opening expense; and certain other gains, charges, recoveries, and expenses.

Adjusted EBITDA includes the Company's portion of EBITDA from our equity investments.

Adjusted EBITDA excludes:

  • Transaction expense, net which includes:
    • Acquisition, disposition, and land sale related charges;
    • Direct online Sports and Casino business exit costs; and
    • Other transaction expense, including legal, accounting, and other deal-related expense;
  • Stock-based compensation expense;
  • Rivers Des Plaines' impact on our investments in unconsolidated affiliates from:
    • The impact of changes in fair value of interest rate swaps; and
    • Legal reserves and transaction costs;
  • Asset impairments;
  • Gain on Calder land sale;
  • Legal reserves;
  • Pre-opening expense; and
  • Other charges, recoveries and expenses.

As of December 31, 2021, Arlington ceased racing and simulcast operations given the pending sale of the property to the Chicago Bears. Arlington's operating loss in the current year quarter was treated as an adjustment to EBITDA and is included in Other expenses, net in the Reconciliation of Comprehensive Income to Adjusted EBITDA.

For segment reporting, Adjusted EBITDA includes intercompany revenue and expense totals that are eliminated in the consolidated statements of comprehensive income. Refer to the Reconciliation of Comprehensive Income to Adjusted EBITDA included herewith for additional information.

CHURCHILL DOWNS INCORPORATED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

Three Months Ended June 30,Six Months Ended June 30,
(in millions, except per common share data)2022202120222021
Net revenue:
Live and Historical Racing$260.9$175.9$346.9$239.1
TwinSpires136.8140.8237.1244.3
Gaming184.3186.0361.6338.0
All Other0.512.41.018.0
Total net revenue582.5515.1946.6839.4
Operating expense:
Live and Historical Racing121.4100.3189.1155.0
TwinSpires90.2102.1165.1179.6
Gaming128.8121.0254.0227.3
All Other2.811.75.920.5
Selling, general and administrative expense38.433.474.363.6
Asset impairments11.24.911.2
Transaction expense, net1.26.20.1
Total operating expense382.8379.7699.5657.3
Operating income199.7135.4247.1182.1
Other income (expense):
Interest expense, net(35.1)(22.0)(56.4)(41.4)
Equity in income of unconsolidated affiliates40.536.473.061.3
Gain on Calder land sale274.6274.6
Miscellaneous, net0.20.10.20.2
Total other income280.214.5291.420.1
Income from operations before provision for income taxes479.9149.9538.5202.2
Income tax provision(140.6)(41.6)(157.1)(57.8)
Net income$339.3$108.3$381.4$144.4
Net income per common share data:
Basic net income$8.91$2.80$9.98$3.72
Diluted net income$8.79$2.76$9.85$3.66
Weighted average shares outstanding:
Basic38.138.738.238.8
Diluted38.639.338.739.4

CHURCHILL DOWNS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Unaudited)

(in millions)June 30, 2022December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents$310.2$291.3
Restricted cash1,589.364.3
Accounts receivable, net65.442.3
Income taxes receivable66.0
Other current assets40.037.6
Total current assets2,004.9501.5
Property and equipment, net1,130.1994.9
Investment in and advances to unconsolidated affiliates658.7663.6
Goodwill366.8366.8
Other intangible assets, net352.8348.1
Other assets23.418.9
Long-term assets held for sale82.987.8
Total assets$4,619.6$2,981.6
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable$139.1$81.6
Accrued expenses and other current liabilities282.6231.7
Income taxes payable87.60.9
Current deferred revenue12.147.7
Current maturities of long-term debt7.07.0
Dividends payable26.1
Total current liabilities528.4395.0
Long-term debt, net of current maturities and loan origination fees665.8668.6
Notes payable, net of debt issuance costs2,488.51,292.4
Non-current deferred revenue10.913.3
Deferred income taxes273.3252.9
Other liabilities49.852.6
Total liabilities4,016.72,674.8
Commitments and contingencies
Shareholders' equity:
Preferred stock
Common stock
Retained earnings603.8307.7
Accumulated other comprehensive loss(0.9)(0.9)
Total shareholders' equity602.9306.8
Total liabilities and shareholders' equity$4,619.6$2,981.6

CHURCHILL DOWNS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

Six Months Ended June 30,
(in millions)20222021
Cash flows from operating activities:
Net income$381.4$144.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization51.252.0
Distributions from unconsolidated affiliates77.947.5
Equity in income of unconsolidated affiliates(73.0)(61.3)
Stock-based compensation14.412.6
Deferred income taxes20.47.4
Asset impairments4.911.2
Amortization of operating lease assets2.72.7
Gain on Calder land sale(274.6)
Other2.93.1
Changes in operating assets and liabilities:
Income taxes154.039.5
Deferred revenue(37.9)(12.6)
Other assets and liabilities56.587.8
Net cash provided by operating activities380.8334.3
Cash flows from investing activities:
Capital maintenance expenditures(23.0)(13.7)
Capital project expenditures(144.1)(15.9)
Proceeds from Calder land sale279.0
Other(7.3)(0.9)
Net cash provided by (used in) investing activities104.6(30.5)
Cash flows from financing activities:
Proceeds from borrowings under long-term debt obligations1,200.0780.8
Repayments of borrowings under long-term debt obligations(3.5)(427.4)
Payment of dividends(25.7)(24.8)
Repurchase of common stock(84.5)(193.9)
Taxes paid related to net share settlement of stock awards(13.2)(12.6)
Debt issuance costs(11.4)(6.8)
Change in bank overdraft(3.0)(6.1)
Other(0.2)1.4
Net cash provided by financing activities1,058.5110.6
Cash flows from discontinued operations:
Operating activities of discontinued operations(124.0)
Net increase in cash, cash equivalents and restricted cash1,543.9290.4
Cash, cash equivalents and restricted cash, beginning of period355.6121.0
Cash, cash equivalents and restricted cash, end of period$1,899.5$411.4

CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(Unaudited)

Three Months Ended June 30,Six Months Ended June 30,
(in millions)2022202120222021
GAAP net income$339.3$108.3$381.4$144.4
Adjustments, continuing operations:
Changes in fair value of interest rate swaps related to Rivers Des Plaines(2.2)(1.8)(12.6)(6.0)
Legal reserves and transaction costs related to Rivers Des Plaines0.26.70.58.0
Other charges1.0
Transaction, pre-opening, and other expense5.61.715.22.4
Legal reserves3.23.2
Asset impairments11.24.911.2
Gain on Calder land sale(274.6)(274.6)
Income tax impact on net income adjustments (a)79.1(5.0)77.5(4.3)
Total adjustments(188.7)12.8(184.9)11.3
Adjusted net income attributable to Churchill Downs Incorporated$150.6$121.1$196.5$155.7
Adjusted diluted EPS$3.90$3.08$5.08$3.95
Weighted average shares outstanding - Diluted38.639.338.739.4

(a)   The income tax impact for each adjustment is derived by applying the effective tax rate, including current and deferred income tax expense, based upon the jurisdiction and the nature of the adjustment.

Three Months Ended June 30,Six Months Ended June 30,
(in millions)2022202120222021
Total Handle
Churchill Downs Racetrack$625.6$529.4$630.0$533.2
TwinSpires Horse Racing(a)610.6620.41,005.51,063.5

(a) Total handle generated by Velocity is not included in total handle from TwinSpires Horse Racing.

CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(Unaudited)

Three Months Ended June 30,Six Months Ended June 30,
(in millions)2022202120222021
Net revenue from external customers:
Live and Historical Racing:
Churchill Downs Racetrack$174.2$105.2$176.2$107.2
Derby City Gaming44.239.987.072.8
Oak Grove34.125.664.545.0
Turfway Park1.00.75.55.2
Newport7.44.513.78.9
Total Live and Historical Racing260.9175.9346.9239.1
TwinSpires:
Horse Racing130.6132.4220.6228.9
Sports and Casino6.28.416.515.4
Total TwinSpires136.8140.8237.1244.3
Gaming:
Fair Grounds and VSI37.235.178.773.4
Presque Isle30.330.557.554.3
Ocean Downs27.427.048.747.0
Calder27.927.454.948.3
Oxford29.424.656.240.3
Riverwalk14.018.428.432.8
Harlow’s12.016.625.130.6
Lady Luck Nemacolin6.16.412.111.3
Total Gaming184.3186.0361.6338.0
All Other0.512.41.018.0
Net revenue from external customers$582.5$515.1$946.6$839.4
Intercompany net revenue:
Live and Historical Racing$15.0$14.6$16.2$16.1
TwinSpires1.71.82.83.3
Gaming0.22.12.0
All Other2.44.0
Eliminations(16.9)(18.8)(21.1)(25.4)
Intercompany net revenue$$$$

CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(Unaudited)

Three Months Ended June 30, 2022
(in millions)Live
and Historical
Racing
TwinSpiresGamingTotal
Segments
All OtherTotal
Net revenue from external customers
Pari-mutuel:
Live and simulcast racing$46.5$118.4$5.5$170.4$$170.4
Historical racing(a)78.41.379.779.7
Racing event-related services121.90.2122.1122.1
Gaming(a)6.2158.1164.3164.3
Other(a)14.112.219.245.50.546.0
Total$260.9$136.8$184.3$582.0$0.5$582.5
Three Months Ended June 30, 2021
(in millions)Live
and Historical
Racing
TwinSpiresGamingTotal
Segments
All OtherTotal
Net revenue from external customers
Pari-mutuel:
Live and simulcast racing$39.6$121.6$4.4$165.6$9.5$175.1
Historical racing(a)64.964.964.9
Racing event-related services63.50.263.71.965.6
Gaming(a)8.4170.2178.6178.6
Other(a)7.910.811.229.91.030.9
Total$175.9$140.8$186.0$502.7$12.4$515.1

(a) Food and beverage, hotel, and other services furnished to customers for free as an inducement to wager or through the redemption of our customers' loyalty points are recorded at the estimated standalone selling prices in other revenue with a corresponding offset recorded as a reduction in historical racing pari-mutuel revenue for HRMs or gaming revenue for our casino properties. These amounts were $7.7 million for the three months ended June 30, 2022 and $5.2 million for the three months ended June 30, 2021.

CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(Unaudited)

Six Months Ended June 30, 2022
(in millions)Live
and Historical
Racing
TwinSpiresGamingTotal
Segments
All OtherTotal
Net revenue from external customers
Pari-mutuel:
Live and simulcast racing$52.1$199.9$18.4$270.4$$270.4
Historical racing(a)152.01.3153.3153.3
Racing event-related services122.40.6123.0123.0
Gaming(a)16.5309.0325.5325.5
Other(a)20.420.732.373.41.074.4
Total$346.9$237.1$361.6$945.6$1.0$946.6
Six Months Ended June 30, 2021
(in millions)Live
and Historical
Racing
TwinSpiresGamingTotal
Segments
All OtherTotal
Net revenue from external customers
Pari-mutuel:
Live and simulcast racing$45.5$210.8$16.1$272.4$14.6$287.0
Historical racing(a)117.8117.8117.8
Racing event-related services63.50.964.41.966.3
Gaming(a)15.4302.7318.1318.1
Other(a)12.318.118.348.71.550.2
Total$239.1$244.3$338.0$821.4$18.0$839.4

(a) Food and beverage, hotel, and other services furnished to customers for free as an inducement to wager or through the redemption of our customers' loyalty points are recorded at the estimated standalone selling prices in other revenue with a corresponding offset recorded as a reduction in historical racing pari-mutuel revenue for HRMs or gaming revenue for our casino properties. These amounts were $14.8 million for the six months ended June 30, 2022 and $8.9 million for the six months ended June 30, 2021.

CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(Unaudited)

Adjusted EBITDA by segment is comprised of the following:

Three Months Ended June 30, 2022
(in millions)Live
and Historical
Racing
TwinSpiresGamingTotal
Segments
All OtherEliminationsTotal
Net revenue$275.9$138.5$184.5$598.9$0.2$(16.9)$582.2
Taxes and purses(59.6)(7.2)(68.2)(135.0)(135.0)
Marketing and advertising(6.4)(5.0)(3.7)(15.1)(0.1)(15.2)
Salaries and benefits(18.9)(6.9)(23.5)(49.3)(49.3)
Content expense(1.0)(68.1)(2.2)(71.3)16.4(54.9)
Selling, general and administrative expense(3.0)(2.6)(6.7)(12.3)(13.5)0.5(25.3)
Other operating expense(23.2)(14.8)(22.2)(60.2)(60.2)
Other income0.148.848.948.9
Adjusted EBITDA$163.9$33.9$106.8$304.6$(13.4)$$291.2
Three Months Ended June 30, 2021
(in millions)Live
and Historical
Racing
TwinSpiresGamingTotal
Segments
All OtherEliminationsTotal
Net revenue$190.5$142.6$186.0$519.1$14.8$(18.8)$515.1
Taxes and purses(50.8)(8.3)(70.0)(129.1)(3.9)(133.0)
Marketing and advertising(4.9)(16.7)(2.5)(24.1)(24.1)
Salaries and benefits(15.3)(6.8)(20.6)(42.7)(2.3)(45.0)
Content expense(0.8)(68.5)(1.3)(70.6)(1.8)18.4(54.0)
Selling, general and administrative expense(3.1)(2.9)(5.9)(11.9)(13.4)0.4(24.9)
Other operating expense(17.3)(14.8)(17.7)(49.8)(2.9)(52.7)
Other income0.151.851.951.9
Adjusted EBITDA$98.4$24.6$119.8$242.8$(9.5)$$233.3

CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(Unaudited)

Adjusted EBITDA by segment is comprised of the following:

Six Months Ended June 30, 2022
(in millions)Live
and Historical
Racing
TwinSpiresGamingTotal
Segments
All OtherEliminationsTotal
Net revenue$363.1$239.9$363.7$966.7$0.3$(21.1)$945.9
Taxes and purses(86.4)(14.7)(135.5)(236.6)(236.6)
Marketing and advertising(9.3)(10.1)(7.2)(26.6)(0.1)(26.7)
Salaries and benefits(29.8)(13.6)(47.4)(90.8)(90.8)
Content expense(1.6)(111.2)(3.7)(116.5)20.3(96.2)
Selling, general and administrative expense(6.3)(5.2)(13.3)(24.8)(28.0)0.8(52.0)
Other operating expense(38.0)(27.1)(42.2)(107.3)(0.2)(107.5)
Other income0.183.583.683.6
Adjusted EBITDA$191.8$58.0$197.9$447.7$(28.0)$$419.7
Six Months Ended June 30, 2021
(in millions)Live
and Historical
Racing
TwinSpiresGamingTotal
Segments
All OtherEliminationsTotal
Net revenue$255.2$247.6$340.0$842.8$22.0$(25.4)$839.4
Taxes and purses(70.8)(14.7)(129.3)(214.8)(7.0)(221.8)
Marketing and advertising(7.0)(25.2)(3.9)(36.1)(0.1)(36.2)
Salaries and benefits(25.3)(13.0)(40.5)(78.8)(3.5)(82.3)
Content expense(1.4)(115.0)(2.3)(118.7)(3.1)24.6(97.2)
Selling, general and administrative expense(6.1)(5.5)(11.9)(23.5)(26.0)0.7(48.8)
Other operating expense(28.0)(26.5)(33.2)(87.7)(5.1)0.1(92.7)
Other income0.183.383.40.183.5
Adjusted EBITDA$116.7$47.7$202.2$366.6$(22.7)$$343.9

CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(Unaudited)

Three Months Ended June 30,Six Months Ended June 30,
(in millions)2022202120222021
Reconciliation of Comprehensive Income to Adjusted EBITDA:
Net income and comprehensive income$339.3$108.3$381.4$144.4
Additions:
Depreciation and amortization26.126.051.252.0
Interest expense35.122.056.441.4
Income tax provision140.641.6157.157.8
EBITDA$541.1$197.9$646.1$295.6
Adjustments to EBITDA:
Stock-based compensation expense$7.4$7.1$14.4$12.6
Legal reserves3.23.2
Pre-opening expense2.61.54.72.1
Other expenses, net1.80.24.30.2
Asset impairments11.24.911.2
Transaction expense, net1.26.20.1
Other income, expense:
Interest, depreciation and amortization expense related to equity investments10.510.521.620.1
Changes in fair value of Rivers Des Plaines' interest rate swaps(2.2)(1.8)(12.6)(6.0)
Rivers Des Plaines' legal reserves and transaction costs0.26.70.58.0
Other charges1.0
Gain on Calder land sale(274.6)(274.6)
Total adjustments to EBITDA(249.9)35.4(226.4)48.3
Adjusted EBITDA$291.2$233.3$419.7$343.9
Adjusted EBITDA by segment:
Live and Historical Racing$163.9$98.4$191.8$116.7
TwinSpires33.924.658.047.7
Gaming106.8119.8197.9202.2
Total segment Adjusted EBITDA304.6242.8447.7366.6
All Other(13.4)(9.5)(28.0)(22.7)
Total Adjusted EBITDA$291.2$233.3$419.7$343.9

CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL JOINT VENTURE FINANCIAL STATEMENTS
(Unaudited)

Summarized financial information for our equity investments is comprised of the following:

Summarized Income Statement
Three Months Ended June 30,Six Months Ended June 30,
(in millions)2022202120222021
Net revenue$214.6$197.9$391.8$336.6
Operating and SG&A expense130.7109.8248.9195.4
Depreciation and amortization6.34.411.68.7
Total operating expense137.0114.2260.5204.1
Operating income77.683.7131.3132.5
Interest and other expense, net(7.3)(19.7)(3.2)(24.3)
Net income$70.3$64.0$128.1$108.2
Summarized Balance Sheet
(in millions)June 30, 2022December 31, 2021
Assets
Current assets$88.4$96.0
Property and equipment, net349.0312.3
Other assets, net263.6264.1
Total assets$701.0$672.4
Liabilities and Members' Deficit
Current liabilities$109.8$95.3
Long-term debt827.8786.9
Other liabilities20.6
Members' deficit(236.6)(230.4)
Total liabilities and members' deficit$701.0$672.4

CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(Unaudited)

Planned capital projects for the Company are as follows:

(in millions)ProjectTarget CompletionPlanned Spend
Live and Historical Racing Segment
Churchill Downs RacetrackTurn 1 ExperienceMay 2023$90
Paddock / Under the SpiresMay 2024$185 - $200
Turfway ParkHRM FacilitySeptember 2022$148
Derby City GamingExpansion and HotelLate 2022 / Second Quarter 2023$76
Derby City Gaming DowntownProperty Build OutSecond Half 2023$80
Oak GroveOak Grove AnnexTBDTBD
New Hampshire Charitable Gaming FacilityAcquisition and Property Build Out2022 / 2023Up to $150
Gaming Segment
Managed Properties
Queen of Terre Haute Casino ResortProperty Build OutLate 2023Up to $260
Fair Grounds and VSIHRMs in OTBsFirst Quarter 2023$35

About Churchill Downs Incorporated

Churchill Downs Incorporated is an industry-leading racing, online wagering and gaming entertainment company anchored by our iconic flagship event, the Kentucky Derby. We own and operate three entertainment venues with approximately 3,050 historical racing machines in Kentucky. We also own and operate TwinSpires, one of the largest and most profitable online wagering platforms for horse racing in the U.S. and we have nine retail sportsbooks. We are also a leader in brick-and-mortar casino gaming in nine states with approximately 11,000 slot machines and video lottery terminals and 200 table games. Additional information about Churchill Downs Incorporated can be found online at www.churchilldownsincorporated.com.

Press Contacts

Nick Zangari
Vice President, Treasury, Investor Relations & Risk Management

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About Churchill Downs Incorporated

Churchill Downs Incorporated is an industry-leading racing, online wagering and gaming entertainment company anchored by our iconic flagship event, the Kentucky Derby. We own and operate three entertainment venues with approximately 3,050 historical racing machines in Kentucky. We also own and operate TwinSpires, one of the largest and most profitable online wagering platforms for horse racing in the U.S. and we have nine retail sportsbooks. We are also a leader in brick-and-mortar casino gaming in nine states with approximately 11,000 slot machines and video lottery terminals and 200 table games. Additional information about Churchill Downs Incorporated can be found online at www.churchilldownsincorporated.com.

Press Contacts

Nick Zangari
Vice President, Treasury, Investor Relations & Risk Management

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Churchill Downs Incorporated Reports 2022 First Quarter Results

LOUISVILLE, KY., (April 27, 2022) Churchill Downs Incorporated (Nasdaq: CHDN) (the "Company", "we", "us", "our") today reported business results for the first quarter ended March 31, 2022.

First Quarter 2022 Highlights

  • Record First Quarter 2022 results:
    • Record net revenue of $364.1 million compared to $324.3 million in first quarter 2021
    • Record net income of $42.1 million compared to $36.1 million in first quarter 2021
    • Record Adjusted EBITDA of $128.5 million compared to $110.6 million in first quarter 2021
  • Our Gaming segment delivered double digit revenue and Adjusted EBITDA growth in first quarter 2022 compared to first quarter 2021
  • Announced a definitive agreement to acquire substantially all of the assets of Peninsula Pacific Entertainment LLC ("P2E") for total consideration of $2.485 billion
    • Completed the financing for the P2E acquisition by closing a $1.2 billion senior secured revolver due 2027, an $800 million senior secured delayed draw term loan A due 2027, and issuing $1.2 billion of senior secured notes due 2030 on April 13, 2022
  • Completed the first two phases of the previously announced $90 million expansion of Rivers Casino Des Plaines ("Rivers Des Plaines")
  • Announced a definitive agreement to acquire Chasers Poker Room in Salem, New Hampshire, with plans to develop an expanded charitable gaming facility to accommodate historical racing machines ("HRMs") with a total investment of up to $150 million
CONSOLIDATED RESULTS
First Quarter
(in millions, except per share data)20222021
Net revenue$364.1$324.3
Net income$42.1$36.1
Diluted EPS$1.08$0.91
Adjusted EBITDA(a)$128.5$110.6
(a) This is a non-GAAP measure. See explanation of non-GAAP measures below.

First Quarter 2022 Results

The Company's first quarter of 2022 net income was $42.1 million compared to $36.1 million in the prior year's first quarter.

The following items impacted the comparability of the Company's first quarter net income:

  • $6.3 million after-tax increase in transaction, pre-opening and other expenses from the prior year quarter related primarily to pre-opening expenses for Turfway Park and P2E transaction expenses;
  • $3.5 million after-tax non-cash impairment charge driven by the decision to exit the direct online Sports and Casino business; and
  • $0.7 million primarily related to our equity portion of Miami Valley Gaming's after-tax non-cash impairment charge related to prior expansion plans.

These increases were partially offset by:

  • $4.5 million after-tax benefit increase related to our equity portion of the non-cash change in the fair value of Rivers Des Plaines' interest rate swaps; and
  • $0.7 million after-tax decrease related to our equity portion of Rivers Des Plaines' legal reserves and transaction costs.

Excluding the items above, first quarter 2022 net income increased $11.3 million primarily due to the following:

  • $12.9 million after-tax increase from the prior year quarter driven by the results of our operations and equity income from our unconsolidated affiliates,
  • Partially offset by $1.6 million after-tax increase from the prior year quarter in interest expense associated with higher outstanding debt balances.
SEGMENT RESULTS

During the first quarter of 2022, we updated our operating segments to include the results of our United Tote business in the TwinSpires segment. We are evolving our strategy to integrate the United Tote offering with TwinSpires Horse Racing, which we believe will create additional business to business revenue opportunities. Results of our United Tote business were previously included in our All Other segment.

The summaries below present net revenue from external customers and intercompany revenue from each of our reportable segments:

Live and Historical Racing

First Quarter
(in millions)20222021
Net revenue$87.2$64.7
Adjusted EBITDA27.918.3

For the first quarter of 2022, net revenue increased $22.5 million due primarily to an $11.0 million increase at Oak Grove Racing, Gaming and Hotel ("Oak Grove"), a $9.9 million increase from Derby City Gaming, and a $1.9 million increase at Newport Racing & Gaming ("Newport"). Oak Grove and Derby City Gaming reflected the benefit of the elimination of the operating restrictions that were in place during the first quarter of 2021 and overall continued growth in the businesses.

Adjusted EBITDA increased $9.6 million due to a $5.3 million increase at Oak Grove, a $5.2 million increase at Derby City Gaming, and a $0.7 million increase at Newport from the increase in net revenue. Partially offsetting these increases was a $1.2 million decrease at Churchill Downs Racetrack due to the timing of Derby Week expenses and a $0.4 million decrease from higher expenses at Turfway Park.

TwinSpires

First Quarter
(in millions)20222021
Net revenue$101.4$105.0
Adjusted EBITDA24.123.1

For the first quarter of 2022, net revenue decreased $3.6 million from the prior year quarter primarily due to a $6.9 million decrease from Horse Racing that was partially offset by a $3.3 million increase from Sports and Casino. Horse Racing net revenue decreased as a portion of our patrons returned to wagering at brick-and-mortar facilities in the current quarter instead of wagering online. Sports and Casino net revenue increased as a result of our expansion into additional states during 2021.

Adjusted EBITDA increased $1.0 million primarily due to a $3.7 million increase from our Sports and Casino business due to decreased marketing and promotional activities and a $0.6 million increase at United Tote. Partially offsetting these increases was a decrease from Horse Racing of $3.3 million due to the reduction in net revenue.

Gaming

First Quarter
(in millions)20222021
Net revenue$179.2$154.0
Adjusted EBITDA91.182.4

For the first quarter of 2022, net revenue increased $25.2 million primarily due to certain capacity restrictions on patrons and gaming during the prior year quarter that were no longer in place at Oxford, Calder, and Presque Isle.

Adjusted EBITDA increased $8.7 million driven by a $5.6 million increase at our wholly-owned Gaming properties due to increased net revenue and a $3.1 million increase from our equity investments, both of which were due to certain capacity restrictions on patrons and gaming during the prior year quarter.

All Other

For the first quarter of 2022, All Other Adjusted EBITDA decreased $1.4 million driven by a $2.6 million increase in legal fees and timing of other Corporate expenses that was partially offset by a $1.2 million decrease in the Arlington operating loss in the current year quarter compared to the prior year quarter as a result of Arlington ceasing racing and simulcast operations at the end of 2021. We are excluding Arlington's operating results from Adjusted EBITDA in 2022 pending the sale of the property to the Chicago Bears.

CAPITAL MANAGEMENT

Share Repurchase Program:

The Company repurchased 116,863 shares of its common stock in conjunction with its publicly announced share repurchase program at a total cost of $25.0 million in the first quarter of 2022. We had approximately $420.6 million repurchase authority remaining under this program as of March 31, 2022.

April 2022 Financing Transactions:

On April 13, 2022, the Company announced an amendment of its senior secured credit agreement (the “Credit Agreement Amendment”) to extend the maturity date of its existing revolving credit facility to 2027 and to increase the commitments under the existing revolving credit facility from $700 million to $1.2 billion (the "Revolver"). The Credit Agreement Amendment also provides for a senior secured delayed draw term loan A credit facility due 2027 in the amount of $800 million (the “Delayed Draw Term Loan A”) and makes certain other changes to its existing credit agreement. The interest rate applicable to borrowings on the Revolver and Delayed Draw Term Loan A will be secured financing overnight rate-based plus a spread, determined by the Company’s total net leverage ratio. The Company also successfully closed into escrow the previously announced offering of $1.2 billion in aggregate principal amount of its 5.750% senior notes due 2030.

Conference Call

A conference call regarding this news release is scheduled for Thursday, April 28, 2022, at 9 a.m. ET. Investors and other interested parties may listen to the teleconference by accessing the online, real-time webcast and broadcast of the call at http://ir.churchilldownsincorporated.com/events.cfm, or by dialing (877) 372-0878 and entering the pass code 9395627 at least 10 minutes before the appointed time. International callers should dial (253) 237-1169. An online replay will be available at approximately noon ET on Thursday, April 28, 2022, and will continue to be available for two weeks. A copy of the Company’s news release announcing quarterly results and relevant financial and statistical information about the period will be accessible at www.churchilldownsincorporated.com.

Use of Non-GAAP Measures

In addition to the results provided in accordance with GAAP, the Company also uses non-GAAP measures, including adjusted net income, adjusted diluted EPS, EBITDA (earnings before interest, taxes, depreciation and amortization) and Adjusted EBITDA.

The Company uses non-GAAP measures as a key performance measure of the results of operations for purposes of evaluating performance internally. These measures facilitate comparison of operating performance between periods and help investors to better understand the operating results of the Company by excluding certain items that may not be indicative of the Company's core business or operating results. The Company believes the use of these measures enables management and investors to evaluate and compare, from period to period, the Company’s operating performance in a meaningful and consistent manner. The non-GAAP measures are a supplemental measure of our performance that is not required by, or presented in accordance with, GAAP, and should not be considered as an alternative to, or more meaningful than, net income or diluted EPS (as determined in accordance with GAAP) as a measure of our operating results.

We use Adjusted EBITDA to evaluate segment performance, develop strategy and allocate resources. We utilize the Adjusted EBITDA metric to provide a more accurate measure of our core operating results and enable management and investors to evaluate and compare from period to period our operating performance in a meaningful and consistent manner. Adjusted EBITDA should not be considered as an alternative to operating income as an indicator of performance, as an alternative to cash flows from operating activities as a measure of liquidity, or as an alternative to any other measure provided in accordance with GAAP. Our calculation of Adjusted EBITDA may be different from the calculation used by other companies and, therefore, comparability may be limited.

Adjusted net income and adjusted diluted EPS exclude discontinued operations net income or loss; net income or loss attributable to noncontrolling interest; changes in fair value for interest rate swaps related to Rivers Des Plaines; Rivers Des Plaines' legal reserves and transaction costs; transaction expense, which includes acquisition and disposition related charges, as well as legal, accounting, and other deal-related expense; pre-opening expense; and certain other gains, charges, recoveries, and expenses.

Adjusted EBITDA includes the Company's portion of EBITDA from our equity investments.

Adjusted EBITDA excludes:

  • Transaction expense, net which includes:
    • Acquisition, disposition, and land sale related charges;
    • Direct online Sports and Casino business exit costs; and
    • Other transaction expense, including legal, accounting, and other deal-related expense;
  • Stock-based compensation expense;
  • Rivers Des Plaines' impact on our investments in unconsolidated affiliates from:
    • The impact of changes in fair value of interest rate swaps; and
    • Legal reserves and transaction costs;
  • Asset impairments;
  • Legal reserves;
  • Pre-opening expense; and
  • Other charges, recoveries and expenses.

As of December 31, 2021, Arlington ceased racing and simulcast operations given the pending sale of the property to the Chicago Bears. Arlington's operating loss in the current year quarter was treated as an adjustment to EBITDA and is included in other Other expenses, net in the Reconciliation of Comprehensive Income to Adjusted EBITDA.

For segment reporting, Adjusted EBITDA includes intercompany revenue and expense totals that are eliminated in the consolidated statements of comprehensive income. Refer to the Reconciliation of Comprehensive Income to Adjusted EBITDA included herewith for additional information.

CHURCHILL DOWNS INCORPORATED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

Three Months Ended March 31,
(in millions, except per common share data)20222021
Net revenue:
Live and Historical Racing$86.0$63.2
TwinSpires100.3103.5
Gaming177.3152.0
All Other0.55.6
Total net revenue364.1324.3
Operating expense:
Live and Historical Racing67.754.7
TwinSpires74.977.5
Gaming125.2106.3
All Other3.18.8
Selling, general and administrative expense35.930.2
Asset impairments4.9
Transaction expense, net5.00.1
Total operating expense316.7277.6
Operating income47.446.7
Other income (expense):
Interest expense, net(21.3)(19.4)
Equity in income of unconsolidated affiliates32.524.9
Miscellaneous, net0.1
Total other income (expense)11.25.6
Income from operations before provision for income taxes58.652.3
Income tax provision(16.5)(16.2)
Net income$42.1$36.1
Net income per common share data:
Basic net income$1.10$0.93
Diluted net income$1.08$0.91
Weighted average shares outstanding:
Basic38.339.0
Diluted38.839.6

CHURCHILL DOWNS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Unaudited)

(in millions)March 31, 2022December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents$294.5$291.3
Restricted cash65.564.3
Accounts receivable, net46.042.3
Income taxes receivable59.866.0
Other current assets54.537.6
Total current assets520.3501.5
Property and equipment, net1,035.8994.9
Investment in and advances to unconsolidated affiliates655.5663.6
Goodwill366.8366.8
Other intangible assets, net351.9348.1
Other assets18.818.9
Long-term assets held for sale87.887.8
Total assets$3,036.9$2,981.6
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable$96.9$81.6
Accrued expenses and other current liabilities224.3232.6
Current deferred revenue104.047.7
Current maturities of long-term debt7.07.0
Dividends payable26.1
Total current liabilities432.2395.0
Long-term debt, net of current maturities and loan origination fees667.2668.6
Notes payable, net of debt issuance costs1,292.71,292.4
Non-current deferred revenue13.313.3
Deferred income taxes263.1252.9
Other liabilities50.652.6
Total liabilities2,719.12,674.8
Commitments and contingencies
Shareholders' equity:
Preferred stock
Common stock
Retained earnings318.7307.7
Accumulated other comprehensive loss(0.9)(0.9)
Total shareholders' equity317.8306.8
  Total liabilities and shareholders' equity$3,036.9$2,981.6

CHURCHILL DOWNS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

Three Months Ended March 31,
(in millions)20222021
Cash flows from operating activities:
Net income$42.1$36.1
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization25.126.0
Distributions from unconsolidated affiliates40.622.0
Equity in income of unconsolidated affiliates(32.5)(24.9)
Stock-based compensation7.05.5
Deferred income taxes10.25.7
Asset impairments4.9
Amortization of operating lease assets1.30.2
Other1.21.2
Changes in operating assets and liabilities:
Income taxes6.49.2
Deferred revenue56.321.0
Other assets and liabilities(27.4)2.2
  Net cash provided by operating activities135.2104.2
Cash flows from investing activities:
Capital maintenance expenditures(10.0)(4.7)
Capital project expenditures(45.5)(7.6)
Other(7.3)
  Net cash used in investing activities(62.8)(12.3)
Cash flows from financing activities:
Proceeds from borrowings under long-term debt obligations780.8
Repayments of borrowings under long-term debt obligations(1.8)(425.7)
Payment of dividends(25.7)(24.8)
Repurchase of common stock(24.3)(193.9)
Taxes paid related to net share settlement of stock awards(13.1)(12.6)
Debt issuance costs(5.8)
Change in bank overdraft(3.0)(12.8)
Other(0.1)1.6
  Net cash (used in) provided by financing activities(68.0)106.8
Cash flows from discontinued operations:
Operating activities of discontinued operations(124.0)
Net increase in cash, cash equivalents and restricted cash4.474.7
Cash, cash equivalents and restricted cash, beginning of period355.6121.0
Cash, cash equivalents and restricted cash, end of period$360.0$195.7

CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(Unaudited)

Three Months Ended March 31,
(in millions)20222021
GAAP net income$42.1$36.1
Adjustments, continuing operations:
Changes in fair value of interest rate swaps related to Rivers Des Plaines(10.4)(4.2)
Legal reserves and transaction costs related to Rivers Des Plaines0.31.3
Other charges1.0
Transaction, pre-opening, and other expense9.60.7
Asset impairments4.9
Income tax impact on net income adjustments(a)(1.6)0.7
Total adjustments3.8(1.5)
Adjusted net income attributable to Churchill Downs Incorporated$45.9$34.6
Adjusted diluted EPS$1.18$0.87
Weighted average shares outstanding - Diluted38.839.6

(a)   The income tax impact for each adjustment is derived by applying the effective tax rate, including current and deferred income tax expense, based upon the jurisdiction and the nature of the adjustment.

Three Months Ended March 31,
(in millions)20222021
Total Handle
Churchill Downs Racetrack$4.4$3.8
TwinSpires Horse Racing(a)394.9443.1

(a) Total handle generated by Velocity is not included in total handle from TwinSpires Horse Racing.

CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(Unaudited)

Three Months Ended March 31,
(in millions)20222021
Net revenue from external customers:
Live and Historical Racing:
Churchill Downs Racetrack$2.0$2.0
Derby City Gaming42.832.9
Oak Grove30.419.4
Turfway Park4.54.5
Newport6.34.4
Total Live and Historical Racing86.063.2
TwinSpires:
Horse Racing90.096.5
Sports and Casino10.37.0
Total TwinSpires100.3103.5
Gaming:
Fair Grounds and VSI41.538.3
Presque Isle27.223.8
Ocean Downs21.320.0
Calder27.020.9
Oxford26.815.7
Riverwalk14.414.4
Harlow’s13.114.0
Lady Luck Nemacolin6.04.9
Total Gaming177.3152.0
All Other0.55.6
Net revenue from external customers$364.1$324.3
Intercompany net revenue:
Live and Historical Racing$1.2$1.5
TwinSpires1.11.5
Gaming1.92.0
All Other1.6
Eliminations(4.2)(6.6)
Intercompany net revenue$$

CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(Unaudited)

Three Months Ended March 31, 2022
(in millions)Live and
Historical
Racing
TwinSpiresGamingTotal
Segments
All OtherTotal
Net revenue from external customers
Pari-mutuel:
Live and simulcast racing$5.6$81.5$12.9$100.0$$100.0
Historical racing(a)73.673.673.6
Racing event-related services0.50.40.90.9
Gaming(a)10.3150.9161.2161.2
Other(a)6.38.513.127.90.528.4
Total$86.0$100.3$177.3$363.6$0.5$364.1
Three Months Ended March 31, 2021
(in millions)Live and
Historical
Racing
TwinSpiresGamingTotal
Segments
All OtherTotal
Net revenue from external customers
Pari-mutuel:
Live and simulcast racing$5.9$89.2$11.7$106.8$5.1$111.9
Historical racing(a)52.952.952.9
Racing event-related services0.70.70.7
Gaming(a)7.0132.5139.5139.5
Other(a)4.47.37.118.80.519.3
Total$63.2$103.5$152.0$318.7$5.6$324.3

(a)      Food and beverage, hotel, and other services furnished to customers for free as an inducement to wager or through the redemption of our customers' loyalty points are recorded at the estimated standalone selling prices in other revenue with a corresponding offset recorded as a reduction in historical racing pari-mutuel revenue for HRMs or gaming revenue for our casino properties. These amounts were $7.0 million for the three months ended March 31, 2022 and $3.7 million for the three months ended March 31, 2021.

CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(Unaudited)

Adjusted EBITDA by segment is comprised of the following:

Three Months Ended March 31, 2022
(in millions)Live and Historical RacingTwinSpiresGamingTotal SegmentsAll OtherEliminationsTotal
Net revenue$        87.2$        101.4$        179.2$        367.8$        0.1$        (4.2)$        363.7
Taxes and purses        (26.8)        (7.5)        (67.3)        (101.6)        —        —        (101.6)
Marketing and advertising        (2.9)        (5.1)        (3.5)        (11.5)        —        —        (11.5)
Salaries and benefits        (10.9)        (6.7)        (23.9)        (41.5)        —        —        (41.5)
Content expense        (0.6)        (43.1)        (1.5)        (45.2)        —        3.9        (41.3)
Selling, general and administrative expense        (3.3)        (2.6)        (6.6)        (12.5)        (14.5)        0.3        (26.7)
Other operating expense        (14.8)        (12.3)        (20.0)        (47.1)        (0.2)        —        (47.3)
Other income        —        —        34.7        34.7        —        —        34.7
Adjusted EBITDA$        27.9$        24.1$        91.1$        143.1$        (14.6)$        —$        128.5
Three Months Ended March 31, 2021
(in millions)Live and Historical RacingTwinSpiresGamingTotal SegmentsAll OtherEliminationsTotal
Net revenue$        64.7$        105.0$        154.0$        323.7$        7.2$        (6.6)$        324.3
Taxes and purses        (20.0)        (6.4)        (59.3)        (85.7)        (3.1)        —        (88.8)
Marketing and advertising        (2.1)        (8.5)        (1.4)        (12.0)        (0.1)        —        (12.1)
Salaries and benefits        (10.0)        (6.2)        (19.9)        (36.1)        (1.2)        —        (37.3)
Content expense        (0.6)        (46.5)        (1.0)        (48.1)        (1.3)        6.2        (43.2)
Selling, general and administrative expense        (3.0)        (2.6)        (6.0)        (11.6)        (12.6)        0.3        (23.9)
Other operating expense        (10.7)        (11.7)        (15.5)        (37.9)        (2.2)        0.1        (40.0)
Other income        —        —        31.5        31.5        0.1        —        31.6
Adjusted EBITDA$        18.3$        23.1$        82.4$        123.8$        (13.2)$        —$        110.6

CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(Unaudited)

Three Months Ended March 31,
(in millions)20222021
Reconciliation of Comprehensive Income to Adjusted EBITDA:
Net income and comprehensive income$42.1$36.1
Additions:
Depreciation and amortization25.126.0
Interest expense21.319.4
Income tax provision16.516.2
EBITDA$105.0$97.7
Adjustments to EBITDA:
Stock-based compensation expense$7.0$5.5
Pre-opening expense2.10.6
Other expenses, net2.5
Asset impairments4.9
Transaction expense, net5.00.1
Other income, expense:
Interest, depreciation and amortization expense related to equity investments11.19.6
Changes in fair value of Rivers Des Plaines' interest rate swaps(10.4)(4.2)
Rivers Des Plaines' legal reserves and transaction costs0.31.3
Other charges1.0
  Total adjustments to EBITDA23.512.9
Adjusted EBITDA$128.5$110.6
Adjusted EBITDA by segment:
Live and Historical Racing$27.9$18.3
TwinSpires24.123.1
Gaming91.182.4
Total segment Adjusted EBITDA143.1123.8
All Other(14.6)(13.2)
Total Adjusted EBITDA$128.5$110.6

CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL JOINT VENTURE FINANCIAL STATEMENTS
(Unaudited)

Summarized financial information for our equity investments is comprised of the following:

Summarized Income Statement
Three Months Ended March 31,
(in millions)20222021
Net revenue$177.2$138.7
Operating and SG&A expense118.285.6
Depreciation and amortization5.34.3
Total operating expense123.589.9
Operating income53.748.8
Interest and other expense, net4.1(4.6)
Net income$57.8$44.2
Summarized Balance Sheet
(in millions)March 31, 2022December 31, 2021
Assets
Current assets$96.8$96.0
Property and equipment, net336.4312.3
Other assets, net263.5264.1
Total assets$696.7$672.4
Liabilities and Members' Deficit
Current liabilities$128.6$95.3
Long-term debt807.4786.9
Other liabilities3.620.6
Members' deficit(242.9)(230.4)
Total liabilities and members' deficit$696.7$672.4

CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL INFORMATION
(Unaudited)

Planned capital projects for the Company are as follows:

(in millions)ProjectTarget CompletionPlanned Spend
Live and Historical Racing Segment
Churchill Downs RacetrackHome Stretch ClubMay 2022$45
Turn 1 ExperienceMay 2023$90
Paddock ProjectMay 2024$185 - $200
Turfway ParkHRM FacilitySeptember 2022$148
Derby City GamingExpansion and HotelLate 2022 / Second Quarter 2023$76
Derby City Gaming DowntownProperty Build OutSecond Quarter 2023$80
Oak GroveOak Grove AnnexTBDTBD
New Hampshire Charitable Gaming FacilityAcquisition and Property Build OutTBD$150
Gaming Segment
Managed Properties
Queen of Terre Haute Casino ResortProperty Build OutLate 2023up to $260
Fair Grounds and VSIHRMs in OTBs2022$35
Equity Investments
Rivers Des Plaines(a)ExpansionSpring 2022$90
Miami Valley Gaming(a)Outdoor Gaming Patio ExpansionThird Quarter 2022$12

(a)      Capital investments at Rivers Des Plaines and Miami Valley Gaming are funded through operating cash flow and debt facilities at the joint venture entity and are not funded by CDI.

About Churchill Downs Incorporated

Churchill Downs Incorporated is an industry-leading racing, online wagering and gaming entertainment company anchored by our iconic flagship event, the Kentucky Derby. We own and operate three entertainment venues with approximately 3,050 historical racing machines in Kentucky. We also own and operate TwinSpires, one of the largest and most profitable online wagering platforms for horse racing in the U.S. and we have nine retail sportsbooks. We are also a leader in brick-and-mortar casino gaming in nine states with approximately 11,000 slot machines and video lottery terminals and 200 table games. Additional information about Churchill Downs Incorporated can be found online at www.churchilldownsincorporated.com.

Press Contacts

Nick Zangari
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Churchill Downs Incorporated Announces Definitive Agreement to Acquire Substantially All of the Assets of Peninsula Pacific Entertainment

Transaction Significantly Expands the Geographic Footprint of CDI’s Live and Historical Racing Entertainment Venues and Increases Scale

 LOUISVILLE, KY., (February 22, 2022) Churchill Downs Incorporated (“CDI” or the “Company”) (Nasdaq: CHDN) announced today that the Company has entered into a definitive purchase agreement to acquire substantially all of the assets of Peninsula Pacific Entertainment LLC (“P2E”) for total consideration of $2.485 billion (the “P2E Transaction”). CDI will acquire all of P2E’s assets in Virginia and New York as well as the operations of its Sioux City casino property. The P2E Transaction is dependent on usual and customary closing conditions, including the Company obtaining approvals from the Virginia Racing Commission, the New York State Gaming Commission, and the Iowa Racing and Gaming Commission. The transaction is expected to close by the end of 2022.

“This unique set of assets expands our geographic footprint and provides additional scale,” said Bill Carstanjen, Chief Executive Officer of CDI. “P2E has done an exceptional job developing and managing this collection of assets, which we are very excited to acquire and plan to strategically grow in the years ahead.”

Colonial Downs Racetrack and Virginia Historical Racing Entertainment Venues

CDI will acquire Colonial Downs Racetrack, a Thoroughbred racing facility in New Kent, Virginia (“Colonial Downs”), as well as six successful and growing “Rosie’s Gaming Emporium” historical horse racing facilities across Virginia. Rosie’s Gaming Emporium locations currently include Collinsville, Dumfries, Hampton, New Kent, Richmond and Vinton.  These facilities currently have approximately 2,700 historical racing machines (“HRMs”). The transaction significantly expands the geographic diversity of CDI’s live and historical racing entertainment venues and reinforces CDI’s role as a national leader in historical horse racing.

del Lago Resort & Casino in Waterloo, New York
CDI will acquire del Lago Resort & Casino (“del Lago”) in Waterloo, New York. del Lago is a 96,000 sq. ft. casino with approximately 1,700 slot machines, 80 table games, a 205-room hotel, nine restaurants / bar areas, 758 covered parking spaces, a 6,000 sq. ft. sportsbook area, a 2,400-seat entertainment venue, and a 7,200 sq. ft. outdoor event venue.

 Hard Rock Hotel & Casino in Sioux City, Iowa
CDI will acquire the operations of Hard Rock Hotel & Casino in Sioux City, Iowa (“Hard Rock Sioux City”). Hard Rock Sioux City is a 45,000 sq. ft. casino with 639 slot machines, 20 table games, a 54-room hotel, 1,511 parking spaces with 530 covered, two live entertainment venues, a 100-piece music memorabilia collection, and a Hard Rock-branded sportsbook.

Under the terms of the P2E Transaction, P2E is expected to reach a definitive agreement to sell the real property associated with Hard Rock Sioux City (“Sioux City Property”) to a third party. CDI will acquire the operating company and lease the Sioux City Property from that third party. Following the closing, CDI will operate Hard Rock Sioux City and lease the Sioux City Property pursuant to lease terms negotiated prior to the closing. In the event P2E is unsuccessful in reaching a definitive agreement with a third party to purchase the Sioux City Property by a certain date, the Sioux City Property will be included in the P2E Transaction and the total consideration will increase to $2.75 billion.

Other Development Rights
Under Virginia law, CDI will have the opportunity to develop up to five additional historical racing entertainment venues in Virginia with collectively up to approximately 2,300 additional HRMs. As part of the P2E Transaction, CDI will also acquire the rights to build a large gaming resort (the “Dumfries Project”), with up to 1,800 HRMs in Northern Virginia. P2E previously announced plans to invest up to $400 million to build the initial phase of the Dumfries Project, which is scheduled to open in 2023.

CDI will also acquire the rights to develop Rosie’s Gaming Emporium in Emporia, the seventh historical racing entertainment venue under P2E’s Colonial Downs license. The Emporia facility, located along I-95 near the North Carolina border, will have 150 HRMs and is expected to open in 2023.

Also, included in the P2E Transaction are the rights to P2E’s ongoing effort in partnership with Urban One, to develop ONE Casino + Resort, a $565 million destination casino in Richmond, Virginia.

P2E’s gaming license in the State of Louisiana, and its casino development rights in Cedar Rapids, Iowa, are not included in the transaction.

Valuation and Financing
The P2E Transaction purchase price represents a multiple of less than 9.0x Adjusted EBITDA. This purchase price multiple includes the incremental value from the recent opening and expansion of certain Virginia facilities and the incremental value that CDI expects to realize from the acquisition of the development rights related to historical horse racing in Virginia. For tax purposes, the acquisition will be treated as an asset purchase allowing CDI to realize incremental tax benefits which will provide additional cash flow and will enhance the overall economics of the transaction.

The P2E Transaction is expected to be immediately accretive to CDI’s free cash flow and diluted earnings per share. CDI will fund the P2E Transaction with a combination of new debt and cash on hand including pending proceeds from the sale of land near Calder Casino. Consolidated proforma bank covenant leverage is projected to be less than 4.2x upon completion of the P2E Transaction.

As previously disclosed, the Company is planning to use the proceeds from its pending sale of land near Calder Casino to structure aspects of this acquisition as an Internal Revenue Code §1031 transaction to defer the tax on the gain on sale.

Macquarie Capital served as the exclusive financial advisor and Sidley Austin LLP served as legal advisor to CDI.

Exhibit A:

Properties to be acquired are as follows:

Live and Historical Racing SegmentStateHRMs  
 Colonial Downs RacetrackVA-  
 Rosie’s New KentVA600  
 Rosie’s VintonVA500  
 Rosie’s RichmondVA700  
 Rosie’s HamptonVA700  
 Rosie’s DumfriesVA150  
 Rosie’s CollinsvilleVA37  
Gaming SegmentStateSlotsTablesHotel Rooms
 del Lago Resort & CasinoNY1,70080205
 Hard Rock Casino & Hotel Sioux CityIA6392054

 

About Churchill Downs Incorporated

Churchill Downs Incorporated is an industry-leading racing, online wagering and gaming entertainment company anchored by our iconic flagship event, the Kentucky Derby. We own and operate three pari-mutuel gaming entertainment venues with approximately 3,050 historical racing machines in Kentucky. We also own and operate TwinSpires, one of the largest and most profitable online wagering platforms for horse racing, sports and iGaming in the U.S. and we have nine retail sportsbooks. We are also a leader in brick-and-mortar casino gaming in nine states with approximately 11,000 slot machines and video lottery terminals and 200 table games. Additional information about Churchill Downs Incorporated can be found online at www.churchilldownsincorporated.com.

This news release contains 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,” and similar words or similar expressions (or negative versions of such words or expressions).

Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important factors, among others, that may materially affect actual results or outcomes include the following: the receipt of regulatory approvals on terms desired or anticipated, unanticipated difficulties or expenditures relating to the proposed transaction, including, without limitation, difficulties that result in the failure to realize expected synergies, efficiencies and cost savings from the proposed transaction within the expected time period (if at all), our ability to obtain financing on the anticipated terms and schedule, disruptions of our or P2E’s current plans, operations and relationships with customers and suppliers caused by the announcement and pendency of the proposed transaction, our and P2E’s ability to consummate a sale-leaseback transaction with respect to the Hard Rock Sioux City on terms desired or anticipated, the impact of the novel coronavirus (COVID-19) pandemic, including the emergence of variant strains, and related economic matters on our results of operations, financial conditions and prospects; the occurrence of extraordinary events, such as terrorist attacks, public health threats, civil unrest, and inclement weather; the effect of economic conditions on our consumers' confidence and discretionary spending or our access to credit; additional or increased taxes and fees; the impact of significant competition, and the expectation the competition levels will increase; changes in consumer preferences, attendance, wagering, and sponsorships; loss of key or highly skilled personnel; lack of confidence in the integrity of our core businesses or any deterioration in our reputation; risks associated with equity investments, strategic alliances and other third-party agreements; inability to respond to rapid technological changes in a timely manner; concentration and evolution of slot machine and HRM manufacturing and other technology conditions that could impose additional costs; inability to negotiate agreements with industry constituents, including horsemen and other racetracks; inability to successfully expand our TwinSpires Sports and Casino business and effectively compete; inability to identify and complete expansion, acquisition or divestiture projects, on time, on budget or as planned; difficulty in integrating recent or future acquisitions into our operations; inability to identify and / or complete acquisitions, divestitures, development of new venues or the expansion of existing facilities on time, on budget, or as planned; general risks related to real estate ownership and significant expenditures, including fluctuations in market values and environmental regulations; reliance on our technology services and catastrophic events and system failures disrupting our operations; online security risk, including cyber-security breaches, or loss or misuse of our stored information as a result of a breach, including customers’ personal information, could lead to government enforcement actions or other litigation; personal injury litigation related to injuries occurring at our racetracks; compliance with the Foreign Corrupt Practices Act or applicable money-laundering regulations; payment-related risks, such as risk associated with fraudulent credit card and debit card use; work stoppages and labor issues; risks related to pending or future legal proceedings and other actions; highly regulated operations and changes in the regulatory environment could adversely affect our business; restrictions in our debt facilities limiting our flexibility to operate our business; failure to comply with the financial ratios and other covenants in our debt facilities and other indebtedness; and increase in our insurance costs, or obtain similar insurance coverage in the future, and inability to recover under our insurance policies for damages sustained at our properties in the event of inclement weather and casualty events.

We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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Nick Zangari
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Churchill Downs Incorporated Signs Agreement to Sell 115.7 Acres of Land by Calder Casino for $291 Million

LOUISVILLE, KY., (November 22, 2021) Churchill Downs Incorporated (“CDI” or “Company”) (Nasdaq: CHDN) announced today that the Company has signed an agreement to sell 115.7 acres of land near Calder Casino for $291 million or approximately $2.5 million per acre. CDI has agreed to sell the land to Link Logistics, one of the premier owners of logistics real estate assets, established in 2019 by Blackstone.

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About Churchill Downs Incorporated

Churchill Downs Incorporated is an industry-leading racing, online wagering and gaming entertainment company anchored by our iconic flagship event, the Kentucky Derby. We own and operate three pari-mutuel gaming entertainment venues with approximately 3,050 historical racing machines in Kentucky. We also own and operate TwinSpires, one of the largest and most profitable online wagering platforms for horse racing, sports and iGaming in the U.S. and we have seven retail sportsbooks. We are also a leader in brick-and-mortar casino gaming in eight states with approximately 11,000 slot machines and video lottery terminals and 200 table games. Additional information about CDI can be found online at www.churchilldownsincorporated.com.

This news release contains 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,” and similar words or similar expressions (or negative versions of such words or expressions).

Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important factors, among others, that may materially affect actual results or outcomes include the following: the impact of the novel coronavirus (COVID-19) pandemic, including the emergence of variant strains, and related economic matters on our results of operations, financial conditions and prospects; the occurrence of extraordinary events, such as terrorist attacks, public health threats, civil unrest, and inclement weather; the effect of economic conditions on our consumers' confidence and discretionary spending or our access to credit; additional or increased taxes and fees; the impact of significant competition, and the expectation the competition levels will increase; changes in consumer preferences, attendance, wagering, and sponsorships; loss of key or highly skilled personnel; lack of confidence in the integrity of our core businesses or any deterioration in our reputation; risks associated with equity investments, strategic alliances and other third-party agreements; inability to respond to rapid technological changes in a timely manner; concentration and evolution of slot machine manufacturing and other technology conditions that could impose additional costs; inability to negotiate agreements with industry constituents, including horsemen and other racetracks; inability to successfully expand our TwinSpires Sports and Casino business and effectively compete; inability to identify and complete expansion, acquisition or divestiture projects, on time, on budget or as planned; difficulty in integrating recent or future acquisitions into our operations; costs and uncertainties relating to the development of new venues and expansion of existing facilities; general risks related to real estate ownership and significant expenditures, including fluctuations in market values and environmental regulations; reliance on our technology services and catastrophic events and system failures disrupting our operations; online security risk, including cyber-security breaches, or loss or misuse of our stored information as a result of a breach, including customers’ personal information, could lead to government enforcement actions or other litigation; personal injury litigation related to injuries occurring at our racetracks; compliance with the Foreign Corrupt Practices Act or applicable money-laundering regulations; payment-related risks, such as risk associated with fraudulent credit card and debit card use; work stoppages and labor issues; risks related to pending or future legal proceedings and other actions; highly regulated operations and changes in the regulatory environment could adversely affect our business; restrictions in our debt facilities limiting our flexibility to operate our business; failure to comply with the financial ratios and other covenants in our debt facilities and other indebtedness; and increase in our insurance costs, or obtain similar insurance coverage in the future, and inability to recover under our insurance policies for damages sustained at our properties in the event of inclement weather and casualty events.

We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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Churchill Downs Incorporated Reports 2021 First Quarter Results

LOUISVILLE, Ky. (April 21, 2021) – Churchill Downs Incorporated (Nasdaq: CHDN) (the "Company", "we", "us", "our") today reported business results for the first quarter ended March 31, 2021.

First Quarter 2021 Highlights
  • Net revenue of $324.3 million, up 28% over the prior year quarter
  • Net income(a) of $36.1 million compared to net loss of $23.4 million in the prior year quarter
    • Adjusted net income(a) of $34.6 million, compared to $2.0 million in the prior year quarter
  • Adjusted EBITDA of $110.6 million, up 100% compared to $55.3 million in the prior year quarter
  • Derby City Gaming delivered record net revenue of $32.9 million, up 52% over the prior year quarter
  • Our TwinSpires Horse Racing business delivered record first quarter net revenue of $93.1 million, up 39% over the prior year quarter
  • Our TwinSpires Sports and Casino business launched sports betting and iGaming operations in Michigan on January 22, 2021 and sports betting operations in Tennessee on March 18, 2021
  • Our Gaming Segment delivered record Adjusted EBITDA of $82.4 million, up 72% over the prior year quarter
  • In February 2021, Kentucky passed legislation that clarifies the legality of historical racing machines
  • On February 1, 2021, we purchased one million shares of CHDN stock from The Duchossois Group for $193.94 per share ($193.9 million total) in a privately negotiated transaction

(a) Reflects amounts attributable to Churchill Downs Incorporated.

CONSOLIDATED RESULTSFirst Quarter
(in millions, except per share data)20212020
Net revenue$324.3$252.9
Net income (loss)(a)$36.1$(23.4)
Diluted EPS(a)$0.91$(0.59)
Adjusted net income(a)(b)$34.6$2.0
Adjusted diluted EPS(a)(b)$0.87$0.05
Adjusted EBITDA(b)$110.6$55.3
(a) Reflects amounts attributable to Churchill Downs Incorporated.
(b) These are non-GAAP measures. See explanation of non-GAAP measures below.
First Quarter 2021 Results

The Company's first quarter of 2021 net income attributable to Churchill Downs Incorporated was $36.1 million compared to net loss attributable to Churchill Downs Incorporated of $23.4 million in the prior year quarter. The Company's first quarter of 2021 net income from continuing operations was $36.1 million compared to net loss from continuing operations of $22.6 million in the prior year quarter. We do not have any noncontrolling interest as of the first quarter of 2021 compared to a net loss attributable to our noncontrolling interest of $0.1 million in the prior year quarter.

The following items impacted the comparability of the Company's first quarter net income from continuing operations:

  • $14.0 million after-tax expense decrease related to our equity portion of the non-cash change in fair value of Rivers Casino Des Plaines ("Rivers Des Plaines") interest rate swaps;
  • $12.0 million non-cash after-tax impact related to our intangible asset impairment from the first quarter of 2020 that did not recur in the first quarter of 2021; and
  • $1.0 million after-tax expense decrease related to lower transaction, pre-opening and other expenses.
  • Partially offset by a $0.9 million after-tax increase in Rivers Des Plaines' legal reserves and transaction costs.

Excluding these items, first quarter 2021 net income from continuing operations increased $32.6 million primarily due to the following:

  • $33.4 million after-tax increase driven by the results of our operations and equity income from our unconsolidated affiliates.
  • Partially offset by $0.8 million after-tax increase in interest expense associated with higher outstanding debt balances.
Segment Results

During the first quarter of 2021, we updated our operating segments as follows:

  • We changed the Churchill Downs segment to the Live and Historical Racing segment to facilitate the realignment of our new HRM facilities - Oak Grove Racing, Gaming & Hotel ("Oak Grove"), Newport Racing & Gaming ("Newport"), and Turfway Park from All Other to this segment. The Live and Historical Racing segment now includes Churchill Downs Racetrack, Derby City Gaming, Oak Grove, Turfway Park, and Newport.
  • We renamed the Online Wagering segment to the TwinSpires segment to facilitate the realignment of our retail sports betting results at our wholly-owned casinos from our Gaming segment to the TwinSpires segment.

The summaries below present net revenue from external customers and intercompany revenue from each of our reportable segments:

Live and Historical RacingFirst Quarter
(in millions)20212020
Net revenue$64.7$29.1
Adjusted EBITDA18.31.0

For the first quarter of 2021, net revenue increased $35.6 million from the prior year quarter primarily due to a $19.4 million increase at Oak Grove as a result of the opening of the HRM facility in September 2020 and the hotel in October 2020, an $11.3 million increase from Derby City Gaming primarily due to the temporary suspension of operations in March 2020 as a result of the COVID-19 global pandemic and the completion of their second outdoor patio which added an additional 225 HRMs in September 2020, a $4.4 million increase at Newport due to the opening in October 2020, and a $0.5 million increase from other sources.

Adjusted EBITDA increased $17.3 million in the first quarter of 2021 from the prior year quarter due to a $8.9 million increase from Derby City Gaming due to the increase in net revenue, increased operating efficiencies, and the temporary closure of the property in March 2020, a $6.6 million increase at Oak Grove due to the opening of the HRM facility in September 2020, a $0.8 million increase at Turfway Park due to an increase in handle, a $0.7 million increase at Newport due to the opening in October 2020, and a $0.3 million increase at Churchill Downs Racetrack primarily due to the temporary suspension of operations in March 2020.

TwinSpiresFirst Quarter
(in millions)20212020
Net revenue$100.1$69.4
Adjusted EBITDA22.516.0

For the first quarter of 2021, net revenue increased $30.7 million from the prior year quarter primarily due to a $26.1 million increase from Horse Racing and a $4.6 million increase from Sports and Casino. Horse Racing net revenue increased as a result of an increase in handle of $113.3 million, or 34%, compared to the prior year quarter due to the continued shift from wagering at brick-and-mortar locations to online wagering. Sports and Casino net revenue increased as a result of our expansion in additional states since the first quarter of 2020 and increased marketing and promotional activities.

Adjusted EBITDA increased $6.5 million in the first quarter of 2021 from the prior year quarter primarily due to a $9.9 million increase from Horse Racing due to an increase in handle, partially offset by a $3.4 million increase in the loss from Sports and Casino due to increased marketing and promotional activities.

GamingFirst Quarter
(in millions)20212020
Net revenue$154.0$147.4
Adjusted EBITDA82.447.9

For the first quarter of 2021, net revenue increased $6.6 million primarily due to a $7.3 million increase at Fair Grounds and VSI, a $5.2 million increase at Ocean Downs, and a $5.0 million increase at our Mississippi properties, all of which resulted from the temporary suspension of operations in March 2020. Partially offsetting these increases were a $4.4 million decrease at Oxford, a $3.2 million decrease at Presque Isle, a $2.4 million decrease at Lady Luck Nemacolin, and a $0.9 million decrease at Calder, all of which resulted from certain operating restrictions.

Adjusted EBITDA increased $34.5 million for the first quarter of 2021 from the prior year quarter driven by a $24.1 million increase at our wholly-owned Gaming properties and a $10.4 million increase from our equity investments, both of which were due to increased operating efficiencies and the temporary closure of all of our Gaming properties in March 2020.

All Other

For the first quarter of 2021, All Other Adjusted EBITDA decreased $3.0 million driven by a $4.4 million increase in accrued bonuses at Corporate compared to prior year where accrued bonuses were reduced as a result of the temporary suspension of operations in March 2020. Partially offsetting this decrease was a $1.4 million increase from Arlington due to increased operating efficiencies and the temporary suspension of operations in March 2020.

Conference Call

A conference call regarding this news release is scheduled for Thursday, April 22, 2021, at 9 a.m. ET. Investors and other interested parties may listen to the teleconference by accessing the online, real-time webcast and broadcast of the call at http://ir.churchilldownsincorporated.com/events.cfm, or by dialing (877) 372-0878 and entering the pass code 6449063 at least 10 minutes before the appointed time. International callers should dial (253) 237-1169. An online replay will be available at approximately noon ET on Thursday, April 22, 2021, and will continue to be available for two weeks. A copy of the Company’s news release announcing quarterly results and relevant financial and statistical information about the period will be accessible at www.churchilldownsincorporated.com.

Use of Non-GAAP Measures

In addition to the results provided in accordance with GAAP, the Company also uses non-GAAP measures, including adjusted net income, adjusted diluted EPS, EBITDA (earnings before interest, taxes, depreciation and amortization) and Adjusted EBITDA.

The Company uses non-GAAP measures as a key performance measure of the results of operations for purposes of evaluating performance internally. These measures facilitate comparison of operating performance between periods and help investors to better understand the operating results of the Company by excluding certain items that may not be indicative of the Company's core business or operating results. The Company believes the use of these measures enables management and investors to evaluate and compare, from period to period, the Company’s operating performance in a meaningful and consistent manner. The non-GAAP measures are a supplemental measure of our performance that is not required by, or presented in accordance with, GAAP, and should not be considered as an alternative to, or more meaningful than, net income or diluted EPS (as determined in accordance with GAAP) as a measure of our operating results.

We use Adjusted EBITDA to evaluate segment performance, develop strategy and allocate resources. We utilize the Adjusted EBITDA metric to provide a more accurate measure of our core operating results and enable management and investors to evaluate and compare from period to period our operating performance in a meaningful and consistent manner. Adjusted EBITDA should not be considered as an alternative to operating income as an indicator of performance, as an alternative to cash flows from operating activities as a measure of liquidity, or as an alternative to any other measure provided in accordance with GAAP. Our calculation of Adjusted EBITDA may be different from the calculation used by other companies and, therefore, comparability may be limited.

Adjusted net income and adjusted diluted EPS exclude discontinued operations net income or loss; net income or loss attributable to noncontrolling interest; changes in fair value for interest rate swaps related to Rivers Des Plaines; Rivers Des Plaines' legal reserves and transaction costs; transaction expense, which includes acquisition and disposition related charges, Calder racing exit costs, as well as legal, accounting, and other deal-related expense; pre-opening expense; and certain other gains, charges, recoveries, and expenses.

Adjusted EBITDA includes the Company's portion of EBITDA from our equity investments.

Adjusted EBITDA excludes:

  • Transaction expense, net which includes:
    • Acquisition and disposition related charges; and
    • Other transaction expense, including legal, accounting, and other deal-related expense;
  • Stock-based compensation expense;
  • Rivers Des Plaines' impact on our investments in unconsolidated affiliates from:
    • The impact of changes in fair value of interest rate swaps and
    • Legal reserves and transaction costs;
  • Asset impairments;
  • Legal reserves;
  • Pre-opening expense; and
  • Other charges, recoveries and expenses.

For segment reporting, Adjusted EBITDA includes intercompany revenue and expense totals that are eliminated in the consolidated statements of comprehensive income (loss). Refer to the Reconciliation of Comprehensive Income (Loss) to Adjusted EBITDA included herewith for additional information.

About Churchill Downs Incorporated

Churchill Downs Incorporated is an industry-leading racing, online wagering and gaming entertainment company anchored by our iconic flagship event, the Kentucky Derby. We own and operate three pari-mutuel gaming entertainment venues with approximately 3,050 historical racing machines in Kentucky. We also own and operate TwinSpires, one of the largest and most profitable online wagering platforms for horse racing, sports and iGaming in the U.S. and we have seven retail sportsbooks. We are also a leader in brick-and-mortar casino gaming in eight states with approximately 11,000 slot machines and video lottery terminals and 200 table games. Additional information about CDI can be found online at www.churchilldownsincorporated.com.

Certain statements made in this news release 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,” and similar words or similar expressions (or negative versions of such words or expressions). 

Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important factors, among others, that may materially affect actual results or outcomes include the following: the impact of the novel coronavirus (COVID-19) pandemic and related economic matters on our results of operations, financial conditions and prospects; the occurrence of extraordinary events, such as terrorist attacks, public health threats, civil unrest, and inclement weather; the effect of economic conditions on our consumers' confidence and discretionary spending or our access to credit; additional or increased taxes and fees; the impact of significant competition, and the expectation the competition levels will increase; changes in consumer preferences, attendance, wagering, and sponsorships; loss of key or highly skilled personnel; lack of confidence in the integrity of our core businesses or any deterioration in our reputation; risks associated with equity investments, strategic alliances and other third-party agreements; inability to respond to rapid technological changes in a timely manner; concentration and evolution of slot machine manufacturing and other technology conditions that could impose additional costs; inability to negotiate agreements with industry constituents, including horsemen and other racetracks; inability to successfully expand our TwinSpires Sports and Casino business and effectively compete; inability to identify and complete expansion, acquisition or divestiture projects, on time, on budget or as planned; difficulty in integrating recent or future acquisitions into our operations; costs and uncertainties relating to the development of new venues and expansion of existing facilities; general risks related to real estate ownership and significant expenditures, including fluctuations in market values and environmental regulations; reliance on our technology services and catastrophic events and system failures disrupting our operations; online security risk, including cyber-security breaches, or loss or misuse of our stored information as a result of a breach, including customers’ personal information, could lead to government enforcement actions or other litigation; personal injury litigation related to injuries occurring at our racetracks; compliance with the Foreign Corrupt Practices Act or applicable money-laundering regulations; payment-related risks, such as risk associated with fraudulent credit card and debit card use; work stoppages and labor issues; risks related to pending or future legal proceedings and other actions; highly regulated operations and changes in the regulatory environment could adversely affect our business; restrictions in our debt facilities limiting our flexibility to operate our business; failure to comply with the financial ratios and other covenants in our debt facilities and other indebtedness; and increase in our insurance costs, or obtain similar insurance coverage in the future, and inability to recover under our insurance policies for damages sustained at our properties in the event of inclement weather and casualty events.

 

We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Press Contacts

Nick Zangari
Vice President, Treasury, Investor Relations & Risk Management

Tonya Abeln
Vice President, Corporate Communications

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Churchill Downs Incorporated Announces Closing of $300 Million Senior Secured Term Loan B Due 2028 and $200 Million Senior Notes Due 2028

LOUISVILLE, KY., (March 17, 2021)  Churchill Downs Incorporated (“CDI” or the “Company”) (Nasdaq: CHDN) today announced that it successfully closed its previously announced offering of $200 million in aggregate principal amount of its 4.75% senior notes due 2028 (the "Additional Notes") and $300 million in aggregate principal amount of a senior secured Term Loan B due 2028 (the "Term Loan B"). The Additional Notes were priced at 103.25% of the principal amount and the Term Loan B has an interest rate of LIBOR plus 200 basis points.

The offer and sale of the Additional Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws and may not be offered or sold within the United States to, or for the benefit of, U.S. persons (as defined in Regulation S) except in transactions exempt from, or not subject to, the registration requirements of the Securities Act. Accordingly, the Additional Notes were sold only to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act and offered and sold outside the United States to non-U.S. persons in accordance with Regulation S under the Securities Act.

The Company will agree to register the Additional Notes for resale to the extent they are not freely tradable under the Securities Act a year after their issuance. The Additional Notes are not listed on any securities exchange or automated quotation system.

This press release is issued pursuant to Rule 135c of the Securities Act, is for informational purposes only and shall neither constitute an offer to sell nor the solicitation of an offer to buy the Additional Notes or any other securities.

About Churchill Downs Incorporated

Churchill Downs Incorporated is an industry-leading racing, online wagering and gaming entertainment company anchored by our iconic flagship event, the Kentucky Derby. We own and operate three pari-mutuel gaming entertainment venues with approximately 3,050 historical racing machines in Kentucky. We also own and operate TwinSpires, one of the largest and most profitable online wagering platforms for horse racing, sports and iGaming in the U.S. and we have seven retail sportsbooks. We are also a leader in brick-and-mortar casino gaming in eight states with approximately 11,000 slot machines and video lottery terminals and 200 table games. Additional information about CDI can be found online at www.churchilldownsincorporated.com.

Information set forth in this news release contains various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”), which provides certain “safe harbor” provisions. All forward-looking statements made in this news release are made pursuant to the Act. 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,” and similar words, although some forward-looking statements are expressed differently.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from expectations include the following: the effect of economic conditions on our consumers' confidence and discretionary spending or our access to credit; additional or increased taxes and fees; public perceptions or lack of confidence in the integrity of our business or any deterioration in our reputation; loss of key or highly skilled personnel; restrictions in our debt facilities limiting our flexibility to operate our business; general risks related to real estate ownership, including fluctuations in market values and environmental regulations; catastrophic events and system failures disrupting our operations; online security risk, including cyber-security breaches; inability to recover under our insurance policies for damages sustained at our properties in the event of inclement weather and casualty events; increases in insurance costs and inability to obtain similar insurance coverage in the future; inability to identify and complete acquisition, expansion or divestiture projects, on time, on budget or as planned; difficulty in integrating recent or future acquisitions into our operations; costs and uncertainties relating to the development of new venues and expansion of existing facilities; risks associated with equity investments, strategic alliances and other third-party agreements; inability to respond to rapid technological changes in a timely manner; inadvertent infringement of the intellectual property of others; inability to protect our own intellectual property rights; payment-related risks, such as risk associated with fraudulent credit card and debit card use; compliance with the Foreign Corrupt Practices Act or applicable money-laundering regulations; risks related to pending or future legal proceedings and other actions; inability to negotiate agreements with industry constituents, including horsemen and other racetracks; work stoppages and labor issues; changes in consumer preferences with respect to Churchill Downs Racetrack and the Kentucky Derby; personal injury litigation related to injuries occurring at our racetracks; weather and other conditions affecting our ability to conduct live racing; the occurrence of extraordinary events, such as terrorist attacks and public health threats, including the ongoing impact of the novel coronavirus (COVID-19 virus); changes in the regulatory environment of our racing operations; increased competition in the horseracing business; difficulty in attracting a sufficient number of horses and trainers for full field horseraces; our inability to utilize and provide totalizator services; changes in regulatory environment of our online horseracing business; number of people wagering on live horse races; increase in competition in our online horseracing; uncertainty and changes in the legal landscape relating to our online wagering business; continued legalization of online sports betting and iGaming in the United States and our ability to predict and capitalize on any such legalization; inability to expand our sports betting operations and effectively compete; failure to manage risks associated with sports betting; failure to comply with laws requiring us to block access to certain individuals could result in penalties or impairment with respect to our mobile and online wagering products; increased competition in our casino business; changes in regulatory environment of our casino business; and concentration and evolution of slot machine manufacturing and other technology conditions that could impose additional costs; and inability to collect gaming receivables from the customers to whom we extend credit.

Press Contacts

Nick Zangari
Vice President, Treasury, Investor Relations & Risk Management

Tonya Abeln
Vice President, Corporate Communications

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Churchill Downs Incorporated Announces Pricing of $300 Million Senior Secured Term Loan B Due 2028 and $200 Million Senior Notes Due 2028

LOUISVILLE, KY., (Mar. 10, 2021) Churchill Downs Incorporated (“CDI” or the “Company”) (Nasdaq: CHDN) today announced that it successfully priced its previously announced offering of $200 million in aggregate principal amount of its 4.75% senior notes due 2028 (the "Additional Notes"). In addition, CDI announced the pricing of a $300 million senior secured Term Loan B (the "Term Loan B") due 2028. The Additional Notes were priced at 103.25% of the principal amount and the Term Loan B was priced at LIBOR plus 200 basis points.

The offering of the Additional Notes is expected to close on March 17th, 2021, and the Term Loan B is expected to close concurrently with the Additional Notes, subject to customary closing conditions.

The Additional Notes will be issued as additional notes under an indenture dated as of December 27, 2017 pursuant to which the Company previously issued $500 million in aggregate principal amount of its 4.75% senior notes due 2028 (the “Existing Notes”). The Additional Notes will have identical terms to the Existing Notes, other than the issue date and the issue price and will be treated as a single class of notes with the Existing Notes for all purposes under the indenture.

CDI intends to use the net proceeds from the offering, together with the proceeds of the Term Loan B, to (i) repay indebtedness outstanding under its revolving credit facility, including indebtedness incurred in connection with the offering of the Additional Notes and CDI’s entry into the Term Loan B, (ii) fund related transaction fees and expenses, and (iii) for working capital and other general corporate purposes.

The offer and sale of the Additional Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws and may not be offered or sold within the United States to, or for the benefit of, U.S. persons (as defined in Regulation S) except in transactions exempt from, or not subject to, the registration requirements of the Securities Act. Accordingly, the Additional Notes are being sold only to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act and offered and sold outside the United States to non-U.S. persons in accordance with Regulation S under the Securities Act.

The Company will agree to register the Additional Notes for resale to the extent they are not freely tradable under the Securities Act a year after their issuance. The Additional Notes will not be listed on any securities exchange or automated quotation system.

This press release is issued pursuant to Rule 135c of the Securities Act, is for informational purposes only and shall neither constitute an offer to sell nor the solicitation of an offer to buy the Additional Notes or any other securities. The offering of the Additional Notes is not being made to any person in any jurisdiction in which the offer, solicitation or sale is unlawful. The offering has not been approved by any gaming regulatory authority having jurisdiction over any of CDI's casino operations.

About Churchill Downs Incorporated

Churchill Downs Incorporated is an industry-leading racing, online wagering and gaming entertainment company anchored by our iconic flagship event, the Kentucky Derby. We own and operate three pari-mutuel gaming entertainment venues with approximately 3,050 historical racing machines in Kentucky. We also own and operate TwinSpires, one of the largest and most profitable online wagering platforms for horse racing, sports and iGaming in the U.S. and we have seven retail sportsbooks. We are also a leader in brick-and-mortar casino gaming in eight states with approximately 11,000 slot machines and video lottery terminals and 200 table games. Additional information about CDI can be found online at www.churchilldownsincorporated.com.

Information set forth in this news release contains various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”), which provides certain “safe harbor” provisions. All forward-looking statements made in this news release are made pursuant to the Act. 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,” and similar words, although some forward-looking statements are expressed differently.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from expectations include the following: the effect of economic conditions on our consumers' confidence and discretionary spending or our access to credit; additional or increased taxes and fees; public perceptions or lack of confidence in the integrity of our business or any deterioration in our reputation; loss of key or highly skilled personnel; restrictions in our debt facilities limiting our flexibility to operate our business; general risks related to real estate ownership, including fluctuations in market values and environmental regulations; catastrophic events and system failures disrupting our operations; online security risk, including cyber-security breaches; inability to recover under our insurance policies for damages sustained at our properties in the event of inclement weather and casualty events; increases in insurance costs and inability to obtain similar insurance coverage in the future; inability to identify and complete acquisition, expansion or divestiture projects, on time, on budget or as planned; difficulty in integrating recent or future acquisitions into our operations; costs and uncertainties relating to the development of new venues and expansion of existing facilities; risks associated with equity investments, strategic alliances and other third-party agreements; inability to respond to rapid technological changes in a timely manner; inadvertent infringement of the intellectual property of others; inability to protect our own intellectual property rights; payment-related risks, such as risk associated with fraudulent credit card and debit card use; compliance with the Foreign Corrupt Practices Act or applicable money-laundering regulations; risks related to pending or future legal proceedings and other actions; inability to negotiate agreements with industry constituents, including horsemen and other racetracks; work stoppages and labor issues; changes in consumer preferences with respect to Churchill Downs Racetrack and the Kentucky Derby; personal injury litigation related to injuries occurring at our racetracks; weather and other conditions affecting our ability to conduct live racing; the occurrence of extraordinary events, such as terrorist attacks and public health threats, including the ongoing impact of the novel coronavirus (COVID-19 virus); changes in the regulatory environment of our racing operations; increased competition in the horseracing business; difficulty in attracting a sufficient number of horses and trainers for full field horseraces; our inability to utilize and provide totalizator services; changes in regulatory environment of our online horseracing business; number of people wagering on live horse races; increase in competition in our online horseracing; uncertainty and changes in the legal landscape relating to our online wagering business; continued legalization of online sports betting and iGaming in the United States and our ability to predict and capitalize on any such legalization; inability to expand our sports betting operations and effectively compete; failure to manage risks associated with sports betting; failure to comply with laws requiring us to block access to certain individuals could result in penalties or impairment with respect to our mobile and online wagering products; increased competition in our casino business; changes in regulatory environment of our casino business; and concentration and evolution of slot machine manufacturing and other technology conditions that could impose additional costs; and inability to collect gaming receivables from the customers to whom we extend credit.

Press Contacts

Nick Zangari
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Churchill Downs Incorporated Announces Proposed Offering of $200 Million of Senior Notes Due 2028

LOUISVILLE, KY., (Mar. 10, 2021) Churchill Downs Incorporated (“CDI” or the “Company”) (Nasdaq: CHDN) today announced that it intends to offer, subject to market and customary conditions, $200 million in aggregate principal amount of senior notes due 2028 (the "New Notes") in a private offering.

The New Notes will be issued as additional notes under an indenture dated as of December 27, 2017 pursuant to which the Company previously issued $500 million in aggregate principal amount of its 4.75% senior notes due 2028 (the “Existing Notes”). The New Notes will have identical terms to the Existing Notes, other than the issue date and the issue price and will be treated as a single class of notes with the Existing Notes for all purposes under the indenture.

CDI intends to use the net proceeds from the offering to (i) repay indebtedness outstanding under its revolving credit facility, including indebtedness incurred in connection with the offering of the Notes, (ii) fund related transaction fees and expenses, and (iii) for working capital and other general corporate purposes.

The offer and sale of the Notes have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws and may not be offered or sold within the United States to, or for the benefit of, U.S. persons (as defined in Regulation S) except in transactions exempt from, or not subject to, the registration requirements of the Securities Act. Accordingly, the Notes are being sold only to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act and offered and sold outside the United States to non-U.S. persons in accordance with Regulation S under the Securities Act.

The Company will agree to register the Notes for resale to the extent they are not freely tradable under the Securities Act a year after their issuance. The Notes will not be listed on any securities exchange or automated quotation system.

This press release is issued pursuant to Rule 135c of the Securities Act, is for informational purposes only and shall neither constitute an offer to sell nor the solicitation of an offer to buy the Notes or any other securities. The offering of the Notes is not being made to any person in any jurisdiction in which the offer, solicitation or sale is unlawful. The offering has not been approved by any gaming regulatory authority having jurisdiction over any of CDI's casino operations.

About Churchill Downs Incorporated

Churchill Downs Incorporated is an industry-leading racing, online wagering and gaming entertainment company anchored by our iconic flagship event, the Kentucky Derby. We own and operate three pari-mutuel gaming entertainment venues with approximately 3,050 historical racing machines in Kentucky. We also own and operate TwinSpires, one of the largest and most profitable online wagering platforms for horse racing, sports and iGaming in the U.S. and we have seven retail sportsbooks. We are also a leader in brick-and-mortar casino gaming in eight states with approximately 11,000 slot machines and video lottery terminals and 200 table games. Additional information about CDI can be found online at www.churchilldownsincorporated.com.

Information set forth in this news release contains various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”), which provides certain “safe harbor” provisions. All forward-looking statements made in this news release are made pursuant to the Act. 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,” and similar words, although some forward-looking statements are expressed differently.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from expectations include the following: the effect of economic conditions on our consumers' confidence and discretionary spending or our access to credit; additional or increased taxes and fees; public perceptions or lack of confidence in the integrity of our business or any deterioration in our reputation; loss of key or highly skilled personnel; restrictions in our debt facilities limiting our flexibility to operate our business; general risks related to real estate ownership, including fluctuations in market values and environmental regulations; catastrophic events and system failures disrupting our operations; online security risk, including cyber-security breaches; inability to recover under our insurance policies for damages sustained at our properties in the event of inclement weather and casualty events; increases in insurance costs and inability to obtain similar insurance coverage in the future; inability to identify and complete acquisition, expansion or divestiture projects, on time, on budget or as planned; difficulty in integrating recent or future acquisitions into our operations; costs and uncertainties relating to the development of new venues and expansion of existing facilities; risks associated with equity investments, strategic alliances and other third-party agreements; inability to respond to rapid technological changes in a timely manner; inadvertent infringement of the intellectual property of others; inability to protect our own intellectual property rights; payment-related risks, such as risk associated with fraudulent credit card and debit card use; compliance with the Foreign Corrupt Practices Act or applicable money-laundering regulations; risks related to pending or future legal proceedings and other actions; inability to negotiate agreements with industry constituents, including horsemen and other racetracks; work stoppages and labor issues; changes in consumer preferences with respect to Churchill Downs Racetrack and the Kentucky Derby; personal injury litigation related to injuries occurring at our racetracks; weather and other conditions affecting our ability to conduct live racing; the occurrence of extraordinary events, such as terrorist attacks and public health threats, including the ongoing impact of the novel coronavirus (COVID-19 virus); changes in the regulatory environment of our racing operations; increased competition in the horseracing business; difficulty in attracting a sufficient number of horses and trainers for full field horseraces; our inability to utilize and provide totalizator services; changes in regulatory environment of our online horseracing business; number of people wagering on live horse races; increase in competition in our online horseracing; uncertainty and changes in the legal landscape relating to our online wagering business; continued legalization of online sports betting and iGaming in the United States and our ability to predict and capitalize on any such legalization; inability to expand our sports betting operations and effectively compete; failure to manage risks associated with sports betting; failure to comply with laws requiring us to block access to certain individuals could result in penalties or impairment with respect to our mobile and online wagering products; increased competition in our casino business; changes in regulatory environment of our casino business; and concentration and evolution of slot machine manufacturing and other technology conditions that could impose additional costs; and inability to collect gaming receivables from the customers to whom we extend credit.

Press Contacts

Nick Zangari
Vice President, Treasury, Investor Relations & Risk Management

Tonya Abeln
Vice President, Corporate Communications

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