Churchill Downs Incorporated Reports 2023 Third Quarter Results

LOUISVILLE, KY., (October 25, 2023– Churchill Downs Incorporated (Nasdaq: CHDN) (the
“Company”, “CDI”) today reported business results for the third quarter ended September 30, 2023.

Company Highlights

  • Third quarter results:
    • Record net revenue of $572.5 million, up 49% compared to the prior year quarter.
    • Net income of $61.0 million, up 7% compared to the prior year quarter.
    • Record Adjusted EBITDA of $218.2 million, up 34% compared to the prior year quarter.
  • Delivered record third quarter revenue and Adjusted EBITDA across our Live and Historical
    Racing and Gaming segments and record third quarter Adjusted EBITDA in our TwinSpires
    • Live and Historical Racing revenue up 120% and Adjusted EBITDA up 134% compared to
      the prior year quarter.
    • Derby City Gaming delivered all-time record Adjusted EBITDA in third quarter
      and Oak Grove delivered record third quarter Adjusted EBITDA.
    • TwinSpires revenue up 5% and Adjusted EBITDA up 9% compared to the prior year
    • Gaming revenue up 32% and Adjusted EBITDA up 10% compared to the prior year
  • We completed the acquisition of Exacta Systems, LLC (“Exacta”) on August 22, 2023.
  • We opened Rosie’s Gaming Emporium in Emporia, Virginia on September 26, 2023. This
    represents our seventh Rosie’s HRM entertainment venue in Virginia.
  • We are finalizing design and construction plans for a new HRM entertainment facility on a 20-acre
    site with convenient access to Highway 60 in Eastern Daviess County near Owensboro, Kentucky
    with a target opening date in first quarter 2025 and a target total spend of $100 to $110 million.
  • We opened six race and sports books at our Kentucky properties on September 7, 2023.
  • Our joint venture, RVA Entertainment Holdings, LLC, launched a November 2023 referendum
    campaign to win approval to develop a casino in Richmond, Virginia.
  • We launched a November 2023 referendum campaign to win approval to develop our eighth HRM
    entertainment venue in Manassas Park, Virginia.
  • We ended the third quarter with net bank leverage of 4.1x and maintained our commitment to
    returning capital to shareholders through $37.3 million of share repurchases in the third quarter and
    by announcing our Board’s approval of a $0.382 per share dividend to shareholders of record as of
    December 1, 2023 and payable on January 5, 2024. This represents the thirteenth consecutive year
    of increased dividend per share.


Third Quarter
(in millions, except per share data)20232022
Net revenue$572.5$383.1
Net income$61.0$57.0
Diluted EPS(a)$0.79$0.74
Adjusted EBITDA(b)$218.2$163.2

(a) The number of shares have been adjusted for the 2023 stock split.
(b) This is a non-GAAP measure. See explanation of non-GAAP measures below.

The summaries below present revenue from external customers and intercompany revenue from each of
our reportable segments. All comparisons discussed below are referencing the third quarter of 2023 as
compared to the second quarter of 2022.

Live and Historical Racing

Third Quarter
(in millions)20232022
Net revenue$225.5$102.4
Adjusted EBITDA80.934.5

For the third quarter of 2023, revenue increased $123.1 million driven by an $89.0 million increase
attributable to the Virginia properties acquired in the P2E Transaction, a $14.7 million increase
attributable to the properties acquired in the Ellis Park and Chasers Transactions, an $8.8 million increase
primarily due to the opening of Turfway Park in Northern Kentucky in September 2022, a $7.4 million
increase from our Derby City Gaming property in Louisville, and a $4.3 million increase from our Oak
Grove property in Southwestern Kentucky. These increases were partially offset by a $1.1 million
decrease at Churchill Downs Racetrack due to the decision to move July race days as part of the Churchill
Downs Racetrack Spring Meet to Ellis Park.

Adjusted EBITDA increased $46.4 million driven by a $38.3 million increase attributable to the Virginia
properties acquired in the P2E Transaction and a portion of the benefit from the Exacta Transaction, a $7.3
million increase from continued growth at our Derby City Gaming property in Louisville and our Oak
Grove property in Southwestern Kentucky, and a $2.9 million increase attributable to our other Live and
Historical Racing properties. These increases were partially offset by a $2.1 million decrease at Churchill
Downs Racetrack primarily due to the decision to move July race days as part of the Churchill Downs
Racetrack Spring Meet to Ellis Park.


Third Quarter
(in millions)20232022
Net revenue$112.4$107.4
Adjusted EBITDA33.931.1

For the third quarter of 2023, revenue increased $5.0 million driven by a $5.5 million increase attributable
to the Exacta Transaction and a $0.9 million increase in all other Horse Racing revenue primarily from the
B2B expansion strategy associated with United Tote totalisator fees. These increases were partially offset
by a $1.4 million reduction in Sports and Casino revenue.

Adjusted EBITDA increased $2.8 million driven by a $3.1 million increase attributable to the Exacta
Transaction, partially offset by a $0.3 million net decrease in Horse Racing and Sports and Casino.


Third Quarter
(in millions)20232022
Net revenue$244.9$185.9
Adjusted EBITDA122.3111.6

For the third quarter of 2023, revenue increased $59.0 million driven by a $70.2 million increase
attributable to the New York and Iowa properties acquired in the P2E Transaction, partially offset by an
$8.7 million decrease in Pennsylvania primarily due to our decision not to renew the management
agreement at Lady Luck, and a $2.5 million net decrease from our other gaming properties.

Adjusted EBITDA increased $10.7 million driven by a $25.0 million increase attributable to the New
York and Iowa properties acquired in the P2E Transaction, partially offset by a $6.5 million decrease from
our equity investments, a $4.9 million decrease from our other wholly-owned gaming properties, and a
$2.9 million decrease attributable to proceeds for business interruption insurance claims related to
Hurricane Ida. We received $4.1 million of business interruption insurance proceeds in the third quarter of
2022, compared to $1.2 million during the third quarter of 2023.

All Other

Third Quarter
(in millions)20232022
Net revenue$0.2$1.2
Adjusted EBITDA(18.9)(14.0)

For the third quarter of 2023, Adjusted EBITDA decreased $4.9 million primarily driven by increased
corporate compensation and benefits related expenses and legal and professional fees.

Exacta Systems, LLC
On August 22, 2023, the Company completed its previously announced acquisition of Exacta.

Share Repurchase Program
The Company repurchased $37.3 million of its common stock in the third quarter of 2023 and had
approximately $232.9 million of repurchase authority remaining under the Company’s share repurchase
program as of September 30, 2023, based on trade date.

Annual Dividend
On October 24, 2023, the Company’s Board of Directors approved an annual cash dividend on the
Company’s common stock of $0.382 per outstanding share, a seven percent increase over the prior year on
a split adjusted basis. The dividend is payable on January 5, 2024, to shareholders of record as of the close
of business on December 1, 2023, with the aggregate cash dividend paid to each shareholder rounded to
the nearest whole cent. This marks the thirteenth consecutive year that the Company has increased the
dividend per share.

The Company’s third quarter of 2023 net income was $61.0 million compared to $57.0 million in the prior
year quarter.

The following impacted the comparability of the Company’s third quarter net income:

  • $0.9 million after-tax net increase in other nonrecurring expenses.

Excluding the items above, third quarter 2023 net income increased $4.9 million primarily due to the

  • $34.5 million after-tax increase primarily driven by the addition of the properties acquired as part
    of the P2E Transaction in the results of our operations;
  • Partially offset by a $22.7 million after-tax increase in interest expense associated with higher
    outstanding debt balances and higher interest rates, and a $6.9 million after-tax decrease in the
    equity income from our unconsolidated affiliates.

Conference Call

A conference call regarding this news release is scheduled for Thursday, October 26, 2023 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, or by registering
in advance via teleconference here. Once registration is completed, participants will be provided with a
dial-in number containing a personalized conference code to access the call. All participants are
encouraged to dial-in 15 minutes prior to the start time. An online replay will be available by noon ET on
Thursday, October 26, 2023. A copy of the Company’s news release announcing quarterly results and
relevant financial and statistical information about the period will be accessible at http://

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 our portion of EBITDA from our equity investments.

Adjusted EBITDA excludes:

  • Transaction expense, net which includes:
    • Acquisition, disposition, and property 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 property and asset sales;
  • Legal reserves;
  • Pre-opening expense; and
  • Other charges, recoveries, and expenses.

On June 26, 2023, the Company’s management agreement for Lady Luck Casino Nemacolin expired and
was not renewed. The Company completed the sale of substantially all of its assets at Lady Luck Casino
Nemacolin for an immaterial amount.

As of December 31, 2021, Arlington ceased racing and simulcast operations and the property was sold on
February 15, 2023 to the Chicago Bears. Arlington’s results and exit costs in 2022 and 2023 are treated as
an adjustment to EBITDA.

For segment reporting, Adjusted EBITDA includes intercompany revenue and expense totals that are
eliminated in the Consolidated Statements of Comprehensive Income. See the Reconciliation of
Comprehensive Income to Adjusted EBITDA included herewith for additional information.

To view and download the full 2023 Third Quarter Results Press Release, please visit our Investor Relations Website.

About Churchill Downs Incorporated

Churchill Downs Incorporated (NASDAQ: CHDN) has been creating extraordinary entertainment experiences for nearly 150 years, beginning with the company’s most iconic and enduring asset, the Kentucky Derby. Headquartered in Louisville, Kentucky, CDI has expanded through the development of live and historical racing entertainment venues, the growth of the TwinSpires horse racing online wagering business and the operation and development of regional casino gaming properties. More information is available at

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 for forward-looking statements. All forward-looking statements made in this news release are made pursuant to the Act. The reader is cautioned that such forward-looking statements are based on information available at the time and / or management’s good faith belief with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Forward-looking statements speak only as of the date that the statement was made. We assume no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. 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 occurrence of extraordinary events, such as terrorist attacks, public health threats, civil unrest, and inclement weather, including as a result of climate change; the effect of economic conditions on our consumers’ confidence and discretionary spending or our access to credit, including the impact of inflation; additional or increased taxes and fees; 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; lack of confidence in the integrity of our core businesses or any deterioration in our reputation; loss of key or highly skilled personnel, as well as general disruptions in the general labor market; cyber security risk, including 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; the impact of significant competition, and the expectation the competition levels will increase; changes in consumer preferences, attendance, wagering, and sponsorships; 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 historical racing machine (HRM) manufacturing and other technology conditions that could impose additional costs; failure to enter into or maintain agreements with industry constituents, including horsemen and other racetracks; inability to successfully focus on market access and retail operations for our TwinSpires Sports and Casino business and effectively compete; reliance on our technology services and catastrophic events and system failures disrupting our operations; inability to identify, complete, or fully realize the benefits of, our proposed acquisitions, divestitures, development of new venues or the expansion of existing facilities on time, on budget, or as planned; difficulty in integrating recent or future acquisitions into our operations; cost overruns and other uncertainties associated with the development of new venues and the expansion of existing facilities; general risks related to real estate ownership and significant expenditures, including risks related to environmental liabilities; 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; increase to interest rates (due to inflation or otherwise), disruptions in the credit markets or changes to our credit ratings may adversely affect our business; increase in our insurance costs, or inability to 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; and other factors described in our most recent Annual Report on Form 10-K and in other filings we make with the Securities and Exchange Commission.

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.