Churchill Downs Inc (CHDN) Q1 2024 Earnings Call Transcript Highlights: Record Revenues and ...

• Net Revenues: Record first quarter net revenues of $591 million.

• Adjusted EBITDA: Record first quarter adjusted EBITDA of $243 million.

• Virginia HRM Properties EBITDA: Increased by nearly $13 million, up more than 27% from the prior year quarter.

• Kentucky HRM Properties EBITDA: Increased by $8.5 million, nearly 20% from the prior year quarter.

• TwinSpires Segment EBITDA: Grew by more than $10 million compared to the prior year quarter.

• Free Cash Flow: $242 million, up 21% per share over the prior year.

• Maintenance Capital: $12 million spent in the first quarter, with an expectation of $90 million to $105 million for the year.

• Project Capital: $143 million spent in the first quarter, with an expectation of $450 million to $550 million for the year.

• Share Repurchases: $22 million of CDI shares repurchased in the first quarter.

• Bank Covenant Net Leverage: 4.1x at the end of the first quarter.

• Warning! GuruFocus has detected 5 Warning Signs with CHDN.

Release Date: April 25, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Q & A Highlights

Q: Can you discuss your leverage tolerance for the next 6 to 8 quarters, especially in light of potential new opportunities? A: William C. Carstanjen (CEO & Director): Our target leverage range is 3 to 4x, but we are willing to exceed this for worthwhile opportunities. We've consistently managed our leverage with this flexible approach.

Q: How should we adjust our expectations for this year's Derby compared to last year? A: William C. Carstanjen (CEO & Director): We will provide a specific range post-Derby to clarify expectations. Generally, each year builds positively on the last, and detailed specifics will be available after the event.

Q: With the strong start at Terre Haute, what are the expectations for its ramp-up to meet ROI targets? A: William C. Carstanjen (CEO & Director): Properties typically take three years to mature fully. Terre Haute has started strong, and we expect it to continue performing well without a long wait for significant returns.

Q: Can you provide an update on the Exacta impact, particularly on Live and Historical Racing margins? A: William C. Carstanjen (CEO & Director): Exacta is enhancing our property operations and margins. We're still exploring how to fully leverage Exacta's capabilities, and there are opportunities for growth in new jurisdictions and possibly internationally.

Q: What are your plans for the additional HRM machines in Virginia? A: William C. Carstanjen (CEO & Director): We have more opportunities than available machines and expect to deploy the remaining 500-plus machines in 2025. We are finalizing decisions on their optimal placement.

Q: How is Derby City Downtown performing, and are there any operational challenges? A: William C. Carstanjen (CEO & Director): It started modestly as expected, given its reliance on tourism and downtown traffic. The performance is ramping up with the seasons, and it aligns with our three-year maturity model for new properties.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.