Churchill Downs Inc (CHDN) 10-Q Quarterly Report April 2022

- Churchill Downs Incorporated (Nasdaq: CHDN) (the "Company", "we", "us", "our") today reported business results for the quarter and full year ended December 31, 2021.

Company Highlights

▪Record 2021 net revenue of $1,597.2 million, up 52% over the prior year

▪2021 net income(a) was $249.1 million, compared to net loss(a) of $81.9 million in the prior year

▪Record 2021 Adjusted EBITDA of $627.0 million, up 119%, compared to $286.5 million in the prior year

▪We had strong operating performance from our business segments:

–Churchill Downs successfully ran the 147th Kentucky Oaks and Derby with over 51,000 fans gathered in person and strong NBC viewership, sponsorship revenue, and margins

–Derby City Gaming delivered record net revenue and Adjusted EBITDA in 2021 and Oak Grove Racing, Gaming & Hotel ("Oak Grove") delivered strong growth in net revenue and Adjusted EBITDA in its first full year of operation

–TwinSpires Horse Racing delivered Adjusted EBITDA of $119.0 million in 2021, down 6% from the prior year

•TwinSpires Horse Racing Adjusted EBITDA in 2021 was up 52% from 2019

–Our Gaming Segment delivered a record $411.9 million of Adjusted EBITDA, an increase of $238.8 million, or 138%, compared to 2020, despite restrictions at our properties during the year and disruption from Hurricane Ida at Fair Grounds and VSI

•Our wholly-owned casinos delivered record margins of 37% in 2021, up 11.1 points from 2020 and up 7.8 points from 2019

▪We announced on February 22, 2022 definitive agreement to acquire substantially all of the assets of Peninsula Pacific Entertainment LLC ("P2E") for total consideration of $2.485 billion

▪We announced key strategic long-term organic growth investments:

–We announced three major multi-year capital investments at Churchill Downs Racetrack: the Homestretch Club, the Turn 1 Experience, and the Paddock and Under the Spires projects

–We announced plans to invest $76 million to expand Derby City Gaming for up to 450 additional historical racing machines ("HRMs") and to build a new five-story hotel with 123 rooms including amenities to better serve and attract guests

–We continued building the new HRM and grandstand facility at Turfway Park Racing & Gaming ("Turfway Park") and are on schedule to open the new entertainment venue

–We announced plans to open Derby City Gaming Downtown in downtown Louisville, Kentucky as a new entertainment venue with 500 HRMs

–We were selected to develop the Queen of Terre Haute Casino Resort in Vigo County, Indiana and plan to invest up to $260 million to build a new entertainment venue with 1,000 slot machines, 50 table games, and a 125-room luxury hotel

▪We announced agreements to sell two properties:

–326-acre property in Arlington Heights, Illinois for $197 million to the Chicago Bears

–115.7 acres of land near Calder Casino for $291 million to Link Logistics

The following information was filed by Churchill Downs Inc (CHDN) on Wednesday, February 23, 2022 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Churchill Downs Inc's 10-Q Quarterly Report:

Financial - Earnings Highlight
The following items impacted comparability of the Company's first quarter of 2022 net income compared to the prior year's first quarter: a $6.3 million after-tax increase in expenses related to transaction, pre-opening and other expenses, net, and a $3.5 million after-tax impairment charge driven by the decision to exit the direct online Sports and Casino business, and $0.7 million of other charges primarily related to our equity portion of Miami Valley Gaming's after-tax non-cash impairment charge related to prior expansion plans.

Financial - Earnings Highlight
Excluding these items, net income increased $11.3 million primarily due to a $12.9 million after-tax increase driven by the results of our operations and equity in income from our unconsolidated affiliates, partially offset by a $1.6 million after-tax increase in interest expense associated with higher outstanding debt balances.
Other - Other Highlight
Adjusted EBITDA We believe that the use of Adjusted EBITDA as a key performance measure of the results of operations enables management and investors to evaluate and compare from period to period our operating performance in a meaningful and consistent manner.
Revenue - Product Highlight
Three Months Ended March 31, 2022, Compared to Three Months Ended March 31, 2021 Live and Historical Racing 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.
Financial - Income Highlight
Reconciliation of Comprehensive Income to Adjusted EBITDA Consolidated Balance Sheet The following table is a summary of our overall financial position: Significant items affecting the comparability of our condensed consolidated balance sheets include: Total assets increased $55.3 million driven by a $40.9 million increase in property and equipment driven by capital expenditures at Churchill Downs Racetrack, Turfway Park, and Derby City Gaming; a $16.9 million increase in other current assets driven by an increase in prepaid insurance; and a $11.8 million increase in all other assets.
Other - Other
We believe that the use...Read more
Financial - Expense
Marketing and advertising expense decreased...Read more
Financial - Cash Flow
Liquidity and Capital Resources The...Read more
Revenue - Product
Gaming Adjusted EBITDA increased $8.7...Read more
Revenue - Product
Consolidated Financial Results The following...Read more
Financial - Shares
Partially offsetting these increases were...Read more
Other - Other
Capital project expenditures represent fixed...Read more
Revenue - Product
Financial Results by Segment Net...Read more
Financial - Income
Operating income increased $0.7 million...Read more
Other - Other
TwinSpires Adjusted EBITDA increased $1.0...Read more
Other - Other
Cash used in investing activities...Read more
Financial - Expense
Other operating expense increased $9.1...Read more
Financial - Shares
Total shareholders' equity increased $11.0...Read more
Financial - Expense
Transaction expense, net increased $4.9...Read more
Other - Other
Common Stock Repurchase Program On...Read more
Financial - Expense
Content expense decreased $1.8 million...Read more
Other - Other
Adjusted EBITDA is a supplemental...Read more
Financial - Income
Adjusted EBITDA should not be...Read more
Other - Other
Adjusted EBITDA is a supplemental...Read more
Financial - Income
Adjusted EBITDA should not be...Read more
Financial - Shares
Partially offsetting this increase were...Read more
Other - Other
The Credit Agreement also contains...Read more
Financial - Shares
On February 1, 2021, the...Read more
Revenue - Product
Sports and Casino net revenue...Read more
Revenue - Product
For segment reporting, Adjusted EBITDA...Read more
Revenue - Product
These indicators include changes in...Read more
Financial - Expense
Partially offsetting these increases was...Read more
Revenue - Product
Horse Racing net revenue decreased...Read more
Other - Other
Oak Grove and Derby City...Read more
Revenue - Product
We are excluding Arlington's operating...Read more
Other - Other
If certain required regulatory approvals...Read more
Financial - Earnings
Net income increased $6.0 million....Read more
Revenue - Product
Total liabilities increased $44.3 million...Read more

Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Material Contracts, Statements, Certifications & more

Churchill Downs Inc provided additional information to their SEC Filing as exhibits

Exhibit 31.A: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 31.B: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 32: Section 1350 Certification

Ticker: CHDN
CIK: 20212
Form Type: 10-Q Quarterly Report
Accession Number: 0000020212-22-000094
Submitted to the SEC: Wed Apr 27 2022 4:15:46 PM EST
Accepted by the SEC: Wed Apr 27 2022
Period: Thursday, March 31, 2022
Industry: Racing Including Track Operation

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Churchill Downs Inc (CHDN) SEC Filing 10-Q Quarterly Report for the period ending Thursday, March 31, 2022

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