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
RESULTS |
First Quarter |
(in millions, except per share
data) |
2021 |
|
2020 |
|
|
|
|
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
Racing |
First Quarter |
(in millions) |
2021 |
|
2020 |
|
|
|
|
Net revenue |
$ |
64.7 |
|
|
$ |
29.1 |
|
Adjusted EBITDA |
18.3 |
|
|
1.0 |
|
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.
TwinSpires |
First Quarter |
(in millions) |
2021 |
|
2020 |
|
|
|
|
Net revenue |
$ |
100.1 |
|
|
$ |
69.4 |
|
Adjusted EBITDA |
22.5 |
|
|
16.0 |
|
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.
Gaming |
First Quarter |
(in millions) |
2021 |
|
2020 |
|
|
|
|
Net revenue |
$ |
154.0 |
|
|
$ |
147.4 |
|
Adjusted EBITDA |
82.4 |
|
|
47.9 |
|
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 Companyâs
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 Companyâs
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 Churchill Downs
Incorporated can be found online at
www.churchilldownsincorporated.com.
This news release contains various
âforward-looking statementsâ within the meaning of the âsafe
harborâ provisions of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements are typically identified by the
use of terms such as âanticipate,â âbelieve,â âcould,â âestimate,â
âexpect,â âintend,â âmay,â âmight,â âplan,â âpredict,â âproject,â
âseek,â âshould,â âwill,â 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 customersâ 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.
CHURCHILL DOWNS
INCORPORATEDCONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
(LOSS)(Unaudited)
|
Three Months Ended March 31, |
(in millions, except per
common share data) |
2021 |
|
2020 |
Net
revenue: |
|
|
|
Live and Historical Racing |
$ |
63.2 |
|
|
$ |
28.1 |
|
TwinSpires |
99.7 |
|
|
69.1 |
|
Gaming |
152.0 |
|
|
145.9 |
|
All Other |
9.4 |
|
|
9.8 |
|
Total net revenue |
324.3 |
|
|
252.9 |
|
Operating
expense: |
|
|
|
Live and Historical Racing |
54.7 |
|
|
33.1 |
|
TwinSpires |
73.0 |
|
|
50.8 |
|
Gaming |
106.3 |
|
|
124.1 |
|
All Other |
13.3 |
|
|
14.6 |
|
Selling, general and administrative expense |
30.2 |
|
|
24.1 |
|
Impairment of intangible assets |
â |
|
|
17.5 |
|
Transaction expense, net |
0.1 |
|
|
0.3 |
|
Total operating expense |
277.6 |
|
|
264.5 |
|
Operating income
(loss) |
46.7 |
|
|
(11.6 |
) |
Other income
(expense): |
|
|
|
Interest expense, net |
(19.4 |
) |
|
(19.3 |
) |
Equity in income of unconsolidated affiliates |
24.9 |
|
|
(3.3 |
) |
Miscellaneous, net |
0.1 |
|
|
â |
|
Total other income (expense) |
5.6 |
|
|
(22.6 |
) |
Income (loss) from continuing operations before provision for
income taxes |
52.3 |
|
|
(34.2 |
) |
Income tax (provision) benefit |
(16.2 |
) |
|
11.6 |
|
Income (loss) from continuing operations, net of tax |
36.1 |
|
|
(22.6 |
) |
Loss from discontinued operations, net of tax |
â |
|
|
(0.9 |
) |
Net income (loss) |
36.1 |
|
|
(23.5 |
) |
Net loss attributable to
noncontrolling interest |
â |
|
|
(0.1 |
) |
Net income (loss) and comprehensive income (loss)
attributable to Churchill Downs Incorporated |
$ |
36.1 |
|
|
$ |
(23.4 |
) |
|
|
|
|
Net income (loss) per
common share data - basic: |
|
|
|
Continuing operations |
$ |
0.93 |
|
|
$ |
(0.57 |
) |
Discontinued operations |
$ |
â |
|
|
$ |
(0.02 |
) |
Net income (loss) per common share data -
basic |
$ |
0.93 |
|
|
$ |
(0.59 |
) |
|
|
|
|
Net income (loss) per
common share data - diluted: |
|
|
|
Continuing operations |
$ |
0.91 |
|
|
$ |
(0.57 |
) |
Discontinued operations |
$ |
â |
|
|
$ |
(0.02 |
) |
Net income (loss) per common share data -
diluted |
$ |
0.91 |
|
|
$ |
(0.59 |
) |
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
Basic |
39.0 |
|
|
39.7 |
|
Diluted |
39.6 |
|
|
39.7 |
|
CHURCHILL DOWNS
INCORPORATEDCONSOLIDATED BALANCE
SHEETS(Unaudited)
(in millions) |
March 31, 2021 |
|
December 31, 2020 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
147.7 |
|
|
$ |
67.4 |
|
Restricted cash |
48.0 |
|
|
53.6 |
|
Accounts receivable, net |
45.3 |
|
|
36.5 |
|
Income taxes receivable |
69.4 |
|
|
49.4 |
|
Other current assets |
36.4 |
|
|
28.2 |
|
Total current assets |
346.8 |
|
|
235.1 |
|
Property and equipment,
net |
1,068.7 |
|
|
1,082.1 |
|
Investment in and advances to
unconsolidated affiliates |
633.7 |
|
|
630.6 |
|
Goodwill |
366.8 |
|
|
366.8 |
|
Other intangible assets,
net |
349.4 |
|
|
350.6 |
|
Other assets |
21.7 |
|
|
21.2 |
|
Total assets |
$ |
2,787.1 |
|
|
$ |
2,686.4 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
74.7 |
|
|
$ |
70.7 |
|
Accrued expenses and other current liabilities |
171.0 |
|
|
167.8 |
|
Current deferred revenue |
52.5 |
|
|
32.8 |
|
Current maturities of long-term debt |
7.0 |
|
|
4.0 |
|
Dividends payable |
â |
|
|
24.9 |
|
Current liabilities of discontinued operations |
â |
|
|
124.0 |
|
Total current liabilities |
305.2 |
|
|
424.2 |
|
Long-term debt, net of current
maturities and loan origination fees |
672.9 |
|
|
530.5 |
|
Notes payable, net of debt
issuance costs |
1,291.4 |
|
|
1,087.8 |
|
Non-current deferred
revenue |
18.4 |
|
|
17.1 |
|
Deferred income taxes |
248.8 |
|
|
213.9 |
|
Other liabilities |
48.2 |
|
|
45.8 |
|
Total liabilities |
2,584.9 |
|
|
2,319.3 |
|
Commitments and
contingencies |
|
|
|
Shareholders' equity: |
|
|
|
Preferred stock |
â |
|
|
â |
|
Common stock |
1.7 |
|
|
18.2 |
|
Retained earnings |
201.4 |
|
|
349.8 |
|
Accumulated other comprehensive loss |
(0.9 |
) |
|
(0.9 |
) |
Total shareholder's
equity |
|
202.2 |
|
|
|
367.1 |
|
Total liabilities and
shareholders' equity |
$ |
2,787.1 |
|
|
$ |
2,686.4 |
|
CHURCHILL DOWNS
INCORPORATEDCONSOLIDATED STATEMENTS OF CASH
FLOWS(unaudited)
|
Three Months Ended March 31, |
(in millions) |
2021 |
|
2020 |
Cash flows from
operating activities: |
|
|
|
Net income (loss) |
$ |
36.1 |
|
|
$ |
(23.5 |
) |
Adjustments to reconcile net (loss) income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
26.0 |
|
|
22.0 |
|
Distributions from unconsolidated affiliates |
22.0 |
|
|
1.3 |
|
Equity in (income) loss of unconsolidated affiliates |
(24.9 |
) |
|
3.3 |
|
Stock-based compensation |
5.5 |
|
|
4.3 |
|
Deferred income taxes |
5.7 |
|
|
(1.9 |
) |
Impairment of intangible assets |
â |
|
|
17.5 |
|
Amortization of operating lease assets |
0.2 |
|
|
1.2 |
|
Other |
1.2 |
|
|
0.9 |
|
Changes in operating assets and liabilities: |
|
|
|
Income taxes |
9.2 |
|
|
(10.7 |
) |
Deferred revenue |
21.0 |
|
|
53.4 |
|
Current liabilities of discontinued operations |
(124.0 |
) |
|
â |
|
Other assets and liabilities |
2.2 |
|
|
(24.3 |
) |
Net cash (used in) provided by operating activities |
(19.8 |
) |
|
43.5 |
|
Cash flows from
investing activities: |
|
|
|
Capital maintenance expenditures |
(4.7 |
) |
|
(9.0 |
) |
Capital project expenditures |
(7.6 |
) |
|
(39.3 |
) |
Net cash used in investing activities |
(12.3 |
) |
|
(48.3 |
) |
Cash flows from
financing activities: |
|
|
|
Proceeds from borrowings under long-term debt obligations |
780.8 |
|
|
719.8 |
|
Repayments of borrowings under long-term debt obligations |
(425.7 |
) |
|
(32.4 |
) |
Payment of dividends |
(24.8 |
) |
|
(23.4 |
) |
Repurchase of common stock |
(193.9 |
) |
|
(28.4 |
) |
Cash settlement of stock awards |
â |
|
|
(12.7 |
) |
Taxes paid related to net share settlement of stock awards |
(12.6 |
) |
|
(15.1 |
) |
Debt issuance costs |
(5.8 |
) |
|
(0.9 |
) |
Change in bank overdraft |
(12.8 |
) |
|
â |
|
Other |
1.6 |
|
|
(0.1 |
) |
Net cash provided by financing activities |
106.8 |
|
|
606.8 |
|
Net increase in cash,
cash equivalents and restricted cash |
74.7 |
|
|
602.0 |
|
Cash, cash equivalents and
restricted cash, beginning of period |
121.0 |
|
|
142.5 |
|
Cash, cash equivalents
and restricted cash, end of period |
$ |
195.7 |
|
|
$ |
744.5 |
|
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL
INFORMATION(Unaudited)
|
Three Months Ended March 31, |
(in millions) |
2021 |
|
2020 |
GAAP net income (loss) attributable to Churchill Downs
Incorporated |
$ |
36.1 |
|
|
$ |
(23.4 |
) |
|
|
|
|
Adjustments, continuing
operations: |
|
|
|
Changes in fair value of interest rate swaps related to Rivers Des
Plaines |
(4.2 |
) |
|
14.9 |
|
Legal reserves and transaction costs related to Rivers Des
Plaines |
1.3 |
|
|
â |
|
Transaction, pre-opening, and other expense |
0.7 |
|
|
2.0 |
|
Impairment of intangible assets |
â |
|
|
17.5 |
|
Income tax impact on net income adjustments (a) |
0.7 |
|
|
(9.9 |
) |
Total adjustments, continuing
operations |
(1.5 |
) |
|
24.5 |
|
Big Fish Games net loss
(b) |
â |
|
|
0.9 |
|
Total adjustments |
(1.5 |
) |
|
25.4 |
|
Adjusted net income
attributable to Churchill Downs Incorporated |
$ |
34.6 |
|
|
$ |
2.0 |
|
|
|
|
|
Adjusted diluted EPS |
$ |
0.87 |
|
|
$ |
0.05 |
|
|
|
|
|
Weighted average shares
outstanding - Diluted (c) |
39.6 |
|
|
40.2 |
|
(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.(b) Due to the sale of Big Fish Games, Inc., Big
Fish Games is presented as a discontinued operation.(c) For the
three months ended March 31, 2020, diluted weighted average shares
outstanding included 0.5 million shares of anti-dilutive stock
awards excluded from the calculation of diluted shares for purposes
of GAAP since we were in a net loss position.
|
Three Months Ended March 31, |
(in millions) |
2021 |
|
2020 |
Total
Handle |
|
|
|
Churchill Downs Racetrack |
$ |
3.8 |
|
|
$ |
5.2 |
|
TwinSpires Horse Racing(a) |
443.1 |
|
|
329.8 |
|
(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) |
2021 |
|
2020 |
Net revenue from external customers: |
|
|
|
Live and Historical Racing: |
|
|
|
Churchill Downs Racetrack |
$ |
2.0 |
|
|
$ |
1.9 |
|
Derby City Gaming |
32.9 |
|
|
21.6 |
|
Oak Grove |
19.4 |
|
|
â |
|
Turfway Park |
4.5 |
|
|
4.6 |
|
Newport |
4.4 |
|
|
â |
|
Total Live and Historical Racing |
63.2 |
|
|
28.1 |
|
TwinSpires: |
|
|
|
Horse Racing |
92.7 |
|
|
66.6 |
|
Sports and Casino |
7.0 |
|
|
2.5 |
|
Total TwinSpires |
99.7 |
|
|
69.1 |
|
Gaming: |
|
|
|
Fair Grounds and VSI |
38.3 |
|
|
31.6 |
|
Presque Isle |
23.8 |
|
|
27.0 |
|
Calder |
20.9 |
|
|
21.8 |
|
Oxford Casino |
15.7 |
|
|
20.1 |
|
Ocean Downs |
20.0 |
|
|
14.8 |
|
Riverwalk Casino |
14.4 |
|
|
12.0 |
|
Harlowâs Casino |
14.0 |
|
|
11.3 |
|
Lady Luck Nemacolin |
4.9 |
|
|
7.3 |
|
Total Gaming |
152.0 |
|
|
145.9 |
|
All Other |
9.4 |
|
|
9.8 |
|
Net revenue from external customers |
$ |
324.3 |
|
|
$ |
252.9 |
|
|
|
|
|
Intercompany net revenue: |
|
|
|
Live and Historical Racing |
$ |
1.5 |
|
|
$ |
1.0 |
|
TwinSpires |
0.4 |
|
|
0.3 |
|
Gaming |
2.0 |
|
|
1.5 |
|
All Other |
2.7 |
|
|
2.4 |
|
Eliminations |
(6.6 |
) |
|
(5.2 |
) |
Intercompany net revenue |
$ |
â |
|
|
$ |
â |
|
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL
INFORMATION(Unaudited)
|
Three Months Ended March 31, 2021 |
(in millions) |
Live and Historical Racing |
|
TwinSpires |
|
Gaming |
|
Total Segments |
|
All Other |
|
Total |
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) |
52.9 |
|
|
â |
|
|
â |
|
|
52.9 |
|
|
â |
|
|
52.9 |
|
Racing event-related
services |
â |
|
|
â |
|
|
0.7 |
|
|
0.7 |
|
|
â |
|
|
0.7 |
|
Gaming(a) |
â |
|
|
7.0 |
|
|
132.5 |
|
|
139.5 |
|
|
â |
|
|
139.5 |
|
Other(a) |
4.4 |
|
|
3.5 |
|
|
7.1 |
|
|
15.0 |
|
|
4.3 |
|
|
19.3 |
|
Total |
$ |
63.2 |
|
|
$ |
99.7 |
|
|
$ |
152.0 |
|
|
$ |
314.9 |
|
|
$ |
9.4 |
|
|
$ |
324.3 |
|
|
Three Months Ended March 31, 2020 |
(in millions) |
Live and Historical Racing |
|
TwinSpires |
|
Gaming |
|
Total Segments |
|
All Other |
|
Total |
Net revenue from
external customers |
|
|
|
|
|
|
|
|
|
|
|
Pari-mutuel: |
|
|
|
|
|
|
|
|
|
|
|
Live and simulcast racing |
$ |
5.2 |
|
|
$ |
63.9 |
|
|
$ |
9.9 |
|
|
$ |
79.0 |
|
|
$ |
5.7 |
|
|
$ |
84.7 |
|
Historical racing(a) |
20.4 |
|
|
â |
|
|
â |
|
|
20.4 |
|
|
â |
|
|
20.4 |
|
Racing event-related
services |
â |
|
|
â |
|
|
1.3 |
|
|
1.3 |
|
|
0.1 |
|
|
1.4 |
|
Gaming(a) |
â |
|
|
2.5 |
|
|
119.8 |
|
|
122.3 |
|
|
â |
|
|
122.3 |
|
Other(a) |
2.5 |
|
|
2.7 |
|
|
14.9 |
|
|
20.1 |
|
|
4.0 |
|
|
24.1 |
|
Total |
$ |
28.1 |
|
|
$ |
69.1 |
|
|
$ |
145.9 |
|
|
$ |
243.1 |
|
|
$ |
9.8 |
|
|
$ |
252.9 |
|
(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 historical racing
machines or gaming revenue for our casino properties. These amounts
were $3.7 million for the three months ended March 31,
2021 and $7.6 million for the three months ended
March 31, 2020.
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL
INFORMATION(Unaudited)
Adjusted EBITDA by segment is comprised of the following:
|
Three Months Ended March 31, 2021 |
(in millions) |
Live and Historical Racing |
|
TwinSpires |
|
Gaming |
|
Total Segments |
|
All Other |
|
Eliminations |
|
Total |
Net revenue |
$ |
64.7 |
|
|
$ |
100.1 |
|
|
$ |
154.0 |
|
|
$ |
318.8 |
|
|
$ |
12.1 |
|
|
$ |
(6.6 |
) |
|
$ |
324.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes and purses |
(20.0 |
) |
|
(6.4 |
) |
|
(59.3 |
) |
|
(85.7 |
) |
|
(3.1 |
) |
|
â |
|
|
(88.8 |
) |
Marketing and advertising |
(2.1 |
) |
|
(8.5 |
) |
|
(1.4 |
) |
|
(12.0 |
) |
|
(0.1 |
) |
|
â |
|
|
(12.1 |
) |
Salaries and benefits |
(10.0 |
) |
|
(3.1 |
) |
|
(19.9 |
) |
|
(33.0 |
) |
|
(4.3 |
) |
|
â |
|
|
(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 |
) |
|
(2.2 |
) |
|
(6.0 |
) |
|
(11.2 |
) |
|
(13.0 |
) |
|
0.3 |
|
|
(23.9 |
) |
Other operating expense |
(10.7 |
) |
|
(10.9 |
) |
|
(15.5 |
) |
|
(37.1 |
) |
|
(3.0 |
) |
|
0.1 |
|
|
(40.0 |
) |
Other income |
â |
|
|
â |
|
|
31.5 |
|
|
31.5 |
|
|
0.1 |
|
|
â |
|
|
31.6 |
|
Adjusted EBITDA |
$ |
18.3 |
|
|
$ |
22.5 |
|
|
$ |
82.4 |
|
|
$ |
123.2 |
|
|
$ |
(12.6 |
) |
|
$ |
â |
|
|
$ |
110.6 |
|
|
Three Months Ended March 31, 2020 |
(in millions) |
Live and Historical Racing |
|
TwinSpires |
|
Gaming |
|
Total Segments |
|
All Other |
|
Eliminations |
|
Total |
Net revenue |
$ |
29.1 |
|
|
$ |
69.4 |
|
|
$ |
147.4 |
|
|
$ |
245.9 |
|
|
$ |
12.2 |
|
|
$ |
(5.2 |
) |
|
$ |
252.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes and purses |
(9.5 |
) |
|
(4.3 |
) |
|
(58.7 |
) |
|
(72.5 |
) |
|
(3.2 |
) |
|
â |
|
|
(75.7 |
) |
Marketing and advertising |
(1.2 |
) |
|
(3.5 |
) |
|
(5.3 |
) |
|
(10.0 |
) |
|
(0.1 |
) |
|
0.2 |
|
|
(9.9 |
) |
Salaries and benefits |
(7.2 |
) |
|
(3.5 |
) |
|
(29.5 |
) |
|
(40.2 |
) |
|
(5.1 |
) |
|
â |
|
|
(45.3 |
) |
Content expense |
(0.7 |
) |
|
(32.6 |
) |
|
(1.0 |
) |
|
(34.3 |
) |
|
(1.3 |
) |
|
4.7 |
|
|
(30.9 |
) |
Selling, general and
administrative expense |
(1.7 |
) |
|
(1.4 |
) |
|
(6.7 |
) |
|
(9.8 |
) |
|
(8.7 |
) |
|
0.2 |
|
|
(18.3 |
) |
Other operating expense |
(7.8 |
) |
|
(8.1 |
) |
|
(19.5 |
) |
|
(35.4 |
) |
|
(3.4 |
) |
|
0.1 |
|
|
(38.7 |
) |
Other income |
â |
|
|
â |
|
|
21.2 |
|
|
21.2 |
|
|
â |
|
|
â |
|
|
21.2 |
|
Adjusted EBITDA |
$ |
1.0 |
|
|
$ |
16.0 |
|
|
$ |
47.9 |
|
|
$ |
64.9 |
|
|
$ |
(9.6 |
) |
|
$ |
â |
|
|
$ |
55.3 |
|
CHURCHILL DOWNS INCORPORATED
SUPPLEMENTAL
INFORMATION(Unaudited)
|
Three Months Ended March 31, |
(in
millions) |
2021 |
|
2020 |
Reconciliation of Comprehensive Income (Loss) to Adjusted
EBITDA: |
|
|
|
Net income (loss) attributable to Churchill Downs Incorporated |
$ |
36.1 |
|
|
$ |
(23.4 |
) |
Net loss attributable to noncontrolling interest |
â |
|
|
0.1 |
|
Net income (loss) before noncontrolling interest |
36.1 |
|
|
(23.5 |
) |
Loss from discontinued operations, net of tax |
â |
|
|
0.9 |
|
Income (loss) from continuing
operations, net of tax |
36.1 |
|
|
(22.6 |
) |
|
|
|
|
Additions: |
|
|
|
Depreciation and amortization |
26.0 |
|
|
22.0 |
|
Interest expense |
19.4 |
|
|
19.3 |
|
Income tax provision (benefit) |
16.2 |
|
|
(11.6 |
) |
EBITDA |
$ |
97.7 |
|
|
$ |
7.1 |
|
|
|
|
|
Adjustments to EBITDA: |
|
|
|
Selling, general and administrative: |
|
|
|
Stock-based compensation expense |
$ |
5.5 |
|
|
$ |
4.3 |
|
Pre-opening expense and other expense |
0.6 |
|
|
1.7 |
|
Impairment of intangible assets |
â |
|
|
17.5 |
|
Transaction expense, net |
0.1 |
|
|
0.3 |
|
Other income, expense: |
|
|
|
Interest, depreciation and amortization expense related to equity
investments |
9.6 |
|
|
9.5 |
|
Changes in fair value of Rivers Des Plaines' interest rate
swaps |
(4.2 |
) |
|
14.9 |
|
Rivers Des Plaines' legal reserves and transaction costs |
1.3 |
|
|
â |
|
Total adjustments to EBITDA |
12.9 |
|
|
48.2 |
|
Adjusted
EBITDA |
$ |
110.6 |
|
|
$ |
55.3 |
|
|
|
|
|
Adjusted EBITDA by segment: |
|
|
|
Live
and Historical Racing |
$ |
18.3 |
|
|
$ |
1.0 |
|
TwinSpires |
22.5 |
|
|
16.0 |
|
Gaming |
82.4 |
|
|
47.9 |
|
Total segment Adjusted EBITDA |
123.2 |
|
|
64.9 |
|
All
Other |
(12.6 |
) |
|
(9.6 |
) |
Total Adjusted EBITDA |
$ |
110.6 |
|
|
$ |
55.3 |
|
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) |
2021 |
|
2020 |
Net revenue |
$ |
138.7 |
|
|
$ |
137.8 |
|
|
|
|
|
Operating and SG&A
expense |
85.6 |
|
|
100.8 |
|
Depreciation and
amortization |
4.3 |
|
|
4.2 |
|
Total operating expense |
89.9 |
|
|
105.0 |
|
Operating income |
48.8 |
|
|
32.8 |
|
Interest and other expense,
net |
(4.6 |
) |
|
(35.8 |
) |
Net income (loss) |
$ |
44.2 |
|
|
$ |
(3.0 |
) |
|
Summarized Balance Sheet |
(in millions) |
March 31, 2021 |
|
December 31, 2020 |
Assets |
|
|
|
Current assets |
$ |
87.7 |
|
|
$ |
132.8 |
|
Property and equipment,
net |
265.7 |
|
|
267.5 |
|
Other assets, net |
246.5 |
|
|
244.9 |
|
Total assets |
$ |
599.9 |
|
|
$ |
645.2 |
|
|
|
|
|
Liabilities and
Members' Deficit |
|
|
|
Current liabilities |
$ |
122.1 |
|
|
$ |
133.5 |
|
Long-term debt |
722.0 |
|
|
753.5 |
|
Other liabilities |
35.6 |
|
|
42.3 |
|
Members' deficit |
(279.8 |
) |
|
(284.1 |
) |
Total liabilities and members' deficit |
$ |
599.9 |
|
|
$ |
645.2 |
|
Contact: Nick Zangari(502) 394-1157Nick.Zangari@kyderby.com
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