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CD

Churchill Downs Inc (CHDN)·Q1 2025 Earnings Summary

Executive Summary

  • Record Q1 results despite weather, leap-year comp and macro headwinds: net revenue $642.6M (+9% Y/Y), Adjusted EBITDA $245.1M (+1% Y/Y), GAAP diluted EPS $1.02 (vs $1.08) . Management flagged consumer hesitancy and paused large Derby capex given tariff-driven cost uncertainty .
  • Versus S&P Global consensus: Revenue essentially in-line ($642.6M vs $642.8M*), and Primary EPS beat ($1.07 vs $1.04*, +$0.03) on resilient operations; adjusted EBITDA aligned with internal reporting (definitions differ) . Values retrieved from S&P Global.*
  • Strategic drivers: The Rose (Northern VA) showed sequential monthly improvement; Owensboro (KY) opened in Feb with solid early returns; Richmond HRM expansion and Henrico (Roseshire) remain on time/on budget .
  • Capital allocation: New $500M repurchase authorization; Q1 repurchases $89.4M (798K shares); net bank leverage 4.0x; 2025 project capex cut to $250–$290M (from $350–$400M) and maintenance capex to $90–$100M .

What Went Well and What Went Wrong

  • What Went Well
    • Record Q1 net revenue ($642.6M) and Adjusted EBITDA ($245.1M) achieved despite weather, one fewer day vs leap-year comp, and macro uncertainty. “We delivered record first quarter net revenue of $643 million and record first quarter adjusted EBITDA of $245 million” (CEO) .
    • New properties/expansion performing: Owensboro (600 HRMs) opened on time, below budget and is “on track to deliver great return”; The Rose posted meaningful sequential GGR growth as the database builds (CEO) .
    • Exacta (B2B HRM tech) driving optimization and third‑party growth; ahead on Richmond HRM expansion and Henrico (Roseshire) timing/budget (CEO) .
  • What Went Wrong
    • Virginia same‑store HRM EBITDA down (−$ ~6M across other VA properties) on lower unrated play, competition, weather and higher handle tax; overall VA same‑store margins still a solid 52% (CFO) .
    • Regional gaming softness pressured wholly owned casinos; same‑store casino margins −2.1 pts Y/Y, notably NY/PA/ME; leap-year comp and weather also weighed (CFO) .
    • Lower-tier Derby ticket demand softer over last 8–9 weeks amid tariff/macro headlines, while premium remains strong; capex for Skye/Conservatory/Infield paused to reassess costs (CEO) .

Financial Results

Headline results and estimate comparison

MetricQ1 2024Q3 2024Q4 2024Q1 2025 (Actual)Q1 2025 (Consensus)
Net Revenue ($M)590.9 628.5 624.2 642.6 642.8*
GAAP Diluted EPS ($)1.08 0.86 0.95 1.02 —
Adjusted Diluted EPS ($)1.13 0.97 0.92 1.07 Primary EPS: 1.04*
Adjusted EBITDA ($M)242.5 235.3 236.6 245.1 —

Margins

MarginQ1 2024Q3 2024Q4 2024Q1 2025
Operating Margin %21.4% (126.3/590.9) 20.0% (125.9/628.5) 20.3% (126.8/624.2) 21.0% (134.6/642.6)
Net Income Margin %13.6% (80.4/590.9) 10.4% (65.4/628.5) 11.5% (71.7/624.2) 11.9% (76.7/642.6)
Adjusted EBITDA Margin %41.0% (242.5/590.9) 37.5% (235.3/628.5) 37.9% (236.6/624.2) 38.1% (245.1/642.6)

Segment performance (Q1)

SegmentRevenue ($M) Q1 2024Revenue ($M) Q1 2025Adj. EBITDA ($M) Q1 2024Adj. EBITDA ($M) Q1 2025
Live & Historical Racing245.1 272.5 100.8 102.0
Wagering Services & Solutions106.6 106.9 39.6 41.3
Gaming239.2 263.2 122.8 123.5
Total590.9 642.6 242.5 245.1

KPIs and cash metrics

KPIQ1 2024Q1 2025
TwinSpires Horse Racing Total Handle ($M)419.7 400.5
Net Bank Leverage (x)—4.0x
Share Repurchases ($M)141.7 89.4
Shares Repurchased (000s)—798.3
Cash from Operating Activities ($M)254.7 246.5
Maintenance Capex ($M)12.4 12.6
Project Capex ($M)142.6 67.5
Owensboro HRMs (units)—600

Estimate notes: Values retrieved from S&P Global.*
Q1 2025 consensus: Revenue $642.8M*, Primary EPS $1.04*; Actuals: Revenue $642.6M , Primary EPS $1.07 . Beat on EPS; revenue in-line. Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Project CapexFY 2025$350–$400M (Feb 19, 2025) $250–$290M (pause major Derby projects) Lowered
Maintenance CapexFY 2025~$100–$110M (implied) $90–$100M Lowered
Bank Covenant Net LeverageFY 2025—~4x for remainder of 2025 Maintained target range
Bank Covenant Net LeverageFY 2026—3.6x–3.8x New outlook
Derby 151 Financials2025 Derby Week—“Comparable to last year across key financial metrics” (Adj. EBITDA focus) Qualitative

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24, Q4’24)Current Period (Q1’25)Trend
Macro/consumer softness & unrated playRegional gaming softness noted; margins resilient Lower-end/unrated softness; weather; leap-year comp; VA handle tax; database strengths at high end Mixed to slightly worse at low end
HRM expansion (VA/KY)Rose opened; continuing build; KY venues growing The Rose sequentially improving; Richmond expansion ahead; Henrico on track; Owensboro opened on time/below budget Positive ramp
Derby monetizationRecord Derby 150 metrics in 2024 Derby 151 expected comparable; lower-tier demand softer; premium strong; price/yield to improve in 2026 Solid; pricing power deferred
Capex disciplineLarge 2025–28 plan outlined Pause Skye/Conservatory/Infield due to tariff/macro cost risk; proceed with $25–$30M Finish Line Suites/Mansion More selective
Exacta technology/B2BDriving TwinSpires/segment EBITDA Continues to optimize; 11/12 NH venues on platform; e-table games planned before end-2025 (regulatory pace-dependent) Positive

Management Commentary

  • Strategy and discipline: “We have demonstrated we can nimbly apply our strategy in any economic environment to effectively manage our capital to create best-in-class value” (CEO) .
  • Derby project pause rationale: “Increased general economic uncertainty and risk of significant inflation driven in part by the new tariffs … created unanticipated and currently unquantifiable expected cost increases” (CEO) . “We have a responsibility to be disciplined” (press release) .
  • 2025 Derby outlook: “We expect this year's Kentucky Derby to be comparable to last year's, delivering one of the best results in the history of our company across our key financial metrics” (CEO) .
  • Property openings: “Owensboro HRM venue … opened on time and below budget … on track to deliver great return” (CEO) .
  • Capex and leverage: “We have reduced our 2025 maintenance capital projection by $10M to $90–$100M … [and] project capital forecast by $100–$110M … now $250–$290M … bank covenant net leverage to remain in the 4x range in 2025, declining to 3.6x–3.8x in 2026” (CFO) .

Q&A Highlights

  • Macro/consumer dynamics: Lower-tier/unrated play softness evident; premium/rated cohorts manageable via database and incentives. “Theme … hesitancy … most evident in our lower tiered or unrated play” (CEO) .
  • Derby demand mix: Premium tiers solid; lowest tier ($1,000+) tickets with somewhat softer demand last 8–9 weeks; overall packed house expected (CEO) .
  • Derby growth path: Expect comparable 2025; pricing/yield improvement likely into 2026 as customers experience new areas; NBC contract economics begin next year (CEO) .
  • Electronic table games for HRMs: Tech is ready; rollout paced by regulation/taxation; plan to implement before end-2025 in select HRM locations (CEO) .
  • Capital allocation: $500M buyback program provides flexibility; management evaluating repurchases versus potential opportunities amid volatile asset values (CEO) .

Estimates Context

  • Q1 2025 vs S&P Global consensus: Revenue $642.6M vs $642.8M* (in-line); Primary EPS $1.07 vs $1.04* (beat by $0.03). Values retrieved from S&P Global.* Actuals from company 8‑K/press release .
  • Where estimates may adjust: Lower capex trajectory and Derby capex pause reduce 2025 spend; Derby 151 “comparable” outlook may temper near-term event upside but supports durability; Exacta/e-table game pathway and VA/KY HRM pipeline could support outer-year revenue/EBITDA trajectories .

Key Takeaways for Investors

  • Resilience with prudent capital: Q1 delivered record revenue/Adj. EBITDA; management is proactively de‑risking Derby megaproject timing amid tariff-driven cost uncertainty while preserving growth via targeted racetrack renovations and HRM pipeline .
  • Operations in focus: VA/KY HRMs and Terre Haute offset softness in unrated casino play; database strength at higher tiers and Exacta optimization underpin margins .
  • Near-term catalysts: Derby 151 (management indicates comparable to record 2024), Richmond HRM expansion, Henrico (Roseshire) opening, continued The Rose ramp .
  • Capital returns/strength: $500M buyback with $434.6M remaining authority as of 3/31; leverage ~4x in 2025 trending to 3.6x–3.8x in 2026; strong operating cash flow supports flexibility .
  • Watch list: Macro/tariffs (capex costs, lower‑tier demand), VA competitive landscape and handle tax, weather variability; management’s disciplined sequencing mitigates risk .
  • Medium-term thesis: Secular expansion of HRMs (VA/KY/NH), B2B Exacta growth, Derby experiential yield/pricing, and disciplined capital allocation sustain multi‑year revenue/EBITDA compounding .

Footnote: Consensus/estimates marked with * are Values retrieved from S&P Global.

Citations:

  • Q1 2025 8‑K press release (financials, segments, cash flow, capital management)
  • Q1 2025 earnings call transcript (strategy, outlook, Q&A)
  • Capital projects update press release (Finish Line Suites/Mansion, pause rationale)
  • Prior quarters for trend (Q4 2024 press release) ; (Q3 2024 press release)