Executive Summary

Record Q4: Net revenue $624.2M (+11% y/y), Adjusted EBITDA $236.6M (+8% y/y), and diluted EPS $0.95 (+25% y/y), driven by Virginia HRMs (including the November opening of The Rose) and strength across segments .
Segment performance: Live & Historical Racing revenue +17% y/y and Adj. EBITDA +14% y/y; Gaming revenue +12% y/y and Adj. EBITDA +6% y/y; Wagering Services & Solutions (ex-TwinSpires) revenue -2% y/y but Adj. EBITDA +7% y/y on Exacta fees and one-time comp expense reduction .
2025 capex outlook raised: Project capital now $350–$400M (vs. ~$250–$325M discussed last quarter) with $120–$130M earmarked in 2025 for Churchill Downs Racetrack’s multi‑year expansion (Skye, Conservatory, Infield) — a material multi‑year growth catalyst .
Capital returns and leverage: $218.3M returned in 2024 (buybacks + dividends); year-end bank covenant net leverage at 4.0x, expected to decrease below 4x over the coming year and decline in 2026 as projects ramp .
Stock reaction catalysts: (1) Largest-ever Derby expansion plan with defined spend cadence; (2) Visible EBITDA ramp from The Rose and Richmond expansion; (3) Ongoing record Derby monetization and sponsorship momentum .

What Went Well and What Went Wrong

What Went Well
- Virginia HRMs powered growth: “Our Virginia HRM venues generated 20% of our nearly $1.2B of adjusted EBITDA in 2024,” with Exacta integration improving fees and margins .
- Terre Haute ramp: Gaming Adj. EBITDA +$6.7M y/y in Q4, with $11.4M contribution from Terre Haute; equity income from Miami Valley Gaming also rose .
- Derby monetization: Another record Derby Week; ticketing, sponsorships and wagering drove margins and set a base for 2025 growth with the Starting Gate Pavilion and Courtyard project .
What Went Wrong
- Sports betting softness: Wagering Services revenue -$2.6M in Q4 on a $3.5M decline in sports betting and $1.3M lower TwinSpires Horse Racing due to race day shifts and access; partly offset by Exacta growth .
- Regional gaming headwinds: Q4 Gaming saw a $2.3M decline at wholly-owned properties and an $8.5M full-year drag at Rivers Des Plaines due to softness, competition, and labor costs .
- Corporate overhead: “All Other” Adj. EBITDA decreased by $4.3M in Q4 on higher corporate compensation and administrative expenses tied to enterprise growth .

Financial Results

Overall performance (oldest → newest):

Metric	Q4 2023	Q3 2024	Q4 2024
Net Revenue ($M)	$561.2	$628.5	$624.2
Net Income Attributable to CDI ($M)	$57.6	$65.4	$71.7
Diluted EPS	$0.76	$0.86	$0.95
Adjusted EBITDA ($M)	$219.1	$235.3	$236.6
Net Income Margin (%)	10.3% (calc. from $57.6/$561.2)	10.4% (calc. from $65.4/$628.5)	11.5% (calc. from $71.7/$624.2)
Adj. EBITDA Margin (%)	39.0% (calc. $219.1/$561.2)	37.5% (calc. $235.3/$628.5)	38.0% (calc. $236.6/$624.2)

Estimates comparison (S&P Global consensus): Unavailable at time of analysis due to data access limits; cannot determine beats/misses.

Segment breakdown (revenue, Adj. EBITDA) — Q4 comparisons and sequential context:

Segment	Q4 2023 Revenue ($M)	Q4 2023 Adj. EBITDA ($M)	Q3 2024 Revenue ($M)	Q3 2024 Adj. EBITDA ($M)	Q4 2024 Revenue ($M)	Q4 2024 Adj. EBITDA ($M)
Live & Historical Racing	235.3	88.9	252.4	93.0	275.5	101.6
Wagering Services & Solutions (TwinSpires)	110.6	34.9	118.7	42.5	108.0	37.3
Gaming	230.2	113.4	270.3	123.3	257.5	120.1
All Other	0.2	(18.1)	2.6	(23.5)	2.1	(22.4)

KPI — TwinSpires Horse Racing Handle (ex‑Velocity):

KPI	Q4 2023	Q3 2024	Q4 2024
Total Handle ($M)	$439.1	$469.1	$400.0

Notes and drivers:

Live & Historical Racing Q4 revenue +$40.2M y/y, led by The Rose (Northern Virginia, +$19.6M), other Virginia HRMs (+$10.4M), Southwestern Kentucky HRM (+$4.1M), Churchill Downs Racetrack (+$2.7M) .
Gaming Q4 revenue +$27.3M y/y on Terre Haute (+$30.3M) partly offset by other properties (-$3.0M); Adj. EBITDA +$6.7M y/y with +$11.4M from Terre Haute and +$2.7M from Miami Valley, offset by declines elsewhere .
Wagering Services & Solutions Q4 revenue -$2.6M y/y (sports betting -$3.5M; TwinSpires Horse Racing -$1.3M), but Adj. EBITDA +$2.4M y/y on Exacta fees and a one-time comp accrual release .

Non‑GAAP adjustments:

Q4 2024 adjusted net income $68.7M vs GAAP $71.7M; adjusted diluted EPS $0.92 vs $0.95, reflecting typical adjustments (transaction/pre-opening, other charges/recoveries, etc.) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Project Capital (Total CDI)	FY 2025	~$250–$325M (Q3 call)	$350–$400M	Raised
Derby Multi‑Year Projects (Skye/Conservatory/Infield) – 2025 Spend Portion	FY 2025	NA	$120–$130M within 2025; total program spans 2025–2028	New detail
Maintenance Capital	FY 2025	NA	$100–$110M	New
Dividend	Cash dividend declared (paid Jan 3, 2025)	NA	$0.409 per share (+7% y/y)	Increased
Share Repurchase Authorization Remaining	As of period end	$170.9M (9/30/24)	$149.6M (12/31/24)	Down on buybacks
Bank Covenant Net Leverage	Through 2026	~4.0x at 2024 YE; decline relatively quickly in 2025	4.0x at YE 2024; expected to decrease below 4x over coming year; decline in 2026	Refined trajectory

Earnings Call Themes & Trends

Topic	Q2 2024 (Prior-2)	Q3 2024 (Prior-1)	Q4 2024 (Current)	Trend
Kentucky Derby monetization & expansion	Record Derby Week; Paddock delivered; 2025 Starting Gate project ($85M, <8yr payback)	Teased multiyear front‑side + infield plan starting 2026–2028	Announced largest-ever expansion (Skye, Conservatory, Infield; 2025–2028); ticketing pacing ahead; 2025 Starting Gate Pavilion on time/budget	Accelerating investment and demand
Virginia HRMs (The Rose, Richmond expansion, Henrico)	Plan to open The Rose (1,650 HRMs); deploy to 5,000 HRMs by 2025; Henrico project (175 HRMs)	The Rose opened (soft/grand openings); add 500 HRMs in Richmond by end-2025; positive gray market enforcement	Early days but “progress every week”; expect sustained ramp over 12 months; 1,800 HRMs in NOVA; Henrico to open 4Q25	Ramp building; footprint nearing 5,000 HRMs
Exacta B2B and tech	International entry (Malta with IGT); ETGs development	Continued international/B2B interest; runway beyond CDI footprint	Exacta drove segment margins; potential to participate in new HRM states (e.g., CA) via B2B	Strategic margin lever; optionality
Regional gaming macro/competition	Same-store margin pressure in ME/MS/LA	1.5pt margin pressure; unrated weakness	“Consumer softness & increased competition” continues; property-level puts/takes	Stable headwinds
Gray/illegal games enforcement (KY/VA)	Ongoing vigilance; not a massive threat	Progress in VA; positive enforcement	“Whack‑a‑mole”; progress but persistent	Improving but ongoing
Capex & leverage	2025 project capex ~⅓ of 2024	2025 project capex $250–$325M; YE leverage ~4.0x	2025 project capex $350–$400M; expect <4x in 2025, decline in 2026	Higher capex with clear delever path

Management Commentary

“Our Virginia HRM venues generated 20% of our nearly $1.2 billion of adjusted EBITDA in 2024... It is still early days for The Rose... tremendous demographics... leadership team committed to successfully growing this asset” — CFO Marcia Dall .
“We announced a series of transformational projects... the largest expansion and renovation undertaken in the 150‑year history of our company.” — CEO Bill Carstanjen on Skye/Conservatory/Infield .
“We are pacing ahead of Derby ticket revenue for the 151st Derby compared to last year’s 150th Derby... we anticipate being fully sold out.” — CEO Bill Carstanjen .
“At the end of December 2024, our bank covenant net leverage was 4.0x... expect to decrease below the 4x range over the coming year... decline in 2026.” — CFO Marcia Dall .

Q&A Highlights

ROI and construction risk: Management reiterated no material Derby disruption, multi‑year Derby projects “among the best projects we can do” with hurdle returns met historically .
The Rose ramp cadence: Emphasized large market education and marketing ramp; short‑term variability (weather, election ad cycle) is noise; confidence in 12‑month ramp .
Payback targets: Gaming assets target ~5‑year payback; HRMs often better than 5 years; applies to Rose; KY HRMs managed individually and as an ecosystem .
Demand for premium Derby seats: Benefiting from experiential spending trends; strong renewals, PSLs, waitlists; expanding U.S./international customer base .
Regional gaming posture: Selective growth focus; evaluate opportunities by market dynamics; not pursuing growth in mature/no‑growth pockets .
Potential new HRM markets: Would participate via Exacta B2B if CA or others open; sees potential for additional jurisdictions over time .
Gray game enforcement: Progress in KY/VA but “whack‑a‑mole” persists; supportive state enforcement; not assuming full elimination .

Estimates Context

Wall Street consensus via S&P Global: Not available at time of analysis due to access limits; as a result, we cannot assess Q4 2024 revenue/EPS/EBITDA beats or misses versus consensus.
Implication: Given record Q4 results and raised 2025 project capital plan, estimate revisions may need to reflect higher capital deployment and the multi‑year Derby revenue uplift path; near‑term Wagering revenue headwinds (sports betting) and regional gaming softness should be considered in segment models .

Key Takeaways for Investors

The largest-ever Churchill Downs Racetrack expansion (2025–2028) provides a clear, multi‑year pipeline to add premium inventory and monetize the Derby brand further; $120–$130M of the spend lands in 2025 with minimal Derby disruption expected .
The Rose’s 12‑month education/marketing ramp and Richmond expansion underpin 2025 growth; management confidence is high given market demographics and prior HRM ramps .
Exacta integration remains an operating lever (fees and content) and a strategic option on new HRM jurisdictions; it also insulates Wagering margins despite sports betting revenue pressures .
Regional gaming headwinds persist (competition, labor), but Terre Haute offsets with strong contribution; portfolio performance is increasingly driven by HRM markets .
Capex outlook rose to $350–$400M for 2025 (from ~$250–$325M), but leverage is expected to fall below 4.0x over the coming year and decline further in 2026 as projects ramp, supporting continued capital returns .
Non‑GAAP adjustments were modest in Q4; adjusted EPS of $0.92 vs $0.95 GAAP reflects typical transaction/pre‑opening normalization amid high project activity .
Modeling focus: Segment mix (Virginia HRMs, Churchill Downs Racetrack monetization), The Rose ramp curve, Richmond HRM adds, and cadence of Derby construction phases — these will drive revenue/EBITDA trajectory through 2028 .

Sources: Q4 2024 8‑K (Item 2.02) and press release, Q4 2024 earnings call transcript, prior-quarter 8‑Ks/press releases, and capital projects release .

Churchill Downs Inc (CHDN)·Q4 2024 Earnings Summary