CHDN - Earnings call transcript Q1 2019 | Churchill Downs Incorporated

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Operator

Good day, ladies and gentlemen, and welcome to the Churchill Downs Incorporated 2019 First Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time.

As a reminder, this conference call is being recorded. I’d now like to introduce your host for today’s conference call, Mr. Treasury, and President, Relations. Vice Zangari, Risk Investor Management Nick

Nick Zangari

will to morning conference quarter the at Thank Regulation business financial statistical Company’s for News, to results we A Investors first Good section yesterday of Company’s in welcome questions. in Company’s this period G, the our the information be The by your the required available remarks, were the results After you, Kevin. quarter call, call. about this and release and website first XXXX call conference XXXX prepared afternoon. released information open and copy earnings located the as other of at website’s is including well presented titled section. churchilldownsincorporated.com, announcing as

with remind release filings to included be statements you today actual number future could assumptions to cautionary statements like I’d statements results and that in and undertake we we XX-K. forward-looking or events. risk SEC, of of specifically report these factors that Form update in as differ statements statements started, no forward-looking Form conjunction get include risks Any our materially. we earnings may most should as involve the with make cause XX-Q of based statements our information the are new of considered and to statements. on in that forward-looking make These that a on uncertainties result the today the obligation some recent we and the a Before All

release Form turn Executive And at included Officer, release. Chief GAAP Carstanjen. our on we reconciliation and XX-Q to measures our over this are in the non-GAAP churchilldownsincorporated.com. is and will press available call, to financial of GAAP press Bill I’ll both earnings Mr. The today’s now, call A During non-GAAP present website measures.

Bill Carstanjen

Financial Officer today Marcia Thanks, President and our our Chief members General our Operating Dall, and including Officer; Chief Nick. Blackwell, With morning, of several Counsel. everyone. Bill our Good are me team, Mudd, Brad

our of will external and our have reporting an I to issued redefining Marcia on purposes provide segments then the for performance share seen, Marcia this week provide questions. our evolution color the and more happy most additional on first will management. As is decision. financial this company. the will you will quarter on quarter our Kentucky we to Derby. finished, growth your on be details of upcoming X-K thoughts take some earlier reflect After she we capital and

preparation the been adjusted of rooftop facility First ground the for quarter We new our into historical Kentucky X-for-X an including a to busy. growth and has Starting quarter, million Derby, while $XXX XXXX compared Oak refinanced three Gates Kentucky very on machine delivering the split. completed this EBITDA suites, racing acquisitions, rate double-digit completed closed broke Grove year revenue our did first bond We for year. prior stock debt lounge, eight variable and

BetAmerica Pennsylvania Downs market excellent BetAmerica platform which Casino this retail Sportsbooks us at an our year-over-year that Presque mortar iGaming provides an launch and to and drive year. Our and for In up few opportunity entire up the meaningful the net and and increases across were prior facility, we Isle was the acquisition over Casino, XX% also January, completed launch are developments change. our the Sportsbooks key brick XX% later adjusted online year. Those of and there revenues EBITDA quarter are that

margin. contributed in company’s which and racing strongest EBITDA a machine ever completed strong March, to approximately deliver with adjusted Next, Gaming, our with Plaines, net respect Rivers of our March a historical XX% Derby and Illinois, growth to in also Louisville proceeded City to adjusted Des early XX% acquisition Facility of we EBITDA. revenue Casino our

EBITDA new Louisiana increased additional run the and and will EBITDA from directly each adjusted BetAmerica and Our poker on also off-track video customer now brick growth mortar XXX% Downs. plan Ocean added performance when Derby. additional We ownership deliver last, believe visitation. provide Sportsbooks parlors some adjusted growth our of contributed are Gaming Kentucky drove insights and at to slot and I’ll some in provide betting segments. operating our efficiently casinos, and game overall contribute table incremental from with two I our of color segment for Sportsbooks two into our Then upcoming And Mississippi activity.

First, the includes Gaming. This the new City Racetrack results Derby Churchill segment. about let’s segment Churchill and talk of Downs Downs

not and Downs for Racetrack, $XX.X Churchill First of City opened do until up, quarter Gaming facility Derby in very Derby, quiet a first week revenue this million growth before we net operational racing database EBITDA of and pleased last the that in given start ramp the is and quarter. of quarter September $X.X million one Saturday, the contributed growth growth customer key adjusted year are We and metrics. with

facility property a investment add machines this plan $XX our was for We reminder, has maturity. XXX floor the a in to believe way the We additional May. As capital in long an to million.

contributions Kentucky. pleased the is Gaming Downs are industry horseracing support making, help Derby We also the Churchill long-term with the of that incremental Racetrack, in which sustainability the purse City will

betting New and online sports Turning Jersey. TwinSpires Wagering segment, to our iGaming our online and in which operations includes

an track. specific first the Anita’s consequently the X% second resumed, breakdowns days racing the of and weeks impacted tragic Santa during – slightly our year’s from for on the quarter grew West declines Coast even consent moved the January handle two in not into of by and provides handle in of second First racetrack level the have first returned TwinSpires in racing its as Anita Park quarter was and less racing wagering Anita until field racing to Elite Oaklawn previous quarter, sizes Park and than Oaklawn quarter. The canceled Anita. seeing XX TwinSpires Santa this by to Santa industry the Santa horse on and X.X%. was outpaced and rash handle premium the industry the business negatively response

the level the top quarter, explain to net for less racing Our who customers very interest to challenges, only horseplayers, Despite TwinSpires’ be churns there during relatively heightened and in X%, than first quarter the revenues few a modestly this. are tend the consent. a traditional sophisticated first have dropped appreciation industry

First, total in up X.X% were active players the quarter. first

window marketing significant Triple dollars effectively We time. aggressively cost races our the and large continue are blocks Derby on quarter, through we acquire of programs, this the not can customers reengage to second one Kentucky We Crown of believe though in because of ones reach quarter customers we the where focus other during and with to even is previous new our we marketing a portion marketing. first

We over also the can provide believe customers these superior returns long-term.

declined player will less. by number growth X.X% Week to customers players many year’s The less players experienced the Crown of team upcoming the who quarter, on add this higher margin, Triple are reflecting active TwinSpires While in and in the season. revenues the and newer first average be however, new Derby wager rose slightly per the are working during

up in remain there site. about what known $XXX,XXX Golden Jersey. very the the BetAmerica a Online sports our gain with harvest and down agreement entered in Nugget Jersey, as and and team with the Casino arrangement online betting ramp directly have Golden In space. the Nugget, a We Our have first us New to to good but access is Atlantic New have growth, allow do launch approximately Jersey organic is an segment our for as EBITDA long-term because quarter optimistic and enter of skins not own TwinSpires to into real the iGaming New online was Jersey whole Adjusted market of business a a to we market. believes we full growth. business that can management casino of is ADW in City very in the This New the as continue which control

from We recently platform have in to our Apple BetAmerica have app iOS approval online the and Store. put Apple launched our received

We still competitive give casino us we extremely the also of list vendors, which product. think game payment an iGaming are implementation compelling will of and our full completing

weather grew the markets we revenue and exceptions we was pleased Gaming the each the across floor. and with first Turning new properties In to our weekends operating with segment. holiday our adjusted Calder, winter encouraging gaming of expanded at Oxford two existing and and severe by our hotel even the we’re experienced impacted quarter, though of quarter, performance of the in EBITDA Oxford net over environments

we incurred legal new related in opening Calder, our expenses. with Regarding expenses well additional as connection Isle as operation,

May are We this our planning Isle to year. event first hold in of

growth respective machines and Rivers approximately markets well casino incremental segment have the and locked Presque games we eight addition We in properties XXX XX,XXX now and of with Our have in table Nemacolin. already Isle over and the Des for in states. Plaines, positioned slot VLTs their are

investments Greenfield and acquisitions both markets. flows offer believe pursuing of strategy gaming held diverse long predictable a stable, we have cash We properties, in in will

casino also their to believe mortar states access may gaming brick we online grant holders. and like casinos We that license sports to and

Turning to this on aspects designs Oak we of Gaming, finalized other Kentucky updated machine on revenue on and Xth. we our projections for bids ground and facility Grove Derby various investments, April City broke results racing have historical have project. the of the of our Based all our the

this projected costs the and increasing million cost modifications expected for higher to for expected support million a some to – demand to the accommodate are the by construction project We $XX of $XXX than consumer property.

from we which this facility ranked this area, the about the Based hour We our Forbes encouraging was requirements. seventh of City along growing with as feel opportunity increase investment very are that will Tennessee, by and on fastest results our America the return about project, city build an thrilled of exceed the Nashville, research to Derby XXXX. in in Nashville our north

conduct during the to in historical open racing facility XXXX October racing to and half first and expect days hotel We XX XXXX. plan the of harness

in update you further the will quarters. coming We

Churchill few the Downs and additional a comments Now Kentucky on Racetrack Derby.

integrity. history will other trainers like best-in-class best means a that, operations. initiatives of and both continue safety saw that announced highest XXX The bring to want Kentucky the for to safety world Racetrack and series reason and have also week, There pursue we their athletes, Downs is the of they years. respect always we meet the As of to will many for practices very more than of Downs well who Derby of and our standards equine. you the and Churchill and racing We to tradition we horses the protect done and human horses in a protect Churchill owners to last with to and our so

to week. equine announced follow obligation the the obligation in we We commitments industry have what care, encourage and best and as an in the an same. behind do as last is well others practices educate implement is to That to

very looked Derby, of the time. of areas number advance event Kentucky a have promising sponsorships and all this categories the admissions, into at of other our in we of Regarding and good visibility revenue these

optimistic We’re set for financial Kentucky wettest Kentucky history. all Derby great suffering the for last our records virtually year despite We of significant Derby. benchmarks in

again We are high this aiming year.

our new top We The sold off-season. XXX additional stage $X $XX the lounge approximately unveiling Breeders’ million track we to over improve seats out. the stage access new the November. Starting project and debuted will the Rooftop Derby. improvements parking is to year external Gates of at XXXX hosted aesthetic. this of past to million of the as Derby, were an ingress the enhancements at We egress area entertainment last year’s on our first added Suites report well project tickets. and which and as to of We it consists at area and this be XXX further pleased Last our the and We significantly completed we the prior facility Cup, transportation the second

hope entered had into first first for is the with the to also we aesthetic ever, year, Kentucky Japan able a.m. the look road zone year’s Japanese between a the time starter that morning we Japanese the arrive to our As our to on are Kentucky of have the Japanese customers an Derby is Due Derby Sunday seeing this the And exit. perspective respect from they forward be Derby. simulcast Fencer this we not wagering. the series. horse entry Derby opportunity. this will also for Also Kentucky time in pleased from online in Japanese will to and Master race but only to to U.S. and for wowed day racing we the the before who in bet be betters I’m ease the the the report This their horse simulcasts Derby Japan. time up to place moment right have U.S. race on do we on as the starts. betters X:XX how react around Japan, the difference to wagering will

segmentation, release signature press for other Please over a There recall, watch the this after years guests have the grow our a the we may for who release. do avenues press you As the seat, XXX,XXX and and pricing and to few capacity international detailing immediately coming from the of additional of seating roughly financial forward. each to issue not are past for name many Kentucky additional interest week. our Derby event to portions metrics harvesting additional a sponsorships, come Derby customer

Our we expect some initiatives numerous growth on call. our of to and an team in these is earnings engaged on provide next update

Beyond the consistently a for invested our Kentucky everything class mission to improve the we metrics, world surrounding is deliver to have Derby. our We’ve experience do customers.

see magic you Day upcoming not and as unique strong is Saturday that Tuesday of connection the with invest the in for Our help that experience feel hope at this a and just on a to on with many participant, week’s Friday long-term to Opening Derby We is on to Thursday and spectator, and Kentucky the projects Derby our a guests Champions for strategy the Derby. to event of Night more Saturday the starting Night, Derby. our for as events Event, Oaks

will over Now, may details additional to we Thank the some to provide answer turn Marcia? on the you. After quarter. you to I’d like that first have. any call questions Marcia that,

Marcia Dall

everyone. Thanks Bill, morning good and

will provide some on an and quarter management As provide XXXX capital plans. on then our Bill financial I our update said, first details results

the in XXXX review market segment format. our provide that the review and walks we the The segments it believe transparency we’ve full historical also results realize to first made year clarity well and financial XXXX on financials closed. XXXX to for the after to new for quarterly as you you financials, and areas. changes segmentation filed X-K the our Tuesday We is As to reporting our that purposes our X-K quarter also and new financials better our as three will important

provide Downs our including Derby, new of we’ll segment, Gaming City Kentucky Downs facility the horse financial asset, Churchill Louisville, our Churchill results emerging the of is Derby the as results well the First, iconic in race historical that track, as Kentucky. machine racing named financial

supports in licensed we’ve on Downs Derby As the Churchill Churchill race the located Gaming, facility Downs past, Downs the discussed ancillary track near City Churchill race property is training which track.

improved and overhead management casinos we Second out tracks of as disclosures our that We’ve same competitors. the financial license by included longer the supports, who corporate earnings reporting. our our enable alignment leading additional easily no margins related aligning the margins wholly-owned stock to and this believe of to the race lastly, exhibit will to property margins industry we’ve our to for our analyst our our our the We each with investors store wholly-owned an gaming external more will compare and And purposes. allocate segments with financial reporting our gaming casino cover release.

up compared increase Sportsbooks Casino to Pennsylvania. $XX driven So this the of & traffic at performance prior Ocean $XXX and our Downs million was turning our of year a first growth as property of including from from quarter. of net locations. addition in on of segment, quarter reported consolidation properties revenue revenue gaming or retail two the we million the August BetAmerica ownership Mississippi XXXX of Presque Erie, a our Downs strong revenue fourths the cost acquiring result Isle XX, results, the Three our to of XXX% by first the from of quarter XX% XXXX, The these

quarter increase The compared in was which City of in addition Derby to quarter year XXXX. opened the the prior Gaming, revenue other primary September, of the first the driver

prior compared to the up Our was first $XX adjusted quarter. million or quarter year XX% EBITDA

the collectively Our of Des Plaines, in Presque for agreement [indiscernible] increase. Isle acquisition $XX this the investment Rivers equity management of and Nemacolin contributed million

of in property the Derby City as ramp continues by effective Gaming its investment Our contributed to customer growing up million $X nearly this marketing. increase to database

from primarily two sports cross-over for million traffic at and remaining Mississippi gaming betting Ocean contributed the the and retail performance Our from $X properties. operating gaming properties growth Downs our solid

launched Bill online set online Sportsbooks segment. impacted platform a have our Jersey investment in which during mentioned, New the nominal wagering our and and As BetAmerica we up quarter, of the and did I-Gaming

disclosure As XXXX. you first XX.X% same for our release, margin quarter our in can store see was from wholly-owned the press additional casino

an Our casino Ocean XXXX, margin August, and same in agreement which margins. of store XXX% that this as acquired excludes as quarter. wholly-owned industry regional Downs casino we Presque during believe Isle Nemacolin acquired management we is well We the leading the

casino of margins properties higher rates. Presque result which the the as a Pennsylvania and Isle by addition have X.X% the wholly-owned Nemacolin Our two of to overall lower due acquisitions these including tax margins decreased

reminder, these and betting a knew the for price entire purchase the in into expectations on online a in sports state iGaming and investment margins we acquisition these of As return had potential the retail fact upside we of as Presque that of the and from properties Isle. Pennsylvania result

net income quarter. the $XX.X first income operations. from to that first the income, four There to million from compared $XX.X impacted quarter million year Turning of net were continuing operations prior in was continuing quarter net our items compatibility

first Midwest item owns the related Rivers equity $X.X Plaines. costs of entity of tax the our a noncash portion is The after Des million that to Gaming recapitalization for costs

capitalized debt interest written related of As for the off the the were Midwest as financing debt of Gaming’s recapitalization rate part Gaming and of existing costs fair to swaps recapitalization. date previously valued Midwest

XXXX operations continuing acquisitions recent the to preopening are prior related year transaction our quarter items states rates tax these also expenses expected remaining to and on was related deferred revenue liabilities the higher The to Illinois revaluing due in and two second the And an to to item item Pennsylvania states. compared increase quarter. million $X.X tax in with related first including based in related and noncash of our higher expenses

operations income continuing $X.X compared quarter items, million XX% from these to prior the net year quarter. our Excluding or grew first

higher by higher segments million result was operating offset equity after of our investments of debt. tax, million Our tax results $X.X as $XX.X expense including which by a were partially higher after outstanding interest

cash up from benefited in to by quarter. having We interest was from from $XX First offset year interest due from million $XX operating core quarter million cash the paid higher quarter, XXXX. partially growth XXXX million the quarter operations of half in flow the our operations, prior payment maintenance flow not in significant capital that first we year was timing the to issued for which December, $X primarily $XX payments the of million first slot the capital than spent for prior on due purchases. bonds in We higher cash

Regarding project $XX Starting facility, we primarily building capital the XXXX, Infield Gates race we discussed on Gate have regarding for revised construction not therefore Suites, changed Oak occur Calder majority this million Oak in spent quarter, for $XXX major project in range Bill the project out of And XXXX first the Isle we million. of anticipate at $XXX Rooftop projects finishing capital not our capital, and have incremental management Downs to million. and Grove. capital changing and $XXX estimated XXXX at this filing spend Churchill four the will million spend projections the our our for except are estimated Grove We initial track, investment million the to from for that $XXX

share and estimated $XX In million $XXX $XX million stock of repurchase We range our changed first spending we quarter, existing capacity also million have under we repurchased have XXXX. our million to program. $XX not remaining maintenance from capital of in our

trailing for times, XX over leverage on is Bill, three so EBITDA adjusted he were that acquisitions completed at reported X.X March a Bill? the call basis at to back times on can quarter. net low turn and XXst I forma the basis that, remains the open months Our questions. pro call relatively With includes the for that which in a will X.X

Bill Carstanjen

Thank Okay. Marcia. questions, have take far away. you if to ready any Everybody, you, we Thanks. them are

Operator

with Instructions] [Operator comes Our Jefferies. David first question Katz from

David Katz

Derby. Hi. some the the can it the mean, to cetera. little be and picture et for start I the One, we’re perspective get you grow this digits, then, the I from I quarter. certain single could what just share a a – us about that, more a the We’ve this on, Good bit off what you event at on Derby morning paint context around commentary everyone. high longer-term of just going can what the property wanted and Congrats if in please. appreciate future, out about thought expecting in year your trajectory you’re color and and

Bill Carstanjen

as this are it Sure. isn’t everything of to Lounge, media, that’s good there very that where the ever With we looks ticket sponsorships, have respect year I a such available number mouth. very a year, of already a been this in product mentioned that strong very metrics visibility there hasn’t as year sales, into before, pleased been we’re Rooftop to word the people Garden so first so

it we that out. sold still So despite

We’re to about product opportunity our excited and also the into Japan. pushing Japan respect with

can on all weather? on really we is know around so prepare we we the weather, What’s best I far well, mind what everybody’s control control things focused look of Look, question we we so that. that can a So impact don’t good. what weather? the often and the is the about the

being where that on we last years the few get Derby. in it economics to we’ve hopefully wasn’t break last so the had going but And that. seems of wettest weather, had flow are years rough the of we the bulk coldest, year but – of very a the being ago independent a couple like So said, weather ultimately

about feel good I So Derby. very Kentucky year’s this very,

up last the We thing hope, of year. could of from we huge year different Loans success. the they understand a of sponsorship opportunity Another us, their race, been for item that’s off. Loans, type worth is paid mentioning type is and of more this a so Quicken do new that’s participants, we which to can the of selected our horse. person gets program is Quicken out and whose mortgage that the coming XX assigned than their them That’s a hope a relationship raffle, future the Derby And the with thing horse actually the for and get $XXX,XXX they of to lucky partners each then in wins where our

lots So good lots year’s and for Derby. things going of on this

precise think, can of this, responsibly but I that developing Long-term, about. been as on lots call I I’ve the facility. things excited like I’m about good we’re going excited as really on further a

the seats that that on don’t building I in attend people that have seat. Derby hospitality think have Derby XXX,XXX unlocking the every more folks and depends part the more do not a for year

to pay I segmentation respect people that create a do seats more richer to better they’re further think have that for. willing with the experiences to experiences,

bucket U.S. that’s that well list it a promise U.S. to events that’s reaching working country great great their something I opportunity we’ll push that to on on that is I attend. something to to international think respect keep there’s our unique encourage further a those for us. event. with think, and stop internationally. and a our to There’s opportunity reach items truly And It’s make I’m iconic great internationally guests. event this and about and This also, American folks to, excited to of come to a product as

you that hope a Derby. how I that about flavor David, of So gives to think

If you that, be on follow-ups have any more specific. I’ll

David Katz

of that assets or that kinds Derby thoughts prospect a end? any construct, approaches that of about casino Derby. you or to adding think would the I Derby the have of Yes, And other to started span capital the I would than take to property And one a to updated a longer Yes. larger of respective may it do. has cycle spend within expect, hotel know been to boutique the to

Bill Carstanjen

with for place logical particularly us a hospitality the racetrack. right hotel. be are to those racing machines around to to Derby, machines at works the things considering. very at us certainly respect gives the license And those way our Certainly, Further the historical

think have the about. earnings any don’t to think specific be at certainly as some those on we’re my during going we our including this growth that specific anything we mentioned future. call, initiatives, or to next on items But comments, of those So more the time announce investments by things for capital we are But others. I

David Katz

business do, other get your TwinSpires, some I the given. correctly question talk sense about and well. our for we would can that, that Are degree about in be that ramping. to you of any a And one and travels Got mitigate as if guess heard be that can that We hearing it. detail I ask competition the you’ve may to helpful commentary strategies I

about how going trajectory business model should we thinking Just the the forward. of

Bill Carstanjen

had about we’ve quarter, and competition little in to an that In at volume it’s first of that strategy some segment higher because the been that adopt quarter, slope. the a player with respect our some bit aggressive really previous the strategy And competitors was rebating. hesitant we talked always continued following a to of slippery

into Some but of that pressure continued quarter, the first largely mitigated.

with out turmoil in the I our of the at where going wasn’t it a not there but just on, of where first the of business first quarter. that change where Oaklawn lot So in of only we the take Anita first first Santa turmoil in any would content, noise sort so we content. into some content But really is coast thought a we west west quarter. And needed in was are for the my premium say of I really we quarter there at that quarter too and comments hesitant coast out quarter of that second long-term identified customers topic with With much watershed moment highlighted to Park moving look days really – be would much trends. to noise. premium There’s that I that race because California the

approached any of the wouldn’t second the of years. long-term take every business and very look this say the it through in quarter. we confident And the carefully, business say and is out started before first comfortable trends now. its feel with watching involved I been of performance having over would Derby evolution since the as the I I last right quarter we about would it I that dozen So aspect eyes open, wide

David Katz

slots Okay. is political point will I around ask on, that that at end? and detail step that are of tabs that to of at this those winds any the I of can Arlington one keep trying then change If Around anything more possibility Is there discussable just to aside. and us track. for Park

Bill Carstanjen

would a – a our expanded of on detail, now. cycle legislative would gaming. There’s I not much lot in Well, about that’s I full but the talk talk as right session great wagering. that’s say scale isn’t There sports going in about

So our Arlington attention so, so to pay very of we the we which need and and to of our very and two state Chicago and for we regulatory a is in which in has heavily Park, Illinois investment then participate close have one business are our company properties very track. for developments we significant traditional legislative horse do important in Rivers, Northwest Suburbs the now,

reasons two it’s often on in now, session, – what’s what to But it’s Illinois, to about to to right whole a forward. goes see have any we hard you lot draw as there. say it’s pay in conclusions of happen So attention going I’d going

best can. offer strategies, So Illinois industry is want the going long-term the certainly and we’ll don’t is so in in broadly more we we body to decisions legislative that to make about But talk State. monitor and what it the clear

David Katz

Thanks It. your nice for comments, Got quarter.

Bill Carstanjen

David. Thanks,

Operator

comes from Politzer Morgan. JP Daniel Our with next question

Daniel Politzer

questions. Hey, good morning everybody, and thanks for taking my

regard was particularly of are and have entering what elaborate mean think long-term Bill, you opportunity? there nicely in you So and the on impressive that if margin I Oak Cities to us regarding I too. could follow-up And XX%. first it then see Grove Derby And the a quarter I

Bill Carstanjen

Yes. Dan. Hi,

even of and team, our really worked very been facility potential about that’s couple a of a before Bill thinking Derby Mudd on years of project the for that proud of were you any I’m there. we’ve start pleased So with City

that compelling Indiana our there and strategy Louisville manufacturer have that to So on would property machines a long work competitive be games long the our to across create class-X a River with game effort to and from through with time think our we for side. the

I innings the we’re perhaps I the we hope So property. in over manufacturers. think early can of improve selection of can I games, over time our hope add time, we

can get running I our better facility. think we at

our I think understand better. we can customers

learn and market of learn more the product the can we think them we them in to I true about better, positioning marketplace. the we as competitive as

trying open I $XX And just apply Louisville. is to be from Oak from Gaming the And be there City is expanding Louisville significant to So of Louisville, When to across and take we think not and that I is – Oak can Grove approximately lot the million what a I we’re take there Grove. still property, market, as that just still more we Kentucky. what exciting down be lot think, $XXX a a capital Derby for investment, in may the which to experience are share River. idea think, our million learned lessons

take go get apply and those So Bill, possibly operation. you learn to ahead. to better everything running them we that do lessons to want We want answer, South. can down at

Bill Mudd

top XXX Thanks, week I Dan, and to I to just We by themes mentioned example, our for say five those Bill themes as five to floor. the want comments, in should themes, last are yes, would – XX we the to those installed introduced are another – our we’re floor and games mid of of May machines in adding his in Dan have those hope eight top those new of already. eight say, eight I

our Derby to that I that the down to continue understand same barrier of we’ll And city, even is partners with for we’re But historical to we’ll do about Oak to facility. thing just at have people to it. ramp of here, a racing product, at the very taking what excited getting kind it’s Grove to we’re we’re think that up better. machine and develop work I the So and terms while a product going develop in continue and think, over

Daniel Politzer

relative So mean, talk that puts like about mean, is think you the mean, with I footprint for guess and getting how I potential Grove, how return to should City? takes about Oak and return you, property area. I Derby But different Grove City? about into different I it and different Derby an relative the the a like the to think can the something we Oak

Bill Carstanjen

what to a a more return event return I open we will And Derby that Oak in when the learned can to more hurdles. learnings taken we’re seen here, more than have comfortable machines want there. do more items Louisville. going going confident give to operationally say to want But and than - have Grove were because very more is an I don’t our the would of we’ll all affect reiterate what down specific center, more just down do we’ve there offered. I we that we margin specific I exceeds and more best-in-class and think that that I we there, And we can than we we’re expect the with from than And give we what historical up City all in opened first don’t more to be amenities have a we what sort have certainly just we’ve are when hotel, and But that. better and up than are we’re we’re pleased somewhat. going racing understanding, few with down

I I’m real not hope optimistic, be you to So but going understand I’m specific.

Daniel Politzer

I your think better to Rivers, of your that than other in And that Yes, then – turning along appreciate expected. and of though. came I with much just lot properties

you’ve a could I there? relative and do even you think what maybe little opportunities expectations how seen there growth And performing, far guess, talk and So the on bit to about initial for basis? about so you a it’s year-over-year how your maybe maybe

Bill Carstanjen

good understand in been the a very long marks had property it’s we The a property feel well we for property marketplace pretty is the and a like time. because

deal to make partner. in We hard properties some future, perspective, our pursue and So think confidence see say the for environment a stable of about it’s we if the had they in can it’s and the And deal our and market. an hard not confidence we would And wagering responsible may future, wagering. this. of there, specific certainly in not company, markets be those play happen in as that we’re But avenues happen, for time. explained it’s Illinois expand over to most – those I interested may decided that had we when team we’re online in as they be a are willing happen, that sports may like on great happen or investment. options the we may to we great a to in soon, very investment an different us and call those such options a they the operating should When a and we very to to are good of optimistic work from a feel in options be interested those we’ve specific

legislative that the feel both market very an density wealth. its population, demographics, good holds, without part So and of about legislative important we terms of in advancements, the opportunity property, that, even expanding what given very, strategy is for

Daniel Politzer

All right, much congrats the great. for Thanks color on quarter. so and a good

Bill Carstanjen

Dan. you, Thank

Operator

our And at back the I’m conference to any this like questions showing over not host. further turn to time. I’d

Bill Carstanjen

We you appreciate our in confidence in investment our your Kentucky company the interest enjoy hope company. your all and Derby. I and

to exit for what and to go this that event, we’re on focused help team room that’s work about to conference now. We’re prepare our

a crossed our all great fingers company, confidence thank us in your of support you So And for again, optimism Thank for future. gives you. it Derby. and our

Operator

Ladies today’s this conclude does presentation. and gentlemen,

now may have and day. disconnect You a wonderful

Churchill Downs (CHDN) 25 Apr 192019 Q1 Earnings call transcript