Earnings call transcript Q1 2023

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Operator

Good day, ladies and gentlemen, and welcome to the Churchill Downs Incorporated 2023 First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will be given at that time.

As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference, Mr. Financial Analysis. President, Vice Forbis, Planning and Phil

Phil Forbis

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

like materially. the some would our conjunction cause All in may that with forward-looking you statements the Before actual cautionary the Form factors on a make statements today XX-Q XX-K. SEC, uncertainties release to started, most to our statements and forward-looking we of the earnings statements included filings Form differ we of specifically in statements. These number risk could results the include involve I with reports and recent that should that and remind risks be considered in get

statements and result we of information assumptions we Any new update on forward-looking statements today, that a as make future undertake of to as based are these no obligation or events.

available earnings and release. on both are churchilldownsincorporated.com. financial measures of present this A and GAAP included to non-GAAP is at release website Form The call, press will we yesterday’s During non-GAAP GAAP our measures. press XX-Q in reconciliation

Carstanjen. Mr. to And our now over the I'll Chief Executive Officer, turn Bill call

Bill Carstanjen

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

strategy. on through an After our on our topics, Marcia results several management will high-level and capital update will your we I strategic take then provide and some questions. thoughts she share finishes, will walk

record our adjusted pleased performance for expectations delivered net We and first year. $XXX were quarter of the record of the our EBITDA $XXX million of all segments of remain high million. and rest the We revenue of with

our a focus HRM next for machines or our with key to start as to existing historical strategic XX are five over expand HRMs footprint. initiatives. Let's company the we seek our racing years

build high developed segment high have Virginia, in with and investments capital, Kentucky, record track and growth, this beyond. Hampshire, on New We to excellent perhaps in on margin we will returns that seek Louisiana,

with to Kentucky, our are HRM Louisville. success build in opening suburban Gaming in on of which We property continuing in operations Derby the began our XXXX, inaugural City

gaming and to Our track there the the open is hotel second is of quarter. floor expansion most by new on now end the recent complete

property significant how and of the very happy We performing across the site caused by through disruption the construction with the the have been the been has floor expansion hotel.

Kentucky, we to open Louisville Our downtown, of XXXX. that our entertainment for fourth In premier entertainment to in have new for working for Gaming plans create also enable better will of evaluating destination City our extension all shifted Owensboro downtown the quarter and of us a western Derby opening venue in team is our are and the profile meet growth region. locations long-term HRM residents better the HRM set the hard our to of prepare

and expectations, is capital relationships. and long-term for disciplined and sometimes time are that decisions build additional means significant capital long-term that communities to in return meet to will long-term taking final determine the regarding investments, which our optimal best our our that We invest the in we to location choose time

on next optimistic. very call these more on earnings We are our will share plans and

a now. path on are better We

safety and at racing the numerous Park and the improve Ellis at property. experience our We environmental improvements enhance compliance to have customers made for

money off end approximately the Spring Park of The will the new Churchill states races. We purse million, XX% on kick Downs to after meet. Race meet Xth July increased we added four has Ellis Friday, and $XX have the over

to so. We great this are and work Kentucky do have a committed to make racetrack to more doing

We material as evaluate and and each investment operational HRM HRM these as Ellis customer portion offering from Owensboro will efficient save in extension any complete Park we properties and in complement until of ensure then the a possible other its perspective. to are

our economically attractive perspective. around HRM area will from larger the that is The thus focus on be market, Owensboro more an and and first

development our As a term potential in portfolio we reminder, HRM longer extension Grove also of Oak projects. have the

projects facilities sports benefit soon retail and of We are the across Kentucky other our on betting HRM Entertainment will in the quarter passage the allowing online legislation from Commonwealth. for now. focused in Kentucky first

to will have live expect locations operational this retail We look will regulations all our the go happen once in the of regulators standards. promulgated and we Currently, half XXXX. second of required in

nine licenses a bar eight to that retail betting up can customers sports easily locations sports have so HRM permitted place of to we sports retail Each be monetize. racetracks will can that will We our with be in enhanced kiosks our and online betting have already Kentucky up and potentially bets. that and conveniently their to facilities sports

drive FanDuel respect will Kentucky. to receive which We revenue our we HRM have and With wagering, sports the entered market online a wagering certain contracts our other and help to believe traffic access retail with grow including in to further connection books platforms, we into to Kentucky online to stream. additional states properties to provide across properties help our

near future. We also other market enter expect into in to arrangements access the

properties HRM are expectations. our cases we Moving exceeding to Virginia, some as six expected, in are performing and our

of XX. that quarter Rosie's in the border to remains near in Carolina HRM XXX Regarding the state and projects, Virginia Interstate be unit track a Emporia North venue of the the the XXXX. constructing completed facility on off are third is southern right of we new portion This

Interstate Virginia, an extremely approximately In XX miles significant XX. Northern Virginia Northern larger of in a Dumfries, because significantly addition, of also we D.C. is corridor. are project Washington, the to located facility which south This in Interstate building its in important XX proximity of directly off population HRM is

we proceeding and our to open of expect first approximately schedule project second and of the according is X,XXX in XXXX. phase be an to construction the The hotel XXX quarter HRMs room with the

machines law size to up our right We Virginia additional to each under all to HRM of facilities cap three a the location machines have an in in of open HRM the the permissible the facilities community, of of the function with of number overall state. X,XXX across subject and

towards new a goal working coming two fall. related in this referendums are communities We conducting of HRM

on about call. projects our We we'll are and earnings these more excited next share details

on of in to our with opportunity call, respect pursue separate with next Virginia. to is a also casino the HRM Class state. in our XX/XX discuss more full plans in will from partnership our This city Richmond, a We X the the detail Urban One operations

City future conduct would to through a details fall we referendum of making more necessary working share the required center. event include are construction hotel, Salem, calls. on Richmond earnings this are and a on the solid the approvals to and we'll authorization project, HRM site obtain Hampshire plans, with this casino, which Also, proceed to We of New progress

exit line significantly. operations, had line a and although business sports XXXX, declined online the casino in to nice TwinSpires direct our top decision improved our primarily our online quarter, our because of Regarding first bottom

our to and in launch to to very were content the early encouraged of deliver decision of to benefits our also services quarter see DraftKings. first We racing FanDuel

Kentucky with We a projects running our the our have progress week to XXXth expect Derby. quarter regarding upcoming accelerate racetrack. our fantastic Derby on business the Churchill for in the And of see BXB second this the finally, we from Downs Saturday, at Kentucky preparations made

Our experience the reserved seats views racetrack and with that an X,XXX is size covered stadium dining is the is on rail and the seats first indoor exclusive additional complete. new a with the the of small horses of venue first This a X,XXX entertainment from turn turn. one-of-a-kind stadium itself

covered seats the the sold, quickly day. are the and remainder stadium more quarters indoor of selling are sold each of than seats three with also reserve All

year's very metrics this available deliver expect are advanced and Week towards progress we at about reserve excited time, sales other record we Derby. Based Overall, our ticket on results. this Derby Kentucky to

the details. We Derby will with a all press release after issue of the

we is the of remarkable year XXXX. XXXth will long special run be the The for in XXX, the May in the on in Run event States. XXXth a kicking Derby milestone our continually preparation also Kentucky off longest United hosting celebration a our While Kentucky Roses Derby focus for are for sporting

World The Recessions Derby annually since pandemics. has XXXX run even and through Wars

will guest and experiences announced offerings special that available very of ticket We Kentucky for a Derby. this be new have number

sales early and ticket already are In selling nicely. underway fact,

project This once TwinSpires, surpass One United reinvent most dining lifetime unrestricted Paddock the a the spectacular views experiences create new and experiences. seating unique be the it exciting of in and developments Project Downs and Churchill breathtaking with will the States. anywhere will completion that with along of of racetrack like in anything the will

We on to course XXXth time reimagination complete the in for Paddock the Derby. remain

and to as focused scale well will Our numerous strategic our country, a capital grow and projects the supported ramp up profitability efforts markets. in of of sales Derby sales continued be the the by as Kentucky foreign across process more

with May NBC cannot another join summary, noon you please Time. seeing be was first In in record at results. broadcast Derby Kentucky us to at quarter watch XXXth forward if look quarter beginning Xth financial this We us for the year. on the sure to you And great person, Eastern of the

We Haute Exacta HRM free and we Virginia and assets, of in New of Kentucky and Project, Hampshire the material for existing have our investments all increase greatly in the to positioned Derby, our projects, Virginia, our cash the a drive strong Kentucky flow Project which operational EBITDA the growth capabilities, Indiana, ongoing will other of acquisition improve in Kentucky which years New and in to coming Terra including adjusted the years. our expect and acquisition the the our pending Salem, with for HRM company Projects, Hampshire come Growth properties PXE Systems,

pursue do one as while profile. what as the best in developing executing strategic Our acquisitions maintaining overarching demonstrated we we the organic industry. is We fit at, well to sheets and growing objective good of our balance Kentucky opportunities, Derby, are greenfield that the this have

turn your that, then to and we With the over Marcia, take call Marcia? questions. I'll will

Marcia Dall

Thanks, everyone. Bill, and good morning

on results first this few capital update start shared, adjusted with we insights then and Bill EBITDA. management. provide revenue I'll record quarter morning financial delivered As an on these and a

First, quarter. HRM contributions properties all first strong made to financial results our of our in

and Grove penetrate facility the markets. Our Oak Tennessee continued southwestern to HRM Kentucky Nashville,

Newport nice market and as and growth Northern presence market in during improve Kentucky Turfway had quarter. also We Park Gaming continue first to our their expand

to expect $XX This improvements margin future. contributed prior to is collectively in material that at net floors revenue for quarter. realize first the performance any adjusted of million a properties. the Virginia represents Our these This gaming properties and in we million of properties EBITDA the XX% $XX these to

Second, regarding higher quarter business, our in the year. the TwinSpires overall our racing first than handle was horse prior

as ADW We margins EBIDA pivot year The expenses the in racing business content-related higher lower this of pleased delivered out slightly adjusted did provided nice in prior slight quarter. certain from adjusted and first online the jurisdictions. that taxes uplift our sports horse compared to Despite and decline first we're with a casino generate in result adjusted in of margins a a the EBITDA, and strong business higher quarter. EBITDA business quarter online to our TwinSpires

We related related further quarters. margins and a and adjusted believe provide racing to expansion enhancement horse coming technology will our our BXB the the in EBITDA to services

acquired New we York significant the of the the Regarding PXE in our business, transaction. gaming properties contributions rely and Iowa from addition

Our and to also the gaming first equity prior performances Valley compared in quarter in year. strong Rivers delivered investments Miami

gaming quarter. to a collectively and Florida compared delivered that increase the in our our regional offset property in are small EBITDA and year in Pennsylvania by That properties Mississippi. Maine, property Harlow’s in and Louisiana, existing properties was than more Our Mississippi Riverwalk prior Maryland, adjusted declines

than properties. casino to decline wholly-owned Our less same point primarily compared in same-store first the adjusted prior margin from from XXXX, down one pressure our period quarter margins in reflecting Pennsylvania the the EBITDA were

positioned well grow our very has team quarter. the XXXX. the continue that are through we in believe first pleased we we are results And to delivered of very to remainder the Overall, with

of generated management. cash cash free result to our million a We $XXX strong quarter, the from the capital primarily up $XX businesses. in generated million Turning flow the of flow over first prior-year, as

in capital, to million the to the maintenance in $XX and to spent spend $XX continue $XX quarter year. Regarding million first million for expect total we

decline acquisition to of times. million net Regarding million expect X.X project and all over come XXXX first then four end remain planned bank for coming our $XXX spent and to spend year. in bank $XXX million our first our leverages covenant to our and covenant capital investments, capital, covenant new we was the continue Exacta expect our year. range between net on Based the net as of expect bank total the We the $XXX our At in we ongoing in leverage quarter the times quarter, leverage XXXX and in to online. investments projects our of in

the from financing repay a financing. of A on the From a Term we proceeds Loan at end facility. $XXX financing balance fully perspective, completed A credit the our to the We utilized Loan million outstanding Term February,

Exacta will also transaction. completed portion repay for would’ve Loan bond used a The proceeds bond XXXX. $XXX be projects this offering capital matured offering of We in We from to December, week. our or the the past remainder million proceeds B this the the Term used of for that

proportionate two for stock to authorized The the stock split of corresponding belief Tuesday shares the a growth of and potential on a week, our split their one And and company. this ours lastly, and the our reflects company. Board long-term increase approved of

I’ll over to Phil? open call the the that, questions. can With Phil turn that for back so call he

Phil Forbis

you, point, for us. have to we’d questions At that you this Thank take Marcia. any like

Operator

Our first the line Jonas of question Barry [Operator Instructions] Truist. with from comes

Barry Jonas

morning. for taking questions. good guys, my Thanks Hey,

Now curious initially as Thanks. that some case, PXE that maybe to you time underwrote deal? upside assets, you’ve when the had you how owning the and what compares the see

Bill Carstanjen

Barry. Thanks,

PXE So far really, we’ve pleased been assets. with really the

we development that. acquire in were hadn’t And still the maturity. One see that of early of our stages in thesis reached general PXE their these on was investing properties to and

and and a also, course, growth what really that are a executed the part about we of on. spends our our on, projects But hadn’t So of that’s of been big excited portion team time projects there properties already air forward. existing the that’s strong existing were looking optimistic a that we’re been operational quite they’ve for quite fresh and generally that in breath been the of

Barry Jonas

And have consumer. to on the options health respond a what follow you then things it. more the maybe think, I you up. deteriorate? businesses? been just Got your Yes. of did you concern, There’s And are guys across seeing the market across do best see What if

Bill Carstanjen

trends in pleased the properties. first think with were we quarter, across we our the saw that I consumer

We look good the read else have everybody been as But well. at So, strong feel to pretty we in far in. everything general. I so does results they’ve they come pretty as and

I enough margins. the economic expense deal economic others, with the than diverse to as a we if appropriately. portfolio right to not flags Some yellow do to with that really marketing at on as don’t that or headwinds is in to there so suggest our always do and structure be any we’ll we’re we’re going If external Because it doing have markets this are you future, raise adjust red our better across but to. see But broad because we data focused as headwinds, now, economy, isn’t trend and need our ours, time. in see we that

Barry Jonas

you so Thank helpful. much. really That’s

Bill Carstanjen

Barry. Thanks,

Operator

comes Thank of the Katz David from you. And line our with next Jefferies. question

David Katz

everyone. back to have an goes but to the of sports apologize, your that sort talked are go it of the and I opportunities are about betting, for remarks, I if in issue what the and live? Good activating came wanted and what you once this is sort out to that respect of Hi. magnitude strategies what morning Kentucky

Bill Carstanjen

these our and put can Good morning. also We in Hi, extensions. HRM Yes. David. our racetracks

opportunities We over to in this time do other several betting. So, this we will in nine have markets. sports other retail do deploy We markets.

the people properties. flow properties, does drive our through that find approach. energy we of to So, does have our that it that traffic help We and overall an it

good And really so thing. it’s a

followed We’ve facilities designed bars. other actually So we follow our sports that Kentucky our in our We around markets happen strategies. in may thinking this at will point. the some

refine built So the and bars we’ve kiosks offering. the put we’ll already sports customer in the

properties facility. of it the be of sports it’ll additional like from that of nice of from company wagering the help to rest scale But drives traffic a the to only piece, material but these anything the bonus. each not And the HRM It’s the the it’ll or that. contribution not

David Katz

compares of right? subject HRM facilities on Whether the machine, of Understood. regularly facilities, to with HRM sorts or is issues noticeable there’s those the in spend an a whether which machine, of it slot comes that And is degree any of difference things, how really with HRM those investors it one behaviors any regular consumer perform, traditional or or same? the the up can just

Bill Carstanjen

locations in – see very margins – and can see with of you gaming the facilities competitive think them the borders, product. our on from some these the types a you our I of if drive competition it’s other surrounding of project of we

think it’s game constantly process manufacturers of the from a titles, if HRMs. So to converted getting X about titles Class you game more traditional

So product a that around I it getting to would of it’s better. I think more to you the variety tell And there concentrated available improve ways us. the make journey constant games are to product, with further most

quality of of property-by-property, as very with foremost haven’t about So eventually maturity that we’re am and see driven the see view using is HRM by over business of you and working why model. reaching evidence at a model, But of company we’re to time the think any our we manufacturers HRM Part and as of pleased constantly and I maturity excited products HRMs. part I improving, available very, and about that maturity that’s excited reaching reached properties. And first a it. margins, depth the improve the of the

year, the not reason of rest be long we come. excited with going to And to Class the when can this acquisition I where able close exact to about more we’re that that to I come, more to as we’re So as the make with are well, part over the X, with to over as of term I’m product that’s think competitive just we manufacturers think toolkit helps yet. work but our us the

David Katz

Okay. Appreciate very it. much. Thank you

Bill Carstanjen

David. Thanks,

Operator

And of from Wells Dan question Politzer with you. Thank the line comes next our Fargo.

Dan Politzer

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

First cracked the recently about market impact down on most you in legislation maybe uplift that most on I the Thanks. or market, then I’m this? restrictive And wanted the you’d some quantify regulation. gray the this. just you or Kentucky or there to that – of was in Kentucky, was this seen properties maybe the the going that could the way gray hint any size what there that, – more about Can had touch drag think there from see of this how talk

Bill Carstanjen

to Happy do Dan. Sure, that.

of So for the up everyone by quarter, legislature to as were These category these we Kentucky sort restaurants the of passed machines we and there authorized part the say of that popping ones euphemistically was to else on a games. but these first during the fair There call, state. to Governor run. many and how the signed bars it’s the banning and that across licensed new taverns gray count several fully actual gaming were number compared the HRM actual, of like these stores machines convenience – of the accurate in were, were refer of legislation facilities and I wasn’t think times

across many, state. that us, legislature they was an harming a untaxed, were the in no they including was and unregulated, were state. where not the unfortunate multiplying were were collective But these of on rapidly fully unauthorized, machines circumstance and there them. view the the had they were including understood, it because this So gained reporting they They multiplying were were really foothold

ban through So has steps legislation taken the to state them.

That’s works. Kentucky just the takes law law summer. a effect in The how of function late

were huge isn’t it’s precisely the just dangerous like when around the and It unmanaged that these But positive So until and given for clearly on to they impact go product we legal implemented They a state, – all us, not these of And yet. get late number by being gaming. summer. have counted as terrible that’s away likely a machines importantly, were while authorized the our unregulated the gaming. industry. for law implemented doesn’t unauthorized, think

go. happy So, them we’re see to

there. to out hard there an number facilities regulated were that because We licensed it’ll improve all accurate expect these and count precisely really quantify ours. are that it’s But out there it, the things never was of that like of

Dan Politzer

to any time. or cannibalization Kentucky of you a you’re and Kentucky how – Can as newer into that the Got The you Grove? on it. I and that City to and how that relative puts market, Derby up the Any Park, then Northern just property, about it’s talk Turfway And an between a Thanks. grow ramping. in think it’s some and follow takes that look insights obviously as to think Oak about well still HRMs. over Newport to profile maybe margin

Bill Carstanjen

a series That’s of unpack one Sure. time. at really good questions. that a I’ll

So Ohio, in is and And Indiana, the Cincinnati borders. all meet with coming Northern Kentucky have Kentucky region the to market region. that you

has Ohio gaming years. market and Indiana in that many for So had

So developed is of of but it a competitive We the the Ohio River, developed market. advantage side a gaming very only being market. competitive was the it bring on our

Park improvement pleased on and I think So over great, started full out for we our quarters. I And last year the Turfway see very of improvement I and it this the the showed on the by you’ll were us than the better very, first think a last. several and between with next improvement, towards quarter followed quarter’s Newport thought path, we’re we’re path every we year, opening building great with

And at we product Newport combined one Turfway as look and offering.

go these have them versus Indiana Newport the really have to an to that material say to and bridges don’t about they between It’s I concerns and So, interplay driving reaching over to market in Ohio. these about people the convincing material anything Turfway. customers alternative or any

quarter. our pleased that dollar. we And in process time in more pleased very start a first have competitive to with the the the are showed a we’re the a market, us try for and But to progress on pleased I’m to us So compete our with developed team opportunity very to customers give with over guy convince but come and an we consumer market takes market. their and dynamics that’s – and that, new very

Dan Politzer

much. Great. Thanks so

Operator

comes Bank the question Thank you. next America. our And line of Shaun Kelley of from with

Shaun Kelley

everyone. morning my questions. for Good taking Hi. Thanks

more is, ask or with Just just TwinSpires. expect FanDuel see and partnership the of are see something to to what contribution from material Maybe on Should yet possibly the any, material, how couple start a strategically through of contribution DraftKings kind we at seeing a bit the I places, spread wanted a agreements but of to we of reached specific in consider of relationship. think economics little we side terms the partnerships with around there? one some coming Derby, different just this about sit kind that to just about are across maybe stage? those know think, help us where

Bill Carstanjen

play Sure, it lot track over really that constantly. a it’s interesting data we Shaun. period and In at of I organization, That’s of see answer think we one time. extended a the and you’ll our an question, look out

So racing initial that others will investing FanDuel’s that we do see well. signs and in as pushing horse that

though, that day see So, the business Kentucky since things think of one TwinSpires milestone became first I lot that the the paid and And tell where those Derby. I’ve this real excited of a attention to can the to we’re a real around thing. of I conceptualized very was is you

of And to to pudding we’re And very, though, personally the data very starting proof. the very some I see that will be think close proof so follow carefully. in that I and

to chance these the there’s better, I complete So Derby, Triple can some think to we’ll Derby actually really be this the Crown provide look events on folks answer a some year. the for events patience, if marketing you look for after handle a show quarter, around, more for able out comprehensive out push have of people you’ll do because they second And towards. in which

thing encouraging, show prior second the some sort into. events quarter, of where the Triple ask Crown but marketing deeply I drill patience initial wait happening that should call do I So, around. folks that the we for use that to really can are signs found a those little events, and these to not this just in you

a And our we and the racing, a is with FanDuel, customers horse to lot will showing think never they’re Derby managed here those particularly offering. or our many Kentucky far appetite. we of I on the interest but on enjoy of TwinSpires that thesis So that customers reach have bet

But is reached customers TwinSpires these broader out business the the folks think with we there our But racing. absolute all platform which betting best a were than are lot wagering a for we focused to it. more on in with FanDuel, they’ve on able now like sports app, you very horse that ever still that’s narrowly do

all You sports. other don’t bet these

more next So us, but in about the we’re time pudding an that We’ll optimistic that. going to is for talk wait happy the be for and to proof in detail quarter.

Shaun Kelley

sense. Makes

And to something look forward to.

in would question of, Second slate for targeting referendum it just kind couple the Virginia of you came a on this be, you’re just up like Richmond sounds got fall.

need think to well we exists as or Petersburg. scale that proposal to I if a, occur up wondering Just as just, opportunity in relative any milestones could revisit, scope things and there of that potential competing a

and your believe has think cons been kind proposal But I scope there. that of Because I longer. pros pretty just scale around is a material. couple there the much the

Bill Carstanjen

get opportunity there the referendum a referendum to a the move forward is was year million That’s delay to to hope project. authorization year potentially one $XXX do project. Last it. Richmond. in million required a ability We in with $XXX conduct A to for city our to

So referendum. to towards working conduct by city the authorization the this year we’re

do to to We pathway achieve a on that. hope We’re that.

to through We’ll a the about. achieved of best in to far do nothing We ourselves to a so series referendum be Those position our to through, are process conduct that that steps that, put but haven’t concerned processing we’re year. yet. this

hotel, license. have Fort been X in and awarded. are This table Virginia. machines. the X It Four full final will State Class Class include the There is which of and casino, authorized a games five licenses requires fifth a

process we fifth has now that the the through of get so So city to or awarded referendum to the this And can authorize is the be referendum the that have the partnership. conducted. license it Richmond authorized go that

before on path. we’re So several realized. steps the project still could And that there’s be here

process going is then finish And And win get far a would the down quarter, of to be XXXX really well. Never third probably a achieve initial referendum. approvals. are and proceed what referendum the the start is timeframe steps that required fantastic in project. the you the Hopefully hopefully the fruition this These you a, project to guarantee the or then over line, unleash something all XXXX. the path, that’s we and think to everything even construct would the not but so second we’ll conduct still measured

Shaun Kelley

much. very you Thank

Operator

the from you. And question our Thank Mcquarie. line Chad comes next of Beynon with

Chad Beynon

my Thanks morning. good taking questions. for Hi,

some on revisit comments wanted facilities. the then First, to gaming focusing guess around margins, and HRM specifically I just the I

believe pressures Florida were of dig bit margins strong. we said, that very Have you plateau? And Thank year? margins for the I that Wondering I could you. labor a utility to revenues into little just if you demand are and strong, at and kind are the the going seen in if just of So back remain hypothetical, Pennsylvania outside guess more. these sustainable least

Bill Carstanjen

always say you that comparisons around There’s that to have in or something the time, We can Appreciate from always that are year the we saying look are results fully carefully them. give we watch trends see Chad. things been Thanks, books understand at for to time I’ve for that Those to doing at by look but that and can events develop. answer affect like question. the our I look a would are quarter. trends, and week-to-week. that long them I’d always this weather prior other

is the So our short thing. doing we’re answer

our portfolio. many property solid cost as But our find Things changes we We’re respond there, to here. tighten these generally there’s alarm you many and the things not this I we plans we the have an operations, that operations cause you up to. across see properties. or then whole in tighten might operations, did feel maintain look to best we of have When If for deeper pretty to good nothing in material at example time. as dig structure where move into across generally there’s report to we margins. no and have, anything the order up But that developing, in seeing

cost, quarter disclosed and to an what don’t on I executing. just in first comes the When we year. We’re or versus we costs release to execute been press going our last have timing it as have update construction, timing

Yes, on but material, on Yes, those. we’re there all be managing there can are labor. challenges challenges

disclosed we’re where and otherwise, that. on I on for projects managing we challenges nothing of than my call. in those of construction course could projects a cost Other on that site we be our volition terms for better last select term. can to there’s what do for timing report in as we’re Owensboro So those own prepared disclosed decided remarks quarter service would the still and yes, our side, the through in better better really But there but long and that we

Chad Beynon

Obviously content? it’s for all or diversification great It’s sounds understanding talk HRMs side HRM they’re like it the And the the that generating things, just there to we manufacturers, of Are in Thanks of in general. content pending. the when on Where acquisition business, whether terms content update. still then exact Thanks. is really journey? of your floor, on overall the hear. to just focused content are opportunities separately, kind for for that improve we, to slot good

Bill Carstanjen

end run the really the haven’t towards oriented near yet We constant are we Class it’ll reached of and up that and catch There state a be the journey. some And the developed. manufacturing pieces of the are we because machines. X of of are haven’t nowhere businesses, that manufacturers content lots businesses

what HRM So attractiveness And something model, their for there’s to the our on getting HRM for on the to ability business think of floor. converted see sell will happen floors. and our return a us always machines healthy I of terms roadmap manufacturers, make that be a product we get But map product our for HRMs product we’re working pretty ours still want on. and in

think It’s fine. It’s question about focus there’s about well. I working it’s the here, to but strategic obviously talk could So and product at area working And how a on lot would for the leave and improve we it’s this. do it an, significant leave us to the an our floors of what are is And product, HRM, I’d be work we we’re that, of we’ve floor. is but always as going competition step would achieved would extra we as have that us always that out any say help types good there various But of has. to our good. also I a all shape to but that that already goal quality on

quarter. good. All improvement see every You’ll

Chad Beynon

Really Bill. nice Thanks, it. quarter. Appreciate Great.

Bill Carstanjen

Appreciate Thanks. the questions.

Operator

Bender our comes Jordan of next you. Thank the And line question from with JMP.

Jordan Bender

morning. in quarter-over-quarter. to of Virginia. thanks. was Great, really There want start margins I during unimpacted the flatter, Good quarter the there opening casino and were kind your

that we something sustainable kind XX% side think about So of months, the coming about online the throughout the rest think when coming casino on or margin of we is year? product in the Thanks. should the land-based

Bill Carstanjen

there is do improve, competition to good and online. is Exacta sustain in online transaction. question. feel good come I about coming Virginia. our that’s our we the margins as competition ability Certainly and really There Really already

in all to facilities are the our machines. across challenge X,XXX there, we’re Our limited state

the state. deployed we relatively have essentially have feels ultimately our versus the to move real expand So machines we particular places state an pressure environment. competition of on can X,XXX, now we those but of and Virginia if quickly around Ultimately, we We the that’s competitive in of around machines the footprint. product based we one X,XXX XX as challenge machines property because move don’t enough have, number our we’ve opportunity, is the another get right will

the resources now So don’t it’s deploy have locations part margin we’ll we that on a great view because the threat, us it locations to chess in great that’s we I but of on future. deploy really really as ultimately be and think we our where smart and to match,

our part so in our I that meet think that of margins the these utilization it’s of game state. the maximize So of we And machines, chess team maximize to challenge. how the will

far So have. they

Jordan Bender

like share in close kind kind it quarters. projects? quarter. that minimal Great, fourth you through these to dividend looks thanks, fair the know assume repurchases to forward. or in Marcia, nine it of going we repurchases growth most of were Is share about We somewhat until have none get of allocation be will Bill. the And We capital think

Marcia Dall

are think I opportunistic a as we’ve we said very in perspective. on share the past repurchase Jordan,

in we shares decide the us, shares things we buy our based with on so to. we the on credit And market just saw all tremendous buy considered, want be well. to that capacity, you when back to in as And our you’ll leverage future back have facility see opportunistically as based

Jordan Bender

quarter. Thanks. Great. Nice

Bill Carstanjen

Jordan. Thanks

Operator

over I remarks. now would the you. Executive back like hand Chief to Thank for any to call Officer, closing Bill Carstanjen

Bill Carstanjen

and stewards have the we really your interest capital. a Thank good in to take growth all it with We company us exciting and an we our on of in want of our Derby now be right Everyone, care lot This capital company. investment obviously up going appreciate for you. good to your projects in and for our is for Kentucky an of us. and We’ll try investment we’re your just time execute and though. optimistic time us, your

and you soon. thank to So all we’ll talk you

Operator

disconnect. concludes you Thank call. may you. and conference Thank This for today’s participating you now

Churchill Downs (CHDN) 27 Apr 232023 Q1 Earnings call transcript