CHDN - Earnings call 4 2023 | Churchill Downs Incorporated

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Churchill Downs Incorporated, 2023 Fourth Quarter and Year Ending Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

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

Philip Forbis

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

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

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

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

William C. Carstanjen

will Mudd, high-level take Marcia finishes, on on and strategy. as as and Counsel. Blackwell, results our strategic questions. capital of well Chief several thoughts Marcia Officer; Chief Financial our your our insight With she General we everyone. morning, an our then me Dall, will Phil. Thanks, update several our provide on are management financial today topics, our share Operating members team, and Bill President I'll Officer; some After Brad including Good

over year accomplished key Churchill the We nearly for of billion I'll objectives and few strong next going $X highlights why this XXXX, to several was growth substantially, and for year a on quickly and billion. Downs. then positioning record number revenue for to our for of EBITDA company very delivered turn exceptional to for of We net company on XXXX touch grew our the $X.X XXXX pivotal growth in company a years. be beyond. strategic record and positioned adjusted focus operational and is a for year a but XXXX

and Derby at In sportsbook for DraftKings. HRM strategic Derby organic in with several Heights will our We Systems. City sale Rosie's the We our Gaming expanded floor in our the of Beginning hotel, held once Kentucky with very our TwinSpires and business with We Chicago we investments significant in and Gaming Illinois process strategic Virginia. BXB launched of completed acquisition the Arlington opening completed accelerate We the have that to Exacta Bears, property FanDuel Southern Emporia, in future virtually the the with our Virginia of and in We opening Derby records the highlights Downtown. business successful a new every Kentucky Gaming City material setting we business XXXX. metric. expanded May, HRM expansion the again gaming of growth. of

beyond. XXXX balance still industry. the our these one maintained in And let's behind year strongest sheets for another With and of all even objectives us, initiatives, we with of discuss the record

through the will number open as properties. half quarter we While impacted our second the volatile year in by a January and the and gaming of was results accelerate about we cold weather, are concerned of that industry new first not in next financial

floor in greenfield gaming the celebrate Haute X,XXX development and will table will we have that April, early Indiana, of slots games. In our Casino Terra opening XX the

in highly XXXth anticipated Saturday will first Kentucky Derby. the May, the host On we

reimagined will Jockey will for $XXX guests engagement world-class renovated years energy to We and drive the our come. Paddock we Club exciting and introduce that Suites, believe investments million for of

few Casino on The the Haute we hotel Then Resort September, at will will The our a I open Terra in a in few Virginia. will later weeks in resort gaming open share Rose short of end moments. mid-May. towards more Northern this

finally, we we our In HRM in Owensboro Hampshire racing New also facility open Kentucky Western and open to the early expanded plan entertainment XXXX. plan XXXX, facility gaming in to in and

the Beyond growth these of execute and as XXXX announced projects, beyond we are in our growing strategy. level on next focused we

business, expanding in of HRMs this an our additional expect disciplined in recall, with acquisitions. may BXB the and an Oak creating additional right license you build and TwinSpires property as license XX expanding footprint our include We Grove racetrack to identifying Virginia, the gaming to the Kentucky, BXC Kentucky within each our business, has miles, associated growing expanding facility Derby, Exacta

strong ones of a opportunities beyond we initial have have pipeline the We announced. growth

Now, a updates few our call. earnings since let's discuss strategic last

to in area from private Derby, the series of chance into The we and to spectacular offer races overlooking the unique will up-close horses the through the opportunity from deliver The which the are of luxurious out a to for preparing Paddock the Paddock the reimagined about the view areas track to Paddock Paddock a the days. rail. First, Club by will and XX followed accommodations directly for is watch and an and Kentucky related hospitality seating next include seating walk will tunnel walk to experiences.

experience and the hospitality access to offers well The the as as a of environment, the sports-themed watch from exclusive new races the rail. views with celebrity or Illustrated Paddock and Club Sports SI similarly

Week. in prior there to capital to the our the of our to that these regardless seated. testament Derby touch in I've most are you my numerous We a grow where of to completed experience transformative undertaking This that increases April, way Downs one we much end events. profitability entertainment the a that This projects views iconic years that budget with drive impactful track there Churchill pleased additional is Derby. Racetrack remain In company, options, be of XX to team's Paddock. addition and reinvent to our customers front-side will in to the X nearly areas we Kentucky and just fantastic and in is of I'm future will of are highly to the they is significant tell project seating with new time every at This plan the more the seen for on deliver do the expect in ability

pace for both with the and already the respect year of ticket from Derby We inventory remain sold. dollars significantly previous any ahead sales, to of earned sales percentages of the

Gaming downtown urban Derby driven opened at the Turning entertainment venues adjacent to capturing Louisville HRM sporting, tourism the our by other residents. convention December. events, This of on concerts venue Downtown, Kentucky. Kentucky X in center, and market, focused our downtown HRM the facility beginning We and City is bourbon

of Kentucky growing XX-acre of get the urban and We Owensboro. seventh has on a We've to This in highway of in the expect we a in area our bourbon improvements the spend development XX, with years. busy area. plan site a construction conventions, the commercial XXXX when million. accelerate which first tourism region to Owensboro, to venue $XXX last open events springtime closer begun located just significant of We surrounding over and venue performance of seen as quarter east increase road a HRM adjacent number to Route the is total directly the traditionally downtown of

HRM our in Virginia. venues to Turning

now miles The south Rose, and progress the great making right week, Interstate the town received parking of X, which on X,XXX. several Virginia. restaurants facility over approval Washington, with are number of and of X we spaces. from This the and part as off D.C. not X,XXX in have Phase XX We instead open Dumfries, a has is and HRMs bars the X,XXX of Northern XXX-room will of increase Phase will XX changed. Last located hotel, to HRMs we town

HRM keep being, XXX time the in Dumfries open we our with existing machines. location For will

an million in pleased are making games. incentive $X.X the We the I of increase be this number for town a onetime Phase to as contribution to

We community of the the making contribution be $X $XXX will onetime to million new design -- also support million, a center. a to town

to September, expected finish the We The structure. months will work extensive of accommodate and team communicated. access of the because and additional to for a in machines than challenges our late parking winter the longer provide The build-out a environment. anticipate road This has additional weather construction construction taken later very couple than previously wet time Rose to to opening finish the some roadway

a spent. invest million to of this $XXX expect million of total of only now project, X Phase on $XXX remain be to which We

addressing our I. pleased in and construction to number than we also are we maximize done bit Although are later HRMs a position job had team to planned, has opening Phase in masterful we of very originally a be the a challenges,

in Washington, for facility's number people location our Given as the maximize Virginia, million machines the with nearly wanted the and available limited customers as of region, in gaming other this we options the quickly X.X possible. D.C. Northern to market

is XX law. HRM Virginia potential under all utilize licenses HRM goal to the X,XXX permitted currently Our our machines and of all deploy

will up in Rose, the of of Virginia of the XXXX. The from the Commonwealth HRMs quarter at of approximately the at X,XXX we across With by XXXX, have the HRMs third X,XXX end increase end operational

return our on of HRM disciplined investments over and we expand capital performance disciplined each our we will our excellent our markets. has led as As time key look has an in further to remain to to demonstrated, approach

which The segment. continued third-party Exacta Turning completed August strides growing Hampshire. of we Systems, make HRM Kentucky, material Exacta in team driven to operations our New our of TwinSpires portfolio in the the efficiencies of has and operations. Wyoming HRM XXXX, In to acquisition has

new this team. and with pleased acquisition extremely are our We

We new our in games have offering as the Virginia jurisdictions margins. We've our diversify this improves improve consider product this to HRM and form venues as high been Kentucky, top group well believe wagering. line we as of in for our the this will at working and expectations better HRM

pursuing we we to each last permitted. we the the ready games table partners, As also with jurisdiction we to of in regulators parameters and legal and electronic regulatory work have our within when during call, are intend games, development made team them the with and HRM-based mentioned deployed our and are get progress

successfully our BXB We business XXXX. launched also TwinSpires in

sports technology wagering into online suite through on Our BXB para-mutual operational platforms our racing is of strategy on and capabilities. directly focused wagering integrating the horse

Our DraftKings in stages. nice be progress, our and platforms BXB Derby in future. deals the other This year's still planning expand to FanDuel are a our of we online are their early to will wagering Kentucky and sports test with business

and to higher, platforms demand pari-mutuel their racing with and more as we As the I margins have sports believe platforms said predictable to familiar more our offers pari-mutuel service focused and sports is wagering become margins. previously, wagering predictable on high and goal horse

Turning to our Gaming segment.

As budget. progressing mid-May. in marketing with and our earlier, opening and are for our smooth opening we planning rolling on Haute Construction I Terra the our We've well initial and early focused remains XXX-room is on April grand mentioned opening a in in Casino our are out executing strategy. built property team Indiana hotel

have increasing scale to and and With Haute Casino, regional across the regional across equity high-quality and efficiencies This Terra casinos will the XX ability X casinos operational wholly us XX states. leverage investments our owned properties. we provides

to also many unlike other real continue own estate gaming of our We underlying companies. the

year. a results, environment that last record given the in was challenging developed our starting financial is company macroeconomic summary, quarter particularly tremendous the second XXXX with year of In noteworthy for which

in by our HRM Casino We are Terra Virginia, in well Indiana. next fueled Hampshire Downs and Kentucky Racetrack, Churchill year New in now Haute in growth ongoing our investments projects for and positioned organic and the beyond,

ability as growth of we to core build have remains believe a I strong ever. One is that opportunities, pipeline demonstrated core competency as our over skill a and time

assets, balance while also in numerous We pursue opportunities on such investment we free about excited of aligned as in future. initiatives come portfolio. We believe our discussed in I'm growth cash in drive our material coming flow today best as we it to growth with our further the coming integrate well in Systems, adjusted and the have long-term plans. increase also Exacta believe we Kentucky a to the there the the across one as our maintain plans flagship growth years, Derby, investments those are projects transformative effectively and have in the can industry. the strategic that EBITDA while sheets acquisitions whether growth be PXE will many executing new our demonstrated years, We

our delivering shareholders. We will keep for

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

Marcia Dall

everyone. Thanks, Bill, and morning, good

our for As year record Bill shared, another XXXX company. was

row a of X XXXX, Excluding revenue has years record team and operations. EBITDA delivered adjusted continuing our from in record

fourth overall net We our record adjusted also and of delivered record segments. for reporting all fourth EBITDA X and across company the quarter quarter revenue

Today, provide thoughts financial management. start these on I initial with XXXX. on an some insights I'll on update capital and a results few provide will then

First, The generating results. PXE nearly regarding $X EBITDA Iowa XXXX billion Virginia, the growth in in created step-function acquisition New clearly and our assets of our financial financials, adjusted XX% of XXXX. of York in

has consistently increases Racetrack margins, first-turn EBITDA over of a of a Gaming strong wagering by significant Turfway and of performance EBITDA addition result very also generated in operations results from record-adjusted to a record-adjusted properties maintaining Racetrack full superior sponsorships Derby the first financial as the successful driven the generated provided experience lift the Churchill also of We our years. properties and the City Kentucky ticketing, pari-mutuel our delivered Derby Oak Downs Downs at and our week. the Grove and year Park. Churchill The while HRM

We function to expect given and Kentucky economics addition the deliver in associated the adjusted in Downs XXXth growth Racetrack Derby. Churchill Paddock other step XXXX, the with of EBITDA project

In disciplined to prior of compared segment, the because million strategies. X our we by $XX adjusted EBITDA TwinSpires grew year

in the of online benefited stages into casino for slight number impacted in content-related higher horse racing horse and XXXX, for wagering, exit from taxes. and online BXB day partially to schedules sports BXB retail and expenses and we And final decline pivot race which on helped the on into a The racing. offset from retail wagering. the shifts the in were higher a business race wagering online cancellations wagering First, there significant pivot of ADW

Overall, remain XXXX. this the headwinds with business facing in pleased we margins strong generates despite industry

by will racing extremely horseracing hopeful weather some in has are handle impacted XXXX. stabilize Although conditions, that January cold been we industry-wide

of central of benefits nearly quarter, properties. economics In system contributed of Exacta HRM began TwinSpires adjusted and Second, to million million our $X for the the We vertically more million than August acquired HRM XXXX. to realize strategy technology. for the and $XXX fourth integrate determinant we our its Virginia Exacta improved in to EBITDA $X Exacta of segment

our well industry. despite our the gaming the XXXX up properties softness last, regional And regarding gaming held in consumer relatively business, across

Our margins down insurance XXXX XXXX. casino points X.X were compared owned same-store wholly to excluding proceeds,

points compared our nearly to However, on the margins same XXXX. up basis were X.X

in economic Des in Rivers record competitive and Regarding EBITDA delivered despite Miami Plaines a in our Chicago equity XXXX. performed and high revenue Des MVG Rivers Valley market with the adjusted challenges well Gaming investments, Plaines challenging record delivered adjusted environment. EBITDA and growth single-digit despite

we mentioned, Despite challenging our XXXX. with we the in As year. results likely year we Overall, team and weather we XXXX, perspective. February, so start first that results strong cause the comparison a from for very inclement are year, to the which pleased with gaming properties and were balance XXXX our by with for far in the to Bill delivered are of remain revenue will combined in the difficult margin for these properties the January have many regional optimistic impacted the of a seen start quarter in a pleased

the will Kentucky we discussed, in and on properties and of Derby growth XXXX Bill that be XXXth May, will series enjoy we fuel beyond. will layering in our As new a iconic

strong per XX% or year, management. XXXX, flow our $XXX businesses. million of cash from cash capital We free primarily flow from share to up in Turning prior the $X.XX per generated share generated over the

racing-related by increase Regarding spend XXXX capital for million XXXX. we XXXX $XX expect and XXXth at for capital in is maintenance and between maintenance facilities. spent in the HRM Derby Downs $XX Churchill slot maintenance capital, slot in and gaming at Racetrack regional upgrades Kentucky projects driven incremental incremental preparation at and Ellis Kentucky million million $XXX The in in Virginia, to our Park, capital

in capital Casino project and million the to Regarding Downs venue Rose Hotel, project in in major Haute Owensboro largest are spend the order project Paddock The in capital, million between HRM planned Terra $XXX the XXXX, Northern spent and million to XXXX. $XXX HRM and components of, XXXX our Virginia, expect Churchill $XXX of venue. in we smallest The and

quarter our per share Regarding share we repurchased price of in fourth shares average an share under the at $XXX approximately repurchase program. XXX,XXX share repurchases, approximately

We The transaction privately for a in also repurchased Law share. negotiated $XXX.XX with million Group X shares Duchossois per

the Our facilities the leverage then reflects to XXXX in leverage disciplined in coming begin to belief covenant as the of we our of shares. opening Virginia leverage timing bank our repurchases ramp. X.Xx. December bank share our and of of investments decline our capital Indiana approach and Xx end XXXX, over the to the to long-term We Kentucky, on remain bank expect our the our Based net our net was year. new value our At range in expect covenant investments in net covenant

for was financial results, and a and XXXX and free closing, generate adjusted as new XXXX value. beyond of flow. online said, projects We of In remain unique assets will better Bill our record year even shareholder our we portfolio given a amount and tremendous our be cash EBITDA long-term coming will expect committed company creating significant to that with

turn can And to I'll with call that he open over the for questions. that, so back Bill? Bill call the

William C. Carstanjen

your now to so Thanks, away. take questions far ready Marcia. We're

Operator

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

David Katz

about lot of talk lot there, just growth is thoughtful capital out to love I'd capital. what Bill, a of a

in more Paddock the capital what's there of future were size? specifically next, some for be forward, should Some there and -- investments X-figure of right, the your comes X-figure productive more As super in the how we us kind Churchill thinking the X-, online? recall we Is move or category? of Racetrack, Downs the and assuming vision what's Derby with do you all

William C. Carstanjen

and morning. David, good Thanks,

there are think Derby, we of are more significant couple that to come projects possible. -- So with a there's and the

time, execute where David, of from this execute So couldn't learnings other and that so and thing our first at should those -- we this isn't on feel come management one goal or a take as and at one, this just I prove This would what what Board I point see a the than Derby which hope when do we've see team possibility. the you call that and significant that I one exactly improvement projects feel still in around, is into be, we haven't roll more take that on I some the you out, -- one you this their out the our significant with almost about areas I come could one see them material confident reveal oval I a it's Derby, and look mile considered. XXX, might a or next. But decided greenfield to

done So -- there's It's the the the other people track. place. it's in we have a around to of -- world we to try lots see other vantage then points a parts scour what on And build big the world, and of best that.

the to XXX, Derby one. to this come So the one one. to going make we're deliver for then for and significant come. is roll big on next and message work going to into today, We're from the learnings this more projects that But we'll

David Katz

sound about any and sort message before I heavy know just yet, was fair a sounds Understood. get may there's guess. It debate Is right and I just I into time be it follow more I exactly of of a of Paddock at little like don't and make a sure we sort takeaway? we ramp on ramp that And that spending little don't that of get and before can think growth magnitude, there. tail the does more we're length maybe getting Or we up, of timing probing bit asset. there if bit the it and the as open though right.

William C. Carstanjen

new, would there's exciting. And say, customers. say at to that and to try something we something our to every year, facility I year-to-year we year, do our there's want who different, So there's something come every delight our something customers look

expenditures. that's So how of of approach part the capital rhythm we

can constant of the -- going are made on there size measured the year-to-year. you So decision a to on be haven't see a consistent project but basis activity that we that,

want The our in still something a or project will foreshadow So but we have mislead, I active but decide the to Derby, be to based the of don't learnings project, on expect we scope that's I from of timing and this material wouldn't XXXX. pause. the

bit the going the team thing. Our on to is chomping get at next

Operator

from question Ramin of our the Truist Sobhany comes And line with Securities. next

Ramin Sobhany

maybe And the some state. in have legalized quantify you upside you skill-based how We've there legislative heard ban? walk Can seen you gains to you're Virginia and us the risk from any responding? through can skill movement the

William C. Carstanjen

Sure.

meant, that been first fourth court to the enforcement and it's the ban quarter first, Virginia in that requires of year, led It to into process case of hard October, over still what the local quarter November that's So exactly because quantify enforcement happened lumpy. has the and last enforcement. and the the

when the pretty efficiencies operational been in to it's to added harder lumpy Virginia. So especially and quantify, clearly demonstrating we're

a So single the for across of case a wasn't complete in court closing on not light of because to skill Instead variable and day case games came then the and games. to it the That's state. process court up The do as the jurisdictions that what down happened. started ability that and different the come of it yet, enforcement a switch. sure enforcement know of and next local woke we those didn't down treat can't that's to multi-month the ban

still that's and understanding we're So continue. that something still will evaluating and that

there's bills of year, always call interesting or always is our legislative matters, backdrop do process. time where and not about, you we sessions As considered time active. at many, most, being active a is I'll this of the legislative if this tell This because of year of opposed in state talked this session. the call being are legislatures the And to against

the part chance year, that processes to Is What and components? that of pass? bill? process there negative an are on a is of always chance Our passed that a Is have part are always happen. goes of versus what a year, that those of part there the focus calls these to a during opportunity mitigate all process opportunities? get might of has this the respectful the details why bill to be there that and has shape -- what on the bill? are know risks? a What this that is that's we might What That's bill to

legislative activity can So involved what cycle in jurisdictions, out, team like evaluate here's those. our those in And different this most as including tell you, I Virginia. will sort

Our we've deal those our with team we what will know not team will different talk we those attempt I and any will precise. we jurisdictions. end best where conveying shape could we to speculate But doesn't can. over what what to base. I happening, to up you as lots drifting about and happened But tell more in particular learned shareholder knowledge wish today down is and what's call got know a actually our on I've of could happen what's be and time, happen hypothetical

Ramin Sobhany

That sense. perfect Got it. makes Yes.

had been quarter. there some what's are be deal? a first just And called BXB follow-up when on would perspective? color. thinking from And the strong in now ramp to the synergy about versus you also, you've How and Any extra color potential you Exacta, that the announced that the out the the appreciate you quick helpful. contribution like I time reception So the

William C. Carstanjen

Ramin. sure, Yes,

margin. folded in that's higher what us and and a cost, that I'd operate us. a is comments her took cleaner, into into operations, and vendor a the that We to gone that's had for Marcia integrated of higher margin. it. operations great more extremely So efficiently efficiently allows start we us it One components we and different in more And referenced ability X for that our to development. just a better, with well our been at and has been business operate that something acquisition

the manufacturers category, our to towards us. more with process the company second to for in development for better to The the is and improve I term to control favorable more control ability product think faster respect push work we is develop would or that say, own long our with

gives blocks, to it and going HRM these the philosophical of more more a space of efficiency. and now that's implement Class our competitive get So to product some the approach in and of and us to ability our casinos. a us effectively versus allow without building control our priorities focus better, loss traditional We to III quickly to areas

but that that quarters. I out. of prove on already is you'll over We're see internally, it more it externally, the progress coming part So proving out something will think

think Hampshire of With question, the a And BXB Exacta of was we people. of also a real might in best That's we those have and BXC big for facilities, up focus real for they key for us this. lot that We it, opportunities facilities We not you are think where both make to if part opening care that's but a us on part about there and a of us. with BXB so not next opportunities to that to about we to Churchill us. states can customers a other the And for sure your have may respect are a Wyoming Downs to those we're are other consumer services. be we team New it. are the and which opportunity, services they very focused disciplined service and a Kentucky a the providing to respect careful with opportunity sell component that's that because

seriously, going So to very one as the of and important we continue and business is take us, it's we well Exacta model we're do really the as it can. to BXB component to

and make just fine. we received care just making them customers of we everything we their how from on deliver provide, been what We're sure that from our exceed absolutely sure this, have it's of terms meet business we and and expectations Exacta, they need In else from itself. takes services our

Operator

comes of line the from with Our next Beynon Macquarie. Chad question

Chad Beynon

I to I mid- wanted one on, or growth guess, ask of another the the company. Bill, long-term

that gave job terms the growth. and the segments? opportunities kind over Is future looks under a us is in think what's X of to stuff in based already terms growth some you lot Is have tech? the at portfolio, about you years? laying embedded makes of across like What a PXE, still here, already multiple the we it gaming of it the did in under would down onset your in sure of future Exacta there's I'm math the next X%, as comes nice You sense desk. down it of you million. But that most double on guys anything on racing, out that different $X opportunities, it like the

William C. Carstanjen

Yes.

and for there's I So concisely. through question, this question, and And Chad. there, first, lot that I'll that thanks appreciate try a walk us to

our asset think company, the young oldest United with XXX years the and when it's called a Derby. States, it's So sporting you is the special have property our old lot still young, continuously run of always a remember, Kentucky while opportunities. in the in first, event about And we mind,

component that's forward. our a growth story going So of

this environment, you development for that company. of our our gaming you the look lot or look been facilities our great capabilities, properties, actual growth happened a at Next, our technology HRM that's if there. technological And U.S. in our whether services, a BXC see you development at

executing we space operator. do BXC the efficient capital. BXC And HRMs that think So perspective in from be perhaps think know there we both We on we uses like in opportunities we've that the and we're of that operator, as to a there'll demonstrated being a what of future. there more are

the servicing other the be for well but the just to both that from of BXC where And then opportunity achieve to operations, don't for our by of really in technology some I avenues serves us up It important our us think own we company. perspective the also opening a other the efficiency operators transition needs development of of been offering services, perspective operator. from have that's to the ourselves returns

So you'll I to see opportunity continue growth there. think and

back watch And businesses. Gaming I the the looking of laws environment is U.S. also both that's lots fairly dynamic. and are and in we as one earlier changes, every those the generally gaming of opportunities to our but think offensively tweaks defensively, have that harkens questions, to year at legislatures for

business even as The country sports as the started affected been robust in example wagering, thoughtful opposed might robust. with as for what an to forms XXXX the is second, things coupling and been there BXC is unusual the started the have been wagering business. then remarkably in most business online as other a And have technology it's other online have a business races just lost I've of to theme TwinSpires of has BXC this about occurrence remarkably like that thing develop a

lost control, seen as X,XXX a also decline around business whether XXXX. anybody's outside for first basis other BXB technology of somewhere wagering we've the We a And And robust, can to in have think that been races been other in into those BXC how like also the been but particular has have providing business platforms. races. things quarter, things take we that but business services we those services in sports

find there into moving We So smarter, efficient. been They that has done. we more as get get We achieve important. gaming, from gaming, work better. scale, Scale regional think, more scale. I our we're teams

Our increase. can margins

gives that and XXX% So for we more answer the like scale of to company as current face right that's for stability this important to it's own company, the us, property environment. our in we the And our gaming. regional

our with is gaming there think filter have we don't gaming that and it our we we the comes over and regional not every can see I out us. of company opportunities But afraid as model, we we like. demonstrated strengthen we for have our opportunity grow that advantages And because we've over some we're approach, our scale there time, and So have in space time. think regional

all I you that say business So segments. I our to I'd of think like

I are think them all contributors. of

all times to growth and businesses are would then weren't, think have businesses our with make profiles are them think came to we execute if them differently great bigger, But contributors plan of and all about it. And where important. the better right now, strategies I there really on. they we'll that's

Chad Beynon

Really time new expanding think about and kind of properties? those should it's machines? X,XXX you 'XX. of line the opened comprehensive. remainder I just follow-up licenses whether of after through in in the And And -- that all of should at a terms of then that terms the deploying we a The Rose market about what's in going Virginia of think HRMs existing a kind at additional How the referendum we appreciate is HRM that. the end have,

William C. Carstanjen

have number machines, Virginia X,XXX is the of under machines. challenge deploy maximum big Our wouldn't every we're machines. We the you enough -- in if we license, allowed potential

machines it's yielding the deploy. we us, about So for

particularly a at and we more. that machines increase Northern that's because happy yield So with was into machines in were move Rose, we Virginia us for to important, the will The nice step think those

where active? we still need active some get has we be comparison think there a of the HRMs. we In over jurisdictions, do be get jurisdictions would additional pass. will other us a license One Our authorize other need referendum can referendum that a it referendum X to In to available a for licenses, time, always passed an been is criteria. because isn't with

can would part we of second we're we licenses we the machines in? criteria there. operational? other playing compare the machines get the versus of And the and where deployment think So deployment deploy chess those criteria can So how of jurisdiction is, that's jurisdictions that that do is first in game

ultimately, and And X,XXX X,XXX year. quickly, to We're offer prepared legislatively, perhaps to challenge remarks, we're again, is to going this at what under The end I'll be out that. my the it's and not more around in to we're machines licenses. places by of I've those where fill the those like going are before, a to over be, machines to be say we'd we're going do somewhere deploy time said it to that said as get I there'll to point to going real path best some this machines

machines have we we to as where now the more answer So and something to we where And a fully deploy to it's question. be. chess other bit it's these figure within of I want each to jurisdictions of we're comparing game more state, course our that we're you comparative hope want and different out licenses a to XXXX actively the and over where game, that's for doing a specifics

Chad Beynon

Nice it. Appreciate results.

Operator

the Our JMP Securities. line with Jordan from Bender of comes next question

Jordan Bender

on touch chasers. to updated to loud nothing how you any at We want thoughts that that and sheet point, willingness announce but I clear build-out the that The balance while. on this time, execute property know Bill, project's have or a see that there's the on and been at maybe you pending market? to some for

William C. Carstanjen

market. We like Yes. Thanks, to proximity Massachusetts Jordan. the its the suburbs. We like

it's challenge and all us, comfortable the order the for of in move So forward. site the getting being in approvals to, necessary,

we've than confidence the a is have faster. would slower the to market. market. done, I well our go and have do We like extremely faster development had they it of when And or like. you I sometimes yes, go It's lot sometimes than one hasn't one like just liked So interest where it you'd they but that moved wish gone in shaken our has, that it

could do line I change and our a we affected the will on it something But it it's to announce, team slower it can. The forward it. fact market, and on of just that, wish we doesn't change we'll a we the moving works have have get complete timing so soon we'll we very and been appetite. that of But in hard we getting as the that news as done plan had announce. It's doesn't announcing interest project our doesn't. to finish

really doing Exacta been customer In their and the book job with they of building been team that because with operators good our dispersed the are really their have meantime, the a we've throughout pleased other relationship state.

Jordan Bender

couple of the a buyers the you've the historically races been at mid-single-digit called couple loss and of pull Great. years over the handle's follow-up, And with truck. TwinSpires wild segment, unusual forward, items the COVID about then for on the out of grower a past

you So in growth growth years? think coming new for looking or as that this just said does level Can like that the you're you the maybe frame about business, we Marcia, out what stabilization. in look

William C. Carstanjen

of occurred variables. racetracks the have do this last was go States other The many We stayed the step-up the so through real the that, percentage. during in who going We've traditionally to so online able United seen weren't that wagering really COVID, the where have online just percentage the fans that the operational, boosted many did it of channel lumpy. been in track, would years and of the to couple but

change emerged we bit and and seen of little in been of events Some along a states. we've window given this and was series on given lot just back race wildfires as COVID that weather unfortunate we've where and rain just storm a in actual that been from lumpiness got and severe with -- then Canada this with has of

industry in been I've XX almost So I think years. this -- now for been this, doing I've

se. behavior of in lumpy So -- where I happen of years things I've seen other bunches. a don't sometimes and periods I the think new couple per it's just norm see you these

her of holding in We is the where is think that calls up engine noise there is and about bit robust. I it. I How lot to you'd the had is out business little it we've asked could. Marcia previous were that that? a incredibly impacting in Bill earnings I business some sports is face how been that here. theories little wagering It's a of about Mudd So need doing. know see the way know, But think to going comments in it definitely settle generally, how the on the

racing the the thing TwinSpires. say I'd and on core the of about is just the worried of our biggest product I'm content. at is I just customers what It's consistency look thing And availability biggest to

work of all other to pari-mutuel ability work ability it racing. bet backstop have services so technology with and providers the like incredibly of not in suite wagering platforms BXC, happen. plus wagering become horse I Our see give stacks we'd like think of of on over wagering, them to think order just that's about our have Exacta. ours just demonstrating sports We'd don't time, others technology the to service to see product but like we'd BXB, over seamlessly business the but to our distribution to sports the broadly. to for and crystal pari-mutuel, BXC the time. they way or more this, term, integrate with with significant. Their We to the may on for differently, have long We'll just ball, the to like and that TwinSpires see we're theirs

Operator

Jeff with from of question the next Stifel. Stantial line Our comes

Jeffrey Stantial

Can say, business. TwinSpires from more little and you talk let's platform? just kind relates horse people your more seeing bringing cross-selling you're as BXB what sports on investment of a talk product the spend? Can users on seeing to here, going investment marketing component? that the you you trajectory betting off about starting partners Are racing relates the it of and bit it towards just Maybe your to into as

William C. Carstanjen

to that, Jeff, and Happy appreciate always question. the do I

of last was think I year Derby concept. proof was really last --

to trying get the deals work and seamlessly. to technology trying Just -- get to place in

Crown the to on is Triple the it devote relatively advantage racing this the around and time. nature of pari-mutuel of high margins horse the they investment products. see event, over at margins The the time of versus consistency this wagering level we'll think to I of interest and want other

of see a Derby. over concept. So Kentucky level that of it. so time, for that, and we'll of become more they have the of we're big I perspective more a Kentucky can ones just year think speak of I last It business the sports It's And just think year, that platforms. into right a for focus now, a they priorities. proof is piece They Derby. was wagering put themselves lot the they This interest from an XXXth will of on different interest have. the But

over of there. a So proven and become biggest that this the progress. I pleased big, year they the sports when what that and product market to understanding of one more have see good a horse But believe for just to you very I But particular I will be we around as That of theory and will and personally next I priorities we're have is horse wagering focus. point are that over the racing, to product right industry be the time. one. I which think out. mean big And of in -- like become that lot time they of -- in engagement proven measure respectful the events multiple a will Kentucky also the that we'll it's with say the big now, a have will interest was level be Derby the last arena,

Jeffrey Stantial

little unrated, sort talk discrepancies just mean seeing And Gaming end, customer segment. there's Can for cohorts what turning region? of high end, Great. I if by then you region to various you're of a bit any kind low the more on

William C. Carstanjen

notes, would So good in think Marcia [Technical change now, and the always right stronger. fourth in that's a her question indicated in say third, Difficulty] the quarter, year, second, economy what a first the ask. question little the little is base quarter was going is last today. think The I through as customer was But stronger it a I now. there's and than don't to I a think I the

change not quality It's really in is the material a seeing been and relatively consistent. sequentially of team Our capability our customers.

winter about things business, we the quality It's Marcia business. consistent of been the our last wasn't when the of material think there's sequentially. rough -- February customer we're not in of or is variations the year. some about that's months. So other worried as bad, It's over and December obsessed January wallet pretty good. rough changes customers winter particularly pretty the talked last in in versus about, weather and capabilities driving this this the number

The HRMs, They're at anyway. anyway. growing they're maturity yet. growing not They're

good. seeing growth look products and we're So there those

are outlook to the in opposed business the that really variables other now as for are there right So capabilities. driving variability customers' the

Operator

of question next from Stauff line SIG. Our comes the with Joe

Joseph Stauff

use to your properties. had you if that a your Bill, of it's just was the Kentucky but wondering other use of expect was to wondering more within downtown, the couple expectation mentioned kind I Kentucky follow-ups. properties, that Just I in about benefits Exacta. of think various I you system

William C. Carstanjen

without and some -- of some some have are some have getting deploy and And of that into Exacta and do differences other facilities. offerings providers. nuances the in deployed and product to the oddities between there of we products, expect of a terms too to availability our detailed is There Yes. in Exacta of

determinant and more is of going in one examples the a everywhere central on and your can those. make floor on where there's whatever determinant central that It's see with maximizes I on major system capital nothing certainly, going think to than be to one invested having more Kentucky then the return sense. you're one So wrong there's Exacta your than Virginia floor system and

Joseph Stauff

I'm Virginia, Makes roughly you offering. in portfolio, how -- time. like existing optimize X,XXX some to, game sense. the wondering units. know takes And I then want It long on it, call say, that

you wondering within that it the I'm so And so, optimize to it, might kind long existing of say, for, units. take game call Virginia offering how X,XXX

William C. Carstanjen

Bill deploy we then to the how allocation in deploy. going where that hard constantly be optimal have third can machines where should -- optimal team And works licenses will what facilities. we the and to with we're many work out team pretty figure works on be team And Mudd's X,XXX quarter. the Well, a with that at we we between else

equation it's So best the will be I point of those always are Kentucky, have than don't but capped. environment to that the also, we'd to change be Joe, law analyzing We'll at some their of ever the is a a is But the different machines and where machines, more course, say, because on have get X,XXX this Virginia's we done. construct it under X,XXX machines there machines. really number know isn't machines love limit where as

to all them not ultimately, But in machines then concept on can we'll to right the we to many want. and as yield in work Kentucky as it's Virginia quite Virginia, the deploy because constantly machines have we important get to as in important a So as more deploy the then we to very just see. X,XXX machines, that's help I'm ultimately, them. would machines. the but not like the license, State market to and would it that utilization that's be support would It And one highest have, and have industry we'd horse would to help nice be nice something thing because foreshadowing

Joseph Stauff

if I one one. you. And Got quick could just

described the lumpy market about Virginia. give pattern now for the talked maybe as in market, enforcement pattern us right of gray the description the illegal the machines? it you about Can Kentucky you gray in the say, for just market machines You gray enforcement

William C. Carstanjen

illegal Kentucky. Yes. They're in clearly

but just their move in it question off right every there direction, not doesn't uniformly time. take and and boots -- of to of moves the a as legality. them So in the There's and the same in question turned It's Virginia. can a That's it jurisdiction removed. ground on have

the reality So in these and of, of both it's the State just State the of Virginia have ubiquitous. things Kentucky, become

They That process it's it's been been happening. just and a to And they It's has been taken widely And manpower that's were happening. get -- it's dispersed. been clearly will just time, -- them removed. and pretty have lumpy.

areas when just isn't everywhere. the take in mid- really court is others. single happy, fall. there something that there have is off and a where in direction, somebody case moving in they're the all right to than make this moved came we've every been Virginia, accounting mechanism faster down. And out all place late Some to That's also but the happened sure That's

are after that these months So happened. the

Operator

question of Daniel comes with Capital One the line next Our Guglielmo from Securities.

Daniel Guglielmo

note develop. labor has framework chain been supply are So obviously continuing last? in development changed, developing versus the year actuals? underwriting you environment mind, considerations, to that anything this how have versus any, and if With So availability, around of

William C. Carstanjen

Yes.

and we volatility the our environment, in into the seen point, it we've think I plans. this build at

able environment So point, I did confidence, been and think there if been cost. you and now we where cost, around generally we Owensboro We're predict on increased it. we're the high The a talk this at this projects, plan in like have has about of inflation, timing degree and has Rose, there but just pre-COVID to that

feeling to comfortable this. back about we're So

from working emerging the differently. supply were significant environment. inflation There And restrictions were we there where the of on hit heavy period supply, was COVID, a little chains, bit we're then

think, within environments our cost as use, masterful we those when close I'd projects than were and did And so the And word a to possible. as as getting our project. started just effectively the I different mostly budget team, job. budget, That's done

has describe is team now the as environment. a this in our at but a we environment, predictable a supply So than around that. it this we done is chain a point, and where plan This just job I was volatile pre-COVID, how volatile understand don't great different environment

just we've had plan others disruptions, around inflation while that. we see a can we at may where it how and or window So chain look works, now supply

we our Rose, we in very, our feel feel about, Owensboro we environment and mentioned predictability. projects thing that's that. that. very We just talked very, now, when all predictable completing very a now, remarks, about volatile about The prepared good do I Rose, need. I in The We're that So need good the I

budgets. about So good feel and I and very about timing plans our

Daniel Guglielmo

ultra-luxury Super And spenders. has I out Great. then around think Bowl appreciate that really strength been brought so just the the color. in all really some Vegas clear. big we -- consumer And

types ticket seen you For prices, in then of year's an interest day? would have on financial outside be spenders? those this seen how of the from race increase Derby, And impact that all

William C. Carstanjen

So what extraordinary is interest the seen in at Kentucky we've points. price Derby all

been we've think long. I this doing for so

I we're American successfully, never for but we to think previously. to building every the doing and it's Derby selling year we're that take this of ourselves granted, landscape. our and team the facility are had testament the And we the sometimes place we testament and it quality a the entertainment and Kentucky it's product so a that

expensive respect shape. whether have. points, sell or all So good most be we very, price to wish we than about had talking we with in where tickets, you're at the We customer about we infield we more are our couldn't to happier interest are very

feel about I question was part we that that? did I to your that. question? Or anything capture And another missed? positive else very there there very, So Was of your

Daniel Guglielmo

it. Appreciate it. you That it. was No, got

Operator

comes from question Bank with of next Shaun Our America. Kelley

Shaun Kelley

productivity given us to bit the of account relative us either ago that other that on out I that of the the just can Virginia Could kind machines the little some mean a be extraordinary those give bit about or of could us coming limited, you up we bridge to you you bounds sense there? for just Bill, your you how I how some expect talk Virginia, right ramp counts help meaningfully increase Can to I bit relative in I there. average the a machines alluded to see very a limits in resort some experiences hoping expectations once of footprint machine there. expectations, the returns think, a give that And was Northern your you in now, that just of the Rose up your And of be to think would market? productivity Just helpful. you little at The ramp-up Virginia. little extreme to

William C. Carstanjen

I appreciate that, Shaun.

So that to operating area, We're that's of we X.X just market. markets large. not million-person in and It's the very the with people. a start used size metropolitan with many

You take million-person is cetera, Louisville, we this market. where for have Derby Gaming, et City a example,

And a of arteries, corridor. large is located of right very market. we, would course, runs -- and that north-south love major Virginia Northern Virginia D.C., Washington, the in market I-XX, on very, So Northern we're that one the directly

running the can. So remarkable. there, experience and It's XXX through remarkable. many been pretty as are has The machines. to there, liked so is as our have and people are the been deployed And our deploying level market would XXX-unit pretty have machines we facility with of far we activity

would terms we're a yielding really our different open The we machines in will So -- case with our And in return say, a more to But thrilled a But we academically, larger I'd machines. facility. base, is of the yet. can I I where how X,XXX this as up customer had academically, Rose it as maximize be we incent levels learning question well of haven't machines opened is of customers the there. wish this to we say,

So the this because a efficiently can we have and machines smartly will number be we yielding running them. about as limited as of

the we going door, it So open Remember, our we And different be all feel ramp-up our good just get have about customers. very the where to that's to when team the know field will market. the period we're be a on customers. about learn optimistic I to we there.

and after we'll also take of successfully. another learn we levels better reason I who them. customers that opened work think we'll different play very are from But time, have different start the to -- every We one And some how we have and will open cohorts. to get hope I customer to will. learn to we we with those as get our best amongst and

Shaun Kelley

facilities, little think little lot of the the area, about the the the Could I just what densities of you lot And talk you was is could your better obviously anybody. relative experiences Owensboro, plan yet talked facility basically that originally. had terms machines machine I of about mean little your XXX -- to different I probably a support a that -- bit you but a bit bit think you question new demographics address about had know Xx of talked you ability the than a for count don't some in for different there elsewhere same a to that, maybe in you little what is bit, your in Kentucky, market,

William C. Carstanjen

side the Kentucky in is lot development there's Owensboro Indiana. Yes, -- the River as from on Kentucky fourth including Owensboro a the surrounding a the development Kentucky, amount of of in And the side, Kentucky city the Ohio River. there's largest on of river separated on region. separating Owensboro Ohio fair and the

So we're XXX going open machines. to up with

There side are us the of big on side that should population market given for on measure we the be Indiana Kentucky have the how there. us market the expectations properties and our help and the size

river and modest our in measuring is we the machines, across not Park area Ellis side much on with and of built on region side. just other what density model, see Kentucky but of based the that having then of on looking a we at population how the the amount So the

project So out plenty to figure size that of to us inputs help how correctly. model into our

Operator

Wells line with question Dan next Our the comes Fargo. from of Politzer

Daniel Politzer

think I year, be are EBITDA pieces or key driving kind maybe gave the expect you us growth. a range Derby, us you I I little that? drill quantify bit an that Bill, a to could into going in last to the the kind think of wondering of function we around step if XXX, maybe of for was you mentioned bridge that kind could change we more growth should

William C. Carstanjen

Sure, talk to to Dan. Good you.

the a in in sponsorships, of at key not would great know direction, the of out We we There's for I our deal deal guidance So been is facility. attendance, seats. generally, wagering, the you trending But build I we're high-end on change Derby We're but not that's don't at the the and increase. also you look XXXth, this say but putting interest out yet right providing a a the great we number. the components it's the on would look at additional of Derby. so to size you building, point how look created in the whether economics the

review year, And and why the going those and modeling of team term optimistic of the you press really, will means at type something level I to step of really said, function infrastructure execute the of increase. seats and this the for last really being through the components at on the of for with out sense That and hospitality, version give where a would we're seeds, we'll are the implemented and share we're I all releases, number years the it happen. the do But by heading Marcia the then it, the that and go Derby. that's And she additional and trends that look know was from I do, they and look actually thinking optimism, good. special of you be you so use looking that a what purposes make

Daniel Politzer

there, Got it. segment within I And the more less were to that $X prior Virginia of think properties, margins uplift then EBITDA racing same the called the think Exacta, and just million or live for the year I period. my relative historical for follow-up, you out

those be margin So XXXX through about And flowing guys cost any managing extent maybe to how that, if more that that think the there's we to in should should there synergies uplift? you offsets through. are

William C. Carstanjen

a Well, of efficiencies we this full mean, it's that. all year variable. year, in. single everything But And it's coming coming to we like I a to single reduce the Exacta do to and that's have never hard variable, -- a

market. have high-yield is hope The in in online machines a coming what Rose new We we

pros to So a going real be there's very and much but margins, to guy. cons good is the Exacta

that. at how yield thoughtful see and at about we'll and I that, we're better good get that, you'll think that the machines, start to think I we're we

the be hopefully, that. margin can. might we as be can that hard control will to as the good doing do drove impacted well. and we other that But And as things think some things on we to there improvement going and those we're So we I working of keep guys, keep

Operator

back the for I'll remarks. now CEO, Carstanjen any Bill call over to hand closing

William C. Carstanjen

was bit over. We questions appreciate were it Thank today. you and great your through time a ran go of a all for lot There the little to questions. We these questions.

also here us. for want on great returns the in very out it room They're field. for company in focused delivering They're team and our happen thank making I and to building shareholders. a the So our

we'll it, very Derby. get X weeks, to So to guess, after talk very I much. the soon in close you or Thank X all we'll and you

Operator

Ladies may and now gentlemen, thank program, you for disconnect. today's participating. and you conclude does This

Churchill Downs (CHDN) 22 Feb 242023 Q4 Earnings call transcript