CHDN - Earnings call transcript Q2 2024 | Churchill Downs Incorporated

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Operator

Good day, ladies and gentlemen, and welcome to the Churchill Downs Incorporated 2024 Second Quarter Earnings 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. Sam Ullrich, Vice President, Investor Relations.

Sam Ullrich

Thank you, Andrew. Good morning, and welcome to our second quarter 2024 earnings conference call. remarks, open prepared your call company's questions. the we the will for After second were business company's quarter The XXXX results released afternoon. yesterday as information of information including copy G, financial be section. churchilldownsincorporated.com this announcing in about of statistical presented results to Investors the the well conference required available by at News, A the located this in period company's at website's and titled release is the and call, other section Regulation as website

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

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

William C. Carstanjen

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

results. million, adjusted delivered second record million excellent quarter regarding year. $XXX in We all-time our all-time revenue record second all this of across segments. of are net First, These quarter our results EBITDA of the $XXX an

are quarter returns strong quarter on can We we strategic our investments to And we and deliver that come. focused capital best-in-class years make. after for demonstrating on we deliver growth long-term choices the remain strategies to executing

at experiences and Downs Every the guest entered through Paddock seating areas and front guests spectacular newly and innovation and with guests and for Racetrack. in views horses with the new sponsorship with in growth very ticketing XXXth for increase new the developments delight Strong views record Derby to record time developments coupled the created enjoyed seek Churchill to This dining Ticketed and area. Derby. was TwinSpires treated generated were setting and breathtaking Week. We our they and foundation for year's regarding Churchill gates was ever at Derby something of adjusted the on this project in as races. and we one Second, most revenue, of significant EBITDA, budget and unique who debut surprise significant were Racetrack. year our the into new new a our Paddock wagering on all-time pleased provides undertaken explore thrilled Kentucky year, We plans future opportunities future. Every further Downs the the This results Churchill monetization Downs this Racetrack. a to construction Project. a of for

significantly capital on seating that any we new projects XXXX, much to to we would look expand to on improve learn we Paddock still area before have and maximize inventory. new large our As our execute

an For on project. renovation Derby focus exciting XXX, we will

gate starting rail XX,XXX and a seating on Grandstand stadium combination announced the we transform bleacher box premium the the trackside to and seats Pavilion Club seats As of in the project from of will racetrack. seats suites of yesterday, front a area X,XXX

surrounding and improve license, the X,XXX experiences diligent options is personal These complete with The these for $XX can less significantly in a additional planning will be time a or will Kentucky is seamlessly that investment PSL, increase is be who sponsorships. which range the will Homestretch million We our amenities Grandstand in in than and projects Racetrack. for by execution X area. This sections at for hospitality to as and XXXX. This for in Club guests year's this well meaningful access Derby. the payback to ticket team Club that new seated will we patrons Churchill unveiled Pavilion our expected to require of inventory as target hospitality capital Downs renew, similar years, an redesign seat next

Beyond experiences front are the of on our this project, plans developing we infield. side the will provide in Downs that both new guests, Racetrack as as for well Churchill

starting our experiences new XXXX our multiyear which earnings plans, on in update October. detailed target more a next provide development will in late call at We delivering

generate for ability investing come. growth commitment in in consistent years our asset reflects to to Our with levels our nominal EBITDA to adjusted belief flagship our of risk

These our regarding HRM an excellent and capital. XX high-growth, on high-margin for to over HRMs focus key years X technology our HRM plan. are Next, return investments next a the strategic company. provide

opportunities Hampshire. and will several we months have HRM further working be Virginia that Kentucky, within X expansion opening on we and the in We next are venues New

of XXXX located on the HRM fourth largest on provide Owensboro, perspective. first the Our of of to and a will Kentucky, each east just from open an we city our in Kentucky. new quarter Exacta venue on be the Owensboro remain additional technology strategic budget. I growth It track opportunities acquisition expansion time these will HRM avenues. In on of provides in BXB update brief also

will venue center machines rich state. bar in is design a XXX initially HRM seventh facility with horse Bourbon simulcast and This racing sports open Our area. inspired will with property be the history our HRM wagering by along bar, Kentucky's and and

one Law to under are additional venue, We license. with Oak our Grove this HRM permitted Kentucky one associated develop

excellent in We on and have We modest related plans evaluating to developing opportunity. the this XXXX. progress capital anticipate a made investment

to definitive September. Virginia, a for new called you and update remain more third in provide on We our location, earnings HRM The timing our Rose in we open with late property respect to will on Dumfries call. In track quarter cost

are the We Richmond, come pieces the HRM as exterior County, a interior application filed which entertainment a of we and time venue. to site, see told HRM. and open on we budget It's a in last on Virginia, to what the to the and as we of construction call X,XXX exciting massive earnings new it's on north completion. We approach to size you increased facility just is Henrico together

amenities our be new details our industry enjoy. X revenue a Our horse facility of cost a years. to convert for will provide HRMs the Virginia. have is store for will application money feature furniture Commonwealth projected included racing to in project This million $XX former and The boost other to plans less have gaming-related into and that tax customers for a million the additional and to $XX purse than of payback XXX

update you next further will call. earnings We our on with details

the taking in the of the remaining at XXXX meet certain we are seeing we number we the that us our that that and some environment have in Virginia. under latest, the may locations HRMs HRMs footprint Commonwealth. business the the also today. investment X,XXX We strong been HRMs to of very deploy look the the the to and to with our partnership that Virginia has of existing will We overall X,XXX to footprint are we anticipate to we demand permitted us, machines for our have approximately expanding law deployed between end full optimize locations across We in Virginia from great planning expand performance. shift a forward by and

of we acquisition and system provided technology venues vertical of our our our for and properties. some fees line this begun Virginia by performance determinant the enabling central the the top gaming our to The have already technology margins. has improved Exacta of charged reduce overall to With has we which improved optimize integration, many us some to of are still better floors and realize Exacta. Exacta to benefits our the developing. we have both company, which HRM Turning

gaming converting Wyoming, Kentucky, New the technology term. Exacta line of internationally. us Exacta over in long to also process most in our to Kentucky the offering in are provide improve Hampshire product enabled and also top We recently, operations of has our floors to HRM approximately technology and XX% third-party to

potential jurisdictions, with Our wagering, in a our that Malta, BXB and working are operators business form looking IGT's international earns forward HRM that number these both considering our to is team in U.S. games. system opportunities. of of this utilizing a central internationally There recently recurring deal, growth IGT and first announced are fee other the on provide We third-party every machine with to technology. our determinant our deploy,

over electronic products We the of is continue part we long of of would further the an to HRM believe on These development make HRM-based venues term, important games. the enhance and future. progress Exacta's performance table our

Regarding are BXB the we that pleased Derby, the with the in year expansion. was TwinSpires' BXB strategy Kentucky and our second This place for results. was

of provide and horse in industry that The para-mutual platforms believe and for important wagering horseracing participation facilitating the other FanDuel, and growth and TwinSpires longer on their Our over distribution businesses United us opportunity is we technology to DraftKings term. racing. other the is Tote wagering services content a for sports

well core as BXC and TwinSpires invest focuses it on wagering in seeking to more committed we quite business relationships, continues a continue While immersive capabilities perform experience. our horseracing horseplayers to our BXB

from happy on XX for investment Next, hotel right the on side been the since April Casino We've We XX in off the by time The XX, gaming X, Indianapolis. opening budget. in miles on our is and held Terre on east followed approximately of downtown Haute, both properties. grand Interstate property its Indiana with Haute performance located the opening. on May regarding our Terre

an HRM record from is Similar results. provides quarter to surrounding metropolitan the entertainment second Casino of the financial Grove in market It area. In and Terre the portion venue area. Kentucky, a with summary, was destination limited Indianapolis, our northern people in particularly statistical for us western for Oak appealing competition Haute also property our the great Southwestern from with all-time

We growth brick-and-mortar both have of businesses pipeline and that in technology-related actively opportunities are executing. a we strong

pipeline also potential further an excellent into have future. of our company to We position growth for are evaluating investments and that acquisitions additional the we

continue growth cash to for we with and to We shows shareholders the will adjusted of We the our best the delivering in record consistent drive committed our EBITDA assets have We our long we years. free execution remain one balance can think that the over superior flow track sheets of with strategy deliver. coming industry, believe in returns great term.

thank personally want an been many than active Directors. your has if friendship directors Bob the member retirement his our from years. worked we of you're closely over Bob enjoy our I want Finally, retirement, XX acknowledge one to to for of that, to you. With listening, turn his Fealy, call and of our him and and and for more questions. on together. long-standing then congratulate I Board wisdom will miss over take Bob, that years Marcia, the I'll will Board Marcia? we've we

Marcia Dall

I'll insights and good with on start capital a an everyone. provide Bill, Thanks, morning, few update financial then our results and on management.

regarding second financial results. First, quarter

in record As delivered all-time revenue, all-time EBITDA quarter. the second Bill we an net shared, record adjusted

by basis. that able $XX Derby portfolio diversified or a you at We adjusted highlighted EBITDA total year. businesses, for generate a Derby project were the XX% quarter-over-quarter growth us week, to and a to record generated running the XXXth Our Kentucky revenue in May able join that were of person Kentucky in XX% watch Derby X. We will Week adjusted on $XX the a million incremental EBITDA million growth NBC hope to on in of on

Week a Derby and second we costs As the of associated recognized with revenue quarter the during reminder, year. of nearly all the

there Derby of superior recognized addition Week-related consistently has of new costs while sales, Week to over related result years. Paddock that strong generated the However, during primarily ticket maintaining other are as as provided significant quarters project, some new a that our the the sponsorships to and well. Increases margins a are lift Derby the wagering para-mutual results the financial

adjusted of on EBITDA basis. Virginia properties related a to the HRMs were growth Our driver HRM primary quarter-over-quarter

prior million EBITDA nearly quarter. Our economics compared to or by HRM during of Savings million quarter HRM the improved year the prior adjusted Virginia compared related $XX to $X to properties the Exacta our increased quarter. the transaction to nearly properties Virginia year XX% provided

compared the the to continued September We as also our quarter. Virginia the strong properties. a our points in the X.X foot gaming growth traffic Rosie's XXXX Emporia from generated of other combined at These as during from to up benefited our properties, and increased prior of XX% opening at quarter, excluding well margin properties racing nearly the upgrades floors year

than EBITDA Our Exacta segment addition adjusted generated the that this from in properties Live business the in central more our Exacta The in of the million to adjusted quarter business benefit determinant second quarter. $X meaningful EBITDA, realized million segment contributed Historical nearly of the Virginia system-related TwinSpires $XX to lower again fees. and

than of margins well our fiscal $XX important than Indiana's The second in expected Casino properties, from opening since gaming on at a gaming tax tax rate we will remain the tiered April the that tax quarter of levels is because Terre the long-term quarter gaming third second XX. EBITDA of year to during the lower million contributing ending normalize Our adjusted Terre beginning the will tax performed benefited note state's at level. highest albeit extremely in a June rates rate regional and It gaming the quarter. Haute structure all more the margin. lower Haute X, quarter rate XX% initial of and of the

excluding wholly-owned year second X.X properties Mississippi in primarily were in quarter Louisiana. Our same same-store, the points XXXX, casino union in prior New nonrecurring Maine, by period down our to payment the margins, driven and compared York,

HRM new the first $XX our or remaining spend quarter, was from of share We is capital our generated end flow below new over the This bank or nearly in capital along Project our half spend million on the continue we generated between $X.XX for expect cash our recently facilities, a of the Kentucky, the on the $XXX share our first million Based million on from announced approximately Project for record half spent and first million Virginia net year the year. strong leverage CDRT $XX $X.XX expected with to the total the year. Club We for $XXX second expect year. We XXXX. At venue free Capital Northern million or Xx. spend per covenant per the and in and of venue and Grandstand flow to the primarily of The Virginia, Owensboro of year million County, million is million the in up called expect the Capital Turning our project HRM venue Henrico cash the Rose and -- XXXX HRM XXXX, businesses. during management. continuing CDR $XXX and half be to to of investments Project year-end to new X/X to the Based first on in total maintenance between the $XX timing spent $XXX in Capital of in bank our capital in $XXX leverage of half our covenant the X.Xx. slightly of and projected at capital net opening at in be to

all-time adjusted and our very turn results has record delivered back quickly to by the covenant well balance bank term, investments net to deliver pipeline in for our the long second grow to open fueled We the the free decline expect continue our for XXXX over team with so strong and relatively call we meaningful Indiana, can our quarter. in by that initiatives over Virginia the growth leverage as call are flow. Overall, pleased he of EBITDA supported to Kentucky tangible positioned questions. remain cash to and our that, sheet. With We I'll Bill very

William C. Carstanjen

Thank Marcia. you,

questions. your take to ready we're everyone, Okay,

Operator

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

Barry Jonas

each talk growth goes you little that year. year. a different variability visibility seems about Can components up derby. and strong It very Another goes maybe drove more this bit the the down

here? where -- goes So think and how you from that do mix mix it how has does that evolved

William C. Carstanjen

Sure, Barry.

about ticketing revenue. We big it. experience first, to tend think driver or is the revenue So

Paddock And were the high-end to we experiences. the capacity, that the a time, So saw. introduced the results with was that more results we contributor at reported more Also, meaningful we Project, fantastic. wagering as

cylinders. firing continue wagering We on year, a every set real been for has all then record that's tailwind And also virtually sponsorships been us. to and each

board, key drivers the across segment. have showing So it's but with revenue our ticketing led improvement, of been all the

Operator

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

David Katz

sort a clarity the a I and where How you Downtown stage there's sort and Kentucky, looking sort more are just get progressing? -- for particular, to progression I'll Louisville in aspire wanted properties right, those there? are on call those middle Grove around of Oak what are in dials get how of we're kinds accelerating? in actualize quarter. how properties try -- where left What's what of and and at for to Turfway, -- adjusting it particular, they them, little to Congrats the where of of you

William C. Carstanjen

the Yes. Thanks, David. Appreciate question.

to Kentucky and come show optimism will that the So for for time. think of growth a over lot we

of them the add and reached maturity at we have think floor. the of change continue mix the of properties I all on our this none point, games to

at teams better operating them. Our get

get database Our deeper.

for to electronic -- the like I also So future I'm respect with optimistic additional products table games.

growth still long I the there's over term, lot So a there. think of

I think lot there's stage. properties or should still those those think as of a projects learning it's anything than there. you their I about think don't And still other ramp-up in

David Katz

rate any going earned. Got about bit? what in sort for But seen opportunities. has aren't But that it of can you have sort bit we opportunities we've follow-up, how Exacta outside some on a on for that just it. term, a to a of in? of you is your little And excluding that as of now, talk plate the ramp my I with plugged yet the just run new near touched know

William C. Carstanjen

Yes.

different are our We've deployed X,XXX. think games, on to start X,XXX about categories I'd there Virginia. of and with we're way I a couple Exacta. So for evaluating

of that's that Exacta rides story. So wave and too, part that

start. to place one s that' So

United any or open when the I product. additional can't generally been markets in of in will make look or potential States or commit markets will area. will any are talk how that that lots expectations many this promises you the but open, to trending right whether has think there at I beyond,

So in right the direction.

beginning own you whether a activities other whether be in and our others has -- like think provider or both our international was a New you ones international, is parties, lot when with were And relations different own potentially about government Also Hampshire realize which see I've We and to needs. expansion, first then inbound. it of do that the or service operators an of I to have Virginia and work as exploring opportunity appetite. new So our to thing. our Churchill's on runway some Kentucky, you was that the markets, companies. And be an the footprint, That Wyoming. inbound states, something teams started contacted think as then other we we there in the business of third might mentioned that's

our to markets, produce It's So deploy I can't a games that. about have make a often to be product various promises opportunities careful you a great it's we've great of lot product, really product. quality on you always quality when with get partners a and it. about a that work But technology. And future thoughtful that to produce produce done you

the just towards. are some those avenues So looking that we're of

Operator

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

Daniel Politzer

Newport, the on and those drag Downtown, acknowledge if in there properties Derby about the takes probably similarly, I seeing Derby cannibalization. we zoom wanted to City just of think but HRM Park to ramp about ramps to And in the terms like kind was talk quarter, potential and follow you're City of up how on could to it you and puts and Turfway, of in what cannibalization? where can relates Turfway a And the Newport Ellis kind there. are we then landscape and and if as and specifically Downtown Kentucky I

William C. Carstanjen

Yes.

from The news see City didn't gaming So Derby property. start any Derby good cannibalization is City our we Downtown there. I'll

And opened has have having very right I'm built They right we bit our confident we that good our the news. I'm would I And than team that, ground. at on though numerous properties. team particularly team the so differently. watched customer all the was point, I that that a ramp say started. ramped the confident that offering. little very slower problematic don't find property this

or to great they well Terre continue react that. when So I incremental progress and like we'll never we've second always quarter the And it's first push although in extremely go seen make to Haute.

Derby I on that. to So from as COVID the encouraged, but market environment the say Louisville rebound comparably City would Gaming downtown some quickest other has sized been I'm to not come cities. more

a been staffed is everything team have what both a there. in of so lot and right, how we otherwise, our And we headwind we've to of bit that driving improvement. built we maybe area of in has doing that terms there expertise devote can And a the But it.

and started continue over that about there. When we'll But those the quarters, as are side. little Newport get Turfway, also build. a seen subsequent they So you've talk bit you the on properties slower to

of improvement. lot I just our a So And to they quarter, confidence. every focus a There's a there's experience, team. continue get stronger. And on that's think lot of and hallmark incremental we of

So stand that's properties reached the see in we of haven't and for we're that those our stage maturity still both team Kentucky. ramp-up across what from the proposition that you

Daniel Politzer

the on quarter. Congrats

William C. Carstanjen

Thanks, Dan.

Operator

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

Joseph Stauff

Yes. you Bill? me hear okay, Can

William C. Carstanjen

you, We just you ahead. Joe. We hear can hear can fine. Go

Joseph Stauff

hear can Bill, me? you

William C. Carstanjen

Yes, hear now. you we can

Joseph Stauff

ask And you within And I other, expect how renovation? about you're or many the ask for yes, Downs wanted -- about how spaces at the to within many Churchill are exist -- that. about, area, I maybe wanted exist areas today? do that about that to white to say, reinvestment? comment guess project. I the tickets sorry after Grandstand say, Grandstand looking

William C. Carstanjen

Sure.

Pavilion a new and bleacher XX,XXX are going to them and there bleacher seats we're So we're take scope, project seats. those with Club in X,XXX currently, couple different the and going in Grandstand categories out, seats, of of to XX,XXX replace seats

hospitality on rail the seat, are be -- Some the of them racetrack. boxes to going of box

them seats. and be stadium seats them to be going are some stadium to are of of going Some covered

the of amenities hospitality options. of moving section those we that's towards combination a with are taking but also and hospitality. premium are And associate we lower-end that seating it we So both options, the a seating

seats, but the hospitality with not seats. the only those we significantly So are upgrading associated

areas in we case, additional there seats of traditionally project. same who that this part and substantially are upgrading an Grandstand hospitality the the fixing X,XXX access as are this In

because X,XXX benefit this those their seat better. from will substantially project amenities be Grandstand So renovation holders will also

So the new your scope, what have And those hospitality substantial an to project. I'm they our will amenities. the last you pricing had increase to other plus seats in all going and question, years number in seating that's That's follow-up, and changing, one a and experience, be course, the X,XXX of experiences. Oh, there of seen access but associated to scope going with Joe, you've that us you do part X,XXX this premium upgrade consistent at an I over facility with aren't for not the XX,XXX know, additional if the of the as whole, forget you other let it. look of

are quickly. the on we call, one than that track. you aware, we anything many do on else else Let We That hit that looking more year was -- I'll what of are these this at, as projects me don't wanted project. at have but to are that often we announce

we be facility announce a we will very working have well a our to before as whole. So approach and good we working on things

for you you an project a have and first area if temporary area might we've world, about concepts the that the what at and first other we where the really term infield, area then also, country including hospitality. there. is places the turn, we're ideas, think around looking if So various have term of between you and about around think around the seen in you But the That's our property, our all have first gap you project, work sky terraces. think the track, which

it. have gap as We [ a we ] call in sometimes smile the

the you So have And the of and that's at. Central down facility. as also our track of we an Avenue area our at look that come stretch then area the you approach top

time that So But really how significant approach untouched. is our it XXX-acre real to the some in out kind we all it puzzle you when that estate figure -- real kind of estate that carefully have property you fit touch so takes have of do project, and some to largely together. will how and

currently those on at to ready so to specific intend be point do. things we're not And are but we exploring, what real this

Operator

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

Jeffrey Stantial

Just how enacted perspective wanted which been And one suggesting Bill, are ban mechanisms. willing overall action? X Virginia. Kentucky recently us. I a number that games great. skill provide get Are you with there's some minimis, just different the you from these try it there the amount still would starting to new the your specifically, articles I'm risk, the seeing recently environment are reveal to around on your more competitive focus curious and skirt emerge, that types to Is any to of in the enforcement you see be across properties? of operating markets? machines X de bans of legal Just to thoughts can on

William C. Carstanjen

Yes.

attempts gaming products. the certain introduce So sort I think in skirt to laws parts gaming there and country bald-faced try is of a to theme states of in certain of to

it state not the go for state legal and by operators stretch because kind authorities, team the that watch authorities don't nefarious machines will far that sort by they a we're violations with legal internal various or in be theory of of wouldn't forms it's should of think to where I law of to why game not some egregious but of But law. claim for of try of introduction lot significant. say vigilance some as of skill I form state nonsensical are other gaming, under I a takes So so whack-a-mole to -- our it's time

Kentucky. of some that So we've seen in

is gaming those. with it in respect states. now a It the vigilant see to be part different company rhythm of You of to like ours

with and proper authorities communication It's enforcement. that, call that. landscape out and to takes some getting threat around need as to the local to we activity or part there describe call out close just so something ensure as or and it deserves is of I to that additional this the a like but it's just law wouldn't work And point something massive of legalization it it it lots focus earnings on from

Operator

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

Jordan Bender

of kind question. a the Maybe last follow-on to

taking that kind conclusions that the are Now Kentucky, trailing of are we that based visitation gray of the that? of XX-month on is, there properties? machine to back year market conclusions off view how to should following half in of the ban, there follow-on definite we're any in any kind in spend And results maybe or the the year Virginia growth to a Kentucky and draw maybe those

William C. Carstanjen

Yes.

say experiment to life doesn't you Jordan, to So single reduce allow I'd that a often an variable.

on We at and our between Kentucky, performing machines at businesses. differences So moving We've between going facilities. been facilities performance different our found at there's the mix. lot operating game a in getting on in good different same been at around efficiencies. better -- good We're based Virginia both We've the time.

Our gotten experienced. team more has

has Our database deeper. gotten

Virginia both you're at in a maturity. not and Kentucky, you're where circumstance in So

there's competition reduction certainly, And a flux company now it's I positive, focuses a all it's things market. percentage, going can't important. a my you between improvement in are removed that facility, I market, still certainly, it's products gaming certainly, get not in it's hard the the that gaming definitely it's are are specific make you equation is competitive maturity. how that have of in we're it's better. in. to from it's sure our haven't products make to percentages suspicion a precisely the business Kentucky positive that of that markets that different But define these relatively right because and on variables Virginia. lot thing. that illegal But But approached facing illegal we're that definitely might much important and and of of is our be give our from certainly, to And something positive on the been because undeveloped can't So But although markets the helps a because because that, illegal give multivariable products

Operator

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

Chad Beynon

programs, of pieces, the different Marcia, ask if of is database, you've and in particularly about or that to end gaming seen you've low what within remaining consumer some Bill, I of the past the stable wanted tiers in months? weakening kind trends the terms couple seen if HRM on in

William C. Carstanjen

But declining broad can have finding finding a trip because pretty and on general, with we're footprint. broad question like a to geographic it that covering per So a depend flat modestly flat. and more ground you're individual trips relatively but we in we're spend lot markets, of

So the a general fair stability amount across of properties. in

Operator

from of Mizuho. comes Ben question the with next line our Chaiken And

Benjamin Chaiken

Terre and universities, ] Haute or of of strong had other this of for footing a continues build great other sources think I the nearby, of some lull history so context do maturing start. How projected before guess ramp you particularly had a start. EBITDA I projects impacting opening demand you think you you finding the I your Do given line. impacting a do anticipate property? in words, understanding about that clearly, of guess In question [ this dynamics them the and to more unique are to it limited asked is et the an dynamic, cetera? And its top some referring competition opening.

William C. Carstanjen

thanks for Well, the question.

on but similar similarly was a close it Tennessee, as close it Haute, think, to also Haute property really Terre to with -- and Nashville around market had we and generally the activity property thought of is I border that Kentucky is Indianapolis. which has about Oak population our to Grove Terre as

when local with high-end introducing sort option pretty we're our how entertainment looked the we at would we we market, the a introducing thought product. in property it a we this way So approached without thought of is we'd project ramp, well, market And there. that about do --

a the -- on we build but easy thought XX the miles So is market quite do there XX, It's well that while trip away. but take into the initially an we locals, freeway, with pretty would and to it or comfort your that's they drive or level develop experience an product the have when to you customer and to hour and it to with distance have a so an while your takes plus. some database hour

So the to of immediately I And further over database working opened. local a population. XX that that to we'll tell -- XX, down see with expected, miles building XX, been seems keep working and hit Haute you great on into I-XX. locally. expect opened time, Terre afield keep those a it be reaching bit we And than to are -- frank, thrilled it Indianapolis quite away really we'll would a improvement with that suburbs how stronger thing. were It's that's and It we was

designed strategy. a not Indianapolis at but a drive come, to near the market attract model point, which of locals. and visitation just of respect it's road, miles we this Terre We with maturity traffic So properties, to XX out more simple are the be simple our to or some Haute built like hoping to that anywhere and down wouldn't

Operator

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

Daniel Guglielmo

been bit off, expansion adjusted any just a you this on expenses EBITDA of at the the late? all last there properties Has quarter So the can been efforts little concerted seeing around environment have that you're year. paying as labor segments talk and versus in about margin

William C. Carstanjen

Yes.

on Mudd, Our focused efficient team, structures. constantly cost by Bill led is

So to our make initiatives trying roll up of countless the we cost to that aggregate their optimize sure structure.

provide we our infrastructure thing, initiative. on a successfully one It's our So as it culture. efficiently a And best one part it as do just we focus run cost that's to can the of and constant to isn't properties so. isn't our need

In terms there particularly I that all level market, find something with wage be some of see of But is our inflation. us to it of versus remarkable the labor out don't term. there's It's particularly are something our eye business in keep And just on. to managing something carefully. on companies manage to terms other going of always always experience concerning and there's your long

careful inflation. we in subject So being been America. wage the by people There designing and same about contribution. some great hiring trends to And and has yes, thoughtful see to to we're jobs maximize really of that manage try their you

in issues concern Mudd an to in these would good and and not to a with a on done, it's untenable So kind HR tribute that's they've our of team, is our top of team situation. find the We're for sure getting this. shape Bill say in team, his particular, and don't ahead I senior that both we work something make ourselves

Operator

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

Shaun Kelley

comments to Bill, back prepared the made some go of you want just the in I to remarks about Virginia.

about of local any to to? you targets need by What hit of of required may or move you deployment I full more or be on opportunity to think are biggest order the elaborate legislative that Could and you physical just CapEx constraints the opportunity those that there in have machine that? i.e., approvals little bit to your target? around meaning are reshuffle seeing of you machines end locations kind back you X,XXX And go some to a hit a bit some there talked to XXXX. of those

William C. Carstanjen

the question. Good Thanks Shaun. for Sure, question.

construct is remind to just XX can can and machines facilities allowed facility of is we to everybody, in scenario the yes, machines any amount So subject also we complex relatively Virginia, we're particular deploy X,XXX and paradigm. which over the in a deploy

loaded level across different to licenses. not it's So XX

allowed as Dumfries know, that X,XXX example, in has market. For of machines you total a

limited biggest have carefully XX we we So strategize to have. to our of machines number now. say how deploy And I right the not is licenses restraint the would

haven't deployed We XX the licenses.

have to couple more a We go.

machines. fact we to Our that have, biggest licenses the full deploy constraint is the X,XXX the that want we across of contingent already

add results And the across haven't want maximum all such we facilities. some, our yet amount over deployed to more. we fully seeing So strong we're

expand And machines. to can not executing shareholder ready, of to sure in we've order general, right got more machine general, can expenditure that community So all in those the the it's the as But our want investor we'll the and machines that now there get number we the properties restraint make be yes, already we're finalized our great the and is into to purchase we capital opened, that to of we and really additional those as we've reveal some house spaces in community licenses, plans properties. and those, fact on them. are modest

So right we're working now. on that

I But are plans underway. precise remarks, necessary now, finalize and to going and get end it's exactly they're where couple being communicated we'll It's expenditures earnings that. as planned. my all we're at what them, executed prepared of before Right on quantity expect the think of have to carefully next real over modest explaining And accomplish X,XXX. completely this been executing XXXX. and I in capital calls, we the as all what all are and said in of we

Shaun Kelley

about there fact And that, anything across sustainable? that -- the about that impact segment absolute either from guess, commentary margin been help to us around the -- do is then you is Great. just year would Can us I calendar properties Marcia's XX%. the but sense, think a that Can Or race just tailwind, number combined about that including, number the across think the double mean, too. we obviously, And similar, quarter then of when start section basis same Exacta around about quarter. like the of follow-up more is incredibly be well year? a I magnitude prior cadence think the has and help how the lap give HRM difficult or gave continue you here the just that of you us XXX margin points comps? is this my question increase you we XX%, balance up to that should this would Like, versus the think I increase at the in timing,

William C. Carstanjen

Sure.

So she about specifically remarks, a detail. Virginia in Marcia's recall most and was lot or of I the improvement talking that we've most on shown as

that's of been Some driven Exacta. by

restructured, margin Exacta still and that and Exacta floors, we contractual gaming relationship the the property some of to goes growing rethought business. the and acquired business, we a Exacta important gaming very rethought that is As between

remove So Exacta in That's to With the driver. us owning contract big Exacta, quality been we from to impact, from a of the could previous exclusivity and operation. the Ainsworth both has the when a floor floor, exclusivity we vertical improve to the PXE, the gaming us bring an of attractiveness that performance product improve gaming owners. Exacta improvements. Remember, integration big with of acquired owning it had

lot Our better. a floor is

the Class to these we more properties, operate and compared has gotten database, there way more we're gaming territories. the utilize structure floor III well. figuring Our our our interesting best and team is how operating in to out And do floors. to traditional competitive how We're other in

driven toolkit a Kentucky But in cetera. things in We're Exacta big lots performs are with getting us have the at database, that it a improve that on giving They're a been have exist unlocking process, too Marcia's business the how mature. They're of to et getting towards comments, period on of And you're better that our there getting I consistent properties during is longer time. our incremental also the going everything improvement. think part ability seeing the to but Virginia, was big to better, key a smarter. So ramp-up maturity. for as in still full we're not

to think So for but as lots of of generally, each time there's improvement, of where the and facilities how over you this seen demonstrate, we to we promise of prove -- operations, improve not that time. improve these cycle to That's are we'll in something end call try use I here don't will in on it's you've today use margins our optimism, but cause for toolkit and businesses. learn team exciting and new these life our the an I'm our

Operator

hand back CEO, to now remarks. you. Thank Bill for closing I'll Carstanjen it any

William C. Carstanjen

time you, and today. your our in appreciate interest appreciate Thank company. we We your everyone,

driven, the very our a skills you to is to of the optimism those do For appreciate investment. we is We'll have And we team our time and try because opportunities team by who this very invested, have we of that investment. motivated, real think your right for shine. they're and

do. your thanks talk And and soon. Thank you. again we what confidence, doing you we'll to for keep we'll So

Operator

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

Churchill Downs (CHDN) 25 Jul 242024 Q2 Earnings call transcript