CHDN — Churchill Downs Incorporated

Summary of Churchill Downs Incorporated (CHDN) Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• Record Revenues: Q1 2026 net revenues reached $663 million, a record for the company.
• Adjusted EBITDA: Also at a record high of $257 million, reflecting strong operational performance.
• Segment Performance:
  • Live and Historical Racing segment and Wagering Services achieved record adjusted EBITDA.
  • Kentucky HRMs saw a 17% increase in adjusted EBITDA, while Virginia properties reported a 6% increase.
• Free Cash Flow: Generated $276 million ($3.94 per share) in free cash flow, supporting reinvestment and shareholder returns.
• Capital Expenditures: Project capital expenditures were $40 million in Q1, with expectations of $180 million to $220 million for the full year.

2. Strategic Updates and Business Highlights:

• New Venue Opening: The Marshall Yards HRM venue opened successfully in Calvert City, Kentucky, contributing positively to local job creation and purse funding.
• Virginia Racing Commitment: Plans to host 48 race dates in 2026, with successful events like the Virginia Derby showing strong attendance and wagering.
• Acquisition of Preakness Stakes IP: Signed an agreement to acquire intellectual property rights for the Preakness Stakes, with a base fee structure starting at $3 million in 2028.
• Kentucky Derby Enhancements: Significant upgrades to hospitality areas for the Kentucky Derby, with expectations for increased attendance and revenue.

3. Forward Guidance and Outlook:

• Derby Week Expectations: Anticipating a strong Derby Week, significantly outpacing last year’s attendance and revenue.
• Long-term Growth Strategy: Focus on expanding Derby Week into a broader national and international event, with plans for additional racing days and primetime broadcasts.
• HRM Expansion: Continued rollout of electronic table games (ETGs) in Kentucky, with positive early performance and plans for further expansion.

4. Bad News, Challenges, or Points of Concern:

• Competitive Pressures: Increased competition in Virginia and challenges from weather affecting performance at some properties.
• Legislative Uncertainty: Ongoing legislative discussions in Virginia regarding gaming, with potential risks from future competition or regulatory changes.
• Market Dynamics: Some softness in customer trends outside Kentucky and among lower-value segments, necessitating refined marketing strategies.

5. Notable Q&A Insights:

• Preakness Stakes Strategy: The company views the Preakness as an iconic asset with significant potential, aligning with their strategy of investing in unique properties.
• International Growth Goals: Emphasis on building an international customer base for the Kentucky Derby, focusing on attendance and sponsorships as key metrics of success.
• Virginia Legislative Environment: Management expressed optimism about the stable environment in Virginia and their commitment to adapting strategies as needed.
• ETG Performance: Initial trends for ETGs are positive, with indications of new customer acquisition and increased gaming revenue.

Overall, CHDN reported a strong start to 2026 with record financial results and strategic initiatives aimed at long-term growth, while also navigating competitive challenges and legislative uncertainties.