Churchill Downs Incorporated Reports 2021 First Quarter Results

LOUISVILLE, Ky., April 21, 2021 (GLOBE NEWSWIRE) — Churchill Downs Incorporated (Nasdaq: CHDN) (the “Company”, “we”, “us”, “our”) today reported business results for the first quarter ended March 31, 2021.

First Quarter 2021 Highlights

• Net revenue of $324.3 million, up 28% over the prior year quarter
• Net income(a) of $36.1 million compared to net loss of $23.4 million in the prior year quarter 
  • Adjusted net income(a) of $34.6 million, compared to $2.0 million in the prior year quarter
• Adjusted EBITDA of $110.6 million, up 100% compared to $55.3 million in the prior year quarter
• Derby City Gaming delivered record net revenue of $32.9 million, up 52% over the prior year quarter
• Our TwinSpires Horse Racing business delivered record first quarter net revenue of $93.1 million, up 39% over the prior year quarter
• Our TwinSpires Sports and Casino business launched sports betting and iGaming operations in Michigan on January 22, 2021 and sports betting operations in Tennessee on March 18, 2021
• Our Gaming Segment delivered record Adjusted EBITDA of $82.4 million, up 72% over the prior year quarter
• In February 2021, Kentucky passed legislation that clarifies the legality of historical racing machines
• On February 1, 2021, we purchased one million shares of CHDN stock from The Duchossois Group for $193.94 per share ($193.9 million total) in a privately negotiated transaction

(a) Reflects amounts attributable to Churchill Downs Incorporated.

First Quarter 2021 Results

The Company’s first quarter of 2021 net income attributable to Churchill Downs Incorporated was $36.1 million compared to net loss attributable to Churchill Downs Incorporated of $23.4 million in the prior year quarter. The Company’s first quarter of 2021 net income from continuing operations was $36.1 million compared to net loss from continuing operations of $22.6 million in the prior year quarter. We do not have any noncontrolling interest as of the first quarter of 2021 compared to a net loss attributable to our noncontrolling interest of $0.1 million in the prior year quarter.

The following items impacted the comparability of the Company’s first quarter net income from continuing operations:

• $14.0 million after-tax expense decrease related to our equity portion of the non-cash change in fair value of Rivers Casino Des Plaines (“Rivers Des Plaines”) interest rate swaps;
• $12.0 million non-cash after-tax impact related to our intangible asset impairment from the first quarter of 2020 that did not recur in the first quarter of 2021; and
• $1.0 million after-tax expense decrease related to lower transaction, pre-opening and other expenses.
• Partially offset by a $0.9 million after-tax increase in Rivers Des Plaines’ legal reserves and transaction costs.

Excluding these items, first quarter 2021 net income from continuing operations increased $32.6 million primarily due to the following:

• $33.4 million after-tax increase driven by the results of our operations and equity income from our unconsolidated affiliates.
• Partially offset by $0.8 million after-tax increase in interest expense associated with higher outstanding debt balances.

Segment Results

During the first quarter of 2021, we updated our operating segments as follows:

• We changed the Churchill Downs segment to the Live and Historical Racing segment to facilitate the realignment of our new HRM facilities – Oak Grove Racing, Gaming & Hotel (“Oak Grove”), Newport Racing & Gaming (“Newport”), and Turfway Park from All Other to this segment. The Live and Historical Racing segment now includes Churchill Downs Racetrack, Derby City Gaming, Oak Grove, Turfway Park, and Newport.
• We renamed the Online Wagering segment to the TwinSpires segment to facilitate the realignment of our retail sports betting results at our wholly-owned casinos from our Gaming segment to the TwinSpires segment.

The summaries below present net revenue from external customers and intercompany revenue from each of our reportable segments:

For the first quarter of 2021, net revenue increased $35.6 million from the prior year quarter primarily due to a $19.4 million increase at Oak Grove as a result of the opening of the HRM facility in September 2020 and the hotel in October 2020, an $11.3 million increase from Derby City Gaming primarily due to the temporary suspension of operations in March 2020 as a result of the COVID-19 global pandemic and the completion of their second outdoor patio which added an additional 225 HRMs in September 2020, a $4.4 million increase at Newport due to the opening in October 2020, and a $0.5 million increase from other sources.

Adjusted EBITDA increased $17.3 million in the first quarter of 2021 from the prior year quarter due to a $8.9 million increase from Derby City Gaming due to the increase in net revenue, increased operating efficiencies, and the temporary closure of the property in March 2020, a $6.6 million increase at Oak Grove due to the opening of the HRM facility in September 2020, a $0.8 million increase at Turfway Park due to an increase in handle, a $0.7 million increase at Newport due to the opening in October 2020, and a $0.3 million increase at Churchill Downs Racetrack primarily due to the temporary suspension of operations in March 2020.

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