Churchill Downs Incorporated (CHDN) Q2 2024 Earnings Call Transcript
AInvestThursday, Jul 25, 2024 9:12 pm ET
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Churchill Downs Incorporated (CDI) recently held its 2024 second quarter earnings call, showcasing a robust financial performance and a strategic roadmap for growth. The company's management team, led by CEO Bill Carstanjen, provided a comprehensive overview of its financial results and strategic initiatives, highlighting its focus on innovation and capital investments.

Record Performance and Strategic Focus

CDI reported all-time record net revenue of $891 million and adjusted EBITDA of $445 million in the second quarter of 2024. This achievement underscores the company's strong financial position and its ability to deliver consistent returns on strategic investments. The success is attributed to a diverse portfolio of businesses, with the Kentucky Derby Week generating significant revenue and adjusted EBITDA growth.

Strategic Investments and Growth Opportunities

Looking ahead, CDI is focused on strategic investments in high-growth, high-margin businesses, particularly in HRM (Historical Racing Machines) venues. The company plans to open two new HRM venues in the next few months and has expansion opportunities in Kentucky, Virginia, and New Hampshire. The acquisition of Exacta, a central determinate system technology provider, has already brought significant benefits, including improved operational efficiency and top-line growth.

The Kentucky Derby and Future Developments

The 150th Kentucky Derby was a standout event for CDI, with strong growth in ticketing and sponsorship revenue, coupled with record wagering. The company has also completed the New Paddock project, which has set a new standard for guest experiences and provides a foundation for further innovation and monetization opportunities. For Derby 151, CDI is planning a significant renovation project, the Grandstand Club and Pavilion, aimed at enhancing the guest experience and increasing ticket revenue, personal seat licenses, and sponsorships.

Capital Management and Financial Outlook

CDI's capital management strategy is focused on maintaining a strong balance sheet and delivering superior returns for shareholders. The company has generated a record $437 million in free cash flow during the first half of the year, with expectations of continued growth in the coming years.

Conclusion

Churchill Downs Incorporated's strong performance in the second quarter of 2024, coupled with its strategic focus on growth and innovation, positions the company well for the future. The company's investments in HRM venues, the Kentucky Derby, and technology are expected to drive adjusted EBITDA growth with nominal levels of risk. With a solid financial foundation and a clear vision for the future, CDI is poised to continue delivering value for its shareholders and stakeholders.

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