Churchill Downs Incorporated (CHDN)

Churchill Downs Incorporated Q1 2025 Financial Analysis

Report Date: 2025-04-30
Reporting Period: Q1 2025 (Three months ended March 31, 2025)

Executive Summary

Churchill Downs Incorporated (CHDN) reported net revenue of $6.426 billion in Q1 2025, up 8.7% year-over-year. Operating income rose to $1.346 billion (up 6.6%), while net income attributable to shareholders was $772 million, down 4.0% from $804 million in Q1 2024. Total debt at quarter end stood at $49.07 billion, a slight 0.6% reduction from December 2024.

Revenue and Profit Analysis

• Net Revenue Growth: Driven by new venue openings (Rose Gaming Resort VA in Nov 2024; Owensboro Racing & Gaming in Feb 2025) and the April 2024 launch of Terre Hauté Casino Resort in IN.
• Profit Decline: A 4.0% drop in net income reflects lower equity income from unconsolidated affiliates, higher interest expense, and one less day in the quarter (2024 was a leap year).
• Segment Performance: Live historical racing revenue jumped 11.1% to $2.725 billion; wagering services ticked up to $1.069 billion; gaming solutions grew 10.1% to $2.632 billion.

Debt and Liquidity

• Total Debt: $49.07 billion (net of current maturities), down $0.32 billion from December 2024, reflecting normal repayment of credit facility balances.
• Credit Facility: $12 billion revolver and two term loans ($2.880 billion due 2028; $11.574 billion due 2029) carry SOFR-based variable rates. Available capacity: $8.309 billion.

Pros and Cons

Pros:

• High-margin historical racing and robust online wagering platform.
• Strategic venue expansions driving incremental revenue streams.
• Strong operating cash flow ($2.465 billion) to fund investments and debt service.

Cons:

• Profit margins pressured by higher interest expense and one-time items.
• Ongoing litigation risk in Louisiana could curtail HHR operations.
• Economic sensitivity in discretionary spending and competition in gaming markets.

Net Revenue by Segment (Q1 2025 vs. Q1 2024):

• Live Historical Racing: $2,725 M (up from $2,451 M)
• Wagering Service & Solutions: $1,069 M (up from $1,066 M)
• Gaming (Casinos & HHR): $2,632 M (up from $2,392 M)

Geographic Highlights – Live Historical Racing (Q1 2025):
• Louisville, KY: $522 M
• Northern KY: $312 M
• Southwestern KY: $405 M
• Western KY: $124 M
• Virginia HHR: $1,293 M

Geographic Highlights – Gaming (Q1 2025):
• Florida: $253 M
• Iowa: $235 M
• Indiana: $316 M
• Louisiana: $446 M
• Maine: $250 M
• Maryland: $208 M
• Mississippi: $251 M
• New York: $434 M
• Pennsylvania: $239 M

Churchill Downs continues a measured growth trajectory, leveraging new venue roll-outs and digital expansion to offset mature market pressures. Debt is stable with ample liquidity, and operating cash flow remains robust. Key challenges include regulatory/legal headwinds (e.g., Louisiana HHR litigation), rising financing costs, and discretionary consumer spending volatility. Long-term opportunities lie in optimizing online wagering platforms, enhancing guest experiences at racing and resort properties, and selective M&A in adjacent markets.