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    CHDN
    Earnings call· Mar 2026(Q1 FY26)

    Churchill Downs Q1 FY26 earnings call CHDN

    Apr 23, 2026 Source

    Executive summary

    Churchill Downs Q1 FY26 — Record Revenue and Adjusted EBITDA, Preakness IP Acquisition

    Churchill Downs delivered a strong start to the year with record financial results driven by robust performance in Live and Historical Racing and Wagering Services. The company is strategically investing in high-return growth projects, including new HRM venues and Derby experience enhancements, while also acquiring the Preakness Stakes IP. Management remains focused on expanding its iconic events and optimizing operations amidst evolving legislative and competitive landscapes.

    Highlights

    5

    • Achieved record first quarter net revenues of $663 million.

    • Delivered record adjusted EBITDA of $257 million for the quarter.

    • Kentucky HRMs adjusted EBITDA increased over $9 million or 17% year-over-year.

    • Virginia Derby handle increased 19% over last year, marking the third highest wagering day in Colonial Downs history.

    • Successfully opened the Marshall Yards HRM venue in February 2026, on time and on budget.

    Concerns

    4

    • Gaming segment performance impacted by the cessation of HRM operations in Louisiana in May of last year.

    • Gaming segment experienced a $2 million weather-related disruption in January.

    • Performance at other Virginia properties was impacted by weather and increased competition.

    • Noted softness in lower-value unrated segments outside of Kentucky within the Gaming segment.

    Guidance & targets

    5
    CategoryTargetConfidence
    Full-year 2026 project capital expenditures
    $180 million to $220 million
    medium materiality
    High
    Full-year 2026 maintenance capital expenditures
    $90 million to $110 million
    medium materiality
    High
    Kentucky Derby incremental EBITDA
    $15 million to $20 million
    high materiality
    High
    Rockingham Grand Casino opening
    mid-2027
    medium materiality
    High
    Victory Run project completion
    in time for the 2028 Kentucky Derby
    medium materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Live and Historical Racing
    Achieved record performance for the quarter with continued momentum.
    Adjusted EBITDA growth YoY: 11%
    		———Adjusted EBITDA increased by more than $11 million
    Kentucky HRMs
    Delivered outstanding results, driven by strong growth across both Western and Northern Kentucky, and the opening of Marshall Yards in February.
    Adjusted EBITDA growth YoY: 17%
    		———Adjusted EBITDA increased more than $9 million
    Virginia HRMs
    Growth supported by continued momentum at The Rose. Performance at other properties impacted by weather and increased competition.
    Adjusted EBITDA growth YoY: 6%The Rose GGR per machine per day: sequential increases for each month of Q1
    		———Adjusted EBITDA increased by $3 million
    Wagering Services and Solutions
    Driven by retail sports betting, online sports betting market access agreements, and expansion of Exacta platform. TwinSpires delivered modest growth in adjusted EBITDA primarily due to lower legal expenses.
    Adjusted EBITDA growth: 8%
    		————
    Gaming
    Performed in line with expectations, impacted by cessation of HRM operations in Louisiana (May last year) and $2 million weather-related disruption in January. Customer trends improved vs. prior year, with strength among higher value rated players and softness in lower-value unrated segments outside Kentucky.
    Same-store margins: relatively consistent with prior year quarter
    		————

    Operational metrics

    14
    Net Revenues
    $663 millionrecord
    Q1 FY26
    Adjusted EBITDA
    $257 millionrecord
    Q1 FY26
    Project capital expenditures
    $40 million
    Q1 FY26
    Maintenance capital expenditures
    $19 million
    Q1 FY26
    Bank covenant net leverage
    3.9x
    Q1 FY26
    Virginia Derby handle
    19%over last year
    March
    Derby Week attendance
    more than 370,000
    last year
    Preakness IP base fee
    $3 million
    annual

    Part of the fee structure for the Preakness IP acquisition.

    Preakness IP handle fee
    2%
    annual

    Part of the fee structure for the Preakness IP acquisition.

    Preakness and Black-Eyed Susan day handle
    $140 million
    last year

    Provides a perspective on the handle amount for the races related to the Preakness IP acquisition.

    Maryland bond proceeds for racing investment
    $400 million
    legislatively authorized

    Funds allocated by the state of Maryland to invest in racing properties like Pimlico.

    Other Maryland government funds for racing investment
    $125 million
    available

    Additional government funds available for investment in Maryland racing properties.

    Total Maryland funds for racing investment
    $525 million
    allocated

    Total war chest of funds allocated by Maryland for racing investment.

    Kentucky HRM ETG GGR accretion
    accretive
    Q1 FY26

    Early indications from the introduction of Roulette ETGs at 6 properties.

    Industry KPIs

    1
    MetricValueDetails
    Net unit growth development pipeline8th HRM facility in Kentuckyfacilities

    Product announcements

    9
    ProductTypeDetails
    Marshall Yards historical racing machine venuelaunch
    Roulette electronic table games (ETGs) based on historical horse raceslaunch
    Craps and Blackjack ETGsroadmap
    Rockingham Grand Casinolaunch
    Derby Week expansion (Sunday racing)expansion
    Kentucky Oaks prime time broadcastexpansion
    The Mansion renovationsupdate
    Finish Line Suites upgradesupdate
    Victory Run projectroadmap

    Deals & partnerships

    1
    a subsidiary of The Stronach GroupAcquisition of intellectual property rights to the Preakness Stakes and Black-Eyed Susan Stakes.

    Includes all trademarks and associated rights for the second leg of the Triple Crown. Management views this as an iconic asset with tremendous potential.

    Risks & headwinds

    5
    Cessation of HRM operations in LouisianaMay of last year

    impacted Gaming segment

    Weather-related disruptionJanuary

    $2 million

    Increased competition in VirginiaQ1 FY26

    impacted performance at other Virginia properties

    Mitigation: actively optimizing our marketing and operating strategies

    Softness in lower-value unrated segmentsQ1 FY26

    customer trends showed softness

    Mitigation: actively refining our marketing strategies to capture opportunities across both segments

    iGaming as a public policy choiceongoing

    not approved in Virginia

    Mitigation: participate vigorously in legislative discussions, evaluate what's best for the company, pursue new options

    What to watch in Q2 FY26

    5

    Derby Week performance

    next quarter
    Currentanticipating an exceptional Derby and Derby Week, significantly outpacing not only last year, but also Derby 150 in 2024
    Targetconfirmation of exceptional performance in attendance, wagering, viewership, sponsorship, and EBITDA

    Why it matters

    Derby Week is a key driver of revenue and EBITDA, and its expansion is a core growth strategy.

    We are anticipating an exceptional Derby and Derby Week, significantly outpacing not only last year, but also Derby 150 in 2024.

    Q&A highlights

    10

    Details on the fee structure for the Preakness IP and longer-term strategy.

    The fee structure is a $3 million base fee starting in 2028 (growing 2.5% annually) plus 2% of handle for Black-Eyed Susan and Preakness days. Management views Preakness as an iconic asset with tremendous potential, consistent with their strategy for unique assets like the Derby.

    “So the fee structure in Maryland is a 2-part structure. First, a base fee of $3 million that grows at 2.5% every year starting in 2028. ... And then the second portion of the fee is 2% of handle for the Black-Eyed Susan day plus the Preakness day.”

    asked by Barry Jonas · answered by William C. Carstanjen

    2 min read5 chapters

    Detailed Narrative

    01

    Preakness Stakes IP Acquisition

    Churchill Downs signed a definitive agreement to acquire the intellectual property rights to the Preakness Stakes and Black-Eyed Susan Stakes from a subsidiary of The Stronach Group. This acquisition includes all trademarks and associated rights for the second leg of the Triple Crown, which is the second most wagered on race in the country. The fee structure involves a $3 million base fee starting in 2028, growing at 2.5% annually, plus 2% of handle for Black-Eyed Susan and Preakness days. Management views this as an iconic asset with tremendous potential, consistent with their strategy for unique assets like the Kentucky Derby.

    02

    Kentucky Derby Enhancements and Expansion

    The company continues to invest in enhancing the Derby experience, with renovations completed for The Mansion and Finish Line Suites for the current year's event. The Victory Run project, a new structure offering premium suites, covered box seating, and high-end dining, will accelerate after Derby Week and is slated for completion by the 2028 Kentucky Derby. Derby Week is expanding with Sunday racing and the Kentucky Oaks broadcast in prime time on NBC and Peacock, aiming to grow attendance, wagering, viewership, sponsorship, and EBITDA.

    03

    HRM Portfolio Performance and Expansion

    The HRM venues in Kentucky and Virginia are performing well, supporting the horse racing industry and local economies. Kentucky HRMs delivered outstanding results, with adjusted EBITDA increasing over $9 million or 17% year-over-year, driven by strong growth and the opening of Marshall Yards in February. In Virginia, adjusted EBITDA increased $3 million or 6% year-over-year, supported by momentum at The Rose, which saw sequential increases in GGR per machine per day. The company introduced Roulette ETGs at six Kentucky HRM properties in Q1, showing encouraging early indications and accretive GGR.

    04

    Virginia Legislative Environment

    The Governor vetoed legislation related to skill games and a proposed new casino in Fairfax County, and iGaming did not receive approval. These outcomes support a more attractive operating environment for Churchill Downs, which remains committed to continued investment and job creation in Virginia. Management views the state's progression on gaming issues as positive, despite the 'messy' legislative process, and is encouraged by the forum for discussion and convergence of views.

    05

    Rockingham Grand Casino Project

    The Rockingham Grand Casino project in Salem, New Hampshire, remains on track for a mid-2027 opening. This development is seen as another compelling opportunity to expand into an attractive market with a high-quality entertainment offering, contributing to the company's long-term growth strategy. The company is confident in its ability to deliver consistent and meaningful value for shareholders through such high-return growth opportunities.

    AI-generated summary of the company’s earnings call. Not investment advice.