Churchill Downs Incorporated Q1 FY2026 earnings call

• Record first quarter net revenues of $663 million and adjusted EBITDA of $257 million.
• Successfully opened Marshall yards in Kentucky, eighth HRM facility in the state, with encouraging early performance.
• Strong progress in Virginia with 48 race dates in 2026, successful Virginia Derby in March, and positive legislative outcomes regarding skill games, casino, and iGaming.
• Signed definitive agreement to acquire Preakness Stakes and Black Eyed Susan Stakes intellectual property rights.
• Renovations to Kentucky Derby mansion and finish line suites, with plans for Victory Run project to be completed by 2028.
• Expansion of Derby Week with racing on Sunday, April 26 and Kentucky Oaks broadcast in prime time.
• Rollout of roulette electronic table games (ETGs) at six Kentucky HRM properties, with plans to expand to other games.
• Rockingham Grand Casino project in New Hampshire on track for mid-2027 opening.

Live and historical racing segment achieved record adjusted EBITDA, increasing over $11 million (11%) compared to prior year quarter. Kentucky HRMs saw adjusted EBITDA increase over $9 million (17%) driven by strong growth in western and northern Kentucky. Virginia adjusted EBITDA rose $3 million (6%) with continued momentum at The Rose. Wagering services and solutions segment adjusted EBITDA increased 8% due to retail sports betting, online sports betting agreements, and Exata platform expansion. Gaming segment wholly-owned regional properties performed in line with expectations despite Louisiana HRM cessation and January weather disruption.

• Full-year 2026 project capital spend expected to be $180 to $220 million.
• Full-year 2026 maintenance capital spend expected to be $90 to $110 million.
• Anticipation of Derby week significantly outpacing prior years in performance.
• Continued investment in high return growth opportunities across portfolio.

Forward-looking statements involve risks and uncertainties such as those in earnings release and SEC filings, which could cause actual results to differ materially from forward-looking statements.

Q: Detail fee structure for Preakness IP and longer term strategy?

A: Base fee of $3 million growing at 2.5% from 2028, plus 2% of handle for Black Eyed Susan Day and Preakness Day; seen as iconic asset with potential for growth.

Q: How Preakness investment fits into capital allocation and medium-term evolution?

A: Preakness is iconic asset with potential, consistent with Derby strategy, working with state to develop it.

Q: Measuring success of growing international Kentucky Derby customer base and medium-term goals?

A: Focus on attendance, sponsorships, viewership; international interest positive and growing.

Q: Legislative win in Virginia, why vetoes and recurring legislation?

A: Part of democratic process, healthy legislative environment, views respected and heard.

Q: Kentucky HRM growth, incremental machines and ripe properties?

A: Kentucky HRMs still growing, properties not at maturity, will innovate and expand offerings.

Q: Derby impact of geopolitical events on ticket sales and EBITDA guidance?

A: No geopolitical impact on 2026 ticket sales, confident in $15 to $20 million EBITDA growth over last year.

Q: HRM ETGs in Kentucky, initial yields, database growth, play shift?

A: New customers, accretive to GGR, just started marketing Roulette ETGs, positive trends.

Q: Digital expansion in states, reverse course on iGaming?

A: Participate in legislative process, iGaming bad public policy, handle issues fairly.

Q: ETGs rollout, 80-20 gaming positions goal?

A: Data-driven, take one step at a time, respond to data and customer feedback.

Q: Maryland HRM proposal, support and process?

A: Focused on Preakness, evaluating how to support state, sea legs in Maryland.

Q: Preakness ambitions, qualitative and quantitative goals?

A: State in control, will assist if asked, love Maryland market with opportunity.