Churchill Downs, Incorporated · NASDAQ:CHDN
Churchill Downs — Imperial Capital 6th Annual Global Opportunities Conference 2012
21 slides from Churchill Downs's conference presentation, Sep 20, 2012
Slide 1: Imperial Capital 6th Annual Global Opportunities Conference
Imperial Capital, LLC 6th Annual Global Opportunities Conference September 20, 2012 Churchill Downs Incorporated (NASDAQ: CHDN) Mike Anderson, VP Corporate Finance & Treasurer
Slide 2: Safe Harbor / Forward-Looking Statements
Page: 2 In addition to historical facts or statements of current conditions, this document contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, estimates, expectations or beliefs ab
Slide 3: Overview: Diversified Racing, Gaming, Online & Entertainment Company
Page: 3 Overview: Diversified Racing, Gaming, Online & Entertainment Company • Leading Online pari- mutuel wagering (“ADW”) company • $800 M handle in 2011; $588 M handle in 2010 • $451 M handle 1H ’12 (14% growth) • 24 hour horse racing channel, joint venture with the Stronach Group • Access to ove
Slide 4: Investment Rationale
Page: 4 Investment Rationale Diversified Asset Portfolio • Largest legal online gaming platform in the U.S.(TwinSpires.com) • ~3,500 Gaming positions in three casinos and 9 OTBs • Four premier Thoroughbred Race Tracks • Iconic Kentucky Oaks & Derby Brands • Tote business, Poker media company, minori
Slide 5: Racing Properties – Foundation which led to diversification
Page: 5 • CDI was built around Racing …. But traditional racing pressures have prompted executive management to diversify and grow through other revenue streams. • “To millions of people worldwide, ‘Churchill Downs’ means…The Kentucky Derby, Thoroughbred racing. But, while that’s what our brands mea
Slide 6: Brand Power – Kentucky Derby
Page: 6 Brand Power – Kentucky Derby The Kentucky Derby is not just “The Greatest Two Minutes in Sports” but rather an annual cultural and social phenomena The longest continuously running sporting event in North America – 138 years Diverse revenue/profit streams – premium ticketing, sponsorsh
Slide 7: The Kentucky Derby has proven resilient
Page: 7 The Kentucky Derby has proven resilient… Record Derby Week EBITDA for the third consecutive year, $5.4 million higher than 2011 2011 Derby Week EBITDA was up $6.4 million over 2010, 2010 EBITDA up $3.4 million over 2009 Derby attendance sets new all-time record of 165,307….breaks recor
Slide 8: Kentucky Oaks & Derby Numbers
Page: 8 Kentucky Oaks & Derby Numbers $152 $171 $174 $187 $208 $202 $196 $186 $199 $203 $227 0.0% 0.5% 1.0% 1.5% 2.0% $50 $100 $150 $200 $250 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Amount wagered on Derby Weekend % Total Year U.S. Industry wagering Dollars in Millions Wagering on Ken
Slide 9: Online Business – The Basics
Page: 9 Online Business – The Basics With over $200 million invested in development and acquisitions, TwinSpires.com is the largest ADW platform in the U.S. • Horse race wagering in the U.S. via the internet is legal under the Interstate Horseracing Act • Advance Deposit Wagering (“ADW”) is pari-mut
Slide 10: Online History: TwinSpires launch
Page: 10 Online History: TwinSpires launch • Jan. 2007 - TwinSpires formed (Mtn. View, CA) • May 2007 - TwinSpires.com launched • June 2007 - CDI acquires AmericaTAB and BRIS • June 2010 - CDI acquires Youbet.com • Nov. 2010 - Youbet, TwinSpires platforms merged • April 2011 - NYRA outsources teleph
Slide 11: Online / ADW channel should continue to grow
Page: 11 Online / ADW channel should continue to grow Source: U.S Industry from Equibase.com; Online (ADW) handle from Oregon Racing Commission and SEC filings. 1Q 2012 ADW hub figures not yet available from Oregon Racing Commission. Industry growth +2% - % (7)% (10)% (7)% (6)% TS.com online handle
Slide 12: Gaming Properties – Building the product offerings
Page: 12 Gaming Properties – Building the product offerings Note: Positions obtained from Form 10-K for periods 2006-2011 Fair Grounds Race Course & Slots (<4 years old) Calder Casino & Race Course (<3 years old) Harlow’s Resort Casino & Hotel (< 5 years old) Number of Gaming Positions (approximate,
Slide 13: Harlow's – renovation in progress following 2011 flood
Page: 13 Harlow’s – renovation in progress following 2011 flood • New event center will replace 2,600-seat arena (now razed), which sustained significant damage during the MS River flooding in May 2011 • ~ $15 M in capital spending expected, fully funded by our flood insurance collections • Construc
Slide 14: Growth Opportunity - Ohio VLT facility development
Page: 14 • On February 29 – we announced a Joint Venture (“JV”) with Delaware North Companies to purchase Lebanon Raceway license in Ohio to develop a new Video Lottery Terminal (“VLT”) facility and harness racetrack • 50/50 JV will manage the development and operation of the VLT facility and racetr
Slide 15: Cincinnati / Dayton OH area is an attractive gaming market
Page: 15 Cincinnati / Dayton OH area is an attractive gaming market Lebanon Raceway (current) Raceway Park (proposed @ Exit 58) to Columbus (under construction) (under construction) 20 miles
Slide 16: Growth Opportunity – Gaming in IL
Page: 16 Growth Opportunity – Gaming in IL Gaming legislation once again passed through the IL legislature with Governor Quinn blocking its passage with his veto power …... • In May 2012 the IL House of Representatives and IL Senate both passed SB 1849, a gaming expansion bill sponsored by Rep. Lou
Slide 17: Growth Opportunity – Luckity.com How It Works
Page: 17 Growth Opportunity – Luckity.com How It Works Step 1: Customer plays one of many Luckity games Step 2: Game play is mapped to pari- mutuel wagering pools Step 3: Live horse race generates results and real cash prizes Step 4: Customer account is credited with real cash winnings based on actu
Slide 18: Luckity.com – Sample Games
Page: 18 Luckity.com – Sample Games Sample of games we will roll out in the initial launch
Slide 19: Financials - Proven EBITDA Growth
Page: 19 $54 $63 $66 $80 $138 $113 $1 $17 2007 2008 2009 2010 2011 1H '11 1H '12 Insurance Recoveries 1H ‘12 EBITDA up 11% over prior year (ex-ins) - All three business segments improved - Online business grew handle14% resulting in EBITDA growth of 22% 2012 Derby Week EBITDA up $5.4 M over ’11 -
Slide 20: Financials - Strong Cash Generation
Page: 20 $50 $61 $71 $60 $172 $105 $17 $104 2007 2008 2009 2010 2011 1H11 1H12 $90 Cash provided by operating activities Strong Cash Generation Continues… 1H 2012 provides robust cash flow - Derby Week grows $5.4 M - Online and Gaming segments increased operating results - YOY decrease result of Q
Slide 21: Financials - Attractive Balance Sheet
Page: 21 Dollars in Millions Total Debt / EBITDA (LTM) 5.3 x 0.4 x EBITDA / Interest (LTM) 4.0 x 33.6 x $68 $43 $71 $265 $128 $63 2007 2008 2009 2010 2011 2Q '12 (a – Gaming industry peer group averages comprised of PENN, BYD, ASCA, ISLE, PNK Source: Company filings and Factset (as of 6/30/12) Finan
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