Churchill Downs, Incorporated · NASDAQ:CHDN
Churchill Downs — Wells Fargo Securities Boston Gaming Forum 2012
22 slides from Churchill Downs's conference presentation, Dec 12, 2012
Slide 1: Wells Fargo Securities Boston Gaming Forum
Prepared For: Investor Relations (NASDAQ: CHDN) December 12, 2012 Bill Mudd, Executive VP & CFO Mike Anderson, VP Finance & Investor Relations Wells Fargo Securities Boston Gaming Forum
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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, expecta
Slide 3: We are a diversified Racing, Gaming & Online Entertainment Company
3 ($m illions ) 2011A 3QYTD 2012 Revenue $298 $254 E BITDA $43.1 $55.1 E BITDA Marg in 14% 22% Churchill Downs Incorporated operates in three distinct segments Confidential We are a diversified Racing, Gaming, & Online Entertainment Company Racing Operations 1 Gaming 2 Online Business 3 (a – exclude
Slide 4: Racing Operations: We own premier Thoroughbred Racetracks
4 Racing Operations: We own 4 premier Thoroughbred Racetracks Our debt and equity is back-stopped with valuable real estate • 336 acres in western Chicago suburb, Arlington Heights • Operates 11OTB’s • 20 minutes form O’Hare airport • Rich history with the “Arlington Million” Arlington International
Slide 5: Racing Operations EBITDA has grown despite industry declines
5 Racing Operations EBITDA has grown despite industry declines $35.0 $35.1 $43.1 2009 2010 2011 $325 $308 $298 $47.3 $55.1 3QYTD 2011 3QYTD 2012 $247 $253 Revenues EBITDA 2011 v 2009 (8)% +23% Y/Y% +3% +17% Wagering on U.S. Thoroughbreds in 2011 is down 21% from 2008 according to The Jockey Club O
Slide 6: The Kentucky Oaks & Derby profits come from many sources
6 The Kentucky Oaks & Derby profits come from many sources Sources of Derby Week Profitability (Illustrative Approximations) Wagering, net of purses & pari-mutuel taxes Premium Tickets / Other Sponsorships TV / Radio Licensing F&B, Merchandise, Parking, Programs General Admissions Premium tickets
Slide 7: Racing EBITDA growth focused on Derby Week & efficiencies
7 Racing EBITDA growth focused on Derby Week & efficiencies Derby Week growth driven by new high-end seating “The Mansion” is a lush new venue with panoramic views and unprecedented levels of personalized service - Partnered with “Legends Sales & Marketing” - ~296 new high-end seats, indoor and ou
Slide 8: What is The Kentucky Oaks & Derby worth?
8 Sports League Number of Teams Enterprise Value ($B) EBITDA ($ millions) EV / EBITDA (multiple) 30 $18.2 $432 ($14.4 Avg./Team) 42.0x 32 $33.2 $979 ($30.6 Avg./Team) 33.9x 30 $11.8 $175 ($5.8 Avg./Team) 67.4x 30 $7.2 $127 ($4.2 Avg./Team) 56.9x 9 $1.3 $58 ($6.4 Avg./Team) 22.0x Total 131 $71.6 $1,7
Slide 9: Gaming: Our properties are relatively new and in mature markets
9 Gaming: Our properties are relatively new and in mature markets Growing our Gaming Business thru development and acquisitions • Located in Miami Gardens Florida, near Sun Life Stadium • Greenfield construction, opened January 2010 • 1,214 Slot Machines • 29 Poker Tables Calder Casino Harlow’s Casi
Slide 10: Gaming EBITDA growth driven by greenfield development & acquisitions
10 Gaming EBITDA growth driven by greenfield development & acquisitions Acquisition & development focused on ROI ($ in millions) Note: EBITDA excludes net insurance gains $18.3 $28.5 $56.6 2009 2010 2011 $72 $142 $213 $43.1 $45.3 3QYTD 2011 3QYTD 2012 $160 $160 Revenues EBITDA Y/Y% - % +5% EBITDA Ma
Slide 11: 2013 Gaming EBITDA growth driven by Riverwalk acquisition
11 2013 Gaming EBITDA growth driven by Riverwalk acquisition Newest property in Vicksburg with a superior design and high quality amenities Acquired Riverwalk Casino Hotel in Vicksburg, MS in October 2012 for $141 million - Expected to add approximately $55 million in revenue, $19 million in EBITD
Slide 12: Harlow's new event center and renovations
12 New event center focuses on attracting meeting groups, local VIP entertainment, family reunions, weddings and attracting new gaming guests ~ $15 million in capital spending, fully funded by our flood insurance collections Construction to be complete by late 2012, Grand Opening early 2013
Slide 13: 2014 Gaming EBITDA growth driven by new Ohio Casino & Racetrack
13 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 racetrack –
Slide 14: Illinois & Kentucky provide future gaming growth options
14 Illinois & Kentucky provide future gaming growth options Gaming expansion is currently a major topic of political discussions in both states Attractive location - Approximately 25 miles from downtown Chicago - Train station on property - ~9 miles from Des Plaines Casino ($759 win per unit in 20
Slide 15: Online Business has grown organically as customers shift wagering behavior
15 Online Business has grown organically as customers shift wagering behavior $13.9 $17.2 $37.7 2009 2010 2011 $72 $121 $165 $28.7 $31.9 3QYTD 2011 3QYTD 2012 $125 $142 Revenues EBITDA 2011 v 2009 +130% +171% Y/Y% +14% +11% Youbet.com acquired in June 2010 drove majority of revenue growth thru 201
Slide 16: Luckity: How It Works
16 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 actual payouts from pari-mutuel pools Lucki
Slide 17: Game Examples
Game Examples Se a pea CHURCHILL Downs
Slide 18: Proven ability to grow Revenues & EBITDA
18 Proven ability to grow Revenues & EBITDA $65.5 $80.4 $138.5 $471 $585 $697 -50 50 150 250 350 450 550 650 750 0 20 40 60 80 100 120 140 160 180 200 2009 2010 2011 $159 Revenues EBITDA 14% Online growth coupled with record Derby attendance & handle drive revenue growth of 5% All three segments
Slide 19: Investment Rationale Summary
19 Investment Rationale Summary Disciplined, Shareholder-Focused Management Team - Diverse backgrounds with multi-industry, technology and international experience - Proven record of capital allocation, revenue & earnings growth Diversified portfolio of Racing, Gaming, Online Entertainment Busin
Slide 20: Appendix
Appendix 2» CHURCHILL Downs
Slide 21: Reconciliations
21 Reconciliations Reconciliation to reported results ($ in millions) 2011 Actual 3QYTD 2011 2011 Actual 3QYTD 2011 3QYTD 2012 2011 Actual 3QYTD 2011 3QYTD 2012 EBTIDA as reported in 10-Q /10-K $63.0 $67.1 $57.0 $43.5 $51.9 $158.7 $139.2 $133.9 Less: Illinois Horse Racing Equity Trust proceeds recog
Slide 22: Shareholder-Focused Management Team
22 Bill Carstanjen, President & COO Bob Evans, Chairman & CEO Alan Tse, EVP & General Counsel Bill Mudd, EVP & CFO CEO since 2006 Diverse background – strategy consulting, software, private equity Technology-focused Led CDI’s diversified growth strategy President and COO, 7 years with CDI
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