Churchill Downs, Incorporated · NASDAQ:CHDN
Churchill Downs — 4th Annual Gaming & Hospitality Conference (Wells Fargo Securities) 2013
23 slides from Churchill Downs's conference presentation, May 20, 2013
Slide 1: Wells Fargo 4th Annual Gaming & Hospitality Conference
Prepared For: Investor Relations (NASDAQ: CHDN) May 20-21, 2013 Bill Mudd, Executive VP & CFO Mike Anderson, VP Finance & Investor Relations 4th Annual Gaming & Hospitality Conference Wells Fargo Securities Las Vegas, NV
Slide 2: Forward-Looking Statements
Forward-Looking Statements This document contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: ["anticipate,"] ["intend,"] ["plan,"] ["goal,"]
Slide 3: Three distinct segments: Racing, Gaming, Online Business
($millions) 2012A 1Q 2013 Revenue $223 $72 EBITDA $61.3 $20.8 EBITDA Margin 27% 29% ($millions) 2012A 1Q 2013 Revenue $302 $28 EBITDA $50.3 ($11.8) EBITDA Margin 17% (42%) Churchill Downs Incorporated operates in three distinct segments We are a diversified Racing, Gaming, & Online Entertainment Com
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 10 OTB’s • 20 minutes form O’Hare airport • Metra commuter train stop on property - easy access to other sub
Slide 5: Racing Operations EBITDA has grown despite industry declines
5 Racing Operations EBITDA has grown despite industry declines Revenues EBITDA 2012 v 2010 (2)% +43% Wagering on U.S. Thoroughbreds in 2012 was up 1% Y/Y, first total year increase since 2006 - 2012 U.S. Industry still down 20% from 2008 according to The Jockey Club Online Fact Book - April 2013 Y
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: Kentucky Derby continues economic growth / popularity
7 Kentucky Derby continues economic growth / popularity 2013 Derby Week results prove the resiliency and brand power of this iconic entertainment event Record Derby Week EBITDA for the fourth consecutive year, projected range of $4.5 to $6.5 mil. growth in EBITDA - Kentucky Derby Week EBITDA has i
Slide 8: What is The Kentucky Oaks & Derby worth?
8 Sports League Number of Teams Enterprise Value ($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 $1,7
Slide 9: Gaming: Our properties are relatively new and in mature markets
9 Gaming: Our properties are relatively new and in mature markets Growing our Gaming Business thru development and acquisitions • Located in Miami Gardens Florida, near Sun Life Stadium • Greenfield construction, opened January 2010 • 1,207 Slot Machines • 29 Poker Tables Calder Casino Harlow’s Casi
Slide 10: Gaming EBITDA growth driven by greenfield development & acquisitions
10 Gaming EBITDA growth driven by greenfield development & acquisitions Acquisition & development focused on ROI ($ in millions) Note: EBITDA excludes net insurance gains $28.5 $56.6 $61.3 2010 2011 2012 $142 $213 $223 $18.9 $20.8 1Q 2012 1Q 2013 $59 $72 Revenues EBITDA Y/Y% +21% +10% EBITDA Margin
Slide 11: 2013 Gaming EBITDA expected growth driven by Riverwalk acquisition
11 2013 Gaming EBITDA expected 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 $145.6 million - Expected to add approximately $55 million in revenue, $19 milli
Slide 12: Harlow's has new amenities in 2013
12 New event center focuses on attracting meeting groups, local VIP entertainment, family reunions, weddings and attracting new gaming guests $15 million construction project complete, multi-purpose event center and buffet opened in December 2012, Official Grand Opening for all other areas was J
Slide 13: 2014 Gaming EBITDA growth driven by new Ohio Gaming & Racing Facility
13 2014 Gaming EBITDA growth driven by new Ohio Gaming & Racing Facility Partnering with Delaware North on a $272 million development in an attractive gaming market Q1 2012 – announced a Joint Venture (“JV”) with Delaware North Companies (“DNC”) to purchase Lebanon Raceway license in Ohio to devel
Slide 14: Pending Gaming Acquisition in Oxford, Maine
14 Pending Gaming Acquisition in Oxford, Maine Announced purchase agreement to acquire Oxford Casino in Oxford, Maine March 2013 – announced pending acquisition of Oxford Casino for total consideration of approx. $160 mil. Oxford Casino, which opened in June 2012, is located approximately 35 mil
Slide 15: Illinois & Kentucky provide future gaming growth options
15 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 16: Online Business has grown organically as customers shift wagering behavior
16 Online Business has grown organically as customers shift wagering behavior $17.2 $37.7 $40.3 2010 2011 2012 $121 $165 $183 $10.4 $10.4 1Q 2012 1Q 2013 $43 $44 Revenues EBITDA 2012 v 2010 +51% +134% Y/Y% (3)% - % Online wagering has grown ~8% to ~14% faster than the industry through 4Q 2012, as
Slide 17: How It Works: Luckity
17 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 18: Proven ability to grow Revenues & EBITDA
18 Proven ability to grow Revenues & EBITDA $80.4 $138.5 $144.5 $585 $697 $732 -50 50 150 250 350 450 550 650 750 0 20 40 60 80 100 120 140 160 180 200 2010 2011 2012 $152 Revenues EBITDA All three segments showed EBITDA growth in 2012 (excluding net insurance gains & IL Horse Racing Equity Trust
Slide 19: Recent actions provide greater flexibility for borrowing / stock repurchase
19 Recent actions provide greater flexibility for borrowing / stock repurchase Amended bank facility adds credit capacity, stock repurchase plan adds option for use of free cash CDI Board of Directors approved April 2013, subject to state regulatory approvals Received final state regulatory appr
Slide 20: Investment Rationale Summary
20 Investment Rationale Summary Disciplined, Shareholder-Focused Management Team - Diverse backgrounds with multi-industry, technology and international experience - Proven record of capital allocation, revenue & earnings growth Diversified portfolio of Racing, Gaming, Online Entertainment Busin
Slide 21: Appendix
Appendix 2 CHURCHILL Downs
Slide 22: Reconciliations
22 Reconciliations Reconciliation to reported results ($ in millions) 2011 2012 2011 2012 2011 2012 Actual Actual Actual Actual Actual Actual EBITDA as reported in Form 10-K 64.3$ 50.8$ 57.0$ 67.8$ 158.7$ 151.5$ Less: Illinois Horse Racing Equity Trust proceeds recognized in 3Q11 19.3 19.3 Less: net
Slide 23: Shareholder-Focused Management Team
23 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
Churchill Downs — 4th Annual Gaming & Hospitality Conference (Wells Fargo Securities) 2013 on 6ix