Churchill Downs Inc 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This report contains various "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"), which provides certain "safe harbor" provisions for forward-looking statements. All forward-looking statements made in this report are made pursuant to the Act. The reader is cautioned that such forward-looking statements are based on information available at the time and / or management’s good faith belief with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Forward-looking statements speak only as of the date that the statement was made. We assume no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. Forward-looking statements are typically identified by the use of terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “predict,” “project,” “seek,” “should,” “will,” “scheduled”, and similar words or similar expressions (or negative versions of such words or expressions), although some forward-looking statements are expressed differently. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from expectations include the following: • the occurrence of extraordinary events, such as terrorist attacks, public health threats, civil unrest, and inclement weather, including as a result of climate change; • the effect of economic conditions on our consumers' confidence and discretionary spending or our access to credit, including the impact of inflation; • changes in, or new interpretations of, applicable tax law or rulings that could result in additional tax liabilities; • the impact of any pandemics, epidemics, or outbreaks of infectious diseases, and related economic matters on our results of operations, financial conditions, and prospects; • lack of confidence in the integrity of our core businesses or any deterioration in our reputation; • negative shifts in public opinion regarding gambling that could result in increased regulation of, or new restrictions on, the gaming industry; • loss of key or highly skilled personnel, as well as general disruptions in the general labor market; • the impact of significant competition, and the expectation that competition levels will increase; • changes in consumer preferences, attendance, wagering, and sponsorships; • risks associated with equity investments, strategic alliances, and other third-party agreements; • inability to respond to rapid technological changes in a timely manner; • concentration and evolution of slot machine and historical racing machine ("HRM") manufacturing and other technology conditions that could impose additional costs; • failure to enter into or maintain agreements with industry constituents, including horsemen and other racetracks; • inability to successfully focus on market access and retail operations for our sports betting business and effectively compete; • online security risk, including cyber-security breaches, or loss or misuse of our stored information as a result of a breach including customers’ personal information could lead to government enforcement actions or other litigation; • costs of compliance with increasingly complex laws and regulations regarding data privacy and protection of personal information; • reliance on our technology services and catastrophic events and system failures disrupting our operations; • inability to identify, complete, or fully realize the benefits of, our proposed acquisitions, divestitures, development of new venues or the expansion of existing facilities on time, on budget, or as planned; • difficulty in integrating recent or future acquisitions into our operations; • cost overruns and other uncertainties associated with the development of new venues and the expansion of existing facilities; FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025 24 • general risks related to real estate ownership and significant expenditures, including risks related to environmental liabilities; • personal injury litigation related to injuries occurring at our racetracks; • compliance with the Foreign Corrupt Practices Act or other similar laws and regulations, or applicable anti-money laundering regulations; • payment-related risks, such as risk associated with fraudulent credit card or debit card use; • work stoppages and labor problems; • risks related to pending or future legal proceedings and other actions; • highly regulated operations and changes in the regulatory environment could adversely affect our business; • restrictions in our debt facilities limiting our flexibility to operate our business; • failure to comply with the financial ratios and other covenants in our debt facilities and other indebtedness; • increases to interest rates (due to inflation or otherwise); • disruption in the credit markets or changes to our credit ratings may adversely affect our business; • increase in our insurance costs, or inability to obtain similar insurance coverage in the future, and any inability to recover under our insurance policies for damages sustained at our properties in the event of inclement weather and casualty events; and • other factors described under the heading “Risk Factors” in our most recent Annual Report on Form 10-K and in other filings we make with the Securities and Exchange Commission. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. The following information is unaudited. Tabular dollars are in millions, except per share amounts. All per share amounts assume dilution unless otherwise noted. This report should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024, including Part I - Item 1A, "Risk Factors" of our Form 10-K for a discussion regarding some of the reasons that actual results may be materially different from those we anticipate. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025 25 Our Business Churchill Downs Incorporated ("CDI" or the "Company") has been creating extraordinary entertainment experiences for over 150 years, beginning with the Company’s most iconic and enduring asset, the Kentucky Derby. Headquartered in Louisville, Kentucky, CDI has expanded through the development of live and historical racing entertainment venues, the growth of the horse racing online wagering business, expanded pari-mutuel content and technology services to B2C platforms, and the operation and development of regional casino gaming properties. We conduct our business through three reportable segments: Live and Historical Racing, Wagering Services and Solutions, and Gaming. We aggregate our other businesses as well as certain corporate operations in All Other. Key Indicators to Evaluate Business Results and Financial Condition Our management monitors a variety of key indicators to evaluate our business results and financial condition. These indicators include changes in net revenue, operating expense, operating income, earnings per share, outstanding debt balance, operating cash flow, and capital spend. Our consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles ("GAAP"). We also use non-GAAP measures, including EBITDA (earnings before interest, taxes, depreciation and amortization) and Adjusted EBITDA. We believe that the use of Adjusted EBITDA as a key performance measure of results of operations enables management and investors to evaluate and compare from period to period our operating performance in a meaningful and consistent manner. Our chief operating decision maker utilizes Adjusted EBITDA to evaluate segment performance, develop strategy, and allocate resources. Adjusted EBITDA is a supplemental measure of our performance that is not required by, or presented in accordance with, GAAP. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income (as determined in accordance with GAAP) as a measure of our operating r`esults. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, adjusted for the following: Adjusted EBITDA includes our portion of EBITDA from our equity investments and the portion of EBITDA attributable to a noncontrolling interest. Adjusted EBITDA excludes, as applicable in each period: • Transaction expense, net which includes: – Acquisition, disposition, and property sale related charges; – Other transaction expense, including legal, accounting, and other deal-related expense; • Stock-based compensation expense; • Rivers Des Plaines' impact on our investments in unconsolidated affiliates from legal reserves and transaction costs; • Asset impairments; • Gain on property sales; • Legal reserves; • Pre-opening expense; and • Other charges, recoveries and expenses For segment reporting, Adjusted EBITDA includes intercompany revenue and expense totals that are eliminated in the Condensed Consolidated Statements of Comprehensive Income. See the Reconciliation of Comprehensive Income to Adjusted EBITDA included in this section for additional information. Governmental Regulations and Legislative Changes We are subject to various federal, state, and international laws and regulations that affect our businesses. The ownership, operation, and management of our Live and Historical Racing, Wagering Services and Solutions, and Gaming segments, as well as our other operations, are subject to regulation under the laws and regulations of each of the jurisdictions in which we operate. The ownership, operation, and management of our businesses and properties are also subject to legislative actions at both the federal and state level. The following update on our regulatory and legislative actions should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024, including Part I - Item 1, "Business" for a discussion of regulatory and legislative changes. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025 26 Specific State Gaming Regulations Louisiana In Louisiana, the 2021 Historical Horse Racing Act (the "2021 HHR Act") allows off-track betting facilities ("OTBs") to have up to 50 HRMs. On October 25, 2022, a number of individual plaintiffs associated with video poker and truckstops, filed a lawsuit in the 19th Judicial District Court in East Baton Rouge, Louisiana against certain racetracks in Louisiana, including our Fair Grounds Racecourse and Slots property, alleging that the 2021 HHR Act is unconstitutional to the extent it purports to permit historical racing in a parish without a referendum. On June 8, 2023, plaintiffs filed a motion for summary judgment on the constitutional issues raised in their complaint and a hearing was conducted on September 11, 2023. On February 23, 2024, the judge issued a ruling in favor of plaintiffs granting summary judgment stating that: (i) historical horseracing is a new form of gaming not specifically authorized by law prior to 1996; (ii) historical horseracing may not be conducted in any parish of the state unless voters approve it through referendum; and (iii) the 2021 HHR Act that authorized historical horseracing is unconstitutional. The summary judgment, which was certified as final for purposes of appeal, was entered on March 18, 2024, and the Company, along with other interested parties including the Louisiana Racing Commission, filed a joint motion for a suspensive appeal, which was entered on March 26, 2024. The suspensive appeal allows the continued operation of HHR during the pendency of the appeal before the Louisiana Supreme Court. Oral arguments took place before the Louisiana Supreme Court on January 27, 2025, and an opinion was issued on March 21, 2025. The opinion affirmed the ruling of the District Court, which stated the 2021 HHR Act is unconstitutional, and that before historical horse racing is licensed or permitted to be conducted in a parish it first requires a voter referendum in an affected parish. The Company submitted an Application for Rehearing to the Louisiana Supreme Court on April 4, 2025. Should this request be denied, the opinion will become final and enforceable. As of March 31, 2025, the Company had approximately 500 HRMs in OTBs in Louisiana. A final opinion by the Louisiana Supreme Court declaring the 2021 HHR Act unconstitutional could have an adverse impact on our Louisiana HRM results which are reported in our Gaming segment. Consolidated Financial Results The following table reflects our net revenue, operating income, net income attributable to Churchill Downs Incorporated, Adjusted EBITDA, and certain other financial information: Three Months Ended March 31, (in millions) 2025 2024 Change Net revenue $ 642.6 $ 590.9 $ 51.7 Operating income 134.6 126.3 8.3 Operating income margin 21 % 21 % Net income attributable to Churchill Downs Incorporated 76.7 80.4 (3.7) Adjusted EBITDA 245.1 242.5 2.6 Three Months Ended March 31, 2025, Compared to Three Months Ended March 31, 2024 • Net revenue increased $51.7 million driven by a $27.4 million increase from the Live and Historical Racing segment primarily due to the opening of The Rose Gaming Resort in November 2024 and the opening of Owensboro Racing and Gaming in February 2025, a $24.0 million increase from the Gaming segment primarily driven by the opening of the Terre Haute Casino Resort in April 2024, and a $0.3 million increase from all other sources. • Operating income increased $8.3 million driven by a $10.4 million increase from the Gaming segment primarily due to the opening of the Terre Haute Casino Resort in April 2024 that was partially offset by regional gaming softness and increased competition, a $1.0 million increase in the Wagering Services and Solutions segment primarily due to Exacta, a $3.7 million decrease in transaction expenses, and a $0.3 million decrease in selling, general and administrative expenses. Partially offsetting these increases was a $5.1 million decrease in the Live and Historical segment and a $2.0 million increase in All Other operating expenses driven primarily by increased insurance expense and depreciation. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025 27 • Net income attributable to Churchill Downs Incorporated decreased $3.7 million. The following impacted the comparability of the Company's net income for the three months ended March 31, 2025 compared to the three months ended March 31, 2024: a $6.7 million after-tax decrease in other recoveries, net primarily driven by insurance claim proceeds recorded in the prior year quarter, partially offset by a $5.6 million after-tax decrease in transaction, pre-opening, and other expenses. Excluding these items, net income decreased $4.8 million primarily due to a $3.0 million after-tax decrease in equity income from our unconsolidated affiliates, a $2.0 million after-tax increase in interest expense, and a $0.5 million after-tax decrease due to a portion of United Tote's income being recognized as noncontrolling interest, partially offset by a $0.7 million after-tax increase primarily driven by the results of our operations. • Adjusted EBITDA increased $2.6 million driven by a $1.2 million increase from the Live and Historical Racing segment primarily due to the opening of The Rose Gaming Resort in November 2024 and Owensboro Racing and Gaming in February 2025, an $1.7 million increase from the Wagering Services and Solutions segment primarily due to Exacta, and a $0.7 million increase from the Gaming segment driven by the opening of the Terre Haute Casino Resort in April 2024 that was partially offset by regional gaming softness and increased competition. These increases were partially offset by a decrease of All Other adjusted EBITDA of $1.0 million. Revenue by Segment The following table presents net revenue for our segments, including intercompany revenue: Three Months Ended March 31, Change (in millions) 2025 2024 Live and Historical Racing $ 276.4 $ 248.9 $ 27.5 Wagering Services and Solutions 115.8 114.1 1.7 Gaming 267.2 243.2 24.0 All Other 2.0 — 2.0 Eliminations (18.8) (15.3) (3.5) Net Revenue $ 642.6 $ 590.9 $ 51.7 Three Months Ended March 31, 2025, Compared to Three Months Ended March 31, 2024 • Live and Historical Racing revenue increased $27.5 million due to an $18.2 million increase at our Virginia HRM venues, an $8.9 million increase from our Kentucky HRM venues, and a $0.4 million increase from our other Live and Historical Racing properties. The Virginia HRM increase of $18.2 million was primarily due to the November 2024 opening of The Rose Gaming Resort in Northern Virginia, partially offset by a decrease from our other Virginia HRM venues primarily due to lower unrated play from consumer softness and competition, inclement weather, and one less day in the quarter due to the 2024 leap year. The Kentucky HRM increase of $8.9 million was primarily due to the February 2025 opening of Owensboro Racing and Gaming in Western Kentucky and growth from our Northern and Southwestern Kentucky properties, partially offset by a decrease at our Louisville properties due to the impact of weather and one less day in the quarter due to 2024 leap year. • Wagering Services and Solutions revenue increased $1.7 million due to a $3.1 million increase from Exacta due to incremental HRMs in Virginia and New Hampshire and a $0.8 million increase in TwinSpires Horse Racing. These increases were partially offset by a $2.2 million decrease from our sports betting business. • Gaming revenue increased $24.0 million due to a $31.6 million increase from the April 2024 opening of the Terre Haute Casino Resort, partially offset by a $7.6 million decrease primarily due to regional gaming softness, increased competition, one less day in the quarter due to the 2024 leap year, and the impact of weather at certain properties. • All Other revenue increased $2.0 million due to intercompany revenue related to the captive insurance company that was established in April 2024. All captive revenue is eliminated in consolidation. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025 28 Consolidated Operating Expense The following table is a summary of our consolidated operating expense: Three Months Ended March 31, Change (in millions) 2025 2024 Gaming taxes and purses $ 165.2 $ 150.4 $ 14.8 Salaries and benefits 85.7 74.9 10.8 Content expense 37.9 38.2 (0.3) Selling, general and administrative expense 54.5 54.8 (0.3) Depreciation and amortization 59.2 46.9 12.3 Marketing and advertising 23.9 19.2 4.7 Maintenance, insurance and utilities 21.0 20.9 0.1 Property and other taxes 6.8 6.4 0.4 Transaction expense, net 0.4 4.1 (3.7) Other operating expense 53.4 48.8 4.6 Total expense $ 508.0 $ 464.6 $ 43.4 Three Months Ended March 31, 2025, Compared to Three Months Ended March 31, 2024 Operating expenses increased $43.4 million for the three months ended March 31, 2025 compared to March 31, 2024 primarily due to the opening of Terre Haute Casino Resort in Indiana in April 2024 and the hotel in May 2024, and The Rose Gaming Resort in Virginia in November 2024. Adjusted EBITDA We believe that the use of Adjusted EBITDA as a key performance measure of the results of operations enables management and investors to evaluate and compare from period to period our operating performance in a meaningful and consistent manner. Adjusted EBITDA is a supplemental measure of our performance that is not required by or presented in accordance with GAAP. Adjusted EBITDA should not be considered as an alternative to operating income as an indicator of performance, as an alternative to cash flows from operating activities as a measure of liquidity, or as an alternative to any other measure provided in accordance with GAAP. Three Months Ended March 31, Change (in millions) 2025 2024 Live and Historical Racing $ 102.0 $ 100.8 $ 1.2 Wagering Services and Solutions 41.3 39.6 1.7 Gaming 123.5 122.8 0.7 Total Segment Adjusted EBITDA 266.8 263.2 3.6 All Other (21.7) (20.7) (1.0) Total Adjusted EBITDA $ 245.1 $ 242.5 $ 2.6 Three Months Ended March 31, 2025, Compared to Three Months Ended March 31, 2024 • Live and Historical Racing Adjusted EBITDA increased $1.2 million due to a $3.1 million increase at our Kentucky HRM venues, partially offset by a $1.9 million decrease primarily from our Virginia HRM venues. Our Kentucky HRM venues increase was primarily due to the February 2025 opening of Owensboro Racing and Gaming in Western Kentucky and growth at our Northern and Southwestern Kentucky properties, partially offset by a decrease from our Louisville properties due to inclement weather and one less day in the quarter due to the 2024 leap year. Our Virginia HRM venues decreased $2.0 million primarily due to lower unrated play from consumer softness and competition, the impact of weather, increased handle tax and racing-related expenses, and one less day in the quarter due to the 2024 leap year, partially offset by the November 2024 opening of The Rose Gaming Resort. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025 29 • Wagering Services and Solutions Adjusted EBITDA increased $1.7 million due to a $3.8 million from Exacta due to a $2.7 million increase primarily from incremental HRMs in Virginia and New Hampshire and $1.1 million decrease from lower compensation expense. These increases were partially offset by a $1.1 million decrease from our sports betting business and a $1.0 millio n decrease at tributable to TwinSpires Horse Racing from increased legal expenses. • Gaming Adjusted EBITDA increased $0.7 million due to an $11.5 million increase attributable to the opening of the Terre Haute Casino Resort in April 2024, partially offset by a $6.6 million decrease from our wholly owned gaming properties and a $4.2 million decrease from our equity investments primarily due to regional gaming softness, increased competition, higher labor and benefit expense, one less day in the quarter due to the 2024 leap year, and the impact of weather at certain properties. • All Other Adjusted EBITDA decreased $1.0 million driven primarily by increased corporate compensation related expenses and other corporate administrative expenses driven by enterprise growth. Reconciliation of Comprehensive Income to Adjusted EBITDA Three Months Ended March 31, Change (in millions) 2025 2024 Net income and comprehensive income attributable to Churchill Downs Incorporated $ 76.7 $ 80.4 $ (3.7) Net income attributable to noncontrolling interest 0.5 — 0.5 Net income 77.2 80.4 (3.2) Adjustments: Depreciation and amortization 59.2 46.9 12.3 Interest expense 72.3 70.4 1.9 Income tax provision 18.7 21.4 (2.7) Stock-based compensation expense 3.6 7.2 (3.6) Pre-opening expense 4.2 8.3 (4.1) Other expense, net (0.4) 0.2 (0.6) Transaction expense, net 0.4 4.1 (3.7) Other income, expense: Interest, depreciation and amortization expense related to equity investments 9.9 10.3 (0.4) Other charges and recoveries, net — (6.7) 6.7 Total adjustments 167.9 162.1 5.8 Adjusted EBITDA $ 245.1 $ 242.5 $ 2.6 Consolidated Balance Sheet The following is a summary of our overall financial position: (in millions) March 31, 2025 December 31, 2024 Change Total assets $ 7,347.1 $ 7,275.9 $ 71.2 Total liabilities 6,254.0 6,172.6 81.4 Total equity 1,071.7 1,083.6 (11.9) Significant items affecting the comparability of our Condensed Consolidated Balance Sheets include: • Total assets increased $71.2 million driven by increased capital expenditures primarily at Churchill Downs Racetrack and Owensboro Racing and Gaming, and an increase in other current assets driven by prepaid insurance and information technology related items. • Total liabilities increased $81.4 million driven primarily by increased current deferred revenue primarily related to advance ticket sales and sponsorships for the Kentucky Oaks and Derby, partially offset by decreased dividends FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025 30 payable due to the payment of the annual dividend, and decreased long-term debt primarily due to payments on the Revolver and Term Loan A. • Total equity decreased $11.9 million driven by share repurchases, partially offset by net income. Liquidity and Capital Resources The following table is a summary of our liquidity and cash flows: (in millions) Three Months Ended March 31, Change Cash flows from: 2025 2024 Operating activities $ 246.5 $ 254.7 $ (8.2) Investing activities (80.1) (153.4) 73.3 Financing activities (147.9) (101.1) (46.8) Three Months Ended March 31, 2025, Compared to the Three Months Ended March 31, 2024 • Cash flows provided by operating activities decreased $8.2 million driven primarily a decrease in cash used for working capital and an increase in operating income, partially offset by increased interest paid and decreased distributions from our unconsolidated affiliates in 2025. We anticipate that cash flows from operations and availability of borrowings under our credit facility over the next twelve months will be adequate to fund our business operations and capital expenditures. • Cash flows used in investing activities decreased $73.3 million primarily driven by decreased capital expenditures in 2025. • Cash flows used in financing activities increased $46.8 million primarily driven by payments on the Revolver, increased payment of dividends, partially offset by decreased stock repurchases in 2025. We have announced several project capital investments, including the following: Starting Gate Pavilion and Courtyard as well as enhancements to The Mansion and Finish Line Suites at Churchill Downs Racetrack; Marshall Yards Racing and Gaming in Southwestern Kentucky; expansion of the Richmond, Virginia HRM venue; and the Roseshire HRM entertainment venue in Henrico County, Virginia. We currently expect our project capital to be approximately $250.0 to $290.0 million in 2025, although this amount may vary significantly based on the timing of work completed, unanticipated delays, and timing of payments to third parties. The 2025 project capital range was reduced to reflect the temporary pause of The Skye, Conservatory, and Infield General Admission capital projects at Churchill Downs Racetrack. Common Stock Repurchase Program On March 12, 2025, the Board of Directors of the Company approved a common stock repurchase program of up to $500.0 million (the "2025 Stock Repurchase Program"). The 2025 Stock Repurchase Program includes and is not in addition to any unspent amount remaining under the prior authorization. Share repurchases may be made at management's discretion from time to time in the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions. The repurchase program has no time limit and may be suspended or discontinued at any time. We had approximately $434.6 million of repurchase authority remaining under the 2025 Stock Repurchase Program at March 31, 2025, based on trade date. On January 2, 2024, the Company closed on an agreement, dated December 18, 2023, with an affiliate of The Duchossois Group ("TDG") to repurchase 1,000,000 shares of the Company’s common stock, for $123.75 per share in a privately negotiated transaction for an aggregate purchase price of $123.8 million. This represented a discount of 4.03% to the closing price on December 15, 2023 of $128.95. The repurchase of shares of common stock from TDG was approved by the Company's Board of Directors separately from and did not reduce the authorized amount remaining under the existing common stock repurchase program. The repurchase of the shares was funded using available cash and borrowings under the Company’s senior secured credit facility. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025 31 Credit Facilities and Indebtedness The following table presents our debt outstanding: (in millions) March 31, 2025 December 31, 2024 Change Revolver $ 361.7 $ 377.5 $ (15.8) Term Loan B-1 due 2028 288.0 288.8 (0.8) Term Loan A due 2029 1,157.4 1,172.4 (15.0) 2027 Senior Notes 600.0 600.0 — 2028 Senior Notes 700.0 700.0 — 2030 Senior Notes 1,200.0 1,200.0 — 2031 Senior Notes 600.0 600.0 — Total debt 4,907.1 4,938.7 (31.6) Current maturities of long-term debt (63.1) (63.1) — Total debt, net of current maturities 4,844.0 4,875.6 (31.6) Issuance costs, net of premiums and discounts (30.1) (31.5) 1.4 Net debt $ 4,813.9 $ 4,844.1 $ (30.2) Credit Agreement At March 31, 2025, the Company’s senior secured credit facility (as amended from time to time, the “Credit Agreement") consisted of a $1.2 billion revolving credit facility (the "Revolver"), $288.0 million senior secured term loan B-1 (the "Term Loan B-1"), $1.2 billion senior secured term loan A (the "Term Loan A"), and $100.0 million swing line commitment. On July 3, 2024, the Company closed an amendment of the Credit Agreement to (i) extend the maturity date of the Revolver and Term Loan A from 2027 to 2029 and (ii) amend certain other provisions to the Credit Agreement. On February 14, 2025, the Company announced that it closed the seventh amendment of the Credit Agreement. The seventh amendment to the Credit Agreement (i) reduced the interest rate margin applicable to the Term Loan B-1 by 0.25%, from Secured Overnight Financing Rate ("SOFR") plus 200 basis points to SOFR plus 175 basis points, (ii) eliminated the 0.10% credit spread adjustment previously applicable to the Term Loan B-1, and (iii) made certain other amendments to the Credit Agreement, as set forth therein. Term Loan B-1 requires quarterly payments of 0.25% of the original $300.0 million balance. The Term Loan B-1 may be subject to additional mandatory prepayment from excess cash flow on an annual basis per the provisions of the Credit Agreement. The Revolver and Term Loan A bear interest at SOFR plus 10 basis points, plus a variable applicable margin which is determined by the Company's net leverage ratio. As of March 31, 2025, that applicable margin was 150 basis points which was based on the pricing grid in the Credit Agreement. The Company had $830.9 million available borrowing capacity, after consideration of $7.4 million in outstanding letters of credit, under the Revolver as of March 31, 2025. The Company is required to pay a commitment fee on the unused portion of the Revolver as determined by a pricing grid based on the consolidated total net secured leverage ratio of the Company. For the period ended March 31, 2025, the Company's commitment fee rate was 0.25%. The estimated contractual payments, including interest, under the Credit Agreement for the next twelve months are estimated to be $170.4 million assuming no change in the weighted average borrowing rate of 5.95%, which was in place as of March 31, 2025. During the three months ended March 31, 2025, we had repayments of principal and interest on the Credit Agreement of $279.2 million. 2027 Senior Notes As of March 31, 2025, we had $600.0 million in aggregate principal amount of 5.500% senior unsecured notes that mature on April 1, 2027 (the "2027 Senior Notes"). The 2027 Senior Notes were issued at par in a private offering to qualified institutional buyers, with interest payable in arrears on April 1st and October 1st of each year, commencing on October 1st, 2019. The Company may redeem some or all of the 2027 Senior Notes at redemption prices set forth in the 2027 Indenture. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025 32 2028 Senior Notes As of March 31, 2025, we had a total of $700.0 million in aggregate principal amount of 4.750% senior unsecured notes (the “2028 Senior Notes”) maturing on January 15, 2028. The 2028 Senior Notes consist of $500.0 million notes issued at par and $200.0 million notes issued at 103.25%. The 2028 Senior Notes were issued in a private offering to qualified institutional buyers, with interest payable in arrears on January 15th and July 15th of each year, commencing on July 15th, 2018. The 3.25% premium is being amortized through interest expense, net over the term of the notes. The Company may redeem some or all the 2028 Senior Notes at redemption prices set forth in the 2028 Indenture. 2030 Senior Notes As of March 31, 2025, we had $1.2 billion in aggregate principal amount of 5.750% senior unsecured notes that mature on April 13, 2030 (the "2030 Senior Notes"). The 2030 Senior Notes were issued at par in a private offering to qualified institutional buyers, with interest payable in arrears on April 1st and October 1st of each year, commencing on October 1st, 2022. The Company may redeem some or all the 2030 Senior Notes at redemption prices set forth in the 2030 Indenture. 2031 Senior Notes As of March 31, 2025, we had $600.0 million in aggregate principal amount of 6.750% senior unsecured notes that mature on April 25, 2031 (the "2031 Senior Notes"). The 2031 Senior Notes were issued at par in a private offering to qualified institutional buyers, with interest payable in arrears on May 1st and November 1st of each year, commencing on November 1st, 2023. The Company may redeem some or all of the 2031 Senior Notes at any time prior to April 25, 2025, at redemption prices set forth in the 2031 Offering Memorandum. Leases The Company leases certain real estate and other property. Most of our building and land leases have terms of 2 to 10 years and include one or more options to renew, with renewal terms that can extend the lease term from 1 to 5 years or more. Certain of our lease agreements include lease payments based on a percentage of net gaming revenue and others include rental payment adjustments periodically for inflation. As of March 31, 2025, minimum rent payable under operating leases was $34.1 million, with $6.7 million due in the next twelve months. As of March 31, 2025, minimum rent payable accounted for as financing obligations was $53.8 million, with $5.1 million due in the next twelve months. Other Contractual Obligations The Company has other contractual obligations with commitments of $12.4 million, $1.6 million of which is due within the next twelve months.