Good day, ladies and gentlemen and welcome to the Churchill Downs Incorporated First Quarter Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]. I would now like to hand the conference over to Courtney Norris, Director of Corporate Communications. Please go ahead.

Thank you, Karen, good morning and welcome to this Churchill Downs Incorporated conference call to review the company’s business results for the first quarter ended March 31, 2015. The company’s first quarter business results were released yesterday afternoon in a news release that has been covered by the financial media. A copy of this release announcing results and any other financial and statistical information about the period to be presented in this conference call, including any information required by Regulation G, is available at the section of the company’s website titled news located at churchilldownsincorporated.com as well as in the website Investor section. Let me also note that a news release was issued advising of the accessibility of this conference call on a listen-only basis via phone and over the Internet. As we begin, let me express that some statements made during this call will be forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, expectations or beliefs about future events or results, or otherwise are not statements of historical fact. The actual performance of the company may differ materially from what is projected in such forward-looking statements. Investors should refer to statements included in reports filed by the company with the Securities and Exchange Commission for discussion of additional information concerning factors that could cause our actual results of operation to differ materially from the forward-looking statements made in this call. The information being provided today is as of this date only and Churchill Downs Incorporated expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any changes in expectations. I will now turn the call over to our CEO Mr. Bill Carstanjen.

Thanks, Courtney. Good morning everyone happy Derby Week. With me today are several members of our team including Bill Mudd, our President and Chief Financial Officer, Alan Tse, our General Counsel, Mike Anderson, our Vice President of Corporate Finance, Treasury and Investor Relations and Bob Evans, the Chairman of our Board of Directors, I’ll make a few general comments and then turn this over to Bill Mudd, after he has finished his comments, we’ll be happy to take your questions. First, I will spend a few minutes on our first quarter. Second, I will touch briefly on the Kentucky Oaks and the Kentucky Derby. The company produced record net revenues, record adjusted EBITDA and record net cash from operating activities, those are the metrics to which we pay great deal of attention as we operate our business segments as generally emerge by our improvement. While there is still noise in our financials as a result of closing the Big Fish Games acquisition and the accounting adjustments required as a result of it. We have the clear picture, the performance and process for our company is beginning to emerge. While our casino segment, our TwinSpires segment and our racing segment, all showed improvements at the adjusted EBITDA line. Big Fish Games was clearly the biggest contributor to the changes in the year-over-year comparison and we expect that we’ll continue to be so going forward. Remind you we closed the transaction for Big Fish Games December 16th of last year. As Bill Mudd will explain a bit further in his comments, Big Fish is experiencing significant growth itself in addition to adding significantly to the overall adjusted EBITDA of our company. So far Big Fish has been everything, we hoped it would be, so far casino business is a very solid, consistent…

Thank you, Bill, and good morning everyone and happy Derby Week. As Bill mentioned in his opening remarks, there is a record first quarter for revenues, adjusted EBITDA and most importantly my favorite cash from operating activities. Our net loss increase driven by acquisition related charges which we will discuss in more detail on a couple of minutes. Let’s start with our newest acquisition and largest contributor to adjust an EBITDA growth in the quarter. Big Fish’s first quarter bookings growth accelerated to 40% this quarter, that casino of 67% and Free-to-Play Casual more than quadrupling prior year’s first quarter to $27 million. Our casino bookings growth is driven by 50% increase in quarterly average paying users and a 12% increase in average bookings per paying user. This means, we’re continuing to add new customers and increasing revenues from existing customers. Our Free-to-play casual growth has driven by a 153% increase in average paying users, largely driven by the success of Gummy Drop, which is continuing to show nice week-over-week growth and is currently averaging more than $250,000 on daily bookings. Our premium business bookings declined by 28% consistent with recent trends, this decline was anticipated and expected to continue as customer shift from personal computers to mobile devices and as their preferences change to Free-To-Play game genres. Premium business also has a majority of Big Fish’s non-US dollar functional currency exposure, primarily in Euros, which accounted from 19% or about $2.2 million of decline on a stronger US dollar. Now let’s take a look at our casino performance, after a very strong start of the year in January and the early part of February, our casino segment net revenues end of the quarter in line with the prior year. We believe this somewhat erratic monthly growth rates are more…

Thanks, Will, if anybody have any questions please let us know and we’ll try to answer them.

[Operator Instructions] Our first question comes from the line of Cameron McKnight from Wells Fargo.

Great, thanks very much. First of all in the casino segment you grew EBITDA by 6% year-on-year with revenues down 1%, can you talk to the cost management of the properties and the efficiencies you are getting in a low growth environment?

Yeah, we each jurisdiction as a country a little bit different than others Cameron, but in the fourth quarter of last year we did take some restructuring actions predominately in our Mississippi properties where we have seen low single digit declines for a descended period of time. We have combined a number of operational roles and took some headcount actions if you will last year to get the cost structure in place. From a marketing promotions perspective, things are relatively stable, we are seeing some very high re-investment in Greenville, Mississippi and some really over inflated three-ply numbers competitors up 50% in Florida for example that we are being a little bit more disappointing looking at hitting the peers of customers that actually have money and there are lots to spend, so we are getting more efficient from a marketing perspective there. And then in Maine, Maine had a great start the year in January, we ended up having, I think the most snowfall ever in the Northeast as people are well aware of the coldest February on record. So we had a tough start to the year specifically in late January in early February, recovered in March, so we really had to be disciplined during those really cold period, we actually had to close the Casino for the first-time ever in Maine. So, the team did a great job of managing the expenses in light of soft revenues, particularly in the early months of the quarter in Maine. So in general, I think the teams are very cost-conscious, I know that there is not a lot of topline growth. So we have to offset the inflationary [indiscernible] on the wages that we provided.

Got it, thanks, Bill. And then moving onto Big Fish, $20 million of quarterly EBITDA puts you well on track to hit the earn out levels. Can you give us a sense of how EBITDA has been trending quarter-on-quarter, at least broadly speaking?

Well, broadly speaking it is way up, I mean last year they did $57 million when we closed on a trailing 12-months number in September. So if you did $20 million in the first quarter, it is pretty easy to say on an apples-to-apples basis it is improved. Beyond that I really can’t say much more than that.

I would add to what Bill just said was, the fact that you have got two segments within the larger Big Fish segment that have been showing pretty consistent significant growth and you can’t ever make promises that that continues, but if you look towards the current period and prior periods, you see consistent growth in the Social Casino business and now pretty consistent strong growth in the Casual Free-to-Play segment.

And one other point I would say, Cameron in this business that investors may understand or may not understand is, if you spend user acquisition money, you pick-up new customers and it may be unfavorable for that particular customer in that month, but the next month you’ve got that customer and your new user acquisitions spend is to really pick-up new customers. And you are getting paid for the other one, so it is a really a velocity based business from that perspective.

Got it, thanks. And then as you look across the Big Fish numbers, when you think about mobile versus non-mobile, because it fair to say that the growth within mobile continues to get stronger or is the growth rate strong but relatively the same versus say last quarter or last year?

Fair question, I think I’m always very, very careful about making predictions about macro market trends, I think there is information out there where other people speculate on what mobile looks like overtime, but certainly there is some good data points with the movement across the world of Smartphone and Tablets and other security mobile devices that I think speak well towards the continued adoption and utilization of these devices, hopefully in United States and to many parts of the world, so making products that take advantage of those devices that are consumed on those devices, that’s like a good place to focus, that was one of the strong interest we had when we got the acquisition of Big Fish done and it’s still seems like those trends generally look very good to us, but I would encourage you to utilize and review other folks that comments on those kind of trends, because there is some pretty good data out there that also comments very specifically on those type of issues.

Sure thing. And then finally guys, you generated $90 million of cash in the quarter and paid down $70 million of debt, your leverage is still significantly below peers. Can you give us some updated thoughts on capital management?

That’s a very – I mean it’s a dynamic process right, Cameron, we still have an earn out up to $350 million yet to pay and debt markets seem to be doing extremely well, something we manage and monitor very carefully and certainly think about quite a bit, so beyond that I really can’t say a lot.

Great. Thanks very much.

Thank you. [Operator Instructions]. Our next question comes from the line of Jeff Thomison from Hilliard Lyons.

Good morning, nice quarter, congratulations on that.

Thanks Jeff.

Bill, I think you just touched on this question, but I will ask it anyway and it’s a follow-up related to the earn out on Big Fish, when that is realized or paid I was curious if you covered how that payment will be funded relative to your balance sheet and then secondly I wanted to step away from the quantitative questions and ask for your interest [indiscernible] on something related to Big Fish and that is compared to your due diligence period. I’m curious as to what has surprised you the most about this business or this company to-date that may be exceeded or fell short of your original expectations anything that just stands out to you.

Okay, thanks Jeff, I’ll take the first question and I’ll let Bill Carstanjen to take the second question. The first question as it relates to the earn out payments, we’re going to have enough capacity on our existing debt facilities to fund those payments without taking in anymore debt that have been said, the long term debt markets looked to be very favorable and once, the picture becomes clear on things like whether we get gaming in Illinois or – and exactly how much one that openly paying in the earn out payments. Then we’ll have a better idea of what our cash structure maybe look like and then we’ll take a look at whether we should put some more longer term [indiscernible].

Can you remind us what the debt facility looks like right now in terms of capacity?

Yes, there is a $300 million bond that has roughly 6 years left on it, come this December. We got $200 million 5 year term loan and we have a $500 million revolving credit facility that‘s what the effort today and then of course you can seen on the balance sheet where we are going on each one of those.

Right, got you, okay.

I’ll let Bill answer the other question with respect to what we are surprise about Big Fish, Bill?

I would say that given the size of this deal versus the overall size of our company, this was the deal we spend a great deal of time on with respect to due in due diligence and trying to think through, how this company would fit with us and how this company and its markets would change overtime and how that change might affect us good and bad. So we were very thoughtful and careful about this particular deal and that doesn’t mean that we get those choices or those predictions correctly overtime, but I would say that going into this deal, I’ve been involved with deals in my entire career and I saw as much works and effort and thoughts put into this one as any I’ve ever been a part of in my entire career here and elsewhere. So thankfully coming out of this deal we give 1 full quarter of it behind us, the business should perform like we hope it would perform across the three major segments. It’s largely been consistent overall with what we hoped and expected it to be, so all good on that front, couple of surprises, I continue to be surprised personally with the rigor and the analytics behind the choice of this company makes, I think when you – if you have to make an assumption about a business like Big Fish, I think the first assumption would be it’s very creatively focused, it’s a creative process, it’s art more than science, because that’s the nature of games and lack of predictability about over which games will be successful, which aren’t. So while creativity is the big part of the customer basing products, fact is I think the secret sauce for Big Fish and I think that got us most by surprise is just how rigorous the testing and measuring behind that creativity really is. Open terms of the features of the games, but then how the games are resonating with the customers, the marketing analytics, the business analytics, those are very, very powerful, those systems in processes and those people are very, very good, and I hope, we’ll see some rough [Indiscernible] from those field sets into TwinSpires and other businesses we do over time. Well that’s series of attributes that I think is what caused – got us more surprising and most happy with.

Okay, I appreciate that color, and then lastly, I just want to express to those to whoever had the responsibility of ordering the [Indiscernible] weather this week and weekend, good job.

Bill, do you want to take credit for that?

Yeah, I’ll take credit for that, thanks. Thanks, Jeff.

Thanks Jeff.

Thank you. And I have no further questions at this time. I would like to turn the conference back over to management for any closing comments.

Thank you very much everybody for joining. Please tune in Saturday and watch everybody on TV, if you’re not able to be here in person, we’re excited about it and we look forward to updating you on behalf of the Derby on Saturday. Happy Derby everybody.

Thank you. Ladies and gentlemen thank you for your participation in today’s conference. This does conclude the program and you may now disconnect. Everyone have a good day.