Churchill Downs Reports Record Earnings of $50.3 Million

by | 08.01.2013 | 7:55am

Churchill Downs Incorporated (CDI or Company) Wednesday reported results for the second-quarter and six months ended June 30, 2013. Please Click HERE for financial tables.

Robert L. Evans, Chairman and CEO: “With record second-quarter net revenues and net earnings, we were pleased with the quarter. Our Gaming segment Adjusted EBITDA was up $4.4 million reflecting the addition of our Riverwalk Casino Hotel property in Vicksburg, Miss., that we acquired in October of last year. The Adjusted EBITDA increase of Kentucky Oaks and Derby Week was $5.8 million, the third consecutive year where Kentucky Oaks and Derby Week Adjusted EBITDA growth has exceeded $5.0 million.

“'s handle was up only 1.3% for the quarter, reflecting the expiration of Illinois' Advance Deposit Wagering (ADW) legislation at the end of 2012, which was not reinstated until June 7. Excluding the impact from Illinois,'s handle was up 7.2% in the second-quarter outpacing the U.S. thoroughbred industry handle growth of 1.0% as reported by

“We continue to build our growth portfolio as we closed on our acquisition of the Oxford Casino in Maine, on July 17, and will invest approximately $3.2 million to expand the gaming floor.  Construction of Miami Valley Gaming, our 1,600-video-lottery-terminal joint venture project north of Cincinnati, Ohio, is progressing on budget and ahead of schedule and we hope to open the property in early-to-mid December 2013.  We announced a $14.5 million project at Churchill Downs Racetrack to construct 51,000 square feet of new space adding 2,400 new reserved seats and new amenities serving 20,400 existing seats.  We intend to complete this project in time for the 140th running of the Kentucky Oaks and Derby in May 2014.”

Due primarily to the expansion of CDI's Gaming segment with the addition of Riverwalk Casino Hotel's (Riverwalk) revenues, the Company's net revenues for the second-quarter of 2013 increased 5%, or approximately $13.0 million, to $283.8 million from $270.8 million, during the same period of the prior year.

Gaming revenues increased 30%, or $15.5 million, reflecting $14.1 million in revenues generated by Riverwalk. Racing revenues decreased $3.1 million, or 2%, from $160.4 million to $157.4 million, compared to the same period last year. The strong performance of Kentucky Oaks and Derby week was offset primarily by the loss of host revenues at Calder Race Course. Online Business revenues were virtually unchanged as lost wagering by Illinois customers were offset by growth in other jurisdictions.

Racing Operations Adjusted EBITDA (earnings from continuing operations before interest, taxes, depreciation, amortization, insurance recoveries of net losses, Illinois Horse Racing Equity Trust Fund proceeds, share based compensation expenses, pre-opening expenses, including those of our equity investments, the impairment of assets and other changes and recoveries) increased $3.1 million and was primarily driven by increased profitability of $5.8 million from Kentucky Oaks and Derby week. Partially offsetting this was a decline in Adjusted EBITDA at Calder of $2.2 million due to the loss of Florida hosting revenues and a decline in Adjusted EBITDA of $0.8 million at Fair Grounds due to the timing of the Louisiana Derby and inclement weather during Jazz Fest.

Our Gaming segment Adjusted EBITDA increased $4.4 million from the same period of the prior year due to the addition of Riverwalk's Adjusted EBITDA of $4.8 million. Also, Calder Casino Adjusted EBITDA increased $0.5 million as a result of successful marketing efforts and the closure of internet cafes in the state. Partially offsetting these increases was a decrease in Adjusted EBITDA at Harlow's Casino Resort and Spa of $1.0 million over the same period of the prior year.

Online Business Adjusted EBITDA increased $0.3 million compared to the same period of the previous year due to the increase in Velocity's Adjusted EBITDA from the addition of new high volume wagering customers and improvement in our equity investment in HRTV. These improvements in Adjusted EBITDA were partially offset by the impact of the expiration of Illinois legislation allowing Illinois residents to wager online.

Net earnings for the three months ended June 30, 2013, was $50.3 million, or $2.81 per diluted common share, an increase in net earnings of 4%, from $48.6 million, or $2.77 per diluted common share, during the second-quarter of 2012.

  • Cconcerned Observer

    And herein lies a problem. CDI financials prosper, as nationally, Horseracing in general, flounders. Horse racing needs all the big players to cooperate, and work together to forge a new vision for the sport. But CDI will never be a part of any new vision if it even slightly diiminishes short term profits.
    Our situation is troubling.
    The NFL, MLB, NASCAR have solved their similar problems.

    • gues

      The bashing of CDI is rather comical. They do well because their management correctly gauged the marketplace, abandoned (rightfully so) horseracing as a profit center and invested hundreds of millions of dollars elsewhere.

      There is no cure for horse racing’s various maladies. It is a dying, shrinking sport and CDI should be applauded for whatever they do regarding Churchill Downs, which one day soon will be spun off and sold, probably to the Stronach Group.

      • seabiscuit

        I agree a lot with your first paragraph. In fact, most of the weakness in CDI’s earnings this quarter comes from non-Derby racing, and much of the strength comes from the areas of diversification (gaming).

        Your thought train derails with you Churchill Downs comment. That property, because of Derby/Oaks, will always be a part of CDI’s portfolio. The company continues to grow the Derby (added $6 million in revenues this year alone, and just announced an expansion of the grandstand area), and the event itself continues to show that while horse racing is still being right-sized, it is far from dying or dead.

        • gues

          I never said “it”was dead. It is, however, an underperforming part of their portfolio, and as a courtesy, here is how it will play out-
          1. CDI announces sale to Stronach.
          2. Kentucky goes beserk.
          3. Keeneland rides to the rescue, only if expanding gaming is passed.
          4. Gaming passed, Keeneland buys Churchill Downs.

          • seabiscuit

            And as a return courtesy, I’d invite you to read more carefully. This year’s Derby/Oaks weekend GREW revenues by nearly $6 million from last year. Since 2008, CHDN has GROWN its Derby week profits by over $21 million. If that is “underperforming,” that is news to CDI. The idea that the company would sell its very profitable signature property and namesake is, well, ludicrous.

          • gues

            The $400,000,000 selling CD would make up for ludicrousosity.

      • Cconcerned Observer

        You said “It is a dying, shrinking sport”. Maybe so, but my point is that many of the short term, bottom line, me only decisions made by CDI, appear to many, to hurt the sport in far flung locations. If we were trying to save or even reverse the decline in the sport, maybe the insiders like CDI (and others), would not be furiously milking the cash cow with little regard for the wide, and long term results.

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