Sales up, profits down at Churchill Downs

Lack of Breeders' Cup hurts racing sales

ssloan@herald-leader.comFebruary 27, 2013 

Churchill Downs on the first Saturday in May is the epicenter of the horse racing world, as up to 20 3-year-olds seek immortality in the Kentucky Derby. The 2012 Derby — the 138th Run for the Roses — was won by I'll Have Another (on the outside), who ran down Bodemeister in the stretch to claim the $2 million race.

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Fourth-quarter and annual revenue grew at Louisville-based racetrack company Churchill Downs, but profits dipped for both periods as the company's flagship track didn't have the benefit in 2012 of again hosting the Breeders' Cup World Championships.

For the fourth quarter, the company recorded sales of $158.5 million, up 6 percent from $149.3 million in the fourth quarter of 2011.

Driving that increase was a 21 percent jump in gaming revenue from $52.2 million in the fourth quarter of 2011 to $62.9 million in 2012.

Part of that increase came because of Churchill's acquisition of the Riverwalk Casino Hotel in Vicksburg, Miss., that was completed Oct. 23. Riverwalk added $10.3 million in revenue in the quarter.

The casino hotel features 723 slot machines and 18 table games, as well as a five-story, 80-room hotel.

Gaming revenue outpaced the company's signature racing segment in the quarter. Revenues from racing fell 7 percent to $48.5 million from $52.1 million in the same quarter in 2011.

Churchill attributed the decline to not hosting the Breeders' Cup World Championships in 2012 as it did in Louisville in 2011.

Churchill also owns racetracks in Miami Gardens, Fla.; New Orleans and Arlington Heights, Ill. Only Calder Race Course in Florida saw racing revenues from external customers increase in the quarter. Those rose just 1 percent to $17.2 million.

While expenses for the racing segment also dropped, they did not drop as much as sales, pushing overall profits down for the company.

The company's net income in the quarter was $2.37 million, or 14 cents per share, down from $7.6 million, or 44 cents per share, in the fourth quarter of 2011.

The company also saw growth in the quarter in its online revenue segment, which saw sales grow 2 percent to $40.9 million from $40.1 million in the same quarter a year ago.

Executives noted the online growth came despite overall U.S. thoroughbred betting declining 3.6 percent in the fourth quarter, according to statistics reported by Equibase.

In a statement, Churchill CEO Robert Evans called the company's performance "strong" and noted that share prices grew more than 27 percent from $52.13 at the end of 2011 to $66.45 at the end of 2012.

"I want to thank our customers for their continued loyalty and our employees for their exceptional contributions to CDI's success in 2012," Evans said.

Evans will discuss the company's quarterly and annual results with analysts during a Thursday morning conference call.

For the full year, revenues were a company record of $732.4 million, up 5 percent from $696.9 million in 2011.

The company credited the growth to the expansion of its online business, a record Kentucky Oaks and Kentucky Derby performance, and the acquisition of Riverwalk.

The company is looking to build on the Derby's growth this year by adding an upscale area called The Mansion at Churchill Downs to target high-end customers.

The company's annual net income fell to $58.3 million, or $3.34 per share, from $64.4 million, or $3.76 per share, in 2011.

Scott Sloan: (859) 231-1447. Twitter: @HeraldLeaderBiz

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