Churchill Downs Incorporated Reports 2011 Second-Quarter Results

• Net earnings from continuing operations climb 41 percent over Q2 of 2010
• Online and Gaming businesses drive quarter-over-quarter increases in net revenue from continuing operations and EBITDA
• Kentucky Oaks and Derby Week EBITDA grows $6.4 million over prior year
• Free cash flow used to reduce long-term debt by $80.2 million since end of 2010

LOUISVILLE, Ky., July 27, 2011 (GLOBE NEWSWIRE) -- Churchill Downs Incorporated ("CDI" or "the Company") (Nasdaq:CHDN) today reported business results for the second quarter and six months ended June 30, 2011.

Net revenues from continuing operations for the quarter grew 16 percent compared to the prior-year period—to $249.7 million from $215.4 million—primarily due to the continued expansion and growth of CDI's Online and Gaming business segments, which now include the Company's 2010 acquisitions. CDI's Online and Gaming segments recorded increases in net revenues from continuing operations of $16.7 million (up 56 percent) and $13.6 million (up 38 percent), respectively, when compared to the second quarter of 2010. The Online segment's results for the second quarter of 2011 include three months of Youbet.com results as opposed to approximately one month of Youbet.com revenues reported during the second quarter of 2010. CDI's most recent acquisition, Harlow's Casino Resort & Hotel, generated $9.5 million in net revenues during the quarter, despite being forced to close for 25 days in May due to Mississippi River flooding, while Calder Casino's net revenues improved $3.5 million over the comparable period in 2010.

EBITDA (earnings before interest, taxes, depreciation and amortization) for the second quarter of 2011 grew to $85.0 million, an increase of 41 percent from EBITDA of $60.4 million recorded in the second quarter of 2010. Racing Operations EBITDA increased $9.0 million quarter over quarter, driven primarily by Kentucky Oaks and Derby Week increases in sponsorship, admissions, corporate hospitality and broadcast right fees that generated an extra $6.4 million of Kentucky Oaks and Derby Week EBITDA compared to the prior year. During the second quarter, Churchill Downs Racetrack also benefited from a $2.9 million reduction in operating expenses related to a tax-increment financing agreement with the Commonwealth of Kentucky. CDI's Online and Gaming businesses also recorded quarter-over-quarter EBITDA increases of $6.7 million and $6.1 million, respectively.

Net earnings from continuing operations for the period were $40.0 million, or $2.36 per diluted common share, an increase of 41 percent from net earnings from continuing operations of $28.3 million, or $1.90 per diluted common share, in the second quarter of 2010.

"This was the first quarter to fully reflect the impact of our growth-through-diversification strategy that we adopted a few years ago," CDI Chairman and Chief Executive Officer Robert L. Evans said. "Revenues, EBITDA and net earnings from continuing operations set all-time records in the second quarter despite having to close our Harlow's casino property for 25 days due to Mississippi River flooding. We have estimated an EBITDA loss of approximately $3 million related to Harlow's temporary closure, and are working with our insurance carriers to recover that amount as part of our business interruption claim. We continue to use the growing free cash flow generated by our operating activities to pay down long-term debt, which decreased by $80.2 million since the end of 2010, while examining other strategic ways in which we can deploy our capital.

"Looking ahead, we see continue to see four paths to additional growth for our Company. First, we believe our existing businesses will benefit if the economy continues to improve. Second, we are cautiously optimistic about the resolution of the Illinois gaming bill that would allow us to operate up to 1,200 slot machines at Arlington Park and up to 900 slot machines at Quad City Downs. Third, we believe there are opportunities ahead for our Online business through the growth of TwinSpires.com, as bettors shift their wagers to the online channel, and through the possible expansion of legal Internet gaming in the United States. Finally, our business development processes and capabilities are significantly stronger, and we have the balance sheet capacity to continue to look for acquisition opportunities in regional casino gaming and elsewhere."

A conference call regarding this news release is scheduled for Thursday, July 28, 2011, at 9 a.m. EDT. Investors and other interested parties may listen to the teleconference by accessing the online, real-time webcast and broadcast of the call at http://ir.churchilldownsincorporated.com/events.cfm or by dialing (877) 372-0878 and entering the conference ID number 52962971 at least 10 minutes before the appointed time. International callers should dial (253) 237-1169. An online replay of the call will be available at http://ir.churchilldownsincorporated.com/events.cfm by noon EDT. A copy of the Churchill Downs Incorporated's news release announcing quarterly results and relevant financial and statistical information about the period will be accessible at www.churchilldownsincorporated.com. 

In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), CDI has provided a non-GAAP measurement, which presents a financial measure of earnings before interest, taxes, depreciation and amortization ("EBITDA"). CDI uses EBITDA as a key performance measure of results of operations for purposes of evaluating performance internally. CDI believes the use of this measure enables management and investors to evaluate and compare, from period to period, CDI's operating performance in a meaningful and consistent manner. This non-GAAP measurement is not intended to replace the presentation of CDI's financial results in accordance with GAAP. A reconciliation of EBITDA to net earnings is included in the Supplemental Information by Operating Unit table within this news release.

Churchill Downs Incorporated ("CDI") (Nasdaq:CHDN), headquartered in Louisville, Ky., owns and operates four world-renowned Thoroughbred racing facilities: Arlington Park in Illinois, Calder Casino & Race Course in Florida, Churchill Downs Racetrack in Kentucky and Fair Grounds Race Course & Slots in Louisiana.  CDI operates Harlow's Casino Resort & Hotel in Greenville, Miss., as well as slot and gaming operations in Florida and Louisiana. CDI tracks are host to North America's most prestigious races, including the Arlington Million, the Kentucky Derby and the Kentucky Oaks, the Louisiana Derby and the Princess Rooney. Churchill Downs Racetrack will host the Breeders' Cup World Championships for a record eighth time Nov. 4-5, 2011. CDI also owns off-track betting facilities; TwinSpires.com and other advance-deposit wagering providers; United Tote; television production, telecommunications and racing service companies such as Bloodstock Research Information Services; and an interest in the national cable and satellite network, HorseRacing TV. Information about CDI can be found online at www.churchilldownsincorporated.com.

Information set forth in this discussion and analysis contains various "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Private Securities Litigation Reform Act of 1995 (the "Act") provides certain "safe harbor" provisions for forward-looking statements. All forward-looking statements made in this Quarterly Report on Form 10-Q 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 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," "should," "will," and similar words, 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 effect of global economic conditions, including any disruptions in the credit markets; a decrease in consumers' discretionary income; the effect (including possible increases in the cost of doing business) resulting from future war and terrorist activities or political uncertainties; the overall economic environment; the impact of increasing insurance costs; the impact of interest rate fluctuations; the effect of any change in our accounting policies or practices; the financial performance of our racing operations; the impact of gaming competition (including lotteries, online gaming and riverboat, cruise ship and land-based casinos) and other sports and entertainment options in the markets in which we operate; our ability to maintain racing and gaming licenses to conduct our businesses; the impact of live racing day competition with other Florida, Illinois and Louisiana racetracks within those respective markets; the impact of higher purses and other incentives in states that compete with our racetracks; costs associated with our efforts in support of alternative gaming initiatives; costs associated with customer relationship management initiatives; a substantial change in law or regulations affecting pari-mutuel and gaming activities; a substantial change in allocation of live racing days; changes in Kentucky, Florida, Illinois or Louisiana law or regulations that impact revenues or costs of racing operations in those states; the presence of wagering and gaming operations at Indiana and other states' racetracks and casinos near our operations; our continued ability to effectively compete for the country's horses and trainers necessary to achieve full fields horse races; our continued ability to grow our share of the interstate simulcast market and obtain the consents of horsemen's groups to interstate simulcasting; our ability to enter into agreements with other industry constituents for the purchase and sale of racing content for wagering purposes; our ability to execute our acquisition strategy and to complete or successfully operate planned expansion projects; our ability to successfully complete any divestiture transaction; market reaction to our expansion projects; the inability of our totalisator company, United Tote, to maintain its processes accurately or keep its technology current; our accountability for environmental contamination; the loss of key personnel; the impact of natural and other disasters on our operations and our ability to obtain insurance recoveries in respect of such losses (including losses related to business interruption); our ability to integrate Youbet, Harlow's and any other businesses we acquire into our existing operations, including our ability to maintain revenues at historic levels and achieve anticipated cost savings; the impact of wagering laws, including changes in laws or enforcement of those laws by regulatory agencies; the outcome of pending or threatened litigation; changes in our relationships with horsemen's groups and their memberships; our ability to reach agreement with horsemen's groups on future purse and other agreements (including, without limiting, agreements on sharing of revenues from gaming and advance deposit wagering); the effect of claims of third parties to intellectual property rights; and the volatility of our stock price.

The reader should read this discussion in conjunction with the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q and the Company's Annual Report on Form 10-K for the year ended December 31, 2010 for further information, including Part I — Item 1A, "Risk Factors" for a discussion regarding some of the reasons that actual results may be materially different from those we anticipate, as modified by Part II — Item 1A, "Risk Factors" of this Quarterly Report on Form 10-Q.

CONTACT: Julie Koenig Loignon

         (502) 636-4502 (office)

         (502) 262-5461 (mobile)

         Julie.Koenig@kyderby.com

Close window | Back to top

• delicious
• Digg
• Facebook
• LinkedIn
• Mixx
• Twitter
• Yahoo! Buzz