Youbet Announces Fourth Quarter, 2009 Results
Youbet, which is being acquired by Churchill Downs Inc., for a reported $126.8 million, announced its 2009 fourth quarter and full year earnings March 11. The deal with Churchill, which also includes United Tote, has not closed yet.
Fourth quarter 2009 earnings per diluted share from continuing operations of $0.19, compared to a loss per diluted share of $0.29 in the fourth quarter of 2008. Fourth quarter 2009 results included an $8.1 million income tax benefit while fourth quarter 2008 results included an $11.2 million impairment charge. Excluding these items, fourth quarter 2009 earnings per diluted share from continuing operations would have been $0.01, while fourth quarter 2008 loss per diluted share would have been $0.02.
"We are pleased with our fourth quarter results given the strong economic headwinds facing the overall horse racing and pari-mutuel industry," said Youbet president and chief executive officer David Goldberg. "In the fourth quarter, the number of weekly unique wagerers increased 7%; however, due to economic pressures, the average handle per unique weekly wagerer decreased 7% versus the prior-year quarter. Looking at the full year 2009, we increased Youbet Express handle by 10% while the industry declined approximately 10%, all while improving many key features on our best-in-class wagering platform. We added new players and significantly increased the number of active wagerers playing on the Youbet Express system by 15% year-over-year. We believe that the increase in players on the system is a positive leading indicator which positions the company well as the economy begins to turn around."
Revenue for the fourth quarter of 2009 declined 4% year-over-year to $19.9 million, and gross profit was down 4% as well when compared to the prior-year quarter, primarily due to an increase in player incentives. Income from continuing operations before other income (expense) and income tax at Youbet was $0.9 million during the fourth quarter of 2009, up $0.7 million or 350% from the fourth quarter of 2008 primarily due to reduced compensation costs and a credit in business taxes as a result of a settlement with the City of Los Angeles, partially offset by an increase in merger and acquisition costs related to the impending Churchill Downs merger. EBITDA from continuing operations at Youbet Express in the fourth quarter of 2009 was $1.5 million, up $0.8 million or 123% from the fourth quarter of 2008.
For the fourth quarter of 2009, revenue at United Tote increased 3%, primarily as a result of increased equipment sales. United Tote's loss from continuing operations before other income (expense) and income tax for the fourth quarter of 2009 was $0.8 million, compared to a loss of $11.8 million in the fourth quarter of 2008 (which includes the $11.2 million impairment charge). EBITDA from continuing operations at United Tote in the fourth quarter of 2009 was $0.5 million, a decline of 58% compared to the fourth quarter of 2008 primarily due to write-offs of obsolete inventory.
Total revenue in the fourth quarter of 2009 was $25.3 million, a decrease of 3% from $26 million in the prior-year quarter.
Youbet revenue was $19.9 million for the fourth quarter of 2009, down 4% from fourth quarter 2008 based on handle of $106.6 million, a 1% decline from the prior-year quarter.
Fourth quarter 2009 handle of $106.6 million was essentially flat compared with the fourth quarter 2008 handle, as a decrease in handle on existing tracks was mostly offset by new content primarily from TrackNet. Youbet handle attributed to new content was up 8%, or $9.1 million, offset by a decline in same-track and same-state handle of $9.8 million, or 9%, compared to the fourth quarter of 2008 due to the overall weak economy and fewer racing days at several racetracks.
For the fourth quarter of 2009, net income from continuing operations, which includes Youbet and United Tote, was $8.5 million, or $0.19 per diluted share, compared to a net loss from continuing operations of $12.0 million, or $0.29 per diluted share, in the prior-year period. Fourth quarter 2009 results included an $8.1 million income tax benefit primarily due to a reduction in the company's valuation allowance against its deferred tax assets, while fourth quarter 2008 results included an $11.2 million impairment charge. Excluding these items, net income from continuing operations for the fourth quarter of 2009 would have been $0.4 million, or $0.01 per diluted share, while net loss from continuing operations for the fourth quarter of 2008 would have been $0.8 million, or $0.02 per diluted share.
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