CDI Says It's Poised for Growth in 2013
Churchill Downs Inc. officials said Nov. 6 the company had a "decent" third quarter in 2012 and is poised for growth in 2013-14.
Net earnings from continued operations for the third quarter totaled $6 million, or $0.34 per diluted common share, down 70% from net earnings from continued operations of $19.7 million, or $1.16 per diluted common share, during the third quarter of 2011, according to financial documents.
Net revenue from continuing operations for the third quarter of 2012 declined 1%, or $1.5 million, to $164.9 million compared with the same period in 2011. Third-quarter earnings before interest, taxes, depreciation, and amortization dropped to $21.3 million from $43 million during the third quarter.
The decline in EBITDA and net earnings was attributed to $19.3 million in Illinois Horse Racing Equity Trust Fund payments that were received in the third quarter of 2011.
"Overall, it was a decent quarter," CDI chief financial officer Bill Mudd said during an earnings teleconference. "It was our second-highest ever EBITDA for a third quarter."
When reporting earnings CDI continues to segregate its online business from racing operations even though the bulk of its online revenue is tied to horse racing through the advance deposit wagering system TwinSpires.com.
The company reported racing operations revenue dropped $3.9 million, or 6%, from the third quarter of 2011 because of three fewer racing days at Churchill Downs in Kentucky and weather-related cancellations at Calder Casino & Race Course in Florida. And though export pari-mutuel handle at Arlington Park in Illinois was up 3%, a decline in handle on track led to a 1% decline in revenue, officials said.
The online segment includes TwinSpires.com; Luckity.com, a gaming site tied to horse racing; Velocity Wagering Ltd., a rebate shop based offshore on the Isle of Man; and HRTV, which CDI owns along with The Stronach Group. Total online-based handle for the third quarter increased 10.6% to $215 million, but EBITDA dropped 8% because of the launch of Luckity.com, expenses related to building an exchange wagering network in California, and continued losses from HRTV.
CDI hasn't publicly discussed Velocity, which is listed as being licensed by the government in the Isle of Man and incorporated in October 2011 but has no website. Racing industry sources have said Velocity has actively sought major players that wager and get rebates from other specialty wagering outlets.
Representatives of a few horsemen's groups said they found out about Velocity after seeing it listed on simulcast contracts as a receiving site for racing signals.
Gaming revenue decreased $2.4 million, or 5%, during the quarter largely due to continued competition in the South Florida market and the closure of casino and video poker operations in New Orleans, La., for five days in September because of Hurricane Isaac. Calder had a 12% drop in revenue, Mudd said.
"This may be the new operating reality at this location," Mudd said of Calder, which has slot machines.
As for 2013 and beyond, CDI has acquired the Riverwalk Casino Hotel in Mississippi and is spending $15 million to rebuild Harlow's Casino in Mississippi following a flood; will proceed with construction of a racetrack video lottery terminal casino in southwestern Ohio in partnership with Delaware North; will begin marketing Luckity.com after a soft launch in October; and will open an off-track betting facility with 50 video poker machines in Jefferson Parish, La.
CDI chief executive officer Bob Evans also reported that "The Mansion" a high-end facility being constructed in the former press box at Churchill, is 93% sold or committed through three- to seven-year contracts. The new "Paddock Plaza" area at the Louisville racetrack will add more than 200 "upper-price-range" seats for major events beginning next year, he said.
"I'm excited about how our portfolio of growth initiatives is going," Evans said.
Copyright © 2013 The Blood-Horse, Inc. All Rights Reserved.