CDI Reports Substantial Jump in Earnings

Pari-mutuel handle increased for the third quarter due to online wagering.

Churchill Downs Inc. reported net earnings from continuing operations of $19.7 million for the third quarter of 2011, up significantly from $3.7 million for the third quarter of 2010.

The company said Oct. 26 receipt of $19.3 million from the Illinois Horse Racing Equity Trust Fund contributed to the strong quarter. The money, paid by several Illinois casinos, had been held in escrow for several years pending resolution of legal issues.

Net revenue from continuing operations was $166.3 million, up 13% from $147.5 million for the comparable quarter last year and a new third-quarter record, CDI said in an earnings release. Revenue gains were attributed to operations at Harlow’s Casino Resort & Hotel, a Mississippi property CDI acquired in December 2010, and 4.2% growth in pari-mutuel handle through, the company’s advance deposit wagering service.

Earnings before interest, taxes, depreciation, and amortization doubled to $43 million in the third quarter. Gaming revenue increased $5.3 million and pari-mutuel revenue increased $2.2 million, CDI reported.

CDI owns four racetracks: Churchill Downs in Kentucky, Calder Casino & Race Course in Florida, Arlington Park in Illinois, and Fair Grounds Race Course & Slots in Louisiana. Calder and Fair Grounds have slot machines.

“It was a very good quarter, even when we exclude the impact of the Illinois Horse Racing Equity Trust Fund proceeds,” CDI chairman and chief executive officer Robert Evans said. “Once again, the decline in net revenues and EBITDA—excluding those trust fund proceeds—in our racing operations was more than offset by significant gains in our online and gaming businesses.

“We used the resulting cash flow to pay down another $28.6 million in long-term debt during the third quarter, bringing our debt reduction for the first nine months of the year to $108.8 million.”

Churchill Downs will host this year’s Breeders’ Cup World Championships Nov. 4-5.