CDI Reports Profit Despite Handle Drop

Profits from continuing operations at Churchill Downs Inc. grew 71% in 2008.

Profits from continuing operations at Churchill Downs Inc. grew 71% in 2008, the company reported March 4, despite handle drops at all of its racetracks.

Net earnings from continuing operations for 2008 increased to $29.1 million from $17 million in 2007. The company also reported a record $80.2 million in annual EBITDA (earnings before interest, taxes, depreciation and amortization), which was augmented by insurance settlements of $17.2 million related to damages incurred from natural disasters.

“Despite a challenging economy in 2008, we continued to grow revenues and manage our cost structure proactively, which led to strong full-year results for the company,” said CDI president and chief executive officer Robert L. Evans in a press release. “We ended the year with a strong balance sheet that, we believe, positions us well for the expected tough economy in 2009, and to pursue growth opportunities.”
Annual net revenues from continuing operations grew to $430.6 million, a 5% increase from the prior-year total of $410.7 million.

Insurance recoveries increased from $800,000 in 2007 related to damages incurred at Calder from Hurricane Wilma to $17.2 million in 2008 related to damages incurred at Fair Grounds Race Course from Hurricane Katrina.

CDI reported it paid down $24.8 million in net bank debt and spent $40 million in new investments such as the permanent slots facility at Fair Grounds.

The company’s account wagering entity,, produced $31.7 million more in additional revenue than in 2007 in its first full year of operation. In addition, CDI’s gaming business produced $21.5 million more in revenues in 2008 than in 2007.

Total handle for all CDI properties was $2.9 billion in 2008, down 9% from 2007. Individual handle figures for respective tracks the company owns included: Churchill Downs, $765.9 million, down 10%; Arlington Park, $791.3 million, down 4%; Calder Race Course, $649.5 million, down 30%; and Fair Grounds, $498.7 million, down 8%. Online handle through CDI's platforms was $234.4 million. 

In the press release, Evans provided some new details on a proposed new slots facility for Calder Race Course.

“We continue to work through the design, planning, permitting and licensing processes for the construction of an up-to-2,000 slot machine facility at Calder,” he said. “We currently plan to build a stand-alone, approximately 100,000 square-foot facility that we hope to open prior to the holidays in 2009 if all goes according to schedule.”

Evans said CDI plans to invest approximately $85 million in the Calder slots project, and continue efforts to pursue expanded gaming possibilities in Kentucky and Illinois.

CDI reported it lost $3.5 million in the fourth-quarter of 2008, and net revenues during the period were $85.9 million, down 3% year-over-year.