A year-to-year doubling of live and historical racing revenue fueled a first quarter of gains for Churchill Downs. The horse-track and casino company posted surging profits and record revenue, both of which topped Wall Street forecasts, and predicted record-breaking revenue for the upcoming Kentucky Derby week.
Investors seemed to celebrate. Churchill Downs reported its results Wednesday and the company’s shares climbed 14% Thursday.
In a statement Wednesday, Louisville, Kentucky-based Churchill Downs said net income was $155.7 million, or $4.09 per share, for the three months ended March 31, up from net income of $42.1 million, or $1.08 per share, a year earlier.
Adjusted earnings per share, which exclude one-time costs, were $1.96 per share, topping the $1.74-per-share consensus estimate of analysts polled by Zacks Investment Research.
Adjusted earnings before interest, taxes, depreciation, and amortization, a cash-flow measure that also excludes one-time costs, rose 73.5% to a record $222.9 million from $128.5 million.
First-quarter revenue soared 53.7% to a record $559.5 million from $364.1 million and topped the $536.6 million consensus forecast of analysts polled by Seeking Alpha.
Churchill Downs shares rose $35.43, or 14.07%, Thursday to close at $287.27 on the Nasdaq Stock Market.
In the first quarter, live and historical racing revenue rose 194% from a year earlier to boost overall revenue, the company said. A $97.7 million increase from Virginia properties acquired in last year’s $2.49 billion deal for Peninsula Pacific Entertainment contributed particularly to first-quarter revenue, the company said.
Those Virginia properties included the Colonial Downs Racetrack in New Kent, Virginia, and six Rosie’s Gaming Emporium locations in six Virginia cities — Collinsville, Hampton, New Kent, Dumfries, Richmond, and Vinton.
In a conference call with analysts and journalists, Churchill Downs Chief Executive Officer Bill Carstanjen said he expected record success for the upcoming Kentucky Derby week, based on advance ticket sales and other metrics. The derby’s 149th iteration will run on May 6.
Carstanjen also said historical-racing machines, which play like slot machines and generate results using past horse-race outcomes, are bolstering his company’s success and remain an important strategic focus.
“We’ve developed high-growth high-margin investments in this segment … and we’ll seek to build on that track record in Kentucky, Virginia, New Hampshire, Louisiana, and perhaps beyond,” he said.
Carstanjen said a casino expansion at the company’s Derby City Gaming historical-racing-machine hub in suburban Louisville is complete and a new hotel there is on track to open by the end of the second quarter.
Carstanjen added that construction continues on Churchill Downs’ historical-racing-machine hub in Dumfries, Virginia, about 30 miles south of Washington, D.C. The project’s first phase, with 1,150 machines and a 100-room hotel, is on pace to open in the second quarter of 2024.
Churchill Downs has the right to open up to three more historical-racing-machine hubs in Virginia.
During the quarter, Churchill Downs closed the sale of its 26-acre racetrack property in Arlington Heights, Illinois, to the National Football League’s Chicago Bears for $197.2 million. The deal closed Feb. 15. On Tuesday, the company announced a two-for-one common-stock split.
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