Churchill Downs touts 150th Kentucky Derby, continued expansion

February 23, 2024 3:18 PM
Photo: Shutterstock
  • Matthew Crowley, CDC Gaming Reports
February 23, 2024 3:18 PM
  • Matthew Crowley, CDC Gaming Reports
  • Indiana
  • Kentucky
  • Virginia

This year’s Kentucky Derby, the 150th running of the event, and a passel of new projects gave racetrack operator Churchill Downs plenty to discuss in its fourth-quarter earnings call. The numbers were boast-worthy as well; adjusted earnings and revenue both topped Wall Street forecasts.

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In a statement Wednesday, Louisville, Kentucky-based Churchill Downs said net income was $57.6 million, or 76 cents per share, for the three months ended Dec. 31, up from net income of $1 million, or 1 cent per share, a year earlier.

Adjusted earnings per share, which exclude one-time costs, were 86 cents per share, topping the 78-cents-per-share consensus forecast of analysts surveyed by Seeking Alpha.

Adjusted earnings before interest, taxes, depreciation and amortization, a cash-flow measure that also excludes one-time costs, rose 21.3% to $219.1 million from $180.7 million.

Revenue rose 16.9% to $561.2 million from $480.1 million and topped the $553.1 million forecast of Seeking Alpha-polled analysts. Churchill Downs said $32.8 million in revenue from Virginia properties acquired in November 2022 from Peninsula Pacific Entertainment boosted overall quarterly income.

The company’s shares rose on the earnings news Thursday, jumping $2.43, or 2.07%, to close at $119.86.

During the 2023 fourth quarter, Churchill Downs opened Derby City Gaming Downtown, the company’s sixth historical racing machine hub, in Louisville and bought back one million shares of stock for $123.75 per share.

As it released fourth-quarter earnings, Churchill Downs also announced a new historical racing machine hub in Owensboro, Kentucky, which will open in the first quarter of 2025 at a projected cost of $100 million. It will include 600 historical racing machines, a sportsbook, simulcast wagering, and restaurants.

The company will open the gaming floor in its casino off Margaret Avenue on the east side of Terre Haute, Indiana, on April 5. It will have 1,000 slots and 34 table games; the property’s 10-story 125-room hotel will debut on May 15.

In May, the Kentucky Derby will return, accompanied by its redesigned paddock, part of a $185 million to $200 million project, and renovated Jockey Club suites, a $14 million upgrade.

During a conference call with analysts and journalists on Thursday, Chief Executive Officer Bill Carstanjen said Churchill Downs expects to further expand the Kentucky Derby and historical racing machine business in Virginia and add a new gaming property tied to the company’s Oak Grove license in Kentucky. Carstanjen said his company aims to use all 10 of its potential Virginia historical racing machine licenses and deploy all 5,000 historical racing machines permitted by state law.

Carstanjen also brimmed with optimism for the Kentucky Derby, saying ticket sales were “significantly ahead” of the pace of any previous year in dollars earned and inventory sold.

“We’re now well positioned for ongoing growth in the next year and beyond,” he said. “We believe there are many growth opportunities to pursue in the coming years, whether it be further investment in our flagship assets, the Kentucky Derby, or new investments aligned with our long-term strategic plans.”

In the question-and-answer session, Carstanjen said Churchill Downs will look to build figuratively and literally on the momentum of this year’s Derby, eventually adding new projects to its flagship track. He said the company will “be active” in 2025, but gave no further details.

Meanwhile, Churchill Downs said it received Dumfries, Virginia’s OK to open the first phase of yhe Rose Gaming Resort, a historical racing machine center, by Sept. 30. The first phase of the project will cost $460 million and will 1,650 machines, 500 more than previously announced.

For the full year ended Dec. 31, Churchill Downs had net income of $417.3 million, or $5.49 per share, down 5% from $439.4 million, or $5.71 per share, a year earlier. Twelve-month revenue rose 38.9 percent to $2.5 billion from $1.8 billion.