Horse track and casino operator Churchill Downs announced a $14 million renovation of the Jockey Club and reported record adjusted cash flow and net revenue for the second quarter. But net income was lower than a year earlier and both net income and revenue missed Wall Street forecasts.
Shares sold off on the news, dropping nearly 10%.
In a statement Wednesday, the Louisville, Kentucky-based company said its net income was $143 million, or $1.86 per share, for the three months ended June 30, down from net income of $339.3 million, or $4.39 per share, a year earlier.
The 2022 result included a $193.6 million after-tax gain on the sale of former Calder Race Course land.
The latest earnings-per-share result missed the $2.41 per share average forecast of analysts surveyed by Seeking Alpha.
Adjusted earnings before interest, taxes, depreciation and amortization, a cash flow measure that excludes one-time costs, surged 24.9% to $363.7 million from $291.2 million.
Revenue rose 31.9% to $768.5 million from $582.5 million, but missed the $792.7 million estimate of Seeking Alpha-polled analysts.
Churchill Downs shares fell $12.76. or 9.7%, Thursday to close at $118.82 in regular Nasdaq Stock Market trading. The shares gained 1.87, or 1.57%, to settle at $120.69 after hours.
In June, Churchill Downs opened a new 123-room hotel, chop house, and bourbon and sports bars at Derby City Gaming and Hotel in Louisville. A month earlier, Churchill Downs’s namesake track drew 150,000 fans to see the 149th running of the Kentucky Derby. Revenues from Derby Week at Churchill Downs Racetrack rose $20.5 million from a year earlier to set a record.
Louisville Tourism Marketing Communications Manager Rosanne Mastin told the Louisville Courier Journal that Churchill Downs created $401.9 million in economic impact from the Kentucky Derby this year.
In a conference call with analysts and journalists, Churchill Downs CEO Bill Carstanjen said, “Strong growth in ticketing and sponsorship revenue coupled with record wagering generated a sizable increase in adjusted EBITDA, setting a new record for Derby Week. Our new first-turn experience debuted on time and on budget, which provided premium accommodations with exclusive views of the horses and track from the rail of the historic first term.”
Churchill Downs said the $14 million renovation of the Jockey Club at the Churchill Downs racetrack is scheduled to finish before the 150th Kentucky Derby next May. The company said the renovation will enhance all aspects of the 61 suites, common spaces, dining rooms, and restrooms on the fourth, fifth, and sixth floors of a tower adjacent to the track’s twin spires along the homestretch.
Churchill Downs said its Ross Emporia historic horse-racing machine (HHR) venue will open later this quarter with 150 slots and added that construction continues on its Dumfries’s HHR venue in northern Virginia, about 30 miles south of Washington, D.C. The Dumfries venue’s first phase will have 1,150 machines and is on track to open in 2024’s second quarter.
Churchill Downs said it’s also on track to open Derby City Gaming Downtown, the company’s sixth Kentucky HHR hub, in downtown Louisville in the fourth quarter.
