Updated on 03/13/2012 2:10PM

Churchill Downs Inc. posts record earnings for 2011


Churchill Downs Inc. posted record revenue and earnings per share during 2011 due to strong growth in its casino and online wagering businesses, according to financial statements released late on Monday.

Revenue for the year was $696.9 million, a 19 percent gain on revenue for 2010. Net earnings for the year was $64.4 million, compared with $16.4 million last year, according to the statements. Earnings per diluted share for the year was $3.55, a record, according to the company.
The 2011 results benefited from full-year results from a Mississippi casino that Churchill purchased late in 2010 and the results from combining the operations of Youbet.com with its own account-wagering company, twinspires.com. Churchill purchased Youbet.com midway through 2010 and merged its account-wagering operations shortly thereafter.

Revenues from the company’s racing operations did not fare as well. For 2011, combined revenues from the racing operations at Churchill, Calder, Fair Grounds, and Arlington Park were $298.3 million, down 3 percent from revenue of $307.5 million. Nationwide, handle in 2010 on U.S. races was down 7.3 percent, so Churchill fared well in that context.

In addition, Calder did not race in December 2011, whereas the track was open for live racing in December 2010. Revenue from Calder was down 12 percent in the fourth quarter of the year compared with the fourth quarter of 2010, according to the financial statements.

The company’s flagship track in Louisville had revenues of $121.2 million in 2011, up 2 percent compared with revenues of $118.4 million in 2010. In a release, the company credited strong results from its Kentucky Derby and Kentucky Oaks programs for the increase.

Related to the Derby and Oaks, Robert Evans, the chief executive of Churchill, said on Tuesday morning in a conference call with analysts that Churchill expects to build what he called “the Mansion” at Churchill’s property following this year’s events in May. Evans offered no specifics on the Mansion, which he said will “favorably affect our Derby and Oaks financials starting in 2013.”

Revenues from casino operations in 2011 was $212.6 million, up 49 percent from revenues of $142.3 million 2010. Operating expenses for the casinos in 2011 was up 34 percent compared with 2010, from $117.9 million last year to $157.9 million. In addition to the casino in Mississippi, Churchill owns and operates casinos at Calder and Fair Grounds as well as video slot machines tied to the Fair Grounds license.
Earlier this year, Kentucky legislators struck down a bill supported by Churchill that could have legalized casinos at racetracks in the state.

Evans said on Tuesday that the company will continue to pursue a casino bill in Kentucky, as well as in Illinois, where Arlington is located.
“We lost this round, but we’re not defeated,” Evans said.  “We not only plan to keep coming back but to increase the resources and attention we devotes to this issue until we get it done.”

Revenues from Churchill’s online operations in 2011 was $165.4 million, up 36 percent from $121.4 million in revenue in 2010, according to the statements. Operating expenses for the online segment increased 28 percent, from $88.2 million to $113.2 million. Twinspires.com is currently the largest account-wagering company in the U.S., when measured by annual handle.

According to the company’s balance sheet, Churchill reduced its long-term debt by more than half in 2011. Long-term debt at the end of 2011 was $127.6 million, compared with long-term debt of $265.1 million at the end of 2010.