02/28/2017 5:25PM

Churchill Downs Inc. shows strong numbers in 2016


Churchill Downs Inc. had net income of $108.1 million in 2016 on record revenues of $1.31 billion, up sharply from net income in 2015 of $65.2 million on revenues of $1.21 billion, despite weak results at several of its racetracks and stagnating casino revenues, according to financial statements released late on Tuesday.

Churchill benefited during the year from the sale of real estate at its Calder Race Course and Casino in Miami, a transaction that netted the company $23.7 million, or more than half of the jump in net income. Revenues for its account-wagering operation, twinspires.com, were up 10 percent during the year, while revenues for its social-gaming unit, Big Fish, were up 17.5 percent.

Net income per share for the company was $6.52, up from $3.75 in 2015. On Tuesday, Churchill’s stock dropped $2.50, or 1.6 percent, to $150.30 per share, but the stock had a relatively solid month, rising from $143 at the start of the month to $155 in mid-February.

The company’s racing division was once again led by Churchill Downs, which had $155.2 million in revenue in 2016, or 60 percent of the total revenue from Churchill’s three operating racetracks. In a statement accompanying the financial documents, the company said that Derby Week revenues at Churchill Downs resulted in $5.2 million in increased profitability in 2016.

Arlington Park outside of Chicago had revenue of $55.3 million during the year, up slightly from revenue of $54.4 million last year, according to the financial statements. Churchill said that the increase was driven by a higher number of days in 2016 in which Arlington was designated as the host simulcast track in the state. Fair Grounds in New Orleans, Churchill’s third track, had racing revenue of $38 million, down from $39.8 million in 2015. The numbers declined in part because of fewer live racing days at the track during 2016, Churchill said.

Twinspires.com had $221.9 million in revenue during the year, and Churchill said that handle through the account-wagering operation increased 14 percent in 2016, by $131.8 million, compared with a 0.6 percent increase in overall handle on U.S. races throughout the year. Churchill also said in its statement that the company’s active players increased 23 percent during the year.

Churchill’s casino division, which includes casinos at Calder and at Fair Grounds racetrack in New Orleans, had stagnant revenue in 2016 of $332.8 million, compared with $332.9 million in 2015. Growth rates at casinos have leveled off in recent years as competition has increased and as the industry struggles to expand its customer base.

Churchill social-gaming division, Big Fish, had net revenue of $486.2 million, up from $413.7 million last year. Operating expense jumped from $340.1 million in 2015 to $398.9 million in 2016, not including $39 million in research and development costs for the company’s products, a separate line item on Churchill’s income statement.

Churchill had interest expense of $43.7 million in 2016, compared with interest expense of $28.6 million in 2015. The company’s cash balance declined from $74.5 million at the end of 2015 to $48.7 million at the end of 2016, according to the financial statements.