Churchill Downs doubles third quarter net income

Churchill Downs Inc. had net income of $8.7 million in the third quarter of 2016, approximately double the company’s net income the same quarter last year, according to financial statements released Thursday.

Net revenue for the company was $303.4 million in the quarter, up 8.4 percent compared with revenue of $279.8 million in last year’s third quarter. Operating expenses jumped 3.3 percent, to $276.6 million.

While revenue for the company’s racing and casino divisions were flat in the quarter, revenue for the company’s account-wagering platform, TwinSpires, was up 8.5 percent to $54.7 million, and revenue for the company’s social-gaming division, Big Fish Games, was up 18 percent, to $122.3 million, according to the financial statements.

However, operating expenses for Big Fish jumped 18 percent as well, to $94.5 million, while research and development costs associated with Big Fish – which are a separate line item on Churchill’s financial statements – was $8.8 million, down from $9.9 million in the third quarter of 2015. Churchill purchased Big Fish late in 2014, at a price expected to approach $900 million.

The net income figure was bolstered by a substantial reduction in exit costs associated with the company’s ownership of Calder Race Course in Miami. In the third quarter of 2016, the exit costs were $500,000, compared with $12.7 million in exit costs in the third quarter of 2015. Churchill has leased the racing operations of the track to The Stronach Group as it explores a redevelopment of the property, which includes a casino owned and operated by Churchill.

Interest expense in the quarter was $11.1 million, up from $6.7 million in the third quarter of last year. Churchill had approximately $906 million in long-term debt and notes payable at the end of the quarter, according to its balance sheet. The company has recorded $32.7 million in interest expense through the first nine months of 2016, compared with $21.3 million in the first nine months of 2015.

Churchill noted in its release of the financial statements that the company’s board of directors approved a $1.32 annual dividend per share of common stock at a meeting in October. The dividend is payable to shareholders of record as of Dec. 2, 2016.