Churchill Downs Inc.'s second quarter income holds steady

Churchill Downs Inc. had net income of $107.1 million in the second quarter of 2019, up slightly from net income of $103.1 million in the second quarter of last year, while posting gains in revenue from its flagship track during Kentucky Derby week, according to financial statements released on Wednesday after the close of trading.

Net revenue for the company’s range of gambling assets during the quarter was $477.4 million, up 26 percent from $379.4 million in the second quarter of last year. The gain in revenue was largely due to its casino assets, but that gain was nearly matched by increases in expenses, according to the financial statements.

:: Get PPs, Clocker Reports, picks, and more from DRF's Saratoga/Del Mar One-Stop Shop

Revenue for the company’s most-recognizable asset, Churchill Downs, was $182.2 million during the quarter, up 17.6 percent over the same quarter last year, with $21.2 million of that increase due to a casino the company opened in Louisville in September of last year that is affiliated with the racetrack. The remainder of the increase, $7.6 million, was due to a gain in revenue due to higher returns from Derby week, the company said.

Despite those numbers, there was some sign of weakness in the company’s horserace wagering business, with revenue from Twinspires.com, the industry’s market-leading account-wagering company, growing $1.9 million in the quarter to $96.0 million. Churchill said that it posted an 18.8 percent gain in active players for the service during the quarter while posting a 12.7 percent decline in net revenue per active player, an indication that Twinspires was successful in signing up new customers during the Triple Crown season but that those players were not heavy bettors.

In a release accompanying its financial statements, Churchill said that weakness at Twinspires.com was primarily due to the lack of a Triple Crown possibility this year and poor results from races in California, where racing during the quarter was marred by developments related to a spate of deaths at Santa Anita Park throughout the track’s meet this year.

Earlier this year, Churchill completed a purchase of a majority equity share of a casino just outside Chicago, Illinois, and revenue from that new property played a part in a 64 percent gain in revenue for the company’s casino division, to $177.8 million. The company also had revenue gains due to a completed transaction for Presque Isle Downs and Casino in Pennsylvania.

Churchill financed the acquisitions using cash from a line of credit, and its balance sheet now lists $1.1 billion in notes payable, up from $493 million at the end of 2018.

During the quarter, Churchill repurchased 187,608 shares of its common stock for total expense of $18.0 million, the company said, as part of a board-approved repurchase program that was initially allotted $300 million. The company has $225 million remaining for repurchases under the allotment.