Churchill Reports Record First Quarter Earnings

Churchill Downs Inc. will carry some momentum into its biggest week of the year as the Louisville-based track and casino owner reported record first quarter earnings in 2022.

With the Kentucky Derby Presented by Woodford Reserve (G1) scheduled May 7 at its flagship track, CDI released its financials for the first quarter of 2022 after markets closed April 27. The company will conduct a conference call with investors and analysts Thursday morning.

CDI's historical horse racing and gaming operations powered much of the record first-quarter performance. CDI reported $87.2 million in net revenue from its live racing and HHR operations fueling $27.9 million in adjusted earnings. Those adjusted earnings were up $9.6 million compared with the $18.3 million reported for the first quarter of 2021.

While Churchill reports its HHR and live racing financials under the same segment, it noted that the growth was fueled by the HHR operations. Historical horse racing offers pari-mutuel wagering through devices that for the customer are similar to slot machines and, compared with the first quarter of 2021, COVID-19 restrictions put in place have been lifted.

"For the first quarter of 2022, net revenue increased $22.5 million due primarily to an $11 million increase at Oak Grove Racing, Gaming, and Hotel, a $9.9 million increase from Derby City Gaming, and a $1.9 million increase at Newport Racing & Gaming," CDI noted. "Oak Grove and Derby City Gaming reflected the benefit of the elimination of the operating restrictions that were in place during the first quarter of 2021 and overall continued growth in the businesses.

"Adjusted (earnings) increased $9.6 million due to a $5.3 million increase at Oak Grove, a $5.2 million increase at Derby City Gaming, and a ($700,000) increase at Newport from the increase in net revenue. Partially offsetting these increases was a $1.2 million decrease at Churchill Downs racetrack due to the timing of Derby Week expenses and a ($400,000) decrease from higher expenses at Turfway Park."

In the gaming segment (casinos), CDI reported adjusted earnings of $91.1 million, up from the $82.4 million reported in the first quarter of 2021.

While TwinSpires.com, CDI's advance-deposit wagering platform, saw a decline in net revenue from $105 million to $101.4 million as some online players returned to brick-and-mortar locations, the segment saw a boost in adjusted earnings from $23.1 million in the first quarter of last year to $24.1 million this year.

Meanwhile, for the first quarter of 2022, all other adjusted EBITDA decreased by $1.4 million as a result of a $2.6 million increase in legal fees and timing of other corporate expenses that was partially offset by a $1.2 million decrease in Arlington International Racecourse operating loss in the current-year quarter compared to the prior-year quarter as a result of Arlington ceasing racing and simulcast operations at the end of 2021. CDI excluded Arlington's operating results from Adjusted EBITDA in 2022 pending the sale of the property to the Chicago Bears.