Churchill Downs Stock Price Soars

A day after Churchill Downs Inc. reported record second-quarter adjusted earnings, the company's stock was soaring July 30 on the NASDAQ market, up by $8.78, or 7.02%, in early afternoon trading.

As of 2 p.m. (EDT), 147,991 shares of CDI had traded hands and the $133.84 share price had surpassed the 365-day high closing price of $132.72 of July 15.

The Louisville, Ky.-based track- and gaming- company reported July 29 it had adjusted EBITDA of $157.2 million, up 34% compared with the same quarter last year. Net earnings declined 4% to $55 million for the quarter, while net earnings for the year are down 6% to $53.49 million for the first six months of the year.

Helping boost CDI's record quarter were record adjusted earnings for Kentucky Derby week—up more than $6 million compared with last year.

Bill Carstanjen, Churchill's chief executive officer, said that while company officials were pleased with the results, particularly the profitability of Derby week, it is unlikely that the Triple Crown sweep of Kentucky Derby Presented by Yum! Brands (gr. I) winner American Pharoah will do much to improve the long-term outlook for American racing.

"We were thrilled to see a Triple Crown in American Pharoah after a 37-year drought," Carstanjen said during a July 30 conference call with analysts. "We think a Triple Crown winner probably does not change the long-term trajectory of horse racing, but it certainly doesn't hurt either."



The executive noted that wagering on North American racing had been flat during the first two quarters of fiscal year 2016, and that the industry continues to face challenges.



"Outside of the (Longines) Kentucky Oaks (gr. I) and the Derby, racing remains a challenging business," Carstanjen said. "We will keep running it the same way we have, with a careful eye on cost structure and a rational ... view of the future."



While Derby week produced gains in every business and operational area, Carstanjen said there are already plans in place on how to make some changes that will enhance the event and CDI's profitability.

For example, he noted that management was looking at the differences between the experiences and costs of Derby-goers on millionaires' row and those in the Mansion, saying "we think we've learned more about the experience we can offer our customers over these two different price points."