Churchill's Racing-Related Operations Thrive

Churchill Downs Inc. has reported record net revenues and record adjusted earnings for 2015, and its racing-related operations contributed to the record year.

In business results released after the close of trading Feb. 24, Churchill, which includes racetracks, an advance deposit wagering company, casinos, and the social gaming company Big Fish Games, generated record net revenue of $1.2 billion and record adjusted earnings of $335.6 million in 2015. Those adjusted earnings for the year ended Dec. 31, were up 66% from 2014, when the publicly traded Louisville-based company registered $202.5 million in adjusted earnings.

In terms of its racing related operations, Churchill credited a record-setting Kentucky Derby week as well as 7.5% increased handle at its ADW operation, TwinSpires.com. The company said cost reductions from the cessation of pari-mutuel operations at Calder Race Course also contributed to its increased adjusted earnings.

On the racing side, the company said adjusted earnings for Derby week improved by $6 million and the cessation of Calder pari-mutuel operations saved the company $3.8 million. The company said Churchill Downs improved earnings outside of Derby week by $1.5 million and racing operations at Fair Grounds Race Course & Slots saw a $500,000 improvement. Churchill said some of these gains were offset by a $900,000 decline in pari-mutuel net revenue at Arlington International Racecourse, which reduced live race days in 2015.

Churchill reported TwinSpires.com registered a 5.2% increase in net revenue in 2015 to $200.2 million and a 13.7% increase in adjusted earnings to $51.5 million. Churchill said partially offsetting the revenue increase was a cancellation of a "low margin, third-party administrative call center agreement." Churchill also noted that adjusted earnings benefitted from the discontinuation of its online bingo operation Luckity.

Overall the company attributed much of its improvement in 2015 to its December 2014 acquisition of Big Fish Games.

"We delivered record net revenue, adjusted EBITDA (earnings), and net cash flows from operations for the year," said Churchill Downs Inc. chief executive officer Bill Castanjen. "These results are a reflection of the strength of the company's operations and our disciplined approach to capital allocation and operational efficiency over time. As we look forward to 2016, we will continue to position our company for long-term sustainable growth."