CDI Reports 27% Increase in Net Income

Continued growth in the week leading up to the Kentucky Derby Presented by Yum! Brands (gr. I) fueled an increase in earnings for the racing segment of Churchill Downs Inc. in the second quarter of 2016.

Overall, it was a solid quarter for CDI, which reported record net income of $69.8 million—up 27% from the second quarter of 2015—and record net revenue of $438.5 million.

CDI chief executive officer Bill Carstanjen during an Aug. 4 earnings webcast said a "spectacular Kentucky Derby week drove the performance of the racing division. We're generally encouraged by all metrics. We think we can build on that momentum and build on it next year."

Carstanjen said the company is in the process of finalizing its 2017 capital investment plan for Churchill Downs, which hosts the Derby and Longines Kentucky Oaks (gr. I).

The CDI racing segment produced adjusted earnings before interest, taxes, depreciation, and amortization of $6.1 million, with $5.2 million attributed to Kentucky Derby week proceeds. A racing calendar shift resulted in a $1.3 million decrease in earnings at Churchill Downs and Arlington International Racecourse.

"The Kentucky Derby is a unique event that does not follow the overall trends in horse racing," Carstanjen said.

TwinSpires.com, the company's advance deposit wagering system that is broken out into its own earnings segment, reported a 16.4% increase in pari-mutuel handle for the second quarter; Carstanjen noted the increase outpaced overall United States Thoroughbred wagering by almost 17 percentage points.

TwinSpires.com also reported net revenue growth of $7.5 million, which CDI attributed to a 26% increase in active players and a $1.2 million marketing spend it expects to recoup with one year.

Carstanjen said the ADW service "has been a real juggernaut that has proven there is growth even in a flat industry. We haven't found the ceiling yet (with online wagering)."