Gaming acquisitions drive Q1 revenue growth at CDI

25 April 2019

US racetrack and casino operator Churchill Downs Incorporated (CDI) has cited the positive impact of gaming M&A as a key drivers of a 40% year-on-year increase in revenue during the first quarter.

Net revenue in the three months through to March 31, 2019, totalled $265.4m (£206.1m/€238.3m), up from $189.3m in the same period last year.

During the quarter, CDI realigned its operating segments, enabling the operator to focus on three specified business segments: gaming, Churchill Downs (horse racing) and online wagering.

Gaming is the main source of income for CDI by some distance, with this segment generating $170.1m in revenue during Q1, up from $112.5m last year. CDI said its gaming business was boosted year-on-year by various acquisitions. In January, CDI finalised its purchase of Presque Isle and this brought in an extra $29.7m, while the acquisition of the remaining 37.5% of Ocean Downs in August 2018 pushed revenue up a further $18.4m.

Revenue from Churchill Downs rocketed from $2.3m to $21.4m, primarily due to an additional $18.7m from Derby City Gaming that opened in September 2014. Churchill Downs Racetrack also brought in an extra $400,000 in revenue.

Online wagering revenue amounted to $63.4m, slightly down on $63.6m in Q1 of last year.

The overall increase in revenue was accompanied by a rise in operating costs for the quarter, with this figure up from $169.6m to $237.4m.

CDI committed more than half of its total expenses to gaming, spending a total of $125.0m on the division, compared to $79.6m. Churchill Downs spend was also up from $9.9m to $23.4m, while online wagering slightly increased from $44.0m to $451.m.

Selling, general and administrative costs were also up from $18.4m to $24.9m, while transaction expenses climbed from $1.4m to $3.5m.

However, despite spending more, revenue growth resulted in operating income rising from $19.7m in Q1 of 2017 to $28.0m and income from continuing operations before tax climbing from $16.7m to $18.4m.

Net income came in at $11.6m, including $300,000 in net loss from discontinued operations, which is significantly down on $182.0m last year. However, CDI said the 2018 result included $167.9m in net income from discontinued operations, namely an $168.3m from the sale of its Big Fish Games social casino business to Aristocrat in January 2018.

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