Browse articles by topic

CDI sees revenue plummet and losses rise in first half


Churchill Downs Incorporated (CDI) has reported a year-on-year fall in revenue and a net loss for the first half of 2020, primarily due to the impact of the novel coronavirus (Covid-19) pandemic on the operator.

Net revenue for the six months to June 30 amounted to $438.0m, down 41.0% from $742.8m in the corresponding period last year.

Analysing its performance, CDI said that the main reason for this decline was the suspension of operations at its casinos, racetracks and gaming facilities across a number of states in response to restrictions related to Covid-19.

CDI noted declines in revenue across both its Churchill Downs and gaming arms, but was able to report some level of growth within its online gambling business.

The gaming division, which was last year CDI’s primary source of income, saw revenue drop 46.6% from $346.4m to $184.9m, with its gaming properties having been forced to close due to Covid-19, but venues have now started to reopen at limited capacity.

Revenue at the Churchill Downs racetrack also fell 77.0% from $203.2m to $46.8m, as the Churchill Downs Racetrack was not operating for a large portion of the first half as a result of Covid-19. Due to this, CDI also saw the track’s showpiece Kentucky Downs horse racing event postponed until September.

However, CDI was able to report growth within its online gambling division, with revenue up 18.8% year-on-year to $188.5m, as services remained available to customers amid the shutdown of brick-and-mortar sites. Though betting options were more limited due to the postponement of many sports events, CDI saw its players switch to wagering on other sports.

Looking at spending in the first half , total operating expenses amounted to $450.0m, which was 19.4% lower than $558.4m, as CDI was able to cut costs in some areas to help mitigate the impact of Covid-19.

Gaming expenses were 34.0% lower at $170.4m, while Churchill Down costs fell 40.5% to $57.7m. In March, CDI announced it was to temporarily furlough staff at venues closed by the pandemic, while all remaining salaried CDI workers had their salaries reduced.

Online wagering spending was up 16.4% to $124.7m as operations continued, but all other costs were down from $37.0m to $32.7, while selling, general and administrative costs fell 15.5% to $46.5m. CDI also noted an impairment cost of $17.5m – first reported in its Q1 results announcement.

Despite lower spending, the decline in revenue left CDI with an operating loss of $12.0m at the end of the half, compared to a profit of $184.4m at the same point in 2019. After taking into account $53.7m in other expenses, loss before tax amounted to $65.7m, down from a profit of $165.3m last year.

CDI was able to reduce some of this loss with $19.5m of income tax benefit, but when including loss from both continuing and discontinued operations net of tax, this meant CDI ended the half with a comprehensive loss of $142.2m, compared to a profit of $118.7m in 2020.

“Our teams have been excited to welcome our guests back to our properties with enhanced safety and social distancing protocols,” CDI chief executive Bill Carstanjen said.

“Our team is looking forward to a safe and successful 146th Kentucky Derby on September 5 when we can come together to celebrate this time-honored great American tradition.”

CDI also published its results for the second quarter, during which it was most impacted by the pandemic, with venue closures having started in mid-March. Revenue was down 61.3% to $185.1m in the three months through to June 30.

Gaming revenue slumped 79.0% to $37.3m, while Churchill Downs revenue was down 87.2% to $23.3m, but online gambling revenue climbed 26.8% to $121.2m.

Lower revenue was partially offset by a 42.2% cut in operating expenses, but this did not stop CDI posting an operating loss of $400,00 for the quarter. Including all other expenses, tax benefit and loss from discontinued operations, this left the operator with a net loss of $118.8m for Q2, compared to $107.1m in profit last year.