Kentucky-based Churchill Downs Incorporated (CDI) reported its financial results for the second quarter of 2023, showcasing a 32% increase in net revenue. Despite the record-breaking revenue figure, the company still faced a considerable drop in net income compared to the same period last year.
According to CDI’s latest financial report, the company achieved a net revenue of $768.5 million during Q2 2023, marking a notable 32% increase compared to Q2 2022’s performance of $582.5 million.
The substantial revenue boost was driven by significant gains across its live and historical racing and gaming segment, which achieved new adjusted EBITDA highs, contributing to an overall adjusted EBITDA of $363.7 million for Q2 – a 25% increase from the previous year’s $291.2 million.
Despite the impressive revenue growth and EBITDA milestones, CDI’s net income experienced a significant decline, plummeting by 58% to $143 million in Q2 2023, compared to net income of $339.3 million in the same period last year.
The company attributed the decline to various factors, including a $193.6 million after-tax gain on the sale of excess land near Calder Race Course in 2022, an $18.5 million after-tax increase in costs in 2023 due to the Presque Isle Downs & Casino impairment, and a $6 million after-tax net increase in all other nonrecurring expenses.
However, CDI clarified that excluding the after-tax gains and increases listed above, the company’s Q2 2023 net income actually increased by $21.8 million year-over-year, primarily driven by a $43.9 million after-tax increase primarily attributed to the results of their operations.
The company also provided insights into the performance of its individual segments during the second quarter. CDI’s live and historical racing segment reported a remarkable 48% increase in revenue, reaching $408 million, and a 36% increase in adjusted EBITDA, totaling $223.5 million.
The gaming segment also showcased substantial growth, with revenue rising by 34% to $247.9 million, and adjusted EBITDA increasing by 16% to $123.4 million. The revenue surge was partly attributed to the acquisition of properties in New York and Iowa from Peninsula Pacific Entertainment (P2E).
Despite the overall growth, the gaming segment faced a slight decrease in revenue from other gaming properties, which was offset by the considerable gains from the newly acquired properties.
Meanwhile, horse racing online wagering business TwinSpires reported slightly increased revenue of $139.1 million and flat adjusted EBITDA of $33.9 million, influenced by the B2B horse racing expansion strategy and the decision to exit the direct online sports and casino business in Q1 2022.
The company expressed satisfaction with the overall performance of the live and historical racing segment, praising the record Derby Week during the 149th Kentucky Derby at Churchill Downs Racetrack.
Looking forward, CDI said it continues to focus on strategic initiatives to drive growth and enhance its offerings. The company’s recent announcement of a $14 million renovation of the Jockey Club Suites at Churchill Downs Racetrack aims to enhance the guest experience and coincide with the 150th Kentucky Derby in May next year.