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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Churchill Downs Inc | NASDAQ:CHDN | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-1.05 | -0.81% | 129.09 | 129.03 | 129.13 | 129.78 | 127.275 | 128.79 | 293,730 | 20:16:01 |
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Kentucky
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61-0156015
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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600 North Hurstbourne Parkway, Suite 400 Louisville, Kentucky 40222
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(502) 636-4400
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(Address of principal executive offices) (zip code)
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(Registrant’s telephone number, including area code)
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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o
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Emerging growth company
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o
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PART I.
|
FINANCIAL INFORMATION
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions, except per common share data)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net revenue:
|
|
|
|
|
|
|
|
||||||||
Racing
|
$
|
182.5
|
|
|
$
|
165.3
|
|
|
$
|
206.2
|
|
|
$
|
189.2
|
|
TwinSpires
|
93.7
|
|
|
80.5
|
|
|
156.9
|
|
|
132.5
|
|
||||
Casino
|
98.2
|
|
|
88.3
|
|
|
196.3
|
|
|
175.8
|
|
||||
Other Investments
|
5.0
|
|
|
5.2
|
|
|
9.3
|
|
|
9.3
|
|
||||
Total net revenue
|
379.4
|
|
|
339.3
|
|
|
568.7
|
|
|
506.8
|
|
||||
Operating expense:
|
|
|
|
|
|
|
|
||||||||
Racing
|
85.3
|
|
|
76.5
|
|
|
121.2
|
|
|
112.9
|
|
||||
TwinSpires
|
59.4
|
|
|
51.4
|
|
|
103.4
|
|
|
87.8
|
|
||||
Casino
|
67.3
|
|
|
62.1
|
|
|
132.1
|
|
|
124.8
|
|
||||
Other Investments
|
5.0
|
|
|
4.9
|
|
|
9.6
|
|
|
8.8
|
|
||||
Corporate
|
0.6
|
|
|
0.6
|
|
|
1.1
|
|
|
1.2
|
|
||||
Selling, general and administrative expense
|
23.1
|
|
|
20.2
|
|
|
41.5
|
|
|
38.8
|
|
||||
Calder exit costs
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.6
|
|
||||
Transaction expense, net
|
2.1
|
|
|
0.5
|
|
|
3.5
|
|
|
0.5
|
|
||||
Total operating expense
|
242.8
|
|
|
216.4
|
|
|
412.4
|
|
|
375.4
|
|
||||
Operating income
|
136.6
|
|
|
122.9
|
|
|
156.3
|
|
|
131.4
|
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(9.7
|
)
|
|
(11.6
|
)
|
|
(19.3
|
)
|
|
(23.4
|
)
|
||||
Equity in income of unconsolidated investments
|
8.8
|
|
|
7.7
|
|
|
15.3
|
|
|
13.8
|
|
||||
Miscellaneous, net
|
0.3
|
|
|
0.7
|
|
|
0.4
|
|
|
0.7
|
|
||||
Total other expense
|
(0.6
|
)
|
|
(3.2
|
)
|
|
(3.6
|
)
|
|
(8.9
|
)
|
||||
Income from continuing operations before provision for income taxes
|
136.0
|
|
|
119.7
|
|
|
152.7
|
|
|
122.5
|
|
||||
Income tax provision
|
(32.8
|
)
|
|
(47.0
|
)
|
|
(35.4
|
)
|
|
(47.6
|
)
|
||||
Income from continuing operations, net of tax
|
103.2
|
|
|
72.7
|
|
|
117.3
|
|
|
74.9
|
|
||||
(Loss) income from discontinued operations, net of tax
|
(0.1
|
)
|
|
5.6
|
|
|
167.8
|
|
|
10.7
|
|
||||
Net income
|
$
|
103.1
|
|
|
$
|
78.3
|
|
|
$
|
285.1
|
|
|
$
|
85.6
|
|
Net income (loss) per common share data - basic:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
7.61
|
|
|
$
|
4.52
|
|
|
$
|
8.38
|
|
|
$
|
4.62
|
|
Discontinued operations
|
$
|
(0.01
|
)
|
|
$
|
0.34
|
|
|
$
|
11.98
|
|
|
$
|
0.65
|
|
Net income per common share data - basic:
|
$
|
7.60
|
|
|
$
|
4.86
|
|
|
$
|
20.36
|
|
|
$
|
5.27
|
|
Net income (loss) per common share data - diluted:
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
7.57
|
|
|
$
|
4.47
|
|
|
$
|
8.34
|
|
|
$
|
4.53
|
|
Discontinued operations
|
$
|
(0.02
|
)
|
|
$
|
0.34
|
|
|
$
|
11.92
|
|
|
$
|
0.65
|
|
Net income per common share data - diluted:
|
$
|
7.55
|
|
|
$
|
4.81
|
|
|
$
|
20.26
|
|
|
$
|
5.18
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
13.5
|
|
|
16.1
|
|
|
14.0
|
|
|
16.2
|
|
||||
Diluted
|
13.6
|
|
|
16.3
|
|
|
14.1
|
|
|
16.5
|
|
||||
Other comprehensive loss:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation, net of tax
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
|
(0.4
|
)
|
||||
Change in pension benefits, net of tax
|
(0.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
||||
Other comprehensive loss
|
(0.2
|
)
|
|
(0.3
|
)
|
|
(0.2
|
)
|
|
(0.4
|
)
|
||||
Comprehensive income
|
$
|
102.9
|
|
|
$
|
78.0
|
|
|
$
|
284.9
|
|
|
$
|
85.2
|
|
(in millions)
|
June 30, 2018
|
|
December 31, 2017
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
254.6
|
|
|
$
|
51.7
|
|
Restricted cash
|
40.1
|
|
|
31.2
|
|
||
Accounts receivable, net
|
37.3
|
|
|
49.6
|
|
||
Income taxes receivable
|
—
|
|
|
35.6
|
|
||
Other current assets
|
22.1
|
|
|
18.9
|
|
||
Current assets of discontinued operations held for sale
|
—
|
|
|
69.1
|
|
||
Total current assets
|
354.1
|
|
|
256.1
|
|
||
Property and equipment, net
|
668.5
|
|
|
608.0
|
|
||
Investment in and advances to unconsolidated affiliates
|
176.8
|
|
|
171.3
|
|
||
Goodwill
|
317.6
|
|
|
317.6
|
|
||
Other intangible assets, net
|
166.5
|
|
|
169.4
|
|
||
Other assets
|
13.1
|
|
|
13.6
|
|
||
Long-term assets of discontinued operations held for sale
|
—
|
|
|
823.4
|
|
||
Total assets
|
$
|
1,696.6
|
|
|
$
|
2,359.4
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
79.0
|
|
|
$
|
54.1
|
|
Purses payable
|
26.3
|
|
|
12.5
|
|
||
Account wagering deposit liabilities
|
31.5
|
|
|
24.0
|
|
||
Accrued expense
|
95.2
|
|
|
75.8
|
|
||
Income taxes payable
|
24.5
|
|
|
—
|
|
||
Current deferred revenue
|
13.6
|
|
|
70.9
|
|
||
Current maturities of long-term debt
|
4.0
|
|
|
4.0
|
|
||
Dividends payable
|
—
|
|
|
23.7
|
|
||
Current liabilities of discontinued operations held for sale
|
—
|
|
|
188.2
|
|
||
Total current liabilities
|
274.1
|
|
|
453.2
|
|
||
Long-term debt, net of current maturities and loan origination fees
|
389.0
|
|
|
632.9
|
|
||
Notes payable, net of debt issuance costs
|
492.7
|
|
|
492.3
|
|
||
Non-current deferred revenue
|
21.1
|
|
|
29.3
|
|
||
Deferred income taxes
|
48.6
|
|
|
40.6
|
|
||
Other liabilities
|
17.9
|
|
|
16.0
|
|
||
Non-current liabilities of discontinued operations held for sale
|
—
|
|
|
54.8
|
|
||
Total liabilities
|
1,243.4
|
|
|
1,719.1
|
|
||
Commitments and contingencies
|
|
|
|
||||
Shareholders' equity:
|
|
|
|
||||
Preferred stock, no par value; 0.3 shares authorized; no shares issued or outstanding
|
—
|
|
|
—
|
|
||
Common stock, no par value; 50.0 shares authorized; 13.6 shares issued and outstanding at June 30, 2018 and 15.4 shares at December 31, 2017
|
6.0
|
|
|
7.3
|
|
||
Retained earnings
|
448.1
|
|
|
634.3
|
|
||
Accumulated other comprehensive loss
|
(0.9
|
)
|
|
(1.3
|
)
|
||
Total shareholders' equity
|
453.2
|
|
|
640.3
|
|
||
Total liabilities and shareholders' equity
|
$
|
1,696.6
|
|
|
$
|
2,359.4
|
|
|
Six Months Ended June 30,
|
||||||
(in millions)
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
285.1
|
|
|
$
|
85.6
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
29.1
|
|
|
49.3
|
|
||
Game software development amortization
|
0.4
|
|
|
8.7
|
|
||
Gain on sale of Big Fish Games
|
(219.5
|
)
|
|
—
|
|
||
Distributed earnings from unconsolidated affiliates
|
9.9
|
|
|
8.7
|
|
||
Equity in income of unconsolidated affiliates
|
(15.3
|
)
|
|
(13.8
|
)
|
||
Stock-based compensation
|
12.6
|
|
|
11.7
|
|
||
Deferred income taxes
|
6.9
|
|
|
—
|
|
||
Big Fish Games earnout payment
|
(2.4
|
)
|
|
(2.5
|
)
|
||
Big Fish Games deferred payment
|
(2.0
|
)
|
|
—
|
|
||
Other
|
1.7
|
|
|
1.7
|
|
||
Increase (decrease) in cash resulting from changes in operating assets and liabilities, net of business acquisitions and dispositions:
|
|
|
|
||||
Game software development
|
(0.3
|
)
|
|
(11.3
|
)
|
||
Income taxes
|
55.3
|
|
|
50.0
|
|
||
Deferred revenue
|
(43.7
|
)
|
|
(34.9
|
)
|
||
Other assets and liabilities
|
44.5
|
|
|
15.2
|
|
||
Net cash provided by operating activities
|
162.3
|
|
|
168.4
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital maintenance expenditures
|
(13.7
|
)
|
|
(17.9
|
)
|
||
Capital project expenditures
|
(58.7
|
)
|
|
(46.1
|
)
|
||
Acquisition of a business
|
—
|
|
|
(23.1
|
)
|
||
Proceeds from sale of Big Fish Games
|
970.7
|
|
|
—
|
|
||
Receivable from escrow
|
—
|
|
|
13.6
|
|
||
Investment in unconsolidated affiliates
|
—
|
|
|
(24.0
|
)
|
||
Other
|
(5.9
|
)
|
|
0.2
|
|
||
Net cash provided by (used in) investing activities
|
892.4
|
|
|
(97.3
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from borrowings under long-term debt obligations
|
117.2
|
|
|
543.6
|
|
||
Repayments of borrowings under long-term debt obligations
|
(361.3
|
)
|
|
(394.2
|
)
|
||
Big Fish Games earnout payment
|
(31.8
|
)
|
|
(31.7
|
)
|
||
Big Fish Games deferred payment
|
(26.4
|
)
|
|
—
|
|
||
Payment of dividends
|
(23.5
|
)
|
|
(21.8
|
)
|
||
Repurchase of common stock
|
(514.7
|
)
|
|
(181.0
|
)
|
||
Other
|
(4.4
|
)
|
|
3.8
|
|
||
Net cash used in financing activities
|
(844.9
|
)
|
|
(81.3
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
209.8
|
|
|
(10.2
|
)
|
||
Effect of exchange rate changes on cash
|
(0.6
|
)
|
|
0.6
|
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
85.5
|
|
|
83.0
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
294.7
|
|
|
$
|
73.4
|
|
|
Six Months Ended June 30,
|
||||||
(in millions)
|
2018
|
|
2017
|
||||
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Cash paid during the period for:
|
|
|
|
||||
Interest
|
$
|
8.5
|
|
|
$
|
21.4
|
|
Income taxes
|
23.7
|
|
|
9.0
|
|
||
Schedule of non-cash investing and financing activities:
|
|
|
|
||||
Property and equipment additions included in accounts payable and accrued expenses
|
21.9
|
|
|
—
|
|
|
At June 30, 2018
|
||||||||||
(in millions)
|
As Reported
|
|
Balances without Adoption of ASC 606
|
|
Effect of Change Increase/(Decrease)
|
||||||
ASSETS
|
|
|
|
|
|
||||||
Accounts receivable, net
|
$
|
37.3
|
|
|
$
|
38.0
|
|
|
$
|
(0.7
|
)
|
Other assets
|
13.1
|
|
|
14.9
|
|
|
(1.8
|
)
|
|||
|
|
|
|
|
|
||||||
LIABILITIES
|
|
|
|
|
|
||||||
Accrued expense
|
95.2
|
|
|
94.4
|
|
|
0.8
|
|
|||
Income taxes payable
|
24.5
|
|
|
24.3
|
|
|
0.2
|
|
|||
Current deferred revenue
|
13.6
|
|
|
15.4
|
|
|
(1.8
|
)
|
|||
Non-current deferred revenue
|
21.1
|
|
|
23.6
|
|
|
(2.5
|
)
|
|||
Deferred income taxes
|
48.6
|
|
|
48.4
|
|
|
0.2
|
|
|||
|
|
|
|
|
|
||||||
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
||||||
Retained earnings
|
448.1
|
|
|
447.5
|
|
|
0.6
|
|
|
Six Months Ended June 30, 2017
|
||||||||||
(in millions)
|
As Previously Reported
|
|
Adoption of ASU 2016-18
|
|
As Adjusted
|
||||||
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
$
|
171.1
|
|
|
$
|
(2.7
|
)
|
|
$
|
168.4
|
|
|
|
|
|
|
|
||||||
Cash, cash equivalents and restricted cash, beginning of period
|
$
|
48.7
|
|
|
$
|
34.3
|
|
|
$
|
83.0
|
|
Net decrease in cash, cash equivalents and restricted cash
|
(7.5
|
)
|
|
(2.7
|
)
|
|
(10.2
|
)
|
|||
Effect of exchange rate changes on cash
|
0.6
|
|
|
—
|
|
|
0.6
|
|
|||
Cash, cash equivalents and restricted cash, end of period
|
$
|
41.8
|
|
|
$
|
31.6
|
|
|
$
|
73.4
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net revenue
|
$
|
—
|
|
|
$
|
112.5
|
|
|
$
|
13.2
|
|
|
$
|
224.5
|
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
—
|
|
|
89.2
|
|
|
8.4
|
|
|
176.2
|
|
||||
Selling, general and administrative expense
|
0.6
|
|
|
6.7
|
|
|
4.9
|
|
|
12.2
|
|
||||
Research and development
|
—
|
|
|
9.9
|
|
|
0.9
|
|
|
20.2
|
|
||||
Transaction expense, net
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.4
|
|
||||
Total operating expense
|
0.6
|
|
|
106.0
|
|
|
14.2
|
|
|
209.0
|
|
||||
Operating (loss) income
|
(0.6
|
)
|
|
6.5
|
|
|
(1.0
|
)
|
|
15.5
|
|
||||
Other income (expense)
|
|
|
|
|
|
|
|
||||||||
Gain on sale of Big Fish Games
|
—
|
|
|
—
|
|
|
219.5
|
|
|
—
|
|
||||
Other expense
|
—
|
|
|
(0.4
|
)
|
|
(0.1
|
)
|
|
(0.4
|
)
|
||||
Total other income (loss)
|
—
|
|
|
(0.4
|
)
|
|
219.4
|
|
|
(0.4
|
)
|
||||
(Loss) income from discontinued operations before provision for income taxes
|
(0.6
|
)
|
|
6.1
|
|
|
218.4
|
|
|
15.1
|
|
||||
Income tax benefit (provision)
|
0.5
|
|
|
(0.5
|
)
|
|
(50.6
|
)
|
|
(4.4
|
)
|
||||
(Loss) income from discontinued operations, net of tax
|
$
|
(0.1
|
)
|
|
$
|
5.6
|
|
|
$
|
167.8
|
|
|
$
|
10.7
|
|
•
|
50%
joint venture ownership in Miami Valley Gaming ("MVG") in Lebanon, Ohio;
|
•
|
25%
equity investment in Saratoga Casino Holdings LLC ("SCH"), which owns Saratoga Casino Hotel in Saratoga Springs, New York ("Saratoga New York") and Saratoga Casino Black Hawk in Black Hawk, Colorado ("Saratoga Colorado"); and
|
•
|
50%
equity investment in Ocean Downs LLC and Services Racing LLC ("Ocean Downs") located near Ocean City, Maryland. SCH owns the remaining 50% of Ocean Downs, providing the Company an effective
62.5%
interest.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net revenue
|
$
|
114.5
|
|
|
$
|
109.4
|
|
|
$
|
216.1
|
|
|
$
|
212.7
|
|
|
|
|
|
|
|
|
|
||||||||
Operating and SG&A expense
|
84.4
|
|
|
83.8
|
|
|
163.3
|
|
|
165.5
|
|
||||
Depreciation and amortization
|
6.6
|
|
|
5.1
|
|
|
13.1
|
|
|
10.9
|
|
||||
Total operating expense
|
91.0
|
|
|
88.9
|
|
|
176.4
|
|
|
176.4
|
|
||||
Operating income
|
23.5
|
|
|
20.5
|
|
|
39.7
|
|
|
36.3
|
|
||||
Interest and other expense, net
|
(2.6
|
)
|
|
(2.7
|
)
|
|
(4.9
|
)
|
|
(5.3
|
)
|
||||
Net income
|
$
|
20.9
|
|
|
$
|
17.8
|
|
|
$
|
34.8
|
|
|
$
|
31.0
|
|
(in millions)
|
June 30, 2018
|
|
December 31, 2017
|
||||
Assets
|
|
|
|
||||
Current assets
|
$
|
71.1
|
|
|
$
|
64.5
|
|
Property and equipment, net
|
231.0
|
|
|
234.6
|
|
||
Other assets, net
|
241.0
|
|
|
236.5
|
|
||
Total assets
|
$
|
543.1
|
|
|
$
|
535.6
|
|
|
|
|
|
||||
Liabilities and Members' Equity
|
|
|
|
||||
Current liabilities
|
$
|
96.8
|
|
|
$
|
100.3
|
|
Long-term debt
|
104.6
|
|
|
110.1
|
|
||
Other liabilities
|
1.2
|
|
|
0.1
|
|
||
Members' equity
|
340.5
|
|
|
325.1
|
|
||
Total liabilities and members' equity
|
$
|
543.1
|
|
|
$
|
535.6
|
|
(in millions)
|
Racing
|
|
TwinSpires
|
|
Casino
|
|
Total
|
||||||||
Balances as of December 31, 2017
|
$
|
51.7
|
|
|
$
|
148.2
|
|
|
$
|
117.7
|
|
|
$
|
317.6
|
|
Additions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Balances as of June 30, 2018
|
$
|
51.7
|
|
|
$
|
148.2
|
|
|
$
|
117.7
|
|
|
$
|
317.6
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
(in millions)
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||||||||
Definite-lived intangible assets
|
$
|
40.0
|
|
|
$
|
(23.7
|
)
|
|
$
|
16.3
|
|
|
$
|
39.8
|
|
|
$
|
(20.6
|
)
|
|
$
|
19.2
|
|
Indefinite-lived intangible assets
|
|
|
|
|
150.2
|
|
|
|
|
|
|
150.2
|
|
||||||||||
Total
|
|
|
|
|
|
|
$
|
166.5
|
|
|
|
|
|
|
$
|
169.4
|
|
|
Level 1
|
||||||
(in millions)
|
June 30, 2018
|
|
December 31, 2017
|
||||
Cash equivalents and restricted cash
|
$
|
40.1
|
|
|
$
|
31.2
|
|
Grant Year
|
|
Award Type
|
|
Number of Shares/Units Awarded
(in thousands)
|
|
Vesting Terms
|
|
|
|
|
|
|
|
2018
|
|
RSA
|
|
18
|
|
Vest equally over three service periods ending in February of 2019, 2020, and 2021
|
2018
|
|
RSU
|
|
16
|
|
Vest equally over three service periods ending December 31 of 2018, 2019, and 2020
|
2018
|
|
PSU
|
|
16
|
|
Three year performance and service period ending December 31, 2020
|
2018
|
|
RSU
|
|
3
|
|
One year service period ending in April 2019
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions, except per share data)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Numerator for basic net income per common share:
|
|
|
|
|
|
|
|
||||||||
Net income from continuing operations
|
$
|
103.2
|
|
|
$
|
72.7
|
|
|
$
|
117.3
|
|
|
$
|
74.9
|
|
Net loss from continuing operations allocated to participating securities
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
||||
Net (loss) income from discontinued operations
|
(0.1
|
)
|
|
5.6
|
|
|
167.8
|
|
|
10.7
|
|
||||
Numerator for basic net income per common share
|
$
|
103.1
|
|
|
$
|
78.3
|
|
|
$
|
285.1
|
|
|
$
|
85.5
|
|
|
|
|
|
|
|
|
|
||||||||
Numerator for diluted net income from continuing operations per common share
|
$
|
103.2
|
|
|
$
|
72.7
|
|
|
$
|
117.3
|
|
|
$
|
74.9
|
|
Numerator for diluted net income per common share:
|
$
|
103.1
|
|
|
$
|
78.3
|
|
|
$
|
285.1
|
|
|
$
|
85.6
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator for net income per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
13.5
|
|
|
16.1
|
|
|
14.0
|
|
|
16.2
|
|
||||
Plus dilutive effect of stock awards
|
0.1
|
|
|
0.2
|
|
|
0.1
|
|
|
0.2
|
|
||||
Plus dilutive effect of participating securities
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
||||
Diluted
|
13.6
|
|
|
16.3
|
|
|
14.1
|
|
|
16.5
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per common share data:
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
7.61
|
|
|
$
|
4.52
|
|
|
$
|
8.38
|
|
|
$
|
4.62
|
|
Discontinued operations
|
$
|
(0.01
|
)
|
|
$
|
0.34
|
|
|
$
|
11.98
|
|
|
$
|
0.65
|
|
Net income per common share - basic
|
$
|
7.60
|
|
|
$
|
4.86
|
|
|
$
|
20.36
|
|
|
$
|
5.27
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
7.57
|
|
|
$
|
4.47
|
|
|
$
|
8.34
|
|
|
$
|
4.53
|
|
Discontinued operations
|
$
|
(0.02
|
)
|
|
$
|
0.34
|
|
|
$
|
11.92
|
|
|
$
|
0.65
|
|
Net income per common share - diluted
|
$
|
7.55
|
|
|
$
|
4.81
|
|
|
$
|
20.26
|
|
|
$
|
5.18
|
|
•
|
Racing, which includes Churchill Downs Racetrack ("Churchill Downs"), Arlington International Race Course ("Arlington"), Fair Grounds Race Course ("Fair Grounds") and Calder Race Course ("Calder");
|
•
|
TwinSpires, which includes TwinSpires.com, Fair Grounds Account Wagering, Velocity, BetAmerica and Bloodstock Research Information Services;
|
•
|
Casino, which includes Oxford Casino ("Oxford"), Riverwalk Casino ("Riverwalk"), Harlow's Casino ("Harlow’s"), Calder Casino, Fair Grounds Slots, Video Services, LLC ("VSI"), 50% equity investment in MVG, 50% equity investment
|
•
|
Other Investments, which includes United Tote and other minor investments; and
|
•
|
Corporate, which includes miscellaneous and other revenue, compensation expense, professional fees and other general and administrative expense not allocated to our other operating segments.
|
•
|
Transaction expense, net which includes:
|
•
|
Acquisition and disposition related charges, including fair value adjustments related to earnouts and deferred payments; and
|
•
|
Other transaction expense, including legal, accounting, and other deal-related expense;
|
•
|
Stock-based compensation expense;
|
•
|
Asset impairments;
|
•
|
Gain on Calder land sale;
|
•
|
Calder exit costs;
|
•
|
Loss on extinguishment of debt;
|
•
|
Pre-opening expense; and
|
•
|
Other charges, recoveries and expenses
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net revenue from external customers:
|
|
|
|
|
|
|
|
||||||||
Racing:
|
|
|
|
|
|
|
|
||||||||
Churchill Downs
|
$
|
154.9
|
|
|
$
|
136.7
|
|
|
$
|
156.9
|
|
|
$
|
139.0
|
|
Arlington
|
17.7
|
|
|
18.0
|
|
|
26.0
|
|
|
26.5
|
|
||||
Fair Grounds
|
9.2
|
|
|
10.0
|
|
|
22.0
|
|
|
22.5
|
|
||||
Calder
|
0.7
|
|
|
0.6
|
|
|
1.3
|
|
|
1.2
|
|
||||
Total Racing
|
182.5
|
|
|
165.3
|
|
|
206.2
|
|
|
189.2
|
|
||||
TwinSpires
|
93.7
|
|
|
80.5
|
|
|
156.9
|
|
|
132.5
|
|
||||
Casino:
|
|
|
|
|
|
|
|
||||||||
Oxford Casino
|
26.2
|
|
|
23.1
|
|
|
50.4
|
|
|
44.0
|
|
||||
Riverwalk Casino
|
13.6
|
|
|
12.0
|
|
|
28.0
|
|
|
23.5
|
|
||||
Harlow’s Casino
|
12.5
|
|
|
12.5
|
|
|
25.8
|
|
|
26.0
|
|
||||
Calder Casino
|
25.3
|
|
|
21.8
|
|
|
49.6
|
|
|
43.2
|
|
||||
Fair Grounds Slots
|
9.2
|
|
|
8.8
|
|
|
19.8
|
|
|
19.0
|
|
||||
VSI
|
11.1
|
|
|
9.8
|
|
|
22.1
|
|
|
19.5
|
|
||||
Saratoga
|
0.3
|
|
|
0.3
|
|
|
0.6
|
|
|
0.6
|
|
||||
Total Casino
|
98.2
|
|
|
88.3
|
|
|
196.3
|
|
|
175.8
|
|
||||
Other Investments
|
5.0
|
|
|
5.2
|
|
|
9.3
|
|
|
9.3
|
|
||||
Net revenue from external customers
|
$
|
379.4
|
|
|
$
|
339.3
|
|
|
$
|
568.7
|
|
|
$
|
506.8
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Intercompany net revenue:
|
|
|
|
|
|
|
|
||||||||
Racing:
|
|
|
|
|
|
|
|
||||||||
Churchill Downs
|
$
|
9.4
|
|
|
$
|
8.4
|
|
|
$
|
9.7
|
|
|
$
|
8.7
|
|
Arlington
|
2.1
|
|
|
1.9
|
|
|
3.3
|
|
|
2.9
|
|
||||
Fair Grounds
|
0.1
|
|
|
0.1
|
|
|
1.1
|
|
|
1.0
|
|
||||
Total Racing
|
11.6
|
|
|
10.4
|
|
|
14.1
|
|
|
12.6
|
|
||||
TwinSpires
|
0.4
|
|
|
0.3
|
|
|
0.8
|
|
|
0.6
|
|
||||
Other Investments
|
1.5
|
|
|
1.3
|
|
|
2.7
|
|
|
2.7
|
|
||||
Eliminations
|
(13.5
|
)
|
|
(12.0
|
)
|
|
(17.6
|
)
|
|
(15.9
|
)
|
||||
Intercompany net revenue
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||
(in millions)
|
Racing
|
|
TwinSpires
|
|
Casino
|
|
Other Investments
|
|
Corporate
|
||||||||||
Net revenue
|
$
|
194.1
|
|
|
$
|
94.1
|
|
|
$
|
98.2
|
|
|
$
|
6.5
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Taxes & purses
|
(34.4
|
)
|
|
(4.6
|
)
|
|
(33.4
|
)
|
|
—
|
|
|
—
|
|
|||||
Marketing & advertising
|
(3.6
|
)
|
|
(3.1
|
)
|
|
(3.5
|
)
|
|
(0.1
|
)
|
|
—
|
|
|||||
Salaries & benefits
|
(15.3
|
)
|
|
(2.4
|
)
|
|
(13.6
|
)
|
|
(3.6
|
)
|
|
—
|
|
|||||
Content expense
|
(4.7
|
)
|
|
(49.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
SG&A expense
|
(4.6
|
)
|
|
(2.9
|
)
|
|
(5.6
|
)
|
|
(0.7
|
)
|
|
(2.6
|
)
|
|||||
Other operating expense
|
(22.8
|
)
|
|
(8.2
|
)
|
|
(11.1
|
)
|
|
(1.1
|
)
|
|
(0.1
|
)
|
|||||
Other income
|
0.4
|
|
|
—
|
|
|
12.9
|
|
|
0.1
|
|
|
—
|
|
|||||
Adjusted EBITDA
|
$
|
109.1
|
|
|
$
|
23.1
|
|
|
$
|
43.9
|
|
|
$
|
1.1
|
|
|
$
|
(2.7
|
)
|
|
Three Months Ended June 30, 2017
|
||||||||||||||||||
(in millions)
|
Racing
|
|
TwinSpires
|
|
Casino
|
|
Other Investments
|
|
Corporate
(a)
|
||||||||||
Net revenue
|
$
|
175.7
|
|
|
$
|
80.8
|
|
|
$
|
88.3
|
|
|
$
|
6.5
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Taxes & purses
|
(32.9
|
)
|
|
(4.1
|
)
|
|
(29.7
|
)
|
|
—
|
|
|
—
|
|
|||||
Marketing & advertising
|
(2.2
|
)
|
|
(4.6
|
)
|
|
(3.0
|
)
|
|
—
|
|
|
—
|
|
|||||
Salaries & benefits
|
(13.5
|
)
|
|
(2.6
|
)
|
|
(13.4
|
)
|
|
(3.3
|
)
|
|
—
|
|
|||||
Content expense
|
(4.7
|
)
|
|
(40.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
SG&A expense
|
(4.2
|
)
|
|
(3.0
|
)
|
|
(5.6
|
)
|
|
(0.7
|
)
|
|
(2.5
|
)
|
|||||
Other operating expense
|
(20.0
|
)
|
|
(7.0
|
)
|
|
(9.8
|
)
|
|
(1.2
|
)
|
|
(0.3
|
)
|
|||||
Other income
|
0.5
|
|
|
—
|
|
|
10.7
|
|
|
—
|
|
|
—
|
|
|||||
Adjusted EBITDA
|
$
|
98.7
|
|
|
$
|
19.3
|
|
|
$
|
37.5
|
|
|
$
|
1.3
|
|
|
$
|
(2.8
|
)
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||
(in millions)
|
Racing
|
|
TwinSpires
|
|
Casinos
|
|
Other Investments
|
|
Corporate
|
||||||||||
Net revenue
|
$
|
220.3
|
|
|
$
|
157.7
|
|
|
$
|
196.3
|
|
|
$
|
12.0
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Taxes & purses
|
(44.7
|
)
|
|
(8.0
|
)
|
|
(65.8
|
)
|
|
—
|
|
|
—
|
|
|||||
Marketing & advertising
|
(4.4
|
)
|
|
(3.9
|
)
|
|
(6.7
|
)
|
|
(0.1
|
)
|
|
—
|
|
|||||
Salaries & benefits
|
(23.9
|
)
|
|
(4.5
|
)
|
|
(27.1
|
)
|
|
(6.8
|
)
|
|
—
|
|
|||||
Content expense
|
(7.8
|
)
|
|
(82.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
SG&A expense
|
(8.6
|
)
|
|
(5.7
|
)
|
|
(11.0
|
)
|
|
(1.4
|
)
|
|
(5.0
|
)
|
|||||
Other operating expense
|
(31.6
|
)
|
|
(14.0
|
)
|
|
(21.2
|
)
|
|
(2.4
|
)
|
|
(0.3
|
)
|
|||||
Other income
|
0.4
|
|
|
—
|
|
|
23.7
|
|
|
0.1
|
|
|
0.1
|
|
|||||
Adjusted EBITDA
|
$
|
99.7
|
|
|
$
|
39.6
|
|
|
$
|
88.2
|
|
|
$
|
1.4
|
|
|
$
|
(5.2
|
)
|
|
Six Months Ended June 30, 2017
|
||||||||||||||||||
(in millions)
|
Racing
|
|
TwinSpires
|
|
Casinos
|
|
Other Investments
|
|
Corporate
(a)
|
||||||||||
Net revenue
|
$
|
201.8
|
|
|
$
|
133.1
|
|
|
$
|
175.8
|
|
|
$
|
12.0
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Taxes & purses
|
(43.1
|
)
|
|
(7.1
|
)
|
|
(58.8
|
)
|
|
—
|
|
|
—
|
|
|||||
Marketing & advertising
|
(2.9
|
)
|
|
(5.6
|
)
|
|
(6.0
|
)
|
|
—
|
|
|
—
|
|
|||||
Salaries & benefits
|
(22.1
|
)
|
|
(4.8
|
)
|
|
(26.5
|
)
|
|
(6.2
|
)
|
|
—
|
|
|||||
Content expense
|
(7.9
|
)
|
|
(65.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
SG&A expense
|
(8.0
|
)
|
|
(5.7
|
)
|
|
(10.8
|
)
|
|
(1.5
|
)
|
|
(5.4
|
)
|
|||||
Other operating expense
|
(29.3
|
)
|
|
(11.8
|
)
|
|
(21.2
|
)
|
|
(2.5
|
)
|
|
(0.5
|
)
|
|||||
Other income
|
0.5
|
|
|
—
|
|
|
20.3
|
|
|
0.1
|
|
|
—
|
|
|||||
Adjusted EBITDA
|
$
|
89.0
|
|
|
$
|
32.5
|
|
|
$
|
72.8
|
|
|
$
|
1.9
|
|
|
$
|
(5.9
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Reconciliation of Comprehensive Income to Adjusted EBITDA:
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income
|
$
|
102.9
|
|
|
$
|
78.0
|
|
|
$
|
284.9
|
|
|
$
|
85.2
|
|
Foreign currency translation, net of tax
|
—
|
|
|
0.3
|
|
|
—
|
|
|
0.4
|
|
||||
Change in pension benefits, net of tax
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
||||
Net income
|
103.1
|
|
|
78.3
|
|
|
285.1
|
|
|
85.6
|
|
||||
Income from discontinued operations, net of tax
|
0.1
|
|
|
(5.6
|
)
|
|
(167.8
|
)
|
|
(10.7
|
)
|
||||
Income from continuing operations, net of tax
|
103.2
|
|
|
72.7
|
|
|
117.3
|
|
|
74.9
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Additions:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
15.3
|
|
|
14.4
|
|
|
29.1
|
|
|
28.6
|
|
||||
Interest expense
|
9.7
|
|
|
11.6
|
|
|
19.3
|
|
|
23.4
|
|
||||
Income tax provision
|
32.8
|
|
|
47.0
|
|
|
35.4
|
|
|
47.6
|
|
||||
EBITDA
|
161.0
|
|
|
145.7
|
|
|
201.1
|
|
|
174.5
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Adjustments to EBITDA:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative:
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense
|
6.4
|
|
|
4.4
|
|
|
9.2
|
|
|
7.8
|
|
||||
Other charges
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
||||
Pre-opening expense
|
0.7
|
|
|
0.3
|
|
|
1.3
|
|
|
0.3
|
|
||||
Other income, expense:
|
|
|
|
|
|
|
|
||||||||
Interest, depreciation and amortization expense related to equity investments
|
4.3
|
|
|
3.1
|
|
|
8.6
|
|
|
6.6
|
|
||||
Transaction expense, net
|
2.1
|
|
|
0.5
|
|
|
3.5
|
|
|
0.5
|
|
||||
Calder exit costs
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.6
|
|
||||
Total adjustments to EBITDA
|
13.5
|
|
|
8.3
|
|
|
22.6
|
|
|
15.8
|
|
||||
Adjusted EBITDA
|
$
|
174.5
|
|
|
$
|
154.0
|
|
|
$
|
223.7
|
|
|
$
|
190.3
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA by segment:
|
|
|
|
|
|
|
|
||||||||
Racing
|
$
|
109.1
|
|
|
$
|
98.7
|
|
|
$
|
99.7
|
|
|
$
|
89.0
|
|
TwinSpires
|
23.1
|
|
|
19.3
|
|
|
39.6
|
|
|
32.5
|
|
||||
Casino
|
43.9
|
|
|
37.5
|
|
|
88.2
|
|
|
72.8
|
|
||||
Other Investments
|
1.1
|
|
|
1.3
|
|
|
1.4
|
|
|
1.9
|
|
||||
Corporate
(a)
|
(2.7
|
)
|
|
(2.8
|
)
|
|
(5.2
|
)
|
|
(5.9
|
)
|
||||
Adjusted EBITDA
|
$
|
174.5
|
|
|
$
|
154.0
|
|
|
$
|
223.7
|
|
|
$
|
190.3
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Casino
|
$
|
8.8
|
|
|
$
|
7.7
|
|
|
$
|
15.3
|
|
|
$
|
13.8
|
|
(in millions)
|
June 30, 2018
|
|
December 31, 2017
|
||||
Total assets:
|
|
|
|
||||
Racing
|
$
|
496.4
|
|
|
$
|
483.0
|
|
TwinSpires
|
222.0
|
|
|
215.9
|
|
||
Casino
|
671.9
|
|
|
679.6
|
|
||
Other Investments
|
53.5
|
|
|
15.2
|
|
||
Corporate
|
252.8
|
|
|
73.2
|
|
||
Big Fish Games
|
—
|
|
|
892.5
|
|
||
|
$
|
1,696.6
|
|
|
$
|
2,359.4
|
|
|
Six Months Ended June 30,
|
||||||
(in millions)
|
2018
|
|
2017
|
||||
Capital expenditures:
|
|
|
|
||||
Racing
|
$
|
43.0
|
|
|
$
|
38.4
|
|
TwinSpires
|
4.7
|
|
|
5.2
|
|
||
Casino
|
5.9
|
|
|
15.6
|
|
||
Other Investments
|
17.6
|
|
|
0.7
|
|
||
Corporate
|
1.0
|
|
|
0.6
|
|
||
Big Fish Games
|
—
|
|
|
3.5
|
|
||
|
$
|
72.2
|
|
|
$
|
64.0
|
|
•
|
Transaction expense, net which includes:
|
•
|
Acquisition and disposition related charges, including fair value adjustments related to earnouts and deferred payments; and
|
•
|
Other transaction expense, including legal, accounting and other deal-related expense;
|
•
|
Stock-based compensation expense;
|
•
|
Asset impairments;
|
•
|
Gain on Calder land sale;
|
•
|
Calder exit costs;
|
•
|
Loss on extinguishment of debt;
|
•
|
Pre-opening expense; and
|
•
|
Other charges, recoveries and expenses
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
(in millions)
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||||
Net revenue
|
$
|
379.4
|
|
|
$
|
339.3
|
|
|
$
|
40.1
|
|
|
$
|
568.7
|
|
|
$
|
506.8
|
|
|
$
|
61.9
|
|
Operating income
|
136.6
|
|
|
122.9
|
|
|
13.7
|
|
|
156.3
|
|
|
131.4
|
|
|
24.9
|
|
||||||
Operating income margin
|
36
|
%
|
|
36
|
%
|
|
|
|
27
|
%
|
|
26
|
%
|
|
|
||||||||
Net income
|
$
|
103.1
|
|
|
$
|
78.3
|
|
|
$
|
24.8
|
|
|
$
|
285.1
|
|
|
$
|
85.6
|
|
|
$
|
199.5
|
|
Adjusted EBITDA
|
174.5
|
|
|
154.0
|
|
|
20.5
|
|
|
223.7
|
|
|
190.3
|
|
|
33.4
|
|
•
|
Our net revenue increased
$40.1 million
driven by a $17.2 million increase from Racing primarily from a successful Kentucky Derby and Oaks week driven by increased ticket sales and handle, a $13.2 million increase from TwinSpires due to a 12.2% increase in handle and a $9.9 million increase from Casino primarily from successful marketing and promotional activities. Partially offsetting these increases was a $0.2 million decrease from Other Investments.
|
•
|
Our operating income increased
$13.7 million
driven by an $8.4 million increase from Racing primarily driven by the increase in net revenue from a successful Kentucky Derby and Oaks week driven by increased ticket sales and handle, a $5.2 million increase from TwinSpires due to the increase in handle, and a $4.7 million increase from our Casino segment primarily driven by the increase in net revenue from successful marketing and promotional activities. Partially offsetting these increases was a $3.3 million increase in selling, general and administrative expense primarily driven by stock-based compensation, a $1.2 million increase in transaction expenses, net due to acquisition-related expenses, and a $0.1 million increase from other expenses.
|
•
|
Our net income increased
$24.8 million
driven by a
$13.7 million
increase in operating income, a $14.2 million decrease in our income tax provision primarily due to the reduction in the statutory corporate tax rate from 35% to 21% as a result of the Tax Cuts and Jobs Act compared to prior year, a $1.9 million decrease in interest expense, net associated with lower outstanding debt balances, and a $1.1 million increase from equity in income of unconsolidated investments due to strong performances at Ocean Downs and MVG. Partially offsetting these increases was a $5.5 million decrease in Big Fish Games' net income and a $0.6 million decrease from other sources.
|
•
|
Our adjusted EBITDA increased
$20.5 million
driven by a $10.4 million increase from Racing primarily driven from a successful Kentucky Derby and Oaks week driven by increased ticket sales and handle, a $6.4 million increase from Casino primarily due to organic growth from successful marketing and promotional activities at certain properties and our unconsolidated investments, and a $3.8 million increase at TwinSpires driven by the increase in handle. Partially offsetting these increases was a $0.1 million decrease from other sources.
|
•
|
Our net revenue increased $61.9 million driven by an $24.4 million increase from TwinSpires due to a 15.3% increase in handle, a $20.5 million increase from Casino primarily from successful marketing and promotional activities, and a $17.0 million increase from Racing primarily from a successful Kentucky Derby and Oaks week driven by increased ticket sales and handle.
|
•
|
Our operating income increased $24.9 million driven by a $13.2 million increase from Casino primarily driven by the increase in net revenue from successful marketing and promotional activities, an $8.8 million increase from TwinSpires due to the increase in handle, and an $8.7 million increase in Racing primarily from a successful Kentucky Derby and Oaks week driven by increased ticket sales and handle. Partially offsetting these increases was a $3.1 million increase in selling, general and administrative expense primarily driven by stock-based compensation and a $2.6 million increase in transaction expenses, net due to acquisition-related expenses, and a $0.1 million decrease from other sources.
|
•
|
Our net income increased $199.5 million driven by a $24.9 million increase in operating income, a $168.3 million after tax gain on the Big Fish Transaction, a $12.2 million decrease in our income tax provision primarily due to the reduction in the statutory corporate tax rate from 35% to 21% as a result of the Tax Cuts and Jobs Act compared to prior year, a $4.1 million decrease in interest expense, net associated with lower outstanding debt balances, and a $1.5 million increase from equity in income of unconsolidated investments primarily due to strong performances at Ocean Downs and MVG. Offsetting these increases was an $11.0 million decrease in Big Fish net income and a $0.5 million decrease from other sources.
|
•
|
Our adjusted EBITDA increased $33.4 million driven by a $15.4 million increase from Casino primarily due to organic growth from successful marketing and promotional activities at certain properties and our unconsolidated investments, a $10.7 million increase from Racing primarily due to a successful Kentucky Derby and Oaks week driven by increased
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
(in millions)
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||||
Racing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Churchill Downs
|
$
|
164.3
|
|
|
$
|
145.1
|
|
|
$
|
19.2
|
|
|
$
|
166.6
|
|
|
$
|
147.7
|
|
|
$
|
18.9
|
|
Arlington
|
19.8
|
|
|
19.9
|
|
|
(0.1
|
)
|
|
29.3
|
|
|
29.4
|
|
|
(0.1
|
)
|
||||||
Fair Grounds
|
9.3
|
|
|
10.1
|
|
|
(0.8
|
)
|
|
23.1
|
|
|
23.5
|
|
|
(0.4
|
)
|
||||||
Calder
|
0.7
|
|
|
0.6
|
|
|
0.1
|
|
|
1.3
|
|
|
1.2
|
|
|
0.1
|
|
||||||
Total Racing
|
194.1
|
|
|
175.7
|
|
|
18.4
|
|
|
220.3
|
|
|
201.8
|
|
|
18.5
|
|
||||||
TwinSpires
|
94.1
|
|
|
80.8
|
|
|
13.3
|
|
|
157.7
|
|
|
133.1
|
|
|
24.6
|
|
||||||
Casino:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Oxford Casino
|
26.2
|
|
|
23.1
|
|
|
3.1
|
|
|
50.4
|
|
|
44.0
|
|
|
6.4
|
|
||||||
Riverwalk Casino
|
13.6
|
|
|
12.0
|
|
|
1.6
|
|
|
28.0
|
|
|
23.5
|
|
|
4.5
|
|
||||||
Harlow's Casino
|
12.5
|
|
|
12.5
|
|
|
—
|
|
|
25.8
|
|
|
26.0
|
|
|
(0.2
|
)
|
||||||
Calder Casino
|
25.3
|
|
|
21.8
|
|
|
3.5
|
|
|
49.6
|
|
|
43.2
|
|
|
6.4
|
|
||||||
Fair Grounds Slots
|
9.2
|
|
|
8.8
|
|
|
0.4
|
|
|
19.8
|
|
|
19.0
|
|
|
0.8
|
|
||||||
VSI
|
11.1
|
|
|
9.8
|
|
|
1.3
|
|
|
22.1
|
|
|
19.5
|
|
|
2.6
|
|
||||||
Saratoga
|
0.3
|
|
|
0.3
|
|
|
—
|
|
|
0.6
|
|
|
0.6
|
|
|
—
|
|
||||||
Total Casino
|
98.2
|
|
|
88.3
|
|
|
9.9
|
|
|
196.3
|
|
|
175.8
|
|
|
20.5
|
|
||||||
Other Investments
|
6.5
|
|
|
6.5
|
|
|
—
|
|
|
12.0
|
|
|
12.0
|
|
|
—
|
|
||||||
Eliminations
|
(13.5
|
)
|
|
(12.0
|
)
|
|
(1.5
|
)
|
|
(17.6
|
)
|
|
(15.9
|
)
|
|
(1.7
|
)
|
||||||
Net Revenue
|
$
|
379.4
|
|
|
$
|
339.3
|
|
|
$
|
40.1
|
|
|
$
|
568.7
|
|
|
$
|
506.8
|
|
|
$
|
61.9
|
|
•
|
Racing revenue increased
$18.4 million
driven by a $19.2 million increase at Churchill Downs primarily from a successful Kentucky Derby and Oaks week driven by increased ticket sales and handle. Partially offsetting this increase was a $0.8 million decrease at Fair Grounds primarily due to the shift in timing of the Louisiana Derby from April 2017 to March 2018.
|
•
|
TwinSpires revenue increased
$13.3 million
primarily due to a
12.2%
handle growth, which outpaced the U.S. thoroughbred industry performance by 7.2 percentage points.
|
•
|
Casino revenue increased
$9.9 million
driven by a $3.5 million increase at Calder Casino due to capital improvements and the temporary closure of a competitor due to Hurricane Irma which re-opened during the second quarter of 2018, a $3.1 million increase at Oxford due to the hotel opening in December 2017 and expanded gaming floor, a $1.7 million increase at our Louisiana properties, and a $1.6 million increase at Riverwalk, both of which resulted from successful marketing and promotional activities.
|
•
|
Racing revenue increased
$18.5 million
driven by an $18.9 million increase at Churchill Downs primarily from a successful Kentucky Derby and Oaks week driven by increased ticket sales and handle, partially offset by a $0.4 million decrease from other sources.
|
•
|
TwinSpires revenue increased
$24.6 million
primarily due to handle growth of
15.3%
, which outpaced the U.S. thoroughbred industry performance by 9.7 percentage points.
|
•
|
Casino revenue increased
$20.5 million
driven by a $6.4 million increase at Oxford due to the hotel opening in December 2017 and expanded gaming floor, a $6.4 million increase at Calder Casino due to capital improvements and the temporary closure of a competitor due to Hurricane Irma which re-opened during the second quarter of 2018, a $4.5 million increase at Riverwalk, and a $3.4 million increase at our Louisiana properties, both of which resulted from successful promotional activities. Partially offsetting these increases was a $0.2 million decrease at Harlow's.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Racing:
|
|
|
|
|
|
|
|
||||||||
Churchill Downs
|
|
|
|
|
|
|
|
||||||||
Race Days
|
38
|
|
|
38
|
|
|
38
|
|
|
38
|
|
||||
Total handle
|
$
|
470.6
|
|
|
$
|
443.7
|
|
|
$
|
477.8
|
|
|
$
|
452.7
|
|
Net pari-mutuel revenue
|
$
|
48.9
|
|
|
$
|
45.4
|
|
|
$
|
50.5
|
|
|
$
|
47.2
|
|
Commission %
|
10.4
|
%
|
|
10.2
|
%
|
|
10.6
|
%
|
|
10.4
|
%
|
||||
Arlington
|
|
|
|
|
|
|
|
||||||||
Race Days
|
26
|
|
|
24
|
|
|
26
|
|
|
24
|
|
||||
Total handle
|
$
|
120.9
|
|
|
$
|
119.4
|
|
|
$
|
177.0
|
|
|
$
|
177.4
|
|
Net pari-mutuel revenue
|
$
|
15.8
|
|
|
$
|
15.7
|
|
|
$
|
24.9
|
|
|
$
|
24.8
|
|
Commission %
|
13.1
|
%
|
|
13.1
|
%
|
|
14.1
|
%
|
|
14.0
|
%
|
||||
Fair Grounds
|
|
|
|
|
|
|
|
||||||||
Race Days
|
—
|
|
|
2
|
|
|
54
|
|
|
57
|
|
||||
Total handle
|
$
|
19.7
|
|
|
$
|
34.2
|
|
|
$
|
166.2
|
|
|
$
|
170.9
|
|
Net pari-mutuel revenue
|
$
|
4.4
|
|
|
$
|
5.3
|
|
|
$
|
15.8
|
|
|
$
|
16.3
|
|
Commission %
|
22.3
|
%
|
|
15.5
|
%
|
|
9.5
|
%
|
|
9.5
|
%
|
||||
Total Racing
|
|
|
|
|
|
|
|
||||||||
Race Days
|
64
|
|
|
64
|
|
|
118
|
|
|
119
|
|
||||
Total handle
|
$
|
611.2
|
|
|
$
|
597.3
|
|
|
$
|
821.0
|
|
|
$
|
801.0
|
|
Net pari-mutuel revenue
|
$
|
69.1
|
|
|
$
|
66.4
|
|
|
$
|
91.2
|
|
|
$
|
88.3
|
|
Commission %
|
11.3
|
%
|
|
11.1
|
%
|
|
11.1
|
%
|
|
11.0
|
%
|
||||
TwinSpires
(1)
|
|
|
|
|
|
|
|
||||||||
Total handle
|
$
|
452.0
|
|
|
$
|
402.9
|
|
|
$
|
756.1
|
|
|
$
|
655.8
|
|
Net pari-mutuel revenue
|
$
|
82.2
|
|
|
$
|
74.1
|
|
|
$
|
138.5
|
|
|
$
|
121.1
|
|
Commission %
|
18.2
|
%
|
|
18.4
|
%
|
|
18.3
|
%
|
|
18.5
|
%
|
||||
Eliminations
(2)
|
|
|
|
|
|
|
|
||||||||
Total handle
|
$
|
(100.2
|
)
|
|
$
|
(88.5
|
)
|
|
$
|
(118.4
|
)
|
|
$
|
(103.5
|
)
|
Net pari-mutuel revenue
|
$
|
(11.6
|
)
|
|
$
|
(10.1
|
)
|
|
$
|
(14.0
|
)
|
|
$
|
(10.9
|
)
|
Total
|
|
|
|
|
|
|
|
||||||||
Handle
|
$
|
963.0
|
|
|
$
|
911.7
|
|
|
$
|
1,458.7
|
|
|
$
|
1,353.3
|
|
Net pari-mutuel revenue
|
$
|
139.7
|
|
|
$
|
130.4
|
|
|
$
|
215.7
|
|
|
$
|
198.5
|
|
Commission %
|
14.5
|
%
|
|
14.3
|
%
|
|
14.8
|
%
|
|
14.7
|
%
|
(1)
|
Total handle and net pari-mutuel revenue generated by Velocity are not included in total handle and net pari-mutuel revenue from TwinSpires.
|
(2)
|
Eliminations include the elimination of intersegment transactions.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Oxford Casino
|
|
|
|
|
|
|
|
||||||||
Slot handle
|
$
|
257.9
|
|
|
$
|
209.2
|
|
|
$
|
480.0
|
|
|
$
|
395.4
|
|
Net slot revenue
|
20.3
|
|
|
17.7
|
|
|
38.3
|
|
|
33.4
|
|
||||
Net gaming revenue
|
24.6
|
|
|
22.1
|
|
|
47.3
|
|
|
41.9
|
|
||||
Riverwalk Casino
|
|
|
|
|
|
|
|
||||||||
Slot handle
|
$
|
174.4
|
|
|
$
|
158.4
|
|
|
$
|
353.0
|
|
|
$
|
289.4
|
|
Net slot revenue
|
11.6
|
|
|
10.2
|
|
|
23.8
|
|
|
20.0
|
|
||||
Net gaming revenue
|
13.0
|
|
|
11.4
|
|
|
26.7
|
|
|
22.4
|
|
||||
Harlow’s Casino
|
|
|
|
|
|
|
|
||||||||
Slot handle
|
$
|
149.4
|
|
|
$
|
140.8
|
|
|
$
|
298.2
|
|
|
$
|
288.4
|
|
Net slot revenue
|
10.9
|
|
|
10.7
|
|
|
22.8
|
|
|
22.5
|
|
||||
Net gaming revenue
|
11.8
|
|
|
11.7
|
|
|
24.5
|
|
|
24.6
|
|
||||
Calder Casino
|
|
|
|
|
|
|
|
||||||||
Slot handle
|
$
|
354.1
|
|
|
$
|
331.4
|
|
|
$
|
697.5
|
|
|
$
|
588.9
|
|
Net slot revenue
|
24.4
|
|
|
21.0
|
|
|
47.7
|
|
|
41.6
|
|
||||
Net gaming revenue
|
24.3
|
|
|
21.0
|
|
|
47.6
|
|
|
41.5
|
|
||||
Fair Grounds Slots and Video Poker
|
|
|
|
|
|
|
|
||||||||
Slot handle
|
$
|
106.0
|
|
|
$
|
98.2
|
|
|
$
|
222.5
|
|
|
$
|
214.9
|
|
Net slot revenue
|
8.9
|
|
|
8.4
|
|
|
19.2
|
|
|
18.4
|
|
||||
Net gaming revenue
|
20.0
|
|
|
18.2
|
|
|
41.2
|
|
|
37.8
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total net gaming revenue
|
$
|
93.7
|
|
|
$
|
84.4
|
|
|
$
|
187.3
|
|
|
$
|
168.2
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
(in millions)
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||||
Taxes & purses
|
$
|
72.4
|
|
|
$
|
66.7
|
|
|
$
|
5.7
|
|
|
$
|
118.5
|
|
|
$
|
109.0
|
|
|
$
|
9.5
|
|
Content expense
|
41.7
|
|
|
33.6
|
|
|
8.1
|
|
|
73.7
|
|
|
59.4
|
|
|
14.3
|
|
||||||
Salaries & benefits
|
34.9
|
|
|
32.8
|
|
|
2.1
|
|
|
62.3
|
|
|
59.6
|
|
|
2.7
|
|
||||||
Selling, general and administrative expense
|
23.1
|
|
|
20.2
|
|
|
2.9
|
|
|
41.5
|
|
|
38.8
|
|
|
2.7
|
|
||||||
Depreciation and amortization
|
15.3
|
|
|
14.4
|
|
|
0.9
|
|
|
29.1
|
|
|
28.6
|
|
|
0.5
|
|
||||||
Marketing & advertising
|
10.2
|
|
|
9.6
|
|
|
0.6
|
|
|
14.9
|
|
|
14.2
|
|
|
0.7
|
|
||||||
Transaction expense, net
|
2.1
|
|
|
0.5
|
|
|
1.6
|
|
|
3.5
|
|
|
0.5
|
|
|
3.0
|
|
||||||
Calder exit costs
|
—
|
|
|
0.2
|
|
|
(0.2
|
)
|
|
—
|
|
|
0.6
|
|
|
(0.6
|
)
|
||||||
Other operating expense
|
43.1
|
|
|
38.4
|
|
|
4.7
|
|
|
68.9
|
|
|
64.7
|
|
|
4.2
|
|
||||||
Total expense
|
$
|
242.8
|
|
|
$
|
216.4
|
|
|
$
|
26.4
|
|
|
$
|
412.4
|
|
|
$
|
375.4
|
|
|
$
|
37.0
|
|
Percent of net revenue
|
64
|
%
|
|
64
|
%
|
|
|
|
73
|
%
|
|
74
|
%
|
|
|
•
|
Taxes and purses increased
$5.7 million
driven by a $3.1 million increase generated by our Casino segment associated with an increase in slot handle, a $2.5 million increase in purses primarily driven by an increase at Churchill Downs, and a $0.1 million increase from other sources.
|
•
|
Content expense increased
$8.1 million
driven by the
16.4%
increase in net revenue for TwinSpires primarily due to the increase in handle.
|
•
|
Salaries and benefits expense increased
$2.1 million
driven by additional personnel costs and related benefits.
|
•
|
Selling, general and administrative expense increased
$2.9 million
driven primarily an increase in stock-based compensation expense.
|
•
|
Depreciation and amortization expense increased
$0.9 million
driven by a $1.2 million increase at Churchill Downs. Partially offsetting this increase was a $0.3 million decrease from other sources.
|
•
|
Transaction expense, net increased
$1.6 million
primarily due to acquisition-related expenses.
|
•
|
Other operating expense increased
$4.7 million
driven by a $2.3 million increase in contract services expense, a $0.7 million increase in maintenance expense at Churchill Downs from Kentucky Derby and Oaks week, and a $1.7 million increase from other sources.
|
•
|
Taxes and purses increased
$9.5 million
due to a $5.9 million increase generated by our Casino segment associated with an increase in slot handle, a $3.5 million increase in purses primarily driven by an increase at Churchill Downs, and a $0.1 million increase from other sources.
|
•
|
Content expense increased
$14.3 million
due to the
18.4%
increase in net revenue for TwinSpires primarily due to the increase in handle.
|
•
|
Salaries and benefits expense increased
$2.7 million
driven by additional personnel costs and related benefits.
|
•
|
Selling, general and administrative expense increased
$2.7 million
driven primarily by an increase in stock-based compensation expense.
|
•
|
Transaction expense, net increased
$3.0 million
primarily due to acquisition-related expenses.
|
•
|
Other operating expense increased
$4.2 million
driven by a $2.5 million increase in contract services expense, a $1.0 million increase in maintenance expense at Churchill Downs from Kentucky Derby and Oaks week, and a $0.7 million increase from other sources.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
(in millions)
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||||
Racing
|
$
|
(1.6
|
)
|
|
$
|
(1.4
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
(3.1
|
)
|
|
$
|
(2.8
|
)
|
|
$
|
(0.3
|
)
|
TwinSpires
|
(1.3
|
)
|
|
(1.3
|
)
|
|
—
|
|
|
(2.7
|
)
|
|
(2.5
|
)
|
|
(0.2
|
)
|
||||||
Casino
|
(2.1
|
)
|
|
(1.8
|
)
|
|
(0.3
|
)
|
|
(4.1
|
)
|
|
(3.5
|
)
|
|
(0.6
|
)
|
||||||
Other Investments
|
(0.4
|
)
|
|
(0.4
|
)
|
|
—
|
|
|
(0.7
|
)
|
|
(0.7
|
)
|
|
—
|
|
||||||
Corporate allocated expense
|
5.4
|
|
|
4.9
|
|
|
0.5
|
|
|
10.6
|
|
|
9.5
|
|
|
1.1
|
|
||||||
Total Corporate allocated expense
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
(in millions)
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||||
Racing
|
$
|
109.1
|
|
|
$
|
98.7
|
|
|
$
|
10.4
|
|
|
$
|
99.7
|
|
|
$
|
89.0
|
|
|
$
|
10.7
|
|
TwinSpires
|
23.1
|
|
|
19.3
|
|
|
3.8
|
|
|
39.6
|
|
|
32.5
|
|
|
7.1
|
|
||||||
Casino
|
43.9
|
|
|
37.5
|
|
|
6.4
|
|
|
88.2
|
|
|
72.8
|
|
|
15.4
|
|
||||||
Other Investments
|
1.1
|
|
|
1.3
|
|
|
(0.2
|
)
|
|
1.4
|
|
|
1.9
|
|
|
(0.5
|
)
|
||||||
Corporate
(a)
|
(2.7
|
)
|
|
(2.8
|
)
|
|
0.1
|
|
|
(5.2
|
)
|
|
(5.9
|
)
|
|
0.7
|
|
||||||
Adjusted EBITDA
|
$
|
174.5
|
|
|
$
|
154.0
|
|
|
$
|
20.5
|
|
|
$
|
223.7
|
|
|
$
|
190.3
|
|
|
$
|
33.4
|
|
•
|
Racing adjusted EBITDA increased
$10.4 million
due to a $11.1 million increase at Churchill Downs primarily from a successful Kentucky Derby and Oaks week driven by increased ticket sales and handle. This increase was partially offset by a $0.7 million decrease from Arlington and Fair Grounds Race Course.
|
•
|
TwinSpires adjusted EBITDA increased
$3.8 million
driven by the
12.2%
handle growth, which outpaced the U.S. thoroughbred industry performance by 7.2 percentage points.
|
•
|
Casino adjusted EBITDA increased
$6.4 million
driven by a $4.3 million increase from our wholly-owned Casino properties, including a $1.5 million increase at Calder Casino, a $1.3 million increase at Riverwalk, a $0.9 million increase at our Louisiana properties, and a $0.6 million increase at Oxford, all of which were due to successful marketing and promotional activities. Calder Casino also benefitted from capital improvements and the temporary closure of a competitor due to Hurricane Irma which re-opened during the second quarter of 2018, and Oxford also benefited from the hotel opening in December 2017 and expanded gaming floor. Our unconsolidated investments also contributed $2.1 million of the increase, primarily due to strong performance from Ocean Downs and MVG.
|
•
|
Racing adjusted EBITDA increased
$10.7 million
due to a $10.5 million increase at Churchill Downs primarily from a successful Kentucky Derby and Oaks week driven by increased ticket sales and handle and a $0.2 million increase from other sources.
|
•
|
TwinSpires adjusted EBITDA increased
$7.1 million
driven by the
15.3%
growth in handle, which outpaced the U.S. thoroughbred industry performance by 9.7 percentage points.
|
•
|
Casino adjusted EBITDA increased
$15.4 million
driven by a $12.1 million increase from our wholly-owned Casino properties, including a $4.6 million increase at our Mississippi properties, a $3.7 million increase at Calder Casino, a $2.0 million increase at Oxford, and a $1.8 million increase at our Louisiana properties, all of which were due to successful marketing and promotional activities. Calder Casino also benefitted from capital improvements and the temporary closure of a competitor due to Hurricane Irma which re-opened during the second quarter of 2018, and Oxford also benefited from the hotel opening in December 2017 and expanded gaming floor. Our unconsolidated investments also contributed $3.3 million of the increase, primarily due to strong performance from Ocean Downs and MVG.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
(in millions)
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||||
Comprehensive income
|
$
|
102.9
|
|
|
$
|
78.0
|
|
|
$
|
24.9
|
|
|
$
|
284.9
|
|
|
$
|
85.2
|
|
|
$
|
199.7
|
|
Foreign currency translation, net of tax
|
—
|
|
|
0.3
|
|
|
(0.3
|
)
|
|
—
|
|
|
0.4
|
|
|
(0.4
|
)
|
||||||
Change in pension benefits, net of tax
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
||||||
Net income
|
103.1
|
|
|
78.3
|
|
|
24.8
|
|
|
285.1
|
|
|
85.6
|
|
|
199.5
|
|
||||||
Income from discontinued operations, net of tax
|
0.1
|
|
|
(5.6
|
)
|
|
5.7
|
|
|
(167.8
|
)
|
|
(10.7
|
)
|
|
(157.1
|
)
|
||||||
Income from continuing operations, net of tax
|
103.2
|
|
|
72.7
|
|
|
30.5
|
|
|
117.3
|
|
|
74.9
|
|
|
42.4
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Additions:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Depreciation and amortization
|
15.3
|
|
|
14.4
|
|
|
0.9
|
|
|
29.1
|
|
|
28.6
|
|
|
0.5
|
|
||||||
Interest expense
|
9.7
|
|
|
11.6
|
|
|
(1.9
|
)
|
|
19.3
|
|
|
23.4
|
|
|
(4.1
|
)
|
||||||
Income tax provision
|
32.8
|
|
|
47.0
|
|
|
(14.2
|
)
|
|
35.4
|
|
|
47.6
|
|
|
(12.2
|
)
|
||||||
EBITDA
|
$
|
161.0
|
|
|
$
|
145.7
|
|
|
$
|
15.3
|
|
|
$
|
201.1
|
|
|
$
|
174.5
|
|
|
$
|
26.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Adjustments to EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Selling, general and administrative:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Stock-based compensation expense
|
$
|
6.4
|
|
|
$
|
4.4
|
|
|
$
|
2.0
|
|
|
$
|
9.2
|
|
|
$
|
7.8
|
|
|
$
|
1.4
|
|
Other charges
|
—
|
|
|
(0.2
|
)
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Pre-opening expense
|
0.7
|
|
|
0.3
|
|
|
0.4
|
|
|
1.3
|
|
|
0.3
|
|
|
1.0
|
|
||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest, depreciation and amortization expense related to equity investments
|
4.3
|
|
|
3.1
|
|
|
1.2
|
|
|
8.6
|
|
|
6.6
|
|
|
2.0
|
|
||||||
Transaction expense, net
|
2.1
|
|
|
0.5
|
|
|
1.6
|
|
|
3.5
|
|
|
0.5
|
|
|
3.0
|
|
||||||
Calder exit costs
|
—
|
|
|
0.2
|
|
|
(0.2
|
)
|
|
—
|
|
|
0.6
|
|
|
(0.6
|
)
|
||||||
Total adjustments to EBITDA
|
13.5
|
|
|
8.3
|
|
|
5.2
|
|
|
22.6
|
|
|
15.8
|
|
|
6.8
|
|
||||||
Adjusted EBITDA
|
$
|
174.5
|
|
|
$
|
154.0
|
|
|
$
|
20.5
|
|
|
$
|
223.7
|
|
|
$
|
190.3
|
|
|
$
|
33.4
|
|
(in millions)
|
June 30, 2018
|
|
December 31, 2017
|
|
Change
|
||||||
Total assets
|
$
|
1,696.6
|
|
|
$
|
2,359.4
|
|
|
$
|
(662.8
|
)
|
Total liabilities
|
$
|
1,243.4
|
|
|
$
|
1,719.1
|
|
|
$
|
(475.7
|
)
|
Total shareholders' equity
|
$
|
453.2
|
|
|
$
|
640.3
|
|
|
$
|
(187.1
|
)
|
•
|
Total assets decreased $662.8 million driven by an $823.4 million decrease in long-term assets of discontinued operations held for sale and a $69.1 million decrease in current assets of discontinued operations held for sale due to the Big Fish Transaction, a $35.6 million decrease in income tax receivable due to our current year income tax provision, and a $12.3 million decrease in accounts receivable, net primarily due to cash receipts associated with the 2018 Kentucky Derby and Oaks. Partially offsetting these decreases were a $202.9 million increase in cash and cash equivalents primarily due to the net proceeds received from the Big Fish Transaction partially offset by repurchases of common stock, a $60.5 million increase in property and equipment, net due to our capital project and maintenance expenditures partially offset by depreciation expense, a $8.9 million increase in restricted cash primarily due to increased advanced deposit wagering player's account balances, and a $5.3 million increase in all other assets.
|
•
|
Total liabilities decreased $475.7 million driven by a $243.5 million decrease in long-term debt, net of maturities and loan origination fees primarily due to the paydown on the Revolver (as defined below) from the Big Fish Transaction proceeds in January 2018, a $188.2 million decrease in current liabilities of discontinued operations held for sale and a $54.8 million decrease in non-current liabilities of discontinued operations held for sale due to the Big Fish Transaction, a $57.3 million decrease in current deferred revenue due to recognition of advanced sales for the 2018 Kentucky Derby and Oaks, and a $23.7 million decrease in dividends payable due to the payment of our annual dividends. Partially offsetting these decreases were a $24.5 million increase in income tax payable due to our current year income tax provision, a $24.9 million increase in accounts payable primarily due to timing of Racing related payments, a $19.4 million increase in accrued expense primarily related to our capital projects and maintenance expenditures, a $13.8 million increase in purses payable due to our spring and summer race meets, a $7.5 million dollar increase in account wagering deposit liabilities due to increased player's account balances and a $1.7 million increase in all other liabilities.
|
•
|
Total shareholders’ equity decreased $187.1 million driven by $514.7 million in repurchases of common stock, primarily as a result of the $500.0 million share repurchase program in a "modified Dutch auction" tender offer that was completed on February 12, 2018. Partially offsetting this decrease were $285.1 million in current year net income, a $29.7 million increase as a result of the adoption of ASC 606, a $12.6 million increase in stock-based compensation, and a $0.2 million increase in other equity components.
|
(in millions)
|
Six Months Ended June 30,
|
||||||||||
Cash flows from:
|
2018
|
|
2017
|
|
Change
|
||||||
Operating activities
|
$
|
162.3
|
|
|
$
|
168.4
|
|
|
$
|
(6.1
|
)
|
Investing activities
|
$
|
892.4
|
|
|
$
|
(97.3
|
)
|
|
$
|
989.7
|
|
Financing activities
|
$
|
(844.9
|
)
|
|
$
|
(81.3
|
)
|
|
$
|
(763.6
|
)
|
•
|
Cash provided by operating activities decreased
$6.1 million
driven by a $8.8 million decrease in current deferred revenue primarily as a result of the timing of payments related to the Kentucky Derby and Oaks events, partially offset by a $2.7 increase from other sources.
|
•
|
Cash provided by investing activities increased
$989.7 million
driven by $970.7 million increase in proceeds related to the Big Fish Transaction, a $24.0 million increase related to the January 2017 investment in Ocean Downs, and a $23.1 million increase related to the BetAmerica acquisition in April 2017. Partially offsetting these increases was a $13.6 million decrease in receivable from escrow in the first half of 2017 related to the Calder land sale and a $14.5 million decrease in all other investing activities.
|
•
|
Cash used in financing activities increased
$763.6 million
primarily driven by a $393.5 million increase in net borrowings and repayments related to our credit agreements, a $333.7 million increase related to share repurchases under our "modified Dutch auction" tender offer completed on February 12, 2018, a $26.4 million increase as a result of the 2016 Big Fish Games deferred payment and a $10.0 million increase from other financing activities.
|
(in millions)
|
June 30, 2018
|
|
December 31, 2017
|
|
Change
|
||||||
2017 Credit Agreement:
|
|
|
|
|
|
||||||
Term Loan B due 2024
|
$
|
398.0
|
|
|
$
|
400.0
|
|
|
$
|
(2.0
|
)
|
Revolving Credit Facility
|
—
|
|
|
239.0
|
|
|
(239.0
|
)
|
|||
Swing line of credit
|
—
|
|
|
3.0
|
|
|
(3.0
|
)
|
|||
Total 2017 Credit Agreement
|
398.0
|
|
|
642.0
|
|
|
(244.0
|
)
|
|||
2028 Senior Notes
|
500.0
|
|
|
500.0
|
|
|
—
|
|
|||
Total debt
|
898.0
|
|
|
1,142.0
|
|
|
(244.0
|
)
|
|||
Current maturities of long-term debt
|
4.0
|
|
|
4.0
|
|
|
—
|
|
|||
Total debt, net of current maturities
|
894.0
|
|
|
1,138.0
|
|
|
(244.0
|
)
|
|||
Issuance Cost and Fees
|
(12.3
|
)
|
|
(12.8
|
)
|
|
0.5
|
|
|||
Total debt, net of current maturities
|
$
|
881.7
|
|
|
$
|
1,125.2
|
|
|
$
|
(243.5
|
)
|
|
Actual
|
|
Requirement
|
Interest Coverage Ratio
|
6.7 to 1.0
|
|
> 2.5 to 1.0
|
Consolidated total secured net leverage ratio
|
0.7 to 1.0
|
|
< 4.0 to 1.0
|
(in millions)
|
July 1 to December 31, 2018
|
|
2019-2020
|
|
2021-2022
|
|
Thereafter
|
|
Total
|
||||||||||
Term Loan B
|
$
|
2.0
|
|
|
$
|
8.0
|
|
|
$
|
8.0
|
|
|
$
|
380.0
|
|
|
$
|
398.0
|
|
Interest on Term Loan B
(1)
|
8.3
|
|
|
32.7
|
|
|
32.0
|
|
|
31.1
|
|
|
104.1
|
|
|||||
Senior Unsecured Notes
|
—
|
|
|
—
|
|
|
—
|
|
|
500.0
|
|
|
500.0
|
|
|||||
Interest on 2028 Senior Notes
|
13.1
|
|
|
47.5
|
|
|
47.5
|
|
|
130.6
|
|
|
238.7
|
|
|||||
Operating leases
|
2.6
|
|
|
8.1
|
|
|
5.3
|
|
|
3.2
|
|
|
19.2
|
|
|||||
Total
|
$
|
26.0
|
|
|
$
|
96.3
|
|
|
$
|
92.8
|
|
|
$
|
1,044.9
|
|
|
$
|
1,260.0
|
|
(1)
|
Interest includes the estimated contractual payments under our 2017 Credit Agreement assuming no change in the weighted average borrowing rate of 4.10% which was the rate in place as of June 30, 2018.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
•
|
general economic trends;
|
•
|
interest rate and credit risk; and
|
•
|
foreign currency exchange risk.
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
PART II.
|
OTHER INFORMATION
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(1)
|
|
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in millions)
(1)
|
||||||
4/1/18-4/30/18
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
78.3
|
|
5/1/18-5/31/18
|
|
—
|
|
|
—
|
|
|
—
|
|
|
78.3
|
|
||
6/1/18-6/30/18
|
|
—
|
|
|
—
|
|
|
—
|
|
|
78.3
|
|
||
Total
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
|
|
(1)
|
On April 25, 2017, the Board of Directors of the Company approved a new common stock repurchase program of up to $250.0 million. The repurchase program has no time limit and may be suspended or discontinued at any time.
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
|
CHURCHILL DOWNS INCORPORATED
|
|
|
|
|
|
|
August 1, 2018
|
/s/ William C. Carstanjen
|
|
William C. Carstanjen
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
August 1, 2018
|
/s/ Marcia A. Dall
|
|
Marcia A. Dall
|
|
Executive Vice President and Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
1 Year Churchill Downs Chart |
1 Month Churchill Downs Chart |
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