Churchill Downs (CHDN) Misses Q2 Earnings & Revenues, Up Y/Y - Analyst Blog


Gaming company, Churchill Downs Inc. ( CHDN ) posted second quarter 2014 results. Earnings from continuing operations of $3.21 per share missed the Zacks Consensus Estimate of $3.40 by 5.6%, possibly due to higher costs and expenses. Share price fell 0.5% post announcement.

However, earnings increased 14.2% year over year driven by an increase in the top-line and lower share count.

Churchill Downs Incorporated - Earnings Surprise | FindTheBest

Revenue Details

Net revenue of $303.7 million also missed the Zacks Consensus Estimate of $323.0 million by 6%, possibly due the negative impacts of continued regional economic weaknesses in Mississippi and Louisiana. However, it increased 7% year over year driven by the acquisition of Oxford Casino in Jul 2013.

The company operates mainly under three segments: Racing, Gaming and Online

The Racing Segment generated revenues of $159.4 million, up 1.3% year over year owing to strong Kentucky Oaks and Derby week results, partially offset by lower hosting revenues and fewer live race days at the Calder race course.

Revenues at the Gaming segment were $82.0 million, up 23% year over year driven by additional revenues from the Oxford acquisition. However, it was partially offset by a decline in revenues from Mississippi and Louisiana properties.

Revenues at the Online business increased 9% year over year to $57.1 million, owing to an increase in revenues from TwinSpires' handle that benefited from Illinois wagering, partially offset by Texas wagering.

Behind the Headline Numbers

Adjusted EBITDA increased 12% year over year to $116.5 million. Operating expenses of the Gaming segment increased 24% to $124.4 million. Selling, general and administrative expenses increased 1% to $40.1 million. Operating income also increased 12.0% to $95.7 million.

Financial Update

As of Jun 30, 2014, cash and cash equivalents were $46.7 million, down from $47.1 million as of Mar 31, 2014. Long-term debt, net of current maturities was $368.8 million, up from $365.8 million as of Mar 31, 2014.

Under the $100.0 million share buyback program, the company repurchased approximately 0.7 million shares for $61.6 million in the second quarter.

Churchill Downs presently has a Zacks Rank #4 (Sell).

Other Stocks to Consider

Zynga, Inc. ( ZNGA ) is a better-ranked stock in the same sector with a Zacks Rank #2 (Buy). Other gaming stocks that are set to release their results in the next few days include MGM Resorts International ( MGM ) that will report on Aug 5, 2014 and Caesars Acquisition Company ( CACQ ) that will release results on Aug 11, 2014.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: MGM , ZNGA , CHDN , CACQ

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