Long-term growth plans paying off for casino and racetrack operator Churchill Downs Matthew Crowley, CDC Gaming Reports · April 23, 2021 at 7:35 am Churchill Downs officials said keeping their eye on long-term growth — investing in high-growth historical racing and gaming properties and preparing to auction off the Arlington brand — helped the company ride out the COVID-19 pandemic’s drag in the first quarter. The Louisville, Kentucky-based casino and racetrack operator posted higher revenue and net income for the three months ending March 31, reversing a net loss from a year ago. Both figures topped Wall Street forecasts. The results Wednesday preceded the company’s Thursday announcement that it would launch an equity and diversity initiative to boost the economy in its headquarters city. In a statement, Churchill Downs said its net income was $36.1 million, or 91 cents per diluted share, for the quarter, reversing a net loss of $23.4 million, or 59 cents per diluted share, a year earlier. The latest result topped the 56-cents-per share in average earnings forecast of analysts surveyed by Seeking Alpha. The company said it benefited from a $14 million after-tax expense decrease related to a non-cash change in fair value of Rivers Casino Des Plaines interest rate swaps. Adjusted earnings before interest, taxes, depreciation, and amortization, a cash flow measure that excludes one-time costs, doubled, rising to $110.6 million from $55.3 million a year earlier. Revenue rose 28.2% to $324.3 million from $252.9 million and topped the $287.1 million forecast of Seeking Alpha-polled analysts. Although Churchill Downs shares got a post report boost, rising 7.7% in after-hours trading Wednesday, the company’s stock price fell 2.78% on Thursday, dropping $6.10 to close at $212.94 on the Nasdaq. Churchill Downs’ shares are up 13% for 2021. In a Thursday conference call with analysts, CEO Bill Carstanjen said Churchill Downs’ properties coped with COVID-19 restrictions. City Gaming, a historical racing machine parlor, opened in September 2018 and recorded a 52% revenue rise. The company opened a new historical racing machine parlor in Oak Grove, Kentucky in September and the Turfway Park historical racing machine annex at Newport Racing and Gaming in Newport, Kentucky, in October. Meanwhile, revenue at the company’s TwinSpires Horse Racing platform rose 39% year over year. Carstanjen said Churchill Downs showed stability and commitment to investors by boosting its dividend by 7% and buying back 1 million shares of stock. “We reimagined our capital investment plans, resulting in a new portfolio of organic growth opportunities that will provide profitable growth for the foreseeable future,” Carstanjen said. “In short, we didn’t want to lose our long-term focus because of short-term challenges but we also believe we could excel in the short term despite the pandemic. We believe our results demonstrate real strength and strategy and execution.” On Thursday, Churchill Downs launched the Derby Equity & Community Initiative, which will add local-economy-boosting events and programs to complement its crown jewel race. The Louisville Courier-Journal reported that Churchill Downs’ move followed post-2020 Derby protests on racetrack grounds that urged the company to address systems that discriminate against Black people. The newspaper further reported that Black Louisville residents had pushed for the Kentucky Derby’s cancellation after police killed Breonna Taylor, a 26-year-old black Louisville resident on March 13, 2020. Police serving a search warrant for Taylor’s apartment shot her six times. On Thursday, Churchill Downs officials told the Courier-Journal they’d heard the criticism and will work with partners KDF and Humana to improve inclusion at Kentucky Derby and its ancillary events. “We felt when we really looked in the mirror and thought about where we devoted our time and where we devoted our resources, we realized that we needed to do better,” Carstanjen told the newspaper. Follow Matthew Crowley on Twitter @copyjockey.