The operator said its racing business was helped by the relaxation of novel coronavirus (Covid-19) restrictions, with operations in the same period last year, as well as in Q2 of 2020, having been impacted by precautionary measures put in place during the pandemic.
However, this year customers were able to attend key racing events such as the Kentucky Derby at Churchill Downs Racetrack, as well as access the Oak Grove Racing, Gaming and Hotel, Derby City Gaming, Newport Racing & Gaming and Turfway Park facilities without restrictions.
In addition, CDI said that its historical racing machine (HRM) properties benefited from the elimination of the capacity restrictions that were in place during the pandemic.
As a result, live and historical racing revenue increased by 48.3% year-on-year to $260.9m (£214.5m/€255.7m) in the three months to June 30, 2022.
CDI noted that its other two segments did not perform as well, with revenue from its TwinSpires division down by 2.9% to $138.5m, driven by the decision to exit the direct online sports and casino business in the first quarter of 2022.
Gaming revenue also slipped 0.9% to $184.3m, with CDI saying this was due to the current economic conditions, competitive pressures, and a mask mandate at its Harlow’s facility that was not withdrawn until early June this year.
However, such was the impact of growth in the racing segment that overall revenue for the quarter was 13.1% higher at $582.5m, a record figure for the business.
Operating expenses in Q2 ticked up slightly to $382.8m. The sale of land near to its Calder Casino in Florida raised $274.6m, meaning total other income reached $280.2m for the quarter. The business said it would use some of the funds from this deal to “invest in other replacement properties”.
As such, pre-tax profit was $479.9m, up 220.2% on last year, while after paying $140.6m in tax, CDI was left with $339.3m in net profit, a year-on-year increase of 213.3% and a new quarterly record for the business.
In addition, CDI said adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) also reached an all-time quarterly high of $291.2m.
Looking at CDI’s first-half performance, group revenue for the six months to June 30 was $946.6m, up 12.8% year-on-year.
This was again driven by growth in racing, with revenue here increasing 45.1% to $356.9m. Gaming revenue also climbed 7.0% to $361.6m, but TwinSpires revenue fell 3.0% to $237.1m.
Operating expenses were up slightly, but this was partially offset by $291.4m in other profit, again primarily due to the Calder Casino land sale.
Pre-tax profit more than doubled $538.5m while net profit was also up by more than 100% to $381.4m. CDI also noted that adjusted EBITDA for the half was 22.0% higher at $419.7m.
Meanwhile, CDI offered an update on other acquisition activity that took place during the quarter, including its purchase of Peninsula Pacific Entertainment (P2E). CDI in February struck a deal to buy all assets for $2.49bn.
The operator said it has obtained the acquisition of ownership interest approval for the P2E Virginia properties from the Virginia Racing Commission. The deal is dependent on customary closing conditions, including approval from the New York State Gaming Commission and the Iowa Racing and Gaming Commission, but CDI expects the transaction to close before the end of 2022.
CDI in March also entered into a definitive purchase agreement to acquire Chasers Poker Room, a charitable gaming facility in New Hampshire. Following the closing of the deal, CDI said it plans to develop an expanded charitable gaming facility to accommodate HRMs.
The operator expects the total investment including the purchase price to be approximately $150.0m, with the transaction due to close in the third quarter of 2022.
Original article: https://igamingbusiness.com/finance/half-year-results/cdi-looks-to-acquire-after-land-sale-boosts-profit-in-q2/
