{"id":1770,"date":"2021-07-30T09:53:55","date_gmt":"2021-07-30T16:53:55","guid":{"rendered":"https:\/\/wagers.com\/staging\/4285\/?p=1770"},"modified":"2021-11-04T10:00:34","modified_gmt":"2021-11-04T17:00:34","slug":"churchill-downs-q2-earnings-call","status":"publish","type":"post","link":"https:\/\/wagers.com\/staging\/4285\/news\/churchill-downs-q2-earnings-call\/","title":{"rendered":"Churchill Downs Q2 earnings call"},"content":{"rendered":"

Capital projects: <\/strong>Capex plans will focus on the $76m expansion of the Derby City Gaming facility and three major racetrack projects to be completed in the next three years: the Homestretch Club, the Turn 1 Experience (costing $135m in total) and the Paddock Area redesign (uncosted). CEO Bill Carstanjen said the group will aim to generate EBITDA multiples of five to eight times on the investments and the projects fit into the company\u2019s \u201csweet spot\u201d with regard to building timeline, completion and EBITDA returns.<\/p>\n

SPAC and spin: <\/strong>Asked why the company hadn\u2019t considered a joint venture or SPAC listing to develop its interactive business, Carstanjen said it already has a highly successful and profitable digital asset in Twin Spires and \u201cSPACs or spin offs\u201d weren\u2019t relevant right now for CDI.<\/p>\n

\u201cWe want to build a great business with the right DNA and because we\u2019ve built Twin Spires maybe we look at it more long term,\u201d Carstanjen added. \u201cWe have to do what works for us, investors have confidence and we want to build over time to maximize value.\u201d<\/em><\/p><\/blockquote>\n

Analysts at Macquarie were positive on CDI and pointed to the Kentucky Derby being run with just ~50% capacity and CDI\u2019s strong handling of capital projects, which \u201cwill provide a runway of organic growth opportunities over the long term.\u201d<\/p>\n

Conversion power: <\/strong>The customer acquisition power of Twin Spires would be apparent once the horse racing and Bet America apps are rolled out across many states. \u201cYou\u2019ll see the power of that,\u201d Carstanjen said, adding that as the NFL season approached the group would remain \u201ca little opaque\u201d as to how it would execute its acquisition strategy. \u201cCosts will consume some of our operational improvements, but we\u2019re not acquiring customers unless we have a plan to be profitable over the long term.\u201d<\/p>\n

Derby day:<\/strong> Asked why the group hadn\u2019t included historical racing machines (HRMs) at its racetrack, Carstanjen said it carefully considered the options when the pandemic hit and saw that \u201cDerby City is even more of a juggernaut than we thought.\u201d The company plans for new high end hotels and hospitality at the track were put on hold and the group focused on what works and \u201cfor the HRMs this was at Derby City.\u201d Churchill Downs enjoyed strong margins (up 10% on AEBITDA) in Q2 and Carstanjen said there was no pressure to \u201crestore amenities\u201d and other measures that would put pressure on margins. Echoing other executives\u2019 recent comments, he said they were sustainable.<\/p>\n

Check out these additional articles today on Earnings + More:<\/h3>\n