LOUISVILLE, Ky., Feb. 24, 2016 (GLOBE NEWSWIRE) -- Churchill Downs Incorporated (NASDAQ:CHDN) (CDI or Company) today reported business results for the quarter and full year ended December 31, 2015.

Full Year 2015 Highlights

• Generated record net revenue of $1,212.3 million, 49% higher than the prior year
  
• Delivered Adjusted EBITDA of $335.6 million, 66% higher than the prior year
  
• Drove net cash flows from operating activities of $264.5 million, up 87% over prior year 
  
  

"We delivered record net revenue, Adjusted EBITDA, and net cash flows from operations for the year," says Bill Carstanjen, CDI's Chief Executive Officer. "These results are a reflection of the strength of the Company's operations and our disciplined approach to capital allocation and operational efficiency over time.  As we look forward to 2016, we will continue to position our company for long-term sustainable growth."

In the fourth quarter 2015, net revenue, Adjusted EBITDA and net income grew significantly compared to the prior year as a result of the Big Fish Games acquisition.  Net revenue growth also benefited from an increase in TwinSpires handle and from organic growth at our Oxford Casino property. The Adjusted EBITDA growth also benefited from cost reductions in our Racing and Casinos segments and from a correction in the Corporate segment related to deferred compensation. The increase in net income for the quarter was a result of strong Adjusted EBITDA growth partially offset by higher depreciation, amortization and income tax expense.

In 2015, net revenue, Adjusted EBITDA and net income grew significantly compared to the prior year as a result of the Big Fish Games acquisition.  Net revenue growth also benefited from a record setting Kentucky Oaks and Derby week, a 7.5% increase in TwinSpires handle and organic growth at our Oxford Casino.  The Adjusted EBITDA growth also benefited from cost reductions in the racing segment as a result of the cessation of Calder pari-mutuel operations and cost controls in our Casinos.  The increase in net income for 2015 was driven by strong Adjusted EBITDA growth and a correction in the Corporate segment related to deferred compensation that was partially offset by Big Fish Games related adjustments, Calder racing exit costs, depreciation, amortization, interest expense and income tax expense.

Operating Segment Summaries:

For the quarter, net revenue decreased $0.5 million as a strong Churchill Downs Fall Meet and growth at Fair Grounds was more than offset by lower net revenue at Arlington.  Adjusted EBITDA increased $1.0 million driven primarily by a strong Churchill Downs Fall Meet.

For the full year, net revenue decreased $12.9 million primarily driven by a $17.3 million reduction as a result of the July 2014 cessation of pari-mutuel operations at Calder and a $6.6 million decrease in Arlington net revenue driven by fewer live race days resulting in lower attendance and pari-mutuel handle.  Partially offsetting these declines was an increase in net revenue from a record Kentucky Oaks and Derby week. Adjusted EBITDA for 2015 increased $10.7 million due to $6.0 million of increased profitability from Kentucky Oaks and Derby week, $3.8 million due to the cessation of pari-mutuel operations at Calder during 2014, $1.5 million from Churchill Downs outside of Derby week and $0.3 million from Fair Grounds.  These increases were partially offset by a $0.9 million decrease due to lower pari-mutuel net revenue at Arlington.

During the quarter, Casinos net revenue increased $1.9 million from the prior year primarily driven by organic growth at Oxford Casino and growth in our VSI net revenue from the addition of new and upgraded video poker machines throughout our Louisiana properties. Partially offsetting this growth was a decline in net revenue at our Mississippi properties and a decline at Fair Grounds Slots from a smoking ban in Orleans Parish.  Adjusted EBITDA grew $4.0 million from the strength of the Oxford Casino and VSI properties as well as increases for both our Mississippi properties resulting from effective cost controls.

For the full year, Casinos net revenue increased $4.0 million driven by organic growth at Oxford Casino, improved performance of our VSI locations in Louisiana, and increased net revenue from Calder.  This growth was partially offset by the impact of the New Orleans smoking ban on our Fair Grounds Slots property and a decline in net revenue from our Mississippi properties.  Adjusted EBITDA increased $7.4 million in 2015 driven by a $2.7 million increase at Oxford Casino as a result of strong net revenue trends, a $2.5 million increase at Riverwalk as a result of disciplined labor and other variable expense reductions, a $1.4 million increase at Miami Valley Gaming from growth despite new competition and a $1.2 million increase from VSI market share growth.  Partially offsetting these increases was a $1.7 million decrease at Fair Grounds Slots as a result of the parish-wide smoking ban on April 22, 2015.

During the quarter, net revenue improved $2.9 million due to a 10.8% increase in handle compared to a total industry increase of 2.3%.  Adjusted EBITDA declined $0.2 million as net revenue growth was more than offset with higher marketing expense related to the Breeders' Cup, higher New York taxes and licensing and regulatory costs in Virginia.

For the full year, net revenue grew $9.9 million primarily due to a 7.5% increase in handle compared to a total industry increase of 1.2%.  Partially offsetting this increase was a decline related to the cancellation of a low-margin, third party administrative call center agreement.  Adjusted EBITDA increased $6.3 million from the strong net revenue growth and from lower expense as a result of the discontinuation of Luckity, our online real-money bingo operation.  These increases were partially offset by higher marketing expense related to marquee racing events in 2015 and from higher pari-mutuel tax rates.

In the fourth quarter 2015 and for the full year 2015, net revenue and Adjusted EBITDA for Big Fish Games grew significantly compared to the prior year as a result of the acquisition in December 2014.  Big Fish Games net revenue includes amounts recognized from its social casino, casual and mid-core free-to-play and premium paid games.  Our net revenue is reflective of the strong growth in our casual free-to-play bookings and ongoing growth in the Big Fish Casino platform. Our 2015 net revenue includes a $20.8 million reduction resulting from the adjustment down to fair value of the deferred revenue balance assumed as part of the Big Fish acquisition based on business combination accounting rules.

For the quarter, total bookings grew $25.7 million or 27% on a comparative basis over the full fourth quarter 2014 bookings. Casino and Casual Free-to-Play business lines continued to show growth more than offsetting the decline in the Premium business line.  Casino bookings grew by $1.2 million, driven by a 15% increase in average bookings per paying user compared to the fourth quarter of 2014, which was partially offset by an 11% decline in average paying users.  Casual Free-to-Play bookings' growth of $31.2 million was driven by a 132% increase in quarterly average paying users and a 26% increase in average bookings per paying user.  Our growth in Casual Free-to-Play bookings was driven by the continued success of Gummy Drop!, as well as the late third quarter launch of Dungeon Boss. Premium bookings declined $6.7 million, or 21%, primarily driven by customers continuing to shift from paid PC games to free-to-play mobile games.  In addition, the foreign currency impact from the strengthening U.S. dollar (USD) reduced Premium bookings by $1.1 million.

For the full year, total bookings grew $117.1 million or 35% on a comparative basis over the full year 2014. Casino bookings grew by $35.9 million, driven by a 12% increase in average paying users and a 10% increase in average bookings per paying user compared to the full year of 2014.  Casual Free-to-Play bookings' growth of $112.6 million was driven by a 165% increase in average paying users and a 48% increase in average bookings per paying user.  Our growth in Casual Free-to-Play bookings was driven by the continued success of Gummy Drop!, as well as the late third quarter launch of Dungeon Boss. Premium bookings declined $31.0 million, or 22%, primarily driven by customers continuing to shift from paid PC games to free-to-play mobile games.  In addition, the foreign currency impact from the strengthening U.S. dollar (USD) reduced Premium bookings by $5.7 million.

Stock Repurchase

In February 2016, the board of directors reauthorized a common stock repurchase program of up to $150 million. The new program replaces the prior $150 million program that was authorized during 2015 and had unused authorization of $11.9 million.  The new authorized amount includes and is not in addition to any unspent amounts remaining under the prior authorization. Repurchases may be made at management's discretion from time to time on the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions.  The repurchase program has no time limit and may be suspended or discontinued at any time.

Conference Call

A conference call regarding this news release is scheduled for Thursday, February 25, 2016, at 9 a.m. ET. Investors and other interested parties may listen to the teleconference by accessing the online, real-time webcast and broadcast of the call at http://ir.churchilldownsincorporated.com/events.cfm, or by dialing (877) 372-0878 and entering the pass code 50839574 at least 10 minutes before the appointed time. International callers should dial (253) 237-1169. An online replay will be available at approximately noon EST on Thursday, February 25, 2016 and continue for two weeks. A copy of the Company's news release announcing quarterly results and relevant financial and statistical information about the period will be accessible at www.churchilldownsincorporated.com.

Non-GAAP Measures

In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), the Company has provided a non-GAAP measurement, which presents a financial measure of earnings before interest, taxes, depreciation and amortization and certain other items as described in the Company's Annual Report on Form 10K ("Adjusted EBITDA"). Churchill Downs Incorporated uses Adjusted EBITDA as a key performance measure of results of operations for purposes of evaluating performance internally. The Company believes the use of this measure enables management and investors to evaluate and compare, from period to period, the Company's operating performance in a meaningful and consistent manner. This non-GAAP measurement is not intended to replace the presentation of the Company's financial results in accordance with GAAP.

About Churchill Downs Incorporated

Churchill Downs Incorporated (CDI) (NASDAQ:CHDN), headquartered in Louisville, Ky., is an industry-leading racing, gaming and online entertainment company anchored by our iconic flagship event - The Kentucky Derby.  We are a leader in brick-and mortar casino gaming with gaming positions in six states, and we are the largest, legal online account wagering platform for horseracing in the U.S., through our ownership of TwinSpires.com. We are also one of the world's largest producers and distributors of mobile games through Big Fish Games, Inc. Additional information about CDI can be found online at www.churchilldownsincorporated.com. 

Information set forth in this news release contains various "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  The Private Securities Litigation Reform Act of 1995 (the "Act") provides certain "safe harbor" provisions for forward-looking statements.  All forward-looking statements made in this press release are made pursuant to the Act.

The reader is cautioned that such forward-looking statements are based on information available at the time and/or management's good faith belief with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements.  Forward-looking statements speak only as of the date the statement was made.  We assume no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information.  Forward-looking statements are typically identified by the use of terms such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "might," "plan," "predict," "project," "should," "will," and similar words, although some forward-looking statements are expressed differently.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct.  Important factors that could cause actual results to differ materially from expectations include: the effect of global economic conditions, including any disruptions in the credit markets; a decrease in consumers' discretionary income; maintaining favorable relationships we have with third-party mobile platforms, the inability to secure new content from third-party developers on favorable terms, keeping our games free from programming errors or flaws, the effect if smart phone and tablet usage does not continue to increase; the financial performance of our racing operations; the impact of casino competition (including lotteries, online gaming and riverboat, cruise ship and land-based casinos) and other sports and entertainment options in the markets in which we operate; our ability to maintain racing and gaming licenses to conduct our businesses; the impact of live racing day competition with other Kentucky, Illinois, Louisiana and Ohio racetracks within those respective markets; the impact of higher purses and other incentives in states that compete with our racetracks; costs associated with our efforts in support of alternative gaming initiatives; a substantial change in law or regulations affecting pari-mutuel or casino activities; a substantial change in allocation of live racing days; changes in Kentucky, Illinois, Louisiana or Ohio law or regulations that impact revenue or costs of racing in those states; the presence of wagering and casino operations at other states' racetracks and casinos near our operations; our continued ability to effectively compete for the country's horses and trainers necessary to achieve full field horse races; our continued ability to grow our share of the interstate simulcast market and obtain the consents of horsemen's groups to interstate simulcasting; our ability to enter into agreements with other industry constituents for the purchase and sale of racing content for wagering purposes; our ability to execute our acquisition strategy and to complete or successfully operate acquisitions and planned expansion projects including the effect of required payments in the event we are unable to complete acquisitions; our ability to successfully complete any divestiture transaction; the inability of our totalisator company, United Tote, to maintain its processes accurately, keep its technology current or maintain its significant customers; the ability of Big Fish Games or TwinSpires to prevent security breaches within their online technologies; the loss of key personnel; the impact of natural and other disasters on our operations and our ability to obtain insurance recoveries in respect of such losses (including losses related to business interruption); our ability to integrate any businesses we acquire into our existing operations, including our ability to maintain revenue at historic or anticipated levels and achieve anticipated cost savings; changes in our relationships with horsemen's groups and their memberships; our ability to reach agreement with horsemen's groups on future purse and other agreements (including, without limitation, agreements on sharing of revenue from casinos and advance deposit wagering); and the effect of claims of third parties to intellectual property rights.

Contact: Lauren DePaso
(502) 636-4506
Lauren.DePaso@kyderby.com