CDI exec: Company is 'pleased' with plan to sell casinos
Photo: Jon Durr / Eclipse Sportswire - editedChurchill Downs Inc. CEO Bill Carstanjen said Thursday that the company is "pleased" with its plan, announced Wednesday, to explorethe sale of Presque Isle Downs. . .
Photo: Jon Durr / Eclipse Sportswire - editedChurchill Downs Inc. CEO Bill Carstanjen said Thursday that the company is "pleased" with its plan, announced Wednesday, to explorethe sale of Presque Isle Downs and Casino and eight other regional gaming properties. The announcement after the market closed was accompanied by news that although the Louisville, Ky. -based companyposted record earningsfor the second quarter, the $3. 45 earnings per share missed the Zacks Consensus Estimate of $3. 51 per share. In mid-morning trading Thursday, CDI stock was down 7. 46% while the Nasdaq Composite Index was up 2. 69%. "These are great assets," Carstanjen said in a call with investment analysts. These, first and foremost, these are assets with long histories of good cash-flow generation, good returns on capital, and performance. So starting with that premise that we have good assets, certainly it's the case that there's activity in the market, in this space in general. We can all see that, and people can take from that what they wish. "But we think this is an excellent time for us to go to market. … I think we'll be looking at more individual or small bundles of transactions based on different buyers' interests and needs. But first and foremost, the most important thing to highlight is we're selling proven, strong assets that ought to fit in other people's portfolios and other people's plans. And from our perspective, we're pleased with the environment and pleased with our plan to take these properties to market. "Asked about the earnings power of the Kentucky Derby, Carstanjen had a quite positive response. "Whether you're talking about admissions revenue, broadcast revenue, sponsorship, wagering – every metric by which we measure the Derby and evaluate the performance of the business, every single metric is moving in the right direction. And that's a great place to be when you operate a business. You don't always find that in every business, at every time. But with the Derby, we found that. That's the environment we're in, and we're the beneficiary of the history of the event, the fact that it's cut above the noise that you find in a broad, diverse American public to reach a national presence and a place where America stops and pays attention. "It's hard to achieve that in America, and we've achieved that with the Derby. "Carstanjen noted that the company is "experimenting" with improvements at its flagship track with smaller capital projects than in the past, such astemporary structures in the infield. "We need to test some concepts before we want to go with permanent structures there so we can really take some of the lessons we think we've learned from what we've seen in other parts of the world and in other parts of of the country, even with other events, to see how they'll work for us. "One analyst noted that with CDI's potential sale of regional casinos, the repurchase of a 49% stake in United Tote, and the company's attempt to get involved with the Preakness, it appears to be "leaning into racing. ""I think like a lot of segments of American business, it's a flight to quality," Carstanjen responded. "And whether you look at our Twin Spires asset or the Derby, you see real opportunity to build around things that work and to enhance those things. So certainly within horse racing, Our focus is on what's best about horse racing, what's most interesting about horse racing, and what's resonating about horse racing with the American consumer and the global consumer. "And that's what we focus on. Not every aspect of the horse racing space, not every track out there, but the things that we see work, the things that are delivering growth, that are delivering excitement, that are delivering better television ratings, etc. So yeah, we do see opportunity in horse racing. I think you see other people do it too. …"You see lots of interest out there around leagues and different ways of packaging horse racing. Those are all things of interest to us as well. Those are all things that we pay attention to as well. So you'll see us focus more on that. You may see more exciting innovations announced from us around that. But we don't shy away from what we think is working. And the top end of horse racing is working. And we've got the formula of building events, building purses, building attendance, building sponsorship. And we think we can expand on that formula. "