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Nasdaq:CPHC

Canterbury Park Holding Corporation Reports 2021 Second Quarter Results

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SHAKOPEE, Minn., Aug. 09, 2021 (GLOBE NEWSWIRE) — Canterbury Park Holding Corporation (“Canterbury” or the “Company”) (NASDAQ: CPHC), today reported financial results for the second quarter and six months ended June 30, 2021.

($ in thousands, except per share data and percentages)

  Three Months Ended June 30,   Six Months Ended June 30,
  2021   2020   Increase(3)   2021   2020   Increase(3)
Net revenues(1) $15,872   $2,768   473.4%   $25,097   $13,717   83.0%
                       
Net income (loss) (1) $1,869   ($1,181)   NM   $2,421   ($926)   NM
                       
Adjusted EBITDA(1) (2) 3,514   (1,775)   298.0%   4,936   (916)   638.8%
                       
Basic EPS $0.39   ($0.25)   NM   $0.51   ($0.20)   NM
Diluted EPS $0.39   ($0.25)   NM   $0.51   ($0.20)   NM

(1)   Net revenues and net income for the six month period ended June 30, 2021 include $515,000 in grant funds received as a result of the Minnesota COVID-19 relief package that was passed and signed into law in December 2020.
(2)   Adjusted EBITDA, a non-GAAP measure, excludes certain items from net income, a GAAP measure. Non-GAAP financial measures are not intended to be considered in isolation from, a substitute for, or superior to GAAP results. Definitions, disclosures, and reconciliations of non-GAAP financial information are included later in the release.
(3)   Amounts referred to as “NM” are defined as not meaningful.

Financial results for the three and six months ended June 30, 2020 reflect the impact of the onset of the COVID-19 pandemic and closure of the Card Casino, simulcast, and special events operations at Canterbury Park from March 16, 2020 to June 9, 2020, after which the Company reopened in a limited capacity. Results for the six months ended June 30, 2021 include the impact of the state-mandated closure of Canterbury Park which ended January 10, 2021 and capacity restrictions from January 11, 2021 to May 28, 2021. Canterbury Park re-opened on January 11, 2021 with a capacity limitation of 150 guests per designated area; this was subsequently increased on February 13, 2021 to 250 guests per designated area. All capacity restrictions were removed on May 28, 2021, and we began operating under pre-pandemic guidelines.

Management Commentary

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“Canterbury Park’s strong operating momentum continued in the second quarter of 2021, as income from operations (excluding one-time gains) increased 157% over the comparable 2019 non-COVID impacted period and, despite lower revenue, we generated record quarterly adjusted EBITDA of $3.5 million,” said Randy Sampson, President and Chief Executive Officer of Canterbury. “This strong performance reflects improved guest visitation as capacity restrictions were lifted which helped drive consistent monthly increases in our higher-margin Card Casino revenues throughout the quarter. The second quarter also benefited from healthy contributions from our racing operations, including the continuation of the strong out-of-state handle increases we achieved in 2020 with our shift to featuring more mid-week racing.

“Importantly, the many operating changes we have effected since the beginning of the pandemic are delivering higher margins and cash flow as reflected by the quarterly record for adjusted EBITDA as a percentage of revenue of 22% in the 2021 second quarter. Our ability to operate in a significantly more efficient manner is also evidenced by the improvement in this metric as compared to 10% achieved in the non-COVID impacted 2019 second quarter period. We are achieving improved operating expense management and efficiencies across our operations including labor management, purchasing, pricing, and marketing, and we are highly focused on maintaining this operating discipline to drive increased profitability as our revenues return to pre-COVID levels.

“Canterbury is leveraging our margin enhancement initiatives with operating strategies focused on profitable revenue growth. These strategies include a focus on higher value Card Casino players, new targeted social media advertising, and ongoing refinements to our marketing programs aimed at deepening the market penetration of our Card Casino. We’re also maintaining the increased spacing for our guests in the Card Casino, which players appreciate and which we believe is contributing to higher theoretical win per player. In addition, we are aggressively courting racing fans in our market by highlighting Canterbury as a horseplayer-friendly racetrack that features high quality racing and entertaining promotions. We are also bringing back special event days that our fans love and drive large family day crowds. Finally, we believe our capable food and beverage and events team, as well as our focus on expanding catering opportunities for events of all sizes and our commitment to launch new event experiences, offers significant growth opportunities for our hospitality operations. However, like most hospitality businesses, we face the challenge of hiring and maintaining adequate staffing at both manager and front-line levels of the Company. We continue to be creative in finding ways to fill our staffing shortages to maintain our customer service standards and allow us to execute on our growth initiatives.

“Progress on the development of Canterbury Commons™ continued throughout the 2021 second quarter and to-date in the third quarter. The number of people living and/or working full time at Canterbury Commons is growing every day. Following our initial focus on residential and office development, we are now seeing an uptick in business development discussions for new retail and hospitality development, particularly for restaurant and hotel venues. We are pleased with both the pace of development for existing projects and with our ongoing discussions around new potential developments and remain highly confident in our ability to achieve our vision of establishing a population, business, and entertainment center at Canterbury. We believe this development will benefit our Card Casino, racing operations, and event facilities and create new value for our shareholders.

“The operating and cost control initiatives we’ve implemented since March 2020 that have resulted in significant operating efficiencies combined with organic growth opportunities in our Card Casino and racetrack operations positions Canterbury to benefit from enhanced margins and cash flow as our operations continue to return to normalized levels. In addition, we have the financial flexibility to pursue strategic growth and diversification transactions where we can leverage our operating expertise. Finally, we are continuing with our efforts to unlock Canterbury Commons’ value for the benefit of our shareholders. Our ability to manage through the challenges of the pandemic and emerge as a stronger company with an extremely bright future is due to our talented and dedicated team members who continue to demonstrate to our guests daily our unwavering commitment to provide exceptional entertainment and customer service. I could not be more excited about our future or prouder of the entire Canterbury team.”

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Canterbury Commons Development Update

Canterbury Commons development work continued during the 2021 second quarter. Leasing continues for the Phase 1 development of the upscale Triple Crown Residences at Canterbury Park, and Canterbury Park and Doran Properties Group expect early stages of the construction of the project’s second phase of roughly 300 additional apartments will begin in the fall of 2021 with the main construction project starting in the spring of 2022.

Development of a new 28,000 square foot office building by Greystone Construction (“Greystone”) was completed in July and approximately 85% of the building is leased, including the portion of the building now occupied by Greystone as its new corporate headquarters. Canterbury Park and Greystone, via their joint venture, continue to make progress on securing additional partners for the balance of the 13-acre site for potential uses such as hospitality, dining, residential, commercial, and service-oriented retail. At present, 50% of the site is either under contract or completed with recent contracts for two commercial sites. A purchase agreement has been signed on 1.67 acres for commercial use with a developer and entitlements are underway on a 156-unit, age-restricted multifamily project.

As previously reported, in April 2021, the Company closed on the sale of approximately eight acres of land to Pulte Homes of Minnesota for the development of 63 new row homes and townhome residences, and on two acres of land to Lifestyle Communities for the development of a new cooperative community featuring a 56-unit, four-story building with over 5,000 square feet of amenity spaces. The sale of the remaining approximately three acres to Pulte Homes is expected to close in 2022, subject to the satisfaction of certain conditions. Total consideration received by the Company for these land sale agreements was approximately $2,500,000.

Developer and partner selection for the remaining approximately 90 acres of Canterbury Commons continues. The primary focus for future projects will be on entertainment, office, retail, hotel, and restaurant uses. Canterbury expects to make additional new partner announcements in the future.

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Summary of 2021 Second Quarter Operating Results

The operating results for the three-month period ended June 30, 2020 presented below reflect the impact of the suspension of operations at Canterbury through June 9, 2020. Live racing, simulcast wagering, and limited food and beverage operations reopened on June 10, 2020 with capacity constraints, followed by the resumption with capacity restraints of table games operations on June 15, 2020. There were no temporary shutdowns during the 2021 second quarter, but capacity was restricted in the 2021 second quarter until May 28, 2021.

Net revenues for the three months ended June 30, 2021 increased 473.4% to $15.9 million, compared to $2.8 million for the same period in 2020. This year-over-year increase in net revenues reflects an increase in all of the Company’s areas of operating revenue in second quarter of 2021 as compared to second quarter 2020, primarily as a result of a return to normalized operations and full capacity in the second quarter 2021 as compared to the prior year temporary suspension of operations through June 9, 2020, which was followed by the resumption of operations over the balance of the second quarter 2020 on a very limited basis.

Operating expenses for the three months ended June 30, 2021 were $13.0 million, an increase of $8.0 million, or 156.4%, compared to operating expenses of $5.1 million for the same period in 2020. This year-over-year increase in operating expenses reflects an increase in all of the Company’s operating expenses in the second quarter 2021 as compared to the second quarter 2020, primarily as a result of a return to normalized operations in the second quarter 2021 as compared to the prior year temporary suspension of operations through June 9, 2020.

During the 2021 second quarter, the Company recorded a $264,000 gain related to the sale of approximately 9.7 acres of land adjacent to the racetrack to Pulte Homes of Minnesota and Lifestyle Communities for $2,500,000.

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The Company recorded a loss from equity investment of $641,000 for the three months ended June 30, 2021, primarily related to its share of depreciation, amortization, and interest expense from the Doran Canterbury joint ventures that are developing the Triple Crown Residences, which opened its initial phase in June 2020. The Company recorded a loss from equity investment of $150,000 for the three months ended June 30, 2020, also primarily related to its share of depreciation, amortization, and interest expense from the Doran Canterbury joint ventures.

The Company recorded income tax expense of $758,000 for the three months ended June 30, 2021. The Company recorded an income tax benefit of $1.1 million for the three months ended June 30, 2020.

The Company recorded net income of $1.9 million, or diluted earnings per share of $0.39, for the three months ended June 30, 2021. The Company recorded a net loss and diluted loss per share for the three months ended June 30, 2020 of $(1.2) million and $(0.25), respectively.

Adjusted EBITDA, a non-GAAP measure, was a quarterly record $3.5 million in the 2021 second quarter compared to an adjusted EBITDA loss of $(1.8) million for the same period in 2020.

Summary of 2021 Year-to-Date Operating Results

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Net revenues for the six months ended June 30, 2021 increased 83.0% to $25.1 million, compared to $13.7 million for the same period in 2020. This year-over-year increase in net revenues reflects an increase in all the Company’s areas of operating revenue as a result of a return to normalized operations and full capacity in the second quarter 2021 as compared to the temporary suspension of operations from March 16, 2020 through June 9, 2020.

Operating expenses for the six months ended June 30, 2021 were $21.0 million, an increase of $5.1 million, or 32.1%, compared to operating expenses of $15.9 million for the same period in 2020. This year-over-year increase in operating expenses reflects increases in a majority of the Company’s operating areas, primarily as a result of a return to normalized operations and full capacity in the second quarter 2021 as compared to the prior year temporary suspension of operations from March 16, 2020 through June 9, 2020.

The Company recorded a loss from equity investment of $1.3 million for the six months ended June 30, 2021. The Company recorded a loss from equity investment of $150,000 for the six months ended June 30, 2020. These losses from equity investments were primarily related to the Company’s share of depreciation, amortization, and interest expense from the Doran Canterbury joint ventures.

The Company recorded income tax expense of $1.0 million for the six months ended June 30, 2021. The Company recorded an income tax benefit of $1.1 million for the six months ended June 30, 2020.

The Company recorded net income of $2.4 million, or diluted earnings per share of $0.51 for the six months ended June 30, 2021. The Company recorded a net loss and diluted loss per share for the six months ended June 30, 2020 of $926,000 and $0.20, respectively.

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Adjusted EBITDA was $4.9 million for the six months ended June 30, 2021 compared to an adjusted EBITDA loss of $916,000 for the same period in 2020.

Additional Financial Information 

Further financial information for the second quarter ended June 30, 2021 is presented in the accompanying tables at the end of this press release. Additional information will be provided in the Company’s Quarterly Report on Form 10-Q that will be filed with the Securities and Exchange Commission on or about August 10, 2021.

Use of Non-GAAP Financial Measures

To supplement our financial statements, we also provide investors with information about our EBITDA and Adjusted EBITDA, each of which is a non-GAAP measure, which excludes certain items from net income a GAAP measure. We define EBITDA as earnings before interest, taxes, depreciation and amortization. We define Adjusted EBITDA as earnings before interest income, income tax expense (benefit), depreciation and amortization, as well as excluding gains on sale of land, depreciation and amortization related to equity investments, grant money received from the Minnesota COVID-19 relief package, and interest expense related to equity investments. Neither EBITDA nor adjusted EBITDA is a measure of performance calculated in accordance with generally accepted accounting principles (“GAAP”), and should not be considered an alternative to, or more meaningful than, net income as an indicator of our operating performance. We have presented EBITDA as a supplemental disclosure because it is a widely used measure of performance and basis for valuation of companies in our industry. Other companies that provide EBITDA information may calculate EBITDA differently than we do. We have presented Adjusted EBITDA as a supplemental disclosure because it enables investors to understand our results excluding the effect of these items.

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About Canterbury Park

Canterbury Park Holding Corporation (Nasdaq: CPHC) owns and operates Canterbury Park Racetrack and Card Casino in Shakopee, Minnesota, the only thoroughbred and quarter horse racing facility in the State. The Company generally offers live racing from May to September. The Card Casino hosts card games 24 hours a day, seven days a week, dealing both poker and table games. The Company also conducts year-round wagering on simulcast horse racing and hosts a variety of other entertainment and special events at its Shakopee facility. The Company is also pursuing a strategy to enhance shareholder value by the ongoing development of approximately 140 acres of underutilized land surrounding the Racetrack that was originally designated for a project known as Canterbury Commons™. The Company is pursuing several mixed-use development opportunities for the remaining underutilized land, directly and through joint ventures. For more information about the Company, please visit www.canterburypark.com

Cautionary Statement

From time to time, in reports filed with the Securities and Exchange Commission, in press releases, and in other communications to shareholders or the investing public, we may make forward-looking statements concerning possible or anticipated future financial performance, business activities or plans. These statements are typically preceded by the words “believes,” “expects,” “anticipates,” “intends” or similar expressions. For these forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in federal securities laws. Shareholders and the investing public should understand that these forward-looking statements are subject to risks and uncertainties which could affect our actual results and cause actual results to differ materially from those indicated in the forward-looking statements. We report these risks and uncertainties in our Annual Report on Form 10-K filed with the SEC and subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. They include, but are not limited to: the effect that the COVID-19 coronavirus pandemic and resulting precautionary measures may have on us as an entertainment venue or on the economy generally, including the fact that we temporarily suspended all card casino, simulcast, and special events operations during portions of 2020 and may be required to do so again in 2021, that we were required to limit visitors and engage in new cleaning protocols, social distancing measures and other changes to our racetrack and card casino operations to comply with state law and health protocols and reductions in the number of visitors due to their COVID-19 concerns; material fluctuations in attendance at the Racetrack; material changes in the level of wagering by patrons; any decline in interest in the unbanked card games offered in the Card Casino; competition from other venues offering unbanked card games or other forms of wagering; competition from other sports and entertainment options; increases in compensation and employee benefit costs; increases in the percentage of revenues allocated for purse fund payments; higher than expected expense related to new marketing initiatives; the impact of wagering products and technologies introduced by competitors; the general health of the gaming sector; legislative and regulatory decisions and changes; our dependence on the Cooperative Marketing Agreement with the Shakopee Mdewakanton Sioux Community for purse enhancement payments and marketing payments, which may not continue after 2022; our ability to successfully develop our real estate, including the effect of competition on our real estate development operations and our reliance on our current and future development partners; temporary disruptions or changes in access to our facilities caused by ongoing infrastructure improvements; and other factors that are beyond our ability to control or predict.

     
Investor Contacts:    
Randy Dehmer   Richard Land, Jim Leahy
Vice President and Chief Financial Officer   JCIR
Canterbury Park Holding Corporation   212-835-8500 or [email protected]
952-233-4828 or [email protected]    
     

– Financial tables follow –

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CANTERBURY PARK HOLDING CORPORATION’S
SUMMARY OF OPERATING RESULTS
(UNAUDITED)

  Three months ended   Six months ended
  June 30,   June 30,
   2021    2020
  2021 
   2020
                   
Net Operating Revenues $15,871,818   $2,767,855     $25,097,360   $13,716,814  
Operating Expenses (13,042,932 )   (5,086,434 )   20,996,363     (15,893,698 )
Gain on Sale of Land 263,581         263,581      
Income (Loss) from Operations 3,092,467     (2,318,579 )   4,364,578     (2,176,884 )
Other (Loss) Income, net (465,786 )   19,719     (934,180 )   183,409  
Income Tax (Expense) Benefit (757,597 )   1,117,663     (1,009,821 )   1,067,499  
Net Income (Loss) $1,869,084   ($1,181,197 )   $2,420,577   ($925,976 )
Basic Net Income (Loss) Per Common Share $0.39   ($0.25 )   $0.51   ($0.20 )
Diluted Net Income (Loss) Per Common Share $0.39   ($0.25 )   $0.51   ($0.20 )


RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA
(UNAUDITED)

    Three months ended   Six months ended
    June 30,   June 30,
    2021   2020   2021   2020
NET INCOME (LOSS)   $ 1,869,084     $ (1,181,197 )   $ 2,420,577     $ (925,976 )
Interest income, net     (175,090 )     (169,358 )     (344,400 )     (333,048 )
Income tax expense (benefit)         757,597       (1,117,663 )     1,009,821       (1,067,499 )
Depreciation     694,168       693,640       1,383,753       1,410,493  
EBITDA     3,145,759       (1,774,578 )     4,469,751       (916,030 )
Gain on sale of land     (263,581 )           (263,581 )      
Depreciation and amortization    related to equity investments     393,673             787,347        
Interest expense related to equity investments     237,871             457,066        
Other revenue, COVID-19 relief grants                 (515,000 )     —   
ADJUSTED EBITDA   $ 3,513,723     $ (1,774,578 )   $ 4,935,583     $ (916,030 )

 

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Nasdaq:CPHC

Canterbury Park Holding Corporation Reports 2023 Fourth Quarter Results

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canterbury-park-holding-corporation-reports 2023-fourth-quarter-results

SHAKOPEE, Minn., March 11, 2024 (GLOBE NEWSWIRE) — Canterbury Park Holding Corporation (“Canterbury” or the “Company”) (Nasdaq: CPHC) today reported financial results for the fourth quarter and full year ended December 31, 2023.

 
  ($ in thousands, except per share data and percentages)
 
  Three Months Ended December 31,   Twelve Months Ended December 31,
  2023   2022   Change   2023   2022   Change
Net revenues $12,527     $13,119     -4.5 %   $61,437     $66,824     -8.1 %
                                   
Net income (2) $1,364     $1,063     28.3 %   $10,563     $7,513     40.6 %
                                   
Adjusted EBITDA (1) (2) $2,051     $2,963     -30.8 %   $10,446     $16,210     -35.6 %
                                   
Basic EPS $0.28     $0.22     27.3 %   $2.15     $1.55     38.7 %
Diluted EPS $0.27     $0.22     22.7 %   $2.13     $1.54     38.3 %

(1) Adjusted EBITDA, a non-GAAP measure, excludes certain items from net income, a GAAP measure. Non-GAAP financial measures are not intended to be considered in isolation from, a substitute for, or superior to GAAP results. Definitions, disclosures, and reconciliations of non-GAAP financial information are included later in the release.
(2) Net income and Adjusted EBITDA in the three- and twelve-month periods ended December 31, 2023, were impacted by professional fees related to long-term strategic growth initiatives totaling approximately $0.2 million and $1.2 million before income tax, respectively.
   

Management Commentary
“Our 2023 fourth quarter results, including net revenue of $12.5 million, net income of $1.4 million and adjusted EBITDA of $2.1 million, represented a solid finish to a year in which we focused on managing our operations to address the evolution of our business. We believe adjusted EBITDA as a percentage of revenue of 16.4% and 17% for the fourth quarter and full year, respectively, are in the range of what we can anticipate going forward as we continue to optimize our operations.

“Fourth quarter Casino revenue performance reflects a weak October followed by a solid reversal over the balance of the quarter. Importantly, the positive Casino revenue trends experienced exiting 2023 have continued into the early part of this year. Pari-mutuel revenues for the quarter were down 8.4% due primarily to reduced advanced deposit wagering (“ADW”) performance while our full-year pari-mutuel and live racing performance was negatively impacted by the expiration of the cooperative marketing agreement at the end of 2022. Following this change, we have continued to re-evaluate all aspects of our racing operations, and we believe our updated operating strategies will improve the performance of this portion of our business going forward.

“Development at Canterbury Commons continues at a rapid pace with significant ongoing activity across our site. Swervo Development Corporation (“Swervo”) has its amphitheater construction in full swing and is on schedule to open in the summer of 2025. Also, our Winner’s Circle development partnership with Greystone continues to bring additional ‘Live, Work, Stay, and Play’ features to Canterbury Commons in the form of a new 10,000 square-foot building now under construction. This project is fully leased, with tenants including a BBQ restaurant, a pizza restaurant and a fitness center. In addition, our barn relocation project is well underway, and we will begin work this summer on a new road that will allow us to unlock approximately 20 acres of land adjacent to the amphitheater for an entertainment district development that would provide further opportunities for Canterbury to create value for its shareholders.

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“We continue to evaluate opportunities to enhance the return from our operations while simultaneously exploring additional ways to create value for our shareholders including seeking new wagering or gaming entertainment options that we could offer. Recently, alongside the region’s other horse racing operation, we submitted a formal request to the Minnesota Racing Commission to allow us to introduce 500 on-track ADW units that would offer our guests the ability to wager on historical horse racing outcomes similar to what is available in multiple jurisdictions. This effort, along with our continued legislative efforts on sports betting, is a clear indication that we will explore all avenues to bring additional gaming and wagering opportunities to our property to further enhance our business and support the Minnesota horse racing industry. With our solid balance sheet and operational discipline, we believe Canterbury Park remains well-positioned to deliver long-term growth, and we remain committed to building a bright future for our Company.”

Canterbury Commons Development Update
Swervo continues to make progress on the construction of its state-of-the-art amphitheater which is expected to open in 2025. The Company’s barn relocation and redevelopment plan is also underway and should be completed in 2025. Later in 2024, Canterbury expects to begin work on the road adjacent to the amphitheater which will unlock development of 20 acres of land in that portion of the site.

Residential and commercial construction updates related to joint ventures include:

  • Phase II of Doran Properties Group’s upscale Triple Crown Residences at Canterbury Park has begun initial occupancy.
  • The Omry at Canterbury, featuring 147 units of senior market rate apartments, is complete and move-ins are underway.
  • Construction has begun on a new 10,000 square-foot commercial building within the Winner’s Circle development; the building features three tenants, including a BBQ restaurant, a pizza restaurant and fitness center. The project is expected to open in late 2024.

Residential and commercial construction updates related to prior land sales include:

  • Greystone completed the Next Steps Learning Center late in 2023.
  • Pulte Homes of Minnesota continues development on the 45-unit second phase of its row home and townhome residences.

Developer and partner selection for the remaining 40 acres of Canterbury Commons, including 20 acres that will become available for development following the completion of a new road the Company will begin building later this year, continues. Additional uses could include office, retail, hotel and restaurants.

Summary of 2023 Fourth Quarter Operating Results
Net revenues for the three months ended December 31, 2023, decreased $592,000, or 4.5%, to $12.5 million, compared to $13.1 million for the same period in 2022. Casino revenue declined 3.7%, or $366,000, due to particularly weak trends in October which partially reversed over the balance of the quarter, as well as the impact from increased competition from a nearby tribal casino that reopened its poker room. Pari-mutuel, food and beverage, and other revenue declined 8.4%, 5.2%, and 6.5%, respectively. The decrease in pari-mutuel revenue was driven by continued decreases in revenues related to ADW wagering. Other revenues decreased primarily due to revenues earned during the three months ended December 31, 2022, as part of the cooperative marketing agreement that expired by its terms on December 31, 2022.

Operating expenses for the three months ended December 31, 2023, were $11.9 million, an increase of $175,000, or 1.5%, compared to operating expenses of $11.8 million for the same period in 2022. Food and beverage cost of goods sold decreased at a rate below the decline in revenues, resulting in increased costs as a percentage of sales. Marketing expenses decreased due to the expiration of the cooperative marketing agreement which resulted in fewer marketing programs in 2023. These decreases were more than offset by higher payroll expense due primarily to increases in annual wage rates, increased depreciation, and increased professional and contracted services due primarily to regulatory fees related to the Company’s racing and Casino operations.

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The Company recorded income from equity investment of $939,000 for the three months ended December 31, 2023. For the three months ended December 31, 2022, the Company recorded a loss from equity investment of $294,000. The income for the three months ended December 31, 2023, is related to a gain recognized on insurance proceeds received by Doran Canterbury I related to an outstanding claim while the loss from equity investments in the prior period was primarily related to the Company’s share of depreciation, amortization, and interest expense from the Doran Canterbury joint ventures.

The Company recorded interest income, net, of $545,000 for the three months ended December 31, 2023, an increase of $256,000, or 88.4%, compared to interest income, net, of $289,000 for the same period in 2022. The continued strength of Canterbury’s balance sheet has driven an increase in interest income through the investment of available cash in certificates of deposit and money market funds as well as from recording additional interest accrued on the TIF receivable and joint venture member loans.

The Company recorded income tax expense of $708,000 for the three months ended December 31, 2023, compared to income tax expense of $288,000 for the three months ended December 31, 2022. The Company recorded net income of $1.4 million, or diluted earnings per share of $0.27, for the three months ended December 31, 2023, compared to net income and diluted earnings per share for the three months ended December 31, 2022, of $1.1 million and $0.22, respectively.

Adjusted EBITDA, a non-GAAP measure, for the three months ended December 31, 2023, was $2.1 million compared to adjusted EBITDA of $3.0 million for the same period in 2022.

Summary of 2023 Full-Year Operating Results
Net revenues for the twelve months ended December 31, 2023, decreased $5.4 million, or 8.1%, to $61.4 million, compared to $66.8 million for the same period in 2022. The year-over-year decrease reflects decreases in Casino, pari-mutuel, food and beverage, and other revenues of $438,000, $2.7 million, $398,000, and $1.8 million, respectively. The decrease in Casino revenue is primarily due to a decrease in live race days year-over-year. The full year decreases in pari-mutuel and other revenues were driven primarily by reduced handle on live racing and the expiration of the cooperative marketing agreement at the end of 2022. Food and beverage revenue declined due to the reduced live racing schedule and not hosting Twin Cities Summer Jam in 2023.

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Operating expenses for the twelve months ended December 31, 2023, were $56.4 million, an increase of $483,000, or 0.9%, compared to operating expenses of $55.9 million for the same period in 2022. The year-over-year increase reflects higher payroll expense and professional services expenses in the twelve months ended December 31, 2023, which more than offset lower purse and marketing expenses as compared to the twelve months ended December 31, 2022. The increase in professional service fees was primarily due to $1.2 million in costs related to growth initiatives being pursued as part of our strategic plan focused on growing Casino revenue.

The Company recorded a $6.5 million gain on the sale of land for the twelve months ended December 31, 2023, related to the sale of 37 acres to Swervo. The Company recorded a gain on the sale of land of $12,000 in the twelve-month period ended December 31, 2022.

The Company recorded income from equity investment of $1.5 million for the twelve months ended December 31, 2023, compared to a loss from equity investment of $1.6 million for the twelve months ended December 31, 2022. The income for the twelve months ended December 31, 2023 and the loss from equity investment in the prior period were primarily related to the reasons described above in the fourth quarter results.

The Company recorded interest income, net, of $2.0 million for the twelve months ended December 31, 2023, an increase of $1.1 million, or 117.4%, compared to interest income, net, of $910,000 for the same period in 2022. The continued strength of Canterbury’s balance sheet has allowed the Company to drive an increase in interest income primarily due to the reasons described above in the fourth quarter results. The Company also recognized interest related to employee retention credit funds that were received during the twelve months ended December 31, 2023.

The Company recorded income tax expense of $4.4 million for the twelve months ended December 31, 2023, compared to income tax expense of $2.7 million for the twelve months ended December 31, 2022.

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The Company recorded net income of $10.6 million, or diluted earnings per share of $2.13, for the twelve months ended December 31, 2023, compared to net income and diluted earnings per share for the twelve months ended December 31, 2022, of $7.5 million and $1.54, respectively.

Adjusted EBITDA was $10.4 million for the twelve months ended December 31, 2023, compared to $16.2 million for the same period in 2022.

Additional Financial Information
Further financial information for the fourth quarter and full-year ended December 31, 2023, is presented in the accompanying tables at the end of this press release. Additional information will be provided in the Company’s Annual Report on Form 10-K that will be filed with the Securities and Exchange Commission on or about March 12, 2024.

Use of Non-GAAP Financial Measures
To supplement our financial statements, we also provide investors with information about our EBITDA and Adjusted EBITDA, each of which is a non-GAAP measure, and which exclude certain items from net income, a GAAP measure. We define EBITDA as earnings before interest, taxes, depreciation and amortization. We define Adjusted EBITDA as earnings before interest income (net of interest expense), income tax expense, depreciation and amortization, as well as excluding stock-based compensation (which includes our 401(k) match expense as this match occurs in Company stock), gain on insurance proceeds relating to equity investments, loss on disposal of assets, gain on sale of land, depreciation and amortization related to equity investments and interest expense related to equity investments. Neither EBITDA nor Adjusted EBITDA is a measure of performance calculated in accordance with generally accepted accounting principles (“GAAP”), and should not be considered an alternative to, or more meaningful than, net income as an indicator of our operating performance. See the table below, which presents reconciliations of these measures to the GAAP equivalent financial measure, which is net income. We have presented EBITDA as a supplemental disclosure because we believe that, when considered with measures calculated in accordance with GAAP, EBITDA gives investors a more complete understanding of our operating results before the impact of investing and financing transactions and income taxes, and it is a widely used measure of performance and basis for valuation of companies in our industry. Other companies that provide EBITDA information may calculate EBITDA or Adjusted EBITDA differently than we do. We have presented Adjusted EBITDA as a supplemental disclosure because we believe it enables investors to understand and assess our core operating results excluding the effect of these items and is useful to investors in allowing greater transparency related to a significant measure used by management in its financial and operational decision-making. Adjusted EBITDA has economic substance because it is used by management as a performance measure to analyze the performance of our business and provides a perspective on the current effects of operating decisions.

About Canterbury Park
Canterbury Park Holding Corporation (Nasdaq: CPHC) owns and operates Canterbury Park Racetrack and Casino in Shakopee, Minnesota, the only thoroughbred and quarter horse racing facility in the State. The Company generally offers live racing from May to September. The Casino hosts card games 24 hours a day, seven days a week, dealing both poker and table games. The Company also conducts year-round wagering on simulcast horse racing and hosts a variety of other entertainment and special events at its Shakopee facility. The Company is also pursuing a strategy to enhance shareholder value by the ongoing development of approximately 140 acres of underutilized land surrounding the Racetrack that was originally designated for a project known as Canterbury Commons™. The Company is pursuing several mixed-use development opportunities for the remaining underutilized land, directly and through joint ventures. For more information about the Company, please visit www.canterburypark.com.

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Cautionary Statement
From time to time, in reports filed with the Securities and Exchange Commission, in press releases, and in other communications to shareholders or the investing public, we may make forward-looking statements concerning possible or anticipated future financial performance, business activities or plans. These statements are typically preceded by the words “believes,” “expects,” “anticipates,” “intends” or similar expressions. For these forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in federal securities laws. Shareholders and the investing public should understand that these forward-looking statements are subject to risks and uncertainties which could affect our actual results and cause actual results to differ materially from those indicated in the forward-looking statements. We report these risks and uncertainties in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC and subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. They include, but are not limited to: we may not be successful in implementing our growth strategy, sensitivity to reductions in discretionary spending as a result of downturns in the economy; we have experienced a decrease in revenue and profitability from live racing due to the loss of purse enhancement payments and marketing payments made under the cooperative marketing agreement with the Shakopee Mdewakanton Sioux Community; challenges in attracting a sufficient number of horses and trainers; a lack of confidence in core operations resulting in decreasing customer retention and engagement; personal injury litigation due to the inherently dangerous nature of horse racing; material fluctuations in attendance at the Racetrack; material changes in the level of wagering by patrons; any decline in interest in horse racing or the unbanked card games offered in the Casino; competition from other venues offering racing, unbanked card games or other forms of wagering; competition from other sports and entertainment options; increases in compensation and employee benefit costs; the impact of wagering products and technologies introduced by competitors; the general health of the gaming sector; legislative and regulatory decisions and changes; our ability to successfully develop our real estate, including the effect of competition on our real estate development operations and our reliance on our current and future development partners; temporary disruptions or changes in access to our facilities caused by ongoing infrastructure improvements; inclement weather and other conditions affecting the ability to conduct live racing; technology and/or key system failures; cybersecurity incidents; the general effects of inflation; our ability to attract and retain qualified personnel; dividends that may or may not be issued at the discretion of our Board of Directors; and other factors that are beyond our ability to control or predict.

The forward-looking statements in this press release speak only as of the date of this press release. Except as required by law, Canterbury assumes no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

Investor Contacts:  
Randy Dehmer Richard Land, Jim Leahy
Senior Vice President and Chief Financial Officer JCIR
Canterbury Park Holding Corporation 212-835-8500 or [email protected]
952-233-4828 or [email protected]  
   

– Financial tables follow –

CANTERBURY PARK HOLDING CORPORATION’S
SUMMARY OF OPERATING RESULTS
 
  Three months ended   Twelve months ended
  December 31,   December 31,
  2023   2022   2023   2022
Operating Revenues:              
Casino $9,459,017     $9,824,566     $39,781,166     $40,218,953  
Pari-mutuel   1,243,905       1,358,622       8,253,615       10,957,692  
Food and Beverage   1,020,738       1,076,390       7,828,980       8,227,105  
Other   803,403       859,654       5,573,097       7,420,131  
Total Net Revenues $12,527,063     $13,119,232     $61,436,858     $66,823,881  
Operating Expenses   (11,939,193)       (11,764,048)       (56,425,975)       (55,943,422)  
Gain on Sale of Land               6,489,976       12,151  
Income from Operations   587,870       1,355,184       11,500,859       10,892,610  
Other Gain/(Loss), net   1,484,047       (4,617)       3,479,390       (657,864)  
Income Tax Expense   (708,000)       (287,722)       (4,417,000)       (2,721,800)  
Net Income   1,363,917       1,062,845       10,563,249       7,512,946  
Basic Net Income Per Common Share $0.28     $0.22     $2.15     $1.55  
Diluted Net Income Per Common Share $0.27     $0.22     $2.13     $1.54  
                               

RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA
               
  Three months ended   Twelve months ended
  December 31,   December 31,
  2023   2022   2023   2022
NET INCOME $1,363,917     $1,062,845     $10,563,249     $7,512,946  
Interest income, net   (544,769)       (289,147)       (1,978,122)       (909,958)  
Income tax expense   708,000       287,722       4,417,000       2,721,800  
Depreciation   837,100       746,378       3,145,372       2,981,168  
EBITDA   2,364,248       1,807,798       16,147,499       12,305,956  
Stock-based compensation   335,817       275,488       1,378,373       1,068,366  
Gain on insurance proceeds related to equity investments   (1,698,800)             (4,227,701)        
Loss on disposal of assets   176,425       157,435       157,160       157,435  
Gain on sale of land               (6,489,976)       (12,151)  
Depreciation and amortization related to
equity investments
  439,270       442,002       1,753,256       1,782,870  
Interest expense related to equity
investments
  434,186       279,856       1,727,192       907,099  
ADJUSTED EBITDA $2,051,146     $2,962,579     $10,445,803     $16,209,575  

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Nasdaq:CPHC

Canterbury Park Holding Corporation Reports 2023 Third Quarter Results

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canterbury-park-holding-corporation-reports 2023-third-quarter-results

SHAKOPEE, Minn., Nov. 09, 2023 (GLOBE NEWSWIRE) — Canterbury Park Holding Corporation (“Canterbury” or the “Company”) (NASDAQ: CPHC), today reported financial results for the three and nine months ended September 30, 2023.

($ in thousands, except per share data and percentages)

  Three Months Ended September 30,   Nine Months Ended September 30,
    2023     2022   Change     2023     2022   Change
Net revenues $19,269   $22,292   -13.6 %   $48,910   $53,705   -8.9 %
                       
Net income $1,136   $2,921   -61.1 %   $9,199   $6,450   42.6 %
                       
Adjusted EBITDA(1)(2) $2,850   $5,341   -46.6 %   $7,352   $12,452   -41.0 %
                       
Basic EPS $0.23   $0.60   -61.7 %   $1.87   $1.33   40.6 %
Diluted EPS $0.23   $0.60   -61.7 %   $1.86   $1.32   40.9 %

(1) Adjusted EBITDA, a non-GAAP measure, excludes certain items from net income, a GAAP measure. Non-GAAP financial measures are not intended to be considered in isolation from, a substitute for, or superior to GAAP results. Definitions, disclosures, and reconciliations of non-GAAP financial information are included later in the release.
(2) Adjusted EBITDA in the three and nine-month periods ended September 30, 2023, was impacted by professional fees related to long-term strategic growth initiatives totaling approximately $0.7 million and $1.0 million, respectively.

Management Commentary
“Canterbury Park’s third quarter results represent a continuation of solid Casino segment performance offset by higher operating costs and our previously disclosed reduced racing calendar compared to the year-ago period. Third quarter net revenue of $19.3 million and adjusted EBITDA of $2.9 million resulted in adjusted EBITDA as a percentage of revenue of 14.8%. Adjusted EBITDA as a percentage of revenue rebounded nicely from a recent low in the 2023 second quarter, and we expect our improved cost structure and operating efficiencies will stabilize this metric at an approximate mid- to high-teens percentage. Adjusted EBITDA and adjusted EBITDA as a percentage of revenue were also impacted by professional fees related to long-term strategic growth initiatives.

“Casino revenue rose 1.8% over the prior year as we saw relatively stable customer visitation and spend, particularly at the upper end of our database. Pari-mutuel revenue declined 28.0% year-over-year primarily due to a significant decline in out-of-state handle on Canterbury Park races as a result of decreased field sizes as well as weather impacts and cancelations that reduced the number of races during the period by 12% compared to the same period last year. In addition, food & beverage revenues were negatively impacted by the live racing cancelations as well as having fewer events this year compared to last year’s third quarter, particularly with Twin Cities Summer Jam not taking place in the third quarter of 2023 as it did during the third quarter of 2022.

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“Development activity at Canterbury Commons™ continued to expand with a broad array of partners bringing exciting amenities to our vibrant lifestyle community and exploring new opportunities. Swervo Development Corporation (“Swervo”) has begun full-scale development of its state-of-the-art amphitheater with significant activity underway on the 37-acre site. Further, the initial success of the Badger Hill Brewery and Bravis Modern Street Food restaurant are drivers of traffic to Canterbury Commons and helping us make good on our promise of ‘Live, Work, Stay, and Play’ across the broader Canterbury Commons development.

“Our Casino business continues to deliver steady financial results and the operating practices and infrastructure we’ve put in place have allowed us to adapt to the changing environment in our operations. At the same time, we continue to leverage our strong balance sheet and stable cash flow generation as we return capital to shareholders through our quarterly cash dividend. Going forward, we are actively evaluating opportunities to further optimize our return of capital while simultaneously exploring additional ways to create new value for our shareholders. As we continue to execute on our five-year strategic plan focused on growing Casino revenue, we are also actively pursuing new opportunities that would diversify and grow our business, including through potential strategic transactions and initiatives. We are committed to continue to build a bright future for Canterbury Park.”

Canterbury Commons Development Update
Swervo broke ground and construction is underway on its state-of-the-art amphitheater which is expected to open in 2025. Canterbury has also received approval for the first phase of its barn relocation and redevelopment plan which is expected to take approximately one year to complete.

Residential and commercial construction updates related to joint ventures include:

  • Greystone completed an 11,000 square-foot brewery, taproom (Badger Hill) and Mexican restaurant (Bravis Modern Street Food) in July 2023.
  • Doran Properties Group continues its development of Phase II of the upscale Triple Crown Residences at Canterbury Park, with initial occupancy anticipated in January 2024.
  • The Omry at Canterbury, featuring 147 units of senior market rate apartments, received a certificate of occupancy for approximately half of the units and initiated move-ins in September. The remaining units are anticipated to be complete by year end.
  • A new 10,000 square-foot commercial building within the Winner’s Circle development received planning and city council approval in October. The project is anticipated to have three tenants and Greystone Construction, the development sponsor, has targeted the inclusion of two restaurant groups and a fitness group within the building. Pending financing and firm commitments from one or two tenants, the project is expected to break ground in late 2023 and open in late 2024.

Residential and commercial construction updates related to prior land sales include:

  • Pulte Homes of Minnesota has begun development of the 45-unit second phase of its new row home and townhome residences.
  • Lifestyle Communities expects to break ground in spring or summer of 2024 for Artessa at Canterbury Park, a cooperative community featuring a 44-unit building and over 5,000 square feet of amenity spaces.
  • Greystone is expected to complete the Next Steps Learning Center late 2023.

Developer and partner selection for the remaining 40 acres of Canterbury Commons continues, with additional uses potentially including offices, retail, a hotel, and restaurants.

Summary of 2023 Third Quarter Operating Results
Net revenues for the three months ended September 30, 2023, decreased $3.0 million, or 13.6%, to $19.3 million, compared to $22.3 million for the same period in 2022. Casino revenue was up 1.8%, or $185,000. This slight increase was more than offset by decreases in pari-mutuel, food & beverage, and other revenue of 28.0%, 15.4%, and 35.5%, respectively. The decrease in pari-mutuel revenue was driven by a continued decrease in out-of-state handle due to smaller field sizes and less races. Food & beverage revenues declined primarily due to Twin Cities Summer Jam not taking place in the third quarter of 2023 as it did during the third quarter of 2022. Other revenues decreased primarily due to revenues earned during the three months ended September 30, 2022, as part of the cooperative marketing agreement that expired by its terms on December 31, 2022.

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Operating expenses for the three months ended September 30, 2023, were $17.5 million, a decrease of $422,000, or 2.4%, compared to operating expenses of $17.9 million for the same period in 2022. The year-over-year decrease reflects lower purse expenses related to decreased pari-mutuel revenue. Food & beverage cost of goods sold decreased with the similar decrease in food and beverage revenues. Marketing expenses decreased due to the expiration of the cooperative marketing agreement. These decreases in operating expense were somewhat offset by higher payroll expense, due primarily to annual wage increases, and increased professional expense related to the long-term strategic growth initiatives noted above.

The Company recorded a loss from equity investment of $674,000 for the three months ended September 30, 2023. For the three months ended September 30, 2022, the Company recorded a loss from equity investment of $500,000. The losses from equity investments in both periods were primarily related to the Company’s share of depreciation, amortization, and interest expense from the Doran Canterbury joint ventures.

The Company recorded interest income, net, of $537,000 for the three months ended September 30, 2023, an increase of $314,000, or 141%, compared to interest income, net, of $223,000 for the same period in 2022. With the continued strength of Canterbury’s balance sheet, the Company has increased interest income due to transferring available cash into certificates of deposit and money market funds as well as recording additional interest accrued on the TIF receivable and member loans.

The Company recorded income tax expense of $533,000 for the three months ended September 30, 2023, compared to income tax expense of $1.2 million for the three months ended September 30, 2022. The Company recorded net income of $1.1 million, or diluted earnings per share of $0.23, for the three months ended September 30, 2023, compared to net income and diluted earnings per share for the three months ended September 30, 2022, of $2.9 million and $0.60, respectively.

Adjusted EBITDA, a non-GAAP measure, for the three months ended September 30, 2023, was $2.9 million compared to adjusted EBITDA of $5.3 million for the same period in 2022.

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Summary of 2023 Year-to-Date Operating Results
Net revenues for the nine months ended September 30, 2023, decreased $4.8 million, or 8.9%, to $48.9 million, compared to $53.7 million for the same period in 2022. The year-over-year decrease reflects decreases in Casino, pari-mutuel, food & beverage, and other revenues of $72,000, $2.6 million, $342,000, and $1.8 million, respectively. Reasons for the year-to-date decreases are similar to the reasons described above in the third quarter results.

Operating expenses for the nine months ended September 30, 2023, remained relatively flat at $44.5 million, a slight increase of $307,000, or 0.7%, compared to operating expenses of $44.2 million for the same period in 2022. The year-over-year increase reflects higher payroll expense and professional services expenses in the nine months ended September 30, 2023, which more than offset lower purse and marketing expenses as compared to the nine months ended September 30, 2022.

The gain on sale of land for the nine months ended September 30, 2023, was $6.5 million and was related to the sale of 37 acres to Swervo for the future development of an amphitheater. The Company recorded a gain on sale of land of $12,000 in the nine-month period ended September 30, 2022.

The Company recorded a gain from equity investment of $562,000 for the nine months ended September 30, 2023, compared to a loss from equity investment of $1.3 million for the nine months ended September 30, 2022. The net gain for the nine months ended September 30, 2023 is related to insurance proceeds received related to a claim by the joint venture against a third party while the losses from investments in the prior period were primarily related to the Company’s share of depreciation, amortization, and interest expense from the Doran Canterbury joint ventures.

The Company recorded interest income, net, of $1.4 million for the nine months ended September 30, 2023, an increase of $813,000, or 131%, compared to interest income, net, of $621,000 for the same period in 2022. With the continued strength of Canterbury’s balance sheet, the Company has increased interest income due to transferring available cash into certificates of deposit and money market funds as well as recording additional interest accrued on the TIF receivable and member loans. The Company also recognized interest related to employee retention credit funds that were received during the nine months ended September 30, 2023.

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The Company recorded income tax expense of $3.7 million for the nine months ended September 30, 2023, compared to income tax expense of $2.4 million for the nine months ended September 30, 2022.

The Company recorded net income of $9.2 million, or diluted earnings per share of $1.86, for the nine months ended September 30, 2023, compared to net income and diluted earnings per share for the nine months ended September 30, 2022, of $6.5 million and $1.32, respectively.

Adjusted EBITDA was $7.4 million for the nine months ended September 30, 2023 compared to $12.5 million for the same period in 2022.

Additional Financial Information
Further financial information for the third quarter ended September 30, 2023, is presented in the accompanying tables at the end of this press release. Additional information will be provided in the Company’s Quarterly Report on Form 10-Q that will be filed with the Securities and Exchange Commission on or about November 13, 2023.

Use of Non-GAAP Financial Measures
To supplement our financial statements, we also provide investors with information about our EBITDA and Adjusted EBITDA, each of which is a non-GAAP measure, and which exclude certain items from net income, a GAAP measure. We define EBITDA as earnings before interest, taxes, depreciation and amortization. We define Adjusted EBITDA as earnings before interest income, income tax expense, depreciation and amortization, as well as excluding gain on sale of land and disposal of assets, depreciation and amortization related to equity investments, interest expense related to equity investments, and gain on insurance proceeds relating to equity investments. Neither EBITDA nor Adjusted EBITDA is a measure of performance calculated in accordance with generally accepted accounting principles (“GAAP”), and should not be considered an alternative to, or more meaningful than, net income as an indicator of our operating performance. See the table below, which presents reconciliations of these measures to the GAAP equivalent financial measures. We have presented EBITDA as a supplemental disclosure because we believe that, when considered with measures calculated in accordance with GAAP, EBITDA gives investors a more complete understanding of our operating results before the impact of investing and financing transactions and income taxes, and it is a widely used measure of performance and basis for valuation of companies in our industry. Other companies that provide EBITDA information may calculate EBITDA differently than we do. We have presented Adjusted EBITDA as a supplemental disclosure because we believe it enables investors to understand and assess our core operating results excluding the effect of these items and is useful to investors in allowing greater transparency related to a significant measure used by management in its financial and operational decision-making. Adjusted EBITDA has economic substance because it is used by management as a performance measure to analyze the performance of our business and provides a perspective on the current effects of operating decisions.

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About Canterbury Park
Canterbury Park Holding Corporation (Nasdaq: CPHC) owns and operates Canterbury Park Racetrack and Casino in Shakopee, Minnesota, the only thoroughbred and quarter horse racing facility in the State. The Company generally offers live racing from May to September. The Casino hosts card games 24 hours a day, seven days a week, dealing both poker and table games. The Company also conducts year-round wagering on simulcast horse racing and hosts a variety of other entertainment and special events at its Shakopee facility. The Company is also pursuing a strategy to enhance shareholder value by the ongoing development of approximately 140 acres of underutilized land surrounding the Racetrack that was originally designated for a project known as Canterbury Commons™. The Company is pursuing several mixed-use development opportunities for the remaining underutilized land, directly and through joint ventures. For more information about the Company, please visit www.canterburypark.com.

Cautionary Statement

From time to time, in reports filed with the Securities and Exchange Commission, in press releases, and in other communications to shareholders or the investing public, we may make forward-looking statements concerning possible or anticipated future financial performance, business activities or plans. These statements are typically preceded by the words “believes,” “expects,” “anticipates,” “intends” or similar expressions. For these forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in federal securities laws. Shareholders and the investing public should understand that these forward-looking statements are subject to risks and uncertainties which could affect our actual results and cause actual results to differ materially from those indicated in the forward-looking statements. We report these risks and uncertainties in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC and subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. They include, but are not limited to: sensitivity to reductions in discretionary spending as a result of downturns in the economy; the termination of the Cooperative Marketing Agreement with the Shakopee Mdewakanton Sioux Community and the purse enhancement payments and marketing payments made under such agreement; the occurrence of epidemics, pandemics, outbreaks of disease, and other adverse public health developments; the inability to attract a sufficient number of horses and trainers; a lack of confidence in core operations resulting in decreasing customer retention and engagement; personal injury litigation due to the inherently dangerous nature of horse racing; material fluctuations in attendance at the Racetrack; material changes in the level of wagering by patrons; any decline in interest in horse racing or the unbanked card games offered in the Casino; competition from other venues offering racing, unbanked card games or other forms of wagering; competition from other sports and entertainment options; increases in compensation and employee benefit costs; higher than expected expense related to new marketing initiatives; the impact of wagering products and technologies introduced by competitors; the general health of the gaming sector; legislative and regulatory decisions and changes; our ability to successfully develop our real estate, including the effect of competition on our real estate development operations and our reliance on our current and future development partners; temporary disruptions or changes in access to our facilities caused by ongoing infrastructure improvements; inclement weather and other conditions affecting the ability to conduct live racing; technology and/or key system failures; cybersecurity breaches; the failure to receive reimbursement for certain public infrastructure improvements we have committed to undertake; the general effects of inflation; our ability to attract and retain qualified personnel; dividends that may or may not be issued at the discretion of our Board of Directors; and other factors that are beyond our ability to control or predict.

The forward-looking statements in this press release speak only as of the date of this press release. Except as required by law, Canterbury assumes no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

Investor Contacts:  
Randy Dehmer Richard Land, Jim Leahy
Senior Vice President and Chief Financial Officer JCIR
Canterbury Park Holding Corporation 212-835-8500 or [email protected] 
952-233-4828 or [email protected]  

– Financial tables follow –

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CANTERBURY PARK HOLDING CORPORATION’S
SUMMARY OF OPERATING RESULTS
(UNAUDITED)
 
  Three months ended   Nine months ended
  September 30,   September 30,
    2023       2022       2023       2022  
Operating Revenues:              
Casino $10,224,216     $10,039,527     $30,322,149     $30,394,387  
Pari-mutuel   3,405,010       4,730,827       7,009,710       9,599,070  
Food and Beverage   3,310,759       3,913,320       6,808,242       7,150,715  
Other   2,328,564       3,608,729       4,769,694       6,560,477  
Total Net Revenues $19,268,549     $22,292,403     $48,909,795     $53,704,649  
Operating Expenses   (17,461,813)       (17,884,034)       (44,486,784)       (44,179,373)  
Gain on Sale of Land               6,489,976       12,151  
Income from Operations   1,806,736       4,408,369       10,912,987       9,537,427  
Other (Loss)/Gain, net   (137,437)       (277,472)       1,995,344       (653,247)  
Income Tax Expense   (533,000)       (1,209,777)       (3,709,000)       (2,434,078)  
Net Income   1,136,299       2,921,120       9,199,331       6,450,102  
Basic Net Income Per Common Share $0.23     $0.60     $1.87     $1.33  
Diluted Net Income Per Common Share $0.23     $0.60     $1.86     $1.32  

RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA
(UNAUDITED)
               
  Three months ended   Nine months ended
  September 30,   September 30,
    2023       2022       2023       2022  
NET INCOME $1,136,299     $2,921,120     $9,199,331     $6,450,102  
Interest income, net   (536,904)       (222,671)       (1,433,353)       (620,811)  
Income tax expense   533,000       1,209,777       3,709,000       2,434,078  
Depreciation   831,379       747,267       2,308,272       2,234,790  
EBITDA   1,963,774       4,655,493       13,783,250       10,498,159  
Gain on insurance proceeds related to equity investments               (2,528,901)        
Gain on disposal of assets   (19,265)             (19,265)        
Gain on sale of land               (6,489,976)       (12,151)  
Depreciation and amortization related to equity investments   438,011       445,181       1,313,986       1,340,856  
Interest expense related to equity investments   467,571       240,418       1,292,627       625,401  
ADJUSTED EBITDA $2,850,091     $5,341,092     $7,351,721     $12,452,265  

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Nasdaq:CPHC

Canterbury Park Holding Corporation Reports 2023 Second Quarter Results

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canterbury-park-holding-corporation-reports 2023-second-quarter-results

SHAKOPEE, Minn., Aug. 10, 2023 (GLOBE NEWSWIRE) — Canterbury Park Holding Corporation (“Canterbury” or the “Company”) (NASDAQ: CPHC), today reported financial results for the three and six months ended June 30, 2023.

($ in thousands, except per share data and percentages)

  Three Months Ended June 30,   Six Months Ended June 30,
    2023     2022   Change     2023     2022   Change
Net revenues $ 16,342   $ 17,774   -8.1 %   $ 29,641   $ 31,412   -5.6 %
                       
Net income $ 5,293   $ 1,755   201.6 %   $ 8,063   $ 3,529   128.5 %
                       
Adjusted EBITDA (1) $ 2,020   $ 3,564   -43.3 %   $ 4,502   $ 7,111   -36.7 %
                       
Basic EPS $ 1.08   $ 0.36   200.0 %   $ 1.64   $ 0.73   124.7 %
Diluted EPS $ 1.07   $ 0.36   197.2 %   $ 1.64   $ 0.73   124.7 %
                                   

(1)   Adjusted EBITDA, a non-GAAP measure, excludes certain items from net income, a GAAP measure. Non-GAAP financial measures are not intended to be considered in isolation from, a substitute for, or superior to GAAP results. Definitions, disclosures, and reconciliations of non-GAAP financial information are included later in the release.


Management Commentary

“Canterbury Park’s second quarter results represent a continuation of the stable trends in our business as our performance exceeded pre-COVID levels and was in-line with our expectations, given the impact of higher costs and a reduced racing calendar. Second quarter net revenue of $16.3 million and adjusted EBITDA of $2.0 million resulted in adjusted EBITDA as a percentage of revenue of 12.4%. While below recent quarters reflecting the impact of higher costs and a reduction in racing days compared to last year, we believe adjusted EBITDA as a percentage of revenue will rebound over the balance of 2023 and continue to exceed historical pre-COVID levels due to the proactive initiatives undertaken during the pandemic to improve our cost structure and operating efficiency.

“Casino revenue rose 3.9% over the prior year as higher visitation and spending trends more than offset lower table games hold for the quarter. Our 54-day live racing meet began on May 27 and, in the quarter, we ran 15 days compared to 25 in the prior-year period. Pari-mutuel revenue declined 31.8% year-over-year primarily due to a significant decline in out-of-state handle on Canterbury Park races. This decline reflects less racing days, lower purses and reduced marketing support related to the expiration of the SMSC Cooperative Marketing Agreement. The reduction in live racing days also impacted Food & Beverage revenue, which declined 5.6% year-over-year even as admission revenues remained strong.

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“Development activity at Canterbury Commons™ remains on track as we continue to attract broad interest in our vibrant lifestyle community from diverse parties. During the second quarter of 2023, we completed the $8.8 million sale of 37 acres of land to Swervo Development Corporation (“Swervo”) which cleared the way for it to begin development of a state-of-the-art amphitheater. Canterbury Park’s development partner, Greystone Construction (“Greystone”), completed the Badger Hill Brewery and Bravis Modern Street Food restaurant in July 2023, both of which have opened to very positive customer response. We are delighted that these venues diversify the on-site options and believe they will help drive further traffic to Canterbury Commons. ‘Live, Work, Stay, and Play’ is at the heart of our development approach, and we believe there is much more excitement to come as we work with new development partners that share our vision and enthusiasm for Canterbury Commons.

“We remain on track to deliver solid financial results over the balance of 2023 as our business benefits from the operating practices and infrastructure we’ve put in place to drive continued growth. Our strong balance sheet and stable cash flow generation continues to position us to return capital to shareholders through our quarterly cash dividend while we also continue to actively evaluate potential strategic transactions that would create new value for our shareholders. We believe that the future of Canterbury Park remains bright.”

Canterbury Commons Development Update
In April 2023, the Company completed the sale of approximately 37 acres in the northeast corner of the property to Swervo for the development of a state-of-the-art amphitheater. Construction is expected to begin later this summer with an anticipated opening in 2025. Canterbury is also making initial progress with the first phase of its barn relocation and redevelopment plan, which among other things will free up land surrounding the amphitheater and facilitate the creation of an entertainment district around the venue.

Residential and commercial construction updates related to joint ventures include:

  • Greystone completed an 11,000 square-foot brewery, taproom (Badger Hill) and Mexican restaurant (Bravis Modern Street Food) in July 2023.
  • Doran Properties Group continues its development of Phase II of the upscale Triple Crown Residences at Canterbury Park, with initial occupancy anticipated in January 2024.
  • Construction on the Omry, featuring 147 units of senior market rate apartments, continues with first occupancy expected in September 2023.

Residential and commercial construction updates related to prior land sales include:

  • Pulte Homes of Minnesota continues to sell units within the 63-unit first phase of its new row home and townhome residences, with development of the 45-unit second phase expected to begin in Fall 2023.
  • Lifestyle Communities expects to begin in early 2024 construction of Artessa at Canterbury Park, a cooperative community featuring a 44-unit building and over 5,000 square feet of amenity spaces.
  • Greystone is expected to complete the Next Steps Learning Center late 2023.

Developer and partner selection for the remaining 40 acres of Canterbury Commons continues, with additional uses potentially including offices, retail, a hotel, and restaurants.

Summary of 2023 Second Quarter Operating Results
Net revenues for the three months ended June 30, 2023 decreased 8.1% to $16.3 million, compared to $17.8 million for the same period in 2022. The year-over-year decrease reflects an increase in Casino revenue of 3.9%, or $389,000, which was more than offset by decreases in Pari-mutuel and Food & Beverage revenue of 31.8% and 5.6%, respectively, due primarily to a 40% decrease in live race days compared to the same period last year.

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Operating expenses for the three months ended June 30, 2023 were $15.3 million, an increase of $196,000, or 1.3%, compared to operating expenses of $15.1 million for the same period in 2022. The year-over-year increase reflects higher payroll expense and professional services expenses, which more than offset lower purse and marketing expenses driven by the expiration of the Cooperative Marketing Agreement at the end of 2022.

Gain on sale of land for the three months ended June 30, 2023 was $6.5 million and was related to the sale of 37 acres to Swervo for the future development of an amphitheater.

The Company recorded a loss from equity investment of $622,000 for the three months ended June 30, 2023. For the three months ended June 30, 2022, the Company recorded a loss from equity investment of $534,000. The losses from equity investments in both periods were primarily related to the Company’s share of depreciation, amortization, and interest expense from the Doran Canterbury joint ventures.

The Company recorded income tax expense of $2.1 million for the three months ended June 30, 2023 compared to income tax expense of $619,000 for the three months ended June 30, 2022. The Company recorded net income of $5.3 million, or diluted earnings per share of $1.07, for the three months ended June 30, 2023 compared to net income and diluted earnings per share for the three months ended June 30, 2022 of $1.8 million and $0.36, respectively.

Adjusted EBITDA, a non-GAAP measure, for the three months ended June 30, 2023 was $2.0 million compared to adjusted EBITDA of $3.6 million for the same period in 2022.

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Summary of 2023 Year-to-Date Operating Results
Net revenues for the six months ended June 30, 2023 decreased 5.6% to $29.6 million, compared to $31.4 million for the same period in 2022. The year-over-year decrease reflects decreases in Casino and Pari-mutuel revenues of $257,000 and $1.3 million, respectively, partially offset by an increase in Food & Beverage revenue of $260,000.

Operating expenses for the six months ended June 30, 2023 were $27.0 million, an increase of $730,000, or 2.8%, compared to operating expenses of $26.3 million for the same period in 2022. The year-over-year increase reflects higher payroll expense, utilities expense, and professional services expenses in the six months ended June 30, 2023, which more than offset lower purse and marketing expenses as compared to the six months ended June 30, 2022.

Gain on sale of land for the six months ended June 30, 2023 was $6.5 million and was related to the sale of 37 acres to Swervo for the future development of an amphitheater.

The Company recorded a gain from equity investment of $1.2 million for the six months ended June 30, 2023 compared to a loss from equity investment of $774,000 for the six months ended June 30, 2022. The net gain for the six months ended June 30, 2023 is related to insurance proceeds received related to a claim by the joint venture against a third party while the losses from investments in the prior period were primarily related to the Company’s share of depreciation, amortization, and interest expense from the Doran Canterbury joint ventures.

The Company recorded income tax expense of $3.2 million for the six months ended June 30, 2023 compared to income tax expense of $1.2 million for the six months ended June 30, 2022.

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The Company recorded net income of $8.1 million, or diluted earnings per share of $1.64, for the six months ended June 30, 2023 compared to net income and diluted earnings per share for the six months ended June 30, 2022 of $3.5 million and $0.73, respectively.

Adjusted EBITDA was $4.5 million for the six months ended June 30, 2023. Adjusted EBITDA was $7.1 million for the same period in 2022.

Additional Financial Information
Further financial information for the second quarter ended June 30, 2023 is presented in the accompanying tables at the end of this press release. Additional information will be provided in the Company’s Quarterly Report on Form 10-Q that will be filed with the Securities and Exchange Commission on or about August 11, 2023.

Use of Non-GAAP Financial Measures
To supplement our financial statements, we also provide investors with information about our EBITDA and Adjusted EBITDA, each of which is a non-GAAP measure, and which exclude certain items from net income, a GAAP measure. We define EBITDA as earnings before interest, taxes, depreciation and amortization. We define Adjusted EBITDA as earnings before interest income, income tax expense, depreciation and amortization, as well as excluding gain on sale of land, depreciation and amortization related to equity investments, interest expense related to equity investments, and grant money received from the Minnesota COVID-19 relief package. Neither EBITDA nor Adjusted EBITDA is a measure of performance calculated in accordance with generally accepted accounting principles (“GAAP”), and should not be considered an alternative to, or more meaningful than, net income as an indicator of our operating performance. See the table below, which presents reconciliations of these measures to the GAAP equivalent financial measures. We have presented EBITDA as a supplemental disclosure because we believe that, when considered with measures calculated in accordance with GAAP, EBITDA gives investors a more complete understanding of our operating results before the impact of investing and financing transactions and income taxes, and it is a widely used measure of performance and basis for valuation of companies in our industry. Other companies that provide EBITDA information may calculate EBITDA differently than we do. We have presented Adjusted EBITDA as a supplemental disclosure because we believe it enables investors to understand and assess our core operating results excluding the effect of these items and is useful to investors in allowing greater transparency related to a significant measure used by management in its financial and operational decision-making. Adjusted EBITDA has economic substance because it is used by management as a performance measure to analyze the performance of our business and provides a perspective on the current effects of operating decisions.

About Canterbury Park
Canterbury Park Holding Corporation (Nasdaq: CPHC) owns and operates Canterbury Park Racetrack and Casino in Shakopee, Minnesota, the only thoroughbred and quarter horse racing facility in the State. The Company generally offers live racing from May to September. The Casino hosts card games 24 hours a day, seven days a week, dealing both poker and table games. The Company also conducts year-round wagering on simulcast horse racing and hosts a variety of other entertainment and special events at its Shakopee facility. The Company is also pursuing a strategy to enhance shareholder value by the ongoing development of approximately 140 acres of underutilized land surrounding the Racetrack that was originally designated for a project known as Canterbury Commons™. The Company is pursuing several mixed-use development opportunities for the remaining underutilized land, directly and through joint ventures. For more information about the Company, please visit www.canterburypark.com.

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Cautionary Statement
From time to time, in reports filed with the Securities and Exchange Commission, in press releases, and in other communications to shareholders or the investing public, we may make forward-looking statements concerning possible or anticipated future financial performance, business activities or plans. These statements are typically preceded by the words “believes,” “expects,” “anticipates,” “intends” or similar expressions. For these forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in federal securities laws. Shareholders and the investing public should understand that these forward-looking statements are subject to risks and uncertainties which could affect our actual results and cause actual results to differ materially from those indicated in the forward-looking statements. We report these risks and uncertainties in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC and subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. They include, but are not limited to: sensitivity to reductions in discretionary spending as a result of downturns in the economy; the termination of the Cooperative Marketing Agreement with the Shakopee Mdewakanton Sioux Community and the purse enhancement payments and marketing payments made under such agreement; the occurrence of epidemics, pandemics, outbreaks of disease, and other adverse public health developments; the inability to attract a sufficient number of horses and trainers; a lack of confidence in core operations resulting in decreasing customer retention and engagement; personal injury litigation due to the inherently dangerous nature of horse racing; material fluctuations in attendance at the Racetrack; material changes in the level of wagering by patrons; any decline in interest in horse racing or the unbanked card games offered in the Casino; competition from other venues offering racing, unbanked card games or other forms of wagering; competition from other sports and entertainment options; increases in compensation and employee benefit costs; higher than expected expense related to new marketing initiatives; the impact of wagering products and technologies introduced by competitors; the general health of the gaming sector; legislative and regulatory decisions and changes; our ability to successfully develop our real estate, including the effect of competition on our real estate development operations and our reliance on our current and future development partners; temporary disruptions or changes in access to our facilities caused by ongoing infrastructure improvements; inclement weather and other conditions affecting the ability to conduct live racing; technology and/or key system failures; cybersecurity breaches; the failure to receive reimbursement for certain public infrastructure improvements we have committed to undertake; the general effects of inflation; our ability to attract and retain qualified personnel; dividends that may or may not be issued at the discretion of our Board of Directors; and other factors that are beyond our ability to control or predict.

The forward-looking statements in this press release speak only as of the date of this press release. Except as required by law, Canterbury assumes no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

Investor Contacts:  
Randy Dehmer
Senior Vice President and Chief Financial Officer
Canterbury Park Holding Corporation
952-233-4828 or [email protected]
Richard Land, Jim Leahy
JCIR
212-835-8500 or [email protected]
   

– Financial tables follow –

 
CANTERBURY PARK HOLDING CORPORATION’S
SUMMARY OF OPERATING RESULTS
(UNAUDITED)
 
  Three months ended   Six months ended
  June 30,   June 30,
    2023       2022       2023       2022  
Operating Revenues:              
Casino $10,383,578     $9,994,433     $20,097,933     $20,354,860  
Pari-mutuel   2,471,366       3,621,556       3,604,700       4,868,243  
Food and Beverage   2,027,652       2,148,673       3,497,483       3,237,395  
Other   1,459,092       2,009,612       2,441,130       2,951,748  
Total Net Revenues $16,341,688     $17,774,274     $29,641,246     $31,412,246  
Operating Expenses   (15,279,233 )     (15,083,603 )     (27,024,968 )     (26,295,339 )
Gain on Sale of Land   6,489,976       12,151       6,489,976       12,151  
Income from Operations   7,552,431       2,702,822       9,106,254       5,129,058  
Other (Loss)/Gain, net   (124,906 )     (329,093 )     2,132,781       (375,775 )
Income Tax Expense   (2,135,000 )     (618,660 )     (3,176,000 )     (1,224,301 )
Net Income   5,292,525       1,755,069       8,063,035       3,528,982  
Basic Net Income Per Common Share $1.08     $0.36     $1.64     $0.73  
Diluted Net Income Per Common Share $1.07     $0.36     $1.64     $0.73  

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RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA
(UNAUDITED)
               
  Three months ended   Six months ended
  June 30,   June 30,
    2023       2022       2023       2022  
NET INCOME $5,292,525     $1,775,069     $8,063,035     $3,528,982  
Interest income, net   (497,274 )     (205,300 )     (896,449 )     (398,140 )
Income tax expense   2,135,000       618,660       3,176,000       1,224,301  
Depreciation   741,632       741,574       1,476,893       1,487,523  
EBITDA   7,671,883       2,910,003       11,819,479       5,842,666  
Gain on insurance proceeds related to equity investments               (2,528,901 )      
Gain on sale of land   (6,489,976 )     (12,151 )     (6,489,976 )     (12,151 )
Depreciation and amortization related to equity investments   435,211       474,352       875,975       895,675  
Interest expense related to equity investments   402,795       192,170       825,056       384,983  
ADJUSTED EBITDA $2,019,913     $3,564,374     $4,501,633     $7,111,173  

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