Canterbury Park Holding Corporation (the “Company”)
(NASDAQ:CPHC) today announced financial results for its second
quarter and six month periods ended June 30, 2016.
The Company reported net revenues of $13,885,992 for the three
months ended June 30, 2016, a decrease of 6.5% from revenues of
$14,848,077 in the same 2015 period. This decrease consisted of a
$305,027, or 9.2%, decrease in Pari-mutuel revenues, a $380,836, or
5.2%, decrease in Card Casino revenues and a $294,551, or 11.7%,
decrease in Food and Beverage revenues. For the six months ended
June 30, 2016, the Company’s revenues were $24,279,303, a decrease
of 1.8% from revenues of $24,729,115 for the same period in 2015.
This decrease consisted of declines in Pari-mutuel, Card Casino and
Food and Beverage revenues of 6.0%, 0.7% and 6.2%,
respectively.
The Company’s operating expenses during the 2016 second quarter
were $9,988,467, a decrease of $3,890,642, or 28.0%, from second
quarter 2015 expenses of $13,879,109, and the Company’s operating
expenses during the six months ended June 30, 2016 were
$19,858,783, a decrease of $3,239,135, or 14.0%, from operating
expenses of $23,097,918 in the six months ended June 30, 2015. The
substantial decline in operating expenses in the quarter and six
months ended June 30, 2016 reflects a $3,990,519 pretax gain on
sale of land in the 2016 second quarter that was accounted for as a
reduction in operating expenses.
Reflecting the second quarter gain on sale of land and a tax
charge associated with this sale, the Company reported net income
of $2,274,900 for the three months ended June 30, 2016 compared to
net income of $571,650 in the same period in 2015, and net income
of $2,585,654 for the six months ended June 30, 2016 compared to
net income of $960,254 for the same period in 2015. Diluted income
per share for the second quarter of 2016 was $.53 compared to $.14
for the same period in 2015. Diluted income per share for the six
month period ended June 30, 2016 was $.60 compared to diluted
income per share of $.23 for the six month period ended June 30,
2015.
The Company generated adjusted EBITDA of $1,624,511 in the first
six months of 2016, a decrease of $1,178,396, or 42%, from the same
period a year ago.
Additional Financial
Information:Further detail regarding our results for the
second quarter and first six months of 2016 is presented in the
accompanying table, and additional information regarding the
Company’s financial results will be presented in the Company’s Form
10-Q Report that will be filed on August 15, 2016 with the
Securities and Exchange Commission.
Management Comments:“We had
a record second quarter as far as our bottom line results due to
the gain from the sale of land, but revenues and operating results
for the quarter did not meet our expectations,” stated Randy
Sampson, Canterbury Park’s President and CEO.
“Our pari-mutuel revenue from simulcast racing, consistent with
national trends, continues to erode due to a shift in consumer
preference to internet wagering platforms. In addition, our
decision to reduce the take-out rate on our live racing to the
lowest in the country to promote our racing product nationally has
not generated the increase in wagering volume we anticipated. The
take-out reduction, along with a reduction in the number of racing
days during the quarter from 26 to 23, resulted in a decline in
on-track pari-mutuel revenues of over 20%. In the card casino, our
second quarter results could not match last year’s record second
quarter revenues due mainly to a general softening of our regional
gaming market. Food and beverage results declined due to the
reduced live racing days and our inability to host a major concert
that we have hosted in the second quarter of previous years. While
the sale of our “Festival Fields” property precluded us from
hosting the concert this year, we are in the final stages of a
construction project to create a concert and event space in the
infield of the racetrack that we believe will provide much better
long term opportunities to grow this area of our business.”
Mr. Sampson added: “We are, nevertheless, pleased to report
strong bottom line results that reflect progress in our real estate
development efforts. Not only were we able to sell land that is not
part of our long range development plans at an attractive price,
but by combining the transaction with our purchase of 32 acres
adjacent to our parking lot that are a strategic fit for our
development plans, we were able to structure the sale as an IRS
Code Section 1031 tax deferred exchange transaction that allows a
majority of the approximately $3.9 million gain to be deferred for
income tax purposes.”
Mr. Sampson concluded: “We remain optimistic about the Company’s
prospects for the remainder of 2016. Due in large measure to our
Cooperative Marketing Agreement with the Shakopee Mdewakanton Sioux
Community, our current live meet is on track to be a record in
terms of attendance and handle. We are also seeing solid increases
in food and beverage and admissions revenues for the live racing
meet, partially resulting from growth in our catering and events
business. Finally, we believe the recent completion of our
corporate reorganization to create a holding company structure for
our business give us much greater flexibility to pursue the
continued development of our underutilized land and that, as our
real estate development matures, it will substantially contribute
to our bottom line results.”
Use of Non-GAAP Financial
Measures:To supplement our financial statements,
we also provide investors with EBITDA (defined below), which is a
non-GAAP measure. EBITDA represents earnings before interest
income, income tax expense, and depreciation and amortization.
EBITDA is not a measure of performance or liquidity 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, or
cash flows from operating activities as a measure of liquidity.
EBITDA has been presented as a supplemental disclosure because it
is a widely used measure of performance and basis for valuation of
companies in our industry. Moreover, other companies that provide
EBITDA information may calculate EBITDA differently than we do.
During the six months ended June 30, 2016, Adjusted EBITDA excluded
the gain on sale of land.
About Canterbury
Park:Canterbury Park Holding Corporation (the
Company) owns and operates Canterbury Park Racetrack and Card
Casino, Minnesota’s only thoroughbred and quarter horse racing
facility. The Company’s 69-day 2016 live race meet began on May
20th and ends September 17th. In addition, Canterbury Park’s Card
Casino hosts “unbanked” card games 24 hours a day, seven days a
week, offering 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 facility
in Shakopee, Minnesota. For more information about the Company,
please visit us at www.canterburypark.com.
The Company was incorporated as a Minnesota corporation in
October 2015. The Company is a successor corporation to another
corporation, also named Canterbury Park Holding Corporation, that
was incorporated in 1994 (“CPHC”). Effective June 30, 2016 CPHC’s
business and operations were reorganized into a holding company
structure (the “Reorganization”) pursuant to an Agreement and Plan
of Merger dated as of March 1, 2016 that was approved by CPHC’s
shareholders on June 28, 2016. Pursuant to the Reorganization:
- The Company replaced CPHC as the public
company owned by CPHC’s shareholders, with each shareholder at June
30, 2016 having the same percentage ownership in Company (and,
indirectly, in all property and other assets then owned by CPHC)
immediately after the Reorganization as that shareholder had
immediately before the Reorganization.
- The Company became the holding company
for and parent company of two subsidiaries, Canterbury Park
Entertainment LLC (“EntertainmentCo”) and Canterbury Development
LLC (“DevelopmentCo”).
- EntertainmentCo is the surviving
business entity in a merger with CPHC pursuant to the
Reorganization and it became the direct owner of all land,
facilities, and substantially all other assets related to the
CPHC’s pari-mutuel wagering, Card Casino, concessions and other
related businesses (“Racetrack Operations”) and EntertainmentCo
continues to conduct these businesses consistent with CPHC’s past
practices and will continue to be subject to direct regulation by
the Minnesota Racing Commission (“MRC”).
- DevelopmentCo will continue CPHC’s
efforts to commercially develop approximately 140 acres of land
currently owned or controlled that is not needed for our Racetrack
Operations. DevelopmentCo is not subject to direct regulation by
the MRC.
For purposes of this press release, when the term “Company” is
used with reference to information covering or related to periods
up to and including June 30, 2016, such term refers to the
operations of CPHC prior to the Reorganization.
Cautionary
Statement:From time to time, in press releases
and in other communications to shareholders or the investing
public, Canterbury Park Holding Corporation may make
forward-looking statements concerning possible or anticipated
future financial performance, business activities or plans based on
management’s beliefs and assumptions. These forward looking
statements are typically preceded by the words such as "believes,"
"expects," "anticipates," "intends" or similar expressions.
Shareholders and the investing public should understand that these
forward-looking statements are subject to risks and uncertainties,
including those disclosed in our periodic filings with the
Securities and Exchange Commission, which could cause actual
performance, activities or plans after the date the statements are
made to differ significantly from those indicated in the
forward-looking statements when made.
CANTERBURY PARK
HOLDING CORPORATION’S
SUMMARY OF
OPERATING RESULTS
(UNAUDITED)
Three Months Three Months
Six Months Six Months Ended Ended Ended Ended
June 30, 2016 June 30, 2015 June 30,
2016 June 30, 2015 Operating Revenues, (net)
$13,885,992 $14,848,077 $24,279,303 $24,719,115 Operating
Expenses $9,988,467 $13,879,109 $19,858,783 $ $23,097,918
Non-Operating Income, (net) ($49,970 ) $688 ($49,025 ) $1,305
Income before Income Taxes $3,847,555 $969,656 $4,371,495
$1,632,502 Income Tax Expense ($1,572,655 ) ($398,006 )
($1,785,841 ) ($672,248 ) Net Income $2,274,900 $571,650
$2,585,654 $960,254 Basic Net Income Per Common Share
$0.53
$0.14
$0.61
$0.23
Diluted Net Income Per Common Share
$0.53
$0.14
$0.60
$0.23
RECONCILIATION OF
NET INCOME TO ADJUSTED EBITDA
Six Months Six Months Ended Ended June 30, 2016 June 30,
2015 NET INCOME $ 2,585,654 $ 960,254 Interest
(income) expense 49,025 (1,305 ) Income tax expense
1,785,841 672,248 Depreciation 1,194,510
1,171,710 EBITDA $ 5,615,030 $ 2,802,907
Gain on disposal of land (3,990,519)0 Adjusted EBITDA
$ 1,624,511 $ 2,802,907
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version on businesswire.com: http://www.businesswire.com/news/home/20160815005867/en/
Canterbury Park Holding CorporationRandy Sampson,
952-445-7223
Canterbury Park (NASDAQ:CPHC)
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