SHAKOPEE, Minn., Nov. 12, 2019 /PRNewswire/ -- Canterbury
Park Holding Corporation (the "Company") (NASDAQ: CPHC) today
announced financial results for its third quarter and
nine month periods ended September 30,
2019.
Q3 2019 Financial Results
The Company reported net
revenues of $18.6 million for the
three months ended September 30, 2019, an increase of
1.3% from revenues of $18.4
million in the same 2018 period. The increase was
primarily due to increases in food and beverage and other revenues
of $582,000 and $104,000, respectively, resulting from hosting
the three-day Twin Cities Summer Jam festival in July 2019, partially offset by a $377,000 decrease in pari-mutuel revenues
resulting from reduced guest fees and live racing revenues,
primarily due to four fewer days of live racing, as well as lower
simulcast revenues.
The Company's operating expenses during the 2019 third
quarter were $17.1 million, an
increase of $788,000, or 4.8%, compared to the 2018
third quarter expenses of $16.3
million. The increase was primarily due to increased
salaries and benefits of $542,000
resulting from adding several new exempt level positions as well as
increased labor costs in the Card Casino and food and beverage
departments. In addition, cost of food and beverage sales
increased $250,000 due primarily to
the increase in food and beverage revenue.
Net income for the three months ended September 30, 2019 totaled $1.2 million
compared to $1.6 million for the same
period in 2018. Diluted net income per share for
the three months ended September 30, 2019 was
$0.25 compared to $0.36 for the same period in 2018.
YTD 2019 Financial Results
For the nine months
ended September 30, 2019, the Company's net revenues were
$46.6 million, a decrease of
1.0% from revenues of $47.1
million for the same period in 2018. The decrease was
primarily due to a reduction in pari-mutuel revenues of
$724,000 as well as a decrease in
other revenues of $484,000. The
decrease in other revenue reflects an unfavorable comparison to
2018 when the Company earned revenues from a one-time,
short-term agreement related to the 2018 Super Bowl in Minneapolis as well as a decrease in
RiverSouth advertising revenues, which were offset by a reduction
in advertising expense. These decreases were partially offset
by an increase in food and beverage revenues of $775,000, primarily due to hosting the Twin
Cities Summer Jam festival in July.
The Company's operating expenses during the nine months ended
September 30, 2019 were $43.9 million, an increase of $1.2 million, or 2.7%, from $42.7 million in the nine months ended
September 30, 2018. The
increase was due to increased salaries and benefits of $1.0 million and increased cost of food and
beverage sales of $388,000.
This increase was slightly offset by a decrease in purse
expense of $246,000 due to a decrease
in pari-mutuel revenues.
Net income for the nine months ended September 30, 2019 totaled $2.2 million compared to $3.3 million for the same period in 2018.
Diluted net income per share for the nine months
ended September 30, 2019 was $0.47 compared to $0.74 for the same period in 2018.
Adjusted EBITDA
The Company generated
Adjusted EBITDA of $2.3 million for the three months
ended September 30, 2019,
a decrease of $426,000, or 15.8%, from the same
period a year ago. Adjusted EBITDA as a percentage of net
revenues for the three months ended September 30, 2019 decreased to 12.2% from 14.6%
for the same period in 2018. The Company generated
Adjusted EBITDA of $4.7 million in the first
nine months of 2019, a decrease of $1.7
million, or 26.8%, from the same period a year ago.
Adjusted EBITDA as a percentage of net revenues for the nine months
ended September 30, 2019 decreased to
10.0% from 13.5% for the same period in 2018. EBITDA
represents earnings before interest, income tax expense,
depreciation, and amortization. Adjusted EBITDA reflects
additional adjustments to net income to eliminate unusual items,
which for the three and nine months ended September 30, 2019, consisted of a loss on
disposal of assets and a gain on insurance recoveries.
Additional information regarding the results of the Company's
third quarter and first nine months of 2019, as well as our
calculation of EBITDA and Adjusted EBITDA, is presented in the
accompanying table and in our Form 10-Q Report that will be filed
with the Securities and Exchange Commission on or before
November 14, 2019.
Management Comments:
Randy Sampson, Canterbury Park's
President and Chief Executive Officer, commented: "We are
disappointed in our operating results for the 2019 third quarter,
as EBITDA and net income were unfavorable compared to last year and
to our 2019 internal plan. Food and beverage revenues
increased 18%, primarily due to hosting Twin Cities Summer Jam, our
first three-day concert in our substantially improved
infield. This increase was partially offset by a decrease in
pari-mutuel revenues of 10%, primarily the result of running four
fewer live race days to host Twin Cities Summer Jam, as well as
lower simulcast wagering compared to the same period of 2018.
Card Casino revenues decreased by 1% compared to the same period in
2018. While total revenues of $18.6
million for the 2019 third quarter represented a record for
the Company, the increase was not enough to offset the increase of
5% in operating expenses compared to the 2018 third quarter.
The increase in operating expenses resulted primarily from
increased salaries and benefits due mainly to two factors.
First, we are operating in a very challenging labor market for
hourly workers, particularly seasonal summer positions. Like
most hospitality businesses, we have found it difficult to staff
many front line positions due to a lack of qualified
candidates. This labor shortage has led to higher wages,
excessive overtime, and use of third-party temporary labor to fill
the gaps. Second, our labor expense has increased, as we have
added a number of salaried positions to support growth initiatives
in our Card Casino, food and beverage, and real estate development
operations. We have aggressive, long-term growth plans, and
we are optimistic that the investments in our human capital
infrastructure to support our expanded table games operations,
enhanced player hosting program, upgraded food and beverage
offerings, and development of our excess real estate will result in
sustained long-term revenue growth."
Mr. Sampson added: "This summer, we achieved a new level in our
special events capabilities when we successfully hosted the Twin
Cities Summer Jam festival in our racetrack infield on July 18-20, 2019. Despite rain and record
high heat, this three-day event brought almost 40,000 people and
some of the biggest names in country and rock music to our
property. Most importantly, it showed that our investment in
infield infrastructure, designed to enable us to host large
concerts and other festivals, has the potential to be a major
revenue driver. The promoters of Twin Cities Summer Jam
recently announced that the 2020 concert will be held again at
Canterbury Park July 23-25.
"Finally, I am pleased to report that tangible progress
continues in transforming our excess land into a multi-faceted real
estate project called Canterbury Commons. Construction of the
13-acre, 300-unit first phase of The Triple Crown at Canterbury apartments continues on schedule,
with leasing now underway and move-in of the first residents
expected in March 2020. Also,
the extension and major upgrade of Shenandoah Drive is nearing
completion, which will give us a grand boulevard to support the
development of approximately 50 acres of our property. We
anticipate construction of this next phase of our overall
Canterbury Commons development will begin in 2020 and feature a
mixture of townhomes, senior apartments, office, and
hospitality. As implementation of our real estate development
strategy progresses and definitive development plans become
available, we will continue to keep our shareholders informed."
Use of Non-GAAP Financial Measures:
To supplement our financial statements, we also provide
investors with information about our EBITDA and Adjusted EBITDA,
both of which are non-GAAP measures. 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. Adjusted EBITDA reflects additional adjustments to our
net income to eliminate unusual items. We have presented
Adjusted EBITDA as a supplemental disclosure because it enables
investors to understand our results excluding the effect of unusual
or infrequent items. For the three and nine months ended
September 30, 2019, Adjusted EBITDA
excluded the gain on insurance recoveries and loss on disposal of
assets.
About Canterbury Park:
Canterbury Park Holding Corporation 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
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
redeveloping 140 acres of underutilized land surrounding the
Racetrack in a project know as Canterbury Commons. The
Company is pursuing several mixed-use development opportunities for
this 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 Form 10-K Report to the SEC. They include, but
are not limited to: material fluctuations in attendance at the
Racetrack; material changes in the level of wagering by patrons;
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 ability to successfully develop our real estate; 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.
CANTERBURY PARK
HOLDING CORPORATION AND SUBSIDIARIES
|
SUMMARY OF
OPERATING RESULTS
|
(UNAUDITED)
|
|
|
|
|
|
Three
Months
|
Three
Months
|
Nine
Months
|
Nine
Months
|
|
Ended
|
Ended
|
Ended
|
Ended
|
|
September
30,
|
September
30,
|
September
30,
|
September
30,
|
|
2019
|
2018
|
2019
|
2018
|
Operating Revenues,
(net)
|
$18,600,641
|
$18,370,511
|
$46,624,515
|
$47,103,183
|
|
|
|
|
|
Operating
Expenses
|
$17,127,279
|
$16,338,866
|
$43,869,142
|
$42,715,316
|
|
|
|
|
|
Non-Operating Income,
(net)
|
$96,065
|
$8,567
|
$204,623
|
$26,023
|
|
|
|
|
|
Income Before Income
Taxes
|
$1,569,427
|
$2,040,212
|
$2,959,996
|
$4,413,890
|
|
|
|
|
|
Income Tax
Expense
|
($418,942)
|
($407,367)
|
($795,164)
|
($1,066,000)
|
|
|
|
|
|
Net Income
|
$1,150,485
|
$1,632,845
|
$2,164,832
|
$3,347,890
|
|
|
|
|
|
Basic Net Income Per
Common Share
|
$0.25
|
$0.36
|
$0.47
|
$0.75
|
|
|
|
|
|
Diluted Net Income
Per Common Share
|
$0.25
|
$0.36
|
$0.47
|
$0.74
|
RECONCILIATION OF
NET INCOME TO ADJUSTED EBITDA
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
NET INCOME
|
$
|
1,150,485
|
|
$
|
1,632,845
|
|
$
|
2,164,832
|
|
$
|
3,347,890
|
Interest
income, net
|
|
(96,065)
|
|
|
(8,567)
|
|
|
(204,623)
|
|
|
(26,023)
|
Income tax
expense
|
|
418,942
|
|
|
407,367
|
|
|
795,164
|
|
|
1,066,000
|
Depreciation
|
|
785,327
|
|
|
659,498
|
|
|
1,987,067
|
|
|
1,895,723
|
EBITDA
|
|
2,258,689
|
|
|
2,691,143
|
|
|
4,742,440
|
|
|
6,283,590
|
Gain on
insurance recoveries
|
|
-
|
|
|
-
|
|
|
(198,874)
|
|
|
(21,064)
|
Loss on
disposal of assets
|
|
6,376
|
|
|
-
|
|
|
114,413
|
|
|
99,934
|
ADJUSTED
EBITDA
|
$
|
2,265,065
|
|
$
|
2,691,143
|
|
$
|
4,657,979
|
|
$
|
6,362,460
|
CONTACT:
|
Randy
Sampson
|
|
(952)
445-7223
|
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SOURCE Canterbury Park Holding Corporation