SHAKOPEE, Minn., March 25, 2020 /PRNewswire/ -- Canterbury Park
Holding Corporation ("Canterbury Park" or "the Company") (NASDAQ:
CPHC) today reported financial results for the fourth quarter and
full year ended December 31,
2019.
($ in thousands,
except per share data and percentages)
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Three Months Ended
December 31,
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Twelve Months Ended
December 31,
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Increase
|
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|
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Increase
|
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2019
|
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2018
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(Decrease)
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2019
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2018
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(Decrease)
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Net revenues
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$12,602
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$12,038
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4.7%
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$59,227
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$59,142
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0.1%
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Adjusted
EBITDA(1)
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1,718
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1,577
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8.9%
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6,366
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7,940
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(19.8%)
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Net income
(2)
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$553
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$2,371
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(76.7%)
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$2,718
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$5,718
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(52.5%)
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Basic
EPS(2)
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$0.12
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$0.52
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(76.9%)
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$0.59
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$1.28
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(53.9%)
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Diluted
EPS(2)
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$0.12
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$0.52
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(76.9%)
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$0.59
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$1.26
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(53.2%)
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(1)
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Definitions,
disclosures and reconciliations of non-GAAP financial information
are included later in the release.
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(2)
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Net income for the
three month and twelve-month periods ended December 31, 2018
include the benefit of a $2.2 million gain related to the transfer
of land to the Doran Canterbury I joint venture that was accounted
for as a reduction in operating expenses. The diluted earnings per
share benefit from this gain for the three month and twelve-month
periods ended December 31, 2018 was $0.35.
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As previously reported, based on the advice of Minnesota state and regulatory bodies, on
March 16, 2020, the Company
temporarily suspended all card casino, simulcast, and special
events operations at Canterbury Park in response to concerns about
the COVID-19 coronavirus. The overall discussion of historical 2019
results in this release may not reflect future results due to the
uncertainty caused by the COVID-19 coronavirus.
Management Commentary
"The fourth quarter concluded a
productive year for Canterbury as
we generated record fourth quarter revenue of $12.6 million and adjusted EBITDA of $1.7 million, reflecting year-over-year growth of
5% and 9%, respectively," said Randy
Sampson, President and Chief Executive Officer of Canterbury
Park. "The improved fourth quarter performance was primarily driven
by initiatives we implemented in our Card Casino that we believe
will help deliver consistent future growth in a normalized
operating environment. At the same time, we made noteworthy
progress on the development and monetization of our extensive real
estate holdings as the first phase of the new Triple Crown
Apartments remains on-track for completion and initial occupancy in
the 2020 second quarter.
"Card Casino revenue growth for the 2019 fourth quarter and full
year periods was driven by recent floor enhancements and game-mix
updates, as well as the more aggressive player development and
promotional programs we implemented in the second half of 2019. In
addition, we have been seeing positive results from the expansion
of our food and beverage program in and around the Card Casino.
Pari-mutuel revenues decreased by 5% in the fourth quarter on lower
simulcast revenue, and by 8% for the full year, reflecting both
lower simulcast and live racing revenue. In addition, pre-leasing
for the 321-unit first phase at the Triple Crown Apartments in our
Canterbury Commons™ development is now underway and has generated
strong interest to-date. We expect that residents will begin to
take occupancy of these rental units during the second quarter of
2020, and, at present, we continue to expect the first phase of the
Triple Crown Apartments project will be complete by year-end.
"Our operating performance in the 2020 first quarter continued
to demonstrate momentum with strong revenue increases prior to the
temporary suspension of all operations on March 16, 2020. However, our upcoming results
will reflect this disruption to our operations. The temporary
suspension of our operations at this time is critical to our
ability to ensure the safety and well being of our team members and
guests. We are closely monitoring developments and relying on
information and advice from the Minnesota Department of Health and
other government resources, and will make a decision on reopening
Canterbury Park at the appropriate time.
"We are confident we have the balance sheet and liquidity to
support the Company through this challenging operating environment
as we have no outstanding long-term debt and an $8 million credit line. We have also taken
precautionary measures to preserve cash, including suspending our
quarterly cash dividend, aggressively reducing operating expenses,
and suspending or delaying our 2020 planned capital expenditure
plans across the enterprise. In addition, and notwithstanding the
temporary suspension of operations, we continue to make further
progress on our efforts to monetize additional parcels of land at
Canterbury Park through sales to third party developers that will
generate cash flow and further the vision of the Canterbury Commons
development project. We are looking forward to the return to a
normalized operating environment as soon as practicable. At such
time, we will resume our focus on implementing a range of
initiatives across our Card Casino, pari-mutuel and hospitality
operations and deriving value from our significant real estate
holdings to return to stability and consistent, profitable growth
and enhanced shareholder value."
Canterbury Commons Development Update
Construction on
Phase One of the Triple Crown Apartments development project
continued in the fourth quarter of 2019 as the Company's joint
venture development partner, Doran Companies ("Doran"), completed work on the community
clubhouse and opened its on-site leasing office. Pre-leasing
activity for the 300 units in the first building is now underway
and initial demand is strong. Doran is working to finish the first 321-unit
building and its associated parking structure and expects initial
occupancy in the second quarter of 2020.
The Company continues to make progress with developer and
partner selection for the balance of the approximately 50-acre
first phase of development. Development partners for the remaining
land uses including townhomes, senior housing, pre-school, office,
and hotel are being selected and the Company expects to make
related announcements later this year.
In addition, the Company expects road work to begin on newly
renamed Unbridled Avenue on the north side of Canterbury Park. The
Company expects Unbridled Avenue to provide significantly improved
access to Canterbury Park, with the construction expected to
conclude by November.
Summary of 2019 Fourth Quarter Operating Results
Net
revenues for the three months ended December
31, 2019 increased 4.7% to $12.6
million compared to $12.0
million for the same period in 2018. The increase reflects a
$532,000 rise in Card Casino revenue
related to an increase in table games revenue, as well as a
$102,000 improvement in food and
beverage revenue related to an expansion of food and beverage
offerings, primarily in the Card Casino. These increases were
partially offset by a decrease in pari-mutuel revenues of
$82,000 due to a decline in simulcast
wagering.
Operating expenses for the three months ended December 31, 2019 were $11.7 million, an increase of $2.9 million, or 33.5%, compared to operating
expenses of $8.8 million for the same
period in 2018. Operating expenses in the 2018 fourth quarter
include the benefit of a $2.2 million
gain on the transfer of land related to the Doran Canterbury I
joint venture that was accounted for as a reduction in operating
expenses. Excluding this gain in the 2018 fourth quarter as well as
additional gains on sale of assets and losses on disposal of assets
recorded in operating expenses for the 2019 fourth quarter (a net
loss of $145,000) and 2018 fourth
quarter (a net gain of $2.3 million)
periods, operating expenses for the 2019 fourth quarter increased
$448,000, or 4.0%, compared to the
same period in 2018, primarily due to an increase in salaries and
benefits, cost of food and beverage sales, and professional and
contracted services.
Net income and diluted earnings per share for the three months
ended December 31, 2019 were
$553,000 and $0.12, respectively. Net income and diluted
earnings per share for the three months ended December 31, 2018 were $2.4 million and $0.52, respectively, inclusive of the
$2.2 million, or $0.35 per share, benefit for the gain on the
transfer of land related to the Doran Canterbury I joint
venture.
EBITDA for the three months ended December 31, 2019 was $1.6
million compared to EBITDA of $3.9
million in the prior-year period, which included the
$2.2 million gain on transfer of land
to the Doran Canterbury I joint venture. Adjusted EBITDA was
$1.7 million for the 2019 fourth
quarter compared to $1.6 million for
the 2018 fourth quarter.
Summary of 2019 Full Year Operating Results
Net
revenues for 2019 were $59.2 million,
an increase of 0.1% compared to 2018 net revenues of $59.1 million. The increase reflects Card Casino
revenue growth of $486,000 and an
$877,000 improvement in food and
beverage revenues due primarily to expanded food and beverage
offerings as well as revenue from the three-day Twin Cities Summer
Jam festival in July 2019. These
increases were offset by an $806,000
decline in pari-mutuel revenues due to lower simulcast, guest fees,
and live racing wagering partially resulting from three less live
racing days in 2019, a $472,000
decline in other revenues reflecting the benefit to other revenues
in 2018 from a one-time, short-term agreement related to the 2018
Super Bowl in Minneapolis, and a
decrease in RiverSouth advertising revenues that were offset by a
reduction in advertising expense.
Operating expenses for the 2019 full year period were
$55.6 million, an increase of
$4.1 million, or 8.0%, from
$51.5 million in 2018. Operating
expenses in 2018 included the benefit of a $2.2 million gain on transfer of land related to
the Doran Canterbury I joint venture that was accounted for as a
reduction in operating expenses. Excluding this gain in 2018 as
well as additional gains on sale of assets and losses on disposal
of assets recorded in operating expenses for the 2019 (a net loss
of $51,000) and 2018 (a net gain of
$2.3 million) full year periods,
operating expenses for 2019 increased $1.8
million, or 3.3%, compared to 2018. The increase is
primarily due to an increase in salaries and benefits, cost of food
and beverage sales, and professional and contracted services.
Net income and diluted earnings per share for 2019 were
$2.7 million and $0.62, respectively. Net income and diluted
earnings per share for 2018 were $5.7
million and $1.26,
respectively, inclusive of the $2.2
million, or $0.35 per share,
benefit from the gain on the transfer of land related to the Doran
Canterbury I joint venture.
The Company's 2019 EBITDA decreased to $6.3 million compared to $10.2 million in 2018. Adjusted EBITDA, which
excludes the gains and losses included in operating expenses, was
$6.4 million in 2019 compared to
$7.9 million in 2018.
Additional Financial Information
Further financial information for the fourth quarter and full year
ended December 31, 2019 is presented
in the accompanying table. Additional information will be provided
in the Company's Form 10-K Report that will be filed with the
Securities and Exchange Commission on or about March 30, 2020.
Annual Shareholders Meeting
The Company will hold its
Annual Meeting of Shareholders on Thursday,
June 25, 2020 at 10 a.m. The
Annual Meeting is currently scheduled to take place at Canterbury
Park in Shakopee, Minnesota. The
record date for shareholders entitled to vote at the Annual Meeting
is May 5, 2020.
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. We define EBITDA as earnings before interest, taxes,
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. 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 define Adjusted EBITDA
as earnings before interest income, income tax expense,
depreciation and amortization and loss from disposal of assets,
gain on sale of assets, gain on transfer of land, and gain from
insurance recoveries. We have presented Adjusted EBITDA as a
supplemental disclosure because it enables investors to understand
our results excluding the effect of these four items.
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 typically 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: any effect that the
coronavirus (COVID-19) 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
at Canterbury Park on March 16,
2020; 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 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.
Investor
Contact:
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Randy
Dehmer
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Richard Land, Jim
Leahy
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Vice President and
Chief Financial Officer
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JCIR
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Canterbury Park
Holding Corporation
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212-835-8500 or
cpch@jcir.com
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952-233-4828 or
investorrelations@canterburypark.com
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- Financial tables follow -
CANTERBURY PARK
HOLDING CORPORATION'S
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SUMMARY OF
OPERATING RESULTS
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Three months
ended
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Twelve months
ended
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|
December
31,
|
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December
31,
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|
|
2019
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2018
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2019
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2018
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Net Operating
Revenues
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$
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12,602,241
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$
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12,038,389
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$
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59,226,857
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$
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59,141,570
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Operating
Expenses
|
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(11,721,832)
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(8,779,324)
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(55,591,093)
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(51,494,641)
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Income from
Operations
|
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880,409
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3,259,065
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3,635,764
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7,646,929
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Non-Operating
Revenues, net
|
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122,150
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|
|
35,492
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326,773
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|
61,515
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Income Tax
Expense
|
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(449,098)
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|
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(924,000)
|
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(1,244,263)
|
|
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(1,990,000)
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Net Income
|
$
|
553,460
|
|
$
|
2,370,558
|
|
$
|
2,718,274
|
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$
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5,718,444
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Net Income Per
Common Share
|
$
|
0.12
|
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$
|
0.52
|
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$
|
0.62
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$
|
1.28
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Diluted Net Income
Per Common Share
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$
|
0.12
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$
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0.52
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$
|
0.62
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$
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1.26
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RECONCILIATION OF
NET INCOME TO EBITDA AND ADJUSTED EBITDA
|
|
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Three months
ended
|
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Twelve months
ended
|
|
December
31,
|
|
December
31,
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
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2018
|
NET INCOME
|
$
|
553,460
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$
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2,370,558
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$
|
2,718,274
|
|
$
|
5,718,444
|
Interest
income, net
|
|
(122,150)
|
|
|
(35,492)
|
|
|
(326,773)
|
|
|
(61,515)
|
Income tax
expense
|
|
449,098
|
|
|
924,000
|
|
|
1,244,263
|
|
|
1,990,000
|
Depreciation
|
|
692,661
|
|
|
667,857
|
|
|
2,679,728
|
|
|
2,563,579
|
EBITDA
|
|
1,573,069
|
|
|
3,926,923
|
|
|
6,315,492
|
|
|
10,210,509
|
Loss on
disposal of assets
|
|
147,316
|
|
|
21,006
|
|
|
261,728
|
|
|
120,940
|
Gain on sale
of assets
|
|
(2,698)
|
|
|
(129,580)
|
|
|
(12,141)
|
|
|
(129,580)
|
Gain on
transfer of land
|
|
-
|
|
|
(2,241,206)
|
|
|
-
|
|
|
(2,241,206)
|
Gain on insurance
recoveries
|
|
-
|
|
|
-
|
|
|
(198,874)
|
|
|
(21,064)
|
ADJUSTED
EBITDA
|
$
|
1,717,687
|
|
$
|
1,577,143
|
|
$
|
6,366,205
|
|
$
|
7,939,599
|
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SOURCE Canterbury Park Holding Corporation