SHAKOPEE, Minn., May 12, 2020 /PRNewswire/ -- Canterbury Park
Holding Corporation ("Canterbury Park" or "the Company") (NASDAQ:
CPHC), today reported financial results for the first quarter ended
March 31, 2020.
($ in thousands,
except per share data and percentages)
|
|
|
|
|
Two Months
Ended
|
|
Month Ended March
31,
|
|
Three Months Ended
March 31,
|
|
|
February 29,
2020
|
February 28,
2019
|
Increase
|
|
2020
|
2019
|
Decrease
|
|
2020
|
2019
|
Increase
(Decrease)
|
|
Net
revenue
|
$8,812
|
$7,337
|
20.1%
|
|
$2,137
|
$4,254
|
(49.8%)
|
|
$10,949
|
$11,591
|
(5.5%)
|
|
Adjusted EBITDA
(1)
|
1,762
|
451
|
290.9%
|
|
(903)
|
265
|
(440.8%)
|
|
859
|
716
|
20.0%
|
|
Net income
|
|
|
|
|
|
|
|
|
$255
|
$57
|
351.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
|
|
|
|
|
|
|
$
0.05
|
$ 0.01
|
400.0%
|
|
Diluted
EPS
|
|
|
|
|
|
|
|
|
$
0.05
|
$ 0.01
|
400.0%
|
|
|
|
(1)
|
Definitions,
disclosures and reconciliations of non-GAAP financial information
are included later in the release.
|
Management Commentary
"The temporary suspension of our
operations on March 16, 2020 as a
result of the COVID-19 pandemic was critical to ensure the safety
and well-being of our team members and guests despite the
significant impact on our business," said Randy Sampson, President and Chief Executive
Officer of Canterbury Park. "The very strong operating results we
generated for the first two months of the quarter demonstrate the
momentum we are capable of achieving, with year-over-year revenue
and Adjusted EBITDA growth in January and February 2020 exceeding internal projections. The
strength of our operating results for the first two months of the
year is notable because despite the suspension of operations in
mid-March, which drove a full-quarter net revenue decline of 5.5%,
our Adjusted EBITDA rose 20% and net income increased 351% year
over year for the first quarter.
"Since we closed our operations in mid-March, we have acted
quickly and prudently to preserve cash and reduce operating
expenses by implementing temporary unpaid furloughs, suspending or
delaying 2020 planned capital expenditures and suspending the
quarterly cash dividend. We believe these actions, combined with
our balance sheet that has no long-term debt and our $8 million line of credit, provide the Company
with the necessary liquidity and financial flexibility to manage
through this challenging operating environment, bring back our
valued employees as the economy re-opens and support Canterbury
Park's long-term outlook.
"Our two recent agreements for the sale of land for the
development of additional residential units at Canterbury Commons™
are expected to generate cash flow later this year that will
strengthen our resources to navigate near-term challenges while
marking further material progress on our long-term vision to bring
additional exciting lifestyle experiences, energy and excitement to
Canterbury Park through the development of vibrant residential,
commercial, hospitality and retail elements. These agreements also
mark further milestones in unlocking the value of our excess real
estate and, when combined with the Triple Crown upscale rental
apartment development which remains on track for initial occupancy
in June 2020, will comprise the
majority of the planned Canterbury Commons residential
development.
"While the measures we have taken to respond to the COVID-19
pandemic, including a delay in the start of this year's race meet
and an anticipated shorter meet, will significantly impact our
second quarter results, we will look to further build on our
strategies to grow player visitation and engagement once we return
to operations. One recent example of these efforts was the
introduction of the first dealer-assist blackjack games in our Card
Casino. While the games were operational for only a few days, early
guest feedback was very favorable. These games offer a unique
blackjack entertainment experience for our local market and provide
us with a new way to engage with players, including potentially new
players seeking a low-wager entry point to blackjack.
"The health and well-being of our employees and guests remains
our primary concern. We are preparing a detailed plan of operations
for the re-opening of Canterbury Park that will offer a safe
environment with the highest standards and safety protocols that
encompass appropriate social distancing and sanitary measures. When
we are able to re-open and begin to return to normalized
operations, we believe the range of growth initiatives we have for
our Card Casino, pari-mutuel and hospitality operations as well as
the near-term outlook for further monetization of our excess real
estate will help us to regain the momentum we were generating in
early 2020 and support our goal of enhancing shareholder
value."
Canterbury Commons Development Update
The Company
recently announced two real estate sales agreements with developers
that would add 160 additional residential units at Canterbury
Commons™. Pursuant to the two purchase agreements which we expect
to close in September 2020,
Canterbury would sell
approximately 14 acres of land for total consideration of
approximately $3.5 million. The
agreement with Pulte Homes of Minnesota would result in the development of
109 row homes and townhome buildings, with initial site work
scheduled to begin later this year. The agreement with Lifestyle
Communities, LLC would result in the development of a cooperative
community featuring a 56-unit, four-story building with over 5,000
square feet of amenity spaces.
Construction on Phase One of the Triple Crown Apartments project
continued in the first quarter of 2020 with the Company's joint
venture development partner, Doran Companies, continuing its
pre-leasing activity for the 321-unit first building, with initial
occupancy expected in June 2020.
Initial groundwork for Phase Two of the project, which would add
another 305 units, is expected to begin later this year.
Collectively, these three development projects would ultimately
represent approximately $200 million
of potential total development for more than 760 residential units
as well as the majority of the residential component of the
Canterbury Commons™ Master Development Plan. The Company
continues to make progress with developer and partner selection for
the balance of the approximately 140 acres that will comprise
Canterbury Commons™, with a renewed focus on commercial development
including office, retail, hotel and entertainment spaces.
Canterbury expects to make
additional announcements of new development partners for this phase
of development in the near future.
The Company also expects road work will begin soon on the newly
re-named Unbridled Avenue on the north side of Canterbury Park. We
expect Unbridled Avenue to provide significantly improved access to
Canterbury Park, with the construction scheduled to conclude by
November 2020.
Summary of 2020 First Quarter Operating Results
The
operating results for the three-month period ended March 31, 2020 presented below reflect the impact
of the suspension of operations at Canterbury Park on March 16, 2020. The operating results for the
three-month period ended March 31,
2019 reflect the impact of disruption and higher costs
associated with the renovation of the Card Casino in that
period.
For the first two months of the 2020 first quarter period, net
revenue increased approximately 20% and Adjusted EBITDA rose 291%
compared to the same period in 2019. While the Company anticipated
favorable year-over-year comparisons for the first two months of
2020 due to the construction disruption in the Card Casino last
year, actual increases in revenues and Adjusted EBITDA for the
two-month period far exceeded its expectations.
Net revenues for the three months ended March 31, 2020 decreased 5.5% to $10.9 million compared to $11.6 million for the same period in 2019. Card
Casino revenues decreased $339,000,
or 4.3%, due to a decrease in poker and table games revenue.
Pari-mutuel revenues decreased $195,000, or 13.1%, primarily due to a decrease
in simulcast revenue. Food and beverage revenues decreased
$234,000, or 17.3%, primarily due to
a decrease in volume in the Card Room and concession stands. Other
revenues increased $126,000, or
14.8%, due to an increase in space rental and other operating
revenues.
Operating expenses for the three months ended March 31, 2020 were $10.8
million, a decrease of $806,000, or 6.9%, compared to operating expenses
of $11.6 million for the same period
in 2019. This year-over-year decrease in operating expenses
reflects reductions in the majority of the Company's operating
expense line items, primarily as a result of the Company's
temporary suspension of operations on March
16, 2020. The Company also recorded a loss on disposal of
assets of $113,000 in 2019, primarily
due to a write-off of assets disposed of as a result of the
renovation of the Card Casino.
Net income and diluted earnings per share for the three months
ended March 31, 2020 were
$255,000 and $0.05, respectively. Net income and diluted
earnings per share for the three months ended March 31, 2019 were $57,000 and $0.01,
respectively.
Adjusted EBITDA increased 20.0% to $859,000 in the 2020 first quarter compared to
2019 first quarter adjusted EBITDA of $716,000.
Given its number of employees and the nature of its primary
operations, the Company does not currently qualify for any of the
federal lending assistance offered by the CARES Act that was passed
in late March and April 2020,
including the Paycheck Protection Program or other CARES Acts small
business lending programs.
Additional Financial Information
Further financial information for the first quarter ended
March 31, 2020 is presented in the
accompanying table. Additional information will be provided in the
Company's Form 10-Q Report that will be filed with the Securities
and Exchange Commission on or about May 14,
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. 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 generally 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
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 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, including 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
cphc@jcir.com
|
952-233-4828 or
investorrelations@canterburypark.com
|
|
- Financial tables follow -
CANTERBURY PARK
HOLDING CORPORATION'S SUMMARY OF OPERATING
RESULTS
|
|
|
Three months
ended
|
|
|
March
31,
|
|
|
|
2020
|
|
|
2019
|
|
Net Operating
Revenues
|
$
|
10,948,959
|
|
$
|
11,590,798
|
|
Operating
Expenses
|
|
(10,807,264)
|
|
|
(11,613,559)
|
|
Income (Loss) from
Operations
|
|
141,695
|
|
|
(22,761)
|
|
Non-Operating
Revenues, net
|
|
163,690
|
|
|
63,240
|
|
Income Tax (Expense)
Benefit
|
|
(50,164)
|
|
|
16,093
|
|
Net Income
|
$
|
255,221
|
|
$
|
56,572
|
|
|
|
|
|
|
|
|
Basic Net Income Per
Common Share
|
$
|
0.05
|
|
$
|
0.01
|
|
Diluted Net Income
Per Common Share
|
$
|
0.05
|
|
$
|
0.01
|
|
RECONCILIATION OF
NET INCOME TO EBITDA AND ADJUSTED EBITDA
|
|
|
Three months
ended
|
|
|
March
31,
|
|
|
|
2020
|
|
|
2019
|
|
NET INCOME
|
$
|
255,221
|
|
$
|
56,572
|
|
Interest
income, net
|
|
(163,690)
|
|
|
(63,240)
|
|
Income tax
expense (benefit)
|
|
50,164
|
|
|
(16,093)
|
|
Depreciation
|
|
716,853
|
|
|
625,520
|
|
EBITDA
|
|
858,548
|
|
|
602,759
|
|
Loss on
disposal of assets
|
|
-
|
|
|
113,437
|
|
ADJUSTED
EBITDA
|
$
|
858,548
|
|
$
|
716,196
|
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/canterbury-park-holding-corporation-announces-first-quarter-2020-financial-results-301057259.html
SOURCE Canterbury Park Holding Corporation