SHAKOPEE, Minn., Aug. 10, 2020 /PRNewswire/ -- Canterbury
Park Holding Corporation ("Canterbury" or "the Company") (NASDAQ: CPHC),
today reported financial results for the second quarter and six
months ended June 30, 2020. These
results reflect the impact of the COVID-19 pandemic and the related
state-mandated closure of Canterbury from March
16, 2020 through June 9, 2020,
after which the Company resumed operations in a limited
capacity.
($ in thousands,
except per share data and percentages)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
|
|
|
|
|
Increase
|
|
|
|
|
|
Increase
|
|
2020
|
|
2019
|
|
(Decrease)
|
|
2020
|
|
2019
|
|
(Decrease)
|
Net revenues
|
$2,768
|
|
$16,433
|
|
(83.2%)
|
|
$13,717
|
|
$28,024
|
|
(51.1%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
(1,775)
|
|
1,677
|
|
(205.8%)
|
|
(916)
|
|
2,393
|
|
(138.3%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
($1,181)
|
|
$958
|
|
(223.3%)
|
|
($926)
|
|
$1,014
|
|
(191.3%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
($0.25)
|
|
$0.21
|
|
(219.0%)
|
|
($0.20)
|
|
$0.22
|
|
(190.9%)
|
Diluted EPS
|
($0.25)
|
|
$0.21
|
|
(219.0%)
|
|
($0.20)
|
|
$0.22
|
|
(190.9%)
|
|
|
(1)
|
Adjusted EBITDA, a
non-GAAP measure, excludes certain items from net (loss) 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
"Our second quarter results
reflect the impact of the suspension of operations at Canterbury for the majority of the quarter.
Importantly, we believe the quick and decisive actions we took
following the closure of our operations in mid-March, as well as
the continued progress we are making to monetize the excess real
estate that surrounds Canterbury,
will ensure that we have the necessary liquidity and financial
flexibility both to support our day-to-day operations as they
continue to ramp up and our long-term development efforts," said
Randy Sampson, President and Chief
Executive Officer of Canterbury Park. "During the time Canterbury was closed and since the resumption
of limited operations in June, we established our detailed COVID-19
Preparedness Plan to protect the health and safety of our team
members and guests, including enhanced sanitation protocols and
promoting social distancing throughout our Card Casino and racing
operations.
"We were very pleased to begin welcoming our team members and
guests back to Canterbury on
June 10 when we reopened for what we
anticipate will be 52 days of live racing as well as simulcast
wagering operations. While limited to only 250 total guests for
live racing beginning on our first day of operations, we have since
expanded capacity to accommodate 750 fans divided across three
separate areas. Our Card Casino reopened for all table games on
June 15 and for poker on July 9, also with a 250-person capacity
limitation. We continue to work closely with state and local
officials to increase capacity across our operations in a safe
manner.
"Notably, throughout this challenging five-month period, we have
continued to make significant progress in unlocking value for
the Company's stakeholders with new agreements to monetize the
excess real estate that surrounds Canterbury. In the 2020 second quarter, we
entered into agreements for three new development projects at
Canterbury Commons™, two of which are land sales that, along with
the previously announced agreement for the sale of land to United
Properties, we anticipate will generate cash flow for the Company
later this year or early next year. The third agreement signed
during the second quarter is a joint venture development that we
expect will generate long-term cash flows for the Company. These
agreements represent significant progress in our efforts to create
a new population center through a complementary mix of residential,
commercial and retail development that can bring additional energy
and economic benefits to our Card Casino, racing and hospitality
operations.
"The first residents of Canterbury Commons at the Triple
Crown Residences at Canterbury Park have been on site for over two
months, marking a significant milestone for our long-term vision.
Through July 31, 2020, we have
entered into agreements that we expect will result in more than
$250 million of residential,
commercial, hospitality and retail-oriented development on
approximately 62 of the 140 acres that comprise Canterbury Commons,
including approximately 850 residential units. We also continue to
make progress pursuing additional agreements to further monetize
our excess real estate."
Mr. Sampson concluded, "For more than 25 years, the Company has
been committed to providing an outstanding entertainment experience
for our guests with world-class service while also focusing on
growing shareholder value. It's a mantra that has been instilled in
our operations since my father, Curtis
Sampson, Dale Schenian, and I
first acquired Canterbury in 1994
and it's a legacy we remain true to today. As we begin to return to
normalized operations and look to regain our operating momentum, we
believe we have the balance sheet and financial flexibility to
support our Card Casino, pari-mutuel and hospitality growth
initiatives as well as our ongoing efforts to create unique
entertainment experiences for our guests, monetize our excess real
estate and enhance value for our shareholders."
Canterbury Commons Development
Update
In the 2020 second quarter, Canterbury entered into three new agreements
that in aggregate will result in new development on approximately
27 acres of land at Canterbury Commons. In June, the Company formed
a joint venture with Greystone Construction ("Greystone") to
develop a 13-acre land parcel located on the southwest portion of
the Canterbury Commons site with potential uses expected to
include hospitality, dining, residential, commercial and
service-oriented retail. Greystone will also relocate its corporate
headquarters to a newly constructed 26,000 square foot office at
the site. The Company contributed the 13 acres of land valued at
approximately $261,000 per acre in
July 2020 and will hold an
approximate 62% interest in the joint venture; Greystone will
provide development and construction services for the project and
will hold an approximate 38% interest in the joint venture. Initial
site work commenced in June and Greystone intends to break ground
on its new corporate headquarters in the fall of 2020, with
occupancy expected in 2021.
In April 2020, the Company entered
into two purchase agreements for the sale of approximately 14 acres
of land for total consideration of approximately $3.5 million. The agreements, which the Company
expects will close late this year or early next year, would add 160
additional residential units within Canterbury Commons. The
agreement with Pulte Homes of Minnesota will result in the development of
109 units including row homes and townhome buildings, with initial
site work expected to begin later this year. The agreement with
Lifestyle Communities, LLC will result in the development of a
cooperative community featuring a 56-unit, four-story building with
over 5,000 square feet of amenity spaces.
Development of Canterbury Commons began in 2018 with the
first of two joint venture agreements between Canterbury and Doran Companies ("Doran") for the development of the upscale
Triple Crown Residences at Canterbury Park. Construction of the
321-unit first phase, which is being developed pursuant to the
first joint venture agreement, began in late 2018 with initial
occupancy on June 1, 2020. As of
July 31, 2020, over half of the 100
units that are currently ready for occupancy have been leased. The
remaining units will be released in phases as they are completed,
with the final units ready for occupancy in the first quarter of
2021. With this initial proof-of-concept for Canterbury
Commons now in place, Doran
recently exercised its option for Phase II of the project, which
will include an additional 300 units. Pursuant to this second
agreement, the Company recently transferred roughly 10 acres of
land to the second joint venture with Doran. As part of the Phase II agreement, the
Company received $2.9 million from
Doran in early August 2020 for repayment of a note receivable,
which was on the Company's balance sheet as a related party
receivable as of June 30, 2020. The
Company expects initial groundwork for the new building to begin
later this year.
The Company also expects that road work on Unbridled Avenue on
the north side of Canterbury will
be completed in November 2020,
providing a new entrance from Canterbury Road that will
significantly improve access to Canterbury Commons.
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 focus on additional
commercial development including office, retail, hotel and
entertainment spaces. Canterbury
expects to make additional announcements of new development
partners in the future for this phase of development.
Summary of 2020 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 from March
16, 2020 through June 9, 2020.
Live racing, simulcast wagering and limited food and beverage
operations reopened at Canterbury
on June 10 with capacity constraints,
followed by initial table games operations, which resumed on
June 15 with capacity
constraints.
Net revenues for the three months ended June 30, 2020 decreased 83.2% to $2.8 million compared to $16.4 million for the same period in 2019. This
year-over-year decrease in net revenues reflects a decrease in all
of the Company's areas of operating revenue, primarily as a result
of the temporary suspension of operations through June 9, 2020, which was followed by the
resumption of operations over the balance of the second quarter on
a very limited basis.
Operating expenses for the three months ended June 30, 2020 were $5.1
million, a decrease of $10.0
million, or 66.4%, compared to operating expenses of
$15.1 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 expenses,
primarily as a result of the temporary suspension of operations
through June 9, 2020. The Company
also recorded a gain on insurance recoveries of $204,000 in the second quarter of 2019, which was
accounted for as a reduction in operating expenses.
The Company recorded a net loss of $1.2
million, or diluted loss per share of $0.25, for the three months ended June 30, 2020. Net income and diluted earnings
per share for the three months ended June
30, 2019 were $958,000 and
$0.21, respectively.
Adjusted EBITDA decreased 205.8% to a loss of $1.8 million in the 2020 second quarter compared
to 2019 second quarter adjusted EBITDA of $1.7 million.
Summary of 2020 Year-to-Date Operating Results
Net
revenues for the six months ended June 30,
2020 decreased 51.1% to $13.7
million compared to $28.0
million for the same period in 2019. This year-over-year
decrease in net revenues reflects a decrease in all the Company's
areas of operating revenue, primarily as a result of the temporary
suspension of operations from March 16,
2020 through June 9, 2020.
Operating expenses for the six months ended June 30, 2020 were $15.9
million, a decrease of $10.8
million, or 40.6%, compared to operating expenses of
$26.7 million for the same period in
2019. This year-over-year decrease in operating expenses reflects
reductions in a majority of the Company's operating areas,
primarily as a result of the temporary suspension of operations
from March 16, 2020 through
June 9, 2020. The Company also
recorded a gain on insurance recoveries of $199,000 in the second quarter of 2019, which was
accounted for as a reduction in operating expenses.
The Company recorded a net loss of $926,000, or diluted loss per share of
$0.20 for the six months ended
June 30, 2020. Net income and diluted
earnings per share for the six months ended June 30, 2019 were $1.0
million and $0.22,
respectively.
Adjusted EBITDA decreased 138.3% to a loss of $916,000 for the six months ended June 30, 2020 compared to adjusted EBITDA of
$2.4 million for the same period in
2019.
Additional Financial Information
Further financial information for the second quarter ended
June 30, 2020 is presented in the
accompanying tables at the end of this press release. 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 August 11, 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, which excludes certain items from net income (loss) 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 insurance
recoveries and loss from disposal of assets. 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.
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 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 known 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 from March 16, 2020 through
June 9, 2020, that since June 9, 2020 we have been open and operating on a
much more limited basis to comply with state law and health
protocols, and that we expect to operate a 53-day live race meet in
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
|
|
Six months
ended
|
|
June
30,
|
|
June
30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net Operating
Revenues
|
$2,767,855
|
|
$16,433,177
|
|
$13,716,814
|
|
$28,023,874
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
(5,086,434)
|
|
(15,128,423)
|
|
($15,893,698)
|
|
($26,741,880)
|
|
|
|
|
|
|
|
|
(Loss) Income from
Operations
|
(2,318,579)
|
|
1,304,754
|
|
(2,176,884)
|
|
1,281,994
|
|
|
|
|
|
|
|
|
Other Operating
Income, net
|
19,719
|
|
45,319
|
|
$183,409
|
|
$108,558
|
|
|
|
|
|
|
|
|
Income Tax Benefit
(Expense)
|
1,117,663
|
|
(392,316)
|
|
$1,067,499
|
|
($376,223)
|
|
|
|
|
|
|
|
|
Net (Loss)
Income
|
($1,181,197)
|
|
$957,757
|
|
($925,976)
|
|
$1,014,329
|
|
|
|
|
|
|
|
|
Basic Net (Loss)
Income Per Common Share
|
($0.25)
|
|
$0.21
|
|
($0.20)
|
|
$0.22
|
|
|
|
|
|
|
|
|
Diluted Net (Loss)
Income Per Common Share
|
($0.25)
|
|
$0.21
|
|
($0.20)
|
|
$0.22
|
RECONCILIATION OF
NET INCOME TO EBITDA AND ADJUSTED EBITDA
|
|
|
|
|
Three months
ended
|
|
|
Six months
ended
|
|
|
|
June
30,
|
|
June
30,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
NET (LOSS)
INCOME
|
|
$
|
(1,181,197)
|
|
$
|
957,757
|
|
$
|
(925,976)
|
|
$
|
1,014,329
|
Interest
income, net
|
|
|
(169,358)
|
|
|
(45,319)
|
|
|
(333,048)
|
|
|
(108,558)
|
Income tax
(benefit) expense
|
(1,117,663)
|
|
|
392,316
|
|
|
(1,067,499)
|
|
|
376,223
|
Depreciation
|
|
|
693,640
|
|
|
576,221
|
|
|
1,410,493
|
|
|
1,201,740
|
EBITDA
|
|
|
(1,774,578)
|
|
|
1,880,975
|
|
|
(916,030)
|
|
|
2,483,734
|
Gain on
insurance recoveries
|
-
|
|
|
(204,274)
|
|
|
-
|
|
|
(198,974)
|
Loss on
disposal of assets
|
|
-
|
|
|
-
|
|
|
-
|
|
|
108,037
|
ADJUSTED
EBITDA
|
|
$
|
(1,774,578)
|
|
$
|
1,676,701
|
|
$
|
(916,030)
|
|
$
|
2,392,797
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/canterbury-park-holding-corporation-reports-second-quarter-results-301108711.html
SOURCE Canterbury Park Holding Corporation