Canterbury Park Holding Corporation (“Canterbury” or the “Company”)
(NASDAQ: CPHC), today reported financial results for the three and
six months ended June 30, 2022.
($ in thousands, except per share data and
percentages)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2022 |
|
2021 (1) |
|
Inc. (Dec.) |
|
|
2022 |
|
2021 (1) |
|
Increase |
Net
revenues (2) |
$17,774 |
|
$15,872 |
|
12.0% |
|
|
$31,412 |
|
$25,097 |
|
25.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (2) |
$1,755 |
|
$1,869 |
|
(6.1%) |
|
|
$3,529 |
|
$2,421 |
|
45.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (3) |
$3,564 |
|
$3,514 |
|
1.4% |
|
|
$7,111 |
|
$4,936 |
|
44.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
EPS |
$0.36 |
|
$0.39 |
|
(7.7%) |
|
|
$0.73 |
|
$0.51 |
|
43.1% |
|
Diluted EPS |
$0.36 |
|
$0.39 |
|
(7.7%) |
|
|
$0.73 |
|
$0.51 |
|
43.1% |
|
(1) Financial results for the
first six months of 2021 reflect the impact of the COVID-19
pandemic, including the state-mandated closure of Canterbury Park
from January 1, 2021 through January 10, 2021. Canterbury Park
re-opened on January 11, 2021 with a capacity limitation of 150
guests per designated area; the capacity limitation was
subsequently increased on February 13, 2021 to 250 guests per
designated area. Remaining restrictions were lifted in late May
2021. Results for the first six months of 2022 reflect no closures
or capacity limitations.(2) Net revenues and net
income for the six-month period ended June 30, 2021 include
$515,000 in grant funds received as a result of the Minnesota
COVID-19 relief package that was signed into law in December
2020.(3) Adjusted EBITDA, a non-GAAP measure, excludes
certain items from net 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
“We had a strong second quarter with revenue
rising 12% to $17.8 million and adjusted EBITDA growing 1% to $3.6
million year-over-year, both of which were records for our second
quarter,” said Randy Sampson, President and Chief Executive Officer
of Canterbury Park. “Our business was strong across our operations
including Card Casino visitation and spend trends, particularly
within the most valuable segments of our players. That said, lower
table games’ hold in our Card Casino during the quarter negatively
impacted revenue performance compared to the same period in 2021.
Canterbury Park’s 65-day race meet began on May 18, 2022 and
revenue in the second quarter benefitted from increased guest
attendance at our live meet. Our racing business had another solid
quarter with strong increases in attendance and revenues from live
racing as customers continue to respond to the differentiated
thoroughbred racing product we offer live at Canterbury Park.
Guests have also responded well to our recent change in our
totalizator services provider, which has resulted in enhanced
features and functionality, including an improved mobile wagering
platform. The combination of our quality racing and improved
out-of-state exposure led to an overall handle increase as well as
an all-time single day handle record on our Northern Stars Racing
Festival held on June 20, 2022. We also continue to benefit from
the return of more normalized operations, including increased
catering and special events.
“In addition to our strong revenue growth, we
remain focused on diligently managing our cost structure to account
for the current economic and inflationary environment. Our Adjusted
EBITDA as a percentage of total revenue of 20% continues to exceed
pre-pandemic levels and reflects our ability to effectively manage
against the ongoing impact of rising labor costs and inflation.
While labor and other cost pressures will remain a challenge for
the near term, we are confident that our team’s success in bringing
efficiencies to our day-to-day operations will help us sustain
attractive margins and cash flow.
“Work on a growing number of development
projects at Canterbury Commons continued in the second quarter,
including initial work on several new projects. Our team is
supporting Swervo Development Corporation (“Swervo”) as it
continues the process of obtaining local and state approvals for
its proposed 19,000-seat concert amphitheater east of the racetrack
on Canterbury Road, a process expected to conclude in the third
quarter of 2022. Last week, the Shakopee Planning Commission
reviewed the PUD Amendment for the Amphitheater development and
voted unanimously to approve and forward to the City Council for
review at their August 16 meeting. We appreciate the community’s
response to the planned amphitheater and believe this project will
serve as a key component in our creation of a hub of lifestyle and
entertainment activity surrounding Canterbury Park, leading to
additional employment and other economic activity for the
region.
“Reflecting the ongoing momentum in our Card
Casino and Racing operations, which has continued to-date in the
current quarter, and the consistent recovery from the pandemic
across our Food & Beverage and Events operations, we believe
the Company is positioned to deliver further revenue growth over
the balance of the year. In addition, we continue to review
potential strategic transactions where we can diversify our
business while bringing to bear our operating expertise and strong
financial position. Canterbury Commons remains a key long-term
differentiator and driver of shareholder value creation, as we
believe all components of the development across the site will help
deliver increased visitation and spend in our core businesses. We
are extremely excited by what the future holds for our Company and
look forward to reporting on our progress over the balance of the
year.”
Canterbury Commons
Development Update
In February 2022, the Company announced plans to
sell approximately 40 acres in the northeast corner of the property
– along Canterbury Road and Unbridled Avenue – to Minneapolis-based
Swervo for the development of a state-of-the-art, 19,000-seat
amphitheater, subject to state and local approvals. Swervo is
seeking final entitlement and development approvals from the
Shakopee Planning Commission and City Council in the third quarter
of 2022. Assuming these approvals are granted, closing on the sale
of the property to Swervo is expected to take place in October with
construction to start in early 2023. The anticipated opening of the
amphitheater is May 2024. Also, Canterbury has submitted its
related stable area improvement plan and request to amend the Class
A license to the Minnesota Racing Commission for approval in the
third quarter of 2022.
Greystone Construction and Canterbury Park’s
joint venture has now successfully leased nearly the entirety of
the Greystone headquarters building. More recently, Greystone has
received approvals for an 11,000 square-foot brewery, taproom and
Mexican restaurant for co-tenants Badger Hill Brewing and Bravis
Modern Street Food on another part of the 13-acre Southwest
Development site. Construction on the facility is expected to begin
in Fall 2022. The co-tenant property is set to open in Summer 2023
and will also include outdoor patio space. In addition,
construction on the 147 units of senior market rate apartments
under the Omry brand name is now underway with the project expected
to be completed by Fall 2023.
Phase I of the upscale Triple Crown Residences
at Canterbury Park is over 90% leased. Doran Companies’
construction on Phase II is now underway, with the parking
structure nearing completion and work on the new residential
structures moving forward. Phase II is expected to be fully
completed by Fall 2023, with occupancy available in phases starting
in Spring 2023.
Pulte Homes of Minnesota continues to make
progress on the 63-unit first phase of its new row home and
townhome residences, and the second phase of the sale transaction
to Pulte was completed during the second quarter of 2022. Adjacent
to Pulte’s development, Lifestyle Communities is in the pre-sales
phase for its new cooperative community (branded “Artessa at
Canterbury Park”) which will feature a 56-unit, four-story building
with over 5,000 square feet of amenity spaces. Lifestyle
Communities plans to begin construction in Spring 2023.
Developer and partner selection for the
remaining 40 acres of Canterbury Commons continues. The primary
focus for future projects will be on entertainment, office, retail,
hotel, and restaurant uses. Canterbury expects to make additional
new partner announcements in the future.
Summary of 2022 Second Quarter Operating
Results
Net revenues for the three months ended June 30,
2022 increased 12.0% to a second quarter record $17.8 million,
compared to $15.9 million for the same period in 2021. The
year-over-year increase reflects improved performance across the
Company’s operations due to the success of targeted marketing
efforts, an expanded events calendar which helped drive higher
visitation and spend across the Company’s operations, and no
capacity constraints in Q2 2022 compared to the same period in
2021.
Operating expenses for the three months ended
June 30, 2022 were $15.1 million, an increase of $2.0 million, or
15.6%, compared to operating expenses of $13.0 million for the same
period in 2021. The year-over-year increase in operating expenses
reflects an increase in all of the Company’s operating expenses in
the second quarter of 2022 as compared to the second quarter of
2021 primarily as a result of a return to normalized operations due
to the various restrictions and capacity constraints the Company
had in place during the second quarter of 2021.
The Company recorded a loss from equity
investment of $534,000 for the three months ended June 30, 2022.
For the three months ended June 30, 2021, the Company recorded a
loss from equity investment of $641,000. The losses from equity
investments in both periods were primarily related to the Company’s
share of depreciation, amortization, and interest expense from the
Doran Canterbury joint ventures.
The Company recorded income tax expense of
$619,000 for the three months ended June 30, 2022 compared to
income tax expense of $758,000 for the three months ended June 30,
2021.
The Company recorded net income of $1.8 million,
or diluted earnings per share of $0.36, for the three months ended
June 30, 2022 compared to net income and diluted earnings per share
for the three months ended June 30, 2021 of $1.9 million and $0.39,
respectively.
Adjusted EBITDA, a non-GAAP measure, for the
three months ended June 30, 2022 was a second quarter record $3.6
million compared to adjusted EBITDA of $3.5 million for the same
period in 2021.
Summary of 2022 Year-to-Date Operating
Results
Net revenues for the six months ended June 30,
2022 increased 25.2% to $31.4 million, compared to $25.1 million
for the same period in 2021. The year-over-year increase reflects
an increase in all the Company’s areas of operating revenue
primarily driven by a return to normalized operations as compared
to the various restrictions and capacity constraints that were in
place during the first half of 2021, as well as increases in
visitation and spend per visit compared to historical pre-pandemic
periods.
Operating expenses for the six months ended June
30, 2022 were $26.3 million, an increase of $5.3 million, or 25.2%,
compared to operating expenses of $21.0 million for the same period
in 2021. The year-over-year increase in operating expenses reflects
an increase in a majority of the Company’s operating areas,
primarily as a result of a return to normalized operations compared
to the various restrictions and capacity constraints that were in
place during the first half of 2021.
The Company recorded a loss from equity
investment of $774,000 for the six months ended June 30, 2022. The
Company recorded a loss from equity investment of $1.3 million for
the six months ended June 30, 2021. The losses from equity
investments in both periods were primarily related to the Company’s
share of depreciation, amortization, and interest expense from the
Doran Canterbury joint ventures.
The Company recorded income tax expense of $1.2
million for the six months ended June 30, 2022 compared to income
tax expense of $1.0 million for the six months ended June 30,
2021.
The Company recorded net income of $3.5 million,
or diluted earnings per share of $0.73, for the six months ended
June 30, 2022 compared to net income and diluted earnings per share
for the six months ended June 30, 2021 of $2.4 million and $0.51,
respectively.
Adjusted EBITDA was $7.1 million for the six
months ended June 30, 2022. Adjusted EBITDA was $4.9 million for
the same period in 2021.
Additional Financial
Information
Further financial information for the second
quarter ended June 30, 2022 is presented in the accompanying tables
at the end of this press release. Additional information will be
provided in the Company’s Quarterly Report on Form 10-Q that will
be filed with the Securities and Exchange Commission on or about
August 12, 2022.
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 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
depreciation and amortization related to equity investments,
interest expense related to equity investments, and grant money
received from the Minnesota COVID-19 relief package. 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 (Nasdaq:
CPHC) 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 December. 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 also pursuing
a strategy to enhance shareholder value by the ongoing development
of approximately 140 acres of underutilized land surrounding the
Racetrack that was originally designated for a project known as
Canterbury Commons™. The Company is pursuing several mixed-use
development opportunities for the remaining underutilized 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 Annual Report on Form 10-K filed with the SEC
and subsequently filed Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K. They include, but are not limited to: our
Cooperative Marketing Agreement with the Shakopee Mdewakanton Sioux
Community contains both affirmative and negative covenants that
restrict our business and limit our ability to pursue certain
changes to gaming laws, even if such activities or changes would be
in the best interests of our company; our dependence on the
Cooperative Marketing Agreement with the Shakopee Mdewakanton Sioux
Community for purse enhancement payments and marketing payments,
which may not continue after 2022; the 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 during portions of 2020
and 2021 and may be required to do so again in 2022, that we were
required to limit visitors and engage in new cleaning protocols,
social distancing measures and other changes to our racetrack and
card casino operations to comply with state law and health
protocols and reductions in the number of visitors due to their
COVID-19 concerns; 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 the
effect of competition on our real estate development operations and
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.
The forward-looking statements in this press
release speak only as of the date of this press release. Except as
required by law, Canterbury assumes no obligation to update or
revise these forward-looking statements for any reason, even if new
information becomes available in the future, except as required by
law.
Investor Contacts: |
|
Randy Dehmer |
Richard Land, Jim Leahy |
Senior 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 |
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
June 30, |
|
June 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net
Operating Revenues |
$17,774,274 |
|
|
$15,871,818 |
|
|
$31,412,246 |
|
|
$25,097,360 |
|
Operating Expenses |
|
(15,083,603) |
|
|
|
(13,042,932) |
|
|
|
(26,295,339) |
|
|
|
(20,996,363) |
|
Gain
on Sale of Land |
|
12,151 |
|
|
|
263,581 |
|
|
|
12,151 |
|
|
|
263,581 |
|
Income from Operations |
|
2,702,822 |
|
|
|
3,092,467 |
|
|
|
5,129,058 |
|
|
|
4,364,578 |
|
Other
Loss, net |
|
(329,093) |
|
|
|
(465,786) |
|
|
|
(375,775) |
|
|
|
(934,180) |
|
Income Tax Expense |
|
(618,660) |
|
|
|
(757,597) |
|
|
|
(1,224,301) |
|
|
|
(1,009,821) |
|
Net
Income |
$1,755,069 |
|
|
$1,869,084 |
|
|
$3,528,982 |
|
|
$2,420,577 |
|
Basic
Net Income Per Common Share |
$0.36 |
|
|
$0.39 |
|
|
$0.73 |
|
|
$0.51 |
|
Diluted Net Income Per Common Share |
$0.36 |
|
|
$0.39 |
|
|
$0.73 |
|
|
$0.51 |
|
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED
EBITDA |
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
June 30, |
|
June 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
NET
INCOME |
$1,755,069 |
|
|
$1,869,084 |
|
|
$3,528,982 |
|
|
$2,420,577 |
|
Interest income, net |
|
(205,300) |
|
|
|
(175,090) |
|
|
|
(398,140) |
|
|
|
(344,400) |
|
Income tax expense |
|
618,660 |
|
|
|
757,597 |
|
|
|
1,224,301 |
|
|
|
1,009,821 |
|
Depreciation |
|
741,574 |
|
|
|
694,168 |
|
|
|
1,487,523 |
|
|
|
1,383,753 |
|
EBITDA |
|
2,910,003 |
|
|
|
3,145,759 |
|
|
|
5,842,666 |
|
|
|
4,469,751 |
|
Gain on sale of land |
|
(12,151) |
|
|
|
(263,581) |
|
|
|
(12,151) |
|
|
|
(263,581) |
|
Depreciation and amortization related to equity investments |
|
474,352 |
|
|
|
393,673 |
|
|
|
895,675 |
|
|
|
787,347 |
|
Interest expense related to equity investments |
|
192,170 |
|
|
|
237,871 |
|
|
|
384,983 |
|
|
|
457,066 |
|
Other revenue, COVID-19 relief grants |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(515,000) |
|
ADJUSTED EBITDA |
$3,564,374 |
|
|
$3,513,723 |
|
|
$7,111,173 |
|
|
$4,935,583 |
|
Canterbury Park (NASDAQ:CPHC)
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