Canterbury Park Holding Corporation (“Canterbury” or the “Company”)
(NASDAQ: CPHC), today reported record financial results for the
first quarter ended March 31, 2022.
($ in thousands, except per share data and
percentages)
|
Three Months Ended March 31, |
|
|
2022 |
|
2021(1) |
|
Increase |
Net revenues(2) |
$ |
13,638 |
|
$ |
9,226 |
|
48 |
% |
|
|
|
|
|
|
Net income(2) |
$ |
1,774 |
|
$ |
551 |
|
222 |
% |
|
|
|
|
|
|
Adjusted EBITDA(3) |
$ |
3,547 |
|
$ |
1,422 |
|
149 |
% |
|
|
|
|
|
|
Basic EPS |
$ |
0.37 |
|
$ |
0.12 |
|
217 |
% |
Diluted EPS |
$ |
0.36 |
|
$ |
0.12 |
|
214 |
% |
(1) |
Financial
results for the 2021 first quarter reflect the impact of the
COVID-19 pandemic, including the state-mandated closure of
Canterbury Park 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. First quarter 2022 reflects no closures
or capacity limitations. |
(2) |
Net revenues and net income for the three-month period ended
March 31, 2021 include $515,000 in grant funds received as a result
of the Minnesota COVID-19 relief package that was passed 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
“Canterbury Park’s record first quarter results
highlight the underlying strength of our operations as we continue
our post-pandemic recovery. Revenue grew 48% year over year to
$13.6 million in the quarter and adjusted EBITDA grew 149% year
over year to $3.5 million, representing our second highest ever
adjusted EBITDA quarter,” said Randy Sampson, President and Chief
Executive Officer of Canterbury. “The strong first quarter
financial performance was driven by ongoing momentum in our Card
Casino operations where we continue to benefit from higher levels
of visitation and spend per visit, with trips from rated players
rising 32%. In addition, our events and food and beverage
businesses benefited from a return to a more normalized events
calendar, including the return of popular events such as ISOC
snowmobile racing, Extreme Horse Skijor races, the M8 Pool
Tournament, the Minnesota Deer and Turkey Classic and a first-time
event, the Lake Home and Cabin Show.
“We remain focused on managing our cost
structure and implementing new operating practices to maintain our
increased operating margins, and our success with these efforts is
helping to offset inflation and higher labor expense. Our success
is noteworthy as Adjusted EBITDA as a percentage of total revenue
was a quarterly record 26%, an increase from our previous quarterly
record of 24% achieved in the 2021 third quarter. Looking forward,
while we expect labor and other cost pressures will continue to
present challenges, we are confident that the operational changes
we’ve implemented, combined with our team’s tireless efforts to
efficiently manage our business and provide guests with great
entertainment, has positioned Canterbury Park to maintain higher
margins for the remainder of 2022 compared to pre-pandemic
periods.
“Momentum at Canterbury Commons™ was evident in
the quarter as ongoing development continued and we attracted new
real estate development partners. As announced earlier this year,
we entered into an agreement to sell 40 acres of land to Swervo
Development Corporation (“Swervo”) to develop a 19,000-seat concert
amphitheater east of the racetrack facing Canterbury Road.
Community response to the project has been favorable and the
comprehensive approval process is now underway. We believe the
creation of a world class outdoor music venue fits well with our
goal of finding complementary development projects that will drive
traffic to Canterbury Park and Canterbury Commons. We look forward
to continuing our work with Swervo, local authorities, the
Minnesota Racing Commission and other stakeholders to move towards
full approval of the amphitheater project in the third quarter of
2022. At the same time, our other partners are making consistent
progress with their respective residential and commercial
developments which we believe highlights Canterbury Commons’ clear
pathway towards becoming a vibrant lifestyle and entertainment
destination in Shakopee.
“Looking at the balance of 2022, we anticipate
continued top-line growth in our existing business as operations
further normalize and the busy summer season approaches. We also
continue to review strategic transactions where we can leverage our
operating expertise and strong financial position to expand the
markets we operate in, diversify our business and grow our
operating results. As we evaluate these opportunities to further
transform our business, we will proceed with long-term shareholder
growth as our key guiding principle. Shareholders will also benefit
from the ongoing development of Canterbury Commons where we are
attracting high-profile tenants and high traffic offerings that are
designed to ultimately benefit our entire enterprise. Canterbury
Park’s future continues to remain bright, and the year ahead is
expected to bring continued growth across our business.”
Canterbury Commons
Development Update
Phase I of the upscale Triple Crown Residences
at Canterbury Park is approximately 90% leased. Doran Companies has
begun construction of Phase II of the project, with construction of
the parking structure and utilities now underway. Phase II is
expected to be fully completed by Fall 2023, with occupancy
available in phases starting in Spring 2023.
Via a joint venture, Greystone Construction and
Canterbury Park have now leased 85% of the Greystone headquarters
building and continue to make progress on selecting end users for
the balance of the 13-acre site. The parties recently signed
letters of intent with a brewery operator and a restaurant operator
and are currently negotiating leases with them for a new co-tenant,
10,000 square feet building which is currently in the design phase.
In March 2022, the joint venture contributed approximately 3.5
acres of land to a development partnership to build 147 units of
senior market rate apartments under the brand name Omry. The Omry
residential development is expected to be completed by Fall
2023.
Pulte Homes of Minnesota continues to make
progress on the 63-unit first phase of its new row home and
townhome residences, with sales ongoing and six buildings
containing 31 units currently under construction. The closing on
the sale to Pulte of the 46-unit second phase is expected to be
completed in May 2022. Adjacent to Pulte’s Canterbury Crossings
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 Fall 2022.
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 regulatory approvals.
Swervo has made significant progress on the planning,
infrastructure, architecture and engineering for the project. The
Company understands Swervo plans to seek final entitlement and
development approvals from the Shakopee Planning Commission and
City Council in the third quarter of 2022. Assuming the approvals
are granted, the planned amphitheater could open as early as 2023.
Furthermore, Canterbury continues to refine its barn and dormitory
reconstruction plans which it expects to present to the Minnesota
Racing Commission for approval in the third quarter of 2022.
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 First Quarter Operating
Results
Net revenues for the three months ended March
31, 2022 increased 47.8% to $13.6 million, compared to $9.2 million
in the same period last year. The year-over-year increase reflects
improved performance across the Company’s operations, the success
of targeted marketing efforts, and an expanded 2022 first quarter
events calendar which helped drive higher visitation and spend in
other areas of the Company’s operations.
Operating expenses for the three months ended
March 31, 2022 were $11.2 million, an increase of $3.3 million, or
41.0%, compared to operating expenses of $8.0 million for the same
period in 2021. The year-over-year increase reflects a full quarter
of normal operations compared to the prior year period which was
impacted by the temporary shutdown of operations from January 1
through January 10, 2021 and capacity limits during the
quarter.
The Company recorded a loss from equity
investment of $240,000 and $638,000 for the three months ended
March 31, 2022 and 2021, respectively, primarily related to its
share of depreciation, amortization, and interest expense from the
Doran Canterbury joint ventures that are developing the Triple
Crown Residences. The 2022 first quarter loss was partially offset
by a one-time gain recorded from the Canterbury DBSV joint venture
as a result of Canterbury DBSV transferring a parcel of land to
another joint venture for the Omry development.
The Company recorded income tax expense of
$606,000 and $252,000 for the three months ended March 31, 2022 and
2021, respectively.
The Company recorded net income and diluted
earnings per share of $1.8 million and $0.36, respectively, for the
three months ended March 31, 2022. The Company recorded net income
and diluted earnings per share of $551,000 and $0.12, respectively,
for the three months ended March 31, 2021.
Adjusted EBITDA, a non-GAAP measure, increased
149.4% to $3.5 million in the 2022 first quarter, compared to $1.4
million in the 2021 first quarter.
Additional Financial
Information
Further financial information for the first
quarter ended March 31, 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.
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 DehmerSenior Vice President and Chief Financial
OfficerCanterbury Park Holding Corporation952-233-4828 or
investorrelations@canterburypark.com |
Richard Land, Jim LeahyJCIR212-835-8500 or cphc@jcir.com |
CANTERBURY PARK HOLDING
CORPORATION’SSUMMARY OF OPERATING
RESULTS(UNAUDITED)
|
Three months ended |
|
March 31, |
|
|
2022 |
|
|
|
2021 |
|
Net Operating Revenues |
$ |
13,637,972 |
|
|
$ |
9,225,542 |
|
Operating Expenses |
|
(11,211,736 |
) |
|
|
(7,953,431 |
) |
Income from Operations |
|
2,426,236 |
|
|
|
1,272,111 |
|
Other Loss, net |
|
(46,682 |
) |
|
|
(468,394 |
) |
Income Tax Expense |
|
(605,641 |
) |
|
|
(252,224 |
) |
Net Income |
$ |
1,773,913 |
|
|
$ |
551,493 |
|
Basic Net Income Per Common
Share |
$ |
0.37 |
|
|
$ |
0.12 |
|
Diluted Net Income Per Common
Share |
$ |
0.36 |
|
|
$ |
0.12 |
|
RECONCILIATION OF NET INCOME TO
EBITDA AND ADJUSTED EBITDA
(UNAUDITED)
|
|
Three months ended |
|
March 31, |
|
2022 |
|
2021 |
NET INCOME |
$ |
1,773,913 |
|
|
$ |
551,493 |
|
Interest income, net |
|
(192,840 |
) |
|
|
(169,310 |
) |
Income tax expense |
|
605,641 |
|
|
|
252,224 |
|
Depreciation |
|
745,949 |
|
|
|
689,585 |
|
EBITDA |
|
2,932,663 |
|
|
|
1,323,992 |
|
Depreciation and amortization related to equity investments |
|
421,323 |
|
|
|
393,673 |
|
Interest expense related to equity investments |
|
192,813 |
|
|
|
219,195 |
|
Other revenue, COVID-19 relief grants |
|
— |
|
|
|
(515,000 |
) |
ADJUSTED EBITDA |
$ |
3,546,799 |
|
|
$ |
1,421,860 |
|
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