Canterbury Park Holding Corporation (NASDAQ:CPHC) today announced
financial results for its fourth quarter and year ended December 31,
2015, and also reported on business developments during and following
2015 and the Company’s upcoming Annual Shareholders Meeting.
Results for the Year Ended December 31, 2015
The Company’s net revenues in 2015 were $52.3 million, a 7.8% increase
compared to 2014 net revenues of $48.5 million. The $3.8 million
increase over 2014 reflects increases of $1.9 million in Card Casino
revenues, $978,000 in Food and Beverage revenues, and $980,000 in Other
Revenues. Partially offsetting these increases was a $171,000 decline in
Pari-mutuel revenues.
Operating expenses in 2015 were $47.6 million compared to $44.4 million
in 2014. This 7.4% increase is primarily attributable to increased
salaries and other operating expenses needed to support our increased
revenue levels and business development initiatives, as well as a
$462,000 decrease in gain from insurance proceeds. The increases were
partially offset by a $659,000 gain on sale of land and a $347,000 gain
on disposal of our Shakopee Valley RV Park property and equipment.
The Company’s net income increased 13% to $2,727,000, or $0.64 per
diluted share, in 2015 compared to net income of $2,411,000, or $0.57
per diluted share, in 2014.
For the twelve months ended December 31, 2015 compared to the same
period in 2014, earnings before interest, taxes, depreciation and
amortization (“EBITDA”) increased to $6.9 million from $6.2 million. Our
Adjusted EBITDA, which excludes gain on disposal of assets, gain on sale
of land and gains on insurance recoveries, was $5.4 million in 2015
compared to $5.3 million in 2014.
Results for the Quarter Ended December 31, 2015
The Company’s net revenues in the fourth quarter were $10,802,000, a
5.2% increase from net revenues of $10,264,000 during the same period in
2014, reflecting an increase in Card Casino revenues of 4.8%, an
increase in Food and Beverage revenues of 15.9% offset by a decrease in
Pari-mutuel revenues of 7.2%. 2015 fourth quarter net income was
$954,000 or $.22 per share, an increase of 1.6% over fourth quarter net
income of $939,000, or $.22 per share in 2014.
Additional Financial Information
Further financial information for the fourth quarter and year ended
December 31, 2015 is presented in the accompanying table, and additional
information will be provided in the Company’s Form 10-K Report that will
be filed on March 30, 2016 with the Securities and Exchange Commission.
Management Comments
Mr. Randy Sampson, Canterbury Park’s President and Chief Executive
Officer, commented: “We are pleased with the strong increases in revenue
and net income in 2015 over the prior year, primarily due to solid
growth in our Card Casino and Food and Beverage operations. We are also
pleased with our progress in 2015 to build a foundation for future
growth in revenue and profitability.
“One element of our plan for revenue and profit growth includes
increasing our catering and events business. In addition to having a
full year of operation of our Expo Center, which hosted its first event
in September of 2014, in May we reopened the remodeled 8,000 square foot
area now called the ‘Triple Crown Club.’ This improvement gives us more
capacity and flexibility to host a wide variety of banquets and events
in an upscale atmosphere.
“During 2015 we also made progress in planning and preparing for the
development of our underutilized land for potential uses such as
multifamily housing, business park, as well as retail and entertainment
including restaurant and hotel opportunities. This effort has resulted
in several transactions supportive of our development plan. In October
2015 we completed the sale of approximately six acres on the south side
of our property for $1.43 million to the Minnesota Municipal Power
Agency. In December 2015, the Company entered into an agreement to
acquire approximately 32 acres of land immediately southwest of the
Racetrack for approximately $4.9 million. Finally, I am pleased to
announce that we have finalized a purchase agreement to sell 23.8 acres
on the north side of our property to United Properties for approximately
$4.3 million. The location of this parcel makes it most suitable for
development as a business park, and we are excited to be working with
United Properties on this project. The sale will generate cash that can
be used in our development activities and the closing of the transaction
in the second quarter will complete a 1031 exchange that allows us to
defer taxes on the gain from the sale.”
Mr. Sampson next stated: “In October 2015 we announced we would be
seeking shareholder approval for the proposed reorganization of our
business structure to facilitate development of our underutilized land
(the “Reorganization”). The Company’s Board of Directors subsequently
decided, for several business reasons, to postpone shareholder
consideration of the Reorganization until the Company’s 2016 Annual
Meeting. The Reorganization remains a key element to our future
development of the Company’s underutilized land, because it will create
the legal framework that will enable the Company to separate its
regulated gaming businesses from its real estate development activities.
In early April we expect to make necessary filings with the Securities
and Exchange Commission that will enable us to include the proposed
Reorganization on our Annual Shareholders Meeting agenda.”
Mr. Sampson concluded: “As we pursue new business opportunities, we
remain committed to our core businesses and will remain focused on
providing our guests with premier gaming, entertainment and event
experiences. With our healthy cash position, positive cash flow and
competitive live racing purse funds provided by our Cooperative
Marketing Agreement with the Shakopee Mdewakanton Sioux Community, we
believe we are well positioned to continue to profitably grow revenues
in our core operations, while at the same time making strategic
investments that will diversify and strengthen our business and enhance
shareholder value.”
Annual Shareholders Meeting
The Company also announced that its 2016 Annual Meeting of Shareholders
will be held on Thursday, June 9, 2016 at 4 p.m., at the Racetrack in
Shakopee, Minnesota. The date of record for shareholders entitled to
vote at the Annual Meeting is April 13, 2016.
Use of Non-GAAP Financial Measures
To supplement our financial statements, we also provide investors with
information about our EBITDA and Adjusted EBITDA, both of which are a
non-GAAP measures. 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. EBITDA has been presented as a supplemental disclosure
because it is a widely used measure of performance and basis for
valuation of companies in our industry. Moreover, other companies that
provide EBITDA information may calculate EBITDA differently than we do.
Adjusted EBITDA represents our earnings before interest income, income
tax expense, depreciation and amortization and gain from disposal of
assets, gain on sale of land, and gain from insurance recoveries.
About Canterbury Park
Canterbury Park Holding Corporation owns and operates Canterbury Park
Racetrack, Minnesota’s only thoroughbred and quarter horse racing
facility. The Company’s 69-day 2016 live race meet begins on May 20 and
ends September 17. In addition, Canterbury Park’s Card Casino hosts card
games 24 hours a day, seven days a week, offering 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 facility in Shakopee, Minnesota. For more information about the
Company, please visit us at www.canterburypark.com.
Important Information Regarding Information to
be filed with the SEC
The Company intends to file a Registration Statement on Form S-4 and a
preliminary Proxy Statement with the Securities and Exchange Commission
with respect to the Reorganization described above. The Company will
make a copy of the definitive Proxy Statement available through our
website when it is available, and will transit to all our shareholders
information how to access this definitive Proxy Statement. The Company
will file other relevant materials with the SEC. The Proxy Statement and
other relevant materials will contain important information about
Reorganization. Shareholders are urged to read the Proxy Statement and
the other relevant materials carefully when they become available before
deciding how to vote on the Reorganization.
Investors and shareholder may obtain free copies of the Proxy Statement
and relevant other documents filed with the SEC by the Company through
the EDGAR website maintained by the SEC at www.sec.gov.
In addition, shareholders may obtain free copies of the Proxy Statement
and the other relevant documents filed by the Company with the SEC by
contacting David C. Hansen, Secretary, Canterbury Park Holding
Corporation Dhansen@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 which are typically preceded
by the words “believes,” “expects,” “anticipates,” “intends” or similar
expressions. For such 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 such 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. Such risks and uncertainties include,
but are not limited to: material fluctuations in attendance at the
Racetrack, material changes in the level of wagering by patrons, 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;
legislative and regulatory decisions and changes; the general health of
the gaming sector; and other factors that are beyond our ability to
control or predict.
NOTE: Financial summary on following page.
CANTERBURY PARK HOLDING CORPORATION’S
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SUMMARY OF OPERATING RESULTS
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|
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(Unaudited)
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Three Months
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Three Months
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Twelve Months
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Twelve Months
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Ended
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Ended
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Ended
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Ended
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December 31,
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December 31,
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December 31,
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December 31,
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|
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2015
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2014
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2015
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2014
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|
|
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Net Operating Revenues
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$10,802,370
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$10,263,711
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$52,263,003
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$48,469,837
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|
|
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Operating Expenses
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($9,207,288
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)
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($8,673,352
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)
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($47,649,186
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)
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($44,369,912
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)
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Income from Operations
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$1,595,082
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|
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$1,590,359
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$4,613,867
|
|
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$4,099,925
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Non-Operating Revenues, net
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$1,151
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|
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$414
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$2,804
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$2,407
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|
|
|
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Income Tax Expense
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($642,601
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)
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($651,865
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)
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($1,889,649
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)
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($1,691,177
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)
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Net Income
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$953,673
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|
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$938,908
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$2,727,022
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$2,411,155
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Basic Net Income Per Common Share
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$0.22
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$0.22
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$0.65
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$0.58
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Diluted Net Income Per Common Share
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$0.22
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$0.22
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$0.64
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$0.57
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RECONCILIATION OF NET INCOME TO Adjusted EBITDA
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(Unaudited)
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Year Ended
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Year Ended
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Dec. 31,
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Dec. 31,
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2015
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2014
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Net income
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$
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2,727,022
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$
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2,411,155
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|
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Interest income, net of interest expense
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|
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(2,804
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)
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(2,407
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)
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Income tax expense
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|
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1,889,649
|
|
|
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1,691,177
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Depreciation
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2,297,613
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2,137,778
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EBITDA
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$
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6,911,480
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$
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6,237,703
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Gain on disposal of assets
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(347,348
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)
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0
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Gain on sale of land
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(659,562
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)
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0
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Gain on Insurance Recoveries
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(495,465
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)
|
|
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(957,597
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)
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Adjusted EBITDA
|
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$
|
5,409,105
|
|
|
$
|
5,280,106
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|
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