Canterbury Park Holding Corporation (“Canterbury” or the “Company”)
(NASDAQ: CPHC), today reported record financial results for the
fourth quarter and full year ended December 31, 2021.
($ in thousands, except per share data and
percentages)
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
2021 |
|
2020 |
|
Increase(3) |
|
2021 |
|
2020 |
|
Increase |
Net revenues |
$ |
13,955 |
|
$ |
6,123 |
|
|
128 |
% |
|
$ |
60,400 |
|
$ |
33,140 |
|
82 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (1) |
$ |
6,620 |
|
$ |
139 |
|
|
NM |
|
$ |
11,798 |
|
$ |
1,062 |
|
1,011 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(2) |
$ |
3,360 |
|
$ |
(27 |
) |
|
NM |
|
$ |
13,471 |
|
$ |
806 |
|
1,572 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS |
$ |
1.38 |
|
$ |
0.03 |
|
|
NM |
|
$ |
2.47 |
|
$ |
0.23 |
|
974 |
% |
Diluted EPS |
$ |
1.37 |
|
$ |
0.03 |
|
|
NM |
|
$ |
2.44 |
|
$ |
0.23 |
|
961 |
% |
(1) |
Net income for the twelve month period ended December 31, 2021
includes a $6.3 million credit to salaries and benefits expense
related to the Employee Retention Credit (“ERC”), a refundable tax
credit recorded in accounts receivable. The ERC assisted business
owners and their employees by providing an incentive to keep
workers on the payroll and eligible businesses received a tax
credit for a percentage of each eligible employee’s wage. Net
income for the twelve month period ended December 31, 2020 includes
a benefit of a $2.4 million gain related to transfers of land to
the Doran Canterbury II and Canterbury DBSV joint ventures. |
(2) |
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. |
(3) |
Amounts referred to as “NM” are defined as not meaningful. |
|
|
Financial results for the twelve months ended
December 31, 2021 include the impact of the state-mandated closure
of Canterbury Park which ended January 10, 2021 as well as the
impact of capacity restrictions from January 11, 2021 to May 28,
2021. Financial results for the three and twelve months ended
December 31, 2020 reflect the impact of the onset of the COVID-19
pandemic and closure of the Card Casino, simulcast, and special
events operations at Canterbury Park from March 16, 2020 to June 9,
2020, after which the Company reopened in a limited capacity, as
well as the state-mandated closure of Canterbury Park from November
21, 2020 through the end of 2020.
Management Commentary
“Canterbury Park finished 2021 with strong
fourth quarter financial results that further demonstrate our
ongoing recovery since we fully reopened our business late in the
second quarter. Revenue grew 128% year over year to $14.0 million,
while adjusted EBITDA reached $3.4 million compared to a slight
loss a year ago,” said Randy Sampson, President and Chief Executive
Officer of Canterbury. “In particular, our fourth quarter
performance benefited from strong Card Casino results as visitation
and spend per customer continue to improve across our customer
base. In this regard, our targeted marketing efforts and expanded
special events and tournaments calendar are attracting new
customers and driving additional visits and spend from existing
customers. In addition, the return of some of our traditional
in-person events, including our annual craft show in November and a
large poker tournament in December, contributed to the strong
results and overall performance in the fourth quarter 2021.
“As our top-line performance has rebounded,
we’ve taken a measured approach to managing operating expenses,
allowing us to maintain profitability and strong margins. To that
end, Adjusted EBITDA as a percentage of total revenue was a record
24% for the second consecutive quarter. The steady recovery in our
business has increased our forward free cash flow visibility, which
allowed us to reinstate our quarterly cash dividend in January
2022. Further, during the quarter we recognized a one-time $6.3
million benefit from the ERC program created during the pandemic to
help businesses retain employees on their payroll. We are grateful
that we were able to qualify for the ERC and believe this is a
direct result of our efforts to care for all of our employees
throughout the pandemic. Upon receipt of the ERC refund, expected
later in 2022, we expect to allocate these funds towards a
combination of further investment in our team members, growth
investments, capital expenditures, and deferred maintenance capital
spending. Going forward, while the availability and the cost of
labor remain headwinds, our team is actively managing expenses
across the business and we believe we will be able to continue to
drive continued strong margin performance.
“Progress on the development of Canterbury
Commons™ continued in the 2021 fourth quarter and in the first
months of 2022. Late last month, we announced the proposed sale of
approximately 40 acres of land to Swervo Development Corporation
(“Swervo”) for use in the development of a state-of-the-art,
19,000-seat amphitheater. This is a significant step in our
long-term vision of creating a leading regional destination that
offers a combination of residential, hospitality, commercial,
retail and entertainment attractions and experiences. Swervo is an
accomplished developer that we believe will create a world-class
entertainment venue which complements Canterbury Park and
highlights Shakopee and Canterbury Commons as the best place to
live, work, stay and play in the greater Minneapolis region.
“As we enter 2022, we are pleased to be able to
again return capital to our shareholders through our quarterly
dividend while simultaneously evaluating strategic transactions
where we can leverage our financial discipline and operating
expertise. We are excited by the opportunities we have to continue
transforming our business and believe we remain well positioned to
deliver strong long-term growth for our shareholders. At the same
time, momentum for Canterbury Commons continues to build, and we
believe the announcement of flagship projects like the planned
amphitheater will serve to attract additional high-profile tenants
and exciting land uses. Canterbury Park remains a strong company,
our future has never been brighter, and we look forward to the year
ahead and the promise of continued growth across our business.”
Canterbury Commons
Development Update
Occupancy of Phase I of the upscale Triple Crown
Residences at Canterbury Park is now approximately 80% leased.
Doran Companies expects to begin construction of the 305 apartments
in Phase II of the project this Spring.
Greystone Construction and Canterbury Park, via
their joint venture, continue to make progress on securing
additional partners for the balance of their collective 13-acre
site, with ongoing interest from potential hospitality and dining
uses. The Greystone headquarters office building was completed in
July 2021 and a certificate of occupancy was obtained in December
2021 for the majority of the buildings first floor. The office
building is currently 84% leased. In March 2022, the joint venture
contributed approximately 3.5 acres of land to a development
partnership to build 156 units of senior market rate apartments.
Construction of the apartments is expected to commence this
Spring.
Pulte Homes of Minnesota is in the process of
completing the first phase of its 63 new row homes and townhome
residences and the first model units were completed in March 2022.
In addition, Lifestyle Communities expects to begin construction of
its development of a new cooperative community featuring a 56-unit,
four-story building with over 5,000 square feet of amenity spaces
in the second half of 2022.
Subsequent to the end of the quarter, 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 use in the
development of a state-of-the-art, 19,000-seat amphitheater,
subject to state and local regulatory approvals. Further, should
this planned development move forward, the Company plans to invest
in a redevelopment of its horse stabling area, including the
renovation of existing facilities, the addition of new barns,
stables and dorms, and a reconfiguration of the existing training
track. The Company and Swervo expect the regulatory approval
process for the amphitheater project to be complete this
Summer.
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 2021 Fourth Quarter Operating
Results
The 2020 fourth quarter results and year over
year comparisons detailed below reflect the impact of the COVID-19
pandemic, which included a state-mandated limit on capacity of no
more than 250 guests per designated area at any one time for the
period between October 1, 2020 and November 20, 2020 and the
temporary closure of all operations (except for development work on
Canterbury Commons) from November 21, 2020 through the end of
2020.
Net revenues for the three months ended December
31, 2021 increased 127.9% to $14.0 million, compared to $6.1
million for the same period in 2020. This year-over-year increase
reflects improved performance across the Company’s operations, the
success of targeted marketing efforts, and expanded events and
tournaments in the 2021 fourth quarter.
Operating expenses for the three months ended
December 31, 2021 were $4.9 million, a decrease of $1.8 million, or
27.0%, compared to operating expenses of $6.7 million for the same
period in 2020. Operating expenses in the 2021 fourth quarter
included a $6.3 million credit to salaries and benefits expense
related to the ERC. Excluding the ERC, operating expenses for the
2021 period increased $4.5 million, or 66.7%, compared to the 2020
period. The year-over-year increase in operating expenses reflects
a full quarter of normal operations compared to the prior year
period which was impacted by the temporary shutdown of operations
starting November 21, 2020 as well as active efforts to reduce
expenses in order to preserve cash in 2020.
The Company recorded a loss from equity
investment of $739,000 and $817,000 for the three months ended
December 31, 2021 and 2020, 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 Company recorded income tax expense of $1.9
million for the three months ended December 31, 2021. The Company
recorded an income tax benefit of $1.3 million for the three months
ended December 31, 2020, driven by the provisions in the CARES Act
which allowed the Company to carry back its net operating loss to a
year with a higher corporate tax rate.
The Company recorded net income and diluted
earnings per share of $6.6 million and $1.37, respectively, for the
three months ended December 31, 2021. The Company recorded net
income and diluted earnings per share of $139,000 and $0.03,
respectively, for the three months ended December 31, 2020.
Adjusted EBITDA, a non-GAAP measure, was $3.4
million in the 2021 fourth quarter compared to a loss of $27,000 in
the same period in 2020.
Summary of 2021 Full Year Operating
Results
Net revenues for the twelve months ended
December 31, 2021 increased 82.3% to $60.4 million, compared to
$33.1 million for 2020. This year-over-year increase reflects
improved performance across the Company’s operations, the success
of targeted marketing efforts, and expanded events and tournaments
after a return to normalized operations and full capacity in the
third and fourth quarters of 2021.
Operating expenses for the twelve months ended
December 31, 2021 were $43.0 million, an increase of $8.0 million,
or 22.9%, compared to operating expenses of $35.0 million for the
same period in 2020. Operating expenses in 2021 included a $6.3
million credit to salaries and benefits expense related to the ERC.
Excluding the ERC, operating expenses for the 2021 period increased
$14.3 million, or 41.0%, compared to 2020. This year-over-year
increase in operating expenses is a result of a return to
normalized operations and full capacity in the 2021 third and
fourth quarters as compared to COVID-related operating impacts
described above.
During 2021, the Company recorded a $264,000
gain related to the sale of approximately 9.7 acres of land to
Pulte Homes of Minnesota and Lifestyle Communities for $2.5
million. In 2020, the Company recorded a $2.4 million gain related
to the transfers of land to the Doran Canterbury II and Canterbury
DBSV joint ventures.
The Company recorded a loss from equity
investment of $2.7 million and $1.5 million for the twelve months
ended December 31, 2021 and 2020, respectively. These losses from
equity investments 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 $4.0
million for the twelve months ended December 31, 2021. The Company
recorded an income tax benefit of $1.3 million for the twelve
months ended December 31, 2020.
The Company recorded net income and diluted
earnings per share of $11.8 million and $2.44, respectively, for
the twelve months ended December 31, 2021. The Company recorded net
income and diluted earnings per share of $1.1 million and $0.23,
respectively, for the twelve months ended December 30, 2020. The
increase in net income and diluted earnings per share for 2021 was
the result of revenue increases that significantly exceeded
increases in operating expense, particularly taking into account
the reduction in fourth quarter 2021 operating expenses from the
ERC.
Adjusted EBITDA was $13.5 million for the twelve
months ended December 31, 2021 compared to adjusted EBITDA of
$806,000 in the same period of 2020.
Additional Financial
Information
Further financial information for the fourth
quarter and full year ended December 31, 2021 is presented in the
accompanying tables at the end of this press release. Additional
information will be provided in the Company’s Annual Report on Form
10-K 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 (benefit), depreciation and amortization, as well as
excluding gains on sale/transfer of land, loss on disposal of
assets, depreciation and amortization related to equity
investments, grant money received from the Minnesota COVID-19
relief package, Employee Retention Credit, and interest expense
related to equity investments. 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: 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 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;
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.
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 |
|
|
- Financial tables follow –
CANTERBURY PARK HOLDING CORPORATION'S |
SUMMARY OF OPERATING RESULTS |
|
Three months ended |
|
Twelve months ended |
|
December 31, |
|
December 31, |
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Net Operating Revenues |
$ |
13,955,004 |
|
|
$ |
6,123,444 |
|
|
$ |
60,399,698 |
|
|
$ |
33,140,272 |
|
Operating Expenses |
|
4,924,088 |
|
|
|
6,742,892 |
|
|
|
42,881,792 |
|
|
|
34,881,989 |
|
Gain on Sale/Transfer of
Land |
|
- |
|
|
|
92,056 |
|
|
|
263,581 |
|
|
|
2,367,514 |
|
Income (Loss) from
Operations |
|
9,030,916 |
|
|
|
(527,392 |
) |
|
|
17,781,487 |
|
|
|
625,797 |
|
Other Loss, net |
|
(544,370 |
) |
|
|
(654,973 |
) |
|
|
(1,983,934 |
) |
|
|
(814,628 |
) |
Income Tax (Expense)
Benefit |
|
(1,866,368 |
) |
|
|
1,321,343 |
|
|
|
(3,999,400 |
) |
|
|
1,250,845 |
|
Net Income |
$ |
6,620,178 |
|
|
$ |
138,978 |
|
|
$ |
11,798,153 |
|
|
$ |
1,062,014 |
|
Basic Net Income Per Common
Share |
$ |
1.38 |
|
|
$ |
0.03 |
|
|
$ |
2.47 |
|
|
$ |
0.23 |
|
Diluted Net Income Per Common
Share |
$ |
1.37 |
|
|
$ |
0.03 |
|
|
$ |
2.44 |
|
|
$ |
0.23 |
|
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED
EBITDA |
|
|
|
Three months ended |
|
Twelve months ended |
|
|
December 31, |
|
December 31, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
NET INCOME |
|
$ |
6,620,178 |
|
|
$ |
138,978 |
|
|
$ |
11,798,153 |
|
|
$ |
1,062,014 |
|
Interest income, net |
|
|
(194,608 |
) |
|
|
(161,971 |
) |
|
|
(719,365 |
) |
|
|
(663,571 |
) |
Income tax benefit (expense) |
|
|
1,866,368 |
|
|
|
(1,321,343 |
) |
|
|
3,999,400 |
|
|
|
(1,250,845 |
) |
Depreciation |
|
|
730,730 |
|
|
|
683,018 |
|
|
|
2,844,647 |
|
|
|
2,748,514 |
|
EBITDA |
|
|
9,022,668 |
|
|
|
(661,318 |
) |
|
|
17,922,835 |
|
|
|
1,896,112 |
|
Loss on disposal of assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
13,407 |
|
Gain on sale/transfer of land |
|
|
— |
|
|
|
(92,056 |
) |
|
|
(263,581 |
) |
|
|
(2,367,514 |
) |
Employee Retention Credit |
|
|
(6,314,468 |
) |
|
|
— |
|
|
|
(6,314,468 |
) |
|
|
— |
|
Depreciation and amortization related to equity investments |
|
|
452,025 |
|
|
|
464,979 |
|
|
|
1,735,883 |
|
|
|
918,571 |
|
Interest expense related to equity investments |
|
|
199,936 |
|
|
|
261,827 |
|
|
|
905,729 |
|
|
|
345,379 |
|
Other revenue, COVID-19 relief grants |
|
|
— |
|
|
|
— |
|
|
|
(515,000 |
) |
|
|
— |
|
ADJUSTED EBITDA |
|
$ |
3,360,161 |
|
|
$ |
(26,568 |
) |
|
$ |
13,471,398 |
|
|
$ |
805,955 |
|
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