Canterbury Park Q2 Earnings & Revenues Decline Y/Y

Canterbury Park Holding Corporation CPHC posted mixed financial results for the second quarter of 2024, reflecting steady operational performance alongside significant non-recurring factors that heavily impacted the bottom line. Despite a sharp decline in earnings per share, the company managed to maintain stability in key areas, showcasing resilient core operations. This quarter's results highlight Canterbury Park's strategic focus on optimizing its business segments, managing expenses, and advancing its real estate development projects, all while navigating a challenging environment.

Q2 Results

Canterbury Park reported second-quarter 2024 earnings per diluted share of 7 cents, declining 93.5% from the $1.07 reported in the year-ago quarter.

Total quarterly revenues of $16.2 million declined slightly by 0.9% from $16.3 million reported in the prior-year quarter.

The weak quarterly earnings were mainly driven by a reduction in Casino revenues, which was a result of ongoing efforts to optimize the company's marketing reinvestment program, aimed at maintaining consistent visitation from high-end players while limiting short-term. The negatives were partially offset by revenue growth in the Pari-mutuel, Food and Beverage, and Other segments due to additional live race days and improved performance in event hosting.

Segment Performance

Casino: The Casino segment, Canterbury Park's largest revenue contributor, witnessed a 5.2% decline in revenues, decreasing to $9.8 million from $10.4 million in the second quarter of 2023. The decrease was primarily due to the lower table games drop, reflecting the company's strategic focus on optimizing marketing efforts and targeting high-end players for more consistent visitation.

Pari-mutuel: Pari-mutuel revenues increased 5.2% year over year, reaching $2.6 million compared with $2.5 million in the second quarter of 2023. Growth was supported by two additional live race days and a higher out-of-state handle, driven by increased field sizes, which contributed to the segment's positive performance.

Food & Beverage: The Food & Beverage segment generated $2.1 million in revenues, marking a 3.6% increase from $2 million in the prior-year quarter. This growth was attributed to enhanced catering operations and higher admissions revenues bolstered by the hosting of large-scale special events.

Other Revenue: Other revenue, which includes income from events and non-core activities, rose 13.6% to $1.7 million from $1.5 million in the second quarter of 2023. This significant growth was driven by the company's efforts to position its event center as a premier destination for events of all sizes, benefiting from increased utilization.

Expenses

The company managed to reduce operating expenses by 1.3% to $15.1 million, down from $15.3 million in the prior year. This decline was primarily due to lower advertising, marketing, and other operating expenses. However, these savings were partly offset by increased purse expenses and depreciation costs. The reduction in expenses helped mitigate the impact of lower revenues on profitability.

Net Income and Adjusted EBITDA

Net income for second-quarter 2024 plunged 93.6% to $0.34 million from $5.3 million in the second quarter of 2023. This drastic decline is largely due to the absence of a $6.5 million gain on the sale of land in the second quarter of 2023, which did not recur this year.

Adjusted EBITDA, however, showed stability, increasing slightly by 1% to $2.4 million from $2.38 million reported in the second quarter of 2023, indicating consistent operational efficiency.

Excluding such non-recurring items, Canterbury Park's core business operations remained robust, as evidenced by the stable adjusted EBITDA margin, which improved to 14.9% from 14.6% in the prior-year quarter.

Cash & Debt

The company's balance sheet remains strong, with unrestricted cash and short-term investments totaling nearly $24 million. Importantly, Canterbury Park has managed to fund its growth initiatives without incurring debt, allowing it to maintain financial flexibility while returning capital to shareholders through its quarterly cash dividend.

Other Developments

Canterbury Park continues to make significant strides in its real estate development projects, particularly the Canterbury Commons. The Swervo Development Corporation's amphitheater remains on track for a Summer 2025 opening, and the construction of a new 10,000-square-foot commercial building within the Winners Circle development is nearing completion. Additionally, Greystone's progress on a second commercial office building signals further development activity, which could enhance the value of Canterbury Park's real estate portfolio.

Moreover, the company is working on the relocation and redevelopment of its barns, with completion expected by early 2025. The continued leasing activity in residential projects, such as the Triple Crown Residences and The Omry, indicates strong demand in the housing market surrounding Canterbury Park's developments.

These ongoing developments underscore Canterbury Park's long-term vision of transforming Canterbury Commons into a regional destination, which could drive new revenue sources and economic growth for the company. However, the financial impact of these projects will likely unfold over the next few years, requiring sustained execution and capital investment.

To read this article on Zacks.com click here.