Canterbury Park Holding Corporation‘s CPHC third-quarter 2024 results reflect its transition by navigating challenges through adjustments to improve operational efficiency and diversification. Despite facing headwinds in its traditional Casino and Pari-mutuel segments, the company has bolstered its financial resilience by expanding entertainment offerings and controlling costs.
CPHC’s proactive approach to enhancing profitability, alongside the progress of its ambitious Canterbury Commons development, showcases its commitment to growth beyond gaming. With projects like new dining and entertainment venues underway, the company positions itself as a promising regional destination, ready to capture opportunities in the coming years.
Q3 Results
Canterbury Park reported third-quarter 2024 diluted earnings per share of 40 cents, surging 73.9% from 23 cents in the prior-year quarter.
Net revenues were $19.28 million, a marginal increase of 0.1% from $19.27 million in the year-ago quarter.
The year-over-year increases were driven by special events, such as a new rodeo and comedy series, which align with the company’s strategy to expand its entertainment offerings beyond gaming. Also, a $1.7 million gain from the transfer of land to a new joint venture significantly boosted the quarterly results.
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Segmental Performances
Casino: Revenues from the Casino segment fell 3.4% from $10.2 million in the year-ago quarter to $9.88 million in the third quarter of 2024. The decline was attributed to lower table game drop rates and a reduced average collection rate, highlighting a need to revisit strategies to enhance patronage and gaming activity.
Pari-Mutuel: Revenues from pari-mutuel operations dropped 2.3% from $3.41 million in third-quarter 2023 to $3.33 million in third-quarter 2024 due to one fewer live race day in 2024.
Food & Beverage: This segment recorded a revenue year-over-year decrease of 6.3% to $3.10 million, also impacted by the reduced race day schedule.
Other Revenues: The metric grew 27.8% year over year to $2.98 million, driven by increased admissions from special events such as Canterbury’s first rodeo in July and a successful comedy series in September. These efforts highlight Canterbury Park’s strategic pivot toward expanding its entertainment offerings beyond traditional gaming.
Profitability Metrics
The company achieved a net income of $2 million in the third quarter of 2024, a 77.9% surge from $1.1 million in the prior-year quarter. This growth was influenced by a $1.7-million gain related to the transfer of land to a new joint venture.
Adjusted EBITDA was $3.3 million in the third quarter of 2024, up 2.8% from $3.2 million in the prior-year quarter, with a stable adjusted EBITDA margin of 17%, reflecting effective cost management amid challenging revenue conditions.
Costs
Operating expenses declined to $17.4 million in the third quarter of 2024 from $17.5 million in the year-ago quarter. Proactive cost-control measures, particularly in advertising, marketing and professional services, contributed to this reduction, though higher promoter expenses for special events partially offset these savings.
The company recorded income tax expenses of $0.8 million in the reported quarter, up from $0.5 million in third-quarter 2023. Increased tax expenses align with CPHC’s higher earnings this quarter.
Cash & Debt
Canterbury Park maintains a robust balance sheet, with nearly $22 million in unrestricted cash and short-term investments, bolstering its financial resilience and funding flexibility.
The company recorded a $1.4-million loss from equity investments related to depreciation, amortization and interest expenses on its Doran Canterbury Park joint ventures.
Management View
Management expressed optimism in achieving consistent annual cash flow and indicated revenue growth from Canterbury Commons. This development, which includes residential units, dining options and entertainment venues, is expected to drive sustained traffic and enhance Canterbury Park’s attractiveness as a regional destination.
Other Developments
The Canterbury Commons project continues to make headway, with several milestones achieved in the third quarter. The joint venture with Trackside Hospitality, LLC, launched construction on a new music venue, restaurant and bar, with completion anticipated in 2025. Commercial space leasing and residential occupancy are also on track, with key projects nearing completion. New barns are operational, and further upgrades to Canterbury Park’s facilities are scheduled to support the 2025 racing season.
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