Canterbury Park Holding Corp 10-Q for FY2020 Q2

About this 10-Q

Headline figures

Canterbury Park Holding Corp (CPHC)

10-Q 2020-08-11 For: 2020-06-30

Added on April 08, 2026

Canterbury Park Holding Corp filed this 10-Q on August 11, 2020, covering the quarter ended June 30, 2020 (FY2020 Q2).

Purse Enhancement Payments to

Marketing Payments to

Horsemen (1)

Canterbury Park

Quarter ended June 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $2.77M; down 83.2% from $16.43M a year earlier
Net loss: $1.18M; compared with net income of $957.76K a year earlier
Diluted EPS: -$0.25; compared with $0.21 a year earlier

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Minnesota		47-5349765
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

	1100 Canterbury Road
	Shakopee, MN 55379


Title of Each Class	Trading Symbol	Name of each exchange on which registered
Common Stock Common stock, $.01 par value	CPHC	Nasdaq


	YES	⌧		NO	◻


	YES	⌧		NO	◻


Large accelerated filer	◻	Accelerated filer	◻
Non-accelerated filer	⌧	Smaller reporting company	⌧
Emerging growth company	◻

			Page

PART I.	FINANCIAL INFORMATION

	Item 1.	Financial Statements (unaudited)

		Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019	2

		Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2020 and 2019	3

		Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2020 and 2019	4

		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019	5

		Notes to Condensed Consolidated Financial Statements	6

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	27

	Item 4.	Controls and Procedures	27

PART II.	OTHER INFORMATION

	Item 1.	Legal Proceedings	27

	Item 1A.	Risk Factors	27

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

	Item 3.	Defaults Upon Senior Securities	27

	Item 4.	Mine Safety Disclosures	27

	Item 5.	Other Information	28

	Item 6.	Exhibits	29

	Signatures		29


	(Unaudited)
	June 30,		December 31,
	2020		2019
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	—	$	355,399
Restricted cash		4,349,381		2,308,955
Short-term investments		—		103,886
Current portion of related party receivable		3,208,000		—
Accounts receivable, net of allowance of $19,250 for both periods		1,037,782		302,037
Inventory		293,998		390,118
Prepaid expenses		545,981		501,493
Income taxes receivable		1,947,939		—
Total current assets		11,383,081		3,961,888

LONG-TERM ASSETS
Deposits		49,500		49,500
Restricted cash - long-term portion		—		1,262,744
TIF receivable		10,374,482		9,708,856
Related party receivable		593,303		3,528,927
Operating lease right-of-use assets		62,275		74,832
Equity investment		2,842,994		2,992,633
Land, buildings and equipment, net		44,052,485		43,833,702
TOTAL ASSETS	$	69,358,120	$	65,413,082

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable		4,128,914		3,495,238
Line of credit		2,865,320		—
Card Casino accruals		1,699,997		2,167,056
Accrued wages and payroll taxes		1,466,122		2,254,379
Cash dividend payable		—		324,439
Accrued property taxes		1,019,657		1,019,658
Deferred revenue		1,061,322		1,482,130
Payable to horsepersons		2,874,308		557,696
Current portion of finance lease obligations		25,117		24,500
Current portion of operating lease obligations		26,066		29,776
Income taxes payable		—		120,960
Total current liabilities		15,166,823		11,475,832

LONG-TERM LIABILITIES
Deferred income taxes		5,325,700		4,404,300
Finance lease obligations, net of current portion		59,069		71,784
Operating lease obligations, net of current portion		36,209		45,056
Total long-term liabilities		5,420,978		4,521,140
TOTAL LIABILITIES		20,587,801		15,996,972

STOCKHOLDERS’ EQUITY
Common stock, $.01 par value, 10,000,000 shares authorized, 4,706,814 and 4,644,522 respectively, shares issued and outstanding		47,068		46,445
Additional paid-in capital		23,096,660		22,733,933
Retained earnings		25,626,591		26,635,732
Total stockholders’ equity		48,770,319		49,416,110
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	69,358,120	$	65,413,082


	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
OPERATING REVENUES:
Pari-mutuel	$	1,420,583	$	3,208,076	$	2,716,609	$	4,698,886
Card Casino		795,195		8,891,005		8,356,367		16,790,968
Food and beverage		111,137		2,544,393		1,230,132		3,897,194
Other		440,940		1,789,703		1,413,706		2,636,826
Total Net Revenues		2,767,855		16,433,177		13,716,814		28,023,874

OPERATING EXPENSES:
Purse expense		601,674		1,960,635		1,705,068		3,356,172
Minnesota Breeders’ Fund		123,427		306,107		313,171		523,802
Other pari-mutuel expenses		58,691		451,685		279,540		720,051
Salaries and benefits		1,893,309		6,936,685		7,471,202		12,681,972
Cost of food and beverage and other sales		70,888		1,201,414		635,039		1,827,171
Depreciation and amortization		693,640		576,221		1,410,493		1,201,740
Utilities		202,021		376,803		492,632		698,918
Advertising and marketing		38,176		757,191		222,164		947,520
Professional and Contracted Services		610,405		1,338,353		1,582,729		2,304,739
Loss on disposal of assets		—		—		—		108,037
Gain on insurance recoveries		—		(204,274)		—		(198,974)
Other operating expenses		794,203		1,427,603		1,781,660		2,570,732
Total Operating Expenses		5,086,434		15,128,423		15,893,698		26,741,880
(LOSS) INCOME FROM OPERATIONS		(2,318,579)		1,304,754		(2,176,884)		1,281,994
OTHER OPERATING INCOME (LOSS)
Loss from equity investment		(149,639)		—		(149,639)		—
Interest income, net		169,358		45,319		333,048		108,558
Net Other Income		19,719		45,319		183,409		108,558
(LOSS) INCOME BEFORE INCOME TAXES		(2,298,860)		1,350,073		(1,993,475)		1,390,552
INCOME TAX BENEFIT (EXPENSE)		1,117,663		(392,316)		1,067,499		(376,223)
NET (LOSS) INCOME	$	(1,181,197)	$	957,757	$	(925,976)	$	1,014,329

Basic (loss) earnings per share	$	(0.25)	$	0.21	$	(0.20)	$	0.22
Diluted (loss) earnings per share	$	(0.25)	$	0.21	$	(0.20)	$	0.22
Weighted Average Basic Shares Outstanding		4,679,122		4,586,734		4,669,350		4,573,106
Weighted Average Diluted Shares		4,679,122		4,595,716		4,672,447		4,588,327
Cash dividends declared per share	$	0.00	$	0.07	$	0.00	$	0.14


For the three months ended June 30, 2020
	Number of	Common		Additional		Retained
	Shares	Stock		Paid-in Capital		Earnings		Total
Balance at March 31, 2020	4,694,138	$	46,941	$	23,035,735	$	26,811,441	$	49,894,117

Stock-based compensation			—		10,058		—		10,058
Dividend distribution	—		—		—		(3,653)		(3,653)
401(K) stock match	1,318		13		14,696		—		14,709
Issuance of deferred stock awards	7,456		75		(75)		—		—
Shares issued under Employee Stock Purchase Plan	3,902		39		36,246				36,285
Net Loss	—		—		—		(1,181,197)		(1,181,197)

Balance at June 30, 2020	4,706,814	$	47,068	$	23,096,660	$	25,626,591	$	48,770,319

For the six months ended June 30, 2020
	Number of	Common		Additional		Retained
	Shares	Stock		Paid-in Capital		Earnings		Total
Balance at December 31, 2019	4,644,522	$	46,445	$	22,733,933	$	26,635,732	$	49,416,110

Exercise of stock options	24,250		242		200,548		—		200,790
Other share retirements	(9,920)		(99)		(44,587)		(79,512)		(124,198)
Stock-based compensation	—		—		67,664		—		67,664
Dividend distribution	—		—		—		(3,653)		(3,653)
401(K) stock match	18,497		185		175,491		—		175,676
Issuance of deferred stock awards	25,563		256		(72,635)		—		(72,379)
Shares issued under Employee Stock Purchase Plan	3,902		39		36,246		—		36,285
Net Loss	—		—		—		(925,976)		(925,976)

Balance at June 30, 2020	4,706,814	$	47,068	$	23,096,660	$	25,626,591	$	48,770,319

For the three months ended June 30, 2019
	Number of	Common		Additional		Retained
	Shares	Stock		Paid-in Capital		Earnings		Total
Balance at March 31, 2019	4,574,658	$	45,747	$	21,783,690	$	24,942,510	$	46,771,947

Exercise of stock options	2,250		23		13,478		—		13,501
Stock-based compensation	—		—		73,450		—		73,450
Dividend distribution	—		—		—		(321,153)		(321,153)
401(K) stock match	21,480		215		292,917		—		293,132
Shares issued under Employee Stock Purchase Plan	5,719		57		59,935		—		59,992
Net Income	—		—		—		957,757		957,757

Balance at June 30, 2019	4,604,107	$	46,041	$	22,223,470	$	25,579,114	$	47,848,625

For the six months ended June 30, 2019
	Number of	Common		Additional		Retained
	Shares	Stock		Paid-in Capital		Earnings		Total
Balance at December 31, 2018	4,527,685	$	45,277	$	21,420,886	$	25,268,187	$	46,734,350

Exercise of stock options	30,310		303		185,589		—		185,892
Other share retirements	(5,863)		(59)		(27,915)		(62,023)		(89,997)
Stock-based compensation	—		—		163,508		—		163,508
Dividend distribution	—		—		—		(641,379)		(641,379)
401(K) stock match	29,591		296		409,229		—		409,525
Issuance of deferred stock awards	10,968		110		(55,044)		—		(54,934)
Shares issued under Employee Stock Purchase Plan	11,416		114		127,217		—		127,331
Net income	—		—		—		1,014,329		1,014,329

Balance at June 30, 2019	4,604,107	$	46,041	$	22,223,470	$	25,579,114	$	47,848,625


				Weighted
		Weighted		Average
		Average		Remaining		Aggregate
	Number of	Exercise		Contractual		Grant Date
Stock Options	Options	Price		Term		Fair Value

Outstanding at January 1, 2020	33,250	$	9.64
Granted	-		-
Exercised	(24,250)		8.28
Expired/Forfeited	-		-
Outstanding at June 30, 2020	9,000	$	13.30		0.6 Years	$	119,700

Exercisable at June 30, 2020	9,000	$	13.30		0.6 Years	$	119,700


	Six Months Ended June 30, 2020
	Horse Racing		Card Casino		Food and Beverage		Development		Total
Net revenues from external customers	$	4,056	$	8,356	$	1,293	$	12	$	13,717
Intersegment revenues		74		—		274		—		348
Net interest (expense) income		(16)		—		—		199		183
Depreciation		1,038		261		111		—		1,410
Segment (loss) income before income taxes		(2,167)		(167)		(419)		61		(2,692)
Segment tax expense (benefit)		(786)		(89)		(224)		33		(1,066)

	June 30, 2020
Segment Assets	$	35,880	$	3,177	$	25,040	$	28,600	$	92,697


	Six Months Ended June 30, 2019
	Horse Racing		Card Casino		Food and Beverage		Development		Total
Net revenues from external customers	$	7,207	$	16,791	$	4,026	$	—	$	28,024
Intersegment revenues		416		—		678		—		1,094
Net interest income		(4)		—		—		113		109
Depreciation		1,079		35		88		—		1,202
Segment (loss) income before income taxes		(1,432)		2,695		154		(15)		1,402
Segment tax expense (benefit)		(391)		729		42		(4)		376

	December 31, 2019
Segment Assets	$	31,618	$	3,327	$	25,430	$	29,074	$	89,449


(Loss) income before income taxes
Total segment (loss) income before income taxes	$	(2,692)	$	1,402
Elimination of intersegment income (loss) before income taxes		699		(11)
Total consolidated (loss) income before income taxes	$	(1,993)	$	1,391


		Six Months Ended June 30,
	Balance Sheet Location	2020		2019
Assets
Finance	Land, buildings and equipment, net (1)	$	84,186	$	$ 109,210
Operating	Operating lease right-of-use assets		62,275		91,577
Total Leased Assets		$	146,461	$	$ 200,787


	Six Months Ended June 30,
	2020		2019
Operating Activities:
Net (loss) income	$	(925,976)	$	1,014,329
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation		1,410,493		1,201,740
Stock-based compensation expense		67,664		163,508
Stock-based employee match contribution		175,676		409,229
Deferred income taxes		921,400		1,084,400
Loss from equity investment		149,639		2,377
Loss on disposal of assets		—		108,037
Gain on insurance recoveries		—		(198,974)
Changes in operating assets and liabilities:
Increase in accounts receivable		(1,008,121)		(556,740)
Decrease (increase) in other current assets		51,632		(63,603)
Increase (decrease) in income taxes receivable/payable		(2,505,635)		(680,177)
Decrease in operating lease right-of-use assets		12,557		11,535
Decrease in operating lease liabilities		(12,557)		(11,535)
Increase in accounts payable		206,665		531,433
(Decrease) increase in deferred revenue		(420,808)		1,310,506
(Decrease) increase in Card Casino accruals		(467,059)		340,760
(Decrease) increase in accrued wages and payroll taxes		(788,257)		44,507
(Decrease) increase in accrued property taxes		(1)		8,436
Increase in payable to horsepersons		2,753,348		4,607,394
Net cash (used in) provided by operating activities		(379,340)		9,327,162

Investing Activities:
Additions to land, buildings, and equipment		(1,349,849)		(5,671,183)
Additions for TIF eligible improvements		(518,042)		(4,843,708)
Decrease in notes receivable		—		1,062,336
Proceeds from sale of investments		103,886		102,659
Net cash used in investing activities		(1,764,005)		(9,349,896)

Financing Activities:
Proceeds from issuance of common stock		112,877		223,522
Payments against line of credit		(2,044,668)		(2,826,044)
Borrowings on line of credit		4,909,988		3,920,257
Cash dividend paid to shareholders		(328,092)		(637,164)
Payments for taxes related to net share settlement of equity awards		(72,379)		(54,934)


	Six Months Ended June 30,
	2020	2019
Weighted average remaining lease term (in years):
Finance	3.2	4.3
Operating	1.0	1.5
Weighted average discount rate (%):
Finance	5.0%	5.0%
Operating	5.5%	5.4%


Six Months Ended June 30, 2020	Operating leases		Finance leases
2020 remaining	$	18,018	$	14,371
2021		23,100		28,743
2022		23,100		28,743
2023		—		19,332
Total minimum lease obligations		64,218		91,189
Less: amounts representing interest		(1,943)		(7,003)
Present value of minimum lease payments		62,275		84,186
Less: current portion		(26,066)		(25,117)
Lease obligations, net of current portion	$	36,209	$	59,069


	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Simulcast	$	219,000	$	1,634,000	$	1,234,000	$	2,852,000
Live racing		122,000		912,000		122,000		912,000
Guest fees		557,000		418,000		557,000		418,000
Other revenue		522,000		244,000		803,000		517,000
Total Pari-Mutuel Revenue	$	1,420,000	$	3,208,000	$	2,716,000	$	4,699,000

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (rules 13a-14 and 15d-14 of the Exchange Act).

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (rules 13a-14 and 15d-14 of the Exchange Act).

32		Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

99.1		Press Release dated August 10, 2020 announcing 2020 Second Quarter Results.

101		The following financial information from Canterbury Park Holding Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020, formatted in eXtensible Business Reporting Language XBRL: (i) Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019, (ii) Condensed Consolidated Statements of Operations for the Three and Six Months ended June 30, 2020 and June 30, 2019, (iii) Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months ended June 30, 2020 and June, 2019, (iv) Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2020 and June 30, 2019, and (v) Notes to Financial Statements.


	Canterbury Park Holding Corporation

Dated: August 11, 2020	/s/ Randall D. Sampson

	Randall D. Sampson,
	Executive Chairman, President, and Chief Executive Officer

Dated: August 11, 2020	/s/ Randy J. Dehmer
	Randy J. Dehmer, Chief Financial Officer



	Three Months Ended June 30,						Six Months Ended June 30,
					Increase						Increase
	2020		2019		(Decrease)		2020		2019		(Decrease)
Net revenues	$	2,768	$	16,433	(83.2)	%	$	13,717	$	28,024	(51.1)	%

Adjusted EBITDA		(1,775)		1,677	(205.8)	%		(916)		2,393	(138.3)	%

Net (loss) income	$	(1,181)	$	958	(223.3)	%	$	(926)	$	1,014	(191.3)	%

Basic EPS	$	(0.25)	$	0.21	(219.0)	%	$	(0.20)	$	0.22	(190.9)	%
Diluted EPS	$	(0.25)	$	0.21	(219.0)	%	$	(0.20)	$	0.22	(190.9)	%


Investor Contact:
Randy Dehmer	Richard Land, Jim Leahy
Vice President and Chief Financial Officer	JCIR
Canterbury Park Holding Corporation	212-835-8500 or cphc@jcir.com


	Three months ended				Six months ended
	June 30,				June 30,
	2020		2019		2020		2019
Net Operating Revenues	$	2,767,855	$	16,433,177	$	13,716,814	$	28,023,874
Operating Expenses		(5,086,434)		(15,128,423)		(15,893,698)		(26,741,880)
(Loss) Income from Operations		(2,318,579)		1,304,754		(2,176,884)		1,281,994
Other Operating Income, net		19,719		45,319		183,409		108,558
Income Tax Benefit (Expense)		1,117,663		(392,316)		1,067,499		(376,223)
Net (Loss) Income	$	(1,181,197)	$	957,757	$	(925,976)	$	1,014,329
Basic Net (Loss) Income Per Common Share	$	(0.25)	$	0.21	$	(0.20)	$	0.22
Diluted Net (Loss) Income Per Common Share	$	(0.25)	$	0.21	$	(0.20)	$	0.22