Canterbury Park (CPHC) - 2019 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section covers unaudited financial statements, management's analysis, market risk, and internal controls Financial Statements This section presents the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2019, including balance sheets, statements of operations, equity, and cash flows Condensed Consolidated Balance Sheets (Unaudited) | Account | September 30, 2019 (in millions) | December 31, 2018 (in millions) | | :--- | :--- | :--- | | Total Current Assets | $7.10 | $12.81 | | Total Assets | $65.84 | $61.43 | | Total Current Liabilities | $12.36 | $10.62 | | Total Liabilities | $16.94 | $14.69 | | Total Stockholders' Equity | $48.90 | $46.73 | Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended Sep 30, 2019 (in millions) | Three Months Ended Sep 30, 2018 (in millions) | Nine Months Ended Sep 30, 2019 (in millions) | Nine Months Ended Sep 30, 2018 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Total Net Revenues | $18.60 | $18.37 | $46.62 | $47.10 | | Income from Operations | $1.47 | $2.03 | $2.76 | $4.39 | | Net Income | $1.15 | $1.63 | $2.16 | $3.35 | | Diluted EPS | $0.25 | $0.36 | $0.47 | $0.74 | Condensed Consolidated Statements of Cash Flows (Unaudited, Nine Months Ended) | Activity | September 30, 2019 (in millions) | September 30, 2018 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $3.95 | $4.28 | | Net cash used in investing activities | ($11.72) | ($2.51) | | Net cash provided by (used in) financing activities | $0.89 | ($0.29) | | Net (decrease) increase in cash | ($6.88) | $1.48 | Notes to Condensed Consolidated Financial Statements This section details the company's business operations, accounting policies, segment reporting, and key agreements - Primary revenue sources include Card Casino, pari-mutuel, and food and beverage operations, with ongoing Canterbury Commons real estate development[12] - The company adopted the new lease accounting standard ASC 842 on January 1, 2019, with no material impact on financial statements[17] Segment Revenues (Nine Months Ended Sep 30, 2019, in thousands) | Segment | Net Revenues from External Customers | | :--- | :--- | | Horse Racing | $13,018 | | Card Casino | $25,351 | | Food and Beverage | $8,244 | | Development | $12 | | Total | $46,625 | - A Cooperative Marketing Agreement (CMA) with SMSC, expiring in 2022, provides annual payments for purse enhancements and joint marketing[25][28][29] - A joint venture with Doran Companies is developing an apartment complex, supported by a TIF Redevelopment Agreement with the City of Shakopee[31][32][34] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q3 and nine-month 2019 financial results, highlighting revenue trends, Adjusted EBITDA decline, and liquidity changes from development investments Operations Review This section reviews operational performance, noting a decline in Adjusted EBITDA due to decreased revenues and increased operating expenses, partially offset by food and beverage growth Adjusted EBITDA Reconciliation (Non-GAAP) | Period | Adjusted EBITDA 2019 (in millions) | Adjusted EBITDA 2018 (in millions) | Change (%) | | :--- | :--- | :--- | :--- | | Three Months Ended Sep 30 | $2.27 | $2.69 | (15.8%) | | Nine Months Ended Sep 30 | $4.66 | $6.36 | (26.8%) | - Pari-mutuel revenue decreased 9.5% for the quarter and 8.0% for the nine months due to reduced wagering and fewer live racing days[44][47] - Food and beverage revenue increased 17.9% for the quarter and 11.1% for the nine months, boosted by a music festival and new facilities[48] - Salaries and benefits increased 8.2% for the quarter and 5.5% for the nine months, driven by minimum wage increases and new positions[50] Liquidity and Capital Resources Liquidity decreased, with cash and equivalents falling to $4.3 million due to $11.7 million in investing activities, supported by an $8 million revolving credit line - The company maintains an $8 million revolving credit line, with $1.67 million outstanding and a maturity extended to September 30, 2020[52] - Cash, cash equivalents, and restricted cash decreased from $11.2 million to $4.3 million by September 30, 2019[54] - Net cash used in investing activities totaled $11.7 million for the nine months, primarily for Card Casino remodel and development[56] Quantitative and Qualitative Disclosures about Market Risk The company has determined that this disclosure is not applicable for the reporting period - Quantitative and qualitative disclosures about market risk are deemed not applicable for this reporting period[71] Controls and Procedures The company's disclosure controls and procedures were effective as of September 30, 2019, with no material changes to internal control over financial reporting - Disclosure controls and procedures were concluded to be effective by the CEO and CFO as of the reporting period end[72] - No significant changes in internal control over financial reporting occurred during the quarter ended September 30, 2019[73] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, unregistered sales of equity securities, and exhibits Other Information (Items 1-6) This section confirms no material legal proceedings or changes to risk factors, no share repurchases in Q3 2019, and lists filed exhibits - No material legal proceedings are reported[76] - No changes to Risk Factors from the Form 10-K for the year ended December 31, 2018, are reported[76] - No shares were repurchased in Q3 2019, with 128,781 shares remaining under the stock repurchase plan as of September 30, 2019[76]