Canterbury Park (CPHC) - 2020 Q1 - Quarterly Report

Part I Item 1. Financial Statements (unaudited) The company's Q1 2020 financial statements show a slight decrease in total assets and liabilities, a decline in net revenues due to COVID-19, but a significant increase in net income Condensed Consolidated Balance Sheets As of March 31, 2020, total assets were $65.1 million, a slight decrease from $65.4 million at December 31, 2019, with total liabilities decreasing to $15.2 million and equity increasing to $49.9 million Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2020 ($) | December 31, 2019 ($) | | :--- | :--- | :--- | | Total Current Assets | $4,350,379 | $3,961,888 | | Total Assets | $65,097,832 | $65,413,082 | | Total Current Liabilities | $10,429,693 | $11,475,832 | | Total Liabilities | $15,203,715 | $15,996,972 | | Total Stockholders' Equity | $49,894,117 | $49,416,110 | Condensed Consolidated Statements of Operations For Q1 2020, total net revenues decreased 5.5% to $10.95 million due to the COVID-19 shutdown, yet net income significantly rose to $255,221 from $56,572 year-over-year Q1 2020 vs Q1 2019 Statement of Operations (Unaudited) | Metric | Three Months Ended March 31, 2020 ($) | Three Months Ended March 31, 2019 ($) | | :--- | :--- | :--- | | Total Net Revenues | $10,948,959 | $11,590,798 | | Total Operating Expenses | $10,807,264 | $11,613,559 | | Income (Loss) from Operations | $141,695 | ($22,761) | | Net Income | $255,221 | $56,572 | | Diluted Earnings Per Share | $0.05 | $0.01 | - Cash dividends declared per share were $0.00 in Q1 2020, compared to $0.07 in Q1 2019, reflecting the suspension of dividends due to the pandemic[6] Condensed Consolidated Statements of Stockholders' Equity For Q1 2020, total stockholders' equity increased from $49.42 million to $49.89 million, primarily driven by net income and stock-based compensation, with no dividend distributions Changes in Stockholders' Equity (Q1 2020) | Description | Amount ($) | | :--- | :--- | | Balance at December 31, 2019 | $49,416,110 | | Net Income | $255,221 | | Exercise of stock options | $200,790 | | 401(K) stock match | $160,967 | | Other share retirements | ($124,198) | | Balance at March 31, 2020 | $49,894,117 | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities significantly decreased to $350,820 in Q1 2020 from $1.46 million in Q1 2019, with total cash balance falling to $3.08 million Cash Flow Summary (Unaudited) | Activity | Three Months Ended March 31, 2020 ($) | Three Months Ended March 31, 2019 ($) | | :--- | :--- | :--- | | Net cash provided by operating activities | $350,820 | $1,460,719 | | Net cash used in investing activities | ($870,608) | ($4,801,419) | | Net cash used in financing activities | ($326,237) | ($227,795) | | Net decrease in cash | ($846,025) | ($3,568,495) | | Cash at end of period | $3,081,073 | $7,635,503 | Notes to Condensed Consolidated Financial Statements Notes detail COVID-19's impact, segment performance, key agreements like the CMA and TIF, and subsequent land sales totaling approximately $3.5 million - On March 16, 2020, the Company suspended all card casino, simulcast, and special events operations in response to the COVID-19 Pandemic, significantly impacting financial results for the quarter[10] - The company has four reportable operating segments: horse racing, Card Casino, food and beverage, and development, with the Card Casino being the largest revenue source[16] - The company has a Cooperative Marketing Agreement (CMA) with the Shakopee Mdewakanton Sioux Community (SMSC) to enhance horse racing purses, which expires in 2022[20][21] - Subsequent to quarter end, the company entered into two land sale agreements in April 2020 for a total consideration of approximately $3.5 million, expected to close in 2020[35] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses COVID-19's impact, Q1 revenue decline, increased adjusted EBITDA due to cost cuts, liquidity measures, and forward-looking risks COVID-19 Pandemic Impact and Response The COVID-19 pandemic led to the temporary suspension of operations on March 16, 2020, prompting cost-saving measures including employee furloughs and dividend suspension - Operations were temporarily suspended on March 16, 2020, due to the COVID-19 pandemic[39] - Mitigation measures included placing most employees on unpaid furlough, implementing salary reductions for remaining staff, suspending the quarterly cash dividend, and reducing discretionary spending[39][41] Operations Review for the Three Months Ended March 31, 2020 Q1 2020 total net revenues decreased 5.5% to $10.9 million due to the March shutdown, but adjusted EBITDA increased 19.9% to $858,548 due to a 6.9% reduction in operating expenses EBITDA Reconciliation (Non-GAAP) | Metric | Three Months Ended March 31, 2020 ($) | Three Months Ended March 31, 2019 ($) | | :--- | :--- | :--- | | Net Income | $255,221 | $56,572 | | EBITDA | $858,548 | $602,759 | | Adjusted EBITDA | $858,548 | $716,196 | Revenue by Source (YoY Change) | Revenue Source | Q1 2020 Revenue ($) | YoY Change | | :--- | :--- | :--- | | Pari-Mutuel | $1,296,000 | -13.1% | | Card Casino | $7,561,000 | -4.3% | | Food and Beverage | $1,119,000 (approx) | -17.3% | | Other Revenue | $973,000 (approx) | +14.8% | | Total Net Revenues | $10,949,000 | -5.5% | - Total operating expenses decreased by $806,000 (6.9%) YoY, primarily due to a $292,000 decrease in purse expense and a $167,000 decrease in salaries and benefits[48] Liquidity and Capital Resources The company has an undrawn $8 million revolving credit line and $3.1 million in cash, expecting future land sales to support liquidity, but does not qualify for CARES Act federal lending assistance - The company has an $8 million revolving credit line, with a $0 balance as of March 31, 2020, maturing on September 30, 2020[50] - Cash, cash equivalents, and restricted cash balance was $3.08 million at March 31, 2020[52] - The Company does not currently qualify for federal lending assistance offered by the CARES Act, including the Paycheck Protection Program[52] Forward-Looking Statements The company outlines key risks including the ongoing impact of the COVID-19 pandemic, competition, legislative changes, and the success of its real estate development - Key risks include the short-term and long-term effects of the COVID-19 pandemic, uncertainty about reopening dates, and potential reluctance from customers to visit[65] - Risks related to the Canterbury Commons real estate development include reliance on joint venture partners and the fact that TIF reimbursement is not guaranteed[67] - The company notes risks from competition, potential increases in operating costs, and legislative or regulatory changes, including those related to sports betting[67] Item 3. Quantitative and Qualitative Disclosures about Market Risk This item is not applicable for the reporting period - Not applicable[69] Item 4. Controls and Procedures The CEO and CFO concluded that disclosure controls and procedures were effective, with no significant changes in internal control over financial reporting during the quarter - The CEO and CFO have concluded that the Company's disclosure controls and procedures are effective[70] - No significant changes in internal control over financial reporting occurred during the fiscal quarter ended March 31, 2020[71] Part II Item 1. Legal Proceedings This item is not applicable for the reporting period - Not Applicable[73] Item 1A. Risk Factors There have been no changes to the Risk Factors as listed in the company's Form 10-K for the year ended December 31, 2019 - There have been no changes to the Risk Factors listed in the Form 10-K for the year ended December 31, 2019[73] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase any shares during Q1 2020, with 128,781 shares remaining authorized for future repurchase as of March 31, 2020 - The Company did not repurchase any shares during the first quarter of 2020[73] - As of March 31, 2020, the maximum number of shares that may yet be purchased under the stock repurchase plan is 128,781[73] Item 6. Exhibits The report includes several exhibits, notably amended corporate bylaws, CEO and CFO certifications, a press release for Q1 2020 results, and XBRL formatted financial statements - Filed exhibits include amended Bylaws, CEO/CFO certifications (Section 302 and 906), a press release for Q1 2020 results, and XBRL data[77][78]