Financial Performance - Canterbury Park Holding Corporation reported net revenues of $13.1 million for Q1 2025, a decrease of 6.8% from $14.1 million in Q1 2024 [3][12] - The company recorded a net loss of $299,000 in Q1 2025, compared to a net income of $998,000 in Q1 2024, reflecting a 130.0% decline [3][17] - Adjusted EBITDA for the first quarter was $1.9 million, down 39.6% from $3.2 million in the same period last year, resulting in an adjusted EBITDA margin of 14.8% [3][4][17] Revenue Breakdown - Casino revenues decreased by 8.6% to $9.2 million, Pari-mutuel revenues fell by 8.2% to $1.1 million, and Food and Beverage revenues declined by 5.9% to $1.6 million [12][24] - Other revenues increased by 9.3% to $1.2 million, primarily driven by strong event admission revenues [12] Operating Expenses - Operating expenses rose by 1.3% to $12.5 million in Q1 2025, compared to $12.3 million in Q1 2024, mainly due to increased salaries, property taxes, and marketing costs [13] Strategic Initiatives - The company is refocusing and expanding its marketing programs to attract new customers and retain existing high-value guests, with a new Vice President of Marketing and Entertainment joining the team [5] - Canterbury Park is enhancing its event strategy, with several record attendance events already held in 2025 and more planned for the year [5][9] Real Estate Development - Canterbury Commons is being developed as a long-term economic driver, with nearly 1,000 residential units and various amenities already in place or under construction [6] - The company is exploring additional trackside development opportunities, including office, retail, hotel, and restaurant spaces [11] Financial Position - The company has no debt and holds cash and short-term investments valued at approximately $15 million, or $3.04 per share, along with over $19 million in tax increment financing receivable [8] - The total value of cash, tax increment financing receivable, and real estate joint ventures is estimated at $10 per share [8]

Financial Data and Key Metrics Changes - The company reported record first quarter net revenue of $643 million and adjusted EBITDA of $245 million, reflecting strong performance despite various challenges [11][12] - The live and historical racing segment increased revenue by nearly $28 million or 11% compared to the prior year quarter [40] - The company generated $234 million or $3.15 per share of free cash flow in the first quarter [47] Business Line Data and Key Metrics Changes - The live and historical racing segment delivered record first quarter revenue and adjusted EBITDA, primarily due to the opening of new venues [39][40] - The Kentucky HRM properties increased adjusted EBITDA by $3.1 million or 6% compared to the prior year quarter [41] - The Virginia HRM properties saw a decrease in adjusted EBITDA by $2.2 million or 3% compared to the prior year quarter, impacted by weather and competition [41][43] Market Data and Key Metrics Changes - The Northern Virginia HRM venues collectively contributed nearly $10 million of adjusted EBITDA during the first quarter, up nearly $4 million from the prior year quarter [41] - The company experienced meaningful sequential growth in gross gaming revenues each month of the first quarter [26] - The Terre Haute Casino Resort in Indiana delivered nearly $12 million of adjusted EBITDA in the first quarter, performing well compared to regional gaming properties [46] Company Strategy and Development Direction - The company is committed to growing the Kentucky Derby through prudent timing of capital investments, pausing a $900 million multiyear project to reassess economic conditions [16][17] - Smaller projects at Churchill Downs Racetrack, costing approximately $25 to $30 million, are expected to deliver strong shareholder returns [19][20] - The company plans to implement electronic table games in existing HRM locations by the end of 2025, focusing on regulatory and taxation challenges [34][78] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased economic uncertainty and inflation risks due to tariffs, impacting cost assessments for projects [16][17] - The leadership team expressed confidence in navigating economic cycles and maintaining growth through strategic investments [37][51] - Management remains optimistic about the upcoming Kentucky Derby, expecting results comparable to last year's record performance [35][131] Other Important Information - The company has reduced its 2025 maintenance capital projection by $10 million to $90 to $100 million [48] - A new common stock repurchase program of up to $500 million was approved, with nearly 800,000 shares repurchased in the first quarter [49][50] - The bank covenant net leverage was 4.0 times at the end of the first quarter, expected to remain stable throughout the year [50] Q&A Session Summary Question: About softness in the quarter and its acceleration - Management noted hesitancy in the lower-tiered play due to macroeconomic volatility, but consistent performance in higher-tiered segments [56][58] Question: Impact on international visitation for Derby 151 - No material change in international visitation was observed, with expectations for strong attendance [62][64] Question: Long-term growth for the Derby and capital plans - Management indicated that the NBC contract will enhance growth, with expectations for pricing power in new areas introduced [70][72] Question: Implementation of electronic table games and tax rates - The rollout will be cautious due to regulatory and taxation challenges, with a focus on gradual acceptance [78] Question: Growth opportunities at existing properties amid macro uncertainty - Management emphasized organic growth in Kentucky properties and ongoing projects in Virginia, with a focus on managing costs [91][92] Question: Trends in Virginia for existing assets - Management expressed optimism about Virginia's market potential, despite recent challenges [100][101] Question: Consumer segment trends and performance - Management highlighted the importance of customer data for managing performance, particularly in less mature properties [106][108] Question: Capital allocation and buybacks - Management indicated that capital allocation decisions will be based on where the best returns can be achieved, including potential buybacks [112][114] Question: Changes for the Derby next year - Management plans to evaluate customer feedback and adjust offerings based on data collected post-Derby [120][122] Question: Comparability of Derby performance this year versus last year - Management acknowledged macroeconomic uncertainties but remains confident in strong demand for the event [130][131]