Canterbury Park Holding Corporation (CPHC) showed strong resilience in its third-quarter 2024 results, managing to navigate recent challenges by optimizing operations and expanding its entertainment options. Even with struggles in its traditional Casino and Pari-mutuel segments, the company has adapted by controlling costs and diversifying its offerings.
CPHC’s efforts to boost profitability, along with the advancement of its ambitious Canterbury Commons project, demonstrate a clear focus on growth beyond just gaming. With new dining and entertainment venues in development, the company is positioning itself as a key destination in the region for future opportunities.
Third Quarter Results Overview
In the third quarter of 2024, Canterbury Park reported diluted earnings per share of 40 cents, marking a significant increase of 73.9% from 23 cents in the same period last year.
Net revenues reached $19.28 million, a slight increase of 0.1% compared to $19.27 million in the third quarter of 2023.
This growth was fueled by special events, including a new rodeo and comedy series, which align with CPHC’s strategy to provide more entertainment options beyond gaming. A notable $1.7 million gain from land transferred to a joint venture also greatly enhanced quarterly results.
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Segment Performance Breakdown
Casino: Revenue from the Casino segment experienced a decline of 3.4%, falling from $10.2 million in the previous year to $9.88 million this quarter. This dip was attributed to lower table game drop rates and a decreased average collection rate, indicating a necessity to reassess strategies to boost gaming activity and attract more customers.
Pari-Mutuel: Revenues in this segment dropped 2.3%, from $3.41 million in the third quarter of 2023 to $3.33 million in 2024, largely due to one fewer live race day this year.
Food & Beverage: This area saw a year-over-year revenue decrease of 6.3%, totaling $3.10 million, similarly influenced by the reduced number of race days.
Other Revenues: In contrast, this segment experienced a year-over-year increase of 27.8% to $2.98 million. Growth stemmed from heightened admissions during special events, including Canterbury’s inaugural rodeo in July and a thriving comedy series in September, which exemplify the company’s shift towards non-gaming entertainment.
Profitability Highlights
Canterbury Park achieved a net income of $2 million in the third quarter of 2024, reflecting a significant increase of 77.9% from $1.1 million in the same quarter last year. This improvement was primarily influenced by a $1.7 million gain from the land transfer related to a joint venture.
The adjusted EBITDA came in at $3.3 million, a slight rise of 2.8% from $3.2 million in 2023, maintaining a stable adjusted EBITDA margin of 17%. This stability illustrates effective cost management despite challenging revenue circumstances.
Cost Management Strategies
Operating expenses slightly decreased to $17.4 million in the latest quarter, compared to $17.5 million the previous year. This decline can be attributed to proactive cost-cutting measures, notably in advertising and professional services. However, increased promoter expenses for special events offset some of these savings.
Income tax expenses rose to $0.8 million this quarter, up from $0.5 million in the third quarter of 2023. This increase correlates with CPHC’s higher earnings this period.
Financial Position and Debt Analysis
Canterbury Park boasts a solid balance sheet, featuring nearly $22 million in unrestricted cash and short-term investments, enhancing its financial resilience and enabling flexible funding options.
However, the company did report a $1.4 million loss from equity investments linked to depreciation, amortization, and interest expenses regarding its Doran Canterbury Park joint ventures.
Management Insights
Management remains optimistic about achieving consistent annual cash flow and anticipates revenue growth from Canterbury Commons. This development, which encompasses residential units along with dining and entertainment facilities, is expected to increase visitor traffic and strengthen Canterbury Park’s appeal as a regional hotspot.
Ongoing Developments
Progress on the Canterbury Commons project is underway, with significant milestones reached during the third quarter. Construction has begun on a new music venue, restaurant, and bar through its partnership with Trackside Hospitality, LLC, with a completion date projected for 2025. Commercial leasing and residential projects are also advancing, alongside operational new barns and facility upgrades set for the 2025 racing season.
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