Canterbury Park Holding Corp

Previous wording

Operations Review for the Three and Six Months Ended June 30, 2025:

Current wording

Operations Review for the Three and Nine Months Ended September 30, 2025:

Previous wording

Total net revenues for the three months ended June 30, 2025 were $15,666,000, a decrease of $537,000, or 3.3%, compared to total net revenues of $16,202,000 for the three months ended June 30, 2024. Total net revenues for the six months ended June 30, 2025 were $28,807,000, a decrease of $1,493,000, or 4.9%, compared to total net revenues of $30,300,000 for the six months ended June 30, 2024. See below for a further discussion of our sources of revenues.

Current wording

Total net revenues for the three months ended September 30, 2025 were $18,315,000, a decrease of $969,000, or 5.0%, compared to total net revenues of $19,284,000 for the three months ended September 30, 2024. Total net revenues for thenine months ended September 30, 2025 were $47,122,000, a decrease of $2,463,000, or 5.0%, compared to total net revenues of $49,585,000 for thenine months ended September 30, 2024. See below for a further discussion of our sources of revenues.

Previous wording

As indicated by the table above, total Casino revenue decreased $356,000, or 3.6%, and decreased $1,220,000, or 6.1%, for the three and six months ended June 30 , 2025, respectively, compared to the same periods in 2024. The decrease for the three and six months ended June 30 , 2025 can be primarily attributed to both a decrease in drop, due to increased competition, and a lower average collection revenue rate in table games, somewhat offset by an increase in our other table games revenue due to increases related to our progressive jackpot revenue.

Current wording

As indicated by the table above, total Casino revenue decreased $954,000, or 9.7%, and decreased $2,174,000, or 7.3%, for the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024. The decrease for the three and nine months ended September 30 , 2025 can be primarily attributed to both a decrease in drop, due to increased competition, and a lower average collection revenue rate in table games, somewhat offset by an increase in our other table games revenue due to increases related to our progressive jackpot revenue.

Previous wording

Total pari-mutuel revenue decreased $336,000, or 12.9%, and decreased $431,000, or 11.4%, for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024. The decrease for the three and six months ended June 30, 2025 can be primarily attributed to both decreased live race days year-over-year (14 race days in 2025 compared to 17 race days in 2024) and lower simulcast revenues which is related to less overall race days for other race tracks across the country compared to the same periods in 2024.

Current wording

Total pari-mutuel revenue decreased $91,000, or 2.7%, and decreased $522,000, or 7.4%, for the three andnine months ended September 30, 2025, respectively, compared to the same periods in 2024. The decrease for three andnine months ended September 30, 2025 can be primarily attributed to both decreased live race days year-over-year and lower simulcast revenues which is related to less overall race days for other race tracks across the country compared to the same periods in 2024.

Previous wording

Other revenues, consisting of admission revenues, corporate sponsorships, space rentals, and other miscellaneous activities, increased $189,000, or 11.4%, and increased $295,000, or 10.5%, for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024. The increases are primarily due to admission revenue increases related to hosting large scale special events that took place in the first half of 2025.

Current wording

Other revenues, consisting of admission revenues, corporate sponsorships, space rentals, and other miscellaneous activities, decreased $330,000, or 11.1%, and decreased $35,000, or 0.6%, for the three andnine months ended September 30, 2025, respectively, compared to the same periods in 2024. The decreases are primarily due to admission revenue decreases related to concert events.

Previous wording

Total operating expenses increased $154,000, or 1.0%, and increased $310,000, or 1.1%, for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024. The following paragraphs provide further detail regarding certain operating expenses.

Current wording

Total operating expenses decreased $106,000, or 0.6%, and increased $203,000, or 0.5%, for the three andnine months ended September 30, 2025, respectively, compared to the same periods in 2024. The following paragraphs provide further detail regarding certain operating expenses.

Previous wording

Purse expense decreased $341,000, or 14.8%, and decreased $472,000, or 12.8%, for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024. The decreases are primarily due to the decreased Casino and pari-mutuel revenues noted above.

Current wording

Purse expense decreased $444,000, or 15.9%, and decreased $916,000, or 14.2%, for the three andnine months ended September 30, 2025, respectively, compared to the same periods in 2024. The decreases are primarily due to the decreased Casino and pari-mutuel revenues noted above.

Previous wording

Salaries and benefits increased $111,000, or 1.6%, and increased $270,000, or 2.1%, for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024. The increases are primarily due to annual wage increases along with the State of Minnesota annual mandated increase in the minimum wage.

Current wording

Salaries and benefits decreased $18,000, or 0.2%, and increased $252,000, or 1.2%, for the three andnine months ended September 30, 2025, respectively, compared to the same periods in 2024. The increase for the nine months ended September 30, 2025 is primarily due to annual wage increases along with the State of Minnesota annual mandated increase in the minimum wage.

Previous wording

Depreciation and amortization increased $97,000, or 10.9%, and increased $178,000, or 10.2%, for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024. The increases are primarily due to placing larger fixed assets into service related to our barn relocation and redevelopment plan in the second quarters of both 2024 and 2025.

Current wording

Depreciation and amortization increased $91,000, or 9.7%, and increased $269,000, or 10.0%, for the three andnine months ended September 30, 2025, respectively, compared to the same periods in 2024. The increases are primarily due to placing larger fixed assets into service related to our barn relocation and redevelopment plan in the second quarters of both 2024 and 2025.

Previous wording

Advertising and marketing costs increased $165,000, or 40.8%, and increased $200,000, or 36.5%, for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024. The increases are primarily due to implementing new Casino promotions to attract and retain new players.

Current wording

Advertising and marketing costs increased $124,000, or 18.6%, and increased $324,000, or 26.7%, for the three andnine months ended September 30, 2025, respectively, compared to the same periods in 2024. The increases are primarily due to implementing new Casino promotions to attract and retain new players.

Previous wording

Professional and contracted services increased $151,000, or 10.5%, and increased $110,000, or 4.1%, for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024. The increases are primarily due to increased live racing regulation costs from the Horseracing Integrity and Safety Authority.

Current wording

Professional and contracted services increased $36,000, or 1.9%, and increased $146,000, or 3.2%, for the three andnine months ended September 30, 2025, respectively, compared to the same periods in 2024. The increases are primarily due to increased live racing regulation costs from the Horseracing Integrity and Safety Authority.

Previous wording

Other loss, net, for the three months ended June 30, 2025 was $910,000, a decrease of $268,000, compared to other loss, net, of $642,000 for the three months ended June 30, 2024. Other loss, net, for the six months ended June 30, 2025 was $2,040,000, a decrease of $1,084,000, compared to other loss, net, of $956,000 for the six months ended June 30, 2024. The decreases compared to the comparable periods of 2024 are primarily due to depreciation expense and debt service costs from our Doran Canterbury II joint venture as it became fully operational during the second quarter of 2024.

Current wording

Other loss, net, for the three months ended September 30, 2025 was $408,000, an increase of $445,000, compared to other loss, net, of $853,000 for the three months ended September 30, 2024. Other loss, net, for thenine months ended September 30, 2025 was $2,448,000, a decrease of $639,000, compared to other loss, net, of $1,808,000 for thenine months ended September 30, 2024. The fluctuations compared to the comparable periods of 2024 are primarily due to timing of depreciation expense and debt service costs from our Doran Canterbury II joint venture as it became fully operational during the second quarter of 2024, somewhat offset by increased lease rates from the Doran Canterbury I joint venture.

Previous wording

The Company recorded a provision for income taxes with a benefit of $151,000 and expense of $142,000 for the three months ended June 30, 2025 and 2024, respectively. The Company recorded a provision for income taxes with a benefit of $332,000 and expense of $592,000 for the six months ended June 30, 2025 and 2024, respectively. We record our quarterly provision for income taxes based on our estimated annual effective tax rate for the year. The income tax benefit for the three and six months ended June 30, 2025 compared to the income tax expense for the same periods in 2024 is primarily due to a decrease in income before taxes from operations and a federal interest income tax refund in the first quarter of 2025. Our effective tax rate was 31.6% and 34.6% for three and six months ended June 30, 2025, respectively. Our effective tax rate was 29.6% and 30.7% for three and six months ended June 30, 2024, respectively.

Current wording

The Company recorded a provision for income taxes of $156,000 and $772,000 for the three months ended September 30, 2025 and 2024, respectively. The Company recorded a provision for income taxes with a benefit of $176,000 and expense of $1,364,000 for thenine months ended September 30, 2025 and 2024, respectively. We record our quarterly provision for income taxes based on our estimated annual effective tax rate for the year. The income tax benefit for thenine months ended September 30, 2025 compared to the income tax expense for the same period in 2024 is primarily due to a decrease in income before taxes from operations and a federal interest income tax refund in the first quarter of 2025. Our effective tax rate was 24.3% and 55.8% for three andnine months ended September 30, 2025, respectively. Our effective tax rate was 27.6% and 28.9% for three andnine months ended September 30, 2024, respectively.

Previous wording

The Company recorded a net loss of $327,000, or $0.06 per basic and diluted share and $627,000, or $0.12 per basic and diluted share, for the three and six months ended June 30, 2025, respectively. The Company recorded net income of $338,000, or $0.07 per basic and diluted share and $1,336,000, or $0.27 per basic and diluted share, for the three and six months ended June 30, 2024, respectively.

Current wording

The Company recorded net income of $487,000, or $0.10 per basic and diluted share and a net loss of $139,000, or $0.03 per basic and diluted share, for the three andnine months ended September 30, 2025, respectively. The Company recorded net income of $2,022,000, or $0.40 per basic and diluted share and $3,358,000, or $0.67 per basic and diluted share, for the three andnine months ended September 30, 2024, respectively.

Previous wording

To supplement our financial statements, we also provide investors with information about our EBITDA and Adjusted EBITDA, each of which is a non-GAAP measure, which excludes certain items from net income, a GAAP measure. See the table below, which presents reconciliations of these measures to the GAAP equivalent financial measures. We define EBITDA as earnings before interest, income tax expense, and depreciation and amortization. We also compute Adjusted EBITDA, which reflects additional adjustments to Net Income to eliminate unusual or non-recurring items, as well as items relating to our real estate development operations and we believe the exclusion of these items allows for better comparability of our performance between periods and is useful in allowing greater transparency related to a significant measure used by management in its financial and operational decision-making. Adjusted EBITDA has economic substance because it is used by management as a performance measure to analyze the performance of our business, excluding the impact of our real estate segment, and provides a perspective on the current effects of operating decisions relating to our core, non-real estate business. For the three and six months ended June 30, 2025 and 2024, Adjusted EBITDA excluded stock-based compensation, as well as depreciation and amortization relating to equity investments, and interest expense related to equity investments. Neither EBITDA nor adjusted EBITDA is a measure of performance calculated in accordance with GAAP and should not be considered an alternative to, or more meaningful than, net income as an indicator of our operating performance. EBITDA is presented as a supplemental disclosure because we believe that, when considered with measures calculated in accordance with GAAP, EBITDA and Adjusted EBITDA provide a more complete understanding of our operating results before the impact of investing and financing transactions and income taxes, and it is a widely used measure of performance and a basis for valuation of companies in our industry. Moreover, other companies that provide EBITDA or Adjusted EBITDA information may calculate EBITDA or Adjusted EBITDA differently than we do.

Current wording

To supplement our financial statements, we also provide investors with information about our EBITDA and Adjusted EBITDA, each of which is a non-GAAP measure, which excludes certain items from net income, a GAAP measure. See the table below, which presents reconciliations of these measures to the GAAP equivalent financial measures. We define EBITDA as earnings before interest, income tax expense, and depreciation and amortization. We also compute Adjusted EBITDA, which reflects additional adjustments to Net Income to eliminate unusual or non-recurring items, as well as items relating to our real estate development operations and we believe the exclusion of these items allows for better comparability of our performance between periods and is useful in allowing greater transparency related to a significant measure used by management in its financial and operational decision-making. Adjusted EBITDA has economic substance because it is used by management as a performance measure to analyze the performance of our business, excluding the impact of our real estate segment, and provides a perspective on the current effects of operating decisions relating to our core, non-real estate business. For the three andnine months ended September 30, 2025 and 2024, Adjusted EBITDA excluded stock-based compensation, as well as depreciation and amortization relating to equity investments, and interest expense related to equity investments. For the three and nine months ended September 30, 2024, Adjusted EBITDA also excluded a gain transfer of land. Neither EBITDA nor adjusted EBITDA is a measure of performance calculated in accordance with GAAP and should not be considered an alternative to, or more meaningful than, net income as an indicator of our operating performance. EBITDA is presented as a supplemental disclosure because we believe that, when considered with measures calculated in accordance with GAAP, EBITDA and Adjusted EBITDA provide a more complete understanding of our operating results before the impact of investing and financing transactions and income taxes, and it is a widely used measure of performance and a basis for valuation of companies in our industry. Moreover, other companies that provide EBITDA or Adjusted EBITDA information may calculate EBITDA or Adjusted EBITDA differently than we do.

Previous wording

The following table sets forth a reconciliation of net income, a GAAP financial measure, to EBITDA and to adjusted EBITDA (defined above) which are non-GAAP financial measures, for thethree and six months ended June 30, 2025 and 2024:

Current wording

The following table sets forth a reconciliation of net income, a GAAP financial measure, to EBITDA and to adjusted EBITDA (defined above) which are non-GAAP financial measures, for thethree and nine months ended September 30, 2025 and 2024:

Previous wording

Adjusted EBITDA decreased $534,000, or 22.2%, and decreased $1,808,000, or 32.2%, for the three and six months ended June 30, 2025, compared to the same periods in 2024. The decrease in Adjusted EBITDA is primarily due to an overall decrease in income from operations. For the three and six months ended June 30, 2025, Adjusted EBITDA as a percentage of net revenue was 12.0% and 13.2%, respectively. For the three and six months ended June 30, 2024, Adjusted EBITDA as a percentage of net revenue was 14.9% and 18.5%, respectively.

Current wording

Adjusted EBITDA decreased $467,000, or 14.2%, and decreased $2,275,000, or 25.6%, for the three andnine months ended September 30, 2025, compared to the same periods in 2024. The decrease in Adjusted EBITDA is primarily due to an overall decrease in income from operations. For the three andnine months ended September 30, 2025, Adjusted EBITDA as a percentage of net revenue was 15.4% and 14.1%, respectively. For the three andnine months ended September 30, 2024, Adjusted EBITDA as a percentage of net revenue was 17.0% and 18.0%, respectively.

Previous wording

The Company’s cash, cash equivalents, and restricted cash balance at June 30, 2025 was $18,383,000 compared to $13,687,000 as of December 31, 2024. In August 2023, the Company received approval for a three-phase barn relocation and redevelopment plan totaling approximately $15 million over the course of two years. As of June 30, 2025, the Company has substantially completed the project, with estimated remaining costs of approxim ately $1,000,000. In addition, the Company expects to spend the remaining $1,555,000 in tax increment financing over the next six months for the completion of the private redevelopment plan. The Company believes that unrestricted funds available in its cash accounts, amounts available under its revolving line of credit, along with funds generated from operations and potential future land sales, will be sufficient to satisfy its ongoing liquidity and capital resource requirements for regular operations, as well as these planned development expenses for at least the next twelve months. Furthermore, if the Company engages in additional significant real estate development, significant improvements to its facilities, the Racetrack or surrounding grounds, or strategic growth or diversification transactions, additional financing would more than likely be required and the Company may seek this additional financing through joint venture arrangements, through incurring debt, or through an equity financing, or a combination of any of these.

Current wording

The Company’s cash, cash equivalents, and restricted cash balance at September 30, 2025 was $16,990,000 compared to $13,687,000 as of December 31, 2024. In August 2023, the Company received approval for a three-phase barn relocation and redevelopment plan totaling approximately $15 million over the course of two years. As of September 30, 2025, the Company has substantially completed the project, with minimal expenditures remaining. In addition, the Company expects to spend the remaining $1,452,000 in tax increment financing over the next six months for the completion of the private redevelopment plan. The Company believes that unrestricted funds available in its cash accounts, amounts available under its revolving line of credit, along with funds generated from operations and potential future land sales, will be sufficient to satisfy its ongoing liquidity and capital resource requirements for regular operations, as well as these planned development expenses for at least the next twelve months. Furthermore, if the Company engages in additional significant real estate development, significant improvements to its facilities, the Racetrack or surrounding grounds, or strategic growth or diversification transactions, additional financing would more than likely be required and the Company may seek this additional financing through joint venture arrangements, through incurring debt, or through an equity financing, or a combination of any of these.

Previous wording

Trends in our operating cash flows tend to follow trends in operating income but can be affected by changes in working capital, the timing of significant interest payments, and tax payments or refunds. Net cash provided by operating activities for thesix months ended June 30, 2025 was $7,756,000, primarily as a result of the following: the Company reported a net loss of $627,000, depreciation and amortization of $1,918,000, a loss from equity investment of $2,963,000, and stock-based compensation and 401(k) match totaling $809,000. The Company also experienced an increase in payable to horsepersons of $2,396,000 and an increase in deferred revenue of $781,000, both primarily due to the timing of our live racing season. This was offset by an increase in accounts receivable of $527,000, also due to the timing of our live racing season, and an increase in TIF receivable of $434,000, related to the interest accrued, for thesix months ended June 30, 2025.

Current wording

Trends in our operating cash flows tend to follow trends in operating income but can be affected by changes in working capital, the timing of significant interest payments, and tax payments or refunds. Net cash provided by operating activities for thenine months ended September 30, 2025 was $9,004,000, primarily as a result of the following: the Company reported a net loss of $139,000, depreciation and amortization of $2,945,000, a loss from equity investment of $3,899,000, and stock-based compensation and 401(k) match totaling $1,202,000. The Company also experienced an increase in payable to horsepersons of $1,158,000, primarily due to the timing of our live racing season, as well as a decrease in income taxes receivable and prepaid income taxes of $1,313,000, primarily due to the receipt of a federal refund during that period. This was offset by an increase in accounts receivable of $922,000, also due to the timing of our live racing season, a decrease in accounts payable, net of land, buildings, and equipment funded through accounts payable, of $1,103,000, and an increase in TIF receivable of $673,000, related to the interest accrued, for thenine months ended September 30, 2025.

Previous wording

Net cash provided by operating activities for the six months ended June 30, 2024 was $7,010,000, primarily as a result of the following: the Company reported net income of $1,336,000, depreciation of $1,740,000, a loss from equity investment of $2,027,000, and stock-based compensation and 401(k) match totaling $715,000. Primarily due to the timing of our live racing season, the Company also experienced an increase in payable to horsepersons of $2,887,000, offset by an increase in accounts receivable of $795,000 and in TIF receivable of $702,000 for the six months ended June 30, 2024.

Current wording

Net cash provided by operating activities for the nine months ended September 30, 2024 was $9,281,000, primarily as a result of the following: the Company reported net income of $3,358,000, depreciation and amortization of $2,676,000, a loss from equity investment of $3,401,000, and stock-based compensation and 401(k) match totaling $1,074,000. This was partially offset by a gain recognized on a transfer of land of $1,732,000. The Company also experienced an increase in payable to horsepersons of $2,143,000, primarily due to the timing of our live racing season. This was offset by an increase in accounts receivable of $1,974,000, primarily due to purse payments made as part of the 2024 live meet and purse fund contribution agreement, and an increase in inventory and prepaid expenses of $1,131,000, primarily due to the prepayment of infrastructure development, for the nine months ended September 30, 2024.

Previous wording

Net cash used in investing activities for thesix months ended June 30, 2025 was $2,377,000, primarily due to additions to land, buildings, and equipment of $2,032,000 and an increase in TIF eligible improvements of $486,000, both of which are associated with the redevelopment plan, an increase in related party receivable of $396,000, primarily due to additional member loans and interest related to the member loans, and purchases of short-term investments of $4,500,000. This was partially offset by proceeds from the sale of short-term investments of $5,000,000.

Current wording

Net cash used in investing activities for thenine months ended September 30, 2025 was $4,655,000, primarily due to additions to land, buildings, and equipment of $3,675,000 and an increase in TIF eligible improvements of $590,000, both of which are associated with the redevelopment plan, an increase in related party receivable of $696,000, primarily due to additional member loans and interest related to the member loans, and purchases of short-term investments of $5,250,000. This was partially offset by proceeds from the sale of short-term investments of $5,500,000.

Previous wording

Net cash used in investing activities for the six months ended June 30, 2024 was $6,689,000, primarily due to additions to land, buildings, and equipment of $5,810,000 and an increase in related party receivables of $846,000.

Current wording

Net cash used in investing activities for the nine months ended September 30, 2024 was $11,637,000, primarily due to additions to land, buildings, and equipment of $8,080,000 and an increase in TIF eligible improvements of $2,486,000, which are associated with the barn relocation and redevelopment.

Previous wording

Net cash used in financing activities for thesix months ended June 30, 2025 was $683,000, primarily due to cash dividends paid to shareholders and payments for taxes of equity awards. The Company declared a cash dividend of $0.07 per share payable during the three months ended June 30, 2025.

Current wording

Net cash used in financing activities for thenine months ended September 30, 2025 was $1,046,000, primarily due to cash dividends paid to shareholders and payments for taxes of equity awards. The Company declared a cash dividend of $0.07 per share payable during the three months ended September 30, 2025.

Previous wording

Net cash used in financing activities for the six months ended June 30, 2024 was $697,000, primarily due to cash dividends paid to shareholders and payments for taxes of equity awards. The Company declared a cash dividend of $0.07 per share payable during the three months ended June 30, 2024.

Current wording

Net cash used in financing activities for the nine months ended September 30, 2024 was $1,058,000, primarily due to cash dividends paid to shareholders and payments for taxes of equity awards. The Company declared a cash dividend of $0.07 per share payable during the three months ended September 30, 2024.

Previous wording

As of June 30, 2025, the Company recorded a TIF receivable on its Consolidated Balance Sheet of approximately $19,819,000, which represents $16,037,000 of principal and $3,782,000 of interest. The TIF receivable requires significant management estimates and judgement pertaining to whether an allowance for doubtful accounts is necessary. The TIF receivable was generated in connection with the Contract for Private Redevelopment, in which the City of Shakopee has agreed that a portion of the future tax increment revenue generated from the developed property around the Racetrack will be paid to the Company to reimburse it for expenses in constructing public infrastructure improvements.

Current wording

As of September 30, 2025, the Company recorded a TIF receivable on its Consolidated Balance Sheet of approximately $20,161,000, which represents $16,141,000 of principal and $4,020,000 of interest. The TIF receivable requires significant management estimates and judgement pertaining to whether an allowance for doubtful accounts is necessary. The TIF receivable was generated in connection with the Contract for Private Redevelopment, in which the City of Shakopee has agreed that a portion of the future tax increment revenue generated from the developed property around the Racetrack will be paid to the Company to reimburse it for expenses in constructing public infrastructure improvements.