Canterbury Park Holding Corp

Previous wording

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

Current wording

Operations Review for the Three Months Ended March 31, 2026:

Previous 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.

Current wording

Total net revenues for the three months ended March 31, 2026 were $13,510,000, an increase of $368,000, or 2.8%, compared to total net revenues of $13,142,000 for the three months ended March 31, 2025. See below for a further discussion of our sources of revenues.

Previous 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.

Current wording

As indicated by the table above, total Casino revenue increased $49,000, or 0.5%, for the three months ended March 31 , 2026, compared to the same period in 2025. The increase for the three months ended March 31 , 2026 can be primarily attributed to an increase in drop, due to increased visitation and spend per visit, which was somewhat offset by a lower average collection revenue rate in table games, which also resulted in a decrease in our other table games revenue.

Previous 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.

Current wording

Total pari-mutuel revenue decreased $60,000, or 5.6%, for the three months ended March 31, 2026, compared to the same period in 2025. The decrease forthree months ended March 31, 2026 can be primarily attributed to lower simulcast revenues which is related to less overall race days for other race tracks across the country compared to the same period in 2025.

Previous wording

Food and beverage revenue increased $405,000, or 13.1%, and increased $269,000, or 3.9%, for the three andnine months ended September 30, 2025, respectively, compared to the same periods in 2024. The increasesfor both periods are primarily related to increased catering operations related to hosting large scale special events and the implementation of a new point-of-sale system that improved speed of service, resulting in increased overall transactions and average spend per customer.

Current wording

Food and beverage revenue increased $224,000, or 13.8%, for the three months ended March 31, 2026, compared to the same period in 2025. The increase can be primarily attributed to increased visitation related to hosting more large scale special events and the implementation of a new point-of-sale system that improved speed of service, resulting in increased overall transactions and average spend per customer.

Previous 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.

Current wording

Other revenues, consisting of admission revenues, corporate sponsorships, space rentals, and other miscellaneous activities, increased $155,000, or 12.5%, for the three months ended March 31, 2026, compared to the same period in 2025. The increase is primarily due to increased admission revenue related to hosting more large scale special events.

Previous 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.

Current wording

Total operating expenses decreased $38,000, or 0.3%, for the three months ended March 31, 2026, compared to the same period in 2025. The following paragraphs provide further detail regarding certain operating expenses.

Previous 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.

Current wording

Depreciation and amortization increased $117,000, or 12.6%, for the three months ended March 31, 2026, compared to the same period in 2025. The increase is primarily due to placing larger fixed assets into service related to the completion of large capital improvement projects.

Previous 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.

Current wording

The Company recorded a provision for income taxes with an expense of $180,000 and a benefit of $181,000 for the three months ended March 31, 2026 and 2025, respectively. We record our quarterly provision for income taxes based on our estimated annual effective tax rate for the year. The income tax expense for the three months ended March 31, 2026 compared to the income tax benefit for the same period in 2025 is primarily due to an increase in income before taxes from operations in the first quarter of 2026. Our effective tax rate was 51.5% and 37.7% for three months ended March 31, 2026 and 2025, respectively, and can vary due to changes in non-deductible expenses such as lobbying fees.

Previous 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.

Current wording

The Company recorded net income of $170,000, or $0.03 per basic and diluted share, for the three months ended March 31, 2026. The Company recorded a net loss of $299,000, or $0.06 per basic and diluted share, for three months ended March 31, 2025.

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 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.

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 months ended March 31, 2026, Adjusted EBITDA excluded stock-based compensation (which includes the Company's 401(k) match in Company stock contribution), gain on disposal of assets, and depreciation and amortization and interest related to equity investments and their joint ventures. For the three months ended March 31, 2025, Adjusted EBITDA excluded stock-based compensation (which includes the Company's 401(k) match in Company stock contribution), and depreciation and amortization and interest related to equity investments and their joint ventures. 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 nine months ended September 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 months ended March 31, 2026 and 2025:

Previous 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.

Current wording

Adjusted EBITDA increased $749,000, or 35.6%, for the three months ended March 31, 2026, compared to the same period in 2025. The increase in Adjusted EBITDA is primarily due to an overall increase in income from operations. For the three months ended March 31, 2026 and 2025, Adjusted EBITDA as a percentage of net revenue was 21.1% and 16.0%, respectively.

Previous 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.

Current wording

The Company’s cash, cash equivalents, and restricted cash balance at March 31, 2026 was $16,357,000 compared to $15,824,000 as of December 31, 2025. The Company expects to spend the remaining $1,198,000 in tax increment financing over the next nine months for the completion of the private redevelopment plan. The Company believes that unrestricted funds available in its cash accounts, short-term investments, 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 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.

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 thethree months ended March 31, 2026 was $3,241,000, primarily as a result of the following: the Company reported net income of $170,000, depreciation and amortization of $1,049,000, a loss from equity investment of $1,217,000, and stock-based compensation and 401(k) match totaling $402,000. The Company also experienced an increase in payable to horsepersons of $310,000, primarily due to the timing of our live racing season, as well as increases in accrued wages and payroll taxes of $277,000, which is timing related, and an increase in accrued property taxes of $328,000. This was partially offset by an increase in accounts receivable of $328,000, 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 $255,000, and an increase in TIF receivable of $239,000, related to the interest accrued, for thethree months ended March 31, 2026.

Previous 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.

Current wording

Net cash provided by operating activities for the three months ended March 31, 2025 was $3,374,000, primarily as a result of the following: the Company reported a net loss of $299,000, depreciation and amortization of $931,000, a loss from equity investment of $1,573,000, and stock-based compensation and 401(k) match totaling $382,000. The Company also experienced an increase in payable to horsepersons of $1,207,000, primarily due to the timing of our live racing season. This was offset by an increase in accounts receivable of $486,000, an increase in TIF receivable of $206,000, and a decrease in accounts payable, net of land, buildings, and equipment funded through accounts payable, of $1,234,000, primarily related to payments for our redevelopment plan, for the three months ended March 31, 2025.

Previous 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.

Current wording

Net cash used in investing activities for the three months ended March 31, 2025 was $891,000, primarily due to additions to land, buildings, and equipment of $859,000, an increase in TIF eligible improvements of $135,000, which are associated with the redevelopment plan, an increase in related party receivable of $166,000, primarily due to additional member loans and interest related to the member loans, and purchases of short-term investments of $2,000,000. The was partially offset by proceeds from the sale of short-term investments of $2,250,000.

Previous 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.

Current wording

Net cash used in financing activities for thethree months ended March 31, 2026 was $452,000, 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 thethree months ended March 31, 2026.

Previous 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.

Current wording

Net cash used in financing activities for the three months ended March 31, 2025 was $430,000, 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 March 31, 2025.

Previous wording

These accounting estimates are described in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Management made no changes to the Company’s critical accounting estimates during the quarter ended September 30, 2025. In applying its critical accounting estimates, management reassesses its estimates each reporting period based on available information. Changes in these estimates did not have a significant impact on earnings for the quarter ended September 30, 2025.

Current wording

These accounting estimates are described in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Management made no changes to the Company’s critical accounting estimates during the quarter ended three months ended March 31, 2026. In applying its critical accounting estimates, management reassesses its estimates each reporting period based on available information. Changes in these estimates did not have a significant impact on earnings for the quarter ended three months ended March 31, 2026.

Previous 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.

Current wording

As of March 31, 2026, the Company recorded a TIF receivable on its Consolidated Balance Sheet of approximately $20,315,000, which represents $16,394,000 of principal and $3,921,000 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. As of December 31, 2025, the Company received its first payment from the City of Shakopee totaling $582,000 related to this receivable.

Previous wording

The Company typically performs an annual collectability analysis of the TIF receivable in the fourth quarter of each year, or more frequently if indicators of potential uncollectability exist. The Company utilizes the assistance of a third party to assist with the projected tax increments. The quantitative analysis includes assumptions based on the market values of the completed development projects within Canterbury Commons, which derives the future projected tax increment revenue. The Company uses the analysis to determine if the future tax increment revenue will exceed the Company's development costs on infrastructure improvements. As a result of our analysis for the year ended December 31, 2024, management believes the TIF receivable will be fully collectible and no allowance related to this receivable is necessary. There were no indicators of potential uncollectability for the three months ended September 30, 2025.

Current wording

The Company typically performs an annual collectability analysis of the TIF receivable in the fourth quarter of each year, or more frequently if indicators of the receivable to be potentially uncollectable exist. The quantitative analysis includes assumptions based on the market values of the completed development projects within Canterbury Commons, which derives the future projected tax increment revenue. The Company uses the analysis to determine if expected future tax increment revenue will exceed the Company's development costs on infrastructure improvements. As a result of our analysis as well as initial payments received in 2025 with additional payments expected to be received in 2026 from the City of Shakopee, as of March 31, 2026, management believes the TIF receivable will be fully collectible and no allowance related to this receivable is necessary.