Dover Motorsports, Inc. (NYSE: DVD) today reported results for the three months ended June 30, 2017.
The Company promoted a NASCAR triple-header and hosted the Firefly Music Festival in Dover during the second quarter of 2017 and 2016. The Company leases a portion of its Dover facility to the promoter of Firefly, provides logistical assistance and handles certain concessions for which the Company retains a percentage of the gross sales.
Revenues for the second quarter of 2017 increased slightly to $25,587,000 from $25,253,000 for the second quarter of 2016. The increase is primarily from the scheduled increase in broadcasting revenue, partially offset by lower admissions revenue for the Dover NASCAR weekend.
Operating and marketing expenses were $14,100,000 in the second quarter of 2017 compared to $13,847,000 in the second quarter of 2016. The increase was due to the scheduled increase in purse and sanction fees for the Dover NASCAR weekend.
General and administrative expenses decreased slightly to $1,783,000 in the second quarter of 2017 from $1,820,000 in the second quarter of 2016.
Depreciation expense decreased slightly to $823,000 in the second quarter of 2017 from $867,000 in the second quarter of 2016. The 2016 expense includes $68,000 of accelerated depreciation from a change in the estimated useful lives of facilities we decided to renovate during 2016.
Net interest expense of $68,000 in the second quarter of 2017 remained consistent compared to $66,000 in the second quarter of 2016.
Provision for contingent obligation was $11,000 during the second quarter of 2017 compared to $70,000 during the second quarter of 2016 primarily due to changes in discount rates.
Earnings before income taxes for the second quarter of 2017 were $8,808,000 compared with $8,575,000 for the second quarter of 2016.
Net earnings for the second quarter of 2017 were $5,203,000 or $0.14 per diluted share compared to $5,066,000 or $0.14 per diluted share in the second quarter of 2016.
At June 30, 2017, the Company’s total indebtedness was $11,200,000 compared with $1,500,000 at June 30, 2016. The increase is attributable to the timing of receipt of our share of broadcast revenue. The Company received its broadcast revenue from NASCAR in July of 2017. In 2016, broadcast revenues were received in June.
As previously reported, on July 21, 2017 we extended our agreement for the sale of our Nashville facility for an additional thirty days to allow for time to finalize agreements for a restructured transaction that contemplates the immediate sale of 150 acres at $35,000 per acre and the grant of a three year option on an additional 150 acres at $55,000 per acre. Assuming both transactions close, we would still have more than 1,000 acres and the speedway would remain intact while we continue to explore future development options.
This release contains or may contain forward-looking statements based on management’s beliefs and assumptions. Such statements are subject to various risks and uncertainties which could cause results to vary materially. Please refer to the Company’s SEC filings for a discussion of such factors.
Dover Motorsports, Inc. is a leading promoter of NASCAR sanctioned and other motorsports events in the United States whose subsidiaries own and operate Dover International Speedway in Dover, Delaware and Nashville Superspeedway near Nashville, Tennessee. For further information, log on to dovermotorsports.com.
| DOVER MOTORSPORTS, INC. | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||||||||||
| In Thousands, Except Per Share Amounts | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenues: | ||||||||||||||||
| Admissions | $ | 3,446 | $ | 3,682 | $ | 3,446 | $ | 3,682 | ||||||||
| Event-related | 4,634 | 4,674 | 4,744 | 4,813 | ||||||||||||
| Broadcasting | 17,505 | 16,890 | 17,505 | 16,890 | ||||||||||||
| Other | 2 | 7 | 2 | 7 | ||||||||||||
| 25,587 | 25,253 | 25,697 | 25,392 | |||||||||||||
| Expenses: | ||||||||||||||||
| Operating and marketing | 14,100 | 13,847 | 15,154 | 15,053 | ||||||||||||
| General and administrative | 1,783 | 1,820 | 3,791 | 3,774 | ||||||||||||
| Costs to remove long-lived assets | – | – | 286 | – | ||||||||||||
| Depreciation | 823 | 867 | 1,644 | 1,763 | ||||||||||||
| 16,706 | 16,534 | 20,875 | 20,590 | |||||||||||||
| Operating earnings | 8,881 | 8,719 | 4,822 | 4,802 | ||||||||||||
| Interest expense, net | (68 | ) | (66 | ) | (116 | ) | (125 | ) | ||||||||
| Provision for contingent obligation | (11 | ) | (70 | ) | (52 | ) | (56 | ) | ||||||||
| Other income (expense) | 6 | (8 | ) | 46 | (8 | ) | ||||||||||
| Earnings before income taxes | 8,808 | 8,575 | 4,700 | 4,613 | ||||||||||||
| Income tax expense | (3,605 | ) | (3,509 | ) | (1,902 | ) | (1,890 | ) | ||||||||
| Net earnings | $ | 5,203 | $ | 5,066 | $ | 2,798 | $ | 2,723 | ||||||||
| Net earnings per common share: | ||||||||||||||||
| Basic | $ | 0.14 | $ | 0.14 | $ | 0.08 | $ | 0.07 | ||||||||
| Diluted | $ | 0.14 | $ | 0.14 | $ | 0.08 | $ | 0.07 | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 36,308 | 36,245 | 36,307 | 36,248 | ||||||||||||
| Diluted | 36,308 | 36,245 | 36,307 | 36,248 | ||||||||||||
| DOVER MOTORSPORTS, INC. | ||||||||||||
| RECONCILIATION OF GAAP EARNINGS BEFORE INCOME TAXES | ||||||||||||
| TO ADJUSTED EARNINGS BEFORE INCOME TAXES | ||||||||||||
| AND RECONCILIATION OF GAAP NET EARNINGS TO ADJUSTED NET EARNINGS | ||||||||||||
| In Thousands, Except Per Share Amounts | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||
| June 30, | June 30, | |||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||
| GAAP earnings before income taxes | $ | 8,808 | $ | 8,575 | $ | 4,700 | $ | 4,613 | ||||
| Accelerated depreciation (1) | – | 68 | – | 159 | ||||||||
| Costs to remove long-lived assets (2) | – | – | 286 | – | ||||||||
| Adjusted earnings before income taxes | $ | 8,808 | $ | 8,643 | $ | 4,986 | $ | 4,772 | ||||
| GAAP net earnings | $ | 5,203 | $ | 5,066 | $ | 2,798 | $ | 2,723 | ||||
| Accelerated depreciation, net of income taxes (1) | – | 40 | – | 94 | ||||||||
| Costs to remove long-lived assets, net of income taxes (2) | – | – | 167 | – | ||||||||
| Adjusted net earnings | $ | 5,203 | $ | 5,106 | $ | 2,965 | $ | 2,817 | ||||
| GAAP net earnings per common share – basic and diluted | $ | 0.14 | $ | 0.14 | $ | 0.08 | $ | 0.07 | ||||
| Accelerated depreciation, net of income taxes (1) | – | – | – | – | ||||||||
| Costs to remove long-lived assets, net of income taxes (2) | – | – | – | – | ||||||||
| Adjusted net earnings per common share – basic and diluted | $ | 0.14 | $ | 0.14 | $ | 0.08 | $ | 0.07 | ||||
| _________________________ | ||
| (1) |
During the first quarter of 2016, we began a renovation project of certain track related assets at our Dover International Speedway facility which was completed in the first quarter of 2017. As a result, we shortened the service lives of these assets which resulted in accelerated depreciation being recorded in the first and second quarters of 2016. |
|
| (2) |
Costs to remove long-lived assets represents costs incurred to remove and dispose of certain grandstand seating at our Dover International Speedway facility. |
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The above financial information is presented using other than generally accepted accounting principles (“non-GAAP”), and is reconciled to comparable information presented using GAAP. Non-GAAP adjusted earnings before income taxes, adjusted net earnings and adjusted net earnings per common share – basic and diluted are derived by adjusting amounts determined in accordance with GAAP for the aforementioned accelerated depreciation and costs to remove long-lived assets. Income taxes are based on our approximate statutory tax rates applicable to each of these items. We believe such non-GAAP information is useful and meaningful to investors, and is used by investors and us to assess core operations. This non-GAAP financial information may not be comparable to similarly titled measures used by other entities and should not be considered as an alternative to earnings before income taxes, net earnings or net earnings per common share – basic and diluted, which are determined in accordance with GAAP. |
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| DOVER MOTORSPORTS, INC. | ||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||
| In Thousands | ||||||||||||
| (Unaudited) | ||||||||||||
| June 30, | June 30, | December 31, | ||||||||||
| 2017 | 2016 | 2016 | ||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash | $ | 1 | $ | 1 | $ | 1 | ||||||
| Accounts receivable | 14,453 | 1,565 | 419 | |||||||||
| Inventories | 17 | 16 | 17 | |||||||||
| Prepaid expenses and other | 995 | 977 | 1,104 | |||||||||
| Assets held for sale | 26,000 | 26,000 | 26,000 | |||||||||
| Total current assets | 41,466 | 28,559 | 27,541 | |||||||||
| Property and equipment, net | 52,800 | 53,502 | 52,723 | |||||||||
| Other assets | 1,068 | 914 | 1,022 | |||||||||
| Total assets | $ | 95,334 | $ | 82,975 | $ | 81,286 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 874 | $ | 647 | $ | 347 | ||||||
| Accrued liabilities | 4,036 | 3,079 | 2,858 | |||||||||
| Payable to Dover Downs Gaming & Entertainment, Inc. | 33 | 14 | 7 | |||||||||
| Income taxes payable | 1,666 | 1,405 | 218 | |||||||||
| Deferred revenue | 2,252 | 2,403 | 1,355 | |||||||||
| Total current liabilities | 8,861 | 7,548 | 4,785 | |||||||||
| Revolving line of credit, net | 11,200 | 1,500 | 3,840 | |||||||||
| Liability for pension benefits | 3,928 | 3,668 | 4,143 | |||||||||
| Provision for contingent obligation | 1,854 | 1,783 | 1,802 | |||||||||
| Deferred income taxes | 12,692 | 13,703 | 12,911 | |||||||||
| Total liabilities | 38,535 | 28,202 | 27,481 | |||||||||
| Stockholders’ equity: | ||||||||||||
| Common stock | 1,838 | 1,829 | 1,828 | |||||||||
| Class A common stock | 1,851 | 1,851 | 1,851 | |||||||||
| Additional paid-in capital | 101,988 | 101,747 | 101,858 | |||||||||
| Accumulated deficit | (45,542 | ) | (47,578 | ) | (48,340 | ) | ||||||
| Accumulated other comprehensive loss | (3,336 | ) | (3,076 | ) | (3,392 | ) | ||||||
| Total stockholders’ equity | 56,799 | 54,773 | 53,805 | |||||||||
| Total liabilities and stockholders’ equity | $ | 95,334 | $ | 82,975 | $ | 81,286 | ||||||
| DOVER MOTORSPORTS, INC. | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| In Thousands | ||||||||
| (Unaudited) | ||||||||
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2017 | 2016 | |||||||
| Operating activities: | ||||||||
| Net earnings | $ | 2,798 | $ | 2,723 | ||||
|
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities: |
||||||||
| Depreciation | 1,644 | 1,763 | ||||||
| Amortization of credit facility fees | 32 | 48 | ||||||
| Stock-based compensation | 245 | 171 | ||||||
| Excess tax benefits from stock-based compensation | – | (27 | ) | |||||
| Deferred income taxes | (258 | ) | (80 | ) | ||||
| Provision for contingent obligation | 52 | 56 | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | (14,034 | ) | (1,392 | ) | ||||
| Inventories | – | 56 | ||||||
| Prepaid expenses and other | 46 | 143 | ||||||
| Accounts payable | 561 | 459 | ||||||
| Accrued liabilities | 1,098 | (136 | ) | |||||
| Payable to/receivable from Dover Downs Gaming & Entertainment, Inc. | 26 | 58 | ||||||
| Income taxes payable/prepaid income taxes | 1,449 | 1,405 | ||||||
| Deferred revenue | 897 | 1,125 | ||||||
| Liability for pension benefits | (131 | ) | (63 | ) | ||||
| Net cash (used in) provided by operating activities | (5,575 | ) | 6,309 | |||||
| Investing activities: | ||||||||
| Capital expenditures | (1,675 | ) | (1,671 | ) | ||||
| Purchases of available-for-sale securities | (126 | ) | (103 | ) | ||||
| Proceeds from sale of available-for-sale securities | 121 | 24 | ||||||
| Net cash used in investing activities | (1,680 | ) | (1,750 | ) | ||||
| Financing activities: | ||||||||
| Borrowings from revolving line of credit | 12,140 | 12,720 | ||||||
| Repayments on revolving line of credit | (4,780 | ) | (17,120 | ) | ||||
| Repurchase of common stock | (105 | ) | (186 | ) | ||||
| Excess tax benefits from stock-based compensation | – | 27 | ||||||
| Net cash provided by (used in) financing activities | 7,255 | (4,559 | ) | |||||
| Net change in cash | – | – | ||||||
| Cash, beginning of period | 1 | 1 | ||||||
| Cash, end of period | $ | 1 | $ | 1 | ||||
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