Dover Motorsports, Inc.
Q1 2019 Earnings Call Transcript

Published: 26 Apr 2019

[Denis McGlynn:]

Good morning, everyone. I'm joined today by Tim Horne, our CFO, who's going to read our forward-looking statement disclaimer. And then we'll get underway.

[Timothy Horne:]

In order to help you understand the Company and its results, we may make certain forward-looking statements. It is possible the Company's actual results might differ from any predictions we make today. Additional information regarding factors that could cause such differences appear in the Company's SEC filings.

[Denis McGlynn:]

Thanks, Tim. As you know, this is a quiet quarter for the Company with no major events occurring. And at this point, our operational focus is next week's Spring NASCAR Weekend. All three of our upcoming races have title sponsors, and the weekend will kick off as a special year for us as we'll be celebrating 50 years in business. And in October, we'll be presenting our 100th NASCAR Cup Series race, becoming only the 10th track in NASCAR history to reach this mark. We have a lot of special activities planned into both race weekends, and we're, of course, anticipating great on-track racing with NASCAR's new rules package. Immediately following our spring race weekend, we'll complete the reconstruction of our Cup Series garage area. The replacement of this original 50-year-old facility was planned to be the final part of our Monster Mile makeover, which began in 2007, but was paused following the 2008 recession and re-prioritized behind the unplanned requirement to install SAFER walls around the speedway and make other safety improvements. This project is anticipated to cost approximately $5.5 million. With that, I'm going to turn it over to Tim for his financial review.

[Timothy Horne:]

Thanks, Denis. We held no events in the first quarter of either 2019 or 2018. If you look at the first quarter statement of earnings, you'll see our revenues were $129,000 compared to $226,000 last year. Both years reflect rental revenue primarily in Nashville as well as NASCAR's revised estimates of ancillary rights revenues we will be receiving for the previous year, and the adjustment for that latter amount was a little higher last year. Our operating and marketing expenses are lower than last year primarily from the timing of advertising expenses for the race season. G&A expenses were also slightly lower than last year at just over $1.9 million from lower employee costs. Depreciation expense was lower than last year at $793,000 versus $878,000 in the first quarter of 2018 as certain items have become fully depreciated. The gain on sale last year related to the closing on the sale of some of our land in Nashville, with sales proceeds of approximately $5 million. After closing expenses, we had a book gain on that transaction of approximately $2.5 million. We sold just over seven acres to the same group this year to help them complete a project they are working on, which yielded a $139,000 book gain in the first quarter of 2019. Net interest expense was down compared to last year at $6,000 versus $40,000 last year and now only reflects the amortization of fees offset by interest income. And our net loss for the quarter was $2.49 million or $0.07 per diluted share compared with a net loss of $992,000 in the first quarter of last year or $0.03 per share. We've attached the schedule to the earnings release that removes the impact of the Nashville sale in the prior year as well as the much smaller sale this year. And on an adjusted basis, our net loss this year is $2.6 million or $0.07 per share compared with the loss of almost $3 million or $0.08 per share in the first quarter of 2018. Looking at the March 31 balance sheet, our financial position continues to strengthen. We had no debt and just over $2.5 million in available cash compared to about $500,000 in debt at March 31 of last year. Also included is a cash flow statement for the quarter, where you'll see our net cash used in operating activities was fairly similar to last year at approximately $1.6 million, with slightly better operating results offset by lower deferred revenue. Capital expenditures were $398,000 for the quarter primarily from the start-up of the Cup garage project, skybox improvements and equipment purchases. The proceeds from land sales represent the aforementioned sale of a few additional acres in Nashville and the closing on the sale of the last piece of land we owned in Gateway that we discussed back in the third quarter of 2018. And we bought back just over 50,000 shares of stock during the first quarter at an average price of $2.02. The result, as mentioned, is that we had just over $2.5 million in cash at March 31. As discussed last quarter, our plan for a normal capital spending in 2019 is for about $500,000 of typical equipment and improvements. Additionally, we were in a bid phase for the much-needed improvements to our Cup Series garage. With almost all bids in at this point, as Denis mentioned, it looks like the cost of the garage work will be just over $5 million and will begin immediately following our May race weekend.

[Timothy Horne:]

That concludes our first quarter update. Thank you for your interest.