Dover Motorsports, Inc.
Q4 2019 Earnings Call Transcript

Published: 30 Jan 2020

[Denis McGlynn:]

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

[Tim Horne:]

In order to help you understand the company and its results, we may make certain forward-looking statements. It is possible that 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. Major event during the quarter was our fall NASCAR weekend, which concluded our 50th season of NASCAR racing and also highlighted our 100th NASCAR Cup race here at Dover. Results were comparable with last year and Tim will have more to say on that in a moment.During the quarter, we made the decision to reduce our grandstand capacity from 83,500 seats to 54,800 seats in order to better adjust the current demand. We expect this project to be completed in the next several weeks and total project costs will be approximately $1.5 million.The news these days is full of stories about transformative changes in the motorsports industry. First, NASCAR purchases International Speedway Corp and Speedway Motor Sports has taken private and Penske acquires the Brickyard and the IndyCar racing series. Interest in motorsports is clearly picking up and we were pleased to see NASCAR television ratings stabilized last year.Under the leadership of Jim France in the France family, many exciting new things are in store for NASCAR from new sponsors and new sponsorship model to the NextGen race car to be unveiled next year. Also, we’re happy to see the rules changes NASCAR is implementing this year, which are designed to increase competition levels that trash of our size obviously, an improved on track racing product is always welcome.As for this year’s schedule, we’re looking forward to moving our fall race date from the fourth quarter to mid-August, where there’ll be no conflicts with the regular NFL season. Additionally, schools will still be out of session and weather at that time, will be more predictable. One final note on the plus side is our August race will be the next to the last race of the regular NASCAR Cup season, where the last remaining playoff spots are up for grabs.With that, I’ll turn it over to Tim for his financial review.

[Tim Horne:]

Thanks, Denis. Our entire fall race weekend fell in the fourth quarter of both 2019 and 2018. If you look at the fourth quarter statement of earnings, you’ll see our revenues were $20.79 million compared to $20.75 million last year. Regarding the October NASCAR weekend, in addition to the broadcast revenue increase, sponsor revenues were also slightly higher this year and these increases were offset by lower admissions and hospitality revenues. Our person sanction fees were up a little more than 4% while all other expenses were down compared to last year. For the weekend, as the whole profits were fairly consistent with last year.Our general and administrative expenses were up a little bit compared to last year at just over $1.8 million from higher pension and insurance costs and higher real estate taxes. You’ll see an increase in depreciation expense this quarter, this relates to our previously communicated decision to remove grandstand seats here in Dover. We’ve changed the estimated useful life of the affected assets and therefore, recorded the remaining $293,000 of accelerated depreciation expense in the fourth quarter, accounting for all of the increase from last year.Related to the removal of grandstand seats, we also expense $1.17 million for costs to remove seats in the fourth quarter and expect the total project costs to be approximately $1.5 million and the work to be completed prior to our May race weekend. Our provision for contingent bond liability increased by $638,000 this quarter, as we changed our assumptions for future real estate taxes, which go towards the bond debt service.Our quarterly pretax earnings were just over $3.8 million compared with just over $5.5 million last year, attached to the press releases a schedule that removes the impact of the accelerated depreciation and the grandstand removal cost this quarter, which shows adjusted pretax earnings of approximately $5.3 million compared to the $5.5 million last year.So, our net earnings for the quarter were just over $2.9 million or $0.08 per diluted share adjusting for the aforementioned items, net earnings were approximately $4 million or $0.11 per share compared with net earnings of approximately $4.1 million or $0.11 per share in the fourth quarter of last year.Looking at the December 31 balance sheet, we had no debt outstanding, and our available cash was just over $7.5 million at year-end. Also included as a cash flow statement for the year ended December 31, where you’ll see our net cash from operating activities was just under $6.8 million compared to $6.9 million last year from the lower year-to-date earnings offset by last year’s pension contributions.Capital expenditures were $6.45 million for the year, almost 90% of which were for the construction of the new Cup Series garage with the balance from equipment purchases and other facility improvements. And we bought back just over 107,000 shares of stock during the fourth quarter at an average price of a $1.92 bringing total buybacks for the year to almost 316,000 shares. The result of all that was an increase in cash of just over $3.6 million this year.One other piece of information as of now, our capital spending plans for 2020 are for approximately $1 million for various facility improvements and equipment here in Dover.That concludes our fourth quarter update. Thank you for your interest.

[Operator:]

[Operator Instructions]