Dover Motorsports, Inc.
Q3 2017 Earnings Call Transcript

Published: 26 Oct 2017

[Operator:]

[Operator Instructions] Welcome and thank you for standing by. At this time all participants will be on a listen-only mode throughout the entire duration of the conference. Today's conference is being recorded. If you any objections, you may disconnect at this time. Now, may I introduce your speaker for today, Denis McGlynn. Please go ahead.

[Denis McGlynn:]

Thank you, and good morning, everyone. I’m joined by Tim Horne, our CFO. And after Tim reads our forward-looking statements disclaimer, we’ll get underway.

[Tim 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. Well, with our fall NASCAR weekend again spread across two quarters, with this year two of the three days falling in the third quarter versus only one day last year, results are going to be a little difficult to compare, but Tim will add more on that in a minute. Overall, I think, anyone who’s lost the racing this year would agree that the format changes nascaR has implemented with the establishment of stage racing has created the desired effect. The competition and resulting drama have been elevated in the earlier and mid stages of the races, which in turn has created more exciting playoff scenario coming down to the season finale next month. On a different subject, the redevelopment process at Nashville Superspeedway is continuing on schedule. The purchase and option agreements with Panattoni have been executed and Panattoni is currently working through the county approvals process. If all goes well we should be able to close on the sale of 152 acres to Panattoni for $35,000 an acre before the end of the year. As a reminder, the auction to Panattoni is for three years and for the purchase of an additional 87 acres at $55,000 an acre. This will leave us with over 1,000 acres of prime real estate including the speedway and we'll continue to explore development opportunities for this property with Panattoni going forward. As for the company overall, our debt is de minimis at this point, and we did repurchase shares during the quarter and we’ve also increased our dividends. So all-in-all, I would say it was a decent quarter for the company. Tim’s going to run through the financials for you now. So I’ll turn it over to him.

[Tim Horne:]

Thanks, Denis. As Denis mentioned, the Friday and Saturday events of our fall NASCAR triple-header were held in the third quarter this year, while last year only the Friday event was held in the third quarter. The Monster Energy Cup Series race, which is obviously the most significant, was held in the fourth quarter, both years, and as such is not included in these results. If you look at the third quarter statement of earnings, you’ll see our revenues were $2.74 million compared to $369,000 last year with the difference largely from this year’s third quarter including the Saturday Xfinity event, whereas that event fell in the fourth quarter of last year. We can’t discuss the full results for the entire NASCAR weekend yet, but it was an operational success with great weather. Admissions revenue for the weekend was fairly consistent with last year and we obviously had the contracted increase in our broadcast rights revenues as well. Person sanction fees were higher this year as were our marketing expenses for the event. G&A expenses were down slightly compared to last year at $1.77 million. Depreciation was up slightly at $863,000 from some capital spending we’d done in recent years. And our net interest expense was down compared to the third quarter of last year at $34,000 and that’s from lower average outstanding borrowings offset by slightly higher rates. And our net loss for the quarter was approximately $2 million or $0.06 per diluted share, compared with the net loss of approximately $2.2 million in the third quarter of last year and $0.06 per share also. Looking at the September 30 balance sheet, our financial position remained strong. The increase you see in receivables reflect the Saturday TV money being earned in the third quarter of this year and then decrease in deferred revenue represents the recognition of Saturday revenue in the third quarter of this year. Our loan balance was $5.880 million at September 30, and that compares to $3.840 million at the end of the year, just over $80 million at September 30 of last year. And our share of the broadcast revenue for the fall race weekend will be received by us next week. Also included is the cash flow statement for the nine months period where you will see our net cash from operating activities was fairly consistent from year-to-year, and that will obviously change significantly when we receive the TV money from the fall race in the fourth quarter. Our capital expenditures were $1.779 million through 9 months, the biggest piece of which was for safer wall additions, bathroom upgrades, skybox improvements and miscellaneous equipment purchases and facility improvements. We also purchased and retired 78,696 shares in common stock at an average price of $2.10 during the quarter. And result of all of that is that we borrowed just over $2 million through September. Our plan for capital spending for the balance of the year is for approximately another $150,000. And lastly, yesterday our board declared an annual cash dividend of $0.08 per share payable on December 10 to shareholders of record at the close of business on November 10. And that represents an increase of $0.03 per share from the dividend paid at this time last year. Dividends will continue to be evaluated annually. That concludes our prepared remarks and our third quarter update. Thank you for your interest.

[Operator:]

And that conclude today’s conference. Thank you for your participation. You may now disconnect.