Dover Motorsports, Inc.
Q1 2015 Earnings Call Transcript

Published: 2 May 2015

[Operator:]

Welcome and thank you for standing by. At this time all participants are in listen-only mode until the duration of today's conference. Also this conference is recorded, if you have any objections, you may disconnect at any time. I would now turn this call over to Mr. Denis McGlynn. Sir, you may begin.

[Denis McGlynn:]

Thank you, operator and good morning everyone. Mike Tatoian, our Executive VP; Tim Horne, our CFO; and Klaus Belohoubek, our General Counsel are all here with me this morning. And after Tim reads our forward-looking statement disclaimer, we'll get underway with our review of the quarter.

[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 cause such differences, appear in the company's SEC filings.

[Denis McGlynn:]

Thanks Tim. Well, there were no public events during the quarter to report on, however, as you will hear from Tim in a minute impacting our results for the quarter were some non-cash charges associated with our grandstand rightsizing project, along with gains from non-refundable payments made by NeXovation or extending the closing date under our agreement for their purchase of Nashville Superspeedway. Looking at the NASCAR season today, we are encouraged by the quality of racing and the energy created by the emergence of several young diverse and talented drivers who are gaining attention in NASCARs Top 3 Series. Our Larson, Erik Jones, Darwal's Junior [ph] and Daniel Suárez are being countered on to resonate with younger and more diverse audiences as NASCAR stakeholders go about replenishing the sports fan base. The media landscape is improving with continued solid TV ratings equal to last year and growing digital and social engagement metrics being recorded weekend and week out. Each spring race so far this season is averaging 1.6 million unique digital visitors and 12.4 million page views across all platforms, and according to Nielsen Social, each race averages 192,000 social mentions and 2 million Twitter impressions. These new metrics reflects the new and various ways today's fan engages our sport, and of course they are very relevant to sponsors and media right holders as well. To over ticket sales for our spring and fall, NASCAR weekends are on budget and all six of our races this year have title sponsorships. NASCAR is tracked by track review of scared barriers in the wake of Kyle Busch's accident at Daytona in February revealed nothing major is lacking here at Dover. We have a couple of small areas to address and we'll be taking care of that prior to our spring race weekend, then we're budgeting about $15,000 to $20,000 for those projects. Plans for this June's Firefly Music Festival and the inaugural Big Barrel Country Music Festival the following week are proceeding on schedule. The organizer of the two events, Red Frog Events, reported strong ticket sales for both events, while the second quarter looks to be very busy one here for the company. One final item before I turn it over to Tim, as the company has previously announced the closing date for the sale of Nashville Superspeedway to NeXovation is now next month on May 27, Tim will share the details of the agreement and its various amendments during his review of the financials and I'm going to turn it over to Tim now for his reviews.

[Tim Horne:]

Thanks Denis, just a few brief comments for the operationally quiet first quarter. Denis mentioned we did not hold any major events in either of the first quarter of this year or last year. If you look at the first quarter statement of earnings, you will see our revenues were fairly immaterial and down from last year's, we had some NASCAR team rentals in Nashville last year but teams are no longer able to test due to NASCAR rule changes in that revenue stream has essentially gone away. Our operating and marketing expenses were up by $74,000 this year, primarily from headcount related cost for safety and operational personal required for the additional events we host onsite with some unusual repair items as well. So our general and administrative expenses were slightly higher than last year at $1.9 million, primarily from consulting fees related to some land use matters, as well as high amortization of actuarial losses related to our pension plan. $40,000 loss on disposal related to finalizing the grandstand removal that we started last year and turned to and most of that was done last year as you will recall. Depreciation expenses shown here is significantly higher this year at $1,545,000 versus $825,000 last year, this is from accelerating depreciation for about 8100 streets, in turn three that we will be removing after the fall race this year. The depreciation has accelerated that the net book value of those assets will be zero after our October event, you will see this each quarter up until that point. We also recognized this income $427,000 in deposits made related to the purchase agreement to sell Nashville Superspeedway for non-refundable payments made by NeXovation in 2015 for extending the closing date under our agreement. These payments will not apply to the purchase price, and they represent the $200,000 we received from Amendment No.4 in January; $200,000 we received from Amendment No.5 in February, and the prorate portion of the $400,000 we received with Amendment No.6 at the end of March. Our net interest expense was down compared to last year, and that's primarily from lower outstanding borrowing since slightly lower fees this year. You can see, our net loss for the quarter was approximately $2.6 million or $0.07 per diluted share compared with a net loss of $2.1 million or $0.06 per share last year, this year's results are obviously impacted by the accelerated depreciation and the deposits recognized to-date that I just discussed, and we've attached the sheet that illustrates those amounts. Looking at the March 31 balance sheet, our deferred revenue is almost identical to last year at this point, ticket sales, they are just slightly behind this time last year and we also required less of a deposit from customers this year, that's offset by the timing of sponsored payments and the receipt of a deposit for our new music festival in 20015. Our loan balance was $11.780 million at the end of March, and that compares to $15.540 million at the end of March last year. Also included is a cash flow statement for the quarter where you will see our net cash used in operating activities was $855,000, a little bit more than last year's first quarter, primarily from the earlier payment of certain event expenses offset by higher advanced collections than last year. Our capital expenditures were $753,000 for the first quarter, the bulk of which was for the installation of fiber required by NASCAR for this racing season. There also the non-refundable payments made this year by NeXovation for extending the closing date under our agreement for their purchase. To talk about this as we borrowed just over $1 million during the first quarter. That concludes our prepared remarks and our first quarter update. Thank you very much for your interest.

[Operator:]

Thank you for calling the digital replay service.