Dover Motorsports, Inc. Reports Results for the Second Quarter of 2016

DOVER, DE – July 28, 2016 – (Motor Sports Newswire) – Dover Motorsports, Inc. (NYSE: DVD) today reported results for the three months ended June 30, 2016.

The Company promoted a NASCAR triple-header and hosted the Firefly Music Festival in Dover during the second quarter of 2016 and 2015. The Company also hosted the inaugural Big Barrel Country Music Festival during the second quarter of 2015, but this event will not be held during 2016. The Company leases a portion of its Dover facility to the promoter of Firefly (and Big Barrel in 2015), provides logistical assistance and handles certain concessions for which the Company retains a percentage of the gross sales.

Revenues for the second quarter of 2016 were down slightly at $25,253,000 compared with $25,380,000 for the second quarter of 2015, primarily from the cancelation of Big Barrel in 2016 and lower admissions related revenue for the Dover NASCAR weekend, partially offset by higher broadcasting and sponsorship revenue.

Operating and marketing expenses were $13,847,000 in the second quarter of 2016 compared to $13,629,000 in the second quarter of 2015. The increase was primarily due to the scheduled increase in purse and sanction fees for the Dover NASCAR weekend.

General and administrative expenses were consistent at $1,820,000 in the second quarter of 2016 compared to $1,811,000 in the second quarter of 2015.

Depreciation expense decreased to $867,000 in the second quarter of 2016 compared to $1,422,000 in the second quarter of 2015. A change in the estimated useful lives of certain grandstand seats and structures we decided to remove from service following the 2015 fall race weekend resulted in an additional depreciation expense of $655,000 in our second quarter 2015. The decrease in 2016 was partially offset by our first quarter decision to begin renovations to certain facilities this year. Accordingly, we changed the estimated useful lives of these facilities resulting in $68,000 of increased depreciation expense in the second quarter of 2016.

Income from assets held for sale of $606,000 in the second quarter of 2015 represents payments we received in 2015 to extend the closing date of the now expired agreement to sell our Nashville facility.

Net interest expense decreased to $66,000 in the second quarter of 2016 from $86,000 in the second quarter of 2015 as a result of lower outstanding borrowings.

(Provision) benefit for contingent obligation was ($70,000) during the second quarter of 2016 compared to $125,000 during the second quarter of 2015 primarily due to changes in discount rates.

Earnings before income taxes for the second quarter of 2016 were $8,575,000 compared with $9,163,000 for the second quarter of 2015. The results for the second quarter of 2016 include the $68,000 of accelerated depreciation expense and the results for the second quarter of 2015 include the $655,000 of accelerated depreciation and $606,000 of income from assets held for sale. On an adjusted basis, excluding these items, earnings before income taxes for the second quarter of 2016 were $8,643,000 compared to $9,212,000 for the second quarter of 2015.

Net earnings for the second quarter of 2016 were $5,066,000 or $0.14 per diluted share compared to $5,494,000 or $0.15 per diluted share in the second quarter of 2015. Net earnings, adjusted for the aforementioned items, were $5,106,000 or $0.14 per diluted share in the second quarter of 2016 compared to $5,489,000 or $0.15 per diluted share in the second quarter of 2015.

At June 30, 2016, the Company’s total indebtedness was $1,500,000 compared with $2,800,000 at June 30, 2015. During the second quarter this year, the Company repurchased 36,826 shares of its common stock on the open market at an average price of $2.22 per share.

The assets of Nashville Superspeedway are reported as assets held for sale in our consolidated balance sheet at June 30, 2016 and December 31, 2015.

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,
2016 2015 2016 2015
Revenues:
Admissions $ 3,682 $ 4,212 $ 3,682 $ 4,212
Event-related 4,542 4,681 4,681 4,691
Broadcasting 17,022 16,486 17,022 16,486
Other 7 1 7 1
25,253 25,380 25,392 25,390
Expenses:
Operating and marketing 13,847 13,629 15,053 14,738
General and administrative 1,820 1,811 3,774 3,751
Loss on disposal of long-lived assets 40
Depreciation 867 1,422 1,763 2,967
16,534 16,862 20,590 21,496
Income from assets held for sale 606 1,033
Operating earnings 8,719 9,124 4,802 4,927
Interest expense, net (66 ) (86 ) (125 ) (233 )
(Provision) benefit for contingent obligation (70 ) 125 (56 ) 102
Other (expense) income (8 ) (8 ) 1
Earnings before income taxes 8,575 9,163 4,613 4,797
Income tax expense (3,509 ) (3,669 ) (1,890 ) (1,907 )
Net earnings $ 5,066 $ 5,494 $ 2,723 $ 2,890
Net earnings per common share:
Basic $ 0.14 $ 0.15 $ 0.07 $ 0.08
Diluted $ 0.14 $ 0.15 $ 0.07 $ 0.08
Weighted average shares outstanding:
Basic 36,245 36,157 36,248 36,155
Diluted 36,245 36,157 36,248 36,155
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,
2016 2015 2016 2015

GAAP earnings before income taxes

$ 8,575 $ 9,163 $ 4,613 $ 4,797
Accelerated depreciation (1) 68 655 159 1,384
Income from assets held for sale (2) (606 ) (1,033 )
Loss on disposal of long-lived assets (3) 40
Adjusted earnings before income taxes $ 8,643 $ 9,212 $ 4,772 $ 5,188
GAAP net earnings $ 5,066 $ 5,494 $ 2,723 $ 2,890
Accelerated depreciation, net of income taxes (1) 40 389 94 822
Income from assets held for sale, net of income taxes (2) (394 ) (672 )
Loss on disposal of long-lived assets, net of income taxes (3) 24
Adjusted net earnings $ 5,106 $ 5,489 $ 2,817 $ 3,064
GAAP net earnings per common share – basic and diluted $ 0.14 $ 0.15 $ 0.07 $ 0.08
Accelerated depreciation, net of income taxes (1) 0.01 0.02
Income from assets held for sale, net of income taxes (2) (0.01 ) (0.02 )
Loss on disposal of long-lived assets, net of income taxes (3)
Adjusted net earnings per common share – basic and diluted (4) $ 0.14 $ 0.15 $ 0.08 $ 0.08

_________________________

(1)

During the first quarter of 2016, we began a renovation project of certain track related assets at our Dover International Speedway facility which will take approximately one year to complete.  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.

During the first quarter of 2015, we made the decision to remove certain grandstand seating at our Dover International Speedway facility at the end of the 2015 race season.  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 2015.

(2)

On May 29, 2014, we entered into an agreement to sell our Nashville Superspeedway facility.  The potential buyer made several payments to us to extend the closing date of settlement.  A portion of these payments were recognized by us as income from assets held for sale during the first and second quarters of 2015.

(3)

Loss on disposal of long-lived assets is attributable to the decision to remove and dispose of certain grandstand seating at our Dover International Speedway facility.

(4)

The components of earnings per basic and diluted share for the six months ended June 30, 2016 do not add to the adjusted earnings per basic and diluted share due to rounding.

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, income from assets held for sale and loss on disposal of 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.

DOVER MOTORSPORTS, INC.
CONSOLIDATED BALANCE SHEETS
In Thousands
(Unaudited)
June 30, June 30, December 31,
2016 2015 2015
ASSETS
Current assets:
Cash $ 1 $ 480 $ 1
Accounts receivable 1,565 1,299 173
Inventories 16 116 72
Prepaid expenses and other 977 1,162 1,136
Receivable from Dover Downs Gaming & Entertainment, Inc. 44
Prepaid income taxes 1
Deferred income taxes 82 79
Assets held for sale 26,000 26,000 26,000
Total current assets 28,559 29,139 27,506
Property and equipment, net 53,502 55,698 53,542
Other assets 914 903 851
Deferred income taxes 561 549
Total assets $ 82,975 $ 86,301 $ 82,448
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 647 $ 554 $ 137
Accrued liabilities 3,079 5,630 3,215
Payable to Dover Downs Gaming & Entertainment, Inc. 14 22
Income taxes payable 1,405 1,840
Deferred revenue 2,403 4,107 1,278
Total current liabilities 7,548 12,153 4,630
Revolving line of credit, net 1,500 2,800 5,900
Liability for pension benefits 3,668 4,132 3,790
Provision for contingent obligation 1,783 1,711 1,727
Deferred income taxes 13,703 14,354 14,408
Total liabilities 28,202 35,150 30,455
Stockholders’ equity:
Common stock 1,829 1,822 1,822
Class A common stock 1,851 1,851 1,851
Additional paid-in capital 101,747 101,622 101,742
Accumulated deficit (47,578 ) (50,859 ) (50,301 )
Accumulated other comprehensive loss (3,076 ) (3,285 ) (3,121 )
Total stockholders’ equity 54,773 51,151 51,993
Total liabilities and stockholders’ equity $ 82,975 $ 86,301 $ 82,448
DOVER MOTORSPORTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)
Six Months Ended
June 30,
2016 2015
Operating activities:
Net earnings $ 2,723 $ 2,890

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation 1,763 2,967
Amortization of credit facility fees 48 48
Stock-based compensation 171 196
Excess tax benefits from stock-based compensation (27 )
Deferred income taxes (80 ) (772 )
Provision (benefit) for contingent obligation 56 (102 )
Income from assets held for sale (1,033 )
Changes in assets and liabilities:
Accounts receivable (1,392 ) (1,160 )
Inventories 56 (46 )
Prepaid expenses and other 143 (132 )
Accounts payable 459 348
Accrued liabilities (136 ) 519
Payable to/receivable from Dover Downs Gaming & Entertainment, Inc. 58
Income taxes payable/prepaid income taxes 1,405 2,006
Deferred revenue 1,125 2,759
Liability for pension benefits (63 ) (36 )
Net cash provided by operating activities 6,309 8,452
Investing activities:
Capital expenditures (1,671 ) (1,112 )
Purchases of available-for-sale securities (103 ) (8 )
Proceeds from sale of available-for-sale securities 24 5
Non-refundable payments received related to assets held for sale 1,200
Net cash (used in) provided by investing activities (1,750 ) 85
Financing activities:
Borrowings from revolving line of credit 12,720 12,640
Repayments on revolving line of credit (17,120 ) (20,600 )
Repurchase of common stock (186 ) (121 )
Excess tax benefits from stock-based compensation 27
Net cash used in financing activities (4,559 ) (8,081 )
Net increase in cash 456
Cash, beginning of period 1 24
Cash, end of period $ 1 $ 480

 

Source: Dover Motorsports, Inc.

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