Dover Motorsports, Inc. Reports Results for the Second Quarter of 2017

Dover Motorsports, Inc

DOVER, DE – July 27, 2017 – (Motor Sports Newswire) – Dover Motorsports, Inc. (NYSE: DVD) today reported results for the three months ended June 30, 2017.

The Company promoted a NASCAR triple-header and hosted the Firefly Music Festival in Dover during the second quarter of 2017 and 2016. The Company leases a portion of its Dover facility to the promoter of Firefly, provides logistical assistance and handles certain concessions for which the Company retains a percentage of the gross sales.

Revenues for the second quarter of 2017 increased slightly to $25,587,000 from $25,253,000 for the second quarter of 2016. The increase is primarily from the scheduled increase in broadcasting revenue, partially offset by lower admissions revenue for the Dover NASCAR weekend.

Operating and marketing expenses were $14,100,000 in the second quarter of 2017 compared to $13,847,000 in the second quarter of 2016. The increase was due to the scheduled increase in purse and sanction fees for the Dover NASCAR weekend.

General and administrative expenses decreased slightly to $1,783,000 in the second quarter of 2017 from $1,820,000 in the second quarter of 2016.

Depreciation expense decreased slightly to $823,000 in the second quarter of 2017 from $867,000 in the second quarter of 2016. The 2016 expense includes $68,000 of accelerated depreciation from a change in the estimated useful lives of facilities we decided to renovate during 2016.

Net interest expense of $68,000 in the second quarter of 2017 remained consistent compared to $66,000 in the second quarter of 2016.

Provision for contingent obligation was $11,000 during the second quarter of 2017 compared to $70,000 during the second quarter of 2016 primarily due to changes in discount rates.

Earnings before income taxes for the second quarter of 2017 were $8,808,000 compared with $8,575,000 for the second quarter of 2016.

Net earnings for the second quarter of 2017 were $5,203,000 or $0.14 per diluted share compared to $5,066,000 or $0.14 per diluted share in the second quarter of 2016.

At June 30, 2017, the Company’s total indebtedness was $11,200,000 compared with $1,500,000 at June 30, 2016. The increase is attributable to the timing of receipt of our share of broadcast revenue. The Company received its broadcast revenue from NASCAR in July of 2017. In 2016, broadcast revenues were received in June.

As previously reported, on July 21, 2017 we extended our agreement for the sale of our Nashville facility for an additional thirty days to allow for time to finalize agreements for a restructured transaction that contemplates the immediate sale of 150 acres at $35,000 per acre and the grant of a three year option on an additional 150 acres at $55,000 per acre. Assuming both transactions close, we would still have more than 1,000 acres and the speedway would remain intact while we continue to explore future development options.

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,
2017 2016 2017 2016
Revenues:
Admissions $ 3,446 $ 3,682 $ 3,446 $ 3,682
Event-related 4,634 4,674 4,744 4,813
Broadcasting 17,505 16,890 17,505 16,890
Other 2 7 2 7
25,587 25,253 25,697 25,392
Expenses:
Operating and marketing 14,100 13,847 15,154 15,053
General and administrative 1,783 1,820 3,791 3,774
Costs to remove long-lived assets 286
Depreciation 823 867 1,644 1,763
16,706 16,534 20,875 20,590
Operating earnings 8,881 8,719 4,822 4,802
Interest expense, net (68 ) (66 ) (116 ) (125 )
Provision for contingent obligation (11 ) (70 ) (52 ) (56 )
Other income (expense) 6 (8 ) 46 (8 )
Earnings before income taxes 8,808 8,575 4,700 4,613
Income tax expense (3,605 ) (3,509 ) (1,902 ) (1,890 )
Net earnings $ 5,203 $ 5,066 $ 2,798 $ 2,723
Net earnings per common share:
Basic $ 0.14 $ 0.14 $ 0.08 $ 0.07
Diluted $ 0.14 $ 0.14 $ 0.08 $ 0.07
Weighted average shares outstanding:
Basic 36,308 36,245 36,307 36,248
Diluted 36,308 36,245 36,307 36,248
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,
2017 2016 2017 2016
GAAP earnings before income taxes $ 8,808 $ 8,575 $ 4,700 $ 4,613
Accelerated depreciation (1) 68 159
Costs to remove long-lived assets (2) 286
Adjusted earnings before income taxes $ 8,808 $ 8,643 $ 4,986 $ 4,772
GAAP net earnings $ 5,203 $ 5,066 $ 2,798 $ 2,723
Accelerated depreciation, net of income taxes (1) 40 94
Costs to remove long-lived assets, net of income taxes (2) 167
Adjusted net earnings $ 5,203 $ 5,106 $ 2,965 $ 2,817
GAAP net earnings per common share – basic and diluted $ 0.14 $ 0.14 $ 0.08 $ 0.07
Accelerated depreciation, net of income taxes (1)
Costs to remove long-lived assets, net of income taxes (2)
Adjusted net earnings per common share – basic and diluted $ 0.14 $ 0.14 $ 0.08 $ 0.07
_________________________
(1)

During the first quarter of 2016, we began a renovation project of certain track related assets at our Dover International Speedway facility which was completed in the first quarter of 2017.  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.

(2)

Costs to remove long-lived assets represents costs incurred to remove and dispose of certain grandstand seating at our Dover International Speedway facility.

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 and costs to remove 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,
2017 2016 2016
ASSETS
Current assets:
Cash $ 1 $ 1 $ 1
Accounts receivable 14,453 1,565 419
Inventories 17 16 17
Prepaid expenses and other 995 977 1,104
Assets held for sale 26,000 26,000 26,000
Total current assets 41,466 28,559 27,541
Property and equipment, net 52,800 53,502 52,723
Other assets 1,068 914 1,022
Total assets $ 95,334 $ 82,975 $ 81,286
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 874 $ 647 $ 347
Accrued liabilities 4,036 3,079 2,858
Payable to Dover Downs Gaming & Entertainment, Inc. 33 14 7
Income taxes payable 1,666 1,405 218
Deferred revenue 2,252 2,403 1,355
Total current liabilities 8,861 7,548 4,785
Revolving line of credit, net 11,200 1,500 3,840
Liability for pension benefits 3,928 3,668 4,143
Provision for contingent obligation 1,854 1,783 1,802
Deferred income taxes 12,692 13,703 12,911
Total liabilities 38,535 28,202 27,481
Stockholders’ equity:
Common stock 1,838 1,829 1,828
Class A common stock 1,851 1,851 1,851
Additional paid-in capital 101,988 101,747 101,858
Accumulated deficit (45,542 ) (47,578 ) (48,340 )
Accumulated other comprehensive loss (3,336 ) (3,076 ) (3,392 )
Total stockholders’ equity 56,799 54,773 53,805
Total liabilities and stockholders’ equity $ 95,334 $ 82,975 $ 81,286
DOVER MOTORSPORTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)
Six Months Ended
June 30,
2017 2016
Operating activities:
Net earnings $ 2,798 $ 2,723

Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:

Depreciation 1,644 1,763
Amortization of credit facility fees 32 48
Stock-based compensation 245 171
Excess tax benefits from stock-based compensation (27 )
Deferred income taxes (258 ) (80 )
Provision for contingent obligation 52 56
Changes in assets and liabilities:
Accounts receivable (14,034 ) (1,392 )
Inventories 56
Prepaid expenses and other 46 143
Accounts payable 561 459
Accrued liabilities 1,098 (136 )
Payable to/receivable from Dover Downs Gaming & Entertainment, Inc. 26 58
Income taxes payable/prepaid income taxes 1,449 1,405
Deferred revenue 897 1,125
Liability for pension benefits (131 ) (63 )
Net cash (used in) provided by operating activities (5,575 ) 6,309
Investing activities:
Capital expenditures (1,675 ) (1,671 )
Purchases of available-for-sale securities (126 ) (103 )
Proceeds from sale of available-for-sale securities 121 24
Net cash used in investing activities (1,680 ) (1,750 )
Financing activities:
Borrowings from revolving line of credit 12,140 12,720
Repayments on revolving line of credit (4,780 ) (17,120 )
Repurchase of common stock (105 ) (186 )
Excess tax benefits from stock-based compensation 27
Net cash provided by (used in) financing activities 7,255 (4,559 )
Net change in cash
Cash, beginning of period 1 1
Cash, end of period $ 1 $ 1

Source: Dover Motorsports, Inc.

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