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DOVER, DE – April 26, 2018 – (Motor Sports Newswire) – Dover Motorsports, Inc. (NYSE: DVD) today reported its results for the three months ended March 31, 2018.
The Company historically reports a loss in the first quarter due to the seasonality of our motorsports business. No major events were promoted during the first quarter of 2018 or 2017; therefore, our revenues were minimal.
Operating and marketing expenses of $1,151,000 in the first quarter of 2018 increased from $1,054,000 in the first quarter of 2017 primarily due to the timing of advertising costs.
General and administrative expenses of $1,955,000 in the first quarter of 2018 decreased slightly from $2,020,000 in the first quarter of 2017 primarily from lower employee costs.
Depreciation expense increased to $878,000 in the first quarter of 2018 from $821,000 in the first quarter of 2017. The increase is due to assets placed in service during the past 12 months.
Costs to remove long-lived assets of $286,000 represent costs incurred during the first quarter of 2017 to remove the remaining grandstands, seats and structures that were taken out of service and written off in 2015.
As previously reported, we closed on the sale of a parcel of land in Nashville for net proceeds of approximately $5 million after closing costs, resulting in a gain of $2,512,000.
Net interest expense was $40,000 in the first quarter of 2018 compared to $48,000 in the first quarter of 2017.
Loss before income taxes was $1,349,000 for the first quarter of 2018 compared to $4,108,000 for the first quarter of 2017. The results for 2018 include the gain on sale of land and the results for 2017 include costs to remove long-lived assets. On an adjusted basis, excluding these items, loss before income taxes was $3,861,000 for the first quarter of 2018 compared to $3,822,000 for the first quarter of 2017.
The Company’s effective income tax rate was 26.5% in the first quarter of 2018 compared with 41.5% in the first quarter of 2017, lower primarily from the impact of the Tax Cuts and Jobs Act.
Net loss for the first quarter of 2018 was $992,000 or $.03 per diluted share compared with a loss of $2,405,000 or $.07 per diluted share in the first quarter of 2017. Net loss, adjusted for the aforementioned items, was $2,976,000 or $.08 per diluted share for the first quarter of 2018 compared to $2,238,000 or $.06 per diluted share for the first quarter of 2017.
At March 31, 2018, the Company’s total indebtedness was $500,000 compared with $6,360,000 at March 31, 2017.
During the first quarter this year, the Company repurchased 92,479 shares of its common stock on the open market at an average price of $2.11 per share.
225 acres of our Nashville Speedway property are under option for a total purchase price of approximately $12.4 million. The Company continues to hold over 1,000 acres of prime commercial real estate.
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 OPERATIONS | ||||||||||||
| In Thousands, Except Per Share Amounts | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2018 | 2017 | |||||||||||
| Revenues: | ||||||||||||
| Event-related | $ | 226 | $ | 110 | ||||||||
| Expenses: | ||||||||||||
| Operating and marketing | 1,151 | 1,054 | ||||||||||
| General and administrative | 1,955 | 2,020 | ||||||||||
| Depreciation | 878 | 821 | ||||||||||
| Costs to remove long-lived assets | – | 286 | ||||||||||
| 3,984 | 4,181 | |||||||||||
| Gain on sale of land | 2,512 | – | ||||||||||
| Operating loss | (1,246 | ) | (4,071 | ) | ||||||||
| Interest expense, net | (40 | ) | (48 | ) | ||||||||
| Provision for contingent obligation | (67 | ) | (41 | ) | ||||||||
| Other income | 4 | 52 | ||||||||||
| Loss before income taxes | (1,349 | ) | (4,108 | ) | ||||||||
| Income tax benefit | 357 | 1,703 | ||||||||||
| Net loss | $ | (992 | ) | $ | (2,405 | ) | ||||||
| Net loss per common share: | ||||||||||||
| Basic | $ | (0.03 | ) | $ | (0.07 | ) | ||||||
| Diluted | $ | (0.03 | ) | $ | (0.07 | ) | ||||||
| Weighted average shares outstanding: | ||||||||||||
| Basic | 36,234 | 36,306 | ||||||||||
| Diluted | 36,234 | 36,306 | ||||||||||
| DOVER MOTORSPORTS, INC. | |||||||||||||||||
| RECONCILIATION OF GAAP LOSS BEFORE INCOME TAXES | |||||||||||||||||
| TO ADJUSTED LOSS BEFORE INCOME TAXES | |||||||||||||||||
| AND RECONCILIATION OF GAAP NET LOSS TO ADJUSTED NET LOSS | |||||||||||||||||
| In Thousands, Except Per Share Amounts | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Three Months Ended | |||||||||||||||||
| March 31, | |||||||||||||||||
| 2018 | 2017 | ||||||||||||||||
| GAAP loss before income taxes | $ | (1,349 | ) | $ | (4,108 | ) | |||||||||||
| Gain on sale of land (1) | (2,512 | ) | – | ||||||||||||||
| Costs to remove long-lived assets (2) | – | 286 | |||||||||||||||
| Adjusted loss before income taxes | $ | (3,861 | ) | $ | (3,822 | ) | |||||||||||
| GAAP net loss | $ | (992 | ) | $ | (2,405 | ) | |||||||||||
| Gain on sale of land, net of income taxes (1) | (1,984 | ) | – | ||||||||||||||
| Costs to remove long-lived assets, net of income taxes (2) | – | 167 | |||||||||||||||
| Adjusted net loss | $ | (2,976 | ) | $ | (2,238 | ) | |||||||||||
| GAAP net loss per common share – basic and diluted | $ | (0.03 | ) | $ | (0.07 | ) | |||||||||||
| Gain on sale of land, net of income taxes (1) | (0.05 | ) | – | ||||||||||||||
| Costs to remove long-lived assets, net of income taxes (2) | – | – | |||||||||||||||
| Adjusted net loss per common share – basic and diluted (3) | $ | (0.08 | ) | $ | (0.06 | ) | |||||||||||
_________________________ | |||
| (1) | During the first quarter of 2018, we closed on the sale of a parcel of land at our Nashville Superspeedway facility resulting in a gain on sale. | ||
| (2) | Costs to remove long-lived assets represents costs incurred to remove and dispose of certain grandstand seating at our Dover International Speedway facility. | ||
| (3) | The components of GAAP net loss per common share for the three months ended March 31, 2017 do not add to the adjusted net loss per common 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 loss before income taxes, adjusted net loss and adjusted net loss per common share – basic and diluted are derived by adjusting amounts determined in accordance with GAAP for the aforementioned gain on sale of land 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 loss before income taxes, net loss or net loss per common share – basic and diluted, which are determined in accordance with GAAP. | |||
| DOVER MOTORSPORTS, INC. | |||||||||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||||||||
| In Thousands | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| March 31, | March 31, | December 31, | |||||||||||||||
| 2018 | 2017 | 2017 | |||||||||||||||
| ASSETS | |||||||||||||||||
| Current assets: | |||||||||||||||||
| Cash | $ | 352 | $ | 1 | $ | 1 | |||||||||||
| Accounts receivable | 1,935 | 1,438 | 476 | ||||||||||||||
| Inventories | 15 | 18 | 15 | ||||||||||||||
| Prepaid expenses and other | 1,290 | 1,515 | 1,119 | ||||||||||||||
| Income taxes receivable | 562 | – | 562 | ||||||||||||||
| Assets held for sale | – | 2,455 | 2,455 | ||||||||||||||
| Total current assets | 4,154 | 5,427 | 4,628 | ||||||||||||||
| Property and equipment, net | 50,261 | 52,326 | 51,000 | ||||||||||||||
| Nashville Superspeedway facility | 23,567 | 23,545 | 23,545 | ||||||||||||||
| Other assets | 1,086 | 1,052 | 1,107 | ||||||||||||||
| Total assets | $ | 79,068 | $ | 82,350 | $ | 80,280 | |||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||
| Current liabilities: | |||||||||||||||||
| Accounts payable | $ | 166 | $ | 352 | $ | 61 | |||||||||||
| Accrued liabilities | 2,403 | 2,263 | 3,049 | ||||||||||||||
| Payable to Dover Downs Gaming & Entertainment, Inc. | 12 | 8 | 7 | ||||||||||||||
| Income taxes payable | – | 103 | – | ||||||||||||||
| Contract liabilities | 5,298 | 4,703 | 1,249 | ||||||||||||||
| Total current liabilities | 7,879 | 7,429 | 4,366 | ||||||||||||||
| Revolving line of credit, net | 500 | 6,360 | 3,240 | ||||||||||||||
| Liability for pension benefits | 2,263 | 3,992 | 2,819 | ||||||||||||||
| Provision for contingent obligation | 2,027 | 1,843 | 1,960 | ||||||||||||||
| Deferred income taxes | 8,326 | 11,223 | 8,673 | ||||||||||||||
| Total liabilities | 20,995 | 30,847 | 21,058 | ||||||||||||||
| Stockholders’ equity: | |||||||||||||||||
| Common stock | 1,826 | 1,838 | 1,825 | ||||||||||||||
| Class A common stock | 1,851 | 1,851 | 1,851 | ||||||||||||||
| Additional paid-in capital | 101,659 | 101,929 | 101,844 | ||||||||||||||
| Accumulated deficit | (43,777 | ) | (50,745 | ) | (42,858 | ) | |||||||||||
| Accumulated other comprehensive loss | (3,486 | ) | (3,370 | ) | (3,440 | ) | |||||||||||
| Total stockholders’ equity | 58,073 | 51,503 | 59,222 | ||||||||||||||
| Total liabilities and stockholders’ equity | $ | 79,068 | $ | 82,350 | $ | 80,280 | |||||||||||
| DOVER MOTORSPORTS, INC. | |||||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||
| In Thousands | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Three Months Ended | |||||||||||||||||
| March 31, | |||||||||||||||||
| 2018 | 2017 | ||||||||||||||||
| Operating activities: | |||||||||||||||||
| Net loss | $ | (992 | ) | $ | (2,405 | ) | |||||||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||||||||
| Depreciation | 878 | 821 | |||||||||||||||
| Amortization of credit facility fees | 16 | 16 | |||||||||||||||
| Stock-based compensation | 105 | 186 | |||||||||||||||
| Deferred income taxes | (357 | ) | (1,703 | ) | |||||||||||||
| Provision for contingent obligation | 67 | 41 | |||||||||||||||
| Losses on equity investments | 16 | – | |||||||||||||||
| Gain on sale of land | (2,512 | ) | – | ||||||||||||||
| Changes in assets and liabilities: | |||||||||||||||||
| Accounts receivable | (1,459 | ) | (1,019 | ) | |||||||||||||
| Inventories | – | (1 | ) | ||||||||||||||
| Prepaid expenses and other | (180 | ) | (460 | ) | |||||||||||||
| Income taxes receivable/payable | – | (115 | ) | ||||||||||||||
| Accounts payable | 105 | (184 | ) | ||||||||||||||
| Accrued liabilities | (646 | ) | (595 | ) | |||||||||||||
| Payable to Dover Downs Gaming & Entertainment, Inc. | 5 | 1 | |||||||||||||||
| Contract liabilities | 4,049 | 3,348 | |||||||||||||||
| Liability for pension benefits | (519 | ) | (109 | ) | |||||||||||||
| Net cash used in operating activities | (1,424 | ) | (2,178 | ) | |||||||||||||
| Investing activities: | |||||||||||||||||
| Capital expenditures | (139 | ) | (235 | ) | |||||||||||||
| Proceeds from sale of land, net | 4,945 | – | |||||||||||||||
| Purchases of equity investments | (35 | ) | (95 | ) | |||||||||||||
| Proceeds from sale of equity investments | 33 | 93 | |||||||||||||||
| Net cash provided by (used in) investing activities | 4,804 | (237 | ) | ||||||||||||||
| Financing activities: | |||||||||||||||||
| Borrowings from revolving line of credit | 2,460 | 3,580 | |||||||||||||||
| Repayments on revolving line of credit | (5,200 | ) | (1,060 | ) | |||||||||||||
| Repurchase of common stock | (289 | ) | (105 | ) | |||||||||||||
| Net cash (used in) provided by financing activities | (3,029 | ) | 2,415 | ||||||||||||||
| Net change in cash | 351 | – | |||||||||||||||
| Cash, beginning of period | 1 | 1 | |||||||||||||||
| Cash, end of period | $ | 352 | $ | 1 | |||||||||||||
Source: Dover Motorsports, Inc.
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