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Edited Transcript of DVD earnings conference call or presentation 30-Jan-20 2:00pm GMT

Q4 2019 Dover Motorsports Inc Earnings Call

DOVER Feb 5, 2020 (Thomson StreetEvents) -- Edited Transcript of Dover Motorsports Inc earnings conference call or presentation Thursday, January 30, 2020 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Denis L. McGlynn

Dover Motorsports, Inc. - President, CEO & Executive Director

* Timothy R. Horne

Dover Motorsports, Inc. - Senior VP of Finance, CFO & Director

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Presentation

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Denis L. McGlynn, Dover Motorsports, Inc. - President, CEO & Executive Director [1]

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Good morning, everyone. I'm joined by Tim Horne, our CFO, who's going to read our forward-looking statement disclaimer, and then we'll get underway. Tim?

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Timothy R. Horne, Dover Motorsports, Inc. - Senior VP of Finance, CFO & Director [2]

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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.

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Denis L. McGlynn, Dover Motorsports, Inc. - President, CEO & Executive Director [3]

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Thanks, Tim. The major event during the quarter was our Fall NASCAR weekend, which concluded our 50th season of NASCAR racing and also highlighted our 100th NASCAR Cup race here at Dover. Results were comparable with last year, and Tim will have more to say on that in a moment.

During the quarter, we made the decision to reduce our grandstand capacity from 83,500 seats to 54,800 seats in order to better adjust the current demand. We expect this project to be completed in the next several weeks and total project cost will be approximately $1.5 million.

The news these days is full of stories about transformative changes in the motorsports industry. First, NASCAR purchases International Speedway Corp. and Speedway Motorsports has taken private and Penske acquires the Brickyard and the IndyCar Racing Series. Interest in motorsports is clearly picking up, and we were pleased to see NASCAR television ratings stabilize last year.

Under the leadership of Jim France and the France family, many exciting new things are in store for NASCAR, from new sponsors and new sponsorship model to the next-gen race car to be unveiled next year. Also, we're happy to see the rules changes NASCAR is implementing this year, which are designed to increase competition levels at tracks of our size. Obviously, an improved on-track racing product is always welcome.

As for this year's schedule, we're looking forward to moving our fall race date from the fourth quarter to mid-August, where there will be no conflicts with the regular NFL season. Additionally, schools will still be out of session, and weather at the time will be more predictable. One final note on the plus side is our August race will be the next to the last race of the regular NASCAR Cup season, where the last remaining playoff spots are up for grabs.

With that, I'll turn it over to Tim for his financial review.

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Timothy R. Horne, Dover Motorsports, Inc. - Senior VP of Finance, CFO & Director [4]

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Thanks, Denis. Our entire fall race weekend fell in the fourth quarter of both 2019 and 2018. If you look at the fourth quarter statement of earnings, you'll see our revenues were $20.79 million compared to $20.75 million last year.

Regarding the October NASCAR weekend, in addition to the broadcast revenue increase, sponsor revenues were also slightly higher this year, and these increases were offset by lower admissions and hospitality revenues. Our person sanction fees were up a little more than 4%, while all other expenses were down compared to last year. For the weekend as a whole, profits were fairly consistent with last year.

Our general and administrative expenses were up a little bit compared to last year at just over $1.8 million from higher pension and insurance costs and higher real estate taxes. You'll see an increase in depreciation expense this quarter. This relates to our previously communicated decision to remove grandstand seats here in Dover. We changed the estimated useful life of the affected assets and, therefore, recorded the remaining $293,000 of accelerated depreciation expense in the fourth quarter, accounting for all of the increase from last year. Related to the removal of grandstand seats, we also expensed $1.17 million for cost to remove seats in the fourth quarter and expect the total project cost to be approximately $1.5 million and the work to be completed prior to our May race weekend.

Our provision for contingent bond liability increased by $638,000 this quarter as we changed our assumptions for future real estate taxes which go towards the bond debt service. Our quarterly pretax earnings were just over $3.8 million compared with just over $5.5 million last year. Attached to the press release is a schedule that removes the impact of the accelerated depreciation and the grandstand removal cost this quarter, which shows adjusted pretax earnings of approximately $5.3 million compared to the $5.5 million last year.

So our net earnings for the quarter were just over $2.9 million or $0.08 per diluted share. Adjusting for the aforementioned items, net earnings were approximately $4 million or $0.11 per share compared with net earnings of approximately $4.1 million or $0.11 per share in the fourth quarter of last year.

Looking at the December 31 balance sheet, we had no debt outstanding, and our available cash was just over $7.5 million at year-end. Also included is a cash flow statement for the year ended December 31, where you'll see our net cash from operating activities was just under $6.8 million compared to $6.9 million last year from the lower year-to-date earnings, offset by last year's pension contributions.

Capital expenditures were $6.45 million for the year, almost 90% of which were for the construction of the new Cup Series garage, with the balance from equipment purchases and other facility improvements. And we bought back just over 107,000 shares of stock during the fourth quarter at an average price of $1.92, bringing total buybacks for the year to almost 316,000 shares. The result of all that was an increase in cash of just over $3.6 million this year.

One other piece of information. As of now, our capital spending plans for 2020 are for approximately $1 million for various facility improvements and equipment here in Dover.

That concludes our fourth quarter update. Thank you for your interest.