Dover Motorsports, Inc. Reports Results for the Quarter Ended March 31, 2017

DOVER, Del.--()--Dover Motorsports, Inc. (NYSE: DVD) today reported its results for the quarter ended March 31, 2017.

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 2017 or 2016; therefore, our revenues were minimal.

Operating and marketing expenses of $1,054,000 in the first quarter of 2017 decreased from $1,206,000 in the first quarter of 2016 primarily due to lower employee costs.

General and administrative expenses of $2,008,000 in the first quarter of 2017 were consistent with the $1,954,000 in the first quarter of 2016.

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. We started the removal project during the fourth quarter of 2016 and incurred a total cost of approximately $489,000.

Depreciation expense decreased to $821,000 in the first quarter of 2017 from $896,000 in the first quarter of 2016. The 2016 expense included approximately $91,000 of increased depreciation expense due to a change in the useful life of assets that we decided to renovate during 2016.

Net interest expense was $48,000 in the first quarter of 2017 compared to $59,000 in the first quarter of 2016.

Loss before income taxes was $4,108,000 for the first quarter of 2017 compared to $3,962,000 for the first quarter of 2016. The results for 2017 include the $286,000 of costs to remove long-lived assets while the 2016 results include the $91,000 of accelerated depreciation expense. On an adjusted basis, excluding these items, loss before income taxes was $3,822,000 for the first quarter of 2017 compared to $3,871,000 for the first quarter of 2016.

Net loss for the first quarter of 2017 was $2,405,000 or $.07 per diluted share compared with a loss of $2,343,000 or $.06 per diluted share in the first quarter of 2016. Net loss, adjusted for the aforementioned items, was $2,238,000 or $.06 per diluted share for the first quarter of 2017 compared to $2,289,000 or $.06 per diluted share for the first quarter of 2016. At March 31, 2017, the Company’s total indebtedness was $6,360,000 compared with $7,580,000 at March 31, 2016.

As previously announced, on August 25, 2016, we entered into a definitive agreement to sell our Nashville Superspeedway facility along with some related equipment and other assets. A second amendment was signed on March 22, 2017 to extend the agreement. Closing is now anticipated during the third quarter of 2017. The assets of Nashville Superspeedway are reported as assets held for sale in our consolidated balance sheets.

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,
  2017     2016  
Revenues:
Event-related $ 110   $ 139  
 
Expenses:
Operating and marketing 1,054 1,206
General and administrative 2,008 1,954
Costs to remove long-lived assets 286 -
Depreciation   821     896  
  4,169     4,056  
 
Operating loss (4,059 ) (3,917 )
 
Interest expense, net (48 ) (59 )
(Provision) benefit for contingent obligation (41 ) 14
Other income   40     -  
 
Loss before income taxes (4,108 ) (3,962 )
 
Income tax benefit   1,703     1,619  
 
Net loss $ (2,405 ) $ (2,343 )
 
Net loss per common share:
Basic $ (0.07 ) $ (0.06 )
Diluted $ (0.07 ) $ (0.06 )
 
Weighted average shares outstanding:
Basic 36,306 36,251
Diluted 36,306 36,251
   
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,
  2017     2016  
 
GAAP loss before income taxes $ (4,108 ) $ (3,962 )
 
Accelerated depreciation (1) - 91
 
Costs to remove long-lived assets (2)   286     -  
 
Adjusted loss before income taxes $ (3,822 ) $ (3,871 )
 
GAAP net loss $ (2,405 ) $ (2,343 )
 
Accelerated depreciation, net of income taxes (1) - 54
 
Costs to remove long-lived assets, net of income taxes (2)   167     -  
 
Adjusted net loss $ (2,238 ) $ (2,289 )
 
 
GAAP net loss per common share - basic and diluted $ (0.07 ) $ (0.06 )
 
Accelerated depreciation, net of income taxes (1) - -
 
Costs to remove long-lived assets, net of income taxes (2)   -     -  
 
Adjusted net loss per common share - basic and diluted (3) $ (0.06 ) $ (0.06 )

_________________________

(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 quarter 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.
 

(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 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 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,
  2017     2016     2016  
 
ASSETS
Current assets:
Cash $ 1 $ 153 $ 1
Accounts receivable 1,438 1,430 419
Inventories 18 71 17
Prepaid expenses and other 1,515 1,820 1,104
Prepaid income taxes - 2 -
Deferred income taxes - 1,408 -
Assets held for sale   26,000     26,000     26,000  
Total current assets 28,972 30,884 27,541
 
Property and equipment, net 52,326 53,105 52,723
Other assets 1,052 844 1,022
Deferred income taxes   -     531     -  
Total assets $ 82,350   $ 85,364   $ 81,286  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 352 $ 686 $ 347
Accrued liabilities 2,242 2,246 2,858
Payable to Dover Downs Gaming & Entertainment, Inc. 8 10 7
Income taxes payable 103 - 218
Deferred revenue   4,703     5,648     1,355  
Total current liabilities 7,408 8,590 4,785
 
Revolving line of credit, net 6,360 7,580 3,840
Liability for pension benefits 4,013 3,689 4,143
Provision for contingent obligation 1,843 1,713 1,802
Deferred income taxes   11,223     14,087     12,911  
Total liabilities   30,847     35,659     27,481  
 
Stockholders' equity:
Common stock 1,838 1,833 1,828
Class A common stock 1,851 1,851 1,851
Additional paid-in capital 101,929 101,764 101,858
Accumulated deficit (50,745 ) (52,644 ) (48,340 )
Accumulated other comprehensive loss   (3,370 )   (3,099 )   (3,392 )
Total stockholders' equity   51,503     49,705     53,805  
Total liabilities and stockholders' equity $ 82,350   $ 85,364   $ 81,286  
   
DOVER MOTORSPORTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)
 
Three Months Ended
March 31,
  2017     2016  
 
Operating activities:
Net loss $ (2,405 ) $ (2,343 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation 821 896
Amortization of credit facility fees 16 24
Stock-based compensation 186 109
Excess tax benefits from stock-based compensation - (27 )
Deferred income taxes (1,703 ) (1,620 )
Provision (benefit) for contingent obligation 41 (14 )
Changes in assets and liabilities:
Accounts receivable (1,019 ) (1,257 )
Inventories (1 ) 1
Prepaid expenses and other (460 ) (692 )
Accounts payable (184 ) 422
Accrued liabilities (616 ) (969 )
Payable to/receivable from Dover Downs Gaming & Entertainment, Inc. 1 54
Income taxes payable/prepaid income taxes (115 ) (1 )
Deferred revenue 3,348 4,370
Liability for pension benefits   (88 )   (72 )
Net cash used in operating activities   (2,178 )   (1,119 )
 
Investing activities:
Capital expenditures (235 ) (332 )
Purchases of available-for-sale securities (95 ) (2 )
Proceeds from sale of available-for-sale securities   93     1  
Net cash used in investing activities   (237 )   (333 )
 
Financing activities:
Borrowings from revolving line of credit 3,580 3,100
Repayments on revolving line of credit (1,060 ) (1,420 )
Repurchase of common stock (105 ) (103 )
Excess tax benefits from stock-based compensation   -     27  
Net cash provided by financing activities   2,415     1,604  
 
Net increase in cash - 152
Cash, beginning of period   1     1  
Cash, end of period $ 1   $ 153  

Contacts

Dover Motorsports, Inc.
Timothy R. Horne – Sr. Vice President - Finance
302-857-3292

Contacts

Dover Motorsports, Inc.
Timothy R. Horne – Sr. Vice President - Finance
302-857-3292