Dover Motorsports Inc. (NYSE:DVD)
Q4 2015 Results Earnings Conference Call
January 28, 2016 08:30 AM ET
Denis McGlynn - Chief Executive Officer
Mike Tatoian - Executive Vice President
Tim Horne - Chief Financial Officer
Klaus Belohoubek - General Counsel
Welcome and thank you for standing by. At this time, all participants are in a listen-only mode. Today’s conference is being recorded. If you have any objections, you may disconnect at this time.
I would like to turn the call over to Mr. Denis McGlynn. Sir, you may begin.
Thank you and good morning, everyone. Mike Tatoian, our Executive Vice President; Tim Horne, our CFO; and Klaus Belohoubek, our General Counsel are all here with me this morning. And after Tim reads our forward-looking statement disclaimer, we'll get underway with our review.
In order to help you understand the Company and its results, we may make certain forward-looking statements. It is possible that Company's actual results might differ from any predictions we make today. Additional information regarding factors that can cause such differences appear in the company's SEC filings.
Thanks, Tim. Well, looking back on the year just concluded, we believe that due to foul weather that interfered with our two music festivals in our entire fall race weekend, results would have been stronger. However, we did benefit from deposits against the purchase of Nashville Superspeedway which were ultimately forfeited and we ended the year with a substantial increase in earnings. Tim will add more on that in a minute.
As for NASCAR, overall, it was a good season with a great scope, with great storyline surrounding Jeff Gordon’s retirement and Kyle Busch’s comeback from injury to compete for and ultimately win the Sprint Cup Championship. The final race of the season was a huge win for NBC with a 42% improvement in ratings over last year and the best rating for a NASCAR finale in the last 10 years. Additionally, both Fox and NBC were happy with regular season ratings and the gains and subscribers each saw for their cable networks with the airing of NASCAR races. And NASCAR's digital and social media consumption numbers soared into the billion plus range to register 34% increase in its mobile audience.
As for the current year here at Dover, we'll continue discussions with new prospects for Nashville Superspeedway, while we begin the first five years in our new five year sanction agreement with NASCAR. We believe we'll benefit from the new rules package NASCAR will deploy this year and we're excited about the new championship chase formats NASCAR is implementing with the Camping World Truck Series and the XFINITY Series which are intended to increase the same playoff excitement in these two series that was generated during the Sprint Cup Championship Chase last year.
There'll also be a new experimental format for our spring XFINITY Race which is the third or four special Dash 4 Cash races this year. This is a new and exciting elements and so far as it calls for two 40 lap heat races to determine the starting order for the 120 lap final main event, as a nod to the format used by 100s of short tracks all across the country where race fans are cultivated and grown. We'll also continue our so far successful efforts to grow the youth audience and we're optimistic that today's lower gas prices will help make trips more affordable for our traditional Dover NASCAR fans.
I'm going to turn it over to Tim now for his review of the financials.
Thanks Denis. As Denis mentioned, our fall NASCAR weekend fell in early October this year as opposed to September last year, so quarterly comparisons are not terribly meaningful. If you look at the fourth quarter statement of earnings, you'll see our revenues were $21 million compared to about $150,000 last year, with last year's revenue primarily from some small rental income in Nashville. As for the fall NASCAR weekend this year, we experienced perhaps the worst weather you can imagine with a potential hit from a hurricane forecast that all activities through Friday cancelled and gloomy and threatening weather for the balance of the weekend. While we were lucky to dodge the hurricane and get all of our events in during the weekend, walk-up attendance and therefore admissions revenue and per cap sales were affected.
Admissions revenues for the weekend were down about 12% and although we were trending towards our budgeted attendance, we had virtually no sales for the week leading up to the event as a result of the forecast and the weather. Merchandizing concession sales really felt the weather impact and they were down as well. We did however have a nice improvement in our sponsorships helped by having all three events titled this year and broadcast revenues were up a little more than 4% for year one in the new television contract. While our person sanction fees were higher this year, other variable expenses were down and we were able to achieve a gross profit that was just short of last year, even with the weather impacted admission shortfall.
Our general and administrative expenses were up a little bit this year at $1.9 million, up from higher insurance real-estate tax and other incentive plans. Depreciation expense as shown here is $949,000 versus $814,000 last year. That increase is entirely from completing the acceleration and depreciation for the seats in turn 3 that we will no longer be using. The net book value of those assets is now zero.
Our net interest expense was down compared to 2014 and was from lower outstanding borrowings this year as well as from lower letter of credit fees. And our net earnings for the quarter were approximately $3.8 million or $0.10 per share and that obviously compares with the net loss in the fourth quarter of last year as we held no events.
Briefly regarding the year as a whole, our revenues were up $865,000 or almost 2% with several improvements that were offset by weather issues at both our fall race weekend and in our music festivals. Bottom-line results were obviously impacted by the accelerated depreciation and the Nashville deposits recognized this year and last year's earnings were affected by the loss on disposal of assets last year. We've attached the sheet that illustrates the impact to those items in the quarter and for the year as a whole. But eliminating all that, we saw adjusted net earnings for the year of $4.73 million which were 3.2% higher than the last year.
Looking at our year-end balance sheet, our financial position remains strong and continues to improve. Our loan balance was $5.9 million at the end of the year, compared to about $10.8 million at the end of last year. After our net earnings and the dividends paid in the fourth quarter, our total equity is now just under $52 million.
Our cash flow statements also included from the year ended December 31st where you see our net cash provided by operating activities was similar to last year at a little more than $7 million. Our capital spending of $1.45 million for the year and the biggest piece of that was through the installation of fiber required by NASCAR for this season back early in 2015 with some other IT and facility improvements we had this year. This was less than last year when we installed a new catch fence around the track. You can see the $1.2 million in non-refundable payments related to the expired Nashville deal that we recorded this year as well. Of course, we paid a dividend same as last year, so the result of all that is that we paid down almost $5 million of our credit facility this year.
That concludes our prepared remarks and our fourth quarter update and we thank you for your interest.
Thank you. That concludes today's conference. Thank you for your participation, you may now all disconnect.
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