Dover Motorsports, Inc. (NYSE:DVD)
Q1 2016 Earnings Conference Call
April 28, 2016 10:30 am ET
Denis McGlynn - CEO
Tim Horne - CFO
Welcome and thank you for standing by. At this time, all participants are on listen-only mode until the duration of today's conference. This call is being recorded. If you have any objections, you may disconnect at this time.
I would now like to turn the call over to your host, Mr. Denis McGlynn. Sir, you may begin.
Thank you, operator, 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 a review of the quarter.
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.
Well, no events of magnitude during the first quarter, our efforts of national event directed towards preparing for our Sprint NASCAR Weekend, which this year will be held two weeks prior to Memorial Day as supposed to the week following. Two of the larger projects currently underway involved the renovation of certain restrooms and the front stretch grandstands and the addition of approximately 500-feet of Safer Barrier in Turn Three of the speedway. Both projects will be completed in time for the Sprint race.
From an industry perspective, so far this season, there has been noticeable positive and collaborative environment within the industry, which has brought all NASCAR stakeholders together to concentrate on moving the sport forward. The landmark charter agreement, NASCAR entered into with its group of racing owners earlier this year has gone a long way towards stabilizing their financial model for race team owners and allowing them the opportunity to now grow transferable equity in their operations similar to what team owners in other major sports can achieve.
The charter agreement has a five-year term with a possible four-year extension period to coincide with the current NASCAR media rights agreement with Fox and NBC. In order to make the 5-year charter commitment to the team owners, NASCAR entered into 5-year sanction agreements with each track that represents Sprint Cup races. Our 5-year sanction agreements have been executed and five of our six races are now formally committed along with our share of broadcast revenue and person sanction fee obligations each year through the year 2020, namely our two Sprint Cup series events, our two Xfinity Series event and our Camping World Truck Series event.
Along with the new charter agreement, NASCAR has provided for greater input and feedback from industry stakeholders through the establishment of a driver's council, the team owners council, the car manufacturers council and a track operators council. These councils enable NASCAR and stakeholders to ensure a more open channel of communication relating to such things such as rule changes, cost containment ideas, race formats, promotion and marketing strategies and event standards.
This enhanced level of communication has already begun to deliver positive outcomes as evidenced by NASCAR's new low downforce rules package which has generated excellent races -- racing at the events so far this season. Also, the expansion of NASCAR's championship chase format to the Xfinity Series and the Camping World Truck Series is another positive development this season and will have suspense to the closing races of the season.
There is an industry consensus right now that the ontrack competition this year is the best we've seen in years. And we are now seeing a new crop of younger drivers like Chase Elliott and Ryan Blaney rising up to challenge for wins at the Sprint Cup level. Coincidental with these developments, NASCAR continues to see strong growth in digital and social media metrics which has everyone knows have become a focal point of interest not only as a means through which to reach a younger race fan, but also the metrics are also extremely important to sponsors, media right holders and other NASCAR stakeholders.
So at this point of the season, I would say so far so good and with the industry united like never before, we are looking for more progress in the months ahead. So, right now, I'm going to turn it over to Tim for his review of the financials.
As Denis mentioned, we held no events in the first quarter of either 2016 or 2015, if you look at the statement of earnings, you will see our revenues were $139,000 compared to about $10,000 last year, with this year's revenue primarily from adjustments to the final ancillary rights revenues from NASCAR for 2015.
Our operating and marketing expenses are slightly higher from some increased sales and marketing costs, while G&A expenses were consistent with last year at $1.95 million. Depreciation is $896,000 versus $1.545 million last year, but recall last year had about $725,000 in accelerated depreciation for the seats in Turn 3 that we will no longer be using. We had about 91,000 and such cost in the first quarter of this year.
Also recall that last year, we recognized as income $427,000 of non-refundable deposits made to extent the closing date and the now expired purchase agreement for Nashville's Super Speedway property.
Our net interest expense was down compared to 2015 at $59,000 versus $147,000 last year, now there is some lower outstanding borrowings as well as from lower letter of credit fees. So, our net loss for the quarter was approximately $2.3 million or $0.06 per diluted share compared with a net loss of approximately $2.6 million or $0.07 per share last year, and of course, last year included both the Nashville deposits and the accelerated depreciation.
Looking at the March 31, balance sheet, our financial position remains strong and continues to improve. Our loan balance was $7,580,000 at the end of March compared to $5.9 million at year end and $11,780,000 last March 31. Deferred revenue is down somewhat compared to March 31, 2015, most of this is from later billing than last year for some title sponsors, the ticket sales that are little behind last year at this point and a few entitlements that we still need to sell add to that.
Also included is a cash flow statement for the quarter, where you will see our net cash used in operating activities was very similar to last year at a little more than $1 million. Our capital spending was $332,000 for the quarter, the biggest piece of which was for WiFi upgrades around the property. We also had some grandstand improvements in other facility upgrades as well. The result of all that is that we borrowed $1.7 million roughly during the quarter.
Regarding Nashville, we continue to have a variety of discussions with additional perspective purchasers and are exploring all options for the property that have nothing new to report at this time.
That concludes our prepared remarks and our first quarter update. Thank you very much for your interest.
End of Q&A
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