Dover Motorsports, Inc. (NYSE:DVD)
Q2 2016 Earnings Conference Call
July 28, 2016 10:30 ET
Denis McGlynn - CEO
Mike Tatoian - EVP
Tim Horne - CFO
Klaus Belohoubek - General Counsel
Welcome and thank you all for standing by. At this time, all participants are in a listen-only mode.
Now I will turn the meeting over to your host, Mr. Denis McGlynn. And this call is being recorded. If you have any objections, you may disconnect at this time. Mr. McGlynn, 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 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.
Thanks Tim. Well this quarter's results combined another weather challenged NASCAR weekend with our 5th Annual Firefly Music Festival which enjoyed excellent weather over all four days and the resulting capacity crowd. Rain on Friday and Saturday, Race Weekend and very cold and windy conditions for Sunday's race kept attendance down all three days along with the associated revenues. This was the third consecutive weather impacted major event for the company following last year's Firefly Festival and fall race weekend.
We feel our mid-May date this year with most kids going to school was another obstacle for us and we're happy to be returning to our June date next year. Tim will have the financial details for the quarter in a minute.
Turning to NASCAR, the racing this year is as good if not better than it's ever been and that's certainly was on display here during our Spring Cup race in May which the media reported as the best over race ever. So, we're happy to see the NASCAR improvements on the track. As for our part, here at Dover we continue to work on programs to build attendance and we're having some success with various grade schooling and college promotions which we plan to expand going forward. We're also focusing on approving the experience for fans who join us on site for our races. We've upgraded our concessions and hospitality offerings and developed new gathering spaces where fans can congregate and enjoy the highly social NASCAR environment.
Expanded access opportunities for fans along with outdoor movie nights, fireworks and concerts are also part of the effort and we're getting very positive feedback from our fans right now. Of course getting our blue collar audience back to work would be very helpful too.
I'm going to turn it over to Tim now for his review of the financials.
Thanks, Denis. Our Sprint NASCAR tripleheader and the Firefly Music Festival were held during the second quarter of both 2016 and 2015. Last year's result included the Big Barrel Music Festival which the promoters decided not to hold this year. Additionally last year we recognized these income payments made pursuing to the now expired agreement to the sell the Nashville Superspeedway to both of those items will affect comparability. If you look at the second quarter statement of earnings, you'll see our revenues were $25.3 million compared to 25.4 million last year.
Our NASCAR weekend saw total revenues, they were almost identical to last year, with higher broadcast rights and sponsor revenues offsetting lower admissions and attendance related revenue. On the expense side our purse and sanction fees were about $300,000 while all other expenses were down just slightly compared to last year. So, I'll quote, "our profit was down a little bit compared with last year.
The 5th Annual Firefly Music Festival held over four days was again a successful event as in the past we leased our property to Red Frog Events, the operator of the festival and in addition to our rental fee we also derived revenue from the sale of alcohol during the event and both revenue streams improved compared to last year.
G&A expenses were consistent at $1.8 million, depreciation is $867,000 versus a 1.422 million last year but recall last year had about $655,000 in accelerated depreciation for the seats in turn 3 that we will no longer use. And we had about $68,000 in such costs this year. And as mentioned in the second quarter of last year we've recognized this income $606,000 in non-refundable deposits made to extend the closing date of the now expired purchase agreement for Nashville.
Our net interest expense was down compared to last year at $66,000 and that was from lower outstanding borrowings as rates were essentially identical from year-to-year. And our net earnings for the quarter were approximately $5.1 million or $0.14 per diluted share compared with net earnings of approximately $5.5 million or $0.15 per share last year and that included the Nashville deposits and the accelerated depreciation and the Big Barrel Music Festival.
Looking at our June 30th balance sheet our financial position remained strong and continues to improve. Our outstanding debt was down to $1.5 million at June 30th compared to 5.9 million at the end of last year and 2.8 million at June 30th of 2015. Deferred revenue was down compared to last year and the most of this is from two open entitlements we currently have for the fall weekend, most significant of which is obviously our Sunday cup race while some is from ticket sales that are a little behind last year at this point, some simply relates to timing of payments for sponsors.
Also included is the cash flow statement for the six month period where you'll see cash provided by operations $6.3 million, down from last year from the slightly lower operating earnings primarily from the cancellation of Big Barrel and lower advanced collections to-date compared to this time last year. Capital expenditures were $1.67 million so far this year, the biggest components of which were for safer barriers, restroom upgrades and WiFi upgrades and some other miscellaneous equipment facility improvements. We're planning some improvements to the garage area and have to add some additional safer vaults and then such we expect to spend about a $1 million for the balance of the year.
We also repurchased about 36,000 shares of our common stock at an average price of $2.22 during the quarter. Result of all that is that we paid down $4.4 million of debt so far this year. Regarding Nashville we continue to have a variety of discussions with prospective purchasers and are evaluating all options for the property at this time but have nothing more to report.
That concludes our prepared remarks and our second quarter update. Thank you very much for your interest.
That concludes today's conference. Thank you all for participating. You may now disconnect.
End of Q&A
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