Dover Motorsports' (DVD) CEO Denis McGlynn on Q2 2021 Results - Earnings Call Transcript

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Dover Motorsports, Inc. (NYSE:DVD) Q2 2021 Earnings Conference Call July 30, 2021 8:00 AM ET

Company Participants

Tim Horne – Chief Financial Officer

Denis McGlynn – President and Chief Executive Officer

Conference Call Participants

Denis McGlynn

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

Tim Horne

In order to help you understand the Company and its results, we may make certain forward-looking statements. It is possible that 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.

Denis McGlynn

Thanks Tim. Well, obviously this was an unusual quarter for the company with both our NASCAR race weekends occurring in the same reporting period versus none last year.

The quarter was highlighted by our reopening of Nashville Superspeedway with a Father’s Day sellout crowd, which required temporary additional, temporary grandstands to accommodate. It was the first full grandstand sellout for NASCAR this year.

Broadcast ratings for the ALLY 400 in Nashville were 22% higher for NBCSN’s telecast versus the previous year’s same date event and it was the second highest rated sports event on cable that week behind the NBA playoffs. There was universal positive response to the Nashville events from fans, race teams, sponsors and media representatives and we are looking forward to going back there to Nashville next year.

Early in the quarter we held our NASCAR weekend here at Dover in front a COVID limited crowd of 20,000 fans. Having sold substantially more tickets than that meant we issued refunds or credits to those fans we were unable to accommodate, and we appreciate everyone's understanding of the situation and we look forward to being back to normal at Dover next spring.

TV ratings for Dover were the best since 2018, and were up 36% from last August. The race was the second most watched sport of the weekend behind only the Preakness. With this year's NASCAR events now behind us, our focus now turns to preparations for our ninth annual Firefly Music Festival scheduled for the last weekend in September. A great talent lineup has been announced. And with COVID restrictions now lifted in Delaware, it should be an outstanding four-day weekend for music fans.

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

Tim Horne

Thanks Denis. As Denis mentioned, we held a triple-header NASCAR weekends at both Dover International Speedway and Nashville Superspeedway during the second quarter of 2021. Given the impact of the pandemic last year, no major events were held during the second quarter of 2020.

If you look at the second quarter statement of earnings, you'll see our revenues were just short of $50 million, compared to $110,000 last year. Our Dover race weekend was an operational success. Admissions revenues and per cap items were somewhat limited as the State of Delaware approved a maximum capacity of 20,000 patrons for the mid-May weekend, but expenses were lower as a result and our corporate sales were strong, allowing us to get close to our budget of results. Our Nashville weekend in mid-June was run without limitation and was very successful. With a grandstand sellout on Sunday and strong corporate sales and hospitality, we exceeded our expectations for the event.

Our operating and marketing expenses were obviously higher than last year at $29.4 million. Additionally, there were somewhat higher employee-related costs, contracting services and repairs expense from the reopening of Nashville.

G&A expenses of $2.2 million were up compared to last year, again, primarily from reopening Nashville with higher employee and utility costs offsetting other costs reductions in Dover.

Appreciation expense was a little higher at $809,000 from starting to depreciate the improvements we made in Nashville in June.

In May, we closed on the sale of approximately 350 acres of property near our Nashville facility, yielding a book gain of just over $8.5 million. We recorded a $500,000 benefit to reduce the contingent bond liability this quarter, as a result of higher-than-expected sales tax collections allocable to the bond funds.

We recorded a benefit of $353,000 in the second quarter of last year, when we announced the reopening of Nashville and first assumed sales taxes would again be available for debt service.

Our effective income tax rate was 25.8% this quarter. In the second quarter of last year, our rate was a benefit of 75.8% as we reversed the portion of the previously booked valuation allowance on Tennessee deferred tax assets that we expected to realize after reopening Nashville and entering into sanction agreements for the Speedway.

So our net earnings for the quarter were $19.7 million or $0.54 per diluted share, compared with a net loss of $689,000 or $0.02 per diluted share last year. Looking at the June 30th balance sheet, we had no debt at quarter end and available cash of just over $18.6 million. Not in that cash balance is Nashville's television money, which we received last week, which is the biggest component of the accounts receivable balance at June 30. The higher payables and accrued expenses primarily represent raise expenses and capital expenditures related to Nashville.

On the cash flow statement for the six-month period, you'll see our net cash from operating activities was just over $1.1 million, compared to net cash used in operating activities of almost $4.4 million last year. The improvement is obviously from holding our events in the second quarter of this year, offset by not receiving our Nashville TV money at June 30.

Capital expenditures were $7.25 million so far this year and related primarily to the reopening project in Nashville. And we, of course, we closed the Nashville land sale during the second quarter with proceeds of $13.8 million. We also paid a $0.04 dividend in June totaling $1.45 million and the result of all that was an increase in cash of just over $6 million through six months.

At this point, we still expect total capital spending for the full year to be approximately $11 million to $11.5 million. Again, most of that was related to getting Nashville reopened.

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

Question-and-Answer Session


Q -


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