Dover Downs Gaming & Entertainment, Inc. (NYSE: DDE) today
reported results for the fourth quarter and year ended December 31,
2018.
Gaming revenues increased 4.2% to $35,868,000 compared to
$34,435,000 for the fourth quarter of 2017. Slot machine and table
game win were both higher, and sports betting win improved as a
result of recently expanded sports wagering in Delaware. These
increases were offset by lower wagering on horse racing compared to
last year.
Other operating revenues of $10,764,000 were up 9% compared to
the fourth quarter of 2017 from an increase in food and beverage
and rooms revenue. Occupancy levels in the Dover Downs Hotel were
approximately 83% and 80% for the fourth quarters of 2018 and 2017,
respectively.
General and administrative costs were $1,242,000 for the fourth
quarter of 2018 compared to $1,297,000 last year.
Costs incurred during the fourth quarter related to the
Company’s pending merger with Twin River Worldwide Holdings, Inc.
were $325,000.
Including the merger related costs, the Company’s pretax
earnings were $686,000 compared with a ($235,000) pretax loss for
the fourth quarter of last year.
Net earnings were $419,000, or $.01 per diluted share compared
with a net loss of ($841,000) or ($.03) per diluted share for the
fourth quarter of 2017. The fourth quarter of 2017 results were
impacted by the Tax Cuts and Job Act, which resulted in an income
tax expense of $662,000, or ($.02) per diluted share.
For the year as a whole, total revenues increased 2% to
$179,931,000, while pretax earnings were $417,000 compared to a
pretax loss of ($619,000) in 2017. Excluding merger related costs,
pretax earnings for 2018 were $1,507,000.
Capital spending was $4,826,000 for the year ended December 31,
2018 as compared to $2,193,000 for 2017.
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 that could cause results
to vary materially. Please refer to the Company’s SEC filings for a
discussion of such factors.
Owned by Dover Downs Gaming & Entertainment, Inc. (NYSE:
DDE), Dover Downs Hotel & Casino® is a premier gaming and
entertainment resort destination in the Mid-Atlantic region. Gaming
operations consist of approximately 2,200 slots, a full complement
of table games, including poker, and a newly expanded race and
sports book taking single game wagers on professional and college
sports. The AAA-rated Four Diamond hotel is Delaware’s largest with
500 luxurious rooms/suites and amenities including a full-service
spa/salon, concert hall and 41,500 sq. ft. of multi-use event
space. Live, world-class harness racing is featured November
through April, and horse racing is simulcast year-round. Additional
property amenities include multiple restaurants from fine dining to
casual fare, bars/lounges and retail shops. For more information,
please visit www.doverdowns.com.
DOVER DOWNS GAMING & ENTERTAINMENT, INC. CONSOLIDATED
STATEMENTS OF EARNINGS (LOSS) In Thousands, Except Per Share
Amounts (Unaudited)
Three Months Ended Years Ended December 31, December 31, 2018
2017 * 2018 2017 * Revenues: Gaming $ 35,868 $ 34,435 $
140,620 $ 138,684 Other operating
10,764
9,879 39,311
37,744 46,632
44,314 179,931
176,428 Expenses: Gaming 33,975
33,494 133,967 133,921 Other operating 8,232 7,541 30,414 28,944
General and administrative 1,242 1,297 5,324 5,321 Merger costs 325
- 1,090 - Depreciation
2,031
2,040 8,231
8,168 45,805
44,372 179,026
176,354 Operating earnings (loss)
827 (58 ) 905 74 Interest expense (192 ) (206 ) (790 ) (840
) Other income
51 29
302 147
Earnings (loss) before income taxes 686 (235 ) 417
(619 ) Income tax expense
(267
) (606 )
(387 ) (523
) Net earnings (loss)
$
419 $ (841
) $ 30 $
(1,142 ) Net earnings (loss) per
common share: - Basic
$ 0.01
$ (0.03 ) $
- $ (0.04
) - Diluted
$ 0.01
$ (0.03 ) $
- $ (0.04
) Weighted average shares outstanding: - Basic
32,447 32,322 32,446 32,321 - Diluted 32,447 32,322 32,446 32,321
_________________________ *
Prior-period information has been restated
for the adoption of Accounting Standards Update (“ASU”) No.
2014-09, Revenue from Contracts with Customers, and ASU No.
2017-07, Improving the Presentation of Net Periodic Pension Cost
and Net Periodic Postretirement Benefit Cost, which we adopted on
January 1, 2018.
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
RECONCILIATION OF GAAP EARNINGS (LOSS) BEFORE INCOME TAXES TO
ADJUSTED EARNINGS (LOSS) BEFORE INCOME TAXES AND RECONCILIATION OF
GAAP NET EARNINGS (LOSS) TO ADJUSTED NET EARNINGS (LOSS) In
Thousands, Except Per Share Amounts (Unaudited)
Three Months Ended Years Ended December 31, December
31, 2018 2017 2018 2017 GAAP earnings (loss) before income
taxes $ 686 $ (235 ) $ 417 $ (619 ) Merger costs (1)
325 -
1,090 - Adjusted
earnings (loss) before income taxes
$
1,011 $ (235 )
$ 1,507 $ (619
) GAAP net earnings (loss) $ 419 $ (841
) $ 30 $ (1,142 ) Merger costs (1) 325 - 1,090 -
Federal income tax reform (2)
-
662 -
662 Adjusted net earnings (loss)
$ 744 $ (179
) $ 1,120 $
(480 ) GAAP net earnings
(loss) per common share - basic and diluted $ 0.01 $ (0.03 ) $ - $
(0.04 ) Merger costs (1) 0.01 - 0.03 - Federal income
tax reform (2)
- 0.02
- 0.02
Adjusted net earnings (loss) per common share - basic and diluted
(3)
$ 0.02 $
(0.01 ) $ 0.03
$ (0.01 )
_________________________ (1)
Merger costs, which are non-deductible for
income tax purposes, relate to legal, accounting and investment
banking expenses incurred in connection with our pending merger
with Twin River Worldwide Holdings, Inc.
(2)
The passage of the Tax Cuts and Jobs Act
in December 2017 lowered our future federal income tax rate to 21%
requiring us to revalue net deferred federal tax assets.
(3)
The components of GAAP net loss per common
share for the year ended December 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 earnings (loss) before
income taxes, net earnings (loss) and adjusted net earnings (loss)
per common share - basic and diluted are derived by adjusting
amounts determined in accordance with GAAP for the aforementioned
merger costs and federal income tax reform. 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 earnings (loss)
before income taxes, net earnings (loss) or net earnings (loss) per
common share - basic and diluted, which are determined in
accordance with GAAP.
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS In Thousands (Unaudited)
December 31, December 31, 2018 2017 * ASSETS Current
assets: Cash $ 10,864 $ 10,714 Accounts receivable 4,297 3,557 Due
from State of Delaware 7,498 5,720 Inventories 1,975 1,928 Prepaid
expenses and other 2,810 2,840 Receivable from Dover Motorsports,
Inc. 9 7 Income taxes receivable
116
318 Total current assets 27,569 25,084
Property and equipment, net 131,322 134,527 Other assets 368
564 Deferred income taxes
1,456
1,786 Total assets
$
160,715 $ 161,961
LIABILITIES AND STOCKHOLDERS’ EQUITY Current
liabilities: Accounts payable $ 2,865 $ 2,571 Purses due horsemen
7,533 5,814 Accrued liabilities 9,888 8,111 Deferred credits 76 49
Contract liabilities 4,126 3,724 Revolving line of credit
15,000 19,900
Total current liabilities
39,488 40,169 Liability for pension benefits
6,883 7,483 Total
liabilities
46,371
47,652 Stockholders’ equity: Common
stock 1,841 1,827 Class A common stock 1,487 1,487 Additional
paid-in capital 6,028 5,877 Retained earnings 109,881 109,817
Accumulated other comprehensive loss
(4,893
) (4,699 ) Total
stockholders’ equity
114,344
114,309 Total liabilities and stockholders’
equity
$ 160,715 $
161,961
_________________________
*
Prior-period information has been restated
for the adoption of ASU No. 2014-09, Revenue from Contracts with
Customers, which we adopted on January 1, 2018.
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS In Thousands (Unaudited)
Years Ended December 31, 2018 2017 * Operating
activities: Net earnings (loss) $ 30 $ (1,142 )
Adjustments to reconcile net earnings
(loss) to net cash provided by operating activities:
Depreciation 8,231 8,168 Amortization of credit facility
origination fees 41 57 Stock-based compensation 239 295 Deferred
income taxes 394 519 Losses on equity investments 30 - Changes in
assets and liabilities: Accounts receivable (740 ) (50 ) Due from
State of Delaware (1,778 ) 1,565 Inventories (47 ) (18 ) Prepaid
expenses and other 20 (446 ) Receivable from Dover Motorsports,
Inc. (2 ) - Income taxes receivable 200 (96 ) Accounts payable 274
23 Purses due horsemen 1,719 (1,835 ) Accrued liabilities 1,781
(127 ) Deferred credits 27 (37 ) Contract liabilities 402 261
Liability for pension benefits
(826
) (437 ) Net cash
provided by operating activities
9,995
6,700 Investing activities:
Capital expenditures (4,826 ) (2,193 ) Purchase of equity
investments (41 ) (59 ) Proceeds from sale of equity investments
29 48 Net
cash used in investing activities
(4,838
) (2,204 )
Financing activities: Borrowings from revolving line of credit
41,290 69,280 Repayments of revolving line of credit (46,190 )
(74,630 ) Repurchase of common stock (74 ) (74 ) Credit facility
fees
(33 ) (35
) Net cash used in financing activities
(5,007 ) (5,459
) Net increase (decrease) in cash 150 (963 )
Cash, beginning of year
10,714
11,677 Cash, end of year
$
10,864 $ 10,714
_________________________ *
Prior-period information has been restated
for the adoption of ASU No. 2014-09, Revenue from Contracts with
Customers, which we adopted on January 1, 2018.
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version on businesswire.com: https://www.businesswire.com/news/home/20190124005137/en/
Timothy R. Horne - Sr. Vice President-Finance(302) 857-3292
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