Dover Motorsports, Inc. (NYSE: DVD) today reported results for the three months ended September 30, 2020.
As previously disclosed, the COVID-19 pandemic caused the postponement of the Company’s scheduled May NASCAR weekend. The three NASCAR events originally scheduled for May were instead held in combination with our scheduled August NASCAR events. All six of the races were held without fans. No major events were held during the third quarter of 2019. Accordingly, the results for the third quarter of 2020 are not comparable to last year.
Revenues for the third quarter of 2020 were $38,044,000 compared to $202,000 for the third quarter of 2019.
Operating and marketing expenses were $22,425,000 compared to $1,347,000 in the third quarter of 2019.
General and administrative expenses of $1,878,000 in the third quarter of 2020 were comparable to $1,888,000 in the third quarter of 2019.
Depreciation expense decreased to $756,000 from $1,669,000 in the third quarter of 2019. The decrease is primarily due to our decision during the third quarter of 2019 to remove grandstand seats at our Dover facility after our 2019 race season. We changed the estimated useful lives of the impacted assets resulting in $879,000 of accelerated depreciation expense in the third quarter of 2019.
As previously disclosed, in July of 2020 we sold approximately 97 acres of land in Nashville for proceeds less closing costs of approximately $6,460,000, resulting in a gain of $4,843,000. The purchaser had previously paid to us a $500,000 deposit that was credited to the purchase price.
During the third quarter of 2019, we closed on the sale of approximately 133 acres of land in Nashville for net proceeds of approximately $6,397,000 after closing costs, resulting in a gain of $4,186,000.
The adjustment to the contingent obligation was a benefit of $128,000 in the third quarter of 2020 compared to an expense of $121,000 in the third quarter of 2019, primarily the result of lower estimated interest rates.
Earnings before income taxes for the third quarter of 2020 were $18,025,000 compared to loss before income taxes of ($588,000) in the third quarter of 2019. The 2020 results include the $4,843,000 gain on sale, and the 2019 results include the $4,186,000 gain on sale and $879,000 of accelerated depreciation. On an adjusted basis, excluding these items, earnings before income taxes were $13,182,000 for the third quarter of 2020 compared to a loss before income tax benefit of ($3,895,000) for the third quarter of 2019.
Net earnings for the third quarter of 2020 were $13,190,000 or $.36 per diluted share compared to net loss of ($414,000) or ($.01) per diluted share for the third quarter of 2019. Net earnings, adjusted for the aforementioned items, were $9,364,000 in 2020 compared to net loss of ($3,087,000) in 2019.
As of September 30, 2020, the Company had no outstanding indebtedness and approximately $21.3 million in available cash.
The Company announced yesterday that its Board of Directors declared an annual cash dividend on both classes of common stock of $.07 per share. The dividend will be payable on December 10, 2020 to shareholders of record at the close of business on November 10, 2020.
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 which could cause results to vary materially. Please refer to the Company's SEC filings for a discussion of such factors.
Dover Motorsports, Inc. is a promoter of NASCAR sanctioned and other motorsports events in the United States whose subsidiaries own and operate Dover International Speedway in Dover, Delaware and Nashville Superspeedway near Nashville, Tennessee. For further information, log on to dovermotorsports.com.
| DOVER MOTORSPORTS, INC. | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) | ||||||||||||||||
| In Thousands, Except Per Share Amounts | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
| Revenues: | ||||||||||||||||
| Admissions | $ | - | $ | - | $ | - | $ | 2,502 | ||||||||
| Event-related | 2,394 | 202 | 2,708 | 3,784 | ||||||||||||
| Broadcasting | 35,646 | - | 35,646 | 18,878 | ||||||||||||
| Other | 4 | - | 4 | 5 | ||||||||||||
38,044 | 202 | 38,358 | 25,169 | |||||||||||||
| Expenses: | ||||||||||||||||
| Operating and marketing | 22,425 | 1,347 | 24,225 | 16,986 | ||||||||||||
| General and administrative | 1,878 | 1,888 | 5,742 | 5,630 | ||||||||||||
| Depreciation | 756 | 1,669 | 2,289 | 3,256 | ||||||||||||
| Cost to remove long-lived assets | - | - | 341 | - | ||||||||||||
25,059 | 4,904 | 32,597 | 25,872 | |||||||||||||
| Gain on sale of land | 4,843 | 4,186 | 4,843 | 4,325 | ||||||||||||
| Operating earnings (loss) | 17,828 | (516 | ) | 10,604 | 3,622 | |||||||||||
| Interest (expense) income | (21 | ) | 20 | (34 | ) | 4 | ||||||||||
| Benefit (provision) for contingent obligation | 128 | (121 | ) | 112 | (367 | ) | ||||||||||
| Other income | 90 | 29 | 115 | 218 | ||||||||||||
| Earnings (loss) before income taxes | 18,025 | (588 | ) | 10,797 | 3,477 | |||||||||||
| Income tax (expense) benefit | (4,835 | ) | 174 | (1,436 | ) | (880 | ) | |||||||||
| Net earnings (loss) | $ | 13,190 | $ | (414 | ) | $ | 9,361 | $ | 2,597 | |||||||
| Net earnings (loss) per common share: | ||||||||||||||||
| Basic | $ | 0.36 | $ | (0.01 | ) | $ | 0.26 | $ | 0.07 | |||||||
| Diluted | $ | 0.36 | $ | (0.01 | ) | $ | 0.26 | $ | 0.07 | |||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 35,836 | 35,952 | 35,836 | 35,998 | ||||||||||||
| Diluted | 35,836 | 35,952 | 35,836 | 35,998 | ||||||||||||
| DOVER MOTORSPORTS, 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 | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
| GAAP earnings (loss) before income taxes | $ | 18,025 | $ | (588 | ) | $ | 10,797 | $ | 3,477 | |||||||
| Gain on sale of land (1) | (4,843 | ) | (4,186 | ) | (4,843 | ) | (4,325 | ) | ||||||||
| Cost to remove long-lived assets (2) | - | - | 341 | - | ||||||||||||
| Accelerated depreciation (3) | - | 879 | - | 879 | ||||||||||||
| Adjusted earnings (loss) before income taxes | $ | 13,182 | $ | (3,895 | ) | $ | 6,295 | $ | 31 | |||||||
| GAAP net earnings (loss) | $ | 13,190 | $ | (414 | ) | $ | 9,361 | $ | 2,597 | |||||||
| Gain on sale of land, net of income taxes (1) | (3,826 | ) | (3,307 | ) | (3,826 | ) | (3,417 | ) | ||||||||
| Cost to remove long-lived assets, net of income taxes (2) | - | - | 246 | - | ||||||||||||
| Accelerated depreciation, net of income taxes (3) | - | 634 | - | 634 | ||||||||||||
| Adjusted net earnings (loss) | $ | 9,364 | $ | (3,087 | ) | $ | 5,781 | $ | (186 | ) | ||||||
| GAAP net earnings (loss) per common share - basic and diluted | $ | 0.36 | $ | (0.01 | ) | $ | 0.26 | $ | 0.07 | |||||||
| Gain on sale of land, net of income taxes (1) | (0.11 | ) | (0.09 | ) | (0.11 | ) | (0.09 | ) | ||||||||
| Cost to remove long-lived assets, net of income taxes (2) | - | - | 0.01 | - | ||||||||||||
| Accelerated depreciation, net of income taxes (3) | - | 0.02 | - | 0.02 | ||||||||||||
| Adjusted net earnings (loss) per common share - basic and diluted(4) | $ | 0.26 | $ | (0.09 | ) | $ | 0.16 | $ | (0.01 | ) | ||||||
(1) | During the third quarter of 2020, we closed on the sale of a parcel of land at our Nashville Superspeedway facility resulting in a gain of $4,843,000. | |
During the third quarter of 2019, we closed on the sale of parcels of land at our Nashville Superspeedway facility resulting in a gain of $4,186,000. | ||
During the first quarter of 2019, we closed on sale of a parcel of land at our Nashville Superspeedway facility resulting in a gain of $139,000. | ||
These transactions were tax effected using our federal statutory rate as we had available state net operating losses. | ||
(2) | Related to the decision to remove grandstand seats at Dover International Speedway, we incurred $341,000 of costs to remove these assets in the first quarter of 2020. This amount was tax effected using our federal and state statutory rates. | |
(3) | During the third quarter of 2019, we made the decision to remove certain grandstand seating at our Dover International Speedway facility at the end of the 2019 race season. As a result, we shortened the service lives of these assets which resulted in $879,000 of accelerated depreciation being recorded in the third quarter of 2019. This amount was tax effected using our federal and state statutory rates. | |
(4) | The components of the GAAP net earnings (loss) per common share for the three months ended September 30, 2020 and nine months ended September 30, 2019 do not add to the adjusted net earnings (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, adjusted 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 gains on sale of land, costs to remove long-lived assets and accelerated depreciation. 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 MOTORSPORTS, INC. | ||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||
| In Thousands | ||||||||||||
| (Unaudited) | ||||||||||||
September 30, | September 30, | December 31, | ||||||||||
2020 | 2019 | 2019 | ||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash | $ | 21,327 | $ | 4,784 | $ | 7,577 | ||||||
| Accounts receivable | 1,232 | 1,866 | 645 | |||||||||
| Inventories | 18 | 20 | 18 | |||||||||
| Prepaid expenses and other | 994 | 6,184 | 1,186 | |||||||||
| Income taxes receivable | - | 95 | 283 | |||||||||
| Total current assets | 23,571 | 12,949 | 9,709 | |||||||||
| Property and equipment, net | 68,125 | 72,035 | 71,357 | |||||||||
| Right of use asset | 131 | 206 | 188 | |||||||||
| Other assets | 1,205 | 1,170 | 1,212 | |||||||||
| Total assets | $ | 93,032 | $ | 86,360 | $ | 82,466 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 793 | $ | 1,631 | $ | 119 | ||||||
| Accrued liabilities | 3,559 | 3,184 | 3,710 | |||||||||
| Income taxes payable | 2,674 | - | - | |||||||||
| Contract liabilities | 1,425 | 4,526 | 976 | |||||||||
| Total current liabilities | 8,451 | 9,341 | 4,805 | |||||||||
| Revolving line of credit | - | - | - | |||||||||
| Liability for pension benefits | 786 | 614 | 1,016 | |||||||||
| Lease liability | 53 | 131 | 112 | |||||||||
| Non-refundable deposit | - | 500 | 500 | |||||||||
| Provision for contingent obligation | 3,276 | 2,751 | 3,389 | |||||||||
| Deferred income taxes | 6,888 | 7,743 | 8,676 | |||||||||
| Total liabilities | 19,454 | 21,080 | 18,498 | |||||||||
| Stockholders' equity: | ||||||||||||
| Common stock | 1,786 | 1,793 | 1,782 | |||||||||
| Class A common stock | 1,851 | 1,851 | 1,851 | |||||||||
| Additional paid-in capital | 101,152 | 101,143 | 100,994 | |||||||||
| Accumulated deficit | (27,607 | ) | (36,229 | ) | (36,968 | ) | ||||||
| Accumulated other comprehensive loss | (3,604 | ) | (3,278 | ) | (3,691 | ) | ||||||
| Total stockholders' equity | 73,578 | 65,280 | 63,968 | |||||||||
| Total liabilities and stockholders' equity | $ | 93,032 | $ | 86,360 | $ | 82,466 | ||||||
| DOVER MOTORSPORTS, INC. | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| In Thousands | ||||||||
| (Unaudited) | ||||||||
Nine Months Ended | ||||||||
September 30, | ||||||||
2020 | 2019 | |||||||
| Operating activities: | ||||||||
| Net earnings | $ | 9,361 | $ | 2,597 | ||||
| Adjustments to reconcile net earnings to | ||||||||
| net cash provided by (used in) operating activities: | ||||||||
| Depreciation | 2,289 | 3,256 | ||||||
| Amortization of credit facility fees | 42 | 47 | ||||||
| Stock-based compensation | 256 | 243 | ||||||
| Deferred income taxes | (1,822 | ) | (659 | ) | ||||
| (Benefit) Provision for contingent obligation | (112 | ) | 367 | |||||
| Gains on equity investments | (4 | ) | (125 | ) | ||||
| Gain on sale of land | (4,843 | ) | (4,325 | ) | ||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | (587 | ) | (1,190 | ) | ||||
| Inventories | - | 1 | ||||||
| Prepaid expenses and other | 171 | (5,159 | ) | |||||
| Income taxes receivable/payable | 2,957 | (213 | ) | |||||
| Accounts payable | 658 | 129 | ||||||
| Accrued liabilities | (266 | ) | 38 | |||||
| Payable to Dover Downs Gaming & Entertainment, Inc. | - | (9 | ) | |||||
| Contract liabilities | 449 | 3,386 | ||||||
| Liability for pension benefits | (109 | ) | (48 | ) | ||||
| Net cash used in operating activities | 8,440 | (1,664 | ) | |||||
| Investing activities: | ||||||||
| Capital expenditures | (545 | ) | (4,651 | ) | ||||
| Proceeds from sale of land and equipment, net | 5,960 | 7,224 | ||||||
| Non-refundable deposit received | - | 500 | ||||||
| Purchases of equity investments | (316 | ) | (14 | ) | ||||
| Proceeds from sale of equity investments | 305 | 1 | ||||||
| Net cash provided by investing activities | 5,404 | 3,060 | ||||||
| Financing activities: | ||||||||
| Borrowings from revolving line of credit | 3,880 | 4,120 | ||||||
| Repayments on revolving line of credit | (3,880 | ) | (4,120 | ) | ||||
| Repurchase of common stock | (94 | ) | (528 | ) | ||||
| Credit facility fees | - | (35 | ) | |||||
| Net cash used in financing activities | (94 | ) | (563 | ) | ||||
| Net increase in cash | 13,750 | 833 | ||||||
| Cash, beginning of period | 7,577 | 3,951 | ||||||
| Cash, end of period | $ | 21,327 | $ | 4,784 | ||||
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