Dover Motorsports, Inc. Reports Results for the Third Quarter of 2020

Rhea-AI Summary

Dover Motorsports, Inc. (NYSE: DVD) reported significant financial results for Q3 2020, generating $38,044,000 in revenues, a stark increase from $202,000 in Q3 2019. Operating expenses rose to $22,425,000, while general and administrative expenses remained stable. The company experienced earnings before taxes of $18,025,000, compared to a loss of ($588,000) the previous year. Net earnings reached $13,190,000 or $.36 per diluted share. Notably, the board declared an annual cash dividend of $.07 per share, payable on December 10, 2020.

Positive

• Revenues for Q3 2020 are $38,044,000, a significant increase from $202,000 in Q3 2019.
• Net earnings of $13,190,000 or $.36 per diluted share compared to a net loss of ($414,000) in Q3 2019.
• Earnings before income taxes of $18,025,000 compared to a loss of ($588,000) in Q3 2019.
• No outstanding indebtedness, with approximately $21.3 million in available cash.
• Declared an annual cash dividend of $.07 per share.

Negative

• Operating expenses increased to $22,425,000 from $1,347,000 in Q3 2019.

DOVER, Del.--(BUSINESS WIRE)--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