Dover Motorsports, Inc. Reports Results for the Third Quarter Of 2019

 

DOVER, Del.--()--Dover Motorsports, Inc. (NYSE: DVD) today reported results for the three months ended September 30, 2019.

No major events were promoted during the third quarter of 2019 or 2018; therefore, our revenues were minimal.

Operating and marketing expenses were $1,347,000 in the third quarter of 2019 compared to $1,599,000 in the third quarter of 2018. The decrease was primarily the result of lower employee costs and the timing of advertising spending.

General and administrative expenses of $1,888,000 in the third quarter of 2019 were comparable to $1,798,000 in the third quarter of 2018.

Depreciation expense increased to $1,669,000 from $793,000 in the third quarter of 2018. The increase is due to our decision during the third quarter to remove additional grandstand seats 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. We expect to incur an additional $293,000 of accelerated depreciation expense in the fourth quarter of 2019.

As previously reported, we closed on the sale of two parcels of land in Nashville during the third quarter of 2019 for net proceeds of approximately $6,397,000 after closing costs, resulting in a gain of $4,186,000. The purchaser has an option to acquire approximately 97 additional acres for a total purchase price of approximately $6,480,000 (including a $500,000 non-refundable deposit previously made). Assuming the exercise of that option, the Company would continue to hold approximately 1,000 acres of commercial real estate, including the superspeedway.

Net interest income was $20,000 in the third quarter of 2019 compared to interest expense of $2,000 in the third quarter of 2018 due to lower borrowings and interest earned on higher cash balances during the third quarter of this year.

Provision for contingent obligation increased $121,000 during the third quarter of 2019 primarily from changes in the discount rate and reimbursement of fees.

Loss before income taxes for the third quarter of 2019 was ($588,000) compared to ($4,014,000) in the third quarter of 2018. The 2019 results include the $4,186,000 gain on sale and $879,000 of accelerated depreciation, and our 2018 results included a $99,000 loss from the sale of land near St. Louis. On an adjusted basis, excluding these items, loss before income tax benefit for the third quarter was ($3,895,000) in 2019 compared to ($3,915,000) in 2018.

Net loss for the third quarter of 2019 was ($414,000) or ($.01) per diluted share compared to ($2,699,000) or ($.07) per diluted share in the third quarter of 2018. Net loss, adjusted for the aforementioned items, was ($3,087,000) in 2019 compared to ($2,623,000) in 2018.

As of September 30, 2019, the Company had no outstanding indebtedness and approximately $4.8 million in available cash.

During the third quarter this year, the Company repurchased 158,196 shares of its common stock on the open market at an average price of $2.04 per share, not including nominal brokerage commissions. Total repurchases during the first nine months of this year were 208,416 shares.

The Company announced yesterday that its Board of Directors declared an increased annual cash dividend on both classes of common stock of $.10 per share. The dividend will be payable on December 10, 2019 to shareholders of record at the close of business on November 11, 2019. Due to the seasonal nature of our business, we will evaluate dividends annually.

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 leading 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 (LOSS) EARNINGS

In Thousands, Except Per Share Amounts

(Unaudited)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2019

 

2018

 

2019

 

2018

Revenues:
Admissions

$

-

 

$

-

 

$

2,502

 

$

2,853

 

Event-related

 

202

 

 

227

 

 

3,784

 

 

5,283

 

Broadcasting

 

-

 

 

-

 

 

18,878

 

 

18,128

 

Other

 

-

 

 

-

 

 

5

 

 

1

 

 

202

 

 

227

 

 

25,169

 

 

26,265

 

 
Expenses:
Operating and marketing

 

1,347

 

 

1,599

 

 

16,986

 

 

16,984

 

General and administrative

 

1,888

 

 

1,798

 

 

5,630

 

 

5,552

 

Depreciation

 

1,669

 

 

793

 

 

3,256

 

 

2,496

 

 

4,904

 

 

4,190

 

 

25,872

 

 

25,032

 

 
Gain (loss) on sale of land

 

4,186

 

 

(99

)

 

4,325

 

 

2,413

 

 
Operating (loss) earnings

 

(516

)

 

(4,062

)

 

3,622

 

 

3,646

 

 
Interest income (expense)

 

20

 

 

(2

)

 

4

 

 

(75

)

(Provision) benefit for contingent obligation

 

(121

)

 

4

 

 

(367

)

 

(132

)

Other income

 

29

 

 

46

 

 

218

 

 

77

 

 
(Loss) earnings before income taxes

 

(588

)

 

(4,014

)

 

3,477

 

 

3,516

 

 
Income tax benefit (expense)

 

174

 

 

1,315

 

 

(880

)

 

(699

)

 
Net (loss) earnings

$

(414

)

$

(2,699

)

$

2,597

 

$

2,817

 

 
Net (loss) earnings per common share:

Basic

$

(0.01

)

$

(0.07

)

$

0.07

 

$

0.08

Diluted

$

(0.01

)

$

(0.07

)

$

0.07

 

$

0.08

 

 
Weighted average shares outstanding:
Basic

 

35,952

 

 

36,102

 

 

35,998

 

 

36,165

 

Diluted

 

35,952

 

 

36,102

 

 

35,998

 

 

36,165

 

DOVER MOTORSPORTS, INC.
RECONCILIATION OF GAAP (LOSS) EARNINGS BEFORE INCOME TAXES
TO ADJUSTED (LOSS) EARNINGS BEFORE INCOME TAXES
AND RECONCILIATION OF GAAP NET (LOSS) EARNINGS TO ADJUSTED NET (LOSS) EARNINGS
In Thousands, Except Per Share Amounts
(Unaudited)
 

Three Months Ended

 

 

Nine Months Ended

September 30,

 

 

September 30,

2019

 

2018

 

 

2019

 

2018

 
GAAP (loss) earnings before income taxes

$

(588

)

$

(4,014

)

$

3,477

 

$

3,516

 

 
(Gain) loss on sale of land (1)

 

(4,186

)

 

99

 

 

(4,325

)

 

(2,413

)

 
Accelerated depreciation (2)

 

879

 

 

-

 

 

879

 

 

-

 

 
Adjusted (loss) earnings before income taxes

$

(3,895

)

$

(3,915

)

$

31

 

$

1,103

 

 
GAAP net (loss) earnings

$

(414

)

$

(2,699

)

$

2,597

 

$

2,817

 

 
(Gain) loss on sale of land, net of income taxes (1)

 

(3,307

)

 

76

 

 

(3,417

)

 

(1,908

)

 
Accelerated depreciation, net of income taxes (2)

 

634

 

 

-

 

 

634

 

 

-

 

 
Adjusted net (loss) earnings

$

(3,087

)

$

(2,623

)

$

(186

)

$

909

 

 
 
GAAP net (loss) earnings per common share - basic and diluted

$

(0.01

)

$

(0.07

)

$

0.07

 

$

0.08

 

 
Gain on sale of land, net of income taxes (1)

 

(0.09

)

 

-

 

 

(0.09

)

 

(0.05

)

 
Accelerated depreciation, net of income taxes (2)

 

0.02

 

 

-

 

 

0.02

 

 

-

 

 
Adjusted net (loss) earnings per common share - basic and diluted (3)

$

(0.09

)

$

(0.07

)

$

(0.01

)

$

0.02

 

_________________________

(1)

 

 

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 third quarter of 2018, we entered negotiations to sell a parcel of land we owned near St. Louis, Missouri. We adjusted the book value of the land to reflect the expected sale price resulting in a $99,000 loss.

 

 

 

 

 

 

 

During the first quarter of 2019 and 2018, we closed on sales of parcels of land at our Nashville Superspeedway facility resulting in gains of $139,000 and $2,512,000, respectively.

 

 

 

 

(2)

 

 

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 accelerated depreciation being recorded in the third quarter of 2019.

 

 

 

 

(3)

 

 

The components of GAAP net (loss) earnings per common share for the three months ended September 30, 2019 and nine months ended September 30, 2019 and 2018 do not add to the adjusted net (loss) earnings 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 (loss) earnings before income taxes, adjusted net (loss) earnings and adjusted net (loss) earnings per common share - basic and diluted are derived by adjusting amounts determined in accordance with GAAP for the aforementioned gains and losses on sale of land and accelerated depreciation. Income taxes are based on our approximate statutory tax rates. 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 (loss) earnings before income taxes, net (loss) earnings or net (loss) earnings 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,

 

 

2019

 

2018

 

2018

 
ASSETS
Current assets:
Cash

$

4,784

 

$

187

 

$

3,951

 

Accounts receivable

 

1,866

 

 

733

 

 

676

 

Inventories

 

20

 

 

19

 

 

21

 

Prepaid expenses and other

 

6,184

 

 

5,827

 

 

1,055

 

Income taxes receivable

 

95

 

 

1,456

 

 

-

 

Assets held for sale

 

-

 

 

531

 

 

531

 

Total current assets

 

12,949

 

 

8,753

 

 

6,234

 

 
Property and equipment, net

 

50,743

 

 

48,764

 

 

48,137

 

Nashville Superspeedway facility

 

21,292

 

 

23,567

 

 

23,567

 

Right of use asset

 

206

 

 

-

 

 

-

 

Other assets

 

1,170

 

 

1,108

 

 

1,015

 

Total assets

$

86,360

 

$

82,192

 

$

78,953

 

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable

$

1,631

 

$

738

 

$

187

 

Accrued liabilities

 

3,184

 

 

2,904

 

 

3,083

 

Payable to Dover Downs Gaming & Entertainment, Inc.

 

-

 

 

6

 

 

9

 

Income taxes payable

 

-

 

 

-

 

 

118

 

Contract liabilities

 

4,526

 

 

4,528

 

 

1,140

 

Total current liabilities

 

9,341

 

 

8,176

 

 

4,537

 

 
Revolving line of credit

 

-

 

 

600

 

 

-

 

Liability for pension benefits

 

614

 

 

896

 

 

773

 

Lease liability

 

131

 

 

-

 

 

-

 

Non-refundable deposit

 

500

 

 

-

 

 

-

 

Provision for contingent obligation

 

2,751

 

 

2,092

 

 

2,384

 

Deferred income taxes

 

7,743

 

 

8,618

 

 

8,371

 

Total liabilities

 

21,080

 

 

20,382

 

 

16,065

 

 
Stockholders' equity:
Common stock

 

1,793

 

 

1,814

 

 

1,805

 

Class A common stock

 

1,851

 

 

1,851

 

 

1,851

 

Additional paid-in capital

 

101,143

 

 

101,545

 

 

101,416

 

Accumulated deficit

 

(36,229

)

 

(39,968

)

 

(38,826

)

Accumulated other comprehensive loss

 

(3,278

)

 

(3,432

)

 

(3,358

)

Total stockholders' equity

 

65,280

 

 

61,810

 

 

62,888

 

Total liabilities and stockholders' equity

$

86,360

 

$

82,192

 

$

78,953

 

DOVER MOTORSPORTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)

Nine Months Ended

September 30,

2019

 

 

2018

 
Operating activities:
Net earnings

$

2,597

 

$

2,817

 

Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation

 

3,256

 

 

2,496

 

Amortization of credit facility fees

 

47

 

 

47

 

Stock-based compensation

 

243

 

 

237

 

Deferred income taxes

 

(659

)

 

(690

)

Provision for contingent obligation

 

367

 

 

132

 

Gains on equity investments

 

(125

)

 

(15

)

Gain on sale of land

 

(4,325

)

 

(2,413

)

Changes in assets and liabilities:
Accounts receivable

 

(1,190

)

 

(257

)

Inventories

 

1

 

 

(4

)

Prepaid expenses and other

 

(5,159

)

 

(4,731

)

Income taxes receivable/payable

 

(213

)

 

(290

)

Accounts payable

 

129

 

 

549

 

Accrued liabilities

 

38

 

 

(145

)

Payable to Dover Downs Gaming & Entertainment, Inc.

 

(9

)

 

(1

)

Contract liabilities

 

3,386

 

 

3,279

 

Liability for pension benefits

 

(48

)

 

(1,811

)

Net cash used in operating activities

 

(1,664

)

 

(800

)

 
Investing activities:
Capital expenditures

 

(4,651

)

 

(762

)

Proceeds from sale of land and equipment, net

 

7,224

 

 

4,945

 

Non-refundable deposit received

 

500

 

 

-

 

Purchases of equity investments

 

(14

)

 

(100

)

Proceeds from sale of equity investments

 

1

 

 

90

 

Net cash provided by investing activities

 

3,060

 

 

4,173

 

 
Financing activities:
Borrowings from revolving line of credit

 

4,120

 

 

10,200

 

Repayments on revolving line of credit

 

(4,120

)

 

(12,840

)

Repurchase of common stock

 

(528

)

 

(547

)

Credit facility fees

 

(35

)

 

-

 

Net cash used in financing activities

 

(563

)

 

(3,187

)

 
Net increase in cash

 

833

 

 

186

 

Cash, beginning of period

 

3,951

 

 

1

 

Cash, end of period

$

4,784

 

$

187

 

 

Contacts

Timothy R. Horne – Sr. Vice President - Finance
(302) 883-6592

Contacts

Timothy R. Horne – Sr. Vice President - Finance
(302) 883-6592