Dover Motorsports, Inc. (NYSE: DVD) today reported results for the three months ended June 30, 2020.
The COVID-19 pandemic caused the postponement of the Company’s scheduled May NASCAR weekend and the cancelation of the Firefly Music Festival (“Firefly”). The three NASCAR events originally scheduled to be held in May will now be held without fans in combination with our already scheduled August NASCAR weekend events. Firefly will not be rescheduled in 2020, though it is expected to return in 2021. The Company promoted a NASCAR triple-header and hosted Firefly in Dover during the second quarter of 2019. Accordingly, the results for the second quarter of 2020 are not comparable to last year.
Revenues for the second quarter of 2020 were $110,000 compared to $24,838,000 for the second quarter of 2019. The decrease is primarily from the schedule changes described above.
Operating and marketing expenses decreased to $812,000 in the second quarter of 2020 from $14,584,000 in the second quarter of 2019. The decrease is also from the schedule changes and cost cutting efforts implemented at the onset of the pandemic.
General and administrative expenses were $1,877,000 in the second quarter of 2020 compared to $1,826,000 in the second quarter of 2019.
The adjustment to the contingent obligation was a benefit of $353,000 in the second quarter of 2020 compared to an expense of $135,000 during the second quarter of 2019, primarily from changed sales tax assumptions associated with the planned reopening of Nashville Superspeedway.
Other income increased to $163,000 in the second quarter of 2020 from $57,000 in the second quarter of 2019, primarily from higher gains on equity investments.
Loss before income taxes for the second quarter of 2020 was ($2,844,000) compared to earnings before income taxes of $7,546,000 for the second quarter of 2019.
The Company’s effective income tax rate was a benefit of 75.8% in the second quarter of 2020 and is the result of reversing a portion of a previously booked valuation allowance on Tennessee state deferred tax assets, which we now expect to realize with the reopening of the Nashville Superspeedway next year.
Net loss for the second quarter of 2020 was ($689,000) or ($0.02) per diluted share compared to net earnings for the second quarter of 2019 of $5,501,000 or $0.15 per diluted share.
On July 29, 2020, we closed on the sale of approximately 97 acres of property near our Nashville Superspeedway pursuant to an option agreement with an entity owned by Panattoni Development Company. Proceeds from the sale, less closing costs, were approximately $6.5 million. The purchaser had previously paid to us a $500,000 deposit that was credited to the purchase price. Net proceeds after taxes are estimated to be approximately $5.3 million. None of the acreage sold extends to the land on which our superspeedway is sited and the Company continues to hold approximately 1,000 acres of commercial real estate, including the superspeedway.
At June 30, 2020, the Company had no outstanding indebtedness and almost $2.9 million in available cash.
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 | |||||||||||||||
| In Thousands, Except Per Share Amounts | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
| Revenues: | |||||||||||||||
| Admissions | $ | - | $ | 2,502 | $ | - | $ | 2,502 | |||||||
| Event-related | 110 | 3,453 | 314 | 3,582 | |||||||||||
| Broadcasting | - | 18,878 | - | 18,878 | |||||||||||
| Other | - | 5 | - | 5 | |||||||||||
110 | 24,838 | 314 | 24,967 | ||||||||||||
| Expenses: | |||||||||||||||
| Operating and marketing | 812 | 14,584 | 1,800 | 15,639 | |||||||||||
| General and administrative | 1,877 | 1,826 | 3,864 | 3,742 | |||||||||||
| Depreciation | 765 | 794 | 1,533 | 1,587 | |||||||||||
| Cost to remove long-lived assets | - | - | 341 | - | |||||||||||
3,454 | 17,204 | 7,538 | 20,968 | ||||||||||||
| Gain on sale of land | - | - | - | 139 | |||||||||||
| Operating (loss) earnings | (3,344 | ) | 7,634 | (7,224 | ) | 4,138 | |||||||||
| Interest expense, net | (16 | ) | (10 | ) | (13 | ) | (16 | ) | |||||||
| Benefit (provision) for contingent obligation | 353 | (135 | ) | (16 | ) | (246 | ) | ||||||||
| Other income, net | 163 | 57 | 25 | 189 | |||||||||||
| (Loss) earnings before income taxes | (2,844 | ) | 7,546 | (7,228 | ) | 4,065 | |||||||||
| Income tax benefit (expense) | 2,155 | (2,045 | ) | 3,399 | (1,054 | ) | |||||||||
| Net (loss) earnings | $ | (689 | ) | $ | 5,501 | $ | (3,829 | ) | $ | 3,011 | |||||
| Net (loss) earnings per common share: | |||||||||||||||
| Basic | $ | (0.02 | ) | $ | 0.15 | $ | (0.11 | ) | $ | 0.08 | |||||
| Diluted | $ | (0.02 | ) | $ | 0.15 | $ | (0.11 | ) | $ | 0.08 | |||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 35,836 | 36,010 | 35,835 | 36,021 | |||||||||||
| Diluted | 35,836 | 36,010 | 35,835 | 36,021 | |||||||||||
| DOVER MOTORSPORTS, INC. | ||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||
| In Thousands | ||||||||||||
| (Unaudited) | ||||||||||||
| June 30, | June 30, | December 31, | ||||||||||
2020 | 2019 | 2019 | ||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash | $ | 2,886 | $ | 8,989 | $ | 7,577 | ||||||
| Accounts receivable | 1,035 | 1,449 | 645 | |||||||||
| Inventories | 18 | 20 | 18 | |||||||||
| Prepaid expenses and other | 1,493 | 933 | 1,186 | |||||||||
| Income taxes receivable | 353 | - | 283 | |||||||||
| Assets held for sale | 1,622 | 2,203 | - | |||||||||
| Total current assets | 7,407 | 13,594 | 9,709 | |||||||||
| Property and equipment, net | 68,398 | 69,881 | 71,357 | |||||||||
| Right of use asset | 150 | 231 | 188 | |||||||||
| Other assets | 1,156 | 1,169 | 1,212 | |||||||||
| Total assets | $ | 77,111 | $ | 84,875 | $ | 82,466 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 26 | $ | 712 | $ | 119 | ||||||
| Accrued liabilities | 2,948 | 3,053 | 3,710 | |||||||||
| Income taxes payable | - | 1,149 | - | |||||||||
| Contract liabilities | 3,676 | 2,008 | 976 | |||||||||
| Non-refundable deposit | 500 | - | - | |||||||||
| Total current liabilities | 7,150 | 6,922 | 4,805 | |||||||||
| Liability for pension benefits | 863 | 666 | 1,016 | |||||||||
| Lease liability | 73 | 157 | 112 | |||||||||
| Non-refundable deposit | - | 500 | 500 | |||||||||
| Provision for contingent obligation | 3,404 | 2,630 | 3,389 | |||||||||
| Deferred income taxes | 5,300 | 8,074 | 8,676 | |||||||||
| Total liabilities | 16,790 | 18,949 | 18,498 | |||||||||
| Stockholders' equity: | ||||||||||||
| Common stock | 1,788 | 1,809 | 1,782 | |||||||||
| Class A common stock | 1,851 | 1,851 | 1,851 | |||||||||
| Additional paid-in capital | 101,112 | 101,388 | 100,994 | |||||||||
| Accumulated deficit | (40,797 | ) | (35,815 | ) | (36,968 | ) | ||||||
| Accumulated other comprehensive loss | (3,633 | ) | (3,307 | ) | (3,691 | ) | ||||||
| Total stockholders' equity | 60,321 | 65,926 | 63,968 | |||||||||
| Total liabilities and stockholders' equity | $ | 77,111 | $ | 84,875 | $ | 82,466 | ||||||
| DOVER MOTORSPORTS, INC. | ||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
| In Thousands | ||||||||||||
| (Unaudited) | ||||||||||||
| Six Months Ended | ||||||||||||
| June 30, | ||||||||||||
2020 | 2019 | |||||||||||
| Operating activities: | ||||||||||||
| Net (loss) earnings | $ | (3,829 | ) | $ | 3,011 | |||||||
| Adjustments to reconcile net (loss) earnings to net cash (used in) provided by operating activities: | ||||||||||||
| Depreciation | 1,533 | 1,587 | ||||||||||
| Amortization of credit facility fees | 28 | 31 | ||||||||||
| Stock-based compensation | 218 | 176 | ||||||||||
| Deferred income taxes | (3,399 | ) | (317 | ) | ||||||||
| Provision for contingent obligation | 16 | 246 | ||||||||||
| Losses (gains) on equity investments | 50 | (113 | ) | |||||||||
| Gain on sale of land | - | (139 | ) | |||||||||
| Changes in assets and liabilities: | ||||||||||||
| Accounts receivable | (390 | ) | (773 | ) | ||||||||
| Inventories | - | 1 | ||||||||||
| Prepaid expenses and other | (321 | ) | 58 | |||||||||
| Accounts payable | (93 | ) | 555 | |||||||||
| Accrued liabilities | (762 | ) | (104 | ) | ||||||||
| Payable to Dover Downs Gaming & Entertainment, Inc. | - | (9 | ) | |||||||||
| Income taxes payable/receivable | (70 | ) | 1,031 | |||||||||
| Contract liabilities | 2,700 | 868 | ||||||||||
| Liability for pension benefits | (73 | ) | (36 | ) | ||||||||
| Net cash (used in) provided by operating activities | (4,392 | ) | 6,073 | |||||||||
| Investing activities: | ||||||||||||
| Capital expenditures | (196 | ) | (2,154 | ) | ||||||||
| Proceeds from sale of land and equipment, net | - | 827 | ||||||||||
| Non-refundable deposit received | - | 500 | ||||||||||
| Purchases of equity investments | (240 | ) | (9 | ) | ||||||||
| Proceeds from sale of equity investments | 231 | 1 | ||||||||||
| Net cash used in investing activities | (205 | ) | (835 | ) | ||||||||
| Financing activities: | ||||||||||||
| Borrowings from revolving line of credit | 180 | 4,060 | ||||||||||
| Repayments on revolving line of credit | (180 | ) | (4,060 | ) | ||||||||
| Repurchase of common stock | (94 | ) | (200 | ) | ||||||||
| Net cash used in financing activities | (94 | ) | (200 | ) | ||||||||
| Net (decrease) increase in cash | (4,691 | ) | 5,038 | |||||||||
| Cash, beginning of period | 7,577 | 3,951 | ||||||||||
| Cash, end of period | $ | 2,886 | $ | 8,989 | ||||||||
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