Dover Motorsports, Inc. Reports Results for the Third Quarter of 2018

Dover Motorsports, Inc.

DOVER, DE – October 25, 2018 – (Motor Sports Newswire) – Dover Motorsports, Inc. (NYSE: DVD) today reported results for the three months ended September 30, 2018.

Our fall 2018 NASCAR event weekend, which consisted of a K&N Pro Series East event, an XFINITY Series event, and a Monster Energy Cup Series event, was held entirely in the fourth quarter of 2018. The 2017 race weekend was held from September 29 to October 1, 2017, therefore, the 2017 K&N Pro Series East event and the XFINITY Series event were held during the third quarter of 2017 and the Monster Energy Cup Series event was held in the fourth quarter of 2017.

As a result of the schedule change, revenues for the third quarter of 2018 were $227,000 compared with $2,740,000 in the third quarter of 2017.

Operating and marketing expenses were $1,599,000 in the third quarter of 2018 compared to $3,485,000 in the third quarter of 2017. The decrease was the result of the schedule change, offset by the timing of advertising expenses for the fall weekend.

General and administrative expenses of $1,798,000 in the third quarter of 2018 were comparable to $1,774,000 in the third quarter of 2017.

Depreciation expense decreased to $793,000 in the third quarter of 2018 from $863,000 in the third quarter of 2017.

Loss on sale of land represents the estimated loss on the pending sale of the last parcel of land we own near Gateway International Raceway. We expect to close on the land sale in the fourth quarter of 2018.

Net interest decreased to $2,000 in the third quarter of 2018 compared to $34,000 in the third quarter of 2017 due to lower borrowings.

Loss before income taxes for the third quarter of 2018 was ($4,014,000) compared to ($3,396,000) in the third quarter of 2017.

Net loss for the third quarter of 2018 was ($2,699,000) or ($.07) per diluted share compared to ($2,015,000) or ($.06) per diluted share in the third quarter of 2017. A lower effective tax rate in the third quarter of 2018 reduced the tax benefit on the loss in 2018 compared to 2017.

As previously reported, we closed on the sale of a parcel of land in Nashville during the first quarter of 2018 for net proceeds of approximately $5 million after closing costs, resulting in a gain of $2,512,000. Currently, 225 acres of our Nashville Speedway property are under option for a total purchase price of approximately $12.4 million. The Company continues to hold over 1,000 acres of prime commercial real estate.

During the third quarter this year, the Company repurchased 65,038 shares of its common stock on the open market at an average price of $2.12 per share, not including nominal brokerage commissions. We have repurchased 212,082 shares during the first nine months of this year.

As of September 30, 2018, the Company had $600,000 of outstanding indebtedness. During the first nine months of 2018, the Company contributed $1,750,000 to its frozen defined benefit pension plan.

The Company announced yesterday that its Board of Directors declared an annual cash dividend on both classes of common stock of $.08 per share. The dividend will be payable on December 10, 2018 to shareholders of record at the close of business on November 12, 2018. 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,
2018 2017 2018 2017
Revenues:
Admissions $ $ 425 $ 2,853 $ 3,871
Event-related 227 995 5,283 5,739
Broadcasting 1,319 18,128 18,824
Other 1 1 3
227 2,740 26,265 28,437
Expenses:
Operating and marketing 1,599 3,485 16,984 18,639
General and administrative 1,798 1,774 5,552 5,590
Depreciation 793 863 2,496 2,507
Costs to remove long-lived assets 286
4,190 6,122 25,032 27,022
(Loss) gain on sale of land (99 ) 2,413
Operating (loss) earnings (4,062 ) (3,382 ) 3,646 1,415
Interest expense, net (2 ) (34 ) (75 ) (150 )
Benefit (provision) for contingent obligation 4 11 (132 ) (41 )
Other income 46 9 77 80
(Loss) earnings before income taxes (4,014 ) (3,396 ) 3,516 1,304
Income tax benefit (expense) 1,315 1,381 (699 ) (521 )
Net (loss) earnings $ (2,699 ) $ (2,015 ) $ 2,817 $ 783
Net (loss) earnings per common share:
Basic $ (0.07 ) $ (0.06 ) $ 0.08 $ 0.02
Diluted $ (0.07 ) $ (0.06 ) $ 0.08 $ 0.02
Weighted average shares outstanding:
Basic 36,102 36,282 36,165 36,299
Diluted 36,102 36,282 36,165 36,299
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,
2018 2017 2018 2017
GAAP (loss) earnings before income taxes $ (4,014 ) $ (3,396 ) $ 3,516 $ 1,304
Loss (gain) on sale of land (1) 99 (2,413 )
Costs to remove long-lived assets (2) 286
Adjusted (loss) earnings before income taxes $ (3,915 ) $ (3,396 ) $ 1,103 $ 1,590
GAAP net (loss) earnings $ (2,699 ) $ (2,015 ) $ 2,817 $ 783
Loss (gain) on sale of land, net of income taxes (1) 76 (1,908 )
Costs to remove long-lived assets, net of income taxes (2) 167
Adjusted net (loss) earnings $ (2,623 ) $ (2,015 ) $ 909 $ 950
GAAP net (loss) earnings per common share – basic and diluted $ (0.07 ) $ (0.06 ) $ 0.08 $ 0.02
Loss (gain) on sale of land, net of income taxes (1) (0.05 )
Costs to remove long-lived assets, net of income taxes (2)
Adjusted net (loss) earnings per common share – basic and diluted (3) $ (0.07 ) $ (0.06 ) $ 0.02 $ 0.02

_________________________

(1)

During the third quarter of 2018, we entered negotiations to sell a parcel of land we own 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 2018, we closed on the sale of a parcel of land at our Nashville Superspeedway facility resulting in a gain on sale.

(2)

Costs to remove long-lived assets represents costs incurred to remove and dispose of certain grandstand seating at our Dover International Speedway facility.

(3)

The components of GAAP net earnings per common share for the nine months ended September 30, 2017 do not add to the adjusted net 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 gain on sale of land and costs to remove long-lived assets.  Income taxes are based on our approximate statutory tax rates applicable to each of these items.  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,
2018 2017 2017
ASSETS
Current assets:
Cash $ 187 $ 146 $ 1
Accounts receivable 733 2,420 476
Inventories 19 16 15
Prepaid expenses and other 5,827 4,352 1,119
Receivable from Dover Downs Gaming & Entertainment, Inc. 27
Income taxes receivable 1,456 982 562
Assets held for sale 531 2,455 2,455
Total current assets 8,753 10,398 4,628
Property and equipment, net 48,764 51,968 51,000
Nashville Superspeedway facility 23,567 23,545 23,545
Other assets 1,108 1,065 1,107
Total assets $ 82,192 $ 86,976 $ 80,280
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 738 $ 129 $ 61
Accrued liabilities 2,904 3,237 3,049
Payable to Dover Downs Gaming & Entertainment, Inc. 6 7
Contract liabilities 4,528 4,702 1,249
Total current liabilities 8,176 8,068 4,366
Revolving line of credit, net 600 5,880 3,240
Liability for pension benefits 896 3,704 2,819
Provision for contingent obligation 2,092 1,843 1,960
Deferred income taxes 8,618 12,778 8,673
Total liabilities 20,382 32,273 21,058
Stockholders’ equity:
Common stock 1,814 1,830 1,825
Class A common stock 1,851 1,851 1,851
Additional paid-in capital 101,545 101,887 101,844
Accumulated deficit (39,968 ) (47,557 ) (42,858 )
Accumulated other comprehensive loss (3,432 ) (3,308 ) (3,440 )
Total stockholders’ equity 61,810 54,703 59,222
Total liabilities and stockholders’ equity $ 82,192 $ 86,976 $ 80,280
DOVER MOTORSPORTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)
Nine Months Ended
September 30,
2018 2017
Operating activities:
Net earnings $ 2,817 $ 783

Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:

Depreciation 2,496 2,507
Amortization of credit facility fees 47 48
Stock-based compensation 237 305
Deferred income taxes (690 ) (272 )
Provision for contingent obligation 132 41
Gains on equity investments (15 )
Gain on sale of land (2,413 )
Changes in assets and liabilities:
Accounts receivable (257 ) (2,001 )
Inventories (4 ) 1
Prepaid expenses and other (4,731 ) (3,302 )
Receivable from/payable to Dover Downs Gaming & Entertainment, Inc. (1 ) (34 )
Income taxes receivable/payable (290 ) (1,119 )
Accounts payable 549 (191 )
Accrued liabilities (145 ) 379
Contract liabilities 3,279 3,347
Liability for pension benefits (1,811 ) (326 )
Net cash (used in) provided by operating activities (800 ) 166
Investing activities:
Capital expenditures (762 ) (1,779 )
Proceeds from sale of land, net 4,945
Purchases of equity investments (100 ) (142 )
Proceeds from sale of equity investments 90 134
Net cash provided by (used in) investing activities 4,173 (1,787 )
Financing activities:
Borrowings from revolving line of credit 10,200 20,660
Repayments on revolving line of credit (12,840 ) (18,620 )
Repurchase of common stock (547 ) (274 )
Net cash (used in) provided by financing activities (3,187 ) 1,766
Net increase in cash 186 145
Cash, beginning of period 1 1
Cash, end of period $ 187 $ 146

Source: Dover Motorsports, Inc.

Dover Motorsports, Inc.

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