Dover Motorsports, Inc. (DVD) 2020 Q3 法說會逐字稿

Good morning, everyone. I'm joined by Tim Horne, our CFO, who's going to read our forward-looking statement disclaimer. And then we'll get underway.

In order to help you understand the company and its results, we may make certain forward-looking statements. It is possible the company's actual results might differ from any predictions we make today. Additional information regarding factors that could cause such differences appears in the company's SEC filings.

Thanks, Tim.

Well, for the second consecutive quarter, we have dramatically noncomparable results versus last year. As a result of the coronavirus, our May NASCAR weekend was combined into our August weekend, giving us 6 races to be conducted over 3 days, all without fans. There were no major events in the third quarter last year. NASCAR released its 2021 Cup Series schedule last month, and we were pleased with the improved May 16 date for Dover as well as the confirmation of the June 20 date for Nashville.

Preparations for the reopening of Nashville are continuing, with several key staff positions filled, including the naming of sports management veteran Erik Moses as President. New relationships are being established, and the old ones renewed in the marketplace, and we're excited about the level of enthusiasm over the return of NASCAR to this historic and much sought-after market. The repaving of the Nashville Speedway apron and infield road course is almost complete and numerous smaller projects are well underway. RFPs for certain larger components of the project are out, with bids expected back in 2 weeks. At that time, we should be in a position to finalize the preopening capital budget for Nashville.

At this point, I'll turn it over to Tim for his review of the financials.

Thanks, Denis.

As Denis mentioned, we ran all 6 of our NASCAR events in the third quarter of this year without fans compared to no major events in the third quarter of '19, so if you look at the third quarter statement of earnings, you'll see our revenues were just over $38 million compared to $202,000 last year.

Our operating and marketing expenses were also significantly higher than last year, obviously, from running 6 events compared to no major events in Q3 '19.

Our combined doubleheader weekend was run without fans. This impacts many revenue streams, from admissions to per cap related items such as concessions, merchandise and parking; and also affects certain sponsorship and corporate programs. Most operating expenses were obviously significantly lower as well. Broadcasting revenue and person sanction fees were unaffected by the fact that no fans were in attendance and account for a majority of both revenues and expenses for race weekend. So running the events was very profitable for us, although running them without fans obviously had a negative impact on the gross profit for the events.

G&A expenses of $1.878 million were almost identical to last year and last quarter. Depreciation expense was lower at $756,000 compared to $1.669 million last year, primarily from $879,000 of accelerated depreciation related to removed grandstand seats recorded in the third quarter of last year.

As previously disclosed, in July, we sold approximately 97 acres of land in Nashville for proceeds, less closing costs, of approximately $6.5 million. The transaction yielded a book gain of just over $4.8 million. We had a land transaction in the third quarter of last year as well, when we sold approximately 133 acres of land for a book gain of almost $4.2 million.

We recorded a $128,000 benefit to reduce the contingent bond liability this quarter as a result of lower projected interest rates on the bonds. We had other income of $90,000 this year compared with $29,000 last year, with the increase primarily driven by higher gains on pension investments.

So our net earnings for the quarter were almost $13.2 million or $0.36 per diluted share compared with a net loss of $414,000 or $0.01 per diluted share last year.

We attached the schedule to the earnings release that removed the impact of the various nonrecurring items for the quarter and the 9-month periods.

Looking at our September 30 balance sheet. We had no debt, and our available cash was just over $21.3 million. Contract liabilities are lower than last September primarily as last year's second race weekend was in October and also as we had not put our 2021 tickets on sale as of September 30. So the $1.4 million balance at September 30 represents ticket and sponsor money that will be applied to future events.

Also included is a cash flow statement for the 9-month period, where you'll see our net cash provided by operating activities is just over $8.4 million compared to net cash used in operating activities of about $1.7 million last year. Obviously, the higher net cash generated was related to holding all events before the end of September this year.

Capital expenditures were $349,000 for the quarter and are $545,000 year-to-date, about half of which relates to starting work out in Nashville. We had proceeds from the land sale, net of expenses and the $500,000 deposit previously made, of almost $6 million. And the result of all that was an increase in cash of $13.75 million through 9 months this year.

Lastly, yesterday, our Board declared a cash dividend of $0.07 per share payable on December 10 to shareholders of record at the close of business on November 10. Given the uncertainty surrounding the pandemic and our required capital spending in Nashville next year, the Board considered this prudent at this time, and we'll continue to evaluate this as we move forward.

That concludes our third quarter update. Thank you for your interest.