DAYTONA BEACH, Fla.,
Oct. 8, 2015 /PRNewswire/
-- International Speedway Corporation (NASDAQ Global Select
Market: ISCA; OTC Bulletin Board: ISCB) ("ISC") today reported
financial results for its fiscal third quarter ended
August 31, 2015.
"Financial results again exceeded our expectations in the third
quarter" stated ISC Chief Executive Officer Lesa France Kennedy. "Solid NASCAR events
in August at Michigan International Speedway and Watkins Glen, growth in earnings from our
investment in the Hollywood Casino at Kansas Speedway and revenue
from the Faster Horses and Phish Magnaball music festivals more
than offset the construction related reduction in seating capacity
for the Coke Zero 400 and the impact of inclement weather at a
number of our events early in the period."
"The Chase for the Sprint Cup Championship is at full throttle
with the line-up for the Contender Round set" continued
France Kennedy. "As we had
hoped, the excitement generated by the Chase is driving such strong
consumer and corporate demand for our fourth quarter NASCAR events
that we are increasing our earnings guidance for the year."
"The reimagining of our iconic Daytona facility, DAYTONA Rising,
is racing towards the checkered flag with a full grand opening of
this historic project scheduled for the Rolex 24 Hours at Daytona
and Speedweeks 2016. On the corporate front, last month ISC
and Sunoco announced a multi-year partnership that will make Sunoco
the fourth Founding Partner for DAYTONA Rising, including naming
rights for one of the five fan injectors."
France Kennedy concluded, "The
stabilization and growth we are seeing in our core business
demonstrates the success we can achieve by sticking with our
capacity management and guest experience initiatives. We can
also grow our business through non-motorsports strategies such as
our Hollywood Casino investment and hosting other major spectator
events at our facilities. These positive trends complement
our industry's long-term broadcast agreements that, along with a
solid balance sheet, position us over the long-term to build
shareholder value."
Third Quarter Comparison
Total revenue for the third quarter ended August 31, 2015
was approximately $125.5 million,
compared to revenue of approximately $130.1
million in the prior-year period. Operating loss was
approximately $7.1 million during the
period compared to operating loss of approximately $3.5 million in the third quarter of fiscal
2014. Year-over-year comparability was impacted by:
- A decrease in attendance and average ticket price for this
year's Coke Zero 400 due to the DAYTONA Rising construction
schedule. Total capacity was limited to 50,000 new stadium seats
available for the event. All other seats had been removed
including Daytona's entire Superstretch, as well as the premium
Sprint Tower seating in the center of the frontstretch. Also, only for 2015, the
Coke Zero was held on Sunday rather than Saturday night to herald
the return of NBC to NASCAR;
- In the third quarter of fiscal 2015, we hosted the Phish
Magnaball music festival at Watkins Glen International
("Watkins Glen"), for which there
was no comparable event in the prior year. Also in the third
quarter of fiscal 2015, we hosted the third annual Faster Horses
music festival at Michigan International Speedway ("Michigan");
- On January 31, 2014, SMI
abandoned its interest and rights in our 50/50 partnership
Motorsports Authentics, LLC ("MA"), consequently bringing our
ownership of MA to 100.0 percent. MA's operations are included in
our consolidated operations subsequent to the date of SMI's
abandonment. In addition, we recognized tax benefits relating to MA
of approximately $2.1 million for the
three months ended August 31, 2014. There was no comparable
event in the same period of fiscal 2015;
- For the third quarter of fiscal 2015, we recognized revenue and
expense related to merchandise operations of approximately
$1.9 million and $1.2 million, respectively. Included
in this amount are $0.9 million of
commission from third party merchandise sales, predominately from
Fanatics, and non-recurring transactions of approximately
$0.4 million of inventory sold to
Fanatics and $0.3 million of
wholesale transactions by MA, which drive a total of $1.0 million in expense including product costs
associated with these transactions and costs related to the
transition of trackside merchandise operations to Fanatics.
This compares to the third quarter of fiscal 2014, where we
recognized revenue and expense related to merchandise operations of
approximately $10.7 million and
$9.2 million, respectively,
which included direct sales of merchandise at trackside;
- During the three months ended August 31, 2015, the Company
recognized approximately $0.4
million, or less than $0.01 per diluted share, in marketing and
consulting costs that are included in general and administrative
expense related to DAYTONA Rising. During the three months ended
August 31, 2014, the Company recognized approximately
$0.2 million, or less than
$0.01 per diluted share, of similar
costs;
- During the three months ended August 31, 2015, the Company
recognized approximately $1.0
million, or $0.01 per diluted
share, of accelerated depreciation that was recorded due to
shortening the service lives of certain assets associated with
DAYTONA Rising and other projects. During the three months ended
August 31, 2014, the Company recognized approximately
$2.7 million, or $0.04 per diluted share, of similar costs related
to DAYTONA Rising and capacity management initiatives;
- During the three months ended August 31, 2015, the Company
recognized approximately $5.4
million, or $0.07 per
diluted share, of losses primarily attributable to demolition
and/or asset relocation costs in connection with DAYTONA Rising and
other capital improvements. During the three months ended
August 31, 2014, the Company recognized approximately
$3.9 million, or $0.05 per diluted share, of similar losses in
connection with DAYTONA Rising and capacity management initiatives;
and
- During the three months ended August 31, 2015, the Company
capitalized approximately $1.2
million, or $0.01 per diluted
share, of interest related to DAYTONA Rising. During the three
months ended August 31, 2014, the Company recognized
approximately $2.1 million, or
$0.03 per diluted share, of similar
interest capitalization.
Net loss for the third quarter ended August 31, 2015 was
approximately $4.0 million, or
$0.08 per diluted share, compared to
net income of approximately $0.2
million, or less than $0.01
per diluted share, in the prior year period. Excluding
certain marketing and consulting costs incurred associated with
DAYTONA Rising, accelerated depreciation, losses associated with
the retirements of certain other long-lived assets, DAYTONA Rising
project capitalized interest, and net loss on sale of certain
assets, non-GAAP (defined below) net loss for the third quarter of
2015 was $0.5 million, or
$0.01 per diluted share.
Non-GAAP net income for the fiscal third quarter of 2014 was
$0.9 million, or $0.02 per diluted share. The year-over-year
decrease in non-GAAP net income and diluted earnings per share is
driven primarily by the construction related reduction in seating
capacity and scheduling of the Coke Zero 400, non-recurring net
revenues and expenses related to the transition of merchandise
operations to Fanatics and depreciation expense for assets placed
in service during 2015 related to DAYTONA Rising prior to the
completion of renovations in 2016.
Year-to-Date Comparison
For the nine months ended August 31, 2015, total revenues
were $426.1 million, compared to
$452.2 million in 2014.
Operating income for the nine-month period was $33.7 million compared to $53.6 million in the prior year.
Year-over-year comparability was impacted by:
- The NASCAR Sprint Cup and Xfinity Series events held at
Darlington in the second quarter of fiscal 2014 will be held in the
fourth quarter of fiscal 2015;
- A decrease in attendance and average ticket price for this
year's Coke Zero 400 due to the DAYTONA Rising construction
schedule. Total capacity was limited to 50,000 new stadium seats
available for the event. All other seats had been removed
including Daytona's entire Superstretch, as well as the premium
Sprint Tower seating in the center of the fronstretch. Also,
only for 2015, the Coke Zero was held on Sunday rather than
Saturday night to herald the return of NBC to NASCAR;
- On January 31, 2014, SMI
abandoned its interest and rights in our 50/50 partnership MA,
consequently bringing our ownership of MA to 100.0 percent. MA's
operations are included in our consolidated operations subsequent
to the date of SMI's abandonment. Prior to January 31, 2014,
MA was accounted for as an equity investment in our financial
statements. As a result of SMI's abandonment of their interest in
MA, we recorded other income of approximately $5.4 million representing the fair value of MA,
over the carrying value, as of January 31,
2014. In addition, we recognized tax benefits relating to MA
of approximately $3.8 million
for the nine months ended August 31, 2014. There was no
comparable event in the same period of fiscal 2015;
- For the nine months ended August 31, 2015, ISC
recognized revenue and expense related to merchandise operations of
approximately $14.6 million and
$12.2 million,
respectively. Included in this amount are $3.2 million of commission from third party
merchandise sales, predominately from Fanatics, non-recurring
transactions of approximately $6.5 million for inventory sold to Fanatics
and $4.0 million of wholesale
transactions by MA, which drive a total of $12.0 million in expense including product costs
associated with the non-recurring transactions, non-recurring costs
related to the transition of trackside merchandise operations to
Fanatics, as well as partial period operating expenses incurred
prior to the transition of Americrown and MA merchandise
operations, for which there was no related revenue. This
compares to the nine months ended August 31, 2014, where ISC
recognized revenue and expense related to merchandise operations of
approximately $32.4 million and
$25.5 million, respectively, which
included direct sales of trackside merchandise and excluded the
partial period pre-consolidation operation of Motorsports
Authentics prior to SMI's abandonment of its MA interest;
- During the nine months ended August 31, 2015, the Company
recognized approximately $1.1
million, or $0.01 per
diluted share, in marketing and consulting costs that are included
in general and administrative expense related to DAYTONA Rising.
During the nine months ended August 31, 2014, the Company
recognized approximately $0.9
million, or $0.01 per diluted
share, of similar costs;
- During the nine months ended August 31, 2015, the Company
recognized approximately $6.9
million, or $0.09 per
diluted share, of accelerated depreciation that was recorded due to
shortening the service lives of certain assets associated with
DAYTONA Rising and other projects. During the nine months ended
August 31, 2014, the Company recognized approximately
$8.7 million, or $0.11 per diluted share, of similar costs related
to DAYTONA Rising and capacity management initiatives;
- During the nine months ended August 31, 2015, the Company
recognized approximately $11.6
million, or $0.15 per
diluted share, of losses primarily attributable to demolition
and/or asset relocation costs in connection with DAYTONA Rising and
other capital improvements. During the nine months ended
August 31, 2014, the Company recognized approximately
$7.3 million, or $0.10 per diluted share, of similar losses in
connection with DAYTONA Rising and capacity management initiatives;
and
- During the nine months ended August 31, 2015, the Company
capitalized approximately $5.0
million, or $0.06 per
diluted share, of interest related to DAYTONA Rising. During the
nine months ended August 31, 2014, the Company recognized
approximately $4.5 million, or
$0.05 per diluted share, of similar
interest capitalization.
Net income for the nine months ended August 31, 2015 was
$24.4 million, or $0.52 per diluted share, compared to a net income
of $41.6 million, or $0.89 per diluted share in 2014. Excluding
certain marketing and consulting costs incurred associated with
DAYTONA Rising, accelerated depreciation, losses associated with
the retirements of certain other long-lived assets, DAYTONA Rising
project capitalized interest, and net gain on sale of certain
assets, non-GAAP (defined below) net income for the nine months
ended August 31, 2015, was $32.9 million, or $0.70 per diluted share. This is compared
to non-GAAP net income for the first nine months of 2014 of
$39.8 million, or $0.86 per diluted share. The year-over-year
decrease in non-GAAP net income and diluted earnings per share is
driven primarily by the change in timing of the Darlington NASCAR
events and the construction related reduction in seating capacity
and scheduling of the Coke Zero 400 discussed above, non-recurring
net revenues and expenses related to the transition of merchandise
operations to Fanatics and depreciation expense for assets placed
in service during 2015 related to DAYTONA Rising prior to
completion of renovations in 2016.
GAAP to Non-GAAP Reconciliation
The following financial information is presented below using
other than U.S. generally accepted accounting principles
("non-GAAP"), and is reconciled to comparable information presented
using GAAP. Non-GAAP net income and diluted earnings per share
below are derived by adjusting amounts determined in accordance
with GAAP for certain items presented in the accompanying selected
operating statement data, net of taxes.
We believe such non-GAAP information is useful and meaningful,
and is used by investors to assess our core operations, which
consist of the ongoing promotion of racing events at our major
motorsports entertainment facilities. Such non-GAAP information
identifies and separately displays and adjusts for items that are
not considered to be reflective of our continuing core operations
at our motorsports entertainment facilities. We believe that such
non-GAAP information improves the comparability of the operating
results and provides a better understanding of the performance of
our core operations for the periods presented. We use this non-GAAP
information to analyze the current performance and trends and make
decisions regarding future ongoing 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 operating income, net income or diluted earnings per
share, which are determined in accordance with GAAP. The
presentation of this non-GAAP financial information is not intended
to be considered independent of or as a substitute for results
prepared in accordance with GAAP. Management uses both GAAP and
non-GAAP information in evaluating and operating the business and
as such deemed it important to provide such information to
investors.
The adjustments for 2014 relate to marketing and consulting
costs incurred associated with DAYTONA Rising, accelerated
depreciation, losses associated with the retirements of certain
other long-lived assets, DAYTONA Rising project capitalized
interest, MA fair value adjustment and income tax benefits, and net
loss on sale of certain assets.
The adjustments for 2015 relate to marketing and consulting
costs incurred associated with DAYTONA Rising, accelerated
depreciation, losses associated with the retirements of certain
other long-lived assets, DAYTONA Rising project capitalized
interest, and net gain on sale of certain assets.
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
August 31,
2014
|
|
August 31,
2015
|
|
August 31,
2014
|
|
August 31,
2015
|
|
(Unaudited)
|
|
(In Thousands, Except
Per Share Amounts)
|
Net income
(loss)
|
$
|
191
|
|
|
$
|
(3,956)
|
|
|
$
|
41,555
|
|
|
$
|
24,352
|
|
Adjustments, net of
tax:
|
|
|
|
|
|
|
|
DAYTONA Rising
project
|
138
|
|
|
255
|
|
|
528
|
|
|
667
|
|
Accelerated
depreciation
|
1,630
|
|
|
593
|
|
|
5,279
|
|
|
4,222
|
|
Losses on asset
retirements
|
2,348
|
|
|
3,262
|
|
|
4,440
|
|
|
7,069
|
|
DAYTONA Rising
project capitalized interest
|
(1,299)
|
|
|
(703)
|
|
|
(2,737)
|
|
|
(3,051)
|
|
MA fair value
adjustment and income tax benefits
|
(2,060)
|
|
|
—
|
|
|
(9,272)
|
|
|
—
|
|
Net (gain)/loss on
sale of certain assets
|
(3)
|
|
|
19
|
|
|
43
|
|
|
(378)
|
|
Non-GAAP net income
(loss)
|
$
|
945
|
|
|
$
|
(530)
|
|
|
$
|
39,836
|
|
|
$
|
32,881
|
|
Per share
data:
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
$
|
0.00
|
|
|
$
|
(0.08)
|
|
|
$
|
0.89
|
|
|
$
|
0.52
|
|
Adjustments, net of
tax:
|
|
|
|
|
|
|
|
DAYTONA Rising
project
|
0.00
|
|
|
0.00
|
|
|
0.01
|
|
|
0.01
|
|
Accelerated
depreciation
|
0.04
|
|
|
0.01
|
|
|
0.11
|
|
|
0.09
|
|
Losses on asset
retirements
|
0.05
|
|
|
0.07
|
|
|
0.10
|
|
|
0.15
|
|
DAYTONA Rising
project capitalized interest
|
(0.03)
|
|
|
(0.01)
|
|
|
(0.05)
|
|
|
(0.06)
|
|
MA fair value
adjustment and income tax benefits
|
(0.04)
|
|
|
—
|
|
|
(0.20)
|
|
|
—
|
|
Net (gain)/loss on
sale of certain assets
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
|
(0.01)
|
|
Non-GAAP diluted
earnings per share
|
$
|
0.02
|
|
|
$
|
(0.01)
|
|
|
$
|
0.86
|
|
|
$
|
0.70
|
|
On the corporate partnership front, the Company has achieved its
gross marketing partnership revenue target for fiscal 2015, up
approximately one percent from fiscal 2014, and sold event
entitlements for all NASCAR Sprint Cup, Xfinity and Camping World
series events. This is compared to last year at this time when
the Company had approximately 97.0 percent of gross marketing
partnership revenue target sold and an open entitlement for one
NASCAR Xfinity series event. According to recent research
published by NASCAR, the appeal of our sport to corporate partners
continues to increase as demonstrated by the steady increase in
participation by Fortune 500 companies, up not only from 2014 but
also from pre-recession years.
External Growth and Other Initiatives
Capital Spending
The Company competes for the consumers' discretionary dollar
with many entertainment options such as concerts and other major
sporting events, not just other motorsport events. To better meet
its customers' expectations, ISC is committed to improving the
guest experience at its facilities through on-going capital
improvements that position it for long-term growth.
In June 2013, ISC's board of
directors endorsed a capital allocation plan for fiscal 2013
through fiscal 2017 to not exceed $600.0
million in capital expenditures over that period. The
five-year capital expenditure plan encompasses all the capital
expenditures for ISC's 13 major motorsports facilities, including
DAYTONA Rising. DAYTONA Rising will account for approximately
$400.0 million, excluding
capitalized interest, of the $600.0 million of the five-year capital
expenditure plan.
With the majority of the capital expenditures for DAYTONA Rising
occurring in fiscal 2014 and 2015, we estimate capital
expenditures, exclusive of capitalized interest, across all of
ISC's existing facilities will be approximately $180.0 million for fiscal 2015. With a
target completion date for DAYTONA Rising in January 2016, capital expenditures associated
with the $600.0 million capital
allocation plan, based on the timing of construction payments, is
expected to decrease significantly, with an expectation of capital
expenditures for projects at all of ISC's existing facilities, to
average approximately $75.0 million
per year in fiscal 2016 and 2017.
For the nine months ended August 31, 2015, the Company
spent approximately $105.7 million on
capital expenditures for projects at its existing facilities, of
which $94.8 million is related to
DAYTONA Rising, with the remainder associated with a variety of
other improvements and renovations. In comparison, the Company
spent approximately $132.5 million
for the nine months ended August 31, 2014, on capital
expenditures for projects at its existing facilities, of which
$122.4 million was related to DAYTONA
Rising.
The Company reviews its capital expenditure program periodically
and modifies it in accordance with its then current assessment of
future financial position and as required to meet current business
needs.
DAYTONA Rising: Reimagining an American Icon
DAYTONA Rising is the redevelopment of the frontstretch of
Daytona International Speedway, ISC's 56-year-old flagship
motorsports facility, to enhance the event experience for its fans,
marketing partners, broadcasters and the motorsports industry.
The vision for DAYTONA Rising places an emphasis on enhancing
the complete fan experience, beginning with five expanded and
redesigned fan entrances, or injectors. Each injector will
lead directly to a series of escalators and elevators that will
transport fans to any of three different concourse levels, each
featuring spacious and strategically-placed social "neighborhoods"
along the nearly mile-long frontstretch.
A total of 11 neighborhoods, each measuring the size of a
football field, will enable fans to meet and socialize during
events without ever missing any on-track action, thanks to dozens
of strategically-placed video screens in every neighborhood. The
central neighborhood, dubbed the "World Center of Racing," features
open sight-lines enabling fans to catch all the on-track action
while celebrating the history of Daytona International Speedway and
its many unforgettable moments throughout more than 50 years of
racing.
Every seat in Daytona's frontstretch will be replaced with
wider, more comfortable seating that will provide pristine
sight-lines. There will also be twice as many restrooms and
three times as many concessions throughout the facility.
During Budweiser Speedweeks 2015, fans experienced some of DAYTONA
Rising's new amenities including first ever vertical
transportation, approximately 40,000 new grandstand seats on the
frontstretch near Turn 1, and new concessions and restrooms.
The Company opened an additional 10,000 new grandstand seats and
supporting amenities in Turn 4 for the 2015 Coke Zero 400.
Since commencement of construction, four Founding Partners have
been announced, Toyota, Florida Hospital, Chevrolet, and most
recently Sunoco, with partnerships extending over 10 years.
Founding partners receive sponsorship rights for a dedicated
injector, as well as approximately 20,000 square feet of innovative
fan engagement space that will enhance the overall guest
experience, and nearly 50,000 square feet of interior and exterior
branding space.
In September 2015, we announced
that Sunoco, a long-time partner in the sport, is expanding their
presence by becoming the fourth Founding Partner for DAYTONA
Rising. The multi-year agreement provides Sunoco naming rights to
an injector as well as 20,000 square feet that will feature fan
engagement opportunities and experiences that vertically span four
concourse levels. In addition, Sunoco will have branding rights for
one of the "neighborhoods" located near its injector. Also in
September, we announced that BRP, the manufacturer of world
renowned motorized recreational vehicles and engines, will serve as
the title sponsor for the 150-mile qualifying races for the DAYTONA
500. The races, which finalize the starting lineup for the DAYTONA
500, will be known as the Can-Am Duel At Daytona. Other
founding and official partner discussions are underway and we
anticipate more announcements in the coming months.
The Company currently anticipates DAYTONA Rising to cost
approximately $400.0 million,
excluding capitalized interest, which it expects to fund from cash
on hand, cash from its operations, and it may use borrowings on its
credit facility for a limited period of time. In June 2014, Florida Governor Rick
Scott signed House Bill 7095 creating the Florida Sports
Development Program and establishing a process for distributing
state tax revenue for the construction or improvement of
professional sports franchise facilities. The DAYTONA Rising
project was among the eligible applicants to receive sales tax
incentives based on the project's capital investment and amount of
sales tax generated by the facility. In 2014, the Company filed its
application and received approval from the state's Department of
Economic Opportunity. Allocation of funds for the
approved applications was not considered during the 2015 session of
the Florida Legislature. The Company intends to continue to
pursue these incentives. A timetable for consideration is unknown
at this time.
Total spending incurred for DAYTONA Rising was $94.8 million during the nine months ended
August 31, 2015. Based on the Company's current
expectations of DAYTONA Rising, it has identified existing assets
that are expected to be impacted by the redevelopment and that
those assets have or will require accelerated depreciation, or
losses on asset retirements. During the nine months ended
August 31, 2015, the Company recognized accelerated
depreciation and losses on disposal of assets totaling
approximately $14.4 million, with a
total of approximately $42.5 million
recognized since the inception of the project.
Despite the Company not anticipating the need for additional
long-term debt to fund this project, accounting rules dictate that
the Company capitalize a portion of the interest on existing
outstanding debt during the construction period. The Company
estimates it will record approximately $13.0
million of capitalized interest from fiscal 2013 through
fiscal 2016. As a result of these assets going into service
during fiscal 2015 and 2016, depreciation expense related directly
to DAYTONA Rising will increase incrementally by approximately
$12.0 million to $14.0 million in
fiscal 2015, and an additional $9.0 million to $10.0
million in fiscal 2016, respectively. Total depreciation
expense for fiscal 2015 is estimated to be between approximately
$93.0 million and $97.0 million, and approximately
$100.0 million to $105.0 million in fiscal 2016, and then
decreasing, due to lower capital spending, to approximately
$85.0 million to $95.0 million
beginning in fiscal 2019.
The Company expects that by providing its fans with a better
experience as well as an expansive platform for its marketing
partners, including an elevated hospitality experience, DAYTONA
Rising, upon completion in 2016, is expected to provide an
immediate incremental lift in Daytona International Speedway's
revenues of approximately $20.0
million, and earnings before interest, taxes, depreciation
and amortization ("EBITDA") lift of approximately $15.0 million with a mid-single-digit growth
rate. The Company also currently anticipates the project to be
accretive to its net income per share within three years of
completion. While these forward looking amounts are management's
projections and the Company believes they are reasonable, its
actual results may vary from these estimates due to unanticipated
changes in projected attendance, lower than expected ticket prices,
and/or lower than forecasted corporate sponsorships. The Company
does not know whether these expectations will ultimately prove
correct and actual revenues and operating results may differ
materially from these estimates.
ONE DAYTONA
In June 2013, the Company entered
into a 50/50 joint venture with Atlanta based Jacoby Development, Inc. ("JDI")
to develop ONE DAYTONA, the proposed premier mixed use and
entertainment destination across from Daytona International
Speedway. In March 2015, the
Company announced a change in its business relationship with JDI
and that we assumed 100.0 percent interest in ONE DAYTONA.
Also in March 2015, the Company
announced Legacy Development, a leading national development group,
as development consultant for ONE DAYTONA. Intensely focused
on innovative destination retail and mixed-use projects, Legacy
Development will work closely with ISC's development resources on
the project. The Legacy team is a natural fit for the project,
having served as the developer for Legends Outlets Kansas City, a
mixed-use retail destination across from the Company's Kansas
Speedway.
Shaner Hotels and Prime Hospitality Group ("PHG") have been
selected as hotel partners. They have executed a franchise
agreement with Marriott International for an exclusive 145-room
full service Autograph Collection hotel at ONE DAYTONA.
The Company continues to refine the conceptual design for the
first phase of ONE DAYTONA. Bass Pro Shops, America's most popular
outdoor store, and Cobb Theatres, the highly respected
Southeastern-based exhibitor, have executed leases to anchor ONE
DAYTONA. The Company is in active discussions with other
potential tenants for ONE DAYTONA. The Company has approved land
use entitlements for ONE DAYTONA to allow for up to 1.4
million square feet of retail/dining/entertainment, 2,500
seats in a movie theater, 660 hotel rooms, 1,350 units of
residential, 567,000 square feet of additional office space
and 500,000 square feet of commercial/industrial space. We
anticipate announcing our revised plans for the first phase of ONE
DAYTONA in the next few months, including a timetable for
commencement, scope of the development, a range of investment,
expected returns and sources of funding in addition to equity
committed.
A Community Development District ("CDD") has been established
for the purpose of installing and maintaining public infrastructure
at ONE DAYTONA. The CDD is a local, special purpose government
framework authorized by Chapter 190 of the Florida Statutes for
managing and financing infrastructure to support community
development.
The CDD has negotiated agreements with the City of Daytona Beach and Volusia County for a total of $40.0 million in incentives to finance a portion
of the estimated $53.0 million in
infrastructure required to move forward with the ONE DAYTONA
project. The Company is currently proceeding with the leasing phase
of the project while simultaneously completing the various
necessary requirements for the CDD to access the incentives to
start infrastructure work.
Hollywood Casino at Kansas Speedway
Kansas Entertainment, LLC, ("Kansas Entertainment") a 50/50
joint venture of Penn Hollywood Kansas, Inc. ("Penn"), a subsidiary
of Penn National Gaming, Inc. and Kansas Speedway Development
Corporation ("KSDC"), a wholly owned indirect subsidiary of ISC,
operates the Hollywood-themed
casino and branded destination entertainment facility, overlooking
turn two at Kansas Speedway. Penn, as the managing member of
Kansas Entertainment, is responsible for the operations of the
casino.
The Company has accounted for Kansas Entertainment as an equity
investment in our financial statements as of August 31, 2014
and 2015. Our 50.0 percent portion of Kansas Entertainment's
net income is approximately $2.3
million and $3.5 million for
the three months ended August 31, 2014 and 2015, respectively,
and $6.7 million and $11.2 million for the nine months ended
August 31, 2014 and 2015, respectively, and is included in
income from equity investments in its consolidated statements of
operations.
For the first nine months of the 2015 fiscal year, the Company
has received cash distributions from the casino totaling
approximately $24.8 million. The
Company expects, for its 2015 fiscal year, that its share of the
cash flow from the casino's operations will be approximately
$32.0 million, compared to
$22.0 million received in fiscal
2014. Approximately $4.5
million of the increase is non-recurring and a result of
transitioning from quarterly to monthly distributions in 2015, with
the balance resulting from improvement in operating results.
Outlook
ISC is raising its previously announced 2015 full year non-GAAP
guidance, reflecting the positive momentum from its consumer and
corporate marketing strategies and favorable results from its
equity investment in the Hollywood Casino at Kansas
Speedway:
- Revenue: $635.0 million to $640.0
million
- EBITDA margin: 30.0% to 30.5%
- Operating margin: 16.0% to 16.5%
- Effective tax rate: 38.5% to 39.0%
- Diluted earnings per share: $1.35
to $1.40
Included in the Company's fiscal 2015 non-GAAP earnings guidance
is approximately $13.0 million
to $14.0 million in depreciation
expense for assets placed in service during 2015 related to DAYTONA
Rising, and non-recurring revenue and expenses related to the
transition of merchandising operations. For fiscal 2015 we
expect the transition of merchandising operations to result in a
net decline in food, beverage and merchandise revenue and expense
of approximately $27.5 million to $28.0
million and $21.5 million to $22.0
million, respectively, and an additional reduction of
approximately $1.0 million to $1.5
million general and administrative costs. This
includes non-recurring revenue of $10.0 million, related to sales of inventory
to Fanatics and wholesale transactions, and $12.0 million of expense, including product costs
associated with the non-recurring transactions, other non-recurring
costs related to the transition of trackside merchandise operations
to Fanatics, as well as partial period operating expenses incurred
prior to the transition of Americrown and MA merchandise operations
for which there was no related revenue. The increased
guidance also includes approximately $2.1
million, or $0.03 EPS, for
DAYTONA Rising related benefits net of expenses driven by partial
opening of previously discussed improvements during Speedweeks and
July events in fiscal 2015.
The Company is also updating guidance for EBITDA to range
between $190.0 million to $195.0
million. Incremental to ISC's EBITDA estimate are cash
distributions from its equity investment in the Hollywood Casino,
approximately $32.0 million.
ISC's fiscal 2015 non-GAAP earnings per share guidance excludes
any income statement impact attributable to the completion of
the DAYTONA Rising project, including non-capitalized costs and
accelerated depreciation for removal of assets not fully
depreciated, partially offset by capitalized interest
expense. Also excluded are potential non-capitalized costs or
charges that could be recognized related to the Company's ONE
DAYTONA development, start up and/or financing costs should the
Company's Hollywood Casino at Kansas Speedway joint venture pursue
construction of an adjacent hotel, any costs related to legal
settlements; gain or loss on sale of fixed assets; accelerated
depreciation and future loss on retirements or relocation of
certain long-lived assets which could be recorded as part of
capital improvements other than DAYTONA Rising resulting from
removal of assets prior to the end of their actual useful life.
In closing, Ms. France Kennedy
stated, "We maintain a solid financial position, developed over
many years, that affords us the ability to follow our disciplined
capital allocation strategy and maintain our leadership position in
the motorsports industry. Building on this foundation we will
continue to execute our five year, $600 million capital
allocation plan through 2017. For the future, we are well
positioned to balance the strategic capital needs of our business
with returning capital to our shareholders."
Conference Call Details
The management of ISC will host a conference call today with
investors at 9:00 a.m. Eastern
Time. To participate, dial toll free (888) 694-4641
five to ten minutes prior to the scheduled start time and request
to be connected to the ISC earnings call, ID number 69157010.
A live Webcast will also be available at that time on the
Company's Web site, www.internationalspeedwaycorporation.com, under
the "Investor Relations" section. A replay will be available
two hours after the end of the call through midnight Thursday, October 22, 2015. To access, dial
(855) 859-2056 and enter the code 69157010, or visit the "Investor
Relations" section of the Company's Web site.
International Speedway Corporation is a leading promoter of
motorsports activities, currently promoting more than 100 racing
events annually as well as numerous other motorsports-related
activities. The Company owns and/or operates 13 of the
nation's major motorsports entertainment facilities, including
Daytona International Speedway® in Florida (home of the DAYTONA 500®); Talladega
Superspeedway® in Alabama;
Michigan International Speedway® located outside Detroit; Richmond International Raceway® in
Virginia; Auto Club Speedway of
Southern CaliforniaSM
near Los Angeles; Kansas Speedway®
in Kansas City, Kansas; Phoenix
International Raceway® in Arizona;
Chicagoland Speedway® and Route 66 RacewaySM near
Chicago, Illinois;
Homestead-Miami SpeedwaySM in Florida; Martinsville Speedway® in
Virginia; Darlington Raceway® in
South Carolina; and Watkins Glen
International® in New York.
The Company also owns and operates Motor Racing
NetworkSM, the nation's largest independent sports radio
network, and Americrown Service CorporationSM, a
subsidiary that provides catering services, and food and beverage
concessions. In addition, the Company has a 50 percent
interest in the Hollywood Casino at Kansas Speedway. For more
information, visit the Company's Web site at
www.internationalspeedwaycorporation.com.
Statements made in this release that express the Company's or
management's beliefs or expectations and which are not historical
facts or which are applied prospectively are forward-looking
statements. It is important to note that the Company's actual
results could differ materially from those contained in or implied
by such forward-looking statements. The Company's results could be
impacted by risk factors, including, but not limited to, weather
surrounding racing events, government regulations, economic
conditions, consumer and corporate spending, military actions, air
travel and national or local catastrophic events. Additional
information concerning factors that could cause actual results to
differ materially from those in the forward-looking statements is
contained from time to time in the Company's SEC filings including,
but not limited to, the 10-K and subsequent 10-Qs. Copies of those
filings are available from the Company and the SEC. The Company
undertakes no obligation to release publicly any revisions to these
forward-looking statements that may be needed to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events. The inclusion of any statement in this
release does not constitute an admission by International Speedway
or any other person that the events or circumstances described in
such statement are material.
(Tables Follow)
# # #
Consolidated
Statements of Operations
(In Thousands, Except
Share and Per Share Amounts)
|
|
|
|
Three Months
Ended
|
|
|
August 31,
2014
|
|
August 31,
2015
|
|
(Unaudited)
|
REVENUES:
|
|
|
|
|
Admissions,
net
|
|
$
|
26,271
|
|
|
$
|
24,038
|
|
Motorsports
related
|
|
81,987
|
|
|
86,628
|
|
Food, beverage and
merchandise
|
|
17,491
|
|
|
10,521
|
|
Other
|
|
4,334
|
|
|
4,303
|
|
|
|
130,083
|
|
|
125,490
|
|
EXPENSES:
|
|
|
|
|
Direct:
|
|
|
|
|
Prize and point fund
monies and NASCAR sanction fees
|
|
30,874
|
|
|
31,824
|
|
Motorsports
related
|
|
33,693
|
|
|
34,503
|
|
Food, beverage and
merchandise
|
|
14,550
|
|
|
9,266
|
|
General and
administrative
|
|
28,190
|
|
|
27,446
|
|
Depreciation and
amortization
|
|
22,438
|
|
|
24,224
|
|
Losses on asset
retirements
|
|
3,863
|
|
|
5,365
|
|
|
|
133,608
|
|
|
132,628
|
|
Operating
loss
|
|
(3,525)
|
|
|
(7,138)
|
|
Interest
income
|
|
20
|
|
|
41
|
|
Interest
expense
|
|
(1,960)
|
|
|
(2,668)
|
|
Equity in net income
from equity investments
|
|
2,330
|
|
|
3,486
|
|
Other
|
|
5
|
|
|
(32)
|
|
Loss before income
taxes
|
|
(3,130)
|
|
|
(6,311)
|
|
Income
taxes
|
|
(3,321)
|
|
|
(2,355)
|
|
Net income
(loss)
|
|
$
|
191
|
|
|
$
|
(3,956)
|
|
|
|
|
|
|
Income (loss) per
share:
|
|
|
|
|
Basic and
diluted
|
|
$
|
0.00
|
|
|
$
|
(0.08)
|
|
Basic weighted
average shares outstanding
|
|
46,593,133
|
|
|
46,647,480
|
|
Diluted weighted
average shares outstanding
|
|
46,606,660
|
|
|
46,647,480
|
|
|
|
|
|
|
Comprehensive income
(loss)
|
|
$
|
354
|
|
|
$
|
(3,792)
|
|
Consolidated
Statements of Operations
(In Thousands, Except
Share and Per Share Amounts)
|
|
|
|
Nine Months
Ended
|
|
|
August 31,
2014
|
|
August 31,
2015
|
|
(Unaudited)
|
REVENUES:
|
|
|
|
|
Admissions,
net
|
|
$
|
92,021
|
|
|
$
|
87,842
|
|
Motorsports
related
|
|
295,604
|
|
|
289,143
|
|
Food, beverage and
merchandise
|
|
53,433
|
|
|
36,830
|
|
Other
|
|
11,125
|
|
|
12,237
|
|
|
|
452,183
|
|
|
426,052
|
|
EXPENSES:
|
|
|
|
|
Direct:
|
|
|
|
|
Prize and point fund
monies and NASCAR sanction fees
|
|
109,227
|
|
|
104,022
|
|
Motorsports
related
|
|
91,808
|
|
|
92,091
|
|
Food, beverage and
merchandise
|
|
42,088
|
|
|
30,671
|
|
General and
administrative
|
|
80,205
|
|
|
80,982
|
|
Depreciation and
amortization
|
|
67,999
|
|
|
72,990
|
|
Losses on asset
retirements
|
|
7,303
|
|
|
11,626
|
|
|
|
398,630
|
|
|
392,382
|
|
Operating
income
|
|
53,553
|
|
|
33,670
|
|
Interest
income
|
|
102
|
|
|
85
|
|
Interest
expense
|
|
(7,796)
|
|
|
(6,738)
|
|
Equity in net income
from equity investments
|
|
6,744
|
|
|
11,232
|
|
Other
|
|
5,377
|
|
|
621
|
|
Income before income
taxes
|
|
57,980
|
|
|
38,870
|
|
Income
taxes
|
|
16,425
|
|
|
14,518
|
|
Net income
|
|
$
|
41,555
|
|
|
$
|
24,352
|
|
|
|
|
|
|
Dividends per
share
|
|
$
|
0.24
|
|
|
$
|
0.26
|
|
Earnings per
share:
|
|
|
|
|
Basic and
diluted
|
|
$
|
0.89
|
|
|
$
|
0.52
|
|
Basic weighted
average shares outstanding
|
|
46,548,078
|
|
|
46,611,656
|
|
Diluted weighted
average shares outstanding
|
|
46,562,082
|
|
|
46,626,223
|
|
|
|
|
|
|
Comprehensive
income
|
|
$
|
42,047
|
|
|
$
|
24,845
|
|
Consolidated
Balance Sheets
(In Thousands, Except
Share and Per Share Amounts)
|
|
|
|
November 30,
2014
|
|
August 31,
2014
|
|
August 31,
2015
|
|
|
(Unaudited)
|
ASSETS
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
158,847
|
|
|
$
|
171,891
|
|
|
$
|
169,249
|
|
Receivables, less
allowance
|
|
27,598
|
|
|
35,477
|
|
|
34,912
|
|
Inventories
|
|
4,030
|
|
|
5,975
|
|
|
1,692
|
|
Income taxes
receivable
|
|
6,202
|
|
|
3,514
|
|
|
15,224
|
|
Deferred income
taxes
|
|
2,789
|
|
|
3,451
|
|
|
2,825
|
|
Prepaid expenses and
other current assets
|
|
8,099
|
|
|
17,865
|
|
|
73,065
|
|
Total Current
Assets
|
|
207,565
|
|
|
238,173
|
|
|
296,967
|
|
|
|
|
|
|
|
|
Property and
Equipment, net
|
|
1,381,190
|
|
|
1,357,570
|
|
|
1,425,681
|
|
Other
Assets:
|
|
|
|
|
|
|
Equity
investments
|
|
122,565
|
|
|
126,623
|
|
|
107,721
|
|
Intangible assets,
net
|
|
178,629
|
|
|
179,268
|
|
|
178,628
|
|
Goodwill
|
|
118,791
|
|
|
118,791
|
|
|
118,791
|
|
Other
|
|
68,911
|
|
|
68,126
|
|
|
7,409
|
|
|
|
488,896
|
|
|
492,808
|
|
|
412,549
|
|
Total
Assets
|
|
$
|
2,077,651
|
|
|
$
|
2,088,551
|
|
|
$
|
2,135,197
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
|
3,435
|
|
|
$
|
3,118
|
|
|
$
|
3,222
|
|
Accounts
payable
|
|
41,491
|
|
|
44,289
|
|
|
49,868
|
|
Deferred
income
|
|
33,043
|
|
|
77,903
|
|
|
83,842
|
|
Other current
liabilities
|
|
18,813
|
|
|
20,883
|
|
|
18,894
|
|
Total Current
Liabilities
|
|
96,782
|
|
|
146,193
|
|
|
155,826
|
|
|
|
|
|
|
|
|
Long-Term
Debt
|
|
268,311
|
|
|
270,885
|
|
|
267,726
|
|
Deferred Income
Taxes
|
|
354,276
|
|
|
340,649
|
|
|
342,081
|
|
Long-Term Deferred
Income
|
|
9,548
|
|
|
8,629
|
|
|
7,287
|
|
Other Long-Term
Liabilities
|
|
2,302
|
|
|
2,689
|
|
|
2,258
|
|
Commitments and
Contingencies
|
|
—
|
|
|
—
|
|
|
—
|
|
Shareholders'
Equity:
|
|
|
|
|
|
|
Class A Common
Stock, $.01 par value, 80,000,000 shares authorized
|
|
262
|
|
|
262
|
|
|
264
|
|
Class B Common
Stock, $.01 par value, 40,000,000 shares authorized
|
|
200
|
|
|
200
|
|
|
199
|
|
Additional paid-in
capital
|
|
447,518
|
|
|
446,581
|
|
|
448,386
|
|
Retained
earnings
|
|
902,433
|
|
|
876,609
|
|
|
914,658
|
|
Accumulated other
comprehensive loss
|
|
(3,981)
|
|
|
(4,146)
|
|
|
(3,488)
|
|
Total Shareholders'
Equity
|
|
1,346,432
|
|
|
1,319,506
|
|
|
1,360,019
|
|
Total Liabilities and
Shareholders' Equity
|
|
$
|
2,077,651
|
|
|
$
|
2,088,551
|
|
|
$
|
2,135,197
|
|
Consolidated
Statements of Cash Flows
(In
Thousands)
|
|
|
|
Nine Months
Ended
|
|
|
August 31,
2014
|
|
August 31,
2015
|
|
|
(Unaudited)
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net income
|
|
$
|
41,555
|
|
|
$
|
24,352
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Gain on assumption of
controlling interest in equity investee
|
|
(5,447)
|
|
|
—
|
|
Depreciation and
amortization
|
|
67,999
|
|
|
72,990
|
|
Stock-based
compensation
|
|
1,889
|
|
|
2,194
|
|
Amortization of
financing costs
|
|
1,333
|
|
|
1,333
|
|
Interest received on
Staten Island note receivable
|
|
4,359
|
|
|
3,486
|
|
Deferred income
taxes
|
|
(26,529)
|
|
|
(12,548)
|
|
Income from equity
investments
|
|
(6,744)
|
|
|
(11,232)
|
|
Distribution from
equity investee
|
|
7,606
|
|
|
12,094
|
|
Loss on asset
retirements, non-cash
|
|
618
|
|
|
428
|
|
Other, net
|
|
111
|
|
|
(602)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Receivables,
net
|
|
(8,284)
|
|
|
(7,314)
|
|
Inventories, prepaid
expenses and other assets
|
|
(9,594)
|
|
|
(7,024)
|
|
Accounts payable and
other liabilities
|
|
1,084
|
|
|
6
|
|
Deferred
income
|
|
42,249
|
|
|
48,538
|
|
Income
taxes
|
|
13,729
|
|
|
(9,365)
|
|
Net cash provided by
operating activities
|
|
125,934
|
|
|
117,336
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
Capital
expenditures
|
|
(132,486)
|
|
|
(105,737)
|
|
Distribution from
equity investee and affiliate
|
|
7,894
|
|
|
12,656
|
|
Equity investments
and advances to affiliate
|
|
(1,052)
|
|
|
—
|
|
Proceeds from sale of
Staten Island property
|
|
6,100
|
|
|
—
|
|
Cash included in
assumption of ownership interest in equity investee
|
|
4,686
|
|
|
—
|
|
Other, net
|
|
25
|
|
|
103
|
|
Net cash used in
investing activities
|
|
(114,833)
|
|
|
(92,978)
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
Payment of long-term
debt
|
|
(533)
|
|
|
(846)
|
|
Cash dividend
paid
|
|
(11,181)
|
|
|
(12,127)
|
|
Reacquisition of
previously issued common stock
|
|
(323)
|
|
|
(983)
|
|
Net cash used in
financing activities
|
|
(12,037)
|
|
|
(13,956)
|
|
Net (decrease)
increase in cash and cash equivalents
|
|
(936)
|
|
|
10,402
|
|
Cash and cash
equivalents at beginning of period
|
|
172,827
|
|
|
158,847
|
|
Cash and cash
equivalents at end of period
|
|
$
|
171,891
|
|
|
$
|
169,249
|
|
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SOURCE International Speedway Corporation