Scheduling, Macro Weaken Q1 for International Speedway
International Speedway Corporation (NASDAQ: ISCA) reported results on a weak 2012 first quarter on Tuesday. The company said results were adversely impacted by macroeconomic challenges, postponed sporting events as well as one-time items impacting quarterly comparability.
Revenue of $127.4 million for the quarter was down 14.3 percent from the comparable period last year. Revenue missed consensus estimates of $134.5 million by 5.3 percent. The drop in revenue, the company said, was impacted by the absence NASCAR Sprint Cup and Nationwide Series Events, which were moved to the second quarter of 2012 this year, as well as the postponement of the NASCAR Camping World Truck Series event, moved to the fourth quarter. These events had been part of the first quarter in 2011, thus resulting in the drop on comparable revenue.
Given the discretionary nature of its product, the company has had high exposure to volatility in consumer confidence. The company saw increased capital spending - $12.8 million, up $1.1 million year-on-year - as it competes for less discretionary dollars with other entertainment options available to consumers. Consumer confidence also impacts the company's corporate marketing partnerships and medial sales for the company's events. The current quarter saw less “vacancy” in its Nascar Sprint Cup and Nationwide entitlements, but with a larger gap to budgeted gross margin budget - 13.7 versus 13 percent - suggesting lower realized revenues per partnership.
The company reported non-GAAP earnings per share of $0.37 for the quarter, down 12 cents from the same quarter in 2011 and 2 cents below average analyst estimates. Asset impairment in last year Q1 contributed for 4 cents of the revenue discrepancy, whereas in the current quarter, Staten Island carrying costs offset net gains on sale of certain assets, at one penny each. Repurchase of 405.5 thousand shares for $10.3 million during the quarter positively impacted comparability as well.
Going forward, the company expects business will pick up, as the second quarter is second only to the fourth from an earnings perspective - the first quarter is typically the second weakest quarter seasonally. Seasonal improvement also comes amid a climate of economic recovery, which is seen on a strengthened labor and stock markets. This will enable the company to enhance revenue realization by increasing prices with no demand repercussions.
ISCA closed at $28.35 a share on Monday and may display the downward tendency experienced in after-hours trading when they open in a few minutes. However, once investors start to look past weak current numbers and toward stronger quarters and better macroeconomic conditions ahead, shares may look at modest to meaningful upsides.
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