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International Speedway Corporation Reports Financial results for the Second Quarter of Fiscal 2018

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~Reaffirms Full Year 2018 Guidance~

DAYTONA BEACH, Fla., July 05, 2018 (GLOBE NEWSWIRE) -- International Speedway Corporation (NASDAQ Global Select Market:ISCA) (OTC Bulletin Board:ISCB) ("ISC") today reported financial results for its fiscal second quarter ended May 31, 2018.

"Our overall financial results for second quarter are in line with expectations and the 2018 outlook, despite admissions headwinds faced during the quarter," stated Lesa France Kennedy, ISC Chief Executive Officer. "Revenue for events held during the quarter was impacted by weather, construction at ISM Raceway, and a general trend of lower sales at live sporting events. We remain committed to our consumer focused sales and marketing initiatives, providing segmented experiences desired by fans for a good value, which have proven to yield positive results against these trends."

"The developments at ISM Raceway and Richmond Raceway are progressing nicely. At ISM Raceway, new renovations are on schedule, as the last remaining grandstand and media structures were recently removed. At the spring event in Richmond, fans experienced a preview of the future infield. These revitalized facilities will immerse guests into race day activities that can only be experienced at NASCAR events. Both projects will be completed in the fourth quarter of 2018."

"Development at ONE DAYTONA continues. Many tenants have recently completed construction and commenced operations, including first-to-market brands Hy's Toggery, Kasa Living and Clair de Lune. We eagerly await additional tenant openings in the near future. Entertainment is also a focus for ONE DAYTONA, with Victory Circle fast becoming the development's focal point, already hosting events from live music and car shows to meet and greets and community festivals. We anticipate ONE DAYTONA to be the epicenter for retail, dining and entertainment in the Daytona Beach area."

"During the quarter, we announced a 9.3 percent increase to our annual dividend for 2018, further demonstrating our commitment to deliver shareholder value."

Second Quarter Comparison

Total revenues for the three months ended May 31, 2018 were approximately $171.7 million, compared to revenues of approximately $165.3 million for the same period in fiscal 2017. Operating income was approximately $17.3 million during the period compared to approximately $18.4 million for the same period in fiscal 2017. Period-over-period comparability was impacted by:

  • In the second quarter of fiscal 2018, we hosted the Country 500 music festival at Daytona International Speedway ("Daytona"), whereby due to certain changes in contractual agreements, a higher amount of event revenues and expenses was recorded in fiscal 2018 as compared to fiscal 2017. Concessions revenue and expense were recorded similarly for both periods. Overall attendance and concession sales in fiscal 2018 were significantly impacted by tropical storm Alberto, prior to, and during, the event;
  • In the second quarter of fiscal 2018, we received lease rents, and incurred operating expenses, related to ONE DAYTONA as a result of certain tenants commencing operations in the period, for which there was no comparable activity in the same period of fiscal 2017 (see "External Growth, Financing-Related and Other Initiatives - ONE DAYTONA");
  • During the three months ended May 31, 2018, we recognized $1.8 million of revenue related to insurance proceeds. There was no comparable activity in fiscal 2017;
  • During the three months ended May 31, 2017, we received a favorable settlement relating to certain facility operations of approximately $1.0 million, or $0.01 per diluted share. There was no comparable activity in fiscal 2018;
  • During the three months ended May 31, 2018, we recognized approximately $0.1 million, or less than $0.01 per diluted share, in non-recurring costs that are included in general and administrative expense related to The ISM Raceway Project (see "External Growth, Financing-Related and Other Initiatives - The ISM Raceway Project Powered by DC Solar"). During the three months ended May 31, 2017, we recognized approximately $0.1 million, or less than $0.01 per diluted share, in similar costs related to The ISM Raceway Project;
  • During the three months ended May 31, 2018, we recognized approximately $0.3 million, or $0.01 per diluted share, of accelerated depreciation due to shortening the service lives of certain assets associated with The ISM Raceway Project and other capital improvements, including the infield project at Richmond Raceway (see "External Growth, Financing-Related and Other Initiatives - Richmond Raceway"). During the three months ended May 31, 2017, we recognized $2.0 million, or $0.03 per diluted share, of similar costs associated with The ISM Raceway Project;
  • During the three months ended May 31, 2018, we recognized approximately $0.1 million, or less than $0.01 per diluted share, of asset retirement losses primarily attributable to demolition and/or asset relocation costs in connection with facility optimization initiatives and ONE DAYTONA. During the three months ended May 31, 2017, we recognized approximately $0.3 million, or less than $0.01 per diluted share of similar losses related to The ISM Raceway Project;
  • During the three months ended May 31, 2018, we recognized total capitalized interest of approximately $0.8 million, or $0.02 per diluted share, primarily associated with The ISM Raceway Project and, to a lesser extent, ONE DAYTONA. During the three months ended May 31, 2017, we capitalized interest of approximately $0.6 million, or $0.01 per diluted share, associated with ONE DAYTONA and approximately $0.2 million, or less than $0.01 per diluted share, related to The ISM Raceway Project; and,
  • During the three months ended May 31, 2018, our effective tax rate decreased primarily as a result of tax legislation associated with the Tax Cuts and Jobs Act, and to a lesser extent, one-time cumulative reductions in certain state tax liabilities.

Net income for the three months ended May 31, 2018, was approximately $16.7 million, or $0.38 per diluted share, compared to approximately $13.2 million, or $0.29 per diluted share, in the prior year period. Excluding legal settlement, non-recurring costs associated with The ISM Raceway Project, accelerated depreciation related to The ISM Raceway Project and other capital improvements including the infield project at Richmond, losses associated with the retirements of certain other long-lived assets, and capitalized interest associated with ONE DAYTONA and The ISM Raceway Project, non-GAAP net income, as defined below, was $16.4 million, or $0.37 per diluted share, as compared to $13.6 million, or $0.30 per diluted share, for the three months ended May 31, 2018 and 2017, respectively (see "GAAP to Non-GAAP Reconciliation").

Year-to-Date Comparison

Total revenues for the six months ended May 31, 2018 were approximately $320.6 million, compared to revenues of approximately $313.2 million for the same period in fiscal 2017. Operating income was approximately $49.8 million during the period compared to approximately $52.2 million for the same period in fiscal 2017. Period-over-period comparability was impacted by:

  • In the first quarter of fiscal 2017, we hosted the Ferrari World Finals at Daytona International Speedway, for which there was no comparable event in fiscal 2018;
  • In the second quarter of fiscal 2018, we hosted the Country 500 music festival at Daytona, whereby due to certain changes in contractual agreements, a higher amount of event revenues and expenses was recorded in fiscal 2018 as compared to fiscal 2017. Concessions revenue and expense were recorded similarly for both periods. Overall attendance and concession sales in fiscal 2018 were significantly impacted by tropical storm Alberto, prior to, and during, the event;
  • During the six months ended May 31, 2018, we received lease rents, and incurred operating expenses, related to ONE DAYTONA as a result of certain tenants commencing operations in the period, for which there was no comparable activity in the same period of fiscal 2017 (see "External Growth, Financing-Related and Other Initiatives - ONE DAYTONA");
  • During the six months ended May 31, 2018, we recognized $1.8 million of revenue related to insurance proceeds. There was no comparable activity in fiscal 2017;
  • In the second quarter of fiscal 2017, we received a favorable settlement relating to certain facility operations of approximately $1.0 million, or $0.01 per diluted share. There was no comparable activity in fiscal 2018;
  • During the six months ended May 31, 2018, we recognized approximately $0.2 million, or less than $0.01 per diluted share, in non-recurring costs that are included in general and administrative expense related to The ISM Raceway Project (see "External Growth, Financing-Related and Other Initiatives - The ISM Raceway Project Powered by DC Solar"). During the six months ended May 31, 2017, we recognized approximately $0.2 million, or less than $0.01 per diluted share, in similar costs related to The ISM Raceway Project;
  • During the six months ended May 31, 2018, we recognized approximately $1.2 million, or $0.02 per diluted share, of accelerated depreciation due to shortening the service lives of certain assets associated with The ISM Raceway Project and other capital improvements, including the infield project at Richmond Raceway (see "External Growth, Financing-Related and Other Initiatives - Richmond Raceway"). During the six months ended May 31, 2017, we recognized $2.7 million, or $0.04 per diluted share, of similar costs associated with The ISM Raceway Project;
  • During the six months ended May 31, 2018, we recognized approximately $1.2 million, or $0.02 per diluted share, of asset retirement losses primarily attributable to demolition and/or asset relocation costs in connection with facility optimization initiatives, and to a lesser extent, ONE DAYTONA. During the six months ended May 31, 2017, we recognized approximately $0.3 million, or less than $0.01 per diluted share, of similar losses related to The ISM Raceway Project;
  • During the six months ended May 31, 2018, we recognized total capitalized interest of approximately $1.7 million, or $0.03 per diluted share, of which approximately $1.5 million, or $0.03 per diluted share, was associated with The ISM Raceway Project and $0.2 million, or less than $0.01 per diluted share, associated with ONE DAYTONA. During the six months ended May 31, 2017, we recognized total capitalized interest of approximately $1.4 million, or $0.02 per diluted share, of which approximately $1.1 million, or $0.02 per diluted share, associated with ONE DAYTONA and approximately $0.3 million, or less than $0.01 per diluted share, related to The ISM Raceway Project; and
  • During the six months ended May 31, 2018, our effective tax rate decreased primarily as a result of tax legislation associated with the Tax Cuts and Jobs Act, and to a lesser extent, one-time cumulative reductions in certain state tax liabilities. Additionally, in the first quarter of fiscal 2018, we recorded a non-recurring, non-cash income tax benefit related to the Tax Cuts and Jobs Act of approximately $143.9 million, or $3.25 per diluted share.

Net income for the six months ended May 31, 2018, was approximately $186.0 million, or $4.21 per diluted share, compared to approximately $34.5 million, or $0.77 per diluted share, in the prior year period. Excluding legal settlement, non-recurring costs associated with The ISM Raceway Project, accelerated depreciation related to The ISM Raceway Project and other capital improvements including the infield project at Richmond, losses associated with the retirements of certain other long-lived assets, capitalized interest associated with ONE DAYTONA and The ISM Raceway Project, and the income tax benefit related to the Tax Cuts and Jobs Act, non-GAAP net income, as defined below, was $42.8 million, or $0.97 per diluted share, as compared to $35.0 million, or $0.78 per diluted share, for the six months ended May 31, 2018 and 2017, respectively (see "GAAP to Non-GAAP Reconciliation").

GAAP to Non-GAAP Reconciliation

The following discussion and analysis of our financial condition and results of operations is presented below using financial measures other than U.S. generally accepted accounting principles ("non-GAAP"). Non-GAAP financial measures, such as Adjusted EBITDA (see below for management interpretation of Adjusted EBITDA), should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). The non-GAAP financial measures disclosed herein do not have standard meaning and may vary from the non-GAAP financial measures used by other companies or how we may calculate those measures in other instances from time to time. The financial information, presented in the tables that follow, has been reconciled to comparable GAAP measures (see "Adjusted EBITDA" below).

The non-GAAP financial measures identified in the tables that follow include adjusted income before taxes, adjusted net income and adjusted diluted earnings per share. These non-GAAP financial measures are derived by adjusting amounts for certain items, presented in the accompanying selected operating statement data that have been determined in accordance with GAAP. The financial measures, income before taxes, net income and diluted earnings per share, should not be construed as an inference by us that our future results will be unaffected by those items, which have been excluded to achieve our adjusted, non-GAAP financial measures.

We believe such non-GAAP information is useful and meaningful, and is used by investors to assess the performance of our core operations, which primarily consist of the ongoing promotions of racing events at our major motorsports entertainment facilities. Such non-GAAP information separately identifies, 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 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 following financial information 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.

The adjustments for fiscal 2017 relate to non-recurring costs incurred associated with The ISM Raceway Project, accelerated depreciation (associated with The ISM Raceway Project), legal settlement, losses associated with the retirements of certain other long-lived assets (associated with The ISM Raceway Project), and capitalized interest (associated with ONE DAYTONA and The ISM Raceway Project).

The adjustments for fiscal 2018 relate to non-recurring costs incurred associated with The ISM Raceway Project, losses associated with the retirements of certain other long-lived assets in connection with facility optimization initiatives and ONE DAYTONA, accelerated depreciation (related to The ISM Raceway Project and other capital improvements including the infield project at Richmond), capitalized interest related to The ISM Raceway Project and ONE DAYTONA, and the income tax benefit related to the Tax Cuts and Jobs Act.

Amounts are in thousands, except per share data, which is shown net of income taxes, (unaudited):

   
  Three Months Ended May 31, 2017
  Income Before
Taxes
Income Tax
Effect
Net Income Earnings Per
Share
GAAP $ 21,410   $ 8,183   $ 13,227   $ 0.29  
Adjustments:        
The ISM Raceway Project 89   34   55   0.00  
Accelerated depreciation 2,040   780   1,260   0.03  
Losses on retirements of long-lived assets 283   108   175   0.00  
Legal settlement (980 ) (375 ) (605 ) (0.01 )
Capitalized interest (812 ) (310 ) (502 ) (0.01 )
Non-GAAP $ 22,030   $ 8,420   $ 13,610   $ 0.30  
         
  Three Months Ended May 31, 2018
  Income Before
Taxes
Income Tax
Effect
Net Income Earnings Per
Share
GAAP $ 21,440   $ 4,770   $ 16,670   $ 0.38  
Adjustments:        
The ISM Raceway Project 111   29   82   0.00  
Accelerated depreciation 301   79   222   0.01  
Losses on retirements of long-lived assets 132   33   99   0.00  
Capitalized interest (844 ) (220 ) (624 ) (0.02 )
Non-GAAP $ 21,140   $ 4,691   $ 16,449   $ 0.37  
         
  Six Months Ended May 31, 2017
  Income Before
Taxes
Income Tax
Effect
Net Income Earnings Per
Share
GAAP $ 55,732   $ 21,232   $ 34,500   $ 0.77  
Adjustments:        
The ISM Raceway Project 247   94   153   0.00  
Accelerated depreciation 2,686  
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