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

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DAYTONA BEACH, Fla., Oct. 04, 2018 (GLOBE NEWSWIRE) -- 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, 2018.

"Our overall financial results for the third quarter are in line with expectations and the 2018 outlook," stated Lesa France Kennedy, ISC Chief Executive Officer. "During the quarter, Watkins Glen announced the fourth consecutive sell-out of reserved grandstand seats for the Monster Energy NASCAR Cup Series event.  Also, the realigned date at Chicagoland Speedway is paving the path for a tradition of NASCAR racing in July, honoring service men and women with its thematic 'Stars and Stripes' weekend.  We remain committed to our consumer-focused sales and marketing initiatives, providing segmented experiences desired by fans for a good value, which we expect will stabilize recent headwinds facing admissions."

"In September, Richmond Raceway debuted the DC Solar Fangrounds, which left fans star struck as they got closer to the action and their favorite drivers, an experience unmatched by any other motorsports facility.  The development at ISM Raceway is also progressing nicely.  The new renovations are on schedule to be showcased at the track's triple-header weekend in November.  We believe these improvements, combining innovative technology, social zones and interactive fan engagement areas with the stars of our sport, will competitively position ISC and ISM Raceway in the Phoenix market."

"Development at ONE DAYTONA continues to gain momentum as tenants complete construction and commence operations.  Recently, GameTime, an ultimate destination for family entertainment, opened its 35,000 square foot location, providing guests with many entertainment options, including bowling, arcade games and a full-service restaurant and sports bar.  The DAYTONA, the Marriott Autograph Collection hotel, is progressing with an anticipated opening in early 2019.  Entertainment continues to be 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."

Third Quarter Comparison

Total revenues for the three months ended August 31, 2018 were approximately $159.3 million, compared to revenues of approximately $131.9 million for the same period in fiscal 2017. Operating income was approximately $10.3 million during the period compared to approximately $2.2 million for the same period in fiscal 2017. Period-over-period comparability was impacted by:

  • The Monster Energy NASCAR Cup, Xfinity and Truck Series were held at Chicagoland Speedway in the third quarter of fiscal 2018 compared to the fourth quarter of fiscal 2017;

  • In the third quarter of fiscal 2018, we hosted a music festival at Auto Club Speedway, where this event was not held at one of our facilities in fiscal 2017;

  • During the three months ended August 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 periods of fiscal 2017 (see "External Growth, Financing-Related and Other Initiatives - ONE DAYTONA");

  • During the three months ended August 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 August 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 August 31, 2017, we recognized $2.1 million, or $0.03 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"). There were no similar charges incurred during the three months ended August 31, 2018;

  • During the three months ended August 31, 2018, we recognized approximately $2.2 million, or $0.04 per diluted share, of asset retirement losses primarily attributable to demolition and/or asset relocation costs in connection with facility optimization initiatives and The ISM Raceway Project. During the three months ended August 31, 2017, we recognized approximately $0.1 million, or less than $0.01 per diluted share of similar losses related to The ISM Raceway Project;

  • During the three months ended August 31, 2018, we recognized total capitalized interest of approximately $1.2 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 August 31, 2017, we capitalized interest of approximately $0.7 million, or $0.01 per diluted share, associated with ONE DAYTONA and approximately $0.4 million, or $0.01 per diluted share, related to The ISM Raceway Project;

  • During the three months ended August 31, 2017, we recognized approximately $0.3 million, or less than $0.01 per diluted share, of net gain on sale of certain assets. There were no similar items during the three months ended August 31, 2018; and

  • During the three months ended August 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.  In the three months ended August 31, 2018 we recorded a $1.2 million, or $0.03 per diluted share, reduction of deferred income tax liabilities and income tax benefit as a result of the aforementioned Federal income tax rate reduction.  In the three months ended August 31, 2017, we impaired a deferred tax asset of approximately $2.1 million, or $0.04 per diluted share, resulting in a charge to income tax expense.

Net income for the three months ended August 31, 2018, was approximately $12.0 million, or $0.27 per diluted share, compared to approximately $0.3 million, or $0.01 per diluted share, in the prior year period. Excluding 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 The ISM Raceway Project and ONE DAYTONA, net gain on sale of certain assets, impairment of deferred tax asset, and the income tax benefit related to the Tax Cuts and Jobs Act, non-GAAP net income, as defined below, was $11.6 million, or $0.26 per diluted share, as compared to $2.9 million, or $0.06 per diluted share, for the three months ended August 31, 2018 and 2017, respectively (see "GAAP to Non-GAAP Reconciliation").

Year-to-Date Comparison

Total revenues for the nine months ended August 31, 2018 were approximately $479.8 million, compared to revenues of approximately $445.2 million for the same period in fiscal 2017. Operating income was approximately $60.0 million during the period compared to approximately $54.4 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;

  • The Monster Energy NASCAR Cup, Xfinity and Truck Series were held at Chicagoland Speedway in the third quarter of fiscal 2018 compared to the fourth quarter of fiscal 2017;

  • In the third quarter of fiscal 2018, we hosted a music festival at Auto Club Speedway, where this event was not held at one of our facilities in fiscal 2017;

  • During the nine months ended August 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 nine months ended August 31, 2018, we recognized $1.8 million, or $0.03 per diluted share, 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 legal 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 nine months ended August 31, 2018, we recognized approximately $0.3 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 nine months ended August 31, 2017, we recognized approximately $0.3 million, or less than $0.01 per diluted share, in similar costs related to The ISM Raceway Project;

  • During the nine months ended August 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 nine months ended August 31, 2017, we recognized $4.7 million, or $0.07 per diluted share, of similar costs associated with The ISM Raceway Project and other capital improvements, including the infield project at Richmond Raceway;

  • During the nine months ended August 31, 2018, we recognized approximately $3.4 million, or $0.06 per diluted share, of asset retirement losses primarily attributable to demolition and/or asset relocation costs in connection with facility optimization initiatives, The ISM Raceway Project and to a lesser extent, ONE DAYTONA. During the nine months ended August 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 nine months ended August 31, 2018, we recognized total capitalized interest of approximately $2.9 million, or $0.05 per diluted share, of which approximately $2.6 million, or $0.05 per diluted share, was associated with The ISM Raceway Project and $0.3 million, or less than $0.01 per diluted share, associated with ONE DAYTONA. During the nine months ended August 31, 2017, we recognized total capitalized interest of approximately $2.5 million, or $0.03 per diluted share, of which approximately $1.7 million, or $0.02 per diluted share, associated with ONE DAYTONA and approximately $0.7 million, or $0.01 per diluted share, related to The ISM Raceway Project;

  • During the nine months ended August 31, 2017, we recognized approximately $0.3 million, or less than $0.01 per diluted share, of net gain on sale of certain assets. There were no similar items during the nine months ended August 31, 2018; and

  • During the nine months ended August 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 and third quarters of fiscal 2018, we recorded non-recurring, non-cash income tax benefits related to the Tax Cuts and Jobs Act totaling approximately $145.1 million, or $3.28 per diluted share.  In the nine months ended August 31, 2017, we impaired a deferred tax asset of approximately $2.1 million, or $0.04 per diluted share, resulting in a charge to income tax expense.

Net income for the nine months ended August 31, 2018, was approximately $198.0 million, or $4.48 per diluted share, compared to approximately $34.8 million, or $0.78 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 The ISM Raceway Project and ONE DAYTONA, net gain on sale of certain assets, impairment of deferred tax asset, and the income tax benefit related to the Tax Cuts and Jobs Act, non-GAAP net income, as defined below, was $54.4 million, or $1.23 per diluted share, as compared to $37.9 million, or $0.85 per diluted share, for the nine months ended August 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, have 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 and other capital improvements including the infield project at Richmond), 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), net gain on sale of certain assets and impairment of deferred tax asset.

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 The ISM Raceway Project, ONE DAYTONA and facility optimization initiatives, 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 August 31, 2017
  Income Before
Taxes
Income Tax
Effect
Net Income Earnings Per
Share
GAAP $ 4,625   $ 4,360   $ 265   $ 0.01  
Adjustments:        
The ISM Raceway Project 57   22   35   0.00  
Accelerated depreciation 2,055   785   1,270   0.03  
Losses on retirements of long-lived assets 66   25   41   0.00  
Capitalized interest (1,047 ) (400 ) (647 ) (0.02 )
Impairment of deferred tax asset   (2,113 ) 2,113   0.04  
Net gain on sale of certain assets (330 ) (126 ) (204 ) 0.00  
Non-GAAP $ 5,426   $ 2,553   $ 2,873   $ 0.06  
         
  Three Months Ended August 31, 2018
  Income Before
Taxes
Income Tax
Effect
Net Income Earnings Per
Share
GAAP $ 14,500   $ 2,469   $ 12,031   $ 0.27  
Adjustments:        
The ISM Raceway Project 50   13   37   0.00  
Losses on retirements of long-lived assets 2,166   567   1,599   0.04  
Capitalized interest (1,185 ) (310 ) (875 ) (0.02 )
Benefit of income tax law change   1,168   (1,168 ) (0.03 )
Non-GAAP $ 15,531   $ 3,907   $ 11,624   $ 0.26  
         
  Nine Months Ended August 31, 2017
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