Market Overview

International Speedway Corporation Reports Financial results for the Second Quarter of Fiscal 2019

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~Reaffirms Full Year 2019 Guidance~

DAYTONA BEACH, Fla., July 03, 2019 (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, 2019.

"Financial results for the second quarter are in line with our 2019 outlook," stated Lesa France Kennedy, ISC Chief Executive Officer. "During the quarter, we hosted six successful Monster Energy NASCAR Cup weekends and Bike Week at Daytona. We continue our consumer-focused sales and marketing initiatives, providing segmented experiences desired by fans for a good value."

"In April, we opened the Marriott Autograph Collection hotel, The DAYTONA, to great success, and commenced construction of the ICON Lifestyle Apartments, both part of the greater ONE DAYTONA project. We anticipate these components will greatly assist in providing the momentum needed to drive this development to stabilization."

"Construction on the redevelopment of the iconic infield at Talladega Superspeedway continues. The redevelopment will immerse fans into the sport of NASCAR with a one-of-a-kind Talladega Garage Experience, featuring unprecedented access, interactive attractions and enhanced amenities for guests. While components of the redevelopment opened for the spring NASCAR weekend, the full project will be completed in the fourth quarter of fiscal 2019, in time for Talladega's 50th anniversary."

"We believe prudent reinvestment in our facilities and strategic developments will continue to position ISC for long-term growth and deliver shareholder value."

Second Quarter Comparison

Total revenues for the three months ended May 31, 2019 were approximately $168.1 million, compared to revenues of approximately $171.7 million for the same period in fiscal 2018. Operating income was approximately $15.5 million during the period compared to approximately $17.3 million for the same period in fiscal 2018. Period-over-period comparability was impacted by:

  • During our second quarter of fiscal 2019, in accordance with our contracts, we terminated the sponsorship agreements and related sublease agreements with one of our marketing partners that filed for bankruptcy. As a result, we experienced lower admissions and sponsorship revenues related to the sponsorship agreements and lower rental expense related to the sublease agreements during the three months ended May 31, 2019 as compared to the same period in fiscal 2018;
  • In the second quarter of fiscal 2018, we hosted an IndyCar event at ISM Raceway, for which there was no comparable event in fiscal 2019;
  • In the second quarter of fiscal 2018, we hosted the Country 500 music festival at Daytona, for which there was no comparable event in fiscal 2019;
  • During the three months ended May 31, 2019, we recognized revenue and expense recorded in the respective food, beverage and merchandise accounts related to the acquisition of Racing Electronics, for which there was no comparable activity in the same period of the prior year;
  • During the three months ended May 31, 2019, we received certain lease rents, and incurred operating expenses, related to ONE DAYTONA as a result of certain tenants commencing operations in the current period, for which there was no comparable activity in the same period of the prior year (see "ONE DAYTONA");
  • During the three months ended May 31, 2019, we recognized approximately $0.1 million, or less than $0.01 per diluted share, of costs incurred associated with the Agreement and Plan of Merger ("Merger Agreement") entered into on May 22, 2019 by ISC with NASCAR Holdings, Inc. and Nova Merger Sub, Inc., a wholly owned subsidiary of NASCAR. There were no comparable costs for the three months ended May 31, 2018;
  • During the three months ended May 31, 2019, we incurred approximately $0.4 million, or less than $0.01 per diluted share, of a one-time, non-cash charge related to terminated agreements associated with non-motorsports operations. There were no comparable costs during the three months ended May 31, 2018;
  • During the three months ended May 31, 2018, we recognized $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 the infield project at Richmond. There were no comparable costs during the three months ended May 31, 2019;
  • During the three months ended May 31, 2019, we recognized $0.5 million, or $0.01 per diluted share, of asset retirement losses primarily attributable to demolition and/or asset relocation costs in connection with the infield project at Talladega. During the three months ended May 31, 2018, we recognized $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 ONE DAYTONA, facility optimization initiatives, and other capital improvements including the infield project at Richmond;
  • 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. There were no comparable costs during the three months ended May 31, 2019; and
  • During the three months ended May 31, 2018, we capitalized approximately $0.8 million, or $0.02 per diluted share, of interest, primarily relating to The ISM Raceway Project, and to a lesser extent, ONE DAYTONA. We did not capitalize any interest related to these projects for the three months ended May 31, 2019.

Net income for the three months ended May 31, 2019, was approximately $15.1 million, or $0.35 per diluted share, compared to approximately $16.7 million, or $0.38 per diluted share, in the prior year period. Excluding losses associated with the retirements of certain other long-lived assets, costs related to the Merger Agreement, non-recurring, non-capitalized costs related to the purchase of certain assets from Racing Electronics, and terminated agreements related to non-motorsports operations, non-GAAP net income, as defined below, was $15.9 million, or $0.36 per diluted share, as compared to $16.4 million, or $0.37 per diluted share, for the three months ended May 31, 2019 and 2018, respectively (see "GAAP to Non-GAAP Reconciliation").

Year-to-Date Comparison

Total revenues for the six months ended May 31, 2019 were approximately $318.6 million, compared to revenues of approximately $320.6 million for the same period in fiscal 2018. Operating income was approximately $41.0 million during the period compared to approximately $49.8 million for the same period in fiscal 2018. Period-over-period comparability was impacted by:

  • In the first quarter of fiscal 2019, we were informed of a bankruptcy proceeding related to one of our marketing partners. During our second quarter of fiscal 2019, in accordance with our contracts, we terminated the sponsorship agreements and related sublease agreements with this entity. As a result, we experienced lower admissions and sponsorship revenues related to the sponsorship agreements and lower rental expense related to the sublease agreements during the six months ended May 31, 2019 as compared to the same period in fiscal 2018;
  • In the second quarter of fiscal 2018, we hosted an IndyCar event at ISM Raceway, for which there was no comparable event in fiscal 2019;
  • In the second quarter of fiscal 2018, we hosted the Country 500 music festival at Daytona, for which there was no comparable event in fiscal 2019;
  • During the six months ended May 31, 2019, we recognized revenue and expense recorded in the respective food, beverage and merchandise accounts related to the acquisition of Racing Electronics, for which there was no comparable activity in the same period of the prior year;
  • During the six months ended May 31, 2019, we received certain lease rents, and incurred operating expenses, related to ONE DAYTONA as a result of certain tenants commencing operations in the current period, for which there was no comparable activity in the same period of the prior year (see "ONE DAYTONA");
  • During the six months ended May 31, 2019, we recognized approximately $2.9 million, or $0.05 per diluted share, of costs incurred associated with the Merger Agreement. There were no comparable costs for the six months ended May 31, 2018;
  • During the six months ended May 31, 2019, we incurred approximately $0.3 million, or less than $0.01 per diluted share, of non-capitalized, non-recurring acquisition costs related to the purchase of certain assets from Racing Electronics. There were no comparable costs during the six months ended May 31, 2018;
  • During the six months ended May 31, 2019, we incurred approximately $0.4 million, or less than $0.01 per diluted share, of a one-time, non-cash charge related to terminated agreements associated with non motorsports operations. There were no comparable costs during the three months ended May 31, 2018;
  • During the six months ended May 31, 2019, we recognized $0.9 million, or $0.02 per diluted share, of accelerated depreciation due to shortening of the service lives of certain assets associated with the infield project at Talladega. During the six months ended May 31, 2018, we recognized $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 the infield project at Richmond;
  • During the six months ended May 31, 2019, we recognized $0.8 million, or $0.02 per diluted share, of asset retirement losses primarily attributable to demolition and/or asset relocation costs in connection with the infield project at Talladega. During the six months ended May 31, 2018, we recognized $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 ONE DAYTONA, facility optimization initiatives, and other capital improvements including the infield project at Richmond;
  • 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. There were no comparable costs during the six months ended May 31, 2019;
  • During the six months ended May 31, 2018, we capitalized approximately $1.7 million, or $0.03 per diluted share, of interest, primarily relating to The ISM Raceway Project, and to a lesser extent, ONE DAYTONA. We did not capitalize any interest related to these projects for the six months ended May 31, 2019; and
  • During the six months ended May 31, 2018, we recorded approximately $143.9 million, or $3.25 per diluted share, of a non-recurring, non-cash income tax benefit related to the Tax Cuts and Jobs Act of 2017. There were no comparable benefits for the six months ended May 31, 2019.

Net income for the six months ended May 31, 2019, was approximately $36.6 million, or $0.84 per diluted share, compared to approximately $186.0 million, or $4.21 per diluted share, in the prior year period. Excluding accelerated depreciation related to the infield project at Talladega, losses associated with the retirements of certain other long-lived assets, costs related to the Merger Agreement, non-recurring, non-capitalized costs related to the purchase of certain assets from Racing Electronics, and terminated agreements costs related to non-motorsports operations, non-GAAP net income, as defined below, was $40.6 million, or $0.93 per diluted share, as compared to $42.8 million, or $0.97 per diluted share, for the six months ended May 31, 2019 and 2018, 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 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 ONE DAYTONA, facility optimization initiatives, and other capital improvements including the infield project at Richmond, accelerated depreciation (associated with The ISM Raceway Project and the infield project at Richmond), capitalized interest related to The ISM Raceway Project and ONE DAYTONA, and an income tax benefit, primarily related to a reduction in our deferred tax liability, as a result of the lower corporate tax rate from the Tax Cut and Jobs Act of 2017.

The adjustments for fiscal 2019 relate to losses associated with the retirements of certain other long-lived assets in connection with the infield project at Talladega, accelerated depreciation associated with the infield project at Talladega, non-recurring, non-capitalized costs related to the purchase of certain assets from Racing Electronics, one-time, non-recurring terminated agreements costs related to non-motorsports operations, and costs incurred associated with the Merger Agreement.

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

  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  
         
  Three Months Ended May 31, 2019
  Income Before
Taxes
Income Tax
Effect
Net Income Earnings
Per Share
GAAP $ 19,551   $ 4,478   $ 15,073   $ 0.35  
Adjustments:        
Losses on retirements of long-lived assets 507   123   384   0.01  
Merger Agreement costs 99   24   75   0.00  
Non-capitalized costs related to business combination 35   9   26   0.00  
Terminated agreements 389   94   295  
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