Speedway Motorsports, Inc. (SMI) (NYSE:TRK) today reported second
quarter 2017 total revenues of $179.3 million, net income of $27.3
million or $0.67 per diluted share, and adjusted non-GAAP net
income of $28.0 million or $0.68 per diluted share. Six month 2017
total revenues were $259.6 million, net income was $25.4 million or
$0.62 per diluted share, and adjusted non-GAAP net income was $29.0
million or $0.71 per diluted share. These results were within
management’s expectations, and SMI reaffirmed its full year 2017
non-GAAP earnings guidance of $0.90 to $1.10 per diluted share as
further described below. Non-GAAP items are further discussed and
reconciled with comparable GAAP amounts below.
Management believes many of the Company’s
revenue categories continue to be negatively impacted by economic
conditions, including underemployment and the absence of a stronger
middle class economic recovery, and changing demographics and media
entertainment consumption.
Race schedule changes in 2017 as compared to
2016 are presented below in the Selected Financial Data.
Second Quarter Comparison:
- Total revenues of $179.3 million in 2017 compared to $175.7
million in 2016
- Impairment charge for goodwill of $1.1 million pre-tax,
$698,000 after tax or $0.02 per diluted share in 2017
- Net income of $27.3 million or $0.67 per diluted share in 2017
compared to $24.7 million or $0.60 per diluted share in 2016
- Adjusted non-GAAP net income of $28.0 million or $0.68 per
diluted share in 2017 compared to $24.7 million or $0.60 per
diluted share in 2016
Year-to-Date Comparison
- Total revenues of $259.6 million in 2017 compared to $258.9
million in 2016
- Impairment charge for goodwill of $1.1 million pre-tax,
$698,000 after tax or $0.02 per diluted share in 2017
- Accelerated depreciation and removal costs on retired assets
aggregating $4.6 million pre-tax, $2.9 million after tax or $0.07
per diluted share in 2017
- Net income of $25.4 million or $0.62 per diluted share in 2017
compared to $25.6 million or $0.62 per diluted share in 2016
- Adjusted non-GAAP net income of $29.0 million or $0.71 per
diluted share in 2017 compared to $25.6 million or $0.62 per
diluted share in 2016
Non-GAAP Financial Information and
ReconciliationNet income and diluted earnings per share as adjusted
and set forth below are non-GAAP (other than generally accepted
accounting principles) financial measures presented as supplemental
disclosures to their individual corresponding GAAP basis amounts.
The following schedule reconciles those non-GAAP financial measures
to their most directly comparable information presented using GAAP.
Management believes such non-GAAP information is useful and
meaningful to investors and helps in understanding, using and
comparing the Company’s operating results.
We have not reconciled non-GAAP forward-looking
earnings per diluted share to its most directly comparable GAAP
measure, as permitted by Item 10(e)(1)(i)(B) of Regulation S-K.
Such reconciliations would require unreasonable efforts to estimate
and quantify various necessary GAAP components largely because, as
indicated by our relatively wide range of earnings guidance,
forecasting or predicting our future operating results is subject
to many factors out of our control or not readily predictable. Such
factors include weather conditions surrounding our events, the
seasonal popularity or success of NASCAR racing in general, the
impact of geopolitical factors on travel plans and spending
sentiment, and fluctuating costs of food, gas, health-care and
other basic necessities, any or all of which can significantly
impact our future results. These components and other factors could
significantly impact the amount of the future directly comparable
GAAP measures, which may differ significantly from their non-GAAP
counterparts.
Management uses the non-GAAP information to
assess the Company’s operations for the periods presented, analyze
performance trends and make decisions regarding future operations
because it believes this separate information better reflects
ongoing operating results. This non-GAAP financial information is
not intended to be considered independent of or a substitute for
results prepared in accordance with GAAP. This non-GAAP financial
information may not be comparable to similarly titled measures used
by other entities, and should not be considered as alternatives to
net income or diluted earnings per share determined in accordance
with GAAP. Individual quarterly per share amounts may not be
additive due to rounding. Amounts below are in thousands except per
share amounts.
|
|
Three Months EndedJune 30: |
|
|
Six Months EndedJune 30: |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Net income using
GAAP |
|
$ |
27,306 |
|
|
$ |
24,747 |
|
|
$ |
25,371 |
|
|
$ |
25,608 |
|
Impairment of goodwill,
pre-tax |
|
|
1,117 |
|
|
|
– |
|
|
|
1,117 |
|
|
|
– |
|
Accelerated
depreciation on retired assets and costs of removal, pre-tax |
|
|
– |
|
|
|
– |
|
|
|
4,597 |
|
|
|
– |
|
Aggregate income tax
effect of non-GAAP adjustments |
|
|
(419 |
) |
|
|
– |
|
|
|
(2,119 |
) |
|
|
– |
|
Non-GAAP net
income |
|
$ |
28,004 |
|
|
$ |
24,747 |
|
|
$ |
28,966 |
|
|
$ |
25,608 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share using GAAP |
|
$ |
0.67 |
|
|
$ |
0.60 |
|
|
$ |
0.62 |
|
|
$ |
0.62 |
|
Impairment of goodwill,
pre-tax |
|
|
0.03 |
|
|
|
– |
|
|
|
0.03 |
|
|
|
– |
|
Accelerated
depreciation on retired assets and costs of removal, pre-tax |
|
|
– |
|
|
|
– |
|
|
|
0.11 |
|
|
|
– |
|
Aggregate income tax
effect of non-GAAP adjustments |
|
|
(0.01 |
) |
|
|
– |
|
|
|
(0.05 |
) |
|
|
– |
|
Non-GAAP diluted
earnings per share |
|
$ |
0.68 |
|
|
$ |
0.60 |
|
|
$ |
0.71 |
|
|
$ |
0.62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To modernize our facilities for fan enhancements
and alternative marketing purposes, the Company has renovated
select seating areas at Charlotte, Kentucky and New Hampshire Motor
Speedways. The Company recorded non-cash, pre-tax charges for
accelerated depreciation and costs of removal aggregating
approximately $4.6 million in the first quarter 2017.
The Company recorded a non-cash, pre-tax
impairment charge of approximately $1.1 million to eliminate
goodwill associated with certain souvenir merchandising activities
in the second quarter 2017.
As recently announced, the Company obtained
approval from NASCAR to realign one Monster Energy Cup Series and
one Camping World Truck Series race from New Hampshire Motor
Speedway, and one Xfinity Series race from Kentucky
Speedway, to Las Vegas Motor Speedway beginning in
2018.
Significant 2017 Second Quarter Racing
Events
- Bristol Motor Speedway – NASCAR Food City 500 Monster Energy
Cup and Fitzgerald Glider Kits 300 Xfinity Series, and NHRA Thunder
Valley Nationals racing events
- Charlotte Motor Speedway – NASCAR Monster Energy All-Star Race,
Coca-Cola 600 Monster Energy Cup, Hisense 4K TV 300 Xfinity and
North Carolina Education Lottery 200 Camping World Truck Series,
and NHRA 4-Wide Nationals racing events
- Las Vegas Motor Speedway – DENSO Spark Plugs NHRA Nationals
racing event
- Sonoma Raceway – NASCAR Toyota/Save Mart 350 Monster Energy Cup
Series racing event
- Texas Motor Speedway – NASCAR O’Reilly Auto Parts 500 Monster
Energy Cup, My Bariatric Solutions 300 Xfinity and
winstaronlinegaming.com 400 Camping World Truck, and IndyCar
Rainguard Water Sealers 600 Series racing events
2017 Earnings GuidanceThe Company reaffirmed
that second quarter 2017 results are consistent with its previous
full year 2017 non-GAAP earnings guidance of $0.90-$1.10 per
diluted share, excluding non-recurring and other special items. The
range of earnings guidance reflects the continuing negative impact
of uncertain economic conditions and underemployment, among other
factors. Higher health-care and fuel costs, along with inclement
weather, could significantly impact our future results.
Dividends and Stock Repurchase ProgramDuring the
six months ended June 30, 2017, the Company declared and paid cash
dividends of $0.15 per share of common stock each quarter for a
combined aggregate of approximately $12.4 million. On July 19,
2017, the Company’s Board of Directors declared a quarterly cash
dividend of $0.15 per share of common stock, aggregating
approximately $6.2 million, payable on September 5, 2017 to
shareholders of record as of August 15, 2017. The Board of
Directors plans to continue to evaluate cash dividends on a
quarterly basis in the future.
During the six months ended June 30, 2017, the
Company repurchased 125,000 shares of common stock for
approximately $2.4 million under its stock repurchase program. As
of June 30, 2017, the Company has repurchased 4,683,000 shares
since adoption of the program in April 2005, and the total number
of shares available for future repurchase as currently authorized
is 317,000.
Comments“SMI’s second quarter and year-to-date
results for 2017 were solid and within our expectations,” stated
Speedway Motorsports Chief Executive Officer and President Marcus
G. Smith. “Various revenue streams, particularly track rentals and
NASCAR ancillary broadcasting rights, have shown sizable increases.
So far in 2017, while certain admission revenues are lower, several
of our NASCAR events show higher attendance trends and growing fan
interest. We are optimistic that our marketing strategies of
offering attractive ticket prices for families and children, and
expanded and innovative pre-race entertainment, are gaining
traction with both our core and potential new fans.”
“Speedway Motorsports’ resounding commitment is
to provide both our long-time loyal and next generation race fans
with innovative entertainment and high-end customer service that
cannot be duplicated at home or other venues,” continued Mr. Smith.
“For example, SMI continues its long history of innovation with
offering our sport’s first combination superspeedway and road
course races at Charlotte Motor Speedway in September 2018. The
NASCAR Monster Energy Cup Bank of America 500 and Xfinity Series
races will take place on a new 13-turn, 2.4-mile ‘Roval’
configuration. Both races will be the first road course races in
NASCAR’s Monster Energy Cup and Xfinity Series playoffs. We believe
fans will find such racing novel and exciting as many are already
inquiring about tickets for this unique event weekend. We are also
excited that Charlotte’s NASCAR Monster Energy Cup Saturday night
and Xfinity Friday night races are returning to traditional Sunday
and Saturday afternoons this October. These afternoon races should
make it easier for families and travelers to attend great racing at
Charlotte this fall.”
“We remain focused on our strategic initiatives
of increasing long-term profitability through debt reduction,
capital spending, dividends and share repurchases, as well as
adjusting our operating cost structures and spending. Our multiple
long-term contracted revenue streams remain strong through our
participation in the ten-year NASCAR broadcasting agreements
through 2024, already having sold many of our NASCAR event
sponsorships for 2018 and beyond, as well as several multi-year
track rental agreements. We believe our business model remains
sound, and that many opportunities exist to increase our long-term
profitability,” Mr. Smith said.
O. Bruton Smith, Executive Chairman of Speedway
Motorsports stated, “Recent changes to our sport are some of the
biggest and most positive in many, many years. NASCAR’s ongoing
improvements to our sport such as the recent ‘stage-based’ racing
format and championship point structure for all three of the
premier national series have been very well received by fans and
drivers. Our pioneering ‘Roval’ course at Charlotte mentioned by
Marcus may set the stage for similar configured racing at other
motorsport facilities. And our Las Vegas Motor Speedway will host a
new NASCAR Monster Energy Cup, Xfinity and Camping World Truck
Series race weekend starting in September 2018 – making it the only
NASCAR venue to host all three national racing series twice each
year. SMI, NASCAR and the media powerhouses are all focused more
than ever on attracting younger race fans and families. However,
SMI has always remembered that our long-time fans are who made this
sport great, and we are forever striving to reward their continued
patronage with superior entertainment value.”
Speedway Motorsports is a leading marketer and
promoter of motorsports entertainment in the United States. The
Company, through its subsidiaries, owns and operates the following
premier facilities: Atlanta Motor Speedway, Bristol Motor Speedway,
Charlotte Motor Speedway, Kentucky Speedway, Las Vegas Motor
Speedway, New Hampshire Motor Speedway, Sonoma Raceway and Texas
Motor Speedway. The Company provides souvenir merchandising
services through its SMI Properties subsidiaries; manufactures and
distributes smaller-scale, modified racing cars and parts through
its US Legend Cars International subsidiary; and produces and
broadcasts syndicated motorsports programming to radio stations
nationwide through its Performance Racing Network subsidiary. For
more information, visit the Company's website at
www.speedwaymotorsports.com.
This news release contains forward-looking
statements, particularly statements with regard to our future
operations and financial results. There are many factors that
affect future events and trends of our business including, but not
limited to, economic factors, weather, the success of NASCAR and
others as sanctioning bodies, hosting of races, capital projects,
expansion, facility reductions, financing needs, income taxes and a
host of other factors both within and outside of management
control. These factors and other factors, including those contained
in our Annual Report on Form 10-K and subsequently filed Quarterly
Reports on Form 10-Q, involve certain risks and uncertainties that
could cause actual results or events to differ materially from
management's views and expectations. Inclusion of any information
or statement in this news release does not necessarily imply that
such information or statement is material. The Company does not
undertake any obligation to release publicly revised or updated
forward-looking information, and such information included in this
news release is based on information currently available and may
not be reliable after this date.
Note: Speedway Motorsports will host a
conference call and webcast today at 10:00 AM (ET) open to the
public. To participate in the conference call, you may dial
877-201-0168 (US / Canada / toll-free) or 647-788-4901
(international). The reference number is 48391905. A webcast of the
call can be accessed at the Company's website at
www.speedwaymotorsports.com under “Investors”. Participating in the
call will be Marcus G. Smith, Chief Executive Officer and
President, and William R. Brooks, Vice Chairman, Chief Financial
Officer and Treasurer.
|
|
|
|
|
|
|
|
|
Speedway Motorsports, Inc. and Subsidiaries |
|
|
|
|
|
|
|
Selected Financial Data - Unaudited |
|
|
|
|
|
|
|
For
The Three and Six Months Ended June 30, 2017 and 2016 |
|
|
|
|
|
|
|
(In
thousands except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Six Months
Ended |
|
STATEMENT OF OPERATIONS
DATA |
|
6/30/2017 |
6/30/2016 |
|
6/30/2017 |
6/30/2016 |
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
Admissions |
|
|
$ |
29,141 |
|
$ |
29,634 |
|
|
$ |
43,891 |
|
$ |
45,073 |
|
|
Event related revenue |
|
|
50,080 |
|
|
49,339 |
|
|
|
69,039 |
|
|
71,069 |
|
|
NASCAR broadcasting revenue |
|
|
92,415 |
|
|
89,167 |
|
|
|
131,226 |
|
|
126,614 |
|
|
Other operating revenue |
|
|
7,617 |
|
|
7,548 |
|
|
|
15,422 |
|
|
16,108 |
|
|
Total Revenues |
|
|
|
179,253 |
|
|
175,688 |
|
|
|
259,578 |
|
|
258,864 |
|
|
Expenses
and Other: |
|
|
|
|
|
|
|
Direct expense of events |
|
|
33,231 |
|
|
34,730 |
|
|
|
45,688 |
|
|
47,790 |
|
|
NASCAR event management fees |
|
|
54,150 |
|
|
52,478 |
|
|
|
77,210 |
|
|
74,776 |
|
|
Other direct operating expense |
|
|
5,031 |
|
|
4,955 |
|
|
|
10,171 |
|
|
10,544 |
|
|
General and administrative |
|
|
26,944 |
|
|
27,312 |
|
|
|
49,530 |
|
|
51,386 |
|
|
Depreciation and amortization |
|
|
13,469 |
|
|
13,570 |
|
|
|
30,974 |
|
|
26,941 |
|
|
Interest expense, net |
|
|
3,163 |
|
|
3,291 |
|
|
|
6,168 |
|
|
6,630 |
|
|
Impairment of other intangible assets and goodwill |
|
|
1,117 |
|
|
- |
|
|
|
1,117 |
|
|
- |
|
|
Other (income) expense, net |
|
|
(376 |
) |
|
(13 |
) |
|
|
202 |
|
|
55 |
|
|
Total Expenses and Other |
|
|
136,729 |
|
|
136,323 |
|
|
|
221,060 |
|
|
218,122 |
|
|
Income
Before Income Taxes |
|
|
42,524 |
|
|
39,365 |
|
|
|
38,518 |
|
|
40,742 |
|
|
Provision for Income Taxes |
|
|
(15,218 |
) |
|
(14,618 |
) |
|
|
(13,147 |
) |
|
(15,134 |
) |
|
Net Income |
|
|
$ |
27,306 |
|
$ |
24,747 |
|
|
$ |
25,371 |
|
$ |
25,608 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic
Earnings Per Share |
|
$ |
0.67 |
|
$ |
0.60 |
|
|
$ |
0.62 |
|
$ |
0.62 |
|
|
Weighted
average shares outstanding |
|
|
41,045 |
|
|
41,184 |
|
|
|
41,066 |
|
|
41,206 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
Earnings Per Share |
|
$ |
0.67 |
|
$ |
0.60 |
|
|
$ |
0.62 |
|
$ |
0.62 |
|
|
Weighted
average shares outstanding |
|
|
41,056 |
|
|
41,195 |
|
|
|
41,082 |
|
|
41,220 |
|
|
|
|
|
|
|
|
|
|
|
|
Major
NASCAR-sanctioned Events Held During Period |
|
|
8 |
|
|
8 |
|
|
|
12 |
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
Certain Race Schedule Changes: |
|
|
|
|
|
|
|
• Poor
weather resulted in postponing and next-day rescheduling one
Monster Energy NASCAR Cup race, and delaying the completion of one
NASCAR Xfinity race, at Bristol Motor Speedway |
|
in
the second quarter 2017 |
|
|
|
|
|
|
|
• Poor
weather resulted in delaying the completion of one Monster Energy
NASCAR Cup race at Charlotte Motor Speedway in the second quarter
2017 |
|
|
|
|
• Texas
Motor Speedway held one IndyCar race in the second quarter 2017.
Poor weather last year resulted in rescheduling an IndyCar race
from the second quarter 2016 to the third quarter 2016 |
|
|
|
|
|
|
|
|
|
|
|
BALANCE SHEET
DATA |
|
6/30/2017 |
12/31/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
87,653 |
|
$ |
79,342 |
|
|
|
|
|
Total
current assets |
|
|
|
146,527 |
|
|
127,909 |
|
|
|
|
|
Property
and equipment, net |
|
|
983,465 |
|
|
1,000,230 |
|
|
|
|
|
Goodwill
and other intangible assets, net |
|
|
344,608 |
|
|
345,725 |
|
|
|
|
|
Total
assets |
|
|
|
1,499,128 |
|
|
1,498,149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
race event and other income, net |
|
|
51,918 |
|
|
44,782 |
|
|
|
|
|
Total
current liabilities |
|
|
114,206 |
|
|
94,671 |
|
|
|
|
|
Credit
facility borrowings (all term loan) |
|
|
40,000 |
|
|
66,000 |
|
|
|
|
|
Total
long-term debt (excluding deferred financing costs) |
|
|
241,049 |
|
|
267,206 |
|
|
|
|
|
Total
liabilities |
|
|
|
689,752 |
|
|
700,366 |
|
|
|
|
|
Total
stockholders' equity |
|
|
809,376 |
|
|
797,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact: Janet Kirkley,
704-532-3318
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