Speedway Motorsports, Inc. (SMI) (NYSE:TRK) today reported third
quarter 2017 total revenues of $137.6 million, and both net income
and adjusted non-GAAP net income of $9.2 million or $0.22 per
diluted share. Nine month 2017 total revenues were $397.2 million,
net income was $34.6 million or $0.84 per diluted share, and
adjusted non-GAAP net income was $38.2 million or $0.93 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.
The Company’s 2017 third quarter and
year-to-date results are not directly comparable to last year
primarily because of “the Battle at Bristol” football game and
large preceding concert held in the third quarter 2016. Those 2016
football weekend results are not reflected as non-GAAP adjustments
in the accompanying financial results. However, excluding those
results, SMI’s third quarter and year-to-date 2017 adjusted
non-GAAP net income increased over 2016. Although not held in 2017,
the Company is attempting to schedule similar events in the
future.
Management believes many of the Company’s
revenue categories continue to be negatively impacted by economic
conditions (although improving), including underemployment and slow
middle class economic recovery, changing demographics and media
entertainment consumption and poor weather. Race schedule changes,
in 2017 as compared to 2016, including racing events impacted by
poor weather, are presented below in the Selected Financial
Data.
Third Quarter Comparison
- Total revenues of $137.6 million in 2017 compared to $170.7
million in 2016
- Accelerated depreciation and removal costs on retired assets
aggregating $357,000 pre-tax, $225,000 after tax or $0.01 per
diluted share in 2016
- Non-recurring benefits from state tax law changes of $507,000
or $0.01 per diluted share in 2016
- Net income of $9.2 million or $0.22 per diluted share in 2017
compared to $13.7 million or $0.33 per diluted share in 2016
- Adjusted non-GAAP net income of $9.2 million or $0.22 per
diluted share in 2017 compared to $13.4 million or $0.33 per
diluted share in 2016
Year-to-Date Comparison
- Total revenues of $397.2 million in 2017 compared to $429.5
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 and $357,000 pre-tax, $225,000 after tax
or $0.01 per diluted share in 2016
- Non-recurring benefits from state tax law changes of $507,000
or $0.01 per diluted share in 2016
- Net income of $34.6 million or $0.84 per diluted share in 2017
compared to $39.3 million or $0.95 per diluted share in 2016
- Adjusted non-GAAP net income of $38.2 million or $0.93 per
diluted share in 2017 compared to $39.0 million or $0.95 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 EndedSeptember 30: |
|
|
Nine Months EndedSeptember 30: |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Net income using
GAAP |
|
$ |
9,211 |
|
|
$ |
13,666 |
|
|
$ |
34,582 |
|
|
$ |
39,274 |
|
Impairment of goodwill,
pre-tax |
|
|
– |
|
|
|
– |
|
|
|
1,117 |
|
|
|
– |
|
Accelerated
depreciation on retired assets and costs of removal, pre-tax |
|
|
– |
|
|
|
357 |
|
|
|
4,597 |
|
|
|
357 |
|
Non-recurring benefit
of state income tax law changes |
|
|
– |
|
|
|
(507 |
) |
|
|
– |
|
|
|
(507 |
) |
Aggregate
income tax effect of non-GAAP adjustments |
|
|
– |
|
|
|
(132 |
) |
|
|
(2,119 |
) |
|
|
(132 |
) |
Non-GAAP
net income |
|
$ |
9,211 |
|
|
$ |
13,384 |
|
|
$ |
38,177 |
|
|
$ |
38,992 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share using GAAP |
|
$ |
0.22 |
|
|
$ |
0.33 |
|
|
$ |
0.84 |
|
|
$ |
0.95 |
|
Impairment of goodwill,
pre-tax |
|
|
– |
|
|
|
– |
|
|
|
0.03 |
|
|
|
– |
|
Accelerated
depreciation on retired assets and costs of removal, pre-tax |
|
|
– |
|
|
|
0.01 |
|
|
|
0.11 |
|
|
|
0.01 |
|
Non-recurring benefit
of state income tax law changes |
|
|
– |
|
|
|
(0.01 |
) |
|
|
– |
|
|
|
(0.01 |
) |
Aggregate
income tax effect of non-GAAP adjustments |
|
|
– |
|
|
|
0.00 |
|
|
|
(0.05 |
) |
|
|
0.00 |
|
Non-GAAP
diluted earnings per share |
|
$ |
0.22 |
|
|
$ |
0.33 |
|
|
$ |
0.93 |
|
|
$ |
0.95 |
|
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 September
2018.
Significant 2017 Third Quarter Events
- Bristol Motor Speedway – NASCAR Bass Pro Shops NRA Night Race
Monster Energy Cup, Food City 300 Xfinity and UNOH 200 Camping
World Truck Series racing events
- zMAX Dragway at Charlotte Motor Speedway – NHRA Carolina
Nationals racing event
- Kentucky Speedway – NASCAR Quaker State 400 presented by
Advance Auto Parts Monster Energy Cup, Alsco 300 Xfinity,
VisitMyrtleBeach.com 300 Xfinity and Buckle Up in Your Truck 225
Camping World Truck, and Crosley Brands 150 Automobile Racing Club
of America Series racing events
- Las Vegas Motor Speedway – NASCAR Las Vegas 350 Camping World
Truck Series racing event
- New Hampshire Motor Speedway – NASCAR Overton’s 301 Monster
Energy Cup, ISM Connect 300 Monster Energy Cup, Overton’s 200
Xfinity and UNOH 175 Camping World Truck Series racing events
- Sonoma Raceway – Toyota NHRA Sonoma Nationals and GoPro Grand
Prix of Sonoma IndyCar Series racing events
2017 Earnings GuidanceThe Company reaffirmed
that third 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 (although improving) 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
nine months ended September 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 $18.6 million. On October 18,
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 December 1, 2017 to
shareholders of record as of November 10, 2017. The Board of
Directors plans to continue to evaluate cash dividends on a
quarterly basis in the future.
During the nine months ended September 30, 2017,
the Company repurchased 189,000 shares of common stock for
approximately $3.7 million under this program. As of September 30,
2017, the Company has repurchased 4,747,000 shares since adoption
of the program in April 2005, and the total number of shares
available for future repurchase as currently authorized is
253,000.
Comments “Excluding the results of our ‘Battle
at Bristol’ collegiate football weekend last year, SMI’s third
quarter and year-to-date 2017 adjusted non-GAAP results increased
over 2016 and are within our expectations,” stated Speedway
Motorsports Chief Executive Officer and President Marcus G. Smith.
“We achieved these results despite having more than our fair share
of poor weather surrounding certain NASCAR and other racing events
in this and last year’s race seasons. Revenue streams from track
rentals and certain non-motorsports activities have shown sizable
increases, demonstrating the ongoing appeal of our first class
facilities in desirable, premium markets. Those increases reflect
the success of our ongoing marketing focus to broaden the use of
our facilities.”
“Our multiple long-term contracted revenue
streams remain substantial. Our largest being the ten-year NASCAR
broadcasting agreements through 2024, along with our NASCAR
ancillary broadcasting rights revenues which continue to grow,”
continued Mr. Smith. “Many of our NASCAR event sponsorships for
2018 and beyond are already sold, as well as several multi-year
track rental agreements and marketing arrangements. Similar to most
sports and sporting venues, our results reflect the ongoing
challenges faced for admissions and various event related revenues
growth. Capturing the next generation of new race fans is a main
focus of SMI, along with NASCAR and the broadcasters. We are
expanding our marketing strategies of offering attractive ticket
prices for families and children, and innovative pre-race
entertainment such as high-end concerts and competitive contests
that appeal to millennials, as well as our existing core fans. SMI
is strongly committed to providing our long-time loyal and next
generation race fans with superior entertainment experiences and
high-end customer service that cannot be duplicated at home or
other venues.”
O. Bruton Smith, Executive Chairman of Speedway
Motorsports stated, “We are extremely excited about offering our
sport’s first combination superspeedway and road course racing at
Charlotte Motor Speedway’s NASCAR Monster Energy Cup and Xfinity
Series playoff races in September 2018. This pioneering 18-turn,
2.4-mile ‘Roval’ course is another innovative step by SMI, and may
set the stage for similar configured racing at other motorsport
facilities. NASCAR remains more focused than ever on improving our
sport – the recent, very well received ‘stage-based’ racing format
and championship point structure for all three of the premier
national series being just one example. Our management team
continues to stress increasing long-term profitability through debt
reduction, restrained capital spending, steady dividends and share
repurchase programs, and ongoing efforts to adjust our operating
cost structures and spending. We believe our business model has
many opportunities for increasing long-term profitability. Major
strategic changes such as our Las Vegas Motor Speedway hosting new
NASCAR Monster Energy Cup, Xfinity and Camping World Truck Series
races starting in September 2018 and the ‘Roval’ at our Charlotte
Motor Speedway – are just a few outstanding examples.”
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
833-236-2749 (US / Canada / toll-free) or 647-689-4174
(international). The reference number is 6187379. 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 Nine Months Ended September 30, 2017 and
2016 |
|
(In thousands except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
STATEMENT OF OPERATIONS
DATA |
|
9/30/2017 |
9/30/2016 |
|
9/30/2017 |
9/30/2016 |
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
Admissions |
|
|
$ |
27,641 |
|
$ |
29,698 |
|
|
$ |
71,532 |
|
$ |
74,771 |
|
|
Event related revenue |
|
|
34,452 |
|
|
37,226 |
|
|
|
103,491 |
|
|
108,295 |
|
|
NASCAR broadcasting revenue |
|
|
68,847 |
|
|
65,839 |
|
|
|
200,073 |
|
|
192,453 |
|
|
Other operating revenue (a) |
|
|
6,668 |
|
|
37,898 |
|
|
|
22,090 |
|
|
54,006 |
|
|
Total Revenues |
|
|
|
137,608 |
|
|
170,661 |
|
|
|
397,186 |
|
|
429,525 |
|
|
Expenses
and Other: |
|
|
|
|
|
|
|
Direct expense of events |
|
|
32,732 |
|
|
36,576 |
|
|
|
78,420 |
|
|
84,366 |
|
|
NASCAR event management fees |
|
|
43,338 |
|
|
41,087 |
|
|
|
120,548 |
|
|
115,863 |
|
|
Other direct operating expense (a) |
|
|
4,363 |
|
|
28,996 |
|
|
|
14,534 |
|
|
39,540 |
|
|
General and administrative |
|
|
25,793 |
|
|
27,205 |
|
|
|
75,323 |
|
|
78,591 |
|
|
Depreciation and amortization |
|
|
13,834 |
|
|
14,016 |
|
|
|
44,808 |
|
|
40,957 |
|
|
Interest expense, net |
|
|
3,054 |
|
|
3,290 |
|
|
|
9,222 |
|
|
9,920 |
|
|
Impairment of goodwill |
|
|
- |
|
|
- |
|
|
|
1,117 |
|
|
- |
|
|
Other (income) expense, net |
|
|
(157 |
) |
|
(941 |
) |
|
|
45 |
|
|
(886 |
) |
|
Total Expenses and Other |
|
|
122,957 |
|
|
150,229 |
|
|
|
344,017 |
|
|
368,351 |
|
|
Income
Before Income Taxes |
|
|
14,651 |
|
|
20,432 |
|
|
|
53,169 |
|
|
61,174 |
|
|
Provision for Income Taxes |
|
|
(5,440 |
) |
|
(6,766 |
) |
|
|
(18,587 |
) |
|
(21,900 |
) |
|
Net Income (a) |
|
|
$ |
9,211 |
|
$ |
13,666 |
|
|
$ |
34,582 |
|
$ |
39,274 |
|
|
|
|
|
|
|
|
|
|
|
|
Basic
Earnings Per Share |
|
$ |
0.22 |
|
$ |
0.33 |
|
|
$ |
0.84 |
|
$ |
0.95 |
|
|
Weighted
average shares outstanding |
|
|
41,004 |
|
|
41,123 |
|
|
|
41,046 |
|
|
41,178 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
Earnings Per Share |
|
$ |
0.22 |
|
$ |
0.33 |
|
|
$ |
0.84 |
|
$ |
0.95 |
|
|
Weighted
average shares outstanding |
|
|
41,022 |
|
|
41,135 |
|
|
|
41,062 |
|
|
41,191 |
|
|
|
|
|
|
|
|
|
|
|
|
Major
NASCAR-sanctioned Events Held During Period |
|
|
8 |
|
|
8 |
|
|
|
20 |
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
Certain Event Schedule Changes:
- Charlotte Motor Speedway held one MXGP motocross race in the
third quarter 2016 that was not held in 2017
- Las Vegas Motor Speedway held one NASCAR Camping World Truck
Series race in the third quarter 2017 that was held in the fourth
quarter 2016
- Texas Motor Speedway held one IndyCar race in the third quarter
2016 (rescheduled from the second quarter due to poor weather) that
was held in the second quarter 2017
- Poor weather resulted in delaying the start of one NASCAR
Camping World Truck race at Bristol Motor Speedway and one NASCAR
Xfinity race at New Hampshire Motor Speedway in the third
quarter 2017
- Poor weather resulted in postponing and next-day rescheduling
one Monster Energy NASCAR Cup race, and delaying the completion of
one NASCAR Xfinity Cup 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
- (a) Includes revenues and direct expenses associated with "the
Battle at Bristol" collegiate football game and preceding concert
held in the third quarter 2016 (no similar event was held in
2017)
|
|
|
|
BALANCE SHEET DATA |
|
9/30/2017 |
12/31/2016 |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
85,827 |
$ |
79,342 |
Total
current assets |
|
|
|
130,518 |
|
127,909 |
Property
and equipment, net |
|
|
974,179 |
|
1,000,230 |
Goodwill
and other intangible assets, net |
|
|
344,608 |
|
345,725 |
Total
assets |
|
|
|
1,473,807 |
|
1,498,149 |
|
|
|
|
|
|
Deferred
race event and other income, net |
|
|
34,184 |
|
44,782 |
Total
current liabilities |
|
|
92,173 |
|
94,671 |
Credit
facility borrowings (all term loan) |
|
|
35,000 |
|
66,000 |
Total
long-term debt (excluding deferred financing costs) |
|
|
236,049 |
|
267,206 |
Total
liabilities |
|
|
|
661,326 |
|
700,366 |
Total
stockholders' equity |
|
|
812,481 |
|
797,783 |
|
|
|
|
|
|
Contact: Janet Kirkley,704-532-3318
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