Speedway Motorsports, Inc. (SMI) (NYSE: TRK) today reported
second quarter 2016 total revenues of $175.7 million and net income
of $24.7 million or $0.60 per diluted share. Six month 2016 total
revenues were $258.9 million and net income was $25.6 million or
$0.62 per diluted share. The results were within management’s
expectations, and SMI reaffirmed its full year 2016 non-GAAP
earnings guidance of $0.90 to $1.10 per diluted share as further
described 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, lower travel and spending by certain fans
and customers due to ongoing geopolitical events, and high food and
health-care costs. The Company’s admissions, certain event related
revenues and operating costs were negatively impacted by poor
weather surrounding several of its events in the first and second
quarters 2016, including Texas Motor Speedway’s rain postponed
IndyCar series racing event rescheduled to the third quarter
2016.
Race schedule changes in 2016 as compared to 2015 are presented
below in the Selected Financial Data. Prior year amounts reflect
the Company's revision of previously issued financial statements in
2015.
Second Quarter Comparison
- Total revenues were $175.7 million in
2016 compared to $179.3 million in 2015
- After tax impairment charge for other
intangible assets and goodwill of $63.4 million or $1.54 per
diluted share in 2015
- Net income was $24.7 million or $0.60
per diluted share in 2016 compared to a net loss of $35.2 million
or $0.85 per diluted share in 2015
- Non-GAAP net income was $24.7 million
or $0.60 per diluted share in 2016 compared to $28.2 million or
$0.68 per diluted share in 2015
Year-to-Date Comparison
- Total revenues were $258.9 million in
2016 compared to $264.6 million in 2015
- In 2015 (after tax items):
- Impairment charge for other intangible
assets and goodwill of $63.4 million or $1.54 per diluted
share
- Loss on early debt redemption and
refinancing of $5.3 million or $0.13 per diluted share
- Interim interest expense associated
with early debt redemption of $1.1 million or $0.03 per diluted
share
- Net income was $25.6 million or $0.62
per diluted share in 2016 compared to a net loss of $39.6 million
or $0.96 per diluted share in 2015
- Non-GAAP net income was $25.6 million
or $0.62 per diluted share in 2016 compared to $30.2 million or
$0.73 per diluted share in 2015
Non-GAAP Financial Information and
Reconciliation
Net 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 2016 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 and other racing in
general, the impact of geopolitical factors on travel plans, and
fluctuating costs of food, gas, health-care and other basic
necessities, any or all of which can significantly impact our
admissions, certain event related revenues and associated direct
expense of events. 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 loss,
or diluted earnings or loss 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 Ended Six Months Ended June 30: June 30:
2016 2015 2016 2015 Net income
(loss) using GAAP
$
24,747
$ (35,179 ) $ 25,608 $ (39,578 ) Impairment of other
intangible assets and goodwill, pre-tax -- 98,868 -- 98,868 Loss on
early debt redemption and refinancing, pre-tax -- -- -- 8,372
Interim interest expense, pre-tax -- -- -- 1,688 Aggregate income
tax effect of non-GAAP adjustments -- (35,454 )
-- (39,186 ) Non-GAAP net income
$
24,747
$ 28,235 $ 25,608 $ 30,164 Diluted earnings (loss) per share
using GAAP $ 0.60 $ (0.85 ) $ 0.62 $ (0.96 )
Impairment of other intangible assets and
goodwill, pre-tax
-- 2.39 -- 2.39 Loss on early debt redemption and refinancing,
pre-tax -- -- -- 0.20 Interim interest expense, pre-tax -- -- --
0.04 Aggregate income tax effect of non-GAAP adjustments --
(0.86 ) -- (0.95 ) Non-GAAP diluted earnings
per share $ 0.60 $ 0.68 $ 0.62 $ 0.73
Significant 2016 Second Quarter Racing
Events
- Bristol Motor Speedway – NASCAR Food City 500 Sprint Cup and
Fitzgerald Glider Kits 300 Xfinity Series, and NHRA Thunder Valley
Nationals racing events
- Charlotte Motor Speedway – NASCAR Sprint All-Star Race,
Coca-Cola 600 Sprint 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 Sprint Cup Series
racing event
- Texas Motor Speedway – NASCAR Duck Commander 500 Sprint Cup,
O’Reilly Auto Parts 300 Xfinity and Rattlesnake 400 Camping World
Truck, and IndyCar Firestone 600 Series racing events (postponed
and rescheduled to the third quarter 2016 due to poor weather)
2016 Earnings Guidance
The Company reaffirmed that second quarter 2016 results are
consistent with its previous full year 2016 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,
among other factors. Potential higher fuel, health-care and food
costs, and continued underemployment could significantly impact our
future results.
Dividends and Stock Repurchase
Program
During the six months ended June 30, 2016, 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, 2016, 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,
2016 to shareholders of record as of August 15, 2016. 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, 2016, the Company
repurchased 125,000 shares of common stock for approximately $2.3
million under this program. As of June 30, 2016, the Company has
repurchased 4,431,000 shares since adoption of the program in April
2005, and the total number of shares available for future
repurchase as currently authorized is 569,000.
Comments
“SMI’s second quarter and year-to-date 2016 results were
significantly impacted by poor weather surrounding several of our
NASCAR and other non-NASCAR events, including Texas Motor
Speedway’s IndyCar Series race rescheduled to the third quarter
2016,” stated Marcus G. Smith, Chief Executive Officer and
President of Speedway Motorsports. “Our results also were
negatively impacted by lower travel and spending by certain fans
and customers due to ongoing geopolitical events, and declines in
certain non-core revenues. Many entertainment companies, including
most sporting venues, are facing admissions, event related revenue
and viewership trends similar to SMI and motorsports in general. We
are reaffirming our full year 2016 earnings guidance
notwithstanding such recurring poor weather and ongoing challenging
business conditions, and the continuing struggles of many core fans
due to underemployment and the absence of a stronger middle class
economic recovery.”
Marcus G. Smith continued, “Certain revenue categories such as
NASCAR ancillary broadcasting revenues reflect improving trends,
and many of our other longer-term revenue streams and facilities
use are experiencing higher interest. Similar to many motorsports
and non-motorsports venues, we have periodically reduced lower
demand seating for managing facility capacity and expanded premium
hospitality, camping and other facility use. As related to those
steps, we are increasingly focused on adjusting our operating cost
structures and spending to increase our long-term profitability.
SMI’s business model of multiple long-term revenue streams,
including our strategic initiatives of ongoing debt reduction and
restrained capital spending, continues to provide us with strong
financial resilience during challenging periods.”
O. Bruton Smith, Executive Chairman of Speedway Motorsports
stated, “Capturing the next generation of race fans, including our
largely untapped demographics, is SMI’s and NASCAR’s primary
marketing focus. SMI, NASCAR and the media powerhouses are all
fully targeting families, the younger generation and first-time
fans. But, always remembering that our long-time core fans are who
made this great sport, SMI has many programs to honor and reward
their continued patronage. SMI remains steadfast in our
never-ending commitment to provide our fiercely loyal fans with new
and innovative entertainment and high-end customer service choices
that cannot be duplicated at home or other venues, and that is
second to none in motorsports. Those factors, along with NASCAR’s
ongoing success of increasing our sport’s racing competition,
provide SMI with significant long-term growth opportunities.”
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, capital projects and expansion, 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
44648739. 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, 2016
and 2015 (In thousands except per share amounts)
Three Months Ended Six Months Ended STATEMENT OF
OPERATIONS DATA 6/30/2016
6/30/2015 (a) 6/30/2016 6/30/2015
(a) Revenues: Admissions $29,634 $31,904 $45,073 $50,656
Event related revenue 49,339 52,979 71,069 75,249 NASCAR
broadcasting revenue 89,167 86,479 126,614 122,798 Other operating
revenue 7,548 7,959 16,108
15,892 Total Revenues 175,688
179,321 258,864 264,595 Expenses and
Other: Direct expense of events 34,730 34,598 47,790 49,468 NASCAR
event management fees 52,478 51,004 74,776 72,623 Other direct
operating expense 4,955 5,254 10,544 10,092 General and
administrative 27,312 25,453 51,386 48,544 Depreciation and
amortization 13,570 13,375 26,941 26,710 Interest expense, net
3,291 3,593 6,630 9,850 Impairment of other intangible assets and
goodwill - 98,868 - 98,868 Loss on early debt redemption and
refinancing - - - 8,372 Other (income) expense, net
(13) 57 55 (333) Total Expenses
and Other 136,323 232,202
218,122 324,194 Income (Loss) Before Income Taxes
39,365 (52,881) 40,742 (59,599) Income Tax Provision
(14,618) 17,702 (15,134) 20,021
Net Income (Loss) $24,747 ($35,179)
$25,608 ($39,578) Basic Earnings (Loss)
Per Share $0.60 ($0.85) $0.62 ($0.96) Weighted average shares
outstanding 41,184 41,313 41,206 41,326 Diluted Earnings
(Loss) Per Share $0.60 ($0.85) $0.62 ($0.96) Weighted average
shares outstanding 41,195 41,346 41,220 41,361 Major
NASCAR-sanctioned Events Held During Period 8 8 12 12
Certain Race Schedule Changes: • Poor weather resulted in
delaying the start of the NASCAR Sprint Cup race held at Las Vegas
Motor Speedway in the first quarter 2016
• Charlotte Motor Speedway (CMS) held one
major National Hot Rod Association racing event in the second
quarter 2016 that was held in the first quarter 2015. Poor weather
resulted in cancellation of a portion of the weekend racing
event
• Poor weather resulted in delays in
starting and completing the NASCAR Sprint Cup race at Texas Motor
Speedway (TMS) and Sprint All-Star race at CMS, and next day
rescheduling of one NASCAR Camping World Truck Series race at CMS,
in the second quarter 2016
• Poor weather resulted in delays in starting and completing one
IndyCar race at TMS, which has been rescheduled from the second
quarter 2016 to the third quarter 2016 (a) Prior year
amounts reflect the Company's revision of previously issued
financial statements in 2015.
BALANCE SHEET DATA
6/30/2016 12/31/2015
Cash and cash equivalents $84,103 $82,010 Total current
assets 153,455 142,886 Property and equipment, net 1,025,242
1,019,650 Goodwill and other intangible assets, net 345,736 345,736
Total assets 1,554,531 1,539,197 Deferred race event and
other income, net 73,831 57,549 Total current liabilities 132,014
108,369 Credit facility borrowings (all term loan) 88,000 120,000
Total long-term debt 289,206 321,383 Total liabilities 757,690
754,357 Total stockholders' equity 796,841 784,840
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version on businesswire.com: http://www.businesswire.com/news/home/20160727005291/en/
Speedway Motorsports, Inc.Janet Kirkley, 704-532-3318
Speedway Motorsports (NYSE:TRK)
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