Tuesday, International Speedway Corp. (ISCA), a promoter of motorsports activities, reported a decline in profit for the first quarter, reflecting lower revenues. The company slashed its outlook for 2009 and warned that it is not immune to the broader macroeconomic challenges facing all businesses.
The Daytona Beach, Florida-based company's first-quarter net income decreased to $25.15 million or $0.52 per share from $36.21 million or $0.71 per share reported in the previous year period.
In the latest period, the company included a charge for equity in net loss from equity investment related to Motorsports Authentics, whereas in the previous year, a benefit was recorded for equity in net income from equity investment primarily associated with Dale Earnhardt, Jr., Nascar's most significant licensee. Net income in both quarters included adjustments for additional depreciation and impairment of long-lived assets. In the year-ago period, the company also recorded correction of certain other assets' carrying value of $0.07 per share.
Excluding items, net income for the first quarter declined to $27.17 million, or $0.56 per share, from $39.67 million, or $0.78 per share, in the previous year.
On average, five analysts polled by Thomson Reuters expected the company to report earnings of $0.61 per share for the quarter. Analysts' estimates typically exclude special items.
Income from continuing operations decreased to $25.19 million or $0.52 per share from $36.24 million or $0.71 per share in the same period last year.
Revenues for the quarter dropped to $166.12 million from $193.86 million in the previous year. Wall Street expected revenues of $179.68 million for the quarter.
Segment-wise, revenue from admissions dipped to $47.84 million from $56.11 million, while Motorsports-related revenues slipped to $102.53 million from $112.85 million. Revenue from Food, beverage and merchandise declined to $13.41 million from $22.69 million.
Operating income dropped to $50.0 million from $66.93 million in the previous year, and expenses reduced to $116.12 million from $126.93 million.
Relating to the company's $150 million senior note with mid-April 2009 maturity, International Speedway said it remains in a favorable financial position and does not need to access the current turbulent credit markets. The maturity will be funded by available cash from its revolving credit facility borrowings that it drew down in October 2008. The company plans to pay down the balance on the credit facility by mid-2010, which is one year prior to its maturity.
Additionally, the company revised its full-year guidance due to further weakening of the macroeconomic environment. International Speedway now expects full-year 2009 non-GAAP earnings of $1.80-$2.00 per share, while analysts are looking for earnings of $1.95-$2.36 per share, with consensus being $2.24 per share.
Total revenue for 2009 is now expected to range between $700 million and $720 million. The Street expects annual revenues of $747.22 million, with the estimates ranging between $698 million and $806.89 million.
The company has not included the results of Motorsports Authentics, LLC, the company's motorsports-related merchandise 50/50 joint venture with Speedway Motorsports Inc., in its 2009 non-GAAP earnings guidance. ISC currently expects Motorsports Authentics to post an operating loss for 2009.
In December, the company had projected 2009 earnings of $2.35-$2.45 per share, and added that currently it was more comfortable at the low end of the range. Total revenues for the year were estimated to be in the range of $745 million-$765 million.
The company noted that as it is still early in the year, it is more comfortable at the low end of these ranges.
According to the company's president Lesa France Kennedy, Although we expect our business will continue to be impacted by a challenging macroeconomic environment throughout 2009, we enjoy a business model that benefits from strong consumer support and a solid foundation of contracted revenues. These significant top-line visibilities combined with undertaken cost containment measures help ensure that our business will continue to generate substantial cash flow.
ISCA closed Monday's regular trade at $24.43, up from the previous close of $24.74, on 395,700 shares. For the past year, the stock traded in the range of $15.96-$44.75.
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