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, 2017.
"Financial results for the second quarter met
expectations," stated Lesa France Kennedy, ISC Chief Executive
Officer. "Comparable revenue for the quarter was within one
percent of the prior year. We remain confident our
consumer-focused sales strategies are working to slow recent
attendance-related revenue trends. The financial position is
strengthened by our broadcast and corporate sales agreements that
provide long-term visibility."
"The 2017 season is shaping up well. Race
format changes implemented by NASCAR have resulted in great
on-track competition with 10 drivers already securing a spot in
NASCAR's Playoffs, through just 17 races. Up-and-coming
drivers, Kyle Larson, Ryan Blaney and Chase Elliot are positioning
themselves among NASCAR's elite, currently holding 3 of the top 16
positions in the Monster Energy Cup Series standings."
"Steel installation has begun on the Phoenix
Redevelopment signaling a significant milestone for the
project."
"Construction continues with ONE DAYTONA, targeting
a fourth quarter grand opening. Anchor tenants Cobb Daytona
Luxury Theatres and Bass Pro Shops have experienced results
exceeding expectations since opening in first quarter 2017.
The Fairfield Inn & Suites is planning a fall 2017
opening. Leasing demand remains strong. We recently
announced six new tenants, including several first-to-market
brands. The second hotel, a Marriott Autograph Collection
property, recently broke ground with an anticipated opening in late
2018."
Second Quarter Comparison
Total revenues for the second quarter ended
May 31, 2017 were approximately $165.3 million, compared
to revenues of approximately $167.6 million in the second
quarter of fiscal 2016. Operating income was approximately
$18.4 million during the period compared to approximately
$23.7 million in the second quarter of fiscal 2016.
Quarter-over-quarter comparability was impacted by:
- During the three months ended May 31, 2017 , the Hollywood
Casino at Kansas Speedway recognized a reduction in depreciation
expense as a result of certain assets that have been fully
depreciated as compared to the same period in the prior year.
For the three months ended May 31, 2017, our 50.0 percent
share of the reduction in depreciation expense was approximately
$1.3 million, or $0.02 per diluted share.
- During the three months ended May 31, 2017, we received a
favorable settlement relating to certain facility operations of
approximately $1.0 million, or $0.01 per diluted share. There was
no comparable activity in the same period of the prior year.
- During the three months ended May 31, 2017, we recognized
approximately $0.1 million, or less than $0.01 per diluted share,
in non-recurring pre-opening costs that are included in general and
administrative expense related to the Phoenix Redevelopment
project. There were no similar costs incurred during the three
months ended May 31, 2016;
- During the three months ended May 31, 2017, we recognized
approximately $2.0 million, or $0.03 per diluted share, of
accelerated depreciation due to shortening the service lives of
certain assets associated with the Phoenix Redevelopment project.
There were no similar costs during the three months ended
May 31, 2016;
- During the three months ended May 31, 2017, we recognized
approximately $0.3 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 the
Phoenix Redevelopment project. During the three months ended
May 31, 2016, we recognized a de minimis loss on similar
losses in connection with demolition and/or asset relocation costs
in connection with facility capital improvements;
- During the three months ended May 31, 2017, we capitalized
approximately $0.8 million, or $0.01 per diluted share, of
interest, predominately relating to approximately $0.6 million, or
$0.01 per diluted share, associated with ONE DAYTONA and
approximately $0.2 million, or less than $0.01 per diluted
share, associated with the Phoenix Redevelopment project. There was
no similar interest capitalization in the three months ended
May 31, 2016; and
- In the second quarter of fiscal 2016, we completed an
assignment of all rights, title and interest in the mortgage and
underlying promissory note of our Staten Island property. As a
result, we recorded a gain of approximately $13.6 million, or
0.18 per diluted share, comprised of deferred gain, interest, and
other consideration paid. The deferred gain of $1.9 million is
included in Other revenue in our consolidated statement of
operations, and the interest, of approximately $11.4 million, and
additional consideration, of approximately $0.3 million, received
is included in Other income in our consolidated statement of
operations. There was no comparable transaction in the current
year.
Net income for the second quarter was approximately
$13.2 million, or $0.29 per diluted share, compared to
approximately $21.9 million, or $0.47 per diluted share, in
the prior year period. Excluding legal settlement,
non-recurring, pre-opening costs associated with the Phoenix
Redevelopment project, accelerated depreciation related to the
Phoenix Redevelopment project, losses associated with the
retirements of certain other long-lived assets, capitalized
interest associated with ONE DAYTONA and the Phoenix Redevelopment
project, and gain on sale of Staten Island property, non-GAAP net
income, as defined below, was $13.6 million, or $0.30 per
diluted share, as compared to $13.4 million, or $0.29 per
diluted share, for the second quarter of fiscal 2017 and 2016,
respectively (see "GAAP to Non-GAAP Reconciliation").
Year-to-Date Comparison
Total revenues for the six months ended
May 31, 2017 were approximately $313.2 million, compared
to revenues of approximately $310.2 million for the same
period in fiscal 2016. Operating income was approximately
$52.2 million during the period compared to approximately
$54.8 million for the same period in fiscal 2016.
Period-over-period comparability was impacted by:
- In the first quarter of fiscal 2017, we hosted the Ferrari
World Finals at Daytona International Speedway ("Daytona"), for
which there was no comparable event in fiscal 2016;
- During the six months ended May 31, 2017, the Hollywood
Casino at Kansas Speedway recognized a reduction in depreciation
expense as a result of certain assets that have been fully
depreciated as compared to the same period in the prior year.
For the six months ended May 31, 2017, our 50.0 percent share
of the reduction in depreciation expense was approximately $1.5
million, or $0.02 per diluted share.
- In the second quarter of fiscal 2017, we received a favorable
settlement relating to certain facility operations of approximately
$1.0 million, or $0.01 per diluted share. There was no comparable
activity in the same period of the prior year.
- During the six months ended May 31, 2017, we recognized
approximately $0.2 million, or less than $0.01 per diluted
share, in non-recurring pre-opening costs that are included in
general and administrative expense related to the Phoenix
Redevelopment project. During the six months ended May 31,
2016, we recognized approximately $0.8 million, or $0.01 per
diluted share, in non-recurring pre-opening costs that are included
in general and administrative expense related to DAYTONA
Rising;
- During the six months ended May 31, 2017, we recognized
approximately $2.7 million, or $0.04 per diluted share, of
accelerated depreciation due to shortening the service lives of
certain assets associated with the Phoenix Redevelopment project.
There were no similar costs during the six months ended
May 31, 2016;
- During the six months ended May 31, 2017, we recognized an
approximate $0.3 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 the
Phoenix Redevelopment project. During the six months ended
May 31, 2016, we recognized approximately $0.9 million,
or $0.01 per diluted share, of similar losses in connection with
demolition and/or asset relocation costs in connection with
facility capital improvements;
- During the six months ended May 31, 2017, we capitalized
approximately $1.4 million, or $0.02 per diluted share, of
interest, predominately relating to approximately $1.1 million, or
$0.02 per diluted share, associated with ONE DAYTONA and
approximately $0.3 million, or less than $0.01 per diluted share,
associated with the Phoenix Redevelopment project. During the six
months ended May 31, 2016, we capitalized approximately
$0.6 million, or $0.01 per diluted share, of interest related
to DAYTONA Rising; and
- In the second quarter of fiscal 2016, we completed an
assignment of all rights, title and interest in the mortgage and
underlying promissory note of our Staten Island property. As a
result, we recorded a gain of approximately $13.6 million, or
0.18 per diluted share, comprised of deferred gain, interest, and
other consideration paid. The deferred gain of $1.9 million is
included in Other operating revenue in our consolidated statement
of operations, and the interest, of approximately $11.4 million,
and additional consideration, of approximately $0.3 million,
received is included in Other in our consolidated statement of
operations. There was no comparable transaction in the current
year.
Net income for the six months ended May 31,
2017, was approximately $34.5 million, or $0.77 per diluted
share, compared to approximately $41.7 million, or $0.90 per
diluted share, in the prior year period. Excluding legal
settlement, non-recurring, pre-opening costs associated with the
Phoenix Redevelopment project and DAYTONA Rising, accelerated
depreciation related to the Phoenix Redevelopment project, losses
associated with the retirements of certain other long-lived assets,
capitalized interest associated with ONE DAYTONA, the Phoenix
Redevelopment project and DAYTONA Rising, and gain on sale of
Staten Island property, non-GAAP net income, as defined below, was
$35.0 million, or $0.78 per diluted share, as compared to
$33.9 million, or $0.73 per diluted share, for the six months
ended May 31, 2017 and 2016, respectively (see "GAAP to Non-GAAP
Reconciliation").
GAAP to Non-GAAP
Reconciliation
The following financial information is presented
below using other than U.S. generally accepted accounting
principles (“non-GAAP”) and includes certain non-GAAP financial
measures as identified in the reconciliation below. 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. Non-GAAP financial measures 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"). Also, our “core” financial
measures should not be construed as an inference by us that our
future results will be unaffected by those items, which are
excluded from our “core” 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 consists 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 the
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 2016 relate to
non-recurring, pre-opening costs incurred associated with DAYTONA
Rising, losses associated with the retirements of certain other
long-lived assets related to capacity management initiatives
(primarily the removal of grandstands at Richmond International
Raceway ("Richmond")) and items in connection with DAYTONA Rising,
capitalized interest related to DAYTONA Rising, the net gain on
sale of certain assets (predominately associated with the sale of
trailers in association with the transition of merchandise
operations), and gain on sale of Staten Island property.
The adjustments for fiscal 2017 relate to
non-recurring costs incurred associated with the Phoenix
Redevelopment project, legal settlement, losses associated with the
retirements of certain other long-lived assets in connection with
the Phoenix Redevelopment project, accelerated depreciation
(related to the Phoenix Redevelopment project), and capitalized
interest related to the ONE DAYTONA and Phoenix Redevelopment
projects.
Amounts are in thousands, except per share data,
which is shown net of income taxes, (unaudited):
| |
Three Months Ended May 31, 2016 |
| |
Income Before Taxes |
Income Tax Effect |
Net Income |
Earnings Per Share |
|
GAAP |
$ |
36,156 |
|
$ |
14,258 |
|
$ |
21,898 |
|
$ |
0.47 |
|
| Adjustments: |
|
|
|
|
| Losses on
retirements of long-lived assets |
10 |
|
4 |
|
6 |
|
0.00 |
|
| Gain on
sale of Staten Island |
(13,631 |
) |
(5,262 |
) |
(8,369 |
) |
(0.18 |
) |
| Net gain
on sale of certain assets |
(213 |
) |
(82 |
) |
(131 |
) |
0.00 |
|
|
Non-GAAP |
$ |
22,322 |
|
$ |
8,918 |
|
$ |
13,404 |
|
$ |
0.29 |
|
| |
|
|
|
|
| |
Three Months Ended May 31, 2017 |
| |
Income Before Taxes |
Income Tax Effect |
Net Income |
Earnings Per Share |
|
GAAP |
$ |
21,410 |
|
$ |
8,183 |
|
$ |
13,227 |
|
$ |
0.29 |
|
| Adjustments: |
|
|
|
|
| Phoenix
Redevelopment project |
89 |
|
34 |
|
55 |
|
0.00 |
|
|
Accelerated depreciation |
2,040 |
|
780 |
|
1,260 |
|
0.03 |
|
| Losses on
retirements of long-lived assets |
283 |
|
108 |
|
175 |
|
0.00 |
|
| Legal
settlement |
(980 |
) |
(375 |
) |
(605 |
) |
(0.01 |
) |
|
Capitalized interest |
(812 |
) |
(310 |
) |
(502 |
) |
(0.01 |
) |
|
Non-GAAP |
$ |
22,030 |
|
$ |
8,420 |
|
$ |
13,610 |
|
$ |
0.30 |
|
| |
|
|
|
|
| |
Six Months Ended May 31, 2016 |
| |
Income Before Taxes |
Income Tax Effect |
Net Income |
Earnings Per Share |
|
GAAP |
$ |
68,297 |
|
$ |
26,568 |
|
$ |
41,729 |
|
$ |
0.90 |
|
| Adjustments: |
|
|
|
|
| DAYTONA
Rising project |
787 |
|
304 |
|
483 |
|
0.01 |
|
| Losses on
retirements of long-lived assets |
930 |
|
360 |
|
570 |
|
0.01 |
|
|
Capitalized interest |
(627 |
) |
(242 |
) |
(385 |
) |
(0.01 |
) |
| Gain on
sale of Staten Island |
(13,631 |
) |
(5,262 |
) |
(8,369 |
) |
(0.18 |
) |
| Net gain
on sale of certain assets |
(277 |
) |
(107 |
) |
(170 |
) |
0.00 |
|
|
Non-GAAP |
$ |
55,479 |
|
$ |
21,621 |
|
$ |
33,858 |
|
$ |
0.73 |
|
| |
|
|
|
|
| |
Six Months Ended May 31, 2017 |
| |
Income Before Taxes |
Income Tax Effect |
Net Income |
Earnings Per Share |
|
GAAP |
$ |
55,732 |
|
$ |
21,232 |
|
$ |
34,500 |
|
$ |
0.77 |
|
| Adjustments: |
|
|
|
|
| Phoenix
Redevelopment project |
247 |
|
94 |
|
153 |
|
0.00 |
|
|
Accelerated depreciation |
2,686 |
|
1,027 |
|
1,659 |
|
0.04 |
|
| Losses on
retirements of long-lived assets |
283 |
|
108 |
|
175 |
|
0.00 |
|
| Legal
settlement |
(980 |
) |
(375 |
) |
(605 |
) |
(0.01 |
) |
|
Capitalized interest |
(1,441 |
) |
(550 |
) |
(891 |
) |
(0.02 |
) |
|
Non-GAAP |
$ |
56,527 |
|
$ |
21,536 |
|
$ |
34,991 |
|
$ |
0.78 |
|
In an effort to enhance the comparability and
understandability of certain forward looking financial guidance,
such as ONE DAYTONA and the Phoenix Redevelopment project (see
"External Growth, Financing-Related and Other Initiatives"), we
adjust for certain non-recurring items that will be included in our
future GAAP reporting to provide information that we believe best
represents our expectations for our core business performance.
Non-GAAP financial measures, such as EBITDA, which we interpret to
be calculated as GAAP operating income, plus depreciation,
amortization, impairment/losses on retirements of long-lived
assets, other non-GAAP adjustments, and cash distributions from
equity investments, are used in our analysis. We have not
reconciled the non-GAAP forward-looking measure to its most
directly comparable GAAP measure. Such reconciliations would
require unreasonable efforts to estimate and quantify various
necessary GAAP components largely because forecasting or predicting
our future operating results is subject to many factors not in our
control or not readily predictable, as detailed in the Risk Factors
section of the Company's previously publicly filed documents, Forms
10-K and 10-Q, with the SEC, 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.
Corporate Sales
The power of the NASCAR brand along with its
brand/product loyal fan base is a highly attractive platform for
corporate participation. The participation of FORTUNE 500
companies in NASCAR is higher than in any other sports property
with more than one in four FORTUNE 500 companies invested in
NASCAR, and nearly half of the FORTUNE 100 listed companies
leveraging NASCAR within their marketing strategy. The number
of FORTUNE 500 companies investing in NASCAR has grown for
five consecutive years, currently up approximately 7.0 percent from
2016. We anticipate this high-level of corporate interest
will continue considering the appealing characteristics of our
sport such as presence in key metropolitan statistical areas, the
near year-round event schedule, our impressive portfolio of major
motorsports events and attractive NASCAR fan demographics.
For fiscal 2017, we have agreements in place for
approximately 94.0 percent of our gross marketing partnership
revenue target, as compared to approximately 96.0 percent for the
same period in fiscal 2016. For 2017, we have remaining open
race entitlements for one Monster Energy NASCAR Cup series event
and one NASCAR Xfinity series events. This is compared to
last year at this time when we had entitlements for one Monster
Energy NASCAR Cup and two NASCAR Xfinity entitlements either open
or not announced.
External Growth, Financing-Related and
Other Initiatives
Capital Allocation
We have established a long-term capital allocation
plan to ensure we generate sufficient cash flow from operations to
fund our working capital needs, capital expenditures at existing
facilities, return of capital through payments of an annual cash
dividend, and repurchase of our shares under our Stock Purchase
Plan. In addition, we have used the proceeds from offerings
of our Class A Common Stock, the net proceeds from the
issuance of long-term debt, borrowings under our credit facilities,
and state and local mechanisms to fund acquisitions and development
projects.
We operate under a five-year capital allocation
plan adopted by the Board of Directors, covering fiscal years 2017
through 2021. Components of this plan include:
- Capital expenditures for existing facilities up to $500.0
million from fiscal 2017 through fiscal 2021. This allocation
will fund a reinvestment at Phoenix, as well as all other
maintenance and guest experience capital expenditures for the
remaining existing facilities. In 2017 we began the
redevelopment of Phoenix (see “Phoenix Redevelopment”) with
completion targeted in late 2018, therefore, we expect spending to
be somewhat front-loaded. While many components of these
expected projects will exceed weighted average cost of capital,
considerable maintenance capital expenditures, approximately $40.0
million to $60.0 million annually, will likely result in a blended
return on this invested capital in the low-to-mid single
digits;
- In addition to the aforementioned $500.0 million in capital
expenditures for existing facilities, we expect we will have an
additional $95.0 million of capital expenditures related to phase
one of ONE DAYTONA. Construction for ONE DAYTONA commenced in
fiscal 2016. Approximately $22.0 million of capital
expenditures was spent as of November 30, 2016. The remaining
approximate $73.0 million of capital expenditures for ONE DAYTONA
will be spent in fiscal years 2017 and 2018. We expect the
returns of this investment to exceed our weighted average cost of
capital.
In April 2017, our Board of Directors approved an
additional approximate $12.0 million of capital expenditures
to further develop the Volusia Point retail property previously
purchased in 2011. Volusia Point is adjacent to ONE DAYTONA
and will be re-branded the Shoppes at ONE DAYTONA (see "ONE
DAYTONA").
As a result of this additional capital expenditure
approval, the total investment in ONE DAYTONA, exclusive of
capitalized interest and net of public incentives, will be
approximately $107.0 million; and,
- Return of capital to shareholders through dividends and share
repurchases is a significant pillar of our capital
allocation. In fiscal 2016 we increased our dividend
approximately 58.0 percent to $0.41 per share, and in fiscal 2017,
we increased our dividend approximately 4.9 percent to $0.43 per
share. We expect dividends to increase in 2018 and beyond, by
approximately four to five percent annually. For the
six months ended May 31, 2017, we repurchased 438,328 shares
of ISCA on the open market at a weighted average share price of
$36.48 for a total of approximately $16.0 million. At
May 31, 2017, we had approximately $190.6 million remaining
repurchase authority under the current $530.0 million Stock
Purchase Plan.
For fiscal 2017 through 2021 we expect our return
of capital program to be approximately $280.0 million, comprised of
close to $100.0 million in total annual dividends and the balance
being open market repurchase of ISCA shares over the five year
period. At this time we expect this spending to be evenly
allocated per year, although we will scale the repurchase program
to buy opportunistically.
We will continue to explore development and/or
acquisition opportunities beyond the initiatives discussed above
that build shareholder value and exceed our weighted average cost
of capital. Should additional development and/or acquisitions
be pursued, we will provide discrete information on timing, scope,
cost and expected returns of such opportunities.
The aforementioned represents certain components of
our capital allocation plan for fiscal 2017 and beyond. This
capital allocation plan is reviewed annually, or more frequently,
if necessary, based on changes in business conditions.
Capital Expenditures
An important strategy for our future growth will
come from investing in our major motorsports facilities to enhance
the live event experience and better enable us to effectively
compete with other entertainment venues for consumer and corporate
spending. To better meet our customers' expectations, we are
committed to improving the guest experience at our facilities
through on-going capital improvements that position us for
long-term growth.
Capital expenditures for projects, including those
related to Phoenix Redevelopment and ONE DAYTONA, were
approximately $40.6 million for the six months ended
May 31, 2017. In comparison, the Company spent
approximately $81.8 million on capital expenditures for
projects for the same period in fiscal 2016. For fiscal 2017,
we expect capital expenditures associated with the aforementioned
capital allocation plan to range between approximately $150.0
million and $175.0 million, which includes approximately $100.0
million to $115.0 million for existing facilities, including the
Phoenix Redevelopment project, and an additional $50.0 million to
$60.0 million in capital expenditures related to construction
for ONE DAYTONA.
We review the capital expenditure program
periodically and modify it as required to meet current business
needs.
ONE DAYTONA
Since June 2013, we have pursued development of ONE
DAYTONA, a premier mixed use and entertainment destination across
from the Daytona International Speedway. We have crafted a strategy
that will create synergy with the Speedway, enhance customer and
partner experiences, monetize real estate on International Speedway
Blvd and leverage our real estate on a year-round basis.
We have approved land use entitlements for ONE
DAYTONA to allow for up to 1.4 million square feet of
retail/dining/entertainment, a 2,500-seat movie theater, 660 hotel
rooms, 1,350 residential units, 567,000 square feet of
additional office space and 500,000 square feet of
commercial/industrial space.
In March 2015, we announced Legacy Development, a
leading national development group, as development consultant for
ONE DAYTONA. Intensely focused on innovative destination
retail and mixed-use projects, Legacy Development is working
closely with ISC’s development staff on the project. The Legacy
Development team is a natural fit for the project, having served as
the developer for Legends Outlets Kansas City, a mixed-use retail
destination across from our Kansas Speedway.
In April 2017, our Board approved an additional
approximate $12.0 million of capital expenditures to further
develop the Volusia Point retail property previously purchased in
2011. Volusia Point is adjacent to ONE DAYTONA and will be
re-branded the Shoppes at ONE DAYTONA ("the Shoppes"). We expect
the improvements to the Shoppes will generate an incremental EBITDA
of approximately $1.0 million to the ONE DAYTONA pro-forma through
increased square footage and securing tenants for currently vacant
spaces (see "GAAP to Non-GAAP Reconciliation" for discussion on
Non-GAAP financial forward looking measures).
A Community Development District ("CDD") has been
established for the purpose of installing and maintaining public
infrastructure at ONE DAYTONA. The CDD is a local, special purpose
government framework authorized by Chapter 190 of the Florida
Statutes for managing and financing infrastructure to support
community development. The CDD has negotiated agreements with the
City of Daytona Beach and Volusia County for a total of $40.0
million in incentives to finance a portion of the estimated $53.0
million in infrastructure required to move forward with the ONE
DAYTONA project.
The design for the first phase of ONE DAYTONA has
been completed and will be comprised of three components: retail,
dining and entertainment (“RD&E”); hotels; and residential.
The RD&E component of phase one will be owned
100.0 percent by us. The expected total square footage for the
RD&E first phase is approximately 300,000 square feet. We
expect to spend approximately $95.0 million in fiscal 2016 through
2018 on the RD&E component of ONE DAYTONA’s first phase.
Other sources of funds will include the public incentives discussed
above and land to be contributed to the project. In September
2016, we announced VCC had been selected as general contractor to
oversee construction of the RD&E component of phase one
including Victory Circle and the parking garage. VCC has an
outstanding national reputation for quality and a proven track
record leading and managing the development and construction of
some of the country’s most engaging mixed-use developments.
Bass Pro Shops®, America’s most popular outdoor
store, and Cobb Theatres, the highly respected Southeastern-based
exhibitor, are anchor tenants of ONE DAYTONA. Lease
agreements have also been executed with other tenants including
P.F. Chang’s, Hy’s Toggery, Kilwins Confections, Guitar
Center, Tervis, IT’SUGAR, Jeremiah’s Italian Ice, Venetian Nail
Spa, Sunglass World, Oklahoma Joe’s BBQ, Rock Bottom Restaurant
& Brewery, MidiCi: The Neapolitan Pizza Company, Lindbergh,
Designers Market, GameTime, Claire de Lune, Kasa Living, BUILT
Custom Burgers, Sprint, Ben & Jerry’s and Pink Narcissus.
Leasing remains strong and we are exceeding our leasing goals for
the project.
Shaner Hotels and Prime Hospitality Group ("PHG")
have been selected as hotel partners. They have executed a
franchise agreement with Marriott International for an exclusive
145-room full service Autograph Collection hotel at ONE DAYTONA
that will be known as The DAYTONA, as well as a 105-room
select-service Fairfield Inn & Suites by Marriott. Both are
currently under construction. As part of the partnership agreement,
our portion of equity will be limited to our land contribution and
we will share proportionately in the profits from the joint
venture.
Prime Group has been selected as the partner for
ONE DAYTONA’s residential development. Following an extensive
request for proposal process, ONE DAYTONA chose the Florida
developer based on their command of market demographics,
development experience and expert property management systems.
Prime Group is proceeding with the development in ONE DAYTONA for
approximately 276 luxury apartment rental units that will add
critical mass to the overall ONE DAYTONA campus. Similar to the
hotel partnership, our portion of equity will be limited to our
land contribution and we will share proportionately in the profits
from the joint venture.
Cobb Daytona Luxury Theatres opened in December
2016, Bass Pro Shops opened in February 2017, and the Fairfield Inn
& Suites is planning an opening later in fiscal 2017. We are
targeting substantial completion of phase one in late fiscal
2017. At stabilization we expect this first phase of ONE
DAYTONA, and the Shoppes , to deliver a combined incremental annual
revenue and EBITDA of approximately $13.0 million and
approximately $10.0 million, respectively, and deliver an unlevered
return above our weighted average cost of capital (see "GAAP to
Non-GAAP Reconciliation" for discussion on Non-GAAP financial
forward looking measures). We expect to add leverage to ONE
DAYTONA’s phase one post-stabilization.
Total capital expenditures for ONE DAYTONA and the
Shoppes, excluding capitalized interest and net of public
incentives, are expected to be approximately $107.0 million. From
inception, through May 31, 2017, capital expenditures totaled
approximately $48.4 million, exclusive of capitalized interest
and labor. At this time, there is no project specific
financing in place for ONE DAYTONA. Ultimately, we expect to
secure financing for the project upon stabilization. However,
accounting rules dictate that we capitalize a portion of the
interest on existing outstanding debt during the construction
period. From inception through May 31, 2017, we recorded
approximately $2.7 million of capitalized interest related to ONE
DAYTONA, and expect approximately $4.0 million to
$4.5 million to be recorded by completion of construction.
Any future phases will be subject to prudent
business considerations for which we will provide discrete cost and
return disclosures.
Phoenix Redevelopment
On November 30, 2016, we announced our Board of
Directors had approved a multi-year redevelopment project to
elevate the fan experience at Phoenix, the company’s 52-year-old
motorsports venue. The redevelopment is expected to focus on new
and upgraded seating areas, vertical transportation options, new
concourses, enhanced hospitality offerings and an intimate infield
experience with greater accessibility to pre-race activities.
The redevelopment of Phoenix is included in our
aforementioned $500.0 million capital allocation plan covering
fiscal years 2017 through 2021. The redevelopment project at
Phoenix is expected to cost approximately $178.0 million,
including maintenance capital, before capitalized interest.
Okland Construction ("Okland") has been selected as general
contractor of the project. Effective November 30, 2016,
Phoenix entered into a Design-Build Agreement with Okland. The
Design-Build Agreement obligates Phoenix to pay Okland
approximately $136.0 million for the completion of the work
described in the Design-Build Agreement. This amount is a
guaranteed maximum price to be paid for the work, which may not
change absent a requested change in the scope of work by
Phoenix.
Based on the Company's current plans for Phoenix,
it has identified existing assets that are expected to be impacted
by the redevelopment and will require accelerated depreciation, or
losses on asset retirements, totaling approximately $4.7 million in
non-cash charges over the approximate 22-month project time
span.
Despite the Company not anticipating the need for
additional long-term debt to fund this project, accounting rules
dictate that the Company capitalize a portion of the interest on
existing outstanding debt during the construction period. The
Company estimates it will record approximately $7.5 million to $8.0
million of capitalized interest from fiscal 2017 through fiscal
2018.
For fiscal 2017, we expect capital expenditures
related to the redevelopment of Phoenix to total approximately
$75.0 million to $80.0 million and capitalized interest of
approximately $2.2 million. From inception, through
May 31, 2017, we have incurred capital expenditures related to
the redevelopment of Phoenix, exclusive of capitalized interest and
labor, of approximately $20.2 million, and approximately $0.3
million of capitalized interest.
Upon completion, the redevelopment is expected to
provide a full fiscal year incremental lift in Phoenix's EBITDA of
approximately $8.5 million to $9.0 million (see "GAAP to
Non-GAAP Reconciliation" for discussion on Non-GAAP financial
forward looking measures). We anticipate recognizing revenue and
expense associated with the project, as a result of assets placed
in service and/or benefits provided to partners, beginning late
fiscal 2017. We expect to recognize the full fiscal year
incremental financial lift in fiscal 2019 and sustained
thereafter.
Hollywood Casino at Kansas
Speedway
Kansas Entertainment, LLC, (“Kansas Entertainment”)
a 50/50 joint venture of Penn Hollywood Kansas, Inc. (“Penn”), a
subsidiary of Penn National Gaming, Inc. and Kansas Speedway
Development Corporation (“KSDC”), a wholly owned indirect
subsidiary of ISC, operates the Hollywood-themed casino and branded
destination entertainment facility, overlooking turn two at Kansas
Speedway. Penn is the managing member of Kansas Entertainment and
is responsible for the operations of the casino.
We have accounted for Kansas Entertainment as an
equity investment in the consolidated financial statements as of
May 31, 2016 and 2017. The Company's 50.0 percent portion
of Kansas Entertainment’s net income, which is before income taxes
as the joint venture is a disregarded entity for income tax
purposes, was approximately $8.1 million and $9.4 million
for the six months ended May 31, 2016 and 2017, respectively,
and is included in Equity in net income from equity investments in
the consolidated statements of operations.
Pre-tax distributions from Kansas Entertainment for
the six months ended May 31, 2017, totaling approximately $9.9
million, received as a distribution from its profits, included in
net cash provided by operating activities on the Company's
consolidated statement of cash flows. Pre-tax distributions from
Kansas Entertainment for the six months ended May 31, 2016,
totaling $10.4 million, consisted of approximately
$8.7 million received as a distribution from its profits,
included in net cash provided by operating activities on the
Company's consolidated statement of cash flows, with the remaining
approximate $1.6 million received, recognized as a return of
capital from investing activities on the Company's consolidated
statement of cash flows.
For fiscal 2017, cash distributions from the casino
joint venture are estimated to be approximately $25.0 million
to $26.0 million.
Fiscal 2017 Financial Outlook
ISC’s reported quarterly and year to date earnings
are presented under GAAP. In an effort to enhance the
comparability and understandability of our forward looking
financial guidance, we adjust for certain non-recurring items that
will be included in our future GAAP reporting to provide
information that we believe best represents our expectations for
our core business performance.
For fiscal 2017, our non-GAAP guidance
excludes:
- any non-recurring pre-opening income statement
impact attributable to the Phoenix Redevelopment project,
including accelerated depreciation and non-capitalized costs and
losses associated with retirements of certain other long-lived
assets, partially offset by capitalized interest expense;
- any non-recurring pre-opening and non-capitalized costs or
charges related to our ONE DAYTONA development, partially offset by
capitalized interest expense ;
- start up and/or financing costs should our Hollywood
Casino at Kansas Speedway joint venture pursue
construction of an adjacent hotel;
- any costs or income related to legal settlements;
- gain or loss on sale of other assets;
- accelerated depreciation and future loss on retirements, mostly
non-cash, or relocation of certain long-lived assets, which could
be recorded as part of capital improvements other than the Phoenix
Redevelopment project resulting from removal of assets prior to the
end of their actual useful life.
ISC is reiterating its 2017 full year non-GAAP
guidance. The earnings outlook is our best estimate of
financial results for fiscal 2017.
- Revenue: $660.0 million to $670.0 million
- EBITDA margin: 31.5% to 32.5%
- Operating margin: 15.5% to 17.0%
- Effective tax rate: 38.0% to 38.5%
- Diluted earnings per share: $1.50 to $1.65
The Company's guidance for EBITDA is to range
between $208.0 million to $218.0 million (see "GAAP to
Non-GAAP Reconciliation" for the Company's definition of EBITDA and
discussion on Non-GAAP financial forward looking measures).
Incremental to ISC's EBITDA estimate are pre-tax cash distributions
from its equity investment in the Hollywood Casino, estimated
to be approximately $25.0 million to $26.0 million. Total
capital expenditures for 2017 are estimated between approximately
$150.0 million to $175.0 million, which include capital
expenditures for existing facilities, including the Phoenix
Redevelopment project and ONE DAYTONA.
In closing, Ms. France Kennedy stated,
"We maintain a solid financial position, developed over many years,
that affords us the ability to follow our disciplined capital
allocation strategy and maintain our leadership position in the
motorsports industry. We have extended our capital allocation
plan through fiscal 2021, demonstrating our ongoing commitment to
building long-term value. For the future, we are well
positioned to balance the strategic capital needs of our business
with returning capital to our shareholders."
Conference Call Details
The management of ISC will host a conference call
with investors at 9:00 a.m. Eastern Time. To participate,
dial toll free (888) 694-4641 five to ten minutes prior to the
scheduled start time and request to be connected to the ISC
earnings call, ID number 99887300.
A live Webcast will also be available at that time
on the Company's Web site,
www.internationalspeedwaycorporation.com, under the “Investor
Relations” section. A replay will be available two hours
after the end of the call through midnight Monday, July 17,
2017. To access, dial (855) 859-2056 and enter the code
99887300, or visit the “Investor Relations” section of the
Company's Web site.
International Speedway Corporation is a leading
promoter of motorsports activities, currently promoting more than
100 racing events annually as well as numerous other
motorsports-related activities. The Company owns and/or
operates 13 of the nation's major motorsports entertainment
facilities, including Daytona International Speedway® in Florida
(home of the DAYTONA 500®); Talladega Superspeedway® in Alabama;
Michigan International Speedway® located outside Detroit; Richmond
International Raceway® in Virginia; Auto Club Speedway of Southern
CaliforniaSM near Los Angeles; Kansas Speedway® in Kansas City,
Kansas; Phoenix International Raceway® in Arizona; Chicagoland
Speedway® and Route 66 RacewaySM near Chicago, Illinois;
Homestead-Miami SpeedwaySM in Florida; Martinsville Speedway® in
Virginia; Darlington Raceway® in South Carolina; and Watkins Glen
International® in New York.
The Company also owns and operates Motor Racing
NetworkSM, the nation's largest independent sports radio network
and Americrown Service CorporationSM, a subsidiary that provides
catering services, and food and beverage concessions. In
addition, the Company owns ONE DAYTONA, the retail, dining and
entertainment development across from Daytona International
Speedway, and has a 50.0 percent interest in the Hollywood Casino
at Kansas Speedway. For more information, visit the Company's
Web site at www.internationalspeedwaycorporation.com.
Statements made in this release that express the
Company's or management's beliefs or expectations and which are not
historical facts or which are applied prospectively are
forward-looking statements. It is important to note that the
Company's actual results could differ materially from those
contained in or implied by such forward-looking statements. The
Company's results could be impacted by risk factors, including, but
not limited to, weather surrounding racing events, government
regulations, economic conditions, consumer and corporate spending,
military actions, air travel and national or local catastrophic
events. Additional information concerning factors that could cause
actual results to differ materially from those in the
forward-looking statements is contained from time to time in the
Company's SEC filings including, but not limited to, the 10-K and
subsequent 10-Qs. Copies of those filings are available from the
Company and the SEC. The Company undertakes no obligation to
release publicly any revisions to these forward-looking statements
that may be needed to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
The inclusion of any statement in this release does not constitute
an admission by International Speedway or any other person that the
events or circumstances described in such statement are
material.
(Tables Follow)
| Consolidated Statements of
Operations(In Thousands, Except Share and Per Share
Amounts) |
| |
|
|
|
|
| |
|
Three Months Ended |
|
Six Months Ended |
| |
|
May 31, 2016 |
|
May 31, 2017 |
|
May 31, 2016 |
|
May 31, 2017 |
| |
|
(Unaudited) |
| REVENUES: |
|
|
|
|
|
|
|
|
|
Admissions, net |
|
$ |
30,473 |
|
|
$ |
28,662 |
|
|
$ |
62,328 |
|
|
$ |
59,997 |
|
|
Motorsports and other event related |
|
121,002 |
|
|
122,322 |
|
|
219,725 |
|
|
225,834 |
|
| Food,
beverage and merchandise |
|
10,289 |
|
|
9,517 |
|
|
18,605 |
|
|
18,659 |
|
|
Other |
|
5,797 |
|
|
4,774 |
|
|
9,533 |
|
|
8,739 |
|
| |
|
167,561 |
|
|
165,275 |
|
|
310,191 |
|
|
313,229 |
|
| EXPENSES: |
|
|
|
|
|
|
|
|
|
Direct: |
|
|
|
|
|
|
|
|
|
NASCAR event management fees |
|
46,484 |
|
|
48,270 |
|
|
74,564 |
|
|
77,246 |
|
|
Motorsports and other event related |
|
36,067 |
|
|
34,728 |
|
|
60,947 |
|
|
60,783 |
|
|
Food, beverage and merchandise |
|
7,559 |
|
|
7,244 |
|
|
13,805 |
|
|
13,269 |
|
| Other
operating expenses |
|
105 |
|
|
656 |
|
|
253 |
|
|
858 |
|
| General
and administrative |
|
27,671 |
|
|
27,309 |
|
|
53,815 |
|
|
53,656 |
|
|
Depreciation and amortization |
|
25,986 |
|
|
28,269 |
|
|
51,032 |
|
|
54,770 |
|
| Losses on
asset retirements |
|
10 |
|
|
374 |
|
|
930 |
|
|
404 |
|
| |
|
143,882 |
|
|
146,850 |
|
|
255,346 |
|
|
260,986 |
|
| Operating income |
|
23,679 |
|
|
18,425 |
|
|
54,845 |
|
|
52,243 |
|
| Interest income |
|
56 |
|
|
251 |
|
|
86 |
|
|
368 |
|
| Interest expense |
|
(3,684 |
) |
|
(3,067 |
) |
|
(6,773 |
) |
|
(6,319 |
) |
| Equity in net income
from equity investments |
|
4,169 |
|
|
5,799 |
|
|
8,139 |
|
|
9,426 |
|
| Other |
|
11,936 |
|
|
2 |
|
|
12,000 |
|
|
14 |
|
| Income before income
taxes |
|
36,156 |
|
|
21,410 |
|
|
68,297 |
|
|
55,732 |
|
| Income taxes |
|
14,258 |
|
|
8,183 |
|
|
26,568 |
|
|
21,232 |
|
| Net income |
|
$ |
21,898 |
|
|
$ |
13,227 |
|
|
$ |
41,729 |
|
|
$ |
34,500 |
|
| |
|
|
|
|
|
|
|
|
| Dividends per
share |
|
$ |
0.41 |
|
|
$ |
0.43 |
|
|
$ |
0.41 |
|
|
$ |
0.43 |
|
| Earnings per
share: |
|
|
|
|
|
|
|
|
| Basic and
diluted |
|
$ |
0.47 |
|
|
$ |
0.29 |
|
|
$ |
0.90 |
|
|
$ |
0.77 |
|
| |
|
|
|
|
|
|
|
|
| Basic weighted average
shares outstanding |
|
46,231,560 |
|
|
44,857,837 |
|
|
46,424,992 |
|
|
44,960,205 |
|
| |
|
|
|
|
|
|
|
|
| Diluted weighted
average shares outstanding |
|
46,246,727 |
|
|
44,871,255 |
|
|
46,439,802 |
|
|
44,974,365 |
|
| |
|
|
|
|
|
|
|
|
| Comprehensive
income |
|
$ |
22,065 |
|
|
$ |
13,394 |
|
|
$ |
42,061 |
|
|
$ |
34,834 |
|
| Consolidated Balance Sheets(In
Thousands, Except Share and Per Share Amounts) |
|
|
| |
|
November 30, 2016 |
|
May 31, 2016 |
|
May 31, 2017 |
| |
|
|
|
(Unaudited) |
| ASSETS |
|
|
|
|
|
|
| Current Assets: |
|
|
|
|
|
|
| Cash and
cash equivalents |
|
$ |
263,727 |
|
|
$ |
303,978 |
|
|
$ |
312,075 |
|
|
Receivables, less allowance |
|
35,445 |
|
|
41,150 |
|
|
55,870 |
|
| Income
taxes receivable |
|
189 |
|
|
— |
|
|
— |
|
| Prepaid
expenses and other current assets |
|
13,759 |
|
|
18,769 |
|
|
19,251 |
|
| Total Current
Assets |
|
313,120 |
|
|
363,897 |
|
|
387,196 |
|
| |
|
|
|
|
|
|
| Property and Equipment,
net |
|
1,455,506 |
|
|
1,455,945 |
|
|
1,448,829 |
|
| Other Assets: |
|
|
|
|
|
|
| Equity
investments |
|
92,392 |
|
|
101,038 |
|
|
91,968 |
|
|
Intangible assets, net |
|
178,629 |
|
|
178,627 |
|
|
178,634 |
|
|
Goodwill |
|
118,791 |
|
|
118,791 |
|
|
118,791 |
|
|
Other |
|
14,222 |
|
|
4,422 |
|
|
15,970 |
|
| |
|
404,034 |
|
|
402,878 |
|
|
405,363 |
|
| Total Assets |
|
$ |
2,172,660 |
|
|
$ |
2,222,720 |
|
|
$ |
2,241,388 |
|
| LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
| Current
Liabilities: |
|
|
|
|
|
|
| Current
portion of long-term debt |
|
$ |
3,404 |
|
|
$ |
3,102 |
|
|
$ |
3,489 |
|
| Accounts
payable |
|
29,770 |
|
|
30,810 |
|
|
32,271 |
|
| Deferred
income |
|
39,416 |
|
|
93,650 |
|
|
91,453 |
|
| Income
taxes payable |
|
— |
|
|
2,654 |
|
|
3,541 |
|
| Other
current liabilities |
|
22,728 |
|
|
37,082 |
|
|
36,113 |
|
| Total Current
Liabilities |
|
95,318 |
|
|
167,298 |
|
|
166,867 |
|
| |
|
|
|
|
|
|
| Long-Term Debt |
|
259,416 |
|
|
262,514 |
|
|
259,082 |
|
| Deferred Income
Taxes |
|
409,585 |
|
|
392,833 |
|
|
406,572 |
|
| Long-Term Deferred
Income |
|
5,988 |
|
|
6,372 |
|
|
5,413 |
|
| Other Long-Term
Liabilities |
|
1,993 |
|
|
2,246 |
|
|
2,377 |
|
| Commitments and
Contingencies |
|
— |
|
|
— |
|
|
— |
|
| Shareholders’
Equity: |
|
|
|
|
|
|
|
Class A Common Stock, $.01 par value, 80,000,000 shares
authorized |
|
249 |
|
|
256 |
|
|
246 |
|
|
Class B Common Stock, $.01 par value, 40,000,000 shares
authorized |
|
197 |
|
|
199 |
|
|
197 |
|
|
Additional paid-in capital |
|
437,292 |
|
|
442,754 |
|
|
434,158 |
|
| Retained
earnings |
|
965,281 |
|
|
951,239 |
|
|
968,801 |
|
|
Accumulated other comprehensive loss |
|
(2,659 |
) |
|
(2,991 |
) |
|
(2,325 |
) |
| Total Shareholders’
Equity |
|
1,400,360 |
|
|
1,391,457 |
|
|
1,401,077 |
|
| Total Liabilities and
Shareholders’ Equity |
|
$ |
2,172,660 |
|
|
$ |
2,222,720 |
|
|
$ |
2,241,388 |
|
| Consolidated Statements of Cash
Flows(In Thousands) |
| |
|
|
| |
|
Six Months Ended |
| |
|
May 31, 2016 |
|
May 31, 2017 |
| |
|
(Unaudited) |
| OPERATING
ACTIVITIES |
|
|
|
|
| Net income |
|
$ |
41,729 |
|
|
$ |
34,500 |
|
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
Gain on sale of Staten Island property |
|
(13,631 |
) |
|
— |
|
|
Depreciation and amortization |
|
51,032 |
|
|
54,770 |
|
|
Stock-based compensation |
|
1,532 |
|
|
1,707 |
|
|
Amortization of financing costs |
|
887 |
|
|
841 |
|
|
Interest and other consideration received on Staten Island note
receivable |
|
1,162 |
|
|
— |
|
|
Deferred income taxes |
|
56,392 |
|
|
(3,220 |
) |
|
Income from equity investments |
|
(8,139 |
) |
|
(9,426 |
) |
|
Distribution from equity investee |
|
8,714 |
|
|
9,850 |
|
|
Loss on retirements of long-lived assets, non-cash |
|
896 |
|
|
404 |
|
|
Other, net |
|
(227 |
) |
|
99 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
Receivables, net |
|
962 |
|
|
(20,425 |
) |
|
Prepaid expenses and other assets |
|
(10,846 |
) |
|
(7,414 |
) |
|
Accounts payable and other liabilities |
|
(5,218 |
) |
|
(10,905 |
) |
|
Deferred income |
|
54,810 |
|
|
51,462 |
|
|
Income taxes |
|
3,190 |
|
|
4,119 |
|
| Net cash provided by
operating activities |
|
183,245 |
|
|
106,362 |
|
| INVESTING
ACTIVITIES |
|
|
|
|
| Capital
expenditures |
|
(81,778 |
) |
|
(40,568 |
) |
|
Distribution from equity investee |
|
1,636 |
|
|
— |
|
| Proceeds
from sale of Staten Island property |
|
66,728 |
|
|
— |
|
| Proceeds
from sale of assets |
|
472 |
|
|
14 |
|
| Other,
net |
|
(2 |
) |
|
(8 |
) |
| Net cash used in
investing activities |
|
(12,944 |
) |
|
(40,562 |
) |
| FINANCING
ACTIVITIES |
|
|
|
|
| Payment
of long-term debt |
|
(418 |
) |
|
(444 |
) |
| Deferred
financing fees |
|
— |
|
|
(43 |
) |
| Exercise
of Class A common stock options |
|
— |
|
|
358 |
|
|
Reacquisition of previously issued common stock |
|
(26,453 |
) |
|
(17,323 |
) |
| Net cash used in
financing activities |
|
(26,871 |
) |
|
(17,452 |
) |
| Net increase in cash
and cash equivalents |
|
143,430 |
|
|
48,348 |
|
| Cash and cash
equivalents at beginning of period |
|
160,548 |
|
|
263,727 |
|
| Cash and cash
equivalents at end of period |
|
$ |
303,978 |
|
|
$ |
312,075 |
|
Investor Relations
(386) 681-6516
International Speedway (NASDAQ:ISCA)
과거 데이터 주식 차트
부터 12월(12) 2024 으로 1월(1) 2025
International Speedway (NASDAQ:ISCA)
과거 데이터 주식 차트
부터 1월(1) 2024 으로 1월(1) 2025
