Speedway Motorsports Inc. (TRK)

Q1 2010 Earnings Conference Call

May 5, 2010 10:00 AM ET


Marcus Smith – President and COO

William Brooks – Vice Chairman, CFO and Treasurer


Howard Bryerman – Evergreen Investment.



Good morning my name is Stephanie and I will be your conference operator today. At this time I would like to welcome everyone to the Speedway Motorsports Inc. first quarter earnings release conference call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer session.

(Operator Instructions)

This conference call contains forward-looking statements particularly statements with regard to the company’s future operations and financial results. There are many factors that affect future events and trends of the company’s business including but not limited to consumer and corporate spending sentiment, air travel, governmental regulations, military actions, national or local catastrophic events, the success of and weather surrounding NASCAR, IRL, NHRA and other racing events, our relationship with NASCAR and other sanctioning bodies, the success of Motorsports Authentics merchandising joint venture, the success of expense reduction efforts, capital projects, expansions, economic conditions, stock repurchases, financing needs, insurance, litigation, taxes, oil and gas activities, including the possibility of discontinuing operations, geo-political situations in foreign countries, and other factors outside of management’s control.

These factors and other factors including those contained in the company’s annual report on Form 10-K and subsequently filed quarterly results on Form 10-Q involve certain risks and uncertainties that could cause actual results or events to differ materially from management’s view and expectations. Inclusion of any information or statement in this conference call 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 release is based on information currently available and may not be reliable after this date.

At this time, I would like to turn the conference over to Marcus Smith. Please go ahead sir.

Marcus Smith

Hey, good morning ladies and gentlemen, thank you for joining us today as we announce first quarter 2010 results for Speedway Motorsports. For the first quarter we reported total revenues of $118.5 million and income from continuing operations of $10.3 million or $0.24 per diluted share. Although the company did not meet the Street’s consensus, our results are within our expectations.

If you recall during our yearend earnings conference call, we projected that the first quarter results for this year would not be as robust as prior year because of sizeable portion of this 2009 results reflected revenues or tickets sold in 2008 before the recessionary conditions peaked and likewise it will take relatively longer for the company’s results to again reflect sales growth as conditions improve.

For our first quarter racing highlights, during the first quarter we hosted three major NASCAR weekends, one in Las Vegas, one in Atlanta and one at Bristol Motor Speedway. Attendance was essentially unchanged at all of these events with the exception of Bristol Motor Speedway whereas hard as it is for us to say we had actually an event for the first time in 55 races at Bristol that we didn’t actually sell out; that’s reflection of the economy but the good news is people had a super time and it was a great racing, we have high hopes for the August event at Bristol.

We also hosted one major NHRA event at zMax Dragway at Charlotte Motor Speedway where we hosted the four wide nationals, a first time ever event there at (inaudible).

Our ticket pricing philosophy remains unchanged for 2010. We continue to offer fans our variety of affordable ticket packages and fan affinity programs. Our advance ticket sales are not where we’d like them to be compared to last year. However, we are seeing more purchasing activity occurring within the three to four week window prior to an event weekend.

For television ratings the Sprint Cup ratings over 2009 are down this year 5%. However, two of the races have been on Monday and we had the pothole event in Daytona. So the ratings are not very comparable to last year. And when you consider the ratings of even the last event in Talladega where we were up 4% to 5.2% and compare that to NBA playoff games with an average 3.1 over the same day at the same weekend, we’re very pleased with how NASCAR ratings are holding up.

Most of our NASCAR Sprint Cup Nationwide and Camping World Truck Series event sponsorships are sold for 2010 and beyond. For 2010 we have one open entitlement at Atlanta for our Labor Day night race. We have high hopes to get that sold as well.

Customer interest in corporate area seems to be reviving. Our sales teams are seeing good activity in the pipeline compared to this same time last year and we’re seeing companies like Dupont, AAA and others come back into sport and increase their activity with hospitality and sponsorship.

Motorsports Authentics continues to chug along as we work with NASCAR and various teams to have a strategy that will transition the sport and the company to the next step and at this time we will continue our position to not put any cash into the business while we look forward to the next steps happening there.

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