International Speedway Corporation Q2 2010 Earnings Call Transcript

International Speedway Corporation (ISCA)

Q2 2010 Earnings Call Transcript

July 8, 2010 9:00 am ET

Executives

Charles Talbert – Director, Investor and Corporate Communications

Lesa France Kennedy – CEO

John Saunders – President

Dan Houser – SVP, CFO and Treasurer

Analysts

Alvin Concepcion – Citigroup

Edward Williams – BMO Capital Markets

Tim Conder – Wells Fargo Securities

Barry Lucas – Gabelli & Company

Darlene Boyle [ph]

Tom Blydki [ph]

Presentation

Operator

Good morning and welcome to the International Speedway Corporation 2010 second quarter results conference call. During the presentation, all participants will be in a listen-only mode. Afterward, you will be invited to participate in the question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded on Thursday, July 8, 2010.

I would now like to turn the conference over to Charles Talbert, Director of Investor and Corporate Communications for International Speedway. Mr. Talbert, please go ahead.

Charles Talbert

Thank you, operator. Good morning, everyone and welcome to the International Speedway's earnings conference call. We are here to discuss the company's results for the second quarter ended May 31, 2010. With us on this morning's call are Lesa France Kennedy, CEO; John Saunders, President; and Dan Houser, Senior Vice President and Chief Financial Officer. After our formal remarks, a question-and-answer period will follow. The operator will instruct you on procedures at that time.

Before we start, I would like to address forward-looking statements that may be addressed on the call. Forward-looking statements involve risks, uncertainties, and assumptions. Actual future performance, outcomes, and results may differ materially from those expressed in these forward-looking statements. Please refer the documents filed by ISC with the SEC, specifically the most recent reports on Form 10-K and 10-Q, which identify important risk factors which could cause actual results to differ from those contained in these forward-looking statements.

So with these formalities out of the way, I will turn the call over to Lesa Kennedy. Lesa?

Lesa France Kennedy

Good morning and thank you, everyone for participating on today's call. When we last talked on April 8th, I believe many of us felt that the economic recovery was gaining momentum and that consumer confidence was on the mend. However, global and domestic conditions have now progressed as positively as we had anticipated and that is reflected not only in our second quarter results, but also in our outlook for the rest of the 2010.

In spite of these ongoing headwinds, I would like to take a few minutes to discuss some positive developments as we head into the second half of the NASCAR season. First, ISC is solidly profitable and continues to generate substantial cash from operations. We remain financially sound with over $166 million in cash at quarter-end, while maintaining modest debt levels. Our cost containment efforts over the past two years remain in place and are helping our margins to stabilize.

I'm also proud of our teams across our facilities who continue to promote and elevate the prominence of motorsports racing. It remains a difficult operating environment, but through the determination and strong marketing and promotional programs, we are seeing signs of progress. At our June Michigan Sprint Cup race, we had an increase in attendance year-over-year and this is an area that's hardest hit by the economic downturn and this is an important development.

As we focus on effectively managing ticket prices and seating capacity, we can encourage more advance sales of tickets. The result is an earlier cash flow and reduces the potential negative impact of actual and forecasted inclement weather, which was a factor in our fiscal second quarter results.

The reintroduction of the spoiler to the NASCAR Sprint Cup series car as well as the green-white-checkered finishes have been positively received by the fans and has improved competition. This and the other competition changes NASCAR has implemented over the past year have been positive for the sport. In addition, the drivers and teams have been active in promoting the sport along with the sanctioning bodies and ISC, as well as the other promoters.

During the quarter, we commenced construction of our Hollywood Casino at Kansas Speedway. This is an exciting project for ISC and our partner, Penn National Gaming. Not only is it the first venture in our market-based real estate strategy to monetize our real estate through ancillary development, but also one that we expect to be tremendously successful for our shareholders.

I am pleased to report that the former owners of the Kentucky Speedway have dropped their antitrust lawsuit against ISC and NASCAR. This puts an end to any question about NASCAR's discussion concerning its race dates and their locations. Like other sports such as the National Football League and Major League Baseball, NASCAR can host its events where it decides it is best for the sport and its fans.

And finally on a macro basis, leading economic indicators continue to be mixed at best. Unemployment, a critical measure related to the overall purchasing power of our fans, continues to be a drag on the recovery and the prospects of a taking-off in the second half of 2010, which appear threatened today.

The question remains when meaningful job growth will begin. In anticipation of eventual job creation and increased consumer spending, we will continue to follow our strategic plan, which has served us well during the downturn and has prepared us for renewed growth in our business.

So with that, I would now like to turn it over to John Saunders.

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