Speedway Motorsports Inc. ( TRK)

Q3 2010 Earnings Call

November 03, 2010 10:00 am ET

Executives

Marcus Smith - President and COO

Bill Brooks - VC and CFO

Analysts

Michael Walsh - Wells Fargo

Eugene Fox - Cardinal Capital Management

Joe Hovorka - Raymond James

Peter Lee - Plough Penny Partners

Presentation

Operator

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 third 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 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 other sanctioning bodies, the success of Motorsports Authentics merchandising joint venture, capital projects, and expansions, financing needs and a host of other factors both within and outside of management's control.

These factors and other factors including those contained in our Annual Report on Form 10-K and subsequently filed quarterly report 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 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 conference call is based on information currently available and may not be reliable after this date.

On today's conference call we have Marcus Smith and Bill Brooks. I now turn the conference over to Marcus Smith.

Marcus Smith

Thank you, Stephanie. Good morning, ladies and gentlemen, thank you for joining us today, as we announce our third quarter 2010 results for Speedway Motorsports. For the third quarter, we reported total revenues of $123.2 million, and income from continuing operations of $7 million or $0.16 per diluted share. Nine-month 2010 total revenues were $419.3 million, and income from continuing operations of $41.3 million or $0.98 per diluted share.

During the third quarter, we hosted several motor sports events, including five major NASCAR-sanctioned event weekends. We began the quarter at Bristol Motor Speedway, for the NASCAR Sprint Cup here as IRWIN Tools Night Race and the Nationwide Series Food City 250, and the Camping World Truck Series, Rally 200 presented by WaveLink. Kyle Busch dominated the weekend capturing the checkered flag in all three series, becoming the first driver in NASCAR history to do so.

Labor Day weekend also brought us some great racing at Atlanta Motor Speedway, where we have the NASCAR Sprint Cup Series Emory Healthcare 500! And the NASCAR Nationwide Series Great Clips 300. Tony Stewart broke his 31 race by edging out Carl Edward to claim the victory. And then, we rounded out the quarter in New Hampshire Motor Speedway where we hosted the NASCAR Sprint Cup Series Sylvania 300 and the Camping World Truck Series race as well.

Tony Stewart came up empty on the white flag there allowing Clint Bowyer to steel his first race and the chase for the Sprint Cup.

TV ratings remain under scrutiny, as the Sprint Cup Series and Camping World Truck Series continue a downward trend. NASCAR has seen some unique challenges this season including weather and unusual increased competition from the Olympics and the World Cup. We don't have any definitive answers, however, NASCAR and the broadcasters are keeping a close watch on this, and hopefully their efforts will provide us with better incite when we begin the 2011 racing season.

From a positive perspective, the nationwide series has seen a 2% increase in ratings over 2009 on ESPN. NASCAR Sprint Cup racing remains dominant in the regular season sport from February to July, and continues to be the number two regular season sport on television, trailing only the NFL. Out of 32 events weekend conducted, NASCAR has been the number one or number two sport on television for 20 of those weekends.

Our operating results continue to be challenged by the ongoing effects from the weak economy, though. Admissions and various event related and other revenues have been negatively impacted by the clients on consumer spending, corporate spending and unemployment. This is consistent to what other major professional sports and entertainment facilities and venues have been experiencing over the past year.

Admissions revenue has declined from both fewer fans attending our races and events and from lower average ticket prices, as we have mentioned in previous calls we have taken appropriate actions in adjusting ticket prices, creating various promotional packages and infinity programs, which will continue over in to 2011.

We have something for everyone. It's family friendly packages, or for groups and fans, who want more for their money, such as special access passes or experiences. In terms of attendance our events are still drawing crowds larger than any professional sporting event, and keep in mind that the large portion of NASCAR's core fan base have been severely impacted by the recession, and we don't expect to see much improvement on our admissions volume until our fans will gain consumer confidence, discretionary spending and of course employment rates improve.

On the corporate spending, our sales team is deep into renewal discussions with all of our national partners and prospects many of our Sprint Cup and Nationwide Series event entitlements are sold for 2011 and years beyond. We do currently have three Sprint Cup Series entitlements yet to be sold or announced for next year. One of those is in effect of the realignment from the Atlanta Motor Speedway to Kentucky Speedway. This is nothing unusual or out of the ordinary and we are confident this will be sold going into 2011.

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