International Speedway's CEO Discusses Q1 2012 Results - Earnings Call Transcript

International Speedway (ISCA)

Q1 2012 Earnings Call

April 03, 2012 9:00 am ET

Executives

Charles N. Talbert - Director of Investor & Corporate Communications

Lesa France Kennedy - Vice Chairman and Chief Executive Officer

John R. Saunders - President

Daniel W. Houser - Chief Financial Officer, Chief Accounting Officer, Senior Vice President and Treasurer

Analysts

Stephen Altebrando - Sidoti & Company, LLC

Barry L. Lucas - Gabelli & Company, Inc.

Presentation

Operator

Good morning, and welcome to the International Speedway Corporation First Quarter 2012 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded on Tuesday, April 3, 2012. I'd now like to turn the conference over to Charles Talbert. Mr. Talbert, please go ahead.

Charles N. 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 first quarter ended February 29, 2012. With us on this morning's call are Lesa France Kennedy, Chief Executive Officer; 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 to the documents filed by International Speedway Corporation 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'll turn the call over to Lesa Kennedy. Lesa?

Lesa France Kennedy

Good morning, and thank you, everyone, for participating on today's call. We have another terrific motorsports season that's now under way. We've been very pleased with Speedway so far and feel like we're off to a great start. We've been following our focused business plan, and we're consistently generating solid financial results. And our first quarter results are no different. With a strengthening economy, we have a great opportunity to grow our business through consumer and corporate spending trends. In addition, we believe the targeted improvements at our motorsports facilities will enhance the guest experience and even further support our growth.

In addition, our highly anticipated Hollywood Casino at Kansas Speedway opened on February 3, and we've been very pleased with the performance to date. Not only does this strategic investment complement our core business, but it's another innovative way that we are building shareholder value.

So with that, I'd like to thank all of you, and I'll now turn it over to John Saunders.

John R. Saunders

Thank you, Lesa, and good morning, everyone. During our fiscal first quarter, due to the scheduling of the Daytona 500 a week later in February, our Phoenix NASCAR Sprint Cup and Nationwide events were moved to our fiscal second quarter. Other quarter-over-quarter comparisons are outlined in the earnings news release.

We are very pleased with the energy generated from the start of the motorsports season, beginning with the 50th running of the Rolex 24 at Daytona, followed by Speedweeks and culminating with the Daytona 500. All of the events surrounding Daytona were excelling, then the rain-postponed 500 had the potential to dampen enthusiasm.

As it turned out, the decision to schedule the event for the first ever primetime running of the Daytona 500 confirmed what we know about NASCAR. The fan passion and enthusiasm is unsurpassed. We estimated 85% to 95% of ticket holders return for the Monday night must-see event. The television viewing audience was impressive. Without significant promotion, the 500 won the night during primetime among adults 18 to 49, a tremendous achievement on a very competitive night of programming entertainment. The Great American Race outperformed NBC's The Voice, ABC's The Bachelor and CBS's How I Met Your Mother.

This Daytona 500 ranks as the most-watched 500 in FOX broadcast history, with more than 36.5 million unique viewers. While its ratings were below 2011, ISC, NASCAR and FOX are thrilled with the results. It is too early to say if other Sprint Cup events will run on primetime. But the results certainly make a compelling case for consideration.

Subsequent Sprint Cup events have also remained among the top 2 most-watched sports on television, outpacing strong competition against Marquee NBA matchups. The lone exception is Auto Club's rain-shortened event.

The Nationwide Series is seeing solid growth in viewership today. The impact of Danica Patrick running NASCAR full time and exciting racing are influencing viewership and continues to be a positive for the sport. These factors on top of last year's strong broadcast results as well as other dynamics breathe optimism regarding the prospect of NASCAR's next broadcast rights agreement.

Entering into the heart of the NASCAR season, we remain optimistic that economic recovery will continue and not once again be derailed by systemic forces.

We have seen some good news on the economic front: improving job numbers, a strong stock market, better housing market. Yet people's incomes lag behind the buying power experienced 2 or 3 years ago. The current trend with the consumer confidence is slowly moving in the right direction, but further improvements are needed before we see meaningful recovery in discretionary spending.

As we expected, our advanced ticket sales for our Sprint Cup events remained soft, off approximately 8% from last year in both units and revenue. This is encouraging, notable improvement in the declines from a year ago when Sprint Cup advanced sales were off 11% and 12% in units and revenue, respectively. Deferred revenue is up year-over-year when adjusting for the Phoenix event in the second quarter.

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