ISC reports dip in still huge profits
International Speedway Corp. saw a year-over-year decline in both its 2012 fourth-quarter and full-year earnings and revenues, but the narrowing of the revenue decline for its core business operations to less than 1 percent has company officials encouraged.
“We experienced leading signs of revenue stabilization this year,” stated Lesa France Kennedy, ISC's chief executive officer, in both a news release and Thursday morning conference call with stock analysts.
ISC, which operates Daytona International Speedway and a dozen other tracks around that country that host NASCAR races and other motorsports events, generated a net profit of roughly $54.6 million for its fiscal year, which ended Nov. 30, down from $69.4 million in fiscal 2011, and a fourth-quarter net profit of about $24.7 million, down from $26.5 million the same period the previous year.
Its revenues totaled $612.3 million in 2012, down from $629.7 million in 2011, and in the fourth quarter it generated $189.4 million in sales, down from $191.9 million the same period the previous year.
Kennedy said ISC had year-over-year increases in both revenues from broadcast fees, corporate sponsorships and food, beverage and merchandise sales at races, but “we continue to experience modest headwinds with admissions, not to the degree experienced in 2011, but enough to know we still have further inroads to make with our consumer.” When excluding the expected decline in revenues from the expiration of a NASCAR broadcast contract with XM Satellite Radio, and NASCAR's decision to not hold a Nationwide race in Montreal that was held the previous year, the year-over-year decline in revenues wound up being fairly minimal, compared with the drop seen just a couple years ago, said Dan Houser, ISC's senior vice president and chief financial officer, in an interview with The Daytona Beach News-Journal.
ISC revenues “were down on a comparable basis approximately 7 percent in 2010 versus 2009 and slightly over 1 percent in 2011 versus 2010,” confirmed Charles Talbert, a company spokesman. “With ISC's total revenues down less than 1 percent, we are moving in the right direction,” he added.
Kennedy said ISC officials are also encouraged by the announcement in October that FOX agreed to an 8-year extension of broadcast rights for NASCAR races through the 2022 season. While the terms of that extension were not officially disclosed, ISC, in a news release announcing its fourth-quarter and 2012 earnings, noted that “industry sources” have valued the new contract at more than $2.4 billion — a 36.4 percent increase over the current agreement that is set to expire after NASCAR's 2014 season.
That increase “keeps us optimistic” as NASCAR prepares to begin negotiations this summer for the broadcast rights for its remaining races with ESPN and Turner Broadcasting, Kennedy stated.
Kennedy said ISC is also continuing its efforts to enhance the fan experience at NASCAR races and to cultivate new NASCAR fans. “We are committed to meeting and exceeding our fans' expectations through on-going capital improvements at our facilities,” Kennedy stated. Those improvements include “enhanced audio and visual experiences,” providing more comfortable and wider seating at ISC tracks, adding more concession and merchandise stands, and greater use of social media to engage younger as well as existing fans and fans of different ethnic backgrounds. ISC officials on Thursday also told stock analysts that the company continues to review potential plans to renovate its existing tracks, including Daytona International Speedway.
“At Daytona, the City Commission of Daytona Beach unanimously approved the company's planned master development application, which is the first step in the pursuit of potential redevelopment protects at the ‘World Center of Racing,' ” ISC announced in its news release.
ISC's plans for Daytona International Speedway “could include a complete overhaul of the entire frontstretch grandstand, including features such as new seats, suites and guest amenities, as well as new entry points, improved fan conveyance, a modern exterior, first-class interior areas, and a redesigned midway for fans,” according to the news release.
A decision on whether to proceed with carrying out the overhaul of Daytona International Speedway “will depend upon several factors,” including the economy, ISC's ability to maintain a “strong liquidity position,” and, “preferably, the sale of the company's Staten Island property.”
Houser said ISC is continuing its exclusive negotiations with a prospective buyer of the Staten Island, N.Y., property, which ISC once considered but later nixed as the potential site for a motorsports track. “We're cautiously optimistic,” he said of the prospects that the talks will eventually lead to a sale of the property. The prospective buyer, whom Houser declined to identify, is interested in turning the site — which borders New York Harbor — into a deep water port logistics operation. Stock analyst Barry L. Lucas, senior vice president of research for Gabelli & Co. in Rye, N.Y., said “I would like to think there's some upside” for ISC, adding that he has a “buy” rating on the company's stock. “Clearly, there's some room for optimism at this time of year,” adding that the “tweaks NASCAR has made” regarding the new Gen 6 race cars and other efforts to appeal to fans “are opportunities, but we won't really know until Feb. 24,” when the Daytona 500 takes place, how well the new race cars will perform.
In Wall Street trading on Thursday, ISC shares, traded on the NASDAQ under the symbol ISCA, fell 72 cents to close at $28.28 a share.