Speedway Motorsports, Inc. Wednesday reported second quarter 2008 total revenues of $212.8 million, net income of $47.0 million and diluted earnings per share of $1.08. Six month 2008 results include record total revenues of $368.0 million, record net income of $77.9 million and record diluted earnings per share of $1.79. Corporate marketing and other event related revenues for NASCAR racing events continue at record year-over-year levels, largely offsetting the ongoing effects on admission revenues of escalating gas prices and other difficult economic conditions. Also, SMI reaffirmed its full year 2008 earnings guidance of $2.40 to $2.50 per diluted share.
Second quarter and year-to-date 2008 results as compared to 2007 were impacted by, among other factors, the following:
• New Hampshire Motor Speedway, acquired in January 2008, hosted successful NASCAR Sprint Cup and Nationwide Series racing events in this second quarter;
• Bristol Motor Speedway hosted a successful major National Hot Rod Association (NHRA) racing event this second quarter that was held in the third quarter 2007; and
• significantly improved operating results of Motorsports Authentics.
•
Second Quarter Comparison
For the second quarter 2008 as compared to 2007:
• total revenues increased 18% to $212.8 million in 2008 compared to $180.8 million in 2007;
• equity investee after tax earnings were $1.8 million in 2008 compared to losses of $168,000 in 2007;
• net income increased 17% to $47.0 million in 2008 compared to $40.3 million in 2007; and
• diluted earnings per share increased 17% to $1.08 in 2008 compared to $0.92 in 2007.
Year-to-Date Comparison
For the six month 2008 period as compared to 2007:
• total revenues increased 11% to $368.0 million in 2008 compared to $332.9 million in 2007;
• equity investee after tax earnings were $2.8 million in 2008 compared to losses of $2.3 million in 2007;
• net income increased 8% to $77.9 million in 2008 compared to $72.2 million in 2007; and
• diluted earnings per share increased 9% to $1.79 in 2008 compared to $1.64 in 2007.
2008 Earnings Guidance Reaffirmed
The Company reiterated that second quarter 2008 earnings are consistent with its previous full year 2008 guidance of $2.40 to $2.50 per diluted share, assuming current industry and economic trends continue, and excluding our 50% share of Motorsports Authentics joint venture operating results, non-core businesses, capital expenditures exceeding current plans, the impact of further increases in fuel prices, interest rates, geopolitical conflicts, poor weather surrounding our events or other unforeseen factors.
2008 Second Quarter Highlights
Similar to its first quarter, SMI’s second quarter highlights include continuing record levels of corporate marketing and other event related revenues for NASCAR racing events. Texas Motor Speedway attracted strong attendance at its NASCAR Samsung 500 Sprint Cup and O’Reilly 300 Nationwide Series racing events, and Lowe’s Motor Speedway attracted significantly higher attendance at its NASCAR Sprint All-Star Race, and strong attendance at its Coca-Cola 600 Sprint Cup Series and CARQUEST Auto Parts 300 Nationwide Series, racing events. New Hampshire Motor Speedway hosted large crowds at its NASCAR LENOX Industrial Tools 301 Sprint Cup Series, and near record attendance at its Camping World RV Sales 200 presented by RVs.com Nationwide Series, racing events. Other highlights include Infineon Raceway hosting a successful Toyota/Save Mart 350 NASCAR Sprint Cup Series racing weekend, and Texas Motor Speedway’s Bombardier Learjet 550 IndyCar and Sam’s Town 400 NASCAR Craftsman Truck Series racing events attracting large crowds.
SMI believes admissions, concessions, souvenir merchandising and other event related second quarter and year-to-date 2008 revenues were negatively impacted by declines in consumer spending from higher fuel prices and difficult consumer credit and housing markets. SMI also believes year-to-date 2008 revenues were negatively impacted by poor weather surrounding certain NASCAR racing events held at AMS and BMS in the first quarter 2008.
Stock Repurchase Program
During the six months ended June 30, 2008, the Company repurchased 156,000 shares of common stock for approximately $4.2 million under its previously announced stock repurchase program. As of June 30, 2008, the Company has repurchased 1,388,000 shares since adoption of the program in April 2005. The total number of shares available for future repurchase under the program, as currently authorized, is 612,000.
Other Comments
“SMI is proud to report record revenues and earnings per share for the first half of the year,” stated Marcus G. Smith, Chief Operating Officer and President of Speedway Motorsports. “Corporate marketing and other event related revenues for NASCAR racing events continue at record year-over-year levels, demonstrating that SMI’s core business remains resilient and strong. We are also pleased that Motorsports Authentics’ earnings continue to show significant improvements over last year, reflecting favorably their ongoing strategic and operational changes. On a regional note, Lowe’s Motor Speedway attracted significantly higher attendance at its NASCAR Sprint All-Star Race event this May. We are extremely proud to demonstrate that the strong demand and appeal for this prestigious event at Lowe’s Motor Speedway continues.”
O. Bruton Smith, Chairman and Chief Executive Officer of Speedway Motorsports stated, “Our first NASCAR Sprint Cup and Nationwide Series racing events at SMI’s newly purchased New Hampshire Motor Speedway were an overwhelming success, demonstrating the merits of SMI continuing to invest in premium markets. SMI’s motorsports business remains strong. Our corporate marketing revenues have shown increases, and all of our NASCAR Sprint Cup and Nationwide Series event sponsorships for 2008, and most for 2009, are already sold. Those factors, among others, should further strengthen SMI as existing economic conditions improve.
“As our spectacular ‘state-of-the-art’ zMAX Dragway at Lowe’s Motor Speedway nears completion, we are excited about hosting the NHRA Carolinas Nationals on September 11-14, 2008. Our inaugural race weekend features the first playoff round of the NHRA POWERade ‘Countdown to the Championship’ where all four professional categories - Top Fuel, Funny Car, Pro Stock and Pro Stock Motorcycle - are competing. We strongly believe our fans, racing competitors, and advertisers will find it undoubtedly the finest dragway facility in motorsports today.”
(Source: Sportsbusinessnews.com)
