ISCA

International Speedway Corporation (ISCA)

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International Speedway (ISCA)

Q1 2011 Earnings Call

April 05, 2011 9:00 am ET

Executives

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

John Saunders - President

Charles Talbert - Director of Investor & Corporate Communications

Lesa Kennedy - Vice Chairman and Chief Executive Officer

Analysts

Stephen Altebrando - Sidoti & Company, LLC

Michael Walsh

Edward Williams - BMO Capital Markets U.S.

Brandon Taylor - Raymond James

Alvin Concepcion - Citigroup

Barry Lucas - Gabelli & Company, Inc.

Presentation

Operator

Good morning, and welcome to the International Speedway Corporation's 2011 First Quarter Results Conference Call. [Operator Instructions] 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 conference call. We are here to discuss the company's results for the first quarter ended February 28, 2011.

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 Kennedy

Good morning, and thank you for participating in today's call. While we couldn't have asked for a better start to the motorsport season in 2011, in addition to the excitement normally surrounding the start of any season with the anticipation of racing on a freshly paved surface at Daytona, this facility looked fantastic, and the racing has never been better. It was just absolutely fantastic. Our fans loved it.

The capital that we spent on the paving project gave us additional national prominence, as well as providing our fans with a brand new experience. The success of this project confirms our belief that we need to continue our focus on strategic capital opportunities that will enhance the guest experience which, of course, ultimately drive positive results for the company.

The storyline of Trevor Bayne pulling off one of the sport's bigger success to become the youngest driver ever to win the 500 [Daytona 500] provided additional momentum to the start of our season. Trevor is an up and coming driver. He's been a great ambassador to our sport, and he's been featured on national programs such as Good Morning America and Ellen DeGeneres Show. He's only 20 years old, and we expect that he would generate a strong following amongst his age group, which will surely benefit us and NASCAR.

We successfully navigated through an extended downturn in the economy, and remained in excellent financial position. While still early in the year, we remain hopeful that the growth in the economy will continue and lead to job creation. Through prudent cost containment, we expect to see meaningful improvement in our operating margin this year. And as growth returns to the economy and to our sport, these sustained cost savings will provide further margin improvement.

So with that, I'd now like to turn it over to John Saunders. Thank you.

John Saunders

Thank you, Lesa, and good morning, everyone. We are very pleased with the momentum generated from the start of the motorsports season, beginning with Speedweeks at Daytona and then on Phoenix. We had solid attendance, incredible racing and strong television ratings, which contributed to a positive quarter for ISC. Dan will provide a detailed review of our financial performance later in the call.

We're keeping a very close eye on the consumer and corporate spending trends. The economy is improving, but concerns remain, particularly in employment levels, consumer confidence and more recent world events. As a result of being disciplined with our capital structure and having focused attention on the cost side of the business, we are reiterating our full year guidance of total revenues of between $635 million and $650 million and non-GAAP earnings to range between $1.60 and $1.80 per diluted share. This guidance contemplates a strong increase in EPS and operating margins compared to our 2010 results.

Our attendance-related revenues continued to be our most significant short-term business risk. Advanced ticket sales for our Sprint Cup events remain in the range of approximately 11% and 12% off from last year in units and revenue, respectively. While part of this decline is associated with the timing of our renewals and related programs, fans continue to make their purchase decisions closer to race day. This is demonstrated by the strong increase in sales we have seen during the weeks preceding our event. For the Daytona 500, we sold almost 30,000 tickets during the final three weeks before the event. That equates to approximately 20% of the available grandstand capacity at the Speedway.

We understand the challenges that face ISC and are aggressively addressing them. Regaining a more normalized advanced ticket sales trend is a priority. In this operating environment, we are providing our customers with attractive pricing, particularly entry points for new fans. And as always, we maintain price integrity throughout an event sales cycle.

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