International Speedway Earnings Call Insights: Fan Demographic, Ticket Pricing
On Thursday, International Speedway Corporation A (NASDAQ:ISCA) reported its second quarter earnings and discussed the following topics in its earnings conference call. Take a look.
Alvin Concepcion – Citi: This is Alvin Concepcion in for Greg. You mentioned sluggishness in your core fan demographic, did you see that trend worsen over the last few months or is it more of a continuation of what you’ve been seeing over the past several quarters?
John Saunders – President: Yeah, it’s more of a continuing sluggishness. I mean we’re largely seeing stabilization. We are just not seeing improvement as we would hope. We have certain markets that are still, seemed to be struggling, Michigan, of course that wasn’t in the past quarter, but the Talladega market is that band through Mississippi and Alabama has particularly high unemployment that’s one of the tracks where we continue to see some pressure. We had I think with the calendar moving around in Kansas with that new event that was a little difficult for some of the fans too. But otherwise I think it’s — we’re largely seeing stabilization. It’s just that we’re try as we might with all types of programs and promotions we’re having difficulty getting the needle to move.
Alvin Concepcion – Citi: Along that note are you seeing changes in sentiment from your corporate customers, you mentioned a slight downtick there?
John Saunders – President: No, I think that, like we said our target for the year was pretty much flat with 2011. We believe we’ll be within a couple of percentage points of hitting that target for the year. So some of it has to do with changes in the mix where you’ve got some events down, some events up — (technical difficulty) — the satellite radio that we discussed.
Alvin Concepcion – Citi: Just kind of looking back at some of the recent history, I was a little surprised that you guys didn’t even issue a repo this quarter, and you guys got down close to 23 in the stock price and just kind of want to see what your thoughts were on that, if there was any particular reasons why?
Daniel W. Houser – SVP, CFO and Treasurer: Again, we had set certain thresholds that are kind of solidly in place on our 10b5 plan. We certainly see the value. We think – it isn’t that we don’t think we reached a point where the stock has a value by any means whatsoever, but we’re also balancing that with what we see as maintaining the flexibility in our balance sheet, the dry powder, we think we still got opportunities to invest in the business and we want to make sure that we’ve got dry powder there. We’re also positioning ourselves for what we see as a needed investment back into the business, into the core business, to keep pace with other entertainment options. At this point, we’re still – while we’re inactive, negotiations on the Staten Island property, we don’t have a deal there yet, and that’s a major cash event for us. So, all things considered, that’s where we are for the time being. We certainly with the dividend and what we purchased this year kind of puts us at an equivalent yield of about 1.7% on the current stock price, that’s not huge, but I think that where we stand, I think in the future that we can see yield well above that, maybe up into the 3% range and still be holding to these other aspects that we think we need to balance, but again, it would – (in order) to take action on the Board’s part to readjust where we’ve got the floor set for purchases.
Alvin Concepcion – Citi: Sure. Yeah, no, I was just kind of curious there. I know Dan you had mentioned Staten Island; would you say it’s progressed a little bit since last couple of quarters or kind of the same place…?
Daniel W. Houser – SVP, CFO and Treasurer: Well, I would say that it is constantly moving, constantly evolving. We’ve got competing parties who are very anxious to get going with viable port development projects on those properties. We’ve got good political will. It creates jobs. We’ve got the environmental issues managed. The problem continues to be in the world that we’re in today that traditional project financing is elusive to these parties. So, then it’s looking for private equity, et cetera, et cetera. So, it’s all centered around these folks being able to come up with the funding that we kind of (stated) circling pattern, and we have a couple of options and those are – things are in the works and we feel good about it, but it’s kind of like we’ve got (Sirius) professing undying love but no one has showed up with the ring at the altar yet.
Alvin Concepcion – Citi: Really quickly here, last question guys, so Daytona enhancements maybe for ’13, what’s the timing of that and you don’t have formal guidance around CapEx or 2013, but I think you have mentioned CapEx maybe pushing over $100 million in ’13 and ’14 (to those contemplating) the Daytona enhancements?
John Saunders – President: This is John. As I said earlier, we’re in the very, very preliminary stages. I would characterize this as conceptual. We’re thinking about the future of our crown jewel and Daytona stands above all and especially the DAYTONA 500 and the reason why we’re even addressing it right now is that in the city of – addressing it publicly in the City of Daytona Beach is a fairly lengthy zoning and permitting process, and so we’re talking to the City through these filings, but it’s not contemplated in anything and we’ve talked about for 2013 at this point, and as I said very early on, but we will – as soon as we have more to report, we’ll certainly keep you informed.
Stephan Altebrando – Sidoti & Company: I apologize if I missed this, but did you give a comparable event admissions revenue for the quarter?
Daniel W. Houser – SVP, CFO and Treasurer: No. We really don’t give that, but what we did say was that we were down a little bit. Our weighted average ticket price on comparable events was pretty flat, I think down 1.2%. We had some reduction in comparable events on the admissions level, but its low single digits.
Stephan Altebrando – Sidoti & Company: In the past you had mentioned that I think you felt somewhat close to being able to push prices. Obviously the economy is not helping out here. How close do you think you are to that? Is that more of a 2013 event?
John Saunders – President: Well I mean ticket pricing for the year 2012 is pretty much set. So we are not going to reduce pricing within – after the ticket prices are set. What we do sometimes is if – we will flex pricing upwards if we see demand for a certain section of the grandstands for a certain event. We will take some opportunity there and do some flex pricing upward. But our policy is we don’t reduce prices in the selling cycle and penalize basically the people who buy early. That’s why we want to incent people to buy early.
Stephan Altebrando – Sidoti & Company: Then last one. On corporate sponsorships, I know these deals are not cookie-cutter, but I’d assume some of the multiyear deals that were I guess inked in ’09 and ’10 probably would not very favorable pricing. Is there an opportunity to benefit as these contracts – some of these contracts renew in ’13, ’14?
John Saunders – President: Yeah, absolutely. I mean, we’re seeing ups and downs in that area now, and what will happen – particularly as you get into the event season like we are right now, if you have inventory that we’ve got a couple of Cup events that are in the works, but there’s less time for a partner to activate. So, what we’ll target doing then is we get a multi-year arrangement, it may have a reduced entry level price for the first year in 2012, but you’ll get a healthy market price in the years going out, and so that’s the phenomenon that you’ll see, but we’ve had some good names, some good partners coming to the sport now. It’s impacted by not only NASCAR, but the – I mean, it’s the wallet of the partner and how things are impacting that industry. So, one of the thing, just for example with the Dodd-Frank kind of things and some of the things that came out of that were banking and the – where the banks were making a lot of money off of transaction fees and bank account fees and things like that for a number of years, well, they really wanted to target these consumer retail type people coming to the track. When their revenue profile then was changed because of regulatory changes. Their focus may alter and it isn’t as targeted of a buy for that industry. So, you’ve got things like that, for example, that can contribute to changes in names from time to time. I mean, home improvement is still very under – very much under pressure with the stagnant housing market and things like that, but we’ve had great names in consumer brands and (indiscernible) brands like that coming into sports too to take the place.