International Speedway Class A Earnings Call Insights: Marketing Partnership Targets and Race Pricing
International Speedway Corporation Class A (NASDAQ:ISCA) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.
Marketing Partnership Targets
Stephan Altebrando – Sidoti & Company: It looks like the marketing partnership targets, in terms of what you are looking to achieve here, up a couple 100 basis points year-over-year. Can you talk a little bit about what the goals are this year compared to last year? Are they up, flat?
Daniel W. Houser – SVP, CFO and Treasurer: This is Dan. Really, they are pretty flat this year. As we said when we gave guidance, we looking to that probably most of the core business revenues admissions, corporate dollars, et cetera we’re hoping we can maintain our levels of last year and that we can hold on to the growth in TV revenues. Having said that, I think we have a great opportunity in – around corporate revenues this year. We are very excited that, we’ve got all of our Sprint Cup entitlements sold and that that really opens up the landscape for prospecting many more opportunities that really aren’t there whenever you are – when you are focused on that perishable inventory. So, I think that can be bright spot, but our expectations are really relatively flat there.
Stephan Altebrando – Sidoti & Company: That kind of leads me into my next question, which is you are well ahead on entitlements year-over-year. Can you talk a little bit about the pricing on those deals?
Daniel W. Houser – SVP, CFO and Treasurer: There is a little bit of a mixed bag there. I’d say overall on a blended rate, they are pretty – they are probably pretty flat. I think the exciting thing there is that we’re getting the terms are getting extended from – you know we were doing a lot of just two year deals before. We’ve got a nice runway going into next year, which is not only the – we got the entitlements sold for this year, but we’ve got many, many that are renewing next year. So I think that that gives us a great positioning on the supply and demand equation.
Stephan Altebrando – Sidoti & Company: Are there escalators on multi-year deals typically?
Daniel W. Houser – SVP, CFO and Treasurer: Yes, usually low single digits.
Jaime Katz – Morningstar: I know Daytona had some really good ratings this year, has that translated into any sort of better pricing for the races ahead in the year and has people maybe have been purchasing earlier because of like the buzz around that?
Daniel W. Houser – SVP, CFO and Treasurer: Well, I think in Lisa’s remark, she pointed out, that was – the TV rating was the best rating that we have seen for the 500 since 2008 and in fact, television through our Auto Club event – Cup ratings are up about 3%, so that’s great news. The demographic is up as well. As I mentioned, we have seen the average ticket price start to uptick at Daytona this year and that’s the first uptick we’ve seen since 2009, but more to your question, we still are seeing somewhat of a late buying crowd. In fact, at Daytona, in the last three weeks leading up to the race, the volume of ticket sales was up 33% over the same three-week period a year before. So we’re still seeing a late buying crowd, but we’re encouraged by the activity that we’re seeing in that last three to six week period.
Jaime Katz – Morningstar: Then as far as the casino outlook is concerned, it looks like it hasn’t really changed very much. (Has everything) as far as like traffic or spending kind of come in where you thought it was going to?
Daniel W. Houser – SVP, CFO and Treasurer: Well, we’re very pleased with the performance there and you know what we saw on the quarter as well as what we’re seeing subsequently, one of the things that they – if you’ve noticed in the – that there has been some very severe weather out there in the Midwest through the – since the year-end and we’ve still been able to see the revenue stay up and actually you know, right now they are a little bit ahead of expectations. We’re very happy with that. The other thing that’s very encouraging is we’re seeing the penetration into the slot market growing and that is your real high-margin revenue. So our outlook there for cash flow and earnings are optimistic. We feel very good about it. Now one of the things that we mentioned in our scripted remarks was that we have this property tax appeal going on out there which we had hoped back in the fall would be resolved in 2013 as we’re going through that process and with delays and some of the bureaucratic maze that we go through there, that we may not see a resolution of that issue in 2013. We’ll have more to say about that when we get to our second quarter discussion…
Jaime Katz – Morningstar: Can you remind us how much that would be worse to you or have you not disclosed that?
Daniel W. Houser – SVP, CFO and Treasurer: It’s about $2.8 million…
Jaime Katz – Morningstar: Then lastly as far as G&A is concern, I know is little bit higher because of Daytona this quarter, but I would expect for the rest of the year it might be a little bit better than last year? Is that a fair way to think about it?
Daniel W. Houser – SVP, CFO and Treasurer: I think the thing that you got to remember there is that, we reinstituted merit increases this year that we haven’t had any merit increases for a few years and that also some of the catch bonuses. So there will be some increase there. I think the rest of the story as though, we work very hard back in ’09 through 2011 to contain cost and take cost out of the business and we are holding those costs containments in place. So, good news is we’re not seeing cost creeping back into the business, but we do think that we’ve got a great team of employees now. We significantly downsized our headcount back during that period. The folks we’ve got here now are all strong players and we want to incent them and retain them. So that’s an aspect of our general costs that I think will – you’ll continue to see some growth in those costs, but otherwise holding motorsports related as well as G&A costs pretty level.
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