Speedway Motorsports, Inc. (SMI) (NYSE: TRK) today reported record third quarter 2007 total revenues of $87.6 million, increasing $2.9 million or 3% over 2006. Also, SMI reaffirmed its full year 2007 earnings guidance of $2.43 to $2.53 per diluted share as further described below.
Excluding equity investee losses of Motorsports Authentics, the Company’s third quarter non-GAAP(1) 2007 net income was $4.4 million and $0.10 per diluted share. The Company’s consolidated net loss was $13.6 million and $0.31 per diluted share for the third quarter 2007. The decreases in consolidated net income and diluted earnings per share are largely attributable to losses of Motorsports Authentics, the Company’s merchandising joint venture with International Speedway Corporation.
Third quarter and year-to-date 2007 results as compared to 2006 were impacted by, among other factors, the following:
—sizable current period losses of Motorsports Authentics as further described below;
—lower revenues under NASCAR’s new broadcasting rights agreement as expected;
—higher effective income tax rates as expected; and
—Bristol Motor Speedway hosted a major National Hot Rod Association (NHRA) racing event in the third quarter 2007 that was held in the second quarter 2006.
Third Quarter Comparison
For the third quarter 2007 as compared to 2006:
—total revenues were $87.6 million in 2007 compared to $84.8 million in 2006;
—equity investee after tax losses were $18.0 million or $0.41 per diluted share in 2007 compared to $616,000 or $0.01 per diluted share in 2006;
—non-GAAP(1) net income, before equity investee losses, was $4.4 million in 2007 compared to $5.3 million in 2006;
—non-GAAP(1) diluted earnings per share, before equity investee losses, were $0.10 in 2007 compared to $0.12 in 2006;
—consolidated net loss was $13.6 million in 2007 compared to net income of $4.7 million in 2006; and
—consolidated diluted loss per share was $0.31 in 2007 compared to diluted earnings per share of $0.11 in 2006.
Year-to-Date Comparison
For the nine month 2007 period as compared to 2006:
—total revenues were $420.6 million in 2007 compared to $419.1 million in 2006;
—equity investee after tax losses were $20.3 million or $0.46 per diluted share in 2007 compared to $1.6 million or $0.04 per diluted share in 2006;
—non-GAAP(1) net income, before equity investee losses, was $78.9 million in 2007 compared to $84.0 million in 2006;
—non-GAAP(1) diluted earnings per share, before equity investee losses, were $1.79 in 2007 compared to $1.91 in 2006;
—consolidated net income was $58.6 million in 2007 compared to $82.4 million in 2006; and
—consolidated diluted earnings per share were $1.33 in 2007 compared to $1.87 in 2006.
(1) Equity Investee Losses and GAAP and Non-GAAP Reconciliation. The Company’s third quarter 2007 operating results and diluted earnings per share were significantly impacted by its 50% share of charges reflected by Motorsports Authentics for inventory and tooling impairment associated with certain recently announced NASCAR driver and team changes and other excess merchandise inventory. Net income before equity investee losses and diluted earnings per share before equity investee losses are non-GAAP (other than generally accepted accounting principles) financial measures presented in this press release as supplemental disclosures to net income and diluted earnings per share.
The following schedule reconciles those non-GAAP financial measures to their most directly comparable information presented using GAAP, and separately presents net income or loss and diluted earnings or loss per share for the Company’s consolidated operations, equity investee losses of MA, and the Company’s operations excluding MA equity investee losses, all net of taxes. Management believes such information is useful and meaningful to investors because it identifies and helps in understanding, using and comparing the Company’s results of operations separate from equity investees for the periods presented. Management uses the non-GAAP information to assess the Company’s operations for the periods presented, analyze performance trends and make decisions regarding future operations because it believes this separate information better reflects ongoing operating results. This non-GAAP financial information may not be comparable to similarly titled measures used by other entities and should not be considered as alternatives to net income or diluted earnings per share determined in accordance with GAAP.
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