SMI this morning reported Q4 and full-year ’16 earnings, and it was another mixed bag for the track operator. For the quarter, which encompassed six NASCAR races, one NHRA race and a Red Bull Air Race, total revenue was down 5% due to weakness in admissions and event-related revenue. SMI attributed that to poor weather at a number of its races as well as continued economic uncertainty among motorsports fanbases. For the full fiscal year, SMI’s total revenue was up 3%, from $496.5M in ’15 to $512.2M in ’16, largely on the strength of contractual increases in broadcast fees as well as a $5M profit off the Battle at Bristol football game. Admissions revenue for '16 was down 10%, from $100.7M in ’15 to $90.6M last year. However, that loss was significantly erased by a 3% gain in NASCAR broadcasting revenue alone, as that rose from $217.5M in ’15 to $224.2M in ’16. Event-related revenue, which encompasses items like corporate sponsorship and merchandise sales, was down 7% for the year, a drop that SMI attributed largely to lower attendance at NASCAR races. SMI did keep expenses relatively flat for the year, with event expenses down 1.4% from $104.3M to $102.8M. That gain was offset by a roughly 2% increase in general and administrative expenses. SMI did see a net profit of $39.5M in ’16, which includes a $5M profit just from the Battle at Bristol. The $39.5M figure compares to a net loss of $34.4M in FY ’15.
EXPECTATIONS FOR THIS YEAR: Looking ahead to ’17, SMI’s full-year guidance shows total revenue of $475M on the low end and $500M on the high end, which seems to indicate that the corporation is expecting what could be a tough year given that total revenues were $512.2M this year and that SMI should see another increase in contractual broadcast fees this year. In its earnings report, SMI stated that the range “reflects the continuing negative impact of uncertain economic conditions, among other factors. Inclement weather, potentially higher fuel costs and health-care costs, and continued underemployement could significantly impact our future results.” On the earnings call this morning, SMI Vice Chair & CFO Bill Brooks said of the ’17 outlook, “We didn’t get to the reduced admissions that we have today in one period, and we probably won’t get out of the situation were in in one period.” However, he added that SMI is optimistic about the longterm because, “I think everyone in the industry is pretty excited about the changes we have today (with the new competition format).” SMI President & CEO Marcus Smith added, “I don’t think certainly that we’re going to have a huge rush of people as a result yet, but I think it’s something that will build.”
PARDON OUR DUST: SMI has slated for $20-30M in capital expenditures this year, and the corporation on the call revealed that it will continue to “manage our facility capacity” -- likely a reference to removing more seats -- at Charlotte, Kentucky and New Hampshire this year.
