SMI is facing the specter of more negative headlines after being beset by poor weather at several races this year, as the company’s Q2 earnings show another double-digit drop in admissions revenue, the best indicator of NASCAR race attendance. SMI’s total Q2 revenue of $165.8M is down 2.5% from last year’s $170M despite a contractually obligated increase in TV money. Admissions revenue -- which reflected NASCAR races at tracks including Bristol, Charlotte, Texas and Sonoma; an IndyCar race at Texas; and some NHRA events -- was $25.4M for Q2, off about 13% from $29.1M from last year. Nonetheless, due to a combination of factors including a significantly reduced corporate tax rate, SMI’s net earnings for the quarter jumped 17% from $27.3M to $31.9M. SMI said results were within expectations and reaffirmed its full-year guidance. The track operator also said that it has 11 of 13 race entitlement sponsorships filled for ’19 and the other two are still in negotiations.
STRAIGHT TO THE POINT: The post-announcement Q&A session was unusually short, with only one analyst asking a question. The analyst asked about whether SMI would look to step up its capital expenditures now that it is in a better cash position after paying down debt, as well as whether SMI had any comment on reports of NASCAR being for sale. SMI Vice Chair & CFO Bill Brooks responded that SMI will look in the early part of ’19 whether or not to significantly increase its capital expenditures. SMI President & CEO Marcus Smith touched on the possibility of NASCAR being sold, saying, “There have been a few news stories about the rumors. I think we’re reading those things but don’t really have any strategic thoughts on those at this point.”
