Out of gas: ISC stock plunges on revenue miss amid muted fan turnout

Motorsports entertainment firm International Speedway Corp. (ISCA) reported better than expected earnings for the first quarter of 2018. However, the top-line missed estimates as a dip in admissions and merchandise sales put the brakes on revenue growth, driving the company’s stock southward.

ISC, which owns stock-car trailblazer NASCAR and racing league IndyCar, said adjusted earnings advanced to $0.60 per share in the first quarter from $0.47 per share last year, surpassing analysts’ forecast. Reported earnings, including special items, surged to $3.83 per share helped mainly by a $135 million tax-related gain.

Revenues edged up 1% annually to $149 million but came in below Street estimates. A strong growth in revenues from motorsports and other events was partially offset by a decline in merchandise and admission revenues. The softness in top-line growth is also attributable to the lesser number of comparable events in the latest quarter and a decline in rent-related gains.

In recent years, falling admission revenues of NASCAR-owned racing companies have put a spoke in the wheels of their growth prospects. However, the continued downturn that began nearly ten years ago eased slightly last year, fuelling hopes that the events are moving back to the fast lane.

NASCAR, which transitioned into a national race event from a regional sport over the years, remains a revenue-spinner for ISC with extensive corporate partnerships making it one of the most popular motorsport organizers in America.

In the current year, the top-line is expected to benefit from the redeveloped Richmond Reimagined, the popular NASCAR raceway which has been included in the company’s $500-million investment program for 2017 through 2021.

An increase in motorsports revenues was partially offset by a fall in merchandise and admission revenues

“We have extended our capital allocation plan through fiscal 2021, demonstrating our ongoing commitment to building long-term value.  For the future, we are well positioned to balance the strategic capital needs of our business with returning capital to our shareholders,” said International Speedway CEO Lesa France Kennedy.

Looking ahead, ISC reaffirmed its full-year 2018 revenue guidance between $680 million and $695 million and earnings outlook in the range of $1.90 to $2.10 per share. The company continues to expect full-year operating margin in the 15.5-16.5% range.

Recently, investment management firm Westwood Holdings Group had raised its stake in ISC by 1.5%. Shares of ISC, which gained about 16% in the last 12 months and 7% so far this year, lost more than 10% during the first hour of trading today following the earnings announcement.