Despite stumbles, Speedway expects rise in profits in ’08
Speed Weeks should give the company a strong start for 2008, said Lesa France Kennedy, president of the motorsports giant. Special events planned for the 50th running of the Daytona 500 race are driving a double-digit percentage increase in advance ticket sales, she said.
"While we continue to keep a close eye on national economic trends and their impact on consumer spending, we expect to post increases in all of our major revenue categories," France Kennedy said.
After twice lowering its profit estimates earlier this year, company officials said the fourth quarter, which ended Nov. 30 on ISC's fiscal calendar, shaped up better than expected. It now expects to report full-year earnings per share of $2.75 to $2.80 per share, a nickel more than its previous estimate.
For 2008, earnings per share are expected to grow to the $3.05 to $3.15 range, with a figure in the lower half of the range more likely, said Susan Schandel, the company's chief financial officer.
An aggressive stock buyback campaign is helping to juice the per-share numbers. The company spent $81 million to repurchase 1.6 million shares from December 2006 through July, and it intends to spend $69 million more, said Wes Harris, director of investor relations.
Motorsports Authentics, a clothing and souvenir business jointly operated with Speedway Motorsports in North Carolina, continues to drag down ISC earnings. Schandel said the company expects to record an "impairment charge" of $25 million to $50 million to reflect the diminished value of the partnership. That will reduce fourth-quarter earnings by 48 to 96 cents per share, an amount not included in ISC's full-year forecast.
Dan Houser, chief accounting officer, said the clothing business suffered a pretax loss of nearly $50 million this year, but it now has a "rock-solid plan" to break even in 2008. A year ago, ISC was forecasting Motorsports Authentics would be generating profits this year. But that was before Dale Earnhardt Jr. and a few other drivers changed teams, leaving the business with obsolete T-shirts and other items that went unsold. News Journal Online