ClubCorp Reports 12th Consecutive Quarter of Growth, Announces Acquisition of Oakhurst Golf and Country Club and “The Collective” a New Club Concept

Posted: April 26, 2017 in Chains

ClubCorp - The World Leader In Private Clubs ClubCorp – The World Leader In Private Clubs

DALLAS, TX – ClubCorp – The World Leader in Private Clubs (NYSE:MYCC) – announces financial results for its fiscal-year 2017 first quarter ended March 21, 2017. The first quarter of fiscal 2017 and fiscal 2016 consisted of 12 weeks. All growth percentages refer to year-over-year progress.

First quarter revenue was $221.3 million, up 3.0%, net loss decreased $0.8 million to $7.5 million, and adjusted EBITDA was $43.7 million, up 4.2%;
ClubCorp acquires Oakhurst Golf and Country Club in Clarkston, Michigan;
ClubCorp signs lease to open a new concept business / social club “The Collective” in Seattle, Washington;
The Company’s Board of Directors provides an update on its review of strategic alternatives by unanimously determining not to pursue a strategic transaction at this time. The Board’s Strategic Review Committee will remain in place, and the Company will continue executing its three-pronged growth strategy focused on organic growth, reinvention and acquisitions;
Eric Affeldt announces his intention to retire from his role as Chief Executive Officer upon the appointment of his successor.

First Quarter Results:

Revenue increased $6.4 million to $221.3 million, up 3.0%.
Net Loss decreased $0.8 million to $7.5 million, down 9.7%.
Adjusted EBITDA(1) increased $1.8 million to $43.7 million, up 4.2%, driven by increased revenue and from effective management of variable operating expenses.
Same Store Combined Clubs(2) revenue increased $5.5 million to $217.1 million, up 2.6%, driven by increases in all three major revenue streams, dues up 2.8%, food & beverage up 2.0% and golf operations up 4.7%.
Same-store Combined Clubs Adjusted EBITDA increased $1.9 million to $59.2 million, up 3.3%, due to increased revenue, and favorable variable payroll, payroll related and other operating expenses as a percentage of revenue. Same-store Adjusted EBITDA margin was 27.3%.
New or Acquired Clubs.(2) New clubs opened or acquired in 2016 and 2017 contributed revenue of $2.7 million and adjusted EBITDA of $0.2 million.

Quotes:

Eric Affeldt, Chief Executive Officer: “We are pleased to deliver our twelfth consecutive quarter of revenue and adjusted EBITDA growth. As we celebrate ClubCorp’s 60th anniversary this year, the Company remains firmly committed to executing its three-pronged growth strategy focused on organic growth, reinvention and acquisitions. We are particularly excited about the pacing of acquisitions, as we have already added four new clubs to our golf and country club segment this year as compared to three clubs added in fiscal 2016. Additionally, we completed a lease agreement to construct a new concept business / social club named “The Collective” that will open next year in Seattle. In each case, these clubs are expected to drive additional return on investment and further expand the value of our local, regional and national networks.”

Mark Burnett, President and Chief Operating Officer: “We continue to see increased member activity and usage at our recently reinvented and acquired clubs. In the first twelve weeks of fiscal 2017, we achieved another quarter of adjusted EBITDA growth, benefiting greatly from improved performance at these clubs. Likewise, our O.N.E. offering continues to appeal to our members with approximately 54% of our memberships enrolled in O.N.E.. We are excited by the positive momentum in our golf and country club business and are gearing up for what we expect will be a busy golf season this spring and into the summer.”

Curt McClellan, Chief Financial Officer: “We delivered solid results in our first quarter of 2017. Consolidated adjusted EBITDA growth of 4.2% during the quarter was in line with our expectations following last year’s impressive growth of 8.2%. Consolidated revenues grew 3.0% for the quarter and overall adjusted EBITDA margins improved 30 bps to 19.8% while same store margins improved 20 bps to 27.3%. Our reinvention projects and acquisitions are performing as expected, significantly increasing member usage. Our leverage is 4.27x currently and we remain committed to de-levering the Company to below 4x by mid-2018.”

Segment Highlights:

Golf and country clubs (GCC):

First quarter, GCC revenue was up $7.3 million to $179.9 million, up 4.2%.
First quarter, GCC adjusted EBITDA increased $2.7 million to $52.8 million, up 5.4%, and GCC adjusted EBITDA margin increased 40 basis points to 29.4%.
First quarter, GCC same-store revenue increased $5.2 million, up 3.0%. Dues revenue was up 3.5%, food & beverage revenue increased 1.9% and golf operations revenue increased 4.7%.
First quarter, GCC same-store adjusted EBITDA increased $2.5 million, up 5.1%, due largely to improved variable payroll, payroll related and other operating expenses as a percentage of revenue.
First quarter, GCC same-store adjusted EBITDA margin improved 60 basis points to 29.7%.
Clubs acquired in 2016 and 2017 contributed first quarter, GCC revenue of $2.7 million and GCC adjusted EBITDA of $0.2 million.

Business, sports and alumni clubs (BSA):

First quarter, BSA revenue was up $0.2 million to $39.9 million, up 0.6% driven by increases in food & beverage revenue.
First quarter, BSA adjusted EBITDA declined $0.6 million to $6.7 million, down 8.4% largely due to an increase in cost of sales and an increase in variable payroll expenses as a percentage of revenue.
First quarter, BSA adjusted EBITDA margin decreased 160 basis points to 16.7%.

Other Data:

O.N.E. and Other Upgrades. As of March 21, 2017 and December 27, 2016, approximately 54% of memberships were enrolled in O.N.E. or similar upgrade programs. As of March 21, 2017, the Company offered O.N.E. at 156 clubs.
Reinvention. In total, for 2017, the Company expects ROI expansion capital to be approximately $44 million. Of this amount, ClubCorp plans to invest approximately $26 million on 7 same-store clubs and approximately $18 million on recently acquired clubs.
Acquisitions. As of March 21, 2017, ClubCorp has acquired three clubs: Eagle’s Nest Country Club in Phoenix, Maryland (part of the greater Baltimore MSA), North Hills Country Club in Glenside, Pennsylvania (part of the greater Philadelphia MSA) and Norbeck Country Club in Rockville, Maryland. And today, ClubCorp acquired Oakhurst Golf and Country Club located in Clarkston, Michigan (part of the Detroit MSA). In fiscal year 2016, ClubCorp acquired three clubs: Heritage Golf and Country Club in Hilliard, Ohio (part of the Columbus MSA); Santa Rosa Country Club in Santa Rosa, California; and Marsh Creek Country Club in St. Augustine, Florida. In addition, ClubCorp entered a management agreement to operate the Country Club of Columbus in Columbus, Georgia. As of March 21, 2017, ClubCorp owns or operates 162 golf and country clubs representing approximately 200 18-hole equivalents, of which nine are managed clubs. Additionally, the Company owns or operates 45 business, sports and alumni clubs, of which three are managed clubs.
Membership. Membership totals exclude membership count from managed clubs. As of March 21, 2017, total memberships increased 3,381 to 174,010, up 2.0%, over memberships at March 22, 2016. Total golf and country club memberships increased 3.8%, while total business, sports and alumni club memberships declined 2.1%.
Capital Structure. At the end of the first quarter, the Company had $53.9 million in cash and cash equivalents and total liquidity of approximately $199 million. ClubCorp’s total leverage ratio was 4.27x at the end of the first quarter, up slightly from 4.20x at the end of fiscal 2016 with the increase related to a decline in cash during our slowest quarter of the year.

Company Outlook:

The following guidance is based on current management expectations. All financial guidance amounts are estimates and subject to change, including as a result of matters discussed under the “Forward-Looking Statements” cautionary language which follows, and the Company undertakes no duty to update its guidance. For fiscal year 2017, the Company reiterates its guidance for revenue in the range of $1,095 to $1,135 million, and adjusted EBITDA in the range of $255 to $265 million.

(1) Adjusted EBITDA is not calculated in accordance with accounting principles generally accepted in the U.S. (“GAAP”). See the “Statement Regarding Non-GAAP Financial Measures” section of this press release for the definition of Adjusted EBITDA and the reconciliation later in this press release to the most comparable financial measure calculated in accordance with GAAP.

(2) Clubs are considered same store once they have been fully operational for one fiscal year. Newly acquired or opened clubs, clubs added under management agreements and divested clubs are not classified as same store. Once a club has been divested, it is removed from the same store classification for all periods presented. New or Acquired Clubs include those clubs that the Company is currently operating as of March 21, 2017, that were opened, acquired or added under management agreements in the twelve weeks ended March 21, 2017 and the fiscal year ended December 27, 2016 consisting of: Marsh Creek Country Club, Santa Rosa Golf and Country Club, Country Club of Columbus, Heritage Golf Club, Eagle’s Nest Country Club, North Hills Country Club and Norbeck Country Club.

(3) Consists of other business activities including ancillary revenues related to alliance arrangements, a portion of the revenue associated with upgrade offerings, reimbursements for certain costs of operations at managed clubs, corporate overhead expenses and shared services.

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