Club Insider

ClubCorp Reports Sixth Consecutive Year of Record Results, and Announces Acquisition of North Hills Country Club

Posted: February 22, 2017 in Chains

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

DALLAS, TX – ClubCorp – The World Leader in Private Clubs (NYSE:MYCC) – announced financial results for its fiscal-year 2016 fourth quarter ended December 27, 2016. The fourth quarter of fiscal 2016 and fiscal 2015 consisted of 16 weeks. Fiscal 2016 and fiscal 2015 consisted of 52 weeks. All comparisons are year-over-year.

  • Fiscal 2016 revenue was $1.1 billion, up 3.4%, net income increased $13.6 million to $4.0 million, and adjusted EBITDA was $247.7 million, up 6.2%;
  • Fourth quarter revenue was $345.3 million, up 4.1%, net income increased $11.7 million to $5.4 million, and adjusted EBITDA was $83.3 million, up 4.7%;
  • ClubCorp acquires North Hills Country Club in Glenside, Pennsylvania.

Fourth Quarter Results:

  • Revenue increased $13.6 million to $345.3 million, up 4.1%.
  • Net Income increased $11.7 million to $5.4 million.
  • Adjusted EBITDA increased $3.8 million to $83.3 million, up 4.7%, driven by increased revenue and effectively managing and controlling variable operating expenses.
  • Same Store Combined Clubs revenue increased $6.7 million to $321.4 million, up 2.1%, driven by increases in all three major revenue streams, dues up 2.4%, food & beverage up 3.2% and golf operations up 0.3%.
  • Same-store Combined Clubs Adjusted EBITDA increased $2.1 million to $98.0 million, up 2.2%, due to increased revenue, and favorable variable payroll and payroll related expenses as a percentage of revenue. Same-store Adjusted EBITDA margin was 30.5%.
  • New or Acquired Clubs. New clubs opened or acquired in 2015 and 2016 contributed revenue of $17.2 million and adjusted EBITDA of $3.3 million.

Full Year 2016 Results:

  • Revenue increased $35.6 million to $1.1 billion, up 3.4%.
  • Net Income improved to $4.0 million, an increase of $13.6 million.
  • Adjusted EBITDA increased $14.4 million to $247.7 million, up 6.2%, driven by higher revenue and improved margin performance across both same-store and new and recently acquired clubs.
  • Same Store Clubs revenue increased $18.8 million to $1.0 billion, up 1.9%, driven by increases in dues up 3.1% and food & beverage up 2.4%, and offset by golf operations down (0.7)%.
  • Same-store adjusted EBITDA grew $12.6 million to $294.6 million, up 4.5%, due to increased revenue and favorable variable payroll expenses and improved operating expenses as a percentage of revenue. Same-store Adjusted EBITDA margin increased 80 bps to 28.9%.
  • New or Acquired Clubs. New clubs opened or acquired in 2015 and 2016 contributed revenue of $51.3 million and adjusted EBITDA of $7.6 million.

Quotes:

Eric Affeldt, Chief Executive Officer: “We are incredibly proud of what we accomplished in 2016. The success of our O.N.E. offering, reinventions and acquisitions embody the core competencies that are at the essence of who we are as a company… a successful membership business and a growing network of private lifestyle clubs that cater to our members’ needs and wants. As a result, ClubCorp has produced six consecutive years of record revenue and adjusted EBITDA growth. Since 2010, revenue and adjusted EBITDA have grown 8.0% and 8.9%, respectively, compounded annually. To celebrate our 60th anniversary, we will be launching some exciting new product offerings that will expand our addressable market reaching even more prospective members.”

Mark Burnett, President and Chief Operating Officer: “We capped off the year with a strong finish in the fourth quarter, as Q4 revenue increased 4.1%, and adjusted EBITDA grew 4.7%. For the full-year, we achieved solid same-store revenue growth in two of our three major revenue streams, namely dues and food & beverage revenue. Despite a decline in full-year same-store golf ops revenue, we experienced positive year-over-year growth in the fourth quarter. We also reached record full-year adjusted EBITDA margins in both segments, and anticipate margins at recently acquired clubs to continue to improve. We completed 16 major reinvention projects in 2016, and we look forward to another year of continued growth from these investments in 2017.”

Curt McClellan, Chief Financial Officer: “We are pleased with our full-year and fourth quarter performance. In particular, we delivered meaningful solid year-over-year gains at both our reinvented and recently acquired clubs. Reinventions and acquisitions are key components of our growth strategy, and investments in these areas will continue. We are excited to have recently added two new clubs our portfolio–Eagle’s Nest Country Club in Maryland and North Hills Country Club in Pennsylvania–both highlighting our commitment to growth via acquisition. Additionally, in 2017, we anticipate investing approximately $40 million on reinvention and expansion projects, including approximately $26 million at same-store clubs and approximately $14 million to reinvent recently acquired clubs. We continue to balance growth capital with cash distributions to shareholders and lenders. In 2016, we paid $34 million in dividends, repurchased $2.3 million in stock and voluntarily paid down $24 million towards our senior secured term loans. We have now lowered our total leverage ratio from 4.5x to 4.2x.”

Segment Highlights:

Golf and country clubs (GCC):

  • Fourth quarter, GCC revenue was up $12.2 million to $271.7 million, up 4.7%.
  • Fourth quarter, GCC adjusted EBITDA increased $3.2 million to $84.4 million, up 4.0%, and GCC adjusted EBITDA margin declined 20 basis points to 31.1%.
  • Fourth quarter, GCC same-store revenue increased $6.2 million, up 2.5%. Dues revenue was up 2.8%, food & beverage revenue increased 5.1% and golf operations revenue increased 0.3%.
  • Fourth quarter, GCC same-store adjusted EBITDA increased $2.3 million, up 2.9%, due largely to favorable operating expenses and improved variable payroll and payroll related expenses as a percentage of revenue.
  • Fourth quarter, GCC same-store adjusted EBITDA margin improved 20 basis points to 31.9%.
  • Clubs acquired in 2015 and 2016 contributed fourth quarter, GCC revenue of $17.1 million and GCC adjusted EBITDA of $3.3 million.
  • Full-year 2016, GCC revenue was $879.1 million, up 4.5%.
  • Full-year 2016, GCC adjusted EBITDA was $260.6 million, up 6.1%, and GCC adjusted EBITDA margin increased 40 basis points to 29.6%.

Business, sports and alumni clubs (BSA):

  • Fourth quarter, BSA revenue was up $0.5 million to $66.9 million, up 0.8% driven by increases in dues revenue and food & beverage revenue.
  • Fourth quarter, BSA adjusted EBITDA declined $0.1 million to $16.9 million, down 0.7% largely due to an increase in cost of sales and an increase in variable payroll expenses as a percentage of revenue.
  • Fourth quarter, BSA adjusted EBITDA margin decreased 40 basis points to 25.2%.
  • Full-year 2016, BSA revenue was $193.4 million, up 1.3%.
  • Full-year 2016, BSA adjusted EBITDA was $41.6 million, up 4.7%, and BSA adjusted EBITDA margin improved 70 basis points to 21.5%.

Other Data:

  • O.N.E. and Other Upgrades. As of December 27, 2016, approximately 54% of memberships were enrolled in O.N.E. or similar upgrade programs, as compared to approximately 50% of memberships that were enrolled in similar upgrade programs as of December 29, 2015. As of December 27, 2016, the Company offered O.N.E. at 153 clubs.
  • Reinvention. For 2017, the Company expects ROI expansion capital to be approximately $40 million. Of this amount, ClubCorp plans to invest approximately $26 million on same-store clubs and approximately $14 million on recently acquired clubs, including the two clubs acquired in 2017.
  • Acquisitions. In February, ClubCorp acquired two clubs: Eagle’s Nest Country Club in Phoenix, Maryland (part of the greater Baltimore MSA), and North Hills Country Club in Glenside, Pennsylvania. In fiscal year 2016, ClubCorp acquired three clubs: Heritage Golf and Country Club in Hilliard, Ohio; 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 December 27, 2016, ClubCorp owned or operated 159 golf and country clubs representing approximately 200 18-hole equivalents, of which nine are managed clubs. Additionally, the Company owned or operated 47 business, sports and alumni clubs, of which three are managed clubs.
  • Membership. Membership totals exclude membership count from managed clubs. As of December 27, 2016, total memberships increased 3,065 to 174,348, up 1.8%, over memberships at December 29, 2015. Total golf and country club memberships increased 3.9%, while total business, sports and alumni club memberships declined 2.6%.
  • Capital Structure. At the end of the fourth quarter, the Company had $84.6 million in cash and cash equivalents and total liquidity of approximately $230 million. Additionally, the Company voluntarily paid $24 million towards its senior secured term loans. ClubCorp’s total leverage ratio was 4.2x at the end of fiscal 2016, down from 4.5x at the end of fiscal 2015.

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 anticipates revenue in the range of $1,095 to $1,135 million, and adjusted EBITDA in the range of $255 to $265 million.

DALLAS, TX – ClubCorp – The World Leader in Private Clubs (NYSE:MYCC) – announced the acquisition of North Hills Country Club, a premier member-owned country club, founded in 1908 located just north of downtown Philadelphia. ClubCorp has plans for a multimillion-dollar reinvention that will bring new amenities, improvements and upgrades to the club.

“We are proud to add North Hills Country Club, an exceptional club rich in history and family traditions, to our portfolio of clubs,” said Mark Burnett, ClubCorp COO and president. “The club allows us to expand to three clubs in the Philadelphia market, perfectly complementing our Hartefeld National club in Avondale and the newly reinvented Pyramid Club located downtown.”

“The members are extremely excited about ClubCorp acquiring North Hills,” said Del Markward, president of the club. “They are a world-class organization that brings an expansive network of benefits and opportunities and a proven track record of improving newly acquired clubs. This is a win-win relationship for our club, the members and ClubCorp.”

North Hills Country Club offers a true old-style championship golf course with tree lined fairways and small greens with the original design by J. Franklin Meehan. Additional amenities include casual and upscale dining, state-of-the-art swimming facility with three swimming pools – heated competition lap pool, resort-style zero entry pool and wading pool – and private event and meeting space that can accommodate up to 200.

North Hills members will be eligible to participate in ClubCorp’s unique O.N.E. (Optimal Network Experiences) program, which provides value-oriented benefits like 50% off a la carte dining at the member’s Home Club. In addition, members can enjoy benefits within the Community – Hartefeld National and Pyramid Club – and Worldwide including complimentary green fees and complimentary dining when traveling throughout the ClubCorp Network, which now offers access to more than 300 private clubs and special offerings at more than 1,000 hotels, resorts and entertainment venues.

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