ClubCorp Reports Strong Second Quarter Results, Announces Promotion of Mark Burnett to President and Announces Deal to Manage a New Business Club Atop of One World Trade Center in New York City
Posted: July 14, 2016 in Chains
ClubCorp – 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 second quarter ended June 14, 2016. The second quarter of fiscal 2016 and fiscal 2015 consisted of 12 weeks. Year-to-date results of fiscal 2016 and fiscal 2015 consisted of 24 weeks. All growth percentages refer to year-over-year progress.
Second Quarter Results:
Revenue increased $5.2 million, or 2.0%, to $269.0 million for the second quarter of 2016.
Net Income increased $6.0 million to $5.8 million due primarily to fewer disposals of assets and lower selling, general and administrative expense.
Adjusted EBITDA increased $3.2 million to $63.3 million, up 5.3%, driven by higher revenue, lower cost of sales and lower variable payroll and other operating expenses as a percentage of revenue.
Same Store Clubs revenue was up $3.0 million, up 1.2% to $253.7 million, driven by increases in dues revenue up 3.8% and a la carte and private events food & beverage revenue up 0.8%. This result was offset by golf operations revenue down (1.7)% impacted by rain and flooding at several clubs in the Houston market.
Same-store adjusted EBITDA grew $4.7 million, up 6.7% to $75.1 million, due to increased revenue and favorable operating expenses as a percentage of revenue. Same-store Adjusted EBITDA margin increased 150 bps to 29.6%.
New or Acquired Clubs. New clubs opened or acquired in 2015 and 2016 contributed revenue of $12.7 million and adjusted EBITDA of $1.6 million.
FY16 Year-to-date Results:
Revenue increased $18.0 million, or 3.9%, to $483.8 million for the first two quarters of the year.
Net Loss narrowed by $1.9 million, or 43.0%, to $(2.6) million.
Adjusted EBITDA increased $6.4 million to $105.3 million, up 6.4%, driven by higher revenue and improved margin performance across both same-store and new and recently acquired clubs.
Same Store Clubs revenue was up $10.9 million, up 2.4% to $460.1 million, driven by increases across all three major revenue streams: dues revenue up 3.8%, a la carte and private events food & beverage revenue up 2.7%, and golf operations revenue 0.1%.
Same-store adjusted EBITDA grew $8.6 million, up 7.0% to $131.7 million, due to increased revenue and favorable operating expenses as a percentage of revenue. Same-store Adjusted EBITDA margin increased 120 bps to 28.6%.
New or Acquired Clubs. New clubs opened or acquired in 2015 and 2016 contributed revenue of $20.4 million and adjusted EBITDA of $2.5 million.
Quotes:
Eric Affeldt, Chief Executive Officer: “We are very happy with our continued progress and growth. Our results represent the ninth consecutive quarter of record revenue and adjusted EBITDA resulting from the continued execution on our organic growth, reinvention and acquisition growth strategies. We are seeing increased activity levels at several of our recently reinvented properties. Additionally, we are seeing increased usage across all membership types, experiencing higher acceptance of our O.N.E. product, higher dining utilization and more guest visits and guest rounds. These results are strong indicators that our reinvention strategy continues to work and resonate with our members and guests. As chief operating officer, Mark Burnett has been instrumental in executing this strategy, and I am thrilled to announce his promotion to President. We look forward to Mark’s continued efforts in leading our growth initiatives. I am also very excited to announce that we will manage a new business club atop One World Trade Center. This project has been long in the making, we look forward to operating a club in the heart of New York City and extending the value of our O.N.E. offering to our many traveling members who will be able to take advantage of this wonderful new venue.”
Curt McClellan, Chief Financial Officer: “This was another solid quarter driven by same-store revenue and adjusted EBITDA growth in both segments. Member turnout across all geographies continues to be strong. Our three pronged growth strategy is predicated on improving amenities and delivering a private club experience that appeals to all members of the family. Our recently reinvented clubs are experiencing higher a la carte food and beverage covers, increased food and beverage revenue, increased private event and banquet business, more golf tournaments, and higher member rounds and guest rounds. This strategy for example has been particularly positive at several of our Sequoia properties and the portfolio overall is delivering on track with our underwriting projections. Both the Sequoia portfolio and our other recently acquired clubs continue to mature under this strategy where revenue and profitability growth continue post reinvention. We believe our acquisition and reinvention growth strategies continue to work and remain a significant driver toward creating long-term shareholder value. We also believe that we can primarily fund these growth strategies from operating free cash flow, and as such do not see any significant changes to capital structure or an additional levering event for the company.”
Segment Highlights:
Golf and country clubs (GCC):
Second quarter, GCC revenue was up $6.7 million to $219.8 million, up 3.1%.
Second quarter, GCC adjusted EBITDA increased $4.5 million to $66.1 million, up 7.3%, and GCC adjusted EBITDA margin increased 120 basis points to 30.1%.
Second quarter, GCC same-store revenue increased $2.1 million, up 1.0%. Dues revenue was up 4.0%. Food & beverage and golf operations revenue declined (0.1)% and (1.7)%, respectively, primarily resulting from fewer rounds and golf outings related to the closure of several clubs due to rain and flooding experienced in the Houston market in April and again in late May/early June.
Second quarter, GCC same-store adjusted EBITDA increased $3.4 million, up 5.6%, due largely to increased revenue, and favorable operating expenses and improved variable payroll expenses as a percentage of revenue.
Second quarter, GCC same-store adjusted EBITDA margin improved 140 basis points to 31.2%.
Clubs acquired in 2015 and 2016 contributed second quarter, GCC revenue of $12.7 million and GCC adjusted EBITDA of $1.6 million.
Business, sports and alumni clubs (BSA):
Second quarter, BSA revenue was up $1.0 million to $46.5 million, up 2.2% driven by increases in dues revenue and food & beverage revenue.
Second quarter, BSA adjusted EBITDA increased $1.3 million to $10.5 million, up 14.4% largely due to a decline in variable payroll expenses as a percentage of revenue and a decrease in rent expense. BSA same-store adjusted EBITDA margin improved 230 basis points to 22.6%.
Other Data:
O.N.E. and Other Upgrades. As of June 14, 2016, approximately 52% of our memberships were enrolled in O.N.E. or similar upgrade programs, as compared to approximately 50% of our memberships that were enrolled in similar upgrade programs as of December 29, 2015. As of June 14, 2016, the Company offered O.N.E. at 153 clubs.
Reinvention. In total, for 2016, the Company expects ROI expansion capital to be approximately $43 million. In 2016, ClubCorp plans to invest approximately $21 million on 9 same-store clubs and approximately $22 million on recently acquired clubs.
Acquisitions. As of June 14, 2016, ClubCorp has acquired two clubs: Marsh Creek Country Club in St. Augustine, Florida and Santa Rosa Country Club in Santa Rosa, California and has entered a management agreement to operate the Country Club of Columbus in Columbus, Georgia. As of June 14, 2016, ClubCorp owns or operates 160 golf and country clubs representing approximately 200 18-hole equivalents, of which ten are managed clubs. Additionally, the Company owns or operates 48 business, sports and alumni clubs, of which three are managed clubs.
Membership. Membership totals exclude membership count from managed clubs. As of June 14, 2016, total memberships increased 1,659 to 175,430, up 1.0%, over memberships at June 16, 2015. Total golf and country club memberships increased 2.1%, while total business, sports and alumni club memberships declined 1.4%.
Capital Structure. At the end of the second quarter, the Company had $104.6 million in cash and cash equivalents and total liquidity of approximately $250 million.
Texas. Additional data on clubs the Company owns and operates in Texas is available in the Company’s earnings presentation that can be found online at ir.clubcorp.com.
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 2016, the Company reiterates that it anticipates revenue in the range of $1,085 to $1,105 million and adjusted EBITDA in the range of $242 million to $252 million. The current outlook implies year-over-year revenue growth of 3-5% and year-over-year adjusted EBITDA growth of 4-8%.
DALLAS, TX – The World Leader in Private Clubs (NYSE: MYCC) — announced the promotion of Mark A. Burnett to the position of President and Chief Operating Officer. He will continue to report to ClubCorp’s CEO, Eric Affeldt.
Announcing the appointment, Affeldt said, “Mark’s promotion to President is the result of his excellent performance and contributions to the Company during his tenure and demonstrates our commitment to developing talent and promoting from within. The Board and I feel fortunate to have someone of Mark’s skill and industry experience as we continue to pursue our growth strategies and drive the Company’s operational and financial performance. I look forward to working with Mark in his expanded role and responsibilities, which will also allow me to devote more time to business development and our strategic initiatives.”
As Chief Operating Officer, Burnett led the successful acquisition, integration and reinvention of Sequoia Golf, the largest acquisition in the Company’s history. He has also led efforts and has overseen the acquisition of 25 additional acquired golf and country clubs and the reinvention of 55 legacy golf and country and business clubs during his career with ClubCorp.
Burnett joined ClubCorp in 2006 and brings over 25 years of experience managing and operating private clubs. Burnett was promoted to Chief Operating Officer in October 2013, and was previously Executive Vice President of Golf & Country Clubs. Prior to joining ClubCorp, Burnett held titles of Executive Vice President and Chief Operating Officer at American Golf Corporation, and President and Chief Executive Officer, Chief Operating Officer and Vice President of Golf Operations at KSL Fairways Golf Corporation.
DALLAS, TX – ClubCorp — The World Leader in Private Clubs (NYSE: MYCC) — announces it will manage China Center’s private business club on the 89th floor of One World Trade Center in New York City. The more than 32,000-square-foot club — with an anticipated opening of late 2017 — will offer a variety of dining, social and business amenities. The club will provide a cultural and business exchange setting for U.S. and Chinese business professionals, political leaders and entrepreneurs and a venue for international business events and forums.
“We are very excited to be a part of this extraordinary private business club in the heart of New York City,” said Eric Affeldt, ClubCorp CEO. “The new club will serve as a confluence for Sino-American relations in the cultural and financial capital of the world and an amazing benefit to our many members who visit New York. We look forward to providing exceptional experiences and opportunities to the club’s members and guests.”
The club will feature:
- Stylish Lobby Lounge;
- Anytime Lounge where members can dine, enjoy relaxed social and business gatherings;
- Sophisticated Dining Rooms offering authentic Chinese cuisine and elegant Western fare;
- Chinese Tea House;
- Additional Private Dining Rooms;
- Touchdown Rooms – Private high-tech-enabled workspaces where members can drop in and work without distractions;
- Power Boardroom with state-of-the-art technology;
- Elegant private event space that can accommodate up to 300;
- Screening Room with advanced sound and screen technology and comfortable recliners;
- International Library and Greeting Hall blending cultural designs and rotating art exhibits;
Prior to its official opening, the club will serve as the site of the December 2016 50th anniversary National Committee on U.S. China Relations Leaders Speak Series public forum featuring former Secretaries of State Henry A. Kissinger and Madeline Albright.
ClubCorp currently operates more than 40 business clubs throughout the United States and the Capital Club in Beijing and manages Meilu Legend Hotel and West Lake Mansion Club in the resort area of scenic Hangzhou of Zhejiang Province.
ClubCorp also offers members golf privileges, through its reciprocal access program, at Mission Hills China — a world-class conglomerate of hotels and resorts; golf and country clubs; award-winning spas; and sports academies which feature two locations in the cities of Shenzhen, Dongguan and Haikou.
ClubCorp will operate this club as a managed property. The development of this venture is in conjunction with affiliates of the Vantone Holdings, Co., Ltd. who will construct and lease the space.
