ClubCorp - The World Leader in Private Clubs- announces financial results for its fiscal-year 2017 second quarter ended June 13, 2017. The second quarter of fiscal 2017 and fiscal 2016 consisted of 12 weeks. Year-to-date results of fiscal 2017 and fiscal 2016 consisted of 24 weeks. All growth percentages refer to year-over-year progress.

Second Quarter Results:

• Revenue increased $7.4 million to $276.4 million, up 2.7%, for the second quarter of 2017.

• Net Income decreased $5.0 million to $0.8 million, down 86.2%, primarily due to higher selling, general and administrative expense related to centralization and transformation of administrative processes, finance processes and related IT systems, and impairment of assets related to recently divested clubs.

• Adjusted EBITDA of $62.9 million, up 0.1%. 

• Same Store Combined Clubs revenue increased $3.5 million to $263.4 million, up 1.4%, driven by increases in all three major revenue streams: dues up 2.1%, food & beverage up 0.6% and golf operations up 0.9%.

• Same-store Combined Clubs Adjusted EBITDA decreased $0.4 million to $75.5 million, down 0.6%, due to higher revenue more than offset by higher operating costs including rent in same-store business, sports and alumni clubs. Same-store Adjusted EBITDA margin was 28.7%.

• New or Acquired Clubs. New clubs opened or acquired in 2016 and 2017 contributed revenue of $7.3 million and adjusted EBITDA of $0.3 million.

FY17 Year-to-date Results:

• Revenue increased $13.8 million to $497.6 million, up 2.8%, for the first two quarters of the year. 

• Net Loss increased $4.2 million to $6.7 million, up 162.0%, primarily due to higher selling, general and administrative expense related to centralization and transformation of administrative processes, finance processes and related IT systems, and impairment of assets related to recently divested clubs.

• Adjusted EBITDA increased $1.9 million to $106.3 million, up 1.8%, driven by increased revenue offset by increased operating expenses including rent. 

• Same Store Combined Clubs revenue increased $8.9 million to $478.3 million, up 1.9%, driven by increases in all three major revenue streams: dues up 2.5%, food & beverage up 1.1% and golf operations up 2.3%.

• Same-store Combined Clubs Adjusted EBITDA increased $1.6 million to $134.4 million, up 1.2%, due to increased revenue offset by higher operating costs including higher costs related to food and beverage sales in same-store golf and country clubs, and an increase in club operating costs including rent and a decline in social memberships in same-store business, sports and alumni clubs. Same-store Adjusted EBITDA margin was 28.1%.

• New or Acquired Clubs. New clubs opened or acquired in 2016 and 2017 contributed revenue of $10.0 million and adjusted EBITDA of $0.5 million.

2017 Second Quarter and Year to Date Summary:

(Unaudited financial information)

Quotes:

• Eric Affeldt, chief executive officer:  "We are pleased to deliver our thirteenth consecutive quarter of growth. As we celebrate ClubCorp's 60th anniversary this year, the Company remains firmly committed to providing our members unrivaled experiences at our clubs. Additionally, we recently announced a definitive agreement with affiliates of Apollo to acquire ClubCorp, and to continue to grow our business and provide the highest level of service and club offerings to our members."

   

• Mark Burnett, president and chief operating officer:  "We continue to see increased member activity and usage at our recently reinvented and acquired clubs. So far in fiscal 2017, we have added five new clubs to our golf and country club segment as compared to three clubs added in all of fiscal 2016. Additionally, we announced an alliance with Topgolf to accelerate innovation in the golf industry. We expect these acquisitions and initiatives to drive additional return on investment and further expand the value of our local, regional and national networks. Additionally, our O.N.E. offering continues to appeal to our members with approximately 56% of our memberships enrolled in O.N.E."

   

• Curt McClellan, chief financial officer: "We are pleased to deliver thirteen consecutive quarters of growth. Our results for the second quarter saw continued dues revenue growth coupled with slower than anticipated golf operations and food and beverage revenue growth due to above average rain fall in the mid Atlantic regions and fewer private events at our business, sports and alumni clubs. Consolidated adjusted EBITDA was largely flat for the quarter. Consolidated revenues grew 2.7% for the quarter and overall adjusted EBITDA margins declined 60 bps to 22.8%. Currently, our reinvention projects and acquisitions are performing as expected."

Segment Highlights:

Golf and country clubs:

• Second quarter, GCC revenue was up $8.9 million to $227.9 million, up 4.1%.

• Second quarter, GCC adjusted EBITDA of $66.1 million was flat, and GCC adjusted EBITDA margin decreased 120 basis points to 29.0%.

• Second quarter, GCC same-store revenue increased $3.8 million, up 1.8%.  Dues revenue was up 2.3%, food & beverage revenue increased 2.0% and golf operations revenue increased 0.9%.

• Second quarter, GCC same-store adjusted EBITDA was flat.  

• Second quarter, GCC same-store adjusted EBITDA margin decreased 50 basis points to 29.8%.

• Clubs acquired in 2016 and 2017 contributed second quarter, GCC revenue of $7.3 million and GCC adjusted EBITDA of $0.3 million.

Business, sports and alumni clubs:

• Second quarter, BSA revenue decreased $0.3 million to $42.9 million, down 0.6%, driven largely by decreases in food & beverage revenue.

• Second quarter, BSA adjusted EBITDA declined $0.5 million to $9.7 million, down 4.6%, largely due largely to decreases in food & beverage revenue and higher costs as a percentage of revenue. 

• Second quarter, BSA adjusted EBITDA margin decreased 90 basis points to 22.7%.

Other Data:

• O.N.E. and Other Upgrades.  As of June 13, 2017 and December 27, 2016, approximately 56% and 54% of memberships were enrolled in O.N.E. or similar upgrade programs, respectively. As of June 13, 2017, the Company offered O.N.E. at 156 clubs.

• Reinvention. In total, for 2017, the Company expects ROI expansion capital to be approximately $46 million.  Of this amount, ClubCorp plans to invest approximately $23 million on same-store clubs and approximately $23 million on recently acquired clubs.

• Acquisitions. As of June 13, 2017, ClubCorp has acquired four 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), Norbeck Country Club in Rockville, Maryland (part of Washington, DC MSA) and Oakhurst Golf and Country Club in Clarkston, Michigan (part of the Detroit MSA). Subsequent to June 13, 2017, on June 20, 2017, ClubCorp acquired Medina Golf and Country Club in Medina, Minnesota (part of Minneapolis 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 June 13, 2017, ClubCorp owns or operates 160 golf and country clubs representing approximately 200 18-hole equivalents, of which eight are managed clubs.  Additionally, the Company owns or operates 44 business, sports and alumni clubs, of which three are managed clubs.

• Membership. Membership totals exclude membership count from managed clubs.  As of June 13, 2017, total memberships increased 4,310 to 174,348, up 2.5%, over memberships at June 14, 2016.  Total golf and country club memberships increased 3.6%, while total business, sports and alumni club memberships were flat.

• Capital Structure. At the end of the second quarter, the Company had $52.0 million in cash and cash equivalents and total liquidity of approximately $196 million. ClubCorp's total leverage ratio was 4.28x at the end of the second quarter, up slightly from 4.20x at the end of fiscal 2016 with the increase related to a decline in cash which resulted mainly from acquisitions. Subsequent to June 13, 2017, on June 20, 2017, the Company borrowed $20.0 million on the revolving credit facility.

Company Outlook:

Given the recent announcement on July 9, 2017 of a definitive merger agreement to take ClubCorp private, we are not providing any further financial guidance.