ClubCorp plans to invest between 48 million and 53 million on its major reinvention projects in 2015 Photo Courtesy ClubCorp

ClubCorp plans to invest between $48 million and $53 million on its major reinvention projects in 2015. (Photo Courtesy ClubCorp.)

ClubCorp Reports Record Q2 Revenue, Sees Opportunity in Fitness Areas

Chief Operating Officer Mark Burnett said ClubCorp sees a push for opportunity in its pool, aquatic and fitness areas.

ClubCorp, Dallas, announced record second quarter results and reaffirmed its outlook for 2015 in releasing its earnings statement Thursday.

Year-over-year second quarter revenue increased 24.8 percent ($52.3 million) to $263.7 million due to increases in same store clubs and growth from new or acquired clubs. ClubCorp's adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased 21.1 percent ($10.5 million) and was driven by increased revenue and improved same store margins during the second quarter.

“We delivered record financial results this quarter bolstered by positive same store sales and a strong contribution from recent acquisitions," ClubCorp CEO Eric Affeldt said. "Our results demonstrate the stability and resiliency of our private club and membership business model."

Highlighted in a call with investors on Thursday was ClubCorp's "reinvention" projects that renovate and update club amenities that go beyond upgrades to golf areas. Chief Operating Officer Mark Burnett said ClubCorp sees a push for opportunity in its pool, aquatic and fitness areas, though no additional details were provided in the call.

ClubCorp plans to invest between $48 million and $53 million on its major reinvention projects in 2015. The company had completed 15 reinventions at existing and newly acquired clubs as of June 30, with projects at 10 other clubs in active construction. ClubCorp said it is on track to add reinvention elements at approximately 30 clubs in 2015.

"Reinvention is about getting the value proposition right, where every member has a reason to belong," Affeldt said.

Total club memberships, including managed clubs, was 174,583 as of June 16, marking an increase of 31,348 (21.9 percent) over 2014. However, that figure marked a drop of 5,498 club memberships (3.05 percent) reported March 24.

ClubCorp owns or operates 159 golf and country clubs, and 49 additional business, sports and alumni clubs (BSA clubs). The company offers the O.N.E. and similar upgrade programs at 134 golf and country clubs (15 BSA clubs), which comprises 46 percent of its total memberships.

The strength of the ClubCorp's membership model helped offset the impact of Texas' unusually wet weather this spring, where it rained 22 days in May, Affeldt said. Same-store revenue was up $5.5 million (2.6 percent) due to higher dues revenue and increased food and beverage spending.

"Our results demonstrate the stability and resiliency of our private club and membership business model," Affeldt said. "If you're in the daily fee model in Texas, your year is effectively over."

ClubCorp has added eight clubs so far this year, and Affeldt said the company continues to look for acquisitions in areas with population density and affluence. Affeldt specifically mentioned Chicago and Charlotte, North Carolina, markets as part of a general strategy to add new properties in close proximity to ClubCorp's current network to maximize premium membership benefits.

"Our network product is the major differentiating factor between us and everybody else in the industry," Affeldt said.

The clubs that ClubCorp acquired this year are: Ravinia Green Country Club (Riverwoods, Illinois), Rolling Green Country Club (Arlington Heights, Illinois), Bermuda Run Country Club (North Carolina), Brookfield Country Club (Roswell, Georgia), Firethorne Country Club ( Marvin, North Carolina), Ford's Colony Country Club (Williamsburg, Virginia), Temple Hills Country Club (Franklin, Tennessee), Legacy Golf Club at Lakewood Ranch (Bradenton, Florida).

Affeldt said the golf business has changed since the recession, with the overall decline of joining fees affecting capital improvements at equity clubs.

"Those clubs are finding it hard to keep up with capital improvements, making ClubCorp the logical acquirer of those clubs," he said.

 

ClubCorp has been highlighted as a strong stock performer by notable financial analysts this year, including CNBC's Jim Cramer, MKM and Barron's, which said the company has opportunities to gain additional market share in the fragmented country club market.

However, Seeking Alpha has countered that optimism by pointing out ClubCorp's largest segment of revenue – membership dues – is maintained and made possible through acquisitions.

Those dues accounted for 43 percent of its $263.7 million reported revenue in the second quarter, the same percentage the company reported on its $211.4 million reported revenue in the second quarter of 2014.

ClubCorp (NYSE:MYCC) was trading slightly down midday Thursday at $24.01 per share. Its 52-week high is $24.95 and its 52-week low is $23.92.

ClubCorp ranked No. 4 on Club Industry's Top 100 Health Clubs of 2014 list.

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