ClubCorp Reports $259 Million Q3 Revenue, Acknowledges Inconsistent Stock Values

ClubCorp, Dallas, reported its 10th consecutive quarter of growth with third quarter revenue of $259 million, according to financials released last Thursday.

The $259 million reflected a 1.6 percent, or $4 million, increase due to a bump in food and beverages revenue. The company’s net income for the quarter was flat to prior at $1.2 million.

Total membership increased 1.2 percent since this time last year. Golf and country club memberships contributed a 2.9 percent increase, while total business, sports and alumni club memberships declined 2.2 percent. In same-store revenue growth, golf operations declined 3 percent due to lower rounds played.

ClubCorp also acquired 12 new clubs between 2015 and 2016, contributing $34.2 million.

“Since going public, we have grown revenue and adjusted EBITDA by over 30 percent by implementing a successful three-pronged strategy focused on organic growth, reinvention and acquisitions,” Eric Affeldt, CEO, ClubCorp, said in a statement. “Part of this strategy anticipated reinvention of clubs we acquired in 2014 and 2015. Much of this planned investment is now complete. As a result, the company is now prepared to de-lever its balance sheet below 4.0z. We plan to de-lever our balance sheet by continuing to grow adjusted EBITDA, reducing capital spend, including fewer planned same-store reinventions in 2017, and using excess cash to pay down debt.”

The company’s stock market difficulties throughout the year have been well-publicized, with stock values declining as much as 40 percent. In a letter issued last month, shareholder FrontFour Capital urged ClubCorp executives to explore a strategic sale of the company. FrontFour representatives asserted the company’s stock should be trading at approximately $27 per share, as compared to its $23 yearlong high and its recent $14 closing price.

In the financials statement, Affeldt did not name FrontFour but did address the situation.

“Our business is approximately a third larger than it was when we went public,” he said. “Despite this success, our stock performance has been inconsistent. We have listened to and fielded questions from investors regarding our growth and capital allocation strategies, and we welcome input from all the company's investors in our continuing efforts to create long-term value for our shareholders.

“We continue to believe our growth is a direct result of implementing and executing our three-pronged strategy focused on organic growth, reinvention, and acquisitions. We believe this three-pronged approach delivers optimal long-term shareholder value. We will continue to grow our business and pursue a combination of both reinvention and value-enhancing acquisitions.

In the release, ClubCorp executives attributed much of the company’s financial growth to the success of its Optimal Network Experience (O.N.E.) initiative. Introduced in 2010, O.N.E. offers members a 50 percent discount off a la carte dining, as well as additional perks at other area clubs. It is now offered at 154 of ClubCorp's 208 properties, with 54 percent of total members enrolled. Notably, total food and beverage offerings have grown 41 percent between 2010 and 2015. Currently, food and beverage accounts for 37 percent of ClubCorp’s total revenue breakdown, while dues make up the other 63 percent.

For this fiscal year, ClubCorp anticipates to spend $59.5 million in maintenance and $16.6 million on information technology projects. The company is also “reducing its revenue outlook” to a range of $1,080 million to $1,090 million, according to the statement, concurrent upon year-over-year revenue growth of 2.5 to 3.5 percent.

ClubCorp ranked No. 4 on Club Industry’s Top 100 Health Clubs of 2016, just behind Life Time Fitness, 24 Hour Fitness and LA Fitness.