ClubCorp Reports Record Third Quarter Results, Looks for Additional Acquisitions

As ClubCorp, Dallas, announced a record third quarter 2015 revenue increase of 24.9 percent ($50.9 million) to $255.4 million and pursuit of additional acquisitions, it also announced that one of its major investors is selling its remaining stock in the company. 

Fillmore CCA Investment, LLC, an affiliate of KSL Capital Partners LLC, intends to offer for sale, in an underwritten secondary offering, 8,968,922 shares of ClubCorp's common stock. Fillmore CCA Investment will receive all of the proceeds from this offering. After the sale, Fillmore will no longer beneficially own any shares of ClubCorp's common stock, according to a media release about the sale. Goldman Sachs is handling the sale. In July, Fillmore had announced it was selling 10 million shares of ClubCorp stock. 

ClubCorp CEO Eric Affeldt said in a media release about ClubCorp's third quarter financials: "We delivered another record quarter with strong same-store growth in both dues and food and beverage revenue, and our golf operations revenue improved slightly after two consecutive quarters of decline. Our acquisitions are performing well with revenue surpassing our underwriting estimates, and we anticipate performance at these clubs to continue to ramp."

Clubs opened or acquired in 2014 and 2015 contributed revenue growth of $44.6 million and adjusted EBITDA growth of $9.7 million.

Some of the newly acquired clubs include six golf clubs that ClubCorp purchased from Stratford Golf Partners and Accord Golf Capital for just under $44 million in March. It also includes 50 golf facilities purchased from Atlanta-based Sequoia Golf in August 2014 for $265 million. At the time of the Sequoia acquisition, ClubCorp committed $30 million of reinvention capital to those clubs over two years, but Affeldt noted on a call with investors and analysts on Thursday that the company is accelerating the reinvesting capital into 2015 at a number of the Sequoia clubs to minimize member disruption ahead of next year's golf season.

"Our members are very excited about the capital we are putting to work to reinvest Sequoia clubs," he said. "Our projects are transforming the club experience by enhancing indoor and outdoor dining, private events, fitness and aquatics amenities at a number of clubs."

ClubCorp will pull forward approximately $10 million of the investment from 2016 to its capital investment plans for 2015, Affeldt said. By the end of 2015, the company will have invested approximately $25 million in Sequoia clubs and will have approximately $5 million left to be invested in 2016.

In Thursday's call, Affeldt, who was named the most powerful person in golf earlier this week by Golf Inc., said that the company is looking at other purchases, but nothing could be disclosed at this time. In response to an analyst's question about ClubCorp getting into businesses other than golf and country clubs, Affeldt responded that they have looked at other membership-based businesses and would not rule out that possibility in the future, but he would not offer specifics on what type of membership-based businesses he has considered.

Third Quarter and Year-to-Date Numbers

For the third quarter, adjusted EBITDA increased $9.6 million to $54.9 million, up 21.2 percent, driven by solid performance at same store clubs and from increased revenue at new and recently acquired clubs.

Same-store revenue was up $3.3 million, or 1.7 percent, driven primarily by higher dues revenue; while same-store adjusted EBITDA grew $1.9 million, or 3.6 percent, due to increased revenue and favorable operating expenses as a percentage of revenue. Same-store flow-through was 57 percent.

For the year through third quarter, ClubCorp's revenue increased $139.6 million to $721.2 million, up 24 percent, which the company said reflects solid same-store revenue growth and the addition of Sequoia Golf and other recently acquired clubs. New clubs opened or acquired in 2014 and 2015 contributed revenue growth of $118.1 million and adjusted EBITDA growth of $25.9 million for the year so far.

Same-store revenue was up $13.4 million, or 2.3 percent, driven primarily by higher dues revenue, which was up 3.9 percent, and food and beverage revenue, which increased 2.8 percent. That increase was offset by golf operations revenue being down 0.7 percent year-to-date.

ClubCorp, which trades on the New York Stock Exchange under MYCC, closed Thursday at $21.39, down from its opening price of $22.19 and its year high of $24.95.

ClubCorp ranked No. 5 on Club Industry's Top 100 Health Clubs list this year with 2014 revenue of $844.16 million.