The management firm reported its twelth consecutive quarter of growth while saying it would not pursue being acquired for the time being, noting that it had not received a purchase proposal for the entire company. The acquisition of Oakhurst G&CC in Clarkston, Mich., is ClubCorp’s fourth this year. Eric Affeldt will retire as Chief Executive Officer upon appointment of a successor.
ClubCorp made a flurry of announcements along with releasing its earnings report for the first quarter of 2017. After announcing that first-quarter revenue was up 3% to $221.3 million, marking the Dallas-based management firm’s twelfth consecutive quarter of growth, the company also announced that it has made its fourth acquisition this year, Oakhurst Golf & Country Club in Clarkston, Mich.
Additionally, ClubCorp provided an update on its “review of strategic alternatives,” saying that “after a careful and thorough evaluation, the Board of Directors has unanimously determined not to pursue a strategic transaction at this time, and to continue executing its three-pronged growth strategy focused on organic growth, reinvention and acquisitions.”
As reported by C&RB in January (http://clubandresortbusiness.com/2017/01/clubcorp-forms-committee-evaluate-alternatives/), ClubCorp announced earlier this year that it had formed a strategic review committee that would “review and evaluate alternatives to further enhance shareholder value,” and acknowledged that those alternatives could include a potential sale of the company.
But in a statement issued with the first-quarter earnings, ClubCorp said that it did not get a purchase proposal for the entire company and would therefore not pursue that option further for the time being.
The company also announced that Eric Affeldt would retire as Chief Executive Officer upon the appointment of his successor. As part of its regular CEO succession planning process, ClubCorp said, its Board has identified a strong internal candidate and will now engage a leading executive search firm to identify additional, highly qualified external candidates.
ClubCorp’s earnings statement for its fiscal-year 2017 first quarter, which ended March 21, also showed that the company’s net loss decreased $0.8 million to $7.5 million. Adjusted EBITDA was $43.7 million, up 4.2%, with the company citing increased revenue and effective management of variable operating expenses as drivers of the increase.
Revenue for Same-Store Combined Clubs increased $5.5 million to $217.1 million, up 2.6%, driven by increases in all three major revenue streams, with dues up 2.8%, food and beverage up 2.0% and golf operations up 4.7%. Adjusted EBITDA for Same-store Combined Clubs increased $1.9 million to $59.2 million, up 3.3%.
New clubs opened or acquired in 2016 and 2017 contributed revenue of $2.7 million and adjusted EBITDA of $0.2 million, ClubCorp said.
“We are pleased to deliver our twelfth consecutive quarter of revenue and adjusted EBITDA growth,” said Affeldt. “As we celebrate ClubCorp’s 60th anniversary this year, the company remains firmly committed to executing its three-pronged growth strategy focused on organic growth, reinvention and acquisitions.
“”We are particularly excited about the pacing of acquisitions, as we have already added four new clubs to our golf and country club segment this year as compared to three clubs added in fiscal 2016,” Affeldt added. “Additionally, we completed a lease agreement to construct a new-concept business / social club named ‘The Collective’ that will open next year in Seattle.”
C&RB reported on the concept for The Collective earlier this month (http://clubandresortbusiness.com/2017/04/clubcorp-develops-collective-seattle/)
“In each case, these clubs are expected to drive additional return on investment and further expand the value of our local, regional and national networks,” Affeldt said.
Mark Burnett, President and Chief Operating Officer added these comments with the latest earnings report: “We continue to see increased member activity and usage at our recently reinvented and acquired clubs. In the first twelve weeks of fiscal 2017, we achieved another quarter of adjusted EBITDA growth, benefiting greatly from improved performance at these clubs.
“Likewise, our O.N.E. [Optimal Network Experiences] offering continues to appeal to our members, with approximately 54% of our memberships enrolled in O.N.E.,” Burnett added. “We are excited by the positive momentum in our golf and country club business, and are gearing up for what we expect will be a busy golf season this spring and into the summer.”
ClubCorp’s acquisition of Oakhurst G&CC follows announcements previously this year of its acquisitions of Eagle’s Nest Country Club in Phoenix, Md., North Hills Country Club in Glenside, Pa., and Norbeck Country Club in Rockville, Md.
In fiscal year 2016, ClubCorp acquired Heritage Golf and Country Club in Hilliard, Ohio, Santa Rosa (Calif.) Country Club and Marsh Creek Country Club in St. Augustine, Fla., and also entered a management agreement to operate the Country Club of Columbus (Ga.).
In announcing its acquisition of Oakhurst G&CC, ClubCorp said it plans to spend more than $! million to reinvent the club by bringing “stylish and new dining and social features to the clubhouse and patio, plus improvements to the golf course and aquatics center.”
Located in Oakland County, Mich., in the greater Detroit area, Oakhurst G&CC features an 18-hole Arthur Hills-designed golf course, a three-level, 42,000-sq. ft. clubhouse, an Olympic-size pool, and six tennis courts.
“This is an exciting time for Oakhurst members,” said Pat Callahan, President of the club’s Board. “We have heard many positive comments about ClubCorp and look forward to all of the changes and improvements coming to the club. Members are already talking about taking advantage of ClubCorp’s expansive network of clubs.”
As of March 21, 2017, ClubCorp owned or operated 162 golf and country clubs representing approximately 200 18-hole equivalents, of which nine are managed clubs. Additionally, the company owned or operated 45 business, sports and alumni clubs, of which three were managed clubs.
The announcement of Affeldt’s planned retirement came over ten years after he joined ClubCorp as President and CEO in late 2006. In that time, he has overseen the investment of more than $720 million in ClubCorp properties and helped to lead the company’s 2013 initial public stock offering.
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