TWC Enterprises Limited Announces Second Quarter 2022 Results and Increase to Eligible Cash Dividend

KING CITY, Ontario, Aug. 04, 2022 (GLOBE NEWSWIRE) —

Consolidated Financial Highlights (unaudited)

(in thousands of dollars except per share amounts) Three months ended Six months ended
June 30,
2022
June 30,
2021
June 30,
2022
June 30,
2021
Net earnings 3,594   4,472   2,501   4,927  
Basic and diluted earnings per share 0.15   0.18   0.10   0.20  

Operating Data

  Three months ended Six months ended
  June 30,
2022
June 30,
2021
June 30,
2022
June 30,
2021
Canadian Full Privilege Golf Members     15,583   15,097  
Championship rounds – Canada 444,000   362,000   444,000   362,000  
18-hole equivalent championship golf courses – Canada     37.5   39.5  
18-hole equivalent managed championship golf courses – Canada     2.0   2.0  
Championship rounds – U.S. 55,000   63,000   167,000   156,000  
18-hole equivalent championship golf courses – U.S.     8.0   8.0  

The following is an analysis of net earnings:

  For the three months ended
(thousands of Canadian dollars) June 30, 2022 June 30, 2021
Operating revenue $ 52,736   $ 34,059  
Direct operating expenses (1)   39,569     25,023  
Net operating income (1)   13,167     9,036  
Amortization of membership fees   1,081     1,037  
Depreciation and amortization   (4,458 )   (4,788 )
Interest, net and investment income   422     (384 )
Other items   (3,582 )   (303 )
Income taxes   (3,036 )   (126 )
Net earnings $ 3,594   $ 4,472  
  For the six months ended
(thousands of Canadian dollars) June 30, 2022 June 30, 2021
Operating revenue $ 90,668   $ 48,168  
Direct operating expenses (1)   72,523     41,389  
Net operating income (1)   18,145     6,779  
Amortization of membership fees   2,020     1,995  
Depreciation and amortization   (8,882 )   (9,543 )
Interest, net and investment income   698     (820 )
Other items   (6,152 )   5,337  
Income taxes   (3,328 )   1,179  
Net earnings $ 2,501   $ 4,927  

The following is a breakdown of net operating income (loss) by segment:

  For the three months ended
(thousands of Canadian dollars) June 30, 2022 June 30, 2021
Net operating income (loss) by segment    
Canadian golf club operations $ 12,675   $ 9,065  
US golf club operations (2022 – US $421,000; 2021 – US $585,000)   529     723  
Corporate and other   (37 )   (752 )
Net operating income (1) $ 13,167   $ 9,036  
  For the six months ended
(thousands of Canadian dollars) June 30, 2022 June 30, 2021
Net operating income (loss) by segment    
Canadian golf club operations $ 16,583   $ 6,178  
US golf club operations (2022 – US $2,857,000; 2021 – US $1,716,000)   3,613     2,156  
Corporate and other   (2,051 )   (1,555 )
Net operating income (1) $ 18,145   $ 6,779  

Operating revenue is calculated as follows:

  For the three months ended
(thousands of Canadian dollars) June 30, 2022 June 30, 2021  
Annual dues $ 17,286   $ 13,992  
Golf   13,842     12,299  
Corporate events   2,573     426  
Food and beverage   10,382     3,577  
Merchandise   4,301     2,945  
Real estate   3,037      
Rooms and other   1,315     820  
Operating Revenue $ 52,736   $ 34,059  
  For the six months ended
(thousands of Canadian dollars)   June 30, 2022     June 30, 2021  
Annual dues $ 34,088   $ 21,934  
Golf    19,680     16,489  
Corporate events    2,597     497  
Food and beverage    11,325     4,150  
Merchandise    5,521     4,008  
Real estate    15,811      
Rooms and other   1,646     1,090  
Operating revenue $ 90,668   $ 48,168  

Direct operating expenses are calculated as follows:

  For the three months ended
(thousands of Canadian dollars)  June 30, 2022 June 30, 2021
Operating cost of sales  $ 5,974   $ 3,350  
Real estate cost of sales    2,370      
Labour and employee benefits    18,822     11,568  
Utilities    1,966     1,716  
Selling, general and administrative expenses    1,460     1,312  
Property taxes    695     724  
Repairs and maintenance    1,556     1,253  
Insurance    903     802  
Turf operating expenses    2,108     1,883  
Fuel and oil    621     335  
Other operating expenses    3,094     2,080  
Direct Operating Expenses (1)  $ 39,569   $ 25,023  
  For the six months ended
(thousands of Canadian dollars) June 30, 2022 June 30, 2021
Operating cost of sales $ 7,302   $ 4,303  
Real estate cost of sales   16,394      
Labour and employee benefits   27,498     19,392  
Utilities   3,640     3,171  
Selling, general and administrative expenses   2,884     2,402  
Property taxes   2,335     2,652  
Repairs and maintenance   1,781     1,602  
Insurance   2,626     1,974  
Turf operating expenses   2,358     1,980  
Fuel and oil   735     418  
Other operating expenses   4,970     3,495  
Direct Operating Expenses (1) $ 72,523   $ 41,389  

(1) Please see Non-IFRS Measures

Second Quarter 2022 Consolidated Operating Highlights

As required by IFRS, ClubLink recognizes its annual dues revenue on a straight-line basis throughout the year based on when its properties are allowed to open and services are provided. As a result of COVID-19 lockdowns in 2021, annual dues revenue was not recognized during certain periods. There were 56 days in the second quarter of 2021 that ClubLink was allowed to operate in Ontario. There have been no COVID-19 lockdowns to date in 2022. Canadian annual dues revenue increased 24.7% to $15,649,000 for the three month period ended June 30, 2022 from $12,547,000 in 2021 due to this policy and the increase in members. This deferral in 2021 was recognized into revenue throughout the remainder of the year on a straight-line basis.

Operating revenue increased 54.8% to $52,736,000 for the three month period ended June 30, 2022 from $34,059,000 in 2021 due to closures in 2021 as a result of COVID-19 lockdowns and less COVID-19 operating restrictions in 2022, allowing the Company to operate on a more normal pace.

Direct operating expenses increased 58.1% to $39,569,000 for the three month period ended June 30, 2022 from $25,023,000 in 2021 due to the fact that certain activities were reduced in 2021 due to lockdowns and restrictions. High inflation is also impacting most expense categories.

Net operating income for the Canadian golf club operations segment increased to $12,675,000 for the three month period ended June 30, 2022 from $9,065,000 in 2021 due to the change in annual dues revenue described above.

Net operating income for the US golf club operations decreased to US$421,000 for the three month period ended June 30, 2022 from US$585,000 in 2021 due to decreased rounds.

Interest, net and investment income increased to income of $422,000 for the three month period ended June 30, 2022 from an expense of $384,000 in 2021 due to a decrease in borrowings and an increase in distributions from the Company’s investment in Automotive Properties REIT.

Other items consist of the following income (loss) items:

  For the three months ended
  June 30, 2022 June 30, 2021
Unrealized foreign exchange gain (loss) $ 481   $ (432 )
Unrealized gain (loss) on investment in marketable securities   (8,366 )   6,808  
Gain on real estate fund investments   4,370      
Insurance proceeds       2,603  
Equity income (loss) from investments in joint ventures   (62 )   404  
Glen Abbey redevelopment charge       (9,500 )
Other   (5 )   (186 )
Other items $ (3,582 ) $ (303 )

The exchange rate used for translating US denominated assets has changed from 1.2496 at March 31, 2022 to 1.2886 at June 30, 2022. This has resulted in a foreign exchange gain of $481,000 for the three month period ended June 30, 2022 on the translation of the Company’s US denominated financial instruments.

Net earnings decreased to $3,594,000 for the three month period ended June 30, 2022 from $4,472,000 in 2021 due to an unrealized loss on the Company’s investment in Automotive Properties REIT. Basic and diluted earnings per share decreased to 15 cents per share in 2022, compared to basic and diluted earnings per share of 18 cents in 2021.

Non-IFRS Measures

TWC uses non-IFRS measures as a benchmark measurement of our own operating results and as a benchmark relative to our competitors. We consider these non-IFRS measures to be a meaningful supplement to net earnings. We also believe these non-IFRS measures are commonly used by securities analysts, investors and other interested parties to evaluate our financial performance. These measures, which included direct operating expenses and net operating income do not have standardized meaning under IFRS. While these non-IFRS measures have been disclosed herein to permit a more complete comparative analysis of the Company’s operating performance and debt servicing ability relative to other companies, readers are cautioned that these non-IFRS measures as reported by TWC may not be comparable in all instances to non-IFRS measures as reported by other companies.

The glossary of financial terms is as follows:

Direct operating expenses = expenses that are directly attributable to company’s business units and are used by management in the assessment of their performance. These exclude expenses which are attributable to major corporate decisions such as impairment.

Net operating income = operating revenue – direct operating expenses

Net operating income is an important metric used by management in evaluating the Company’s operating performance as it represents the revenue and expense items that can be directly attributable to the specific business unit’s ongoing operations. It is not a measure of financial performance under IFRS and should not be considered as an alternative to measures of performance under IFRS. The most directly comparable measure specified under IFRS is net earnings.

Eligible Dividend

Today, TWC Enterprises Limited announced an eligible cash dividend of 5 cents per common share to be paid on September 15, 2022 to shareholders of record as at August 31, 2022. This is an increase from 2 cents per common share.

Corporate Profile

TWC is engaged in golf club operations under the trademark, “ClubLink One Membership More Golf.” TWC is Canada’s largest owner, operator and manager of golf clubs with 47.5 18-hole equivalent championship and 2.5 18-hole equivalent academy courses (including two managed properties) at 36 locations in Ontario, Quebec and Florida.

For further information please contact:

Andrew Tamlin
Chief Financial Officer
15675 Dufferin Street
King City, Ontario L7B 1K5
Tel: 905-841-5372 Fax: 905-841-8488
[email protected]

Management’s discussion and analysis, financial statements and other disclosure information relating to the Company is available through SEDAR and at www.sedar.com and on the Company website at www.twcenterprises.ca


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