ClubLink Corporation
TSX : LNK

ClubLink Corporation

November 07, 2006 12:29 ET

ClubLink Announces Third Quarter 2006 Results

KING CITY, ONTARIO--(CCNMatthews - Nov. 7, 2006) - For the three months ended October 1, 2006, ClubLink's (TSX:LNK) operating revenue increased 5.1% to $59,384,000 from $56,488,000 in 2005, and net operating income increased 8.9% to $20,496,000 from $18,815,000 in 2005. Net membership fee income decreased to $2,502,000 from $2,515,000 in 2005. Net income increased to $8,378,000 from $7,184,000 in 2005. Earnings per share for the three months ended October 1, 2006 increased to $0.49 from $0.42 in 2005. Cash flow from operations per share was $1.07 compared to $1.02 in 2005.



For the 3 Months Ended For the 9 Months Ended
October 1, October 2, October 1, October 2,
Financial Highlights 2006 2005 2006 2005

Operations
Operating revenue ($000) 59,384 56,488 115,747 108,079
Net operating
income ($000)(1) 20,496 18,815 29,719 27,268
Operating margin (%)(1) 34.5% 33.3% 25.7% 25.2%

Net membership fee
income($000)(1) 2,502 2,515 7,074 5,723

Earnings before interest,
taxes, amortization and
other ($000)(1) 22,998 21,330 36,793 32,991

Net income ($000) 8,378 7,184 2,799 2,022

Cash flow from
operations ($000)(1) 18,282 17,484 26,271 24,022

Membership Data
Sales and transfer fees ($000) 3,811 19,180 15,828 30,089
Sales (Members) 198 1,668 850 2,346
Resignations and
terminations ($000) 379 1,360 2,189 3,048
Resignations and
terminations (Members) 40 239 472 498
Cash collected, net of
origination costs ($000) 7,235 7,631 16,062 14,450
Deferred membership fees,
net at period end ($000) 48,426 39,391
Golf members at period end 14,478 13,737

Per Common Share Data ($)
Basic and diluted earnings 0.49 0.42 0.16 0.12
Basic and diluted cash flow
from operations(1) 1.07 1.02 1.54 1.40
Cash dividends 0.05 0.04 0.15 0.12
Net book value at end of
period(1) 10.12 10.40

Common Share Data (000)
Shares outstanding at end
of period 17,004 17,093
Weighted average shares
outstanding 17,073 17,136


(1) Net operating income, operating margin, net membership fee income, earnings before interest, taxes, amortization and other, cash flow from operations, basic and diluted cash flow from operations per share and net book value per share are not recognized measures under Canadian generally accepted accounting principles (GAAP). Management believes these measures are useful supplemental information. Investors should be cautioned, however, that these measures should not be construed as an alternative to net income (loss) determined in accordance with GAAP as an indicator of the Company's performance or to cash flows from operating, investing and financing activities, as a measure of liquidity and cash flows. ClubLink's method of calculating these measures is consistent from year to year, but may be different than those used by other companies.

Third Quarter 2006 Operating Highlights

Championship golf rounds increased 3.0% to 459,718 from 446,386 in the third quarter of 2005. The number of rounds per 18-hole golf course decreased 2.7% to 12,770 from 13,129 in 2005.

Operating revenue increased 5.1% to $59,384,000 from $56,488,000 in the third quarter of 2005. This increase is primarily the result of a 21.2% increase in annual dues revenue from the 741 additional members that have joined since October 2, 2005.

Operating expenses and costs of goods sold increased 3.6% to $35,842,000 from $34,611,000 in 2005. This increase is primarily due to the addition of The Country Club in 2006.

Sales and marketing costs decreased 9.8% to $716,000 from $794,000 in 2005 due to cost savings from a reduction in sales and marketing programs. These costs were 1.2% of operating revenue compared to 1.4% in 2005.

General and administrative expenses and provincial capital taxes increased 2.7% to $2,330,000 from $2,268,000 in 2005 and were 3.9% of operating revenue in 2006 compared to 4.0% in 2005.

Net operating income increased 8.9% to $20,496,000 from $18,815,000 in 2005.

Total Golf Members increased 5.4% to 14,478 on October 1, 2006 from 13,737 on October 2, 2005. New membership sales during the third quarter of 2006 decreased to $2,655,000 (198 members) from $15,198,000 (1,668 members) during the third quarter of 2005. This decrease is due to the successful membership launches of The Country Club and Wyndance Golf Clubs during the third quarter of 2005. The average price of a new membership was $13,409 during the third quarter of 2006 compared to $9,112 during the third quarter in 2005. Transfer fees during the third quarter of 2006 decreased to $1,156,000 from $3,982,000 in 2005 due to a reduction in the transfers that were associated with the membership launches in 2005. Resignations and terminations decreased to $379,000 (40 members) from $1,360,000 (239 members) in 2005. This decrease is due to terminations related to non payment of annual dues which occurred in the second quarter of this year compared to third quarter in 2005 as a consequence of changes in the Company's procedures in this regard. Membership fee instalments received in cash decreased to $7,663,000 from $8,380,000 in 2005.

Direct costs of originating membership fees decreased 42.9% to $428,000 from $749,000 in 2005, primarily due to fewer advertising campaigns during 2006.

Net membership fee income decreased to $2,502,000 from $2,515,000 in 2005.

Earnings before interest, amortization, taxes and other increased 7.8% to $22,998,000 from $21,330,000 in 2005.

Net operating income from Golf Club operations increased 6.9% to $21,410,000 from $20,025,000 in 2005 due to the increased annual dues revenue from the 741 additional members that have joined since October 2, 2005.

Net operating income from Resort operations increased 10.4% to $2,875,000 from $2,605,000 in 2005.

Net income increased 16.6% to $8,378,000 from $7,184,000 in 2005.

Earnings per share increased 16.7% to 49 cents from 42 cents in 2005.

Cash flow from operations per share increased 4.9% to $1.07 from $1.02 in 2005.

Cash dividends per share increased 25.0% to five cents from four cents in 2005.

Dividend

The Board of Directors has declared a dividend of 5 cents per common share payable December 15, 2006 to shareholders of record on November 30, 2006.

Income Tax Reassessments

On October 18, 2006, ClubLink Corporation announced that, pursuant to minutes of settlement, the Minister of National Revenue has agreed to accept the basis on which ClubLink accounted for membership fees in its tax returns for the taxation years 1994 to 2001. The Canada Revenue Agency and Ontario's Ministry of Finance had previously issued notices of reassessment in respect of these tax returns.

As a consequence of the settlement, management expects to receive refunds of amounts previously paid to the Canada Revenue Agency and Ontario's Ministry of Finance aggregating to $7.0 million together with interest prior to the end of March, 2007. Interest earned on these settlements will be recognized when it is determinable.

Normal Course Issuer Bids

On January 27, 2006, ClubLink announced a normal course issuer bid, expiring on January 30, 2007 to purchase up to 851,700 common shares of ClubLink. As of November 7, 2006, ClubLink has repurchased 290,400 common shares for cancellation under this bid for an aggregate purchase price of $2,895,000 or $9.97 per share, excluding commissions. As of November 7, 2006, the number of common shares issued and outstanding is 16,925,407.

On October 6, 2005, ClubLink announced a normal course issuer bid, which expired on October 10, 2006 to purchase up to $7,138,000 principal amount of its 6% convertible unsecured subordinated debentures. As part of this bid, ClubLink has purchased for cancellation $92,000 principal amount of its debentures for an aggregate purchase price of $91,080 excluding commissions. As of November 7, 2006, the principal amount of convertible debentures outstanding is $10,092,000.

ClubLink is Canada's largest owner, operator and developer of member golf clubs.


Contact Information

  • ClubLink Corporation
    Mr. Robert Visentin
    Chief Financial Officer
    (905) 841-3730
    Email: rvisentin@clublink.ca
    or
    ClubLink Corporation
    Mr. Robert Poile
    President & CEO
    Email: rpoile@clublink.ca
    or
    ClubLink Corporation
    15675 Dufferin Street
    King City, Ontario L7B 1K5
    Website: www.clublink.ca