Consolidated Financial Highlights
(unaudited)
(in thousands of dollars except per share
amounts) |
Three months ended |
Nine months ended |
September 30, 2020 |
September 30, 2019 |
September 30, 2020 |
September 30, 2019 |
Net earnings (loss) |
22,427 |
7,322 |
(7,388 |
) |
45 |
Basic and diluted earnings (loss) per share |
0.87 |
0.27 |
(0.28 |
) |
0.00 |
Operating Data
|
Three months ended |
Nine months ended |
|
September 30, 2020 |
September 30, 2019 |
September 30, 2020 |
September 30, 2019 |
Canadian Full Privilege Golf Members |
|
|
14,515 |
14,755 |
Championship rounds – Canada |
689,000 |
607,000 |
991,000 |
954,000 |
18-hole equivalent championship golf courses – Canada |
|
|
39.5 |
41.5 |
18-hole equivalent managed championship golf courses – Canada |
|
|
1.0 |
1.0 |
Championship rounds – U.S. |
43,000 |
43,000 |
191,000 |
254,000 |
18-hole equivalent championship golf courses – U.S. |
|
|
8.0 |
11.0 |
The following is a breakdown of net operating income (loss) by
segment:
|
|
For the three months
ended |
(thousands of Canadian dollars) |
|
September 30,
2020 |
September 30,
2019 |
|
|
|
|
Net
operating income (loss) by segment |
|
|
|
Canadian golf club operations |
|
$ |
32,193 |
|
$ |
17,346 |
|
US golf club operations |
|
|
|
(2020 - US loss $336,000; 2019 - US loss $930,000) |
|
(445 |
) |
|
(1,231 |
) |
Corporate operations |
|
(758 |
) |
|
(939 |
) |
Net operating income (1) |
|
$ |
30,990 |
|
$ |
15,176 |
|
|
|
|
|
|
|
For the nine months
ended |
(thousands of Canadian dollars) |
|
September 30,
2020 |
September 30,
2019 |
|
|
|
|
Net
operating income (loss) by segment |
|
|
|
Canadian golf club operations |
|
$ |
35,140 |
|
$ |
25,668 |
|
US golf club operations |
|
|
|
(2020 - US $207,000; 2019 - US $828,000) |
|
263 |
|
|
1,106 |
|
Corporate operations |
|
(2,260 |
) |
|
(2,673 |
) |
Net operating income (1) |
|
$ |
33,143 |
|
$ |
24,101 |
|
|
|
|
|
The following is an analysis of net earnings (loss):
|
|
For the three months
ended |
(thousands of Canadian dollars) |
|
September 30,
2020 |
September 30,
2019 |
|
|
|
|
Operating revenue |
|
$ |
55,293 |
|
$ |
65,260 |
|
Direct operating expenses (1) |
|
|
24,303 |
|
|
50,084 |
|
Net
operating income (1) |
|
|
30,990 |
|
|
15,176 |
|
Amortization
of membership fees |
|
|
1,307 |
|
|
1,480 |
|
Depreciation
and amortization |
|
|
(4,718 |
) |
|
(4,993 |
) |
Interest,
net and investment income |
|
|
(1,046 |
) |
|
(1,317 |
) |
Other
items |
|
|
3,119 |
|
|
357 |
|
Income taxes |
|
|
(7,225 |
) |
|
(3,381 |
) |
Net earnings |
|
$ |
22,427 |
|
$ |
7,322 |
|
|
|
|
|
|
|
|
|
|
|
For the nine months
ended |
(thousands of Canadian dollars) |
|
September 30,
2020 |
September 30,
2019 |
|
|
|
|
Operating revenue |
|
$ |
97,059 |
|
$ |
134,496 |
|
Direct operating expenses (1) |
|
|
63,916 |
|
|
110,395 |
|
Net
operating income (1) |
|
|
33,143 |
|
|
24,101 |
|
Amortization
of membership fees |
|
|
3,552 |
|
|
4,033 |
|
Depreciation
and amortization |
|
|
(14,561 |
) |
|
(15,177 |
) |
Interest,
net and investment income |
|
|
(2,848 |
) |
|
(4,126 |
) |
Other
items |
|
|
(24,744 |
) |
|
(7,594 |
) |
Income taxes |
|
|
(1,930 |
) |
|
(1,192 |
) |
Net earnings (loss) |
|
$ |
(7,388 |
) |
$ |
45 |
|
|
|
|
|
(1) Please see Non-IFRS Measures
Third Quarter 2020 Consolidated Operating
Highlights
The outbreak of the novel strain of coronavirus,
specifically identified as “COVID-19”, has resulted in governments
worldwide enacting emergency measures to contain the spread of the
virus which have led to prolonged voluntary or mandatory building
closures, business closures, government restrictions on travel and
gatherings, quarantines, self-isolation and physical distancing. As
a result, the Company closed all golf clubs in mid-March in order
to adhere to these restrictions that involve social gatherings and
ensure the health and wellbeing of members and staff alike. This
has and will continue to impact revenue streams such as corporate
events, banquets, weddings and food and beverage. As government
closure orders were lifted, Ontario courses were re-opened on May
16th, 2020 and Quebec courses were re-opened on May 20th, 2020, but
social distancing requirements continue to prohibit certain revenue
streams such as corporate events, banquets, weddings, meetings and
other large gatherings. All Florida courses were re-opened by May
2nd. The Company will continue to adhere to guidance provided by
governments and regulatory authorities.
As required by IFRS, ClubLink recognizes its
annual dues revenue on a straight-line basis throughout the year
based on when its properties are open, and services are provided.
As a result of COVID-19, annual dues revenue was not recognized
during the Spring course closures. Canadian annual dues revenue
increased 14.6% to $14,254,000 for the three-month period ended
September 30, 2020 from $12,440,000 in 2019 due to this
methodology. This methodology shifts annual dues revenue from the
second quarter to third and fourth quarters.
Due to overwhelming demand for golf amongst the
Company’s members and customers, golf revenue increased 39.0% to
$19,609,000 for the three-month period ended September 30, 2020
from $14,108,000 in 2019 for the Canadian golf operations.
Consolidated operating revenue decreased 15.3%
to $55,293,000 for the three-month period ended September 30, 2020
from $65,260,000 in 2019 due to the decline in revenue from the
impact of COVID-19. This decline is due to streams of revenue that
have been lost due to regulations surrounding COVID-19. Group
business has been minimal, including corporate events, weddings,
banquets or resort stays, as social distancing measures remain in
place.
Direct operating expenses decreased 51.5% to
$24,303,000 for the three-month period ended September 30, 2020
from $50,084,000 in 2019 due to the fact that certain revenue
streams were reduced which all had costs associated with them.
Certain cost saving measures have been enacted in order to help
offset the revenue declines. Labour and employee benefits for the
Canadian golf operations have decreased 73.3% to $6,370,000 for the
three months ended September 30, 2020 from $23,846,000 in 2019 as a
result of these changes and the recording of the Canada Emergency
Wage Subsidy.
Net operating income for the Canadian golf club
operations segment increased to $32,193,000 for the three-month
period ended September 30, 2020 from income of $17,346,000 in 2019
despite the impact of COVID-19 on streams of revenue relating to
group business.
Interest, net and investment income decreased
20.6% to an expense of $1,046,000 for the three-month period ended
September 30, 2020 from $1,317,000 in 2019 due to a decrease in
borrowings,
Other items consist of the following income
(loss) items:
|
|
For the three months
ended |
(thousands of Canadian dollars) |
|
September 30,
2020 |
September 30, 2019 |
|
|
|
|
Foreign exchange gain (loss) |
|
$ |
(1,556 |
) |
$ |
1,027 |
|
Gain on
property, plant and equipment |
|
|
891 |
|
|
167 |
|
Unrealized gain on investment in Automotive Properties REIT |
|
3,909 |
|
|
- |
|
Unrealized loss on common shares in Carnival plc |
|
- |
|
|
(943 |
) |
Equity income from investments in joint ventures |
|
43 |
|
|
- |
|
Insurance
proceeds |
|
|
- |
|
|
394 |
|
Other |
|
|
(168 |
) |
|
(288 |
) |
|
|
|
|
Other items |
|
$ |
3,119 |
|
$ |
357 |
|
|
|
|
|
The exchange rate used for translating US denominated assets has
changed from 1.3628 at June 30, 2020 to 1.3339 at September 30,
2020. This has resulted in a foreign exchange loss of $1,556,000
for the three-month period ended September 30, 2020 on the
translation of the Company’s US denominated financial
instruments.
On July 13, 2020, ClubLink sold Club de Golf Val
des Lacs for proceeds of $1,750,000, including a vendor take-back
mortgage of $300,000. Net proceeds totaled $1,684,000 and ClubLink
recorded a gain of $839,000 on the sale.
Net earnings is $22,427,000 for the three-month
period ended September 30, 2020 from $7,322,000 in 2019 due to the
reduction in direct operating expenses. Basic and diluted earnings
per share increased to 87 cents per share in 2020, compared to 27
cents in 2019.
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 2 cents per common share to be paid on
December 15, 2020 to shareholders of record as at November 30,
2020.
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 48.5 18-hole
equivalent championship and 3.5 18-hole equivalent academy courses
(including one managed property) at 40 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 atamlin@clublink.ca
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
TWC Enterprises (TSX:TWC)
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