Adjusted EBITDA and Adjusted EPS Exceed Company�s
Earnings Guidance and Consensus Analyst Estimate
MADISON, Wis., February 20, 2008�Great Wolf Resorts, Inc. (NASDAQ: WOLF),
North America�s leading family of indoor waterpark resorts, today reported
results for the fourth quarter ended December 31, 2007.
Highlights
-
Achieved Adjusted EBITDA of $11.5 million and Adjusted net loss per share
of $(0.05) for the 2007 fourth quarter, resulting in full year 2007 amounts
of $51.1 million of Adjusted EBITDA and $0.03 of Adjusted EPS, exceeding
both consensus analyst estimates and the top end of the company�s earnings
guidance for the quarter and the full year.
-
Generated seventh consecutive quarter of same store RevPAR improvement,
with Great Wolf Lodge® brand same store Total RevPAR up 6.6 percent
compared to the same period last year, and have seen an increase in same
store rooms sold / booked in the first quarter of 2008 compared to the
first quarter of 2007.
-
Opened the 402-suite Great Wolf Lodge resort in Grapevine, Texas in December,
featuring the state�s largest indoor waterpark. Also broke ground
on construction of a 203-suite and 20,000 square-foot meeting space expansion
to the newly-opened resort. Achieved 25,000 sold and future booked
rooms on the new resort to date.
-
Broke ground on construction of a 402-suite Great Wolf Lodge resort in
Concord, N.C. in October 2007.
-
Completed a significant expansion of the Traverse City, Mich., Great Wolf
Lodge in the 2007 fourth quarter, adding 9,000 square feet of meeting space.
-
Capitalized on increased emphasis on group sales at resorts, resulting
in a 35 percent year-over-year increase in same store total number of group
rooms sold / booked through February 18, 2008.
The company reported a 2007 fourth quarter net loss of $(7.7) million,
or $(0.25) per diluted share, compared to a net loss of $(49.0) million,
or $(1.61) per diluted share in last year�s fourth quarter. Fourth
quarter 2006 operating results included the impact of a pre-tax, $51.0
million goodwill impairment charge and the related effect on income taxes.
Fourth Quarter Operating Results
�Our portfolio of resorts continued to perform well, providing operating
results that exceeded both the top end of our earnings guidance and consensus
analyst estimates for the fourth quarter,� said John Emery, chief executive
officer. �We continued our seven-quarter string of strong year-over-year
same store revenue per available room (RevPAR) growth. We believe
this is due in large part to the impact of our targeted marketing and our
continued focus on great guest service, a feature at the core of our business.
Our fourth quarter is heavily dependent upon holiday activities, and our
business appears to have held up better than certain other companies which
are dependent on discretionary consumer spending. We believe this
clearly demonstrates the advantage of our business model: providing
a high-quality, drive-to, destination family resort experience.�
The company reported fourth quarter Adjusted EBITDA of $11.5 million
and Adjusted EPS of $(0.05), resulting in full year 2007 amounts of $51.1
million of Adjusted EBITDA and $0.03 of Adjusted EPS. The company�s
2007 fourth quarter Adjusted EBITDA increased 40 percent over the 2006
period.
The company�s newest resort, located in Grapevine, Texas, opened in
December 2007. �We are pleased with the early consumer demand for
our new resort in Grapevine,� Emery commented. �The initial booking
patterns for the resort have been strong, with Grapevine having the second
highest total bookings among our resorts in January. To date, we
have approximately 25,000 rooms sold or on the books for Grapevine since
its mid-December opening, a pace significantly ahead of the totals for
our Williamsburg and Mason resorts for the same time periods following
their respective openings.
�Our Grapevine resort reflects the continuing evolution of our brand
to encompass an increasingly wide array of activities designed to entertain
all members of the family,� Emery added. The Grapevine resort includes
the company�s newest amenity, gr8_space�, a 1,200 square-foot interactive
family tech center. gr8_space features multiple computer stations
offering family-friendly Internet access, docking stations for digital
music players, as well as multiple gaming stations. Additionally,
gr8_space features family events, like rock star karaoke and family challenge
games. �We are excited to add this gr8_space concept in Grapevine
and we expect to incorporate it into our future resorts as well,� Emery
said. �We think the presentation of technology in a family-friendly
atmosphere further increases the attractiveness of our resort to �tweens�
who visit our resort.� The company is evaluating adding the gr8_space
amenity to existing resorts, with plans to add it to its Williamsburg resort
in 2008.
�We continue to look for ways to enhance our existing properties,� Emery
noted. �For example, in the 2007 fourth quarter, we completed the
last phase of enhancements to our Traverse City resort. This included
the completion of a 9,000 square-foot, full-service conference facility,
capable of handling groups ranging from 10 - 270. We believe this
will generate more mid-week group business, as well as support reunions
and other large family and social get-togethers.�
The company also noted its continuing emphasis on growing group business
throughout its resorts as a complement to its core leisure business.
�Group sales are an attractive opportunity for us to build mid-week occupancy
rates,� Emery commented. �Through today, our system-wide group rooms
sold or booked are running more than 13,000 rooms, or 35 percent, ahead
of last year, with the largest increases coming from Mason (6,500 rooms,
up 164 percent), Traverse City (2,300 rooms, up 48 percent) and Sheboygan
(1,700 rooms, up 20 percent).�
The company added the interactive, live-action, fantasy adventure game,
MagiQuest�, to its Mason resort in the fourth quarter, bringing to six
the number of resorts that offer the popular attraction. Earlier
in 2007, the company made an investment in Creative Kingdoms, LLC, developers
of MagiQuest. �Throughout the past year, we have been constantly
refining and upgrading our product offering within our resort portfolio,�
Emery said. �As we develop our new resorts, we will look to incorporate
our various enhancements � such as the gr8_space family tech center, Scooops
® Kid Spa, minigolf, increased meeting space, larger food and beverage
and retail outlets, and MagiQuest � to provide an increasingly robust experience
for all of our guests.�
The company noted that the operating environment at its upper Midwest
properties continues to be impacted by ongoing difficulties of the U.S.
automobile industry companies. �We expect a few of our markets, particularly
those for our Sandusky and Traverse City locations, will continue to feel
the effects of the auto industry problems and remain difficult for at least
the next few quarters,� Emery noted.
Fourth quarter 2007 operating statistics for the company�s portfolio
of Great Wolf Lodge resorts were as follows:
Same store comparison includes only Great Wolf Lodge
resorts that were open for all of both Q4 2007 and Q4 2006.
Construction Update
The company hosted the grand opening of its 402-suite Great Wolf Lodge
in Grapevine, Texas on January 10, 2008. In November 2007, the company
broke ground on a 203-suite addition and a 20,000 square-foot meeting facility
at the Grapevine resort. �Much of the resort�s initial infrastructure
was designed to support 600+ suites because of the significant size of
the Dallas/Ft. Worth metropolitan market,� Emery commented. �Based upon
our forecasts of market demand, we accelerated the construction of the
planned expansion.� The addition is a connecting wing to the existing
resort structure and is being built without disruption to current guests.
�We expect the first phase of the expansion to open in December 2008,�
Emery added.
The 398-suite Great Wolf Lodge in Grand Mound, Wash., remains on schedule
to open in March 2008. That resort is owned by a joint venture between
a subsidiary of Great Wolf Resorts and the Confederated Tribes of the Chehalis
Reservation. The resort is located adjacent to Interstate 5, the
major highway link between Portland and Seattle/Tacoma. �This is
the first major indoor waterpark resort in that region,� Emery said.
�Pre-opening interest is strong, especially since we expect to open just
before the region�s spring break period.�
In the fourth quarter, the company broke ground on the 402-suite Great
Wolf Lodge resort in Concord, N.C., near Charlotte, off of Speedway Boulevard
and Interstate 85 and near the Lowes Motor Speedway and Concord Mills Mall.
The resort will include a 98,000 square-foot indoor entertainment area,
featuring what will be the state�s largest indoor waterpark; 20,000 square
feet of meeting space; multiple food outlets; a confectionary café;
a spa and Scooops Kid Spa; a children�s craft and activity room; a game
arcade; MagiQuest; an 18-hole outdoor miniature golf course; gr8_space;
a fitness room; a gift emporium; and an animated clock tower. The
property is expected to open in Spring 2009. �The nearby Lowes Motor
Speedway recently announced it will invest $200 million to expand its facilities,�
Emery said. �We believe this will further enhance the destination
aspects of the area and create more year-round events which will attract
more leisure travelers to the area and increase demand for our resort.�
The company noted that the pace of construction cost increases on its
projects that commenced in 2007 appears to have moderated somewhat.
�As we have noted in the past and similar to other companies involved in
the construction of large commercial projects, we have seen steeply increased
construction costs over the past two-three years,� Emery noted. �We
are focused on and committed to controlling and mitigating these construction
cost increases in our construction and development projects. Our
current projection of construction costs for our projects that commenced
in the fourth quarter � our Concord resort and Grapevine expansion -- are
still in line with our initial estimates.
�Even in the recent rising construction cost environment, our portfolio
returns continued to be healthy� Emery added. �For our Great Wolf
Lodge brand consolidated resorts open more than 18 months as of December
31, 2007, we achieved an unlevered return (calculated as Adjusted EBITDA
divided by the average net book value of property and equipment) of more
than 14 percent for 2007. For 2008, we project a portfolio unlevered
return on those same resorts of approximately 16 percent, assuming the
mid-point of our full-year earnings guidance. We are targeting for
our newer assets to eventually achieve reasonably similar returns following
their ramp-up.�
Development Update
�We continue to work on the development of several projects which are
currently under letters of intent,� Emery said. These include: a
Great Wolf Lodge resort at the Mall of America®, located in Bloomington,
Minn.; a joint venture with the Mashantucket Pequot Tribal Nation to develop
a Great Wolf Lodge resort of up to 700 suites on tribal-owned land near
its southeast Connecticut reservation and Foxwoods Resort Casino; and a
Great Wolf Lodge resort on the shores of Lake Lanier, near Atlanta, Ga.
�All three of these projects, along with others in our development pipeline,
are in the early planning stages. We continue to be focused on high-quality
opportunities like these, although it is difficult to predict the precise
timing or approval of these potential projects as they move through the
development process and into the construction phase,� he added.
The company�s domestic development is concentrated primarily on the
East and West Coasts in markets near large population centers. International
development opportunities are currently focused principally on Canada,
Europe and Asia. The company�s preferred model for international
development is for third-party ownership of international projects, with
the company licensing its brand concept to third-party owners, as well
as possibly management and other consulting assignments.
Emery noted that, at any one time, the company has identified approximately
two dozen potential development sites and is in the due diligence process
on a number of them. �Our resorts are large and complex, so we are
working with a number of different governmental agencies in the entitlement
process, which takes time. We continue to feel that unit growth is
the best way to expand our brand presence more rapidly. But we will
only pursue opportunities where we feel that both marketplace demand is
sufficient and we can reasonably expect to obtain capital funding for the
debt and equity portions of the project.
�We believe we are well-positioned despite the recent constraints in
the capital markets,� he continued. �The fallout from the subprime
loan crisis has constricted borrowing opportunities for smaller companies
and may benefit us by limiting the entry of competition. This impact
on potential new competition allows us to continue to build our brand recognition,
which we believe may provide us a long-term competitive advantage by helping
us create national awareness for our resorts.�
Capital Structure and Liquidity
In February 2008, the company obtained a $55 million mortgage loan secured
by its Great Wolf Lodge resort in Williamsburg. The loan has a one-year
term and bears interest at a floating rate of LIBOR plus 300 basis points,
with a minimum rate of 6.50 percent per annum.
�We closed on this loan to add liquidity to our balance sheet,� said
James A. Calder, chief financial officer. �We think closing on a
loan like this in a tough debt market is a positive reflection on our company.
As we have noted previously, our strategy continues to be ensuring that
our liquidity is more than sufficient to achieve our current development
objectives.�
�As we have mentioned before, given the number of development opportunities
we have, we expect to use joint ventures or licensing arrangements for
certain projects,� Emery noted. �We feel that our Grand Mound and
Niagara Falls properties have shown the benefits of incorporating the joint
venture and licensing strategies into our business model. We are
currently in discussions on possible joint venture arrangements for each
of our planned future resorts. We believe joint venture and licensing
strategies provide a good opportunity for us to continue to meet our brand
growth objectives, even in the current constrained capital environment.�
�Our current construction projects are the expansion of our existing
Grapevine resort (first phase expected to open at the end of 2008) and
our new Concord resort (expected to open in Spring 2009),� Calder said.
�Through the Concord resort construction timeline, assuming no other borrowings
from this point other than the expected construction loan for Concord,
our primary sources of capital to fund these projects are a combination
of cash on hand, cash provided by operations and the Concord construction
loan. We expect these potential sources to exceed $200 million through
the completion of the Concord resort. Our expected remaining cash
requirements for these two projects over the same period total approximately
$150 million. With more than $50 million of expected sources of capital
in excess of expected uses, we feel we are well-positioned to execute our
current projects.�
�Additionally, we believe we will have, over the next 12-18 months,
more than $100 million of liquidity through borrowing capacity on our unlevered
or lower-levered assets,� Emery noted. �We believe this potential
additional liquidity source provides us with a comfortable cushion as we
navigate through the choppy current capital market environment.�
�We are currently working with our lead lender to finalize a construction
loan of approximately $90 million for our Concord resort,� Calder noted.
�The lead lender on this loan has historically been the largest construction
lender in the indoor waterpark industry. The Concord construction
loan is the fourth resort financing we have done with this lender.
Their process to complete the financing is moving forward as anticipated
and we expect to close on the loan within the next 60 days.�
At year-end 2007, the company had $18.6 million of unrestricted cash.
More than 83 percent of the company�s long-term debt was effectively fixed
with a weighted average interest rate of 7.1 percent and an average debt
maturity of 9.0 years.
Key Financial Data
As of December 31, 2007, Great Wolf Resorts had:
-
Total cash, cash equivalents and restricted cash of $20.9 million
-
Total secured debt of $315.8 million.
-
Total unsecured debt of $80.6 million.
-
Weighted average cost of total debt of 7.1 percent.
-
Weighted average debt maturity of 9.0 years.
-
Total construction in progress for consolidated resorts and other projects
currently under construction but not yet opened of $19.7 million
Outlook and Guidance
�Our resort portfolio continues to produce year-over-year, same-store
RevPAR growth,� Emery said. �We think our product offering may have
greater recession resistance than other entertainment venues. We
believe our resorts can continue to be a reasonably-priced, convenient
family vacation alternative. The all-in cost for a family vacation
at one of our resorts is substantially lower than flying to a destination
resort with a major entertainment component, and weather is not an issue.�
The company provides the following outlook and earnings guidance for
the 2008 first quarter and full year 2008 (amounts in thousands, except
per share data). The outlook and earnings guidance information is
based on the company�s current outlook of business conditions, including
consumer demand and discretionary spending trends, as of February 20, 2008.
As in the past, the company does not anticipate updating its guidance again
until next quarter�s earnings release. The company may, however,
update any portion of its business outlook at any time as conditions dictate:
(a)For reconciliations of Adjusted EBITDA and Adjusted
net income (loss), see tables accompanying this press release.
Net income (loss), net income (loss) per diluted share, adjusted net
income (loss), and adjusted net income (loss) per diluted share for 2008
are significantly affected by increases in depreciation and amortization
and interest expense, primarily for properties that are still in their
ramp-up stages.
Adjusted EBITDA and Adjusted net income are non-GAAP financial measures
within the meaning of the Securities and Exchange Commission (SEC) regulations.
See the discussion below in the �Non-GAAP Financial Measures� section of
this press release. Reconciliations of Adjusted EBITDA and Adjusted
net income are provided in the tables of this press release.
Great Wolf Resorts will hold a conference call to discuss its 2007 fourth
quarter results today, February 20, at 10 a.m. Eastern Time. Stockholders
and other interested parties may listen to a simultaneous webcast of the
conference call on the Internet by logging onto the company�s Web site,
www.greatwolf.com, or www.streetevents.com, or may call (800) 218-8862,
reference number 11108380. A recording of the call will be available
by telephone until midnight on Wednesday, February 27, 2008, by dialing
(800) 405-2236, reference number 11108380. A replay of the conference
call will be posted on the company�s Web site through March 20, 2008.
Non-GAAP Financial Measures
Included in this press release are certain �non-GAAP financial measures,�
which are measures of the company�s historical or future performance that
are different from measures calculated and presented in accordance with
GAAP, within the meaning of applicable SEC rules, that Great Wolf Resorts
believes are useful to investors. They are as follows: (i) Adjusted
EBITDA and (ii) Adjusted net income (loss). The following discussion
defines these terms and presents the reasons the company believes they
are useful measures of its performance.
Great Wolf Resorts defines Adjusted EBITDA as net income plus (a) interest
expense, net, (b) income taxes, (c) depreciation and amortization, (d)
non-cash employee compensation, (e) costs associated with early extinguishment
of debt or postponement of debt offerings, (f) opening costs of resorts
under development, (g) shareholder litigation expenses, (h) equity in earnings
(loss) of affiliates, (i) loss on disposition of assets, (j) impairment
charges, (k) other unusual or non-recurring items, and (l) minority interests.
The company defines Adjusted net income (loss) as net income without the
effects of (a) non-cash employee compensation, (b) costs associated with
early extinguishment of debt or postponement of debt offerings, (c) opening
costs of resorts under development (including costs incurred by unconsolidated
joint ventures), (d) shareholder litigation expenses, (e) loss on disposition
of assets, (f) impairment charges, (g) other unusual or non-recurring items,
and (h) the effect of non-normalized income tax expense.
Adjusted EBITDA and Adjusted net income (loss) as calculated by the
company are not necessarily comparable to similarly titled measures by
other companies. In addition, Adjusted EBITDA (a) does not represent
net income or cash flows from operations as defined by GAAP, (b) is not
necessarily indicative of cash available to fund the company�s cash flow
needs, and (c) should not be considered as an alternative to net income,
operating income, cash flows from operating activities or the company�s
other financial information as determined under GAAP. Also, Adjusted
net income does not represent net income as defined by GAAP.
Management believes Adjusted EBITDA is useful to an investor in evaluating
the company�s operating performance because a significant portion of its
assets consists of property and equipment that are depreciated over their
remaining useful lives in accordance with GAAP. Because depreciation and
amortization are non-cash items, management believes that presentation
of Adjusted EBITDA is a useful measure of the company�s operating performance.
Also, management believes measures such as Adjusted EBITDA are widely used
in the hospitality and entertainment industries to measure operating performance.
Similarly, management believes Adjusted net income (loss) is a useful
performance measure because certain items included in the calculation of
net income may either mask or exaggerate trends in the company�s ongoing
operating performance. Furthermore, performance measures that include
these types of items may not be indicative of the continuing performance
of the company�s underlying business. Therefore, the company presents
Adjusted EBITDA and Adjusted net income (loss) because they may help investors
to compare Great Wolf Resorts� ongoing performance before the effect of
various items that do not directly affect the company�s ongoing operating
performance.
Great Wolf Resorts, Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Three
Months Months
Ended Ended Year Ended Year Ended
December December December December
31, 2007 31, 2006 31, 2007 31, 2006
---------------------------------------
Revenues:
Rooms
$24,602 $19,272 $112,261 $87,775
Food and beverage
6,968 5,236 29,588
21,930
Other hotel operations
6,094 4,973 27,085
21,207
Management and other fees
1,643 1,938 7,169
5,816
------- ------- ------- -------
39,307 31,419 176,103 136,728
Other revenue from managed
properties
2,625 2,788 11,477
11,920
------- ------- ------- -------
Total revenues
41,932 34,207 187,580 148,648
Operating expenses:
Resort departmental expenses
14,871 11,925 64,016
47,837
Selling, general and
administrative
12,375 9,388 46,757
40,961
Property operating costs
4,314 3,998 20,327
15,823
Opening costs for resorts
under
development
5,514 4,332 10,228
7,394
Debt-related costs
- 336
- 747
Loss on disposition of
property 958
114 1,286 1,066
Depreciation and amortization
9,806 6,919 36,372
25,616
Goodwill impairment
- 50,975
- 50,975
------- ------- ------- -------
47,838 87,987 178,986 190,419
Other expenses from managed
properties
2,625 2,788 11,477
11,920
------- ------- ------- -------
Total operating expenses
50,463 90,775 190,463 202,339
Operating loss
(8,531) (56,568) (2,883) (53,691)
Investment income
(331) -
(667) -
Interest income
(394) (790) (2,758) (3,105)
Interest expense
3,783 1,770 14,887
7,169
------- ------- ------- -------
Loss before minority interests,
equity in loss of unconsolidated
related parties and income taxes
(11,589) (57,548) (14,345) (57,755)
Income tax benefit
(4,695) (8,682) (5,859) (8,764)
Minority interests, net of tax
- (388)
(452) (502)
Equity in loss of unconsolidated
related parties, net of tax
787 515 1,547
761
------- ------- ------- -------
Net loss
$(7,681) $(48,993) $(9,581) $(49,250)
======= ======= ======= =======
Net loss per share:
Basic
$(0.25) $(1.61) $(0.31) $(1.63)
Diluted
$(0.25) $(1.61) $(0.31) $(1.63)
Weighted average common shares
outstanding:
Basic
30,570 30,381 30,533
30,300
Diluted
30,570 30,381 30,533
30,300
Great Wolf Resorts, Inc.
Reconciliations of Non-GAAP Financial
Measures
(in thousands, except per share amounts)
Three Three
Months Months Year
Year
Ended Ended Ended
Ended
December December December December
31, 2007 31, 2006 31, 2007 31, 2006
-------- -------- -------- --------
Net loss
$(7,681) $(48,993) $(9,581) $(49,250)
Adjustments:
Opening costs for
resorts under
development
5,514 4,332 10,228
7,394
Litigation expenses
- 63
- 1,172
Non-cash employee
compensation 3,076
1,168 5,080 3,559
Debt-related costs
- 336
- 747
Loss on disposition
of property 958
114 1,286 1,066
Depreciation and
amortization 9,806
6,919 36,372 25,616
Interest expense,
net
3,389 980 12,129
4,064
Minority interest
expense, net of
tax
- (388) (452)
(502)
Goodwill impairment
- 50,975 -
50,975
Environmental liability
costs 320
833 320
833
Equity in loss of
unconsolidated
related parties,
net of tax 787
515 1,547 761
Income tax benefit
(4,695) (8,682) (5,859) (8,764)
------- ------- ------- -------
Adjusted EBITDA (1)
$11,474 $8,172 $51,070 $37,671
====== ====== ====== ======
Net loss
$(7,681) $(48,993) $(9,581) $(49,250)
Adjustments to net loss:
Opening costs for
resorts under
development
5,514 4,332 10,228
7,394
Litigation expenses
- 63
- 1,172
Non-cash employee
compensation 3,076
1,168 5,080 3,559
Debt-related costs
- 336
- 747
Loss on disposition
of property 958
114 1,286 1,066
Goodwill impairment
- 50,975 -
50,975
Environmental liability
costs 320
833 320
833
Equity in loss of
unconsolidated
related parties
(2)
484 -
1,161 -
Income tax rate
adjustment (3) (4,213) (8,740)
(7,517) (11,857)
------- ------- ------- --------
Adjusted net income (loss) (1)
$(1,542) $88 $977
$4,639
======= ====== ====== ======
Adjusted net income (loss) per
share:
Basic
$(0.05) $0.00 $0.03
$0.15
Diluted
$(0.05) $0.00 $0.03
$0.15
Weighted average shares outstanding:
Basic
30,570 30,381 30,533 30,300
Diluted
30,570 30,430 30,533 30,349
Great
Wolf Resorts, Inc.
Operating Statistics - Great Wolf
Lodge Resorts
Three Months Ended Year Ended
------------------ --------------
December 31, December 31,
2007 2006 2007
2006
------ ------ ------ ------
All Great Wolf Lodge Properties
Occupancy
51.8% 52.4% 62.2%
64.0%
ADR
$245.76 $236.13 $248.66 $241.70
RevPAR
$127.36 $123.74 $154.60 $154.61
Total
RevPOR
$379.14 $361.47 $374.20 $359.57
Total
RevPAR
$196.48 $189.43 $232.66 $230.01
Great Wolf Lodge Properties - Same
Store (4)
Occupancy
52.8% 52.5% 64.7%
64.8%
ADR
$249.47 $234.92 $248.05 $240.14
RevPAR
$131.64 $123.41 $160.45 $155.68
Total
RevPOR
$380.84 $358.75 $368.59 $354.78
Total
RevPAR
$200.95 $188.46 $238.42 $230.00
The company defines its operating statistics
as follows:
Occupancy
is calculated by dividing total occupied rooms by total
available
rooms.
Average
daily rate (ADR) is the average daily room rate charged and
is calculated
by dividing total rooms revenue by total occupied
rooms.
Revenue
per available room (RevPAR) is the product of (a) occupancy
and
(b) ADR.
Total
revenue per occupied room (Total RevPOR) is calculated by
dividing
total resort revenue (including revenue from rooms, food and
beverage,
and other amenities) by total occupied rooms.
Total
revenue per available room (Total RevPAR) is the product of (a)
occupancy
and (b) Total RevPOR.
Great Wolf Resorts, Inc.
Reconciliations of Outlook Financial
Information (5)
(in thousands, except per share amounts)
Three Months
Ending Year Ending
March 31, December 31,
2008
2008
------------ ------------
Net income (loss)
$(2,730) $(15,390)
Adjustments:
Opening costs
of resorts under
development
2,500
4,000
Non-cash employee
compensation
550
2,350
Depreciation
and amortization
12,750
53,400
Interest expense,
net
6,800
24,700
Equity in
loss of unconsolidated
affiliates
450
7,200
Income tax
expense (benefit)
(1,820) (10,260)
------- --------
Adjusted EBITDA (1)
$18,500
$66,000
======
======
Net income (loss)
$(2,730) $(15,390)
Adjustments to net income (loss):
Opening costs
of resorts under
development
2,500
4,000
Non-cash employee
compensation
550
2,350
Income tax
rate adjustment (3)
(1,220)
(2,540)
-------
-------
Adjusted net income (loss) (1)
$(900) $(11,580)
====== ========
Net income (loss) per share:
Basic
$(0.09)
$(0.50)
Diluted
$(0.09)
$(0.50)
Adjusted net income (loss) per share:
Basic
$(0.03)
$(0.38)
Diluted
$(0.03)
$(0.38)
Weighted average shares outstanding:
Basic
30,600
30,800
Diluted
30,600
30,800
Great Wolf Resorts, Inc.
Calculations of Unlevered Returns
(in thousands)
Year Ended Year Ending
December 31, December 31,
2007
2008 (5)
----------- ------------
Adjusted EBITDA
- portfolio of
resorts
(6)
$45,618 $48,812
Adjusted EBITDA
- all other
operations
(7)
5,452
17,188
------
------
Total Adjusted
EBITDA
$51,070 $66,000
======
======
Net book value
of property and
equipment
of portfolio of
resorts:
December 31, 2006 (8)
$305,999
March 31, 2007 (8)
$311,721
June 30, 2007 (8)
$313,717
September 30, 2007 (8)
$311,468
December 31, 2007 (8)
$306,934 $306,934
December 31, 2008 (9)
$284,527
Average of amounts above
$309,968 $295,731
======= =======
Unlevered return
(10)
14.7%
16.5%
======= =======
(1) See discussions of Adjusted EBITDA
and Adjusted net income (loss)
located in
the "Non-GAAP Financial Measures" section of this press
release.
(2) This amount represents the company's
equity method loss recorded for
the joint
venture that owns a Great Wolf Lodge resort under
construction
in Grand Mound, Washington.
(3) This amount represents an adjustment
to recorded income tax expense
to bring the
overall effective tax rate to an estimated normalized
rate of 40%.
This effective tax rate differs from the effective tax
rates in the
company's historical statements of operations.
(4) Same store comparison includes
Great Wolf Lodge resorts that were
open for the
full periods in both 2006 and 2007.
(5) The company's outlook reconciliations
use the mid-points of its
estimates
of Adjusted EBITDA and Adjusted net income (loss).
(6) Portfolio of resorts represents
Great Wolf Lodge brand consolidated
resorts open
more than 18 months as of December 31, 2007 (that is,
the company's
Traverse City, Kansas City, Williamsburg and Pocono
Mountains
resorts).
(7) All other operations represents
(a) the company's consolidated
resorts not
included in the "Portfolio of resorts" above and (b)
corporate
activities.
(8) Net book value amount of property
and equipment represents the
amounts included
for the portfolio of resorts in the company's
historical
financial statements.
(9) Estimated net book value amount
of property and equipment for the
portfolio
of resorts as of December 31, 2008 calculated as (a) net
book value
amount as of December 31, 2007 less (b) estimated
depreciation
expense for the year ending December 31, 2008 plus (c)
assumed capital
expenditures of 4% of budgeted 2008 total revenues.
(10)Unlevered return calculated as
(a) Adjusted EBITDA - portfolio of
resorts divided
by (b) average net book value of fixed assets of
portfolio
of resorts. |
This press release contains forward-looking statements
within the meaning of the federal securities laws. All statements,
other than statements of historical facts, including, among others, statements
regarding Great Wolf Resorts' future financial position, business strategy,
projected levels of growth, projected costs and projected performance and
financing needs, are forward-looking statements. Those statements
include statements regarding the intent, belief or current expectations
of Great Wolf Resorts, Inc. and members of its management team, as well
as the assumptions on which such statements are based, and generally are
identified by the use of words such as �may,� �will,� �seeks,� �anticipates,�
�believes,� �estimates,� �expects,� �plans,� �intends,� �should� or similar
expressions. Forward-looking statements are not guarantees of future
performance and involve risks and uncertainties that actual results may
differ materially from those contemplated by such forward-looking statements.
Many of these factors are beyond the company's ability to control or predict.
Such factors include, but are not limited to, competition in the company�s
markets, changes in family vacation patterns and consumer spending habits,
regional or national economic downturns, the company�s ability to attract
a significant number of guests from its target markets, economic conditions
in its target markets, the impact of fuel costs and other operating costs,
the company's ability to develop new resorts in desirable markets or further
develop existing resorts on a timely and cost efficient basis, the company's
ability to manage growth, including the expansion of the company�s infrastructure
and systems necessary to support growth, the company�s ability to manage
cash and obtain additional cash required for growth, the general tightening
in the U.S. lending markets as a result of the subprime loan crisis, potential
accidents or injuries at its resorts, its ability to achieve or sustain
profitability, downturns in its industry segment and extreme weather conditions,
increases in operating costs and other expense items and costs, uninsured
losses or losses in excess of the company's insurance coverage, the company's
ability to protect its intellectual property, trade secrets and the value
of its brands, current and possible future legal restrictions and requirements.
A further description of these risks, uncertainties and other matters can
be found in the company�s annual report and other reports filed from time
to time with the Securities and Exchange Commission, including but not
limited to the company�s Annual Report on Form 10-K for the year ended
December 31, 2006 filed with the Securities and Exchange Commission on
March 7, 2007. Great Wolf Resorts cautions that the foregoing list
of important factors is not complete and assumes no obligation to update
any forward-looking statement that it may make.
Management believes these forward-looking statements are
reasonable; however, undue reliance should not be placed on any forward-looking
statements, which are based on current expectations. All written
and oral forward-looking statements attributable to Great Wolf Resorts
or persons acting on its behalf are qualified in their entirety by these
cautionary statements. Further, forward-looking statements speak
only as of the date they are made, and the company undertakes no obligation
to update or revise forward-looking statements to reflect changed assumptions,
the occurrence of unanticipated events or changes to future operating results
over time unless otherwise required by law.
About Great Wolf Resorts, Inc.
Great Wolf Resorts, Inc.® (NASDAQ: WOLF), Madison,
Wis., is North America�s largest family of indoor waterpark resorts, and,
through its subsidiaries and affiliates, owns and operates its family resorts
under the Great Wolf Lodge® and Blue Harbor Resort� brands. Great
Wolf Resorts is a fully integrated resort company and owns and/or manages
Great Wolf Lodge locations in: Wisconsin Dells, Wis.; Sandusky, Ohio; Traverse
City, Mich.; Kansas City, Kan.; Williamsburg, Va.; the Pocono Mountains,
Pa.; Niagara Falls, Ontario; Mason, Ohio; and Grapevine, Texas; and Blue
Harbor Resort & Conference Center in Sheboygan, Wis. Great Wolf
Lodge properties are currently under construction in Grand Mound, Wash.;
and Concord, N.C.
The company�s resorts are family-oriented destination
facilities that generally feature 300 to 400 rooms and a large indoor entertainment
area measuring 40,000 to 100,000 square feet. The all-suite properties
offer a variety of room styles, arcade/game rooms, fitness centers, themed
restaurants, spas, supervised children�s activities and other amenities.
Additional information may be found on the company�s Web site at www.greatwolf.com. |