News for the Hospitality Executive
Great Wolf Resorts Reports 2009 First Quarter Net Loss
of $5.6 million,
More than Double Compared to the Same Period a Year Earlier;
Occupancy Drops from 65.2% to 61.5%
Hotel Operating Statistics
MADISON, Wis., May 5, 2009 - Great Wolf Resorts, Inc. (Nasdaq: WOLF), North America's leading family of indoor waterpark resorts, reported results today for the first quarter ended March 31, 2009.
First Quarter Highlights
• Reported 2009 first quarter Adjusted EBITDA of $15.1 million, which
was above the company's previously issued guidance of $12.4 to $14.4 million
and higher than consensus analyst estimates.
For the first quarter ended March 31, 2009, the company reported a net loss of $(5.6) million, or $(0.18) per diluted share, compared to a net loss of $(2.3) million, or $(0.08) per diluted share for the same period a year earlier.
First quarter operating statistics for the company's portfolio of Great
Wolf Lodge resorts were as follows:
Great Wolf Lodge Brand - Generation II Resorts Only -
(a) Same store comparison includes only Great
Wolf Lodge resorts
Note: The company's Generation II resorts, as described in the tables above, are generally larger resorts that better represent the company's current resort development model, include an extensive range of amenities and are located in or near larger metropolitan areas.
"Our resorts continued to perform well relative to the overall hotel industry in this extremely challenging economy," said Kim Schaefer, chief executive officer. "Same store revenue per available room (RevPAR) for our Generation II resorts, which contribute more than 80 percent of our Adjusted EBITDA, was down 12.5 percent (8.2 percent using constant dollars, which normalizes the foreign currency translation effect on operating statistics of our Canadian resort), compared to the 17.7 percent decline in the overall U.S. hotel industry according to Smith Travel Research data. We believe these results are reasonable, especially given that the Easter holiday and many schools' spring break periods, both of which are traditionally strong demand generators for our resorts in the first four months of the year, fell in the second quarter in 2009."
To normalize for the shift in Easter and spring break in the calendars, the company believes looking at year-over-year RevPAR results for the four months ended April 30 is meaningful. Over that four-month period, the company's Generation II resorts' same-store RevPAR declined approximately 6.0 percent using constant dollars, and overall same-store RevPAR declined about 7.5 percent using constant dollars.
The company's first quarter 2009 and January-April 2009 same store operating statistics do not reflect the results of three Generation II resorts:
With the opening of its newest resort, the company expects to benefit from brand marketing synergies all along the eastern corridor as the company's resorts now extend from Niagara Falls in Canada down to North Carolina. "Based on past experience, we expect many guests who have stayed at one of our resorts will visit others," Schaefer said. "While our resorts share the same core attributes, each is slightly different and offers its own unique guest experience.
"Recent consumer research conducted on behalf of our company points to a new paradigm for our guests," she continued. "While families clearly still value their vacations, many are choosing to forego resort destinations that require expensive air travel. Instead, they are choosing to stay closer to home and drive to their vacation destinations. These trips are generally more convenient and less costly. With our high perceived value and memorable guest experience, we believe this trend should continue."
In April 2009, the company announced that all of its U.S. properties had achieved Green Seal(TM) Silver certification for the lodging part of their operations, making Great Wolf Lodge brand resorts the first and only national hotel chain to earn that distinction. "We are proud to be on the forefront of the emerging green tourism travel trend," Schaefer noted.
The company had Adjusted EBITDA of $15.1 million for the 2009 first quarter, above the $14.4 million top end of the company's previously issued earnings guidance for the period. "In a challenging economic environment, we were able to achieve better-than-projected operating results due to the strength of our business model, coupled with our success in controlling and reducing variable costs," Schaefer commented.
In an environment marked by declining RevPAR, the company achieved substantial cost reductions for the 2009 first quarter. "We literally have evaluated every position and expense at each of our resorts, with an approach designed to find ways to maximize the efficiency of our labor and other operating costs," Schaefer said. "While we remain highly focused on cost control, we have not compromised guest satisfaction or our emphasis on quality and safety at our resorts. Our high guest satisfaction scores remain consistent with historic levels."
Capital Structure and Liquidity
"With the completion of the expansion at our Grapevine resort and the opening of our Concord resort in the first quarter of 2009, we currently have minimal remaining construction-related payments," said James A. Calder, chief financial officer. "We have no significant long-term capital commitments for construction or development of new properties. Over the near term, we intend to utilize all free cash flow to manage our balance sheet leverage.
"As is the case with many companies with significant real estate holdings, we are focused on strategies to extend our debt maturities and maintain adequate liquidity while the capital markets remain disrupted," Calder continued. "The most effective tool we have available to support these strategies is to continue to produce strong operating results at our resorts. We do not plan to make any material capital commitments or begin construction on future development projects until we have both the debt and equity capital fully committed."
Key Financial Data
As of March 31, 2009, Great Wolf Resorts had:
Schaefer said the company currently does not expect to begin construction on any new projects in 2009, but is engaged in identifying potential opportunities for joint venture and licensing arrangements. "For example, with a signed letter of intent with the Mashantucket Pequot Tribal Nation to develop a Great Wolf Lodge resort on tribal-owned land near its southeast Connecticut reservation and Foxwoods Resort Casino, we can look to begin construction once the required capital is in place. As we have stated previously, in order to use our capital efficiently to grow our brand going forward, we expect our near-term development plans to concentrate exclusively on licensing arrangements and joint ventures."
Outlook and Guidance
"In the second quarter this year, we have two busy periods, spring break and the last two weeks of June when the summer vacation season begins," Schaefer noted. "Consistent with what we have seen recently, our booking window remains relatively stable, with about 70 percent of our transient rooms being booked within 28 days of arrival. We have not seen any trends recently that we believe will substantially change this booking window pattern. Given this booking window timeframe, we expect to continue to focus our ongoing marketing strategies to present the value and convenience of a Great Wolf Lodge family vacation experience."
The company provides the following outlook and earnings guidance for the second quarter and full year 2009 (amounts in thousands, except per share data). The outlook and earnings guidance information is based on the company's current assessment of business conditions, including consumer demand and discretionary spending trends, as of May 4, 2009. The company may update any portion of its business outlook at any time as conditions dictate:
Q2 2009 Full year 2009
(a) For reconciliations of Adjusted EBITDA
and Adjusted net income
The midpoint of the forecast above assumes a second quarter 2009 same
store RevPAR decline of approximately 8-10 percent in constant dollars.
Adjusted EBITDA and Adjusted net income (loss) 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 (loss) are provided in the tables of this press release.
Non-GAAP Financial Measures
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.
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, potential accidents or injuries at its resorts,
decreases in travel due to pandemic or other widespread illness, 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, 2008 filed with the Securities
and Exchange Commission. 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.
About Great Wolf Resorts, Inc.
Great Wolf Resorts, Inc.(R) (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(R) and Blue Harbor Resort(TM) brands. Great Wolf Resorts is a fully integrated resort company with 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; Grapevine, Texas; Grand Mound, Wash.; and Concord, N.C.; and Blue Harbor Resort & Conference Center in Sheboygan, Wis. Through Great Wolf Resorts' environmental sustainability program, Project Green Wolf(TM), the company is the first and only national hotel chain to have all US properties Green Seal(TM) Certified - Silver.
The company's resorts are family-oriented destination facilities that generally feature 300 - 600 rooms and a large indoor entertainment area measuring 40,000 - 100,000 square feet. The all-suite properties offer a variety of room styles, arcade/game rooms, fitness rooms, 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.
Great Wolf Resorts, Inc.
|Also See:||Great Wolf Resorts Inc. Narrows 4th Qtr 2007 Loss to $7.7 million Compared to a Loss of $49 million in the Prior Year Quarter; Operates 10 Resorts With Two Under Construction / Hotel Operating Statistics / February 2008|