News for the Hospitality Executive |
Great Wolf Resorts
Reports 2nd Qtr 2009 Net loss of
$5.7 million Compared to a Net Loss of $4.1 million for the Same Period
a Year
Earlier
Hotel Operating Statistics -Adjusted
EBITDA of
$17.3 million Exceeds Top End of Guidance- MADISON,
Wis.- August 4, 2009 --Great
Wolf Resorts, Inc. (NASDAQ:WOLF), North America’s leading family of
indoor
waterpark resorts, reported results today for the second quarter ended
June 30,
2009. Second
Quarter Highlights
For
the second quarter ended June 30, 2009, the Company reported a net loss
of
$(5.7) million, or $(0.18) per diluted share, compared to a net loss of
$(4.1)
million, or $(0.13) per diluted share for the same period a year
earlier. “We
delivered Adjusted EBITDA improvement as our new and expanded resorts
performed
well, despite the ongoing challenging economy,” said Kim Schaefer,
chief
executive officer. “Additionally, our repeat and referral guest
business
increased, along with the average length of stay. This performance
underscores
the appeal of our resorts in challenging economic cycles as more guests
stay at
our resorts for their primary vacations.” Schaefer
concluded, “Looking ahead, we expect the operating environment to
remain
difficult. However, we believe our resorts will continue to outperform
the
broader hotel industry for the remainder of 2009, based primarily on
our
ability to provide a convenient, regional vacation alternative for
families. We
remain focused on increasing cash flow by driving growth through
operational
improvements and increased guest visits to our resorts. In the near
term, our
priority is to manage our existing capital structure while identifying
opportunities
for longer term growth through joint venture and licensing
arrangements.” Operating
Results In
the second quarter of 2009, adjusted EBITDA increased 23.3 percent to
$17.3
million from $14.0 million in the second quarter of 2008. Total
revenues increased
8.9 percent to $68.6 million from $63.0 million in the second quarter
of 2008. In
light of the challenging economic environment, the Company remained
focused on
reducing controllable costs. The three categories that make up the
majority of
controllable costs are resort departmental expenses, selling, general
and
administrative (SG&A) costs and property operating costs. As a
percentage
of revenues, these costs declined by 360 basis points to 68.3 percent,
in the
aggregate, in the 2009 second quarter. As a percentage of revenues,
SG&A
costs declined by 360 basis points to 22.9 percent in the 2009 second
quarter.
The cost savings were generated primarily by increasing the efficiency
of labor
and operating costs, along with operational leverage from higher total
revenues. Brand
Results Same
store revenue per available room (RevPAR) in the second quarter of 2009
was
down 8.0 percent (6.2 percent using constant dollars, which normalizes
the
foreign currency translation effect on operating statistics of the
Company’s
Canadian resort), compared to the 19.5 percent decline in the overall
U.S.
hotel industry according to Smith Travel Research data. Same-store
occupancy
was down 3.9 percentage points, with leisure occupancy declines
accounting for
approximately 70 percent of the decrease. In the second quarter of
2009,
approximately 90 percent of the Company’s system-wide revenue was from
leisure
guests. Same store average daily rate (ADR) declined 2.2 percent (0.3
percent
using constant dollars). Total same store revenue per occupied room
(Total
RevPOR), which includes revenue from rooms, food and beverage, and
other
amenities, decreased 2.1 percent (0.6 percent using constant dollars). Same
store RevPAR for Great Wolf’s Generation II resorts, which are
generally larger resorts that better represent the
Company's current resort development model and contribute more than 80
percent
of the Company’s Adjusted EBITDA, was down 7.6 percent (5.2 percent
using
constant dollars) versus 2008. Same store occupancy was down 3.6
percentage
points, with group occupancy up slightly, offset by a larger decline in
leisure
occupancy. Same store ADR declined 2.7 percent (0.2 percent using
constant
dollars), while total RevPOR for Generation II resorts decreased 2.8
percent
(0.3 percent using constant dollars). The
Company’s second quarter 2009 same store operating statistics do not
reflect
the results of two Generation II resorts:
Balance
Sheet and Liquidity As
of
the end of the second quarter, the Company has no remaining
construction-related payments for its Grapevine and Concord resorts,
and no
significant long-term capital commitments for construction or
development of
new properties. With the recently announced extension of the maturity
dates of
its Mason and Grapevine mortgage loans, the Company has no debt
maturities
until July 2011. Over the near term, the Company intends to utilize its
free
cash flow to manage its balance sheet leverage. As
of
June 30, 2009, the Company had:
Outlook
and Guidance The
Company provides the following outlook and earnings guidance for the
third
quarter and updates its full year 2009 guidance. The outlook and
earnings
guidance information is based on the Company’s current assessment of
business
conditions, including consumer demand and discretionary spending
trends. The
Company may 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. The
forecast above assumes third quarter 2009 same store RevPAR declines
approximately 8 percent in constant dollars versus third quarter 2008. 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. Conference
Call Great
Wolf Resorts will hold a 2009 second quarter results conference call
today at 5
p.m. ET, hosted by Chief Executive Officer Kim Schaefer and Chief
Financial
Officer Jim Calder. 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,
and clicking on “Corporate
Site” at the bottom of the page. Interested parties may also call
1-888-271-8601, or for international callers 1-913-312-0971. A
recording of the
call will be available by telephone until midnight on August 11, by
dialing
1-888-203-1112, or for international callers 1-719-457-8020, using
reference
number 4258389. 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 (loss) plus (a)
interest
expense, net, (b) income taxes, (c) depreciation and amortization, (d)
non-cash
employee compensation and professional fees, (e) costs associated with
early
extinguishment of debt or postponement of debt offerings, (f) opening
costs of
resorts under development, (g) equity in earnings (loss) of
unconsolidated
related parties, (h) loss on disposition of property, (i) other unusual
or
non-recurring items, and (j) minority interests. The Company defines
Adjusted
net income (loss) as net income (loss) without the effects of (a)
non-cash
employee compensation and professional fees, (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)
loss on disposition of property, (e) other unusual or non-recurring
items, and
(f) 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 (loss) does not represent net
income
(loss) 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. Forward-Looking
Statements 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, and Quarterly Report on Form 10-Q for the quarter
ended
March 31, 2009, both 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. 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
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™,
the Company is the first and only national hotel chain
to have all US properties Green Seal™ 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 atwww.greatwolf.com.
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Contact: Great Wolf Resorts, Inc. Investors Alex Lombardo or Nikki Sacks, 608-661-4791 |
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