MADISON, Wis., Nov. 4, 2008 - Great Wolf Resorts, Inc. (NASDAQ:WOLF)
, North America's leading family of indoor waterpark resorts, today reported
results for the third quarter ended September 30, 2008.
Highlights
-- Achieved 2008 third quarter Adjusted EBITDA of $23.0 million, which
was near the top end of the company's previously issued third quarter guidance
range of $19.5 - $23.5 million.
-- Reported that Adjusted EBITDA per diluted share rose 34 percent
in the third quarter of 2008 over the same period a year earlier, primarily
as a result of a 5.4 percent increase in same store RevPAR for the company's
consolidated properties in the quarter.
-- Named Kim Schaefer as the company's chief executive officer effective
January 1, 2009.
-- Produced the 10th consecutive quarter of same store RevPAR increases,
despite a softening economy and disruptions in the credit markets. Great
Wolf Lodge(R) brand third quarter and year-to-date same store RevPAR improved
0.6 percent and 2.8 percent, respectively, over the same periods in 2007.
-- Closed on a $65.0 million mortgage loan on the company's Williamsburg,
Va., property in August 2008.
-- Reduced the midpoint of full-year 2008 Adjusted EBITDA guidance
by $1.5 million to $65.0 million.
The company reported 2008 third quarter net income of $2.2 million,
or $0.07 per diluted share, compared to net income of $1.8 million, or
$0.06 per diluted share, in the prior year's third quarter.
"Our third quarter results were strong, especially in light of the persistent
negative macro-economic news and declining consumer confidence," said Randy
Churchey, interim chief executive officer. "We saw consistently strong
demand throughout the busy summer vacation season, a period when family
vacations generally account for a large amount of our business. Our third
quarter Adjusted EBITDA per diluted share rose 34 percent over the same
period a year earlier and same store revenue per available room (RevPAR)
performance for our consolidated properties has outpaced the overall lodging
industry by 3 to 4 percentage points this year. We believe that our properties'
locations, generally within 180 miles of major population centers, helped
attract 'stay- cation' families who wanted to get away to a convenient,
drive-to location with great value."
Third Quarter Operating Results
"We had a strong 2008 third quarter, which is traditionally our largest
EBITDA-producing quarter for the year," said Kimberly Schaefer, president
and chief operating officer. "Our resorts performed very well during the
quarter, led by results at our Generation II properties, which had a same
store RevPAR increase of 3.5 percent. We achieved this same store RevPAR
growth through 410 basis points of growth in occupancy, offset somewhat
by a 2.2 percent reduction in average daily rate for this set of properties.
Further, our Grapevine resort (which opened in December 2007 and is not
included in the company's same store operating results) continued to perform
well in its first year of operation, achieving the second-highest third
quarter RevPAR of any resort in our system.
"Over the past few years, we have worked to extend and expand the range
of amenities we offer at our larger resorts," Schaefer continued. "Our
Generation II properties, which contribute about 80 percent of our company's
Adjusted EBITDA, generally include a fuller range of amenities and conference
space, and reflect our development model for the company going forward.
We are pleased to see that the breadth of amenities we now offer at our
larger resorts resulted in significant occupancy gains this year. We also
are encouraged by our strong results in the face of reports of decreased
RevPAR or similar statistics for other hospitality and entertainment companies
in 2008."
Schaefer noted that the company's increased emphasis on group business,
primarily with small- to medium-sized groups designed to fill in mid-week
occupancy, has been successful. "With a total of more than 165,000 square
feet of meeting space now in our resort portfolio, we can offer an attractive,
fun meeting experience for meeting planners and participants. Our group
rooms sold increased 69.1 percent in the 2008 third quarter compared to
the prior year period. Group rooms accounted for 12.1 percent of our total
rooms sold in the third quarter in 2008, as compared to 9.8 percent in
2007."
Third quarter 2008 operating statistics for the company's portfolio
of Great Wolf Lodge resorts were as follows:
Great Wolf Lodge Brand - Same Store Comparison (a)
Increase (Decrease)
Q3
Q3 ---------------------
2008 2007
$ %
Occupancy
71.6% 70.0%
N/A 160 bps
ADR
$248.76 $252.66
$(3.90) (1.5)%
RevPAR
$178.06 $176.92
$1.14 0.6 %
Total RevPOR
$367.32 $374.08
$(6.76) (1.8)%
Total RevPAR
$262.93 $261.95
$0.98 0.4 %
Great Wolf Lodge Brand - Generation I Resorts Only -
Same Store Comparison (b)
Increase (Decrease)
Q3
Q3 ---------------------
2008 2007
$ %
Occupancy
67.8% 69.8%
N/A (200) bps
ADR
$202.38 $205.97
$(3.59) (1.7)%
RevPAR
$137.14 $143.68
$(6.54) (4.6)%
Total RevPOR
$295.46 $301.50
$(6.04) (2.0)%
Total RevPAR
$200.21 $210.33
$(10.12) (4.8)%
Great Wolf Lodge Brand - Generation II Resorts Only -
Same Store Comparison ( c )
Increase (Decrease)
Q3
Q3 ---------------------
2008 2007
$ %
Occupancy
74.3% 70.2%
N/A 410 bps
ADR
$278.75 $284.94
$(6.19) (2.2)%
RevPAR
$207.07 $200.05
$7.02 3.5 %
Total RevPOR
$413.78 $424.27
$(10.49) (2.5)%
Total RevPAR
$307.37 $297.87
$9.50 3.2 % |
(a) Same store comparison includes only Great
Wolf Lodge resorts that were open for all of both Q3 2008 and Q3 2007 (that
is, the company's Wisconsin Dells, Sandusky, Traverse City, Kansas City,
Williamsburg, Pocono Mountains, Niagara Falls and Mason resorts).
(b) Generation I Resorts same store comparison includes
Great Wolf Lodge resorts of approximately 300 rooms or less that were open
for all of both Q3 2008 and Q3 2007 (that is, the company's Wisconsin Dells,
Sandusky, Traverse City and Kansas City resorts).
( c ) Generation II Resorts same store comparison includes
Great Wolf Lodge resorts of approximately 400 rooms or more that were open
for all of both Q3 2008 and Q3 2007 (that is, the company's Williamsburg,
Pocono Mountains, Niagara Falls and Mason resorts).
The company's Generation I resorts, as described in the table above,
are generally smaller resorts than the company's current resort development
model and located in or near smaller markets, primarily in the upper Midwest.
The company's Generation II resorts, as described in the table above, are
generally larger resorts that better represent the company's current resort
development model, include a more extensive range of amenities than Generation
I resorts, and are located in or near larger metropolitan areas.
Capital Structure and Liquidity
In August, the company closed on a $65.0 million non-recourse mortgage
loan on its Williamsburg, Va. property. The new loan matures in 2011, has
a one-year extension option upon satisfaction of certain conditions, and
bears interest at a rate of LIBOR plus 350 basis points, with a minimum
rate of 6.25 percent per annum. The company used a portion of the net proceeds
to repay an existing $55.0 million bridge loan on the property.
The company has one near-term debt maturity, a $76.8 million non-recourse
mortgage loan secured by its Mason, Ohio property, maturing on November
30, 2008. "We are disappointed with the lack of progress in our discussions
with the loan's lead lender toward obtaining an extension of the loan's
maturity date," said James A. Calder, chief financial officer. "The Mason
resort continues to provide more than sufficient cash flow to service the
current loan balance. On a trailing 12-month basis through September 30,
2008, the resort produced $6.3 million of Adjusted EBITDA and incurred
$4.8 million of debt service payments. We will continue working diligently
to resolve this impending maturity issue, but we cannot give any assurances
on the ultimate outcome of the resolution of this maturity issue. Consequently,
we believe we will either reach an agreement to extend this loan's maturity
or the lenders will assume the asset. In either event, we believe the company's
liquidity and future cash flows will not be affected materially.
"Other than the Mason mortgage loan, based on our current forecasts
we do not expect to have any significant debt maturities until mid-2011,"
Calder noted. "We currently have financing and expect to have sufficient
capital to complete the ongoing expansion at our existing Grapevine property
and our new Concord, N.C. resort.
"We have no long-term capital commitments for construction or development
after the opening of our Concord property in Spring 2009," Calder continued.
"Moreover, given the current state of the capital markets, we do not plan
on making any significant commitments or begin construction on future development
projects until we have both the debt and equity capital fully committed.
As we have discussed previously, we expect our near-term development plans
to focus exclusively on licensing arrangements and joint ventures. We believe
those development strategies will provide the most effective use of our
equity capital as we seek to expand the geographic reach of our brand."
Construction and Development Update
The company's 402-suite Great Wolf Lodge resort in Concord, N.C., near
Charlotte, is approximately 60 percent complete, is on budget and remains
on schedule to open in Spring 2009. "The immediate area continues to grow
as a destination attraction with the recent opening in Concord of the zMAX
Dragway, a 125-acre complex that is part of the popular, nearby Lowe's
Motor Speedway," Schaefer said. "This will create a number of additional
family-oriented events that will expand our base of potential guests."
Construction is approximately 75 percent completed on the company's
Grapevine, Texas, resort expansion, consisting of a 203-suite addition
and 20,000 square feet of additional meeting space. The first phase of
this expansion is scheduled to open in late 2008, with full completion
expected in early 2009. "Consumer response to our Grapevine property has
been positive since its opening in late 2007, and the construction has
been scheduled so that it does not disrupt guests at the existing resort,"
she said. "Opening the new addition will give us another strong marketing
opportunity in the region. We are encouraged that we will have the first
phase of the expansion open in time for the traditionally busy late December
holiday vacation period, with the full expansion open in time for spring
break."
The company previously has announced three projects in the letters-of-
intent phase: a joint venture 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; a Great Wolf Lodge
resort at the Mall of America(R) in Bloomington, Minn.; and a Great Wolf
Lodge Resort on the shores of Lake Lanier, near Atlanta, Ga. "We believe
all of these locations have excellent year-round potential, but we will
proceed cautiously with each of them, given the current environment," Schaefer
said. "We also remain actively engaged in the discussion and evaluation
process for several additional development opportunities in North America
and internationally."
Key Financial Data
As of September 30, 2008, Great Wolf Resorts had:
-- Total unrestricted cash and cash equivalents of $25.9 million.
-- Total secured debt of $396.7 million.
-- Total unsecured debt (junior subordinated debentures) of
$80.5 million.
-- Weighted average cost of total debt of 7.0 percent.
-- Weighted average debt maturity of 7.2 years.
-- Total construction in progress for consolidated resorts and
other
projects currently under construction but
not yet opened of $110.9
million.
-- Proforma leverage ratio (net debt to Adjusted EBITDA) of
4.9 times
(adjusts for construction in progress and
resorts open less than one
year).
Outlook and Guidance
"The hotel industry, including a large number of resorts, had a difficult
2008 third quarter, with Smith Travel Research reporting a 1.1 percent
decline in RevPAR for the overall U.S. hotel industry, the first decline
since the 2003 second quarter," Churchey commented. "Our portfolio's results
trended downward for the 2008 second quarter, but still produced a slight
increase in RevPAR. We believe the negative impact that many business-oriented
hotels and destination resort properties have reported as a result of airline
flight cutbacks will have a more limited effect on our portfolio. In fact,
as airlines have fewer flights, we believe the attractiveness of drive-to,
shorter vacations may increase, relative to longer vacations. While no
consumer-based business is immune to economic pressures, we believe our
combination of convenient properties and high value for a family vacation
can make us a preferred vacation choice for families.
"We remain cautious and have become slightly more conservative in our
forecast for the remainder of the year," he continued. "October same store
RevPAR decreased approximately 7 percent over the prior year for our portfolio
versus an estimated 9 percent decrease for the overall lodging industry
and our advance bookings for the remainder of the fourth quarter are slightly
behind last year's pace. Also, our advance booking window remains relatively
short, giving us limited long-range visibility. As a result, we have adjusted
the midpoint of our 2008 full-year Adjusted EBITDA range from $66.5 million
to $65.0 million. Our updated range for full-year guidance for Adjusted
EBITDA is now $63.0 million to $67.0 million."
The company provides the following outlook and earnings guidance for
the fourth 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 assessment of business conditions, including consumer
demand and discretionary spending trends, as of November 4, 2008. The company
may update any portion of its business outlook at any time as conditions
dictate:
Q4 2008 Full year 2008
------------------ -------------------
Low High
Low High
$(10,790) $(8,390) $(15,040) $(12,640)
Net income (loss)
Net income (loss) per diluted
share
$(0.35) $(0.27) $(0.49) $(0.41)
Adjusted EBITDA (a)
$6,560 $10,560 $63,000 $67,000
Adjusted net income (loss) (a)
$(9,830) $(7,430) $(8,130) $(5,730)
Adjusted net income (loss) per
diluted share
$(0.32) $(0.24) $(0.26) $(0.19)
(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 related to the company's recently opened
properties.
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, Inc. will hold a conference call to discuss its
2008 third quarter results tomorrow, November 5, at 9 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)
257-1927, reference number 11121213. A recording of the call will be available
by telephone until midnight on Wednesday, November 12, 2008, by dialing
(800) 405-2236, reference number 11121213. A replay of the call will be
posted on the company's Web site through December 5, 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 (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 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 Nine
Nine
Months Months Months Months
Ended Ended Ended
Ended
September September September September
30, 2008 30, 2007 30, 2008 30, 2007
---------------------------------------
Revenues:
Rooms
$40,994 $30,754 $115,801 $87,659
Food and beverage
10,088 7,577 30,751 22,621
Other hotel operations
9,759 7,407 28,439 20,990
Management and other fees
2,630 2,145 6,655
5,526
---------- ------- -------- --------
63,471 47,883 181,646 136,796
Other revenue from managed
properties
5,942 3,015 14,993
8,852
---------- ------- -------- --------
Total revenues
69,413 50,898 196,639 145,648
Operating expenses:
Resort departmental expenses
21,415 16,455 62,711 49,145
Selling, general and
administrative
11,339 10,005 41,431 34,382
Property operating costs
8,239 5,262 24,206 16,013
Opening costs for resorts under
development
403 1,291 4,350
4,713
Loss on disposition of property
317 128
317 328
Depreciation and amortization
11,995 9,105 34,755 26,567
---------- ------- -------- --------
53,708 42,246 167,770 131,148
Other expenses from managed
properties
5,942 3,015 14,993
8,852
---------- ------- -------- --------
Total operating expenses
59,650 45,261 182,763 140,000
Operating income
9,763 5,637 13,876
5,648
Investment income
(625) (281) (1,629) (336)
Interest income
(279) (551) (1,178) (2,365)
Interest expense
6,808 3,829 20,599 11,104
---------- ------- -------- --------
Income (loss) before minority
interests, equity in earnings
(loss) of unconsolidated
affiliates and income taxes
3,859 2,640 (3,916) (2,755)
Income tax expense (benefit)
1,755 784 (1,282)
(1,157)
Minority interests, net of tax
- -
- (443)
Equity in loss (earnings) of
unconsolidated affiliates,
net of tax
(67) 95 1,612
745
---------- ------- -------- --------
Net income (loss)
$2,171 $1,761 $(4,246) $(1,900)
========== ======= ======== ========
Net income (loss) per share:
Basic
$0.07 $0.06 $(0.14) $(0.06)
Diluted
$0.07 $0.06 $(0.14) $(0.06)
Weighted average common shares
outstanding:
Basic
30,841 30,571 30,794 30,521
Diluted
30,841 30,571 30,794 30,521
Great Wolf Resorts, Inc.
Reconciliations of Non-GAAP Financial Measures
(in thousands, except per share amounts)
Three Three Nine
Nine
Months Months Months
Months
Ended Ended Ended
Ended
September September September September
30, 2008 30, 2007 30, 2008 30, 2007
---------- -------- --------- ---------
Net income (loss)
$2,171 $1,761 $(4,246) $(1,900)
Adjustments:
Opening costs for resorts under
development
403 1,291 4,350 4,713
Non-cash employee compensation
and
professional fees
(97) 599 (7)
2,004
Loss on disposition of property
317 128 317
328
Depreciation and amortization
11,995 9,105 34,755 26,567
Interest expense, net
6,529 3,278 19,421 8,739
Separation payments
- -
1,258 -
Minority interest expense, net
of
tax
- -
- (443)
Environmental liability costs
30 -
262 -
Equity in loss (earnings) of
unconsolidated affiliates,
net of tax
(67) 95 1,612
745
Income tax expense (benefit)
1,755 784 (1,282) (1,157)
---------- ------- -------- --------
Adjusted EBITDA (1)
$23,036 $17,041 $56,440 $39,596
========== ======= ======== =========
Net income (loss)
$2,171 $1,761 $(4,246) $(1,900)
Adjustments:
Opening costs for resorts
under development
403 1,291 4,350 4,713
Non-cash employee compensation
and professional fees
(97) 599 (7)
2,004
Debt-related costs
615 - 1,333
-
Loss on disposition of property
317 128 317
328
Separation payments
- -
1,258 -
Environmental liability costs
30 -
262 -
Equity in loss (earnings) of
unconsolidated affiliates
(2) (5)
339 1,867 677
Income tax rate adjustment (3)
(281) (1,218) (3,428) (3,303)
---------- ------- -------- --------
Adjusted net income (1)
$3,153 $2,900 $1,706 $2,519
========== ======= ======== =========
Adjusted net income per share:
Basic
$0.10 $0.09 $0.06
$0.08
Diluted
$0.10 $0.09 $0.06
$0.08
Adjusted EBITDA per diluted share
$0.75 $0.56 $1.83
$1.30
Weighted average shares outstanding:
Basic
30,841 30,571 30,794 30,521
Diluted
30,841 30,571 30,794 30,521
Great Wolf Resorts,
Inc.
Operating Statistics - Great Wolf Lodge Resorts
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2008 2007 2008
2007
----- ---- ----
----
Great Wolf Lodge Brand
Properties - All
Occupancy
72.6% 70.0% 68.6%
65.8%
ADR
$259.41 $252.66 $256.37 $249.45
RevPAR
$188.27 $176.92 $175.76 $164.08
Total RevPOR
$388.60 $374.08 $390.23 $372.84
Total RevPAR
$282.04 $261.95 $267.53 $245.25
Great Wolf Lodge Brand Properties -
Same Store (4)
Occupancy
71.6% 70.0% 67.4%
65.8%
ADR
$248.76 $252.66 $250.38 $249.45
RevPAR
$178.06 $176.92 $168.74 $164.08
Total RevPOR
$367.32 $374.08 $375.78 $372.84
Total RevPAR
$262.93 $261.95 $253.25 $245.25
Great Wolf Lodge Brand Properties -
Consolidated (5)
Occupancy
72.3% 68.9% 68.9%
66.6%
ADR
$270.92 $255.97 $271.67 $262.71
RevPAR
$196.01 $176.41 $187.30 $174.91
Total RevPOR
$398.18 $374.88 $406.98 $387.60
Total RevPAR
$288.07 $258.36 $280.58 $258.05
Great Wolf Lodge Brand - Generation I
Resorts - Same Store (6)
Occupancy
67.8% 69.8% 62.1%
63.8%
ADR
$202.38 $205.97 $198.76 $202.35
RevPAR
$137.14 $143.68 $123.45 $129.01
Total RevPOR
$295.46 $301.50 $295.33 $298.93
Total RevPAR
$200.21 $210.33 $183.42 $190.59
Great Wolf Lodge Brand - Generation II
Resorts - Same Store (7)
Occupancy
74.3% 70.2% 71.1%
67.2%
ADR
$278.75 $284.94 $282.19 $281.61
RevPAR
$207.07 $200.05 $200.70 $189.33
Total RevPOR
$413.78 $424.27 $425.35 $423.31
Total RevPAR
$307.37 $297.87 $302.51 $284.59
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
(8)
(in thousands, except per share amounts)
Three Months
Ending Year Ending
December 31, December 31,
2008
2008
------------ ------------
Net loss
$(9,590) $(13,840)
Adjustments:
Interest expense, net
7,200
26,620
Income tax benefit
(6,400) (8,700)
Depreciation and amortization
12,750
47,510
Non-cash employee compensation
and
professional fees
600
600
Environmental liability
costs
-
260
Equity in loss in unconsolidated
affiliates
3,000
5,620
Separation payments
-
1,260
Loss on disposition of
assets
-
320
Opening costs of resorts
under
development
1,000
5,350
------------ ------------
Adjusted EBITDA (1)
$8,560 $65,000
============ ============
Net loss
$(9,590) $(13,840)
Adjustments to net loss:
Non-cash employee compensation
and
professional fees
600
600
Environmental liability
costs
-
260
Separation payments
-
1,260
Loss on disposition of
assets
-
320
Opening costs of resorts
under
development
1,000
5,350
Debt-related costs
-
1,330
Equity in loss of unconsolidated
affiliate (2)
-
1,875
Income tax rate adjustment
(3)
(640) (4,085)
------------ ------------
Adjusted net income (loss) (1)
$(8,630) $(6,930)
============ ============
Net loss per share:
Basic
$(0.31) $(0.45)
Diluted
$(0.31) $(0.45)
Adjusted net income (loss) per share:
Basic
$(0.28) $(0.22)
Diluted
$(0.28) $(0.22)
Weighted average shares outstanding:
Basic
30,900
30,850
Diluted
30,900
30,850
Great Wolf Resorts, Inc.
Pro forma Net Debt to Adjusted EBITDA
(dollars in thousands)
Pro forma net debt as of September 30, 2008:
Total secured debt
$396,731
Total junior subordinated
debentures
80,545
Total unrestricted cash
and cash equivalents
(25,884)
Total construction in
progress
(110,895)
----------
$340,497
==========
Pro forma trailing twelve-month
Adjusted EBITDA:
Historical Adjusted EBITDA
by quarter (9):
Q4 2007
11,474
Q1 2008
19,400
Q2 2008
14,004
Q3 2008
23,036
Additional projected Adjusted
EBITDA from resorts
open less than twelve
months (10)
1,500
----------
$69,414
==========
Pro forma leverage ratio (11)
4.91
==========
(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
that was under construction in Grand Mound, Washington through March 2008.
(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 properties comparison includes Great Wolf
Lodge resorts that were open for the full periods in both 2008 and 2007
(that is, the company's Wisconsin Dells, Sandusky, Traverse City, Kansas
City, Williamsburg, Pocono Mountains, Niagara Falls and Mason resorts).
(5) Consolidated properties comparison includes Great
Wolf Lodge resorts that are consolidated for financial reporting purposes
(that is, the company's Traverse City, Kansas City, Williamsburg, Pocono
Mountains, Mason and Grapevine resorts).
(6) Generation I properties comparison includes only
Great Wolf Lodge resorts of approximately 300 rooms or less that were open
for all of both Q2 2008 and Q2 2007 (that is, the company's Wisconsin Dells,
Sandusky, Traverse City and Kansas City resorts).
(7) Generation II properties same store comparison includes
only Great Wolf Lodge resorts of approximately 400 rooms or more that were
open for all of both Q2 2008 and Q2 2007 (that is, the company's Williamsburg,
Pocono Mountains, Niagara Falls and Mason resorts).
(8) The company's outlook reconciliations use the mid-points
of its estimates of Adjusted EBITDA and Adjusted net income. The outlook
information excludes the impact of resolving the November 2008 maturity
of the mortgage loan on the company's Mason resort.
(9) Amounts are from the company's quarterly earnings
releases.
(10) Adjustment reflects that the company's Grapevine
and Grand Mound resorts are included in Adjusted EBITDA for less than twelve
months as of September 30, 2008.
(11) Pro forma leverage ratio calculated as (a) pro forma
net debt as of September 30, 2008 divided by (b) pro forma trailing twelve-month
Adjusted EBITDA. |
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 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, 2007 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.(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 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; Grapevine, Texas; Grand Mound, Wash.,
and Blue Harbor Resort & Conference Center in Sheboygan, Wis. A Great
Wolf Lodge currently is under construction in Concord, N.C. and a 203-suite
expansion is under construction at the company's Grapevine resort.
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.
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