TWC TWC Enterprises Limited

Consolidated Financial Highlights (unaudited)

Operating Data

The following is an analysis of net earnings:

The following is a breakdown of net operating income (loss) by segment:

Operating revenue is calculated as follows:

Direct operating expenses are calculated as follows:

(1) Please see Non-IFRS Measures

Third Quarter 2023 Consolidated Operating Highlights

Operating revenue increased 4.0% to $67,635,000 for the three month period ended September 30, 2023 from $65,009,000 in 2022 due to the revenue from the two Highland Gate home sales in 2023 as compared to none in 2022.

Direct operating expenses increased 10.7% to $47,264,000 for the three month period ended September 30, 2023 from $42,687,000 in 2022 due to the cost of sales from the two Highland Gate home sales in 2023 as compared to none in 2022, as well as above normal increases in labour and certain operating expenses. It continues to be a challenging environment in being able to manage labour costs due to the above normal minimum wage increases and a competitive environment for hiring staff.

Net operating income for the Canadian golf club operations segment decreased to $21,173,000 for the three month period ended September 30, 2023 from $23,626,000 in 2022 due to the conclusion of ClubLink’s lease of The Country Club which expired as of December 31, 2023, as well as above normal increases in labour and certain operating expenses. There has also been a noticeable decline in traffic in the Muskoka, Ontario tourist region this summer which has affected the results of the Company’s resorts which operate in this area.

Depreciation and amortization decreased 19.7% to $3,607,000 in 2023 from $4,493,000 in 2022 due to the conclusion of The Country Club lease which has also resulted in a decline in depreciation of right-of-use assets.

Interest, net and investment income increased to $2,327,000 for the three month period ended September 30, 2023 from an expense of $1,510,000 in 2022 due to a decrease in borrowings and an increase in distributions from the Company’s investment in Automotive Properties REIT. In 2022, the Company paid off several non-revolving mortgages in advance of their due dates. The payoff amounts totaled $46,303,000 (US$35,169,000) and resulted in prepayment penalties totaling $2,604,000.

Other items consist of the following income (loss) items:

At September 30, 2023, the Company recorded unrealized losses of $9,859,000 on its investment in marketable securities (September 30, 2022 - $1,915,000). This loss is attributable to the fair market value adjustments of the Company's investment in Automotive Properties REIT.

The contingent contractual obligation of USD$5,000,000 (CDN$6,620,000) originating from the sale of White Pass in 2018 expired in July 2023 and as such has been reversed since it had not been expended.

On September 20, 2023, the Company completed the divestiture of its investment in the Geranium real estate management company along with other non-Highland Gate joint ventures in which it was a co-investor with the Geranium Group. These assets were purchased by the Company’s co-investors with Geranium. Total proceeds for the transaction were $12,500,000 including deferred proceeds of $5,300,000. A gain of $6,521,000 was recorded as a result of the transaction.

Net earnings increased to $17,690,000 for the three month period ended September 30, 2023 from $11,920,000 in 2022 due to the change in other items described above. Basic and diluted earnings per share increased to 72 cents per share in 2023, compared to basic and diluted earnings per share of 49 cents in 2022.

Non-IFRS Measures

TWC uses non-IFRS measures as a benchmark measurement of our own operating results and as a benchmark relative to our competitors. We consider these non-IFRS measures to be a meaningful supplement to net earnings. We also believe these non-IFRS measures are commonly used by securities analysts, investors and other interested parties to evaluate our financial performance. These measures, which included direct operating expenses and net operating income do not have standardized meaning under IFRS. While these non-IFRS measures have been disclosed herein to permit a more complete comparative analysis of the Company’s operating performance and debt servicing ability relative to other companies, readers are cautioned that these non-IFRS measures as reported by TWC may not be comparable in all instances to non-IFRS measures as reported by other companies.

The glossary of financial terms is as follows:

Direct operating expenses = expenses that are directly attributable to company’s business units and are used by management in the assessment of their performance. These exclude expenses which are attributable to major corporate decisions such as impairment.

Net operating income = operating revenue – direct operating expenses

Net operating income is an important metric used by management in evaluating the Company’s operating performance as it represents the revenue and expense items that can be directly attributable to the specific business unit’s ongoing operations. It is not a measure of financial performance under IFRS and should not be considered as an alternative to measures of performance under IFRS. The most directly comparable measure specified under IFRS is net earnings.

Eligible Dividend

Today, TWC Enterprises Limited announced an eligible cash dividend of 5 cents per common share to be paid on December 15, 2023 to shareholders of record as at November 30, 2023.

Corporate Profile

TWC is engaged in golf club operations under the trademark, “ClubLink One Membership More Golf.” TWC is Canada’s largest owner, operator and manager of golf clubs with 44 18-hole equivalent championship and 2 18-hole equivalent academy courses (including two managed properties) at 34 locations in Ontario, Quebec and Florida.

For further information please contact:

Andrew Tamlin Chief Financial Officer 15675 Dufferin Street King City, Ontario L7B 1K5 Tel: 905-841-5372 Fax: 905-841-8488 atamlin@clublink.ca

Management’s discussion and analysis, financial statements and other disclosure information relating to the Company is available through SEDAR and at www.sedar.com and on the Company website at www.twcenterprises.ca

TWC Enterprises (TSX:TWC)
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