Margaritaville weathers the storm
Margaritaville Caribbean Ltd (MCL), which saw revenues fall in its second quarter due to the impact of bad weather on subsidiary operations, ended the period with EBITDA (Earnings before interest, tax, depreciation and amortisation) of US$37,700 compared to US$178,000 in the quarter of the prior year.
Revenue for the second quarter ending November 30, 2016, was US$7.13 million, compared to US$7.78 million in the prior year’s quarter.
EBITDA for the half-year was US$963,366 compared to US$1 million in the previous half-year.
Company chairman Ian Dear, in notes attached to the second quarter’s financials, said the US$656,000 decline in revenue was a direct result of unusual weather patterns in the second quarter, resulting in rough seas across the Caribbean.
“This saw the Turks and Caicos location, in particular, coming up US$450,000 short in revenue for the period when compared to the prior year’s quarter, and short over US$500,000 when compared with plans,” Dear stated.
A total of 22 ship calls were cancelled at that location alone for the quarter.
The Montego Bay location also lost US$150,000 in revenue while the Negril location was down by US$93,000 in revenues as well, for the quarter.
Dear noted, “The Caribbean tourism product is always susceptible to disruptions associated with changes in weather patterns.
“However, the cancellation of 22 ship calls in one location is the highest that we have ever recorded for any one quarter.”
In the report for the TCI operation, management was commended for containing losses.
“The management team has done a great job in containing the exposure to product loss from spoilage as a result of the numerous cancellations at the last minute after preparations were made to receive the ship calls,” it was noted.
For MCL, revenue for the half-year was recorded at US$16.34 million compared to US$16.45 million in the prior half-year — a reduction of US$ 100,000.
Dear noted that the St Thomas location contributed additional revenues of US$557,000 over the prior half-year, and the airport location improved by US$115,000 as well: “…however, this was nullified by the loss in revenue at the other locations.”
Total expenditure increased marginally and in line with plans. Cost of sales of 25.58 per cent for the half-year improved marginally compared to 25.77 per cent in the prior half-year.
Directors said that in September the group successfully negotiated and concluded the purchase of all the minority shares in subsidiary company Express Catering Ltd.
Express Catering Ltd owns and manages all of the group’s food and beverage interests at the Sangster International Airport in Montego Bay.
MCL is the parent company for a number of subsidiaries that own and operate attractions, restaurants, bars, nightclubs and retail outlets throughout the Caribbean.
It operates nine Jimmy Buffett Margaritaville locations across four islands, the last being in St Thomas, USVI, which commenced operations in August 2015 in a partnership created with Wyndham Vacation Ownership.
The company targets transportation hubs and high-traffic locations with captive markets, offering a range of food, beverage and entertainment options.
It also operates additional international food and beverage franchises such as Quiznos Subs, American Dairy Queen (DQ Grill and Chill) , Auntie Anne’s Pretzels, Cinnabon, Moe’s Southwest Grill, Wendy’s, Domino’s Pizza and Nathan’s Famous Hotdogs.