| SPRINGFIELD, Mo.-- Aug. 12, 2003 -- John Q.
Hammons Hotels, Inc. (AMEX:JQH) today reported on its second quarter 2003
results.
Year-to-Date Results
Basic earnings per share for the six months ended July 4, 2003 were
$0.06, compared to a loss per share of ($0.15) for the six months ended
June 28, 2002. Net income for the six months ended July 4, 2003 was $0.3
million, compared to a net loss of ($0.8) million for the same period in
2002. The 2002 six months included a charge of $6.8 million applicable
to debt extinguishment costs, primarily related to the refinancing of a
significant portion of our long-term debt completed in May of 2002. We
produced EBITDA for the six months ended July 4, 2003 of $61.3 million,
compared to $65.1 million in the 2002 period (See attached table for reconciliation
of net income to EBITDA and for the definition of EBITDA). The decrease
was primarily attributable to increases in property insurance, guest frequency
program costs and rising natural gas prices.
Total revenues for the 2003 six months were $218.8 million, a decrease
of $3.8 million, compared to the same period in 2002. Revenue Per Available
Room (RevPAR) was $64.43 for the 2003 six months, virtually equal to the
prior year's level of $64.72, while the industry's RevPAR for the first
six months of 2003 was down 2.5% from the first half of 2003, to $48.70,
as reported by Smith Travel Research.
Second Quarter Results
Basic earnings per share for the three months ended July 4, 2003 were
$0.02, compared to a loss per share of ($0.20) for the same period in 2002.
Net income was $0.1 million for the 2003 quarter, compared to a loss of
($1.0) million for the 2002 quarter. The 2002 quarter included the debt
extinguishment costs discussed above. EBITDA was $30.6 million for the
2003 quarter, down $3.4 million compared to the 2002 second quarter EBITDA
of $34.0 million (See attached table for reconciliation of net income to
EBITDA and for the definition of EBITDA). The decrease was primarily attributable
increases in property insurance, guest frequency program costs and rising
natural gas prices.
Total revenues for the 2003 second quarter were $108.7 million, compared
to $115.2 million for the 2002 quarter, reflecting the ongoing weakness
in the association and corporate group travel segments of the hospitality
industry. Our Revenue Per Available Room (RevPAR) was $65.16 for the 2003
second quarter, compared to the prior year's level of $67.58, while the
industry's RevPAR for the second quarter of 2003 was down 3.2% compared
to the same period in 2002, to $51.31 as reported by Smith Travel Research.
Chairman Comments
"Although the ongoing weakness in the industry has been difficult, our
goal of strengthening our balance sheet has helped to improve the financial
picture of this company," stated Mr. John Q. Hammons, Chairman and Chief
Executive Officer. "We continue to reduce debt and maintain quality service
levels, thereby positioning ourselves for the economic and industry recovery."
Financing Activities
We retired a $6.3 million mortgage (Springdale Hampton Inn) at 9.25%,
which was due to mature in the fourth quarter of 2003, bringing total debt
reduction in the first half of 2003 to $10.1 million. The remaining current
portion of long-term debt ($7.7 million) is attributable only to scheduled
principal amortization on various individual hotel mortgages.
Operations Outlook
We forecast that the lingering industry weakness will continue throughout
the third quarter of 2003, generating year-over-year RevPAR comparable
to, or slightly below last year's levels. Despite this weakness, we expect
to continue our cash generation and will maintain our focus on operational
efficiencies.
JOHN Q. HAMMONS HOTELS, INC.
AND COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(000's omitted, except share data)
Three Months Ended Six
Months Ended
July 4, June 28,
July 4, June 28,
2003 2002
2003 2002
------------ ----------- ------------ ----------
REVENUES:
Rooms
$ 68,959 $ 71,551 $
136,362 $ 137,041
Food and beverage
27,390 30,101
56,529 59,388
Meeting room rental,
related party
management fee
and other
12,315 13,509
25,903 26,161
---------- ---------- ---------- ---------
Total revenues
108,664 115,161
218,794 222,590
OPERATING EXPENSES:
Direct operating
costs and expenses:
Rooms
17,046 17,712
33,326 33,768
Food and beverage
21,982 23,219
43,888 45,374
Other
701 896
1,393 1,605
General, administrative,
sales and
management expenses 33,747
34,770 69,822
67,779
Repairs and
maintenance
4,585 4,602
9,038 8,957
Depreciation and
amortization
12,586 13,096
25,067 26,088
---------- ---------- ---------- ---------
Total operating
costs
90,647 94,295
182,534 183,571
---------- ---------- ---------- ---------
INCOME FROM OPERATIONS 18,017
20,866 36,260 39,019
OTHER INCOME (EXPENSE):
Other income
- -
175 -
Interest income
156 194
335 448
Interest expense and
amortization of
deferred financing
fees
(17,595) (18,232) (35,207)
(35,484)
Extinguishment of
debt costs
- (6,792)
- (6,792)
---------- ---------- ---------- ---------
INCOME (LOSS) BEFORE
MINORITY INTEREST
AND PROVISION
FOR INCOME TAXES
578 (3,964)
1,563 (2,809)
Minority interest in
(earnings) loss of
partnership
(439) 3,011
(1,187) 2,134
---------- ---------- ---------- ---------
INCOME (LOSS) BEFORE
PROVISION FOR INCOME
TAXES
139 (953)
376 (675)
Provision for income
taxes
(60) (60)
(90) (90)
---------- ---------- ---------- ---------
NET INCOME (LOSS)
ALLOCABLE TO THE
COMPANY
$ 79 $ (1,013)
$ 286 $ (765)
========== ========== ========== =========
BASIC EARNINGS (LOSS)
PER SHARE:
Net earnings (loss)
allocable to
Company
$ 0.02 $ (0.20)
$ 0.06 $ (0.15)
========== ========== ========== =========
BASIC WEIGHTED
AVERAGE SHARES
OUTSTANDING
5,089,728 5,081,008 5,086,778
5,078,644
========== ========== ========== =========
DILUTED EARNINGS
(LOSS) PER SHARE:
Net earnings (loss)
allocable to
Company
$ 0.01 $ (0.20)
$ 0.05 $ (0.15)
========== ========== ========== =========
DILUTED WEIGHTED
AVERAGE SHARES
OUTSTANDING
5,372,627 5,081,008 5,369,677
5,078,644
========== ========== ========== =========
JOHN Q. HAMMONS HOTELS, INC.
AND COMPANIES
(Amounts in thousands except earnings per
share and operating data)
Three Months Ended Six Months Ended
July 4, June 28, July 4, June 28,
2003 2002 2003
2002
-------- --------- -------- --------
Reconciliation of Net Income to
EBITDA:
Net Income (Loss)
$ 79 ($1,013) $ 286
($765)
Provision for income taxes
60 60
90 90
Minority interest in earnings
(loss) of partnership
439 (3,011) 1,187 (2,134)
Extinguishment of debt costs
0 6,792
0 6,792
Interest expense and
amortization of deferred
financing fees
17,595 18,232 35,207 35,484
Interest income
(156) (194) (335)
(448)
Other income
0 0
(175) 0
Depreciation and amortization
12,586 13,096 25,067 26,088
------- -------- ------- -------
EBITDA (a)
$30,603 $ 33,962 $61,327 $65,107
======= ======== ======= =======
EBITDA Margin (% of Total
Revenue)
28.2% 29.5% 28.0%
29.2%
(a) EBITDA is defined as income before interest
income and expense, income tax expense, depreciation and amortization,
minority interest, extinguishment of debt costs and other income.
Management considers EBITDA to be one measure of operating performance
for the Company before debt service that provides a relevant basis for
comparison, and EBITDA is presented to assist investors in analyzing the
performance of the Company. This information should not be considered as
an alternative to any measure of performance as promulgated under accounting
principles generally accepted in the United States, nor should it be considered
as an indicator of the overall financial performance of the Company. The
Company's calculation of EBITDA may be different from the calculation used
by other companies and, therefore, comparability may be limited.
Three Months Ended Six Months
Ended
July 4, June 28, July 4, June 28,
2003 2002 2003
2002
-------- --------- -------- --------
Total Owned Hotels:
Occupancy
65.7% 68.2% 64.2%
65.3%
Average Room Rate
$99.21 $99.11 $100.29 $99.11
RevPAR (Room Revenue per
available room)
$65.16 $67.58 $64.43 $64.72
July 4, Jan. 3, Dec. 28,
2003 2003
2001
---------- --------- ----------
Selected Balance Sheet Data
Current Assets
$ 60,489 $ 52,020 $ 60,673
Total Assets
$851,433 $859,972 $881,724
Current Liabilities Excluding Debt
$ 40,628 $ 40,789 $ 45,072
Current Portion of Long-Term Debt
$ 7,734 $ 13,683 $ 38,862
Total Long-Term Debt Including
Current Portion
$796,205 $806,342 $813,007
Total Cash and Equivalents, Restricted
Cash and Marketable Securities
$ 48,558 $ 35,358 $ 44,196
Net Debt
$747,647 $770,984 $768,811 |
John Q. Hammons Hotels, Inc. owns 47 hotels located in 20 states, containing
11,629 guest rooms or suites, and manage 11 additional hotels located in
seven states, containing 2,623 guest rooms or suites. The majority of these
58 hotels operate under the Embassy Suites, Holiday Inn and Marriott trade
names. Most of our hotels are located near a state capitol, university,
convention center, corporate headquarters, office park or other stable
demand generator.
This press release contains "forward-looking statements" within the
meaning of Section 21E of the Securities Exchange Act of 1934, regarding,
among other things, our operations outlook, business strategy, prospects
and financial position.
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