DALLAS, July 29, 2004 - La Quinta Corporation (NYSE: LQI) today announced
financial results for the second quarter ended June 30, 2004.
La Quinta reported the following financial results. A detailed schedule
reconciling net loss to Adjusted EBITDA is included in the supplemental
tables.
For the second quarter 2004, La Quinta reported:
-
Revenues of $145 million, a 8% increase compared to 2003. -- Net loss of
$7 million, or ($0.04) per share, versus net loss of $14 million, or ($0.10)
per share, in 2003.
-
RevPAR for total company owned hotels of $41.33, a 9% increase compared
to 2003.
-
Adjusted EBITDA of $46 million, a 10% increase compared to 2003.
For the six months ended June 30, 2004, La Quinta reported:
-
Revenues of $277 million, a 9% increase compared to 2003.
-
Net loss of $19 million, or ($0.11) per share, versus net loss of
-
$64 million, or ($0.45) per share, in 2003.
-
RevPAR for total company owned hotels of $39.48, a 10% increase compared
to 2003.
-
Adjusted EBITDA of $83 million, a 12% increase compared to 2003.
"We had another quarter of strong RevPAR growth that exceeded our competitors,"
stated Francis W. ("Butch") Cash, President and Chief Executive Officer.
"Our revenue initiatives continue to deliver results. With the recently
announced acquisition of Baymont, we will have the opportunity to replicate
our success. We look forward to growing the La Quinta and Baymont brands
in an industry at the beginning of a recovery cycle."
Operating Results
La Quinta's total company RevPAR increased 9% during the second quarter.
The improvement was driven by an occupancy increase of 7 percentage points,
partially offset by slightly lower average rates. In addition, La Quinta
continued to improve its performance relative to its local market competition.
For the quarter, RevPAR of La Quinta's direct competitors in all markets
increased 7% while La Quinta's RevPAR increased 9%. La Quinta's RevPAR
in its top ten markets increased 10% compared to a RevPAR increase of 7%
by La Quinta's direct competitors. As a result, La Quinta continues to
expand its RevPAR premium.
"We continue to see strong growth from our Internet distribution channels
and we are working closely with our third party distribution partners to
optimize our results through those channels," commented Mr. Cash. "Our
sales force again generated revenues that exceeded the prior year as the
strength of business travel continues to improve. We are also beginning
to see changes in our customer mix with the addition of higher rate business
travel. As a result, we started to see an increase in our average rates
as we ended the quarter."
During the second quarter, franchise rooms increased by 687 rooms (8
hotels). As of June 30, 2004, La Quinta had opened 9,612 franchise rooms
(107 hotels) compared to 6,683 franchise rooms (75 hotels) at June 30,
2003. La Quinta continues to expect to open at least 4,000 franchise rooms
(50 hotels) this year.
Financial Results
Revenues for the second quarter increased 8% over the second quarter
of 2003. The revenue increase was primarily the result of a total company
RevPAR increase of 9%, partially offset by the loss of revenue due to the
sale of hotels in the second quarter of 2004 and the second half of 2003.
Net loss was $7 million, or ($0.04) per share, for the second quarter
of 2004, versus a net loss of $14 million, or ($0.10) per share, for the
second quarter of 2003. The improved net loss during the quarter was primarily
the result of revenue increases and lower interest and depreciation expenses,
partially offset by higher impairment charges and increased direct lodging
expenses.
Adjusted EBITDA for the second quarter of 2004 was $46 million, a 10%
increase compared to $42 million in the second quarter of 2003. The increase
in Adjusted EBITDA was driven primarily by revenue improvement offset by
higher labor costs as a result of increased occupancy levels, increased
energy costs as a result of higher utility rates, and various corporate
expenses.
At June 30, 2004, La Quinta had $315 million in cash and cash equivalents
and no borrowings under its $150 million credit facility (other than $20
million in letters of credit). La Quinta's net debt (total indebtedness
less cash and the investment in its 7.114% Securities) was $439 million
at June 30, 2004.
On July 1, 2004, the Company received an early repayment of $26 million
related to a note receivable issued in 2001 in conjunction with a healthcare
asset sale. As a result of the early repayment, cash and cash equivalents
were approximately $350 million as of July 14, 2004.
Revenues for the first six months of 2004 increased 9% over the first
six months of 2003. The revenue increase was primarily the result of a
total company RevPAR increase of 10%, partially offset by the loss of revenue
due to the sale of hotels in the second quarter of 2004 and the second
half of 2003.
Net loss was $19 million, or ($0.11) per share, for the first six months
of 2004, versus a net loss of $64 million, or ($0.45) per share, for the
first six months of 2003. The improved net loss for the first six months
of 2004 was primarily the result of revenue increases and lower impairment
charges and depreciation expenses, partially offset by increased direct
lodging expenses.
Adjusted EBITDA for the first six months of 2004 was $83 million, a
12% increase compared to $74 million in the first six months of 2003. The
increase in Adjusted EBITDA was driven primarily by revenue improvement
partially offset by higher direct lodging expenses as a result of increased
occupancy levels.
Baymont Acquisition
As announced on July 15, 2004, La Quinta has entered into a definitive
agreement with The Marcus Corporation to purchase its limited service lodging
division for a total of $395 million in cash. As part of the agreement,
La Quinta will acquire 86 Baymont Inns & Suites (including one management
contract), seven Woodfield Suites and one Budgetel. In addition, La Quinta
will acquire all of the trade rights associated with the Baymont, Woodfield
Suites and Budgetel brands, and the current Baymont franchise system of
84 hotels (containing 7,074 rooms). The 178 hotels (containing 16,837 rooms)
are located across 32 states, with approximately half of the hotels in
the Midwest region of the U.S.
"Baymont has a strong brand and real estate in markets we want to penetrate,"
said Mr. Cash. "We believe we can apply our successful revenue initiatives
to enhance the cash flows from the Baymont operations. In addition, we
believe we can more aggressively grow the Baymont franchise system."
La Quinta has obtained a committed financing of $150 million as part
of this transaction. This financing and existing cash on hand will fund
the $395 million purchase price as well as estimated one-time transaction
costs of $9 million and integration costs of $12 million. The Company believes
there will be opportunities to create value through upgrades and potential
cross brand conversions between La Quinta and Baymont. The Company is beginning
the process of reviewing the portfolio for these opportunities. For current
modeling purposes only, the Company currently estimates the potential capital
required to complete these conversions to be between $25 million to $45
million.
"With the announced acquisition of Baymont, we achieved our strategic
objective of gaining both quality real estate and a brand that we can grow
that will allow us to leverage our existing investments in our people and
technology to create shareholder value," said David L. Rea, Executive Vice
President and Chief Financial Officer.
Current Outlook
La Quinta's guidance for full year 2004 currently anticipates a total
company owned La Quinta hotel RevPAR increase of 7%, Adjusted EBITDA of
approximately $174 million and a net loss of $51 million. The net loss
includes an estimated pretax loss of $25 million on early retirement of
the 7.114% Notes, as well as $5 million of estimated integration expenses.
Guidance also reflects the loss of approximately $1.6 million of OtheR
revenues from early repayment of healthcare receivables. For modeling purposes,
guidance reflects the Adjusted EBITDA and earnings impact of the Baymont
acquisition for only the full fourth quarter 2004. Estimated 2004 integration
expenses of $5 million related to the acquisition and the estimated $25
million loss related to early debt retirement are excluded from Adjusted
EBITDA guidance. Capital expenditures for 2004 are currently estimated
to be approximately $80 million, which includes $20 million related to
a redevelopment project in downtown San Antonio, as well as capitalized
integration costs and normal maintenance capital expenditures for Baymont
and La Quinta, and excludes the $395 million cost of the acquisition and
$9 million of related transaction costs.
La Quinta's guidance for the third quarter of 2004 currently anticipates
total company owned La Quinta hotel RevPAR to increase approximately 5%
over the third quarter of 2003, when the Company reported an industry leading
RevPAR increase of 8% over the third quarter of 2002. The Company anticipates
RevPAR growth in the third quarter of 2004 to be driven by rate increases
rather than occupancy increases. Adjusted EBITDA is currently anticipated
to be approximately $50 million and excludes estimated integration expenses
of $2 million related to the acquisition and the estimated $25 million
loss related to early debt retirement. Net loss is currently anticipated
to be approximately $17 million. Schedules reconciling net loss to Adjusted
EBITDA guidance for the third quarter and full year 2004 are included in
this press release.
La Quinta Corporation
Schedule A
Financial Results
(Unaudited)
Three months ended Six months ended
Operating Data:
June 30,
June 30,
(In thousands,
except per share data)
2004 2003
2004 2003
Revenues
Lodging
$143,474 $132,878 $274,585
$251,026
Other
1,191 1,364
2,377 2,595
Total revenues
144,665 134,242 276,962
253,621
Expenses
Direct lodging
operations
64,019 59,014 124,954
113,789
Other lodging expenses
18,976 19,076
37,227 36,849
General and
administrative
15,703 14,569
31,876 29,012
Interest, net
14,756 16,508
30,294 30,751
Depreciation and
amortization
30,215 32,381
59,492 63,772
Impairment of property
and equipment
7,719 4,578
12,733 66,590
Other (income) expense
(633) 3,969
(768) 7,133
Total expenses
150,755 150,095 295,808
347,896
Loss before minority
interest, income taxes,
and discontinued
operations
(6,090) (15,853) (18,846)
(94,275)
Minority interest
(4,661) (4,602) (9,229)
(9,112)
Income tax benefit
3,931 6,612
8,960 39,589
Loss before discontinued
operations
(6,820) (13,843) (19,115)
(63,798)
Discontinued operations,
net
--- 216
--- (117)
Net loss
$(6,820) $(13,627) $ (19,115) $(63,915)
Per Share Data:
Loss before discontinued
operations
$(0.04) $(0.10) $(0.11)
$(0.45)
Discontinued operations,
net
--- ---
--- ---
Net loss per share - basic
and assuming dilution
$(0.04) $(0.10) $(0.11)
$(0.45)
Weighted average shares
outstanding
Basic
176,620 143,414 176,444
143,060
Assuming dilution
176,620 143,414 176,444
143,060
Prior period results have been
reclassified to conform to current period
presentation.
La Quinta Corporation
Schedule B
Other (Income) Expense
(Unaudited)
Three months ended Six months ended
June 30, June
30,
(In millions)
2004 2003 2004
2003
Loss on sale of assets and
related costs
$ 0.2 $0.1
$0.2 $---
Loss on early extinguishments
of debt
--- 4.3
--- 6.2
Other (A)
(0.8) (0.4) (1.0)
0.9
Total other (income) expense
$(0.6) $4.0 $(0.8)
$7.1
(A) During the three months
ended June 30, 2004, we recognized income of
$0.8 million primarily as a result of settlement of litigation
related to the exit of the healthcare business and refunds of public
company filing fees partially offset by approximately $0.2 million
of expense related to the termination and ongoing settlement of the
La Quinta retirement plan. During the three months ended June 30,
2003, we recognized income of approximately $0.4 million primarily
related to a refund of relocation costs and an adjustment of amounts
previously accrued for healthcare business exit costs. During the
six months ended June 30, 2004, we recognized $1.0 million of income
primarily as a result of settlement of litigation and return of
collateral related to the exit of the healthcare business and
refunds of public company filing fees partially offset by
approximately $0.4 million of expense related to the termination and
ongoing settlement of the La Quinta retirement plan. During the six
months ended June 30, 2003, we recognized expenses of approximately
$0.9 million primarily related to an adjustment of actuarial
assumptions on deferred compensation agreements and changes in net
cash surrender values of key man life policies in the healthcare
business.
La Quinta Corporation
Schedule C
Supplemental Non-GAAP Financial Data
(Unaudited)
Three months ended Six months ended
Adjusted EBITDA Reconciliation
June 30,
June 30,
(In millions)
2004 2003
2004 2003
Net loss (per GAAP)
$(6.8) $(13.6) $(19.1)
$(63.9)
Add:
Depreciation and amortization
30.2 32.4
59.5 63.8
Impairment of property
and
equipment
7.7 4.6
12.7 66.6
Minority interest
4.7 4.6
9.2 9.1
Income tax benefit
(3.9) (6.6)
(9.0) (39.6)
Interest, net
14.7 16.5
30.3 30.8
Other (income) expense
(A) (0.6)
4.0 (0.8)
7.1
Discontinued operations,
net of tax (B)
--- (0.2)
--- 0.1
Adjusted EBITDA (Non-GAAP)
$46.0 $41.7
$82.8 $74.0
(A) See attached Schedule B for
details.
(B) Discontinued operations
for the three and six months ended June 30,
2003
includes three company owned hotels and TeleMatrix, Inc., a
business
component, which were sold during the fourth quarter of
2003.
The separately identifiable results of operations of the
components
have been reported as results from discontinued
operations
for all periods presented.
Adjusted EBITDA Reconciliation
(Current 2004 Outlook)
Three months ended Full Year
(In millions)
September 30, 2004 2004
Net loss (per GAAP)
$(17)
$(51)
Add:
Depreciation and amortization
30
127
Impairment of property
and equipment ---
13
Minority interest
5
18
Income tax benefit
(10)
(27)
Interest, net
15
65
Other expense (A)
27
29
Adjusted EBITDA (Non-GAAP)
$50
$ 174
(A) Includes the estimated
loss on early retirement of the 7.114% Notes
and estimated 2004 Baymont integration expenses.
La Quinta Corporation
Schedule D
Other Supplemental Information
(Unaudited)
Three months ended Six months ended
Capital Expenditures
June 30, June
30,
(In millions)
2004 2003 2004
2003
Capital expenditures
$20 $16
$29 $32
Selected Balance Sheet Data
(In millions)
June 30, December 31,
2004
2003
(Audited)
Property and equipment, net
$2,100
$2,144
Cash and cash equivalents (A)
315
327
Investment in securities (B) (1)
122
122
Total assets
2,755
2,806
Total indebtedness (C)
876
895
Total liabilities
1,147
1,183
Minority interest (D)
206
206
Total shareholders' equity (E)
1,401
1,417
Net debt to total capitalization
Equal to (C-B-A)/(E+D+C-B-A)
22%
22%
(1) Investments in securities
are the 7.114% Exercisable Put Option
Securities
owned by the Company and which relate to the $150 million
principal
amount of 7.114% Notes issued by the Company.
Debt Maturity Schedule
(In millions)
Year
At June 30,
2004
2004 (A)
$150
2005
116
2006
20
2007
210
2008
50
2009 and thereafter
330
Total debt
876
Less: Cash and cash equivalents
315
Less: Investment in securities (B)
122
Net debt
$439
(A) The maturity schedule assumes
the $150 million of 7.114% Notes due
in 2011
will be redeemed at the option of the current holders or due
to the
Company exercising its repurchase rights and excludes any
prepayment
expense as a result of the early retirement of debt.
(B) Investments in securities
are the 7.114% Exercisable Put Option
Securities
owned by the Company and which relate to the $150 million
principal
amount of 7.114% Notes issued by the Company.
La Quinta Corporation
Schedule E
Lodging Statistics
(Unaudited)
Three months ended Three months ended
June 30, 2004 June 30, 2003
Change
Occ ADR RevPAR Occ ADR
RevPAR Occ ADR RevPAR
Comparable
Hotels
(A,B)
70.5% $58.77 $41.41 63.6% $59.91 $38.10 6.9 pts (1.9)% 8.7%
Company
Owned (A)
Inns
68.5% $55.65 $38.12 63.2% $56.75 $35.87 5.3 pts (1.9)% 6.3%
Inns &
Suites
75.3% $65.88 $49.57 63.7% $67.65 $43.06 11.6 pts (2.6)% 15.1%
Total
70.4% $58.71 $41.33 63.3% $59.67 $37.78 7.1 pts (1.6)% 9.4%
Six months ended Six months ended
June 30, 2004 June 30, 2003
Change
Occ ADR RevPAR Occ ADR
RevPAR Occ ADR RevPAR
Comparable
Hotels (B) 67.4% $58.69 $39.56
59.0% $61.16 $36.11 8.4 pts (4.0)% 9.6%
Company
Owned (C)
Inns
65.3% $55.33 $36.15 58.2% $57.60 $33.55 7.1 pts (3.9)% 7.8%
Inns &
Suites
72.6% $66.24 $48.07 60.3% $69.78 $42.09 12.3 pts (5.1)% 14.2%
Total
67.4% $58.61 $39.48 58.8% $60.92 $35.82 8.6 pts (3.8)% 10.2%
Hotel and Room Count Data
At June 30, 2004 At June
30, 2003
Number of Number of Number of
Number of
Hotels Rooms
Hotels Rooms
Comparable Hotels (B)
274 35,821
274 35,860
Company Owned (C)
274 35,821
278 36,358
Franchised Hotels
107 9,612
75 6,683
Total
381 45,433
353 43,041
(A) Excludes franchised
operating statistics and statistics for three
hotels reported in discontinued operations for the three and six
months ended June 30, 2003.
(B) Comparable hotels
for the three and six months ended June 30, 2004
and 2003 excludes two hotels classified as held for sale,
representing 250 rooms in aggregate.
(C) Excludes three hotels
(366) rooms reported in discontinued
operations for the three and six months ended June 30, 2003. All
three hotels were sold in 2003.
Source: La Quinta Corporation |
Dallas based La Quinta Corporation, a leading limited service lodging
company, owns, operates or franchises more than 380 La Quinta Inns and
La Quinta Inn & Suites in 33 states. Today's news release, as well
as other information about La Quinta, is available on the Internet at http://www.LQ.com.
Certain matters discussed in this press release may constitute "forward-
looking statements" within the meaning of Section 27A of the Securities
Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the
Private Securities Litigation Reform Act of 1995.
|