Orient-Express Hotels
Reports Third Quarter 2009 Net Loss of $13.0 million
Compared with Net Earnings of $6.4 million in Prior
year Same Quarter
RevPAR Down 26% in US
dollars
Hotel Operating Statistics
HAMILTON, Bermuda, November 3,
2009 - - Third Quarter 2009 Earnings Summary
- Third quarter total revenues, excluding Real Estate, of $142.5 million - Same store RevPAR down 20% in local currency, 26% in US dollars - Adjusted EBITDA before Real Estate and Impairment of $30.6 million
Key Events
- Windsor Court Hotel, New Orleans sold in October, for $44.3 million, over 50x 2008 EBITDA - Total proceeds from non-core asset sales now $86.3 million - Letter of intent signed in October for sale of third non-core hotel asset - Relaunched Hotel das Cataratas, Iguassu Falls, Brazil, upgraded to Orient-Express standards - Returned refurbished Road to Mandalay river cruise ship in Burma to service - Commenced conversion of historic convent into 56 key hotel Palacio Nazarenas, Cuzco, Peru, scheduled for completion in 2011 - Sold a further two residential villas at Napasai, Koh Samui, Thailand for $1.7 million
Orient-Express Hotels Ltd. (NYSE: OEH, http://www.orient-express.com),
owners or part-owners and managers of 49 luxury hotels, restaurants,
tourist trains and river cruise properties operating in 25 countries,
today announced its results for the third quarter ended September
30, 2009.
The net loss for the period was $13.0 million
(loss of $0.17 per common share) on revenue of $144.2
million, compared with net earnings of $6.4 million
($0.15 per common share) on revenue of $176.7
million in the third quarter of 2008. The net loss from
continuing operations for the period was $2.7 million
(loss of $0.04 per common share) compared with net
earnings from continuing operations of $20.6 million ($0.48
per common share) in the third quarter of 2008. The adjusted net
earnings from continuing operations for the period was $1.4
million ($0.02 per common share) compared with
adjusted net earnings from continuing operations of $22.6
million ($0.53 per common share) in the third
quarter of 2008.
Commenting on the quarter, Paul White,
President and Chief Executive Officer said, "The third quarter has
again demonstrated the resilience of the Orient-Express business model.
Our focus on the high end leisure traveller and our international
diversification translated into RevPAR declines that were not as steep
as those experienced by the luxury sector in general or the 'big brand'
operators that rely heavily on group and corporate business.
Nevertheless, the quarter was another challenging trading period for
the Company and the industry as a whole.
"During the quarter we continued to expedite the sale of
non-core assets, with $86.3 million of sales completed
so far this year. A non-binding letter of intent has since been signed
for the sale of a third non-core hotel asset, and total proceeds are
expected to rise to over $100 million by the end of
2009. The completed sales, coupled with the equity raised in April, has
helped to reduce our net debt from $835.3 million at December
31, 2008 to $705.8 million.
"Progress continues on our Real Estate developments in St.
Martin. The construction of Porto Cupecoy is nearing
completion, with the grand opening scheduled for February 2010.
To date the project is nearly 50% sold. We expect the balance of 93
condominiums to be sold over the next two to three years at an
anticipated average price of $0.6 to $0.7 million,
which will further deleverage the balance sheet.
"Trading has been consistent with our expectations. It is
particularly pleasing to see the operational efficiencies continue
through the high season, when savings are more challenging in the
luxury sector. Again in this quarter, we achieved savings sufficient to
offset 47% of the revenue drop, excluding Charleston Place,
which was consolidated from January 1, 2009."
Business Highlights
Revenue, excluding Real Estate revenue, was $142.5
million in the third quarter of 2009, down $30.8 million
from the third quarter of 2008. On a same store basis, revenue,
excluding Real Estate revenue, was down by 22% in US dollars or by $37.7
million.
Revenue from Owned Hotels for the third quarter was $116.5
million, including $10.0 million from Charleston
Place. This excludes revenue from Windsor
Court Hotel, which has been accounted for as a discontinued operation.
On a same store basis, revenue from Owned Hotels declined by 21% year
over year. Owned Hotels same store RevPAR declined by 20% in local
currency (26% in US dollars).
Trains and Cruises revenue fell by 23% or $7.0 million.
These operations have a high variable cost component and EBITDA fell by
only $2.6 million.
Adjusted EBITDA before Real Estate and Impairment was $30.6
million compared to $51.3 million in the prior
year. The principal variances from the third quarter of 2008 included
results from owned hotels in Italy (down $3.9
million), Reid's Palace, Madeira (down $1.2 million),
Grand Hotel Europe, St Petersburg (down $2.9
million), La Residencia, Mallorca (down $1.8 million),
La Samanna, St. Martin (down $1.2 million),
Orient-Express Safaris, Botswana (down $1.2
million), and the Venice Simplon-Orient-Express (down $2.7
million).
The results for the third quarter include a non-cash fixed
asset impairment charge of $9.8 million relating to the
Company's ownership of Lilianfels Blue Mountains, Katoomba, Australia.
During the quarter, work started on a fully-financed $14.1
million, 56 key hotel Palacio Nazarenas, Cuzco, Peru,
scheduled for completion in 2011. The hotel, a conversion of an
historic convent, will complement our next door Hotel Monasterio with a
presidential suite, 29 junior suites, 9 suites and 17 deluxe
oxygen-enriched rooms.
The entirely refurbished Road to Mandalay river cruise ship in
Burma returned to service in August
2009, after an absence of more than 12 months, following damage
sustained during Cyclone Nargis. A new Governor's Suite and five
additional state cabins have been created. Deluxe cabins have been
reduced in number and expanded to improve the guest experience.
Regional Performance
Europe: In the third quarter, revenues
from Owned Hotels were $67.5 million, down 23% from $88.1
million in the third quarter of 2008. EBITDA was $25.6
million in 2009 versus $35.9 million in the
prior year. Same store RevPAR decreased by 18% in local currency (26%
in US dollars). Overall the Italian hotels experienced a 12% fall in
local currency RevPAR (19% in US dollars). Reid's Palace, which is
heavily dependent on the weakened UK outbound market experienced a 35%
fall in local currency RevPAR (39% in US dollars). Similarly, La
Residencia, which is also largely dependent on the UK market,
experienced a 31% fall in local currency RevPAR (36% in US dollars).
Grand Hotel Europe, St Petersburg continued to be
adversely affected by the global recession and suffered a 28% fall in
local currency RevPAR (44% in US dollars). The depreciation of the
rouble had a $1.4 million adverse impact on the hotel's
EBITDA.
North America: Revenue was $19.9
million, including $10.0 million with respect
to Charleston Place, South Carolina which was
consolidated from January 1, 2009. Excluding this
hotel, revenue was 25% lower than the third quarter of 2008. Excluding
EBITDA of $1.8 million from Charleston Place,
there was an EBITDA decrease of $2.2 million. Same
store RevPAR for the region fell by 31%. The region includes La
Samanna, St. Martin, which was significantly
impacted by the economic downturn as well as the closure of the
property for one week due to a hurricane threat. Consequently, the
hotel suffered a 41% fall in RevPAR.
Southern Africa: Revenue of $7.2
million was 29% lower year over year, and EBITDA of $1.1
million was 58% lower than in the third quarter of 2008.
South America: Revenue decreased by 10%
to $11.3 million in the third quarter of 2009, from $12.5
million in the third quarter of 2008. EBITDA was $0.9
million, compared to $1.9 million last year.
Copacabana Palace had a RevPAR decrease of 19% in local currency, and
EBITDA was down by $0.5 million. The region's EBITDA
results were impacted by a $1.6 million EBITDA loss at
Hotel das Cataratas which was relaunched under the Orient-Express brand
in October 2009.
Asia Pacific: Revenue for the third
quarter of 2009 was $10.7 million, a decrease of 2%
year over year. EBITDA was $2.8 million compared to $2.2
million in the third quarter of 2008. Same store RevPAR in
local currency for the region fell by 4% from $172 to $166.
Hotel management and part-ownership interests: EBITDA for the
third quarter of 2009 was a loss of $0.1 million
compared to a profit of $4.7 million in the third
quarter of 2008, which included $3.1 million of EBITDA
from Charleston Place.
Restaurants: Revenue from restaurants in the third quarter of
2009 was $2.2 million compared to $2.9 million
in the same quarter of 2008, and EBITDA was a loss of $0.5
million compared with a loss of $0.3 million in
2008.
Trains and Cruises: Revenue was down $7.0 million
in the third quarter of 2009, a decrease of 23% year over year, and
EBITDA was down by $2.6 million, reflecting the high
level of variable costs in the trains business.
Central costs: In the third quarter of 2009, central costs
were $7.4 million compared with $6.2 million
in the prior year period. In the quarter, there was a $0.5
million increase in the cost of non-cash equity-compensation
awards.
Depreciation and amortization: The depreciation and
amortization charge for the third quarter of 2009 was $11.0
million compared with $8.9 million in the third
quarter of 2008. The current year quarter includes $1.9 million
relating to Charleston Place, which was consolidated from January
1, 2009.
Interest: The interest charge for the third quarter of 2009
was $7.8 million compared with $10.9 million
in the third quarter of 2008.
Tax: The tax charge for the quarter was $7.9 million
compared to a charge of $8.2 million in the same
quarter in the prior year. The third quarter 2009 tax charge includes a
deferred tax charge of $1.7 million arising in respect
of fixed asset timing differences following appreciation of certain
local currencies against the US dollar in the quarter. There was also a
benefit to deferred tax of $2.9 million in respect of
the impairment charge in the quarter.
Discontinued Operations: The charge in the third quarter of
2009 was $10.3 million. Discontinued operations in the
third quarter include the results of Windsor
Court Hotel, New Orleans, Bora Bora Lagoon Resort
and La Cabana, Buenos Aires. The charge included
an operating loss in the quarter of $0.4 million and
impairment charges, net of tax, of $5.4 million
relating to La Cabana and $4.5 million relating to Bora
Bora Lagoon Resort.
Investment: Capital expenditure in the third quarter was $10.4
million which was necessary to complete projects at, in
particular, Grand Hotel Europe and Copacabana Palace. This also
included $5.9 million for Road To Mandalay, which is
fully covered by insurance. There was an additional $9.0 million
deposit for the New York hotel project. In
addition, the Company invested $8.9 million during the
quarter in the Company's development at Porto Cupecoy and $3.5
million was invested in Hotel das Cataratas.
Liquidity and Capital Reserves
At September 30, 2009, the Company had total
debt of $830.1 million, working capital loans of $8.4
million and cash balances of $132.8 million
(including $17.8 million of restricted cash), giving a
total net debt of $705.8 million compared with total
net debt of $683.9 million at the end of the second
quarter of 2009. Additionally, at September 30, 2009,
Other Liabilities Held for Sale included $36.8 million
of debt relating to The Windsor Court Hotel,
which was repaid in October when the hotel was sold.
At September 30, 2009, undrawn amounts
available to the Company under committed short-term lines of credit
were $25.0 million and undrawn amounts available to the
Company under secured revolving credit facilities were $12.0
million, bringing total cash availability at September
30, 2009, to $169.8 million, including
restricted cash of $17.8 million.
At September 30, 2009, approximately 56% of
the Company's debt was at fixed interest rates and 44% was at floating
interest rates. The weighted average maturity of the debt was
approximately 2.7 years and the weighted average interest rate
(including margin) was approximately 3.5%.
Outlook
"As we enter the low season period, we see business conditions
continuing to stabilize. Bookings remain very last minute, a trend we
expect to continue into 2010", said Paul White. "We
maintain our tight control of costs and capital expenditures and are
pursuing the sale of non-core assets and developed Real Estate in line
with our strategy. Having achieved key milestones in all three of these
areas, with further progress expected in the coming months, the Company
can now begin to evaluate growth opportunities in management, ownership
or a combination of both. Our aim continues to be to deleverage the
Company significantly by the end of 2011, with a targeted 4-5 times
ratio of debt to EBITDA on a stabilized basis."
Reconciliation to reported earnings
$'000 - except per share amounts Three months ended Nine months September 30 ended September 30 2009 2008 2009 2008
EBITDA 19,315 51,110 46,609 116,688 Adjusted items: Legal costs (1) 19 - 648 - Management restructuring (2) 755 - 1,472 - Impairment (3) 9,809 - 16,857 - Adjusted EBITDA 29,898 51,110 65,586 116,688 (13,015) 6,379 (51,967) 21,505
US GAAP reported net (losses)/earnings Discontinued operations net of tax 10,308 14,172 34,473 19,135 Net (loss)/earnings from continuing operations (2,707) 20,551 (17,494) 40,640 Adjusted items net of tax: Legal costs (1) 19 - 648 - Management restructuring (2) 455 - 1,080 - Impairment (3) 6,866 - 13,914 - Interest rate swaps (4) 113 583 965 137 Foreign exchange (5) (3,355) 1,466 (368) (2,075) Adjusted net earnings/(loss) from continuing operations 1,391 22,600 (1,255) 38,702 Reported EPS (0.17) 0.15 (0.80) 0.51 Reported EPS from continuing Operations (0.04) 0.48 (0.27) 0.96 Adjusted EPS from continuing Operations 0.02 0.53 (0.02) 0.91 Number of shares (millions) 76.84 42.47 65.08 42.47
1. Costs associated with litigation challenging the Company's
class B common share structure, as reported in the 2008 Form 10-K.
2. Restructuring and redundancy costs incurred in 2009 as the
final part of the Company's cost reduction program.
3. Goodwill and fixed asset impairment charges recorded on
four owned properties.
4. Swaps that did not qualify for hedge accounting.
5. Foreign exchange, net of tax, is a non-cash item arising on
the translation of certain assets and liabilities denominated in
currencies other than the reporting currency of the entity concerned.
Management evaluates the operating performance of the
Company's segments on the basis of segment net earnings before
interest, foreign currency, tax (including tax on unconsolidated
companies), depreciation and amortization (segment EBITDA), and
believes that segment EBITDA is a useful measure of operating
performance, for example to help determine the ability to incur capital
expenditure or service indebtedness, because it is not affected by
non-operating factors such as leverage and the historic cost of assets.
EBITDA is also a financial performance measure commonly used in the
hotel and leisure industry, although the Company's segment EBITDA may
not be comparable in all instances to that disclosed by other
companies. Segment EBITDA does not represent net cash provided by
operating, investing and financing activities under U.S. generally
accepted accounting principles (U.S. GAAP), is not necessarily
indicative of cash available to fund all cash flow needs, and should
not be considered as an alternative to earnings from operations or net
earnings under U.S. GAAP for purposes of evaluating operating
performance.
Adjusted net earnings, adjusted net earnings from continuing
operations, and adjusted E.P.S. are non-GAAP financial measures and do
not have any standardized meanings prescribed by U.S. GAAP. They are,
therefore, unlikely to be comparable to similar measures presented by
other companies, which may be calculated differently, and should not be
considered as an alternative to net earnings, cash flow from operating
activities or any other measure of performance prescribed by U.S. GAAP.
Management considers adjusted net earnings, adjusted net earnings from
continuing operations, and adjusted E.P.S. to be meaningful indicators
of operations and uses them as measures to assess operating performance
because, when comparing current period performance with prior periods
and with budgets, management does so after having adjusted for
non-recurring items, foreign exchange (a non-cash item) and significant
disposals of assets or investments, which could otherwise have a
material effect on the comparability of the Company's core operations.
Adjusted net earnings, adjusted net earnings from continuing
operations, and adjusted E.P.S. are also used by investors, analysts
and lenders as measures of financial performance because, as adjusted
in the foregoing manner, the measures provide a consistent basis on
which the performance of the Company can be assessed.
This news release and related oral presentations by management
contain, in addition to historical information, forward-looking
statements that involve risks and uncertainties. These include
statements regarding earnings outlook, investment plans, debt
reduction, asset sales and similar matters that are not historical
facts. These statements are based on management's current expectations
and are subject to a number of uncertainties and risks that could cause
actual results to differ materially from those described in the
forward-looking statements. Factors that may cause a difference
include, but are not limited to, those mentioned in the news release,
unknown effects on the travel and leisure markets of terrorist activity
and any police or military response, varying customer demand and
competitive considerations, failure to realize hotel bookings and
reservations and planned property development sales as actual revenue,
inability to sustain price increases or to reduce costs, rising fuel
costs adversely impacting customer travel and the Company's operating
costs, fluctuations in interest rates and currency values, uncertainty
of completing proposed asset sales, adequate sources of capital and
acceptability of finance terms made more difficult by the current
crisis in financial markets and by weakening national economies,
possible loss or amendment of planning permits and delays in
construction schedules for expansion or development projects, delays in
reopening properties closed for repair or refurbishment and possible
cost overruns, shifting patterns of tourism and business travel and
seasonality of demand, inability to reduce funded debt as planned or to
agree loan agreement waivers or amendments, adverse local weather
conditions, changing global and regional economic conditions in many
parts of the world and weakness in financial markets, legislative,
regulatory and political developments, and possible continuing
challenges to the Company's corporate governance structure. Further
information regarding these and other factors is included in the
filings by the company with the U.S. Securities and Exchange Commission.
Orient-Express Hotels will conduct a conference call on Wednesday,
November 4, 2009 at 10.00 am ET (15.00 GMT)
which is accessible at +1-866-966-5335 (US toll free) or
+44(0)20-3037-9120 (Standard International access). The conference ID
is 'Orient-Express'. A replay of the conference call will be available
until 5.00pm (ET) Wednesday, November 11, 2009 and can
be accessed by calling +1-866-583-1035 (US toll free) or
+44(0)20-8196-1998 (Standard International) and entering replay access
passcode: 3917290#. A replay will also be available on the company's
website: http://www.orient-expressinvestorinfo.com.
ORIENT-EXPRESS HOTELS LTD Three Months ended September 30, 2009 SUMMARY OF OPERATING RESULTS (Unaudited)
Three months ended September 30 $'000 - except per share amount 2009 2008
Revenue and earnings
from unconsolidated companies Owned hotels - Europe 67,535 88,117 - North America 19,897 13,184 - Rest of World 29,113 33,437 Hotel management & part ownership interests (141) 4,664 Restaurants 2,151 2,899 Trains & Cruises 23,944 30,984 Revenue and earnings from unconsolidated companies before Real Estate 142,499 173,285 Real Estate 1,688 3,454 Total (1) 144,187 176,739
Analysis of earnings Owned hotels - Europe 25,595 35,905 - North America (68) 300 - Rest of World 4,704 6,681 Hotel management & part ownership interes (141) 4,664 Restaurants (494) (269) Trains & Cruises 7,686 10,247 Central overheads (7,418) (6,195) EBITDA before Real Estate and Impairment 29,864 51,333 Real Estate (740) (223) EBITDA before Impairment 29,124 51,110 Impairment (9,809) - EBITDA 19,315 51,110 Depreciation & amortization (11,041) (8,931) Interest (7,781) (10,858) Foreign exchange 4,709 (2,531) Earnings before tax 5,202 28,790 Tax (7,909) (8,239) Net (losses)/earnings from continuing Operations (2,707) 20,551 Discontinued operations (10,308) (14,172) Net (losses)/earnings on common shares (13,015) 6,379 (Losses)/earnings per common share (0.17) 0.15 Number of shares - millions 76.84 42.47
(1) Comprises earnings from unconsolidated companies of $2,012,000
(2008 - $5,798,000) and revenue of $142,175,000
(2008 - $170,941,000).
ORIENT-EXPRESS HOTELS LTD Three Months Ended September 30, 2009 SUMMARY OF OPERATING INFORMATION FOR OWNED HOTELS
Three months ended September 30 2009 2008 Average Daily Rate (in U.S. dollars) Europe 797 962 North America 273 308 Rest of World 282 279 Worldwide 458 517
Rooms Available (000's) Europe 82 82 North America 67 66 Rest of World 119 109 Worldwide 268 257
Rooms Sold (000's) Europe 48 55 North America 36 41 Rest of World 55 66 Worldwide 139 162
RevPAR (in U.S. dollars) Europe 470 639 North America 147 193 Rest of World 130 167 Worldwide 238 324
Change % Same Store RevPAR Dollar Local (in U.S. dollars) currency Europe 470 639 -26% -18% North America 193 282 -31% -31% Rest of World 145 180 -19% -18% Worldwide 280 379 -26% -20%
ORIENT-EXPRESS HOTELS LTD Nine Months ended September 30, 2009 SUMMARY OF OPERATING RESULTS (Unaudited)
Nine months ended September 30 $'000 - except per share amount 2009 2008
Revenue and earnings from unconsolidated companies Owned hotels - Europe 133,212 194,100 - North America 75,877 49,772 - Rest of World 85,278 105,044 Hotel management & part ownership interests 1,774 17,618 Restaurants 8,717 12,162 Trains & Cruises 52,205 73,101 Revenue and earnings from unconsolidated
companies before Real Estate 357,063 451,797 Real Estate 1,688 11,980 Total (1) 358,751 463,777
Analysis of earnings Owned hotels - Europe 37,357 65,277 - North America 11,957 8,936 - Rest of World 17,253 23,061 Hotel management & part ownership interests 1,774 17,618 Restaurants 31 1,516 Trains & Cruises 15,983 21,616 Central overheads (19,356) (20,153) EBITDA before Real Estate and Impairment 64,999 117,871 Real Estate (1,533) (1,183) EBITDA before Impairment 63,466 116,688 Impairment (16,857) - EBITDA 46,609 116,688 Depreciation & amortization (29,992) (27,609) Interest (24,588) (33,546) Foreign exchange 487 2,131 (Losses)/earnings before tax (7,484) 57,664 Tax (10,010) (17,024) Net (losses)/earnings from continuing Operations (17,494) 40,640 Discontinued operations (34,473) (19,135) Net (losses)/earnings on common shares (51,967) 21,505
(Losses)/earnings per common share (0.80) 0.51 Number of shares - millions 65.08 42.47
(1) Comprises earnings from unconsolidated companies of $6,362,000
(2008 - $18,323,000) and revenue of $352,389,000
(2008 - $445,454,000).
ORIENT-EXPRESS HOTELS LTD Nine Months Ended September 30, 2009 SUMMARY OF OPERATING INFORMATION FOR OWNED HOTELS
Nine months ended September 30 2009 2008 Average Daily Rate
(in U.S. dollars) Europe 717 879 North America 364 406 Rest of World 276 282 Worldwide 420 484
Rooms Available (000's) Europe 212 217 North America 164 162 Rest of World 353 343 Worldwide 729 722
Rooms Sold (000's) Europe 102 128 North America 92 108 Rest of World 174 209 Worldwide 368 445
RevPAR (in U.S. dollars) Europe 344 519 North America 205 271 Rest of World 136 172 Worldwide 212 299
Change % Same Store RevPAR Dollar Local (in U.S. dollars) Currency Europe 344 521 -34% -23% North America 272 368 -26% -25% Rest of World 148 184 -20% -14% Worldwide 235 332 -29% -21%
ORIENT-EXPRESS HOTELS LTD CONSOLIDATED AND CONDENSED BALANCE SHEETS (Unaudited)
September 30 December 31 2009 2008 $'000 Assets
Cash 132,769 77,826 Accounts receivable 62,515 45,232 Due from related parties 14,519 9,985 Prepaid expenses 25,548 19,297 Inventories 44,206 43,265 Other assets held for sale 74,971 156,207 Real estate assets 107,711 83,983 Total current assets 462,239 435,795
Property, plant & equipment, net book value 1,431,993 1,352,996 Investments 70,681 67,464 Goodwill 149,460 154,054 Other intangible assets 20,795 20,255 Other assets 38,463 38,569 2,173,631 2,069,133
Liabilities and Equity
Working capital facilities 8,402 54,179 Accounts payable 26,266 23,243 Accrued liabilities 97,059 72,277 Deferred revenue 69,397 55,988 Other liabilities held for sale 42,775 78,837 Current portion of long-term debt and capital leases 170,074 138,813 Total current liabilities 413,973 423,337
Long-term debt and obligations under capital leases 660,064 657,952 Deferred income taxes 168,523 162,199 Other liabilities 36,441 41,476 Total liabilities 1,279,001 1,284,964
Shareholders' equity 893,061 782,598 Non-controlling interests 1,569 1,571 Total equity 894,630 784,169 2,173,631 2,069,133
Contact: Martin O'Grady Vice President, Chief Financial Officer Tel: +44-20-7921-4038 E: [email protected]
Pippa Isbell Vice President, Corporate Communications Tel: +44-20-7921-4065 E: [email protected]
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