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La Quinta Corporation Reports 1st Qtr Net loss of $12.2 million versus Net Loss of $50.2 million in 2003;
RevPAR for Owned hotels Up 11%
Hotel Operating Statistics

DALLAS, April 29, 2004 - La Quinta Corporation (NYSE: LQI) today announced financial results for the first quarter ended March 31, 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 first quarter 2004, La Quinta reported:

  • Revenues of $132 million, an 11% increase compared to 2003.
  • Net loss of $12 million, or ($0.07) per share, versus net loss of $50 million, or ($0.35) per share, in 2003.
  • RevPAR for total company owned hotels of $37.64, an 11% increase compared to 2003.
  • Adjusted EBITDA of $37 million, a 14% increase compared to 2003.
"As anticipated, the company specific revenue initiatives that began to improve our results in the last half of 2003 have continued into 2004, delivering La Quinta's third consecutive quarter of RevPAR improvement that significantly outpaced the industry," said Francis W. ("Butch") Cash, President and Chief Executive Officer. "I am pleased with the focus our inn managers and employees have placed on guest satisfaction and improving the profitability at each of our hotels. We have now completed our 14th consecutive quarter of improving guest satisfaction and we exceeded both our RevPAR and Adjusted EBITDA guidance for the quarter."

Operating Results

La Quinta's total company RevPAR increased 11% during the first quarter. Guidance for the first quarter was for a 9% RevPAR increase. The improvement was driven by an occupancy increase of 10 percentage points, partially offset by 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 6% while La Quinta's RevPAR increased 11%. La Quinta's RevPAR in its top ten markets increased 12% 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 performance from our Internet distribution channels and frequent stayer program," commented Mr. Cash. "We are pleased that our sales force generated revenues that exceeded last year's first quarter results as the new sales force gained traction. Leisure travel remains strong and we are encouraged by the signs that business travel is picking up."

During the first quarter, franchise rooms increased by 223 rooms (3 hotels). As of March 31, 2004, La Quinta had opened 8,925 franchise rooms (99 hotels) compared to 6,009 franchise rooms (68 hotels) at March 31, 2003. La Quinta continues to expect to open approximately 4,000 franchise rooms (50 hotels) annually.

Financial Results

Revenues for the first quarter increased 11% over the first quarter of 2003. The revenue increase was primarily the result of a total company RevPAR increase of 11% due to significantly increased occupancy levels and a more favorable travel environment compared to last year, which was impacted by the war in Iraq, partially offset by a decline in average rates.

Net loss was $12 million, or ($0.07) per share, for the first quarter of 2004, versus a net loss of $50 million, or ($0.35) per share, for the first quarter of 2003. The improved net loss during the quarter was primarily the result of revenue increases and lower impairment expense compared to the first quarter of 2003, partially offset by increased sales and marketing expenses.

Adjusted EBITDA for the first quarter of 2004 was $37 million, a 14% increase compared to $32 million in the first quarter of 2003 and $2 million ahead of first quarter guidance. The increase in Adjusted EBITDA was driven primarily by revenue improvement and strong cost management at the property level. La Quinta's cost per rented room decreased 5% over the same quarter last year.

"La Quinta once again benefited from an improvement in Adjusted EBITDA as we maintained our expense controls and increased revenues," said David L. Rea, Executive Vice President and Chief Financial Officer. "We continue to focus on our growth strategy to improve cash flow from existing company owned hotels, to grow our franchising program and to acquire limited service assets and/or brands that meet our strategic and economic objectives."

At March 31, 2004, La Quinta had $291 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 $463 million at March 31, 2004. During the quarter, La Quinta repaid $19.5 million of the remaining balance of its 7.25% Senior Notes that matured March 2004.

"La Quinta is in an excellent position to benefit from the recovering economy with a strong portfolio of well maintained properties, high guest satisfaction scores and an exceptional franchising program in place," concluded Mr. Cash. "Our balance sheet is strong, our revenue initiatives are positively impacting financial results and lodging demand is improving amidst low supply growth."

Current Outlook

La Quinta is increasing its 2004 guidance and currently anticipates a total company RevPAR increase of 6%, Adjusted EBITDA of approximately $168 million and a net loss of $49 million. The net loss includes an estimated pretax loss of $28 million on early retirement of the 7.114% Notes. Capital expenditures for 2004 are currently estimated to be approximately $70 million, which includes $20 million related to a redevelopment project in downtown San Antonio. La Quinta continues to expect its 2004 RevPAR growth to be higher in the first half of the year than in the second half.

For the second quarter of 2004, La Quinta currently anticipates total company RevPAR to increase approximately 9% over the second quarter of 2003. Adjusted EBITDA is currently anticipated to be approximately $47 million and net loss is currently anticipated to be approximately $5 million. Schedules reconciling net loss to Adjusted EBITDA guidance for the second quarter and full year 2004 are included in this press release.

Statement Concerning Non-GAAP Measurement Tools

La Quinta uses Adjusted EBITDA as a supplemental measure of the Company's performance because we believe it gives the reader a more complete understanding of our financial condition and operating results. We use this metric to calculate various financial ratios and to measure our performance, and we believe some debt and equity investors also utilize this metric for similar purposes. Adjusted EBITDA includes adjustments for non-cash income or expenses such as depreciation, amortization and other non-cash items. Adjusted EBITDA is also adjusted for discontinued operations, income taxes, interest expense, net and minority interest (which includes our preferred stock dividends of La Quinta Properties, Inc.), as well as certain cash income or expense that we believe otherwise distort the comparability of the measure. Adjusted EBITDA is intended to show unleveraged, pre-tax operating results. The impact of investing and financing transactions, as well as income taxes, should also be considered in evaluating overall results. Adjusted EBITDA is not intended to represent any measure of performance in accordance with generally accepted accounting principles ("GAAP") and our calculation and use of this measure may differ from our competitors. This non-GAAP measure should not be used in isolation or as a substitute for a measure of performance or liquidity prepared in accordance with GAAP. A detailed schedule reconciling GAAP net loss to Adjusted EBITDA is included in the attached supplemental tables.

                            Supplemental Schedules

     Financial Results                       A
     Other (Income) Expense                  B
     Supplemental Non-GAAP Financial Data    C
     Other Supplemental Information          D
     La Quinta Summary Lodging Statistics    E

                            La Quinta Corporation
                                  Schedule A
                              Financial Results

                                                     Three months ended
    Operating Data:                                        March 31,
    (In thousands, except per share data)             2004           2003
      Lodging                                       $131,111       $118,148
      Other                                            1,186          1,231
    Total revenues                                   132,297        119,379

      Direct lodging operations                       60,935         54,775
      Other lodging expenses                          18,251         17,773
      General and administrative                      16,173         14,443
      Interest, net                                   15,538         14,243
      Depreciation and amortization                   29,277         31,391
      Impairment of property and equipment             5,014         62,012
      Other (income) expense                            (135)         3,164
    Total expenses                                   145,053        197,801
    Loss before minority interest, income taxes
     and discontinued operations                     (12,756)       (78,422)
      Minority interest                               (4,568)        (4,510)
      Income tax benefit                               5,029         32,978
    Loss before discontinued operations              (12,295)       (49,954)
      Discontinued operations, net                       ---           (334)
    Net loss                                        $(12,295)      $(50,288)

    Per Share Data:
    Loss before discontinued operations               $(0.07)        $(0.35)
      Discontinued operations, net                       ---            ---
    Net loss per share - basic and assuming
     dilution                                         $(0.07)        $(0.35)

    Weighted average shares outstanding
      Basic                                          176,269        142,701
      Assuming dilution                              176,269        142,701

Prior period results have been reclassified to conform to current period presentation.

                            La Quinta Corporation
                                  Schedule B
                            Other (Income) Expense

                                                       Three months ended
                                                             March 31,
    (In thousands)                                      2004           2003
      Gain on settlement (1)                            $(345)          $---
      Gain on sale of assets and related costs            ---           (105)
      Loss on early extinguishments of debt               ---          1,934
      Other (2)                                           210          1,335
      Total other (income) expense                      $(135)        $3,164

     (1)  During the three months ended March 31, 2004, we settled obligations
          related to assets previously sold that resulted in a net gain of
          approximately $345,000.

     (2)  During the three months ended March 31, 2004, we recognized expense
          of approximately $232,000 related to the termination and ongoing
          settlement of the La Quinta retirement plan.  During the three
          months ended March 31, 2003, we recognized expenses of approximately
          $1,339,000 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

                            La Quinta Corporation
                                  Schedule C
                     Supplemental Non-GAAP Financial Data

                                                     Three months ended
    Adjusted EBITDA Reconciliation                         March 31,
    (In thousands)                                    2004           2003
    Net loss (per GAAP)                             $(12,295)      $(50,288)
      Depreciation and amortization                   29,277         31,391
      Impairment of property and equipment             5,014         62,012
      Minority interest                                4,568          4,510
      Income tax benefit                              (5,029)       (32,978)
      Interest, net                                   15,538         14,243
      Other (income) expense (1)                        (135)         3,164
      Discontinued operations, net (2)                   ---            334
    Adjusted EBITDA (Non-GAAP)                       $36,938        $32,388

     (1)  See attached Schedule B for details.

     (2)  Discontinued operations for the three months ended March 31, 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)
    (In millions)

                                                Three months ended  Full Year
                                                   June 30, 2004      2004

    Net loss (per GAAP)                                 $(5)          $(49)
      Depreciation and amortization                      33            128
      Impairment of property and equipment              ---              5
      Minority interest                                   5             18
      Income tax benefit                                 (1)           (23)
      Interest, net                                      15             61
      Other expense                                     ---             28 (A)
    Adjusted EBITDA (Non-GAAP)                          $47           $168

    (1)  Includes the estimated loss on early retirement of the 7.114% Notes.

                            La Quinta Corporation
                                  Schedule D
                        Other Supplemental Information

                                                       Three months ended
    Capital Expenditures                                    March 31,
    (In millions)                                      2004           2003

    Capital expenditures                                  $9            $16

    Selected Balance Sheet Data
    (In millions)
                                                   March 31,     December 31,
                                                      2004           2003
    Property and equipment, net                       $2,121         $2,144
    Cash and cash equivalents (A)                        291            327
    Investments in securities (B) (1)                    122            122
    Total assets                                       2,749          2,804
    Total indebtedness (C)                               876            895
    Total liabilities                                  1,136          1,182

    Minority interest (D)                                206            206

    Total shareholders' equity (E)                     1,407          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                   March 31, 2004
                 2004 (1)                       $150
                   2005                          116
                   2006                           20
                   2007                          210
                   2008                           50
          2009 and thereafter                    330
                Total debt                      $876
     Less: Cash and cash equivalents             291
     Less: Investments in securities (2)         122
                 Net debt                       $463

     (1)  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.

     (2)  Investments in securities are the 7.114% Exercisable Put Option
          Securities owned by the Company which relate to the $150 million
          principal amount of 7.114% Notes issued by the Company.

La Quinta Corporation
                                  Schedule E
                              Lodging Statistics

              Three months ended   Three months ended
                 March 31, 2004       March 31, 2003           Change
              Occ     ADR  RevPAR   Occ   ADR  RevPAR     Occ    ADR   RevPAR

     (1,2)    64.4% $58.60 $37.72  54.4% $62.63 $34.09  10.0 pts (6.4)% 10.6%
     Owned (1)
      Inns    62.2% $54.97 $34.18  53.3% $58.62 $31.22   8.9 pts (6.2)%  9.5%
      Inns &
       Suites 69.9% $66.63 $46.56  57.0% $72.17 $41.10  12.9 pts (7.7)% 13.3%
      Total   64.3% $58.50 $37.64  54.2% $62.40 $33.85  10.1 pts (6.3)% 11.2%

    Hotel and Room Count Data

                           March 31, 2004           March 31, 2003
                        Number of  Number of    Number of   Number of
                          Hotels     Rooms        Hotels       Rooms
    Comparable Hotels (2)   274      35,826         274       35,878
    Company-Owned (3)       276      36,076         281       36,758
    Franchised Hotels        99       8,925          68        6,009
    Total (3)               375      45,001         349       42,767

     (1)  Excludes franchised operating statistics and statistics for three
          hotels reported in discontinued operations for the three months
          ended March 31, 2003.

     (2)  Comparable hotels for the three months ended March 31, 2004 and 2003
          excludes two hotels classified as held for sale, representing
          250 rooms in aggregate.

     (3)  Excludes three hotels (366 rooms) reported in discontinued
          operations for the three months ended March 31, 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 370 La Quinta Inns and La Quinta Inn & Suites in 33 states. 

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. 

 La Quinta Corporation

Also See: La Quinta Founder Sam Barshop Receives Hotel Industry Lifetime Achievement Award; Credited with Creating the Limited Service Lodging Concept / January 2004
La Quinta Inn & Suites in Galveston, Texas Is 100th Franchised Property for La Quinta Corporation / March 2004

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