Morgans Hotel Group Co.
Unaudited Income Statement (in $ 000s)
Three Months Ended
3/31/06 3/31/05
Change
----------------------------
Revenues:
Rooms
36,816 35,352 4%
Food & beverage
21,985 21,495
Other hotel
3,081 2,905
--------------------
Total hotel revenues
61,882 59,752 4%
Management fees
2,207 2,500
--------------------
Total revenues
64,089 62,252 3%
Operating Costs and Expenses:
Rooms
10,061 9,571
Food & beverage
14,062 13,560
Other departmental
1,164 920
Hotel, selling, general and administrative
13,212 12,680
Property taxes, insurance and other
3,677 3,080
--------------------
Total hotel operating expenses
42,176 39,811 6%
Corporate expenses:
Stock based compensation
1,052
Other
4,618 3,839
Depreciation
5,325 6,880
--------------------
Total operating costs and expenses
53,171 50,530 5%
Operating income
10,918 11,722 -7%
Interest expense, net
14,584 11,714
Equity in loss of unconsolidated joint
ventures
376 1,809
Minority interest in joint ventures
1,405 1,240
Other non-operating (income) loss
42 (433)
--------------------
Pre tax loss
(5,489) (2,608) -110%
Income taxes
11,386 183
--------------------
Net loss before minority interest in
MHGC
(16,875) (2,791) -505%
Shares Outstanding
33,500
Loss per share (1)
(0.36)
(1) Loss per share represents the loss for Morgan's Hotel
Group Co.
from February 17, 2006, the date of
the IPO, to March 31, 2006
over the number of shares outstanding
in that period.
Morgans Hotel Group, Co.
Unaudited Hotel Operating Statistics
Three Months Ended %
3/31/06 3/31/05 Change
------------------------------
Morgans
Occupancy
81.0% 83.5% -3.0%
ADR
265.83 249.46 6.6%
RevPAR
215.32 208.30 3.4%
Royalton
Occupancy
85.3% 87.4% -2.4%
ADR
289.57 263.96 9.7%
RevPAR
247.00 230.70 7.1%
Hudson
Occupancy
75.8% 80.4% -5.7%
ADR
217.36 197.79 9.9%
RevPAR
164.76 159.02 3.6%
Delano
Occupancy
82.0% 84.9% -3.4%
ADR
586.78 587.89 -0.2%
RevPAR
481.16 499.12 -3.6%
Mondrian
Occupancy
81.2% 80.8% 0.5%
ADR
318.89 299.77 6.4%
RevPAR
258.94 242.21 6.9%
Clift
Occupancy
63.7% 61.8% 3.1%
ADR
241.82 213.49 13.3%
RevPAR
154.04 131.94 16.8%
Total Owned
Occupancy
68.5% 70.5% -2.8%
ADR
286.49 267.48 7.1%
RevPAR
196.25 188.57 4.1%
St. Martins Lane
Occupancy
73.2% 69.0% 6.1%
ADR
345.18 369.02 -6.5%
RevPAR
252.67 254.62 -0.8%
Sanderson
Occupancy
73.5% 65.0% 13.1%
ADR
423.63 448.75 -5.6%
RevPAR
311.37 291.69 6.7%
Shore Club
Occupancy
75.4% 80.6% -6.5%
ADR
429.61 405.40 6.0%
RevPAR
323.93 326.75 -0.9%
Total Joint Venture
Occupancy
74.3% 73.5% 1.1%
ADR
402.59 403.45 -0.2%
RevPAR
299.12 296.54 0.9%
Total Company
Occupancy
75.5% 76.9% -1.8%
ADR
316.20 301.40 4.9%
RevPAR
238.73 231.78 3.0%
EBITDA and Adjusted EBITDA
We believe that earnings before interest, income taxes,
depreciation and amortization (EBITDA) is a useful financial metric to
assess our operating performance before the impact of investing and financing
transactions and income taxes. It also facilitates comparison between us
and our competitors. Given the significant investments that we have made
in the past in property, plant and equipment, depreciation and amortization
expense comprises a meaningful portion of our cost structure. We believe
that EBITDA will provide investors with a useful tool for assessing the
comparability between periods because it eliminates depreciation and amortization
expense attributable to capital expenditures.
We disclose Adjusted EBITDA because we believe it provides
a meaningful comparison to our EBITDA as it excludes other non-operating
(income) expenses that do not relate to the on-going performance of our
assets and excludes the operating performance of assets in which we do
not have a fee simple ownership interest.
The use of EBITDA and Adjusted EBITDA has certain limitations.
Our presentation of EBITDA and Adjusted EBITDA may be different from the
presentation used by other companies and therefore comparability may be
limited. Depreciation expense for various long-term assets, interest expense,
income taxes and other items have been and will be incurred and are not
reflected in the presentation of EBITDA or Adjusted EBITDA. Each of these
items should also be considered in the overall evaluation of our results.
Additionally, EBITDA and Adjusted EBITDA do not consider capital expenditures
and other investing activities and should not be considered as a measure
of our liquidity. We compensate for these limitations by providing the
relevant disclosure of our depreciation, interest and income tax expense,
capital expenditures and other items both in our reconciliations to the
GAAP financial measures and in our consolidated financial statements, all
of which should be considered when evaluating our performance. The term
EBITDA is not defined under accounting principles generally accepted in
the United States, or U.S. GAAP, and EBITDA is not a measure of net income,
operating income, operating performance or liquidity presented in accordance
with U.S. GAAP. In addition, EBITDA is impacted by reorganization of businesses
and other restructuring-related charges. When assessing our operating performance,
you should not consider this data in isolation, or as a substitute for,
our net income, operating income or any other operating performance measure
that is calculated in accordance with U.S. GAAP. In addition, our EBITDA
may not be comparable to EBITDA or similarly titled measures utilized by
other companies since such other companies may not calculate EBITDA in
the same manner as we do.
A reconciliation of net income (loss) and operating income
(loss), the
most directly comparable U.S. GAAP measures, to EBITDA
and Adjusted
EBITDA for each of the respective periods indicated is
as
follows:
Morgans Hotel Group, Co.
Unaudited EBITDA Reconciliation
(in $ 000s)
Three Months Ended
3/31/06 3/31/05
----------------------
Net income (loss)
(16,875) (2,791)
Interest expense,net
14,584 11,714
Income tax expense
11,386 183
Depreciation and amortization expense
5,325 6,880
Proportionate share of interest expense
from unconsolidated joint ventures
1,599 1,864
Proportionate share of depreciation expense
from unconsolidated joint ventures
1,233 2,006
Proportionate share of depreciation expense
of consolidated joint ventures
(130) (158)
----------------------
EBITDA
17,122 19,698
Other non operating expense (income)
42 (433)
Less: Clift
(836) (640)
Add: Stock based compensation
1,052
-
----------------------
Adjusted EBITDA
17,380 18,625
Morgans Hotel Group, Co.
Reconciliation of Operating Income to Adjusted
EBITDA
(unaudited, in $ 000s)
Three Months Ended
3/31/06 3/31/05
----------------------
Operating Income
10,918 11,722
Depreciation
5,325 6,880
EBITDA from joint ventures
2,456 2,061
Minority interest
(1,535) (1,398)
Other non-operating income (loss)
(42) 433
----------------------
EBITDA
17,122 19,698
Other non-operating (income) loss
42 (433)
Less: Clift
(836) (640)
Add: Stock based compensation
1,052
Adjusted EBITDA
17,380 18,625
Morgans Hotel Group, Co.
Unaudited Room Revenue Analysis
(in $ 000s)
Three Months Ended %
3/31/06 3/31/05 Change
-------------------------------
Morgans
2,190 2,118
3%
Royalton
3,755 3,507
7%
Hudson
11,917 11,486
4%
Delano
8,398 8,760
-4%
Mondrian
5,520 5,167
7%
Clift
5,036 4,314
17%
-------------------------------
Total
Owned
36,816 35,352
4%
Hotel Revenue Analysis
Three Months Ended %
3/31/06 3/31/05 Change
-------------------------------
Morgans
4,971 4,874
2%
Royalton
5,134 4,816
7%
Hudson
15,989 15,765
1%
Delano
16,495 16,511
0%
Mondrian
10,713 10,124
6%
Clift
8,580 7,662
12%
-------------------------------
Total
Owned
61,882 59,752
4%
Morgans Hotel Group, Co.
Unaudited EBITDA Analysis
(in $ 000s)
Three Months Ended %
3/31/06 3/31/05 Change
-------------------------------
Morgans
817 889
-8%
Royalton
944 1,028
-8%
Hudson
4,590 4,943
-7%
Delano
7,048 7,549
-7%
Mondrian
3,936 3,494
13%
Clift
836 640
31%
-------------------------------
Total
Owned
18,171 18,543
-2%
St Martins Lane
1,264 1,117
13%
Sanderson
857 611
40%
Shore Club
335 333
1%
-------------------------------
Total
Joint Venture
2,456 2,061
19%
Management Fees
2,207 2,500
-12%
Corporate Expenses
(5,670) (3,839) 48%
-------------------------------
Total
Company
17,164 19,265 -11%
Less Clift
(836) (640)
31%
Less: Stock Based Compensation
1,052 -
----------------------
Adjusted EBITDA
17,380 18,625
-7%
Morgans Hotel Group, Co.
Unaudited Balance Sheet
(in $ 000s)
Mar 31 Dec 31
2006 2005
----------- -----------
Cash
60,306 21,835
Cash reserves
33,601 32,754
Property and equipment
437,724 426,927
Goodwill
73,698 73,698
Accounts receivable
11,754 10,567
Prepaid expenses and other assets
11,607 12,687
Investments in joint ventures
7,754 7,529
Other assets
28,500 20,278
----------- -----------
Total
assets
664,944 606,275
Long-term debt
381,482 584,492
Capital lease obligations - Clift
76,111 75,140
Accounts payable and accrued expenses
33,279 32,309
Other liabilities
21,394 23,751
Deferred income taxes
10,561
-
----------- -----------
Total
liabilities
522,827 715,692
Minority interests
20,646 1,156
Stockholders'equity (deficit)
121,471 (110,573)
----------- -----------
Total
liabilities and equity
(deficit)
664,944 606,275
Conference Call
The Company will host a conference call to discuss the
financial results for the first quarter 2006, today at 5:00 PM Eastern
time. Hosting the call will be Mr. W. Edward Scheetz, President and Chief
Executive Officer, and Mr. Richard Szymanski, Chief Financial Officer.
The call will be webcast live over the Internet at www.morganshotelgroup.com
under the About Us, Investor Relations section. Participants should follow
the instructions provided on the website for the download and installation
of audio applications necessary to join the webcast. The call can also
be accessed live over the phone by dialing (888) 802-2266 or (913) 312-1270
for international callers.
A replay of the call will be available one hour after
the call and can be accessed by dialing (888) 203-1112 or (719) 457-0820
for international callers; the password is 6784403. The replay will be
available from May 8, 2006 through May 15, 2006.
Forward-Looking and Cautionary Statements
Statements contained in this press release which are not
historical facts are forward-looking statements as the term is defined
in the Private Securities Litigation Reform Act of 1995. These forward-looking
statements can be identified by the use of words such as "expects," "plans,"
"estimates," "projects," "intends," "believes," "guidance," and similar
expressions that do not relate to historical matters. These forward-looking
statements are subject to risks and uncertainties which can cause actual
results to differ materially from those currently anticipated, due to a
number of factors which include, but are not limited to, downturns in economic
and market conditions, particularly levels of spending in the business,
travel and leisure industries; hostilities, including future terrorist
attacks, or fear of hostilities that affect travel; risks related to natural
disasters, such as earthquakes and hurricanes; the completion of transactions
and the integration of properties with our existing business; the seasonal
nature of the hospitality business; changes in the tastes of our customers;
increases in real property tax rates; increases in interest rates and operating
costs; general volatility of the capital markets and our ability to access
the capital markets; and changes in the competitive environment in our
industry and the markets where we invest, and other risk factors discussed
in Morgans Hotel Group Co.'s Annual Report on Form 10-K and other documents
filed by the Company with the Securities and Exchange Commission from time
to time. All forward-looking statements in this press release are made
as of today, based upon information known to management as of the date
hereof, and the Company assumes no obligations to update or revise any
of its forward-looking statements even if experience or future changes
show that indicated results or events will not be realized.
About Morgans Hotel Group
Morgans Hotel Group Co. (Nasdaq: MHGC - News), which is
widely credited with establishing and developing the rapidly expanding
boutique hotel sector, owns and operates Morgans, Royalton and Hudson in
New York, Delano and The Shore Club in Miami, Mondrian in Los Angeles and
Scottsdale, Clift in San Francisco, and Sanderson and St. Martins Lane
in London. MHG has other property transactions in various stages of completion
including projects in Miami Beach, Florida, and Las Vegas, Nevada, and
continues to vigorously pursue its strategy of developing unique properties
at various price points in international gateway cities in the United States,
Europe, South America, Asia and around the world. For more information,
please visit www.morganshotelgroup.com. |
