End of quarter
marked the completion of the Gaylord Hotels conversion to Marriott's
systems
 |
|
News for the Hospitality Executive |
|
|
|
NASHVILLE, Tenn.--()--Ryman Hospitality Properties, Inc. (NYSE: RHP), a lodging real estate investment trust ("REIT") specializing in group-oriented, destination hotel assets in urban and resort markets, today reported financial results for the first quarter ended March 31, 2013. The end of the first quarter marked the completion of the Gaylord Hotels conversion to Marriott’s systems, allowing the hotels to start to benefit from the many anticipated synergies. Colin V. Reed, chairman, chief executive officer and president of Ryman Hospitality Properties, stated, “Despite an unusual confluence of events during the quarter that adversely impacted the group sector, including government related attrition and cancellations, the timing of the Easter holiday, and negative group mix shift year-over-year, we are seeing encouraging signs that the benefits of the Marriott affiliation are beginning to emerge. Our hotels produced record first quarter forward group bookings, record first quarter in-the-year, for-the-year group bookings, and record first quarter transient room night production. All three were material increases year-over-year. As the Marriott systems are fully implemented and anticipated costs savings begin to be realized, we continue to believe that our previously discussed cost synergies projection of $13 million to $16 million at the property level for 2013 will be accomplished. Furthermore, our projected corporate cost savings are being realized as expected, which can be seen in our first quarter numbers.” First Quarter 2013 Results (as compared to First Quarter 2012):
For our definitions of RevPAR, Total RevPAR, Adjusted EBITDA, Retail Adjusted Revenue, Retail Adjusted Total RevPAR, and Adjusted FFO as well as a reconciliation of the non-GAAP financial measure Adjusted EBITDA to Net Income, a reconciliation of the non-GAAP financial measure Retail Adjusted Revenue to revenue, and a reconciliation of the non-GAAP financial measure Adjusted FFO to Net Income, see “Retail Adjusted Revenue”, “Calculation of RevPAR and Total RevPAR”, “Non-GAAP Financial Measures”, and “Supplemental Financial Results” below. Refinancing After Quarter End
Reed continued, “In addition, to give ourselves maximum balance sheet flexibility and take advantage of historically low interest rates, after quarter end, we completed the refinancing of the majority of our debt, which provides us with a strong balance sheet and a tremendous amount of flexibility. Finally, we announced a healthy planned 2013 dividend payout anticipated to be approximately $2.00 per share, or $0.50 per quarter, which we believe gives us one of the best dividend yields in the lodging REIT sector.” Hospitality Property-level results and operating metrics for the first quarter of 2013 and 2012 are presented in greater detail below under “Supplemental Financial Results.”
Reed continued, “While we anticipated the shift in mix at our properties would impact our first quarter performance, the challenges brought about by government budget issues had a negative impact on Gaylord National. Given that our properties traditionally rely on a mix of roughly 80 percent group and 20 percent transient business, the significant government group cancellations were felt more acutely by our business than some competitors in the D.C. area who focus more heavily on the transient segment and can thus reclaim more of those lost room nights in the quarter. “Looking at our properties as a whole, we were pleased that in spite of the issues in D.C., occupancy and RevPAR were only slightly down compared to the first quarter of last year, and ADR actually improved modestly. Our Total RevPAR performance represented a decrease compared to last year, due to a decline in corporate and association business partially offset by an increase in SMERF and transient business. The negative impact of this shift away from premium corporate and association business was felt in terms of outside-the-room spending. However, these types of shifts tend to occur from quarter-to-quarter, and based on the group and association business we have secured for the remainder of the year, we are optimistic that this shift does not reflect an ongoing trend.” Gross advance group bookings set a record first quarter production level with 587,682 group room nights booked for all future periods. Gross group room night production in-the year, for-the-year set a record first quarter production level and reflect a 42.0% increase over the same period last year. Additionally, transient room night production, a first quarter production record, increased 18,567 room nights and transient ADR grew $17.05 compared to the prior year quarter as the Marriott Rewards program began to gain traction and the Marriott transient delivery channels continued to ramp for Gaylord Hotels. Reed continued, “Despite a potentially disruptive transition from the legacy Gaylord Hotels’ sales system to the new Marriott sales system (CI/TY) during February and March, the sales team did an outstanding job of not only migrating over five million group room nights to the new system, but also generating a record sales production quarter. Furthermore, 17% of first quarter production resulted from new customers obtained through Marriott sales channels, which we see as an encouraging sign.” Opry and Attractions Opry and Attractions segment revenue declined 2.6 percent to $12.5 million in the first quarter of 2013 from $12.9 million in the prior-year quarter. The segment’s Adjusted EBITDA declined 36.7 percent to $1.4 million in the first quarter of 2013, from $2.2 million in the prior-year quarter. Due to the REIT conversion, this segment shares a greater proportion of allocated expenses for centralized services than in the past. Corporate Corporate and Other Adjusted EBITDA totaled a loss of $5.4 million in the first quarter of 2013 compared to a loss of $11.5 million in the same period last year. The reduction in costs at the Corporate level are directly related to the transition of the Company from a C-Corp to a REIT and are in-line with previously discussed estimated cost synergies. REIT Conversion Costs The Company has allocated all REIT conversion costs by operating segments and reported these amounts separately as REIT conversion costs in the accompanying financial information. During the first quarter of 2013, the Company incurred $15.0 million of costs associated with this conversion. These costs include employment and severance costs ($11.2 million), professional fees ($1.1 million), and various other transition costs ($2.7 million). During the quarter, the Company recorded an income tax benefit of $66.3 million. This benefit was primarily due to the reversal of $137.4 million in net deferred tax liabilities that are no longer necessary as a result of the Company’s REIT conversion, partially offset by a valuation allowance of $76.1 million on the net deferred tax assets of the Company’s taxable REIT subsidiaries, or TRSs. Dividend Update The Company paid its first quarterly cash dividend of $0.50 per share of common stock on April 12, 2013 to stockholders of record on March 28, 2013. It is the Company’s current plan to distribute total annual dividends of approximately $2.00 per share for 2013 in cash in equal quarterly payments in April, July, October, and January, subject to the board’s future determinations as to the amount of quarterly distributions and the timing thereof. Balance Sheet/Liquidity Update As of March 31, 2013, the Company had total debt outstanding of $1,092.1 million and unrestricted cash of $44.8 million. At March 31, 2013, $171.0 million of borrowings were undrawn under the Company’s $925 million credit facility, and the lending banks had issued $7.7 million in letters of credit, which left $163.3 million of availability under the credit facility. On January 17, 2013, the Company redeemed its remaining 6.75% senior notes at par at a cost of $152.2 million, which was funded using borrowings under the revolving credit line of the Company’s $925 million credit facility. During the quarter, the Company announced a private placement of $350 million aggregate principal amount of 5.00% senior notes due 2021 (the “Notes”), which closed on April 3, 2013. The Notes are senior unsecured obligations of the Company’s issuing subsidiaries and are guaranteed by the Company and all of the Company’s subsidiaries that guarantee its senior credit facility. Aggregate net proceeds from the sale of the notes were approximately $342 million, after deducting the initial purchasers’ discounts and commissions and estimated offering expenses. The Company used substantially all of the net proceeds of the offering to repay amounts outstanding under its revolving credit facility. In addition, the Company announced on April 18, 2013 that it successfully refinanced its $925 million credit facility that was scheduled to mature in August 2015. The increased and extended $1 billion credit facility will mature in April 2017 and is comprised of a $700 million revolving credit line ($154 million of which was drawn at close) and a fully funded $300 million term loan. The Company was able to secure favorable pricing on the facility as the interest rate is LIBOR plus an applicable margin based on the Company’s consolidated funded indebtedness to total asset value ratio, or the base rate plus the applicable margin. The initial rate is set at LIBOR + 1.75%. The extended facility reflects both a reduction in the term loan and an increase in the revolving credit line, as well as improved pricing. The previous credit facility was comprised of a $400 million term loan and a $525 million revolving credit line. At April 30, 2013, $439.0 million of borrowings were drawn under the Company’s $1 billion credit facility, and the issuing banks had issued $7.7 million in letters of credit, which left $553.3 million of availability under the credit facility. During the quarter, the Company repurchased and cancelled approximately 1.3 million shares of its common stock for an aggregate purchase price of $55.7 million, which the Company funded using cash on hand and borrowings under the revolving credit line of its credit facility. Guidance Update: The Company is reiterating its 2013 Guidance for Hospitality RevPAR, Hospitality Total RevPAR, Adjusted EBITDA and Adjusted FFO, as originally announced on February 15, 2013. However, due to higher than expected employee transition and pension cost associated with the REIT conversion, the Company is modifying its 2013 guidance for Adjusted FFO after REIT conversion costs as outlined in the following table. In addition, the Company has updated the estimated basic shares outstanding to reflect the recent share repurchase activity.
For our definitions of RevPAR, Total RevPAR, Adjusted EBITDA, Retail Adjusted Revenue, Retail Adjusted Total RevPAR, and Adjusted FFO as well as a reconciliation of the non-GAAP financial measure Adjusted EBITDA to Net Income, a reconciliation of the non-GAAP financial measure Retail Adjusted Revenue to revenue, and a reconciliation of the non-GAAP financial measure Adjusted FFO to Net Income, see “Retail Adjusted Revenue”, “Calculation of RevPAR and Total RevPAR”, “Non-GAAP Financial Measures”, “Supplemental Financial Results” and “Reconciliation of Forward-Looking Statements” below. Reed continued, “When we originally announced our outlook for the year it was with the understanding that our performance would strengthen as the year progressed and we would begin to realize the revenue and cost synergies we expected once the Marriott systems were fully implemented. With the successful integration of our hotels on the Marriott platform, coupled with the strong in-the-year, for-the-year group bookings and transient demand, we believe we will end the year within our original guidance range other than for Adjusted FFO after REIT conversion costs. Despite the challenges we experienced in the first quarter, our hotel assets are heading in the right direction, our corporate cost savings are being realized as expected, and we are seeing many positive signs for the future. As a result, we are reiterating our guidance for Hospitality RevPAR, Hospitality Total RevPAR, Adjusted EBITDA and Adjusted FFO.” Earnings Call information Ryman Hospitality Properties will hold a conference call to discuss this release today at 10:00 a.m. ET. Investors can listen to the conference call over the Internet at www.rymanhp.com. To listen to the live call, please go to the Investor Relations section of the website (Investor Relations/Presentations, Earnings, and Webcasts) at least 15 minutes prior to the call to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call and will run for at least 30 days. About Ryman Hospitality Properties, Inc.: Ryman Hospitality Properties, Inc. (NYSE: RHP) is a REIT for federal income tax purposes, specializing in group-oriented, destination hotel assets in urban and resort markets. The Company’s owned assets include a network of four upscale, meetings-focused resorts totaling 7,795 rooms that are managed by world-class lodging operator Marriott International, Inc. under the Gaylord Hotels brand. Other owned assets managed by Marriott International, Inc. include Gaylord Springs Golf Links, the Wildhorse Saloon, the General Jackson Showboat and The Inn at Opryland, a 303-room overflow hotel adjacent to Gaylord Opryland. The Company also owns and operates a number of media and entertainment assets, including the Grand Ole Opry (opry.com), the legendary weekly showcase of country music’s finest performers for nearly 90 years; the Ryman Auditorium, the storied former home of the Grand Ole Opry located in downtown Nashville; and WSM-AM, the Opry’s radio home. For additional information about Ryman Hospitality Properties, visit www.rymanhp.com. Cautionary Note Regarding Forward-Looking Statements This press release contains statements as to the Company’s beliefs and expectations of the outcome of future events that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Examples of these statements include, but are not limited to, statements regarding the future performance of our business, the effect of the Company’s election of REIT status, the amount of REIT conversion or other costs relating to the restructuring transactions, anticipated cost synergies and revenue enhancements from the Marriott relationship, the expected approach to making dividend payments, the board’s ability to alter the dividend policy at any time, plans to engage in common stock repurchase transactions and the timing and form of such transactions, and other business or operational issues. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made. These include the risks and uncertainties associated with economic conditions affecting the hospitality business generally, the geographic concentration of the Company’s hotel properties, business levels at the Company’s hotels, the effect of the Company’s election to be taxed as a REIT for federal income tax purposes effective for the year ending December 31, 2013, the Company’s ability to remain qualified as a REIT, the Company’s ability to execute its strategic goals as a REIT, the effects of business disruption related to the Marriott management transition and the REIT conversion, the Company’s ability to realize cost savings and revenue enhancements from the REIT conversion and the Marriott transaction, the Company’s ability to generate cash flows to support dividends, future board determinations regarding the timing and amount of dividends and changes to the dividend policy, which could be made at any time, the determination of Adjusted FFO and REIT taxable income, and the Company’s ability to borrow funds pursuant to its credit agreements. Other factors that could cause operating and financial results to differ are described in the filings made from time to time by the Company with the U.S. Securities and Exchange Commission (SEC) and include the risk factors described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012. The Company does not undertake any obligation to release publicly any revisions to forward-looking statements made by it to reflect events or circumstances occurring after the date hereof or the occurrence of unanticipated events. Additional Information This release should be read in conjunction with the consolidated financial statements and notes thereto included in our most recent report on Form 10-K. Copies of our reports are available on our website at no expense at www.rymanhp.com and through the SEC’s Electronic Data Gathering Analysis and Retrieval System (“EDGAR”) at www.sec.gov. Retail Adjusted Revenue Under Marriott International, Inc.’s management of Gaylord Opryland, Gaylord Texan, and Gaylord National, the retail operations of such hotels were outsourced to a third party retailer beginning in the fourth quarter of 2012. The properties now receive rental lease payments rather than full retail revenue and associated expense. The net impact of this change lowered overall retail revenue for each affected property. During the first quarter of 2013 the change resulted in revenue decreases of approximately $2.2 million (Gaylord Opryland–$1.3 million, Gaylord Texan–$0.5 million, and Gaylord National–$0.4 million). The change impacted consolidated revenue, Hospitality segment revenue, property revenue, and Total RevPAR as explained below. To enable period-over-period comparison, we have included adjusted 2012 revenue and 2012 Total RevPAR figures to reflect the elimination of retail revenues from operations that have been outsourced in the 2013 period. No adjustments were made to the Gaylord Palms’ results due to the fact that during all periods presented, retail operations were outsourced at that property. A reconciliation of actual revenue to Retail Adjusted Revenue for the 2012 period is set forth below under “Supplemental Financial Results.” Calculation of RevPAR and Total RevPAR We calculate revenue per available room (“RevPAR”) for our hotels by dividing room revenue by room nights available to guests for the period. We calculate total revenue per available room (“Total RevPAR”) for our hotels by dividing the sum of room revenue, food & beverage, and other ancillary services revenue by room nights available to guests for the period. We calculate retail adjusted total revenue per available room (“Retail Adjusted Total RevPAR”) for our hotels by dividing the sum of room revenue, food & beverage, and other ancillary services revenue minus the retail inventory adjustment for the period by room nights available to guests for the period. RevPAR estimated annual increases included in our guidance are based on 2012 RevPAR of $123.36 (as adjusted to reflect a change in room counting methods that does not exclude renovation rooms from the calculation of rooms available, per Marriott room counting methods), and Total RevPAR estimated annual increases are based on 2012 Retail Adjusted Total RevPAR of $305.30 (as adjusted to reflect the elimination from the first three quarters of 2012 of revenues from retail operations that were outsourced to a third-party retailer beginning in the fourth quarter of 2012, as well as Marriott room counting methods). Non-GAAP Financial Measures We present the following non-GAAP financial measures we believe are useful to investors as key measures of our operating performance: Adjusted EBITDA, Adjusted FFO and Retail Adjusted Revenue, as described above. To calculate Adjusted EBITDA, we determine EBITDA, which represents net income (loss) determined in accordance with GAAP, plus loss (income) from discontinued operations, net; provision (benefit) for income taxes; other (gains) and losses, net; (income) loss from unconsolidated entities; interest expense; and depreciation and amortization, less interest income. Adjusted EBITDA is calculated as EBITDA plus preopening costs; non-cash ground lease expense; equity-based compensation expense; impairment charges; any closing costs of completed acquisitions; interest income on Gaylord National bonds; other gains (and losses); REIT conversion costs and any other adjustments we have identified in this release. We believe Adjusted EBITDA is useful to investors in evaluating our operating performance because this measure helps investors evaluate and compare the results of our operations from period to period by removing the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization) from our operating results. A reconciliation of net income (loss) to EBITDA and Adjusted EBITDA and a reconciliation of segment operating income to segment Adjusted EBITDA are set forth below under “Supplemental Financial Results.” Our method of calculating Adjusted EBITDA as used herein differs from the method we used to calculate Adjusted EBITDA as presented in press releases covering periods prior to 2013. We calculate Adjusted FFO to mean net income (loss) (computed in accordance with GAAP), excluding non-controlling interests, and gains and losses from sales of property; plus depreciation and amortization (excluding amortization of deferred financing costs and debt discounts) and impairment losses; we also exclude written-off deferred financing costs, non-cash ground lease expense, amortization of debt discounts and amortization of deferred financing costs; and gain (loss) on extinguishment of debt, and subtract certain capital expenditures (the required FF&E reserves for our managed properties plus maintenance capital expenditures for our non-managed properties). We also exclude the effect of the non-cash income tax benefit relating to the REIT conversion. We have presented Adjusted FFO both excluding and including REIT conversion costs. We believe that the presentation of Adjusted FFO provides useful information to investors regarding our operating performance because it is a measure of our operations without regard to specified non-cash items such as real estate depreciation and amortization, gain or loss on sale of assets and certain other items which we believe are not indicative of the performance of our underlying hotel properties. We believe that these items are more representative of our asset base than our ongoing operations. We also use Adjusted FFO as one measure in determining our results after taking into account the impact of our capital structure. A reconciliation of net income (loss) to Adjusted FFO is set forth below under “Supplemental Financial Results.” We caution investors that amounts presented in accordance with our definitions of Adjusted EBITDA and Adjusted FFO may not be comparable to similar measures disclosed by other companies, because not all companies calculate these non-GAAP measures in the same manner. Adjusted EBITDA and Adjusted FFO, and any related per share measures, should not be considered as alternative measures of our net income (loss), operating performance, cash flow or liquidity. Adjusted EBITDA and Adjusted FFO may include funds that may not be available for our discretionary use due to functional requirements to conserve funds for capital expenditures and property acquisitions and other commitments and uncertainties. Although we believe that Adjusted EBITDA and Adjusted FFO can enhance an investor’s understanding of our results of operations, these non-GAAP financial measures, when viewed individually, are not necessarily better indicators of any trend as compared to GAAP measures such as net income (loss) or cash flow from operations. In addition, you should be aware that adverse economic and market and other conditions may harm our cash flow.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contacts:
Ryman Hospitality Properties, Inc. |