COLUMBUS, Ohio, March 2, 1999 - Red Roof Inns, Inc.
(NYSE: RRI), one of the leading economy lodging chains in the United States,
today reported record financial results for the full year 1998. The 1998
fiscal year consisted of 52 weeks while the 1997 fiscal year consisted
of 53 weeks. Revenues for the year totaled $375.3 million, a 4 percent
increase over 1997 revenues of $360.8 million. Comparative diluted earnings
per share for the year increased to $1.37, up 9 percent compared to $1.26
per share for 1997. Comparative net income was $38.1 million, up 7 percent
from 1997 net income of $35.6 million. Comparative earnings before interest,
taxes, depreciation and amortization (EBITDA) increased nearly 6 percent
to $146.5 million for 1998 from $138.4 million in 1997.
The fourth quarter of 1998 consisted of 13 weeks while the fourth quarter
of 1997 consisted of 14 weeks. The extra week in fiscal year 1997 contained
approximately $5 million of revenues. Revenues for the fourth quarter totaled
$84.3 million, a 5 percent decline from prior year revenues of $89.0 million.
Comparative diluted earnings per share for the quarter were 24 cents, down
8 percent from fourth quarter earnings of 26 cents per share for 1997.
Comparative net income was $6.5 million for the fourth quarter, down 11
percent from fourth quarter 1997 net income of $7.3 million. Comparative
earnings before interest, taxes, depreciation and amortization (EBITDA)
decreased 4 percent to $31.7 million in the fourth quarter of 1998 from
$33.2 million in 1997.
Comparative earnings per share, net income and EBITDA results for 1998
exclude pre-tax charges to earnings of $6.2 million (13 cents per diluted
share, net of tax) related to the conversion of the Company's accounting
system to be year 2000 compliant, severance expenses for certain officers
and employees, the write-off of site development costs, recognition of
certain asset impairments and the termination of a pension plan. Fourth
quarter results exclude $5.7 million (13 cents per diluted share, net of
tax) related to the same charges. In addition, earnings per share and net
income for the year and the fourth quarter exclude an extraordinary loss
of $0.2 million, net of tax (1 cent per diluted share) associated with
the repurchase of senior unsecured debt.
Comparative earnings per share, net income and EBITDA results for 1997
exclude charges to earnings of $15.5 million (33 cents per diluted share,
net of tax) related to the Company's Inn renewal program and severance
expenses associated with a re-engineering. In addition, earnings per share
and net income for 1997 exclude an extraordinary loss of $0.7 million,
net of tax (3 cents per diluted share) associated with the Company's refinancing
of its bank facility. Fourth quarter results exclude pre-tax charges to
earnings of $3.6 million (8 cents per diluted share, net of tax) related
to the Company's Inn renewal program and severance expenses associated
with a re-engineering.
"I am pleased with our 1998 efforts to grow our fee-based revenue,"
said Francis W. "Butch" Cash,
chairman of the board, president and chief executive officer. "We significantly
exceeded our 1998 goal of opening 20 franchised properties with a total
of 34 franchised Inns opened during the year. Our goal for 1999 is to add
50 franchised Inns and we hope to once again exceed our goal. Our fee-based
revenue went from $1.2 million in 1997 to approximately $4 million in 1998
and we hope to double that figure in 1999."
"The shift in strategy we made over a year ago to move from being a
developer and owner-operator to a Company more focused on franchising and
other fee-based revenues has, we believe, put us in a position of solid
financial flexibility," Cash commented. "The Company's growth plan to leverage
the Red Roof Inns brand, not the balance sheet, has allowed us to significantly
improve our free cash flow. In 1998, the Company increased it's system-wide
room count by 15 percent and still generated over $20 million of cash which
was used for debt reduction and share repurchases. In all prior years as
a public company, Red Roof Inns has been a significant net user of capital.
In 1999, we expect to generate even more free cash flow."
The Comparable Inn occupancy rate remained high at 73.0 percent for
1998 and at 67.1 percent for the fourth quarter. The Comparable Inn occupancy
premium over the economy lodging competitors has increased from 13.3 percentage
points in 1997 to 16.6 percentage points in 1998. Net ADR (Average Daily
Rate) for Comparable Inns is down 0.6 percent for the year from 1997 and
increased 3.1 percent in the fourth quarter. Comparable Inn RevPAR (Revenue
Per Available Room) increased 3.0 percent for the year and 1.0 percent
in the fourth quarter of 1998. Red Roof Inns continues to maintain a RevPAR
premium against its competitors in excess of 30 percent.
Red Roof Inns, Inc.
Comparable Inn Statistics (a)
|
Fourth Quarter Ended |
Year Ended |
|
|
|
January 3, 1998
(13 weeks)
|
January 2, 1999
(13 weeks)
|
January 3, 1998
(52 weeks)
|
January 2, 1999
(52 weeks)
|
Occupancy Percentage |
68.5% |
67.1% |
70.4% |
73.0% |
Average Daily Rater Per Occupied Room (b) |
$43.82 |
$45.19 |
$47.10 |
$46.80 |
Revenue Per Available Room (c) |
$30.02 |
$30.32 |
$33.16 |
$34.16 |
(a) Comparable Inns are the 238 Inns that the Company-owned
and operated at the beginning of and throughout the 1998 fiscal year as
open, operating, fully renovated or constructed properties. Inn statistics
are based upon comparable weeks for the quarter and the year.
(b) Average daily rate per occupied room is room
revenue (less sales allowances) divided by the total number of rooms occupied.
(c) Revenue per available room is the occupancy
percentage times the average daily rate per occupied room.
Red Roof Inns, Inc.
Property Information
|
Year Ended |
|
|
January 3, 1998
|
January 2, 1999
|
Company-Owned Inns |
254 |
256 |
Company-Owned Rooms |
29,120 |
29,562 |
Franchis Inns |
5 |
39 (d) |
Franchise Rooms |
541 |
4,619 (d) |
(d) Includes four company-owned Inns (452 rooms)
sold and a company-owned Inn (125 rooms) leased to a franchisee in 1998.
Red Roof Inns, Inc. (NYSE: RRI) is one of the leading economy lodging
chains in the U.S. With more than 300 properties and approximately 34,000
rooms in 37 states and the District of Columbia, Red Roof Inns offers business
and leisure travelers exceptional value, quality and convenience. With
one of the highest occupancy rates in the industry, Red Roof Inns is expanding
its operations through franchising and strategic partnerships.
This press release includes forward-looking statements,
including without limitation, statements relating to expected openings
of franchised Inns, future fee-based revenues, levels of financial flexibility,
and increases in free cash flow, which should be considered forward-looking
statements within the meaning of the Private Securities Litigation Reform
Act of 1995. The Company wishes to caution readers that these forward-looking
statements involve known and unknown risks and uncertainties, and are subject
to change based on various important risk factors that could cause actual
Company results, performance, plans, goals, and objectives to differ materially
from those expressed or implied by such forward-looking statements. The
following factors, among others, in some cases have affected and in the
future could affect the Company's results, performance, plans, goals, and
objectives: U.S. economic conditions; oversupply of hotel rooms; competition;
expansion into new markets; pricing and availability of construction materials;
changes in interest rates; availability of financing; changes in federal,
state, and local laws and regulations; environmental matters; and year
2000 issues. For a discussion of these and other risk factors, please refer
to the Company's Annual Report on Form 10-K and in other periodic reports
filed with the Securities and Exchange Commission. The Company expressly
disclaims any obligation or undertaking to update or revise any forward-looking
statements contained herein to reflect any changes in the Company expectations
or results, or changes in events. |