RevPAR Increased 2.9 percent; Franchise and other
Fee-based Revenue Grew 9.4 percent
La Quinta Holdings Inc. (“La Quinta” or the “Company”) (NYSE:LQ)
today reported results for the quarter ended September 30, 2017.
Third Quarter 2017 Highlights
- Grew system-wide comparable RevPAR 2.9 percent;
excluding the impact of the owned hotels undergoing significant
renovation as part of the repositioning effort, RevPAR grew 4.0
percent
- Increased RevPAR Index by 147 bps, the fifth
consecutive quarter of market share growth
- Increased franchise and other fee-based revenue 9.4
percent
- Opened nine franchised hotels, totaling over 700 rooms,
including locations in Brooklyn, New York and Anchorage,
Alaska
- Completed 8 renovations as part of the Company’s owned
hotel repositioning effort, including completion of the Company’s
downtown San Antonio location
- Increased franchise pipeline to 252 hotels,
representing approximately 23,700 additional rooms, and continued
to expand the brand’s footprint with 16 new franchise agreements
including locations in downtown Nashville, Tennessee, Santa Cruz,
California, and the Beacon Hill neighborhood of Kansas City,
Missouri
- Continued to generate strong cash flow
- Reported Net Income of $12.4 million and Adjusted Net
Income of $15.9 million; Net Income per Share was $0.11 and
Adjusted Earnings per Share was $0.14
Overview
“La Quinta’s third quarter results demonstrate the momentum we
are building in our business, as we execute on our key strategic
initiatives to deliver a consistent product, to consistently
deliver an outstanding guest experience and to drive engagement
with our brand. We saw impressive gains in RevPAR and guest
satisfaction scores this quarter, which resulted in our fifth
consecutive quarter of market share gains,” said Keith A. Cline,
President and Chief Executive Officer of La Quinta. “We
completed the renovation of eight additional hotels in our
repositioning program during the third quarter and continue to
be encouraged by the positive response from our guests. We
also added to a strong pipeline that will allow us to further
expand our reach into new markets and take advantage of our unique
growth opportunity in the industry.”
Mr. Cline continued, “Like many others in our industry, La
Quinta was impacted by the devastation caused by Hurricanes Harvey
and Irma. As of today, we still have eight owned and two franchised
hotels closed and over 3,000 rooms out of service across Texas,
Florida and Georgia. We anticipate that these closures will
have a meaningful impact on our owned hotel business in the fourth
quarter. Our teams are working diligently to get rooms back
in service as quickly as possible. I am so proud of our team
members who continue to work tirelessly, despite their own personal
situations, to serve our guests, help those in need and support
their communities.”
Financial Overview
For the third quarter of 2017, the Company grew system-wide
comparable RevPAR 2.9 percent over the same period of 2016, driven
by 5.0 percent growth in its franchise locations and 0.4 percent
growth in its owned hotels. Excluding the impact of the owned
hotels undergoing significant renovation as part of the
repositioning effort, system-wide comparable RevPAR increased 4.0
percent in the third quarter. The Company grew franchise and other
fee-based revenue 9.4 percent in the third quarter of 2017 over the
prior year period and reported its fifth consecutive quarter of
market share growth, as evidenced by a 147 basis point improvement
in RevPAR index over the prior year period.
For the third quarter of 2017, the Company reported net income
of $12.4 million and adjusted net income of $15.9 million. Net
Income per Share was $0.11 and Adjusted Earnings per Share was
$0.14.
Total Adjusted EBITDA for the third quarter of 2017 was $93.8
million. Total Adjusted EBITDA for the third quarter of 2017 as
compared to the prior year quarter was affected by the sale of
owned hotels in 2016 and early 2017. These hotels contributed
revenues of approximately $6.7 million and total Adjusted EBITDA of
approximately $1.7 million in the third quarter of 2016, which did
not recur in 2017. Total Adjusted EBITDA was also impacted by
competitive wage pressures as well as an elevated presence of
third-party booking agents in the Company’s channel mix as compared
to the prior year.
Hurricanes Harvey and Irma had a meaningful impact on the
Company’s business in the third quarter. Due to the damage
caused by the hurricanes, the Company currently has eight owned and
two franchised hotels closed and over 3,000 rooms out of
service. The Company is working to reopen the hotels and to
restore the out-of-order rooms to service as quickly as possible,
but currently estimates that a portion of the rooms and several
hotels could be closed for more than 90 days.
The Company expects to generate approximately $5 million less
Adjusted EBITDA than it had previously projected in the fourth
quarter of 2017 due to the impact of Hurricanes Harvey and Irma and
is updating its guidance below to reflect these revised
expectations.
The Company’s system-wide portfolio, as of September 30,
2017, is located across 48 states in the U.S., as well as in
Canada, Mexico, Honduras and Colombia. The portfolio includes:
|
|
September 30, 2017 |
|
|
September 30, 2016 |
|
|
|
# of hotels |
|
|
# of rooms |
|
|
# of hotels |
|
|
# of rooms |
|
Owned (1) |
|
|
317 |
|
|
|
40,500 |
|
|
|
325 |
|
|
|
41,500 |
|
Joint Venture |
|
|
1 |
|
|
|
200 |
|
|
|
1 |
|
|
|
200 |
|
Franchised(2) |
|
|
576 |
|
|
|
47,100 |
|
|
|
567 |
|
|
|
46,300 |
|
Totals |
|
|
894 |
|
|
|
87,800 |
|
|
|
893 |
|
|
|
88,000 |
|
|
(1)
As of September 30, 2017 and 2016, Owned
included three hotels (400 rooms) and nine hotels (1,100 rooms),
respectively, designated as assets held for sale, which are subject
to definitive purchase agreements (2) As
of September 30, 2017 and 2016, Franchised included five hotels
(600 rooms) and eight hotels (1,100 rooms), respectively, under
temporary franchise agreements related to formerly owned hotels
which are in the process of leaving the system |
The results of operations for the Company for the three months
ended September 30, 2017 and 2016 include the following
highlights ($ in thousands, except per share amounts):
|
Three Months Ended
September 30, |
|
|
|
2017 (1) |
|
|
2016 (1) |
|
|
% Change |
|
|
Total Revenue |
$ |
268,642 |
|
|
$ |
272,312 |
|
|
|
-1.3 |
% |
|
Franchise and
Management Segment Adj. EBITDA |
|
33,174 |
|
|
|
32,101 |
|
|
|
3.3 |
% |
|
Owned Hotels Segment
Adj. EBITDA |
|
69,295 |
|
|
|
76,662 |
|
|
|
-9.6 |
% |
|
Total Adj. EBITDA |
|
93,824 |
|
|
|
100,737 |
|
|
|
-6.9 |
% |
|
Total Adj. EBITDA
margin |
|
34.9 |
% |
|
|
37.0 |
% |
|
|
|
|
|
Operating Income |
|
42,132 |
|
|
|
61,285 |
|
|
|
-31.3 |
% |
|
Operating Income
Margin |
|
15.7 |
% |
|
|
22.5 |
% |
|
|
|
|
|
Adj. Operating
Income |
|
47,975 |
|
|
|
60,295 |
|
|
|
-20.4 |
% |
|
Adj. Operating Income
Margin |
|
17.9 |
% |
|
|
22.1 |
% |
|
|
|
|
|
|
(1)
2016 results include approximately $6.7 million
of total revenues and approximately $1.7 million of total Adjusted
EBITDA from hotels sold in 2016 and 2017 |
|
|
Three Months Ended |
|
|
Three Months Ended |
|
|
|
|
|
|
|
September 30, 2017 |
|
|
September 30, 2016 |
|
|
% Change |
|
|
|
|
NetIncome |
|
|
DilutedEPS |
|
|
NetIncome |
|
|
DilutedEPS |
|
|
NetIncome |
|
|
DilutedEPS |
|
|
Net Income Attributable
to La Quinta Holdings’ stockholders |
|
$ |
12,415 |
|
|
$ |
0.11 |
|
|
$ |
22,666 |
|
|
$ |
0.20 |
|
|
|
-45.2 |
% |
|
|
-45.0 |
% |
|
Adjusted Net Income
Attributable to La Quinta Holdings’ stockholders |
|
$ |
15,921 |
|
|
$ |
0.14 |
|
|
$ |
22,072 |
|
|
$ |
0.19 |
|
|
|
-27.9 |
% |
|
|
-26.3 |
% |
|
The results of operations for the Company for the nine months
ended September 30, 2017 and 2016 include the following
highlights ($ in thousands, except per share amounts):
|
Nine Months Ended
September 30, |
|
|
|
2017 (1) |
|
|
2016 (1) |
|
|
% Change |
|
|
Total Revenue |
$ |
766,351 |
|
|
$ |
783,638 |
|
|
|
-2.2 |
% |
|
Franchise and
Management Segment Adj. EBITDA |
|
91,318 |
|
|
|
89,221 |
|
|
|
2.4 |
% |
|
Owned Hotels Segment
Adj. EBITDA |
|
208,955 |
|
|
|
228,154 |
|
|
|
-8.4 |
% |
|
Total Adj. EBITDA |
|
266,679 |
|
|
|
290,445 |
|
|
|
-8.2 |
% |
|
Total Adj. EBITDA
margin |
|
34.8 |
% |
|
|
37.1 |
% |
|
|
|
|
|
Operating Income
(Loss) |
|
115,882 |
|
|
|
56,250 |
|
|
NM |
|
(2) |
Operating Income
Margin |
|
15.1 |
% |
|
|
7.2 |
% |
|
|
|
|
|
Adj. Operating
Income |
|
132,516 |
|
|
|
154,098 |
|
|
|
-14.0 |
% |
|
Adj. Operating Income
Margin |
|
17.3 |
% |
|
|
19.7 |
% |
|
|
|
|
|
|
(1) 2016 results include
approximately $26 million of total revenues and approximately $8
million of total Adjusted EBITDA from hotels sold in 2016 and
2017 (2) Change in terms of
percentage is not meaningful |
|
|
Nine Months Ended |
|
|
Nine Months Ended |
|
|
|
|
|
|
|
September 30, 2017 |
|
|
September 30, 2016 |
|
|
% Change |
|
|
|
|
NetIncome |
|
|
DilutedEPS |
|
|
Net(Loss)Income |
|
|
DilutedEPS |
|
|
Net(Loss)Income |
|
|
DilutedEPS |
|
|
Net Income (Loss)
Attributable to La Quinta Holdings' stockholders |
|
$ |
30,790 |
|
|
$ |
0.26 |
|
|
$ |
(1,260 |
) |
|
$ |
(0.01 |
) |
|
NM |
|
(1) |
NM |
|
(1) |
Adjusted Net Income
Attributable to La Quinta Holdings’ stockholders |
|
$ |
40,770 |
|
|
$ |
0.34 |
|
|
$ |
57,449 |
|
|
$ |
0.49 |
|
|
|
-29.0 |
% |
|
|
-30.6 |
% |
|
|
(1) Change in terms of percentage
is not meaningful. |
Comparable hotel statistics |
|
Three Months Ended September 30,
2017 |
|
|
Variance Three Months Ended September 30,
2017 vs. 2016 |
|
|
|
Nine Months Ended September 30,
2017 |
|
|
Variance Nine Months Ended September 30,
2017 vs. 2016 |
|
|
Owned hotels |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy |
|
|
68.7 |
% |
|
25 |
|
bps |
|
|
67.0 |
% |
|
|
-15 |
|
bps |
ADR |
|
$ |
87.54 |
|
|
|
0.0 |
|
% |
|
$ |
86.62 |
|
|
|
1.0 |
|
% |
RevPAR |
|
$ |
60.16 |
|
|
|
0.4 |
|
% |
|
$ |
58.03 |
|
|
|
0.8 |
|
% |
Franchised hotels |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy |
|
|
74.4 |
% |
|
204 |
|
bps |
|
|
70.0 |
% |
|
|
188 |
|
bps |
ADR |
|
$ |
101.17 |
|
|
|
2.1 |
|
% |
|
$ |
96.13 |
|
|
|
1.6 |
|
% |
RevPAR |
|
$ |
75.23 |
|
|
|
5.0 |
|
% |
|
$ |
67.33 |
|
|
|
4.4 |
|
% |
System-wide |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy |
|
|
71.6 |
% |
|
116 |
|
bps |
|
|
68.5 |
% |
|
|
87 |
|
bps |
ADR |
|
$ |
94.69 |
|
|
|
1.3 |
|
% |
|
$ |
91.52 |
|
|
|
1.4 |
|
% |
RevPAR |
|
$ |
67.76 |
|
|
|
2.9 |
|
% |
|
$ |
62.72 |
|
|
|
2.7 |
|
% |
|
|
Three Months Ended September 30,
2017 |
|
|
Variance three months ended September 30, 2017 vs.
2016 |
|
|
Nine Months Ended September 30,
2017 |
|
|
Variance Nine Months Ended September 30, 2017 vs.
2016 |
RevPAR Index(1)
|
|
|
96.8 |
% |
|
147
bps |
|
|
|
96.2 |
% |
|
217
bps |
|
(1)
Information based on the STR competitive set of
hotels existing as of September 30, 2017. |
Development
During the third quarter of 2017, the Company opened a total of
nine franchised hotels (over 700 rooms), excluding one temporary
location, and terminated four franchised hotels, resulting in a net
increase of six franchised hotels during the third quarter.
The elevated level of franchise terminations was in keeping with
the Company’s overall strategy to drive consistency in its product.
As of September 30, 2017, the Company had a pipeline of 252
franchised hotels totaling approximately 23,700 rooms, to be
located in the United States, Mexico, Colombia, Nicaragua,
Guatemala, Chile, and El Salvador.
Owned Hotel Portfolio
As of September 30, 2017, the Company had three hotels held for
sale. During the third quarter of 2017, we closed on the sale of
one hotel and entered into an agreement to sell an owned hotel
located in Morrisville, North Carolina. In addition, during the
third quarter, construction progressed on the portfolio of
approximately 50 owned hotels which the Company believes have the
opportunity to be repositioned upward within their markets in order
to drive enhanced guest experience and revenue growth. Late in the
second quarter and throughout the third quarter, several of these
hotels emerged from construction and are currently being
reintroduced to their markets as being significantly improved.
Balance Sheet and Liquidity
As of September 30, 2017, the Company had
approximately $1.7 billion of outstanding indebtedness with a
weighted average interest rate of approximately 4.4%, including the
impact of an interest rate swap. Total cash and cash
equivalents was $180.0 million as of September 30,
2017.
Outlook
Based upon management’s current estimates, the Company is
updating its guidance for the full year 2017:
|
|
Updated Guidance |
|
Prior Guidance |
RevPAR growth on a
system-wide comparable hotel basis |
|
2.0 percent to 3.0 percent |
|
0.0 percent to 2.0 percent |
Adjusted EBITDA |
|
$320 million to $335 million |
|
$320 million to $340 million |
Please see the schedules to this press release for a
reconciliation of Adjusted EBITDA to Adjusted Net Income (Loss)
Attributable to La Quinta Holdings’ stockholders. A
reconciliation of Adjusted EBITDA to the closest GAAP financial
measure is not available without unreasonable efforts on a
forward-looking basis due to the high variability, complexity and
low visibility with respect to impairment charges, gains or losses
on sales of assets, and other non-recurring items excluded from
these non-GAAP financial measures. For the same reasons, the
Company is unable to address the probable significance of the
unavailable information, which could have a potentially
unpredictable, and potentially significant, impact on its future
GAAP financial results.
Webcast and Conference Call
The Company will host a conference call for investors and other
interested parties beginning at 5:30 p.m. Eastern
Time on Wednesday, November 1, 2017. The call may be
accessed by dialing (844) 395-9252, or (478) 219-0505 for
international participants, and enter passcode 97212983.
Participants may also access the live call via webcast by visiting
the Company's investor relations website
at www.lq.com/investorrelations. Participants are encouraged
to dial into the call or link to the webcast at least fifteen
minutes prior to the scheduled start time.
The replay of the call will be available from
approximately 8 a.m. Eastern Time on November 2,
2017 through midnight Eastern Time on November
9, 2017. To access the replay, the domestic dial-in number is (855)
859-2056, the international dial-in number is (404) 537-3406, and
the passcode is 97212983. The archive of the webcast will be
available on the Company's website for a limited time.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of
1934, as amended. These statements include, but are not limited to,
statements related to the Company’s expectations regarding the
performance of its business, its financial results, its liquidity
and capital resources, the outcome of the Company’s strategic
initiatives and the potential separation of its businesses and
other non-historical statements, including the statements in the
“Outlook” section of this press release. You can identify these
forward-looking statements by the use of words such as “outlook,”
“believes,” “expects,” “potential,” “continues,” “may,” “will,”
“should,” “could,” “seeks,” “projects,” “predicts,” “intends,”
“plans,” “estimates,” “anticipates” or the negative version of
these words or other comparable words. Such forward-looking
statements are subject to various risks and uncertainties,
including those described under the section entitled “Risk Factors”
in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2016, filed with the Securities and Exchange
Commission (“SEC”), as such factors may be updated from time to
time in the Company’s periodic filings with the SEC, which are
accessible on the SEC’s website at www.sec.gov. Accordingly, there
are or will be important factors that could cause actual outcomes
or results to differ materially from those indicated in these
statements. These factors should not be construed as exhaustive and
should be read in conjunction with the other cautionary statements
that are included in this release and in the Company’s filings with
the SEC. The Company undertakes no obligation to publicly update or
review any forward-looking statement, whether as a result of new
information, future developments or otherwise, except as required
by law.
Non-GAAP Financial Measures
The Company refers to certain non-GAAP financial measures in
this press release including Adjusted EBITDA, Adjusted EBITDA
margins, Segment Adjusted EBITDA, Adjusted Net Income, Adjusted
Operating Income and Adjusted Earnings Per Share. Please see the
schedules to this press release for additional information and
reconciliations of such non-GAAP financial measures for historical
periods.
About La Quinta Holdings Inc.
La Quinta Holdings Inc. (LQ) is a leading owner, operator and
franchisor of select-service hotels primarily serving the
upper-midscale and midscale segments. The Company’s owned and
franchised portfolio consists of more than 890 properties
representing approximately 87,500 rooms located in 48 states in the
U.S., and in Canada, Mexico, Honduras and Colombia. These
properties operate under the La Quinta Inn & Suites™, La Quinta
Inn™ and LQ Hotel™ brands. La Quinta’s team is committed to
providing guests with a refreshing and engaging experience. For
more information, please visit: www.LQ.com.
From time to time, La Quinta may use its website as a
distribution channel of material company information. Financial and
other important information regarding the Company is routinely
accessible through and posted on its website at
www.lq.com/investorrelations. In addition, you may automatically
receive email alerts and other information about La Quinta when you
enroll your email address by visiting the Email Notification
section at www.lq.com/investorrelations.
Contacts:
|
|
Investor
Relations |
Media |
Kristin Hays |
Teresa Ferguson |
214-492-6896
|
214-492-6937 |
investor.relations@laquinta.com
|
Teresa.Ferguson@laquinta.com |
LA QUINTA HOLDINGS INC.BALANCE SHEETS
(in thousands, except share data) |
|
|
|
|
|
September 30, 2017 |
|
|
December 31, 2016 |
|
ASSETS |
|
(unaudited) |
|
|
|
|
|
Current
Assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
180,037 |
|
|
$ |
160,596 |
|
Accounts
receivable, net of allowance for doubtful accounts of $4,154 and
$4,022 |
|
|
60,649 |
|
|
|
45,337 |
|
Assets
held for sale |
|
|
8,384 |
|
|
|
29,544 |
|
Other
current assets |
|
|
14,274 |
|
|
|
9,943 |
|
Total Current Assets |
|
|
263,344 |
|
|
|
245,420 |
|
Property and equipment,
net of accumulated depreciation |
|
|
2,494,402 |
|
|
|
2,456,780 |
|
Intangible assets, net
of accumulated amortization |
|
|
176,237 |
|
|
|
177,002 |
|
Other non-current
assets |
|
|
17,825 |
|
|
|
13,321 |
|
Total Non-Current Assets |
|
|
2,688,464 |
|
|
|
2,647,103 |
|
Total Assets |
|
$ |
2,951,808 |
|
|
$ |
2,892,523 |
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
|
|
|
|
|
Current
portion of long-term debt |
|
$ |
17,514 |
|
|
$ |
17,514 |
|
Accounts
payable |
|
|
41,825 |
|
|
|
38,130 |
|
Accrued
expenses and other liabilities |
|
|
60,624 |
|
|
|
64,581 |
|
Accrued
payroll and employee benefits |
|
|
43,641 |
|
|
|
38,467 |
|
Accrued
real estate taxes |
|
|
24,797 |
|
|
|
21,400 |
|
Total Current Liabilities |
|
|
188,401 |
|
|
|
180,092 |
|
Long-term debt |
|
|
1,673,429 |
|
|
|
1,682,436 |
|
Other long-term
liabilities |
|
|
25,880 |
|
|
|
29,130 |
|
Deferred tax
liabilities |
|
|
361,118 |
|
|
|
343,028 |
|
Total Liabilities |
|
|
2,248,828 |
|
|
|
2,234,686 |
|
Commitments and
Contingencies |
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
Preferred Stock, $0.01
par value; 100,000,000 shares authorized and none outstanding
as of September 30, 2017 and December 31, 2016 |
|
|
— |
|
|
|
— |
|
Common Stock, $0.01 par
value; 2,000,000,000 shares authorized at September 30, 2017
and December 31, 2016; 132,476,865 shares issued and
117,459,877 shares outstanding as of September 30, 2017 and
131,750,715 shares issued and 116,790,470 shares outstanding
as of December 31, 2016 |
|
|
1,325 |
|
|
|
1,318 |
|
Additional
paid-in-capital |
|
|
1,177,841 |
|
|
|
1,165,651 |
|
Accumulated
deficit |
|
|
(265,216 |
) |
|
|
(296,006 |
) |
Treasury stock at cost,
15,016,988 shares at September 30, 2017 and 14,960,245 shares
at December 31, 2016 |
|
|
(210,340 |
) |
|
|
(209,523 |
) |
Accumulated other
comprehensive loss |
|
|
(3,208 |
) |
|
|
(6,372 |
) |
Noncontrolling
interests |
|
|
2,578 |
|
|
|
2,769 |
|
Total Equity |
|
|
702,980 |
|
|
|
657,837 |
|
Total Liabilities and Equity |
|
$ |
2,951,808 |
|
|
$ |
2,892,523 |
|
LA QUINTA HOLDINGS
INC.STATEMENTS OF OPERATIONS (in
thousands) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
|
Nine Months Ended
September 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
(unaudited) |
|
REVENUES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room
revenues |
|
$ |
222,883 |
|
|
$ |
230,081 |
|
|
$ |
643,670 |
|
|
$ |
669,422 |
|
Franchise
and other fee-based revenues |
|
|
32,842 |
|
|
|
30,026 |
|
|
|
86,995 |
|
|
|
80,196 |
|
Other
hotel revenues |
|
|
4,950 |
|
|
|
4,895 |
|
|
|
14,683 |
|
|
|
14,744 |
|
|
|
|
260,675 |
|
|
|
265,002 |
|
|
|
745,348 |
|
|
|
764,362 |
|
Brand
marketing fund revenues from franchised properties |
|
|
7,967 |
|
|
|
7,310 |
|
|
|
21,003 |
|
|
|
19,276 |
|
Total
Revenues |
|
|
268,642 |
|
|
|
272,312 |
|
|
|
766,351 |
|
|
|
783,638 |
|
OPERATING
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
lodging expenses |
|
|
110,387 |
|
|
|
108,649 |
|
|
|
315,175 |
|
|
|
311,139 |
|
Depreciation and amortization |
|
|
37,934 |
|
|
|
36,048 |
|
|
|
110,390 |
|
|
|
110,973 |
|
General
and administrative expenses |
|
|
34,615 |
|
|
|
29,572 |
|
|
|
105,551 |
|
|
|
86,451 |
|
Other
lodging and operating expenses |
|
|
17,419 |
|
|
|
14,872 |
|
|
|
39,310 |
|
|
|
45,848 |
|
Marketing, promotional and other advertising expenses |
|
|
18,656 |
|
|
|
15,566 |
|
|
|
59,370 |
|
|
|
55,853 |
|
Impairment loss |
|
|
989 |
|
|
|
1,058 |
|
|
|
989 |
|
|
|
100,618 |
|
Gain on
sales |
|
|
(1,457 |
) |
|
|
(2,048 |
) |
|
|
(1,319 |
) |
|
|
(2,770 |
) |
|
|
|
218,543 |
|
|
|
203,717 |
|
|
|
629,466 |
|
|
|
708,112 |
|
Brand
marketing fund expenses from franchised properties |
|
|
7,967 |
|
|
|
7,310 |
|
|
|
21,003 |
|
|
|
19,276 |
|
Total Operating
Expenses |
|
|
226,510 |
|
|
|
211,027 |
|
|
|
650,469 |
|
|
|
727,388 |
|
Operating
Income (Loss) |
|
|
42,132 |
|
|
|
61,285 |
|
|
|
115,882 |
|
|
|
56,250 |
|
OTHER INCOME
(EXPENSES): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense, net |
|
|
(20,696 |
) |
|
|
(20,427 |
) |
|
|
(60,929 |
) |
|
|
(61,019 |
) |
Other
income |
|
|
834 |
|
|
|
1,188 |
|
|
|
741 |
|
|
|
2,288 |
|
Total Other
Expenses, net |
|
|
(19,862 |
) |
|
|
(19,239 |
) |
|
|
(60,188 |
) |
|
|
(58,731 |
) |
Income
(Loss) Before Income Taxes |
|
|
22,270 |
|
|
|
42,046 |
|
|
|
55,694 |
|
|
|
(2,481 |
) |
Income
tax (expense) benefit |
|
|
(9,862 |
) |
|
|
(19,362 |
) |
|
|
(24,785 |
) |
|
|
1,359 |
|
NET INCOME
(LOSS) |
|
|
12,408 |
|
|
|
22,684 |
|
|
|
30,909 |
|
|
|
(1,122 |
) |
Less: net
loss (income) attributable to noncontrolling interests |
|
|
7 |
|
|
|
(18 |
) |
|
|
(119 |
) |
|
|
(138 |
) |
Net Income
(Loss) Attributable to La Quinta Holdings’
Stockholders |
|
$ |
12,415 |
|
|
$ |
22,666 |
|
|
$ |
30,790 |
|
|
$ |
(1,260 |
) |
RECONCILIATIONS
The tables below provide a reconciliation of EBITDA
and Adjusted EBITDA to Net Income (Loss), a reconciliation of
Adjusted Operating Income to Operating Income, a reconciliation of
Adjusted Net Income and Adjusted Earnings Per Share to Net (Loss)
Income and Earnings Per Share, and a reconciliation of Adjusted
EBITDA to Adjusted Net Income with respect to the Company’s
outlook. The Company believes this financial information provides
meaningful supplemental information. The Company further believes
the presentation of Adjusted EBITDA, Adjusted Operating Income,
Adjusted Net Income and Adjusted Earnings Per Share provides
meaningful information because it excludes the impact of certain
special items and/or certain items that are not expected to have an
ongoing effect on its operations. This represents how management
views the business and reviews its operating performance. It is
also used by management when publicly providing the business
outlook.
“EBITDA” and “Adjusted EBITDA.” Earnings before interest, taxes,
depreciation and amortization (“EBITDA”) is a commonly used measure
in many industries. The Company adjusts EBITDA when evaluating its
performance because the Company believes that the adjustment for
certain items, such as restructuring and acquisition transaction
expenses, impairment charges related to long-lived assets, non-cash
equity-based compensation, discontinued operations, and other items
not indicative of ongoing operating performance, provides useful
supplemental information to management and investors regarding its
ongoing operating performance. The Company believes that EBITDA and
Adjusted EBITDA provide useful information to investors about it
and its financial condition and results of operations for the
following reasons: (i) EBITDA and Adjusted EBITDA are among
the measures used by the Company’s management team to evaluate its
operating performance and make day-to-day operating decisions; and
(ii) EBITDA and Adjusted EBITDA are frequently used by
securities analysts, investors, lenders and other interested
parties as a common performance measure to compare results or
estimate valuations across companies in the Company’s industry.
EBITDA and Adjusted EBITDA are not recognized terms under GAAP,
have limitations as analytical tools and should not be considered
either in isolation or as a substitute for net (loss) income, cash
flow or other methods of analyzing the Company’s results as
reported under GAAP. Some of these limitations are:
- EBITDA and Adjusted EBITDA do not reflect changes in, or cash
requirements for, the Company’s working capital needs;
- EBITDA and Adjusted EBITDA do not reflect the Company’s
interest expense, or the cash requirements necessary to service
interest or principal payments, on its indebtedness;
- EBITDA and Adjusted EBITDA do not reflect the Company’s tax
expense or the cash requirements to pay its taxes;
- EBITDA and Adjusted EBITDA do not reflect historical cash
expenditures or future requirements for capital expenditures or
contractual commitments;
- EBITDA and Adjusted EBITDA do not reflect the impact on
earnings or changes resulting from matters that the Company
considers not to be indicative of its future operations;
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be
replaced in the future, and EBITDA and Adjusted EBITDA do not
reflect any cash requirements for such replacements; and
- other companies in the Company’s industry may calculate EBITDA
and Adjusted EBITDA differently, limiting their usefulness as
comparative measures.
Because of these limitations, EBITDA and Adjusted EBITDA should
not be considered as discretionary cash available to the Company to
reinvest in the growth of its business or as measures of cash that
will be available to the Company to meet its obligations.
“Adjusted EBITDA margin” represents the ratio of Adjusted EBITDA
to total revenues.
“Adjusted operating income (loss)” represents the Company’s
reported operating income (loss), adjusted to exclude the impact of
items not indicative of ongoing operating performance. Adjusted
operating income (loss) is presented to provide additional
perspective on underlying trends in the Company’s operating
results.
“Adjusted Net Income” and “Adjusted Earnings Per Share”
are not recognized terms under U.S. GAAP and should not be
considered as alternatives to net income (loss), earnings per
share, or other measures of financial performance or liquidity
derived in accordance with U.S. GAAP. In addition, the Company’s
definitions of Adjusted Net Income and Adjusted Earnings Per Share
may not be comparable to similarly titled measures of other
companies.
Adjusted Net Income and Adjusted Earnings Per Share are included
to assist investors in performing meaningful comparisons of past,
present and future operating results and as a means of highlighting
the results of the Company’s ongoing operations in a comparable
format.
ADJUSTED EBITDA NON-GAAP
RECONCILIATION(unaudited, in
thousands) |
|
|
|
|
|
Three Months Ended September 30,
2017 |
|
|
Three Months Ended September 30,
2016 |
|
|
Nine Months Ended September 30,
2017 |
|
|
Nine Months Ended September 30,
2016 |
|
Operating
income |
|
$ |
42,132 |
|
|
$ |
61,285 |
|
|
$ |
115,882 |
|
|
$ |
56,250 |
|
Interest
expense, net |
|
|
(20,696 |
) |
|
|
(20,427 |
) |
|
|
(60,929 |
) |
|
|
(61,019 |
) |
Other
income |
|
|
834 |
|
|
|
1,188 |
|
|
|
741 |
|
|
|
2,288 |
|
Income
tax (expense) benefit |
|
|
(9,862 |
) |
|
|
(19,362 |
) |
|
|
(24,785 |
) |
|
|
1,359 |
|
(Loss)
income from noncontrolling interest |
|
|
7 |
|
|
|
(18 |
) |
|
|
(119 |
) |
|
|
(138 |
) |
Net Income
(Loss) attributable to La Quinta Holdings’
Stockholders |
|
|
12,415 |
|
|
|
22,666 |
|
|
|
30,790 |
|
|
|
(1,260 |
) |
Interest
expense |
|
|
21,012 |
|
|
|
20,501 |
|
|
|
61,584 |
|
|
|
61,190 |
|
Income
tax expense (benefit) |
|
|
9,862 |
|
|
|
19,362 |
|
|
|
24,785 |
|
|
|
(1,359 |
) |
Depreciation and amortization |
|
|
38,216 |
|
|
|
36,224 |
|
|
|
111,231 |
|
|
|
111,620 |
|
Noncontrolling interest |
|
|
(7 |
) |
|
|
18 |
|
|
|
119 |
|
|
|
138 |
|
EBITDA |
|
|
81,498 |
|
|
|
98,771 |
|
|
|
228,509 |
|
|
|
170,329 |
|
Impairment loss |
|
|
989 |
|
|
|
1,058 |
|
|
|
989 |
|
|
|
100,618 |
|
Gain on
sales |
|
|
(1,457 |
) |
|
|
(2,048 |
) |
|
|
(1,319 |
) |
|
|
(2,770 |
) |
Loss
(gain) related to casualty disasters |
|
|
1,747 |
|
|
|
(303 |
) |
|
|
(1,234 |
) |
|
|
(282 |
) |
Equity-based compensation |
|
|
3,887 |
|
|
|
3,701 |
|
|
|
12,186 |
|
|
|
10,811 |
|
Amortization of software service agreements |
|
|
2,498 |
|
|
|
2,272 |
|
|
|
7,145 |
|
|
|
6,906 |
|
Other
losses (gains), net |
|
|
4,662 |
|
|
|
(2,714 |
) |
|
|
20,403 |
|
|
|
4,833 |
|
Adjusted
EBITDA |
|
$ |
93,824 |
|
|
$ |
100,737 |
|
|
$ |
266,679 |
|
|
$ |
290,445 |
|
SEGMENT REVENUES AND ADJUSTED EBITDA
RECONCILIATION(unaudited, in
thousands) |
|
|
|
|
|
Three Months Ended September 30,
2017 |
|
|
Three Months Ended September 30,
2016 |
|
|
Nine Months Ended September 30,
2017 |
|
|
Nine Months Ended September 30,
2016 |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned
Hotels |
|
$ |
229,142 |
|
|
$ |
236,426 |
|
|
$ |
661,748 |
|
|
$ |
688,345 |
|
Franchise
and management |
|
|
33,174 |
|
|
|
32,101 |
|
|
|
91,318 |
|
|
|
89,221 |
|
Segment
revenues |
|
|
262,316 |
|
|
|
268,527 |
|
|
|
753,066 |
|
|
|
777,566 |
|
Other
fee-based revenues from franchised properties |
|
|
7,967 |
|
|
|
7,310 |
|
|
|
21,003 |
|
|
|
19,276 |
|
Corporate
and other |
|
|
34,633 |
|
|
|
33,824 |
|
|
|
96,032 |
|
|
|
95,955 |
|
Intersegment elimination |
|
|
(36,274 |
) |
|
|
(37,349 |
) |
|
|
(103,750 |
) |
|
|
(109,159 |
) |
Total revenues |
|
$ |
268,642 |
|
|
$ |
272,312 |
|
|
$ |
766,351 |
|
|
$ |
783,638 |
|
Adjusted
EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned
Hotels |
|
$ |
69,295 |
|
|
$ |
76,662 |
|
|
$ |
208,955 |
|
|
$ |
228,154 |
|
Franchise
and management |
|
|
33,174 |
|
|
|
32,101 |
|
|
|
91,318 |
|
|
|
89,221 |
|
Segment
Adjusted EBITDA |
|
|
102,469 |
|
|
|
108,763 |
|
|
|
300,273 |
|
|
|
317,375 |
|
Corporate
and other |
|
|
(8,645 |
) |
|
|
(8,026 |
) |
|
|
(33,594 |
) |
|
|
(26,930 |
) |
Total Adjusted EBITDA |
|
$ |
93,824 |
|
|
$ |
100,737 |
|
|
$ |
266,679 |
|
|
$ |
290,445 |
|
ADJUSTED OPERATING INCOME NON-GAAP
RECONCILIATION(unaudited, in
thousands) |
|
|
|
|
|
Three Months Ended September 30,
2017 |
|
|
Three Months Ended September 30,
2016 |
|
|
Nine Months Ended September 30,
2017 |
|
|
Nine Months Ended September 30,
2016 |
|
Operating
income |
|
$ |
42,132 |
|
|
$ |
61,285 |
|
|
$ |
115,882 |
|
|
$ |
56,250 |
|
Impairment loss |
|
|
989 |
|
|
|
1,058 |
|
|
|
989 |
|
|
|
100,618 |
|
Retention
plan |
|
|
2,923 |
|
|
|
— |
|
|
|
8,487 |
|
|
|
— |
|
Reorganization costs |
|
|
3,388 |
|
|
|
— |
|
|
|
8,477 |
|
|
|
— |
|
Gain on
sales |
|
|
(1,457 |
) |
|
|
(2,048 |
) |
|
|
(1,319 |
) |
|
|
(2,770 |
) |
Adjusted
operating income |
|
$ |
47,975 |
|
|
$ |
60,295 |
|
|
$ |
132,516 |
|
|
$ |
154,098 |
|
ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER
SHARENON-GAAP
RECONCILIATION(unaudited, in thousands, except per
share data) |
|
|
|
|
|
Three Months Ended September 30,
2017 |
|
|
Three Months Ended September 30,
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
|
DilutedEarningsPerShare |
|
|
Net Income |
|
|
DilutedEarningsPerShare |
|
Net Income
attributable to La Quinta Holdings’
Stockholders |
|
$ |
12,415 |
|
|
$ |
0.11 |
|
|
$ |
22,666 |
|
|
$ |
0.20 |
|
Impairment loss |
|
|
989 |
|
|
|
0.01 |
|
|
|
1,058 |
|
|
|
0.01 |
|
Retention
plan |
|
|
2,923 |
|
|
|
0.02 |
|
|
|
— |
|
|
|
— |
|
Reorganization costs |
|
|
3,388 |
|
|
|
0.03 |
|
|
|
— |
|
|
|
— |
|
Gain on
sales |
|
|
(1,457 |
) |
|
|
(0.01 |
) |
|
|
(2,048 |
) |
|
|
(0.02 |
) |
Tax
impact of adjustments |
|
|
(2,337 |
) |
|
|
(0.02 |
) |
|
|
396 |
|
|
|
— |
|
Adjusted Net
Income attributable to La Quinta Holdings’
Stockholders |
|
$ |
15,921 |
|
|
$ |
0.14 |
|
|
$ |
22,072 |
|
|
$ |
0.19 |
|
Weighted
average common shares outstanding, basic |
|
|
|
|
|
|
116,090 |
|
|
|
|
|
|
|
115,795 |
|
Weighted
average common shares outstanding, diluted |
|
|
|
|
|
|
116,849 |
|
|
|
|
|
|
|
115,955 |
|
|
|
Nine Months Ended September 30,
2017 |
|
|
Nine Months Ended September 30,
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
|
DilutedEarningsPerShare |
|
|
Net (Loss) Income |
|
|
Diluted(Loss)
EarningsPerShare |
|
Net Income
(Loss) attributable to La Quinta Holdings’
Stockholders |
|
$ |
30,790 |
|
|
$ |
0.26 |
|
|
$ |
(1,260 |
) |
|
$ |
(0.01 |
) |
Impairment loss |
|
|
989 |
|
|
|
0.01 |
|
|
|
100,618 |
|
|
|
0.85 |
|
Retention
plan |
|
|
8,487 |
|
|
|
0.07 |
|
|
|
— |
|
|
|
— |
|
Reorganization costs |
|
|
8,477 |
|
|
|
0.07 |
|
|
|
— |
|
|
|
— |
|
Gain on
sales |
|
|
(1,319 |
) |
|
|
(0.01 |
) |
|
|
(2,770 |
) |
|
|
(0.02 |
) |
Tax
impact of adjustments |
|
|
(6,654 |
) |
|
|
(0.06 |
) |
|
|
(39,139 |
) |
|
|
(0.33 |
) |
Adjusted Net
Income attributable to La Quinta Holdings’
Stockholders |
|
$ |
40,770 |
|
|
$ |
0.34 |
|
|
$ |
57,449 |
|
|
$ |
0.49 |
|
Weighted
average common shares outstanding, basic |
|
|
|
|
|
|
116,004 |
|
|
|
|
|
|
|
118,886 |
|
Weighted
average common shares outstanding, diluted |
|
|
|
|
|
|
116,560 |
|
|
|
|
|
|
|
118,956 |
|
ADJUSTED EBITDA NON-GAAP
RECONCILIATIONOUTLOOK: FORECASTED
2017(unaudited, in thousands) |
|
|
|
|
|
Year Ending December 31, 2017 |
|
|
|
Low Case |
|
|
High Case |
|
Adjusted Net
income attributable to La Quinta Holdings’ Stockholders
(1) |
|
$ |
41,820 |
|
|
$ |
50,820 |
|
Interest
expense (2) |
|
|
84,000 |
|
|
|
84,000 |
|
Income
tax provision |
|
|
27,880 |
|
|
|
33,880 |
|
Depreciation and amortization (3) |
|
|
150,000 |
|
|
|
150,000 |
|
Noncontrolling interest |
|
|
300 |
|
|
|
300 |
|
Share
based compensation expense (4) |
|
|
16,000 |
|
|
|
16,000 |
|
Adjusted
EBITDA |
|
$ |
320,000 |
|
|
$ |
335,000 |
|
|
|
(1)
This table provides a reconciliation of
forward-looking forecasted Adjusted EBITDA to Adjusted Net income
attributable to La Quinta Holdings’ stockholders that excludes the
impact of certain items that are not expected to have an ongoing
effect on the Company’s operations. (2)
Includes interest expense for $1.7 billion of outstanding
indebtedness with a weighted average interest rate of approximately
4.4%, including the impact of an interest rate swap, commitment
fees for the undrawn balance of the Company’s revolving credit
facility, and amortization of deferred financing costs. (3)
Includes the amortization of software service
agreements.(4) Reflects equity based
compensation expense. |
|
LA QUINTA HOLDINGS
INC.CERTAIN DEFINED TERMS
“ADR” or “average daily rate” means hotel room revenues divided
by total number of rooms sold in a given period.
“comparable hotels” means hotels that: were active and operating
in the Company’s system for at least one full calendar year as of
the end of the applicable period and were active and operating as
of January 1st of the previous year; except for (i) hotels
that sustained substantial property damage or other business
interruption, (ii) owned hotels that become subject to a purchase
and sale agreement, or (iii) hotels in which comparable results are
otherwise not available. Management uses comparable hotels as the
basis upon which to evaluate ADR, occupancy, RevPAR and RevPAR
Index on a system-wide basis and for each of the Company’s
reportable segments.
“occupancy” means the total number of rooms sold in a given
period divided by the total number of rooms available at a hotel or
group of hotels.
“RevPAR” or “revenue per available room” means the product of
the ADR charged and the average daily occupancy achieved.
“RevPAR Index” measures a hotel’s fair market share of its
competitive set’s revenue per available room.
“system-wide” refers collectively to the Company’s owned,
franchised and managed hotel portfolios.
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