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
provided an updated financial outlook for 2013.
Colin V. Reed, chairman, chief executive officer and president
of Ryman Hospitality Properties, stated, “We were recently informed
by our manager, Marriott International that the pace of
in-the-year, for-the-year group bookings has slowed for our hotels
segment. Coupled with the fact that cost synergies are
materializing more slowly than originally anticipated, Marriott has
decided to reduce their 2013 operating forecast for our hotel
business. As a result, we believe that it is prudent to modify both
our revenue and profitability guidance for the year.”
While first quarter booking results, both in-the-year,
for-the-year and for all future years, were positive and a cause
for optimism for the remainder of 2013, recent trends indicate that
performance in 2013 will be challenged by several adverse impacts.
These include:
- Lower than expected in-the-year,
for-the-year group bookings – Following the completion of the
transition to Marriott’s regional sales organization at the end of
the first quarter, in-the-year, for-the-year group production has
slowed and is not ramping up as quickly as originally forecasted.
Group production in these regional sales offices has been
challenged by the transition process. Marriott also reports
cautiousness by corporate customers to book short-term group
business.
- Cost synergies are not being
realized as quickly as anticipated – The speed with which
hotel-level cost synergies would be realized during the first year
of operation has been challenged by the complexity of the
transition of these unique hotels.
- Margin disruption due to conversion
activities – The deployment of all new operating systems has
created short-term disruption in the hotels. Property-level staff
is continuing to work to fully leverage the new tools effectively,
but the transition has negatively impacted operating margins.
Reed continued, “We are working with Marriott to identify
opportunities to mitigate these issues and ensure that any
detrimental effects of this transition are contained to our 2013
performance. Despite these near term challenges, we continue to
believe in the long term value creation associated with our
conversion to a REIT. Our hotels have strong advanced group
business on the books for 2014 with approximately 100,000 more room
nights on the books compared to the same period last year. We
continue to observe solid increases in transient room night
production and our projected corporate cost savings are being
realized as expected. Albeit ramping up slower than was projected,
the performance of our hotel assets is heading in the right
direction, and we anticipate that the benefits of the Marriott
relationship will materialize more significantly as the year
progresses, and will have a positive impact in 2014 and
beyond.”
Guidance Update:
The Company is revising its 2013 guidance on a consolidated
basis and for the hospitality segment to reflect the impact of the
transition-related and other issues outlined above. In addition,
the Company has updated the estimated basic shares outstanding to
reflect the recent share repurchase activity described below.
Prior Guidance Revised Guidance Full Year 2013
Full Year 2013 Low High Low High
Hospitality RevPAR 1 3.0 % 6.0 % -1.0 % 2.0 % Hospitality
Total RevPAR 1 2.0 % 5.0 % -2.0 % 1.0 %
Adjusted
EBITDA
Hospitality $ 278.0 $ 288.0 $ 255.0 $ 270.0 Opry and Attractions
15.0 17.0 15.0 17.0 Corporate and Other (24.0 ) (20.0 ) (24.0 )
(20.0 ) Gaylord National Bonds 2 12.0 12.0
12.0 12.0 Adjusted EBITDA $
281.0 $ 297.0 $ 258.0 $ 279.0
Adjusted FFO (excluding REIT conversion costs) 3 $ 212.0 $ 225.0 $
194.5 $ 213.0 REIT conversion costs (tax effected) $ 19.0 $ 18.0 $
19.0 $ 18.0
Adjusted FFO after REIT conversion costs 3
$ 193.0 $ 207.0 $ 175.5 $ 195.0 Adjusted FFO per Share
(excluding REIT conversion costs) 3 $ 4.09 $ 4.34 $ 3.81 $ 4.17
Adjusted FFO per Share after REIT conversion costs 3
$ 3.72 $ 3.99 $ 3.43 $ 3.82 Estimated basic shares outstanding 51.9
51.9 51.1 51.1
1. Hospitality RevPAR estimated annual changes 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
Hospitality Total RevPAR estimated annual changes are based on 2012
Retail Adjusted Total RevPAR of $306.41 (as adjusted to reflect the
elimination from the first three quarters of 2012 of revenues from
retail operation that were outsourced to a third-party retailer
beginning in the fourth quarter of 2012, as well as Marriott room
counting methods; revenue adjustment amounts have been revised
slightly).
2. Interest income from Gaylord National bonds reported in
estimated hospitality segment results in 2013.
3. Adjusted FFO guidance includes a deduction for maintenance
capital expenditures of $36.0 to $38.0 million.
For our definitions of RevPAR, Total RevPAR, Adjusted EBITDA,
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 Adjusted FFO to Net Income, and
2012 Retail Adjusted Revenue and Total RevPAR amounts, see
“Calculation of RevPAR and Total RevPAR”, “Non-GAAP Financial
Measures”, “Supplemental Financial Results” and “Reconciliation of
Forward-Looking Statements” below.
Second Quarter Dividend Declared
On June 3, 2013, the Company declared its second quarter cash
dividend of $0.50 per share of common stock payable on July 15,
2013 to stockholders of record on June 28, 2013. It is the
Company’s current plan to distribute total annual dividends of
approximately $2.00 per share in cash in equal quarterly payments,
subject to the board’s future determinations as to the amount of
quarterly distributions and the timing thereof.
As a result of the declaration of the dividend on June 3, 2013,
effective immediately after the close of business on June 26, 2013,
the conversion rate of the Company’s outstanding 3.75 percent
convertible notes due 2014 will adjust from a conversion rate of
44.9815 per $1,000 principal amount of notes, which is equivalent
to a conversion price of $22.23, to a conversion rate of 45.5431,
which is equivalent to a conversion price of $21.96. Pursuant to
customary anti-dilution adjustments, effective immediately after
the close of business on June 26, 2013, the strike price of our
call options related to the convertible notes will be adjusted to
$21.96 per share of common stock and the exercise price of the
common stock warrants we issued will be adjusted in a similar
manner.
Stock Repurchase Program Completed
During May 2013, the Company completed the remainder of its
previously authorized $100 million share repurchase program, by
repurchasing and cancelling approximately 1.0 million shares of its
common stock for an aggregate purchase price of $44.3 million,
which the Company funded using cash on hand and borrowings under
the revolving credit line of its credit facility.
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, 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 and Quarterly Reports on Form 10-Q. 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
reports on Forms 10-K and 10-Q. 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.
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 for 2012 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.
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. To enable
period-over-period comparison, we have based 2013 Total RevPAR
guidance on 2012 Retail Adjusted Revenue and 2012 Retail Adjusted
Total RevPAR figures, which reflect the elimination from the 2012
figures of retail revenues from operations that have been
outsourced in the 2013 period. No adjustments were made to the
Gaylord Palms’ revenue due to the fact that during all periods
presented, retail operations were outsourced at that property. A
presentation of actual revenue and Retail Adjusted Revenue for the
2012 period is set forth below under “Supplemental Financial
Results.” 2012 retail adjustment amounts have been revised
slightly.
RevPAR estimated annual change included in our guidance is 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 change is based on 2012
Retail Adjusted Total RevPAR of $306.41 (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.
Ryman Hospitality Properties, Inc. and Subsidiaries
Reconciliation of Forward-Looking Statements
Unaudited (in thousands)
Adjusted Earnings Before Interest, Taxes,
Depreciation and Amortization ("Adjusted EBITDA") and
Adjusted Funds From Operations ("AFFO") reconciliation:
PRIOR GUIDANCE
RANGE NEW GUIDANCE RANGE FOR FULL YEAR 2013
FOR FULL YEAR 2013 Low High Low
High
Ryman Hospitality
Properties, Inc.
Net Income $ 145,400 $ 152,400 $ 127,900 $ 140,400 Provision
(benefit) for income taxes (19,300 ) (18,400 ) (25,000 ) (24,000 )
Non-cash tax write-off from REIT conversion (62,000 ) (62,000 )
(62,000 ) (62,000 ) Other (gains) and losses, net (2,300 ) (2,300 )
(2,300 ) (2,300 ) Interest expense 60,000 64,000 60,000 63,000
Interest income (12,000 ) (12,000 ) (12,000 )
(12,000 ) Operating Income 109,800 121,700 86,600 103,100
Depreciation and amortization 120,000 125,000
120,000 125,000 EBITDA 229,800
246,700 206,600 228,100 Non-cash lease expense 5,600 5,600 5,600
5,600 Equity based compensation 6,300 6,400 6,500 7,000 Other gains
and (losses), net 2,300 2,300 2,300 2,300 Interest income 12,000
12,000 12,000 12,000 REIT conversion costs 25,000
24,000 25,000 24,000
Adjusted EBITDA $ 281,000 $ 297,000 $ 258,000
$ 279,000
Hospitality
Segment
Operating income $ 156,800 $ 164,300 $ 133,800 $ 146,300
Depreciation and amortization 107,000 110,000
107,000 110,000 EBITDA 263,800
274,300 240,800 256,300 Non-cash lease expense 5,600 5,600 5,600
5,600 Equity based compensation - - - - Other gains and (losses),
net 2,300 2,300 2,300 2,300 Interest income 12,000 12,000 12,000
12,000 REIT conversion costs 6,300 5,800
6,300 5,800 Adjusted EBITDA $
290,000 $ 300,000 $ 267,000 $ 282,000
Opry and
Attractions Segment
Operating income $ 8,700 $ 9,600 $ 8,700 $ 9,600 Depreciation and
amortization 5,500 6,500 5,500
6,500 EBITDA 14,200 16,100 14,200 16,100
Non-cash lease expense - - - - Equity based compensation 600 700
600 700 Interest income - - - - REIT conversion costs 200
200 200 200
Adjusted EBITDA $ 15,000 $ 17,000 $ 15,000 $
17,000
Corporate and
Other Segment
Operating income $ (55,700 ) $ (52,200 ) $ (55,900 ) $ (52,800 )
Depreciation and amortization 7,500 8,500
7,500 8,500 EBITDA (48,200 )
(43,700 ) (48,400 ) (44,300 ) Non-cash lease expense - - - - Equity
based compensation 5,700 5,700 5,900 6,300 Interest income - - - -
REIT conversion costs 18,500 18,000
18,500 18,000 Adjusted EBITDA $ (24,000
) $ (20,000 ) $ (24,000 ) $ (20,000 )
Ryman Hospitality
Properties, Inc.
Net income $ 145,400 $ 152,400 $ 127,900 $ 140,400 Depreciation
& amortization 120,000 125,000 120,000 125,000 Capital
expenditures (38,000 ) (36,000 ) (38,000 ) (36,000 ) Non-cash lease
expense 5,600 5,600 5,600 5,600 Amortization of debt premiums/disc.
15,000 15,000 15,000 15,000 Amortization of DFC 7,000 7,000 7,000
7,000 Non-cash tax write-off from REIT conversion (62,000 ) (62,000
) (62,000 ) (62,000 ) Loss (gain) on debt extinguishment -
- - - Adjusted FFO
193,000 207,000 175,500 195,000 REIT conversion costs (tax
effected) 19,000 18,000 19,000
18,000 Adjusted FFO excl. REIT conversion
costs $ 212,000 $ 225,000 $ 194,500 $ 213,000
RYMAN HOSPITALITY PROPERTIES, INC. AND
SUBSIDIARIES SUPPLEMENTAL FINANCIAL RESULTS Unaudited
(in thousands, except operating metrics)
Twelve Months Ended Dec. 31, 2012
Actual 2012 Adjusted
Hospitality
Segment
OtherPAR $ 186.40 $ 183.05 Total RevPAR $ 310.21 $ 306.41
Revenue $ 916,041 $ 908,146
Gaylord
Opryland
OtherPAR $ 159.86 $ 155.48 Total RevPAR $ 273.69 $ 269.31
Revenue $ 288,693 $ 284,074
Gaylord
Texan
OtherPAR $ 232.69 $ 229.28 Total RevPAR $ 362.07 $ 358.66
Revenue $ 200,235 $ 198,347
Gaylord
National
OtherPAR $ 192.45 $ 190.55 Total RevPAR $ 331.78 $ 329.88
Revenue $ 242,379 $ 240,988
Notes:
2012 adjusted revenue, OtherPAR and Total
RevPAR reflect the impact from outsourcing the retail
operations
at Opryland, Texan and National. Revenue
adjustment amounts have been revised slightly.
2012 adjusted OtherPAR and Total RevPAR
reflect Marriott accounting procedures and do not exclude
renovation rooms from the calculation of
rooms available which is different from how the Company has
accounted for renovation rooms in the
past.
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