EX-99.1 2 q32015errlhcex9918-k.htm EXHIBIT 99.1 Exhibit



RLHC Reports Third Quarter 2015 Results
Achieved Third Consecutive Quarter of Double Digit RevPAR Growth;
Continued Network Expansion with 24 New Franchise and Management Deals Executed in 2015;
Acquired Hotels in Atlanta and Washington D.C. through Joint Ventures

SPOKANE, WA, November 5, 2015 - (GLOBE NEWSWIRE) -- RLHC (“Red Lion Hotels Corporation”) (NYSE: RLH), a hospitality company that operates and franchises upscale, midscale and economy hotels, today reported third quarter 2015 results.

Third Quarter Highlights:
•
Systemwide RevPAR increased 10.9 percent while RevPar from comparable company operated hotels increased 10.0 percent year over year. Comparable Red Lion franchised hotels RevPAR increased 12.3 percent year over year.
•
ADR and Occupancy from comparable company operated hotels improved 6.1 percent and 290 bps year over year, respectively. Red Lion franchised hotels ADR and Occupancy improved 6.2 percent and 360 bps year over year, respectively.
•
Adjusted EBITDA of $8.7 million was in line with the prior year period.
•
Net income per share, as reported, was $0.04 compared with $0.26 in the prior year period. After adjusting for special items, net income per share was $0.17 in 2015 compared with $0.22 in the prior year period.
•
As part of a joint venture, acquired a hotel adjacent to the Atlanta International Airport and secured financing to complete a comprehensive renovation of the property, which is expected to open in the first quarter of 2016 as the Red Lion Hotel Atlanta International Airport.

Year-to-Date Highlights and Subsequent Event:
•
Systemwide RevPAR increased 12.3 percent, driven by a 5.3 percent increase in ADR and a 420 bps increase in Occupancy.
•
Subsequent to quarter-end, as part of a joint venture, closed on the acquisition of The Quincy hotel in downtown Washington D.C. and immediately began operations as Hotel RL Washington D.C.

Comparable operating results (as disclosed in the table by the same title) for the periods included in this release reflect the operating results of hotels that were in the system for at least one full calendar year as of the end of the current period other than hotels for which comparable results were not available. Throughout this release the Company refers to certain non-GAAP financial measures, such as EBITDA and Adjusted EBITDA. Please refer to the tables attached to this release for a reconciliation of these non-GAAP financial measures to their most directly comparable financial measure determined in accordance with GAAP.

“We have now generated three consecutive quarters of double digit comparable systemwide RevPAR growth in 2015, outpacing the industry and continuing to demonstrate the appreciable impact of our RevPak guest management system to both our company operated and franchised hotels,” said RLHC President & CEO Greg Mount.
 
“These results, driven primarily by the effectiveness of our RevPak guest management system and digital marketing and ecommerce initiatives, have clearly supported the growth of our core brands. We have already achieved our goal of executing 20-30 agreements in 2015, with 24 properties signed year-to-date and counting.” Mount continued, “We achieved several important milestones on our path to national expansion, opening our first franchise hotel in New York City, signing our first Hotel RL franchise with Hotel RL St. Louis and completing two joint




venture acquisitions with Hotel RL Washington D.C. and the future Red Lion Hotel Atlanta International Airport. These recent achievements have significantly expanded our presence on the East Coast and further increased awareness of our brands nationally.” 

Third Quarter 2015 Results
Comparable revenue from company operated hotels was $35.9 million, an increase of $2.9 million or 8.9 percent compared with the same period a year ago, primarily due to an increase in RevPAR. Comparable company operated RevPAR increased 10.0 percent to $89.78 driven by a 6.1 percent increase in ADR to $107.31 and a 290 basis point increase in occupancy. Systemwide Red Lion branded RevPAR increased 10.9 percent and the GuestHouse and Settle Inn properties generated 5.2 percent of RevPAR improvement. Comparable company operated hotel direct operating margin increased 190 basis points to 34.0 percent from 32.1 percent, mainly due the increase in RevPAR.

Franchise revenue was $3.8 million, an increase of 83.9 percent or $1.7 million compared with the same period a year ago, reflecting the growth in the franchise network. As a result, net segment profits increased $0.4 million over the prior year.

Entertainment revenue decreased by $1.5 million mainly due to a change in the show line-up versus the prior year. Net segment profits were essentially flat compared with the same period a year ago.

Net income attributable to RLHC was $0.8 million, or $0.04 per share, compared with net income of $5.1 million, or $0.26 per share, in the same period a year ago. The decrease is primarily due to net income attributable to noncontrolling interest, increased interest expense and increased general and administrative expenses. After adjusting for special items, adjusted net income per share in 2015 was $0.17 compared with $0.22 per share in 2014.

Adjusted EBITDA of $8.7 million was in line with the prior year period, supported by strong hotel performance.

Liquidity and Balance Sheet
At September 30, 2015, the Company had $97.1 million in cash, cash equivalents, restricted cash and short-term investments and had consolidated outstanding debt of $102.3 million.

Capital expenditures for the first nine months totaled $10.7 million, primarily utilized for renovations of Hotel RL Baltimore Inner Harbor and the twelve RL Venture properties.

Lodging Development Update
Year-to-date, the Company executed 24 new franchise and management agreements.

2015 Outlook
Based on the outlook for the markets in which the Company operates and on information currently available, the Company affirms the following financial guidance for 2015, excluding the impact of the acquisition of the GuestHouse International and Settle Inn brands:

•
2015 RevPAR for comparable company operated hotels is expected to increase 7 to 9 percent over 2014
•
Capital expenditures, including those associated with the 12 hotel joint venture portfolio and its loan, are expected to be between $25 and $30 million
•
The Company expects to sign between 20 and 30 hotels in the Red Lion brands in 2015

Conference Call Information
The Company will conduct a conference call on November 5, 2015 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time), to discuss the results for interested investors, analysts and portfolio managers. Hosting the call will be President and Chief Executive Officer Greg Mount and Executive Vice President and Chief Financial Officer Jim Bell.

To participate in the conference call, please dial the following number ten minutes prior to the scheduled time: 877-407-8289. International callers should dial 201-689-8341.





This conference call will also be webcast live on www.redlion.com in the Investor Relations section of the website. To listen to the live call, please login at least fifteen minutes prior to the start of the call to register and to download and install any necessary audio software. For those unable to participate during the live broadcast, a replay will be available on November 5, 2015, through December 5, 2015, at 877-660-6853 or 201-612-7415 (International), using access code 13622753. The replay will also be available shortly after the call on the website.

About RLHC
Red Lion Hotels Corporation is a hospitality company primarily engaged in the franchising, management and ownership of upscale, midscale and economy hotels under the Hotel RL, Red Lion Hotel, Red Lion Inn & Suites, GuestHouse International and Settle Inn brands. Established in 1959, the Company has 125 hotels systemwide and also owns and operates an entertainment and event ticket distribution business. For more information, please visit the company's website at www.redlion.com.

Forward Looking Statements
This press release contains forward-looking statements within the meaning of federal securities law, including statements concerning plans, objectives, goals, strategies, projections of future events or performance and underlying assumptions (many of which are based, in turn, upon further assumptions). The forward-looking statements in this press release are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those expressed. Such risks and uncertainties include, among others, economic cycles; international conflicts; changes in future demand and supply for hotel rooms; competitive conditions in the lodging industry; relationships with franchisees and properties; impact of government regulations; ability to obtain financing; changes in energy, healthcare, insurance and other operating expenses; ability to sell non-core assets; ability to locate lessees for rental property; dependency upon the ability and experience of executive officers and ability to retain or replace such officers as well as other matters discussed in the Company's annual report on Form 10-K for the year ended December 31, 2014, and in other documents filed by the Company with the Securities and Exchange Commission.


For Additional Information:
Pam Scott, VP, Corporate Communications
(509) 777-6393 (Direct)
(509) 570-4610 (Cell)
Pam.Scott@redlion.com






Red Lion Hotels Corporation
Consolidated Statements of Comprehensive Income (Loss)
(unaudited)
($ in thousands, except footnotes and per share amounts)
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
 
 
 
 
2015
 
2014
 
$ Change
 
% Change
Revenue:
 
 
 
 
 
 
 
Company operated hotels
$
36,972

 
$
36,758

 
$
214

 
0.6

Other revenues from managed properties
1,147

 
—

 
1,147

 
n/m

Franchised hotels
3,800

 
2,066

 
1,734

 
83.9

Entertainment
1,800

 
3,306

 
(1,506
)
 
(45.6
)
Other
16

 
14

 
2

 
14.3

Total revenues
43,735

 
42,144

 
1,591

 
3.8

Operating expenses:
 
 
 
 
 
 
 
Company operated hotels
25,439

 
24,776

 
663

 
2.7

Other costs from managed properties
1,147

 
—

 
1,147

 
n/m

Franchise
3,087

 
1,761

 
1,326

 
75.3

Entertainment
1,666

 
3,092

 
(1,426
)
 
(46.1
)
Other
10

 
72

 
(62
)
 
(86.1
)
Depreciation and amortization
3,484

 
3,241

 
243

 
7.5

Hotel facility and land lease
1,894

 
1,167

 
727

 
62.3

Gain on asset dispositions, net
(88
)
 
40

 
(128
)
 
n/m

General and administrative expenses
2,676

 
1,899

 
777

 
40.9

Total operating expenses
39,315

 
36,048

 
3,267

 
9.1

Operating income (loss)
4,420

 
6,096

 
(1,676
)
 
(27.5
)
Other income (expense):
 
 
 
 
 
 
 
Interest expense
(1,989
)
 
(1,041
)
 
(948
)
 
(91.1
)
Other income, net
75

 
46

 
29

 
63.0

Income (loss) before taxes
2,506

 
5,101

 
(2,595
)
 
n/m

Income tax expense (benefit)
(49
)
 
—

 
(49
)
 
n/m

Net income (loss) from continuing operations
2,555

 
5,101

 
(2,546
)
 
n/m

Discontinued operations (1)
 
 
 
 
 
 
 
Loss from discontinued business units, net of income tax benefit of $0
—

 
—

 
—

 
n/m

Loss on disposal of the assets of discontinued business units, net of income tax benefit of $0
—

 
—

 
—

 
n/m

Net income (loss) from discontinued operations
—

 
—

 
—

 
n/m

Net income (loss)
2,555

 
5,101

 
(2,546
)
 
n/m

Net (income) loss attributable to noncontrolling interest
(1,746
)
 
—

 
(1,746
)
 
n/m

Net income (loss) attributable to Red Lion Hotels Corporation
$
809

 
$
5,101

 
$
(4,292
)
 
n/m

        Unrealized loss on cash flow hedge, net of tax
—

 
—

 
—

 
n/m

Comprehensive income (loss)
$
809

 
$
5,101

 
$
(4,292
)
 
n/m

 
 
 
 
 
 
 
 
Earnings per share - basic
 
 
 
 
 
 
 
Income (loss) from continuing operations attributable to RLHC
$
0.04

 
$
0.26

 
 
 
 
Income (loss) from discontinued operations
$
—

 
$
—

 
 
 
 
Net income (loss) attributable to RLHC
$
0.04

 
$
0.26

 
 
 
 
Earnings per share - diluted
 
 
 
 
 
 
 
Income (loss) from continuing operations attributable to RLHC
$
0.04

 
$
0.26

 
 
 
 
Income (loss) from discontinued operations
$
—

 
$
0.00

 
 
 
 
Net income (loss) attributable to RLHC
$
0.04

 
$
0.26

 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Financial Measures(2)
 
 
 
 
 
 
 
EBITDA
$
6,233

 
$
9,383

 
$
(3,150
)
 
(33.6
)
Adjusted EBITDA
$
8,729

 
$
8,665

 
$
64

 
0.7

Adjusted net income (loss)
$
3,305

 
$
4,383

 
$
(1,078
)
 
24.6

 
 
 
 
 
 
 
 
(1) Discontinued operations includes a hotel in Eugene, Oregon that ceased operations in first quarter 2014.
(2) The definitions of "EBITDA", "Adjusted EBITDA" and Adjusted net income (loss) and how those measures relate to net income (loss) are discussed further in this release under Non-GAAP Financial Measures.




Red Lion Hotels Corporation
Consolidated Statements of Comprehensive Income (Loss)
(unaudited)
($ in thousands, except footnotes and per share amounts)
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30,
 
 
 
 
 
2015
 
2014
 
$ Change
 
% Change
Revenue:
 
 
 
 
 
 
 
Company operated hotels
$
91,092

 
$
94,081

 
$
(2,989
)
 
(3.2
)
Other revenues from managed properties
2,274

 
—

 
2,274

 
n/m

Franchised hotels
9,123

 
8,044

 
1,079

 
13.4

Entertainment
7,537

 
13,950

 
(6,413
)
 
(46.0
)
Other
38

 
65

 
(27
)
 
(41.5
)
Total revenues
110,064

 
116,140

 
(6,076
)
 
(5.2
)
Operating expenses:
 
 
 
 
 
 
 
Company operated hotels
68,578

 
72,827

 
(4,249
)
 
(5.8
)
Other costs from managed properties
2,274

 
—

 
2,274

 
n/m

Franchise
8,494

 
5,259

 
3,235

 
61.5

Entertainment
7,041

 
11,946

 
(4,905
)
 
(41.1
)
Other
26

 
237

 
(211
)
 
(89.0
)
Depreciation and amortization
9,603

 
9,566

 
37

 
0.4

Hotel facility and land lease
5,089

 
3,492

 
1,597

 
45.7

Gain on asset dispositions, net
(16,590
)
 
(3,439
)
 
(13,151
)
 
(382.4
)
General and administrative expenses
7,803

 
6,078

 
1,725

 
28.4

Total operating expenses
92,318

 
105,966

 
(13,648
)
 
(12.9
)
Operating income (loss)
17,746

 
10,174

 
7,572

 
74.4

Other income (expense):
 
 
 
 
 
 
 
Interest expense
(5,228
)
 
(3,436
)
 
(1,792
)
 
(52.2
)
Loss on early retirement of debt
(1,159
)
 
—

 
(1,159
)
 
n/m

Other income, net
380

 
203

 
177

 
87.2

Income (loss) before taxes
11,739

 
6,941

 
4,798

 
69.1

Income tax expense
37

 
31

 
6

 
n/m

Net income (loss) from continuing operations
11,702

 
6,910

 
4,792

 
69.3

Discontinued operations (1)
 
 
 
 
 
 
 
Loss from discontinued business units, net of income tax benefit of $0
—

 
(187
)
 
187

 
n/m

Loss on disposal of the assets of discontinued business units, net of income tax benefit of $0
—

 
(2
)
 
2

 
n/m

Net income (loss) from discontinued operations
—

 
(189
)
 
189

 
n/m

Net income (loss)
11,702

 
6,721

 
4,981

 
74.1

Net (income) loss attributable to noncontrolling interest
(2,653
)
 
—

 
(2,653
)
 
n/m

Net income (loss) attributable to Red Lion Hotels Corporation
$
9,049

 
$
6,721

 
$
2,328

 
34.6

        Unrealized loss on cash flow hedge, net of tax
—

 
—

 
—

 
n/m

Comprehensive income (loss)
$
9,049

 
$
6,721

 
$
2,328

 
34.6

 

 

 

 


Earnings per share - basic
 
 
 
 
 
 
 
Income (loss) from continuing operations attributable to RLHC
$
0.45

 
$
0.35

 
 
 
 
Income (loss) from discontinued operations
$
—

 
$
(0.01
)
 
 
 
 
Net income (loss) attributable to RLHC
$
0.45

 
$
0.34

 
 
 
 
Earnings per share - diluted
 
 
 
 
 
 
 
Income (loss) from continuing operations attributable to RLHC
$
0.45

 
$
0.35

 
 
 
 
Income (loss) from discontinued operations
$
—

 
$
(0.01
)
 
 
 
 
Net income (loss) attributable to RLHC
$
0.45

 
$
0.34

 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Financial Measures(2)
 
 
 
 
 
 
 
EBITDA
$
23,917

 
$
19,754

 
$
4,163

 
21.1

Adjusted EBITDA
$
13,242

 
$
13,037

 
$
205

 
1.6

Adjusted net income (loss)
$
(1,626
)
 
$
4

 
$
(1,630
)
 
40,750.0

 
 
 
 
 
 
 
 
(1) Discontinued operations includes a hotel in Eugene, Oregon that ceased operations in first quarter 2014.
(2) The definitions of "EBITDA", "Adjusted EBITDA" and Adjusted net income (loss) and how those measures relate to net income (loss) are discussed further in this release under Non-GAAP Financial Measures.





Red Lion Hotels Corporation
Consolidated Balance Sheets
(unaudited)
($ in thousands, except per share data)
 
 
 
 
 
 
 
September 30,
2015
 
December 31,
2014
 
 
(In thousands, except share data)
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
75,889

 
$
5,126

Restricted cash
 
13,303

 
225

Short-term investments
 
7,866

 
—

Accounts receivable, net
 
8,909

 
6,752

Notes receivable, net
 
287

 
2,944

Inventories
 
1,065

 
1,013

Prepaid expenses and other
 
3,753

 
3,671

Deferred income taxes
 
629

 
—

Assets held for sale
 
—

 
21,173

Total current assets
 
111,701

 
40,904

Property and equipment, net
 
168,070

 
160,410

Goodwill
 
8,512

 
8,512

Intangible assets
 
15,474

 
7,012

Notes receivable, long term
 
1,685

 
2,340

Other assets, net
 
4,249

 
3,849

Total assets
 
$
309,691

 
$
223,027

LIABILITIES
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
5,632

 
$
2,952

Accrued payroll and related benefits
 
6,767

 
4,567

Other accrued entertainment expenses
 
8,374

 
5,625

Other accrued expenses
 
6,467

 
2,547

Deferred income taxes
 
—

 
2,778

Total current liabilities
 
27,240

 
18,469

Long-term debt, due after one year, net of discount
 
102,265

 
60,698

Deferred income
 
2,637

 
2,988

Deferred income taxes
 
3,442

 
35

Total liabilities
 
135,584

 
82,190

Commitments and contingencies
 
 
 
 
STOCKHOLDERS’ EQUITY
 
 
 
 
Red Lion Hotels Corporation stockholders' equity
 
 
 
 
Preferred stock- 5,000,000 shares authorized; $0.01 par value; no shares issued or outstanding
 
—

 
—

Common stock - 50,000,000 shares authorized; $0.01 par value; 20,039,079 and 19,846,508 shares issued and outstanding
 
200

 
198

Additional paid-in capital, common stock
 
143,299

 
153,671

Accumulated other comprehensive income (loss), net of tax
 
—

 
(203
)
Retained earnings (accumulated deficit)
 
(3,780
)
 
(12,829
)
Total Red Lion Hotels Corporation stockholders' equity
 
139,719

 
140,837

Noncontrolling interest
 
34,388

 
—

Total stockholders’ equity
 
174,107

 
140,837

Total liabilities and stockholders’ equity
 
$
309,691

 
$
223,027









Red Lion Hotels Corporation
Additional Hotel Statistics
(unaudited)
 
Systemwide Hotels as of September 30, 2015
Hotels
Rooms
Company operated hotels



Majority owned and consolidated
13

2,660

Leased and consolidated
5

1,027

Managed
2

487

Franchised hotels
104

10,132

Leo Hotel Collection
1

300

Total systemwide
125

14,606

Comparable Hotel Statistics from Continuing Operations (1)(5)
 
 
 
 
 
 
 
For the three months ended September 30,
 
2015
 
2014
 
Average Occupancy(2)
 
 
ADR (3)
 
RevPAR (4)
 
Average Occupancy(2)
 
ADR (3)
 
RevPAR (4)
Company operated hotels
 
 
 
 
 
 
 
 
 
 
 
 
Midscale
83.7%
 
 
$107.31
 
$89.78
 
80.8%
 
$101.16
 
$81.70
Franchised hotels
 
 
 
 
 
 
 
 
 
 
 
 
Midscale
65.8%
 
 
$91.04
 
$59.91
 
62.2%
 
$85.72
 
$53.36
Economy (pro forma) (5)
64.0%
 
 
$77.45
 
$49.58
 
62.2%
 
$75.79
 
$47.15
Systemwide
 
 
 
 
 
 
 
 
 
 
 
 
Midscale
74.5%
 
 
$99.92
 
$74.42
 
71.2%
 
$94.22
 
$67.12
Economy (pro forma) (5)
64.0%
 
 
$77.45
 
$49.58
 
62.2%
 
$75.79
 
$47.15
 
 
 
 
 
 
 
 
 
 
 
 
 
Change from prior comparative period:
Average Occupancy(2)
 
 
ADR (3)
 
RevPAR (4)
 
 
 
 
 
 
Company operated hotels
 
 
 
 
 
 
 
 
 
 
 
 
Midscale
290
bps
 
6.1%
 
10.0%
 
 
 
 
 
 
Franchised hotels
 
 
 
 
 
 
 
 
 
 
 
 
Midscale
360
bps
 
6.2%
 
12.3%
 
 
 
 
 
 
Economy (pro forma) (5)
180
bps
 
2.2%
 
5.2%
 
 
 
 
 
 
Systemwide
 
 
 
 
 
 
 
 
 
 
 
 
Midscale
330
bps
 
6.0%
 
10.9%
 
 
 
 
 
 
Economy (pro forma) (5)
180
bps
 
2.2%
 
5.2%
 
 
 
 
 
 
(1
)
Certain operating results for the periods included in this report are shown on a comparable hotel basis. With the exception of pro forma economy hotels, comparable hotels are defined as hotels that were in the system for at least one full calendar year as of the end of the current period.
(2
)
Average occupancy represents total paid rooms divided by total available rooms. Total available rooms represents the number of rooms available multiplied by the number of days in the reported period and includes rooms taken out of service for renovation.
(3
)
Average daily rate ("ADR") represents total room revenues divided by the total number of paid rooms occupied by hotel guests.
(4
)
Revenue per available room ("RevPAR") represents total room and related revenues divided by total available rooms.
(5
)
We acquired the franchise license agreements of GuestHouse International and Settle Inn & Suites properties on April 30, 2015. Results presented prior to that date are attributable to and provided by the prior owner.




Comparable Hotel Statistics from Continuing Operations (1)(5)
 
 
 
 
 
 
 
For the nine months ended September 30,
 
2015
 
2014
 
Average Occupancy(2)
 
 
ADR (3)
 
RevPAR (4)
 
Average Occupancy (2)
 
ADR (3)
 
RevPAR (4)
Company operated hotels
 
 
 
 
 
 
 
 
 
 
 
 
Midscale
73.1%
 
 
$99.15
 
$72.51
 
69.4%
 
$93.92
 
$65.14
Franchised hotels
 
 
 
 
 
 
 
 
 
 
 
 
Midscale
60.4%
 
 
$87.18
 
$52.67
 
56.0%
 
$82.94
 
$46.46
Economy (pro forma) (5)
54.2%
 
 
$71.59
 
$38.81
 
52.6%
 
$69.92
 
$36.78
Systemwide
 
 
 
 
 
 
 
 
 
 
 
 
Midscale
66.8%
 
 
$93.72
 
$62.57
 
62.6%
 
$88.97
 
$55.72
Economy (pro forma) (5)
54.2%
 
 
$71.59
 
$38.81
 
52.6%
 
$69.92
 
$36.78
 
 
 
 
 
 
 
 
 
 
 
 
 
Change from prior comparative period:
Average Occupancy(2)
 
 
ADR (3)
 
RevPAR (4)
 
 
 
 
 
 
Company operated hotels
 
 
 
 
 
 
 
 
 
 
 
 
Midscale
370
bps
 
5.6%
 
11.3%
 
 
 
 
 
 
Franchised hotels
 
 
 
 
 
 
 
 
 
 
 
 
Midscale
440
bps
 
5.1%
 
13.4%
 
 
 
 
 
 
Economy (pro forma) (5)
160
bps
 
2.4%
 
5.5%
 
 
 
 
 
 
Systemwide
 
 
 
 
 
 
 
 
 
 
 
 
Midscale
420
bps
 
5.3%
 
12.3%
 
 
 
 
 
 
Economy (pro forma) (5)
160
bps
 
2.4%
 
5.5%
 
 
 
 
 
 
(1
)
Certain operating results for the periods included in this report are shown on a comparable hotel basis. With the exception of pro forma economy hotels, comparable hotels are defined as hotels that were in the system for at least one full calendar year as of the end of the current period.
(2
)
Average occupancy represents total paid rooms divided by total available rooms. Total available rooms represents the number of rooms available multiplied by the number of days in the reported period and includes rooms taken out of service for renovation.
(3
)
Average daily rate ("ADR") represents total room revenues divided by the total number of paid rooms occupied by hotel guests.
(4
)
Revenue per available room ("RevPAR") represents total room and related revenues divided by total available rooms.
(5
)
We acquired the franchise license agreements of GuestHouse International and Settle Inn & Suites properties on April 30, 2015. Results presented prior to that date are attributable to and provided by the prior owner.





Red Lion Hotels Corporation
Comparable Operations and Data From Continuing Operations
(unaudited)
($ in thousands)
 
 
 
 
 
 
 
 
 
Certain operating results for the periods included in this report are shown on a comparable hotel basis. Comparable hotels are defined as properties that were operated by the Company for at least one full calendar year as of the end of the current period. Comparable results exclude eight hotels which were sold or closed, one hotel which was converted from owned to managed, one hotel which was converted from franchised to managed, and one hotel which began operations in August 2015.
 
We utilize these comparable measures because management finds them a useful tool to perform more meaningful comparisons of past, present and future operating results and as a means to evaluate the results of core, ongoing operations. We believe they are a complement to reported operating results. Comparable operating results are not intended to represent reported operating results defined by generally accepted accounting principles in the United States ("GAAP"), and such information should not be considered as an alternative to reported information or any other measure of performance prescribed by GAAP.
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2015
 
2014
 
2015
 
2014
Company operated hotel revenue from continuing operations
 
$
38,119

 
$
36,758

 
$
93,366

 
$
94,081

less: revenue from sold and closed hotels
 
—

 
(3,807
)
 
(918
)
 
(13,845
)
less: revenue from hotels without comparable results
 
(2,235
)
 
—

 
(3,679
)
 
—

Comparable company operated hotel revenue
 
$
35,884

 
$
32,951

 
$
88,769

 
$
80,236

 
 
 
 
 
 
 
 
 
Company operated hotel operating expenses from continuing operations
 
26,586

 
24,776

 
$
70,852

 
$
72,827

less: operating expenses from sold and closed hotels
 
—

 
(2,411
)
 
(781
)
 
(10,723
)
less: operating expenses from hotels without comparable results
 
(2,909
)
 
—

 
(5,391
)
 
—

Comparable company operated hotel operating expenses
 
$
23,677

 
$
22,365

 
$
64,680

 
$
62,104

 
 
 
 
 
 
 
 
 
Company operated hotel direct operating margin from continuing operations
 
$
11,533

 
$
11,982

 
$
22,514

 
$
21,254

less: operating margin from sold and closed hotels
 
$
—

 
$
(1,396
)
 
(137
)
 
(3,122
)
less: operating margin from hotels without comparable results
 
$
674

 
$
—

 
$
1,712

 
$
—

Comparable company operated hotel direct margin
 
$
12,207

 
$
10,586

 
$
24,089

 
$
18,132

Comparable company operated hotel direct margin %
 
34.0
%
 
32.1
%
 
27.1
%
 
22.6
%






Red Lion Hotels Corporation
Reconciliation of Non-GAAP Measures
(unaudited)
($ in thousands)
 
 
 
 
 
 
 
 
 
EBITDA is defined as net income (loss), before interest, taxes, depreciation and amortization. We believe it is a useful financial performance measure due to the significance of our long-lived assets and level of indebtedness.
Adjusted EBITDA and Adjusted net income (loss) are additional measures of financial performance. We believe that the inclusion or exclusion of certain special items, such as gains and losses on asset dispositions and impairments, is necessary to provide the most accurate measure of core operating results and as a means to evaluate comparative results.
EBITDA, Adjusted EBITDA and Adjusted net income (loss) are commonly used measures of performance in the industry. We utilize these measures because management finds them a useful tool to perform more meaningful comparisons of past, present and future operating results and as a means to evaluate the results of core, ongoing operations. We believe they are a complement to reported operating results. EBITDA, Adjusted EBITDA and Adjusted net income (loss) are not intended to represent net income (loss) defined by generally accepted accounting principles in the United States ("GAAP"), and such information should not be considered as an alternative to reported information or any other measure of performance prescribed by GAAP. In addition, other companies in our industry may calculate EBITDA and in particular Adjusted EBITDA and Adjusted net income (loss) differently than we do or may not calculate them at all, limiting the usefulness of EBITDA, Adjusted EBITDA and Adjusted net income (loss) as comparative measures.
 
 
 
 
 
 
 
 
 
The following is a reconciliation of EBITDA and Adjusted EBITDA to net income (loss) for the periods presented:
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2015
 
2014
 
2015
 
2014
Net income (loss) attributable to Red Lion Hotels Corporation
$
809

 
$
5,101

 
$
9,049

 
$
6,721

 
Depreciation and amortization
3,484

 
3,241

 
9,603

 
9,566

 
Interest expense
1,989

 
1,041

 
5,228

 
3,436

 
Income tax expense (benefit)
(49
)
 
—

 
37

 
31

EBITDA
$
6,233

 
$
9,383

 
$
23,917

 
$
19,754

 
Noncontrolling interest (1)
1,746

 
—

 
2,653

 
—

 
Loss on discontinued operations (2)
—

 
—

 
—

 
189

 
Gain on asset dispositions (3)
—

 
—

 
(16,362
)
 
(3,521
)
 
Loss on early retirement of debt (4)
—

 
—

 
1,159

 
—

 
Lease termination costs (5)
750

 
—

 
1,875

 
—

 
Franchise termination fees (6)
—

 
—

 
—

 
(2,095
)
 
Termination of loyalty program (7)
—

 
(718
)
 
—

 
(1,290
)
Adjusted EBITDA
$
8,729

 
$
8,665

 
$
13,242

 
$
13,037

 
 
 
 
 
 
 
 
 
(1)
Represents noncontrolling interests in consolidated joint ventures.
 
 
 
 
(2)
Discontinued operations include a hotel in Eugene, Oregon that ceased operations in the first quarter of 2014.
(3)
In the first quarter of 2015, we recorded $16.4 million in gain on the sales of the Bellevue and Wenatchee properties. In the second quarter of 2014, we recorded $3.5 million in gain on the sales of the Yakima, Kelso, Kennewick and Canyon Springs properties. These amounts are included in the line item "Gain on asset dispositions, net" on the accompanying consolidated statements of comprehensive income (loss).
(4)
In the first quarter of 2015, we recorded $1.2 million in loss on the early retirement of debt.
(5)
In the fourth quarter of 2014, we amended the lease for the Red Lion Hotel Vancouver at the Quay and recorded additional amortized lease termination fees in 2015.
(6)
In the second quarter of 2014, we recorded $2.1 million in revenue for an early termination fee related to the Seattle Fifth Avenue Hotel terminating its franchise agreement. This amount is included in the line item "Franchised hotels revenue" on the accompanying consolidated statements of comprehensive income (loss).
(7)
In 2014, we recognized a non-cash benefit related to the termination of our loyalty program.




Red Lion Hotels Corporation
Reconciliation of Adjusted Net Income (Loss) to Net Income (Loss)
(unaudited)
($ in thousands)
 
 
 
 
 
 
 
 
 
 
The following is a reconciliation of adjusted net income to net income (loss) for the periods presented:
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
 
2015
 
2014
 
2015
 
2014
 Net income (loss) attributable to Red Lion Hotels Corporation
 
$
809

 
$
5,101

 
$
9,049

 
$
6,721

 
Noncontrolling interest (1)
 
1,746

 
—

 
2,653

 
—

 
Loss on discontinued operations (2)
 
—

 
—

 
—

 
189

 
Gain on asset dispositions (3)
 
—

 
—

 
(16,362
)
 
(3,521
)
 
Loss on early retirement of debt (4)
 
—

 
—

 
1,159

 
—

 
Lease termination costs (5)
 
750

 
—

 
1,875

 
—

 
Franchise termination fees (6)
 
—

 
—

 
—

 
(2,095
)
 
Termination of loyalty program (7)
 
—

 
(718
)
 
—

 
(1,290
)
Adjusted net income (loss)
 
$
3,305

 
$
4,383

 
$
(1,626
)
 
$
4

 
 
 
 
 
 
 
 
 
 
Adjusted net income (loss) per share
 
$
0.17

 
$
0.22

 
$
(0.08
)
 
$
—

Weighted average shares - basic
 
20,028

 
19,822

 
19,960

 
19,765

Weighted average shares - diluted
 
20,607

 
19,866

 
20,131

 
19,839

 
 
 
 
 
 
 
 
 
 
(1)
Represents noncontrolling interests in consolidated joint ventures.
(2)
Discontinued operations include a hotel in Eugene, Oregon that ceased operations in the first quarter of 2014.
(3)
In the first quarter of 2015, we recorded $16.4 million in gain on the sales of the Bellevue and Wenatchee properties. In the second quarter of 2014, we recorded $3.5 million in gain on the sales of the Yakima, Kelso, Kennewick and Canyon Springs properties. These amounts are included in the line item "Gain on asset dispositions, net" on the accompanying consolidated statements of comprehensive income (loss).
(4)
In the first quarter of 2015, we recorded $1.2 million in loss on the early retirement of debt.
(5)
In the fourth quarter of 2014, we amended the lease for the Red Lion Hotel Vancouver at the Quay and recorded additional amortized lease termination fees in 2015.
(6)
In the second quarter of 2014, we recorded $2.1 million in revenue for an early termination fee related to the Seattle Fifth Avenue Hotel terminating its franchise agreement. This amount is included in the line item "Franchised hotels revenue" on the accompanying consolidated statements of comprehensive income (loss).
(7)
In 2014, we recognized a non-cash benefit related to the termination of our loyalty program.