August 2, 2016 | (August 2, 2016) |
Date of Report (Date of Earliest Event Reported) |
RED LION HOTELS CORPORATION |
(Exact Name of Registrant as Specified in its Charter) |
Washington | 001-13957 | 91-1032187 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File No.) | (IRS Employer Identification No.) |
201 W. North River Drive, Suite 100, Spokane, WA 99201 |
(Address of Principal Executive Offices, Zip Code) |
(509) 459-6100 |
(Registrant’s Telephone Number, Including Area Code) |
(Former Name or Former Address, if Changed Since Last Report) |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits. |
Exhibit Number | Description | |
99.1 | Press Release dated August 2, 2016 reporting financial results for the three and six months ended June 30, 2016. |
RED LION HOTELS CORPORATION | ||||
August 2, 2016 | By: | /s/ David M. Wright | ||
David M. Wright | ||||
Vice President, Interim Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | ||||
Exhibit Number | Description | |
99.1 | Press release dated August 2, 2016 reporting financial results for the three and six months ended June 30, 2016. |
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• | Systemwide same store RevPAR grew 4.3% |
• | Total revenues increased 23% year-over-year |
• | Consolidated net income increased to $0.2 million from a net loss of $1.9 million in 2015; EPS was $0.01 in 2016 – an increase of $0.11 year-over-year |
• | Adjusted EBITDA grew 45% year-over-year |
• | Opened two new franchise hotels and one company operated hotel in the second quarter |
• | Launched Hello Rewards App with Keyless Entry & announced innovative Wi-Fi Customer Affinity Program |
• | Executed Red Lion Inn & Suites, Fargo, North Dakota – Conversion, Franchise |
• | Opened Red Lion Hotel, Jacksonville, Florida – Conversion, Franchise |
• | Opened Red Lion Inn & Suites, Susanville, California – Conversion, Franchise |
• | Opened Red Lion Hotel, Atlanta, Georgia – Conversion, Joint Venture |
• | Executed Hotel RL, Houston, Texas – New Build, Franchise |
• | Executed Red Lion Hotel & Convention Center, Billings, Montana – Conversion, Franchise |
• | Opened Red Lion Inn & Suites, Hattiesburg, Mississippi – Conversion, Franchise |
• | Opened Hotel RL, Olympia, Washington – Brand conversion from a Red Lion Hotel, Joint Venture |
• | Opened Hotel RL, Salt Lake, Utah – Brand conversion from a Red Lion Hotel, Joint Venture |
• | Opened Hotel RL, Spokane, Washington – Brand conversion from a Red Lion Hotel, Joint Venture, grand opening coming up on August 17th |
• | EBITDA is expected to be between $17 to $20 million |
• | Capital expenditures to range from $25 to $35 million, primarily funded at the joint venture level |
• | Addition of 25 to 35 hotels to the system-wide portfolio |
Red Lion Hotels Corporation | ||||||||||||||
Consolidated Statements of Operations | ||||||||||||||
(unaudited) | ||||||||||||||
($ in thousands, except footnotes and per share amounts) | ||||||||||||||
Three Months Ended June 30, | ||||||||||||||
2016 | 2015 | $ Change | % Change | |||||||||||
Revenue: | ||||||||||||||
Company operated hotels | $ | 32,209 | $ | 30,348 | $ | 1,861 | 6.1 | |||||||
Other revenues from managed properties | 1,580 | 964 | 616 | n/m | ||||||||||
Franchised hotels | 4,131 | 3,229 | 902 | 27.9 | ||||||||||
Entertainment | 7,047 | 2,060 | 4,987 | 242.1 | ||||||||||
Other | 12 | 12 | — | — | ||||||||||
Total revenues | 44,979 | 36,613 | 8,366 | 22.8 | ||||||||||
Operating expenses: | ||||||||||||||
Company operated hotels | 24,072 | 22,218 | 1,854 | 8.3 | ||||||||||
Other costs from managed properties | 1,580 | 964 | 616 | n/m | ||||||||||
Franchise | 3,464 | 3,031 | 433 | 14.3 | ||||||||||
Entertainment | 6,140 | 2,249 | 3,891 | 173.0 | ||||||||||
Other | 9 | 9 | — | — | ||||||||||
Depreciation and amortization | 4,037 | 3,144 | 893 | 28.4 | ||||||||||
Hotel facility and land lease | 1,185 | 1,594 | (409 | ) | (25.7 | ) | ||||||||
Gain on asset dispositions, net | (512 | ) | (88 | ) | (424 | ) | 481.8 | |||||||
General and administrative expenses | 2,695 | 2,800 | (105 | ) | (3.8 | ) | ||||||||
Total operating expenses | 42,670 | 35,921 | 6,749 | 18.8 | ||||||||||
Operating income (loss) | 2,309 | 692 | 1,617 | 233.7 | ||||||||||
Other income (expense): | ||||||||||||||
Interest expense | (1,487 | ) | (1,738 | ) | 251 | 14.4 | ||||||||
Loss on early retirement of debt | — | — | — | n/m | ||||||||||
Other income, net | (166 | ) | 35 | (201 | ) | (574.3 | ) | |||||||
Total other income (expense) | (1,653 | ) | (1,703 | ) | 50 | (2.9 | ) | |||||||
Income (loss) before taxes | 656 | (1,011 | ) | 1,667 | (164.9 | ) | ||||||||
Income tax expense (benefit) | 34 | (25 | ) | 59 | n/m | |||||||||
Net income (loss) | 622 | (986 | ) | 1,608 | (163.1 | ) | ||||||||
Net (income) loss attributable to noncontrolling interests | (459 | ) | (936 | ) | 477 | n/m | ||||||||
Net income (loss) attributable to RLHC | $ | 163 | $ | (1,922 | ) | $ | 2,085 | 108.5 | % | |||||
Earnings per share - basic | ||||||||||||||
Net income (loss) attributable to RLHC | $ | 0.01 | $ | (0.10 | ) | |||||||||
Earnings per share - diluted | ||||||||||||||
Net income (loss) attributable to RLHC | $ | 0.01 | $ | (0.10 | ) | |||||||||
Weighted average shares - basic | 20,155 | 19,955 | ||||||||||||
Weighted average shares - diluted | 20,649 | 19,955 | ||||||||||||
Non-GAAP Financial Measures(1) | ||||||||||||||
EBITDA | $ | 6,180 | $ | 3,871 | $ | 2,309 | 59.6 | |||||||
Adjusted EBITDA | $ | 6,423 | $ | 4,434 | $ | 1,989 | 44.9 | |||||||
Adjusted net income (loss) | $ | 865 | $ | (423 | ) | $ | 1,288 | 304.5 | ||||||
(1) 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 Operations | ||||||||||||||
(unaudited) | ||||||||||||||
($ in thousands, except footnotes and per share amounts) | ||||||||||||||
Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | $ Change | % Change | |||||||||||
Revenue: | ||||||||||||||
Company operated hotels | $ | 56,358 | $ | 54,120 | $ | 2,238 | 4.1 | |||||||
Other revenues from managed properties | 2,766 | 1,127 | 1,639 | n/m | ||||||||||
Franchised hotels | 7,427 | 5,322 | 2,105 | 39.6 | ||||||||||
Entertainment | 11,078 | 5,736 | 5,342 | 93.1 | ||||||||||
Other | 25 | 23 | 2 | 8.7 | ||||||||||
Total revenues | 77,654 | 66,328 | 11,326 | 17.1 | ||||||||||
Operating expenses: | ||||||||||||||
Company operated hotels | 45,672 | 43,139 | 2,533 | 5.9 | ||||||||||
Other costs from managed properties | 2,766 | 1,127 | 1,639 | n/m | ||||||||||
Franchise | 6,820 | 5,407 | 1,413 | 26.1 | ||||||||||
Entertainment | 9,577 | 5,375 | 4,202 | 78.2 | ||||||||||
Other | 21 | 17 | 4 | 23.5 | ||||||||||
Depreciation and amortization | 7,540 | 6,119 | 1,421 | 23.2 | ||||||||||
Hotel facility and land lease | 2,346 | 3,195 | (849 | ) | (26.6 | ) | ||||||||
Gain on asset dispositions, net | (629 | ) | (16,503 | ) | 15,874 | 96.2 | ||||||||
General and administrative expenses | 5,751 | 5,126 | 625 | 12.2 | ||||||||||
Total operating expenses | 79,864 | 53,002 | 26,862 | 50.7 | ||||||||||
Operating income (loss) | (2,210 | ) | 13,326 | (15,536 | ) | (116.6 | ) | |||||||
Other income (expense): | ||||||||||||||
Interest expense | (2,948 | ) | (3,240 | ) | 292 | 9.0 | ||||||||
Loss on early retirement of debt | — | (1,159 | ) | 1,159 | n/m | |||||||||
Other income, net | 52 | 306 | (254 | ) | (83.0 | ) | ||||||||
Total other income (expense) | (2,896 | ) | (4,093 | ) | 1,197 | (29.2 | ) | |||||||
Income (loss) before taxes | (5,106 | ) | 9,233 | (14,339 | ) | (155.3 | ) | |||||||
Income tax expense (benefit) | 92 | 87 | 5 | n/m | ||||||||||
Net income (loss) | (5,198 | ) | 9,146 | (14,344 | ) | (156.8 | ) | |||||||
Net (income) loss attributable to noncontrolling interest | 562 | (906 | ) | 1,468 | n/m | |||||||||
Net income (loss) attributable to RLHC | $ | (4,636 | ) | $ | 8,240 | $ | (12,876 | ) | (156.3 | )% | ||||
Earnings per share - basic | ||||||||||||||
Net income (loss) attributable to RLHC | $ | (0.23 | ) | $ | 0.41 | |||||||||
Earnings per share - diluted | ||||||||||||||
Net income (loss) attributable to RLHC | $ | (0.23 | ) | $ | 0.41 | |||||||||
Weighted average shares - basic | 20,121 | 19,926 | ||||||||||||
Weighted average shares - diluted | 20,121 | 20,116 | ||||||||||||
Non-GAAP Financial Measures(1) | ||||||||||||||
EBITDA | $ | 5,382 | $ | 18,592 | $ | (13,210 | ) | (71.1 | ) | |||||
Adjusted EBITDA | $ | 5,753 | $ | 4,514 | $ | 1,239 | 27.4 | |||||||
Adjusted net income (loss) | $ | (4,827 | ) | $ | (4,932 | ) | $ | 105 | 2.1 | |||||
(1) 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) | ||||||||
June 30, 2016 | December 31, 2015 | |||||||
(In thousands, except share data) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 27,426 | $ | 23,898 | ||||
Restricted cash | 10,048 | 11,304 | ||||||
Short-term investments | 12,695 | 18,085 | ||||||
Accounts receivable, net | 10,513 | 8,164 | ||||||
Notes receivable, net | 1,214 | 929 | ||||||
Inventories | 658 | 721 | ||||||
Prepaid expenses and other | 2,779 | 2,149 | ||||||
Assets held for sale | 3,942 | — | ||||||
Total current assets | 69,275 | 65,250 | ||||||
Property and equipment, net | 204,959 | 195,390 | ||||||
Goodwill | 8,512 | 8,512 | ||||||
Intangible assets | 15,291 | 15,301 | ||||||
Notes receivable, long term | 1,658 | 1,676 | ||||||
Other assets, net | 1,230 | 1,089 | ||||||
Total assets | $ | 300,925 | $ | 287,218 | ||||
LIABILITIES | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 13,974 | $ | 9,263 | ||||
Accrued payroll and related benefits | 3,969 | 6,163 | ||||||
Other accrued entertainment expenses | 9,021 | 9,211 | ||||||
Other accrued expenses | 4,359 | 3,225 | ||||||
Long-term debt, due within one year | 5,838 | — | ||||||
Total current liabilities | 37,161 | 27,862 | ||||||
Long-term debt, due after one year, net of discount | 94,531 | 87,557 | ||||||
Deferred income and other long term liabilities | 1,428 | 1,326 | ||||||
Deferred income taxes | 2,940 | 2,872 | ||||||
Total liabilities | 136,060 | 119,617 | ||||||
Commitments and contingencies | ||||||||
STOCKHOLDERS’ EQUITY | ||||||||
RLHC 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; 20,176,911 and 20,051,145 shares issued and outstanding | 202 | 201 | ||||||
Additional paid-in capital, common stock | 145,504 | 143,901 | ||||||
Retained earnings (accumulated deficit) | (14,746 | ) | (10,110 | ) | ||||
Total RLHC stockholders' equity | 130,960 | 133,992 | ||||||
Noncontrolling interest | 33,905 | 33,609 | ||||||
Total stockholders’ equity | 164,865 | 167,601 | ||||||
Total liabilities and stockholders’ equity | $ | 300,925 | $ | 287,218 |
Six Months Ended | ||||||||
June 30, | ||||||||
2016 | 2015 | |||||||
(In thousands) | ||||||||
Operating activities: | ||||||||
Net income (loss) | $ | (5,198 | ) | $ | 9,146 | |||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
Depreciation and amortization | 7,540 | 6,119 | ||||||
Amortization of debt issuance costs | 593 | 325 | ||||||
Gain on disposition of property, equipment and other assets, net | (629 | ) | (16,503 | ) | ||||
Loss on early retirement of debt | — | 1,074 | ||||||
Deferred income taxes | 68 | 38 | ||||||
Equity in investments | (171 | ) | 100 | |||||
Stock based compensation expense | 1,268 | 478 | ||||||
Provision for doubtful accounts | 175 | 252 | ||||||
Change in current assets and liabilities: | ||||||||
Restricted cash for interest payments and other | (763 | ) | (7,281 | ) | ||||
Accounts receivable | (2,470 | ) | (1,387 | ) | ||||
Notes receivable | (45 | ) | (177 | ) | ||||
Inventories | 63 | 1 | ||||||
Prepaid expenses and other | (717 | ) | (174 | ) | ||||
Accounts payable | 3,308 | 2,684 | ||||||
Accrued other liabilities | (914 | ) | 4,022 | |||||
Net cash used in operating activities | 2,108 | (1,283 | ) | |||||
Investing activities: | ||||||||
Capital expenditures | (19,638 | ) | (7,782 | ) | ||||
Proceeds from sale of intellectual property | 393 | — | ||||||
Purchase of GuestHouse International assets | — | (8,855 | ) | |||||
Proceeds from disposition of property and equipment | 2 | 37,729 | ||||||
Collection of notes receivable related to property sales | 52 | 3,492 | ||||||
Advance of note receivable | (328 | ) | (27 | ) | ||||
Sales of short-term investments | 5,390 | — | ||||||
Change in restricted cash for property improvements | 2,019 | — | ||||||
Other, net | 78 | |||||||
Net cash provided by (used in) investing activities | (12,032 | ) | 24,557 | |||||
Financing activities: | ||||||||
Borrowings on long-term debt | 12,325 | 67,543 | ||||||
Repayment of long-term debt | — | (30,528 | ) | |||||
Debt issuance costs | (67 | ) | (3,203 | ) | ||||
Proceeds from sale of interests in joint ventures | 3,194 | 19,071 | ||||||
Distributions to noncontrolling interest | (1,797 | ) | — | |||||
Stock based compensation awards withheld for tax liability | (271 | ) | — | |||||
Other, net | 68 | 49 | ||||||
Net cash provided by financing activities | 13,452 | 52,932 | ||||||
Change in cash and cash equivalents: | ||||||||
Net increase (decrease) in cash and cash equivalents | 3,528 | 76,206 | ||||||
Cash and cash equivalents at beginning of period | 23,898 | 5,126 | ||||||
Cash and cash equivalents at end of period | $ | 27,426 | $ | 81,332 |
Red Lion Hotels Corporation | ||||
Additional Hotel Statistics | ||||
(unaudited) | ||||
Systemwide Hotels as of June 30, 2016 | Hotels | Rooms | ||
Company operated hotels | ||||
Majority owned and consolidated | 15 | 3,007 | ||
Leased and consolidated | 4 | 867 | ||
Managed | 3 | 684 | ||
Franchised hotels | 92 | 9,980 | ||
Total systemwide | 114 | 14,538 |
Comparable Hotel Statistics(1) | ||||||||||||
For the three months ended June 30, | ||||||||||||
2016 | 2015 | |||||||||||
Average Occupancy(2) | ADR (3) | RevPAR (4) | Average Occupancy(2) | ADR (3) | RevPAR (4) | |||||||
Company operated hotels | ||||||||||||
Midscale | 74.7% | $97.63 | $72.97 | 74.3% | $96.70 | $71.88 | ||||||
Franchised hotels | ||||||||||||
Midscale | 65.1% | $93.60 | $60.92 | 66.0% | $87.06 | $57.45 | ||||||
Economy (pro forma) (5) | 60.1% | $68.22 | $41.01 | 56.3% | $67.66 | $38.09 | ||||||
Systemwide | ||||||||||||
Midscale | 69.9% | $95.76 | $66.96 | 70.2% | $92.18 | $64.68 | ||||||
Economy (pro forma) (5) | 60.1% | $68.22 | $41.01 | 56.3% | $67.66 | $38.09 | ||||||
Total Systemwide | 67.0% | $88.28 | $59.11 | 66.0% | $85.87 | $56.66 | ||||||
Change from prior comparative period: | Average Occupancy(2) | ADR (3) | RevPAR (4) | |||||||||
Company operated hotels | ||||||||||||
Midscale | 40 | bps | 1.0% | 1.5% | ||||||||
Franchised hotels | ||||||||||||
Midscale | (90) | bps | 7.5% | 6.0% | ||||||||
Economy (pro forma) (5) | 380 | bps | 0.8% | 7.7% | ||||||||
Systemwide | ||||||||||||
Midscale | (30) | bps | 3.9% | 3.5% | ||||||||
Economy (pro forma) (5) | 380 | bps | 0.8% | 7.7% | ||||||||
Total Systemwide | 100 | bps | 2.8% | 4.3% |
(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 beginning of the current period under materially similar operations. | ||||||||||||
(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(1) | ||||||||||||
For the six months ended June 30, | ||||||||||||
2016 | 2015 | |||||||||||
Average Occupancy(2) | ADR (3) | RevPAR (4) | Average Occupancy(2) | ADR (3) | RevPAR (4) | |||||||
Company operated hotels | ||||||||||||
Midscale | 67.7% | $93.43 | $63.25 | 67.0% | $93.13 | $62.37 | ||||||
Franchised hotels | ||||||||||||
Midscale | 59.7% | $89.12 | $53.21 | 58.3% | $85.46 | $49.85 | ||||||
Economy (pro forma) (5) | 53.1% | $65.46 | $34.79 | 49.8% | $65.54 | $32.65 | ||||||
Systemwide | ||||||||||||
Midscale | 63.7% | $91.42 | $58.25 | 62.7% | $89.57 | $56.12 | ||||||
Economy (pro forma) (5) | 53.1% | $65.46 | $34.79 | 49.8% | $65.54 | $32.65 | ||||||
Total Systemwide | 60.5% | $84.52 | $51.15 | 58.8% | $83.49 | $49.11 | ||||||
Change from prior comparative period: | Average Occupancy(2) | ADR (3) | RevPAR (4) | |||||||||
Company operated hotels | ||||||||||||
Midscale | 70 | bps | 0.3% | 1.4% | ||||||||
Franchised hotels | ||||||||||||
Midscale | 140 | bps | 4.3% | 6.7% | ||||||||
Economy (pro forma) (5) | 330 | bps | -0.1% | 6.6% | ||||||||
Systemwide | ||||||||||||
Midscale | 100 | bps | 2.1% | 3.8% | ||||||||
Economy (pro forma) (5) | 330 | bps | (0.1)% | 6.6% | ||||||||
Total Systemwide | 170 | bps | 1.2% | 4.2% |
(1 | ) | Certain operating results for the periods included in this report are shown on a comparable hotel basis. With the exception of pro forma economy hotels, comparable hotels are defined as hotels that were in the system for at least one full calendar year as of the beginning of the current period under materially similar operations. | ||||||||||||
(2 | ) | Average occupancy represents total paid rooms divided by total available rooms. Total available rooms represents the number of rooms available multiplied by the number of days in the reported period and includes rooms taken out of service for renovation. | ||||||||||||
(3 | ) | Average daily rate ("ADR") represents total room revenues divided by the total number of paid rooms occupied by hotel guests. | ||||||||||||
(4 | ) | Revenue per available room ("RevPAR") represents total room and related revenues divided by total available rooms. | ||||||||||||
(5 | ) | We acquired the franchise license agreements of GuestHouse International and Settle Inn & Suites properties on April 30, 2015. Results presented prior to that date are attributable to and provided by the prior owner. |
Red Lion Hotels Corporation | |||||||||||||||||
Comparable Operations and Data From Operations | |||||||||||||||||
(unaudited) | |||||||||||||||||
($ 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 our company for at least one full calendar year as of the beginning of the current period other than hotels for which comparable results were not available. Comparable results excludes one hotel that was converted from owned to managed, one hotel that was converted from owned to franchised and one hotel that was closed. In addition, Hotel RL Baltimore, Hotel RL Washington DC, and Red Lion Hotel Atlanta International Airport are excluded as these properties have not been open since the beginning of both comparable periods. | |||||||||||||||||
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 June 30, | Six Months Ended June 30, | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Company operated hotel revenue | $ | 32,209 | $ | 30,348 | $ | 56,358 | $ | 54,120 | |||||||||
less: revenue from sold and closed hotels | — | (1,484 | ) | — | (3,612 | ) | |||||||||||
less: revenue from hotels without comparable results | (3,700 | ) | (285 | ) | (6,012 | ) | (317 | ) | |||||||||
Comparable company operated hotel revenue | $ | 28,509 | $ | 28,579 | $ | 50,346 | $ | 50,191 | |||||||||
Company operated hotel operating expenses | $ | 24,072 | $ | 22,218 | $ | 45,672 | $ | 43,139 | |||||||||
less: hotel divisional general and administrative expenses | (2,756 | ) | (2,304 | ) | (6,053 | ) | (5,264 | ) | |||||||||
less: operating expenses from sold and closed hotels | — | (1,083 | ) | — | (2,921 | ) | |||||||||||
less: operating expenses from hotels without comparable results | (2,760 | ) | (313 | ) | (4,865 | ) | (392 | ) | |||||||||
Comparable company operated hotel operating expenses | $ | 18,556 | $ | 18,518 | $ | 34,754 | $ | 34,562 | |||||||||
Company operated hotel direct operating profit | $ | 8,137 | $ | 8,130 | $ | 10,686 | $ | 10,981 | |||||||||
less: hotel divisional general and administrative expenses | 2,756 | 2,304 | 6,053 | 5,264 | |||||||||||||
less: operating profit from sold and closed hotels | — | (401 | ) | — | (691 | ) | |||||||||||
less: operating profit from hotels without comparable results | (940 | ) | 28 | $ | (1,147 | ) | $ | 75 | |||||||||
Comparable company operated hotel direct profit | $ | 9,953 | $ | 10,061 | $ | 15,592 | $ | 15,629 | |||||||||
Comparable company operated hotel direct margin % | 34.9 | % | 35.2 | % | 31.0 | % | 31.1 | % |
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 June 30, | Six Months Ended June 30, | ||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||
Net income (loss) | $ | 622 | $ | (986 | ) | $ | (5,198 | ) | $ | 9,146 | |||||||||
Depreciation and amortization | 4,037 | 3,144 | 7,540 | 6,119 | |||||||||||||||
Interest expense | 1,487 | 1,738 | 2,948 | 3,240 | |||||||||||||||
Income tax expense (benefit) | 34 | (25 | ) | 92 | 87 | ||||||||||||||
EBITDA | $ | 6,180 | $ | 3,871 | $ | 5,382 | $ | 18,592 | |||||||||||
Gain on asset dispositions (1) | (393 | ) | — | (393 | ) | (16,362 | ) | ||||||||||||
Loss on early retirement of debt (2) | — | — | — | 1,159 | |||||||||||||||
Lease termination costs (3) | — | 563 | — | 1,125 | |||||||||||||||
Reserve for environmental cleanup (4) | — | — | 128 | — | |||||||||||||||
Transition and other costs (5) | 636 | — | 636 | — | |||||||||||||||
Adjusted EBITDA | $ | 6,423 | $ | 4,434 | $ | 5,753 | $ | 4,514 | |||||||||||
(1 | ) | In the second quarter of 2016, we recorded a gain on sale of intellectual property, net of brokerage fees, of $0.4 million. In the first quarter of 2015, we recorded $16.4 million in gain on the sales of the Bellevue and Wenatchee properties. These amounts are included in the line item "Gain on asset dispositions, net" on the accompanying consolidated statements of operations. | |||||||||||||||||
(2 | ) | In the first quarter of 2015, we recorded $1.2 million in loss on the early retirement of debt. | |||||||||||||||||
(3 | ) | In the fourth quarter of 2014, we amended the lease for the Red Lion Hotel Vancouver at the Quay and recorded $0.6 million of additional amortized lease termination fees in the first and second quarters of 2015. | |||||||||||||||||
(4 | ) | In the first quarter of 2016, a reserve account was recorded for environmental cleanup at one of our hotel properties. | |||||||||||||||||
(5 | ) | The costs recorded in the second quarter of 2016 consisted primarily of expenses associated with the separation of the former Executive Vice President and Chief Financial Officer and other legal and consulting services associated with the CFO transition and other non-recurring transaction costs. |
Red Lion Hotels Corporation | |||||||||||||||||||
Reconciliation of Adjusted Net Income (Loss) to Net Income (Loss) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
($ in thousands) | |||||||||||||||||||
The following is a reconciliation of adjusted net income to net income (loss) for the periods presented: | |||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||
Net income (loss) | $ | 622 | $ | (986 | ) | $ | (5,198 | ) | $ | 9,146 | |||||||||
Gain on asset dispositions (1) | (393 | ) | — | (393 | ) | (16,362 | ) | ||||||||||||
Loss on early retirement of debt (2) | — | — | — | 1,159 | |||||||||||||||
Lease termination costs (3) | — | 563 | — | 1,125 | |||||||||||||||
Reserve for environmental cleanup (4) | — | — | 128 | — | |||||||||||||||
Transition and other costs (5) | 636 | — | 636 | — | |||||||||||||||
Adjusted net income (loss) | $ | 865 | $ | (423 | ) | $ | (4,827 | ) | $ | (4,932 | ) | ||||||||
Adjusted net income (loss) per share | $ | 0.04 | $ | (0.02 | ) | $ | (0.24 | ) | $ | (0.25 | ) | ||||||||
Weighted average shares - basic | 20,155 | 19,955 | 20,121 | 19,926 | |||||||||||||||
Weighted average shares - diluted | 20,649 | 19,955 | 20,121 | 20,116 | |||||||||||||||
(1 | ) | In the second quarter of 2016, we recorded a gain on sale of intellectual property, net of brokerage fees, of $0.4 million. In the first quarter of 2015, we recorded $16.4 million in gain on the sales of the Bellevue and Wenatchee properties. These amounts are included in the line item "Gain on asset dispositions, net" on the accompanying consolidated statements of operations. | |||||||||||||||||
(2 | ) | In the first quarter of 2015, we recorded $1.2 million in loss on the early retirement of debt. | |||||||||||||||||
(3 | ) | In the fourth quarter of 2014, we amended the lease for the Red Lion Hotel Vancouver at the Quay and recorded $0.6 million of additional amortized lease termination fees in the first and second quarters of 2015. | |||||||||||||||||
(4 | ) | In the first quarter of 2016, a reserve account was recorded for environmental cleanup at one of our hotel properties. | |||||||||||||||||
(5 | ) | The costs recorded in the second quarter of 2016 consisted primarily of expenses associated with the separation of the former Executive Vice President and Chief Financial Officer and other legal and consulting services associated with the CFO transition and other non-recurring transaction costs. |
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