EX-99.1 2 q22016errlhcex9918-k.htm EXHIBIT 99.1 Exhibit




RLHC Reports Second Quarter 2016 Results

Systemwide Same Store RevPAR Increases 4.3%
Achieves Strong EBITDA Growth

SPOKANE, Wash., August 2, 2016 - (GLOBE NEWSWIRE) -- Red Lion Hotels Corporation (“RLHC" or the "company”) (NYSE:RLH), a growing hospitality company that operates and franchises upscale, midscale and economy hotels, today reported second quarter 2016 results.

Highlights Second Quarter 2016
•
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

RLHC President and Chief Executive Officer Greg T. Mount stated, “RLHC delivered another strong quarter of RevPAR growth across all of our segments and ahead of comparable industry segments. The success of our initiatives is improving our EBITDA, and we are encouraged by the revenue gains in our franchise operations. The majority of the renovations in our joint venture hotels are substantially complete and we anticipate improved productivity from these repositioned hotels. The fundamental changes we have initiated over a year ago have equipped RLHC to perform well in a challenging lodging environment. We are well positioned to pursue various growth avenues and remain on track to meeting our goal of 100 hotels in 100 weeks.”

Second Quarter 2016 Results
Franchise hotels revenue reached $4.1 million, up 28% compared to the second quarter of 2015. Segment operating income for the quarter improved significantly to 13.7% versus 0.9% in the same period of 2015.
Comparable revenue from company operated hotels was $28.5 million, flat, compared to the same period a year ago. RevPAR for company operated hotels increased 1.5%, generated primarily by a 1.0% increase in rate and occupancy increase of 40 basis points. RevPAR was adversely impacted by our extensive renovations and upgrade activities at our company operated hotels. Comparable company operated hotel gross profit was $10.0 million, comparable to $10.1 million in the prior year. Systemwide same store midscale RevPAR grew 3.5%. Outperforming the industry, same store franchised economy RevPAR increased 7.7%, and same store franchised midscale increased 6.0%.





Entertainment revenue for the second quarter was $7.0 million compared with $2.1 million in the prior year period, increasing more than 240% year over year. Segment operating income was $0.9 million versus a loss of $0.3 million in the second quarter of 2015. The strong results in the Entertainment segment were driven by high demand for The Book of Mormon, which debuted in Hawaii for a limited production run and ended in early May. The company does not anticipate the pace of revenue contribution from its Entertainment segment to continue into the second half of 2016.
Consolidated net income attributable to RLHC in the second quarter of 2016 was $0.2 million compared to net loss of $1.9 million in the same period a year ago. Net income per share for the second quarter of 2016 was $0.01 versus net loss per share of $0.10 for the prior year period.
After adjusting for special items, adjusted net income per share for the second quarter 2016 was $0.04 versus an adjusted loss per share of $0.02 in 2015. Total company Adjusted EBITDA for the second quarter was $6.4 million compared to $4.4 million in the prior year period.

Balance Sheet
At June 30, 2016, the company had $27.4 million in cash and cash equivalents, $10.0 million in restricted cash and $12.7 million in short-term investments. Additionally, the company had consolidated long-term debt of $100.4 million, borrowed by the company’s joint venture entities.
Capital expenditures for the six months ended June 30, 2016, totaled $21.0 million; the majority of which was funded with proceeds from debt financing associated with the company’s joint ventures.

Brand Portfolio Developments
Since the first quarter earnings release, RLHC enjoyed accretive additions to its brand portfolio that included openings, new franchises, conversions from non-RLHC brands and conversions from Red Lion Hotels to Hotel RLs within the system. The announced changes are listed below.
Additions to the portfolio include the following:
•
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

Subsequent Events
On August 1st, the company filed a Universal Shelf Registration on Form S-3 with the Securities and Exchange Commission in the amount of $100 million. The company, who has been shelf-eligible, has never had a shelf filing in place. Management and the Board of Directors collectively decided that going forward RLHC should have an active




shelf registration as a best practice for the company, which will provide it optionality and flexibility to support growth initiatives over time.

2016 Outlook
The company is reiterating the following financial guidance for full year 2016, based on the outlook for the markets in which they operate, and its current expectations:
•
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

The company is revising its full year 2016 RevPAR guidance for comparable company operated hotels to increase 2% to 4% over 2015.

The company is introducing full year 2016 RevPAR guidance for systemwide same store to increase 2.5% to 4.5% over 2015. Systemwide same store RevPAR in 2015 was $51.95.

Conference Call Information
The company will conduct a conference call on August 2, at 2:00 p.m. Pacific Time (5:00 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 Vice President and Interim Chief Financial Officer David Wright.
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 go to the RLHC website 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 at 3:30 p.m. Pacific Time on August 2, 2016 through August 16, 2016, at (877) 660-6853 or (201) 612-7415 (International), using access code 13640744. The replay will also be available shortly after the call on the RLHC website.

About RLHC
Red Lion Hotels Corporation, established in 1959, is a national 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 and Settle Inn brands. The company also owns and operates an entertainment and event ticket distribution business under the brand name TicketsWest. 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, 2015, and in other documents filed by the company with the Securities and Exchange Commission.

Investor Relations Contact
Evelyn Infurna
O: 203-682-8265
C: 203-856-2088
Investor.relations@redlion.com





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






RED LION HOTELS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30, 2016 and 2015
 
 
 
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.