Segment information

6 Months Ended

Jun. 30, 2019

We consider each one of our owned resorts to be an operating segment, none of which meets the threshold for a reportable segment. We also allocate resources and assess operating performance based on individual resorts. Our operating segments meet the aggregation criteria and thus, we present four separate reportable segments by geography: (i) Yucatán Peninsula, (ii) Pacific Coast, (iii) Dominican Republic and (iv) Jamaica. For the three and six months ended June 30, 2019 and 2018, we have excluded the immaterial amounts of management fees, cost reimbursements and other from our segment reporting.

Our operating segments are components of the business which are managed discretely and for which discrete financial information is reviewed regularly by our Chief Executive Officer, Chief Financial Officer and Chief Operating Officer, all of whom represent our chief operating decision maker (“CODM”). Financial information for each reportable segment is reviewed by the CODM to assess performance and make decisions regarding the allocation of resources.

The performance of our business is evaluated primarily on adjusted earnings before interest expense, income tax benefit (provision), and depreciation and amortization expense (“Adjusted EBITDA”), which should not be considered an alternative to net income or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. The performance of our segments is evaluated on Adjusted EBITDA before corporate expenses and management fee income (“Owned Resort EBITDA”).

We define Adjusted EBITDA as net income, determined in accordance with U.S. GAAP, for the period presented, before interest expense, income tax benefit (provision), and depreciation and amortization expense, further adjusted to exclude the following items: (a) other income (expense); (b) pre-opening expenses; (c) share-based compensation; (d) other tax expense; (e) transaction expenses; (f) severance expense; and (g) Jamaica delayed opening accrual reversal.

There are limitations to using financial measures such as Adjusted EBITDA and Owned Resort EBITDA. For example, other companies in our industry may define Adjusted EBITDA differently than we do. As a result, it may be difficult to use Adjusted EBITDA or similarly named financial measures that other companies publish to compare the performance of those companies to our performance. Because of these limitations, Adjusted EBITDA should not be considered as a measure of the income or loss generated by our business or discretionary cash available for investment in our business and investors should carefully consider our U.S. GAAP results presented in our Condensed Consolidated Financial Statements.

The following table presents segment owned net revenue and a reconciliation to total revenue for the three and six months ended June 30, 2019 and 2018 ($ in thousands):



	Three Months Ended June 30,					Six Months Ended June 30,
	2019		2018			2019		2018
Owned net revenue:
Yucatàn Peninsula	$	59,772	$	63,667		$	129,985	$	142,938
Pacific Coast	22,087		19,815			47,657		48,870
Dominican Republic	22,566		31,495			55,641		71,913
Jamaica	50,464		26,730			109,611		50,490
Segment owned net revenue ⁽¹⁾	154,889		141,707			342,894		314,211
Other	14		(9		)	16		343
Management fees	551		55			1,485		351
Cost reimbursements	2,949		78			3,537		122
Compulsory tips	5,620		3,741			11,887		7,392
Total revenue	$	164,023	$	145,572		$	359,819	$	322,419

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⁽¹⁾ Segment owned net revenue represents total revenue less compulsory tips paid to employees, cost reimbursements, management fees and other miscellaneous revenue not derived from segment operations.

The following table presents segment Owned Resort EBITDA, Adjusted EBITDA and a reconciliation to net income for the three and six months ended June 30, 2019 and 2018 ($ in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Owned Resort EBITDA:
Yucatàn Peninsula	$	21,151		$	25,726		$	53,310		$	65,330
Pacific Coast	8,569			6,550			20,956			20,458
Dominican Republic	5,043			9,586			18,506			28,013
Jamaica	14,631			8,089			38,979			18,733
Segment Owned Resort EBITDA	49,394			49,951			131,751			132,534
Other corporate - unallocated	(9,887		)	(8,689		)	(18,393		)	(17,009		)
Management fees	551			55			1,485			351
Total Adjusted EBITDA	40,058			41,317			114,843			115,876
Add:
Interest expense	(10,666		)	(5,632		)	(24,860		)	(27,514		)
Depreciation and amortization	(25,908		)	(15,882		)	(48,219		)	(31,571		)
Other income (expense)	364			378			(238		)	(1,446		)
Pre-opening expenses	(202		)	—			(291		)	—
Share-based compensation	(2,014		)	(2,104		)	(4,762		)	(3,890		)
Other tax expense	(443		)	(427		)	(802		)	(858		)
Transaction expenses	(1,273		)	(3,887		)	(3,240		)	(6,231		)
Severance expense	(133		)	—			(133		)	—
Jamaica delayed opening accrual reversal	—			—			—			342
Non-service cost components of net periodic pension cost (benefit)⁽¹⁾	249			(298		)	175			157
Net income before tax	32			13,465			32,473			44,865
Income tax benefit (provision)	1,008			3,356			11,555			(6,227		)
Net income	$	1,040		$	16,821		$	44,028		$	38,638

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⁽¹⁾	Represents the non-service cost components of net periodic pension cost (benefit) recorded within other income (expense) in the Condensed Consolidated Statements of Operations. We include these costs (benefits) in calculating Adjusted EBITDA as they are considered part of our ongoing resort operations.

The following table presents segment property and equipment, gross and a reconciliation to total property and equipment, net as of June 30, 2019 and December 31, 2018 ($ in thousands):



	As of June 30,			As of December 31,
	2019			2018
Segment property and equipment, gross:
Yucatàn Peninsula	$	870,296		$	861,380
Pacific Coast	285,952			285,936
Dominican Republic	579,358			501,624
Jamaica	502,968			500,550
Total segment property and equipment, gross	2,238,574			2,149,490
Other corporate	14,547			9,189
Accumulated depreciation	(395,125		)	(350,267		)
Total property and equipment, net	$	1,857,996		$	1,808,412

The following table presents segment capital expenditures and a reconciliation to total capital expenditures for the six months ended June 30, 2019 and 2018 ($ in thousands):



	Six Months Ended June 30,
	2019		2018
Segment capital expenditures:
Yucatàn Peninsula	$	10,055	$	6,602
Pacific Coast	395		1,401
Dominican Republic	79,515		28,146
Jamaica	2,507		1,919
Total segment capital expenditures ⁽¹⁾	92,472		38,068
Other corporate	5,379		2,280
Total capital expenditures ⁽¹⁾	$	97,851	$	40,348

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⁽¹⁾

Includes capital expenditures incurred, but not yet paid.