Business segments

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

Business segments

Business segments

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 months ended March 31, 2022 and 2021, 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 (provision) benefit, and depreciation and amortization expense (“Adjusted EBITDA”), which should not be considered an alternative to net income (loss) 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 (loss), determined in accordance with U.S. GAAP, for the periods presented, before interest expense, income tax (provision) benefit, and depreciation and amortization expense, further adjusted to exclude the following items: (a) impairment loss; (b) loss on sale of assets; (c) other expense; (d) share-based compensation; (e) other tax expense; (f) transaction expenses; and (g) severance expenses.

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 months ended March 31, 2022 and 2021 ($ in thousands):

	Three Months Ended March 31,
	2022		2021
Owned net revenue
Yucatán Peninsula	$	68,629	$	33,603
Pacific Coast	29,104		8,621
Dominican Republic	69,664		20,881
Jamaica	44,264		11,722
Segment owned net revenue (1)	211,661		74,827
Other	507		125
Management fees	1,057		344
Cost reimbursements	1,952		513
Compulsory tips	4,397		1,937
Total revenue	$	219,574	$	77,746

________

(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 (loss) for the three months ended March 31, 2022 and 2021 ($ in thousands):

	Three Months Ended March 31,
	2022		2021
Owned Resort EBITDA
Yucatán Peninsula	$	29,458	$	7,174
Pacific Coast	12,544		485
Dominican Republic	28,377		1,666
Jamaica	17,158		(2,780)
Segment Owned Resort EBITDA	87,537		6,545
Other corporate	(11,651)		(9,394)
Management fees	1,057		344
Adjusted EBITDA	76,943		(2,505)
Interest expense	(9,168)		(18,167)
Depreciation and amortization	(19,500)		(20,883)
Impairment loss	—		(24,011)
Loss on sale of assets	—		(273)
Other expense	(514)		(706)
Share-based compensation	(3,356)		(3,179)
Other tax expense	(240)		(163)
Transaction expenses	(191)		(579)
Severance expense	—		(1,287)
Non-service cost components of net periodic pension cost (1)	387		57
Net income (loss) before tax	44,361		(71,696)
Income tax (provision) benefit	(1,614)		1,951
Net income (loss)	$	42,747	$	(69,745)

________

(1) Represents the non-service cost components of net periodic pension cost or benefit recorded within other expense in the Condensed Consolidated Statements of Operations. We include these costs 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 March 31, 2022 and December 31, 2021 ($ in thousands):

	As of March 31,		As of December 31,
	2022		2021
Segment property and equipment, gross
Yucatán Peninsula	$	668,667	$	667,618
Pacific Coast	289,243		288,309
Dominican Republic	684,948		684,187
Jamaica	409,009		408,107
Total segment property and equipment, gross	2,051,867		2,048,221
Corporate property and equipment, gross	4,852		4,802
Accumulated depreciation	(486,980)		(468,449)
Total property and equipment, net	$	1,569,739	$	1,584,574

The following table presents segment capital expenditures and a reconciliation to total capital expenditures for the three months ended March 31, 2022 and 2021 ($ in thousands):

	Three Months Ended March 31,
	2022		2021
Segment capital expenditures
Yucatán Peninsula	$	1,265	$	681
Pacific Coast	1,152		141
Dominican Republic	946		645
Jamaica	985		1,027
Total segment capital expenditures (1)	4,348		2,494
Corporate	52		57
Total capital expenditures (1)	$	4,400	$	2,551

________

(1) Represents gross additions to property and equipment