SPOKANE, Wash., Feb. 28, 2013 // PRNewswire // -- Red Lion Hotels Corporation (NYSE: RLH), a western U.S. based owner and franchisor of midscale hotels, today announced its results for the fourth quarter and year ended December 31, 2012.
Comparable operating results and data from continuing operations (as disclosed in the table by the same title) for the periods included in this release exclude from hotel operations the results of the Red Lion Hotel on Fifth Avenue in Seattle, which was sold in the second quarter of 2011, the Red Lion Colonial Hotel in Helena, Montana, which was sold in the third quarter of 2012, and the Red Lion Hotel Denver Southeast, which was sold in the fourth quarter of 2012. Following the sales, these properties continue to operate as franchised hotels and the company is therefore required to report their financial results in continuing operations. Throughout this release the company refers to certain non-GAAP financial measures. 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.
"I am pleased with Red Lion's accomplishments in 2012," said Jon E. Eliassen, President and Chief Executive Officer of Red Lion Hotels Corporation. "We increased our RevPAR and ADR, grew our hotel network, better defined our product offerings and strengthened our balance sheet by using proceeds from asset sales to pay down debt. We are well-positioned to refinance our maturing debt."
"We continue to execute our asset sale strategy which is providing additional capital to further invest in our owned hotels," Eliassen said. "At the same time, we continue to make progress on growing our network of hotels through franchising. During the fourth quarter, we opened two new locations and converted a formerly owned hotel in Denver. We also signed two new franchises, which converted subsequent to year end."
Comparable revenue from owned and leased hotels of $27.1 million increased $0.6 million or 2.1 percent compared to the same period a year ago. Comparable RevPAR increased 4.3 percent year over year to $41.20 driven by a 4.3 percent increase in ADR to $80.53. Comparable hotel direct operating margin declined to 9.6 percent from 14.7 percent in the same period in 2011. Fourth quarter 2011 results benefitted from workers' compensation expense adjustments, reductions of real property tax assessments and labor cost reductions that did not reoccur in the 2012 period.
Franchise revenue increased to $1.2 million from $1.1 million from the same period a year ago. Profitability in the segment was negatively impacted by increased investment in sales and marketing initiatives.
Entertainment revenue grew to $2.8 million, up $0.4 million from 2011. This increase was primarily driven by the timing and mix of shows. However, profitability declined year over year as the ticketing division continues to see decreased demand.
On a comparable basis, total company EBITDA from continuing operations before special items was $0.2 million for the fourth quarter compared to $1.3 million in the prior year period. As mentioned above, the fourth quarter of the prior year benefitted from certain non-recurring favorable adjustments relating to worker's compensation expense, real property tax assessments and labor cost reductions.
Net loss from continuing operations in the fourth quarter of 2012 was $3.8 million, including $0.6 million in pre-tax impairment charges, compared to $20.5 million in the prior year period. The prior year period included $21 million in pre-tax impairment charges related to goodwill and certain assets held for sale.
Comparable revenue from owned and leased hotels of $126.6 million increased $5.5 million, or 4.6 percent compared to prior year. Comparable RevPAR increased 5.5 percent driven by a 240 basis point increase in occupancy and a 1.5 percent increase in ADR. RevPAR results exceeded the company's guidance of 3 to 5 percent growth, due to stronger than anticipated ADR performance. Comparable hotel direct operating margin declined to 19.4 percent from 19.9 percent in the prior year due to increased occupancy-related costs, including reservations and commissions expenses, as well as prior year adjustments to workers' compensation expense and labor cost reductions.
Franchise revenue increased to $5.2 million from $4.0 million in 2011. Revenue and profitability improved year over year primarily due to the addition of franchises to the system.
Entertainment revenue of $9.2 million decreased $2.2 million from the prior year primarily driven by a change in the mix of productions during the year and a decline in ticketing revenue due to weak demand for entertainment events in the company's markets. Profitability for the segment declined as the prior year Best of Broadway series included a sold out 11-day run of the hit, "Wicked," and there was not a similar production in 2012.
On a comparable basis, total company EBITDA from continuing operations before special items was $14.2 million for the full year ended December 31, 2012 compared to $12.5 million in the prior year, an increase of 13.7 percent.
Net loss from continuing operations for 2012 was $10.5 million compared to $5.6 million in the prior year. The comparison of the two years is impacted by the timing of asset sales, impairment charges, gain on property sales, and income tax adjustments. Major items impacting 2012 include partial year results of assets that were sold during the year and $9.4 million in pre-tax asset impairment charges. Major items impacting 2011 include pre-tax goodwill and asset impairment charges of $23.1 million, a $33.5 million pre-tax gain on the sale of a property, and the income tax effect of a non-deductible goodwill impairment charge.
At December 31, 2012, the operations of the company's commercial mall in Kalispell, Montana were classified as discontinued operations. Additional operating results classified as discontinued include the property in Medford, Oregon and the ownership of certain real estate in Sacramento, California. This presentation as required under generally accepted accounting principles ("GAAP") separately reports the results including any related asset impairment charges, net of income taxes as "net income (loss) from discontinued operations" on the company's statement of operations for all periods presented.
The operating results of the Red Lion Inn Missoula in Montana had been classified as discontinued operations since the fourth quarter of 2011 because the property was not expected to continue to operate as a Red Lion franchise. Upon closing of the sale of this property on February 20, 2013, however, the buyers signed a franchise agreement with the company. The company therefore reclassified the results of the property as a continuing operation for the fourth quarter and all comparable periods presented.
During the fourth quarter, the company recorded $0.4 million and $0.2 million in pre-tax asset impairment charges in continuing operations related to its properties held for sale in Pendleton, Oregon and Missoula, Montana respectively. For the full year, pre-tax asset impairment charges from continuing operations totaled $9.4 million relating to the company's properties held for sale or sold in Southeast Denver, Colorado, Helena and Missoula, Montana and Pendleton, Oregon.
Reported EBITDA from continuing operations before special items for 2012 excludes these impairment charges which are separately identified in the company's operating results.
At December 31, 2012, the company had $6.5 million in cash and cash equivalents and $10.0 million available on its line of credit. Additionally, at December 31, 2012, the company had outstanding debt of $80.0 million, of which $49.2 million is current. This compares to outstanding debt of $100.5 million, of which $3.3 million was current, at December 31, 2011. Based on the reduction in debt and strengthening of the balance sheet, the company believes it will be well-positioned to refinance its debt that matures in 2013.
Capital expenditures for the full year ended December 31, 2012, totaled $8.4 million primarily for hotel improvement projects.
During 2012, the company sold three properties:
At December 31, 2012, the following assets were classified as held for sale on the balance sheet: the Red Lion Hotel Medford, the Red Lion Inn Missoula, the Red Lion Hotel Pendleton and the commercial mall in Kalispell.
Subsequent to year end, the company closed on the sale of the Red Lion Inn Missoula in Montana for $1.95 million. Upon closing of the sale of this property, the buyers signed a franchise agreement with the company.
In 2012, the company signed six franchise agreements; four with owners of new locations and two with the buyers of the company's previously owned properties:
In January, the company announced The Leo Hotel Collection, a new soft brand for independent owners of unique, boutique, historic and destination hotels looking for access to a franchise distribution system, while maintaining the individual identity of their hotels. In February, the company announced the first member of the Leo Hotel Collection, the LVH – Las Vegas Hotel & Casino, a 2,956 room resort adjacent to the Las Vegas Convention Center. The company will earn incremental revenue based on the reservations delivered to the LVH through select Red Lion distribution channels.
Also in January and February, the company opened two new franchise locations, the Red Lion Inn & Suites Denver Airport inColorado and the Red Lion Inn & Suites Kent in Washington.
In February, the company closed on the sale of its Red Lion Inn Missoula in Montana for $1.95 million. Upon closing of the sale of this property, the buyers signed a franchise agreement with the company.
Based on the outlook for the markets in which the company operates and on currently available information, the company is providing the following RevPAR guidance and plans for capital expenditures for 2013:
The company will conduct a conference call on February 28, 2013, 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 Jon E. Eliassen and Executive Vice President and Chief Financial Officer Julie Shiflett. Executive Vice President and Chief Operating Officer George Schweitzer will also be available to answer questions.
To participate in the conference call, please dial the following number ten minutes prior to the scheduled time, (800) 230-1085. International callers should dial (612) 288-0337.
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 Red Lion 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 4:00 p.m. Pacific Time on February 28, 2013, through March 14, 2013, at (800) 475-6701 or (320) 365-3844 (International) access code - 282568. The replay will also be available shortly after the call on the Red Lion website.
Red Lion Hotels Corporation is a hospitality and leisure Company primarily engaged in the franchising, ownership and operation of hotels under its Red Lion Hotel, Red Lion Inn & Suites and Leo Hotel Collection brands. As of December 31, 2012, the RLH hotel network was comprised of 48 hotels located in nine states and one Canadian province, with 9,015 rooms and 484,693 square feet of meeting space. The Company also owns and operates an entertainment and event ticket distribution business. For more information, please visit the Company's website at www.redlion.com.
his 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, 2011 and in other documents filed by the Company with the Securities and Exchange Commission.
SOURCE Red Lion Hotels Corporation
Pam Scott
Director of Corporate Communications
(509) 777-6393
Red Lion Hotels Corporation is a hospitality company primarily engaged in the franchising, management and ownership of upscale, midscale and economy hotels.