SPOKANE, Wash. - May 7, 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 first quarter 2013.
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 Inn Missoula, Montana, which was sold in the first quarter of 2013, 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.
"We had a great start to the year driving rate growth at our hotels while expanding our franchise network and continuing to execute on our asset sale strategy," said Jon E. Eliassen, President and Chief Executive Officer of Red Lion Hotels Corporation. "We also signed a commitment letter with Wells Fargo for a new credit facility to refinance our maturing debt on more favorable terms. Our further improved balance sheet and the new credit facility will give us more flexibility to take advantage of opportunities to reinvest in our owned hotels and improve our guests' experience."
Comparable revenue from owned and leased hotels of $25.5 million decreased $0.1 million or 0.5 percent compared to the same period a year ago. Comparable ADR increased by 3.7 percent to $80.57, which drove a RevPAR increase of 1.3 percent year over year to $42.64. Despite the increase in RevPAR, rooms revenue was essentially flat due to the impact of Leap Year Day in 2012. Comparable hotel direct operating margin declined to 9.2 percent from 12.6 percent in the same period in 2012. Last year, first quarter results benefitted from one-time seasonal labor cost adjustments that did not reoccur in the first quarter of 2013. The company also invested approximately $0.3 million in additional marketing initiatives in the first quarter of 2013 as compared to the prior year.
Franchise revenue increased to $1.3 million from $1.1 million and net segment results improved slightly from the same period a year ago.
Entertainment revenue grew to $3.4 million, up $0.8 million from the first quarter of 2012. This revenue increase, as well as improved profitability, was primarily driven by the timing and mix of shows.
On a comparable basis, total company EBITDA from continuing operations before special items was a loss of $0.1 million for the first quarter of 2013 compared to income of $1.0 million in the prior year period. Increased marketing investment, legal costs and workers compensation expense in the first quarter of 2013 contributed to the decline in EBITDA. Additionally, the first quarter of the prior year benefitted from favorable labor cost adjustments that did not reoccur in the 2013 period.
Net loss from continuing operations in the first quarter of 2013 was $3.2 million compared to $7.1 million in the first quarter of 2012. The prior year period included $6.7 million in pre-tax asset impairment charges related to certain assets held for sale.
The operations of the company's commercial mall in Kalispell, Montana, the Red Lion Hotel Medford in Oregon, the ownership of certain real estate in Sacramento, California, and a contract catering business in Yakima, Washington, were classified as discontinued operations. 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.
During first quarter, the company sold the Red Lion Inn Missoula in Montana for $1.95 million. Upon closing, the buyers signed a franchise agreement with the company.
At March 31, 2013, the following assets were classified as held for sale on the balance sheet:
Subsequent to quarter end, the company sold the following assets:
During the first quarter, the company signed three franchise agreements; two with owners of new locations and one with the buyer of the company's previously owned property:
Subsequent to quarter end, the company signed two franchise agreements; one with the buyer of the company's previously owned property and one with the owner of a new location:
At March 31, 2013, the company had $5.2 million in cash and cash equivalents and $10.0 million available on its line of credit. Additionally, at March 31, 2013, the company had outstanding debt of $79.2 million, of which $48.3 million is current.
During the first quarter of 2013, the company amended its existing credit facility with Wells Fargo Bank, National Association ("Wells Fargo") to extend its maturity to June 30, 2013. The company also signed a commitment letter with Wells Fargo for a new credit facility. Proceeds from the new facility will be used to refinance all maturing debt, for capital expenditures and for general corporate purposes, and is expected to close prior to June 30, 2013.
Subsequent to quarter end, the company used a portion of the proceeds from the sale of the Kalispell Center Mall to pay off $8.8 million on the existing credit facility.
Capital expenditures for the first quarter ended March 31, 2013, totaled $2.0 million primarily for hotel improvement projects.
Based on the outlook for the markets in which the company operates and on currently available information, the company reaffirms the previously announced RevPAR guidance and plans for capital expenditures for 2013:
The company will conduct a conference call on May 7, 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.
To participate in the conference call, please dial the following number ten minutes prior to the scheduled time: (800) 230-1096. International callers should dial (612) 234-9960.
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 5:00 p.m. Pacific Time on May 7, 2013, through May 21, 2013, at (800) 475-6701 or (320) 365-3844 (International) access code - 291589. The replay will also be available shortly after the call on the Red Lion website.
Red Lion Hotels Corporation is a hospitality company primarily engaged in the franchising, ownership and operation of hotels located in nine states and one Canadian province. As of, the company has system wide. The Red Lion Hotels and Red Lion Inn & Suites network is comprised of square feet of meeting space. The Leo Hotel Collection is comprised of one hotel with 2,956 rooms and 220,000 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.
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, 2012, and in other documents filed by the Company with the Securities and Exchange Commission.
Pam Scott
Director of Corporate Communications
(509) 777-6393
SOURCE Red Lion Hotels Corporation
Red Lion Hotels Corporation is a hospitality company primarily engaged in the franchising, management and ownership of upscale, midscale and economy hotels.