SPOKANE, Wash. - Aug. 8, 2013 // PRNewswire // - Red Lion Hotels Corporation (NYSE: RLH), a western U.S. based owner and a franchisor of midscale hotels, today announced its results for the second 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 hotels or operations that have been sold in the past four quarters. 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 have been successful in growing rate in 2013 with ADR increasing by 4.3 percent during the second quarter," said Jon E. Eliassen, President and Chief Executive Officer of Red Lion Hotels Corporation. "We will continue to focus on ADR growth for the remainder of the year."
Eliassen continued, "Expanding our franchise network also remains a key growth initiative. With 27 franchised properties, we are well on our way toward our goal of 30 by the end of the year. Additionally, with the completion in June of our refinancing and expanded credit facility, Red Lion has a stronger balance sheet and is better positioned to invest in franchising and in improvements for our owned properties."
Total comparable revenue from owned and leased hotels of $32.6 million increased $0.3 million or 0.9 percent compared to the same period a year ago. Comparable room revenue from owned and leased hotels of $25.5 million increased $0.8 million over the same period last year. Comparable ADR increased by 4.3 percent to $88.15, which drove a RevPAR increase of 3.0 percent year over year to $58.89. Comparable hotel direct operating margin declined to 22.1 percent from 24.7 percent in the same period in 2012, largely due to timing of sales & marketing initiatives, declines in food and beverage contribution, and one-time labor cost adjustments that benefited the second quarter of 2012.
Franchise revenue increased to $1.9 million from $1.3 million. Net segment results however declined $0.3 million reflecting increased costs to support the company's franchise growth initiative.
Entertainment revenue of $1.8 million decreased $0.6 million from the second quarter of 2012. The timing and mix of shows drove the decline in revenue and segment results.
On a comparable basis, total company EBITDA from continuing operations before special items was $4.0 million for the second quarter of 2013 compared to $5.0 million in the prior year period. Increased marketing expense, franchise development costs and unfavorable labor cost comparisons due to one-time adjustments that occurred in 2012 were the primary contributors to the decline in EBITDA.
Net loss from continuing operations in the second quarter of 2013 was $0.9 million compared to $0.1 million in the second quarter of 2012.
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 comprehensive income (loss) for all periods presented.
On June 20, 2013, the company expanded its existing credit facility with Wells Fargo Bank, National Association. The term loan under the facility, which will not mature until June 2018, was increased to $45 million with a 15-year amortization. Proceeds of approximately $38 million from the expanded facility were used to refinance the company's maturing debt. The remaining proceeds will be used for capital expenditures and for general corporate purposes. Additionally, a $10 million two-year revolving line of credit is available under the facility, a portion of which supports outstanding letters of credit. The company has pledged 19 Red Lion hotels as collateral for the new agreement.
At June 30, 2013, the company had $17.2 million in cash and cash equivalents and no cash borrowings on its $10 million revolving line of credit. Additionally, at June 30, 2013, the company had outstanding debt of $75.8 million, of which $3.0 million was current.
Capital expenditures, primarily for guest room improvement projects, for the three and six months ended June 30, 2013, totaled $2.7 million and $4.7 million respectively.
During the second quarter, the company signed three franchise agreements; one with the buyer of the company's previously owned property; one with the owners of a new location which converted in the quarter; and a third with the owners of an independent hotel which joined the Leo Hotel Collection subsequent to quarter end:
During the second quarter, the company sold the following assets:
Subsequent to quarter end, the company sold the Red Lion Hotel Medford in Oregon for $2.8 million.
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 has refined its capital expenditure estimates for 2013:
The company will conduct a conference call on Aug. 8, 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) 230-1059. International callers should dial (612) 288-0329.
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 Aug. 8, 2013, through Aug. 22, 2013, at (800) 475-6701 or (320) 365-3844 (International), access code - 298326. 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 ten states and one Canadian province. As of August 8, 2013, the company has 52 hotels system wide. The Red Lion Hotels and Red Lion Inn & Suites network is comprised of 50 hotels with 8,903 rooms and 462,135 square feet of meeting space. The Leo Hotel Collection is comprised of two hotels with 3,256 rooms and 241,000 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
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SOURCE Red Lion Hotels Corporation
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Red Lion Hotels Corporation is a hospitality company primarily engaged in the franchising, management and ownership of upscale, midscale and economy hotels.