SPOKANE, Wash., April 22 -- Cavanaughs Hospitality Corporation (NYSE: CVH), a lodging, entertainment and management services company, today reported record results for the first quarter ending March 31, 1999. The Company reported a first quarter income before extraordinary items of $495 thousand, or $.04 per share, compared to a loss of $87 thousand, or $.01 per share for the same period a year ago. Total Revenues for the Company rose $7.5 million, or 51.3%, from $14.6 million in the first quarter of 1998 to $22.1 million for the comparable period in 1999. EBITDA
(earnings before interest, income taxes, depreciation and amortization) rose $1.1 million, or 28.5%, from $3.8 million in the first quarter of 1998 to $4.9 million in the first quarter of 1999. The first quarter,historically the lowest for the Company, was the only quarter in 1998 that recorded a net loss. After one year as a publicly traded company, Cavanaughs Hospitality Corporation has delivered positive EPS and record growth in each quarter.
"This quarter was an example of the growing synergy between the various divisions of Cavanaughs Hospitality Corporation," said Donald K. Barbieri, Chairman and CEO. "Our entertainment division really is kicking into high gear with explosive growth in Cavanaughs Entertainment and a high tech Internet solution bringing connectivity to our leisure, corporate and entertainment customers. We are reaching for what no other lodging company we know has," said Barbieri, "with real time Internet access for all our communities of the Northwest that can merge lodging, community venues, community events and leisure escapes into one stop shopping. This quarter saw us take a major step to that goal. We were able to purchase software that we are now developing for roll out this quarter. Watch your ads for the roll out; it's going to be fun."
"While entertainment growth was strong, some lodging markets were weak," said Barbieri. "Specifically the ski markets of Salt Lake City and the high tech area of Hillsboro, Oregon, created unfavorable year on year growth of revenue per available room (RevPAR). Asian flu tempered the agricultural communities surrounding Spokane and affected Spokane's lodging performance. If a lodging company tells you that rates and occupancy always go up," said Barbieri, "they are painting an unrealistic picture. I've been in this business for 25 years and seen many cycles. They will always have ups and downs. The great companies know how to take advantage of down cycles to accelerate and fine tune their strategies. We strive to be one of those textbook companies. When Intel began laying off in Hillsboro, we began an extensive renovation. We want to be the corporate travelers choice when the market rebounds, and we feel the high tech and Asian market will return with strength. In Salt Lake City, we frankly had a poor ski season with many resorts reporting historically low snow pack. Our property didn't have a great winter quarter compared to the previous year, but look at the city and how it is getting ready for its next growth. The freeway ramp to our property is closed for construction, and light rail has the streets torn up in anticipation of a late 1999 completion. We have both exterior and interior construction redefining the hotel to the Cavanaughs standard. So while our numbers from this hotel may affect our overall statistics and give way to negative RevPAR growth for the quarter, we say bring on the Olympics, it will make Salt Lake a world class community. In our agricultural communities, which have had to tighten their belts, we see great promise as China opens up to wheat and apple imports. We intend to be ready to serve our customers as they again express their interest in leisure, convention and corporate activity."
"One of the best examples of getting ready for the consumer," said Jack Lucas, Vice President of the Entertainment Division of Cavanaughs, "can be demonstrated by our bold merger of the Internet and entertainment. We launched our New Millennium Series with series and group sales for Phantom of the Opera, Les Miserable, Show Boat, River Dance and Miss Saigon in this quarter! We are growing our number of shows from 27 to 70. We have already doubled our subscription base and are adding tens of thousands of dollars of advance room package business into what has traditionally been slow hotel room periods. We are drawing consumers who will be part of an Internet portal that will become the Northwest's own site for instant access to lodging events, restaurants, rental cars, airlines, and all the services that go with leisure activity. We are laying a foundation for growth for future quarters and years that will raise the bar for other companies. No city other than New York has ever staged all of these legendary shows in one Broadway season. As we capture the names and wants of these customers, we will be building an e-commerce base that, when merged with our lodging user profiles and strategic partners' consumers, will be formidable."
"This entertainment activity," said Barbieri, "balanced off some weakness in what was otherwise a good performing hotel winter quarter. You will see us accelerate this entertainment and Internet synergy into as many markets as we can export our leisure, entertainment and retail strategy. We will leverage this leisure growth to our Commercial and Retail divisions. Just our commercial base of owned properties in Spokane alone has a 20% plus upside in retail and office growth as Spokane takes advantage of the aggressive retail expansion in downtown Spokane, set to open in August of this year."
"We don't minimize the effect of a poor hotel market," said Tom Barbieri, Executive Vice President. "We know, by past history, that when a market becomes soft, even if only in a few select markets, this causes some owners to look to exit the market. We like that opportunity to buy at the right time and add to our strategy of regional dominance. We'll be selective, but aggressive. We'll add great work associates, well located properties and loyal customers."
Cavanaughs Hospitality Corporation serves the Northwest with 3,933 full-service hotel rooms in 19 hotels, including 47 restaurants and lounges and 196,900 square feet of meeting space. G&B Real Estate Services is the real estate division of Cavanaughs Hospitality Corporation and owns 590,000 square feet of Company commercial real estate and manages 3.4 million square feet of Company and third party owned commercial real estate, and 2,000 units of third party owned apartment and condominium properties. In addition, Cavanaughs provides entertainment services through G&B Select-a-Seat, a 20-outlet computerized ticket company, and Cavanaughs Entertainment, a Broadway and special event presenting company.
No assurance can be given that earnings will not be lower than management currently anticipates. Statements in this release may be construed to be forward looking and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward looking statements involve risks and uncertainties, including without limitation, risks relating to the operation and acquisition of hotels, the availability of capital to finance growth, and the historical cyclicality of the lodging industry, as well as the other matters disclosed in the documents filed by the Company with the Securities & Exchange Commission.
Cavanaughs Hospitality Corporation Summary Statements of Operations (unaudited) (in thousands except EPS and hotel statistics) Three months ended March 31, F/Y 99 F/Y 98 $ Change % Change Revenues: Hotels & Restaurants Rooms $11,375 $6,884 $4,491 65.2% Food and Beverage 6,512 4,175 2,337 56.0% Other 1,093 782 311 39.8% Total Hotels and Restaurants 18,980 11,841 7,139 60.3% Entertainment, Management & Services 1,329 1,018 311 30.5% Rental Operations 1,839 1,776 63 3.5% Total Revenues 22,148 14,635 7,513 51.3% Operating Expenses: Direct: Hotels & Restaurants Rooms 3,397 2,091 1,306 62.5% Food and Beverage 5,285 3,558 1,727 48.5% Other 438 337 101 29.6% Total Hotels and Restaurants 9,120 5,986 3,134 52.3% Entertainment, Management & Services 777 697 80 11.5% Rental Operations 536 385 151 39.2% Total Direct Expenses 10,433 7,068 3,365 47.6% Undistributed Operating Expenses: Selling, general & administrative 3,307 1,780 1,527 85.9% Property Operating Costs 3,080 1,796 1,284 71.5% Corporate Expenses 477 216 261 120.4% Depreciation and Amortization 1,931 1,338 593 44.3% Total Undistributed Operating Expenses 8,795 5,130 3,665 71.4% Total Expenses 19,228 12,198 7,030 57.6% Operating Income 2,920 2,437 483 19.9% Other Income (Expense): Interest Expense (2,280) (2,679) 399 -14.9% Interest Income 55 70 (15) -20.7% Other Income 5 0 5 0.0% Minority Interest in Partnerships 50 40 10 24.3% Income (Loss) Before Income Taxes 750 (132) 881 668.5% Income Tax Provision (Benefit) 255 (45) 300 -668.9% Income (Loss) Before Extraordinary Item and Cumulative Effect of Change in Accounting Principle 495 (87) 582 668.3% Extraordinary Expense, net of taxes 10 0 10 0.0% Cumulative Effect of Change in Accounting Principle, net of taxes 133 0 133 0.0% Net Income (Loss) After Extraordinary Item and Cumulative Effect of Change in Accounting Principle $352 $(87) $439 503.7% EBITDA 4,851 3,775 1,076 28.5% EBITDA % 21.9% 25.8% 3.3% 12.8% Weighted Average Shares of Stock Outstanding - Basic 12,660,847 7,084,253 Earnings (loss) per Share - Basic 0.04 (0.01) 0.05 418.0% Hotel Statistics: Comparable hotels (hotels owned > 1 year) Occupancy* 44.0% 51.1% -- -7.1% Average Rate $76.73 $70.96 $5.77 8.1% RevPAR* $33.74 $36.26 ($2.52) -6.9% Room Revenue 6,244,079 6,468,690 (224,611) -3.5%