SPOKANE, WA, August 5, 2009 - Red Lion Hotels Corporation (NYSE: RLH) today announced its results for the second quarter and six-month period ended June 30, 2009. Summary results for the three and six-month periods follow:
In addition, key hotel operating metrics, on a comparable basis, and reported hotel operating margins for the three and six-month periods ended June 30, 2009 and June 30, 2008 are highlighted below for owned and leased hotels:
Commenting on the second quarter results, President and Chief Executive Officer Anupam Narayan said, "In the face of another quarter of economic weakness and a difficult lodging market, I am pleased that the Red Lion team continued to rise to the challenge. Even with lower revenues in the second quarter, our team delivered about the same level of EBITDA as last year. We were able to do this by maintaining our disciplined focus on revenue management, sales and cost containment."
Narayan continued, "From a balance sheet standpoint, we have no near-term debt maturities and expect to continue to fund cash needs through operating cash flow and cash on hand. Given the challenging outlook and limited visibility for the industry, we will continue to focus on managing our costs, but at the same time will be aggressive with sales and marketing initiatives to drive revenues."
Second Quarter Results
Red Lion's total revenue during the second quarter of 2009 was $44.9 million, compared to $49.8 million for the prior-year period. Revenue from hotels was $41.0 million, down 12.3% from the second quarter of 2008, due primarily to the weak economic and industry environment.
RevPAR for owned and leased hotels on a comparable basis for the second quarter of 2009 was down 12.6%, due to a 590 basis point decrease in occupancy and a 4.3% decrease in ADR. Despite the lower revenues, hotel direct operating margin for the quarter was 30.1%, an increase of 170 basis points from the prior-year period. System-wide RevPAR (which includes franchised hotels) on a comparable basis for the quarter decreased 12.4%, caused by a 620 basis point decrease in occupancy and a 3.2% decrease in ADR.
Franchise and management revenue was $0.7 million, an increase of $0.3 million from the prior-year period due primarily to the receipt of a settlement received in connection with the termination of a franchise that occurred in the second quarter of 2008. Entertainment revenue was $2.6 million, an increase of $0.7 million compared to the same quarter in 2008.
EBITDA for the second quarter of 2009 was $10.1 million, compared to $10.4 million for the second quarter of 2008, a 2.9% decline on a year-over-year basis. The company's net income was $1.8 million, compared to net income of $2.3 million for the prior-year period. Diluted earnings per share were $0.10, compared to diluted earnings per share of $0.12 for the second quarter of 2008.
First Half 2009 Results
Red Lion's total revenue for the six months ended June 30, 2009 was $79.3 million, compared to $89.4 million in the same period in 2008. Reported revenue from hotels was $71.8 million, down 12.4% from the prior-year period, primarily due to the weak economic and industry environment. Hotel direct operating profit decreased 9.5% to $16.7 million, but direct operating margin increased 70 basis points to 23.3%.
RevPAR for owned and leased hotels on a comparable basis for the first six months of 2009 was down 14.0%, due to a 620 basis point decrease in occupancy and a 4.1% decrease in ADR. System-wide, RevPAR on a comparable basis decreased 12.4% from the prior-year period, with a 570 basis point decrease in occupancy and a 3.1% decrease in ADR.
Franchise and management revenue was $1.0 million, up $0.2 million from the prior-year period, due to the receipt of a settlement payment in connection with the termination of a franchise that occurred in the second quarter of 2008. Entertainment revenue was $5.1 million, comparable to the prior-year period.
EBITDA for the six-month period ending June 30, 2009 was $12.4 million, compared to $13.6 million for the prior-year period before a one-time expense for separation costs. The company's net loss was $1.1 million, compared to net income of $0.1 million for the prior-year period before the one-time expense for separation costs. Loss per share for the six-month period ending June 30, 2009 was $0.06, compared to diluted earnings of $0.01 per share for the prior-year period before the one-time expense for separation costs.
Liquidity and Balance Sheet
As of June 30, 2009, the company had approximately $6.8 million in cash and cash equivalents, and outstanding debt of $142.7 million. During the quarter, the company paid down $6 million of its variable rate credit facility. The debt balance is comprised of $30.0 million outstanding under the company's variable rate credit facility, $13.5 million under a variable rate note with a bank, $30.8 million of publicly traded unsecured debt in the form of deeply subordinated trust preferred securities and a total of $68.4 million in thirteen fixed-rate non-recourse notes collateralized by individual properties. The company's first term debt maturity is in September 2011 in the aggregate amount of $22.2 million. Only the credit facility, which also matures in September 2011, and the variable rate bank note have restrictive financial covenants, with which the company is in compliance as of June 30, 2009.
Capital expenditures for the first six months of 2009 totaled $12.5 million, including $5.4 million and $2.3 million spent on renovations at our Anaheim and Denver Southeast properties, respectively. We expect to spend another $1.0 million on additional renovations at Denver Southeast in the second half of 2009 and another $4.5 million on normal capital expenditures at other properties. Combined, the total expected capital expenditures for 2009 will now be approximately $18 million. Given current economic conditions, the company continues to closely monitor capital spending.
Outlook for 2009
With the challenging economic environment and, based on currently available information, the company is adjusting its broad guidance for 2009 as follows:
Conference Call Information
The company will hold a conference call at 11:00 a.m. Pacific Time (2:00 p.m. Eastern Time) on August 6, 2009, to discuss the results for interested investors, analysts and portfolio managers. Management on the call will include President and CEO Anupam Narayan and Chief Financial Officer Anthony Dombrowik.
To participate in the conference call, please dial the following number ten minutes prior to the scheduled time: (888) 639-6205. International callers should dial (703) 925-2608.
This conference call will also be webcast live at http://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, download and install any necessary audio software. For those unable to participate during the live broadcast, a replay will be available at 1:30 p.m. PDT on August 6, 2009, through September 6, 2009 at (800) 475-6701 or (320) 365-3844 (International) access code - 108702. The replay will also be available shortly after the call on the Red Lion website.
About Red Lion Hotels Corporation:
Red Lion Hotels Corporation is a hospitality and leisure company primarily engaged in the ownership, operation and franchising of upscale and midscale hotels under its Red Lion® brand. As of June 30, 2009, the RLH hotel network was comprised of 46 hotels located in nine states and one Canadian province, with 8,803 rooms and 436,355 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, 2008 and in other documents filed by the company with the Securities and Exchange Commission.
Red Lion Hotels Corporation
Julie Langenheim, Investor Relations Manager