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TYSONS, Va.--(BUSINESS WIRE)--
Park Hotels & Resorts Inc. (“Park” or the “Company”) (NYSE: PK) today
announced results for the first quarter ended March 31, 2018. Highlights
include:
First Quarter 2018 Highlights
-
Comparable RevPAR was $165.57, an increase of 1.1% from the same
period in 2017; excluding the effect of renovations at several key
hotels during the quarter, Comparable RevPAR increased 2.0% from the
same period in 2017;
-
Net income was $149 million and net income attributable to
stockholders was $150 million;
-
Adjusted EBITDA was $174 million, a decrease of 1.7% over the same
period in 2017;
-
Adjusted FFO attributable to stockholders was $137 million, a decrease
of 0.7% over the same period in 2017;
-
Diluted earnings per share was $0.71;
-
Diluted Adjusted FFO per share was $0.65, an increase of 1.6% over the
same period in 2017;
-
Comparable Hotel Adjusted EBITDA margin was 26.9%, a decrease of 10
bps from the same period in 2017;
-
Completed the sale of 12 hotels for total gross proceeds of $379
million and used most of the net proceeds to repurchase 14,000,000
shares of Park’s common stock at $24.85 per share; and
-
Under contract to sell the Hilton Berlin (40% JV interest) at a price
per key of over $610,000.
Thomas J. Baltimore, Jr., Chairman, President and Chief Executive
Officer, stated, “I am pleased to report another successful quarter with
results coming in ahead of our expectations. I am incredibly proud of
the team’s unwavering focus on creating shareholder value as we continue
to execute on our stated objectives of prudent capital allocation and
operational excellence by recycling capital from the sale of non-core
assets to repurchase stock at a price significantly below our NAV and by
delivering relative margin outperformance. As we look out over the
balance of the year, we continue to observe improving fundamentals
across our portfolio, especially on the group side with pace up 60 basis
points in 2018 to 3.6%, while 2019 pace is nearing 7%.”
Selected Statistical and Financial Information
(unaudited,
dollars in millions, except per share data, Comparable RevPAR and
Comparable ADR)
|
|
|
|
|
| Three Months Ended March 31, | |
| | | | | 2018 | |
|
| 2017 | |
|
| Change | |
Comparable RevPAR
| | | | |
$
|
165.57
| | | |
$
|
163.83
| | | |
|
1.1
|
%
|
Comparable Occupancy
| | | | | |
78.5
|
%
| | | |
78.5
|
%
| | | |
—
|
% pts
|
Comparable ADR
| | | | |
$
|
210.83
| | | |
$
|
208.64
| | | | |
1.0
|
%
|
| | | | | | | | | | | | | | | | |
|
Net income(1) | | | | |
$
|
149
| | | |
$
|
2,350
| | | |
NM(2) | |
Net income attributable to stockholders(1) | | | | |
$
|
150
| | | |
$
|
2,350
| | | |
NM(2) | |
| | | | | | | | | | | | | | | | |
|
Adjusted EBITDA
| | | | |
$
|
174
| | | |
$
|
177
| | | | |
(1.7
|
)%
|
Comparable Hotel Adjusted EBITDA
| | | | |
$
|
159
| | | |
$
|
159
| | | | |
—
|
%
|
Comparable Hotel Adjusted EBITDA margin
| | | | | |
26.9
|
%
| | | |
27.0
|
%
| | | |
(10
|
) bps
|
Adjusted FFO attributable to stockholders
| | | | |
$
|
137
| | | |
$
|
138
| | | | |
(0.7
|
)%
|
| | | | | | | | | | | | | | | | |
|
Earnings per share - Diluted(1)(3) | | | | |
$
|
0.71
| | | |
$
|
11.01
| | | |
NM(2) | |
Adjusted FFO per share - Diluted(3) | | | | |
$
|
0.65
| | | |
$
|
0.64
| | | | |
1.6
|
%
|
Weighted average shares outstanding - Diluted
| | | | | |
212
| | | | |
213
| | | | |
(1
|
)
|
___________________________________
|
(1)
|
|
|
The three months ended March 31, 2017 includes an income tax benefit
from the derecognition of deferred tax liabilities of $2,288 million
associated with Park’s intent to elect REIT status.
|
(2)
| | |
Percentage change is not meaningful.
|
(3)
| | |
Per share amounts are calculated based on unrounded numbers.
|
| | |
|
Top 10 Hotels
RevPAR at Park’s Top 10 Hotels, which account for approximately 70% of
Hotel Adjusted EBITDA, increased 1.5% due to a 0.4% pt. increase in
occupancy and a 1.0% increase in rate, as compared to the same period in
2017. Highlights within the Top 10 Hotels include:
- Hilton Hawaiian Village Waikiki Beach Resort: RevPAR growth was
0.9% due to an increase in rate from increased transient demand offset
by weaker group demand for the quarter;
- New York Hilton Midtown: RevPAR declined 1.0% due to weak
transient demand coupled with disruption from rooms renovation during
the quarter; excluding the renovation disruption RevPAR would have
increased an estimated 1.8%;
- Hilton San Francisco Union Square / Parc 55 San Francisco – a
Hilton Hotel: Combined RevPAR declined 0.7% due to decreases in
rate driven by a decrease in group events as compared to the prior
year coupled with the disruption from the last phase of rooms
renovation at the Hilton San Francisco Union Square completed in early
February; excluding the renovation disruption combined RevPAR would
have increased an estimated 0.2%;
- Hilton Waikoloa Village: RevPAR growth was 9.5% due to an
increase in the number of flights to Kona and group demand, which
yielded an increased transient rate;
- Hilton New Orleans Riverside: RevPAR growth was 3.2% due to an
increase in occupancy from very strong transient demand offset by
weaker group demand due to the loss of a city-wide event in January;
- Hilton Chicago: RevPAR declined 7.2% as a result of a decrease
in rate from group business relative to last year;
- Hilton Orlando Bonnet Creek / Waldorf Astoria Orlando: Combined
RevPAR growth was 7.2% primarily from strong growth in transient rate
across the complex and strong group business; and
- Casa Marina, A Waldorf Astoria Resort: RevPAR declined 0.4%
from a decrease in transient demand that was partially offset by a
strong increase in group business.
Total Consolidated Comparable Hotels
Comparable RevPAR increased 1.1% for the quarter primarily due to a 1.0%
increase in rate, as compared to the same period in 2017. Transient
rooms revenue increased 1.0%, offset by a 2.2% decline in group rooms
revenue primarily due to a decrease in corporate events and conventions.
Highlights across comparable hotels and select markets include:
- Florida: RevPAR growth was 6.0%, attributable to strong group
business in both Orlando and Key West as well as increased transient
revenue from leisure business due to the timing of the Easter holiday
occurring earlier than in 2017;
- Northern California: RevPAR growth was 1.9%, primarily
attributable to increased occupancy as a result of increased transient
and contract demand;
- New Orleans: RevPAR growth was 2.3%, primarily attributable to
increased occupancy from an increase in transient business;
- Southern California: RevPAR declined 6.7% due to decreases in
both rate and occupancy, primarily from the renovation at the recently
converted Hilton Santa Barbara Beachfront Resort (formerly The Fess
Parker Santa Barbara Hotel – a DoubleTree Resort), which was completed
in April 2018; and
- Washington, D.C.: RevPAR declined 13.0% due to weaker transient
demand in 2018 due to the inauguration occurring in 2017, contributing
to a decrease in both rate and occupancy.
Hurricanes Irma and Maria
In September 2017, Hurricanes Irma and Maria caused damage and
disruption at the Caribe Hilton in San Juan, Puerto Rico and Park’s two
hotels in Key West, Florida. During the three months ended March 31,
2018, Park incurred an additional $7 million of expenses, and based upon
additional information obtained during the period, recognized an
additional loss of $22 million for property and equipment damaged during
the hurricanes. The amounts were offset by the recognition of an
additional insurance receivable of $29 million. Park expects the Caribe
Hilton to remain closed for almost all of 2018 and the results of
operations of that property are presented as non-comparable. Full year
2017 EBITDA, prior to the hurricanes, was projected to be $8 million.
Park expects that insurance proceeds, excluding any applicable insurance
deductibles, will be sufficient to cover a significant portion of the
property damage to the hotels and the near-term loss of business. Park
has received $20 million of property and casualty insurance proceeds to
date for both Key West hotels and the Caribe Hilton, including $18
million received in the first quarter. No business interruption
insurance proceeds have been received to date.
Dispositions
During the three months ended March 31, 2018, Park completed the sale of
the following 12 hotels in four separate transactions (the results of
these hotels are presented as non-comparable):
|
|
|
| |
|
| |
|
| |
|
| |
Hotel | | | | Location | | | Month Sold | | | Room Count | | | Gross Proceeds |
Hilton Rotterdam
| | | | Rotterdam, Netherlands | | |
January 2018
| | |
|
254
| | |
$
|
62.2
|
| | | | | | | | | |
|
254
| | | |
62.2
|
Embassy Suites Portfolio(1) | | | | | | | | | | | | | | | |
Embassy Suites by Hilton Kansas City Overland Park
| | | | Overland Park, Kansas | | |
February 2018
| | | |
199
| | | |
25.0
|
Embassy Suites by Hilton San Rafael Marin County
| | | | San Rafael, California | | |
February 2018
| | | |
236
| | | |
37.9
|
Embassy Suites by Hilton Atlanta Perimeter Center
| | | | Atlanta, Georgia | | |
February 2018
| | |
|
241
| | |
|
32.9
|
| | | | | | | | | | |
676
| | | |
95.8
|
UK Portfolio(1) | | | | | | | | | | | | | | | |
Hilton Blackpool
| | | | Blackpool, United Kingdom | | |
February 2018
| | | |
278
| | |
N/A
|
Hilton Belfast
| | | | Belfast, United Kingdom | | |
February 2018
| | | |
198
| | |
N/A
|
Hilton London Angel Islington
| | | | London, United Kingdom | | |
February 2018
| | | |
188
| | |
N/A
|
Hilton Edinburgh
| | | |
Grosvenor, United Kingdom | | |
February 2018
| | | |
184
| | |
N/A
|
Hilton Coylumbridge
| | | |
Aviemore, United Kingdom | | |
February 2018
| | | |
175
| | |
N/A
|
Hilton Bath City
| | | | Bath, United Kingdom | | |
February 2018
| | | |
173
| | |
N/A
|
Hilton Milton Keynes
| | | |
Keynes, United Kingdom | | |
February 2018
| | |
|
138
| | |
N/A
|
| | | | | | | | | | |
1,334
| | | |
188.5
|
| | | | | | | | | | | | | | |
|
Hilton Durban
| | | | Durban, South Africa | | |
February 2018
| | |
|
328
| | |
|
32.5
|
| | | | | | | | | |
|
328
| | |
|
32.5
|
Total | | | | | | | | | |
| 2,592 | | | $ | 379.0 |
___________________________________
|
(1) |
|
|
|
Hotels were sold as a portfolio.
|
| | | |
|
In April 2018, Park and the other joint venture owners of the entities
that own the Hilton Berlin entered into an agreement to sell the
ownership interest in these entities for a gross sales price of
approximately $367 million, or $610,000 per key, which is subject to
customary adjustments. The transaction is currently expected to close in
May 2018, subject to the completion of a local regulatory process. Park
owns a 40% interest in the joint venture, which has no debt outstanding,
and expects to receive net proceeds of approximately $140 million
subject to the aforementioned adjustments. Subsequent to the closing of
the sale, Park currently expects to declare a special dividend in the
range of $80 million to $90 million, subject to approval by its Board of
Directors.
Balance Sheet and Liquidity
Park had the following debt outstanding as of March 31, 2018:
(unaudited, dollars in millions) |
|
|
| |
|
| | | |
Debt |
|
| Collateral |
|
| Interest Rate | | | | Maturity Date | | | As of March 31, 2018 | |
Fixed Rate Debt | | | | | |
| | | | | | | | | | |
Mortgage loan
|
| |
DoubleTree Hotel Spokane City Center
|
| |
3.55%
| | |
|
October 2020
| |
|
$
|
12
| |
Commercial mortgage-backed securities loan
|
| |
Hilton San Francisco Union Square, Parc 55 San Francisco - a Hilton
Hotel
|
| |
4.11%
| | |
|
November 2023
| |
|
|
725
| |
Commercial mortgage-backed securities loan
|
| |
Hilton Hawaiian Village Beach Resort
|
| |
4.20%
| | |
|
November 2026
| |
|
|
1,275
| |
Mortgage loan
|
| |
Hilton Santa Barbara Beachfront Resort
|
| |
4.17%
| | |
|
December 2026
| |
|
|
165
| |
Total Fixed Rate Debt | | | | | | 4.16%(1) | | | | | | | | 2,177 | |
| | | | | | | | | | | | | | | |
|
Variable Rate Debt | | | | | | | | | | | | | | | | |
Revolving credit facility(2) |
| |
Unsecured
|
| |
L + 1.50%
| | |
|
December 2021(3) | |
|
|
—
| |
Term loan
|
| |
Unsecured
|
| |
L + 1.45%
| | |
|
December 2021
| |
|
|
750
| |
Mortgage loan
|
| |
DoubleTree Hotel Ontario Airport
|
| |
L + 2.25%
| | |
|
May 2022(3) | |
|
|
30
| |
Total Variable Rate Debt | | | | | | 3.36%(1) | | | | | | | | 780 | |
| | | | | | | | | | | | | | | |
|
Less: unamortized deferred financing costs and discount
|
| |
|
| | |
|
| |
|
|
(11
|
)
|
Total Debt(4) | | | | | | 3.95%(1) | | | | | | | $ | 2,946 | |
___________________________________
|
(1) |
|
|
Calculated on a weighted average basis.
|
(2) | | | $1 billion available.
|
(3) | | |
Assumes the exercise of all extensions that are exercisable solely
at Park’s option.
|
(4) | | |
Excludes $236 million of Park’s share of debt of its unconsolidated
joint ventures.
|
| | |
|
Total cash and cash equivalents were $280 million as of March 31, 2018,
including $108 million of restricted cash. Restricted cash included $94
million related to proceeds from the sale of the Embassy Suites
Portfolio that was released from restriction in April 2018.
In March 2018, Park repurchased and retired 14,000,000 shares of Park’s
common stock for $348 million, or $24.85 per share, from an affiliate of
HNA Tourism Group Co. Ltd (“HNA”) concurrently with the closing of HNA’s
secondary offering of Park’s common stock.
Capital Investments
Park invested $48 million in the first quarter on capital improvements
at its hotels, including $30 million on improvements made to guest
rooms, lobbies and other guest-facing areas. Key projects include:
- Hilton Santa Barbara Beachfront Resort: $4 million primarily on
the conversion from a Doubletree to a Hilton; which was completed in
April 2018. Total project spend was $14 million and included a
complete remodel of the hotel’s 360 rooms and bathrooms, a full
renovation of the hotel’s 40,000 square feet of meeting space, while
further enhancing the arrival experience with entirely new flooring,
soft seating and case goods throughout the lobby. Comparable RevPAR
decreased an estimated 35 basis points from these renovations during
the first quarter;
- New York Hilton Midtown: $12 million primarily on phase four of
guest room renovations. Total project spend was $26 million and
included a full renovation of 371 rooms. Comparable RevPAR decreased
an estimated 23 basis points from these renovations during the first
quarter;
- Hilton San Francisco Union Square: $5 million primarily on the
final phase of guest room renovations. Total project spend was $16
million and included a full renovation of 407 existing rooms, while
converting excess office space into two rooms. Comparable RevPAR
decreased an estimated 13 basis points from these renovations during
the first quarter;
- Hilton Short Hills:$2 million primarily on renovations
to add 10 new rooms to the property, new bathrooms and soft goods.
Total project spend is anticipated to be about $8 million and is
expected to be completed by the second quarter.Comparable
RevPAR decreased an estimated 13 basis points from these renovations
during the first quarter;
- DoubleTree Ontario: $2 million primarily on guest room
renovations. Comparable RevPAR decreased an estimated 8 basis points
from these renovations during the first quarter; and
- Hilton Chicago: $4 million primarily on ballroom renovations.
Dividends
Park declared a first quarter 2018 cash dividend of $0.43 per share to
stockholders of record as of March 30, 2018. The first quarter 2018 cash
dividend was paid on April 16, 2018.
On April 27, 2018, Park declared a second quarter 2018 cash dividend of
$0.43 per share to be paid on July 16, 2018 to stockholders of record as
of June 29, 2018.
Full Year 2018 Outlook
Park has updated its 2018 guidance that was previously provided on March
9, 2018 following the repurchase of 14,000,000 shares of common stock
from HNA. Park now expects the full year 2018 operating results to be as
follows:
| | |
|
| | | | |
|
| | | | |
(unaudited, dollars in millions, except per share amounts) | | | | | | | | | | | | | | |
|
|
|
| 2018 Outlook | | | Variance to Prior Outlook |
| | | | as of May 3, 2018 | | | as of March 9, 2018 |
Metric |
|
|
| Low |
|
| High | | | Low |
|
| High |
Comparable RevPAR Growth
| | | | |
0.5
|
%
| |
|
| |
2.5
|
%
| | | | |
0.5
|
%
| | | | |
0.5
|
%
| |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Net income
| | | |
$
|
336
| | | | |
$
|
369
| | | | |
$
|
104
| | | | |
$
|
103
| | |
Net income attributable to stockholders
| | | |
$
|
331
| | | | |
$
|
364
| | | | |
$
|
104
| | | | |
$
|
104
| | |
Diluted earnings per share(1) | | | |
$
|
1.62
| | | | |
$
|
1.78
| | | | |
$
|
0.51
| | | | |
$
|
0.51
| | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Adjusted EBITDA
| | | |
$
|
710
| | | | |
$
|
750
| | | | |
$
|
5
| | | | |
$
|
5
| | |
Comparable Hotel Adjusted EBITDA margin change
| | | | |
(70
|
)
|
bps
| | | |
30
| |
bps
| | | |
10
| |
bps
| | | |
10
| |
bps
|
Adjusted FFO per share - Diluted(1) |
|
|
|
$
|
2.76
|
|
|
|
|
$
|
2.92
|
|
| | |
$
|
0.02
|
|
|
|
|
$
|
0.02
|
|
|
|
| |
(1) | |
Per share amounts are calculated based on unrounded numbers.
|
| |
|
Full year 2018 guidance is based in part on the following assumptions:
-
General and administrative expenses are projected to be $44 million,
excluding $16 million of non-cash share-based compensation expense and
$6 million of transition expense;
-
Fully diluted weighted average shares are expected to be 203.8 million;
-
Includes $8 million of Adjusted EBITDA from the Caribe Hilton
representing a full year of operations, for which Park expects to be
covered by business interruption insurance resulting from the hotel
being closed for most of 2018 following the damage caused by Hurricane
Maria; and
-
Excludes potential future acquisitions and dispositions, which could
result in a material change to Park’s outlook.
Supplemental Disclosures
In conjunction with this release, Park has furnished a financial
supplement with additional disclosures on its website. Visit www.pkhotelsandresorts.com
for more information. Park has no obligation to update any of the
information provided to conform to actual results or changes in Park’s
portfolio, capital structure or future expectations.
Conference Call
Park will host a conference call for investors and other interested
parties to discuss first quarter 2018 results on May 4, 2018 beginning
at 10:00 a.m. Eastern Time.
Participants may listen to the live webcast by logging onto the
Investors section of the website at www.pkhotelsandresorts.com.
Alternatively, participants may listen to the live call by dialing (877)
451-6152 in the United States or (201) 389-0879 internationally, and
requesting Park Hotels & Resorts’ First Quarter 2018 Earnings Conference
Call. Participants are encouraged to dial into the call or link to the
webcast at least ten minutes prior to the scheduled start time.
A replay and transcript of the webcast will be available within 24 hours
after the live event on the Investors section of Park’s website.
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements include, but are not limited to, statements
related to Park’s current expectations regarding the performance of its
business, financial results, liquidity and capital resources, the
effects of competition and the effects of future legislation or
regulations, the expected completion of anticipated acquisitions and
dispositions (including the expected completion of the sale of Park’s
interests in the entities owning the Hilton Berlin), the declaration and
payment of future dividends and other non-historical statements.
Forward-looking statements include all statements that are not
historical facts, and in some cases, can be identified by the use of
forward-looking terminology such as the words “outlook,” “believes,”
“expects,” “potential,” “continues,” “may,” “will,” “should,” “could,”
“seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,”
“anticipates” or the negative version of these words or other comparable
words. Forward-looking statements involve risks, uncertainties and
assumptions. Actual results may differ materially from those expressed
in these forward-looking statements. You should not put undue reliance
on any forward-looking statements and Park urges investors to carefully
review the disclosures Park makes concerning risk and uncertainties in
Item 1A: “Risk Factors” in Park’s Annual Report on Form 10-K for the
year ended December 31, 2017, as such factors may be updated from time
to time in Park’s periodic filings with the SEC, which are accessible on
the SEC’s website at www.sec.gov.
Except as required by law, Park undertakes no obligation to update or
revise publicly any forward-looking statements, whether as a result of
new information, future events or otherwise.
Non-GAAP Financial Measures
Park presents certain non-GAAP financial measures in this press release,
including NAREIT FFO attributable to stockholders Adjusted FFO
attributable to stockholders, EBITDA, Adjusted EBITDA, Hotel Adjusted
EBITDA, and Hotel Adjusted EBITDA margin. These non-GAAP financial
measures should be considered along with, but not as alternatives to,
net income (loss) as a measure of its operating performance. Please see
the schedules included in this press release including the “Definitions”
section for additional information and reconciliations of such non-GAAP
financial measures.
About Park
Park is a leading lodging REIT with a diverse portfolio of hotels and
resorts with significant underlying real estate value. Park’s portfolio
consists of 55 premium-branded hotels and resorts with over 32,000
rooms, a majority of which are located in prime United States markets
with high barriers to entry.
|
PARK HOTELS & RESORTS INC. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(unaudited, in millions, except share and per share data) |
|
|
|
|
| March 31, 2018 | |
|
| December 31, 2017 | |
ASSETS | | | | | | | | | | | |
Property and equipment, net
| | | |
$
|
8,051
| | | |
$
|
8,311
| |
Assets held for sale, net
| | | | |
—
| | | | |
37
| |
Investments in affiliates
| | | | |
87
| | | | |
84
| |
Goodwill
| | | | |
607
| | | | |
606
| |
Intangibles, net
| | | | |
28
| | | | |
41
| |
Cash and cash equivalents
| | | | |
172
| | | | |
364
| |
Restricted cash
| | | | |
108
| | | | |
15
| |
Accounts receivable, net
| | | | |
138
| | | | |
125
| |
Prepaid expenses
| | | | |
54
| | | | |
48
| |
Other assets
| | | |
|
91
| | | |
|
83
| |
TOTAL ASSETS | | | |
$
|
9,336
| | | |
$
|
9,714
| |
LIABILITIES AND EQUITY | | | | | | | | | | | |
Liabilities | | | | | | | | | | | |
Debt
| | | |
$
|
2,946
| | | |
$
|
2,961
| |
Accounts payable and accrued expenses
| | | | |
172
| | | | |
215
| |
Due to hotel manager
| | | | |
108
| | | | |
141
| |
Due to Hilton Grand Vacations
| | | | |
138
| | | | |
138
| |
Deferred income tax liabilities
| | | | |
46
| | | | |
65
| |
Other liabilities
| | | |
|
211
| | | |
|
232
| |
Total liabilities
| | | | |
3,621
| | | | |
3,752
| |
Stockholders' Equity | | | | | | | | | | | |
Common stock, par value $0.01 per share, 6,000,000,000 shares
authorized, 201,168,293 shares issued and 201,095,915 shares
outstanding as of March 31, 2018 and 214,873,778 shares issued and
214,845,244 shares outstanding as of December 31, 2017
| | | | |
2
| | | | |
2
| |
Additional paid-in capital
| | | | |
3,578
| | | | |
3,825
| |
Retained earnings
| | | | |
2,193
| | | | |
2,229
| |
Accumulated other comprehensive loss
| | | |
|
(8
|
)
| | |
|
(45
|
)
|
Total stockholders' equity
| | | | |
5,765
| | | | |
6,011
| |
Noncontrolling interests
| | | |
|
(50
|
)
| | |
|
(49
|
)
|
Total equity
| | | |
|
5,715
| | | |
|
5,962
| |
TOTAL LIABILITIES AND EQUITY | | | |
$
|
9,336
| | | |
$
|
9,714
| |
| | | | | | | | | | |
|
|
PARK HOTELS & RESORTS INC. |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(unaudited, in millions, except share and per share data) |
|
|
|
|
|
| Three Months Ended | |
| | | | | March 31, | |
| | | | | 2018 | |
|
| 2017 | |
Revenues | | | | | | | | | | | | |
Rooms
| | | | |
$
|
418
| | | |
$
|
432
| |
Food and beverage
| | | | | |
183
| | | | |
192
| |
Ancillary hotel
| | | | | |
50
| | | | |
47
| |
Other
| | | | |
|
17
| | | |
|
13
| |
Total revenues
| | | | | |
668
| | | | |
684
| |
| | | | | | | | | | | |
|
Operating expenses | | | | | | | | | | | | |
Rooms
| | | | | |
112
| | | | |
113
| |
Food and beverage
| | | | | |
126
| | | | |
131
| |
Other departmental and support
| | | | | |
156
| | | | |
164
| |
Other property-level
| | | | | |
53
| | | | |
51
| |
Management and franchise fees
| | | | | |
33
| | | | |
34
| |
Depreciation and amortization
| | | | | |
70
| | | | |
70
| |
Corporate general and administrative
| | | | | |
16
| | | | |
14
| |
Other
| | | | |
|
17
| | | |
|
13
| |
Total expenses
| | | | | |
583
| | | | |
590
| |
| | | | | | | | | | | |
|
Gain on sales of assets, net
| | | | | |
89
| | | | |
—
| |
| | | | | | | | | | | |
|
Operating income | | | | | |
174
| | | | |
94
| |
| | | | | | | | | | | |
|
Interest income
| | | | | |
1
| | | | |
—
| |
Interest expense
| | | | | |
(31
|
)
| | | |
(30
|
)
|
Equity in earnings from investments in affiliates
| | | | | |
4
| | | | |
4
| |
Gain on foreign currency transactions
| | | | |
|
1
| | | |
|
1
| |
| | | | | | | | | | | |
|
Income before income taxes | | | | | |
149
| | | | |
69
| |
Income tax benefit
| | | | |
|
—
| | | |
|
2,281
| |
| | | | | | | | | | | |
|
Net income | | | | | |
149
| | | | |
2,350
| |
Net loss attributable to noncontrolling interests | | | | |
|
1
| | | |
|
—
| |
Net income attributable to stockholders | | | | |
$
|
150
| | | |
$
|
2,350
| |
| | | | | | | | | | | |
|
Earnings per share: | | | | | | | | | | | | |
Earnings per share - Basic
| | | | |
$
|
0.71
| | | |
$
|
11.63
| |
Earnings per share - Diluted
| | | | |
$
|
0.71
| | | |
$
|
11.01
| |
| | | | | | | | | | | |
|
Weighted average shares outstanding - Basic
| | | | | |
211
| | | | |
202
| |
Weighted average shares outstanding - Diluted
| | | | | |
212
| | | | |
213
| |
| | | | | | | | | | | |
|
Dividends declared per common share
| | | | |
$
|
0.43
| | | |
$
|
0.43
| |
| | | | | | | | | | | |
|
|
PARK HOTELS & RESORTS INC. |
NON-GAAP FINANCIAL MEASURES RECONCILIATIONS |
EBITDA AND ADJUSTED EBITDA |
(unaudited, in millions) |
|
|
|
|
| Three Months Ended | |
| | | | March 31, | |
| | | | 2018 | |
|
| 2017 | |
Net income | | | |
$
|
149
| | | |
$
|
2,350
| |
Depreciation and amortization expense
| | | | |
70
| | | | |
70
| |
Interest income
| | | | |
(1
|
)
| | | |
—
| |
Interest expense
| | | | |
31
| | | | |
30
| |
Income tax benefit
| | | | |
—
| | | | |
(2,281
|
)
|
Interest expense, income tax and depreciation and amortization
included in equity in earnings from investments in affiliates
| | | |
|
7
| | | |
|
5
| |
EBITDA | | | | |
256
| | | | |
174
| |
Gain on sales of assets, net
| | | | |
(89
|
)
| | | |
—
| |
Gain on foreign currency transactions
| | | | |
(1
|
)
| | | |
(1
|
)
|
Transition expense
| | | | |
2
| | | | |
1
| |
Share-based compensation expense
| | | | |
4
| | | | |
3
| |
Other items
| | | |
|
2
| | | |
|
—
| |
Adjusted EBITDA | | | |
$
|
174
| | | |
$
|
177
| |
| | | | | | | | | | |
|
|
PARK HOTELS & RESORTS INC. |
NON-GAAP FINANCIAL MEASURES RECONCILIATIONS |
COMPARABLE HOTEL ADJUSTED EBITDA AND COMPARABLE HOTEL ADJUSTED
EBITDA MARGIN |
(unaudited, dollars in millions) |
|
|
|
|
| Three Months Ended | |
| | | | March 31, | |
| | | | 2018 | |
|
| 2017 | |
Adjusted EBITDA | | | |
$
|
174
| | | |
$
|
177
| |
Less: Adjusted EBITDA from investments in affiliates
| | | | |
12
| | | | |
9
| |
Less: All other(1) | | | |
|
(12
|
)
| | |
|
(12
|
)
|
Hotel Adjusted EBITDA | | | | |
174
| | | | |
180
| |
Less: Adjusted EBITDA from non-comparable hotels
| | | |
|
15
| | | |
|
21
| |
Comparable Hotel Adjusted EBITDA | | | |
$
|
159
| | | |
$
|
159
| |
| | | | | | | | | | |
|
(1) Includes other revenue and other expense,
non-income taxes on REIT leases and corporate general and
administrative expenses.
| |
| | | | | | | | | | |
|
| | | | Three Months Ended | |
| | | | March 31, | |
| | | | 2018 | | | | 2017 | |
Total Revenues | | | |
$
|
668
| | | |
$
|
684
| |
Less: Other revenue
| | | | |
17
| | | | |
13
| |
Less: Revenues from non-comparable hotels(1) | | | |
|
61
| | | |
|
83
| |
Comparable Hotel Revenue | | | |
$
|
590
| | | |
$
|
588
| |
| | | | | | | | | | |
|
(1) Includes revenues from Park's non-comparable hotels
and rental revenues from office space and antenna leases.
| |
| | | | | | | | | | |
|
| | | | Three Months Ended | |
| | | | March 31, | |
| | | | 2018 | | | | 2017 | |
Comparable Hotel Revenues
| | | |
$
|
590
| | | |
$
|
588
| |
Comparable Hotel Adjusted EBITDA
| | | |
$
|
159
| | | |
$
|
159
| |
Comparable Hotel Adjusted EBITDA margin
| | | | |
26.9
|
%
| | | |
27.0
|
%
|
| | | | | | | | | | |
|
|
PARK HOTELS & RESORTS INC. |
NON-GAAP FINANCIAL MEASURES RECONCILIATIONS |
NAREIT FFO AND ADJUSTED FFO |
(unaudited, in millions, except per share data) |
|
|
| Three Months Ended | |
| | March 31, | |
| | 2018 | |
| 2017 | |
Net income attributable to stockholders | |
$
|
150
| | |
$
|
2,350
| |
Depreciation and amortization expense
| | |
70
| | | |
70
| |
Depreciation and amortization expense attributable to
noncontrolling interests
| | |
(1
|
)
| | |
(1
|
)
|
Gain on sales of assets, net
| | |
(89
|
)
| | |
—
| |
Equity investment adjustments:
| | | | | | | | |
Equity in earnings from investments in affiliates
| | |
(4
|
)
| | |
(4
|
)
|
Pro rata FFO of investments in affiliates
| |
|
10
| | |
|
8
| |
NAREIT FFO attributable to stockholders | | |
136
| | | |
2,423
| |
Gain on foreign currency transactions
| | |
(1
|
)
| | |
(1
|
)
|
Transition expense
| | |
2
| | | |
1
| |
Share-based compensation expense
| | |
4
| | | |
3
| |
Other items(1) | |
|
(4
|
)
| |
|
(2,288
|
)
|
Adjusted FFO attributable to stockholders | |
$
|
137
| | |
$
|
138
| |
| | | | | | | |
|
NAREIT FFO per share - Diluted(2) | |
$
|
0.64
| | |
$
|
11.36
| |
Adjusted FFO per share - Diluted(2) | |
$
|
0.65
| | |
$
|
0.64
| |
Weighted average shares outstanding - Diluted | | |
212
| | | |
213
| |
___________________________________
|
(1) |
|
|
The three months ended March 31, 2017 includes an income tax benefit
from the derecognition of deferred tax liabilities of $2,288 million
associated with Park’s intent to elect REIT status.
|
(2) | | |
Per share amounts are calculated based on unrounded numbers.
|
| | |
|
|
PARK HOTELS & RESORTS INC. |
NON-GAAP FINANCIAL MEASURES RECONCILIATIONS |
2018 OUTLOOK – EBITDA AND ADJUSTED EBITDA |
(unaudited, in millions) |
|
|
|
|
| Year Ending | |
| | | | December 31, 2018 | |
| | | | Low Case | |
|
| High Case | |
Net income | | | |
$
|
336
| | | |
$
|
369
| |
Depreciation and amortization expense
| | | | |
283
| | | | |
283
| |
Interest income
| | | | |
(4
|
)
| | | |
(4
|
)
|
Interest expense
| | | | |
125
| | | | |
128
| |
Income tax expense
| | | | |
12
| | | | |
16
| |
Interest expense, income tax and depreciation and amortization
included in equity in earnings from investments in affiliates
| | | |
|
24
| | | |
|
24
| |
EBITDA | | | | |
776
| | | | |
816
| |
Transition expense
| | | | |
6
| | | | |
6
| |
Share-based compensation expense
| | | | |
16
| | | | |
16
| |
Gain on sale of assets, net
| | | | |
(89
|
)
| | | |
(89
|
)
|
Other items
| | | |
|
1
| | | |
|
1
| |
Adjusted EBITDA | | | |
$
|
710
| | | |
$
|
750
| |
| | | | | | | | | | |
|
|
PARK HOTELS & RESORTS INC. |
NON-GAAP FINANCIAL MEASURES RECONCILIATIONS |
2018 OUTLOOK – NAREIT FFO ATTRIBUTABLE TO STOCKHOLDERS AND |
ADJUSTED FFO ATTRIBUTABLE TO STOCKHOLDERS |
(unaudited, in millions except per share amounts) |
|
|
| Year Ending | |
| | December 31, 2018 | |
| | Low Case | |
| High Case | |
Net income attributable to stockholders | |
$
|
331
| | |
$
|
364
| |
Depreciation and amortization expense
| | |
283
| | | |
283
| |
Depreciation and amortization expense attributable to
noncontrolling interests
| | |
(3
|
)
| | |
(3
|
)
|
Gain on sale of assets, net
| | |
(89
|
)
| | |
(89
|
)
|
Equity investment adjustments:
| | | | | | | | |
Equity in earnings from investments in affiliates
| | |
(16
|
)
| | |
(16
|
)
|
Pro rata FFO of equity investments
| |
|
33
| | |
|
33
| |
NAREIT FFO attributable to stockholders | | |
539
| | | |
572
| |
Transition expense
| | |
6
| | | |
6
| |
Share-based compensation expense
| | |
16
| | | |
16
| |
Other items
| |
|
1
| | |
|
1
| |
Adjusted FFO attributable to stockholders | |
$
|
562
| | |
$
|
595
| |
Adjusted FFO per share - Diluted(1) | |
$
|
2.76
| | |
$
|
2.92
| |
Weighted average diluted shares outstanding | |
|
203.8
| | |
|
203.8
| |
___________________________________
| | | | | | | | |
(1) Per share amounts are calculated based on unrounded
numbers.
|
PARK HOTELS & RESORTS INC.
DEFINITIONS
EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and
Hotel Adjusted EBITDA Margin
Earnings before interest expense, taxes and depreciation and
amortization (“EBITDA”), presented herein, reflects net income excluding
depreciation and amortization, interest income, interest expense, income
taxes and interest expense, income tax and depreciation and amortization
included in equity in earnings from investments in affiliates.
Adjusted EBITDA, presented herein, is calculated as EBITDA, as
previously defined, further adjusted to exclude:
-
Gains or losses on sales of assets for both consolidated and
unconsolidated investments;
-
Gains or losses on foreign currency transactions;
-
Transition expense related to the Company’s establishment as an
independent, publicly traded company;
-
Transaction expense associated with the potential disposition of
hotels or acquisition of a business;
-
Severance expense;
-
Share-based compensation expense;
-
Casualty and impairment losses; and
-
Other items that management believes are not representative of the
Company’s current or future operating performance.
Hotel Adjusted EBITDA measures hotel-level results before debt service,
depreciation and corporate expenses of the Company’s consolidated
hotels, including both comparable and non-comparable hotels but
excluding hotels owned by unconsolidated affiliates, and is a key
measure of the Company’s profitability. The Company presents Hotel
Adjusted EBITDA to help the Company and its investors evaluate the
ongoing operating performance of the Company’s consolidated hotels.
Hotel Adjusted EBITDA margin is calculated as Hotel Adjusted EBITDA
divided by total hotel revenue.
EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA
margin are not recognized terms under United States (“U.S.”) GAAP and
should not be considered as alternatives to net income (loss) or other
measures of financial performance or liquidity derived in accordance
with U.S. GAAP. In addition, the Company’s definitions of EBITDA,
Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA margin
may not be comparable to similarly titled measures of other companies.
The Company believes that EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA
and Hotel Adjusted EBITDA margin provide useful information to investors
about the Company and its financial condition and results of operations
for the following reasons: (i) EBITDA, Adjusted EBITDA, Hotel Adjusted
EBITDA and Hotel Adjusted EBITDA margin are among the measures used by
the Company’s management team to make day-to-day operating decisions and
evaluate its operating performance between periods and between REITs by
removing the effect of its capital structure (primarily interest
expense) and asset base (primarily depreciation and amortization) from
its operating results; and (ii) EBITDA, Adjusted EBITDA, Hotel Adjusted
EBITDA and Hotel Adjusted EBITDA margin are frequently used by
securities analysts, investors and other interested parties as a common
performance measure to compare results or estimate valuations across
companies in the industry.
EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA
margin have limitations as analytical tools and should not be considered
either in isolation or as a substitute for net income (loss) or other
methods of analyzing the Company’s operating performance and results as
reported under U.S. GAAP.
NAREIT FFO attributable to stockholders, Adjusted
FFO attributable to stockholders NAREIT FFO per share - diluted and
Adjusted FFO per share - diluted
NAREIT FFO attributable to stockholders and NAREIT FFO per diluted share
(defined as set forth below) are presented herein as non-GAAP measures
of the Company’s performance. The Company calculates funds from
operations (“FFO”) attributable to stockholders for a given operating
period in accordance with standards established by the National
Association of Real Estate Investment Trusts (“NAREIT”), as net income
or loss attributable to stockholders (calculated in accordance with U.S.
GAAP), excluding depreciation and amortization, gains or losses on sales
of assets, impairment, and the cumulative effect of changes in
accounting principles, plus adjustments for unconsolidated joint
ventures. Adjustments for unconsolidated joint ventures are calculated
to reflect the Company’s pro rata share of the FFO of those entities on
the same basis. As noted by NAREIT in its April 2002 “White Paper on
Funds From Operations,” since real estate values historically have risen
or fallen with market conditions, many industry investors have
considered presentation of operating results for real estate companies
that use historical cost accounting to be insufficient by themselves.
For these reasons, NAREIT adopted the FFO metric in order to promote an
industry-wide measure of REIT operating performance. The Company
believes NAREIT FFO provides useful information to investors regarding
its operating performance and can facilitate comparisons of operating
performance between periods and between REITs. The Company’s
presentation may not be comparable to FFO reported by other REITs that
do not define the terms in accordance with the current NAREIT
definition, or that interpret the current NAREIT definition differently.
The Company calculates NAREIT FFO per diluted share as NAREIT FFO
divided by the number of fully diluted shares outstanding during a given
operating period.
The Company also presents Adjusted FFO attributable to stockholders and
Adjusted FFO per diluted share when evaluating its performance because
management believes that the exclusion of certain additional items
described below provides useful supplemental information to investors
regarding the Company’s ongoing operating performance. Management
historically has made the adjustments detailed below in evaluating its
performance and in its annual budget process. Management believes that
the presentation of Adjusted FFO provides useful supplemental
information that is beneficial to an investor’s complete understanding
of operating performance. The Company adjusts NAREIT FFO attributable to
stockholders for the following items, which may occur in any period, and
refers to this measure as Adjusted FFO attributable to stockholders:
-
Gains or losses on foreign currency transactions;
-
Transition expense related to the Company’s establishment as an
independent, publicly traded company;
-
Transaction expense associated with the potential disposition of
hotels or acquisition of a business;
-
Severance expense;
-
Share-based compensation expense;
-
Casualty losses;
-
Litigation gains and losses outside the ordinary course of business;
and
-
Other items that management believes are not representative of the
Company’s current or future operating performance.
Occupancy
Occupancy represents the total number of room nights sold divided by the
total number of room nights available at a hotel or group of hotels.
Occupancy measures the utilization of the Company’s hotels’ available
capacity. Management uses occupancy to gauge demand at a specific hotel
or group of hotels in a given period. Occupancy levels also help
management determine achievable Average Daily Rate (“ADR”) levels as
demand for rooms increases or decreases.
Average Daily Rate
ADR represents rooms revenue divided by total number of room nights sold
in a given period. ADR measures average room price attained by a hotel
and ADR trends provide useful information concerning the pricing
environment and the nature of the customer base of a hotel or group of
hotels. ADR is a commonly used performance measure in the hotel
industry, and management uses ADR to assess pricing levels that the
Company is able to generate by type of customer, as changes in rates
have a more pronounced effect on overall revenues and incremental
profitability than changes in occupancy, as described above.
Revenue per Available Room
Revenue per Available Room (“RevPAR”) represents rooms revenue divided
by the total number of room nights available to guests for a given
period. Management considers RevPAR to be a meaningful indicator of the
Company’s performance as it provides a metric correlated to two primary
and key factors of operations at a hotel or group of hotels: occupancy
and ADR. RevPAR is also a useful indicator in measuring performance over
comparable periods for comparable hotels.
References to RevPAR and ADR are presented on a currency neutral basis
(prior periods are reflected using current period exchange rates),
unless otherwise noted.
Comparable Hotels
The Company presents certain data for its consolidated hotels on a
comparable hotel basis as supplemental information for investors. The
Company defines its comparable hotels as those that: (i) were active and
operating in its portfolio since January 1st of the previous year; and
(ii) have not sustained substantial property damage, business
interruption, undergone large-scale capital projects or for which
comparable results are not available. The Company presents comparable
hotel results to help the Company and its investors evaluate the ongoing
operating performance of its comparable hotels. Of the 46 hotels that
are consolidated as of March 31, 2018, 44 hotels have been classified as
comparable hotels. Due to the conversion, or planned conversions, of a
significant number of rooms at the Hilton Waikoloa Village in 2017 to
HGV timeshare units, and due to the effects of the hurricane at the
Caribe Hilton in Puerto Rico and the expected continued effects from
business interruption in 2018, the results from these properties were
excluded from comparable hotels. The Company’s comparable hotels also
exclude the 12 hotels that were sold in January and February 2018.

View source version on businesswire.com: https://www.businesswire.com/news/home/20180503006459/en/
Park Hotels & Resorts Inc.
Ian Weissman, + 1 571-302-5591
Source: Park Hotels & Resorts Inc.