Gaylord Entertainment Co. Reports Second Quarter 2007 Earnings
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Gaylord Entertainment Co. Reports Second Quarter 2007 Earnings
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Category: Worldwide -
This is a press release selected by our editorial committee and published online for free on 2007-08-07
Gaylord Entertainment Co. (NYSE: GET) today reported its financial results for the second quarter of 2007.
For the second quarter ended June 30, 2007:
-- Consolidated revenue increased 6.9 percent to $189.4 million in the second quarter of 2007 from $177.1 million in the same period last year, led by the continued strong performance of the hospitality segment, which showed meaningful gains in occupancy, ADR (Average Daily Rate) and total revenue per available room(2) (Total RevPAR).
-- Income from continuing operations was $93.6 million, or $2.29 per share including a one-time gain from the sale of the Company's equity interest in Bass Pro, compared to a loss from continuing operations of $5.6 million, or $0.14 per share in the prior-year quarter.
-- Hospitality segment total revenue increased 7.1 percent to $168.4 million in the second quarter of 2007 compared to $157.2 million in the prior-year quarter. Gaylord Hotels revenue per available room(1) ("RevPAR") and "Total RevPAR" increased 8.8 percent and 9.6 percent, respectively, compared to the second quarter of 2006.
-- Adjusted EBITDA(3) was $38.7 million in the second quarter of 2007 compared to $32.3 million in the prior-year quarter.
-- Consolidated Cash Flow(4) ("CCF") increased 13.8 percent to $44.8 million in the second quarter of 2007 compared to $39.4 million in the same period last year.
"Gaylord had yet another strong performance this quarter, highlighted by year-over-year CCF margin growth to 30 percent in our hospitality business and average occupancy of more than 80 percent across the Gaylord Hotels network. Additionally, we posted strong same-store net definite bookings growth of 8.6 percent, which reflects the strength of our brand and highlights our success in further penetrating a larger audience of meeting planners and high-value customers," said Colin V. Reed, chairman and chief executive officer of Gaylord Entertainment. "Nowhere can this be seen more readily than at our soon to be opened Gaylord National property outside Washington, D.C., where we recently booked our millionth room night."
Segment Operating Results
Hospitality
Key components of the Company's hospitality segment performance in the second quarter of 2007 include:
-- Gaylord Hotels' RevPAR increased 8.8 percent to $130.18 compared to $119.63 in the prior-year quarter. Gaylord Hotels' Total RevPAR increased 9.6 percent to $310.36 compared to $283.22 in second quarter of 2006.
-- Gaylord Hotels' CCF increased 16.9 percent to $51.5 million in the second quarter of 2007 compared to $44.1 million in the same period last year. CCF margins for the hospitality segment increased 260 basis points to 30.6 percent, compared to 28.0 percent in the prior-year quarter, driven by higher occupancy levels and improved margins due to an increased focus on cost control.
-- Gaylord Hotels' same-store net definite bookings for all future years, excluding Gaylord National, increased 8.6 percent to a record 413,967 room nights booked in the second quarter of 2007. For the year, Gaylord has a same-store record 734,406 room nights on the books.
-- Gaylord National booked an additional 100,068 room nights in the second quarter of 2007, bringing National's cumulative net definite room nights booked to 1,031,029.
"Gaylord Opryland and Gaylord Texan posted impressive increases in CCF, up 17.3 percent and 41.9 percent respectively, year-over-year. Our strategy to target high-value groups has proven successful, demonstrated by the positive mix shift toward these groups seen this quarter. The improved flow-through this quarter, resulting from cost reduction efforts previously outlined, also contributed to the bottom-line growth in the hospitality sector," said Reed.
Reed continued, "One of the unique elements of our business model is that it provides relatively clear visibility into our future performance and we have been able to post strong results. The year-over-year improvements in advance bookings serve as important leading indicators of our growth prospects and of our future performance. Additionally, the completion of Gaylord National remains generally on track in regards to the cost and the completion date. We remain confident it will quickly become the premier meetings-oriented facility on the east coast. The exceptional success we have seen at Gaylord National gives us great confidence that our strategies are scalable and that we will be able to successfully attract high-quality customers in new markets."
At the property level, Gaylord Opryland generated revenue of $71.4 million in the second quarter of 2007, a 6.7 percent increase compared to the prior-year quarter. RevPAR increased 14.5 percent to $129.69 compared to $113.28 in the same period last year, driven by a 6.6 percent increase in ADR relative to the second quarter of 2006. Total RevPAR increased 12.0 percent to $285.95 in the second quarter of 2007. CCF increased to $21.3 million, versus $18.1 million in the year-ago quarter, resulting in a CCF margin of 29.8 percent, a 270 basis point increase versus the prior-year quarter. Second quarter 2007 operating statistics reflect 12,574 room nights out of available inventory due to the Opryland room renovation.
Gaylord Palms posted revenue of $46.1 million in the second quarter of 2007, an increase of 2.3 percent compared to $45.1 million in the prior-year quarter. Gaylord Palms experienced a 5.4 percentage point decrease in occupancy in the second quarter of 2007, which was partially offset by a 2.6 percent increase in ADR compared to the prior-year quarter. The hotel's RevPAR decreased to $141.23 compared to $147.10 in the same period last year due to lower occupancy levels. CCF decreased slightly to $14.2 million compared to $14.4 million in the prior-year quarter, resulting in a CCF margin for the quarter of 30.8 percent. Total RevPAR increased 2.3 percent to $360.58 from $352.32 in the second quarter of 2006.
Gaylord Texan revenue increased 12.9 percent to $48.4 million in the second quarter of 2007, compared to $42.9 million in the prior-year quarter. RevPAR in the second quarter increased 13.0 percent to $131.29, driven by a 3.4 percentage point increase in occupancy and a 7.7 percent increase in ADR compared to the same period last year. Driven by strong occupancy and improved cost control measures at the property, CCF increased 41.9 percent to $15.3 million in the second quarter of 2007, versus $10.8 million in the prior year resulting in a 31.5 percent CCF margin. For the quarter Total RevPAR increased 12.9 percent to $352.24 from $311.88 in the same period last year.
Development Update
Progress at the 2,000-room Gaylord National in Prince George's County remains on-track and the company continues to anticipate an April 2008 opening. The company spent an additional $119.4 million in the second quarter of 2007, bringing total capital expenditures for the hotel to $488.1 million.
Gaylord National achieved an impressive accomplishment, booking its one-millionth room night in July, ten months prior to opening. Bookings continue to increase with an additional 100,068 room nights booked during the second quarter, bringing the cumulative number of net definite room nights for the property to 1,031,029 as of July 1, 2007.
The Company also said that due to the overwhelming local support from the Chula Vista community, Gaylord accommodated a request from the national AFL-CIO leadership to make a counter proposal to union negotiators in regards to the development of a Gaylord property on the San Diego bay-front in the City of Chula Vista. Gaylord is currently reviewing the union's response to the counter proposal and is in discussion with the City of Chula Vista and the Port Authority of San Diego about next steps.
"Our model of providing all-under-one-roof accommodations continues to resonate very positively throughout the association and meeting planner communities. The strong demand we continue to see across our network of convention hotels gives us confidence that we can extend our model into key resort and urban locations, targeting both large and small groups and capitalizing on the valuable relationships we have built with convention customers and meeting planners," said Reed. "Regarding the development project in the City of Chula Vista, we recently made a counter proposal to the local unions at the request of the national AFL-CIO leadership, a group with which we have worked well on other projects, including Gaylord National. While we are disappointed by the tone and tenor of the union's response to our counter proposal, we remain encouraged by the incredible support that we have received from the City and the Port Authority of San Diego."
ResortQuest and Bass Pro Shops
"During the quarter, we raised more than $366 million collectively from the sale of ResortQuest Hawaii, ResortQuest Mainland and our remaining equity interest in BassPro Shops. We are pleased with the outcome of this process and will use the proceeds from these sales to further invest in growing our already strong hospitality business," said Reed.
As a result of the sale of ResortQuest Hawaii and ResortQuest Mainland during the second quarter of 2007, the results of operations of ResortQuest are presented in discontinued operations for all periods presented.
Opry and Attractions
Opry and Attractions segment revenue increased 5.6 percent to $20.9 million in the second quarter of 2007, compared to $19.8 million in the year-ago quarter. The segment's CCF increased 58.2 percent to $4.7 million in the second quarter of 2007 from $2.9 million in the prior-year quarter.
Corporate and Other
Corporate and Other operating loss totaled $13.9 million in the second quarter of 2007 compared to an operating loss of $12.5 million in the same period last year. Corporate and Other CCF in the second quarter of 2007 decreased 49.1 percent to a loss of $11.4 million compared to a loss of $7.6 million in the same period last year.
Liquidity
As of June 30, 2007, the Company had long-term debt outstanding, including current portion, of $692.6 million and unrestricted and restricted cash of $63.5 million. $871.7 million of the Company's $1.0 billion credit facility remains undrawn at the end of the second quarter of 2007, which includes $13.3 million in letters of credit.
The Company is currently evaluating its financing alternatives for the announced development projects. Such plans could include incurrence of additional indebtedness, sale of non-core assets or a combination thereof.
In May, 2007 the secured forward exchange contract with respect to Gaylord's shares of Viacom, Inc. and CBS Corporation stock matured. At maturity, all of the Viacom and CBS stock was delivered to Credit Suisse First Boston to satisfy the $613.1 million debt obligation under this secured forward exchange contract. As a result, the debt obligation, Viacom stock, CBS stock, put option, call option, and deferred financing costs related to the secured forward exchange contract were removed from the consolidated balance sheet as of June 30, 2007.
Outlook
The following outlook is based on current information as of April 26, 2007. The Company does not expect to update guidance until next quarter's earnings release. However, the Company may update its full business outlook or any portion thereof at any time for any reason.
"Gaylord's performance in the first half of 2007 indicates group business activity remains strong. In addition, our record year-to-date pace gives us confidence that we will exceed our previous guidance of 1.3 - 1.4 million advanced room nights booked. We expect this strong booking performance to continue in the second half of the year and therefore we are revising our guidance range on advance bookings from 1.3 - 1.4 million room nights to 1.35 - 1.45 million room nights in 2007," said Reed. "However, the recent dramatic shift in capital markets, driven by issues in the subprime and leveraged lending markets, have raised the possibility that spending by transient customers in the fourth quarter may be negatively impacted and causes us to be cautious with our Total RevPAR guidance. As such, we are revising our Total RevPAR guidance from growth of 7% - 9% to a projected increase 6% - 8% in 2007."
2007 2007
Prior New
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Consolidated Cash Flow
Gaylord Hotels $182 - 190 Million $182 - 190 Million
Opry and Attractions $11 - 12 Million $11 - 12 Million
Corporate and Other $(40 - 43) Million $(40 - 43) Million
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1.35 - 1.45
Gaylord Hotels Advance Bookings 1.3 - 1.4 Million Million
Gaylord Hotels RevPAR 5% - 7% 5% - 7%
Gaylord Hotels Total RevPAR 7% - 9% 6% - 8%
Gaylord's 2007 outlook reflects approximately 48,000 room nights out of service due to the room renovation at the Gaylord Opryland.
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