Gaylord Reports 2Q 2009 Results

Consolidated revenue decreased 15.5 percent to $218.3 million in the second quarter of 2009 from $25

• 
  SAVE
• 
  SHARE
• 
  TEXT SIZE
• 
  PRINT
• 
  COMMENT
• 
  PDF

. August 04, 2009

AUGUST 4, 2009 - Gaylord Entertainment Co. (NYSE: GET) today reported its financial results for the second quarter of 2009. Highlights from the second quarter of 2009 include:

o Consolidated revenue decreased 15.5 percent to $218.3 million in the second quarter of 2009 from $258.3 million in the same period last year. Hospitality segment total revenue decreased 14.2 percent to $200.5 million in the second quarter of 2009 compared to $233.6 million in the prior-year quarter. Gaylord Hotels revenue per available room1 ('RevPAR') decreased 13.1 percent and total revenue per available room2 ('Total RevPAR') decreased 14.3 percent in the second quarter of 2009 compared to the second quarter of 2008. 2009 Total RevPAR includes attrition and cancellation fees of approximately $8.2 million collected during the quarter compared to $3.6 million in fees for the prior-year quarter.

o Income from continuing operations was $10.1 million, or $0.25 per share, in the second quarter of 2009 compared to $8.5 million, or $0.21 per share, in the prior-year quarter. Income from continuing operations in the second quarter of 2009 included an $8.2 million pre-tax gain on the repurchase of $28.3 million in aggregate principal amount of the Company's outstanding Senior Notes, a $3.6 million gain related to a payment received in connection with a tax increment financing ('TIF') arrangement related to the Ryman Auditorium, and $2.8 million in special expense related to severance costs associated with the Company's cost containment initiatives. Income from continuing operations in the second quarter of 2008 included $3.2 million in pre-opening expenses.

o Adjusted EBITDA3 was $49.0 million in the second quarter of 2009 compared to $57.9 million in the prior-year quarter.

o Consolidated Cash Flow4 ('CCF') decreased 13.5 percent to $55.8 million in the second quarter of 2009 compared to $64.5 million in the same period last year. CCF results for the second quarter of 2009 included approximately $2.4 million of special expense related to severance costs and the gain under the TIF arrangement related to the Ryman Auditorium of $3.6 million.

o Gaylord Hotels gross advance group bookings in the second quarter of 2009 for all future years was 498,247 room nights; a decrease of 9.8 percent when compared to the same period last year. Net of attrition and cancellation, advance bookings in the second quarter for all future years were 171,712 room nights; a decrease of 59.9 percent when compared to the same period last year.

'Our group-centric business model delivered a solid performance this quarter, despite what remains a challenging climate for the hospitality sector. Furthermore, we were delighted to book nearly 500,000 new group room nights in this challenging environment,' said Colin V. Reed, chairman and chief executive officer of Gaylord Entertainment. 'Our commitment to customer service, a continued focus on cost controls, and our aggressive collection of attrition and cancellation fees enabled us to maintain strong levels of operating income.'

Segment Operating Results

Hospitality

Key components of the Company's hospitality segment performance in the second quarter of 2009 include:

o Same-store RevPAR decreased 19.8 percent to $104.85 in the second quarter of 2009 compared to $130.68 in the prior-year quarter. Same-store Total RevPAR decreased 19.6 percent to $248.72 in the second quarter compared to $309.50 in the prior-year quarter. Same-store hotels excludes Gaylord National for all periods presented. In the second quarter of 2009, Gaylord National RevPAR increased 6.1 percent to $145.25 compared to $136.85 in the prior-year quarter. Gaylord National Total RevPAR was flat in the second quarter at $343.99 compared to $343.12 in the prior-year quarter.

o Second quarter 2009 same-store CCF decreased 29.9 percent to $39.1 million compared to $55.8 million in the prior-year quarter. Same-store CCF included approximately $0.4 million of special expense related to severance costs in the second quarter of 2009. Same-store CCF margin4 declined 420 basis points to 28.3 percent compared to 32.5 percent for the same period last year. In the second quarter of 2009, Gaylord National generated CCF of $20.6 million compared to $14.1 million in the prior-year quarter. Gaylord National second quarter CCF results include approximately $0.2 million of special expense related to severance costs. Gaylord National CCF margin improved 1,030 basis points to 33.0 percent versus 22.7 percent for the same period last year.

o Same-store attrition in the second quarter was 14.0 percent of the agreed upon room block compared to 9.8 percent for the same period in 2008 and 16.7 percent in the first quarter of 2009. Same-store cancellations in the second quarter totaled approximately 29,381 room nights compared to 12,847 in the same period of 2008 and 66,872 in the first quarter of 2009. Gaylord Hotels attrition and cancellation fee collections totaled $8.2 million in the quarter compared to $3.6 million for the same period in 2008 and $7.6 million in the first quarter of 2009.

Reed continued, 'During the quarter, attrition and cancellation fees contributed significantly to our profitability. Although we would prefer to have guests stay at our properties, attrition and cancellation fees provide an important measure of profitability protection for us and are especially critical in these challenging times. While meeting planner decisions continue to be negatively impacted by the ongoing difficult economic conditions, we are beginning to see signs of improvement. Cancellations are down considerably relative to the first quarter of this year, and attrition is beginning to improve. Even so, we remain focused on identifying additional ways to improve our cost structure, preserve capital and maximize cash flow. Our efforts thus far have enabled the solid margin performance delivered by our hotels in the second quarter of 2009. We will not, however, cut costs in areas where it will adversely impact customer service as it is one of the fundamental principles that differentiate Gaylord from other brands as evidenced by our second quarter gross room night production.'

At the property level, Gaylord Opryland generated revenue of $55.3 million in the second quarter of 2009, compared to $73.5 million for the same period a year ago. Second quarter RevPAR decreased 22.4 percent to $96.67 compared to $124.54 in the same period last year, driven by a 13.9 percentage point decline in occupancy resulting from group cancellations and attrition. Total RevPAR decreased 24.8 percent to $211.14 in the second quarter of 2009 compared to $280.68 in the prior-year quarter. CCF decreased 41.2 percent to $13.6 million for the second quarter, versus $23.1 million in the year-ago quarter due to the decline in rooms revenue and a drop in food and beverage spending and resulted in a CCF margin performance in the second quarter of 24.5 percent. CCF includes special expense of approximately $0.1 million related to severance costs in the second quarter of 2009.

Gaylord Palms posted revenue of $39.2 million in the second quarter of 2009, a 17.9 percent decrease compared to $47.8 million in the prior-year quarter. Occupancy for the quarter was down 10.9 percentage points compared to the prior-year quarter due to group cancellations and attrition. Second quarter RevPAR decreased 15.0 percent to $129.95 compared to $152.89 in the same quarter last year, largely driven by the decline in occupancy and a decrease in transient ADR. Total RevPAR decreased 17.9 percent to $306.56, due largely to decreased occupancy and food and beverage revenue. CCF at the property was $11.9 million compared to $16.0 million in the prior-year quarter, resulting in a CCF margin of 30.4 percent. CCF at the property includes approximately $0.1 million of special expense related to severance costs in the second quarter of 2009.

Gaylord Texan revenue was $41.5 million in the second quarter of 2009, a decrease of 13.4 percent from $48.0 million in the prior-year quarter, largely driven by a 10.0 percentage point decline in occupancy. RevPAR in the second quarter decreased 19.9 percent to $106.13 due to the decline in occupancy. Total RevPAR decreased 13.4 percent to $302.28 compared to $348.95 in the prior-year quarter. CCF decreased 17.9 percent to $13.0 million in the second quarter of 2009, compared to $15.9 million in the prior-year quarter, resulting in a 31.4 percent CCF margin. CCF at the property includes approximately $0.2 million in special expense related to severance costs in the second quarter of 2009.

Gaylord National generated revenue of $62.5 million in the second quarter of 2009, an increase of 1.0 percent from $61.8 million in the prior-year quarter. RevPAR in the second quarter increased 6.1 percent to $145.25 compared to $136.85 in the prior-year quarter. Total RevPAR increased 0.3 percent to $343.99 in the second quarter compared to $343.12 in the prior-year quarter. CCF increased 46.7 percent to $20.6 million in the second quarter of 2009 compared to $14.1 million in the prior-year quarter, resulting in a 33.0 percent CCF margin. CCF at the property includes approximately $0.2 million in special expense related to severance costs in the second quarter of 2009.

Reed continued, 'We continue to be pleased with the progress of the Gaylord National and we are encouraged by the success of the National Harbor development in not only attracting groups and tourists but also world-class brands and attractions. The recent announcement that Disney will be developing a family-themed resort hotel supports our belief that the Gaylord National and the surrounding area will continue to deliver even greater success in the future.'

Development Update

Gaylord Entertainment's planned resort and convention hotel in Mesa, Arizona is still in the very early stages of planning and specific details of the property and budget have not yet been determined. In the current economic environment, Gaylord remains focused on conserving capital, and the Company anticipates that any expenditure associated with the project will not have a material financial impact in the near-term.

Opry and Attractions

Opry and Attractions segment revenue decreased 27.6 percent to $17.7 million in the second quarter of 2009, compared to $24.5 million in the year-ago quarter. The segment's CCF increased to $7.3 million in the second quarter of 2009 compared to $4.6 million in the prior-year quarter, primarily due to a $3.6 million gain recorded from the TIF payment related to the Ryman Auditorium. CCF for the second quarter of 2009 includes approximately $0.1 million in special expense related to severance costs.

Corporate and Other

Corporate and Other operating loss totaled $14.8 million in the second quarter of 2009 compared to an operating loss of $12.8 million in the same period last year. Corporate and Other CCF in the second quarter decreased 13.0 percent to a loss of $11.2 million compared to a loss of $9.9 million in the same period last year. For the second quarter of 2009, the difference between Corporate and Other operating loss and Corporate and Other CCF was primarily due to depreciation and amortization expense and non-cash stock option expense. Second quarter 2009 CCF includes approximately $1.7 million in special expense related to severance costs.

Liquidity

As of June 30, 2009, the Company had long-term debt outstanding, including current portion, of $1,241.0 million and unrestricted and restricted cash of $29.5 million. At the end of the second quarter of 2009, $790.5 million of borrowings were outstanding under the Company's $1.0 billion credit facility, and the lending banks had issued $9.9 million of letters of credit, which left $199.6 million of availability under the credit facility. Gaylord Entertainment has no significant loan maturities until July 2012.

During the second quarter of 2009, Gaylord Entertainment recorded a pretax gain of $8.2 million as a result of the repurchase of $28.3 million in aggregate principal amount of its outstanding senior notes ($21.3 million of 8.0 percent senior notes and $7.0 million of 6.75 percent senior notes). This brings the total aggregate principal amount repurchased to $134.0 million since the inception of the Company's debt repurchase program in December 2008. The Company used available cash and borrowings under its revolving credit facility to finance the purchases and will consider additional repurchases of its senior notes from time to time depending on market conditions.