HALIFAX, NOVA SCOTIA -- (Marketwired) -- 05/13/13 -- Royal Host Inc. (TSX: RYL) (TSX: RYL.DB.B) (TSX: RYL.DB.C) (TSX: RYL.DB.D) ("Royal Host" or the "Company") today announced results for the three months ended March 31, 2013 (the "First Quarter").
FIRST QUARTER HIGHLIGHTS
($000's except key performance indicators)
The Company experienced a 2.7 percentage point increase in Comparable Hotel (as defined in the MD&A) gross margin although revenue from Comparable Hotels remained relatively flat as compared to the same period in 2012. Revenues and gross margins were up overall at the Company's comparable full service hotels but declined at the Company's comparable select service hotels. RevPAR at Comparable Hotels was flat with comparable full service RevPAR improving 3.4% and comparable select service RevPAR down 9.2%.
Key events of the three months ended March 31, 2013 include:
-- Sold two select service hotel properties for gross proceeds of $4,450 yielding a pre-tax gain on disposition of properties of $1,826.-- Completed the refinancing of the $2,750 mortgage secured by a hotel property in Belleville, Ontario, extending the maturity to March 2018 and decreasing the interest rate to 8.0% from 8.44%. The rate was reduced further to 6.5% subsequent to March 31, 2013.-- Repaid the mortgage secured by a hotel property in Trenton, Ontario using funds from the Company's secured credit facility.-- Assumed management of its four hotel properties located in Atlantic Canada.-- Entered into a standby facility with Clarke which allows a maximum borrowing of $2,000 with any borrowings due no later than January 14, 2014 and bearing interest at a graduated rate of 10.00% - 10. 25%, subsequently reduced to 8.0%
The Company has experienced negative cash flow (excluding proceeds received upon hotel dispositions) for several consecutive years. The Company's main focus for the remainder of the year will be to create a corporate and operational structure that is sustainably cash flow positive. This will be pursued, among other ways, by an intense focus on reducing costs at both the corporate and hotel levels, driving additional revenues to our hotels and reducing debt service expense. We believe there are meaningful process improvements and cost reduction initiatives that can be implemented to achieve this goal.
For the remainder of the year, we anticipate positive results from our full service portfolio and comparable to slightly negative results from our select service portfolio, in each case compared to the prior year's results and without taking into account the effect of any cost reduction initiatives.
SELECTED FINANCIAL INFORMATION
The following table provides key financial information for the three months ended March 31, 2013 and 2012:
---------------------------------------------------------------------------- Three months ended($000's, except as otherwise noted) March 31 Variance ---------------------------------- 2013 2012 ----------------------------------Hospitality Revenue (1) 16,911 17,408 (497)Hospitality Expenses excluding depreciation (1) 14,337 15,151 (814)Gross Margin (2) 2,574 2,257 317Gross Margin % (2) 15.2% 13.0% 2.2% Other Income (Expense) Investment Income 39 (178) 217 Finance Costs (2,501) (2,613) 112 Gain on Sale of Property and Equipment 1,826 129 1,697 Depreciation and Amortization (2,094) (2,234) 140 Corporate Administration (451) (869) 418 Insurance Proceeds, Net of Remediation Costs 45 814 769 Income Tax Recovery - 549 (549)Net Loss (562) (2,145) 1,583Basic Income (Loss) per Share ($) (0.03) (0.12) 0.09Diluted Income (Loss) per Share ($) (0.03) (0.12) 0.09FFO (2) (294) (395) 101Basic FFO per Share (0.02) (0.02) 0.00AFFO (2) (953) (1,077) 124Basic AFFO per Share (0.05) (0.06) 0.01Number of Shares Outstanding (000's) 17,491 17,582 (91)Weighted Average Shares Outstanding (000's) 17,519 17,582 (63)Closing Share Price ($) $ 0.90 $ 1.55 (0.65)
As at May 10, 2013, the Company had 16,379,675 shares outstanding
(1) Hospitality revenue and hospitality expenses have been reclassified for previously reported quarters of 2012 as the result of a reclassification of loyalty expenses so that they reduce hospitality revenue rather than being grouped with hospitality expenses. This reclassification will result in changes to hospitality revenue and hospitality expenses throughout this MD&A as well as to any other measures calculated with hospitality revenue as a basis. Gross margin and net loss have not been impacted by this reclassification.
(2) Items represent non-GAAP financial measures.
ROYAL HOST INC.
Royal Host is a diversified hospitality company that delivers shareholder value through hotel ownership, management, investment and franchising. The Company's hotels, which contain approximately 2,824 rooms, are located in five Provinces and Territories across Canada. Many of the Company's hotels operate under internationally recognized brands such as Travelodge®, Super 8®, Holiday Inn®, and Hilton®. In addition to its real estate holdings, the Company owns and operates the Travelodge Canada franchise business which is currently comprised of over 90 hotels across nine Provinces and Territories.
Royal Host's common shares and convertible debentures are traded on the Toronto Stock Exchange under the trading symbols "RYL", "RYL.DB.B", "RYL.DB.C" and "RYL.DB.D" respectively.
This press release may contain certain forward-looking statements relating, but not limited to, Royal Host's operations, anticipated financial performance, business prospects, and strategies. Forward-looking information typically contains statements with words such as "anticipate", "does not anticipate", "believe", "estimate", "forecast", "intend", "expect", "does not expect", "could", "may", "would", "will", "should", "budgeted", "plan" or other similar terms and expressions suggesting future outcomes. Such forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed, projected, or implied by such forward-looking statements. Readers are therefore cautioned that Royal Host's expectations, estimates and assumptions, although considered reasonable, may prove to be incorrect and readers should not place undue reliance on forward-looking statements.
Forward-looking statements contained herein are not guarantees of future performance and involve certain risks, uncertainties, and other factors that are difficult to predict, and could result in the outcome of such events being materially different from those intended, planned, anticipated, believed, estimated, or expected in this news release. Such factors and assumptions include, but are not limited to, general economic conditions, levels of travel in Royal Host's key market areas, political conditions and events, competitive pressures, changes in government policy or regulations, and lodging industry conditions. Royal Host does not undertake any obligation to update or release any revisions to these forward-looking statements to reflect events or circumstances, unanticipated events or circumstances, or should its estimates or assumptions change, after the date hereof, except as expressly required by law.
This press release contains registered trademarks that are the exclusive property of their respective owners. None of the owners of these trademarks has any responsibility or liability for any information contained in this press release.
Royal Host Inc.
Chief Financial Officer