Royal Host Inc. Announces First Quarter Results
HALIFAX, May 12, 2014 /CNW/ - Royal Host Inc. ("Royal Host" or the "Company") today announced results for the three months (the "First Quarter") ended March 31, 2014.
QUARTERLY OVERVIEW AND OUTLOOK
(All dollar amounts are shown in thousands of Canadian dollars unless otherwise indicated)
In the first quarter of 2014 the Company has continued to pursue the goal of creating an operating structure that is sustainably cash flow positive. Overall hospitality margins for the quarter were up marginally from the prior year and cash from operations during the quarter has improved from last year. On the positive side, we believe the cost initiatives we have implemented are starting to flow through to the profit line. On the negative side, our profitability was impacted by higher utility costs across the portfolio due to an extremely cold and prolonged winter and our food and beverage operations did not perform at acceptable levels. Continuing hotel utility expenses were $347 higher than the prior year, approximately 15% of the hospitality gross margin achieved in the quarter.
During the quarter the Company completed the sale of two select service properties, realizing cash proceeds of $4.4 million which were used to reduce debt and fund operations during a seasonally weak quarter. At this time, the Company plans no further asset sales.
For the remainder of the year the Company remains focused on generating improved operating results. In particular, we are working on new revenue strategies, additional operating efficiencies at the hotel level and reducing our headcount. We are also focused on the internalization of our full service hotel management and accounting, which is expected to occur on May 31, 2014 and result in annual cost savings.
Revenue for the remainder of the year is expected to be flat or slightly ahead compared to the prior year with improving margins and, therefore, improved profitability.
On May 5, 2014, Holloway Lodging Corporation ("Holloway") and the Company announced that they have entered into an arrangement agreement pursuant to which Holloway has agreed to acquire all of the issued and outstanding common shares of the Company. Pursuant to the arrangement agreement, the Company's shareholders will receive for each Royal Host Inc. common share they own a combination of $1.00 in cash and 0.1 of a Holloway common share.
SELECTED FINANCIAL INFORMATION - FIRST QUARTER
|($000's, except as otherwise noted)||Three months ended March 31|
|Hospitality Expenses excluding Depreciation||12,933||14,351||(1,418)|
|Hospitality Gross Margin (1)||2,319||2,560||(241)|
|Hospitality Gross Margin % (1)||15.2%||15.1%||0.1%|
|Other Income (Expense)|
|Gain (Loss) on Sale of Property and Equipment||(42)||1,887||(1,929)|
|Depreciation and Amortization||(1,888)||(2,094)||(206)|
|Insurance Proceeds, Net of Remediation Costs||—||45||(45)|
|Basic Loss Per Share ($)||(0.16)||(0.03)||(0.13)|
|Diluted Loss Per Share ($)||(0.16)||(0.03)||(0.13)|
|Basic FFO per Share ($)||(0.04)||(0.02)||(0.02)|
|Basic AFFO per Share ($)||(0.08)||(0.06)||(0.08)|
|Number of Shares Outstanding (000's) (2)||16,380||17,491||(1,111)|
|Weighted Average Shares Outstanding (000's)||16,380||17,519||(1,139)|
|Closing Share Price ($)||$1.24||$0.90||0.34|
(1) Items represent non-GAAP financial measures.
(2) As at May 9, 2014, the Company had 16,379,675 shares outstanding.
ROYAL HOST INC.
Royal Host is a diversified hospitality company. Royal Host currently owns 17 hotels with 2,382 rooms across Canada. Royal Host also owns and operates the Travelodge Canada franchise business which is currently comprised of over 90 hotels across Canada. 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.
SOURCE Royal Host Inc.For further information:
Chief Financial Officer