Gaylord Entertainment Co. Reports Fourth Quarter and Full-Year 2008 Results
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Gaylord Entertainment Co. Reports Fourth Quarter and Full-Year 2008 Results
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Category: Worldwide - Industry economy
- Figures / Studies
This is a press release selected by our editorial committee and published online for free on 2009-02-11
Gaylord Entertainment Co. (NYSE: GET) today reported its financial results for the fourth quarter and full year ended December 31, 2008.
“In the face of such an exceptionally difficult economic environment, it's a testament to our STARS, our focus on customer service and our business model that GET performed as well as it did in the fourth quarter and fiscal year,” said Colin V. Reed, chairman and chief executive officer of Gaylord Entertainment.
Highlights from the fourth quarter and full year ended December 31, 2008 include:
* Consolidated revenue increased 19.9 percent to $250.6 million in the fourth quarter of 2008 from $209.1 million in the same period last year. For the full year 2008, consolidated revenue increased 24.5 percent to $930.9 million.
* Income from continuing operations was $9.4 million, or $0.23 per share, in the fourth quarter of 2008 compared to income from continuing operations of $5.5 million, or $0.13 per share, in the prior-year quarter. For the full year 2008, income from continuing operations was $4.6 million, or $0.11 per share, compared to income from continuing operations of $102.0 million in the full year 2007, or $2.49 per share. Income from continuing operations in the fourth quarter of 2008 included a $19.9 million pre-tax gain on the repurchase of $45.8 million in aggregate principal amount of the Company’s outstanding Senior Notes, a $4.7 million impairment charge related to the termination of the Chula Vista project and a $2.5 million impairment charge associated with the write-off of Gaylord’s investment in Waipouli Holdings, LLC. Income from continuing operations in 2008 included a $12.0 million impairment charge related to the termination of the La Cantera acquisition. Income from continuing operations in 2007 included a $140.3 million gain on the sale of the Company’s interest in Bass Pro Group, LLC.
* Adjusted EBITDA1 was $38.4 million in the fourth quarter of 2008 compared to $30.2 million in the prior-year quarter. For the full year 2008, Adjusted EBITDA was $147.2 million compared to $120.5 million in the prior year.
* Consolidated Cash Flow2 (“CCF”) increased 19.5 percent to $48.4 million in the fourth quarter of 2008 compared to $40.5 million in the same period last year. CCF for the full year 2008 increased by 30.7 percent from 2007 to $198.0 million.
* Corporate and Other CCF improved 18.4 percent for the fourth quarter of 2008 and 3.2 percent for the full year 2008 compared to the prior year periods.
* Hospitality segment total revenue increased 23.7 percent to $232.9 million in the fourth quarter of 2008 compared to $188.4 million in the prior-year quarter, and same-store hospitality revenue decreased 3.8 percent to $181.3 million. Hospitality revenue for the full year 2008 increased 26.7 percent to $848.3 million, and same-store hospitality revenue increased 1.4 percent to $679.1 million. Gaylord Hotels full-year CCF increased 25.5 percent to $229.9 million, and full-year same-store CCF increased 7.4 percent to $196.8 million.
* Gaylord Hotels revenue per available room3 (“RevPAR”) and total revenue per available room4 (“Total RevPAR”) decreased 8.0 percent and 8.9 percent, respectively, in the fourth quarter of 2008 compared to the fourth quarter of 2007. For the full year 2008, Gaylord Hotels’ RevPAR and Total RevPAR decreased 1.1 percent and 0.6 percent, respectively, compared to 2007.
Results for the fourth quarter and full year 2008 can be attributed primarily to the inclusion of the results of the Gaylord National Resort and Convention Center, which opened in April 2008, but were offset by lower revenues at the Company’s same-store hotels due to a deteriorating economy.
Reed continued, “This quarter caps a successful year for our brand. Most notably, we opened and are now receiving the benefits from the much-anticipated Gaylord National, which opened with more than 1.4 million room nights on the books. We have great confidence that this property will perform well for years to come.
“As we head into 2009, we understand that no business model is immune to the unprecedented market forces affecting the hospitality industry. Because of this, during 2008 we took several steps to ensure that our business will emerge from the current downturn in a strong state. We implemented numerous cost controls in operations that led to increased cash flow margins for our same-store hospitality operations and we made several changes to our corporate cost controls, the benefits of which can be seen in our fourth quarter results. Our cost control efforts resulted in corporate CCF improving approximately 18 percent in the fourth quarter compared to the fourth quarter of 2007. We also addressed the balance sheet, extending the maturity date of our $1 billion credit facility at favorable rates and reducing our debt by repurchasing $45.8 million of our Senior Notes at attractive prices.
“It is important to make clear that we remain cautious about how the market will play out in 2009, especially during the first quarter. As a result, we will continue efforts to reduce costs and aggressively manage our balance sheet with an eye toward conserving capital.”
Segment Operating Results
Hospitality
Key components of the Company’s hospitality segment performance in the fourth quarter and full year 2008 include:
* Same-store RevPAR for the quarter decreased 6.4 percent compared to the prior-year quarter, driven primarily by a decrease in occupancy. Same-store Total RevPAR decreased 5.8 percent compared to the prior-year quarter, driven by the decline in occupancy and a decrease in food and beverage spending. Same-store RevPAR for the full year decreased 1.4 percent driven by a decrease in occupancy, which offset a 2.6 percent increase in Average Daily Rate (“ADR”). Same-store Total RevPAR decreased 0.8 percent compared to the prior year, as a result of the decline in occupancy and a decrease in food and beverage revenue which was partially offset by increases in attrition and cancellation fees.
* Gaylord National generated RevPAR and Total RevPAR of $112.11 and $281.44 respectively in the fourth quarter of 2008. For the full year 2008, the National achieved RevPAR of $124.84 and Total RevPAR of $309.09.
* Same-store CCF decreased 3.8 percent to $49.6 million for the quarter compared to the prior-year quarter. Same-store CCF for the year increased 7.4 percent compared to 2007 due to the Company’s continued focus on effective expense management and increased attrition and cancellation fees. Same-store CCF margin was flat compared to the fourth quarter of 2007 at 27.4 percent. Same-store CCF margin for the year increased 160 basis points to 29.0 percent compared to 27.4 percent in 2007. Gaylord National generated CCF of $8.4 million in the fourth quarter and $33.1 million for the full year 2008. (Gaylord National was fully operational as of April 2, 2008.)
* Gaylord Hotels same-store net definite bookings for all future years decreased 52.2 percent to 263,397 room nights booked in the fourth quarter of 2008 compared to the same period in 2007. During the quarter, meeting planners deferred booking decisions for future periods and Gaylord Hotels continued to experience elevated levels of attrition and cancellation. Same-store attrition for the fourth quarter was 14.1 percent compared to 9.7 percent for the same period in 2007. Gaylord National net definite bookings for all future years declined 30.6 percent to 138,359 room nights booked in the fourth quarter of 2008 compared to the same period last year. Attrition in the fourth quarter at Gaylord National was 13.3 percent. For the full year 2008, all Gaylord Hotel properties booked 1,622,880 room nights for future periods, compared to 1,973,835 room nights in 2007. Room night production in 2008 reflects approximately 200,000 room nights related to the proposed hotel expansions.
Reed continued, “For the fourth quarter and the full year, as expected, Gaylord Hotels RevPAR and Total RevPAR experienced modest declines as some of our clients reduced spending. Despite acceleration in these trends as the fourth quarter ended, our hotels performed well. In fact, according to our data, we believe that we rank first versus our competitive set for Total RevPAR for the full-year 2008, underscoring the value and strength of our brand, quality of our service and the draw of the unique amenities and outside-the-room offerings we provide.”
At the property level, Gaylord Opryland generated revenue of $86.4 million in the fourth quarter of 2008, a slight decrease compared to the prior-year quarter. Full-year 2008 revenue of $296.7 million represented a 3.7 percent increase compared to 2007. Fourth quarter RevPAR decreased 7.1 percent to $125.61 compared to $135.16 in the same period last year, driven by a 6.5 percentage point decline in occupancy as a result of lower group volume, which offset an increase in transient business. Total RevPAR decreased 5.6 percent to $326.12 in the fourth quarter of 2008 compared to $345.50 in the prior-year quarter. For the full year 2008, RevPAR and Total RevPAR decreased 1.9 percent and 0.8 percent to $119.32 and $282.90, respectively. A 4.3 percentage point decrease in occupancy offset a 3.8 percent increase in ADR for the year. CCF increased 1.7 percent to $24.0 million for the fourth quarter, versus $23.6 million in the year-ago quarter. For the quarter, CCF margin increased 70 basis points over the prior-year quarter to 27.8 percent. Full-year 2008 CCF increased 17.8 percent due to increased revenue from food and beverage spending and collections of attrition and cancellation fees along with efficiency and cost control measures. Full-year 2007 CCF also includes a $2.9 million charge related to the termination of a tenant lease at Opryland. Full-year CCF margin was 28.6 percent, a 350 basis point increase over 2007. The Opryland room renovation was completed in February 2008 and therefore did not affect availability during the fourth quarter. Operating statistics reflect 5,171 room nights out of available inventory for the full year 2008, 12,712 room nights out of available inventory for the fourth quarter of 2007 and 48,752 room nights out of available inventory during the full year 2007.
Gaylord Palms posted revenue of $43.0 million in the fourth quarter of 2008, a 7.5 percent decrease compared to $46.5 million in the prior-year quarter. Occupancy for the quarter was relatively flat to the prior-year quarter due to an increase in transient business that offset a decline in group volume. Full-year 2008 revenue of $180.8 million represented a slight decrease compared to $181.8 million in 2007. Fourth quarter RevPAR decreased 7.2 percent to $120.05 compared to $129.35 in the same quarter last year, largely driven by a 5.2 percent decrease in ADR. Total RevPAR decreased 8.1 percent to $330.43, based on the lower ADR and a decrease in food and beverage revenue due to lower group spending. For the full year, RevPAR decreased 1.1 percent to $137.71 and Total RevPAR decreased 1.0 percent to $350.75. In the fourth quarter, CCF decreased to $10.8 million compared to $11.8 million in the prior-year quarter, resulting in a CCF margin of 25.2 percent, a 20 basis point decrease compared to the prior-year quarter. For the full year, CCF decreased slightly to $52.6 million compared to $52.8 million in 2007. CCF margin for the year increased 10 basis points to 29.1 percent.
Gaylord Texan revenue was $49.6 million in the fourth quarter of 2008, a decrease of 5.0 percent from $52.2 million in the prior-year quarter, largely driven by a 5.3 percentage point decline in occupancy and the resulting decrease in room and food and beverage revenue. For the full year, revenue decreased slightly to $192.7 million from $192.8 million in 2007. RevPAR in the fourth quarter decreased 6.0 percent to $119.87 due to the decline in occupancy, which offset a 1.6 percent increase in ADR. Total RevPAR decreased 5.0 percent to $356.66 compared to $375.60 in the prior-year quarter. For the year, RevPAR decreased slightly to $128.77 from $129.55 in 2007. Total RevPAR for the full year decreased slightly to $348.46 compared to $349.54 in 2007. CCF decreased 9.5 percent to $13.6 million in the fourth quarter of 2008, versus $15.0 million in the prior-year quarter, resulting in a 27.4 percent CCF margin, a 130 basis point decrease from the prior-year quarter. The decline in CCF was primarily due to a decrease in revenue for the quarter. For the full year, CCF increased 1.5 percent to $56.4 million for a CCF margin of 29.3 percent, a 50 basis point increase compared to the prior year.
Gaylord National generated revenue of $51.7 million in the fourth quarter of 2008 and $169.2 million for the full year. RevPAR was $112.11 in the fourth quarter and $124.84 for the full year 2008. Total RevPAR was $281.44 in the fourth quarter and $309.09 for the full year. CCF was $8.4 million in the fourth quarter of 2008, resulting in a 16.3 percent CCF margin. For the full year, CCF was $33.1 million, with a CCF margin of 19.6 percent. During the quarter, the property contracted an additional 138,359 room nights as compared to 199,632 room nights in the fourth quarter of 2007. As a result of construction delays during the opening of the property, full-year 2008 figures reflect 1,408 room nights out of available inventory.
Development Update
Gaylord Entertainment continues to make progress on the planned resort and convention hotel in Mesa, Arizona. The project is still in the early stages and specific details of the property and budget have not yet been determined. All plans remain subject to final approval by Gaylord’s board of directors.
Opry and Attractions
Opry and Attractions segment revenue decreased 14.5 percent to $17.7 million in the fourth quarter of 2008, compared to $20.7 million in the year-ago quarter. For the full year, revenue increased to $82.1 million compared to $77.8 million in 2007. The segment’s CCF decreased to $1.7 million in the fourth quarter of 2008 from $2.9 million in the prior-year quarter. Full-year CCF decreased by 12.7 percent to $10.8 million compared to 2007.
Corporate and Other
Corporate and Other operating loss totaled $19.2 million in the fourth quarter of 2008 compared to an operating loss of $16.7 million in the same period last year. The 2008 loss reflects a $4.7 million impairment charge related to the termination of the Chula Vista project. For the full year, the segment reported an operating loss of $71.3 million compared to an operating loss of $56.0 million in the prior year. Corporate and Other CCF in the fourth quarter of 2008 improved 18.4 percent to a loss of $11.3 million compared to a loss of $13.9 million in the same period last year. For the full year, CCF improved 3.2 percent to a loss of $42.8 million compared to a loss of $44.2 million in 2007.
Liquidity
As of December 31, 2008, the Company had long-term debt outstanding, including current portion, of $1,262.9 million and unrestricted and restricted cash of $2.2 million. At the end of the fourth quarter of 2008, $277.5 million of borrowings were undrawn under the Company’s $1.0 billion credit facility, and the lending banks had issued $10.3 million in letters of credit, which left $267.2 million of availability under the credit facility.
During the fourth quarter, Gaylord Entertainment recorded a pretax gain of approximately $20 million (approximately $13 million after tax) as a result of the repurchase of $45.8 million in aggregate principal amount of its outstanding senior notes ($28.5 million of 8 percent senior notes and $17.3 million of 6.75 percent senior notes) for $25.6 million 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.
Outlook
The following business performance outlook is based on current information as of February 10, 2009. The Company does not expect to update guidance before next quarter’s earnings release. However, the Company may update its full business outlook or any portion thereof at any time for any reason.
Reed continued, “We are very proud of the results we produced in 2008: growing revenue in our hospitality segment, expanding our operating margins through a keen eye on cost control and reducing corporate overhead. We recognize 2009 will be a challenging year for our company as well as the overall hospitality industry from a revenue perspective, and as a result, we will continue our focus on cost management. We ended the year in an economic environment that continued to rapidly decelerate and since then, has shown no signs of improvement. Meeting planners are deferring decision making, shrinking the booking window for 2009 and 2010 business. We are redeploying our sales force to focus more of its efforts on 2009 and 2010 to address this change in booking behavior.
“We are adjusting our outlook for 2009 to reflect sales, cancellation and attrition activity that more accurately represents the trends we have seen in recent weeks. We are anticipating Gaylord Hotels same-store RevPAR in the first quarter of 2009 to decline 18 percent – 20 percent and same-store Total RevPAR to decline 17 percent – 19 percent when compared to performance in the first quarter of 2008. For the full year 2009, we are reducing same-store RevPAR and Total RevPAR to a decrease of 9 percent – 12 percent and 9 percent – 12 percent, respectively.
“The business environment has slowed dramatically in recent weeks. We are addressing the revenue challenges with aggressive cost management and thus far have identified approximately $30 – 35 million in cost reductions from our prior guidance which we believe we can implement in 2009 – some of which will be a reduction in corporate expenses and some of which will be realized in our properties. We believe it is prudent to reduce our same-store CCF guidance to $160 – 170 million and our CCF guidance on the Gaylord National to $60 – 70 million. The slowdown in consumer and group spending has also affected our Opry and Attractions segment, and as a result, we are reducing our CCF guidance on this segment to $12 – 13 million. We are adjusting our Corporate and Other CCF guidance for the year from a loss of $49 – 46 million to a loss of $44 – 40 million. As such, we expect total CCF to be in the range of $188 – 213 million.”
2009 Prior 2009 New
Consolidated Cash Flow
Gaylord Hotels (Same Store) $185 – 197 Million $160 – 170 Million
Gaylord National $65 – 75 Million $60 – 70 Million
Opry and Attractions $13 – 14 Million $12 – 13 Million
Corporate and Other $(49 – 46) Million $(44 – 40) Million
Totals $214 – 240 Million $188 – 213 Million
Gaylord Hotels Same-Store RevPAR (3)% – 0% (12)% – (9)%
Gaylord Hotels Same-Store Total RevPAR (2)% – 0% (12)% – (9)%
Webcast and Replay
Gaylord Entertainment will hold a conference call to discuss this release today at 10 a.m. ET. Investors can listen to the conference call over the Internet at www.gaylordentertainment.com. To listen to the live call, please go to the Investor Relations section of the website (Investor Relations/Presentations, Earnings, and Webcasts) at least 15 minutes prior to the call to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call and will run for at least 30 days.
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