LA QUINTA HOLDINGS INC IRVING, Texas, Oct. 28, 2015 /PRNewswire/ -- La Quinta Holdings Inc. ("La Quinta" or the "Company") (NYSE: LQ) today reported its third quarter 2015 results on a historical basis, as well as the results of operations on a pro forma basis, giving effect to La Quinta's initial public offering (IPO) in 2014 and the related transactions as described below.
Third Quarter 2015 Highlights:
-- Pro Forma Total Adjusted EBITDA increased 4.5 percent to $114.2 million,
and Pro Forma Adjusted EBITDA margin increased 60 basis points
-- Pro Forma Adjusted Net Income increased 18.2 percent to $24.8 million;
Historical Net Income was $17.1 million
-- Pro Forma Adjusted Earnings per Share increased by $0.03 to $0.19;
Historical Earnings per Share was $0.13
-- System-wide comparable RevPAR increased 2.1 percent, ADR increased 3.0
percent and occupancy decreased 64 basis points
-- Pro Forma Franchise and Management Segment Adjusted EBITDA increased 8.3
percent to $31.5 million
-- Opened 8 franchised hotels totaling over 600 rooms and increased
franchise pipeline to 221 hotels, representing approximately 19,500
additional rooms, including the addition of key developments in Mexico,
Miami, Philadelphia, and the first location in Alaska
-- Signed the highest year-to-date number of franchise agreements since
2008
-- Pro Forma Owned Hotels Segment Adjusted EBITDA decreased 1.0 percent to
$87.1 million
-- Repurchased 1.0 million shares for an aggregate purchase price of $16
million as part of a $100 million share repurchase program
-- Entered into a definitive purchase and sale agreement to sell 24 owned
hotels
Overview
Keith A. Cline, Interim President & Chief Executive Officer of La Quinta, said, "During the third quarter, we continued to execute on our growth strategies. We expanded our geographic presence with the opening of 8 franchise properties, including locations in New York, Oregon, Washington and Illinois. We continued to grow our pipeline, with our franchise development activity in the first three quarters of 2015 resulting in the highest number of franchise agreement signings during the first nine months of the year since 2008. Our international presence continues to grow with the execution of new franchise agreements for two additional locations in Mexico. We are also expanding into our 48(th) state, with the signing of a franchise agreement for our first location in Alaska."
Mr. Cline continued, "We once again grew our RevPAR, franchise pipeline, and system-wide units. We accelerated a portion of our share repurchase program due to recent market activity, acquiring 1.0 million shares in the third quarter with available cash. In addition, we entered into a definitive purchase and sale agreement to sell 24 of our owned hotels, which we expect to have an accretive EBITDA multiple, despite the fact that most of the properties will be removed from our system. In an environment of ongoing strong industry fundamentals, we remain focused on growing our business and delivering long-term shareholder value."
The results of operations for the Company, on a pro forma basis and on a historical basis, for the three months ended September 30, 2015 include the following highlights (1) ($ in thousands, except per share amounts):
Pro Forma Historical
Three Months Ended September 30, Three Months Ended September 30,
2015 2014 % chg 2015 2014 % chg
---- ---- ----- ---- ---- -----
Total Revenue $279,103 $271,118 2.9% $279,103 $271,118 2.9%
Franchise and
Management
Segment Adj.
EBITDA 31,460 29,054 8.3% 31,460 29,054 8.3%
Owned Hotels
Segment Adj.
EBITDA 87,098 87,951 -1.0% 87,098 87,951 -1.0%
Total Adj. EBITDA 114,231 109,297 4.5% 114,231 109,297 4.5%
Total Adj. EBITDA
margin 40.9% 40.3% 40.9% 40.3%
Operating Income
Margin 18.9% 22.0% 18.9% 20.0%
Three Months Three Months
Ended Ended
September 30, 2015 September 30, 2014 % Change
------------------ ------------------ --------
Net Basic Net Basic Net Basic
Income and Income and Income and
Diluted Diluted Diluted
EPS EPS EPS
--- --- ---
Pro Forma Adjusted
Net Income
Attributable to
La Quinta
Holdings'
stockholders(1) $24,816 $0.19 $20,997 $0.16 18.2% 18.8%
Historical Net
Income
Attributable to
La Quinta
Holdings'
stockholders 17,058 0.13 12,817 0.10 33.1% 30.0%
(1) Please see the schedules to this
press release for a
reconciliation of the pro forma
financial information and
adjusted results of operations.
Pro forma information excludes
adjustments that are not expected
to have a continuing effect on
the Company, and adjusted
information is adjusted for
certain special items, in each
case as discussed in the
schedules attached to this press
release. Pro Forma Segment
Adjusted EBITDA reflects
intercompany fees charged to our
owned hotels under new agreements
entered into at the time of the
IPO.
Comparable hotel statistics Three months Variance
three
ended
September 30, months ended
2015
September
30,
2015 vs.
2014
--- ----
Owned Hotels
Occupancy 69.6% -142 bps
ADR $83.34 4.0%
RevPAR $57.97 2.0%
Franchised Hotels
Occupancy 73.0% 30 bps
ADR $95.61 1.8%
RevPAR $69.84 2.3%
System-wide
Occupancy 71.1% -64 bps
ADR $89.02 3.0%
RevPAR $63.33 2.1%
Development
The Company opened 8 franchised hotels with over 600 rooms in the third quarter and achieved net franchise unit growth of 6 hotels with approximately 400 rooms. Through September 30, 2015, the Company opened 28 franchised hotels with approximately 2,100 rooms. As of September 30, 2015, the Company had a pipeline of 221 franchised hotels totaling approximately 19,500 rooms, to be located in the United States, Mexico, Canada, Colombia, Nicaragua, Guatemala and Chile. The Company believes this pipeline represents a significant embedded growth opportunity for the brand.
The Company's system-wide portfolio, as of September 30, 2015, consisted of 884 hotels representing approximately 87,600 rooms located across 47 U.S. states, as well as in Canada, Mexico and Honduras. This portfolio includes 352 owned and operated hotels and 532 franchised hotels.
September 30, 2015 September 30, 2014
------------------ ------------------
# of # of rooms # of
hotels hotels # of rooms
------- ---------- ------- ----------
Owned (1) 351 44,600 352 44,800
Joint
Venture 1 200 1 200
Franchised 532 42,800 501 40,500
--- ------ --- ------
Totals 884 87,600 854 85,500
=== ====== === ======
(1) For September 30, 2015, Owned
includes 24 hotels (2,800 rooms)
designated as assets held for sale,
which are subject to a definitive
purchase agreement.
Owned Hotel Portfolio
During the quarter, the Company entered into a definitive purchase and sale agreement for the sale of 24 of its owned hotels, and expects to close the sale before year-end. The Company believes that a sale of these assets will have many benefits, including an aggregate sales price with an accretive EBITDA multiple, the opening of several markets to new franchise development as the majority of these hotels will be removed from the La Quinta system, improvement of key operating metrics, and provision of additional available cash.
Balance Sheet and Liquidity
As of September 30, 2015, the Company had approximately $1.7 billion of outstanding indebtedness with a weighted average interest rate of approximately 4.3%, including the impact of an interest rate swap. During the quarter, as a result of the Company's net debt, defined as total debt less cash, to Pro Forma Adjusted EBITDA ratio dropping below 4.5, the Company realized a 25 basis point reduction in the interest rate for its long-term debt. Total cash and cash equivalents was $117.6 million as of September 30, 2015.
As previously announced in September, the Board of Directors approved a program to repurchase an aggregate of up to $100 million of the Company's common stock, The Company had previously announced that the Board of Directors had approved moving forward with a $200 million program which would commence once the Company's net debt to Pro Forma Adjusted EBITDA ratio falls below 4.0 times. However, given recent market activity, the Company and the Board of Directors have decided to accelerate a portion of the program. In the third quarter, the Company acquired 1.0 million shares for an aggregate purchase price of $16 million. Since the end of the third quarter, the Company has acquired additional shares, bringing the total to approximately 3.0 million shares for an aggregate purchase price of $50 million.
Outlook
Based upon management's current estimates, the Company is reconfirming its September guidance for full year 2015 as shown in the table below, except for an update regarding the expected number of shares outstanding, which now takes into account the Company's repurchase activity. With the share repurchase activity considered, the Company now expects weighted average shares outstanding to be 130.0 million shares compared to the prior expectation of 131.7 million.
Guidance
RevPAR
growth
on a
system-
wide
comparable
hotel
basis 3.5 percent to 4.5 percent
Pro
Forma
Adjusted
EBITDA $393 million to $400 million
Interest
expense Approximately $87 million
Franchise
hotel
openings 50 to 55
Weighted
average
shares
of
common
stock
outstanding Approximately 130.0 million
Webcast and Conference Call
La Quinta Holdings Inc. will host a conference call to discuss third quarter 2015 results on Wednesday, October 28, 2015 at 5:00 p.m. Eastern Daylight Time. Participants may listen to the live webcast by dialing (877) 407-3982, or (201) 493-6780 for international participants, or by logging onto the La Quinta Investor Relations website at www.lq.com/investorrelations. Participants are encouraged to dial into the call or link to the webcast at least fifteen minutes prior to the scheduled start time.
A replay of the call will be available from approximately 8 p.m. Eastern Time on October 28, 2015 through midnight Eastern Time on November 11, 2015. To access the replay, the domestic dial-in number is (877) 870-5176, the international dial-in number is (858) 384-5517, and the passcode is 13582658. The archive of the webcast will be available on the Company's website for a limited time.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934. These statements include, but are not limited to, statements related to our expectations regarding the performance of our business, our financial results, our liquidity and capital resources and other non-historical statements, including the statements in the "Outlook" section of this press release. You can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "projects," "predicts," "intends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including those described under the section entitled "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2014, as amended, filed with the Securities and Exchange Commission ("SEC"), as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in our filings with the SEC. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
Non-GAAP Financial Measures
We refer to certain non-GAAP financial measures in this press release including Adjusted EBITDA, Adjusted EBITDA margins, Segment Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings Per Share on both a pro forma and historical basis. Please see the schedules to this press release for additional information and reconciliations of such non-GAAP financial measures.
About La Quinta Holdings Inc.
La Quinta Holdings Inc. (LQ) is a leading owner, operator and franchisor of select-service hotels primarily serving the upper-midscale and midscale segments. The Company's owned and franchised portfolio consists of more than 880 properties representing approximately 87,600 rooms located in 47 US states, Canada, Mexico and Honduras. These properties operate under the La Quinta Inn & Suites(TM), La Quinta Inn(TM) and LQ Hotel(TM) brands. La Quinta's team is committed to providing guests with a refreshing and engaging experience. For more information, please visit: www.LQ.com.
From time to time, La Quinta may use its website as a distribution channel of material company information. Financial and other important information regarding the Company is routinely accessible through and posted on our website at www.lq.com/investorrelations. In addition, you may automatically receive email alerts and other information about La Quinta when you enroll your email address by visiting the Email Notification section at www.lq.com/investorrelations.
LA QUINTA HOLDINGS INC.
HISTORICAL STATEMENTS OF OPERATIONS
(unaudited, in thousands)
Three months ended Nine months ended
September 30, September 30,
2015 2014 2015 2014
---- ---- ---- ----
Revenues:
Room revenues $238,758 $234,658 $692,893 $649,181
Franchise and other fee-based revenues 28,504 25,224 75,558 68,215
Other hotel revenues 5,173 5,078 14,686 14,809
----- ----- ------ ------
272,435 264,960 783,137 732,205
Brand marketing fund revenues from
franchise and managed properties 6,668 6,158 17,960 16,511
----- ----- ------ ------
Total revenues 279,103 271,118 801,097 748,716
Operating expenses:
Direct lodging expenses 105,268 101,076 302,775 285,430
Depreciation and amortization 44,363 45,086 132,293 129,948
General and administrative expenses 31,761 32,251 92,674 100,863
Other lodging and operating expenses 17,165 15,589 49,122 46,124
Marketing, promotional and other
advertising expenses 19,230 16,639 57,034 50,170
Impairment loss 1,823 - 44,321 5,157
Loss on sale 85 - 4,088 -
--- --- ----- ---
219,695 210,641 682,307 617,692
Brand marketing fund expenses from
franchise and managed properties 6,668 6,158 17,960 16,511
----- ----- ------ ------
Total operating expenses 226,363 216,799 700,267 634,203
------- ------- ------- -------
Operating income 52,740 54,319 100,830 114,513
Other income (expenses):
Interest expense, net (20,970) (24,495) (65,932) (97,260)
Loss on extinguishment of debt, net - - - (2,030)
Other income (loss) 719 (795) 1,298 (1,096)
--- ---- ----- ------
Total other income (expenses) (20,251) (25,290) (64,634) (100,386)
Income from continuing operations before
income taxes 32,489 29,029 36,196 14,127
Income tax provision (15,406) (16,162) (17,366) (21,860)
Recognition of net deferred tax
liabilities upon C-corporation
conversion - - - (321,054)
--- --- --- --------
Net Income (Loss) from continuing
operations, net of tax 17,083 12,867 18,830 (328,787)
Income (Loss) on discontinued
operations, net of tax - - - (503)
--- --- --- ----
Net income (loss) 17,083 12,867 18,830 (329,290)
Income from noncontrolling interests in
continuing operations, net of tax (25) (50) (293) (3,814)
Income from noncontrolling interests in
discontinued operations, net of tax - - - -
--- --- --- ---
Net income attributable to
noncontrolling interests (25) (50) (293) (3,814)
Amounts attributable to La Quinta
Holdings' stockholders
Income (loss) from continuing
operations, net of tax 17,058 12,817 18,537 (332,601)
Income (loss) from discontinued
operations, net of tax - - - (503)
--- --- --- ----
Net income (loss) attributable to La
Quinta Holdings' stockholders $17,058 $12,817 $18,537 $(333,104)
======= ======= ======= =========
RECONCILIATIONS
Prior to the consummation of the IPO on April 14, 2014, the Company's business was conducted, and the Company's hotel properties were owned, through multiple entities including (i) the "La Quinta Predecessor Entities" which were entities under common control or otherwise consolidated for financial reporting purposes, and their consolidated subsidiaries and (ii) entities that owned 14 hotels (the "Previously Managed Portfolio") managed by the La Quinta Predecessor Entities. In connection with the IPO, among other transactions, (i) the La Quinta Predecessor Entities were contributed to the Company, (ii) the La Quinta Predecessor Entities purchased the Previously Managed Portfolio, and (iii) the Company effected certain refinancing transactions (together with the IPO, the "IPO Transactions").
The unaudited pro forma financial data for the three and nine months ended September 30, 2015 and 2014 are presented as if the IPO Transactions all had occurred on January 1, 2014. The unaudited pro forma combined financial information excludes adjustments that are not expected to have a continuing effect on the Company. Excluded adjustments include the gains and losses related to the debt financing transactions, and the impact of the issuance of vested and unvested restricted stock at the time of the IPO related to long term incentives, as well as the impact of discontinued operations. Accordingly, the unaudited pro forma financial data is not necessarily indicative of our financial position or results of operations had the transactions described above for which we are giving pro forma effect actually occurred on the dates indicated.
The tables below provide a reconciliation of the pro forma financial information, including segment information, for the Company to the Company's historical information, a reconciliation of Adjusted EBITDA to Net Income, both on a pro forma and historical basis, a reconciliation of Pro Forma Adjusted Net Income and Pro Forma Adjusted Earnings Per Share to Net Income and Earnings Per Share on a historical basis and a reconciliation of Pro Forma Adjusted EBITDA to Adjusted Pro Forma Net Income with respect to our outlook. We believe this financial information provides meaningful supplemental information because it reflects the combined business of the La Quinta Predecessor Entities and the Previously Managed Portfolio and the ongoing effects of the other IPO Transactions. We further believe the presentation of Pro Forma Adjusted Net Income and Pro Forma Adjusted Earnings Per Share provides meaningful information because it gives effect to the pro forma adjustments described above and excludes the impact of certain items that are not expected to have an ongoing effect on our operations. This represents how management views the business and reviews our operating performance. It is also used by management when publicly providing the business outlook. See the definitions of "EBITDA", "Adjusted EBITDA", "Pro Forma Adjusted Net Income" and "Pro Forma Adjusted Earnings Per Share" for a further explanation of the use of these measures.
PRO FORMA FINANCIAL INFORMATION AND NET INCOME RECONCILIATION
(unaudited, in thousands)
Three months ended Three months ended
September 30, 2015 September 30, 2014
------------------
Historical Adjustments Pro Forma Historical Adjustments Pro Forma
---------- ----------- --------- ---------- ----------- ---------
Revenues:
Room revenues $238,758 $ - $238,758 $234,658 $ - $234,658
Franchise and other fee-based
revenues 28,504 - 28,504 25,224 - 25,224
Other hotel revenues 5,173 - 5,173 5,078 - 5,078
----- --- ----- ----- --- -----
272,435 - 272,435 264,960 - 264,960
Brand marketing fund revenues from
franchise and managed properties 6,668 - 6,668 6,158 - 6,158
----- --- ----- ----- --- -----
Total revenues 279,103 - 279,103 271,118 - 271,118
Operating expenses:
Direct lodging expenses 105,268 - 105,268 101,076 - 101,076
Depreciation and amortization 44,363 - 44,363 45,086 (31) 45,055
General and administrative expenses 31,761 - 31,761 32,251 (5,393) 26,858
Other lodging and operating expenses 17,165 - 17,165 15,589 - 15,589
Marketing, promotional and other
advertising expenses 19,230 - 19,230 16,639 - 16,639
Impairment loss 1,823 - 1,823 - - -
Loss on sale 85 - 85 - - -
--- --- --- --- --- ---
219,695 - 219,695 210,641 (5,424) 205,217
Brand marketing fund expenses from
franchise and managed properties 6,668 - 6,668 6,158 - 6,158
----- --- ----- ----- --- -----
Total operating expenses 226,363 - 226,363 216,799 (5,424) 211,375
------- --- ------- ------- ------ -------
Operating income 52,740 - 52,740 54,319 5,424 59,743
Other income (expenses):
Interest expense, net (20,970) - (20,970) (24,495) 625 (23,870)
Other income (loss) 719 - 719 (795) - (795)
--- --- --- ---- --- ----
Total other income (expenses) (20,251) - (20,251) (25,290) 625 (24,665)
Income from continuing operations
before income taxes 32,489 - 32,489 29,029 6,049 35,078
Income tax provision (15,406) - (15,406) (16,162) 2,131 (14,031)
------- --- ------- ------- ----- -------
Income from continuing operations,
net of tax 17,083 - 17,083 12,867 8,180 21,047
Net income 17,083 - 17,083 12,867 8,180 21,047
Income from noncontrolling interests
in continuing operations, net of tax (25) - (25) (50) - (50)
--- --- --- --- --- ---
Net income attributable to
noncontrolling (25) - (25) (50) - (50)
interests
Amounts attributable to La Quinta
Holdings' stockholders
Income from continuing operations,
net of tax 17,058 - 17,058 12,817 8,180 20,997
------ --- ------ ------ ----- ------
Net income attributable to La Quinta
Holdings' stockholders $17,058 $ - $17,058 $12,817 $8,180 $20,997
======= === === ======= ======= ====== =======
PRO FORMA FINANCIAL INFORMATION AND NET INCOME RECONCILIATION
(unaudited, in thousands)
Nine months ended Nine months ended
September 30, 2015 September 30, 2014
------------------ ------------------
Historical Adjustments Pro Forma Historical Adjustments Pro Forma
---------- ----------- --------- ---------- ----------- ---------
Revenues:
Room revenues $692,893 $ - $692,893 $649,181 $12,814 $661,995
Franchise and other fee-based revenues 75,558 - 75,558 68,215 (732) 67,483
Other hotel revenues 14,686 - 14,686 14,809 159 14,968
------ --- ------ ------ --- ------
783,137 - 783,137 732,205 12,241 744,446
Brand marketing fund revenues from
franchise and managed properties 17,960 - 17,960 16,511 (321) 16,190
------ --- ------ ------ ---- ------
Total revenues 801,097 - 801,097 748,716 11,920 760,636
Operating expenses:
Direct lodging expenses 302,775 - 302,775 285,430 5,832 291,262
Depreciation and amortization 132,293 - 132,293 129,948 1,573 131,521
General and administrative expenses 92,674 (5,564) 87,110 100,863 (31,617) 69,246
Other lodging and operating expenses 49,122 - 49,122 46,124 944 47,068
Marketing, promotional and other
advertising expenses 57,034 - 57,034 50,170 - 50,170
Impairment loss 44,321 - 44,321 5,157 - 5,157
Loss on sale 4,088 - 4,088 - - -
----- --- ----- --- --- ---
682,307 (5,564) 676,743 617,692 (23,268) 594,424
Brand marketing fund expenses from
franchise and managed properties 17,960 - 17,960 16,511 (321) 16,190
------ --- ------ ------ ---- ------
Total operating expenses 700,267 (5,564) 694,703 634,203 (23,589) 610,614
------- ------ ------- ------- ------- -------
Operating income 100,830 5,564 106,394 114,513 35,509 150,022
Other income (expenses):
Interest expense, net (65,932) - (65,932) (97,260) 25,768 (71,492)
Loss on extinguishment of debt, net - - - (2,030) 2,030 -
Other income (loss) 1,298 - 1,298 (1,096) - (1,096)
----- --- ----- ------ --- ------
Total other income (expenses) (64,634) - (64,634) (100,386) 27,798 (72,588)
Income from continuing operations before
income taxes 36,196 5,564 41,760 14,127 63,307 77,434
Income tax provision (17,366) (1,748) (19,114) (21,860) (9,113) (30,973)
Recognition of net deferred tax
liabilities upon C-corporation
conversion - - - (321,054) 321,054 -
--- --- --- -------- ------- ---
Income (loss) from continuing
operations, net of tax 18,830 3,816 22,646 (328,787) 375,248 46,461
Net income (loss) (1) 18,830 3,816 22,646 (328,787) 375,248 46,461
Income from noncontrolling interests in
continuing operations, net of tax (293) - (293) (3,814) 3,489 (325)
---- --- ---- ------ ----- ----
Net income attributable to
noncontrolling interests (1) (293) - (293) (3,814) 3,489 (325)
---- --- ---- ------ ----- ----
Amounts attributable to La Quinta
Holdings' stockholders
Income (loss) from continuing
operations, net of tax 18,537 3,816 22,353 (332,601) 378,737 46,136
------ ----- ------ -------- ------- ------
Net income (loss) attributable to La
Quinta Holdings' stockholders (1) $18,537 $3,816 $22,353 $(332,601) $378,737 $46,136
======= ====== ======= ========= ======== =======
(1) Excludes the impact of the
Company's discontinued
operations on a historical and
pro forma basis for the periods
presented
PRO FORMA AND HISTORICAL ADJUSTED EBITDA NON-GAAP RECONCILIATION
(unaudited, in thousands)
Pro forma Historical
Three months Three months Three months Three months
ended ended ended ended
September 30, September 30, September 30, September 30,
2015 2014 2015 2014
---- ---- ---- ----
Operating income $52,740 $59,743 $52,740 $54,319
Interest expense, net (20,970) (23,870) (20,970) (24,495)
Other income (loss) 719 (795) 719 (795)
Income tax provision (15,406) (14,031) (15,406) (16,162)
Income from noncontrolling interest (25) (50) (25) (50)
--- --- --- ---
Net Income (Loss) Attributable to La
Quinta Holdings' stockholders 17,058 20,997 17,058 12,817
------ ------ ------ ------
Interest expense 20,988 23,875 20,988 24,500
Income tax provision 15,406 14,031 15,406 16,162
Depreciation and amortization 44,985 45,321 44,985 45,352
Non-controlling interest 25 50 25 50
--- --- --- ---
EBITDA 98,462 104,274 98,462 98,881
------ ------- ------ ------
Fixed asset impairment loss 1,823 - 1,823 -
Loss on sale 85 - 85 -
Gain related to casualty disasters 393 (108) 393 (108)
Equity based compensation 3,320 3,207 3,320 8,600
Severance charges(1) 11,021 - 11,021 -
Other (gains) losses, net (873) 1,924 (873) 1,924
---- ----- ---- -----
Adjusted EBITDA $114,231 $109,297 $114,231 $109,297
-------- -------- -------- --------
(1) Charges of $8.0 million of cash and
$3.0 million of non-cash,
relating to the departure of the
Company's former President and
Chief Executive Officer were
recognized in general and
administrative expenses during the
three months ended September 30,
2015.
PRO FORMA AND HISTORICAL ADJUSTED EBITDA NON-GAAP RECONCILIATION
(unaudited, in thousands)
Pro forma Historical
Nine months Nine months Nine months Nine months
ended ended ended ended
September 30, September 30, September 30, September 30,
2015 2014 2015 2014
---- ---- ---- ----
Operating income $106,394 $150,022 $100,830 $114,513
Interest expense, net (65,932) (71,492) (65,932) (97,260)
Other income (loss) 1,298 (1,096) 1,298 (1,096)
Loss on extinguishment of debt, net - - - (2,030)
Income tax provision (19,114) (30,973) (17,366) (21,860)
Recognition of net deferred tax
liabilities upon C-corporation
conversion - - - (321,054)
Income from noncontrolling interest (293) (325) (293) (3,814)
Loss on discontinued operations, net of
tax - - - (503)
--- --- --- ----
Net Income (Loss) Attributable to La
Quinta 22,353 46,136 18,537 (333,104)
Holdings' stockholders
Interest expense 66,021 71,532 66,021 97,300
Income tax provision 19,114 30,973 17,366 21,860
Recognition of net deferred tax
liabilities upon C-corporation
conversion - - - 321,054
Depreciation and amortization 133,335 132,288 133,335 130,711
Non-controlling interest 293 325 293 3,814
--- --- --- -----
EBITDA 241,116 281,254 235,552 241,635
------- ------- ------- -------
Fixed asset impairment loss 44,321 5,157 44,321 5,308
Loss on sale 4,088 - 4,088 377
Loss on retirement of assets 161 - 161 -
Gain related to casualty disasters 1,064 (1,098) 1,064 (1,106)
Loss on extinguishment of debt, net - - - 2,030
Equity based compensation 10,900 8,036 16,464 39,703
Severance charges(1) 11,021 - 11,021 -
Other (gains) losses, net 3,400 2,570 3,400 2,312
----- ----- ----- -----
Adjusted EBITDA $316,071 $295,919 $316,071 $290,259
-------- -------- -------- --------
(1) Charges of $8.0 million of cash and
$3.0 million of non-cash,
relating to the departure of the
Company's former President and
Chief Executive Officer were
recognized in general and
administrative expenses during the
nine months ended September 30,
2015.
PRO FORMA AND HISTORICAL SEGMENT REVENUES AND ADJUSTED EBITDA RECONCILIATION
(unaudited, in thousands)
Three months ended September 30, 2015 Three months ended September 30, 2014
Historical Adjustments Pro Historical Adjustments Pro
Forma Forma
----- -----
Revenues:
Owned hotels $245,558 $ - $245,558 $241,266 $ - $241,266
Franchise and management 31,460 - 31,460 29,054 - 29,054
------ --- ------ ------ --- ------
Segment revenues 277,018 - 277,018 270,320 - 270,320
Other fee-based revenues from
franchise and managed properties 6,668 - 6,668 6,158 - 6,158
Corporate and other 34,757 - 34,757 34,026 - 34,026
Intersegment elimination (39,340) - (39,340) (39,386) - (39,386)
------- --- ------- ------- --- -------
Total revenues $279,103 $ - $279,103 $271,118 $ - $271,118
======== === === ======== ======== === === ========
Adjusted EBITDA:
Owned hotels $87,098 $ - $87,098 $87,951 $ - $87,951
Franchise and management 31,460 - 31,460 29,054 - 29,054
------ --- ------ ------ --- ------
Segment Adjusted EBITDA 118,558 - 118,558 117,005 - 117,005
Corporate and other (4,327) - (4,327) (7,708) - (7,708)
------ --- ------ ------ --- ------
Total Adjusted EBITDA $114,231 $ - $114,231 $109,297 $ - $109,297
======== === === ======== ======== === === ========
PRO FORMA AND HISTORICAL SEGMENT REVENUES AND ADJUSTED EBITDA RECONCILIATION
(unaudited, in thousands)
Nine months ended September 30, 2015 Nine months ended September 30, 2014
Historical Adjustments Pro Historical Adjustments Pro
(1) Forma (1) Forma
--- ----- --- -----
Revenues:
Owned hotels $711,451 $ - $711,451 $667,564 $10,929 $678,493
Franchise and management 87,357 - 87,357 68,977 11,729 80,706
------ --- ------ ------ ------ ------
Segment revenues 798,808 - 798,808 736,541 22,658 759,199
Other fee-based revenues from
franchise and managed properties 17,960 - 17,960 16,511 (321) 16,190
Corporate and other 97,862 - 97,862 88,054 4,633 92,687
Intersegment elimination (113,533) - (113,533) (92,390) (15,050) (107,440)
-------- --- -------- ------- ------- --------
Total revenues $801,097 $ - $801,097 $748,716 $11,920 $760,636
======== === === ======== ======== ======= ========
Adjusted EBITDA:
Owned hotels $253,922 $ - $253,922 $249,226 $(10,702) $238,524
Franchise and management 87,357 - 87,357 68,977 11,729 80,706
------ --- ------ ------ ------ ------
Segment Adjusted EBITDA 341,279 - 341,279 318,203 1,027 319,230
Corporate and other (25,208) - (25,208) (27,944) 4,633 (23,311)
------- --- ------- ------- ----- -------
Total Adjusted EBITDA $316,071 $ - $316,071 $290,259 $5,660 $295,919
======== === === ======== ======== ====== ========
(1) Adjustments include (i) reflection
of the results of operations of
the 14 previously managed hotels
which were acquired in connection
with the IPO as if the
acquisition had occurred on
January 1, 2014; and (ii)
reflection of franchise and
management fees that we charge
our owned hotels as if the rates
put in place pursuant to new
agreements dated April 14, 2014
had been in effect beginning on
January 1, 2014. On a historical
basis, prior to April 14, 2014 we
charged aggregate fees of 2.0%
(0.33% license fees for trademark
rights and 1.67% management fee
for management services) to our
owned hotels. Effective April 14,
2014, we terminated the existing
franchise and management
agreements with our owned hotels
and entered into new agreements,
which provide for a franchise fee
of 4.5% of gross room revenues
and a management fee of 2.5% of
total hotel revenues, which are
reflected as revenue in the
franchise and management segment.
The agreements we entered into
with our owned hotels upon
effectiveness of the IPO also
include a reservations fee of
2.0% of gross room revenues,
which is reflected as revenue in
corporate and other after April
14, 2014.
ADJUSTED NET INCOME AND
PRO FORMA AND ADJUSTED EARNINGS PER SHARE
NON-GAAP RECONCILIATION
(unaudited, in thousands, except per share data)
Three months ended September 30, Three months ended September 30,
2015 2014
Net Income Basic and Net Income Basic and
Diluted Diluted
Earnings Earnings
Per Per
Share Share
Net Income Attributable to La
Quinta Holdings' stockholders $17,058 $0.13 $12,817 $0.10
Pro Forma Adjustments(1) - - 8,180 0.06
--- --- ----- ----
Pro Forma Net Income Attributable
to La Quinta Holdings'
stockholders $17,058 $0.13 $20,997 $0.16
Severance charges, net of tax (2) 6,613 0.05 - -
Impairment loss, net of tax 1,094 0.01 - -
Loss on sale, net of tax 51 - - -
--- --- --- ---
Pro Forma Adjusted Net Income
Attributable to La Quinta
Holdings' stockholders $24,816 $0.19 $20,997 $0.16
Weighted average common shares
outstanding, basic 129,858 127,734
Weighted average common shares
outstanding, diluted 130,914 128,494
(1) Refer to Pro Forma Financial
Information and Net Income
Reconciliation on page 8.
(2) Charges relating to the departure of
the Company's former President and
Chief Executive Officer of $4.8
million in cash and $1.8 million in
non-cash, net of tax, were
recognized in general and
administrative expenses during the
three months ended September 30,
2015
Nine months ended September 30, 2015 Nine months ended September 30, 2014
Net Income Basic and Net Income Basic and
Diluted Diluted
Earnings Earnings
Per Per
Share Share
Net Income (loss)
Attributable to La
Quinta Holdings'
stockholders(1) $18,537 $0.14 $(332,601) $(2.65)
Pro Forma Adjustments(2) 3,816 0.03 378,737 3.02
Loss from discontinued
operations, net of tax - - 503 -
--- --- --- ---
Pro Forma Net Income
Attributable to La
Quinta Holdings'
stockholders $22,353 $0.17 $46,639 $0.37
Secondary offering
expenses, net of tax (3) 827 0.01 - -
Severance charges, net of
tax (4) 6,613 0.05 - -
Impairment loss, net of
tax 26,593 0.21 3,094 0.02
Loss on sale , net of tax 2,453 0.02 - -
----- ---- --- ---
Pro Forma Adjusted Net
Income Attributable to
La Quinta Holdings'
stockholders $58,839 $0.46 $49,733 $0.39
Weighted average common
shares outstanding,
basic 129,264 125,542
Weighted average common
shares outstanding,
diluted 130,543 126,084
(1) Includes the impact of the Company's
discontinued operations on a
historical basis for the periods
presented.
(2) Refer to Pro Forma Financial
Information and Net Income
Reconciliation on page 9.
(3) Expense was recognized in general
and administrative expenses during
the nine months ended September 30,
2015 related to costs incurred in
connection with the secondary
equity offering by certain selling
stockholders.
(4) Charges relating to the departure of
the Company's former President and
Chief Executive Officer of 4.8
million in cash and $1.8 million in
non-cash, net of tax, were
recognized in general and
administrative expenses during the
nine months ended September 30,
2015
PRO FORMA ADJUSTED EBITDA NON-GAAP RECONCILIATION
OUTLOOK: FORECASTED 2015
(unaudited, in thousands)
Year Ended December 31, 2015
----------------------------
Low Case High Case
-------- ---------
Adjusted Pro Forma Net income
Attributable to La Quinta Holdings'
stockholders (1) $69,660 $73,860
Interest expense (2) 87,000 87,000
Income tax provision 46,440 49,240
Depreciation and amortization 176,200 176,200
Non-controlling interest 500 500
--- ---
Pro Forma EBITDA 379,800 386,800
Share based compensation expense (3) 13,200 13,200
Pro Forma Adjusted EBITDA $393,000 $400,000
======== ========
(1) This table provides a reconciliation
of forward-looking forecasted
Adjusted EBITDA to adjusted pro
forma net income attributable to La
Quinta Holdings' stockholders that
excludes the impact of certain
items that are not expected to have
an ongoing effect on our
operations, including the severance
charges incurred in the third
quarter described above and for a
certain portion of our equity based
compensation which reflects the
exchange of ownership units that
were outstanding under our long-
term cash incentive plan at the
time of our IPO for shares of La
Quinta Holdings Inc. common stock,
100% of which vested within one
year of the IPO.
(2) Includes interest expense for $1.7
billion of outstanding indebtedness
with a weighted average interest
rate of approximately 4.3%,
including the impact of an interest
rate swap, commitment fees for the
undrawn balance of our revolving
credit facility, and amortization
of deferred financing costs.
(3) Reflects share based compensation
expense other than compensation
expense related to exchange of
ownership units that were
outstanding under our long-term
cash incentive plan at the time of
our IPO for shares of La Quinta
Holdings Inc. common stock.
LA QUINTA HOLDINGS INC.
DEFINED TERMS
"EBITDA" and "Adjusted EBITDA." Earnings before interest, taxes, depreciation and amortization ("EBITDA") is a commonly used measure in many industries. We adjust EBITDA when evaluating our performance because we believe that the adjustment for certain items, such as restructuring and acquisition transaction expenses, impairment charges related to long-lived assets, non-cash equity-based compensation, discontinued operations, and other items not indicative of ongoing operating performance, including other items relating to the IPO Transactions, provides useful supplemental information to management and investors regarding our ongoing operating performance. We believe that EBITDA and Adjusted EBITDA provide useful information to investors about us and our financial condition and results of operations for the following reasons: (i) EBITDA and Adjusted EBITDA are among the measures used by our management team to evaluate our operating performance and make day-to-day operating decisions; and (ii) EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors, lenders and other interested parties as a common performance measure to compare results or estimate valuations across companies in our industry.
EBITDA and Adjusted EBITDA are not recognized terms under GAAP, have limitations as analytical tools and should not be considered either in isolation or as a substitute for net income (loss), cash flow or other methods of analyzing our results as reported under GAAP. Some of these limitations are:
-- EBITDA and Adjusted EBITDA do not reflect changes in, or cash
requirements for, our working capital needs;
-- EBITDA and Adjusted EBITDA do not reflect our interest expense, or the
cash requirements necessary to service interest or principal payments,
on our indebtedness;
-- EBITDA and Adjusted EBITDA do not reflect our tax expense or the cash
requirements to pay our taxes;
-- EBITDA and Adjusted EBITDA do not reflect historical cash expenditures
or future requirements for capital expenditures or contractual
commitments;
-- EBITDA and Adjusted EBITDA do not reflect the impact on earnings or
changes resulting from matters that we consider not to be indicative of
our future operations;
-- although depreciation and amortization are non-cash charges, the assets
being depreciated and amortized will often have to be replaced in the
future, and EBITDA and Adjusted EBITDA do not reflect any cash
requirements for such replacements; and
-- other companies in our industry may calculate EBITDA and Adjusted EBITDA
differently, limiting their usefulness as comparative measures.
Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as discretionary cash available to us to reinvest in the growth of our business or as measures of cash that will be available to us to meet our obligations.
"Pro Forma Adjusted Net Income" and "Pro Forma Adjusted Earnings Per Share" are not recognized terms under U.S. GAAP and should not be considered as alternatives to net income (loss), earnings per share, or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. In addition, the Company's definitions of Pro Forma Adjusted Net Income and Pro Forma Adjusted Earnings Per Share may not be comparable to similarly titled measures of other companies.
Pro Forma Adjusted Net Income and Pro Forma Adjusted Earnings Per Share are included to assist investors in performing meaningful comparisons of past, present and future operating results and as a means of highlighting the results of the Company's ongoing operations in a comparable format.
"ADR" or "average daily rate" means hotel room revenues divided by total number of rooms sold in a given period.
"comparable hotels" means hotels that: (i) were active and operating in our system for at least one full calendar year as of the end of the applicable period and were active and operating as of January 1st of the previous year; and (ii) have not sustained substantial property damage or business interruption or for which comparable results are not available. Management uses comparable hotels as the basis upon which to evaluate ADR, occupancy, RevPAR and RevPAR Index on a system-wide basis and for each of our reportable segments.
"occupancy" means the total number of rooms sold in a given period divided by the total number of rooms available at a hotel or group of hotels.
"RevPAR" or "revenue per available room" means the product of the ADR charged and the average daily occupancy achieved.
"RevPAR Index" measures a hotel's fair market share of its competitive set's revenue per available room.
"system-wide" refers collectively to our owned, franchised and managed hotel portfolios.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/la-quinta-holdings-inc-reports-results-for-third-quarter-2015-300168125.html
SOURCE La Quinta Holdings Inc.
