John Q. Hammons (AMEX:JQH)
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John Q. Hammons Hotels, Inc. Reports Basic and Diluted Earnings
of $0.34 and $0.29 Per Share, Respectively, for the First Half of 2004
SPRINGFIELD, Mo., Aug. 9 /PRNewswire-FirstCall/ -- John Q. Hammons Hotels,
Inc. (AMEX:JQH) today reported results for the second quarter and first six
months of 2004.
Year-to-Date Results
Total revenues for the 2004 six months ended July 2, 2004 were $229.5 million,
an increase of 4.9% compared to the 2003 six months ended July 4, 2003. We
produced EBITDA for the 2004 six months of $59.7 million, down 2.6% compared to
$61.3 million in the 2003 six months primarily attributable to the asset
impairment charge discussed below. (See attached table for reconciliation of
net income to EBITDA and for our definition of EBITDA). The asset impairment
charge had a negative effect on EBITDA of $4.6 million for the 2004 six month
period.
Basic and diluted earnings per share for the six months ended July 2, 2004 were
$0.34 and $0.29, respectively, compared to basic and diluted earnings per share
of $0.06 and $0.05, respectively, for the six months ended July 4, 2003.
Net income for the 2004 six month period was $1.7 million, compared to $0.3
million for the same period in 2003. The 2004 results included two items,
which, after giving effect to minority interest, had a net impact of $0.3
million on the Company's net income. One of the items was the recognition of a
$1.1 million asset impairment, net of minority interest, due to our decision to
sell certain non-strategic hotels and reflects the difference between the net
book value, less selling costs, and the current estimated fair market value of
these hotels. The other item includes $1.4 million for the recapture of the
limited partners' losses we absorbed in the fourth quarter of 2003 and second
quarter of 2004. An additional $2.4 million must be recaptured before the
limited partners can be allocated future earnings in minority interest.
The following represents a reconciliation of the net income (loss), as
reported, to net income, as adjusted (in thousands):
Three Months Ended Six Months Ended
July 2, July 4, July 2, July 4,
2004 2003 2004 2003
Net income (loss), as reported ($2,622) $79 $1,727 $286
Additions (subtractions):
Asset impairment, net of
expected minority interest 1,115 --- 1,115 ---
Reallocation of minority
interest losses (gains) 1,928 --- (1,394) ---
Sub total 3,043 --- (279) ---
Net income, as adjusted $421 $79 $1,448 $286
Executive Comments
"We are pleased with our results for the first six months of 2004," stated Mr.
John Q. Hammons, Chairman and Chief Executive Officer, "We believe our
outstanding performance, coupled with the planned sale of non-strategic hotels
and debt reduction, will continue to have a positive impact on the value of our
Company for our shareholders."
Second Quarter Results
Total revenues for the three months ended July 2, 2004 were $115.2 million, an
increase of 6.0% compared to the three months ended July 4, 2003. We produced
EBITDA for the 2004 quarter of $26.4 million, down compared to $30.6 million in
the 2003 quarter primarily attributable to the asset impairment charge
discussed below. (See attached table for reconciliation of net income to
EBITDA and for the definition of EBITDA). The asset impairment charge reduced
EBITDA by $4.6 million for the 2004 quarter.
Basic and diluted loss per share for the three months ended July 2, 2004 was
($0.51), compared to basic and diluted earnings per share of $0.02 and $0.01,
respectively, for the three months ended July 4, 2003.
Net loss for the 2004 second quarter was $2.6 million, compared to net income
of $0.1 million for the 2003 quarter. The 2004 results included two items,
which, after giving effect to minority interest, had a negative impact of $3.0
million on the Company's net loss. One of the items was the recognition of a
$1.1 million asset impairment, net of minority interest, due to our decision to
sell certain non-strategic hotels and reflects the difference between the net
book value, less selling costs, and the current estimated fair market value of
these hotels. The other item includes $1.9 million of the limited partners'
losses we absorbed due to the inability of the limited partners' net
contribution to fall below zero. A total of $2.4 million must be recaptured
before the limited partners can be allocated future earnings in minority
interest.
Revenue Per Available Room (RevPAR) was $68.19 for the 2004 quarter, up 4.7%
from the prior year's level of $65.16.
Financing and Investing Activities
Since the beginning of 2003, we have reduced total debt by over $29 million,
including scheduled principal amortization. Our current portion of long-term
debt ($7.5 million) is attributable to scheduled principal amortization on
various individual hotel mortgages.
Operations Outlook
We forecast that the industry will continue recovery throughout 2004,
generating RevPAR and EBITDA above our 2003 levels. This recovery should
enhance our cash generation and produce favorable results as we focus on
operational efficiencies.
Although we are not developing new hotels, Mr. Hammons personally has numerous
projects in various stages of development, which we will manage upon
completion, including properties in St. Charles and Springfield, Missouri;
Junction City, Kansas; Frisco, Texas; Albuquerque, New Mexico; North
Charleston, South Carolina and Hampton, Virginia.
John Q. Hammons Hotels, Inc. is a leading independent owner and manager of
affordable upscale, full service hotels located primarily in key secondary
markets. We own 47 hotels located in 20 states, containing 11,630 guest rooms
or suites, and manage 12 additional hotels located in seven states, containing
2,889 guest rooms or suites. The majority of these 59 hotels operate under the
Embassy Suites, Holiday Inn and Marriott trade names. Most of our hotels are
located near a state capitol, university, convention center, corporate
headquarters, office park or other stable demand generator. A copy of this
press release announcing our earnings as well as other financial information
will be available in the Investor Relations section of our website at
http://www.jqhhotels.com/ .
NOTE -- FORWARD-LOOKING STATEMENTS: This press release contains "forward-
looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934, regarding, among other things, our operations outlook,
business strategy, prospects and financial position. These statements contain
the words "believe," "anticipate," "estimate," "expect," "forecast," "project,"
"intend," "may," "will," and similar words. These forward-looking statements
are not guarantees of future performance, and involve known and unknown risks,
uncertainties and other factors that may cause our actual results to be
materially different from any future results expressed or implied by such
forward-looking statements. Such factors include, among others:
-- General economic conditions, including the speed and strength of the
economic recovery;
-- The impact of any serious communicable diseases on travel;
-- Competition;
-- Changes in operating costs, particularly energy and labor costs;
-- Unexpected events, such as the September 11, 2001 terrorist attacks,
or outbreaks of war;
-- Risks of hotel operations, such as hotel room supply exceeding
demand, increased energy and other travel costs and general industry
downturns;
-- Seasonality of the hotel business;
-- Cyclical over-building in the hotel and leisure industry;
-- Requirements of franchise agreements, including the right of some
franchisors to immediately terminate their respective agreements if
we breach certain provisions; and
-- Costs of complying with applicable state and federal regulations.
These risks and uncertainties should be considered in evaluating any
forward-looking statements contained in this press release. We undertake no
obligation to update or revise publicly any forward looking statement, whether
as a result of new information, future events or otherwise, other than as
required by law.
- - Tables Attached - -
JOHN Q. HAMMONS HOTELS, INC.
AND COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(000's omitted, except share data)
Three Months Ended Six Months Ended
July 2, July 4, July 2, July 4,
2004 2003 2004 2003
REVENUES:
Rooms $72,157 $68,959 $142,345 $136,362
Food and beverage 29,528 27,390 59,602 56,529
Meeting room rental, related
party management fee and other 13,465 12,315 27,579 25,903
Total revenues 115,150 108,664 229,526 218,794
OPERATING EXPENSES:
Direct operating costs and
expenses:
Rooms 17,673 17,046 34,957 33,326
Food and beverage 23,134 21,982 45,270 43,888
Other 578 701 1,194 1,393
General, administrative, sales
and management service expenses 37,749 33,747 74,106 69,822
Repairs and maintenance 4,968 4,585 9,674 9,038
Asset Impairment 4,619 --- 4,619 ---
Depreciation and amortization 12,079 12,586 24,010 25,067
Total operating expenses 100,800 90,647 193,830 182,534
INCOME FROM OPERATIONS 14,350 18,017 35,696 36,260
OTHER INCOME (EXPENSE):
Other income --- --- --- 175
Interest income 159 156 277 335
Interest expense and
amortization of deferred
financing fees (17,050) (17,595) (34,135) (35,207)
INCOME (LOSS) BEFORE MINORITY
INTEREST AND PROVISION FOR
INCOME TAXES (2,541) 578 1,838 1,563
Minority interest in income
of partnership --- (439) --- (1,187)
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES (2,541) 139 1,838 376
Provision for income taxes (81) (60) (111) (90)
NET INCOME (LOSS) ALLOCABLE TO
THE COMPANY $(2,622) $79 $1,727 $286
BASIC EARNINGS (LOSS) PER SHARE:
Net earnings (loss) allocable
to Company $(0.51) $0.02 $0.34 $0.06
BASIC WEIGHTED AVERAGE SHARES
OUTSTANDING 5,143,119 5,089,728 5,127,195 5,086,778
DILUTED EARNINGS (LOSS) PER SHARE:
Net earnings (loss) allocable
to Company $(0.51) $0.01 $0.29 $0.05
DILUTED WEIGHTED AVERAGE
SHARES OUTSTANDING 5,143,119 5,372,627 5,902,355 5,369,677
JOHN Q. HAMMONS HOTELS, INC.
AND COMPANIES
(Amounts in thousands except earnings per share and operating data)
Three Months Ended Six Months Ended
July 2, July 4, July 2, July 4,
2004 2003 2004 2003
Reconciliation of Net Income to EBITDA:
Net income (loss) ($2,622) $79 $1,727 $286
Provision for income taxes 81 60 111 90
Minority interest in earnings of
partnership 0 439 0 1,187
Interest expense and amortization of
deferred financing fees, net 16,891 17,439 33,858 34,872
Other income 0 0 0 (175)
Depreciation and amortization 12,079 12,586 24,010 25,067
EBITDA (a) (b) $26,429 $30,603 $59,706 $61,327
EBITDA Margin (% of Total Revenue) 23.0% 28.2% 26.0% 28.0%
(a) EBITDA is defined as income before interest income and expense,
income tax expense, depreciation and amortization, minority
interest, extinguishment of debt costs and other income. Management
considers EBITDA to be one measure of operating performance for the
Company before debt service that provides a relevant basis for
comparison, and EBITDA is presented to assist investors in analyzing
the performance of the Company. This information should not be
considered as an alternative to any measure of performance as
promulgated under accounting principles generally accepted in the
United States, nor should it be considered as an indicator of the
overall financial performance of the Company. The Company's
calculation of EBITDA may be different from the calculation used by
other companies and, therefore, comparability may be limited.
(b) EBITDA for the 2004 periods includes an Asset Impairment charge of
$4.6 million.
Three Months Ended Six Months Ended
July 2, July 4, July 2, July 4,
2004 2003 2004 2003
Total Owned Hotels:
Occupancy 67.3% 65.7% 66.4% 64.2%
Average Room Rate $101.35 $99.21 $101.32 $100.29
RevPAR (Room Revenue per available
room) $68.19 $65.16 $67.26 $64.43
July 2, Jan. 2, Jan. 3,
2004 2004 2003
Selected Balance Sheet Data
Current Assets $72,605 $54,022 $52,020
Total Assets $821,680 $822,183 $859,972
Current Liabilities Excluding Debt $41,989 $41,043 $40,789
Current Portion of Long-Term Debt $7,492 $7,423 $13,683
Total Long-Term Debt Including
Current Portion $777,106 $781,072 $806,342
Total Cash and Equivalents, Restricted
Cash and Marketable Securities $81,806 $61,222 $50,368
Net Debt (Total Long-Term Debt less
Total Cash and Equivalents,
Restricted Cash and Marketable
Securities) $695,300 $719,850 $755,974
DATASOURCE: John Q. Hammons Hotels, Inc.
CONTACT: Paul Muellner, Chief Financial Officer of John Q. Hammons
Hotels, Inc., +1-417-864-4300
Web site: http://www.jqhhotels.com/