LA Quinta (NYSE:LQI)
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La Quinta Corporation Announces First Quarter 2005 Financial
Results; Adjusted EBITDA Exceeds Expectations; Company Increases Full Year
Guidance
DALLAS, April 27 /PRNewswire-FirstCall/ -- La Quinta Corporation (NYSE:LQI)
today announced financial results for the first quarter ended March 31, 2005.
The Company will hold a conference call today at 11:00 a.m. (EDT) to discuss
these results and its business.
"Our first quarter results substantially exceeded our expectations," stated
Francis W. ("Butch") Cash, chairman and chief executive officer. "Adjusted
EBITDA of $53 million exceeded our guidance of $47 million due to strong top
line growth driven by increases in average rate and margin expansion. As a
result, we are increasing guidance for the full year."
For the first quarter ended March 31, 2005, the Company reported:
* Total revenues of $171 million, a 33% increase compared to 2004.
* Net loss of $4 million, or ($0.02) per share, versus net loss of
$12 million, or ($0.07) per share, in 2004.
* RevPAR for company owned La Quinta branded hotels of $41.78, a 9%
increase compared to 2004.
* Adjusted EBITDA of $53 million, a 46% increase compared to 2004. A
detailed schedule reconciling net loss to Adjusted EBITDA is included
in the supplemental tables.
Operating Results
RevPAR for company owned La Quinta branded hotels increased 9% during the first
quarter. The improvement was driven primarily by an average rate increase of
8%. La Quinta hotels in the southern Florida region were particularly strong
with RevPAR growth of over 20%. La Quinta hotels in Texas had mixed results,
with RevPAR up modestly in Dallas and San Antonio, down in Houston and up over
15% in Austin.
RevPAR for company owned Baymont branded hotels increased approximately 7%
during the first quarter. Baymont's improvement was driven primarily by rate
increases. Baymont's property management and reservation systems were
successfully converted to La Quinta's systems in mid-March, giving guests the
option to book with any of the Company's brand offerings electronically or
telephonically through an integrated reservations platform.
"We are seeing average daily rate increases for our company owned La Quinta
branded hotels across all of our key revenue channels," said David L. Rea,
president and chief operating officer. "Our electronic distribution channel
showed strong rate and volume increases. Revenues from our proprietary
website, LQ.com, increased 59% for the quarter and were driven primarily by
volume increases. Third party Internet revenues were up modestly as a result
of rate increases. With the systems implementation at Baymont complete, we
believe we can leverage our existing systems to improve the RevPAR performance
for our Baymont branded hotels."
Earlier this month, the Company merged La Quinta's and Baymont's loyalty
programs. Frequency program members are now able to earn and redeem points
across the Company's brands through a program that has been enriched with
additional airline, hotel and retail reward offerings.
During the first quarter, the Company added one La Quinta and two Baymont
franchise hotels to its system of hotels. As of March 31, 2005, the Company
had 10,894 La Quinta branded franchise rooms (126 hotels) and 8,155 Baymont
branded franchise rooms (95 hotels), including one managed hotel.
In January, the Company completed redevelopment of the La Quinta San Antonio
Convention Center. Located in downtown San Antonio -- next to the Convention
Center, the Riverwalk and the Alamo -- the 14-story, 350 room hotel is a
showcase for our chain.
Financial Results
Total revenues for the first quarter 2005 increased 33% over the first quarter
2004. Franchise revenue increased 112% for the first quarter 2005. Other
revenue (including healthcare interest income and restaurant rental income)
decreased 27% for the first quarter 2005. The total revenue increase was
primarily the result of company owned La Quinta branded RevPAR increase of 9%,
the Baymont acquisition and an increase in franchise revenue, partially offset
by reduced interest income from a healthcare note receivable, which was paid
off in 2004.
Net loss was $4 million, or ($0.02) per share, for the first quarter 2005,
versus a net loss of $12 million, or ($0.07) per share, for the first quarter
2004. The improvement from 2004 to 2005 was primarily the result of improved
operating performance at La Quinta owned hotels, an increase in franchise
income and the Baymont acquisition.
Adjusted EBITDA for the first quarter 2005 was $53 million, a 46% increase
compared to $36 million in the first quarter 2004. The increase in Adjusted
EBITDA, which excludes other expense of $2 million principally related to
Baymont integration expenses, was primarily driven by revenue increases at
comparable company owned hotels, strong cost management and an increase in
franchise income, as well as the addition of income from the Baymont
acquisition. Adjusted EBITDA margins improved almost 300 basis points to 31.1%
for the first quarter 2005, reflecting strong flow through from average rate
increases coupled with prudent cost management.
At March 31, 2005, the Company had $80 million in cash and cash equivalents and
no borrowings under its $150 million credit facility, other than $20 million in
letters of credit. The Company's net debt (total indebtedness less cash and
cash equivalents) was $846 million at March 31, 2005.
Current Outlook
For the second quarter 2005, the Company anticipates company owned La Quinta
branded hotel RevPAR to increase approximately 10% compared to the prior year
second quarter. The Company anticipates company owned Baymont branded hotel
RevPAR to increase approximately 9%. Adjusted EBITDA is anticipated to be
approximately $61 million, excluding approximately $1 million for Baymont
integration related expenses. Net income is anticipated to be approximately $1
million.
The Company is increasing its full year 2005 RevPAR and Adjusted EBITDA
guidance. For the full year 2005, the Company now expects approximately 9%
RevPAR growth for company owned La Quinta branded hotels, driven primarily by
rate increases. Expectations for company owned Baymont branded hotels are for
a RevPAR increase of approximately 7%, driven by both rate and occupancy
increases.
Adjusted EBITDA for the full year 2005 is currently anticipated to be
approximately $236 million, an increase of $10 million from prior guidance, and
excludes estimated Baymont integration expenses of $3 million. The Company's
previously published full year 2005 Adjusted EBITDA guidance included an
adverse impact of $2 million assuming the implementation in the second half of
2005 of a new accounting change requiring the expensing of unvested stock
options. With the implementation of that accounting change now expected to
occur in the first quarter 2006, that $2 million is no longer deducted as an
expense from the updated full year 2005 Adjusted EBITDA guidance.
Net loss for 2005 is anticipated to be approximately $1 million. Capital
expenditures for 2005 are anticipated to be approximately $120 million, which
includes funding for the redevelopment of the La Quinta Arlington Convention
Center property, conversions between the La Quinta and Baymont brands,
corporate capital expenditures and maintenance capital expenditures for our
owned Baymont and La Quinta hotels.
The franchise pipeline continues to grow with more than 85 contracts currently
executed for La Quinta and Baymont branded hotels. The Company anticipates
opening at least 50 La Quinta branded hotels and at least 25 Baymont branded
hotels during 2005.
"We are pleased to have delivered strong performance in the first quarter,"
concluded Mr. Cash. "Our ability to improve average rate has exceeded our
initial expectations. By continuing to grow revenues at our La Quinta branded
hotels and leveraging the recent Baymont systems installation, we believe we
can generate additional cash flow to reinvest in growing our company. With
continued growth and improvements at La Quinta and the successful integration
of Baymont, we believe these brands cover our customers' midprice and economy
lodging needs. We are now beginning to consider how to continue enhancing
shareholder value by meeting travelers' other lodging needs through the
addition of lodging brands and/or real estate."
Conference Call and Where You Can Find Additional Information
As previously announced, at 11:00 AM (EDT) today, the Company will hold a
conference call and audio webcast to discuss its financial results and its
business. During the conference call, the Company may discuss and answer one
or more questions concerning business and financial matters and trends
affecting the Company. The Company's responses to these questions, as well as
other matters discussed during the conference call, may contain or constitute
information that has not been previously disclosed.
Simultaneous with the conference call, an audio webcast of the call will be
available via a link on the Company's website, http://www.lq.com/ , in the
Investor Relations-Webcasts section. The conference call can be accessed by
dialing 800-218-0713 (International: 303-205-0033). An access code is not
required. A replay of the call will be available from 1:00 PM (EDT) on April
27, 2005 through 12:59 AM (EDT) on May 5, 2005 by dialing 800-405-2236
(International: 303-590-3000) and entering the access code of 11026438#. The
replay will also be available in the Investor Relations-Webcasts section of the
La Quinta website, http://www.lq.com/ .
About La Quinta Corporation
La Quinta Corporation is one of the largest owner/operators of limited service
hotels in the United States. Based in Dallas, Texas, the Company owns,
operates or franchises more than 590 hotels in 39 states under the La Quinta
Inns(R), La Quinta Inn & Suites(R), Baymont Inn & Suites(R), Woodfield
Suites(R) and Budgetel(R) brands. For reservations or more information about
La Quinta Corporation, its brands or franchising programs, please visit
http://www.lq.com/ .
Safe Harbor Statement
Certain matters discussed in this press release may constitute "forward-
looking statements" within the meaning of Section 27A of the Securities Act of
1933, Section 21E of the Securities Exchange Act of 1934 and the Private
Securities Litigation Reform Act of 1995. Words such as "believes,"
"anticipates," "expects," "intends," "estimates," "projects" and other similar
expressions, which are predictions of or indicate future events and trends,
typically identify forward-looking statements. Our forward-looking statements
are subject to a number of risks and uncertainties, which could cause actual
results or the timing of events to differ materially from those described in
the forward-looking statements. Accordingly, we cannot assure you that the
expectations set forth in these forward-looking statements will be attained.
Some of the factors that could cause actual results or the timing of certain
events to differ from those described in these forward-looking statements
include, without limitation, our ability to successfully grow revenues (through
our revenue initiatives, including our franchising programs, our internet
distribution initiatives and our customer loyalty programs, or otherwise) and
profitability of our lodging business and franchising programs; concentration
of our properties in certain geographic areas; our ability to realize sustained
labor or other cost savings; the availability and costs of insurance for our
properties and business; competition within the lodging industry, including in
the franchising of the La Quinta and Baymont brands; our ability to generate
attractive rates of return on new lodging investments; the cyclicality of the
lodging business; the impact of U.S. military action abroad and/or additional
terrorist activities; the effects of a general economic slowdown, including
decreases in consumer confidence and business spending, which may adversely
affect our business and industry; interest rates; the ultimate outcome of
litigation filed against us; the availability of capital for corporate purposes
including for debt repayment, acquisitions and capital expenditures; the
conditions of the capital markets in general; acquisition-related risks; and
other risks detailed from time to time in our filings with the Securities and
Exchange Commission, including, without limitation, the risks described in our
Joint Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 15, 2005, in the section entitled "Certain Factors You
Should Consider About Our Companies, Our Businesses and Our Securities." We
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or other
changes.
Historical Data of Baymont
La Quinta Corporation acquired substantially all of the assets of The Marcus
Corporation's limited service lodging division on September 3, 2004. The Marcus
Corporation has provided us with a limited amount of unaudited historical
operating data for the acquired properties related to certain periods prior to
the acquisition by La Quinta Corporation. We have recompiled comparable
property and reporting period results for Baymont from this internal, unaudited
data. This data has not been audited or otherwise independently verified by
the Company or its independent auditors, although the Company has no reason to
believe that this data is not accurate in any material respect. As a result,
we will only be disclosing approximate RevPAR changes for Baymont through the
quarter ending September 30, 2005. Beginning with the quarter ending December
31, 2005, we will be able to disclose more detailed comparable operating data
for Baymont.
Statement Concerning Non-GAAP Measurement Tools
The Company uses Adjusted EBITDA as a supplemental measure of the Company's
performance because we believe it gives the reader a more complete
understanding of our financial condition and operating results. We use this
metric to calculate various financial ratios and to measure our performance,
and we believe some debt and equity investors also utilize this metric for
similar purposes. Adjusted EBITDA includes adjustments for non-cash income or
expenses such as depreciation, amortization and other non-cash items. Adjusted
EBITDA is also adjusted for discontinued operations, income taxes, interest
expense, net and minority interest (which includes our preferred stock
dividends of La Quinta Properties, Inc.), as well as certain cash income or
expense that we believe otherwise distorts the comparability of the measure.
Adjusted EBITDA is intended to show unleveraged, pre-tax operating results.
The impact of investing and financing transactions, as well as income taxes,
should also be considered in evaluating overall results. Adjusted EBITDA is not
intended to represent any measure of performance in accordance with accounting
principles generally accepted in the United States ("GAAP") and our calculation
and use of this measure may differ from our competitors. This non-GAAP measure
should not be used in isolation or as a substitute for a measure of performance
or liquidity prepared in accordance with GAAP. A detailed schedule reconciling
GAAP net loss to Adjusted EBITDA is included in the attached supplemental
tables.
Supplemental Schedules
Financial Results A
Other Expense (Income) B
Supplemental Non-GAAP Financial Data C
Other Supplemental Information D
Lodging Statistics E
La Quinta Corporation
Schedule A
Financial Results
(Unaudited)
Three months ended
Operating Data: March 31,
(In thousands, except per share data) 2005 2004
Revenues
Hotel operations $162,481 $122,123
Franchise fees 6,025 2,845
Other 2,636 3,626
Total revenues 171,142 128,594
Expenses
Direct lodging operations 76,497 58,349
Other lodging and operating expenses 22,797 17,594
General and administrative 18,606 16,173
Interest, net of interest income of $507
and $3,022, respectively 18,354 15,538
Depreciation and amortization 34,334 28,622
Impairment of property and equipment 489 5,014
Other expense (income) 2,057 (135)
Total expenses 173,134 141,155
Loss before minority interest, income taxes
and discontinued operations (1,992) (12,561)
Minority interest (4,375) (4,568)
Income tax benefit 2,466 4,955
Loss before discontinued operations (3,901) (12,174)
Income (loss) from discontinued operations,
net of taxes 139 (121)
Net loss $(3,762) $(12,295)
Per Share Data:
Loss before discontinued operations $(0.02) $(0.07)
Loss from discontinued operations,
net of taxes --- ---
Net loss per share - basic and assuming
dilution $(0.02) $(0.07)
Weighted average shares outstanding
Basic 179,352 176,269
Assuming dilution 179,352 176,269
Prior period results have been reclassified to conform to current period
presentation.
La Quinta Corporation
Schedule B
Other Expense (Income)
(Unaudited)
Three months ended
March 31,
(In millions) 2005 2004
Loss on sale of assets and related costs $0.2 $---
Gain on settlement (1) --- (0.3)
Acquisition, retirement plan and other (2) 1.9 0.2
Total other expense (income) $2.1 $(0.1)
(1) During the three months ended March 31, 2004, we settled obligations
related to assets previously sold that resulted in a net gain of
approximately $0.3 million.
(2) During the three months ended March 31, 2005, we recognized expense
of approximately $1.9 million primarily for integration costs
related to our Baymont acquisition.
La Quinta Corporation
Schedule C
Supplemental Non-GAAP Financial Data
(Unaudited)
Three months ended
Adjusted EBITDA Reconciliation March 31,
(In millions) 2005 2004
Net loss (per GAAP) $(3.8) $(12.3)
Add:
Depreciation and amortization 34.3 28.6
Impairment of property and equipment 0.5 5.0
Minority interest 4.4 4.6
Income tax benefit (2.5) (5.0)
Interest, net 18.3 15.5
Other expense (income) (1) 2.1 (0.1)
(Income) loss from discontinued operations,
net of taxes (2) (0.1) 0.1
Adjusted EBITDA (c) (Non-GAAP) $53.2 $36.4
(1) See attached Schedule B for details.
(2) In the first quarter 2005, the Company made the decision to classify
17 hotels as Held for Sale. Loss from discontinued operations for
the three months ended March 31, 2005 and 2004 includes these
17 company owned hotels and 13 company owned hotels (excluding four
Baymont hotels acquired during September 2004), respectively. The
separately identifiable results of operations of these hotels have
been reported as results from discontinued operations for all
periods presented.
(3) Includes $0.6 million and $0.5 million of stock-based compensation
(amortization of restricted stock) for the three months ended
March 31, 2005 and 2004, respectively.
Adjusted EBITDA Reconciliation (Current Outlook)
(In millions) Three months
ended Full Year
June 30, 2005 2005
Net income (loss) (per GAAP) $1 $(1)
Add:
Depreciation and amortization 36 147
Minority interest 5 19
Income tax benefit --- (2)
Interest, net 19 72
Other expense 1 3
Income from discontinued operations,
net of taxes (1) (2)
Adjusted EBITDA (Non-GAAP) $61 $236
La Quinta Corporation
Schedule D
Other Supplemental Information
(Unaudited)
Three months ended
Capital Expenditures March 31,
(In millions) 2005 2004
Capital expenditures $9 $9
Selected Balance Sheet Data
(In millions)
March 31, December 31,
2005 2004
Property and equipment, net $2,402 $2,429
Cash and cash equivalents (A) 80 103
Total assets 2,774 2,813
Total indebtedness (B) 926 926
Total liabilities 1,178 1,217
Minority interest (C) 206 206
Total shareholders' equity (D) 1,390 1,390
Net debt to total capitalization
Equal to (B-A)/(D+C+B-A) 35% 34%
Debt Maturity Schedule
(In millions)
Year March 31, 2005
2005 $116
2006 20
2007 210
2008 50
2009 ---
2010 and thereafter 530
Total debt 926
Less: Cash and cash equivalents (80)
Net debt $846
La Quinta Corporation
Schedule E
Lodging Statistics
(Unaudited)
Three months ended Three months ended
March 31, 2005 March 31, 2004 Change
Occ ADR RevPAR Occ ADR RevPAR Occ ADR RevPAR
Comparable
Hotels (1) 65.5% $63.53 $41.64 64.8% $58.97 $38.23 0.7 pts 7.7% 8.9%
Company
Owned (2)
La Quinta
Inns 62.6% $59.01 $36.96 62.7% $55.51 $34.81 (0.1) pts 6.3% 6.2%
La Quinta
Inn &
Suites
(3) 71.7% $73.59 $52.77 69.9% $66.63 $46.56 1.8 pts 10.4% 13.3%
Subtotal
(La Quinta
owned) 65.4% $63.88 $41.78 64.8% $59.01 $38.24 0.6 pts 8.3% 9.3%
Baymont
Inn &
Suites
(4) 59.3% $54.84 $32.50 N/A N/A N/A N/A N/A N/A
Total
(5) 63.9% $62.45 $39.90 64.8% $59.01 $38.24 (0.9) pts 5.8% 4.3%
Hotel and Room Count Data
March 31, 2005 March 31, 2004
Number of Number of Number of Number of
Hotels Rooms Hotels Rooms
Comparable Hotels (1) 260 34,093 260 34,107
Company-Owned (2)
La Quinta Inns 185 24,026 188 24,427
La Quinta Inn &
Suites (3) 77 10,565 75 10,068
Baymont Inn & Suites 85 8,736 --- ---
Other (5) 10 1,241 --- ---
Franchised/Managed
Hotels (6)
La Quinta Inns 67 6,159 52 5,161
La Quinta Inn & Suites 59 4,735 47 3,764
Baymont Inn & Suites 95 8,155 --- ---
Total 578 63,617 362 43,420
(1) Comparable hotels represent hotels owned and open for both of the
comparable periods, excluding hotels under redevelopment.
Comparable hotels for the three months ended March 31, 2005 and 2004
excludes 13 hotels (1,476 rooms) reported in discontinued operations
and one hotel undergoing redevelopment. The three months ended
March 31, 2004 also excludes two hotels classified as held for sale,
representing 250 rooms in aggregate.
(2) Excludes franchised operations and 17 hotels (1,868 rooms) and
13 hotels (1,476 rooms) reported in discontinued operations for the
three months ended March 31, 2005 and 2004, respectively.
(3) Includes one hotel acquired on December 9, 2004 that was converted
to a La Quinta Inn & Suites.
(4) Represents operating statistics for 85 Baymont Inn & Suites acquired
on September 3, 2004.
(5) Includes seven Woodfield Suites and one Budgetel property acquired
on September 3, 2004 and two hotels acquired on December 9, 2004.
(6) The three months ended March 31, 2005 includes one managed Baymont
Inn & Suites representing 95 rooms.
DATASOURCE: La Quinta Corporation
CONTACT: Temple Weiss, Investor Relations of La Quinta Corporation,
+1-214-492-6600
Web site: http://www.lq.com/