Temple Hotels Inc. Reports 2017 Third Quarter Financial Results
Donnerstag, 09.11.2017 22:50 von PR Newswire
Canada NewsWire
MISSISSAUGA, ON, Nov. 9, 2017
MISSISSAUGA, ON, Nov. 9, 2017 /CNW/ - Temple Hotels Inc. ("Temple" or the "Company") (TSX: TPH) today reported its financial results for the three months ended September 30, 2017 ("third quarter"). The following comments in regard to the financial position and operating results of Temple should be read in conjunction with Management's Discussion & Analysis and the financial statements for the three and nine months ended September 30, 2017, which may be obtained from the Temple website at www.templehotels.ca or the SEDAR website at www.sedar.com.
Monetary data in the tables of this press release, unless otherwise indicated, are in thousands of Canadian dollars, except for per common share, average daily rate ("ADR"), and revenue per available room ("RevPar") amounts.
Q3 2017 KEY POINTS/HIGHLIGHTS
- Revenue increased by $0.8 million or 2% during the three months ended September 30, 2017 compared to 2016, primarily due to an increase in revenue within the Other Canada portfolio of $1.8 million, partially offset by a decrease in revenue within the Fort McMurray and Other Alberta portfolios of $0.8 million and $0.2 million, respectively.
- Hotel operating income decreased by $0.9 million or 5% during the three months ended September 30, 2017 compared to 2016, primarily due to a decrease in hotel operating income within the Fort McMurray and Other Alberta portfolios of $1.6 million and $0.1 million, respectively, partially offset by an increase in hotel operating income within the Other Canada portfolio of $0.8 million.
- FFO increased by $0.3 million during the three months ended September 30, 2017, compared to 2016. On a basic per common share basis, FFO decreased by $0.29 per common share, compared to the third quarter of 2016, primarily as a result of an increase in the weighted average number of common shares outstanding.
- Temple completed the sale of Holiday Inn Express, Sherwood Park, Alberta, on September 15, 2017 for gross proceeds of $9.7 million.
- Subsequent to September 30, 2017, holders of the Series E convertible debentures agreed to extend the maturity date from September 30, 2017 to September 30, 2020, while decreasing the conversion price from $40.08 to $9.75 per common share of Temple. On October 2, 2017, Temple redeemed $2,258 of the principal amount of the Series E debentures outstanding, which represents approximately 5% of the issued and outstanding Series E debentures.
OPERATING RESULTS
|
Three Months Ended |
Nine Months Ended | ||||||
|
2017 |
2016 |
2017 |
2016 | ||||
|
Total revenue |
$46,106 |
$45,280 |
$125,734 |
$123,001 | |||
|
Hotel operating income |
$15,190 |
$16,052 |
$35,306 |
$36,133 | |||
|
Provision for impairment |
($235) |
- |
($235) |
($43,574) | |||
|
Net income (loss) |
$3,355 |
$1,390 |
$495 |
($67,968) | |||
|
Net income (loss) per common share - basic and diluted |
$0.13 |
$0.11 |
$0.02 |
($5.23) | |||
|
Cash flow provided by operating activities |
$8,585 |
$6,572 |
$10,933 |
$11,142 | |||
|
Funds from operations |
$8,170 |
$7,863 |
$14,628 |
$11,268 | |||
|
Per common share |
|||||||
|
‑ Funds from operations |
$0.32 |
$0.61 |
$0.57 |
$0.87 | |||
|
Weighted average number of common shares |
25,351,516 |
13,007,808 |
25,344,724 |
12,996,435 | |||
|
Occupancy |
70% |
69% |
63% |
61% | |||
|
ADR |
$145.52 |
$143.94 |
$139.65 |
$140.98 | |||
|
RevPar |
$101.65 |
$99.32 |
$88.33 |
$85.50 | |||
Operating Activities
- Net Income – Temple completed the third quarter of 2017 with net income of $3.4 million, compared to net income of $1.4 million during the same period in 2016. The increase in net income is mainly due to a decrease in depreciation and amortization of $1.7 million and a decrease in interest expense of $1.3 million, partially offset by a decrease in hotel operating income of $0.9 million. On a per common share basis, net income was $0.13 for the third quarter of 2017, compared to a net income of $0.11 during the third quarter of 2016.
- Occupancy and ADR – The increase in revenue primarily reflects higher occupancy and ADR levels within the Other Canada segment. In the third quarter of 2017, the ADR and occupancy levels of the Other Canada segment increased by $6.88 and 1%, respectively, to $154.64 and 81%, in comparison to the third quarter of 2016. In addition, reduced ADR levels within the Other Alberta and Fort McMurray segments, resulted in a lower operating margin as unfavourable market conditions continue to affect oil-dependent markets in Alberta.
- Cash Provided by Operating Activities – Cash provided by operating activities increased by $2.0 million during the third quarter of 2017, compared to the third quarter of 2016. Excluding working capital adjustments, cash provided by operating activities increased by $0.1 million, compared to 2016.
- Funds from Operations ("FFO") – During the third quarter of 2017, FFO increased by $0.3 million, compared to the third quarter of 2016. On a basic per common share basis, FFO decreased by $0.29 per common share, compared to the third quarter of 2016.
Liquidity and Financing Activities
As of September 30, 2017, the unrestricted cash balance of Temple was $18.2 million and working capital was $12.1 million.
- On August 14, 2017, the Company refinanced a five-loan mortgage portfolio with the incumbent lender. The five loans are cross collateralized and three of the loans were refinanced for a five year term at an interest rate of 5.20% and are not subject to any financial covenants during the first 12 months of the term. As a condition of refinancing, the Company paid down the maturing, aggregate balance by $7.5 million. The fourth mortgage loan of five in the portfolio does not mature until November 2019, and the fifth was subsequently discharged on the disposal of Holiday Inn Express, Sherwood Park, Alberta.
- Temple completed the sale of Holiday Inn Express, Sherwood Park, Alberta, on September 15, 2017 for gross proceeds of $9.7 million and net proceeds of approximately $0.3 million, after repayment of the first mortgage loan and sale costs.
- Subsequent to September 30, 2017, holders of the Series E convertible debentures agreed to extend the maturity date from September 30, 2017 to September 30, 2020, while decreasing the conversion price from $40.08 to $9.75 per common share of Temple.
Investing Activities
As disclosed in the Statement of Cash Flows in the financial statements, the investing activities of Temple resulted in a net cash inflow of $9.3 million during the third quarter of 2017. Investing activities primarily reflect the proceeds from the sale of property and equipment and the cash distribution on equity investments, partially offset by cash outflows related to capital expenditures on hotel properties.
Debt Covenants
At September 30, 2017, the Company was not in compliance with debt service covenants affecting six mortgage loans (December 31, 2016 – nine) in the aggregate amount of $93.9 million (December 31, 2016 – $139.2 million). During the third quarter the Company refinanced a five-loan mortgage portfolio which included a $7.5 million pay down and a condition that the properties are not subject to any financial covenants during the first 12 months of the five year term. Management has been working with lenders throughout the year and the remaining loan covenant breaches are expected to be resolved by debt refinancings, loan modification agreements and/or a waiver of the covenant requirements.
ANALYSIS OF OPERATING RESULTS
|
Analysis of Net Income (Loss) and Comprehensive Net Income (Loss) |
||||||||||||
|
Three Months Ended |
Nine Months Ended | |||||||||||
|
September 30 |
September 30 | |||||||||||
|
2017 |
2016 |
Increase/ |
2017 |
2016 |
Increase/ | |||||||
|
Revenue |
||||||||||||
|
Room revenue |
$36,119 |
$35,426 |
$693 |
$93,614 |
$91,005 |
$2,609 | ||||||
|
Other hotel revenue |
9,987 |
9,854 |
133 |
32,120 |
31,996 |
124 | ||||||
|
Total revenue |
46,106 |
45,280 |
826 |
125,734 |
123,001 |
2,733 | ||||||
|
Hotel operating costs |
30,916 |
29,228 |
(1,688) |
90,428 |
86,868 |
(3,560) | ||||||
|
Hotel operating income |
15,190 |
16,052 |
(862) |
35,306 |
36,133 |
(827) | ||||||
|
Interest expense |
6,753 |
8,017 |
1,264 |
21,431 |
23,915 |
2,484 | ||||||
|
Other expense (income) |
(71) |
(73) |
(2) |
(1,847) |
(256) |
1,591 | ||||||
|
Share based compensation |
37 |
70 |
33 |
103 |
243 |
140 | ||||||
|
General and administrative |
||||||||||||
|
expenses |
905 |
812 |
(93) |
2,511 |
2,485 |
(26) | ||||||
|
Depreciation and amortization |
4,415 |
6,136 |
1,721 |
13,383 |
18,639 |
5,256 | ||||||
|
3,151 |
1,090 |
2,061 |
(275) |
(8,893) |
8,618 | |||||||
|
Equity income on investment in |
||||||||||||
|
hotel properties |
439 |
435 |
4 |
981 |
913 |
68 | ||||||
|
Provision for impairment |
(235) |
- |
(235) |
(235) |
(43,574) |
43,339 | ||||||
|
Change in fair value of financial |
||||||||||||
|
instruments: gain |
- |
- |
- |
- |
90 |
(90) | ||||||
|
Income tax recovery (expense) |
- |
(135) |
135 |
24 |
(16,504) |
16,528 | ||||||
|
Net income (loss) and |
||||||||||||
|
comprehensive income (loss) |
$3,355 |
$1,390 |
$1,965 |
$495 |
($67,968) |
$68,463 | ||||||
|
Per Common Share Results: |
||||||||||||
|
Basic and diluted |
$0.13 |
$0.11 |
$0.02 |
($5.23) |
||||||||
Hotel Revenue
|
Analysis of Total Hotel Revenues | ||||||||||||||||||
|
Three Months Ended September 30 |
Nine Months Ended September 30 | |||||||||||||||||
|
Increase/ |
Increase/ | |||||||||||||||||
|
2017 |
2016 |
(Decrease) |
2017 |
2016 |
(Decrease) | |||||||||||||
|
Same Property |
||||||||||||||||||
|
Fort McMurray |
||||||||||||||||||
|
Room revenue |
$ |
6,239 |
$ |
6,811 |
$ |
(572) |
$ |
17,290 |
$ |
15,701 |
$ |
1,589 | ||||||
|
Other hotel revenue |
277 |
455 |
(178) |
962 |
1,681 |
(719) | ||||||||||||
|
$ |
6,516 |
$ |
7,266 |
$ |
(750) |
$ |
18,252 |
$ |
17,382 |
$ |
870 | |||||||
|
Other Alberta |
||||||||||||||||||
|
Room revenue |
$ |
4,702 |
$ |
4,780 |
$ |
(78) |
$ |
13,109 |
$ |
13,922 |
$ |
(813) | ||||||
|
Other hotel revenue |
3,503 |
3,501 |
2 |
12,812 |
12,991 |
(179) | ||||||||||||
|
$ |
8,205 |
$ |
8,281 |
$ |
(76) |
$ |
25,921 |
$ |
26,913 |
$ |
(992) | |||||||
|
Other Canada |
||||||||||||||||||
|
Room revenue |
$ |
24,691 |
$ |
23,228 |
$ |
1,463 |
$ |
61,387 |
$ |
59,417 |
$ |
1,970 | ||||||
|
Other hotel revenue |
6,202 |
5,890 |
312 |
18,317 |
17,294 |
1,023 | ||||||||||||
|
$ |
30,893 |
$ |
29,118 |
$ |
1,775 |
$ |
79,704 |
$ |
76,711 |
$ |
2,993 | |||||||
|
Total ‑ Same Property |
||||||||||||||||||
|
Room revenue |
$ |
35,632 |
$ |
34,819 |
$ |
813 |
$ |
91,786 |
$ |
89,040 |
$ |
2,746 | ||||||
|
Other hotel revenue |
9,982 |
9,846 |
136 |
32,091 |
31,966 |
125 | ||||||||||||
|
Total hotel revenue |
$ |
45,614 |
$ |
44,665 |
$ |
949 |
$ |
123,877 |
$ |
121,006 |
$ |
2,871 | ||||||
|
Total ‑ Sold Property |
||||||||||||||||||
|
Room revenue |
$ |
487 |
$ |
607 |
$ |
(120) |
$ |
1,828 |
$ |
1,965 |
$ |
(137) | ||||||
|
Other hotel revenue |
5 |
8 |
(3) |
29 |
30 |
(1) | ||||||||||||
|
Total hotel revenue |
$ |
492 |
$ |
615 |
$ |
(123) |
$ |
1,857 |
$ |
1,995 |
$ |
(138) | ||||||
|
Total |
||||||||||||||||||
|
Room revenue |
$ |
36,119 |
$ |
35,426 |
$ |
693 |
$ |
93,614 |
$ |
91,005 |
$ |
2,609 | ||||||
|
Other hotel revenue |
9,987 |
9,854 |
133 |
32,120 |
31,996 |
124 | ||||||||||||
|
Total hotel revenue |
$ |
46,106 |
$ |
45,280 |
$ |
826 |
$ |
125,734 |
$ |
123,001 |
$ |
2,733 | ||||||
During the third quarter of 2017, Same Property room revenue increased by $0.8 million or 2%, compared to the third quarter of 2016. The increase is comprised of a $1.5 million (6%) increase in the Other Canada portfolio, partially offset by a $0.6 million (8%) decrease in the Fort McMurray portfolio and a $0.1 million (2%) decrease in the Other Alberta portfolio.
The increase in Same Property room revenue during the third quarter of 2017, compared to the third quarter of 2016, is largely due to an increase in occupancy and RevPar for the Other Canada segment, partially offset by the continued unfavourable market conditions affecting oil‑dependent markets in the Fort McMurray and Other Alberta segments.
Room Revenue Statistics
As disclosed in the following chart, for the third quarter ended September 30, 2017, RevPar for the Same Property portfolio was $102.26, compared to $99.95 for the third quarter ended September 30, 2016.
For the nine months ended September 30, 2017, RevPar for the Same Property portfolio was $88.54, compared to $85.64 for the nine months ended 2016.
RevPar for the Same Property portfolio generally reflects increased occupancy levels in the Fort McMurray and Other Canada segments, offset by reduced ADR levels in the Fort McMurray and Other Alberta segments.
Occupancy at the Fort McMurray properties increased during the third quarter of 2017 compared to the third quarter of 2016, but is still impacted by the unfavourable market conditions in Alberta.
|
Room Revenue Statistics | ||||||||||||||||
|
Three Months Ended September 30 | ||||||||||||||||
|
2017 |
2016 |
|||||||||||||||
|
Occ |
ADR |
RevPar |
Occ |
ADR |
RevPar | |||||||||||
|
Same Property |
||||||||||||||||
|
Fort McMurray |
54% |
$ |
138.20 |
$ |
73.98 |
53% |
$ |
154.00 |
$ |
81.46 | ||||||
|
Other Alberta |
57% |
$ |
117.90 |
$ |
67.78 |
58% |
$ |
119.75 |
$ |
68.91 | ||||||
|
Other Canada |
81% |
$ |
154.64 |
$ |
125.38 |
80% |
$ |
147.76 |
$ |
118.09 | ||||||
|
Total – Same Property |
70% |
$ |
145.75 |
$ |
102.26 |
69% |
$ |
144.12 |
$ |
99.95 | ||||||
|
Sold Property |
55% |
$ |
130.46 |
$ |
71.13 |
54% |
$ |
135.60 |
$ |
73.42 | ||||||
|
Overall Portfolio |
70% |
$ |
145.52 |
$ |
101.65 |
69% |
$ |
143.94 |
$ |
99.32 | ||||||
|
Room Revenue Statistics | ||||||||||||||||
|
Nine Months Ended September 30 | ||||||||||||||||
|
2017 |
2016 |
|||||||||||||||
|
Occ |
ADR |
RevPar |
Occ |
ADR |
RevPar | |||||||||||
|
Same Property |
||||||||||||||||
|
Fort McMurray |
49% |
$ |
138.65 |
$ |
68.50 |
39% |
$ |
157.97 |
$ |
61.53 | ||||||
|
Other Alberta |
53% |
$ |
120.11 |
$ |
63.69 |
54% |
$ |
125.26 |
$ |
67.41 | ||||||
|
Other Canada |
72% |
$ |
145.23 |
$ |
105.08 |
71% |
$ |
141.23 |
$ |
100.55 | ||||||
|
Total – Same Property |
63% |
$ |
139.83 |
$ |
88.54 |
61% |
$ |
141.18 |
$ |
85.64 | ||||||
|
Sold Property |
60% |
$ |
131.42 |
$ |
79.01 |
60% |
$ |
133.70 |
$ |
79.72 | ||||||
|
Overall Portfolio |
63% |
$ |
139.65 |
$ |
88.33 |
61% |
$ |
140.98 |
$ |
85.50 | ||||||
The above chart does not reflect the operating results for the Cortona Residence, which is 100% leased at an annual net rent of $2.1 million.
Operating Income and Profit Margin
|
Operating Income and Profit Margin |
|||||||||||||||||||
|
Three Months Ended September 30 |
Nine Months Ended September 30 | ||||||||||||||||||
|
Operating Income |
Operating Profit Margin |
Operating Income |
Operating Profit Margin | ||||||||||||||||
|
2017 |
2016 |
2017 |
2016 |
2017 |
2016 |
2017 |
2016 | ||||||||||||
|
Same Property |
|||||||||||||||||||
|
Fort McMurray |
$2,605 |
$4,238 |
40% |
58% |
$6,982 |
$8,204 |
38% |
47% | |||||||||||
|
Other Alberta |
1,191 |
1,243 |
15% |
15% |
3,767 |
4,446 |
15% |
17% | |||||||||||
|
Other Canada |
11,298 |
10,444 |
37% |
36% |
24,061 |
22,937 |
30% |
30% | |||||||||||
|
Total ‑ Same Property |
$15,094 |
$15,925 |
33% |
36% |
$34,810 |
$35,587 |
28% |
29% | |||||||||||
|
Sold Property |
$96 |
$127 |
20% |
21% |
$496 |
$546 |
27% |
27% | |||||||||||
|
Total portfolio |
$15,190 |
$16,052 |
33% |
35% |
$35,306 |
$36,133 |
28% |
29% | |||||||||||
After accounting for the increase in total revenues and the increase in hotel operating costs, operating income decreased by $0.9 million or 5% during the third quarter of 2017, compared to the third quarter of 2016. The decrease is comprised of a decrease of $1.6 million or 39% for the Fort McMurray segment and a decrease of $0.1 million or 4% for the Other Alberta segment, partially offset by an increase of $0.8 million or 8% in operating income for the Fort McMurray segment.
For the first nine months of 2017, operating income decreased by $0.8 million or 2% compared to the first nine months of 2016, which was comprised of a decrease of $1.2 million or 15% for the Fort McMurray segment, a decrease of $0.7 million or 15% for the Other Alberta segment and a decrease of $0.1 million for the Sold Property segment, partially offset by an increase of $1.1 million or 5% in operating income for the Fort McMurray segment.
As disclosed in the preceding chart, the overall profit margin of the entire hotel portfolio was at 33% for the third quarter of 2017 compared to 35% for the third quarter of 2016. For the nine months ended September 30, 2017, the overall profit margin was 28%, compared to 29% for the nine months ended September 30, 2016.
ABOUT TEMPLE
Temple is a growth oriented hotel investment company with hotel properties located across Canada. Temple is listed on the Toronto Stock Exchange under the symbols TPH (common shares), TPH.DB.E and TPH.DB.F (convertible debentures). The primary long‑term investment objectives of the Company are to yield stable and growing cash flows and to maximize the long‑term share value of the Company through the active management of its assets, accretive acquisitions, and the performance of value‑added capital improvement programs on selected properties, as deemed appropriate. For further information on Temple, please visit our website at www.templehotels.ca.
This press release contains certain statements that could be considered as forward-looking information. The forward-looking information is subject to certain risks and uncertainties, which could result in actual results differing materially from the forward-looking statements.
SOURCE Temple Hotels Inc.