IRVING, Texas, Oct. 22, 2014 /PRNewswire/ -- La Quinta Holdings
Inc. (NYSE: LQ) today reported its third quarter 2014 results on a
pro forma basis, giving effect to La Quinta's initial public
offering (IPO) and the related transactions as described below, as
well as the results of operations for the third quarter 2014 on a
historical basis.
Third Quarter 2014 Highlights:
- Pro forma total Adjusted EBITDA increased 13.6 percent to
$109.3 million, and Pro forma
Adjusted EBITDA margin increased 130 basis points
- Pro forma net income increased 17.9 percent to $21.0 million; historical net income was
$12.8 million
- Pro forma earnings per share increased to $0.16; historical earnings per share was
$0.10
- System-wide comparable RevPAR increased 8.9 percent, ADR
increased 4.6 percent and occupancy increased 282 basis
points
- Pro forma Franchise and Management Segment Adjusted EBITDA
increased 12.4 percent to $29.1
million
- Grew existing franchise base by 8% over the last twelve
months with minimal capital investment. Increased franchise
pipeline to 196 hotels, including over 16,000 additional
rooms.
- Opened 500th franchise property, bringing total system room
count to over 85,000
- Maintained commitment to balance sheet de-levering strategy
by voluntarily paying down an additional $75
million of long-term debt with free cash flow. Year to date
voluntary debt pay downs total $155
million.
- Raises full year 2014 guidance
Overview
Wayne B. Goldberg,
President & Chief Executive Officer of La Quinta, said,
"Our third quarter results demonstrate another quarter of solid
performance delivered across our key metrics, including strong
RevPAR, franchise unit, and EBITDA growth, and EBITDA margin
expansion. Overall, the lodging industry remains healthy, with
a steadily improving economy and strong transient travel
demand. La Quinta is extremely well-positioned to continue to
capture this demand as we capitalize on our refreshed and upgraded
portfolio and our repositioned brand. Over the last twelve months,
we have grown our franchise base 8% and, in the third quarter,
opened our 500th franchise property. This unit
growth, along with our increased occupancy, allows our geographic
reach and customer base to continue to grow. Franchise
interest in the La Quinta brand remains robust and our ongoing
system growth is further supported by a continued strong
pipeline. Furthermore, we have continued to de-lever our
balance sheet and we remain focused on our strategic objectives,
all of which are designed to increase shareholder value."
The results of operations for the Company, on a pro forma basis
and on a historical basis, for the three months ended
September 30, 2014 include the following
highlights(1) ($ in thousands, except per share
amounts):
|
|
|
|
|
|
|
|
Pro
Forma
|
Historical
|
|
Three Months Ended September
30,
|
Three Months Ended September
30,
|
|
2014
|
2013
|
% chg
|
2014
|
2013
|
% chg
|
Total
Revenue
|
$271,118
|
$246,488
|
10.0 %
|
$271,118
|
$238,035
|
13.9 %
|
Franchise and
Management Segment Adj.
EBITDA
|
29,054
|
25,859
|
12.4 %
|
29,054
|
15,233
|
NM(2)
|
Owned Hotels Segment
Adj. EBITDA
|
87,951
|
76,565
|
14.9%
|
87,951
|
88,997
|
NM(2)
|
Total Adj.
EBITDA
|
109,297
|
96,238
|
13.6 %
|
109,297
|
93,747
|
16.6 %
|
Total Adj. EBITDA
margin
|
40.3 %
|
39.0 %
|
|
40.3 %
|
39.4 %
|
|
Operating Income
Margin
|
22.0%
|
21.7 %
|
|
20.0 %
|
21.7 %
|
|
Net Income
attributable to La Quinta Holdings' stockholders
|
20,997
|
17,812
|
17.9%
|
12,817
|
22,570
|
(43.2) %
|
Earnings per share –
basic and diluted
|
0.16
|
0.15
|
6.6%
|
0.10
|
0.19
|
(47.4) %
|
Adjusted Net
Income
|
|
|
|
18,237
|
22,570
|
(19.2) %
|
(1)
|
Please see the
schedules to this press release for an explanation of the basis of
the pro forma presentation and 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 as
if these fees had been in place for all periods
presented.
|
(2)
|
Changes in terms of
percentage is not meaningful.
|
Comparable hotel
statistics
|
Three months
ended
September 30,
2014
|
Variance
2014 vs.
2013
|
Owned
Hotels
|
|
|
Occupancy
|
70.9 %
|
306 bps
|
ADR
|
$
80.04
|
4.5 %
|
RevPAR
|
$
56.78
|
9.2 %
|
Franchised
Hotels
|
|
|
Occupancy
|
72.6 %
|
252 bps
|
ADR
|
$
93.25
|
4.9 %
|
RevPAR
|
$
67.67
|
8.7 %
|
System-wide
|
|
|
Occupancy
|
71.7 %
|
282 bps
|
ADR
|
$
85.91
|
4.6 %
|
RevPAR
|
$
61.56
|
8.9 %
|
Development
Over the last twelve months, the Company has grown its franchise
base 8% and, in the third quarter, opened its 500th
franchise property. During the third quarter, the Company
opened 7 franchised hotels with over 600 rooms and achieved net
system-wide growth of 6 hotels with approximately 500 rooms.
The Company has opened 31 franchised hotels with approximately
3,000 rooms through September 30,
2014 and, consistent with a recent history of over 40% of
annual franchise hotel openings occurring in the fourth quarter,
remains on track to open 45 to 50 hotels in 2014. As of
September 30, 2014, the Company had a pipeline of 196
franchised hotels totaling over 16,000 rooms, to be located in
the United States, Mexico, Canada, Colombia, Honduras, Nicaragua, and Guatemala.
The Company's system-wide portfolio, as of September 30,
2014, consisted of 854 hotels representing approximately 85,500
rooms located predominantly across 47 U.S. states, as well as in
Canada and Mexico. This portfolio includes 353 owned and
operated hotels and 501 franchised hotels.
|
|
|
|
|
|
September 30,
2014
|
September 30,
2013
|
|
# of hotels
|
# of rooms
|
# of hotels
|
# of rooms
|
Owned
(1)
|
352
|
44,800
|
355
|
45,200
|
Joint
Venture
|
1
|
200
|
1
|
200
|
Previously Managed
Hotels(2)
|
—
|
—
|
14
|
1,700
|
Franchised
|
501
|
40,500
|
466
|
37,300
|
|
|
|
|
|
Totals
|
854
|
85,500
|
836
|
84,400
|
|
|
|
|
|
(1)
|
For September 30,
2013, Owned hotels includes 17 hotels designated as assets held for
sale, all of which have been sold as of September 30,
2014.
|
(2)
|
At the time of the
IPO, April 14, 2014, we acquired the Previously Managed
Hotels; as such they are included in Owned hotels as of September
30, 2014.
|
Balance Sheet and Liquidity
During the quarter, the Company made a voluntary prepayment of
$75.0 million on its senior secured
term loan facility, for a total of $155.0
million of voluntary prepayments in 2014. As of
September 30, 2014, the Company had approximately $1.9 billion of outstanding indebtedness with a
weighted average interest rate of approximately 4.5%, including the
impact of an interest rate swap. Total cash and cash equivalents
was $108.5 million as of
September 30, 2014.
Outlook
Based upon management's current estimates, the Company is
increasing its guidance for full year 2014 and is expecting:
|
|
|
|
Updated
Guidance
|
Prior
Guidance
|
RevPAR growth on a system-wide comparable hotel
basis
|
7.0 percent to 7.5
percent
|
6.0 percent to 7.0
percent
|
|
|
|
Pro forma Adjusted
EBITDA
|
$370 million to $375
million
|
$367 million to $372
million
|
|
|
|
Capital
expenditures
|
$75 million to $79
million
|
$71 million to $77
million
|
|
|
|
Franchise hotel
openings
|
45 to 50
|
45 to 50
|
Webcast and Conference Call
La Quinta Holdings Inc. will host a conference call to discuss
third quarter 2014 results on Wednesday, October 22, 2014 at
5:00 p.m. Eastern 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 22, 2014 through midnight Eastern Time on November 5, 2014. 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
13591706. 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
prospectus dated April 8, 2014, filed with the Securities and
Exchange Commission ("SEC") pursuant to Rule 424(b) of the
Securities Act on April 9, 2014, 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. 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 850 La Quinta
Inn & Suites™ and La Quinta Inn™ branded hotels
representing more than 85,000 rooms located in 47 states, as well
as Canada and Mexico. La
Quinta's team is committed to providing guests with a refreshing
and engaging experience. For more information, please visit:
www.LQ.com.
LA QUINTA HOLDINGS
INC.
|
HISTORICAL
STATEMENTS OF OPERATIONS
|
(unaudited, in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
September 30,
|
Nine months
ended
September 30,
|
|
2014
|
2013
|
2014
|
2013
|
Revenues:
|
|
|
|
|
Room
revenues
|
$ 234,658
|
$ 205,741
|
$ 649,181
|
$ 585,294
|
Franchise and other
fee-based revenues
|
25,224
|
22,226
|
68,215
|
59,846
|
Other hotel
revenues
|
5,078
|
4,657
|
14,809
|
13,650
|
|
|
|
|
|
|
264,960
|
232,624
|
732,205
|
658,790
|
Brand marketing fund
revenues from franchise and managed properties
|
6,158
|
5,411
|
16,511
|
14,594
|
|
|
|
|
|
Total
revenues
|
271,118
|
238,035
|
748,716
|
673,384
|
Operating
expenses:
|
|
|
|
|
Direct lodging
expenses
|
101,076
|
91,567
|
285,430
|
264,208
|
Depreciation and
amortization
|
45,086
|
41,484
|
129,948
|
122,694
|
General and
administrative expenses
|
32,251
|
12,989
|
100,863
|
49,724
|
Other lodging and
operating expenses
|
15,589
|
13,346
|
46,124
|
39,666
|
Marketing, promotional
and other advertising expenses
|
16,639
|
21,560
|
50,170
|
54,226
|
Impairment
loss
|
—
|
—
|
5,157
|
—
|
|
|
|
|
|
|
210,641
|
180,946
|
617,692
|
530,518
|
Brand marketing fund
expenses from franchise and managed properties
|
6,158
|
5,411
|
16,511
|
14,594
|
|
|
|
|
|
Total operating
expenses
|
216,799
|
186,357
|
634,203
|
545,112
|
|
|
|
|
|
Operating
income
|
54,319
|
51,678
|
114,513
|
128,272
|
Other income
(expenses):
|
|
|
|
|
Interest expense,
net
|
(24,495)
|
(38,228)
|
(97,260)
|
(110,746)
|
Loss on extinguishment
of debt, net
|
—
|
—
|
(2,030)
|
—
|
Other income
(loss)
|
(795)
|
591
|
(1,096)
|
1,057
|
|
|
|
|
|
Total other income
(expenses)
|
(25,290)
|
(37,637)
|
(100,386)
|
(109,689)
|
Income from
continuing operations before income taxes
|
29,029
|
14,041
|
14,127
|
18,583
|
Income tax
provision
|
(16,162)
|
(1,006)
|
(21,860)
|
(2,526)
|
Recognition of net
deferred tax liabilities upon C-corporation conversion
|
—
|
—
|
(321,054)
|
—
|
|
|
|
|
|
Net Income (Loss)
from continuing operations, net of tax
|
12,867
|
13,035
|
(328,787)
|
16,057
|
Income (Loss) on
discontinued operations, net of tax
|
—
|
9,941
|
(503)
|
(6,303)
|
|
|
|
|
|
Net income
(loss)
|
12,867
|
22,976
|
(329,290)
|
9,754
|
Income from
noncontrolling interests in continuing operations, net of
tax
|
(50)
|
(406)
|
(3,814)
|
(1,106)
|
Income from
noncontrolling interests in discontinued operations, net of
tax
|
—
|
—
|
—
|
—
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
(50)
|
(406)
|
(3,814)
|
(1,106)
|
Amounts attributable
to La Quinta Holdings' stockholders
|
|
|
|
|
Income (loss) from
continuing operations, net of tax
|
12,817
|
12,629
|
(332,601)
|
14,951
|
Income (loss) from
discontinued operations, net of tax
|
—
|
9,941
|
(503)
|
(6,303)
|
|
|
|
|
|
Net income (loss)
attributable to La Quinta Holdings' stockholders
|
$
12,817
|
$ 22,570
|
$ (333,104)
|
$
8,648
|
|
|
|
|
|
RECONCILIATIONS
Prior to the IPO, 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
the refinancing transactions described below (together with the
IPO, the "IPO Transactions").
The unaudited pro forma financial data for the three-month and
nine month periods ended September 30, 2014 and 2013 are
presented as if the IPO Transactions all had occurred on
January 1, 2013 for the purposes of the unaudited pro forma
combined statements of operations. 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 initial income tax impact of the La Quinta Predecessor
Entities and the Previously Managed Portfolio being owned by a "C"
corporation, 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, and a reconciliation of Adjusted Net Income and
Adjusted Earnings Per Share to Net Income and Earnings Per Share.
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 Adjusted Net Income and
Adjusted Earnings Per Share provides meaningful information because
it 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", "Adjusted Net Income" and "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
September 30, 2014
|
Three months ended
September 30, 2013
|
|
Historical
|
Adjustments
|
Pro Forma
|
Historical
|
Adjustments
|
Pro Forma
|
Revenues:
|
|
|
Room
revenues
|
$ 234,658
|
$
—
|
$ 234,658
|
$ 205,741
|
$
9,112
|
$ 214,853
|
Franchise and other
fee-based revenues
|
25,224
|
—
|
25,224
|
22,226
|
(547 )
|
21,679
|
Other hotel
revenues
|
5,078
|
—
|
5,078
|
4,657
|
116
|
4,773
|
|
|
|
|
|
|
|
|
264,960
|
—
|
264,960
|
232,624
|
8,681
|
241,305
|
Brand marketing fund
revenues from franchise and managed properties
|
6,158
|
—
|
6,158
|
5,411
|
(228)
|
5,183
|
|
|
|
|
|
|
|
Total
revenues
|
271,118
|
—
|
271,118
|
238,035
|
8,453
|
246,488
|
Operating
expenses:
|
|
|
Direct lodging
expenses
|
101,076
|
—
|
101,076
|
91,567
|
5,002
|
96,569
|
Depreciation and
amortization
|
45,086
|
(31)
|
45,055
|
41,484
|
1,549
|
43,033
|
General and
administrative expenses
|
32,251
|
(5,393)
|
26,858
|
12,989
|
(143)
|
12,846
|
Other lodging and
operating
expenses
|
15,589
|
—
|
15,589
|
13,346
|
423
|
13,769
|
Marketing, promotional
and other advertising expenses
|
16,639
|
—
|
16,639
|
21,560
|
—
|
21,560
|
|
|
|
|
|
|
|
|
210,641
|
(5,424)
|
205,217
|
180,946
|
6,831
|
187,777
|
Brand marketing fund
expenses from franchise and managed properties
|
6,158
|
—
|
6,158
|
5,411
|
(228)
|
5,183
|
|
|
|
|
|
|
|
Total operating
expenses
|
216,799
|
(5,424)
|
211,375
|
186,357
|
6,603
|
192,960
|
|
|
|
|
|
|
|
Operating
income
|
54,319
|
5,424
|
59,743
|
51,678
|
1,850
|
53,528
|
Other income
(expenses):
|
|
|
Interest expense,
net
|
(24,495)
|
625
|
(23,870)
|
(38,228)
|
13,848
|
(24,380)
|
Other income
(loss)
|
(795)
|
—
|
(795)
|
591
|
—
|
591
|
|
|
|
|
|
|
|
Total other income
(expenses)
|
(25,290)
|
625
|
(24,665)
|
(37,637)
|
13,848
|
(23,789)
|
Income from
continuing operations before income taxes
|
29,029
|
6,049
|
35,078
|
14,041
|
15,698
|
29,739
|
Income tax
provision
|
(16,162)
|
2,131
|
(14,031)
|
(1,006)
|
(10,889)
|
(11,895)
|
|
|
|
|
|
|
|
Income from
continuing operations, net of tax
|
12,867
|
8,180
|
21,047
|
13,035
|
4,809
|
17,844
|
Net income
(1)
|
12,867
|
8,180
|
21,047
|
13,035
|
4,809
|
17,844
|
Income from
noncontrolling interests in continuing operations, net of
tax.
|
(50)
|
—
|
(50)
|
(406)
|
374
|
(32)
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests (1)
|
(50)
|
—
|
(50)
|
(406)
|
374
|
(32)
|
|
|
|
|
|
|
|
Amounts attributable
to La Quinta Holdings' stockholders
|
|
|
Income from continuing
operations, net of tax
|
12,817
|
8,180
|
20,997
|
12,629
|
5,183
|
17,812
|
|
|
|
|
|
|
|
Net income
attributable to La Quinta Holdings' stockholders
(1)
|
$
12,817
|
$
8,180
|
$ 20,997
|
$ 12,629
|
$
5,183
|
$ 17,812
|
|
|
|
|
|
|
|
(1)
|
Excludes the impact
of the Company's discontinued operations on a historical and pro
forma basis for the periods presented
|
PRO FORMA
FINANCIAL INFORMATION AND NET INCOME RECONCILIATION
|
(unaudited, in
thousands)
|
|
|
|
|
|
|
|
|
Nine months ended
September 30, 2014
|
Nine months ended
September 30, 2013
|
|
Historical
|
Adjustments
|
Pro Forma
|
Historical
|
Adjustments
|
Pro Forma
|
Revenues:
|
|
|
Room
revenues
|
$ 649,181
|
$
12,814
|
$ 661,995
|
$ 585,294
|
$
29,151
|
$ 614,445
|
Franchise and other
fee-based revenues
|
68,215
|
(732)
|
67,483
|
59,846
|
(1,738)
|
58,108
|
Other hotel
revenues
|
14,809
|
159
|
14,968
|
13,650
|
349
|
13,999
|
|
|
|
|
|
|
|
|
732,205
|
12,241
|
744,446
|
658,790
|
27,762
|
686,552
|
Brand marketing fund
revenues from franchise and managed properties
|
16,511
|
(321)
|
16,190
|
14,594
|
(729)
|
13,865
|
|
|
|
|
|
|
|
Total
revenues
|
748,716
|
11,920
|
760,636
|
673,384
|
27,033
|
700,417
|
Operating
expenses:
|
|
|
Direct lodging
expenses
|
285,430
|
5,832
|
291,262
|
264,208
|
14,884
|
279,092
|
Depreciation and
amortization
|
129,948
|
1,573
|
131,521
|
122,694
|
4,812
|
127,506
|
General and
administrative expenses
|
100,863
|
(31,617)
|
69,246
|
49,724
|
(94)
|
49,630
|
Other lodging and
operating expenses
|
46,124
|
944
|
47,068
|
39,666
|
2,084
|
41,750
|
Marketing, promotional
and other advertising expenses
|
50,170
|
—
|
50,170
|
54,226
|
—
|
54,226
|
Impairment
loss
|
5,157
|
—
|
5,157
|
—
|
—
|
—
|
|
|
|
|
|
|
|
|
617,692
|
(23,268)
|
594,424
|
530,518
|
21,686
|
552,204
|
Brand marketing fund
expenses from franchise and managed properties
|
16,511
|
(321)
|
16,190
|
14,594
|
(729)
|
13,865
|
|
|
|
|
|
|
|
Total operating
expenses
|
634,203
|
(23,589)
|
610,614
|
545,112
|
20,957
|
566,069
|
|
|
|
|
|
|
|
Operating
income
|
114,513
|
35,509
|
150,022
|
128,272
|
6,076
|
134,348
|
Other income
(expenses):
|
|
|
Interest expense,
net
|
(97,260)
|
25,768
|
(71,492)
|
(110,746)
|
36,845
|
(73,901)
|
Loss on extinguishment
of debt, net
|
(2,030)
|
2,030
|
—
|
—
|
—
|
—
|
Other income
(loss)
|
(1,096)
|
—
|
(1,096)
|
1,057
|
—
|
1,057
|
|
|
|
|
|
|
|
Total other income
(expenses)
|
(100,386)
|
27,798
|
(72,588)
|
(109,689)
|
36,845
|
(72,844)
|
Income from
continuing operations before income taxes
|
14,127
|
63,307
|
77,434
|
18,583
|
42,921
|
61,504
|
Income tax
provision
|
(21,860)
|
(9,113)
|
(30,973)
|
(2,526)
|
(22,076)
|
(24,602)
|
Recognition of net
deferred tax liabilities upon C-corporation conversion
|
(321,054)
|
321,054
|
—
|
—
|
—
|
—
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations, net of tax
|
(328,787)
|
375,248
|
46,461
|
16,057
|
20,845
|
36,902
|
Net income
(loss) (1)
|
(328,787)
|
375,248
|
46,461
|
16,057
|
20,845
|
36,902
|
Income loss from
noncontrolling interests in continuing operations, net of
tax
|
(3,814)
|
3,489
|
(325)
|
(1,106)
|
803
|
(303)
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests (1)
|
(3,814)
|
3,489
|
(325)
|
(1,106)
|
803
|
(303)
|
|
|
|
|
|
|
|
Amounts attributable
to La Quinta Holdings' stockholders
|
|
|
Income (loss) from
continuing operations, net of tax
|
(332,601)
|
378,737
|
46,136
|
14,951
|
21,648
|
36,599
|
|
|
|
|
|
|
|
Net income (loss)
attributable to La Quinta Holdings' stockholders
(1)
|
$ (332,601)
|
$
378,737
|
$ 46,136
|
$ 14,951
|
$
21,648
|
$ 36,599
|
|
|
|
|
|
|
|
(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, 2014
|
September 30, 2013
|
September 30, 2014
|
September 30, 2013
|
Operating
income
|
$
59,743
|
$
53,528
|
$
54,319
|
$
51,678
|
Interest expense,
net
|
(23,870)
|
(24,380)
|
(24,495)
|
(38,228)
|
Other income
(loss)
|
(795)
|
591
|
(795 )
|
591
|
Income tax
provision
|
(14,031)
|
(11,895)
|
(16,162)
|
(1,006)
|
Income from
noncontrolling interest
|
(50)
|
(32)
|
(50)
|
(406)
|
Income on discontinued
operations, net of tax
|
—
|
—
|
—
|
9,941
|
|
|
|
|
|
Net Income (Loss)
Attributable to La Quinta Holdings' stockholders
|
20,997
|
17,812
|
12,817
|
22,570
|
|
|
|
|
|
Interest
expense
|
23,875
|
24,438
|
24,500
|
38,290
|
Income tax
provision
|
14,031
|
11,895
|
16,162
|
969
|
Depreciation and
amortization
|
45,321
|
43,357
|
45,352
|
41,796
|
Non-controlling
interest
|
50
|
32
|
50
|
406
|
|
|
|
|
|
EBITDA
|
104,274
|
97,534
|
98,881
|
104,031
|
|
|
|
|
|
Income from
discontinued operations
|
—
|
—
|
—
|
(1,533)
|
Gain on sale from
discontinued operations
|
—
|
—
|
—
|
(7,694)
|
(Gain) loss on
retirement of assets
|
—
|
—
|
—
|
(4)
|
Gain related to
casualty disasters
|
(108)
|
(506)
|
(108)
|
(739)
|
Equity based
compensation
|
3,207
|
—
|
8,600
|
—
|
Other (gains) losses,
net
|
1,924
|
(790)
|
1,924
|
(314)
|
|
|
|
|
|
Adjusted
EBITDA
|
$
109,297
|
$
96,238
|
$
109,297
|
$
93,747
|
|
|
|
|
|
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, 2014
|
September 30, 2013
|
September 30, 2014
|
September 30, 2013
|
Operating
income
|
$
150,022
|
$
134,348
|
$
114,513
|
$
128,272
|
Interest expense,
net
|
(71,492)
|
(73,901)
|
(97,260)
|
(110,746)
|
Other income
(loss)
|
(1,096)
|
1,057
|
(1,096)
|
1,057
|
Loss on extinguishment
of debt, net
|
—
|
—
|
(2,030)
|
—
|
Income tax
provision
|
(30,973)
|
(24,602)
|
(21,860)
|
(2,526)
|
Recognition of net
deferred tax liabilities upon C-corporation conversion
|
—
|
—
|
(321,054)
|
—
|
Income from
noncontrolling interest
|
(325)
|
(303)
|
(3,814)
|
(1,106)
|
Loss on discontinued
operations, net of tax
|
—
|
—
|
(503)
|
(6,303)
|
|
|
|
|
|
Net Income (Loss)
Attributable to La Quinta Holdings' stockholders
|
46,136
|
36,599
|
(333,104)
|
8,648
|
|
|
|
|
|
Interest
expense
|
71,532
|
74,059
|
97,300
|
110,908
|
Income tax
provision
|
30,973
|
24,602
|
21,860
|
2,573
|
Recognition of net
deferred tax liabilities upon C-corporation conversion
|
—
|
—
|
321,054
|
—
|
Depreciation and
amortization
|
132,288
|
128,489
|
130,711
|
128,711
|
Non-controlling
interest
|
325
|
303
|
3,814
|
1,106
|
|
|
|
|
|
EBITDA
|
281,254
|
264,052
|
241,635
|
251,946
|
|
|
|
|
|
Fixed asset impairment
loss
|
5,157
|
—
|
5,308
|
19,913
|
(Income) loss from
discontinued operations
|
—
|
—
|
377
|
(8,420)
|
Gain on sale from
discontinued operations
|
—
|
—
|
—
|
(7,694)
|
Loss on retirement of
assets
|
—
|
51
|
—
|
47
|
Gain related to
casualty disasters
|
(1,098)
|
(1,524)
|
(1,106)
|
(2,611)
|
Loss on extinguishment
of debt, net
|
—
|
—
|
2,030
|
—
|
Equity based
compensation
|
8,036
|
—
|
39,703
|
—
|
Other (gains) losses,
net
|
2,570
|
849
|
2,312
|
3,034
|
|
|
|
|
|
Adjusted
EBITDA
|
$
295,919
|
$
263,428
|
$
290,259
|
$
256,215
|
|
|
|
|
|
PRO FORMA AND
HISTORICAL SEGMENT REVENUES AND ADJUSTED EBITDA
RECONCILIATION
|
(unaudited, in
thousands)
|
|
|
|
|
|
|
|
|
Three months ended
September 30, 2014
|
Three months ended
September 30, 2013
|
|
Historical
|
Adjustments
|
Pro
Forma
|
Historical
|
Adjustments
(1)
|
Pro
Forma
|
Revenues:
|
|
|
Owned
hotels
|
$ 241,266
|
$
—
|
$ 241,266
|
$ 211,569
|
$
8,057
|
$ 219,626
|
Franchise and
management
|
29,054
|
—
|
29,054
|
15,233
|
10,626
|
25,859
|
|
|
|
|
|
|
|
Segment
revenues
|
270,320
|
—
|
270,320
|
226,802
|
18,683
|
245,485
|
Other fee-based
revenues from franchise and managed properties
|
6,158
|
—
|
6,158
|
5,411
|
(228)
|
5,183
|
Corporate and
other
|
34,026
|
—
|
34,026
|
26,733
|
4,297
|
31,030
|
Intersegment
elimination
|
(39,386)
|
—
|
(39,386)
|
(20,911)
|
(14,299)
|
(35,210)
|
|
|
|
|
|
|
|
Total
revenues
|
$ 271,118
|
$
—
|
$ 271,118
|
$ 238,035
|
$
8,453
|
$ 246,488
|
|
|
|
|
|
|
|
Adjusted
EBITDA:
|
|
|
|
Owned
hotels
|
$ 87,951
|
$
—
|
$ 87,951
|
$ 88,997
|
$
(12,432)
|
$ 76,565
|
Franchise and
management
|
29,054
|
—
|
29,054
|
15,233
|
10,626
|
25,859
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA
|
117,005
|
—
|
117,005
|
104,230
|
(1,806 )
|
102,424
|
Corporate and
other
|
(7,708)
|
—
|
(7,708)
|
(10,483)
|
4,297
|
(6,186)
|
|
|
|
|
|
|
|
Total Adjusted
EBITDA
|
$ 109,297
|
$
—
|
$ 109,297
|
$ 93,747
|
$
2,491
|
$ 96,238
|
|
|
|
|
|
|
|
(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, 2013;
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, 2013. 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.
|
PRO FORMA AND
HISTORICAL SEGMENT REVENUES AND ADJUSTED EBITDA
RECONCILIATION
|
(unaudited, in
thousands)
|
|
|
|
|
|
|
|
|
Nine months ended
September 30, 2014
|
Nine months ended
September 30, 2013
|
|
Historical
|
Adjustments
(1)
|
Pro
Forma
|
Historical
|
Adjustments
(1)
|
Pro
Forma
|
Revenues:
|
|
|
Owned
hotels
|
$ 667,564
|
$
10,929
|
$ 678,493
|
$ 601,504
|
$
26,940
|
$ 628,444
|
Franchise and
management
|
68,977
|
11,729
|
80,706
|
42,232
|
30,146
|
72,378
|
|
|
|
|
|
|
|
Segment
revenues
|
736,541
|
22,658
|
759,199
|
643,736
|
57,086
|
700,822
|
Other fee-based
revenues from franchise and managed properties
|
16,511
|
(321)
|
16,190
|
14,594
|
(729 )
|
13,865
|
Corporate and
other
|
88,054
|
4,633
|
92,687
|
74,424
|
12,289
|
86,713
|
Intersegment
elimination
|
(92,390)
|
(15,050)
|
(107,440)
|
(59,370)
|
(41,613)
|
(100,983)
|
|
|
|
|
|
|
|
Total
revenues
|
$ 748,716
|
$
11,920
|
$ 760,636
|
$ 673,384
|
$
27,033
|
$ 700,417
|
|
|
|
|
|
|
|
Adjusted
EBITDA:
|
|
|
|
Owned
hotels
|
$ 249,226
|
$
(10,702)
|
$ 238,524
|
$ 246,171
|
$
(35,222)
|
$ 210,949
|
Franchise and
management
|
68,977
|
11,729
|
80,706
|
42,232
|
30,146
|
72,378
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA
|
318,203
|
1,027
|
319,230
|
288,403
|
(5,076 )
|
283,327
|
Corporate and
other
|
(27,944)
|
4,633
|
(23,311)
|
(32,188)
|
12,289
|
(19,899)
|
|
|
|
|
|
|
|
Total Adjusted
EBITDA
|
$ 290,259
|
$
5,660
|
$ 295,919
|
$ 256,215
|
$
7,213
|
$ 263,428
|
|
|
|
|
|
|
|
(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, 2013;
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, 2013. 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.
|
PRO FORMA ADJUSTED
EBITDA NON-GAAP RECONCILIATION
|
OUTLOOK:
FORECASTED 2014
|
(unaudited, in
thousands)
|
|
|
|
|
Year Ended December 31, 2014
|
|
Low
Case
|
High
Case
|
Net income
Attributable to La Quinta Holdings' stockholders
(1)
|
$ 50,551
|
$ 53,551
|
Interest expense
(2)
|
96,503
|
96,503
|
Income tax
provision
|
33,988
|
35,988
|
Depreciation and
amortization
|
174,515
|
174,515
|
Non-controlling
interest
|
420
|
420
|
|
|
|
EBITDA
|
355.977
|
360,977
|
Fixed asset impairment
loss
|
5,157
|
5,157
|
Share based
compensation expense (3)
|
11,071
|
11,071
|
Other (gains) losses,
net
|
(2,205)
|
(2,205)
|
|
|
|
Adjusted
EBITDA
|
$ 370,000
|
$ 375,000
|
|
|
|
(1)
|
This table provides a
reconciliation of forward-looking forecasted Adjusted EBITDA to net
income attributable to La Quinta Holdings' stockholders before
adjustments which include (i) one-time net tax expense, which
reflects the establishment of a net deferred tax liability
associated with the La Quinta Predecessor Entities becoming owned
by La Quinta Holdings Inc., a "C" corporation for income tax
purposes, (ii) certain of our share 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, 80% of which vest
within one year of the IPO, and (iii) loss on extinguishment
of the historical debt that was refinanced on April 14,
2014.
|
(2)
|
Includes interest
expense for $1.9 billion of outstanding indebtedness with a
weighted average interest rate of approximately 4.5%, including the
impact of an interest rate swap.
|
(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.
|
ADJUSTED NET
INCOME AND
|
PRO FORMA AND
ADJUSTED EARNINGS PER SHARE
|
NON-GAAP
RECONCILIATION
|
(unaudited, in
thousands, except per share data)
|
|
|
|
|
|
|
Historical
three months
|
Pro forma
three months
|
Historical
three months
|
Pro forma
three months
|
|
ended
|
ended
|
ended
|
ended
|
|
September 30, 2014
|
September 30, 2014
|
September 30, 2013
|
September 30, 2013
|
Net Income
Attributable to La Quinta Holdings'
stockholders(1)
|
$
12,817
|
$
20,997
|
$
22,570
|
$
17,812
|
|
|
|
|
|
Equity- based
compensation(2)
|
5,420
|
—
|
—
|
—
|
|
|
|
|
|
Adjusted Net
Income Attributable to La Quinta Holdings'
stockholders
|
$
18,237
|
$
20,997
|
$
22,570
|
$
17,812
|
|
|
|
|
|
Weighted average
common shares outstanding,
basic
|
127,734
|
127,734
|
121,996
|
121,996
|
Weighted average
common shares outstanding, diluted
|
128,494
|
128,494
|
121,996
|
121,996
|
Earnings per
share, basic and diluted
|
$
0.10
|
$
0.16
|
$
0.19
|
$
0.15
|
Adjusted Earnings
per share, basic and diluted
|
$
0.14
|
|
$
0.19
|
|
(1)
|
Includes the impact
of the Company's discontinued operations on a historical basis for
the periods presented
|
(2)
|
Share based
compensation adjustment, which reflects the expense to exchange
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, 80% of which vest within one year of the IPO.
|
|
|
|
|
|
|
Historical
nine months
|
Pro forma
nine months
|
Historical
nine months
|
Pro forma
nine months
|
|
ended
|
ended
|
ended
|
ended
|
|
September 30, 2014
|
September 30, 2014
|
September 30, 2013
|
September 30, 2013
|
Net Income (Loss)
Attributable to La Quinta Holdings'
stockholders(1)
|
$
(333,104)
|
$
46,136
|
$
8,648
|
$
36,599
|
|
|
|
|
|
Recognition of net
deferred tax liabilities upon C-corporation conversion
(2)
|
321,054
|
—
|
—
|
—
|
Equity- based
compensation(3)
|
31,667
|
—
|
—
|
—
|
Impairment
loss
|
5,157
|
—
|
—
|
—
|
Loss on extinguishment
of
debt
|
2,030
|
—
|
—
|
—
|
|
|
|
|
|
Adjusted Net
Income Attributable to La Quinta Holdings'
stockholders
|
$
26,804
|
$
46,136
|
$
8,648
|
$
36,599
|
|
|
|
|
|
Weighted average
common shares outstanding,
basic
|
125,542
|
125,542
|
121,996
|
121,996
|
Weighted average
common shares outstanding, diluted
|
126,084
|
126,084
|
121,996
|
121,996
|
Earnings per
share, basic and diluted
|
$
(2.65)
|
$
0.37
|
$
0.07
|
$
0.30
|
Adjusted Earnings
per share, basic and diluted
|
$
0.21
|
|
$
0.07
|
|
(1)
|
Includes the impact
of the Company's discontinued operations on a historical basis for
the periods presented.
|
(2)
|
One-time net tax
expense, which reflects the establishment of a net deferred tax
liability associated with the La Quinta Predecessor Entities
becoming owned by La Quinta Holdings Inc., a "C" corporation for
income tax purposes.
|
(3)
|
Share based
compensation adjustment, which reflects the expense to exchange
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, 80% of which vest within one year of the IPO.
|
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.
"Adjusted Net Income" and "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 Adjusted Net Income and Adjusted Earnings Per Share may not be
comparable to similarly titled measures of other companies.
Adjusted Net Income and 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.
"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-strong-third-quarter-2014-results-169744160.html
SOURCE La Quinta Holdings Inc.