IRVING, Texas, Nov. 2, 2016 /PRNewswire/ — La Quinta Holdings Inc. ("La Quinta" or the "Company") (NYSE: LQ) today reported its third quarter 2016 results, for the period ending September 30, 2016.
Third Quarter 2016 Highlights
- Net Income per Share was $0.20; Adjusted Earnings per Share was $0.19
- Net Income was $22.7 million; Adjusted Net Income was $22.1 million
- Cash flow generation remained strong, as demonstrated by $100.7 million of Total Adjusted EBITDA
- Grew franchise and other fee based revenue 5.3 percent
- System-wide comparable RevPAR increased 0.8 percent, and excluding properties located in STR-defined "oil tracts", RevPAR increased 2.0 percent
- Opened 15 franchised hotels, excluding six temporary hotels, totaling approximately 1,300 rooms, including the Company's first location in Colombia, South America
- Increased franchise pipeline to 239 hotels, representing approximately 21,800 additional rooms, including a new franchise agreement in San Diego's Gaslamp District
- La Quinta Returns® ranked in the top 5 by U.S. News and World Report as a Best Travel Rewards program in U.S. News's Best Travel Rewards 2016-17 rankings
Overview
Keith A. Cline, President & Chief Executive Officer of La Quinta, said, "We continued to make meaningful progress against the Company's strategic initiatives to drive consistency in our product and in the delivery of an outstanding guest experience, as well as to drive increased engagement with our brand. We saw positive comparable RevPAR growth and a significant improvement in Net Promoter Score this quarter, reflecting our investment in the guest experience. On the development front, we continued to grow our current and future footprint by opening 15 new hotels, including La Quinta's first location in Colombia, South America, and by signing 21 new franchise agreements bringing our total pipeline to 239 hotels."
Mr. Cline continued, "System-wide comparable RevPAR grew 80 basis points and RevPAR index grew 18 basis points when compared to the same period last year. We also experienced high single digit RevPAR growth in several key markets. As we noted last quarter, the impact of the pullback in oil production has moderated in terms of year-over-year RevPAR comparisons, and our hotels in the oil markets continued to improve their overall market share. Our third quarter system-wide comparable RevPAR would have been up 2.0 percent as compared to last year, if we exclude the impact of the oil markets. We are proud of La Quinta's performance this quarter and remain confident that the strategic priorities and initiatives we are executing will drive brand performance as well as continued strong cash flow generation and long-term shareholder value."
The Company's system-wide portfolio, as of September 30, 2016, is located across 48 states in the U.S., as well as in Canada, Mexico, Honduras and Colombia. The portfolio includes:
September 30, 2016
September 30, 2015
# of hotels
# of rooms
# of hotels
# of rooms
Owned (1)
325
41,500
351
44,600
Joint Venture
1
200
1
200
Franchised(2)
567
46,300
532
42,800
Totals
893
88,000
884
87,600
(1)
As of September 30, 2016 and 2015, Owned includes nine hotels (1,100 rooms) and 24 hotels (2,800 rooms), respectively, designated as assets held for sale, which are subject to definitive purchase agreements.
(2)
As of September 30, 2016 and 2015, Franchised includes eight hotels (1,100 rooms) and two hotels (200 rooms), respectively, under temporary franchise agreements related to formerly owned hotels which are in the process of leaving the system.
The results of operations for the Company for the three months ended September 30, 2016 and 2015 include the following highlights (1) ($ in thousands, except per share amounts):
Three months ended September 30,
2016
2015
% chg
Total Revenue
$
272,312
$
279,103
-2.4
%
Franchise and Management Segment Adj. EBITDA
32,101
31,460
2.0
%
Owned Hotels Segment Adj. EBITDA
76,662
87,098
-12.0
%
Total Adj. EBITDA
100,737
114,231
-11.8
%
Total Adj. EBITDA margin
37.0
%
40.9
%
Operating Income
61,285
52,740
16.2
%
Operating Income Margin
22.5
%
18.9
%
Adj. Operating Income
60,295
65,669
-8.2
%
Adj. Operating Income Margin
22.1
%
23.5
%
Three Months Ended
Three Months Ended
September 30, 2016
September 30, 2015
% Change
Net
Income
Basic
and
Diluted
EPS
Net
Income
Basic
and
Diluted
EPS
Net
Income
Basic
and
Diluted
EPS
Net Income Attributable to La Quinta Holdings' stockholders
$
22,666
$
0.20
$
17,058
$
0.13
32.9
%
53.8
%
Adjusted Net Income Attributable to La Quinta Holdings' stockholders
$
22,072
$
0.19
$
24,816
$
0.19
-11.1
%
0.0
%
(1)
See the schedules to this press release for a reconciliation of the adjusted results of operations to the most directly comparable financial measures calculated in accordance with Generally Accepted Accounting Principles ("GAAP"), as well as a discussion of the adjustments made.
Comparable hotel statistics
Three months ended September 30, 2016
Variance three months ended September 30, 2016 vs. 2015
Nine months ended September 30, 2016
Variance nine months ended September 30, 2016 vs. 2015
Owned Hotels
Occupancy
68.2
%
-192 bps
67.1
%
-205 bps
ADR
$
87.28
3.1
%
$
85.81
1.8
%
RevPAR
$
59.56
0.2
%
$
57.57
-1.2
%
Franchised Hotels
Occupancy
72.4
%
-25 bps
68.8
%
-42 bps
ADR
$
98.09
1.6
%
$
93.86
0.8
%
RevPAR
$
71.03
1.2
%
$
64.59
0.1
%
System-wide
Occupancy
70.3
%
-111 bps
67.9
%
-126 bps
ADR
$
92.70
2.3
%
$
89.78
1.3
%
RevPAR
$
65.15
0.8
%
$
60.99
-0.5
%
Three months ended September 30, 2016
Variance three months ended September 30, 2016 vs. 2015
Nine months ended September 30, 2016
Variance nine months ended September 30, 2016 vs. 2015
RevPAR Index(1)
97.0
%
18 bps
96.2
%
-75 bps
(1)
Information based on the STR competitive set of hotels existing as of September 30, 2016.
Development
During the third quarter, the Company opened a total of 21 franchised hotels (2,000 rooms), including six temporary franchised hotels related to formerly owned hotels which are in the process of leaving the system. These 21 openings, together with seven terminations, led us to a net growth of 14 franchised hotels. As of September 30, 2016, the Company had a pipeline of 239 franchised hotels totaling approximately 21,800 rooms, to be located in the United States, Mexico, Colombia, Nicaragua, Guatemala, Chile, and El Salvador. The Company believes this pipeline represents a significant embedded growth opportunity for the brand.
Owned Hotel Portfolio
During the third quarter of 2015, the Company entered into a definitive purchase and sale agreement for the sale of 24 of its owned hotels. Of these 24 hotels, 21 had closed as of the end of the third quarter of 2016, and the remaining three hotels closing after the end of the third quarter. During the third quarter of 2016, the Company closed the sale of additional owned hotels located in Charleston, South Carolina, Georgetown, Texas, and Houston, Texas and entered into definitive purchase and sale agreements for the sale of five additional owned hotels located in Wayne, New Jersey, Elmsford, New York, Daytona Beach, Florida, Sulphur, Louisiana, and in The Woodlands-Houston, Texas.
Balance Sheet and Liquidity
As of September 30, 2016, the Company had approximately $1.7 billion of outstanding indebtedness with a weighted average interest rate of approximately 4.3%, including the impact of an interest rate swap. Total cash and cash equivalents was $148.2 million as of September 30, 2016.
Outlook
Based upon management's current estimates, the Company is revising its guidance for full year 2016. This revision reflects the Company's third quarter performance and adjusted expectations for the remainder of the year, as well as the impact of changes in the timing of owned assets leaving the system.
Updated Guidance
Prior Guidance
RevPAR growth on a system-wide comparable hotel basis
-0.75 percent to 0.25 percent
-0.75 percent to 0.75 percent
Adjusted EBITDA
$354 million to $360 million
$361 million to $371 million
Franchise hotel openings
45 to 50
55 to 60
Please see the schedules to this press release for a reconciliation of Adjusted EBITDA to Adjusted Net Income Attributable to La Quinta Holdings' stockholders. A reconciliation of Adjusted EBITDA to the closest GAAP financial measure is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to impairment charges, gains or losses on sales of assets, and secondary offering expenses excluded from these non-GAAP financial measures. These items could have a potentially unpredictable, and potentially significant, impact on our future GAAP financial results.
To view full financial release and corresponding tables please click the PDF icon or visit: http://ir.lq.com/file.aspx?IID=4424891&FID=36525050
