EXHIBIT 99.1
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News Update
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RESORTQUEST INTERNATIONAL ANNOUNCES FIRST QUARTER
2003 FINANCIAL RESULTS
-COMPANY MEETS EARNINGS PER SHARE AND EBITDA GUIDANCE DESPITE TRAVEL MARKET
CONTINUED DOWNTURN-
Memphis, TN, April 29, 2003 - ResortQuest International, Inc. (NYSE: RZT), the
nation's leading property manager of vacation condos, homes and villas, today
announced financial results for the first quarter ended March 31, 2003.
FIRST QUARTER HIGHLIGHTS
The following are operational highlights from the first quarter:
- - Hawaii gross lodging revenues increased 6% over prior year.
- - The Ski Now/Tan Later promotional program has generated over $1 million
in gross lodging revenues so far in 2003.
- - The first stages of the Portofino and Bahama Bay managed resorts in
Florida are fully operational and have been well received by guests.
- - ResortQuest was named manager of two new luxury resorts in Gatlinburg,
Tennessee, representing a potential of 100 new units.
- - The Company signed a joint venture agreement with Wells Fargo Home
Mortgage to offer financial products and services in its real estate
locations throughout Florida.
- - ResortQuest reached an agreement to become the preferred supplier of
vacation rental property to Carlson-Wagonlit Travel and GIANTS, the
Greater Independent Association of National Travel Services.
- - In a customer survey by Yesawich, Pepperdine, Brown & Russell completed
during the first quarter, consumers cited their positive past experience
as a reason to vacation at ResortQuest properties again and over 80%
said they would recommend ResortQuest to a friend.
FIRST QUARTER RESULTS
ResortQuest reported revenues of $46.6 million for the first quarter of 2003,
which represents a 5.0% decrease from revenues of $49.0 million for the prior
year first quarter. Included in both periods is other revenue from managed
properties that primarily relates to reimbursed payroll expense and related
benefits. The Company reported net income for the first quarter of 2003 of
$742,000, compared to a net loss of ($3.7) million in 2002. This translates to
diluted earnings per share of $0.04 in the first quarter of 2003, as compared to
a diluted loss per share of ($0.19) in the first quarter of 2002. Included in
the first quarter of 2003 is $306,000 of expenses related to the move of the
Company's corporate office to Destin, Florida. These results are in line with
the Company's previous quarterly guidance which excluded any expenses related to
the corporate relocation. The Company estimates that the total cost of the move
will be $800,000, which includes actual moving costs and related severance.
Management anticipates that the relocation of its corporate office and the
continued accounting consolidation from existing operations in Colorado and
Hawaii will save ResortQuest over $1 million annually beginning in the second
half of 2003.
Included in the first quarter of 2002 is $502,000 of expenses related to
professional fees resulting from certain employee-related matters and a study to
explore financing and strategic growth alternatives. Additionally, in the first
quarter of 2002, the Company recorded, upon the adoption
of a new accounting principle, an after-tax non-cash goodwill charge of $6.3
million related to its Desert resorts.
The Company reported EBITDA(1) of $4.7 million in the first quarter of 2003
compared to $7.0 million in the first quarter of 2002, a 32.7% decline. EBITDA
per diluted share was $0.25 in the first quarter of 2003, as compared to $0.36
in the first quarter of 2002. The number of ResortQuest diluted shares
outstanding for the first quarter of 2002 and 2003 was 19.4 million and 19.3
million, respectively.
"We are reasonably pleased to report quarterly earnings per share and EBITDA
results in line with our previous guidance in spite of the challenges facing our
industry," said Jim Olin, President and Chief Executive Officer of ResortQuest
International. "The economy, the war in Iraq and the recent SARS (Severe Acute
Respiratory Syndrome) outbreak impacted consumers' budgets and their willingness
to travel during the first quarter, especially in our fly-to markets. The
reality is that consumers simply did not travel as much as they had in the past,
but we worked extremely hard to control our cost structure during the quarter.
The good news is that we are excited about the opportunity at hand for our
drive-to markets in the forthcoming summer months. Historically, our summer
drive-to markets have represented approximately 85% of our total summer
revenues, and we see early booking signs that our drive-to markets will perform
reasonably well this summer."
At March 31, 2003, the Company had $18.4 million in total cash and total debt of
$76.3 million, which generated a debt to total capitalization of 37.5%. "During
the quarter, we completed an amendment to our credit facility and senior notes
that provides us with more favorable financial covenants for 2003," said Mitch
Collins, Executive Vice President and Chief Financial Officer. "Both pieces of
our debt mature in 2004 and we are currently working to refinance our debt, and
we expect to complete this process no later than January 2004."
FIRST QUARTER OPERATING HIGHLIGHTS
Total gross lodging revenues were $98.7 million for the first quarter of 2003,
compared to $107.7 million in the first quarter of 2002, representing an 8.4%
decrease. Average daily rate for all lodging in the quarter increased 2.1% to
$126.65, as compared to $124.00 in 2002. The Hawaii region gross lodging
revenues increased 6.4% to $39.5 million in the first quarter of 2003 from $37.1
million in the first quarter of 2002 as Hawaii continued to rebound towards
pre-September 11th levels. Activity in Hawaii did experience a downturn in the
middle of March due to the war in Iraq and SARS concerns. The Company
experienced declines in gross lodging revenues in both its Beach and Mountain
regions primarily due to lower occupancy levels in fly-to markets. Total
occupancy levels declined 6.3 percentage points to 56.4% in the first quarter of
2003 from 62.7% in 2002. The total number of exclusively managed units was down
2.0% to 18,277 in 2003.
"During the first quarter, we experienced continued softness in most of our
fly-to markets although we were very pleased to see Hawaii's gross lodging
revenues increase more than 6% versus prior year, primarily due to strong ADR
growth," said Park Brady, Senior Vice President and Chief Operating Officer.
"While Southwest Florida experienced a 12 point decline in occupancy, Northwest
Florida, which is primarily a drive-to market, experienced only a 6% drop in
occupied nights which was offset by a 36% increase in net real estate
commissions. We continue to see strong real estate activity in markets where the
average real estate sales price is less than $500,000, but real estate activity
continues to be somewhat sluggish in our high-end markets."
"While we continue to face a challenging travel market, we remain committed to
improving the overall customer experience by streamlining our processes while at
the same time increasing our distribution channels and capitalizing on high
customer satisfaction by cross-selling amongst our properties," added Olin. "We
have made much progress in consolidating our back offices, which is the first
step in streamlining and simplifying our operations towards standardizing the
customer experience. The move of the corporate office to Destin, Florida is on
schedule and on budget. In addition, the preferred supplier agreements we have
signed with GIANTS and Carlson-Wagonlit Travel are positive additions to our
distribution network. On the cross-selling front, we are currently beta testing
a customer loyalty program, which we expect will significantly increase our
cross-selling penetration. We currently are cross-selling across our network at
under 3%, and our strategy is to move that rate to approximately 10% over the
next several years. Each occupancy point of cross-sell is worth $8 million in
gross lodging revenue and well over $1 million in EBITDA to the Company."
OUTLOOK
The following information is based on current information as of April 29, 2003.
The Company does not expect to update full year guidance until next quarter's
earnings release; however, the Company may update the full business outlook or
any portion thereof at any time for any reason.
The Company expects a continued challenging economic environment for the lodging
industry given the issues discussed above. Even with these issues, the Company
does anticipate improved drive-to market performance during the forthcoming
summer months under the belief that consumers will stay closer to home this
summer when taking leisure trips. ResortQuest should benefit from this situation
given our significant inventory in these primarily drive-to markets. The Company
is maintaining its 2003 expectations of achieving revenues, excluding other
revenue from managed properties, of $152-$157 million and EBITDA of $18-$19
million.
CONFERENCE CALL
ResortQuest International will hold a national conference call today, April 29,
2003 at 11:00 a.m. (EDT). To participate on the call, please dial (973) 582-2706
and request the ResortQuest conference call. A recording of the call will be
available for 7 days by dialing (973) 341-3080 and entering access code 3887862.
The call will be simultaneously broadcast over the Internet and will be
available thereafter at www.resortquest.com.
(1)EBITDA, defined as earnings before interest, taxes, depreciation and
amortization, is presented as supplemental information in the discussion
of operating results above and in the accompanied financial tables
because the Company believes that analysis of EBITDA (a non-GAAP
measure), along with other GAAP measurements, provides a more
comprehensive representation of the Company's financial performance.
EBITDA is commonly used in the lodging industry as a measure of
performance and as a basis for valuation of lodging Companies. EBITDA
should not be regarded as an alternative or replacement to any GAAP
measurement of performance. All companies do not calculate EBITDA in the
same manner. As a result, EBITDA as presented by our Company may not be
comparable to similar titles presented by other companies. See the
following reconciliation of EBITDA to operating income.
Reconciliation of EBITDA to Operating Income:
Three Months Ended
March 31, March 31,
2002 2003
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EBITDA $7,035 $4,737
Depreciation 1,430 1,665
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Operating Income $5,605 $3,072
ABOUT RESORTQUEST INTERNATIONAL
ResortQuest International, the first brand name "real-time" online booking
service (WWW.RESORTQUEST.COM) in vacation condominium and home rentals and
sales, provides a one-stop resource in over 50 premier resort destinations in
the U.S. and Canada. ResortQuest is the nation's leading vacation rental
property management company, based on a portfolio of approximately 20,000
vacation rental properties with a combined real estate value estimated in excess
of $7.0 billion.
This news release contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act of 1934, as amended, which are intended to be covered by the safe harbors
created thereby. These forward-looking statements involve risks and
uncertainties, as well as assumptions that, if they never materialize or prove
incorrect, could cause the results of ResortQuest and its consolidated
subsidiaries to differ materially from those expressed or implied by such
forward looking statements. In addition to the factors discussed above, other
factors that could cause actual results to differ materially include the risks
associated with successful integration of additional acquired companies, factors
affecting internal growth and management of growth, ResortQuest's acquisition
strategy and the availability of financing, the tour and travel industry,
seasonality, quarterly fluctuations and general economic conditions, dependence
on technology and travel providers, and other factors discussed from time to
time in ResortQuest's Securities and Exchange Commission reports, including its
annual report on Form 10-K for the year ended December 31, 2002.
Although the Company believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and, therefore, there can be no assurance that
the forward-looking statements included in this filing will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by ResortQuest or any other person
that the objectives and plans of the Company will be achieved. The company
undertakes no obligation to publicly update or revise any forward-looking
statements whether as a result of new information, future events or any other
reason.
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INVESTOR RELATIONS CONTACTS: MEDIA CONTACTS:
ResortQuest International Sloane & Company
Mitch Collins / David Selberg Dan O'Connor
(901) 762-0600 (212) 446-1865
Sloane & Company
Jenny Lee
(212) 446-1892
ResortQuest International, Inc.
Consolidated Condensed Statements of Operations
(unaudited)
Three Months Ended
March 31, March 31,
(in thousands) 2002 2003
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Revenues
Property management fees $ 25,324 $ 22,556
Service fees 10,300 10,070
Real estate and other 4,889 5,044
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40,513 37,670
Other revenue from managed properties(1) 8,503 8,887
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Total revenues 49,016 46,557
Operating expenses
Direct operating 20,142 21,212
General and administrative 13,336 11,721
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33,478 32,933
Other expenses from managed properties(1) 8,503 8,887
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Total operating expenses 41,981 41,820
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EBITDA(2) 7,035 4,737
Depreciation 1,430 1,665
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Total non-cash expenses 1,430 1,665
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Operating income 5,605 3,072
Interest and other expense, net 1,466 1,812
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Income before income taxes 4,139 1,260
Provision for income taxes (1,552) (518)
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Income before the cumulative effect of a change
in accounting principle 2,587 742
Cumulative effect of a change in accounting principle(3) (6,280) -
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Net income $ (3,693) $ 742
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Earnings per share
Basic and Diluted
Before cumulative effect of a change in accounting principle $ 0.13 $ 0.04
Cumulative effect of change in accounting principle (0.32) -
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$ (0.19) $ 0.04
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EBITDA per diluted share(2) $ 0.36 $ 0.25
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(1) Revenue and expense from managed entities are included in our reported
results in response to a recent FASB announcement. These costs relate
primarily to reimbursed payroll costs and related benefits at managed
entities where we are the employer. These costs primarily relate to our
Hawaii resorts.
(2) EBITDA, a non-GAAP measure, is defined as earnings before interest, taxes,
and depreciation and excludes the cumulative effect of a change in
accounting principle.
(3) Beginning January 1, 2002, the Company adopted SFAS Nos. 141 and 142 as it
relates to the accounting for goodwill and related amortization. In
conjunction with the adoption of these pronouncements, the Company recorded
an after-tax non-cash goodwill charge of $6.3 million related to its Desert
resorts. Additionally, the Company has ceased recording amortization of all
existing goodwill and any goodwill associated with future mergers and
acquisitions.
ResortQuest International, Inc.
Performance Statistics
Total System(2)
Three Months Ended
March 31, March 31,
2002 2003 VAR
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Beach
Gross Lodging Revenues(1) $ 34,359 $28,101 (18.2)%
Occupancy 56.2% 48.0% (8.2)pts
ADR $ 92.66 $ 89.80 (3.1)%
RevPAU $ 52.04 $ 43.11 (17.2)%
Total Units 9,276 9,056 (2.4)%
Hawaii
Gross Lodging Revenues(1) $ 37,123 $39,503 6.4 %
Occupancy 78.2% 77.0% (1.2)pts
ADR $ 110.90 $118.86 7.2 %
RevPAU $ 86.70 $ 91.56 5.6 %
Total Units 5,537 5,464 (1.3)%
Mountain
Gross Lodging Revenues(1) $ 32,584 $28,588 (12.3)%
Occupancy 53.4% 44.0% (9.4)pts
ADR $ 236.91 $243.87 2.9 %
RevPAU $ 126.55 $107.32 (15.2)%
Total Units 3,331 3,351 0.6 %
Desert
Gross Lodging Revenues(1) $ 3,613 $ 2,470 (31.6)%
Occupancy 64.5% 53.8% (10.7)pts
ADR $ 142.74 $149.94 5.0 %
RevPAU $ 92.02 $ 80.63 (12.4)%
Total Units 506 406 (19.8)%
Total
Gross Lodging Revenues(1) $107,679 $98,662 (8.4)%
Occupancy 62.7% 56.4% (6.3)pts
ADR $ 124.00 $126.65 2.1 %
RevPAU $ 77.74 $ 71.48 (8.1)%
Total Units 18,650 18,277 (2.0)%
(1) Lodging revenues are in thousands and represent the total rental charged to
property rental customers. Our revenue represents from 3% to over 40% of the
lodging revenues based on the services provided by us.
(2) Total system statistics include all exclusive managed contracts from the
period under management through March 31, 2002 and March 31, 2003. Excluded
from these statistics are non-exclusive management contracts which
approximated 1,440 units as of March 31, 2002 and 1,600 as of March 31,
2003. Also excluded from these statistics are owner use nights and
renovation nights which were approximately 15.6% of gross available nights
in the three months ended March 31, 2002 and 15.6% of gross available nights
in the three months ended March 31, 2003.
ResortQuest International, Inc.
Performance Statistics
Same-Store(2)
Three Months Ended
March 31, March 31,
2002 2003 VAR
-------- -------- -----
Beach
Gross Lodging Revenues(1) $ 34,273 $28,101 (18.0)%
Occupancy 56.2% 48.0% (8.2)pts
ADR $ 93.29 $ 89.80 (3.7)%
RevPAU $ 52.41 $ 43.11 (17.7)%
Total Units 9,195 9,056 (1.5)%
Hawaii
Gross Lodging Revenues(1) $ 37,123 $39,503 6.4 %
Occupancy 78.2% 77.0% (1.2)pts
ADR $ 110.90 $118.86 7.2 %
RevPAU $ 86.70 $ 91.56 5.6 %
Total Units 5,537 5,464 (1.3)%
Mountain
Gross Lodging Revenues(1) $ 32,584 $28,588 (12.3)%
Occupancy 53.4% 44.0% (9.4)pts
ADR $ 236.91 $243.87 2.9 %
RevPAU $ 126.55 $107.32 (15.2)%
Total Units 3,331 3,351 0.6 %
Desert
Gross Lodging Revenues(1) $ 3,613 $ 2,470 (31.6)%
Occupancy 64.5% 53.8% (10.7)pts
ADR $ 142.74 $149.94 5.0 %
RevPAU $ 92.02 $ 80.63 (12.4)%
Total Units 506 406 (19.8)%
Total
Gross Lodging Revenues(1) $107,593 $98,662 (8.3)%
Occupancy 62.7% 56.4% (6.3)pts
ADR $ 124.39 $126.65 1.8 %
RevPAU $ 78.03 $ 71.48 (8.4)%
Total Units 18,569 18,277 (1.6)%
(1) Lodging revenues are in thousands and represent the total rental charged to
property rental customers. Our revenue represents from 3% to over 40% of the
lodging revenues based on the services provided by us.
(2) For better comparability, the above statistics exclude all non-exclusive
management contracts as well as all properties that were not part of
ResortQuest for both time periods, which approximated 1,540 units as of
March 31, 2002 and 1,600 units as of March 31, 2003. Also excluded from
these statistics are owner use nights and renovation nights which were
approximately 15.6% of gross available nights in the three months ended
March 31, 2002 and 15.6% of gross available nights in the three months ended
March 31, 2003.