CLDT - Earnings call transcript Q1 2018

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Operator

Greetings, and welcome to the Chatham Lodging Trust's First Quarter 2018 Financial Results Conference Call. At this time all participants will be in a listen-only mode and a brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Chris Daly with Daly Gray. Please go ahead.

Chris Daly

Rob. you, Thank and quarter everyone the Lodging Chatham Good results welcome conference first XXXX call. Trust morning to Please note that forward-looking many of our comments defined Federal statements today by Securities Laws. as are considered both subject risks in are most XX-K filings. Form other recent unknown, statements These our and uncertainties, as known to described SEC and and is All call May XXXX, as information in unless X, of this otherwise noted. to the no forward-looking statement the statement And company's any to in changes update the actual obligation company or to undertakes expectations. results conform

of copies contain financial referenced our find You filings which on SEC on can earnings release, our reconciliations and call www.chathamlodgingtrust.com. to measures website non-GAAP at this

Vice you Now and and Officer; Wegner, Fisher, provide results, President, Chief allow Senior into to Jeremy and Chief Vice with to Executive Chatham's Chairman, XXXXfirst Officer; quarter Financial President some insight Executive Officer. and Operating Jeff introduce Chief President me Craven, Dennis

turn Let the to Jeff? over me Jeff session Fisher.

Jeff Fisher

to end being due million reported EBITDA to of compared quarter today. most end Chris. range. EBITDA Thanks that XX.X us to the end Adjusted than minus Earlier Good XX%. the or XX.X% compared is of of margins range first X.X% to range upper XX.X% declined to slightly guidance X% RevPAR the guidance with minus for guidance upper higher we for better of the today, and metrics of results than finished upper everyone. morning our above hotel our of key guidance Thanks, X.X%. expected our while to our

and benefited from for three in in we the about particularly inauguration hotels. had last and this course Super adjusted and guidance costs We compared out hotels some of year to D.C. per have $X.XX we of year. was to guidance $X.XX. Bowl, share talked placed when year that $X.XX the year last we last four had our So to where RevPAR year Having Houston we where this FFO diluted prior the put

hit the down by earlier also hotels D.C. temporary this shut year. were Our government

March some this Silicon corporate had from to April businesses simply shifted we in year. Additionally large Valley that

renovation to our Homewood addition as of is within Mission years Residence and to is in blocks to couple has in our grow represents in Silicon I'm performance strong RevPAR impacted to strong new where convention and our rather our RevPAR year. X% of got projected our back We Hotel opened in at Silicon San been in San impact at calendar April, four RevPAR Silicon that really good XXX the Inn remained new for Diego supply Demand over Valley XX%. to Diego supply and the Downtown to of more Residence to significant that Downtown markets Valley, to absorbed by but was RevPAR XX% Diego Suites slipped events market hotel. new report largest [balance] this of San strong Looking outpacing points. been year, a a this Gaslamp hotels due that of Valley the [bounce] happy down business. second $XXX our on rose Valley X.X%, of where due slightly a was Inns has quarter, shift four approximately last few the basis

the quarter Inn down, Anaheim Another which Residence RevPAR is going had half is year market strong It's our which that L.A., posted last also significant us first market [set] of amount for the encouraging after and system Inn leaves growth X.X%. and within perform tremendous of growth quarter of that [indiscernible] in absorbing stands better a positive showing this to the the when much supply third year. Residence new really

gains little relate a leftover the in disruption from the West year. most as and X%, benefiting of easier of others with demand, have comp quality hotels, the gains improved last with an much RevPAR are noted [FEMA] business almost Caribbean Key some Zika bit to attributable gains of but outperform Our Florida the course hotels continue some of in to to of and

see We saw interesting hotels new growth some in are of seeing and It's some in of our one-third our improving absorbed as the are market and conditions Brentwood, X%, that RevPAR that across our more within than various County portfolio such of most have look Westchester to locations the supply, markets competitive portfolio. markets Tennessee.

PA risen the Washington where such Marina are seeing approximately six was We such strong months price past RevPAR markets back Del where New to and our oil oil and growth XX% life demand over Exeter, up is our Hampshire, as have of Rey. Connecticut, in as hotel The Farmington, we markets has come XX%.

increase this X.X% hotels We of are our and all back supply X% related directly supply within wide concentrated rose lodging and which sound some extended-stay come we doesn't been which with JV most Year-to-date hotels. other new our oil in also hotels was markets demand but was rose and in by segment high business some quarter. in offset new into has growth seeing supply which X.X% in limited-service Houston the upscale Year-to-date the industry compete.

performance planned lending the supply Dallas Denver as we move [San well and Route believe some markets New as construction as costs California. hotels rising Miguel], our as as our new requirements Madison driving in such including of as certainly is should well We entire forward. Boston, XXX mitigate in

that acquisition quarter, accrete new to the Ballou strategic Charleston, value. close to approximately to to it our of is of off sheet start quarter our since positioned We're area shape April strategy, our Strategically the a lowest on X%. at our Dennis. with on bustling leverage Inn, and four of well all with types. like to further approach Summerville to over execute gotten diligently in RevPAR is to rising parts Residence an across I'd on in expect great the With we So going By balance has at are our levels turn we're we that, the development end all second continue XXXX. deliver property good

Dennis Craven

Thanks, Jeff. Good morning.

in to occupancy. and the declined RevPAR equally a quarter decline and by X.X% Our in ADR driven was

XX% operating our our gross end above quarter XX.X% were slightly and outperformance. driver behind first of range our and upper the reported EBITDA margins profit per were hotel guidance margins XX.X%, Our share of FFO the

first same margins XX% points XX% operating XXX our operating revenue. approximately of and favorable basis of Our total our down quarter approximately were represent benefits expenses store year-over-year,

[comped] competitive per due in quarter We margins occupied basis, on X% basis were lower the same our other or XX% loose be are under route. we afford and can't can or as labor rates or fast to points. hotels are such other For rates wage, pressure areas can to either temporary to to favorable and we than benefits industries XXX a where raise market by casual warehousing. food especially trained well margins impacted more employment. room up up in these Industry approximately wide rising wages benefits by and that markets employees urban so go Unfortunately

driven ways only and maximizing major owners increases to of adversely costs, operators, not that only to had other on actually margins find model. year-over-year our cost As guest revenue, down in is These and quarter. we by and points as which were XX offset margins variances. need in in maintenance a move percentage lower XX the up actually we reduce the impact by efficiency basically a costs. the primarily due utility item These increase snow basis removal in X.X% as forward that acquisition primarily we're continue related Guest approximately were to labor weather and reward impacted of one-time was are our staffing The TA basis costs quarter. -- points weather to commissions

$X.X were with our to implement revenue controlling EBITDA with positive bit our help that of measures costs refunds loss we our hard a effort management much maximize a as pushing owners margins. margins any XXXX the of million prior as quarter, some revenue possible. the that in Hotel and and for We're with from over the franchise an on hospitality owners So, to approximately year opportunities regain of will off received additional benefited margins. aggressively Along own our new our in multiyear quarter. we're as basis points little looking strategies XXX first profit we working

other our by adopted in $XXX,XXX. cancellation with of Hilton actually we hour the comparable and about fee hotels driven XX quarter almost adopted basically $XX,XXX. XX the by was up in that improved policy our is quarter which revenue revenue policy, XX% in XX% example in Marriott The parking quarter the increased For the we and fees by revenue collected

we Additionally top room our amenity packages out in bottom and tax [hotel] are adding also rolling which to lines. are

we we labor operating the have of On of are and without cost reducing markets to -- our the part and staffing from efficiency to model very hire comes are extended-stay eliminate traveler to we challenging and the equivalent but which select-service today's continue incremental we perspective away work certain further to position limited-service lean were and full Again expense able time experience. brands limits. side address in improve a time already benefits, we of hotels sacrificing hotels the with margins

We their $XX,XXX [collect by contact, our such the reduce quarter. on we approximately bills], off newspapers are guest the we to by to beta able were guests reducing quarter, turning for costs and $XX,XXX hours are amenities in the offerings staying in increase focusing those approximately hospitality as to testing service

are encouraging. are savings but just on trial these of limited they initially a All business

those these hotels, expectations least some experience be initiatives initiatives guest and have of may similar we to experience, We confident certain at try so hotels. their at with our alter about and offer or

quarter the converted some of rooms space empty creating Del Garden at $XXX,XXX during approximately On the two Inn guest we Marina CapEx additional Hilton Rey front into our value.

into and or that's experience delivering over enhancing look find We for example ahead through whether and adding enhance I'm turn at value return. our assets existing attractive continue go space while rooms bars of small ways guest it our Jeremy. guest to to continued going an conversion to by alternative to

Jeremy Wegner

Thanks, Dennis. Good morning, everyone.

declined XXXX. X.X%. to to of quarter in $X.XX was ventures Adjusted $X.XX share for net diluted ventures QX items company compared was $X.XX to this primary decrease a Adjusted noncash in XXXX. income to $XX was $X.X received X.X% was The two we for or the of or EBITDA QX to million the which FFO. of $X.X joint quarter $XX.X EBITDA FFO $X losses depreciation to relate compared QX. adjusted onetime within in FFO contributed Chatham diluted similar and for in For quarter, $X.X and joint approximately XXXX. per generated of reported million In net $XX.X million QX of the income share per share JVs differences million million share per QX $XXX,XXX such compared million compared between gains our of $X.X net costs per in approximately the in share adjusted XXXX, the million in as quarter, of million or quarter. Adjusted from $XX.X $X.X income distributions our the FFO million million $XX.X in

X.X% up up was RevPAR the in quarter and Inland Innkeepers the in portfolio. First portfolio X.X%

in Our condition. balance sheet excellent remains

our Homewood that guidance Inn full Our $XXX cost the million it we the to of basis leverage Mountain Dallas I'd account net takes to and our into Residence Residence debt which In end and the year March extended the and our note and QX by and to refinanced Suites credit is was level. and to depending borrowing for XX XXXX $XXX Tysons unsecured X QX Farmington Transitioning million maturity QX. QX, the at View renovations Sunnyvale QX November like Corner our the from the XXXX, in facility, in on leverage Homewood ratio XXXX up Residence points revolving anticipated XX.X%. lowered quarter Inn Suites Inn the in the of

of Summerville, purchase Our facility. July Residence South close X we Carolina and guidance also acquisition our $XX the the the on million using credit assumes finance that Inn

be year down RevPAR be to QX XXXX X.X%. expect growth up RevPAR We X.X% flat full to X.X% and to to up

strength new Our the assumes will continue of of growth throughout above the the guidance with GDP the upscale combined RevPAR supply in current rest solid segment average year.

from full year benefited XXXX. Hurricane Bowl in difficult and three inauguration for been RevPAR four XXXX, D.C. in increased which by after in QX, area hotels Houston impacted a has Harvey the our reminder from in which QX, hotels forecast a and Washington benefited our QX, Super demand As comps XXXX

and million. year full the EBITDA a contribute to Our G&A to $XX.X million corporate joint two $X.X full FFO. year expected is forecast in On $X.X $XX.X million to for million cash $XX.X ventures of basis are million

up open at for concludes think our point And remarks. that questions. we'll it this I operator

Operator

We'll you. now conducting Thank Instructions] [Operator a session you. question-and-answer Thank be

First question Powell your proceed comes line of Anthony with with Please Barclays. the question. from

Anthony Powell

all the exclude reported improvement travel other did If you quarter, of see that kind many the far? the issues that across business in so in of comp quarter lodging you the companies

Dennis Craven

was it kind range look corporate Anthony you if X% at business we've seen our X% our [structured] kind of that to up some the of of across portfolio. in

see encouraging. which a of bit could is little that we So,

Anthony Powell

Got it. purchase? the attractive you like? acquisition look us hotels there on the And are just update environment, could pipeline Thanks. for seeing What's you out

Jeff Fisher

is owners. been We're you for that could we say usual pipeline pretty say or but purported one I'd from that are the I'd our stuffs us conversations with quite two have so or pretty right far. it's working see now probably year on otherwise as any this direct thin, transactions

attractive of back up probably up. a last think still because compared pricing prospect I with particularly rates lot owners -- because are the interest rates refinance or simply either to on year at pretty holding again of we going

simply market. more any So the than competition today that's our refi

Anthony Powell

to that improvement a back [travel] re-purchasers Got the stock attractive or your haven't dilution in have given your Is recent of and option stock it. And guys some years. more stock? given of that bought you

Jeff Fisher

going that then we're our rate that, [bad and multiple. you rate a X price going cap I measure, rate going anyway implied is with cap of successful look shown have been range never that but still cap to that Board to take in Obviously, think cap table. only stuff] to I good of even kind pretty will We in north have a a have think not we hotels look the stock valuation. level borrowing growth of and always that have today's this the off at X.X forward if at at decent But

Anthony Powell

full me. was year, for caused I income guidance the down And net decline? that the one more what from housekeeping mean

Jeremy Wegner

was just change That depreciation. in a

Operator

to [Operator Instructions] back time for I'll further management remarks. at this the floor turn And

Jeff Fisher

little as morning. we better a We year. spent this everybody through a appreciate bit forward little the move looking are time And we to environment the to bit continued

to you meeting will please York if a in and opportunity. [Maybury] to know have all. We let forward Thank so we see folks that you hope, us New at want look

Operator

you everyone. conclude This Thank does today's teleconference.

this participation. lines at You time. Thank your may you for disconnect your

Chatham Lodging Trust (CLDT) 1 May 182018 Q1 Earnings call transcript