CPLG - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2019 CorePoint Lodging Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call will be recorded. I’d now like to introduce your host for today’s conference, Ms. President Vice Senior Roseberry, of Finance. Becky

begin. may You

Becky Roseberry

that Act Any first Good will, or risks from anticipate, and believe, other conference earnings such the company’s view intend, of by Litigation of Lodging’s company’s and forward-looking and forward-looking to reflects forward-looking such which are afternoon, welcome to subject meaning as historical or Reform Securities Private any performance. identify actual and future quarter statements. similar the XXXX, or call. current plan, within which the XXXX statements. implied statements that CorePoint statements such forward-looking materially uncertainties, expressed results current of financial the future differ This or Words is such from expressions events includes could expectations presentation expect, outlook, results

For company’s on the the please Annual filed refer and Report Exchange more to with these XX-K Commission. Securities Form details risks, on

EBITDAre we In FFO, addition, remarks, non-GAAP today’s which in to will and measures. are adjusted financial adjusted refer

You to the our a our Form be Also, is detail. forma earnings to giving La pro calculated at the exhibit from earnings for on on EBITDAre, basis additional included the note to related important be that to of will an release, certain with filed accordance to we which most Quinta this www.corepoint.com. matters. press discussed it and may in Please press GAAP spin-off as information may other adjusted financial results, Holdings including presented in effect measure refer Inc release adjustments is and to comparable SEC, also website reconciliation which X-K with find a found our our

possible remind presentation of listening XXXX, that the on more to before correct. the the after review will recent that longer our Keith XXXX discussed is updated non-core execution we activity on asset of our the strategic and Executive your be a our Swanstrom, our This strategy. update then will this repurchase Investments. Finally, SVP on update Dan share priorities, sheet, quarterly you an provide execution Accounting call, performance questions. balance Chief no Cline, for and highlight details Song, with the will provide President open today provide XX, few in continued Rob then Officer; this it CorePoint’s an afternoon, a I CorePoint’s and Howard be including Wyndham line for Also, will sales. performance, information estate With CEO, comments room those replay Garfield, May not of our the will quarter and closing discuss Financial and Keith President real and to first our integration an Chief Officer, Chief update our of Officer, us on our call make and over now turn Cline. that, is will our we Keith

Keith Cline

Becky. conference and everyone, you, XXXX welcome Lodging’s to afternoon, CorePoint quarter Good call. Thank first earnings

by driven compared We’re RevPAR X%, This pleased us. in first our the today reported flat a comparable could performance. quarter with to of with ADR quarter first occupancy year. roughly in quarter increases first you begin afternoon, the of when growth I’ll recap last join we of

points. index realized basis RevPAR We of XXX comparable also growth

in both we’re closures from benefited reported from the Our QX total from hotels our adjusted XXXX, over they growth were especially and and EBITDAre the XX up ramp. performance primarily today, impacted driven hotels first that non-comp to properties note driven RevPAR in in by Hurricane we in X.X%, properties. room important was double-digit was that It’s our hurricanes Texas. portfolio quarter In ADR by addition, year the margins for significant of year West basis, occupancy the the RevPAR $XX basis on our or comparable quarter, by the pro partially a hotels continue first period benefited headwinds quarter in repositioned growth hotel same over XX in hurricane-impacted forma facing was repositioned $X with growth last markets, oil cycling offset by to up and first XX% of the This last million increasing approximately as the points. million,

generally pleased are operating performance. with first quarter We our

displacement we we from of of benefiting first growth As continued tailwinds the year have of previously, from said quarter the for properties. expected the lapping last rest RevPAR the and year the hurricane repositioned in

labor, line continued year focus with expense As to forecasted, we second through will have balance measures perspective, the including the management our in to cost expected quarter across as we move quarter areas From combat insurance the weakest prior pressures top our to year. estate asset portfolio, our a to taxes. growth real highlighted, more and comparison the cadence property the continue expect be of we of moderate on team previously third-party fees, OTA control RevPAR

Now turning to our XXXX priorities.

ongoing we to XXXX entire evaluation of maximize two This margins expand to to our engage the potential improve an executing announced to fourth unlock opportunities identify portfolio we’re As and CorePoint’s results. overall continue performance. CorePoint’s and initiatives on strategic portfolio to year, in of profit on call, quarter focused we diverse

markets, call outage center indications to CorePoint’s are the asset an underperforming hotels to manager portfolio, impact. timing working factors: aggressive holiday; systems ongoing fit for leverage change of the softer La distribution to of to softness especially candidates the in regard with third-party management of April. the temporary contributing we several real possible a network in closely disposition. impact negative network executing hotels month from early our was and strategic it strategic property Wyndham management a than initiative. identify and our transition to we no The CorePoint broad a engaged of to The of within in estate portfolio improve and operational are strategy working a the first the Texas infrastructure. First, performance systems Easter may QX distribution With and in and are And that additional in at includes plans second, longer April our provider; that with Quinta as including release disruptive oil; Wyndham’s of our review transitioned revenue-generating

too benefits it’s measure transition opportunities direct in to Wyndham continue to distribution centers cross-selling traffic financial the network, soon hotels website. from channels to we be by will to drive call their the there and our to to believe our their While via

as focused loyalty With We more brand. a meaningful to also the the said, revenue believe mix on are that La we opportunity platform our as revenue being Wyndham exposed drive of that’s represents to Quinta incremental generated that remain customers fully the well network as impact channels, the have this visibility By year, of acquisition. of customer regarding the we’ll Wyndham’s direct and second-half through scale. more La once overall the distribution of brand is integrated, cost Quinta

expenses, we better savings labor manager with approximately scale to continue $X addition, costs can includes improve employee we first workers’ of million our comp In to where benefits quarter leverage results. areas their the important related and a identify control to partner It’s to that to and note lower insurance.

which annual of guidance. recall $X Wyndham-related in we million, savings cost included is that our You’ll an approximately expect

assets announced in his call, those fourth in non-core sales. more in sale release Next, we and our on will this under ongoing initiative, lowest-performing provide to the afternoon, to estate pricing Dan our quarter remarks. hotels review and transactions earnings addition in non-core second the our real our continue hotels of asset the details With of portfolio, engage disclosed execute an our the we particular, three two we in of

these improving initiatives, at driving to creation. level addition performance operating they’re the In strategic and two focused value hotel on

also We’re level. the cost at working to lower corporate

a to excluding in steps expense lower reduction severance a of paid. approximately or mentioned cost in headcount. benefit the have cash annualized net XXXX, home-office cash and we X%, G&A effective will $X taken with in As amounts a under deliver an G&A to $X.X today, This million, reduction change X-K little XX filed in million of May any

our Becky Operating both a our As to Kristin reduction, the to Kristin contributions leaving Finance, of asset Relations, Relations, of SVP the over La them Dan? wish CorePoint that, know, for be Dan Roseberry, all who best. responsibility for the President already to of for John of and be I’ll we CFO, want SVP Chief will Swanstrom. turn Quinta and this and most CorePoint. over Lodging, our will John contact of call all taking Investor I Vice certainly Investor and be part thank primary and other our Officer; Executive Hays, you Cantele, management I’ll and With very

Daniel Swanstrom

offset our afternoon, good for which and balance and hotels non-core sheet, XXXX. details exposure our respect Keith, of discuss the additional our quarter EBITDAre approximately forma with $XX CorePoint’s more sales guidance the highlight for asset portfolio the of XXXX was the share $X for EBITDAre to adjusted $XX EBITDAre hotels Today, pro our West of hurricane-impacted demand, and with you, I our provide results repositioned Adjusted of both operating and basis compares to review quarter, first to everyone. recent repurchase a activity, our Thank increases million, for decreases quarter first on adjusted hotels will summarize our from million million, first than remainder Texas our oil-related XXXX. hotels from portfolio. totaling in including Year-over-year, within the group

outstanding company Turning of total debt of debt of our XXXX, of gross end $X.XXX which to our quarter the billion, CMBS balance sheet. entirely had facility. consisted the the first At

$X.XXX incorporating CMBS sale outstanding have paydowns total asset today, gross billion. of of proceeds, we of As debt from the debt recent

business shares perspective, in approximately total. we approximately $XX.XX, include we $XXX million $XX revolving our to received borrowings insurance have sheet to $XX which facility. estimated or excluded We paying first does million interruption of million company X.X the received EBITDAre. $X debt respect a additional in on repurchasing in received common at $XX price addition our also business total of interruption to currently asset to To quarter allocation repurchase March an proceeds. average that total proceeds its of with through March. stock million an approximately business outstanding have in from claims XXXX $X in With common our stock credit of adjusted Subsequent million the balance quarter-end, date, cash began shares from insurance during company XXXX, interruption million the proceeds, no utilized capital of insurance million approximately sales, on have From approximately is down

the interruption future. We of the million claims business expect to outstanding remaining in recover of the $X majority

on you incremental keep and timing received. proceeds posted will amounts We of the

are As a guidance. XXXX from insurance interruption proceeds reminder, business our excluded

asset sales. to Turning

Savannah, two approximately transactions represented of on hotels an price the revenue gross a additional today, in mentioned, sales total million, and one an over located hotels gross pro hotel outstanding. sales sold a price totaling approximately we announced key. in level Georgia of hotels debt XXX $XX,XXX announced, guest sales sale multiple. a we per Keith for Colorado over to previously represents just price price and million non-core gross hotel as proceeds located times basis quarter, times combined EBITDAre from rooms. Two Aurora, The from $XX on a for XX or CMBS paydown basis, as paydown approximately net X.X And non-core revenue first multiple on then, $X.X these hotel the debt sales net times X.X forma on months the combined XX XX a level to or multiple. a of trailing multiple pro an The used gross outstanding. three We the adjusted allocated the approximately adjusted times CMBS sales forma During proceeds or those EBITDAre

pleased their of these are assets disposition to execute to We value. lower-performing the on non-core maximize

portfolio in hotels, than further EBITDAre assets. strong margin sale additional for non-core our XX% the basis XXX three of we to hotel was to than approximately value lower portfolio opportunities our average level was through lower evaluate interest average assets hotel average average. remain points shareholders create continue and For the non-core the more than our RevPAR and Buyer the our

in continue our currently year Towards of strategic disposition non-core assets of and that that process, to a as are keep posted end, the on the various we activity we will sale you marketing have and number our progresses. stages

XXXX our for adjusted reaffirmed and we RevPAR comparable EBITDAre. growth guidance Lastly,

full-year adjusted We $XXX growth of expect for RevPAR continue the $XXX continue to to we million to the XXXX. to to comparable and range million X% EBITDAre X% expect be in

remainder from for repurchase of the The all Our EBITDAre be of of a includes in XXXX XXXX. estimated date. disposition the higher expected the offset and is balance to hotels to reduction recently G&A savings sold, share slightly cash outlook activity corporate by adjusted for level

we an range. share, the our respect be approximately With of guidance expense cash to share XXXX $X.XX FFO diluted low-end per which to per adjusted result to reductions be updated headcount will our adjusted one-time the EBITDAre of excluded corporate increase $X.XX per quarter, in $X.XX from a adjusted prior we to share FFO. million our of the expect and in of incur in As the severance second to $X.X range, staff,

share does As capital unannounced posted outlook activity, of we dispositions, over turn the the markets the you Keith. including move a or balance activity provide such and to back reminder, as call acquisitions on XXXX keep now We’ll will our I updates continue consider throughout any repurchases. not to hotel year.

Keith Cline

Thanks, closing, believe opportunity. compelling investment In a Dan. we CorePoint represents

executing line distribution our by through questions. cost portfolio we’re scale; and is highly performance XXXX and your a we’ll non-core asset manager which continuously focused improve working transformation creation, includes and by brand on proactive on cultivating by to two, property team high-growth initiatives the revenue multifaceted and to of With aggressive through sales. open Our against Operator? to approach profitable and the property-level One, we’re with strategic value realizing realize two we’re that, and leveraging for Wyndham’s management, value synergies our management assets initiatives. asset partnering our operating key executing with asset also key

Operator

Instructions] [Operator Omer first you. JPMorgan. question with comes And from Thank Sander our

open. is line Your

Omer Sander

the Hey, guys, thanks for taking question.

Keith Cline

Omer. Hi,

Omer Sander

deployment about regard you you extent just Can repaying talk versus continue your the review? in To to debt? can repurchases portfolio priorities capital share what

Daniel Swanstrom

Omer, this is Hey, Sure. Dan.

has our accretively repurchasing to opportunistically shares priority been debt NAV. paying discount a and Our down on at

upon plus additional amount. facility As about actual are require property And of debt to until allocated sale, loan to the further amount, us the we above paydown release stated premium XX% then paydown to does sales, our you on release mentioned we CMBS X% a sales yield hit required debt loan sales. upon our

paydowns a capital after be full including and have repurchases. loan to then proceeds debt the priority, continue to discretion forward reach we then So cash allocation for we other allocated move that we level when then to to as priorities, expect do with share use amounts for the

Omer Sander

hurricane-impacted Okay. same-store – hotels, RevPAR the I the X% was by many, that had as well as And guess, renovated from included correct? are The the a excludes then shifting quarter bucket? renovated nice gears, benefit driven how is in that hotel. first in And those hotels,

Daniel Swanstrom

No, handful of includes took actually base. X% hotels actually that There’s a comp, are RevPAR comp in the we the hurricane not comp the only hotels. hotels of about seven that out

hotels, of properties includes our Our all the all properties. base comp XXX is of and hurricane renovated which

Omer Sander

Got it. And then…

Daniel Swanstrom

headwind hurricane mentioned, growth of the in obviously, in pretty properties oil renovated RevPAR And generated as we the we and the in markets. kind quarter double-digit saw a significant

Omer Sander

opened? that’s only there’s one now And renovated hotel, Okay. one hotel not yet

Keith Cline

our to yet go but comp not it’s Yes, last investments. our some opened. property It continues at is LAX through in base,

Omer Sander

the Got then bps of gain. it. And XXX gain, with regard north to index I think you index were of

XQ, index the gains. I in think, you above also was pretty now Are XXX? solid there of

Keith Cline

because in Well, well pretty in so realizing, of we’re to first of recall index gains saw disruption against relates quarter, saw benefits hurricane in it we index QX, we disruption. think as about in and QX that as we that to and overlapping as you those the as properties, as the XXXX markets heavy XXXX, QX

ramp. sitting out there front of that over renovated properties Now, in seen quarters. specific healthy the number ramping pretty obviously, certainly some I me, overall are breakdown and have we’ve but increases past of got the index couple our don’t we’ve of continuing to

Omer Sander

you Okay. do And that a ex-renos the hotels? haven’t, maybe Just know don’t. trying ex you you maybe RevPAR overall? hurricane to and comp get But

Keith Cline

basis the be we consider And comp Q. actually be that MD&A about the first non-hurricane. hotels I – those the Q, in that believe the X% the we a down in And it’s of of non-impact are hotels our that would disclosed hotels. were non-oil, quarter. kind RevPAR In the on of the non-reno, would section these

Omer Sander

you. Thank Awesome. it. Got

Keith Cline

Thanks, Omer.

Operator

from with Barclays. Thank next comes our Powell you. Anthony And question

Your is open. line

Anthony Powell

everyone. afternoon, good Hi,

Keith Cline

Hey, Anthony.

Anthony Powell

second quarter. asset just question the sales Hey, here in on the a

market higher you looks – RevPAR? how March did markets it walk your me other And they previously? maybe than different those they hotels sales? were Were you in It multiples, also Can in better higher those For sold the as are to than what sold March? than you higher-margin? a

Daniel Swanstrom

Dan. is this Anthony, Hey, Yes.

sold Aurora. Denver Tennessee, we in compared two was markets lower-performing Tuscaloosa that And the in to first hotels hotel. was are and our Chattanooga only two Baymont-branded certainly actually both of One very that and the Chattanooga, and

look that margin a were which and have Aurora RevPAR by of from So you in about $XX was asset recent than the the as in previously sold. we particular EBITDA RevPAR, the profile sales Savannah they two an the pretty And Denver, most at stronger created did perspective. strong

that As we’re level we’re a whole we March. of and three, the margins, again about of two first which in stronger sales XX% higher kind the than a executed

Anthony Powell

you the may of in it order it. proceeds? higher mean that that than to XX% rather more those Does hotels below bucket generate hotels margin sell non-core Got some in

Daniel Swanstrom

Yes.

just think to of portfolio call, average review of about following in are contribution, our of – sorry, but number about sub-XX% identified our terms EBITDA again hotels call kind them initial the X%. quarter of about small we it our the and, strategic first in recap margin is non-core. as in quarter terms XX large of and Those As we many of fact, in of hotels, and fourth have

we is across creation on So which what is the basis, multiple may price value revenue value by transacting multiple share opportunity we’re implied by assets, executing portfolio. think assets very compelling maximize our these on demonstrate more on ascribe EBITDA what of to value to these a more a

value really and low to lower-performing with are closed of year-to-date sell we assets XX that EBITDA times. maximize margin five basis. revenue looking of sales think EBITDA the we’re representative north on multiple multiples these opportunity their And So contribution this a and we

Anthony Powell

any surprises performed the I in post-integration slightly, know would were April Were some May? relative expect did it. you is there down to it’s on early, great? what the Thanks. I more hoping and RevPAR performance said detail be Got but you for was how know here but that? integration you

Keith Cline

that want And Did you then, from you made. I core great. comment you portfolio? to thought two last a Yes, sales were clarify comment those Anthony, that the that’s

Anthony Powell

the whether could asking hotels margin than were…? the that would get theoretically was I you a below No. selling non-core more of that and XX% multiple if rather assets consider core higher

Keith Cline

would would we consider Exactly. certainly and I to it. if underwriting we math the your the fully. just work obviously, sure would work, question answered mean, I want make

as the as be the negative of integration, month, oil. planned we was planned the quarter about call, however. and the certainly did We right? lack saw weaker that data small systems so in impact in did had a it’s the But a number for of incremental to throughout a into center we right, about as reasons, know talked terms conversion, related have what we impact discussed, isolate softness you softness experience point, QX, We to on Texas from to source was given We think from So at our in call there ADR the specific We the our Easter for see outage reversal. we in the impact. was a decline on temporary But this the us challenging today very post-migration. and visibility of provider. disruption information,

really will disruptive I of a terms as disclosure and more that that reiterate manifested these ADR. the is mature and But stabilize our and see systems will very in learn did certainly So, it throughout acknowledging this soon quarter. in we something second it is transition lot

what more have QX call. this we the and better think as transition is, So we’ll certainly on we our of that communicate insights impact quantify,

Anthony Powell

me. for it That’s you. right. All Thank

Keith Cline

Great. Thanks, Anthony.

Operator

Keith further questions closing turn in like I’d back remarks. to I’m to Cline And no call queue. showing Mr. for you. the Thank the

Keith Cline

thank Great, you.

thank you day. you of Have thank support great a dialing continued for for always, today, CorePoint. in your As and

Operator

today’s conference. you in gentlemen, for program. and thank today’s Ladies concludes This participation

disconnect. all may Everyone, a day. great You have

CorePoint Lodging (CPLG) 14 May 192019 Q1 Earnings call transcript