CPLG - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the CorePoint Lodging Fourth Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to hand the conference to your speaker today, Becky Roseberry, SVP of Finance and Investor Relations. ma'am. ahead go Please

Becky Roseberry

Swanstrom, welcome SVP In Lodging's have a Keith our is and comments and room in XXXX us CAO. Investments with some Quarter and Conference from today Dan CEO our Call. moment, Song, Cline, CFO. to afternoon Also Fourth the our CorePoint Rob Earnings prepared our of Good we Garfield, will Howard

differ our materially start, speak would as those statements Actual like remarks that today update not do I everyone statements. forward-looking will today. any we of the Before results only in duty forward-looking remind could from indicated And expectations forward-looking to forward-looking include to statements. We undertake to statements. our today made

cause or differ from our actual These subject implied. statements are results those materially may to expressed that risk to factors

filed details XX-K financial more section Factors Report the For please risks, measures. some in remarks, certain Exchange these we and the also the the on on refer refer recent non-GAAP will Risk to reports to Commission. In company’s with Annual Form Securities today’s most and of of subsequent

on GAAP website and Corresponding non-GAAP provided available in corepoint.com. reconciliation measures at our measures earnings of is which metrics GAAP release, to a are our

the to that listening information Finally, for it not discussed will March you no call this that presentation possible XXXX after will replay be those a we of XX, this remind And current. will be is longer updated.

to call turn now over With the will that, I Keith.

Keith Cline

Thank join Good you, everyone could us. Becky. afternoon, you We're welcome. and pleased

to environment the We're as Wyndham and industry, closely priority. the with and last the there's always, employees health macro and rapid few in been to of our weeks, a we've actual lodging for and we’re the As deterioration of the a lodging seen COVID-XX to over in sudden safety unprecedented the anticipated and circumstances impact virus. times the guests as all working due respond

demand. With initiatives transient cost in actual we've evidenced we business, by disruptions respect as million our we're slowing have declining the response pace. diligently of to $X to our forward-booking from experienced And in level, incurred to asset the revenue implement in business approximately our slowdown business working containment At lost in a a seen to-date.

does also travel business group cancellations. of and constitute part our group overall a mix, Although material experienced not we've conference

recent these course time the With this formal to due at and in mind, to limited uncertainty the trends forward-bookings we on prudent believe guidance visibility operating is trends. and withhold

its cognizant most without on obviously our While of that addressing employees our is goes immediate saying we're priority. it the impact guests and macro-environment, business

want provide did on to on some take call company's I and initiatives today's Dan, to performance. the time However, key an and update

expand briefly disposition to hand will fourth provide our meaningful it non-core time. off decision and discuss led I'll full-year strategic us review we that value this program to to shareholder results I the of Before why and our review and estate real over Dan, quarter asset believe the our strategy

to which XXXX. decline compared of results. year. million, for was $XXX quarter the to compared a for the as quarter Adjusted the comparable X.X% fourth us declined EBITDAre us for same RevPAR to Now XXXX to year the X.X% period XXXX, in of XXXX Fourth bringing million brought to the as $XX

ADR, was outlook, included revised quarter with which continued market in fourth consistent our share. The XXXX declines and occupancy

segments. midscale macro-lodging of the Wyndham the perspective. in certainly discussed quarters, general following from a system's and for to migration as softening significantly XXXX, back half platform the challenging early was XXXX in a most operational last the disruptions We experienced of well few as occurred in that revenue the environment we've As year economy the our year, an

and this of have legacy schedule we're to we other the were key support at working we’re closely revenue functionalities quarter, to And the settlement, reached With Wyndham during reestablishment with are the management on to at Wyndham fourth least equivalent point which reasonably respect booking the pleased their meet deliverables. systems. to to agreed that the upon XXXX

Given that XXXX expecting not the benefits see changes or would material these until any late to implementation we're from like to remind early I everyone timeline, XXXX.

fourth quarter the of payments $XX During terms than to remaining June $X of CorePoint received settlement, the the totaling of XXXX, in Wyndham payments receive accordance the later XXXX. cash no by approximate from settlement million expect with approximately economic million we

closing Wyndham reaching sales criteria, assisted with and settlement has franchise only efficient an resolving on The a asset operational not was for which agreement the transfer more timely important for us but approval process. dispute also achieving in

and was of disposition we proceeds approximately the and date hotels X XX million. we've and hotels outlined sales, To for sell $XXX under to $XXX gross initiatives hotel of March, Phase XX contract sold non-core plan million to gross proceeds XX a have for million additional our an of $XX proceeds approximately one for approximately hotels for top of gross $XXX targeted Our million. highly accretive program XXXX. Last non-core

would proceeds our XX of XX the multiple above times an revenue of which accretive valuations, times of Phase have total and X multiple well our This assets and multiple. gross bring XX average X.X hotel a approximately total trading been range EBITDAre for highly to initial adjusted

our platform to ensuring to properly turning to drive focused any environment, evolving to believe initiatives, and improved aggressively we well from vigilant and Now disruption on other the rapidly capabilities upon are asset top and revenue remaining our addition the which our results. completed to business address XXXX improving and operational settlement as time our also this improvements that will we’re processes, management in as pursuant responding Wyndham needs, on

Additionally, real XXX strategy meaningful portfolio asset phase full At potential creation assets and higher are once drive on MSAs. growth dispositions. estate of value next primarily located will execution, focused in Top we're again should that quality on executing our a in are this which through hotels core the that our strategy, result XX focused on of

I and a strategic sales of disposition hotels, of review holding as GAAP program non-cash details, quarter mentioned XXX a the we’re led of portfolio, size an charge these include non-core the disposition but our necessitating the fourth our non-core of at This outset, for expanding to success asset the Dan on will X the hotels. the walk to-date the program based of through of Phase to reduction periods impairment additional $XXX group of expansion applicable million. more of

under with combined date, four to X hotels million these with a of To pleased have additional Phase we’re of for buyers approximately $XXX sales sold expected generate XX $XX an proceeds. Phase to hotels price qualified X approximately contract gross gross in million

times sell we three have $XXX targeted remaining years XXX of As over of on a hotels disposition intend in next two to have generally sales the proceeds based million of to we of generally non-core our gross and total multiples times. program today, that revenue two approximately

As and X gross with representing these under times revenue hotels generate remaining adjusted XXX Phase multiple reviewing which of times. of of X.X multiple million approximately highlighted non-core expected X EBITDAre both I Phase sales progress, contract qualified and XX an just average have in already we to hotel in are approximately proceeds our XX and buyers, $XXX total, approximately a

contract in it environment. potential in the asset current meaningful to a assets the date, asset as sales, seen monitor to the pace will term, continue it impact evaluate we a We any is under relates although a slowdown haven't reasonable sales anticipate near to these impact of COVID-XX closing disruption to given of of and for or

current and Executing on transitional near-term value next to continue on will and is phase for balance multi-year financial sales unlock to portfolio. while we this environment year our us strengthen to and our of a the enable the asset CorePoint, business supporting evaluate the monitor embedded of XXXX focus impacts sheet.

on We're This our and getting environment management company creation. maintain we're critical initiatives also should operators, better working employees. management portfolio our Both long-term the and transformation. online ensure year the our in appropriate CorePoint to end measures excited to with success place safety the revenue our tools to of for position of by and guests value are be executing

And CFO, Dan to Dan? call over Swanstrom. our turn with that, I'll the

Dan Swanstrom

Keith good afternoon everyone. you, and Thank

balance review strategy led operating disposition review update. then by review the the the sheet our and additional I'll that non-core expansion providing XXXX quarter details strategic of also of provide I'll to discuss recent allocation start brief today our fourth observations. and provide a activities, results our a portfolio on of capital

And outlook for a XXXX above results in in in operating XXX to with during basis generally quarter the was we full-year midpoint line came RevPAR and decrease declined the just decrease comparable for and RevPAR fourth adjusted were result, a achieved X.X% The point revised expectations. EBITDAre. growth as ADR our Fourth a in comparable occupancy. of our X.X% midpoint of quarter due the

headwinds this in in continued following and primarily weakness revenue, the for to in $XX the fourth the declines year, quarter comparable RevPAR transition the in Platforms sold year-over-year including to decline impact earlier markets. The our of due and of hotels gas EBITDAre reflect of Wyndham which decreases portfolio million the oil XXXX is adjusted

our December and of which debt asset to the $XXX have in million $XXX quarter-end as debt downs balance $XXX debt $XXX had sales down Turning total proceeds, we completed subsequent sheet million, gross After gross is factoring million. of we of a XX, cash to million pay approximately outstanding quarter-ago. total outstanding of from now of using approximately

million currently borrowings $XXX have outstanding facility. no also credit our We on revolving

focused on adjusted we portfolio a net debt X.X basis. debt approximately balance, on remain our EBITDAre allocation time. highly our and current shareholder increase on disciplined the to value capital to based own For times net We trailing today is over

disposition $XXX XXXX, from gross proceeds million non-core have program. March Since our we in generated

substantial million proceeds being of of Our capital we allocation have made approximately that on CMBS priority with with been repayment to-date debt front the debt $XXX has repaid. sales and progress

aggregate property XXXX, Hurricane million capital of proceeds. $XX an in we $XX common totaling dividends approximately $XX in shares out restoration insurance portfolio the X.X costs made which common approximately repurchased and for million, of approximately During that predominantly million, by funded investments excludes are paid stock million investment

also cash half as mentioned We about currently of the meaningfully which our at stands million. second XXXX position $XXX in increased

of flexibility. debt capacity deployment our primarily and continuing future to the we’re raising the paying for and balance sales CMBS priority on will Our asset sheet to down be through concentrated maintain continue capital

non-core As discussed, we're program. disposition expanding our

core portfolio of quality focused Our MSAs. are will potential that in be top XX higher hotels assets comprised growth XXX primarily on go-forward and our now located

resides XX% In XX portfolio the MSAs. Top core fact, in of approximately

XX states of the XX completion program, non-core XXX narrowing and we XX MSAs and for the to disposition footprint our geographic MSAs. from are states forma Pro

in higher California concentrations increasing volatile West while as as market as Southeast Midwest in locations, in well energy and and markets, low Coast more We’re growth reducing our Washington, footprint in generally our markets. the such growth

of We’re of our $XX in that hotels compared than approximately XXXX of hotels hotels, remaining all about average XX% of about to margins scale EBITDAre average margins remaining and hotel had XX%. $XX RevPAR that non-core hotel sold less also adjusted adjusted economy our chain disposing had and EBITDAre and RevPAR

hotels and core XXX age of hotel This EBITDAre substantial, higher of as this of with margins adjusted transformation are will with performing lower of key $XX capital RevPAR more hotels. achieved portfolio the a benefits needs of meaningfully significantly in be of we focused markets level average strategy in portfolio a reduced The XXXX older and better sale hotels, XX%.

noted formal XXXX. earlier, for Keith guidance providing we’re As not

events guidance few on hold-off Given believe portfolios wanted time. the weeks, environment XXXX some unlike walk what we are we might a experiencing, how through unfolded. to capable provide extraordinary Obviously past it in environment, the on thought year. thought otherwise were and of this I over the To currently macro-lodging have at stable what we core this non-core producing the perspective is briefly in to prudent we

results we $XXX EBITDAre XXX core for own was portfolio XXXX point, of a assets. $XXX for total adjusted portfolio, for the starting hotel million and actual as million the portfolio today Using the

down flat were portfolio expect be taxes estate continued For growth headwinds others in down to XXXX expecting from expense X% property as property comparable for XXXX, industry, we the portfolio. X% operating down Similar we the and compared the X% to for and including labor core to RevPAR insurance. real total to wages, to the and

Clearly, the EBITDAre given hotel We creating total for would future slightly below have expectations expected adjusted core the the about year-over-year the XX% visibility current X% prior into current in these and environment for decline portfolio is of to of significantly affecting operations. portfolio. uncertainty this a lack to translate

cost appropriate this We’re on expenditures. initiatives non-essential the and respond as to now to our working as on mitigation capital deferring focused closely with manager third-party environment, well containment

comments million our to demonstrates generally of proceeds two transaction to-date time times factoring of times three revenue program. with approximately can be net targeting of expansion of in the we Keith's costs. midpoint gross approximately disposition based expand sales management, range remaining on sold, or $XXX we million we’re over proceeds the estimated $XXX fees create asset to To The multiple of in the the valuations an hotels and this non-core XXX with termination believe on after to value success respect sales

least We to of debt provide pay portfolios current would $XXX used which that to at its investment could over core of opportunities, balance envisioned capacity capital include that proceeds million down be accretive proceeds additional further balance earnings grow other the would million, profile the net for CMBS net the $XXX approximately or pay time. and down debt increase from allocation of

Our to strengthen target for portfolio EBITDAre and times times. sheet to debt adjusted objective core is range four balance net of reduce the longer-term five to the our to

which on levels. generally forma annual to for From basis a CapEx capital an X% about total is core under revenues, maintenance we the pro anticipate with just investments consistent $XX perspective, or XXXX portfolio million be of

unlocking to macro believe and ongoing responding the balance our a disruption business, realizing allocation capital accretive core embedded long-term numerous and sheet, portfolio quality opportunities which are investment portfolio there value, sudden portfolio profiles. the on and growth environment, transformation, capital higher with for this resulting to to hotels our focused next the to phase focused strengthening better the of CorePoint in we’re for of be position while lodging capacity change closing, include strategic benefits higher XXX we future the of rapid located to In on better significant creating our uses, optimizing enhanced priority

With the Operator? your questions. line open that, we'll for

Operator

Bank. [Operator Woronka question Deutsche Instructions] Our Chris comes first from with

Your line is now open.

Chris Woronka

under for are hotels? of contract to portfolios maybe as is are, they mostly of kind some pool? now but give the are the that sense sense What these a you they they give a sold? us us not right bigger hotels you Can small general Can buyer or one-offs? group there are Are buyers

Keith Cline

et kind acquire It's pool buyer of investors. as a of those of expect realistic that general this certainly or would the third of also be of under same but the buyer hotels under are the in And access asset end the typically to current the close small, about group, by continues cetera. hotels in the capital, terms five small today, is contract, of to one purchases. period Maybe type as we we as about to all are the over a could to environment two have a So the that that constantly in quarter we contract can of you think year, think but time, we're groups. changing three transactions

now So the this our by it, we're going these is to continue close to year. monitor that should but quarter of vacation as third of right hotels

Chris Woronka

functions for how you kind want Okay, there how Wyndham, to containment of challenging they're take Or kind in following they on are that's since costs? out? guideline there really terms that initiatives costs environment, sense occupancy any can of much And cost for, kind current take underwriting, territory, fall? we're very It's process helpful. how might starting to the uncharted underwriting but properties is is obviously of the of in at they then they're you these any of with step on mentioned in

Keith Cline

call, shrink Well, a in bit yourself, unchartered you're maintain. occupancy that box. you rooms lot footprint as having the I at to and hours mentioned right on you and little the you clean how the of the Everything sizing so number you're we're hotel point. quickly demand declined, inside available of on the on allocating this steep territory continuously over the focus things from time can that based and can in has given there Obviously, are of a mentioned a

potential of try make and guest mean, hotel of can guests, hotel level is address. There's and only help variable you for hotels open also some to type some buffet safer mind of I the out to a other growing servings, costs. certainly a a things as one that there myself a there tweak lot the is comes consumer food can concern that and food in where contain that it not you to costs but

So can thing aggressively is given to and of to I continue is things demand address changing litany move monitor in quickly we that changing. The can that quickly would the response a how there's we environment how we demand. say

Operator

comes Our JPMorgan. Omer from Sander next with question

open. Your now line is

Omer Sander

ability Can sources liquidity tap any with your and you maybe capital talk CapEx about about of to maybe if needed? maybe other any or defer

Dan Swanstrom

Omer, Sure, Dan. is this

call, perspective, property revolving in Clearly level. So credit as and focused, liquidity we're at containment I borrowings very initiatives we $XXX have mentioned the cash million in a on environment, currently of this cost million sheet $XXX balance from on the have about our outstanding we Keith mentioned currently as facility. on no

maintenance all the CapEx deferring as portfolio. across kind non-essential mentioned also And I of we're in call, the

couple a maintaining terms capital in there pull of just and and scaling are and those very we're some that been flexibility being has caution prudent So capacity. that can sheet we spend balance sure levers and of back making

Omer Sander

as get of the the think higher times, about just go of in on lockstep maybe asset assets kind of the to in one of kind does and reaching you these sales. of Can scale maybe five then and regard talk up XXX are, does and kind that you with there the as target leverage portfolio? that four tune these then in garnering is And or you are some presumably multiples portfolio, should of EBITDA you one that is quality these step asset or the what improve follow-up that sort your timeline sales net about towards there on to earlier core in questions

Dan Swanstrom

Sure.

on the Let me multiples. with your start question

EBITDA year-ago hotels, a of they're respect successful, assets, as of multiple on with than to communicated been high-end out had in contribution achieved less we've that these terms margins. As about And revenue XX% lower our Keith the very mentioned we've of the range X X.X Phase times. we've in the obviously, put script, we

EBITDA achieve able of XX times. multiple an to So we're

forward, of XX As a to valuation translates this we about times, a times remaining have hotels move on hotels on to margins or slightly but higher we as the mentioned, EBITDA double about EBITDA that to EBITDA XX% the do basis. XX margins, multiple higher non-core a three two so and given actually the is multiple gross

Keith Cline

Omer group, of as remaining hotel about. XX those which kind adjusted those aggregate new mentioned are that under we contract. times look Dan multiples the about at talking of And Phase range and contract X.X script, hotels, in is Phase are was multiple, at that I X of X multiples as with And revenue times XX the XXX EBITDAre the under and consistent non-core,

Operator

further Thank I'm any would for this the turn I call any to closing Keith not showing you. like questions remarks. now at Cline time. back to over

Keith Cline

thank CorePoint want the us you. Lodging. you in call your everyone to on for continued just I today interest certainly thank joining and for Thank

Operator

and today's you this concludes call. for Ladies conference gentlemen, Thank participating.

now disconnect. may You

CorePoint Lodging (CPLG) 12 Mar 202019 Q4 Earnings call transcript