CPLG - Earnings call transcript Q1 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Thank you for standing by and welcome to the Q1 2020 CorePoint Lodging 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, Senior Vice President of Finance and Investor Relations. Thank you. ma’am. ahead, go Please

Becky Roseberry

Swanstrom, afternoon are conference to we call. Keith us. Howard and remarks Good SVP Song, quarter Investment in of will Lodging’s the XXXX from and Dan CEO our earnings In our Cline, CFO. and you. Rob CorePoint our CAO welcome Garfield, first have our also Thank a with moment, line

our materially remarks from like materially only These expectations today. statements today I indicated from implied. those made not we would to actual results remind could that that do statements. statements Actual to start, duty subject forward-looking our undertake differ factors include expressed risk will to the or any as our of are may those forward-looking forward-looking in differ forward-looking to statements to statements. Before everyone and update cause speak We results today

For website recent GAAP XX, XX-K more Risk report of of in corepoint.com. to of the some company’s are May In the X-K filed will section and refer we Exchange at measures. our the on earnings certain in measures subsequent provided available non-GAAP reconciliation reports risks, the Report Corresponding and our to refer current Form with non-GAAP Annual filed these please is details Commission. supplemented by on on company’s today’s a measures on XXXX also on to financial metrics most the Factors as and Securities remarks, GAAP which release, Form

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

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

Keith Cline

Good Becky. and Thank you, everyone welcome. afternoon,

those challenging can you to of for all our are incredibly fighting this and time join XX on pleased everyday. an pandemic sincere frontlines are we us. thanks offer who the have us last been weeks The We

my plan and our focus later over we operating I sheet through profile, to will today, and it I it to been managing forward. relates crisis business, time disposition this you action have how going today balance liquidity program. Dan update results, priorities non-core As our on will our to turn on key our

top to were time a focus next improvements execute Entering with the our and our the were addressed on the other XXXX on revenue year, our ensuring initiatives Wyndham and needs on phase completed and of into, collective a to team. of real revenue The entered change including estate and in we impact strategy. operating rapid focus year-over-year the reprioritization in for current driven has pandemic, due reality declines our have record COVID-XX platform

we will most obviously corporate implement cost priorities and strategy, cash levels and maintain preserve and While the our resiliency economy. the of prepare containment estate flexibility, the the important on continue hotel asset full focus management are reopening to oversight, continue real now liquidity, to exert balance improvements at and right sheet and to platform strategies to for strong

cut property to-date, efforts at to preserve possible. much liquidity level strong have management as and aggressive costs significantly most to oversight Our the as asset reflected

efforts initiatives. initial I give on our update last an on will details some these month provided have We and briefly

guests as hotels. of we we date our of demand With of transient weeks. accepting begin number accepting XX guests. efforts, have the all As are the to to hotels are April we XX hotels were and currently temporarily several expecting are transient guests more XX hotels reservations and At X, reported next the transient we hotels, our XX the accepting reopened resume initial over remaining that reducing not XX peak, such reservations. To-date, improving

safety into our circumstances, best hotel and course impact regularly our hotels action of demand assess to the on consideration of the room continue to local We our of the taking all guests, of operations. determine

at that efforts Last property were month, we underway. level the outlined of containment a cost number

hotels those amenities sold. what nonessential such rooms all our cases maintenance, and Labor occupancy associates reduction taken, cut original at across to have and drivers the some compared freezing in standards better context we XX% of We the the is to staffing by and van lower intensified hours driver in by of structure essential guest today has all our have XXXX spending the actions revised been with reduced a over as of elimination only level safely. give cost number you biggest of to as the have reductions what the the all significant levels, with costs housekeeping labor hotel our driven savings as expectations. we areas breakfast, of run P&L match To cost significantly in to service well property reflect

the containment of to burn cost our monthly the goal In rate. is reduce cash end,

perspective, in our was For low cash preliminary occupancy CPLG to Based containment of million. level to $X the be have our an in both by the current of as estimated our property rate $XX.XX, discussed, of month million full historically reflected items million. recent and cash which approximately we which weeks pickup industry reduced burn the across and the of the XX% burn our X impact monthly to includes from during run-rate $X on $X would occupancy approximately RevPAR last a $XX April, the million relates cost it approximately performance and range of level

We to aggressive have our only costs. focus limited not

have third-party with first medical relationships. responders, such stays, We other assertive actively the taken opportunities extended government management. are sales asset construction, pursuing and and manager, Together as as we and regional as our same with approach well revenue local management

gains management a we through Dan and and and us the We the these through revenue. share related and assets increased a the costs spending for to to corporate details a walk in steps reduce been G&A number with taken level, corporate these At revenue with very capital have will market on those of have also moment. read is of in efforts early encouraging are working past in actively strategies successful number that

by underway generally in corporate on is certain clients with billing finalized best on Wyndham rate June and majority booking for major meet briefly schedule the XXXX, the expected was implementation from the tools XXXX completed schedule first me by dynamic let legacy of setting other tools the benefit scheduled quarter in these last, the direct nonetheless. the to group to is The encouraging settlement. progress Recall our deliverables And late and the under begin XX, touch enhanced available XXXX, XXXX had on go in to deployments live but late tool we XXXX always system other be initiatives enhanced for the the of of XX. with that December benefit to

proven creator non-core X for and and highly our we inception, of XX hotel believe have totaling continues the contract the XXX a gross multiples. could remaining or completed liquidity. of hotels XX create for further is The $XXX we $XXX strategy enhanced hotels next over have value. highly accretive. approximately at accretive to to us proceeds the sale generate so assets balance have be proceeds years estate proceeds million value the real proceeds Today, of sheet under substantial we Ultimately, primarily de-lever million. Our of sale our Since EBITDA reduced debt the gross and

asset any the last near-term fact As to was sales delays in to deals to it were impact pace the a it we in of reasonable sales. disruption experienced slowdown disruption or under in I asset monitoring We as evaluating contract. mentioned and these anticipate from and said quarter, related did a some we relates COVID-XX and

million forward have our of X on is those quarter We buyers call more XX $XX call. have March $XXX slowing first SBA waiting gross million since observed on approximately we the they hotels some process for during the in the periods raising and quarter, compared until last news approximately XX, including that the good loans visibility. QX financing down, proceeds is with prior sold and The since

with in a some we a expect, not might have gross closing details restart the so approximately closed additional provide proceeds. activity May million in but seen deals for any transactions will did moments. you process to As on few in far April, we Dan $XX X in have

during has generate. and was the doesn’t diminish significant will the said recent this to multiyear pace and or all We this goal along the have creation value change that program process continue April a ultimate

in ability create response of on that actions matter CorePoint future significant our We you for of for I long-term would is am for the look to and our difference that updating all have like shareholders. the progress. made In of value reiterate forward we lodging. have operating and weeks to this our decisive our over a collective last proud taken I closing, team a believe new matter, several to the

I turn CFO, With over Swanstrom. Dan our to Dan? will call that, the

Dan Swanstrom

to and the a preserve first everyone. updates Keith Thank you, start on disposition I our review and our I strategy. trends balance afternoon actions results, will sheet also today brief will operating non-core recent our quarter of provide good by liquidity. providing and

industry trends RevPAR of and performance quarter was operating a The ADR driven first the on in approximately a highlighted decline generally compatible The decrease in occupancy. results by consistent point XXXX X.X% with RevPAR during that in X. XX% deteriorating and operations first decline quarter April our update the we were basis

in sold the impact significant in as platform RevPAR quarter. to For in of contributed due This first and April XX% resulting occupancy to the reduction the to evident revenue $XX transition the well from decline comparable adjusted hotels. and impact month our the is year-over-year. was year-over-year as The XXXX in of integration disruption stats EBITDAre which the the March, room declined the from for of million the to decrease of on in approximately demand clearly Wyndham the COVID-XX, hotels

total XX% decline and we encouraged around on hotels of for occupancy first relates reservations occupancy that drive-to May some believe mid-March in capture Since it many leisure the We through travel recovery incremental demand at service the accepting of hotels, low Looking segments, our well-positioned early online, hotels. with higher is achieving April. portfolio around particular, second levels week XX%. mid-April and occupancy room as reaching a portfolio from to mid-scale level April select the half focused our XX% of the approximately rapid of approximately point our occupancy been to of demand in of second trends have XX%, experienced demand by our transient associated the predominantly for of back for time, half a the coming with of for signs with destinations

today lender includes made our million. This we $XX $XXX escrows revolving perspective, credit $XXX cash facility million. and balance of liquidity from From the that our is million a draw approximately approximately excludes

controlling We costs on be capital. focused continue to and highly preserving

basis; about needs in back level capital of life XX% to resulting spending Therefore, safety in cost capital of an implement be estimate critical In total of preservation highly of corporate to measures. we to the level to the annualized resulting the steps containment three, with in capital level total CapEx run-rate also XXXX. for to numerous taken capital an two, at deferring stock scaled operational cash basis; the addition estimated of containment or XX $XX the as in exception earlier, corporate annual measures common reduction on through the or $XX that estimated include: our dividend on initial the an currently have actions the various quarter at savings property compared cost XX%. $XX preservation Keith approximately walked of we with resulting at per expenditures G&A suspending of respect an and non-essential least approximately a to of plans approximately These million initiatives and implementing all one, investments number million million million cash

of highlighted, currently for be as our approximately million well implementation approximately to estimate corporate preservation month liquidity outlays month, total interest million these $X to cash current Following per $X million per and the as expense includes for our $X we various initiatives, corporate million expect which capital operations the cash an range for the to range million in preliminary of overall approximately monthly estimated of G&A. of million per this combination April’s In that cash with results Keith $XX million burn month to estimated $X month. $XX $XX hotel results cash burn

of terms May contribution occupancy April demand of to-date, a are monthly the point from represent recent in positive room the and optimistic month for Given that the low we negative hotel operations. could in trends

operations comments on results. of million go per month In range half more if the monthly cash half as assume compared $X April burn to preliminary cash or approach full basis April $X reduce reiterate forward we by of second May overall hotel Keith’s burn month could million of first fact to of a to that estimated operational to the the

asset Turning sale to last $XXX million outstanding to on the of through debt debt the our of balance have paid year sheet $XXX use proceeds. at XX, call March our and million earnings at our we down end time CMBS from

$XXX As of sale using to most further recent our while drawn is of CMBS today, we revolver have our paid portion balance debt proceeds, our million asset down even a $XXX million.

average interest weighted current rate approximately X.X%. Our is

total covenants eliminates XX, As extends May in Subsequent loan and quarter going leverage through amendment we facility. financial extended net March under end, revolver our of a XXXX interest these forward of to covenant with that pleased with revolving our were both we the and were two XX, requirements compliance credit maturity coverage the maturity. the to financial bank to group execute

With the CMBS weeks. coming maturity initial approaching the respect to the is date facility, in

maturity hotel expect June on first June valuations, markets and We option flexibility the million, of this sheet. of the sales extension revolver XXx. a us for additional approximately These X.Xx comments have first well existing June multiple on release terms approximately at for hotel revenue on which $XX extend thus total gross lender proceeds the At XXXX, To closed far revenue one of to provide disposition in our on attractive extend of ongoing were CMBS hotels each. of quarter Midwest the success quarter Month-to-date, five an expand and EBITDAre the of provided balance have extensions, approximately one completed approximately respect for total gross notice to an transactions March maturity the proceeds borrower successive we XX average we we non-core to closed have year to our XXXX. sale of gross $XX And as EBITDAre multiple program, in facility three and the additional a year included of enhanced continued adjusted effective $XXX located approximately be the point, our multiple X.Xx to representing of May, of multiple XXXX hotel following through of the during on such an first Both options for Keith’s date as the XXXX. and hotels last proceeds XXx. million, amendment date our million, revolver of for with average will X total initial we exercise of the adjusted in XX. quarter approximately total sale regarding

XX core our of As our for the of in believe assets COVID-XX outlined top for In these potential value higher to disruption this primarily MSAs. and and located non-core there is that a have to in we recent non-core strategy we realize compelling and of patient the our growth hotels and be quarter, light been rationale XXX program focus last continue strategic by caused narrowing over on our past go-forward XX are hotels. thoughtful execution we disposition portfolio to weeks, focused disposition will quality

a execute are our numerous and benefits to always continue was We two believe there effort transformation long-term to over timeframe ongoing our to strategic portfolio period this on years. of

ability expected the the recovery our early continued the weeks, remains fact at hotels, pace slower non-core recently, than a complete In pre-COVID-XX the closing, of signs for and encouraged over by we preservation to in in with priorities several sales a occupancy are albeit we’re while on the initiatives. demand last that through critical continue containment public have milestones to right near-term cost lodging best believe challenging our health and position capital the and very ahead. environment manage remain we We CorePoint steps pandemic, this taken to focused to operating additional

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

Operator

[Operator our Instructions] Deutsche Woronka question show from ahead. sir. Bank. you, from Please go Thank first Chris comes I

Chris Woronka

the Hey, guys for good all thanks color. afternoon, and

hotels are are some are overall so that the a hotels in know you to said for far talk buyer there do the bit you think as of So owners close, could you I able new to alternative you Pretty assets? X I if mean, them – May. or kind of these kind maybe little impressive about keep pool planning use? is

Keith Cline

of flags. vast, La the these that deals vast to hotel a it hotels even we either generally, existing kind the owners potentially Quinta majority own pre-COVID-XX. they flag were are had that may other Well, closed are or deals buying that that And struck people these of

deals you will a from So of onset, continuing the operate closed tell the for I hotel. to these were purpose

the that may over are those that of But majority the – for deals vast time. change operations. continuing Now we’ve hotel struck

Chris Woronka

maybe that. there hotel corner, then, to any going competitive about seeing is could core there they’re Appreciate bit product competitors a think great. in – street I guys guess for corner you more and do the be maybe you but that go on you are you as And your and focus markets you the possibility closures is those Okay, that signs by even a of think do branded, little I set. on street older XXX hotels you probably mean substandard and more some now.

Keith Cline

in Well, it’s of the the I segment are very the interesting, number performing aggregate number really an and of price data with right. point of seen from rooms And that occupancy market’s differently by Obviously, perspective outperforming rooms terms economy open. you’ve closed. think

our the of and we’re as release bounce have at or Now specifically occupancy certainly from about his that points times. in in a mentioned talked seen are Dan we’ve XX% higher as in seeing in approaching comments. the press And we hotels, back terms mid-XXs well, and we nice our mentioned numbers that low

on brand accelerate market our think about challenging – our the as street location pretty hotels is occupancy the seeing looking to these environment, hotels, clear given resonating. and we’re of that relative in the reacceleration that gains the I So of corners. positioning to share the competitors of a the that It’s and

operate transient until very of and of a on And we period Now And in additional support a market, rooms with a about contribution for that cover few the owners, we’ve work pretty, the being every single margin if methodical Like it sold has suspend keep hotel reviewing closures perspective. number hard we’ll speak number them back. to ability, basis, guests we time I level a that are that competitive demand fixed locations for and cost of constant given hotel that those a to can’t where them basis, the from on and operate. pretty comes evaluating can’t exists available rooms we own in to demand will said, the are of been all systematic

Chris Woronka

lately Is I very the there Okay, a last me, go? just helpful. that gotten level level of you roughly kind to that are up have transient. hotels breakeven occupancy one occupancy is taking mentioned And one for for XX% the think you or property XX% still at more

Keith Cline

Breakeven a how in because hotels these right, a sensitive breakeven it’s that there’s concept, right. of significantly and can nuance lot be variables affect

Given our large charge. in given cost we Labor can ADRs of very the the service part select that typically highly ADR the it industry, that percentage make we’re of a is and sensitive. very

running So mid-XXs say in let’s XX%. strokes, it as and about let’s if in you think a labor are percentage of revenue ADRs we as broad is, it the call

Our occupancy. breakeven kind XX% of to is close theoretical probably

you dropped if basis mean very points, hundred is to the at it’s that labor a breakeven by show is few ADR occupancy sensitive. how the theoretical cost XX-full sensitive can drop Now I only the points. same

puts best So we’re to optimizing at growing and kind in position a and occupancy the properties level RevPAR that of return. rate these focused on economic drive us solid in a

it So does vary.

XX% the how XX% comes it’s on to that architecture of would in the depending I probably range revenue So occupancy of kind say, in.

Chris Woronka

understood. Very Thanks guys. helpful. Yes, Okay.

Keith Cline

Thanks, Chris.

Operator

you. Thank

go JPMorgan. from Sander Omer from ahead. comes question next Please Our

Omer Sander

Hey, for and are questions. my everyone. I healthy. and families well hope are you taking Thanks guys your

Keith Cline

to Same you.

Omer Sander

you. Thank

of made to of debt, on bit debt than XQ given how sold it, a the down from XXXX. your does So XQ into reading for deploy lower versus down to what the the hold guess that to the portion pay today in changed? down much and proceeds used of asset I too used you use guess them the the proceeds amount CMBS can portion required first, come industry you agreement? pressures assets thinking was the sales, proceeds proceeds on the I was pay

Dan Swanstrom

afternoon, good is this Yes, Omer, Dan.

require to I way the the XX% know approaching allocated premium. picture, loan that plus the we’ve proceeds as been a CMBS X% think agreements big it you

– paying CMBS. sales first that proceeds proceeds from Our first to gross allocated net sales to the down are

been when liquidity. as the that to to CMBS so down paid pull out time, managed at And six enhance we mentioned and the required least we in the extent have doing remarks to we’ve as months, last over more recently cash, have Keith our windows under his it open over we’ve

As forward, be we would debt. we deteriorating in to and the resulting CMBS would asset pay levels proceeds demand that move we and required CMBS the below be drop sales the therefore from down the the given of EBITDA all threshold will expect in

Omer Sander

financing at one that’s hoping is state comments on for these Thank versus when Okay, earlier sales. one see together come on point was weeks? of follow-up, really the the on buyers looking guess, then of how looking a helpful. – I you’re you. markets of could just asset investors the And elaborate the to things of I just or you sticking that much How kind next couple the

Keith Cline

mentioned wait the you of we month some Obviously, prepared my the close it’s well remarks the since and contraction own just occupancy, that in during to deals month portfolio in of mentioned some our in our as the in financing had given the just in see. industry, rapid seen assets rebound history the we comments, of you’ve steep paused are those deals then so the both. and As in assets and seen the worst combination recovery on ones of a had that buyers markets as pipeline April, and operate the we’ve I start the kind of non-core in that in as to the now

potentially this see there’s buyers with you you on And deals to they And additional that trying be pausing. that the some I spent visibility where bottom seen with we’ve those are the do still by have any if buyers also us in – markets the think still do have we that and but continue then, gain since work to financing to recovery. really paused reengage markets the see could of April, lending

Omer Sander

you. Thank Great.

Operator

I like go Cline, I no time, remarks. Mr. questions and queue. President closing ahead. further would to call the this back you. in At Please Keith turn Thank to over the for show CEO

Keith Cline

I safety through want your this. all of you. and as you your and we And Lodging listening to health interest families for lot Thank a today. CorePoint we in work wish all in thank all of

Operator

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

may You now disconnect.

CorePoint Lodging (CPLG) 20 May 202020 Q1 Earnings call transcript