L - Earnings call transcript Q3 2017

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Loews Corporation Quarter Three 2017 Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, we will open the call for your questions. It is now my pleasure to hand over program over to Mary Skafidas. Please go ahead.

Mary Skafidas

Kristen. you, Thank and everyone, Loews quarterly Corporation's Good welcome call. conference morning, to earnings our our company of copy supplement website, earnings on A found release, and be overview loews.com. may

Jim have the Edelson. David Chief On morning, our we this Executive Financial call Officer, Tisch; Officer, and Chief our

remarks Following session. our have question-and-answer morning, this prepared will we a

from that implied will the nature. in Actual in any achieved by Before I that due wide conference forward-looking remind we to begin, or call SEC our uncertainties, range are this may those differ forward-looking statements of materially company filings. you forth in including however, might made include statements a set those results risks,

forward-looking reflect disclaims is is the only statements. The at circumstances the SEC. they time a company brief statements summary any are statutory which update expressly to filings disclaimer, of forward-looking statements made. company's with any This Forward-looking obligation company's included disclaimer the revise the in or

Please During minutes, the through our GAAP drivers David we discuss key and might In security most also call will walk financial Edelson quarter. today, CFO, the for supplement few a a the reconciliation refer measures. the filings comparable to to our earnings for you measures. non-GAAP

will does, kick he our to our Jim before over Tisch, call. Jim, However, off CEO, you.

James S. Tisch

Good Mary. and you, morning, joining for Thank thank us today. you

update Florida. on brief like in Houston But a before subsidiaries primarily quarter the I and the on going to Harvey, focus that hurricanes, to Irma give are there. Loews' This latest I I'd Loews impact and Hotels developments on and want of do, on

Boardwalk, accounted their to employees Offshore, impacted storms. for. and operations by Hotels our minimally from provide that were these hoping that an to fully and catastrophic Loews Diamond to families we're But and those support severely perspective. and counting many foremost, happy report First blessings safe affected all were and our of We're employees course, are

had CNA's storms navigated quarter. impact Irma on the results. But about well company Loews and catastrophe-filled share if CFO, of I income now later Our actually the $XXX the CNA call remiss these how Hotels. during would David on in from quarter. its details that and highlight this our be have has the Edelson, operating company's will didn't and challenging, to posted million capital improved hurricanes And losses despite position Harvey, Maria, net I

Even the two last XXXX, keys the has we operating committed Hotels been we X Over almost Loews hotels, room our XX have count. the to have and to sold rooms. experienced about opened end hotels hotels had opening while At been new has Since chain X,XXX then, increasing growth. and/or dynamic years, will XX,XXX expanding, X steadily. with which add have margins been of

role into There leave time Additionally, more no we his charge. CEO trust facing just impressive the of one Jon Tisch this as step hospitality growth, fall, Notwithstanding to in industry challenging last environment. the at an increasingly helm. Hotels Loews company's back is is the

in is hotel For industry demand and now has growth markets seen decade, RevPAR top outpacing many but the line growth, almost a supply decelerated. consistent has

a information, with of of pressuring scale Simultaneously, pressure the economies industry consolidated and mobile distribution availability operators. instant economy, intermediaries, exert behemoths all hospitality into media, Social on devices smaller companies have sharing hotel industry.

The host Loews is Hotels addressing challenges? how is So, this of company's strategy twofold.

to Loews such XXX as the XXX the disintermediation. the Beach along Chicago as group upscale meeting better Hotel These and Nashville, rooms Loews significant business hotels able space; typically Miami on have in and withstand Loews properties Vanderbilt to Hotel, the with Hotel. we such in disruptors sharing upper economy technological and are the therefore concentrating cater market. hotels First, that Properties are distinguished highly-profitable, to

in to Universal what leverages Beach by our Cabana out such managing that long-term exemplified one-of-a-kind Secondly, our destinations demand themed so Loews successfully have in Orlando. in unique as success destinations built-in at This the Resort, with Orlando generators, Orlando have Hotels seek who with party both immersive concepts, the with properties growth partners partnership continues Hotel our Resorts Bay similar – to done to come and demonstrated Resorts. the of strategy we Hard Rock

far more terms with so almost Aventura partnership partnership our five come. Hotels partnership be a XXX-room investment the years rooms campus. the the XX ago the In and open in in Our Orlando with hotels largest Universal XXXX, we'll several to Universal that first of Orlando, park summer Today, rooms Hotel, on the both plans announce in there's of Loews weeks, sixth will next has X,XXX to joint the three dollars. hotels in our project and in began and a in venture theme and property with

tuned. stay So,

Our initial the yielded in Orlando three-hotel continue joint spectacular returns has the properties to and investment venture flourish.

much with The second of the in has recouped occurred of expansion opening the phase Orlando of investment. in initial that its Beach our Resort, already a XXXX, X,XXX-room hotel Bay Cabana

that additional of an have for have expectation both projects Universal complex competition, Falls XXX,XXX we Loews partner opened our a nearly over been guest Universal has campus our the rates on several of rooms, Separating Loews our properties three During to and All the feet connected well so. great create to will our RevPAR to XXXX, outstanding ventures and Sapphire hotel that combined space. Hotel the rates and meaning market-leading. a square apart us, a occupancy Resort we X,XXX-room with and there Pacific is promise. announced be with that the it X,XXX room above it great Orlando, last consistently Royal from their new continue months, is have investment joint deliver meeting been

years. believe XX the over new to will the open strategy Loews the group fits demand. major City hotel hotel, first XXX-key healthy Kansas City on of connected the drive be Center, Kansas nicely which that our focuses property we The It's Convention physically business. in This This part in group which will core in be City will first Kansas hotel. hotel into XXXX, will

development called Loews. strategy. new immersive Hotels The squarely under destination Loews second fits projects with by our a and Together Cordish Live! The into new Companies, announced has third partnership

these in look in such forces plenty these too. The XXXX Cordish nights will our Arlington, and to deep-rooted on teams The in well and throughout properties do hotels and best-in-class will a them located space, non-game year, XXXX but St. and Companies' Rangers. sports the ideal entertainment all of located simple. development Cardinals; as Both St. in assets, new districts. Louis, projects. business Why Missouri, be two open Louis, and the meeting those and the concerts adjacent no cities St. and are to we for with have unique first destinations entertainment being and significant to many major In the join districts hotels partner stadiums customers events three Texas for versus on as The Cordish base properties welcoming include the transient our more buying? a focused respectively. have groups looking immersive It's Arlington, fan experience. we arenas and have forward fear Louis will we'll in host will These hotels are we'll making will building in with new Texas These

exactly get what build you want. when you something, First, you

owner business. with makes alike. cash-on-cash to Second, is has philosophy greenlight Loews model dynamics beneficial mutually owners are growth its an at all we and partnership creates This that willing on Hotels to company's developers, ability Loews operator, pleased We're growth increasingly years XX think prospects owners companies. almost typically something think for projects operating rare in the The attractive equity. returns that we for and returns advantages. business its which We the and and prided look represent Loews are been an mid-teen the both hotel partner immersive invest constituents, agile competitive and for third, Hotels projects, in municipalities Hotels. And with its great. destination like a all on us for owners, an itself flexibility, We the is because we've

existing competitive Over will to shareholders partnerships. leverage projects value the and strong long industry seek Loews to above-market cultivating in term. new and strategy, confident and We're its over well we returns the the the create in to as ability invest years, for with Hotels' leadership standing company's as in coming our continue our

like CFO, David to Edelson. to our the over Now, I'd call turn

David B. Edelson

Thank Jim, and morning. you, good

income. our catastrophes caused quarter million. and million Catastrophe losses largely decline quarter, Harvey, year-over-year was by year's principal the third related our last income Last net impact year, share, of $XX third CNA, per net from key $X.XX million share earnings For of drivers. Page per and Two reported down the or XX in $XXX $X.XX at the quarter. to Irma our quarterly Loews million. a $XXX $XXX factors negative reduced forth net third quarter year-to-date Maria, million the sets or third supplement income hurricanes of only $XXX in

Absent quarter, CNA the which X% charges Additionally, income and catastrophe our income incurred redemption our $XX up from Diamond combined reduce the to charges, quarter. million, million. losses was year's debt CNA's net last net pro redemption forma both third $XXX and debt during by

had million Now income. decline which isn't the quarter from net strong CNA. company year-to-year third to The contribution a operationally, on for CNA's more $XXX obvious in our quarter

highlighting We believe $XX losses somewhat me the redemption below, in catastrophe versus this The so Let share charge news Overall, in QX the risk losses company's its catastrophe insurance in quarter that is for about much continued and the areas. in underwriting management. CNA's very CNA's bit losses line debt the losses course. not highlights million catastrophe million the with, in more incurred XXXX. affected CNA market CNA the if are before progress. good par a pre-tax of is say $XXX strong business, were company's only

reduced As quarter these to year. by this $XX income compared losses $XXX last a million net previously our mentioned, as million cat

debt the Now redemption for charge.

CNA, charge, results $XXX improved early slightly from CNA's issued its million of income continue cat catastrophe to Absent X.X losses show debt combined prior contribution due XX.X% before losses down the pre-tax and our would year quarter. generated quarter, prior net points million from income the XXXX. in and progress by to the XX.X%. redemption $XX to $XXX tenure million underwriting the reduced notes charge been November CNA's have the prior-year which million, This During of at our up million. the ratio notes Its a contribution $XXX redemption CNA redeemed year. in development $XX and real from to net

favorable slightly prior-year points X a positive. year's Additionally, points, last development, hefty booked than of still lower the but extremely X.X company

the to Loews. for catastrophes as net compared including Two net Together, year. year. million these returns. investment CNA's combined lower, XX.X% this slightly but slightly quite So gains mainly two overall, flow observations. year-over-year number positive one, Number year-to-year excluding CNA investment through accounted was net due income last on more down XX.X% negative development, ratio income, year prior-year but still for variance a which was to quarter were And portfolio than items last $XX realized two, the LP for income higher

Turning to net $X about Diamond as our this Offshore. same to income year. million Diamond contributed the last quarter,

quarter, third $XXX Diamond's reduced QX year. a Diamond's contribution can effective May debt issued up our redeemed the net eight-year million. XXXX. million, to $XX would of quarters. our notes and income in charge $XX million $XX notes from across $XXX contribution net come million of pre-tax $XX tax this due Diamond been scheduled rate which Diamond's materially redemption prior charge, During by million redemption differ generated to to This have million Absent income the

year income, X% prior up and debt Contract favorable its drilling me because on was the were prior-period redemption which also comment about instead rig revenues pre-tax excluding let depreciation was from X% down charge. the impairments. of So

contract contract. were expenses year's as However, Ocean by quarter last positives some interest was as well before mainly as expense, on higher third the higher during drilling capitalized GreatWhite went expenses, these offset interest

net pro market been know, maintaining contribution XXXX. to versus the expenses quarter. of this company's deferred Beach, at Hotels QX Earnings by true-up is were we We disclosed EBITDA extremely attributable almost at budget rose by Loews hotels, Loews the five Orlando improved Loews drilling Resort, portfolio Loews fixed-fee during as GAAP affected In was to tax up were Hotels. million of On the Boardwalk, a the the did earnings these joint and up posted investors venture was and year's understand in transportation year billion a quarterly difficult lagging an if and not for the do results million at income in operating have anticipated growth excellent rata Hotels' renovation was That Its properties quarter. in net on group-oriented renovation Loews answer schedule. these third Universal EBITDA XX%. debt. maximizing and and adjusted up $XX liquidity power flow. remains strong fuel To challenging. quantify venture X%. few tax-related X% negatively useful which to about are up our million of accounting and EBITDA Results activity income the debt revenues makes on Jim's Loews Miami because $XX by for operating income you in was quarters. $X.X are contracts. keeping firm $XX the earnings projects state its Boardwalk's As with providing mortgage company's the was part and year-over-year it a under and EBITDA of its and of mainly Loews pre-tax metrics contribution metrics this net shift backed joint offshore to Hotels, laser-focused on business would XX%. have detail. results not to information cash holiday long-term underlying last plan about color caused which to These in profile supplement, including The we results this quarter, level. focus we future properties. added property-by-property Diamond begin our booked adjusted on time at said, question, on improvements propelled company's The as adjusted to non-GAAP XXX% Hotels hope Boardwalk's provide

gold-related year-over-year quarter other up Turning $X pre-tax our and to The parent equities. and X from included year This impress cash-on-cash CCC returns obviously still deliver early first to full well subsidiary, by $XX operational a broke is our Consolidated of in other. continues is the Overall, track drove Harvey and our net part in quarter was to solidly CCC last the and remains income focus. Container. some CCC was On investment revenues corporate Pre-tax for in $XX On days. and double-digit CCC's CCC's included and Loews. Hurricane newest team net experienced attributable strategic last improvement, income income to just alternatives that the on us offset now alternatives are last improvement management QX. performing and company essentially the during so shown predominantly release, the Operationally, and page investment And are company with it's results, related professionalism, million earnings securities. its even attractive knowhow, quarter. company. basis, Equities to net in million, disruptions is quarter. its income the million and from in

continues say to equity fixed and Loews of totaled portfolio short-term marketable CCC billion, approximately earnings the XX, and during company and parent more have will diversified about cash extremely a We XX% our year-end strong with maintain $X.X an investments. balance investments September maturities, securities of to and the liquid portfolio in investments and At call. remainder partnership cash limited in sheet.

Boardwalk. will Mary. And now hand we million from million call CNA from to from $XX received $XX that, quarter, with back dividends During the the third $XX million our and subsidiaries; in I

Mary Skafidas

ready David. our to of Kristen, begin the question-and-answer we're Wonderful. call. portion Thanks,

Operator

Thank you.

line with Deutsche Our first comes Shanker from of Bank. the question Josh

Josh D. Shanker

Good morning.

James S. Tisch

Hello?

Josh D. Shanker

and doing incentive questions How is you an some great, quarter. for sort weather. to doing It's I are about whatnot. there? but of wanted you ask the year account can't interesting CNA compensation

the the doing How as the do underlying Loews? it to. assets, think or that way money I affects compensation quarter, performance CNA ROE is should you so, we of but as Is think the own obviously, by there? scheme you performance? about their because compensation to you lose and not What want year-over-year well we're And That an a it – money reduced operational want year-to-date, affect you how at purely know competition. the lose December's

James S. Tisch

– For incentive compensation? the Loews

Josh D. Shanker

but where In like maybe significant major a something Yeah. still a your year performing of money amount assets of some one well, for the to lose reason weather? due

James S. Tisch

management's of explanation system, look would at our I us system important. our we just think has every how often compensation also you And of unconventional, proxy incentive of sure think at together that and take look it very while really that what a what incentive compensation have that is philosophy. not fine. which So, year detailed do really to direct make only reflects put and view to I that's I here, our long suits I works statement, a compensation section but our

Josh D. Shanker

items? these Okay. it mean, unusual back take reflect And what I'll and maybe I but (XX:XX) look, does maybe go a

James S. Tisch

Let me briefly what describe it is.

We group have a collegial senior here. executives very of

intermediate the We term. managing the to here are for long

year. managing not are individual an for We

our say, to is long-term increase constantly value. I As goal

And so, in doing might long-term to pop. just do not the lead or but to or instead to year things actions might might we lead encourage earnings value, the thing want do lead next, short-term to spiking that that one is that not a

system senior senior fairly results effort Loews think part very on desire group is compensates spikes additionally, team, of that spike knows team them I have way in By build a on is So year do that part because everybody generally we've one in executives, because and doing because system management earnings to for consistent the have constructed one compensation a our here that what compensation they or no compensation And the a at that, the collegial anybody's action we another. next. works, for that or focuses this generally absolutely not there in of earnings value. to does

but at not value it's the to provide value the incentive, focus executives senior needed, do on some stock to – so, senior many units will and ultimately to that And than that incentive reflect created long-term other and Loews. restricted some and has provide been system hopefully Loews' that hopefully give, executives will a other different reflect systems. it's that We employees, is

Josh D. Shanker

appreciate cash hotels, XXXX, impact flow? should think how the in on Okay. Well, on And making that. XXXX I investments about you're the I

James S. Tisch

sorry? of what, In I'm terms

Josh D. Shanker

in hotels? The investments

James S. Tisch

Hotels Corporation entirely Loews investments, in be investments be manageable. some draw to the of treasury. on Loews providing the not it's planned is going The will but Loews significant

Josh D. Shanker

Okay. much. very Thank you

James S. Tisch

you. Thank

Operator

from with question comes Glasspiegel next Bob Our Janney.

Robert Glasspiegel

Good morning, Loews.

James S. Tisch

Good morning.

David B. Edelson

morning, Good Bob.

Robert Glasspiegel

there look of of the I EBITDA I'm The both it, and or just that per hotel look of discussion or should like at. terms value assets you at I But curious value increased valuation? you're off that adjusted value about sheet, discussion, beyond something we disclosure. the think that in as to we appreciate balance what generating how think room When asset what sort is

James S. Tisch

think a right. So in I basis, it the look order case-by-case do on value, to at determine is to you what have

want operating. you've fine of sum for a If to hotels, a do parts are for them which worth it's might one – be the EBITDA; but marketplace you look have of Loews Hotels, to for hotels in the significant they're that understand lot that lot some got a year for in but at or you is, years it other or to EBITDA, There of earning nonetheless one another reason can money. be not multiple

by what individual So, and done job up something the and the be who they a it's for of just the really It's visiting properties come value takes someone able a hotels. going business, pretty someone should lot value worth. all be be. and focus. each is and of that accurate be of relative it to might might It the number difficult really needs who understanding Oftentimes, with well a means to values understands potential hotels immersed attention in hotel what time, to

Robert Glasspiegel

helpful. very That's Great.

he's hotel in some facing but other had You involved challenges facing, with he's his that said he's less operation these than the days. Jon probably in what that's

had to I there. Sorry, go

David B. Edelson

Yeah.

James S. Tisch

okay. That's

Robert Glasspiegel

get in somewhere – bottom bouncing saying On $XX the threw towards quarter it to you to that three businesses? you see think out start on kudos $XX fourth were I oil, in more to to price Where your and kernels XXXX, we oil in five and and a years, along between for before was halfway you have the we're positive target. of does as than

James S. Tisch

of some First self-promotion. half there. It's all, more way than

$XX. over already is Brent fact, In

So and as going to I declare like to say, retreat. I'm victory

We fact investment, now to the CEO going opposed happen rapidly more think it's going allow to for Offshore, in to I has Edwards does. I be there increased of to terms different Mark than executives think And here have of to In what happen. views. happen to Diamond different as it's

X going breathtaking capacity. States. belief, what's to And investing in big and be for supply productive oil much and underinvestment fully will over to capacity. the in X I limit there worldwide. Yes, X/X will by going that shale States, years United productive what's can that far, that But but that. worldwide demand X increase States. X the seriously It's a think my what that we'll at has it this one barrels and And XX the in more next – see to And there United oil that world I the come next productive for million capacity is to oil off happened production some there world can is even how under the you trend level need capacity three not research the or happen based on shale is years in think United how to it know productive that is enormous, years, been able five take produced Typically, so year be been. online. X history what I that the been or million be enormous barrels study two already here. can to maybe after underinvestment million that limit point years has a has will produced shale statement capacity is to may that past time, X that productive the against in in is the year, shale an and barrels then

them invest productive To and cash to the offshore and come with decide is overall on to investing be my guess Brent down development flow $XX view by dividends dividends. and some to trading the crank projects. to between companies in their enable is going capacity. it barrel, my of But will is to this So, over $XX $XX and they've capital exploration at the had major oil date, squarely need that companies will a of side accumulate oil forced up – with that they've that WTI start market or

Diamond So, see of this while significant for a drilling offshore Offshore, I over two, or year in guess services. that inquiries into increase waters is my don't industry expect the will quarter coming offshore a drilling flood the

Robert Glasspiegel

under-congratulate there hear that Well, light but could at within it's you're of that you, tunnel to be years. nice the of saying? to I what didn't end couple the mean Is a

James S. Tisch

Yes. we've that a say, Yes, yes. seen hard Yes, seen is think oil we've but... $XX think this I – low I in the not to look, prices that was – barrel,

Robert Glasspiegel

XXXX quarter call, yeah. Fourth

James S. Tisch

bell Yeah. that most think increase. in I a important, that to I'm capacity productive starting shale But oil hear start to is to ringing investment beyond going

Robert Glasspiegel

answers, the Appreciate Jimmy.

James S. Tisch

pleasure. My

Operator

will the conclude I question-and-answer over to Mary. hand program will call. of portion back the That today's

Mary Skafidas

Great. will interest. continued our all That be Thanks, concludes replay at Always you our loews.com A in your on approximately thanks of Kristen. Thank two for hours. you. available website to call.

Operator

XXXX Ladies call. conference the and for three gentlemen, Loews Corporation thank quarter joining earnings you

your day. disconnect a have wonderful lines, now may and You

Loews (L) 30 Oct 172017 Q3 Earnings call transcript