Ryman Hospitality Properties, Inc. quarterly report, Q1 FY2024

Business Context and Reporting Period

Ryman Hospitality Properties, Inc. filed an unaudited Form 10-Q for the three months ended March 31, 2024. The company operates as a REIT focused on group-oriented destination hotels and owns a controlling 70% interest in Opry Entertainment Group. Its segments are Hospitality, Entertainment, and Corporate and Other. Marriott manages the principal hotel properties.

The portfolio includes five Gaylord Hotels resorts, the JW Marriott San Antonio Hill Country Resort & Spa acquired June 30, 2023, other overflow hotels, and entertainment assets including the Grand Ole Opry, Ryman Auditorium, Ole Red, Block 21, and Category 10 under construction.

Financial Results and Key Metrics

Metric	Q1 2024	Q1 2023	Change
Total revenue	$528.3 million	$491.7 million	7.4%
Operating income	$96.4 million	$105.7 million	(8.8%)
Operating margin	18.2%	21.5%	Down 330 bps
Net income	$42.8 million	$61.0 million	(29.9%)
Net income available to common stockholders	$43.1 million	$61.3 million	(29.8%)
Diluted earnings per share	$0.67	$1.02	(34.3%)
Adjusted EBITDA_re	$161.1 million	$157.7 million	2.1%
Adjusted EBITDA_re, excluding consolidated JV noncontrolling interest	$156.4 million	$153.4 million	2.0%
FFO available to common stockholders and unit holders	$98.5 million	$108.5 million	(9.3%)
Adjusted FFO available to common stockholders and unit holders	$102.7 million	$113.6 million	(9.6%)

Revenue growth was driven primarily by the addition of JW Marriott Hill Country, which contributed $49.9 million of Hospitality revenue. Hotel revenue increased 8.7% to $461.5 million, while Entertainment revenue declined 0.6% to $66.9 million.

Hospitality operating income declined 3.7% to $102.2 million as operating expenses increased faster than revenue. Entertainment operating income declined 28.7% to $7.5 million, excluding preopening costs. Higher depreciation, labor, operating costs, and management fees pressured margins.

Hospitality occupancy was 66.7%, down 5.6 percentage points; ADR increased 5.3% to $250.48; RevPAR decreased 2.9% to $167.17; and Total RevPAR decreased 1.9% to $444.29. Same-store occupancy declined to 67.0%, same-store ADR increased 2.9%, and same-store RevPAR decreased 4.6%.

Cash Flow, Debt, and Liquidity

Operating cash flow was $7.5 million, compared with $31.7 million in Q1 2023. The decline primarily reflected unfavorable working-capital movements, including lower accrued liabilities and higher receivables.
Capital expenditures were $79.4 million, compared with $36.8 million in Q1 2023.
Unrestricted cash was $465.3 million at March 31, 2024; restricted cash was $81.6 million.
Total debt and finance lease obligations were $3.38 billion, approximately unchanged from December 31, 2023 after refinancing activity.
On March 28, 2024, the company issued $1.0 billion of 6.50% senior notes due 2032, generating approximately $983 million of net proceeds. Proceeds were used to repay the $800 million Gaylord Rockies term loan and $200 million of the Term Loan B.
At March 31, 2024, $295.0 million remained outstanding under the Term Loan B, $295.5 million under the OEG Term Loan, $22.0 million under the OEG revolver, and $131.2 million under the Block 21 CMBS loan.
The main revolving credit facility had no borrowings and $695.7 million of availability after letters of credit. Aggregate revolving availability was reported at $738.7 million.
The company reported no debt covenant defaults. On April 12, 2024, the Term Loan B interest-rate margin was reduced to 2.25% for SOFR loans without increasing principal or changing maturity.
Cash, cash equivalents, and restricted cash declined by $153.6 million during the quarter to $546.9 million, primarily reflecting capital expenditures, dividends, debt repayments, and financing costs.

Material Changes Versus the Prior Comparable Period

JW Marriott Hill Country added $49.9 million of revenue and $9.1 million of operating income, but also increased operating expenses and depreciation.
Same-store group room nights traveled declined 4.6%, and transient room nights declined 12.6%. Management attributed part of the weakness to the Easter holiday shifting from April in 2023 to March in 2024.
Same-store net definite group room nights booked declined 39.4%, primarily reflecting timing and a record booking quarter in Q4 2023. However, future group room nights on the books at March 31, 2024 were 3.2% ahead of the prior-year level, with ADR 6.2% higher.
Interest expense increased 42.1% to $60.4 million, reflecting higher debt levels, the 2023 refinancing and senior-notes issuance, and higher variable interest rates. The weighted-average borrowing rate increased to 7.2% from 5.9%.
Entertainment results reflected the January 2024 opening of Ole Red Las Vegas, the temporary closure of Wildhorse Saloon for conversion to Category 10, and construction-related disruption at the W Austin Hotel.
The company declared a first-quarter dividend of $1.10 per share, or approximately $66.3 million, paid April 15, 2024.

Guidance, Outlook, Commentary, and Risks

Management expects 2024 capital expenditures of approximately $280 million to $360 million, including Gaylord Rockies enhancements, Gaylord Opryland meeting-space improvements, renovations at Gaylord Palms and W Austin, Block 21 enhancements, and the Category 10 conversion.
The company identified more than $1 billion of potential capital investment opportunities across its hotel portfolio, anticipated to be completed in phases through 2027.
Management stated that cash on hand, operating cash flow, and revolving-credit availability should fund operating expenses, interest, lease obligations, declared dividends, and planned capital expenditures. The filing does not provide formal full-year revenue, earnings, EBITDA, or FFO guidance.
The company stated that it has no debt maturities until January 2026 and believes it can refinance debt before maturity. Estimated interest obligations through 2028 total $948.4 million, subject to changes in rates and principal balances.
Approximately 85% of outstanding debt was fixed-rate after considering interest-rate swaps, partially mitigating exposure to higher rates.
Key risks include inflationary labor, insurance, food, supply, and energy costs; higher interest rates; reliance on Marriott; concentration in U.S. destination and group markets; seasonal operating volatility; REIT qualification and dividend requirements; refinancing risk; and compliance with restrictive debt covenants.
Notes receivable related to Gaylord National had a $60.6 million carrying value, net of a $38.0 million credit-loss reserve. The Series B bond was fully reserved.
A personal-injury lawsuit filed in Colorado relates to a May 2023 incident involving collapsed HVAC equipment at the Gaylord Rockies indoor pool. The company cannot estimate a potential loss but does not believe the outcome will materially affect its financial position.

Important Facts for Investors to Verify

Whether lower same-store occupancy, group bookings, and transient demand persist beyond the Easter-related comparison effects.
The pace and return on the planned $280 million to $360 million of 2024 capital expenditures and the broader potential $1 billion investment program.
Interest-rate trends, refinancing conditions, and compliance with leverage, fixed-charge coverage, secured-debt, and unencumbered-leverage covenants.
Whether the new $1.0 billion 6.50% senior notes and debt refinancing reduce near-term maturity risk but increase recurring interest costs.
Progress, opening timing, and investment requirements for Category 10 and the performance of Ole Red Las Vegas.
Cash flow coverage of dividends and capital expenditures, given Q1 operating cash flow of only $7.5 million versus $79.4 million of capital expenditures and $67.1 million of dividend payments.
The potential financial impact of the Gaylord Rockies lawsuit and the recoverability of the Gaylord National notes receivable.