Ryman Hospitality Properties, Inc. quarterly report, Q1 FY2021

Ryman Hospitality Properties, Inc. — Form 10-Q Summary

Business context and reporting period

Ryman Hospitality Properties, Inc. is a REIT focused on group-oriented destination hotels and entertainment assets. Its portfolio includes five Gaylord Hotels properties, other Marriott-managed hotels, and entertainment assets including the Grand Ole Opry, Ryman Auditorium, Ole Red and WSM-AM. The filing covers the three months ended March 31, 2021, compared with the three months ended March 31, 2020.

Operations remained materially affected by COVID-19. Gaylord National was closed throughout the quarter and was expected to reopen July 1, 2021. Other hotels and entertainment venues operated at reduced capacity; the Wildhorse Saloon reopened in April 2021.

Financial performance and key metrics

Metric	Q1 2021	Q1 2020	Change
Total revenue	$84.2 million	$313.0 million	Down 73.1%
Operating income (loss)	$(79.6) million	$4.8 million	Declined by $84.3 million
Net loss	$(117.1) million	$(50.7) million	Loss increased by $66.4 million
Net loss available to common stockholders	$(104.5) million	$(46.5) million	Loss increased by $58.0 million
Diluted loss per share	$(1.90)	$(0.85)	Loss increased by $1.05
Cash flow from operations	$(42.9) million	$4.7 million	Declined by $47.6 million
Capital expenditures	$25.8 million	$43.2 million	Down $17.3 million
Adjusted EBITDAre	$(22.4) million	$66.9 million	Declined by $89.3 million
Adjusted FFO available to common shareholders and unit holders	$(50.5) million	$32.4 million	Declined by $82.9 million

Reported operating margin was approximately negative 94.5% in Q1 2021 versus 1.5% in Q1 2020. Net margin was approximately negative 139.1% versus negative 16.2%. Hospitality revenue fell 75.6% to $69.8 million, while Entertainment revenue fell 47.5% to $14.4 million.

Hospitality occupancy was 16.4%, compared with 57.1% in the prior-year period; ADR was $189.42, down 6.3%.
Hospitality RevPAR was $31.02, down 73.1%, and Total RevPAR was $76.71, down 75.3%.
Hospitality operating loss was $63.5 million, compared with operating income of $23.8 million.
Entertainment operating loss was $7.9 million, compared with a $5.1 million loss.
Interest expense increased to $30.8 million from $29.4 million, while the weighted-average borrowing rate was approximately 4.4%.

Balance sheet, debt and liquidity

Total assets were $3.54 billion at March 31, 2021, compared with $3.56 billion at December 31, 2020.
Total debt and finance lease obligations were $2.75 billion, up from $2.66 billion, and total equity was $117.3 million, down from $219.8 million.
Unrestricted cash was $67.1 million, and restricted cash was $20.7 million.
The company had $699.7 million available under its $700 million revolving credit facility, with no revolver borrowings outstanding and $0.3 million of letters of credit.
In February 2021, the company issued $600 million of 4.50% senior notes due 2029, generating approximately $591 million of net proceeds. It used the proceeds principally to repay the revolver and tender for or redeem the $400 million of 5.0% senior notes due 2023.
The company recognized a $2.9 million loss on extinguishment of debt. Redemption of the remaining 2023 notes was completed April 15, 2021.
Credit agreement financial covenants were waived through March 31, 2022, subject to a minimum unrestricted liquidity covenant of $100 million. The company reported no debt covenant defaults at quarter-end.

Material changes versus the prior comparable period

Revenue declined sharply because the prior-year quarter included materially higher group and convention activity before the full effect of the pandemic, while Q1 2021 remained capacity constrained.
Group room revenue fell to $4.5 million from $82.7 million, and banquet food and beverage revenue fell to $4.0 million from $108.2 million.
Cost containment reduced operating expenses, but the reduction was insufficient to offset the revenue decline. Depreciation and amortization remained essentially unchanged at approximately $53.3 million.
Operating cash flow shifted from a $4.7 million source to a $42.9 million use.
The 2020 period included a $5.8 million credit loss on held-to-maturity securities; no comparable charge was recorded in 2021. Conversely, Q1 2021 included the $2.9 million debt extinguishment loss.
Management reported approximately 1.6 million room nights rebooked through March 31, 2021, representing approximately 60% of pandemic-related cancellations. Group room nights booked were 382,000, up 7% from Q1 2019, with ADR up 5% from that pre-pandemic comparison.

Guidance, outlook, risks and unusual items

Management expected Gaylord National to reopen July 1, 2021. The Gaylord Palms expansion, including 302 rooms and 96,000 square feet of meeting space, was completed in April 2021.
Management projected $46 million to $66 million of 2021 capital expenditures, primarily maintenance capital and the Gaylord National rooms renovation.
Management estimated average monthly cash needs in Q2 2021 of approximately $10 million to $13 million, including Gaylord Rockies operating costs and debt service on a fully consolidated basis.
The regular quarterly dividend remained suspended. The credit agreement permits distributions necessary to maintain REIT status and a dividend of $0.01 per share per quarter, subject to board approval.
In April 2021, the company agreed to acquire the remaining 35% of the Gaylord Rockies joint venture for approximately $188 million and approximately 130 acres of adjacent undeveloped land for $22 million. The transaction was expected to close in May 2021 and be funded with cash and revolver borrowings.
The Gaylord Rockies expansion was postponed, and substantially all non-essential capital projects were deferred.
Key risks include the duration and recovery effects of COVID-19, group and transient travel demand, liquidity and refinancing capacity, covenant restrictions, interest-rate volatility, LIBOR transition, geographic concentration, REIT qualification and the ability to restore positive operating cash flow.
The company had approximately $1.5 billion of LIBOR-indexed variable-rate debt at March 31, 2021, partly hedged with interest-rate swaps. USD LIBOR was expected to cease publication after June 30, 2023, creating potential refinancing and interest-cost risks.

Important facts for investors to verify

Actual reopening timing, occupancy, group demand and cash generation following the reopening of Gaylord National and the broader easing of capacity restrictions.
Whether operating cash flow and Adjusted EBITDAre return to positive levels before available liquidity is materially reduced.
Closing terms and financing for the acquisition of the remaining Gaylord Rockies interest and adjacent land.
Compliance with the $100 million minimum liquidity requirement and other amended credit agreement provisions after the temporary covenant waiver period.
The company’s post-April 15, 2021 debt balances, interest expense and refinancing profile following the senior note refinancing.
The timing and amount of any reinstated dividend and its effect on liquidity and REIT compliance.
The impact of LIBOR replacement, variable-rate debt and interest-rate swaps on future interest expense.