Ryman Hospitality Properties, Inc. annual report, FY2020

Ryman Hospitality Properties, Inc. — FY2020 Form 10-K Summary

Reporting period: Fiscal year ended December 31, 2020. The filing is an annual Form 10-K; it does not provide a separate Q4-only income statement. Results were materially affected by the COVID-19 pandemic.

Business Context

Ryman is a self-advised REIT focused on group-oriented destination hotels and entertainment assets. Its portfolio includes five Gaylord Hotels resorts totaling 9,615 rooms, with Marriott managing the hotels, plus the Grand Ole Opry, Ryman Auditorium, WSM-AM, Ole Red and other entertainment assets. Hospitality generated 89% of 2020 revenue and Entertainment generated 11%. Ryman owns 65% of the Gaylord Rockies joint venture and 50% of Circle, a country-lifestyle media network.

At year-end, all hotels were open at limited capacity except Gaylord National, which remained closed. Most entertainment assets had reopened at reduced capacity, while General Jackson remained closed and Wildhorse Saloon was temporarily closed following the December 2020 Nashville bombing.

Financial Performance and Key Metrics

Metric	2020	2019	Change
Total revenue	$524.5 million	$1.6046 billion	(67.3%)
Operating income (loss)	$(303.8) million	$267.5 million	Declined $571.4 million
Net income (loss)	$(460.8) million	$128.3 million	Turned to loss
Net income (loss) available to common stockholders	$(417.4) million	$145.8 million	Turned to loss
Diluted EPS	$(7.59)	$2.81	Declined $10.40
Adjusted EBITDA_re, excluding noncontrolling interest	$(44.3) million	$479.4 million	Turned negative
Adjusted FFO available to common shareholders and unit holders	$(149.6) million	$356.6 million	Turned negative
Cash flow from operating activities	$(161.5) million	$354.7 million	Turned negative
Capital expenditures	$165.5 million	$152.5 million	Increased $12.9 million

Hospitality revenue declined 67.2% to $466.0 million, and Hospitality operating income declined from $263.2 million to a $204.9 million loss. Occupancy fell to 23.2% from 75.8%; ADR increased modestly to $200.02 from $199.26, while RevPAR fell 69.3% to $46.41 and Total RevPAR fell 67.3% to $125.95. Entertainment revenue declined 68.1% to $58.4 million and the segment recorded a $34.2 million operating loss.

During 2020, the company recorded $39.7 million of COVID-related operating costs, net of $10.2 million of CARES Act payroll tax credits. It also recorded a $32.8 million credit loss on held-to-maturity securities, a $15.0 million loss from forfeiting the Block 21 acquisition deposit, and a $26.7 million valuation allowance against beginning net deferred tax assets.

Liquidity, Debt and Capital Structure

Year-end unrestricted cash was $56.7 million, down from $362.4 million at December 31, 2019. Restricted cash was $23.1 million.
Revolver availability was $593.2 million, with $106.0 million outstanding and $0.8 million of letters of credit.
Total debt and finance lease obligations were $2.658 billion, including approximately $0.8 billion of Gaylord Rockies joint-venture debt.
Operating cash flow was negative $161.5 million, while cash used in investing activities was $172.6 million and cash used in financing activities was $6.5 million.
Credit agreement amendments waived specified financial covenants through March 31, 2022, but increased interest rates and imposed restrictions on debt, investments, dividends, share repurchases and capital expenditures. The company must maintain at least $100 million of unrestricted liquidity.
The regular quarterly dividend was suspended after payment of the $0.95-per-share first-quarter 2020 dividend. The credit agreement permits dividends necessary to maintain REIT status and permits a $0.01-per-share quarterly dividend, subject to board approval.
Subsequent to year-end, Ryman issued $600 million of 4.50% senior notes due 2029, used proceeds to tender and redeem the $400 million 5.00% senior notes due 2023 and repay all Revolver borrowings.

Material Changes Versus 2019

COVID-19 caused temporary closures beginning in March 2020, limited-capacity reopenings, and the continued closure of Gaylord National at year-end.
The company experienced approximately 2.4 million COVID-related net room-night cancellations, representing approximately $488 million of room revenue. Approximately 1.4 million canceled room nights had been rebooked by year-end.
Group rooms declined to 52% of rooms sold from 72% in 2019, while transient rooms increased to 48% from 28%.
Management fees declined to $10.3 million from $31.6 million, and incentive fees fell to zero from $12.6 million.
Approximately $82 million of non-essential capital projects were deferred, and the planned $80 million Gaylord Rockies expansion was postponed. The $158 million Gaylord Palms expansion continued and was expected to be completed in April 2021.
The Gaylord National bonds were written down through a $38.0 million credit-loss reserve; their net carrying value was $71.9 million at year-end, and the Series B bond was fully reserved.

Outlook, Commentary and Risks

Management’s near-term strategy was to safely reopen assets, rebook canceled hotel business, contain costs and conserve liquidity. The company anticipated approximately $70 million to $95 million of 2021 capital expenditures, primarily for maintenance, the Gaylord Palms expansion and a Gaylord National room renovation. Management estimated first-quarter 2021 monthly cash needs of approximately $23 million to $26 million, including consolidated Gaylord Rockies operating costs and debt service.

Management stated that cash on hand and Revolver availability were expected to fund short-term operating expenses, interest, leases and other commitments until assets returned to pre-pandemic operating levels. The filing does not provide a definitive timetable for a return to normal occupancy, group demand, margins or dividend payments.

Principal risks include the duration and severity of COVID-19, renewed closures, capacity restrictions, delayed group-meeting recovery, cancellations and uncertain consumer confidence in travel.
Leverage and refinancing risk are significant, particularly because debt is secured by a substantial portion of the company’s assets and major maturities include the Gaylord Rockies loan in 2023, the Revolver and Term Loan B in 2024, and the Term Loan A in 2025.
Variable-rate debt, LIBOR transition risk, covenant restrictions and increased waiver-period interest costs could pressure liquidity.
The company depends heavily on Marriott for hotel management, sales, operating performance and financial reporting, creating concentration and counterparty risk.
Recovery assumptions underlying asset valuations, the Gaylord National bond reserve and deferred tax assets are sensitive to hotel revenues, property taxes and broader economic conditions.
REIT qualification, required distributions, taxable REIT subsidiary performance and restrictions on dividends remain important tax and capital-allocation considerations.

Investor Verification Priorities

Verify the post-year-end refinancing, including the final amount of 5.00% notes redeemed, Revolver balance and resulting interest expense.
Track occupancy, RevPAR, group room-night bookings, cancellations, rebookings and the reopening status of Gaylord National and entertainment assets.
Reassess liquidity against the $100 million minimum requirement, projected monthly cash needs and covenant compliance after March 31, 2022.
Review debt maturities, refinancing options, interest-rate exposure and the transition away from LIBOR.
Evaluate the recoverability of the Gaylord National bonds, deferred tax assets and hotel carrying values as operating forecasts change.
Confirm the timing and funding of the Gaylord Palms expansion, the postponed Gaylord Rockies expansion and 2021 capital expenditures.
Monitor the board’s decision regarding resumption and level of common-stock dividends.