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.