Ryman Hospitality Properties, Inc. quarterly report, Q2 FY2021

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

Reporting period: Quarter and six months ended June 30, 2021; filed August 3, 2021. Ryman operates as a REIT focused on group-oriented destination hotels managed primarily by Marriott, plus Nashville-based entertainment assets. Results remained materially affected by COVID-19-related closures and reduced capacity.

Business Context and Key Developments

The five Gaylord Hotels properties comprise 9,917 rooms. Gaylord National remained closed through June 30, 2021 and reopened July 1, 2021; all entertainment assets were open by the end of the quarter.
In May 2021, Ryman acquired the remaining 35% of the Gaylord Rockies joint venture for approximately $188.0 million and acquired adjacent undeveloped land for $22.0 million.
The $158.0 million Gaylord Palms expansion, including 302 rooms and 96,000 square feet of meeting space, was completed in April 2021.

Financial Results

Metric	Three Months Ended June 30, 2021	Three Months Ended June 30, 2020	Six Months Ended June 30, 2021	Six Months Ended June 30, 2020
Total revenue	$170.9 million	$14.7 million	$255.0 million	$327.7 million
Operating loss	$30.9 million	$140.7 million	$110.5 million	$136.0 million
Net loss	$63.0 million	$187.7 million	$180.2 million	$238.4 million
Net loss available to common stockholders	$57.9 million	$173.5 million	$162.4 million	$220.0 million
Diluted loss per share	$1.05	$3.16	$2.95	$4.00
Adjusted EBITDAre, excluding joint-venture noncontrolling interest	$28.4 million	$(63.1) million	$6.7 million	$(3.9) million
Cash flow from operating activities	Not separately presented for the quarter	$(27.9) million	$(110.8) million

Revenue and Operating Performance

Second-quarter revenue increased $156.2 million, or 1,063.8%, year over year, reflecting the reopening and recovery of hotel and entertainment operations from the severely disrupted 2020 period.
Six-month revenue declined 22.2% because the 2020 comparison included more pre-pandemic activity early in the year and because Gaylord National remained closed through June 2021.
Second-quarter Hospitality revenue was $135.7 million versus $10.3 million in the prior-year period. Six-month Hospitality revenue was $205.5 million, down 30.6% year over year.
Second-quarter Entertainment revenue was $35.2 million, up 703.8%; six-month Entertainment revenue was $49.5 million, up 56.1%.
Second-quarter Hospitality occupancy was 32.9%, up 31.2 percentage points, while ADR increased 11.3% to $202.12 and RevPAR increased to $66.51 from $3.05. Six-month occupancy was 24.7%, down 4.7 percentage points, and six-month RevPAR was $48.98, down 17.3%.
Hospitality operating loss improved to $27.1 million in the quarter from $100.1 million, but increased to $90.6 million for the six-month period from $76.3 million. Entertainment generated second-quarter operating income of $5.9 million versus a $12.5 million loss, while the six-month loss narrowed to $2.0 million from $17.6 million.

Liquidity, Cash Flow, Debt and Capital Structure

At June 30, 2021, unrestricted cash was $71.6 million, restricted cash was $17.0 million, and revolver availability was $474.7 million. The company reported positive cash flow in June 2021.
Six-month operating cash flow was negative $27.9 million. Investing cash flow was negative $262.7 million, including the $210.0 million Gaylord Rockies interest and land acquisition and $53.5 million of capital expenditures.
Financing cash flow was positive $299.4 million, primarily reflecting $600.0 million of new senior notes, $119.0 million of revolver borrowings, and the redemption of $400.0 million of 5.0% senior notes.
Total debt and finance lease obligations were $3.0 billion at June 30, 2021, compared with $2.7 billion at December 31, 2020. Principal debt included $225.0 million on the revolver, $300.0 million Term Loan A, $378.8 million Term Loan B, $800.0 million Gaylord Rockies Term Loan, $700.0 million of 4.75% senior notes due 2027, and $600.0 million of 4.50% senior notes due 2029.
The new 2029 notes generated approximately $591 million of net proceeds and were used principally to redeem the 2023 notes, repay prior revolver borrowings and fund general corporate purposes. The company recognized a $2.9 million loss on debt extinguishment.
Financial covenant requirements under the credit facility were waived through March 31, 2022, subject to a minimum unrestricted liquidity requirement of $100 million. Ryman reported no debt covenant defaults at June 30, 2021.
Total equity was negative $25.8 million at June 30, 2021, compared with positive equity of $219.8 million at December 31, 2020, primarily reflecting the acquisition of the remaining Gaylord Rockies interest and ongoing losses.

Material Changes Versus the Prior Comparable Period

Operations improved significantly in the second quarter as venues reopened and capacity restrictions eased, but the six-month comparison remained below 2020 levels because of the timing and severity of the pandemic disruption.
Ryman rebooked approximately 66% of room nights canceled because of COVID-19 through June 30, 2021. Occupancy increased sequentially from 11.9% in January to 47.3% in June.
Organic group bookings represented 56% of group room nights booked in the second quarter, compared with 44% in the first quarter and 23% in the third quarter of 2020.
The 2020 comparative periods included a $25.0 million six-month credit loss on Gaylord National bond investments and a $15.0 million forfeited Block 21 earnest deposit; neither item recurred in 2021.
The regular quarterly dividend remained suspended. The credit agreement permits dividends necessary to maintain REIT status and permits a dividend of up to $0.01 per share per quarter, subject to board approval.

Guidance, Outlook, Commentary and Risks

Management expects to spend approximately $26 million to $41 million on capital expenditures during the remainder of 2021, primarily for maintenance capital.
Management believes available cash and revolver capacity are adequate for short-term operating expenses, interest, lease obligations and other commitments until properties return to pre-pandemic operating levels.
Contracted 2022 business was approaching or exceeding pre-pandemic levels based on comparable historical pacing, and group ADR booked for the next five years was 6.0% ahead of the comparable 2018 level on average.
The company continues to face substantial uncertainty from COVID-19, including renewed restrictions, changes in travel and group demand, consumer confidence, labor and operating costs, and the pace of recovery.
Ryman had approximately $1.7 billion of variable-rate debt indexed to LIBOR. The expected transition from LIBOR to successor rates, including SOFR, could increase interest expense, affect refinancing and alter cash flows.
Gaylord Rockies debt is generally non-recourse but subject to limited repayment and carry guaranties covering 10% of principal debt plus specified interest and operating expenses, as well as customary carve-outs and potential completion guarantees.
The company may issue up to 4.0 million common shares under a May 2021 at-the-market agreement to repay debt or fund general corporate purposes; no shares had been issued under the agreement through June 30, 2021.

Facts Investors Should Verify

Whether the reopening of Gaylord National and continued recovery in group demand produce sustained positive operating and free cash flow.
The company’s ability to maintain the minimum $100 million liquidity requirement and comply with credit covenants after the temporary waiver period ends.
Refinancing and maturity risk, particularly the $800 million Gaylord Rockies Term Loan due July 2023 and other variable-rate debt exposure.
The impact of LIBOR replacement, interest-rate movements and the company’s $19.5 million net derivative liability.
The recoverability of the approximately $72.0 million Gaylord National bond investment, which includes a $38.0 million credit loss reserve and a fully reserved Series B bond.
The timing and amount of any future dividend and any dilution from the ATM equity program.