Business Context and Reporting Period
Filing identity: The supplied filing is a Form 10-Q for Gaylord Entertainment Company, not Ryman Hospitality Properties, Inc. It covers the three and nine months ended September 30, 2011, and was filed November 4, 2011.
The company operated primarily through Hospitality, Opry and Attractions, and Corporate and Other segments. Hospitality represented 91.9% of consolidated revenue in the third quarter and 92.9% for the first nine months.
Financial Metrics
| Metric | Q3 2011 | Q3 2010 | 9M 2011 | 9M 2010 |
|---|---|---|---|---|
| Revenue | $225.2 million | $158.3 million | $682.7 million | $556.6 million |
| Operating income (loss) | $13.8 million | $(32.6) million | $59.8 million | $(38.4) million |
| Operating margin | 6.1% | (20.6)% | 8.8% | (6.9)% |
| Net income (loss) | $(1.6) million | $(31.8) million | $5.1 million | $(56.4) million |
| Diluted EPS | $(0.03) | $(0.67) | $0.10 | $(1.20) |
| Operating cash flow | Not separately provided for the quarter | Not separately provided for the quarter | $82.9 million | $88.7 million |
For the nine months, capital expenditures were $93.8 million, cash used in investing activities was $89.2 million, and cash used in financing activities was $106.0 million. Unrestricted cash declined to $12.1 million at September 30, 2011, from $124.4 million at December 31, 2010.
Total debt was $1.071 billion, consisting primarily of $600.0 million outstanding under the new credit facility, $315.9 million carrying value of convertible notes, and $152.2 million of senior notes. Long-term debt was $1.070 billion, and current debt was $0.7 million. The company reported $317.0 million of remaining availability under its $925 million credit facility, subject to applicable debt-incurrence tests.
Material Changes Versus the Prior Comparable Period
- Revenue increased 42.3% in Q3 and 22.7% for the nine months, primarily because Gaylord Opryland was open in 2011 after being closed during the comparable 2010 period following the Nashville flood.
- Operating income improved by $46.5 million in Q3 and $98.1 million for the nine months. The 2010 periods included $6.0 million and $37.4 million of casualty losses and $25.5 million and $31.7 million of flood-related preopening costs, respectively.
- Hospitality operating income increased 58.1% in Q3 and 26.5% for the nine months. Opry and Attractions operating income increased to $3.5 million in Q3 and $6.7 million for the nine months.
- Hospitality occupancy was 73.6% in Q3 and 72.2% for the nine months. Nine-month occupancy increased 1.1 percentage points, while ADR declined 0.7% and Total RevPAR declined 1.7%.
- Gaylord Texan improved, with nine-month revenue up 5.3% and RevPAR up 13.3%. Gaylord National weakened, with nine-month revenue down 11.1% and occupancy down 7.0 percentage points. Gaylord Palms nine-month revenue declined 4.8% and RevPAR declined 2.6%.
- The company refinanced its former $1.0 billion credit facility on August 1, 2011 with a $925 million senior secured facility maturing August 1, 2015. It repaid $100.0 million of credit-facility borrowings during the nine months.
- Interest expense declined modestly to $60.3 million from $60.9 million for the nine months, while the company incurred a $1.7 million write-off of deferred financing costs related to the refinancing.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
- Management reported stabilization in hospitality demand, higher group travel and improved future booking levels, although near-term pricing remained pressured. No formal earnings or revenue guidance was provided.
- Flood remediation and rebuilding costs were at the low end of the previously projected $215 million to $225 million range, and preopening costs were below the projected $57 million to $62 million range. Additional flood-protection enhancements of approximately $17 million were expected to be completed by mid-to-late 2012.
- The planned Aurora, Colorado resort was expected to cost approximately $800 million, with potential groundbreaking in late 2012 or early 2013 and opening in early 2016. The project remained contingent on governmental approvals, incentives, financing sources, and board approval; no material financial commitment had been made.
- The company remained exposed to economic conditions, group-booking volatility, labor-cost inflation, geographic concentration, flood-related effects, development costs, and the availability of financing.
- The $925 million facility required compliance with leverage, tangible-net-worth, fixed-charge-coverage, and debt-service-coverage tests. Management stated that all debt covenants were met at September 30, 2011.
- A 100-basis-point increase in LIBOR would have increased annual interest expense by approximately $6.0 million based on $600.0 million of credit-facility borrowings.
- Unrecorded contingent exposures included a potential contribution obligation of up to $23.8 million related to guarantees of joint-venture debt and a separate Nashville Predators-related guarantee with a stated maximum potential amount of $15.0 million, subject to limitations.
- The company recognized a $3.5 million charge related to disposal of fixed assets associated with new Gaylord Palms resort pools, including $3.2 million in depreciation and $0.3 million in other losses.
Important Facts for Investors to Verify
- Confirm the issuer identity: the provided document names Gaylord Entertainment Company, while the request identifies Ryman Hospitality Properties, Inc.
- Assess the sustainability of reported growth after excluding the favorable comparison created by the 2010 Nashville flood closure and related unusual costs.
- Reconcile low unrestricted cash of $12.1 million with debt maturities, capital expenditures, construction commitments, and the company’s reliance on credit-facility availability.
- Review the 2014 maturities of the convertible and senior notes and the 2015 maturity of the secured credit facility, including refinancing risk.
- Evaluate the deterioration at Gaylord National and Gaylord Palms against the recovery at Gaylord Opryland and Gaylord Texan.
- Verify the assumptions, approvals, incentives, financing, and commitments associated with the proposed Aurora and Mesa developments.