Ryman Hospitality Properties, Inc. — Q1 2022 Form 10-Q Summary
Business context and reporting period
Ryman Hospitality Properties is a REIT focused on group-oriented destination hotels and entertainment assets. Its portfolio includes five Gaylord Hotels resorts, additional hotels, the Grand Ole Opry, Ryman Auditorium, Ole Red, WSM-AM, Wildhorse Saloon, General Jackson Showboat and a 50% interest in Circle. The filing covers the unaudited three months ended March 31, 2022, compared with the three months ended March 31, 2021.
Financial performance and key metrics
| Metric | Q1 2022 | Q1 2021 | Change |
|---|---|---|---|
| Total revenue | $299.1 million | $84.2 million | +255.4% |
| Operating income (loss) | $7.9 million | $(79.6) million | Improved by $87.4 million |
| Operating margin | 2.6% | (94.5)% | Improved |
| Net loss | $(24.8) million | $(117.1) million | Improved by $92.3 million |
| Net loss available to common stockholders | $(24.6) million | $(104.5) million | Improved by $79.9 million |
| Diluted loss per share | $(0.45) | $(1.90) | Improved |
| Adjusted EBITDAre | $69.0 million | $(22.4) million | Improved by $91.4 million |
| Adjusted FFO available to common shareholders and unitholders | $34.8 million | $(50.5) million | Improved by $85.3 million |
Hospitality revenue increased 274.1% to $261.1 million, while Entertainment revenue increased 164.6% to $38.0 million. Hospitality operating income was $15.7 million versus a $63.5 million loss in the prior-year period; Entertainment operating income was $2.7 million versus a $7.9 million loss.
Hospitality occupancy increased to 47.3% from 16.4%, ADR rose 21.0% to $229.17, RevPAR rose 249.5% to $108.41, and Total RevPAR rose 263.2% to $278.64. Group business represented approximately 66% of rooms sold versus 18% in Q1 2021. Attrition and cancellation fee revenue was $19.6 million.
Cash flow from operations was $(4.2) million versus $(42.9) million in Q1 2021. Capital expenditures were $9.7 million versus $25.8 million. Total cash, including restricted cash, declined by $18.1 million to $144.9 million, consisting of $128.4 million of unrestricted cash and $16.5 million of restricted cash.
Total debt and finance lease obligations were $2.94 billion at March 31, 2022, essentially unchanged from year-end 2021. Debt included $190.0 million drawn on the revolving facility, $300.0 million under Term Loan A, $375.0 million under Term Loan B, $1.30 billion of senior notes and an $800.0 million Gaylord Rockies term loan. The company reported $509.9 million of remaining revolving availability and no debt covenant defaults at March 31, 2022.
Total equity was negative $37.2 million, compared with negative $22.4 million at December 31, 2021. The regular quarterly dividend remained suspended.
Material changes versus the prior comparable period
- Results benefited substantially from reopening and recovery from COVID-19 restrictions. Gaylord National was closed during the first half of 2021 but operated throughout Q1 2022.
- Cancelled room nights decreased 44.5%, group attrition as a percentage of contracted blocks decreased by 10.0 percentage points, and outside-the-room spending increased 283.7% year over year.
- Operating expenses increased 77.9% to $291.3 million, reflecting higher operating activity, labor, utilities and other property costs. Expense growth was materially below revenue growth.
- Interest expense increased 3.7% to $31.9 million. Cash interest expense decreased slightly, but capitalized interest was lower and non-cash financing-cost amortization increased.
- The prior-year period included a $2.9 million loss on extinguishment of debt and a $4.0 million income-tax provision, neither of which recurred in Q1 2022.
- Capital expenditures decreased primarily because the major Gaylord Palms expansion and Gaylord National renovation were largely completed in 2021.
Guidance, outlook, commentary and risks
Management did not provide formal full-year revenue or earnings guidance in the filing. It expects 2022 capital expenditures of approximately $120 million to $150 million, plans to contribute up to $10 million more to Circle, and expects to spend approximately $125 million after assumed mortgage debt to complete the Block 21 acquisition.
Management stated that group demand continues to recover but remains below pre-pandemic levels. Group room nights on the books at March 31, 2022 for the following five years were approximately 93% of the comparable bookings at December 31, 2019, while the related ADR was more than 5% higher.
The company expects to complete the $260 million Block 21 acquisition in Austin, Texas before June 1, 2022, subject to customary conditions. Block 21 includes the 251-room W Austin, ACL Live and other mixed-use assets.
On April 4, 2022, OEG agreed to sell 30% of its equity to Atairos for approximately $293 million, subject to adjustments and a possible $30 million earnout. The company expects to retain 70% and continue consolidating OEG. Proceeds, together with approximately $300 million of OEG term financing, are intended primarily to repay Term Loan A and substantially reduce revolver borrowings. Closing is subject to conditions, including financing, and is not assured.
Key risks include continued COVID-19 effects, group and transient demand volatility, inflation and labor and supply costs, interest-rate and LIBOR transition risk, substantial leverage, debt refinancing, covenant compliance, the Gaylord Rockies cash sweep and limited guaranties, completion of Block 21 and the OEG transaction, and potential disagreements with Atairos. The company also has long-term lease obligations with a present value of $115.0 million and a $67.5 million net carrying value of Gaylord National-related notes receivable, including a fully reserved Series B bond.
Most important facts for investors to verify
- Whether the post-quarter-end OEG transaction and related financing closed on the expected terms and how proceeds affected leverage and liquidity.
- Whether the Block 21 acquisition closed, its operating contribution, assumed mortgage debt and required capital spending.
- Progress toward compliance with financial covenants after the March 31, 2022 waiver period and the effects of the April 4 credit agreement amendment.
- Revolving availability, unrestricted cash, restricted cash and cash burn relative to planned capital expenditures and debt service.
- Sustainability of the recovery in occupancy, group bookings, ADR, RevPAR and attrition and cancellation fee revenue.
- Timing and potential amount of any dividend reinstatement, which remained suspended at the filing date.
- Exposure to variable interest rates, debt maturities beginning in 2023, refinancing conditions and the transition from LIBOR.
- Reconciliation and comparability of non-GAAP measures, including Adjusted EBITDAre and Adjusted FFO, with GAAP results.