La Quinta Holdings Inc. (LQ)

[Enterprising Investor]

La Quinta Holdings Inc. Reports First Quarter 2018 Results (5/08/18)

IRVING, Texas, May 08, 2018 (GLOBE NEWSWIRE) -- La Quinta Holdings Inc. (“La Quinta” or the “Company”) (NYSE:LQ) today reported its results for the first quarter ended March 31, 2018.

First Quarter 2018 Highlights
•Grew system-wide comparable RevPAR 4.3 percent; excluding the owned hotels significantly impacted by Hurricanes Irma and Harvey and the owned hotels undergoing significant renovation, system-wide RevPAR grew 5.9 percent

•Franchise comparable RevPAR increased 7.8 percent, driving an increase in franchise and other fee-based revenue of 8.0 percent

•System-wide RevPAR Index decreased by nine basis points; excluding the owned hotels significantly impacted by Hurricanes Irma and Harvey and the owned hotels undergoing significant renovation, system-wide RevPAR Index grew nearly 200 basis points

•Opened eight franchised hotels, totaling over 650 rooms, including the first location in Chile

•Franchise pipeline stands at 259 hotels, representing approximately 24,400 additional rooms, and the brand’s footprint continued to expand with 6 new franchise agreements for key locations in coastal North Carolina, St. Louis, Missouri and Yucaipa, California

•Completed the construction phase of 12 renovations, bringing the total number of repositioning projects with construction complete to 39, as part of the Company’s owned hotel repositioning efforts

•Reported Net Loss of $15.1 million; Adjusted Net Loss was $6.2 million

•Generated Net Loss per Share of $0.13; Adjusted Net Loss per Share was $0.05

Overview

“We are extremely pleased with our performance this quarter. We delivered gains in RevPAR despite the ongoing hurricane disruption in our owned hotel business, and continued to execute on our key strategic initiatives to deliver a consistent product, to consistently deliver an outstanding guest experience and to drive engagement with our brand,” said Keith A. Cline, President and Chief Executive Officer of La Quinta. “We have completed the significant renovation of 39 owned hotels in our repositioning program and continue to be very encouraged by their early results.”

Mr. Cline continued, “We expect to complete the spin-off of our owned hotel assets into CorePoint Lodging as well as the sale of our franchise and management business to Wyndham Hotel Group by the end of this month. These are exciting opportunities for the thriving La Quinta brand, which celebrates its 50th anniversary this year, and for our owned hotel portfolio as it transitions to become CorePoint Lodging, all of which we believe will yield long-term benefits to our stakeholders.”

Financial Overview

For the first quarter of 2018, the Company grew system-wide comparable RevPAR 4.3 percent over the same period of 2017, driven by 7.8 percent growth in its franchise locations and a 0.2 percent increase in its owned hotels. Excluding the impact of the owned hotels undergoing significant renovation as part of the repositioning effort and the owned hotels affected by Hurricanes Harvey and Irma, system-wide comparable RevPAR increased 5.9 percent in the first quarter of 2018. The Company grew franchise and other fee-based revenue 8.0 percent in the first quarter of 2018, over the same period of 2017.

For the first quarter of 2018, the Company reported net loss of $15.1 million and Adjusted Net Loss of $6.2 million. Net Loss per Share was $0.13 and Adjusted Loss per Share was $0.05. Total Adjusted EBITDA for the first quarter of 2018 was $64.0 million.

Hurricanes Harvey and Irma continued to have a significant impact on the Company’s business in the first quarter, once again lifting performance for the franchised hotels, and posing significant challenges for certain owned hotels, particularly those in Florida affected by Hurricane Irma. The Company estimates that the impact of the hurricanes on first quarter results was a reduction of approximately $11 million in Total Adjusted EBITDA.

The Company’s system-wide portfolio, as of March 31, 2018, is located across 48 states in the U.S., as well as in Canada, Mexico, Honduras, Colombia and Chile.

Development

During the first quarter of 2018, the Company opened a total of eight franchised hotels (over 650 rooms) and terminated two franchised hotels, resulting in a net increase of six open and operating franchised hotels during the first quarter. As of March 31, 2018, the Company had a pipeline of 259 franchised hotels totaling approximately 24,400 rooms, to be located in the United States, Mexico, Colombia, Nicaragua, Guatemala, and El Salvador.

Owned Hotel Portfolio

As of March 31, 2018, the Company had two hotels held for sale. During the first quarter of 2018, the Company closed on the sale of one hotel. In addition, during the first quarter, construction progressed on the portfolio of approximately 50 owned hotels which the Company believes have the opportunity to be repositioned upward within their markets in order to drive enhanced guest experience and revenue growth. As of March 31, 2018, 39 of these hotels had completed the construction phase of the project and are now in the process of being reintroduced to their markets with encouraging early results.

Balance Sheet and Liquidity

As of March 31, 2018, the Company had approximately $1.7 billion of outstanding indebtedness with a weighted average interest rate of approximately 4.9%, including the impact of an interest rate swap. Total cash and cash equivalents was $113.5 million as of March 31, 2018.

Outlook

On January 18, 2018, Wyndham Worldwide Corporation (“Wyndham”) and La Quinta announced that they entered into a definitive agreement under which Wyndham will acquire La Quinta’s franchise and management business for $1.95 billion in cash. The acquisition is expected to close in the second quarter of 2018, immediately following completion of the planned taxable spin-off of La Quinta’s owned real estate assets into a new publicly-traded real estate investment trust (the “Spin”), CorePoint Lodging Inc. (“CorePoint Lodging”).

Given the expected timeline to close these transactions, La Quinta is not providing guidance for 2018. Near the time of the Spin, management of CorePoint Lodging expects to conduct investor education meetings during which, among other items, financial and strategic outlooks will be provided.

Webcast and Conference Call

The Company will hold a conference call with prepared remarks for investors and other interested parties beginning at 5:00 p.m. Eastern Time on Tuesday, May 8, 2018. Given the anticipated timing of the Spin, and the pending acquisition of the Company’s franchise and management business by Wyndham, the Company will not be hosting a question and answer session during the call. The conference call may be accessed in listen-only mode by dialing [phone], or [phone] for international participants, and enter passcode 3985708.

Listeners may also access the live call via webcast by visiting the Company's investor relations website at www.lq.com/investorrelations. You are encouraged to dial into the call or link to the webcast at least fifteen minutes prior to the scheduled start time. The replay of the call will be available from approximately 8:00 a.m. Eastern Time on May 9, 2018 through midnight Eastern Time on May 16, 2018. To access the replay, the domestic dial-in number is [phone], the international dial-in number is [phone], and the passcode is 3985708. The archive of the webcast will be available on the Company's website for a limited time.

https://www.globenewswire.com/news-release/2018/05/08/1498945/0/en/La-Quinta-Holdings-Inc-Reports-First-Quarter-2018-Results.html