Park Hotels and Resorts Inc (PK)

[JohnCM]

Park Hotels & Resorts Inc. Reports First Quarter 2020 Results and Provides Operational Update

May 11 2020

Park Hotels & Resorts Inc. (“Park” or the “Company”) (NYSE: PK) today announced results for the first quarter ended March 31, 2020 and provides an operational update on COVID-19.

Financial highlights include:

Pro-forma RevPAR was $136.27 a decrease of 22.6% from the same period in 2019;

Pro-forma Total RevPAR was $218.17, a decrease of 20.2% from the same period in 2019;

Net loss was $689 million and net loss attributable to stockholders was $688 million, including a $607 million non-cash impairment loss related to goodwill allocated to Park from Hilton in the spin-off and $88 million of non-cash impairment losses related to long-lived assets, primarily associated with one hotel;

Adjusted EBITDA was $82 million;

Adjusted FFO attributable to stockholders was $57 million;

Diluted loss per share was $2.89; and
Diluted Adjusted FFO per share was $0.24.

Additional highlights include:

Completed the sales of the Embassy Suites Washington DC and Park’s interests in the Hilton São Paulo Morumbi in February 2020 for total gross proceeds of $208 million;

Suspended operations at 38 of the Company’s 60 hotels due to disruption from COVID-19, along with the consolidation of operations at other hotels that remain open further reducing rooms currently available to 15% of full capacity;

Fully drew on the Company’s $1 billion revolving credit facility (“Revolver”) as a precautionary measure, resulting in a cash and restricted cash balance of $1.3 billion as of March 31, 2020, of which $105 million was used to pay Park’s April 15, 2020 dividend payment;

In May 2020, the Company amended its credit and term loan facilities to suspend all financial covenants through March 31, 2021 and exercised options to extend the Revolver maturity date to December 2021; and
Implemented actions to preserve cash, including establishing a baseline cash burn rate of approximately $70 million per month assuming all hotels have suspended operations.

Thomas J. Baltimore, Jr., Chairman, President and Chief Executive Officer, stated, “I am proud of the focused and proactive efforts of the Park team and our operating and lending partners during this quarter as we worked together to respond to the unprecedented impact of the COVID-19 pandemic to our business. In addition to suspending operations at over half of the hotels in our portfolio in March, and consolidating operations at hotels that remain open, we proactively drew our $1 billion Revolver prior to the end of the quarter, giving us considerable financial flexibility to weather this extremely challenging operating environment.

With our portfolio currently operating with only 15% of our rooms available, we have reduced hotel operating expenses by approximately 75% at the current occupancy levels and reduced our 2020 capex budget by approximately 75%. Additionally, last week, we amended our credit and term loan facilities to waive certain debt covenants through and including March 31, 2021 and extended the maturity of our revolving credit facility to December 2021.

We received a unanimous vote from the syndicate of banks on the extension, highlighting the strong partnership and support we enjoy with our bank group. Our management team has managed several disruptive events throughout our careers, including natural disasters, 9/11 and the Great Recession. With $1.2 billion in current liquidity and a cash burn rate of $70 million per month in an extreme situation with all operations suspended, Park is well positioned to navigate the disruption from the COVID-19 pandemic.”