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01/10 17:51
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary presents mixed signals. Financial performance shows modest growth with a 2% revenue increase and 6% EBITDAre growth, but there is weak RevPAR growth and declining EBITDA margin. Share repurchases and a solid debt structure are positives, but limited cash on hand is concerning. The Q&A reveals optimism about leisure travel and business transient growth, but lacks clarity on 2025 expenses and group bookings. Overall, the market cap suggests moderate stock reaction, aligning with a neutral sentiment due to balanced positives and negatives.
Total Revenue $378 million for Q3 2024, up approximately 2% year-over-year.
Year-to-Date Total Revenue $1.1 billion through September 2024, up approximately 2% year-over-year.
RevPAR (Comparable Hotels) $125 for Q3 2024, up approximately 1% year-over-year, driven by improvement in rate.
ADR (Average Daily Rate) $163 for Q3 2024, up more than 1% year-over-year.
Occupancy Rate 77% for Q3 2024, essentially flat year-over-year.
Adjusted EBITDAre $129 million for Q3 2024, up approximately 6% year-over-year.
Modified Funds from Operations (MFFO) $107 million for Q3 2024, up 3% year-over-year.
Comparable Hotels Adjusted Hotel EBITDA Approximately $139 million for Q3 2024, essentially flat year-over-year.
Comparable Hotels Adjusted Hotel EBITDA Margin 36.8% for Q3 2024, down only 60 basis points year-over-year.
Year-to-Date Adjusted EBITDAre $371 million, up approximately 7% year-over-year.
Year-to-Date MFFO $312 million, up 6% year-over-year.
Distributions Paid $58 million for Q3 2024, or $0.24 per common share.
Total Debt Outstanding Approximately $1.5 billion as of September 30, 2024.
Weighted Average Interest Rate on Debt 4.9%.
Shares Repurchased Year-to-Date Approximately 2.4 million shares at a weighted average price of approximately $14.16 per share for an aggregate purchase price of approximately $35 million.
CapEx for 2024 Expected to be between $75 million and $85 million.
Insurance Costs Down 20% year-over-year, driven by restructuring the program and favorable loss experience.
New Acquisitions: Since the beginning of 2024, Apple Hospitality REIT has completed the sale of three hotels for a combined sales price of approximately $41 million and entered into contracts for the sale of an additional four hotels for a total sales price of approximately $31 million.
New Hotel Development: Apple Hospitality REIT has one additional hotel under contract for purchase, a Motto by Hilton, which is under construction in downtown Nashville for approximately $98 million.
Market Positioning: The company reported a favorable supply-demand dynamic, with approximately 54% of its hotels not having any new upper upscale or upper midscale product under construction within a five-mile radius.
Operational Efficiency: Total hotel expenses increased year-over-year by 2.7% for the third quarter, decelerating from previous quarters, driven primarily by a reduction in fixed costs.
Capital Expenditures: During the first 9 months of the year, Apple Hospitality REIT invested approximately $48 million in capital expenditures and expects to spend between $75 million and $85 million during 2024.
Strategic Shifts: The company has been optimizing its portfolio through strategic dispositions and share repurchases, with approximately 1.4 million common shares repurchased at a weighted average market purchase price of approximately $14.02 per share.
Forward-looking statements: The company acknowledges that forward-looking statements are subject to numerous risks and uncertainties that could materially affect actual results.
Market conditions: Evolving market conditions have provided opportunities for disciplined capital allocation, but the overall transaction market remains challenging.
Supply chain challenges: Limited supply growth in markets improves the risk profile of the portfolio, but the company faces challenges in managing construction costs and financing.
Economic factors: The company is cautious about the economic environment, which could impact operating performance and growth.
Regulatory issues: The company is subject to regulatory risks, particularly in relation to its filings with the SEC and compliance with federal securities laws.
Competitive pressures: The company faces competitive pressures in the hospitality market, particularly in terms of pricing and occupancy rates.
Hurricane impact: While the company was not adversely impacted by recent hurricanes, there is a risk of future weather-related disruptions affecting operations.
Debt and interest rates: The company has a significant amount of debt, and fluctuations in interest rates could impact financial performance and capital allocation strategies.
Acquisition and disposition risks: The company is actively engaged in acquisitions and dispositions, but market conditions and seller reluctance to adjust pricing pose risks.
Operational challenges: The company faces operational challenges related to staffing and planning due to shorter booking windows and fluctuating demand.
Adjusted EBITDAre: Third quarter adjusted EBITDAre was $129 million, up approximately 6% compared to the third quarter of 2023.
Capital Expenditures: During the first 9 months of the year, we invested approximately $48 million in capital expenditures, and we expect to spend between $75 million and $85 million during 2024.
Share Repurchase Program: We repurchased approximately 1.4 million common shares at a weighted average market purchase price of approximately $14.02 per share for an aggregate purchase price of approximately $19 million.
Hotel Sales: Since the beginning of 2024, we have completed the sale of three hotels for a combined sales price of approximately $41 million.
Future Acquisitions: We have one additional hotel under contract for purchase in downtown Nashville for approximately $98 million.
Net Income Guidance: For the full year 2024, we anticipate net income between $204 million and $221 million.
RevPAR Change Guidance: Comparable hotels RevPAR change is expected between 0.75% and 2%.
Adjusted EBITDAre Guidance: Adjusted EBITDAre is projected between $458 million and $469 million.
Comparable Hotels Adjusted Hotel EBITDA Margin Guidance: Expected margin between 35.3% and 35.9%.
Annualized Regular Monthly Cash Distribution: $0.96 per share, representing an annual yield of approximately 6.5%.
Distributions Paid: Total distributions paid during the quarter were $58 million, or $0.24 per common share.
Share Repurchase Program: Repurchased approximately 1.4 million common shares at a weighted average market purchase price of approximately $14.02 per share for an aggregate purchase price of approximately $19 million during the quarter.
Total Shares Repurchased Year-to-Date: Approximately 2.4 million shares at a weighted average market purchase price of approximately $14.16 per share for an aggregate purchase price of approximately $35 million.
Remaining Under Share Repurchase Program: Approximately $301 million remaining under the share repurchase program.
The earnings call reveals a mix of positive and negative elements. The guidance downgrade due to macroeconomic uncertainties and government shutdown impacts, coupled with increased expenses, suggest potential challenges. Although there are strategic developments and optimistic market dynamics, these are overshadowed by the negative financial outlook and lack of clear guidance. The market cap suggests a moderate reaction, leading to a prediction of a negative stock price movement.
The earnings call summary presents a mixed picture. Financial performance is stable but not exceptional, with RevPAR expected to decline in Q3 before improving in Q4. The guidance is slightly weak, and expenses are rising. However, the company is optimistic about market opportunities and has strategic plans in place. The Q&A reveals cautious optimism, with management acknowledging some market weaknesses but also highlighting potential growth areas. Overall, the sentiment is balanced, leading to a neutral stock price prediction.
The earnings call reveals a mixed financial performance with declining RevPAR, occupancy, and EBITDA, alongside rising expenses, indicating market challenges. The Q&A section highlights uncertainties in demand and macro conditions, with management providing vague responses. Despite share repurchases and a special cash distribution, the weak guidance and lack of clear strategic direction suggest a negative market reaction. Given the company's mid-cap status, the stock price is likely to decline by 2% to 8%.
The earnings call summary presents mixed signals. Financial performance shows modest growth with a 2% revenue increase and 6% EBITDAre growth, but there is weak RevPAR growth and declining EBITDA margin. Share repurchases and a solid debt structure are positives, but limited cash on hand is concerning. The Q&A reveals optimism about leisure travel and business transient growth, but lacks clarity on 2025 expenses and group bookings. Overall, the market cap suggests moderate stock reaction, aligning with a neutral sentiment due to balanced positives and negatives.
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