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01/11 03:35
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals several concerning elements: weak RevPAR growth and occupancy rates, missed expectations in March and April, and unclear management responses regarding sales and government demand. Despite positive elements like share repurchase and capital availability, the negative growth forecast and uncertainties in government demand weigh heavily. The Q&A section further highlights these concerns, with management's lack of clarity adding to investor unease. Given the company's small market cap, the stock is likely to react negatively, falling in the -2% to -8% range.
RevPAR $141.23, achieving RevPAR growth of 1.6% year-over-year, driven by a 2.1% increase in ADR, offset by a 0.5% decline in occupancy.
Average Daily Rate (ADR) $204.31, reflecting a 2.1% increase year-over-year.
Occupancy Rate 69.1%, which represents a 0.5% decline year-over-year.
Total Revenue Growth 1.2% year-over-year, benefiting from a 3.8% growth in out of room spend.
Hotel EBITDA $85.3 million, representing a $3 million contraction from 2024, with a hotel EBITDA margin of 26.1%.
Adjusted EBITDA $77.6 million for the first quarter.
Adjusted FFO per diluted share $0.31.
Liquidity Over $800 million at the end of the first quarter.
Debt $2.2 billion.
Share Repurchase Approximately 2.7 million shares repurchased for $24.3 million at an average price of $8.91 per share.
Quarterly Dividend $0.15 per share, well covered by free cash flow.
Capital Expenditures Expected to be in the range of $80 million to $100 million for 2025.
Cash G&A Expected to be in the range of $34 million to $35 million for 2025.
Net Interest Expense Expected to be in the range of $94 million to $96 million for 2025.
RevPAR Growth: Achieved RevPAR growth of 1.6% driven by a 2.1% increase in ADR.
Conversions: Six initial conversions achieved RevPAR growth of 14%.
Renovation: Physical renovation for Nashville is in its final stages, generating RevPAR growth of 16%.
Urban Hotel Performance: Urban hotels achieved robust RevPAR growth of 3.6%, benefiting from business travel and large events.
Group Segment Growth: Group segment revenue grew by 10% driven by strong citywide events.
Northern California Recovery: Recovery in Northern California gaining momentum supported by a stronger citywide calendar.
Cost Control: Diligent cost controls allowed EBITDA to exceed the high end of the outlook range.
Operating Cost Growth: Total hotel operating cost growth moderated to 2.9%.
Liquidity: Ended the first quarter with over $800 million of liquidity.
Capital Allocation: Recycled capital by selling a non-core asset at an 18 times multiple and repurchased shares.
Debt Management: Proactively addressed 2025 and early 2026 debt maturities with a new $300 million term loan.
Share Repurchase Program: Approved a new $250 million share repurchase program to take advantage of market volatility.
Economic Uncertainty: The company acknowledged a choppy economic backdrop causing uncertainty, which has reduced visibility on near-term lodging operating results.
Government Demand: There is a noted softness in government-related demand, which only represents about 3% of revenues, impacting overall performance.
Booking Window: The booking window has shortened significantly, indicating heightened uncertainty among travelers.
International Demand: Softness in international demand has been observed, although it represents less than 3% of revenues.
Supply Chain Challenges: Concerns regarding tariffs and their impact on renovation costs were discussed, although the company has diversified its supply sources.
Competitive Pressures: The company is not seeing significant rate degradation in urban markets, but there are concerns about increased competition from new limited-service hotels.
Market Volatility: The transaction market is currently in a pause due to uncertainty, affecting the ability to close new deals.
Operational Costs: Operating cost growth rates are moderating, but the company is actively working to contain costs in response to macroeconomic uncertainty.
RevPAR Trends: RevPAR growth has moderated, with expectations of negative growth in the second quarter due to difficult comparisons and economic conditions.
RevPAR Growth: Achieved RevPAR growth of 1.6% driven by a 2.1% increase in ADR, despite a 0.5% decline in occupancy.
Capital Allocation: Strengthened balance sheet by addressing current maturities and selling a non-core asset at an 18 times multiple, redeploying proceeds into share repurchases.
Conversions: 2025 conversions remain on track with renovations in Nashville nearing completion, generating 16% RevPAR growth.
Group Segment Performance: Group segment revenue grew by 10% driven by strong citywide events in key markets.
Cost Control Initiatives: Implemented cost containment initiatives to minimize operating cost growth in response to macroeconomic uncertainty.
RevPAR Guidance: Updated full year guidance for comparable RevPAR growth to range between -1% and +1%.
EBITDA Guidance: Expect comparable hotel EBITDA between $365.5 million and $395.5 million.
Adjusted FFO Guidance: Adjusted FFO per diluted share expected to be between $1.38 and $1.58.
Capital Expenditures: Estimated capital expenditures for 2025 in the range of $80 million to $100 million.
Net Interest Expense: Expected net interest expense in the range of $94 million to $96 million.
Quarterly Dividend: $0.15 per share, well covered and supported by free cash flow.
Share Repurchase Program: $250 million share repurchase program initiated, with $24.3 million used to repurchase approximately 2.7 million shares at an average price of $8.91 per share.
New Share Repurchase Program: A new one-year $250 million share repurchase program approved by the Board to take advantage of future market volatility.
The earnings call presents a mixed outlook. Despite positive developments like renovations and strategic events in 2026, current headwinds such as softer RevPAR, government shutdown impacts, and cost pressures overshadow potential gains. The Q&A reveals management's optimism for long-term growth, but immediate challenges like declining RevPAR and unclear guidance responses raise concerns. Given the company's small-cap status and current market conditions, the stock is likely to experience a negative reaction in the short term.
The company's earnings call reveals mixed signals: strong urban leisure performance and positive Nashville market updates are offset by soft group bookings and flat RevPAR guidance. While F&B revenue is up, leisure rate pressure and unclear management responses on supply growth impact create uncertainty. The market cap suggests a moderate reaction, leading to a neutral sentiment.
Despite strong shareholder return initiatives, the earnings call revealed several negative factors: EPS and revenue missed expectations, guidance was lowered due to economic uncertainties, and there is a decline in occupancy rates. The Q&A highlighted concerns about government demand, international travel, and increased cancellations. Although there are positive aspects like share repurchases and a new partnership, the overall sentiment remains negative, especially given the market cap of $1.48 billion, which implies a more pronounced reaction to these developments.
The earnings call summary presents mixed signals: Basic Financial Performance is weak with declining occupancy and EBITDA, but there's a positive outlook on RevPAR growth and shareholder returns through repurchases and dividends. The Q&A section highlights uncertainties in government demand and international travel, with some positive momentum in Northern California. The financial health appears stable, but the lack of strong guidance and uncertainties in demand balance out positives, leading to a neutral market reaction prediction.
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