DiamondRock Hospitality Company (DRH) Q2 2025 Earnings Call August 08, 2025 09:00 AM ET Speaker0Good day, and thank you for standing by. Welcome to the DiamondRock Hospitality Company Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. Please be advised that today's conference is being recorded. After the speakers' presentation, there will be a question and answer session.I would now like to hand the conference over to your speaker today, Bri ...

For the quarter ended June 2025, DiamondRock Hospitality (DRH) reported revenue of $305.72 million, down 1.2% over the same period last year. EPS came in at $0.35, compared to $0.10 in the year-ago quarter.The reported revenue compares to the Zacks Consensus Estimate of $308.63 million, representing a surprise of -0.94%. The company delivered an EPS surprise of +6.06%, with the consensus EPS estimate being $0.33.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings ...

DiamondRock Hospitality (DRH) came out with quarterly funds from operations (FFO) of $0.35 per share, beating the Zacks Consensus Estimate of $0.33 per share. This compares to FFO of $0.34 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an FFO surprise of +6.06%. A quarter ago, it was expected that this hotel and resort real estate investment trust would post FFO of $0.17 per share when it actually produced FFO of $0.19, delivering a surprise of +11. ...

COMPANY CONTACTS Briony Quinn Chief Financial Officer (240) 744-1196 Dori Kesten Capital Markets (617) 835-8366 DIAMONDROCK HOSPITALITY COMPANY REPORTS SECOND QUARTER 2025 RESULTS "RevPAR in the second quarter was in line with our expectations, with demand down modestly and rates up compared to the same time last year. Out-of-room spend accelerated from levels experienced in the first quarter, and that trend has continued into the third quarter. Excluding a larger than anticipated property tax increase in C ...

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Core Viewpoint - DiamondRock Hospitality Company has successfully refinanced, upsized, and extended the maturities of its senior unsecured credit facility, enhancing its balance sheet strength and flexibility [1][3]. Group 1: Credit Facility Details - The existing $1.2 billion credit facility has been increased to $1.5 billion, with a maturity schedule extended [1]. - The Credit Facility includes a $400 million revolving credit facility maturing in January 2031, a $500 million term loan maturing in January 2029, and two $300 million term loans maturing in January 2030, all with prepayment options [1][2]. - The Company plans to use the additional $300 million to repay three mortgage loans totaling approximately $125 million that matured in 2025 [2]. Group 2: Financial Strategy and Position - Following the repayment of the mortgage loans, the Company will have no debt maturities until January 2028, resulting in a fully unencumbered portfolio [2]. - The Company emphasizes maintaining low leverage and financial flexibility to capitalize on future capital allocation opportunities [3]. Group 3: Company Overview - DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) with a portfolio of 36 premium quality hotels and resorts, totaling approximately 9,600 rooms [5]. - The Company operates hotels under leading global brands and independent boutique hotels in leisure destinations and top gateway markets [5].

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Company Overview - DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that owns a diversified portfolio of hotels concentrated in leisure destinations and top gateway markets [4] - The Company currently owns 36 premium quality hotels and resorts with approximately 9,600 rooms [4] - The portfolio includes both leading global brand hotels and independent boutique hotels in the lifestyle segment [4] Financial Reporting - The Company will report financial results for the second quarter of 2025 after the market closes on Thursday, August 7, 2025 [1] - A conference call to discuss the financial results and business outlook will be held on Friday, August 8, 2025, at 9:00 a.m. Eastern Time [1] Conference Call Details - The conference call will be accessible by telephone and through the internet, with registration required for participation [2] - A replay of the call will be available two hours after the live call for a limited time on the Company's website [3]

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[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Unaudited Q1 2025 financial statements show net income attributable to common stockholders increased to **$9.4 million**, total assets decreased to **$3.10 billion**, and **$63.5 million** net cash provided by investing activities, including a **$92.0 million** hotel sale Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$3,101,597** | **$3,172,251** | | Total Liabilities | $1,527,945 | $1,573,319 | | Total Equity | $1,573,652 | $1,598,932 | Consolidated Statement of Operations Summary (in thousands, except per share amounts) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $254,853 | $256,423 | | Total Operating Expenses | $230,086 | $233,978 | | Net Income | $11,915 | $8,358 | | Net Income Attributable to Common Stockholders | $9,403 | $5,874 | | EPS (Basic) | $0.05 | $0.03 | | EPS (Diluted) | $0.04 | $0.03 | Consolidated Statement of Cash Flows Summary (in thousands) | Cash Flow Category | Three Months Ended March 31, 2025 | | :--- | :--- | | Net cash provided by operating activities | $27,606 | | Net cash provided by (used in) investing activities | $63,457 | | Net cash used in financing activities | $(69,593) | - On February 19, 2025, the company sold the Westin Washington, D.C. City Center for **$92.0 million**, receiving net proceeds of approximately **$89.0 million**[30](index=30&type=chunk) - During Q1 2025, the company repurchased **1,413,643 shares** of common stock at an average price of **$7.85 per share**, for a total of **$11.1 million**[50](index=50&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 performance, noting a **0.6%** revenue decrease to **$254.9 million** but a **2.0%** RevPAR increase, supported by **$100.6 million** cash and **$400 million** credit facility capacity, with **$85-95 million** projected 2025 capital expenditure - As of March 31, 2025, DiamondRock owned a portfolio of **36 premium hotels and resorts** with **9,595 guest rooms** in **26 U.S. markets**[81](index=81&type=chunk) Revenue Comparison (in thousands) | Revenue Category | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Rooms | $163,118 | $163,507 | (0.2)% | | Food and beverage | $66,841 | $68,381 | (2.3)% | | **Total revenues** | **$254,853** | **$256,423** | **(0.6)%** | Key Hotel Operating Statistics | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Occupancy % | 66.6% | 67.5% | (0.9)% | | ADR | $277.01 | $268.31 | 3.2% | | RevPAR | $184.60 | $180.98 | 2.0% | - The company maintains significant liquidity with **$100.6 million** of unrestricted cash and **$400 million** of borrowing capacity under its senior unsecured revolving credit facility as of March 31, 2025[113](index=113&type=chunk)[126](index=126&type=chunk) - For 2025, the company expects to spend between **$85 million and $95 million** on capital improvements, with significant projects at Orchards Inn Sedona, Kimpton Hotel Palomar Phoenix, and Courtyard New York Manhattan/Midtown East[134](index=134&type=chunk)[137](index=137&type=chunk) Non-GAAP Financial Measures Reconciliation Summary (in thousands) | Metric | Q1 2025 | Q1 2024 (As Adjusted) | | :--- | :--- | :--- | | Net Income | $11,915 | $8,358 | | EBITDA/EBITDAre | $54,123 | $51,827 | | Adjusted EBITDA | $56,110 | $56,214 | | Hotel Adjusted EBITDA | $61,664 | $61,414 | | FFO available to common stock and unit holders | $37,353 | $34,217 | | Adjusted FFO available to common stock and unit holders | $39,516 | $38,604 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk from its **$0.8 billion** variable-rate debt, mitigated by interest rate swaps fixing **$325 million** - The primary market risk is interest rate risk. As of March 31, 2025, **$0.8 billion** of the company's **$1.1 billion** total debt had a variable interest rate[157](index=157&type=chunk) - The company has effectively fixed the interest rate on **$325 million** of its variable-rate debt through the use of interest rate swaps[157](index=157&type=chunk) - A **100 basis point (1%)** fluctuation in market interest rates on the unhedged variable rate debt would change annual interest expense by approximately **$4.8 million**[157](index=157&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[158](index=158&type=chunk) - There were no changes in the company's internal control over financial reporting during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[159](index=159&type=chunk) [PART II. OTHER INFORMATION](index=42&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal proceedings, with management expecting no material adverse effect on financial condition or results - The company is subject to various claims and lawsuits arising in the ordinary course of business but does not expect the aggregate liability to have a material adverse impact on its financial condition[161](index=161&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) Key risk factors include the lodging industry's cyclicality, adverse impacts of inflation on costs, higher interest rates on financing and valuations, and challenges in funding ongoing capital improvements - The performance of the lodging industry is highly cyclical and historically linked to key macroeconomic indicators, making the business sensitive to economic downturns[163](index=163&type=chunk) - Heightened inflation could continue to negatively impact operating expenses (e.g., labor, food, utilities) and the cost of renovations. Tariffs on imported goods could further increase costs[165](index=165&type=chunk)[171](index=171&type=chunk) - Higher interest rates could increase future financing costs and negatively affect real estate valuations due to rising capitalization rates[165](index=165&type=chunk)[167](index=167&type=chunk) - The company faces ongoing risks related to necessary hotel renovations, including construction cost overruns, operational disruptions, and the challenge of funding these projects due to REIT distribution requirements limiting retained earnings[168](index=168&type=chunk)[169](index=169&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased over **1.4 million** shares for approximately **$11.1 million** in Q1 2025 under its **$200.0 million** share repurchase program Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Total Shares Purchased as Part of Publicly Announced Program | | :--- | :--- | :--- | :--- | | Jan 1 - Jan 31, 2025 | — | $ — | — | | Feb 1 - Feb 28, 2025 | 218,418 | $8.17 | — | | Mar 1 - Mar 31, 2025 | 1,430,769 | $7.86 | 1,413,643 | - The share repurchases were made under a **$200.0 million** program approved on May 1, 2024, which expires on May 1, 2026. As of March 31, 2025, approximately **$161.2 million** remained available under the program[173](index=173&type=chunk) [Item 3. Defaults Upon Senior Securities](index=45&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon its senior securities during the period - None[175](index=175&type=chunk) [Item 4. Mine Safety Disclosures](index=45&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[176](index=176&type=chunk) [Item 5. Other Information](index=45&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - During the three months ended March 31, 2025, no directors or officers adopted, terminated, or modified a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement[177](index=177&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including credit agreement amendments, CEO/CFO certifications, and Inline XBRL financial data files - The exhibits filed with the report include amendments to the Sixth Amended and Restated Credit Agreement, CEO and CFO certifications (Rule 13a-14(a) and Section 906), and Inline XBRL documents[178](index=178&type=chunk)[179](index=179&type=chunk)