Core Viewpoint - DiamondRock Hospitality Company announced the tax treatment of its 2025 distributions to common and Series A preferred stockholders [1] Distribution Summary - Common stockholders will receive distributions of $0.08 per share on March 28, June 30, and September 30, 2025, and $0.12 per share on December 31, 2025 [2] - Series A preferred stockholders will receive distributions of $0.515625 per share on March 20, June 20, September 19, and December 19, 2025 [2] Company Overview - DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that owns a diversified portfolio of hotels, focusing on leisure destinations and major gateway markets [3] - The company currently owns 35 premium quality hotels and resorts, totaling approximately 9,600 rooms [3] - The portfolio includes both globally recognized brand hotels and independent boutique hotels in the lifestyle segment [3]

Core Viewpoint - DiamondRock Hospitality (DRH) has shown strong performance with a recent 52-week high of $9.44 and a year-to-date gain of 3.2%, although this is below the Zacks Finance sector's 19.1% and the REIT and Equity Trust - Other industry's 4.5% [1] Financial Performance - DRH has consistently beaten earnings estimates, reporting EPS of $0.1 against a consensus estimate of $0.25 in its last earnings report [2] - For the current fiscal year, DRH is projected to earn $1.08 per share on revenues of $1.12 billion, with a year-over-year earnings growth of 3.43% [3] Valuation Metrics - DRH trades at 8.6X current fiscal year EPS estimates, below the peer industry average of 11.3X, and has a trailing cash flow multiple of 11.8X compared to the peer average of 11.2X [7] - The stock has a PEG ratio of 4.45, indicating strong value potential for investors [7] Zacks Rank and Style Scores - DRH holds a Zacks Rank of 2 (Buy) due to rising earnings estimates, which is favorable for investors [8] - The stock has a Value Score of A, a Growth Score of D, and a Momentum Score of B, resulting in a combined VGM Score of B [6] Industry Comparison - The REIT and Equity Trust - Other industry is performing well, ranking in the top 42% of all industries, suggesting positive market conditions for DRH and its peers [12] - CTO Realty Growth, a peer, also shows strong performance with a Zacks Rank of 2 (Buy) and has reported earnings that exceeded estimates [10][11]

Core Insights - Steven Cress is the Head of Quantitative Strategies at Seeking Alpha, managing quant ratings and factor grades for stocks and ETFs, and leading the Alpha Picks initiative which identifies two attractive stocks to buy each month [1][2] Group 1: Company Overview - Seeking Alpha has developed a quantitative stock rating system and analytical tools that provide insights for investors, aimed at saving time and simplifying investment research [2] - The Alpha Picks tool is designed to assist long-term investors in building a high-quality portfolio through systematic stock recommendations [2] Group 2: Leadership and Experience - Steven Cress has over 30 years of experience in equity research, quantitative strategies, and portfolio management, having previously founded CressCap Investment Research and Cress Capital Management [2] - Prior to his current role, Cress worked at Morgan Stanley running a proprietary trading desk and led international business development at Northern Trust [2]

Group 1 - The Company, DiamondRock Hospitality, will report its fourth quarter 2025 financial results on February 26, 2026, after market close [1] - A conference call to discuss the financial results and business outlook will take place on February 27, 2026, at 9:00 a.m. Eastern Time [1] - The conference call will be accessible via telephone and internet, with registration required for participation [2] Group 2 - DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that owns a diversified portfolio of hotels, focusing on leisure destinations and major gateway markets [4] - The Company currently owns 35 premium quality hotels and resorts, totaling approximately 9,600 rooms [4] - The portfolio includes both globally recognized brand hotels and independent boutique hotels in the lifestyle segment [4]

Group 1 - The world economy remains volatile, yet most hotel REITs, including DiamondRock Hospitality REIT (DRH), are performing well [1] - DiamondRock Hospitality REIT has increased the midpoint of its adjusted EBITDA, indicating positive financial performance [1] Group 2 - The Investment Doctor emphasizes a portfolio should include a mix of dividend and growth stocks, focusing on high-quality small-cap ideas [1] - The investment group European Small Cap Ideas provides exclusive access to actionable research on European investment opportunities [1] - Features of the investment group include two model portfolios, weekly updates, educational content, and an active chat room for discussions [1]

Core Viewpoint - DiamondRock Hospitality Company announced a fourth quarter dividend of $0.12 per common share, which includes a regular quarterly dividend of $0.08 and a stub dividend of $0.04, leading to a total dividend of $0.36 per share for 2025, representing a 12.5% increase over 2024 [1] Company Overview - DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that owns a diversified portfolio of hotels, primarily located in leisure destinations and major gateway markets [1] - The company currently owns 36 premium quality hotels and resorts, totaling approximately 9,600 rooms [1] - The portfolio includes both globally recognized brand hotels and independent boutique hotels in the lifestyle segment [1] Future Dividend Expectations - For 2026, DiamondRock expects to declare regular quarterly dividends of $0.09 per common share, with the potential for a stub dividend in the fourth quarter, depending on operating income [1]

Core Viewpoint - DiamondRock Hospitality Company announced the redemption of all outstanding shares of its 8.250% Series A Cumulative Redeemable Preferred Stock on December 31, 2025, utilizing approximately $121.5 million in cash to fund the redemption price and accrued dividends [1][2]. Group 1: Redemption Details - The Company will redeem 4,760,000 shares at a price of $25.00 per share, plus accrued and unpaid dividends [1]. - The quarterly dividend of $0.515625 per share on the Series A Preferred Stock is declared and payable on December 31, 2025, to shareholders of record as of December 19, 2025 [2]. - After the redemption date, the Series A Preferred Stock will no longer be outstanding, and dividends will cease to accrue [3]. Group 2: Company Overview - DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that owns a portfolio of 36 premium quality hotels and resorts, totaling approximately 9,600 rooms [4]. - The Company's portfolio is strategically positioned in leisure destinations and top gateway markets, operating under leading global brand families and independent boutique hotels [4].

Core Points - DiamondRock Hospitality Company will voluntarily transfer its Class A Common Stock listing from NYSE to Nasdaq, with trading expected to begin on December 1, 2025, under the existing symbol "DRH" [1] - The partnership with Nasdaq is anticipated to provide cost-effective exchange listing, trading advisory services, and enhanced marketing opportunities, supporting the company's strategic objectives [2] - DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that owns a diversified portfolio of 36 premium hotels and resorts, totaling approximately 9,600 rooms [4] Company Overview - DiamondRock Hospitality Company focuses on premium accommodations across the United States, strategically positioning its portfolio to include both global brand hotels and independent boutique hotels [4] - The company has been operational for over 20 years and has expressed appreciation for its partnership with NYSE during this period [2][3]

Company Overview - As of September 30, 2025, DiamondRock Hospitality Company owned a portfolio of 36 premium hotels and resorts with a total of 9,595 guest rooms located in 26 different markets in the United States[81]. Revenue Performance - Room revenue accounted for approximately 65% of total revenues for the nine months ended September 30, 2025[90]. - Total revenues for the three months ended September 30, 2025, were $285.4 million, a slight increase of 0.1% compared to $285.1 million in the same period of 2024[100]. - Total revenues for the nine months ended September 30, 2025, were $846.0 million, a decrease of $4.9 million or 0.6% from $850.8 million in 2024[110]. - Rooms revenue decreased by $3.4 million, primarily due to a $5.9 million decrease from the 2025 Disposition, partially offset by a $2.9 million increase from the 2024 Acquisition[101]. - Food and beverage revenues increased by $1.6 million for the three months ended September 30, 2025, primarily due to higher banquet and catering revenues[104]. - Food and beverage revenues increased by $0.8 million, while other revenues rose by $3.3 million, primarily due to new resort fees and increased spa and parking revenue[114]. Financial Metrics - The company employs key performance indicators such as Occupancy percentage, Average Daily Rate (ADR), and Rooms Revenue per Available Room (RevPAR) to evaluate financial performance[89]. - The company’s financial performance is also measured using metrics such as EBITDA, Adjusted EBITDA, Funds From Operations (FFO), and Adjusted FFO[92]. - RevPAR is calculated as the product of ADR and occupancy percentage, serving as a critical statistic for monitoring hotel performance[90]. - EBITDA for the three months ended September 30, 2025, was $68.558 million, while Adjusted EBITDA was $79.084 million[154]. - Hotel Adjusted EBITDA for the nine months ended September 30, 2025, was $240.192 million, reflecting a slight decrease from $243.161 million in the same period of 2024[154]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $225.651 million, compared to $228.229 million in the same period of 2024[154]. - FFO for the nine months ended September 30, 2025, is calculated by excluding gains or losses from sales of properties and impairment losses, plus real estate-related depreciation and amortization[150]. Operating Performance - Occupancy rate for the three months ended September 30, 2025, was 76.2%, unchanged from the same period in 2024[103]. - Occupancy rate for the nine months ended September 30, 2025, was 73.2%, a decrease of 0.5% compared to 73.7% in 2024[113]. - Average Daily Rate (ADR) increased by 1.2% to $284.93 in 2025 from $281.47 in 2024[113]. - Revenue per Available Room (RevPAR) rose by 0.6% to $208.54 in 2025, compared to $207.36 in 2024[113]. - The weighted average RevPAR for the properties was $208.54, reflecting a 0.6% increase from the previous year[100]. Expenses and Debt - Total hotel operating expenses decreased by $0.9 million to $203.6 million for the three months ended September 30, 2025[105]. - The company reported a 2.9% decrease in rooms operating expenses for the three months ended September 30, 2025, totaling $46.5 million[105]. - Interest expense increased by $0.1 million to $17.1 million for the three months ended September 30, 2025, primarily due to an increase in unsecured term loans[108]. - Interest expense decreased by $2.3 million to $47.1 million in 2025, primarily due to mortgage debt repayments[119]. - As of September 30, 2025, the company had $1.1 billion of outstanding debt with a weighted average interest rate of 5.31%[125]. - The outstanding debt as of September 30, 2025, was $1.1 billion, all of which had a variable interest rate, with sensitivity to changes in one-month Secured Overnight Financing Rate (SOFR)[164]. Capital Management - The company aims to deliver long-term stockholder returns that exceed those generated by peers through dividends and capital appreciation[84]. - The company is focused on aggressive asset management and disciplined capital allocation in high-quality lodging properties[84]. - The company regularly assesses the availability and affordability of capital to maximize stockholder value and minimize enterprise risk[86]. - The company repurchased 4,597,942 shares of common stock at an average price of $7.71 per share for a total of $35.5 million during the nine months ended September 30, 2025[130]. - The company had $145.3 million of unrestricted cash and $50.1 million of restricted cash as of September 30, 2025[135]. - As of September 30, 2025, the company has set aside $50.0 million for capital projects in property improvement reserves[142]. - The company invested approximately $60.9 million on capital improvements at its hotels during the nine months ended September 30, 2025, and expects to spend between $85.0 to $90.0 million on capital improvements in 2025[143]. Risks and Challenges - The company faces risks including elevated inflation, interest rates, and increased competition in the lodging industry[82]. - The company continues to monitor macroeconomic factors that may impact leisure and international travel to the United States[93]. - Inflation has moderated but remains above the Federal Reserve's long-term target, impacting the company's ability to adjust room rates and affecting expenses[161]. - Management believes that actual results could differ materially from estimates due to uncertainties in accounting policies, particularly regarding impairment of long-lived assets[159]. - The company expects some seasonality in its business, with higher revenues varying by property location and customer base[163]. Renovations and Improvements - The company completed significant renovations at multiple hotels, including the Hilton Garden Inn New York and Kimpton Hotel Palomar Phoenix, enhancing guest experiences[149]. - The company’s capital expenditures include costs for replacing and repairing furniture, fixtures, and equipment at its hotels, calculated as a percentage of hotel revenues[142]. Impairment and Losses - The company reported impairment losses of $1.076 million for the three months ended September 30, 2024, and $1.596 million in 2025, with the same figures for the nine months[157]. - The company reported a loss on debt extinguishment of $5.850 million for the three months ended September 30, 2024, with no such loss reported in 2025[157]. Interest Rate Management - The company executed an interest rate swap for a notional amount of $75 million in August 2025, effective January 2, 2026, and an additional swap for $50 million in October 2025, effective January 4, 2027[164].

Financial Data and Key Metrics Changes - Corporate adjusted EBITDA for Q3 2025 was $79.1 million, and adjusted FFO per share was $0.29, both exceeding expectations [2] - Free cash flow per share for the trailing 12 months increased approximately 4% to $0.66 per share [3] - Comparable RevPAR declined 0.3%, which was better than the expected low single-digit decline [3] - Total hotel operating expenses increased by 1.6%, resulting in only a 3 basis point EBITDA margin contraction [5] Business Line Data and Key Metrics Changes - Business transient revenue grew almost 2%, while leisure transient revenue declined 1.5% and group room revenue declined 3.5% [3] - Out-of-room revenues increased by 5.1%, leading to total RevPAR growth of 1.5% [4] - Food and beverage revenues increased by 4%, with banquets and catering up almost 8% [4] - EBITDA margins for resorts expanded by over 150 basis points despite a 2.5% decline in RevPAR [7] Market Data and Key Metrics Changes - Urban portfolio achieved RevPAR growth of 0.6%, while total RevPAR growth was 2.1% [5] - Resort RevPAR declined 2.5%, but total RevPAR increased 0.4% due to a 4% growth in out-of-room revenues [6] - Group room revenues across the portfolio declined 3.5%, but the group revenue pace is up in the mid to high single digits for 2026 [8] Company Strategy and Development Direction - The company focuses on driving outsized free cash flow per share, which historically results in outsized total shareholder returns [12][13] - The CapEx strategy has been to spend 7-9% of revenues, compared to peers' 10.5%, resulting in significant capital preservation [15][16] - The company is actively underwriting acquisition opportunities, primarily targeting group-oriented hotels and urban select service hotels [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the lodging industry's trajectory, citing upcoming events like the FIFA World Cup as potential demand drivers [26] - The federal government shutdown has created uncertainty regarding short-term group pickup and transient guest arrivals [24] - The company raised the midpoint of its adjusted EBITDA guidance by $6 million to $287-$295 million for 2025 [11] Other Important Information - The company has successfully refinanced its senior unsecured credit facility, eliminating secured debt and improving financial flexibility [9] - The company repurchased 1.5 million common shares at an implied cap rate of approximately 9.7% during the year [10] - The company expects to end the year with over $150 million in cash on hand [10] Q&A Session Summary Question: How much of the expense control is driven by headcount reduction? - Management clarified that the focus is on productivity improvements rather than headcount reduction, with efforts to increase efficiency across the portfolio [29] Question: What are the options for recent or upcoming franchise expirations? - Management discussed various options, including potential upbranding or remaining with current brands, depending on what drives the best return [30] Question: What projects are on the docket for next year? - Management indicated that there are ongoing projects, but no significant disruptions are expected in 2026 [37] Question: How will the company approach potential asset dispositions? - Management stated that they are considering a mix of opportunistic asset sales and older properties that may not fit future strategies [40] Question: What is the outlook for labor costs in 2026? - Management anticipates that labor costs may not see the same efficiency gains as in 2025, projecting a growth rate of around 2.5-3% [43] Question: How is the company positioning for the FIFA World Cup? - Management is cautiously optimistic and is monitoring team matchups to gauge potential demand [45] Question: What is the expected impact of capital recycling on earnings? - Management aims to ensure that capital recycling is accretive to earnings, focusing on maximizing shareholder value [49]