Financial Data and Key Metrics Changes - Comparable RevPAR growth in Q2 2025 was 0.1%, driven by a 1.1% increase in rate and an 80 basis point decline in occupancy [4] - Total RevPAR growth was 1.1%, attributed to a 4.2% increase in out of room revenues per occupied room, reaching a new quarterly high of $160 per occupied room [4] - Corporate adjusted EBITDA was $90.5 million, and adjusted FFO per share was $0.35, with free cash flow per share increasing approximately 4.5% to $0.63 [7] Business Line Data and Key Metrics Changes - Group room revenue increased by 0.8%, business transient revenue rose by 4.2%, while leisure transient revenue declined by 1.6% [5] - Food and beverage revenues increased by 3.1%, with F&B profit rising over 6%, leading to a margin increase of 105 basis points [5][6] - Urban portfolio achieved 3% RevPAR growth, with April being the strongest month at 4.6% growth [7][8] - Resort portfolio saw comparable RevPAR decline of 6.3%, impacted by the delayed opening of The Cliffs at La Verge [9] Market Data and Key Metrics Changes - Urban hotels experienced total RevPAR growth that was 100 basis points stronger than RevPAR growth, with food and beverage revenues up over 5% [8] - Resort RevPAR performance varied, with Florida resorts experiencing a 4.1% decline, but out of room spend per occupied room increased by 6.7% [11] - Group room revenues across the portfolio increased by 0.8%, with rates up 3.3% and room nights down 2.5% [12] Company Strategy and Development Direction - The company aims to drive outsized free cash flow per share growth and is focused on recycling low free cash flow yield hotels into higher yielding investments [18][19] - The company plans to continue share repurchases as a key use of capital, especially when trading at a favorable cap rate [15][23] - Future value creation opportunities include potential developments at Chico Hot Springs and residential opportunities in Destin and Fort Lauderdale [26] Management's Comments on Operating Environment and Future Outlook - Management noted that the operating environment is expected to stabilize, with improving group lead volumes and out of room spending trends [30] - The company maintains a full-year outlook for RevPAR growth of negative 1% to positive 1%, with total RevPAR growth expected to outperform RevPAR growth by 50 basis points in 2025 [31] - Management expressed optimism about the potential for RevPAR acceleration in the coming year, contingent on reduced political turmoil and increased domestic investment [70] Other Important Information - The company successfully refinanced its senior unsecured credit facility, increasing its size to $1.5 billion, providing operational and transactional flexibility [14][71] - The company has declared or paid a quarterly common dividend of $0.08 per share and may declare an additional sub-dividend for Q4 based on taxable income [15] Q&A Session Summary Question: Can you elaborate on the stabilization at the higher end of the portfolio? - Management clarified that the comment referred to overall portfolio demand improving from a previously softer point [34] Question: What is driving the low single-digit RevPAR declines in Q3? - Management indicated that the decline is primarily due to difficult comparisons from last year's exceptional performance, particularly related to the DNC in Chicago [36][38] Question: How do you view share buybacks in relation to addressing preferred shares? - Management stated that share buybacks remain an attractive use of capital, but they will weigh options regarding preferred shares as the year progresses [41][42] Question: What segments are driving the improvement in group booking pace? - Management noted that the urban side is seeing significant improvement, with short-term group bookings contributing positively [48] Question: How does the company plan to pursue asset sales? - Management acknowledged that recent market volatility and property tax increases have impacted their disposition plans, but they remain focused on accretive recycling opportunities [80][100]

Financial Performance - For the quarter ended June 2025, DiamondRock Hospitality (DRH) reported revenue of $305.72 million, down 1.2% year-over-year [1] - EPS for the quarter was $0.35, compared to $0.10 in the same quarter last year, indicating significant improvement [1] - The reported revenue was below the Zacks Consensus Estimate of $308.63 million, resulting in a surprise of -0.94% [1] - The company delivered an EPS surprise of +6.06%, with the consensus EPS estimate being $0.33 [1] Key Metrics - Revenues from Other sources were $28.66 million, exceeding the estimated $27.87 million, representing a +3.5% change year-over-year [4] - Food and beverage revenues were reported at $78.83 million, slightly above the estimated $78.58 million, with a +0.9% change compared to the previous year [4] - Room revenues were $198.24 million, below the estimated $205.01 million, reflecting a year-over-year decline of -2.6% [4] - Net Earnings Per Share (Diluted) was $0.18, slightly below the estimated $0.19 [4] Stock Performance - Shares of DiamondRock Hospitality have returned -4.9% over the past month, contrasting with the Zacks S&P 500 composite's +1.2% change [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential for outperformance in the near term [3]

Core Viewpoint - DiamondRock Hospitality (DRH) reported quarterly funds from operations (FFO) of $0.35 per share, exceeding the Zacks Consensus Estimate of $0.33 per share, and showing a slight increase from $0.34 per share a year ago [1] Group 1: Financial Performance - The quarterly FFO surprise was +6.06%, and the company had a previous quarter surprise of +11.76% with an actual FFO of $0.19 compared to an expected $0.17 [2] - Revenues for the quarter ended June 2025 were $305.72 million, which missed the Zacks Consensus Estimate by 0.94%, and decreased from $309.28 million year-over-year [3] - Over the last four quarters, the company has surpassed consensus FFO estimates three times but has only topped revenue estimates once [3] Group 2: Stock Performance and Outlook - DiamondRock Hospitality shares have declined approximately 16.1% since the beginning of the year, contrasting with the S&P 500's gain of 7.9% [4] - The company's FFO outlook is crucial for investors, with current consensus FFO estimates at $0.26 for the coming quarter and $1.00 for the current fiscal year [5][8] - The Zacks Rank for DiamondRock Hospitality is currently 2 (Buy), indicating expectations for the stock to outperform the market in the near future [7] Group 3: Industry Context - The REIT and Equity Trust - Other industry is currently in the top 40% of over 250 Zacks industries, suggesting a favorable outlook for stocks within this sector [9]

[Financial Highlights & Operating Results](index=1&type=section&id=Financial%20Highlights%20%26%20Operating%20Results) DiamondRock reported a **73.8%** net income increase to **$38.4 million** in Q2 2025, with flat Adjusted FFO per share and a **1.1%** rise in Comparable Total RevPAR Q2 2025 Key Performance Indicators (vs. Q2 2024) | Metric | Q2 2025 | Change vs. Q2 2024 | | :--- | :--- | :--- | | Net Income | $38.4 million | +73.8% | | Comparable RevPAR | $226.95 | +0.1% | | Comparable Total RevPAR | $350.00 | +1.1% | | Comparable Hotel Adjusted EBITDA | $95.4 million | -1.9% | | Adjusted EBITDA | $90.5 million | -4.7% | | Adjusted FFO per Share | $0.35 | Flat | - Out-of-room spend accelerated from Q1 levels and is expected to remain a strong point in the second half of the year[3](index=3&type=chunk)[5](index=5&type=chunk) - Expense growth was limited to **0.7%**, excluding a larger-than-anticipated property tax increase in Chicago; excluding this tax impact, Comparable Hotel Adjusted EBITDA margins would have expanded by **30 basis points** instead of contracting by **97 basis points**[3](index=3&type=chunk) Comparable Operating Results Summary | Metric | Three Months Ended June 30, 2025 | Change (YoY) | Six Months Ended June 30, 2025 | Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | RevPAR | $226.95 | 0.1% | $206.69 | 1.0% | | Total RevPAR | $350.00 | 1.1% | $320.95 | 1.3% | | Total Revenues | $305.7M | 1.2% | $557.5M | 0.9% | | Hotel Adjusted EBITDA | $95.4M | (1.9)% | $156.7M | (0.4)% | | Hotel Adjusted EBITDA Margin | 31.19% | (97) bps | 28.11% | (34) bps | [Capital Management & Shareholder Returns](index=3&type=section&id=Capital%20Management%20%26%20Shareholder%20Returns) The company completed a **$1.5 billion** refinancing, extending debt maturities to 2028, and continued share repurchases - Completed a **$1.5 billion** refinancing of its senior unsecured credit facility, increasing its size from **$1.2 billion**, addressing all near-term maturities and leaving no debt maturities until **2028**[1](index=1&type=chunk)[9](index=9&type=chunk) - Following the planned prepayment of the Westin Boston Seaport District mortgage in September 2025, the company's entire portfolio will be unencumbered by secured debt[10](index=10&type=chunk) - The company invested **$41.3 million** in capital improvements in the first half of 2025 and expects to invest a total of **$85.0 to $95.0 million** for the full year[11](index=11&type=chunk) - Year-to-date, the company repurchased **3.6 million** common shares for approximately **$27.3 million**, with **$146.8 million** remaining under its repurchase program[1](index=1&type=chunk)[12](index=12&type=chunk) - Declared a quarterly cash dividend of **$0.08** per common share and **$0.515625** per Series A Preferred Stock share[14](index=14&type=chunk) [Full Year 2025 Guidance](index=4&type=section&id=GUIDANCE) DiamondRock raised its full-year 2025 guidance midpoint for Adjusted EBITDA and FFO per share, anticipating improved Total RevPAR growth Full Year 2025 Guidance Update | Metric | Current Guidance | Previous Guidance | Change at Midpoint | | :--- | :--- | :--- | :--- | | Comparable RevPAR Growth | (1.0)% to 1.0% | (1.0)% to 1.0% | —% | | Comparable Total RevPAR Growth | (0.5%) to 1.5% | (1.0)% to 1.0% | +0.5% | | Adjusted EBITDA | $275M to $295M | $270M to $295M | +$2.5M | | Adjusted FFO per share | $0.96 to $1.06 | $0.94 to $1.06 | +$0.01 | - Key guidance assumptions include: - Corporate expenses of **$24M to $25M** (unchanged) - Cash interest expense of **$63M to $64M** (increased by **$2.5M** due to credit facility upsizing) - Fully diluted weighted average shares of **209.0 million**[20](index=20&type=chunk) [Financial Statements](index=7&type=section&id=Financial%20Statements) Unaudited financial statements show total assets decreased to **$3.06 billion**, with net income attributable to common stockholders surging to **$38.4 million** [Consolidated Balance Sheets](index=7&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) As of June 30, 2025, total assets were **$3.06 billion**, down from **$3.17 billion** at year-end 2024, while total liabilities decreased Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$3,061,315** | **$3,172,251** | | Debt, net | $1,020,320 | $1,095,294 | | **Total Liabilities** | **$1,476,817** | **$1,573,319** | | **Total Equity** | **$1,584,498** | **$1,598,932** | [Consolidated Statements of Operations](index=8&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For Q2 2025, total revenues were **$305.7 million**, with net income attributable to common stockholders surging to **$38.4 million** Consolidated Statements of Operations Summary (in thousands) | Account | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Revenues | $305,720 | $309,280 | | Total Operating Expenses | $249,586 | $268,274 | | Net Income | $41,039 | $24,631 | | Net Income Attributable to Common Stockholders | $38,381 | $22,076 | | Earnings per Diluted Share | $0.18 | $0.10 | [Non-GAAP Financial Measures & Reconciliations](index=9&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) This section details the company's use of non-GAAP measures like EBITDA and FFO, providing comprehensive reconciliations from GAAP net income [Explanation of Non-GAAP Financial Measures](index=9&type=section&id=Explanation%20of%20Non-GAAP%20Financial%20Measures) The company defines and justifies its use of EBITDA, FFO, and their adjusted variants as key performance indicators - Management uses non-GAAP measures like EBITDA and FFO to evaluate hotel performance and facilitate comparisons with other lodging REITs[29](index=29&type=chunk) - Effective **January 1, 2025**, the company excludes share-based compensation from its calculations of Adjusted EBITDA and Adjusted FFO to align with financial covenant calculations and enhance peer comparability[8](index=8&type=chunk)[36](index=36&type=chunk) [Reconciliations of Non-GAAP Measures](index=13&type=section&id=Reconciliations%20of%20Non-GAAP%20Measures) Detailed reconciliations from GAAP net income to non-GAAP metrics show Q2 2025 net income of **$41.0 million** reconciled to Adjusted EBITDA of **$90.5 million** Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Line Item | Three Months Ended June 30, 2025 | | :--- | :--- | | Net income | $41,039 | | Interest expense | $14,868 | | Real estate related depreciation and amortization | $28,156 | | EBITDA/EBITDAre | $85,054 | | Adjustments (Share-based comp, etc.) | $5,403 | | **Adjusted EBITDA** | **$90,457** | Reconciliation of Net Income to Adjusted FFO (in thousands) | Line Item | Three Months Ended June 30, 2025 | | :--- | :--- | | Net income | $41,039 | | Real estate related depreciation and amortization | $28,156 | | FFO | $69,195 | | Adjustments (Share-based comp, etc.) | $5,589 | | Distribution to preferred stockholders | ($2,454) | | **Adjusted FFO available to common stock** | **$72,330** | - Comparable Hotel Adjusted EBITDA for Q2 2025 was **$95.4 million**, compared to **$97.2 million** in Q2 2024; the reconciliation adjusts for the sale of the Westin Washington D.C. City Center and the acquisition of the AC Hotel Minneapolis Downtown[40](index=40&type=chunk) [Supplemental Information](index=15&type=section&id=Supplemental%20Information) This section provides supplemental data, including market capitalization, debt structure, and extensive property-level operating statistics [Market Capitalization and Debt Summary](index=16&type=section&id=Market%20Capitalization%20and%20Debt%20Summary) As of June 30, 2025, total enterprise value was approximately **$2.68 billion**, with total debt outstanding of **$1.27 billion** Enterprise Value as of June 30, 2025 (in thousands) | Component | Value | | :--- | :--- | | Common equity capitalization | $1,592,487 | | Preferred equity capitalization | $119,000 | | Consolidated debt (face amount) | $1,020,876 | | Cash and cash equivalents | ($52,402) | | **Total enterprise value** | **$2,679,961** | - Post-refinancing (as of Aug 7, 2025), the average years to maturity for the company's debt increased from **1.4 years** to **2.8 years**[46](index=46&type=chunk) [Hotel Operating Statistics](index=17&type=section&id=Hotel%20Operating%20Statistics) Detailed operating statistics for 36 comparable hotels show Q2 2025 comparable ADR increased by **1.1%** to **$295.78** Comparable Portfolio Operating Statistics - Q2 2025 vs Q2 2024 | Metric | 2Q 2025 | 2Q 2024 | Change | | :--- | :--- | :--- | :--- | | ADR | $295.78 | $292.59 | 1.1% | | Occupancy | 76.7% | 77.5% | (0.8)% | | RevPAR | $226.95 | $226.83 | 0.1% | | Total RevPAR | $350.00 | $346.27 | 1.1% | [Hotel Adjusted EBITDA Reconciliation](index=22&type=section&id=Hotel%20Adjusted%20EBITDA%20Reconciliation) This section provides granular, hotel-by-hotel reconciliations of total revenues to Hotel Adjusted EBITDA for Q2 2025 and YTD periods - Provides a detailed reconciliation from Total Revenues to Hotel Adjusted EBITDA for each of the company's properties for Q2 2025, Q2 2024, YTD 2025, and YTD 2024[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk)

Group 1 - The article invites active investors to join a free trial and engage in discussions with sophisticated traders and investors [1] Group 2 - There are no stock, option, or similar derivative positions held by the analyst in any of the mentioned companies, nor plans to initiate such positions within the next 72 hours [2] - The article expresses the author's own opinions and is not receiving compensation from any company mentioned [2] Group 3 - Seeking Alpha clarifies that past performance does not guarantee future results and no investment recommendations are provided [3] - The views expressed may not reflect those of Seeking Alpha as a whole, and the analysts may not be licensed or certified [3]

Group 1 - The article compares two stocks, DiamondRock Hospitality (DRH) and CubeSmart (CUBE), to determine which offers better value for investors [1] - DRH has a Zacks Rank of 2 (Buy), indicating a stronger earnings outlook compared to CUBE, which has a Zacks Rank of 3 (Hold) [3][7] - Value investors typically consider various traditional metrics to identify undervalued stocks, beyond just earnings outlook [3] Group 2 - The Value category of the Style Scores system evaluates companies based on key metrics such as P/E ratio, P/S ratio, earnings yield, and cash flow per share [4] - DRH has a forward P/E ratio of 8.03, significantly lower than CUBE's forward P/E of 15.85, suggesting DRH may be undervalued [5] - DRH's PEG ratio is 4.61, while CUBE's PEG ratio is 7.51, indicating DRH's expected earnings growth is more favorable [5] - DRH's P/B ratio is 1.07, compared to CUBE's P/B of 3.26, further supporting DRH's valuation as more attractive [6] - Based on these valuation metrics, DRH holds a Value grade of B, while CUBE has a Value grade of D [6]

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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