DiamondRock Hospitality pany(DRH) - 2025 Q2 - Quarterly Results

Financial Highlights & Operating Results 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][5] - 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] 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 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][9] - 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] - 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] - 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][12] - Declared a quarterly cash dividend of $0.08 per common share and $0.515625 per Series A Preferred Stock share[14] Full Year 2025 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] Financial Statements 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 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 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 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 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] - 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][36] Reconciliations of Non-GAAP Measures 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] Supplemental Information This section provides supplemental data, including market capitalization, debt structure, and extensive property-level operating statistics Market Capitalization and Debt Summary 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] Hotel Operating Statistics 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 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][54][55][56]