RLJ Lodging Trust(RLJ) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Performance Overview RLJ Lodging Trust's Q2 2025 performance exceeded expectations, driven by portfolio resilience and cost control, despite slight RevPAR declines, while maintaining strong liquidity and active capital returns Second Quarter Highlights RLJ Lodging Trust reported Q2 2025 results that exceeded expectations, demonstrating portfolio resilience and disciplined cost control, advancing renovations, addressing near-term debt maturities, and repurchasing shares - Management highlighted the portfolio's resilience, the ramp-up of conversions, and disciplined cost controls as key drivers for exceeding Q2 expectations, anticipating a softer Q3 but seeing positive tailwinds for Q4 from a more favorable calendar and strong citywide events[3] Q2 2025 Key Metrics | Metric | Value | | :--- | :--- | | Net Income per share | $0.15 | | Adjusted FFO per diluted share | $0.48 | | Adjusted EBITDA | $104.0 million | | Comparable RevPAR | $155.08 (-2.1% YoY) | | Shares Repurchased | 0.8 million | Financial and Operating Results In Q2 2025, RLJ Lodging Trust experienced a slight decline in key performance indicators compared to the prior year, with total revenue decreasing by 1.7% to $363.1 million and Comparable RevPAR falling by 2.1% Financial and Operating Highlights (Q2 & YTD 2025 vs 2024, in thousands) | Metric | Q2 2025 | Q2 2024 | Change | YTD 2025 | YTD 2024 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Comparable RevPAR | $155.08 | $158.44 | (2.1)% | $148.19 | $148.71 | (0.3)% | | Total Revenue | $363,103 | $369,297 | (1.7)% | $691,222 | $693,707 | (0.4)% | | Net Income | $28,631 | $37,291 | (23.2)% | $31,803 | $42,037 | (24.3)% | | Comparable Hotel EBITDA | $113,023 | $117,975 | (4.2)% | $198,320 | $206,312 | (3.9)% | | Adjusted EBITDA | $104,008 | $108,971 | (4.6)% | $181,602 | $188,563 | (3.7)% | | Adjusted FFO Per Share | $0.48 | $0.51 | (5.9)% | $0.79 | $0.84 | (6.0)% | Capital Allocation The company actively returned capital to shareholders through both share repurchases and dividends, repurchasing 0.8 million shares for $6.0 million in Q2 and declaring a quarterly cash dividend of $0.15 per common share - During the second quarter, the Company repurchased 0.8 million common shares for approximately $6.0 million, with 3.2 million shares repurchased year-to-date for $28.0 million, leaving $246.3 million remaining under the share repurchase program[7] - The Board of Trustees declared a quarterly cash dividend of $0.15 per common share and a dividend of $0.4875 on its Series A Preferred Shares[10] Balance Sheet and Liquidity As of June 30, 2025, the company maintained a strong liquidity position with approximately $974 million, including $374 million in cash and $600 million available on its revolver, successfully addressing near-term debt maturities - As of June 30, 2025, the Company had approximately $974 million of total liquidity, comprised of $374 million of unrestricted cash and $600 million available under its revolving credit facility[8] - The company refinanced its $200.0 million term loan, upsizing it to $300.0 million and extending the maturity to April 2030, using the incremental proceeds to repay the outstanding balance on the Revolver[9] 2025 Outlook RLJ Lodging Trust updated its full-year 2025 outlook, anticipating the lower end of guidance due to Q3 softness and macroeconomic uncertainty, excluding future capital activities Full Year 2025 Guidance RLJ Lodging Trust updated its full-year 2025 outlook, stating that the low end of its guidance ranges is now the most likely outcome, reflecting softer-than-anticipated third-quarter results and limited visibility due to macroeconomic uncertainty - The Company now expects the low end of its guidance range to be the most likely outcome, citing a softer than anticipated third quarter and macroeconomic uncertainty[11] FY 2025 Outlook (in millions) | Metric | FY 2025 Range | | :--- | :--- | | Comparable RevPAR Growth | -1.0% to +1.0% | | Comparable Hotel EBITDA | $365.5 to $395.5 | | Adjusted EBITDA | $332.5 to $362.5 | | Adjusted FFO per diluted share | $1.38 to $1.58 | - Additional full-year 2025 outlook assumptions include: Net interest expense: $94.0 million - $96.0 million; Cash corporate G&A: $34.0 million - $35.0 million; Renovation capital expenditures: $80.0 million - $100.0 million; Diluted weighted average shares: 151.5 million[15] Financial Statements This section provides key financial statements, including consolidated balance sheets, statements of operations, and a detailed debt summary, offering a comprehensive view of the company's financial position and performance Consolidated Balance Sheets As of June 30, 2025, RLJ's total assets stood at $4.82 billion, compared to $4.88 billion at the end of 2024, with total liabilities stable at $2.58 billion and cash decreasing to $373.9 million Key Balance Sheet Items (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $373,896 | $409,809 | | Total assets | $4,822,810 | $4,883,879 | | Debt, net | $2,220,768 | $2,220,081 | | Total liabilities | $2,582,575 | $2,585,602 | | Total equity | $2,240,235 | $2,298,277 | Consolidated Statements of Operations For the second quarter of 2025, total revenues were $363.1 million, a decrease from $369.3 million in the same period of 2024, with net income attributable to common shareholders declining to $22.2 million Key Income Statement Items (in thousands, except per share data) | Account | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total revenues | $363,103 | $369,297 | | Total operating expenses | $310,167 | $312,069 | | Net income | $28,631 | $37,291 | | Net income attributable to common shareholders | $22,174 | $30,827 | | Net income per share - diluted | $0.15 | $0.20 | Consolidated Debt Summary As of June 30, 2025, the company's total debt outstanding was approximately $2.23 billion with a weighted average interest rate of 4.53%, consisting of both fixed and floating rate instruments with staggered maturities Debt Summary as of June 30, 2025 | Debt Type | Balance (in thousands) | Weighted Avg. Rate | | :--- | :--- | :--- | | Mortgage Debt | $206,000 | 4.74% | | Corporate Debt | $2,025,000 | 4.51% | | Total Debt | $2,231,000 | 4.53% | - The company had $600.0 million of borrowing capacity on its Revolver, which was undrawn as of June 30, 2025[50] Non-GAAP Financial Measures This section defines and reconciles key non-GAAP financial measures, including FFO, EBITDA, and Hotel EBITDA, providing insights into the company's operational performance beyond GAAP metrics Definitions of Non-GAAP Measures The company utilizes several non-GAAP financial measures, including FFO, Adjusted FFO, EBITDA, EBITDAre, and Hotel EBITDA, to supplement its GAAP results and provide useful insights into operating performance - Funds from Operations (FFO) is calculated per NAREIT standards and is considered helpful in evaluating a real estate company's operations by excluding gains/losses from property sales and real estate depreciation[21] - Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is used to evaluate operating performance by removing the impact of a company's capital structure and asset base[23] - Hotel EBITDA is used to provide a clearer understanding of the operating results over which individual hotels have direct control by excluding corporate-level expenses and certain non-cash items[27] Reconciliation of Non-GAAP Measures The report provides detailed reconciliations from GAAP Net Income to key non-GAAP metrics, with Q2 2025 Net Income of $28.6 million reconciled to Adjusted FFO of $72.7 million and Adjusted EBITDA of $104.0 million Reconciliation of Net Income to Adjusted FFO (Q2 2025, in thousands) | Line Item | Amount | | :--- | :--- | | Net income | $28,631 | | Depreciation and amortization | $46,363 | | Other adjustments | ($2,336) | | FFO | $69,216 | | Transaction costs, non-cash items, etc. | $3,442 | | Adjusted FFO | $72,658 | Reconciliation of Net Income to Adjusted EBITDA (Q2 2025, in thousands) | Line Item | Amount | | :--- | :--- | | Net income | $28,631 | | Depreciation and amortization | $46,363 | | Interest expense, net | $24,515 | | Other adjustments | $1,123 | | EBITDA | $100,332 | | Adjustments for EBITDAre & other items | $3,676 | | Adjusted EBITDA | $104,008 | Reconciliation of Non-GAAP Measures - Full-Year Outlook The company provides a reconciliation of its full-year 2025 net income guidance to its Adjusted EBITDA and Adjusted FFO guidance, with the low end of net income ($36.8M) reconciling to Adjusted EBITDA of $332.5M and Adjusted FFO of $209.5M FY 2025 Outlook Reconciliation: Net Income to Adjusted EBITDA (in millions) | Line Item | Low End | High End | | :--- | :--- | :--- | | Net income | $36.8 | $64.8 | | D&A, Interest, Taxes, etc. | $281.4 | $283.4 | | EBITDA | $318.2 | $348.2 | | Adjustments | $14.3 | $14.3 | | Adjusted EBITDA | $332.5 | $362.5 | FY 2025 Outlook Reconciliation: Net Income to Adjusted FFO (in millions) | Line Item | Low End | High End | | :--- | :--- | :--- | | Net income | $36.8 | $64.8 | | D&A, Preferred Dividends, etc. | $160.2 | $160.2 | | FFO | $197.0 | $225.0 | | Adjustments | $12.5 | $14.5 | | Adjusted FFO | $209.5 | $239.5 |