Playa Hotels & Resorts(US:PLYA)2022-08-04 20:09PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Unaudited condensed consolidated financial statements for Playa Hotels & Resorts N.V. reflect a significant recovery from net loss to net income Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2022, shows an increase in total assets to $2.10 billion from $2.06 billion at year-end 2021, primarily driven by a rise in cash and cash equivalents Condensed Consolidated Balance Sheet Highlights ($ in thousands) | Account | June 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $348,797 | $270,088 | | Property and equipment, net | $1,558,236 | $1,584,574 | | Total assets | $2,102,589 | $2,057,576 | | Liabilities & Equity | | | | Debt | $915,401 | $944,847 | | Related party debt | $195,860 | $194,472 | | Total liabilities | $1,386,747 | $1,426,742 | | Total shareholders' equity | $715,842 | $630,834 | Condensed Consolidated Statements of Operations The company reported a significant turnaround in profitability, with total revenue growing 71.8% year-over-year to $221.3 million in Q2 2022, resulting in a net income of $30.5 million Statement of Operations Highlights ($ in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $221,267 | $128,803 | $440,841 | $206,549 | | Operating Income (Loss) | $38,947 | $(642) | $92,990 | $(53,465) | | Net Income (Loss) | $30,525 | $(7,768) | $73,272 | $(77,513) | | Diluted EPS | $0.18 | $(0.05) | $0.44 | $(0.48) | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities was $97.3 million for the six months ended June 30, 2022, a significant improvement from the $13.6 million used in the prior year period Cash Flow Summary for Six Months Ended June 30 ($ in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $97,301 | $(13,578) | | Net cash (used in) provided by investing activities | $(11,970) | $80,560 | | Net cash (used in) provided by financing activities | $(30,111) | $23,520 | | Increase in cash, cash equivalents, and restricted cash | $55,220 | $90,502 | - The significant cash provided by investing activities in H1 2021 ($80.6 million) was primarily due to $89.1 million in proceeds from the sale of assets, namely the Dreams Puerto Aventuras and Capri Resort22222 Notes to the Condensed Consolidated Financial Statements Detailed notes support the financial statements, disclosing revenue disaggregation, debt structure, and significant segment performance improvements - The company owns and/or manages a portfolio of 22 resorts (8,366 rooms) in Mexico, the Dominican Republic, and Jamaica2692 Total Revenue by Geographic Segment - Six Months Ended June 30 ($ in thousands) | Segment | 2022 | 2021 | | :--- | :--- | :--- | | Yucatán Peninsula | $142,366 | $81,209 | | Pacific Coast | $64,248 | $30,102 | | Dominican Republic | $134,616 | $54,817 | | Jamaica | $94,208 | $38,830 | - As of June 30, 2022, total net debt was $1.11 billion, down from $1.14 billion at year-end 2021. The company was in compliance with all debt covenants5960 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the significant operational and financial recovery in H1 2022, driven by increased demand and improved liquidity, while addressing market risks Overview and Portfolio Playa is a leading owner and operator of 22 all-inclusive resorts (8,366 rooms) in Mexico, Jamaica, and the Dominican Republic, leveraging brand partnerships for significant Q2 2022 improvements - As of June 30, 2022, Playa owned and/or managed 22 resorts with 8,366 rooms across Mexico, Jamaica, and the Dominican Republic92 Key Performance Highlights - Q2 2022 vs Q2 2021 ($ in millions) | Metric | Q2 2022 | Q2 2021 | | :--- | :--- | :--- | | Net Income (Loss) | $30.5 | $(7.8) | | Total Revenue | $221.3 | $128.8 | | Adjusted EBITDA | $61.7 | $22.9 | Results of Operations The company's financial performance improved dramatically in H1 2022, with Total Net Revenue increasing 72.1% in Q2 and 114.0% in H1, driven by higher Occupancy and Net Package ADR Total Portfolio Performance - Q2 2022 vs Q2 2021 | Metric | Q2 2022 | Q2 2021 | % Change | | :--- | :--- | :--- | :--- | | Occupancy | 75.1% | 49.9% | +25.2 pts | | Net Package ADR | $361.29 | $302.71 | +19.4% | | Net Package RevPAR | $271.40 | $150.98 | +79.8% | | Adjusted EBITDA | $61,704k | $22,915k | +169.3% | Total Portfolio Performance - H1 2022 vs H1 2021 | Metric | H1 2022 | H1 2021 | % Change | | :--- | :--- | :--- | :--- | | Occupancy | 73.7% | 40.7% | +33.0 pts | | Net Package ADR | $374.35 | $297.31 | +25.9% | | Net Package RevPAR | $276.06 | $121.05 | +128.1% | | Adjusted EBITDA | $138,647k | $20,410k | +579.3% | - Interest expense decreased by 32.0% in Q2 2022 and 40.6% in H1 2022, primarily due to benefits from the change in fair value of interest rate swaps112130 Segment Results All geographic segments demonstrated strong year-over-year growth in Q2 and H1 2022, with the Dominican Republic and Jamaica showing particularly significant Owned Resort EBITDA increases Owned Resort EBITDA by Segment - Q2 2022 vs Q2 2021 ($ in thousands) | Segment | Q2 2022 | Q2 2021 | % Change | | :--- | :--- | :--- | :--- | | Yucatán Peninsula | $25,974 | $13,022 | +99.5% | | Pacific Coast | $13,910 | $7,078 | +96.5% | | Dominican Republic | $20,747 | $7,926 | +161.8% | | Jamaica | $12,142 | $4,072 | +198.2% | Owned Resort EBITDA by Segment - H1 2022 vs H1 2021 ($ in thousands) | Segment | H1 2022 | H1 2021 | % Change | | :--- | :--- | :--- | :--- | | Yucatán Peninsula | $55,432 | $20,196 | +174.5% | | Pacific Coast | $26,454 | $7,563 | +249.8% | | Dominican Republic | $49,124 | $9,592 | +412.1% | | Jamaica | $29,300 | $1,292 | +2,167.8% | - The Dominican Republic segment's performance was boosted by the premium-positioned Hyatt Ziva and Hyatt Zilara Cap Cana resorts, but weighed down by two externally managed properties that lagged in rate gains and margins172175 Liquidity and Capital Resources The company's liquidity position strengthened significantly, with available cash increasing to $348.8 million as of June 30, 2022, driven by strong cash from operations - Available cash increased to $348.8 million as of June 30, 2022208 - Net cash provided by operating activities was $97.3 million for the first six months of 2022, compared to a use of $13.6 million in the prior year period220 - A restricted cash balance of $23.5 million related to the Property Loan was released into unrestricted cash in Q2 2022210 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to interest rate risk, with 88% of its debt at fixed rates, and foreign currency risk, as 75.9% of resort-level operating expenses are in local currencies - As of June 30, 2022, 88% of the company's outstanding debt bore fixed interest rates, with the remaining 12% at floating rates230 - A 1.0% increase in market interest rates would decrease future earnings and cash flows by approximately $1.8 million annually on the floating rate debt235 - The company is exposed to foreign currency risk, with about 75.9% of H1 2022 resort-level operating expenses denominated in Mexican Pesos, Dominican Pesos, and Jamaican Dollars. No currency hedges are currently in place232233 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2022, with no material changes in internal control over financial reporting - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report234 - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls235 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is subject to various claims and administrative proceedings in the ordinary course of business, none of which are believed to be material - The company reports no material legal proceedings that would be expected to have a material adverse effect on its financial condition, cash flows, or results of operations237 Item 1A. Risk Factors This section supplements existing risk factors with a new disclosure concerning the Russia-Ukraine conflict, highlighting potential negative impacts on global macroeconomic conditions - A new risk factor was added regarding the Russia-Ukraine conflict, highlighting potential negative impacts on macroeconomic conditions, consumer spending, utility prices, and supply chains239240 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the period - None241 Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities during the period - None242 Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable243 Item 5. Other Information There was no other information to report for the period - None244 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL interactive data files - The exhibits filed include certifications from the CEO and CFO as required by the Sarbanes-Oxley Act (Sections 302 and 906) and XBRL data files246