Ryman Hospitality Properties(RHP) - 2022 Q3 - Quarterly Report

Part I - Financial Information Financial Statements The company reported a significant financial recovery in Q3 2022, achieving a net income of $73.6 million and positive equity Condensed Consolidated Balance Sheets Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Assets | $3,947,280 | $3,580,525 | | Cash and cash equivalents - unrestricted | $224,696 | $140,688 | | Property and equipment, net | $3,178,104 | $3,031,844 | | Total Liabilities | $3,591,545 | $3,602,918 | | Debt and finance lease obligations | $2,863,081 | $2,936,819 | | Total Equity (Deficit) | $51,886 | $(22,393) | - Total assets grew primarily due to an increase in property and equipment and cash reserves. Total liabilities slightly decreased, while total equity shifted from a deficit to a positive balance, indicating improved financial health[9] Condensed Consolidated Statements of Operations Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $467,755 | $306,906 | $1,237,094 | $561,942 | | Operating Income (Loss) | $97,005 | $25,695 | $210,847 | $(84,809) | | Net Income (Loss) | $47,451 | $(8,607) | $73,578 | $(188,777) | | Net Income (Loss) available to common stockholders | $45,241 | $(8,546) | $70,904 | $(170,986) | | Diluted EPS | $0.79 | $(0.16) | $1.28 | $(3.11) | - The company demonstrated a strong recovery, with total revenues increasing 52.4% in Q3 2022 and 120.1% in the first nine months of 2022 compared to the prior year periods. This revenue growth drove a significant swing from a net loss to a net income[11] Condensed Consolidated Statements of Cash Flows Cash Flow Summary - Nine Months Ended Sep 30 (in thousands) | Cash Flow Category | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $245,970 | $22,670 | | Net cash used in investing activities | $(147,862) | $(277,004) | | Net cash provided by financing activities | $59,595 | $253,083 | - Operating cash flow improved significantly to $246.0 million in the first nine months of 2022 from $22.7 million in the prior year period, reflecting the strong business recovery. Investing activities included the purchase of Block 21, while financing activities were driven by the OEG transaction and related debt restructuring[13] Notes to Condensed Consolidated Financial Statements - The company operates as a REIT specializing in group-oriented destination hotels, primarily the Gaylord Hotels brand managed by Marriott, and an Entertainment segment (Opry Entertainment Group)[17][20] - On June 16, 2022, the company sold a 30% equity interest in its Entertainment segment (OEG) to Atairos Group for approximately $296.0 million. The company retains a 70% controlling interest[30][32] - On May 31, 2022, the company acquired Block 21, a mixed-use complex in Austin, TX, for an adjusted purchase price of $255 million, which included assuming approximately $136 million of mortgage debt[44] Total Debt Outstanding (in thousands) | Debt Instrument | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | $500M Term Loan B | $372,500 | $376,250 | | $600M Senior Notes, 4.50% | $600,000 | $600,000 | | $700M Senior Notes, 4.75% | $700,000 | $700,000 | | $800M Gaylord Rockies Term Loan | $800,000 | $800,000 | | $300M OEG Term Loan | $300,000 | - | | Block 21 CMBS Loan | $135,308 | - | | Revolving Credit Facility | - | $190,000 | | Total Debt (Principal & Leases) | $2,908,529 | $2,967,134 | - In September 2022, the company reinstated its cash dividend, declaring $0.10 per share of common stock[97] Management's Discussion and Analysis of Financial Condition and Results of Operations Strong Q3 2022 performance, driven by pandemic recovery and strategic acquisitions, significantly improved operating income and liquidity Overview and Strategic Plan - The company's core business consists of five upscale, meetings-focused Gaylord Hotels resorts and a portfolio of media and entertainment assets under the Opry Entertainment Group (OEG)[118][119] - Recent strategic moves include the sale of a 30% interest in OEG to Atairos for ~$296M, the acquisition of the Block 21 complex in Austin for ~$255M, and the full acquisition of the Gaylord Rockies joint venture in May 2021[130][135][136] - Long-term strategy focuses on being the premier hospitality REIT for group meetings, expanding the hotel portfolio, continuously investing in existing properties, and leveraging the brand awareness of its entertainment assets like the Grand Ole Opry[139][141][144][145] Results of Operations Summary Financial Results (in thousands) | Metric | Q3 2022 | Q3 2021 | % Change | | :--- | :--- | :--- | :--- | | Total revenues | $467,755 | $306,906 | 52.4% | | Operating income | $97,005 | $25,695 | 277.5% | | Net income (loss) | $47,451 | $(8,607) | 651.3% | Hospitality Segment Key Performance Metrics | Metric | Q3 2022 | Q3 2021 | Change | | :--- | :--- | :--- | :--- | | Occupancy | 71.5% | 54.5% | 17.0 pts | | ADR | $226.20 | $216.79 | 4.3% | | RevPAR | $161.75 | $118.17 | 36.9% | | Total RevPAR | $407.77 | $269.19 | 51.5% | - The mix of business in the Hospitality segment shifted significantly towards group stays, which represented 73% of rooms sold in Q3 2022, up from 59% in Q3 2021[163] - Entertainment segment revenue grew 57.3% in Q3 2022 year-over-year, driven by the recovery from pandemic-related closures and the contribution from the newly acquired Block 21[174] Non-GAAP Financial Measures Reconciliation of Net Income to Adjusted EBITDAre (in thousands) | Metric | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $47,451 | $(8,607) | $73,578 | $(188,777) | | EBITDAre | $144,335 | $79,550 | $364,281 | $70,484 | | Adjusted EBITDAre | $151,125 | $85,992 | $387,744 | $91,698 | Reconciliation of Net Income to Adjusted FFO (in thousands) | Metric | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) available to common shareholders and unit holders | $45,564 | $(8,607) | $71,411 | $(172,276) | | FFO available to common shareholders and unit holders | $91,951 | $47,467 | $230,292 | $(19,323) | | Adjusted FFO available to common shareholders and unit holders | $100,773 | $52,113 | $250,462 | $(39) | Liquidity and Capital Resources - As of September 30, 2022, the company had a strong liquidity position with $224.7 million in unrestricted cash and $754.6 million available for borrowing under its revolving credit facilities[211] - Capital expenditure plans for the remainder of 2022 are estimated to be between $25 million and $45 million, focusing on enhancements at Gaylord Rockies, Block 21, and the construction of Ole Red Las Vegas[212] - The company's debt structure includes a mix of term loans and senior notes. The company has no debt maturities until July 2023 and believes it will be able to refinance its debt agreements prior to maturity[212][214] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate fluctuations on its variable-rate OEG Term Loan, impacting annual interest expense - The company is exposed to interest rate risk from its variable-rate OEG Term Loan. A 1% (100 basis points) increase in the SOFR would result in an approximate $3.0 million increase in annual interest cost on the $300.0 million outstanding balance[256] Controls and Procedures Management confirmed effective disclosure controls and procedures, with no material changes, excluding the newly acquired Block 21 from assessment - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[260] - The company plans to exclude the recently acquired Block 21 from its assessment of internal control over financial reporting as of December 31, 2022, as permitted by the SEC for recent business combinations[262] Part II - Other Information Legal Proceedings Ongoing legal actions are in the ordinary course of business and are not expected to materially affect financial statements - Management believes that ongoing litigation from the ordinary course of business will not have a material effect on the company's financial statements[263] Risk Factors Key risks include failing to realize benefits from recent acquisitions, potential partner disagreements, and fluctuating REIT distribution requirements - There is a risk that the company may not realize the intended long-term economic benefits from the OEG Transaction or the Block 21 Acquisition[265] - The company's partnership with Atairos in the OEG venture includes certain consent rights for Atairos on major decisions, which could lead to disagreements and adversely affect the Entertainment business[266] - To maintain its REIT status, the company must distribute at least 90% of its REIT taxable income annually. Failure to do so could result in federal and state corporate income tax. These distributions are not guaranteed and may fluctuate[267][269][271] Other Items (Items 2-6) This section notes that Items 2-5 of Part II were inapplicable for the period, with Item 6 listing filed exhibits - Items 2, 3, 4, and 5 of Part II are noted as 'Inapplicable' for this reporting period[272][273][274][275]