Ryman Hospitality Properties(RHP) - 2022 Q4 - Annual Report

Part I Business Ryman Hospitality Properties, Inc. operates as a REIT specializing in group-oriented, destination hotel assets, primarily five large-scale Gaylord Hotels managed by Marriott - The company is a REIT specializing in group-oriented, destination hotels, with its primary assets being five upscale Gaylord Hotels resorts managed by Marriott[25][26] - The company's long-term strategy includes expanding its hotel portfolio, particularly in the group meetings sector, and leveraging its entertainment brands like the Grand Ole Opry and Ole Red[31][32] Revenue by Business Segment (FY 2022) | Segment | Percentage of Total Revenue | | :--- | :--- | | Hospitality | 85% | | Entertainment | 15% | | Corporate and Other | 0% | Marriott Management Fees (in millions) | Fee Type | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Base Management Fees | $35.1 | $17.6 | $10.3 | | Incentive Fees | $13.5 | $0.3 | $0 | Hotel Portfolio The company owns five large-scale Gaylord Hotels, among the largest U.S. convention hotels, and two smaller overflow hotels, all managed by Marriott International - The company continuously invests in its properties, including the completed $158 million expansion of Gaylord Palms in 2021 and an ongoing $98 million enhancement project at Gaylord Rockies started in 2022[32][38][42] Gaylord Hotels Properties and Meeting Space | Facility | Location | Hotel Rooms | Total Exhibit and Meeting Space (sq. ft.) | | :--- | :--- | :--- | :--- | | Gaylord Opryland | Nashville, TN | 2,888 | 640,000 | | Gaylord National | National Harbor, MD | 1,996 | 500,000 | | Gaylord Palms | Kissimmee, FL | 1,718 | 496,000 | | Gaylord Texan | Grapevine, TX | 1,814 | 488,000 | | Gaylord Rockies | Aurora, CO | 1,501 | 409,000 | Entertainment Portfolio The Entertainment segment, Opry Entertainment Group (OEG), includes iconic assets like the Grand Ole Opry and Ryman Auditorium, Ole Red venues, and the recently acquired Block 21 complex in Austin - In May 2022, the company acquired Block 21, a mixed-use complex in Austin, TX, which includes the ACL Live entertainment venue and the 251-room W Austin hotel[48] - The company owns a controlling 70% equity interest in Opry Entertainment Group (OEG) after a strategic transaction with an affiliate of Atairos Group, Inc. in 2022[27][32] - The company is expanding the Ole Red brand, with a new location in Las Vegas scheduled to open in 2023[49] Human Capital and ESG The company employed 1,269 people as of December 31, 2022, emphasizing a people-centric culture with diversity, inclusion, and ESG initiatives, including a 2022 Sustainability Report - As of year-end 2022, the company employed 1,269 people (689 full-time, 580 part-time/on-call) - Women represent 54% of the workforce and hold 50% of leadership positions[65] - The company has implemented a Diversity Council, Business Employee Resource Groups, and a Volunteer Paid Time Off Policy to reinforce its commitment to diversity, inclusion, and community engagement[68][70] - In July 2022, the company published its first Sustainability Report, highlighting its environmental and social performance and initiatives[75] Risk Factors The company faces significant risks related to business operations, REIT status, and capital structure, including reliance on Marriott, sector concentration, and substantial debt of approximately $2.9 billion - The company's financial condition is highly dependent on Marriott's successful management of its hotel properties, as Marriott is the sole third-party manager for substantially all of the Hospitality segment's revenue[112][115] - Concentration in the group-oriented meetings sector exposes the company to risks beyond its control, such as economic downturns affecting corporate travel and competition from publicly-financed convention centers[119][124] - Failure to maintain REIT qualification would subject the company to corporate income tax rates and prevent it from deducting stockholder distributions, significantly reducing cash flow[164] - As of December 31, 2022, the company had approximately $2.9 billion in total debt - This substantial debt could increase vulnerability to adverse economic conditions and limit funds available for dividends and capital expenditures[195] Properties The company's property portfolio includes seven Hospitality segment hotels, notably five large-scale Gaylord Hotels, and key Entertainment assets like the Grand Ole Opry and Block 21 complex - The Entertainment segment owns key properties including the Grand Ole Opry House, Ryman Auditorium, Ole Red Nashville, Wildhorse Saloon, and the Block 21 complex in Austin[225] Hospitality Segment Properties | Hotel | Location | Rooms | Meeting, Exhibit and Pre-Function Space (sq. ft.) | | :--- | :--- | :--- | :--- | | Gaylord Opryland | Nashville, TN | 2,888 | 640,000 | | Gaylord National | National Harbor, MD | 1,996 | 500,000 | | Gaylord Palms | Kissimmee, FL | 1,718 | 496,000 | | Gaylord Texan | Grapevine, TX | 1,814 | 488,000 | | Gaylord Rockies | Aurora, CO | 1,501 | 409,000 | | Inn at Opryland | Nashville, TN | 303 | 14,000 | | AC Hotel | National Harbor, MD | 192 | 3,700 | Legal Proceedings The company is involved in ordinary course legal actions, with management believing insurance coverage is adequate and no material financial statement impact is expected - The company is involved in ordinary course legal actions and believes existing insurance policies provide adequate coverage, with no expected material impact on financial statements[227] Mine Safety Disclosures No disclosures regarding mine safety are applicable or reported Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on the NYSE under 'RHP', with no repurchases in Q4 2022, and an intent to pay annual dividends of 100% of REIT taxable income - The company's common stock trades on the NYSE under the symbol 'RHP'[231] - No shares of the company's common stock were repurchased in the three months ended December 31, 2022[233] - The company intends to pay annual dividends equal to 100% of its REIT taxable income, though this is subject to board determination and restrictions in its credit facility[235][236] Management's Discussion and Analysis of Financial Condition and Results of Operations In 2022, the company achieved significant recovery with total revenues increasing 92.3% to $1.81 billion and net income of $134.9 million, driven by Hospitality segment rebound and strategic acquisitions - In June 2022, the company sold a 30% equity interest in Opry Entertainment Group (OEG) to an affiliate of Atairos for approximately $296.0 million[251] - In May 2022, the company acquired Block 21 in Austin, TX, for an adjusted purchase price of $255 million, including the assumption of $136 million in debt[254] Summary Financial Results (2022 vs. 2021) (in millions) | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Total revenues | $1,806.0 | $939.4 | 92.3% | | Operating income (loss) | $327.2 | $(58.7) | 657.6% | | Net income (loss) | $134.9 | $(194.8) | 169.3% | | Diluted EPS | $2.33 | $(3.21) | 172.6% | Hospitality Segment Key Performance Indicators (2022 vs. 2021) | Metric | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Occupancy | 66.2% | 39.5% | +26.7 pts | | ADR | $236.86 | $221.33 | +7.0% | | RevPAR | $156.71 | $87.53 | +79.0% | | Total RevPAR | $404.69 | $209.34 | +93.3% | Liquidity and Capital Resources As of December 31, 2022, the company maintained strong liquidity with $334.2 million in cash and $754.6 million available credit, anticipating $225 million to $275 million in 2023 capital expenditures - At year-end 2022, the company had $334.2 million in unrestricted cash and $754.6 million available for borrowing under its revolving credit facilities[324] - The company plans to invest between $225 million and $275 million in capital expenditures during 2023[325] Principal Debt Balances (as of Dec 31, 2022) (in millions) | Debt Instrument | Outstanding Balance | | :--- | :--- | | $500M Term Loan B | $371.3 | | $600M Senior Notes | $600.0 | | $700M Senior Notes | $700.0 | | $800M Gaylord Rockies Term Loan | $800.0 | | $300M OEG Term Loan | $299.3 | | Block 21 CMBS Loan | $134.6 | Critical Accounting Policies and Estimates The company's financial statements rely on critical accounting policies and estimates requiring significant judgment, including impairment assessments, credit loss estimates, and pension plan assumptions - Impairment assessment of long-lived assets requires management to make significant assumptions about future cash flows, growth rates, and holding periods[371][372] - Estimating credit losses for the Gaylord National Bonds is complex, relying on long-term projections of hotel and property tax revenues in the Washington D.C. market through 2037[373][374] - Pension plan accounting is sensitive to assumptions for discount rates and expected long-term return on plan assets - A 1% change in the discount rate or rate of return could materially affect pension expense[382][388] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks include interest rate exposure on variable-rate debt, partially hedged by swaps, and fluctuations in pension plan asset values - The company is exposed to interest rate risk on its variable-rate debt, including portions of the Term Loan B, Gaylord Rockies Loan, and OEG Term Loan - It uses interest rate swaps to hedge this exposure[392][393][396] - A 100 basis point increase in the Adjusted Term SOFR would increase annual interest cost on the unhedged portion of the OEG Term Loan ($199.3 million) by approximately $2.0 million[397] - The company's pension plan assets, valued at $52.3 million, are exposed to market risk - A 10% decrease in the value of these investments would reduce the fund's value by approximately $5.2 million[399] Financial Statements and Supplementary Data The company's consolidated financial statements and supplementary data are included in the report, beginning on page 76 - This item incorporates by reference the company's consolidated financial statements, which begin on page 76 of the report[401] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure No changes in or disagreements with accountants on accounting and financial disclosure are reported Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with no material changes, excluding the recently acquired Block 21 - Management concluded that disclosure controls and procedures were effective as of December 31, 2022[403] - Management's assessment of internal control over financial reporting concluded that it was effective, but excluded the internal controls of Block 21, which was acquired on May 31, 2022[407][408] Other Information Effective February 23, 2023, the Board of Directors amended and restated the company's bylaws to enhance procedural mechanics and disclosure requirements for stockholder nominations and proposals - On February 23, 2023, the company's Board of Directors amended and restated the bylaws to update procedures for stockholder nominations and proposals[411][419] Part III Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance is incorporated by reference from the company's 2023 Proxy Statement - Information required by this item is incorporated by reference from the company's 2023 Proxy Statement[416] Executive Compensation Information on executive and director compensation is incorporated by reference from the company's 2023 Proxy Statement - Information required by this item is incorporated by reference from the company's 2023 Proxy Statement[421] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information on security ownership by beneficial owners and management, and equity compensation plans, is incorporated by reference from the company's 2023 Proxy Statement - Information required by this item is incorporated by reference from the company's 2023 Proxy Statement[422] Certain Relationships and Related Transactions, and Director Independence Information on certain relationships, related party transactions, and director independence is incorporated by reference from the company's 2023 Proxy Statement - Information required by this item is incorporated by reference from the company's 2023 Proxy Statement[423] Principal Accountant Fees and Services Information on fees paid to and services provided by the principal independent registered public accounting firm is incorporated by reference from the company's 2023 Proxy Statement - Information required by this item is incorporated by reference from the company's 2023 Proxy Statement[424] Part IV Exhibits and Financial Statement Schedules This section lists financial statements, schedules, and numerous exhibits filed as part of the Annual Report on Form 10-K, including debt agreements and management contracts - The report includes financial statement schedules for Valuation and Qualifying Accounts (Schedule II) and Real Estate and Accumulated Depreciation (Schedule III)[427] - A comprehensive list of exhibits is provided, including key agreements such as the Sixth Amended and Restated Credit Agreement and the Investment Agreement with Atairos related to the OEG transaction[428][431]