La Quinta Holdings Inc. Reports Results For First Quarter 2016

IRVING, Texas, April 27, 2016 /PRNewswire/ -- La Quinta Holdings Inc. ("La Quinta" or the "Company") (NYSE: LQ) today reported its first quarter 2016 results.

First Quarter 2016 Highlights

• Solidified key senior leadership positions with the permanent appointments of the Chief Executive Officer and the Chief Financial Officer and, subsequent to quarter end, the Chief Operating Officer
• Cash flow generation remained strong, as demonstrated by $84.3 million of Total Adjusted EBITDA
• Adjusted Earnings per Share increased by $0.01 to $0.09; GAAP Net Loss per Share was $0.31, including the impact of a non-cash impairment charge of $0.40 per share, net of tax
• Adjusted Net Income increased 14.5 percent to $11.2 million; GAAP Net Loss was $38.8 million, including the impact of a non-cash impairment charge of $50.0 million, net of tax
• System-wide comparable RevPAR decreased 2.5 percent, ADR remained unchanged and occupancy decreased 165 basis points; excluding properties located in STR-defined "oil tracts", RevPAR decreased 0.5 percent
• Opened 5 franchised hotels totaling approximately 650 rooms, including the eighth location in Mexico
• Increased franchise pipeline to 232 hotels, the highest level since 2008, representing over 20,500 additional rooms, including new franchise agreements for key locations in Lake Buena Vista, Florida and downtown Chattanooga, Tennessee
• Commenced a second $100 million share repurchase program, acquiring a total of $25 million of shares as of March 31, 2016 and a total of $61 million of shares through April 22, 2016

Overview

Keith A. Cline, President & Chief Executive Officer of La Quinta, said, "As expected, the first quarter of 2016 was impacted by the pullback in oil pricing and production.  During the first quarter, system-wide comparable RevPAR decreased 2.5 percent compared to the strong 8.2 percent RevPAR growth that we realized in the first quarter of last year.  Excluding the STR-defined oil tracts, our first quarter RevPAR would have been down 50 basis points as compared to last year.  We continue to expect RevPAR comparisons to become more favorable as we move through the remainder of 2016."

Also during the first quarter, we began to execute on our strategic initiatives which are designed to drive consistency in our hotels and guest experience, and drive engagement with our brand. Most significantly, during the first quarter, we identified approximately 50 owned hotels as candidates for disposition in the near-term. We are also excited to add John Cantele to our leadership team as Executive Vice President and Chief Operating Officer.  With his extensive experience in growing multiple select service brands at Hyatt, we are confident that John will be instrumental in advancing our strategy."

Mr. Cline continued, "On the development front, we continued to grow our footprint by opening five hotels, including key locations at the Atlanta airport and our eighth open location in Mexico. Interest in growing the La Quinta brand from our franchise partners remains strong with the signing of 12 new franchise agreements during the quarter, growing our pipeline to 232 hotels. We remain focused on delivering strong performance through the quality and consistency of our guest experience, as well as on creating long-term shareholder value."

The results of operations for the Company for the three months ended March 31, 2016 and 2015 include the following highlights ⁽¹⁾ ($ in thousands, except per share amounts):

Development

During the first quarter, the Company opened five franchised hotels with approximately 650 rooms, with net franchise units remaining unchanged. As of March 31, 2016, the Company had a pipeline of 232 franchised hotels totaling over 20,500 rooms, to be located in the United States, Mexico, Colombia, Nicaragua, Guatemala and Chile. The Company believes this pipeline represents a significant embedded growth opportunity for the brand.

The Company's system-wide portfolio, as of March 31, 2016, is located across 48 states in the U.S., as well as in Canada, Mexico and Honduras. The portfolio includes:

Owned Hotel Portfolio

During the third quarter of 2015, the Company entered into a definitive purchase and sale agreement for the sale of 24 of its owned hotels. Of these 24 hotels, 11 were sold during the fourth quarter of 2015, three have closed since the end of the first quarter, and the Company currently expects to close the sale of the remaining 10 before the end of the second quarter of 2016.  In addition, during the first quarter of 2016, the Company entered into a definitive purchase and sale agreement for the sale of one of its owned hotels located in Orlando, Florida, recorded an associated impairment charge of approximately $3 million related to the reduced assumed holding period and classified this hotel as held for sale. 

At the end of the first quarter of 2016, the Company identified approximately 50 additional owned hotels as candidates for sale in the near-term and, as such, the Company recorded an impairment charge of $80 million related to the reduced assumed holding period for these assets. The Company believes that a sale of these hotels will have many benefits, including improvement of the consistency of the product and various key operating metrics; the opening of markets to new franchise development as the vast majority of these hotels will be removed from the La Quinta system; and provision of additional available cash.

Balance Sheet and Liquidity

As of March 31, 2016, the Company had approximately $1.7 billion of outstanding indebtedness with a weighted average interest rate of approximately 4.3%, including the impact of an interest rate swap. During the first quarter of 2016, the Company repurchased 2.0 million of its shares for an aggregate purchase price of approximately $25 million, with $75 million authorized for future repurchases.  Since the end of the first quarter, the Company has repurchased additional shares, bringing the current program total to approximately 4.9 million shares for an aggregate purchase price of approximately $61 million as of April 22, 2016.  Total cash and cash equivalents was $83.3 million as of March 31, 2016.

Outlook

Based upon management's current estimates, the Company is reaffirming its guidance for full year 2016:

This outlook does not reflect the impact of any additional sales of owned hotels beyond the 13 remaining properties from the group of 24 properties previously discussed under "Owned Hotel Portfolio" above.  In particular, it does not reflect the sale of the approximately 50 additional assets discussed under "Owned Hotel Portfolio" above.

Webcast and Conference Call

La Quinta Holdings Inc. will host a conference call to discuss first quarter 2016 results on Wednesday, April 27, 2016 at 5:00 p.m. Eastern Time. Participants may listen to the live webcast by dialing (877) 407-3982, or (201) 493-6780 for international participants, or by logging onto the La Quinta Investor Relations website at www.lq.com/investorrelations. Participants are encouraged to dial into the call or link to the webcast at least fifteen minutes prior to the scheduled start time.

A replay of the call will be available from approximately 8 p.m. Eastern Time on April 27, 2016 through midnight Eastern Time on May 11, 2016. To access the replay, the domestic dial-in number is (877) 870-5176, the international dial-in number is (858) 384-5517, and the passcode is 13629955. The archive of the webcast will be available on the Company's website for a limited time.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934. These statements include, but are not limited to, statements related to our expectations regarding the performance of our business, our financial results, our liquidity and capital resources and other non-historical statements, including the statements in the "Outlook" section of this press release. You can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "projects," "predicts," "intends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including those described under the section entitled "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission ("SEC"), as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in our filings with the SEC. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Non-GAAP Financial Measures

We refer to certain non-GAAP financial measures in this press release including Adjusted EBITDA, Adjusted EBITDA margins, Segment Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings Per Share. Please see the schedules to this press release for additional information and reconciliations of such non-GAAP financial measures.

About La Quinta Holdings Inc.

La Quinta Holdings Inc. (LQ) is a leading owner, operator and franchisor of select-service hotels primarily serving the upper-midscale and midscale segments. The Company's owned and franchised portfolio consists of more than 880 properties representing approximately 87,500 rooms located in 48 states in the U.S., and in Canada, Mexico and Honduras. These properties operate under the La Quinta Inn & Suites™, La Quinta Inn™ and LQ Hotel™ brands. La Quinta's team is committed to providing guests with a refreshing and engaging experience. For more information, please visit: www.LQ.com.

From time to time, La Quinta may use its website as a distribution channel of material company information. Financial and other important information regarding the Company is routinely accessible through and posted on our website at www.lq.com/investorrelations. In addition, you may automatically receive email alerts and other information about La Quinta when you enroll your email address by visiting the Email Notification section at www.lq.com/investorrelations.