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Deutschland MISSISSAUGA, ON, Nov. 6, 2018 /CNW/ - Temple Hotels Inc. ("Temple" or the "Company") (TSX: TPH) today reported its financial results for the three months ended September 30, 2018 ("third quarter"). The following comments in regard to the financial position and operating results of Temple should be read in conjunction with Management's Discussion & Analysis and the financial statements for the three and nine months ended September 30, 2018, which may be obtained from the Temple website at www.templehotels.ca or the SEDAR website at www.sedar.com.
Monetary data in the tables of this press release, unless otherwise indicated, are in thousands of Canadian dollars, except for per common share, average daily rate ("ADR"), and revenue per available room ("RevPar") amounts.
Q3 2018 KEY POINTS/HIGHLIGHTS
- Revenue decreased $0.6 million or 1% during the three months ended September 30, 2018 compared to 2017, primarily due to a decrease within the Fort McMurray of $1.0 million as a result of lower occupancy and the expiry of a long-term lease at the Cortona Residence and a decrease within the Sold Property portfolio of $0.5 million. The decrease was partially offset by increases in revenue within the Other Alberta and Other Canada portfolios of $0.5 million and $0.4 million, respectively.
- Hotel operating income decreased by $1.3 million or 8% during the three months ended September 30, 2018 compared to 2017, primarily due to a decrease in hotel operating income within the Fort McMurray, Other Canada and Sold Property portfolios of $1.0 million, $0.1 million and $0.1 million, respectively.
- FFO decreased by $1.1 million during the three months ended September 30, 2018, compared to the three months ended September 30, 2017. On a basic per common share basis, FFO decreased by $0.04 per common share, compared to the third quarter of 2017.
- Subsequent to September 30, 2018, Temple redeemed $2.3 million of the principal amount of the Series E debentures outstanding.
OPERATING RESULTS
Three Months Ended | Nine Months Ended | ||||||
2018 | 2017 | 2018 | 2017 | ||||
Total revenue | $45,490 | $46,106 | $125,795 | $125,734 | |||
Hotel operating income | $13,921 | $15,190 | $33,610 | $35,306 | |||
Provision for impairment | $ - | ($235) | ($6,785) | ($235) | |||
Net income (loss) | $2,780 | $3,355 | ($5,798) | $495 | |||
Cash flow provided by operating activities | $7,128 | $8,585 | $10,402 | $10,933 | |||
Funds from operations | $7,086 | $8,170 | $12,019 | $14,628 | |||
Per common share | |||||||
- Net income (loss) - basic and diluted | $0.11 | $0.13 | ($0.23) | $0.02 | |||
- Funds from operations | $0.28 | $0.32 | $0.48 | $0.57 | |||
Weighted average number of common shares | 25,144,881 | 25,351,516 | 25,215,194 | 25,344,724 | |||
Occupancy | 69% | 70% | 63% | 63% | |||
ADR | $147.52 | $145.52 | $142.04 | $139.65 | |||
RevPar | $101.80 | $101.65 | $90.12 | $88.33 | |||
Operating Activities
- Net Income – Temple completed the third quarter of 2018 with net income of $2.8 million, compared to net income of $3.4 million during the same period in 2017. The decrease in net income is mainly due to a decrease in hotel operating income of $1.3 million, partly offset by a decrease in depreciation and amortization of $0.3 million and an increase in other income of $0.2 million. On a per common share basis, net income was $0.11 for the third quarter of 2018, compared to net income of $0.13 during the third quarter of 2017.
- Occupancy and ADR – The decrease in Same Property revenue primarily reflects lower occupancy levels within the Fort McMurray segment leading to a decrease in RevPar. Reduced occupancy levels within the Fort McMurray segment partially offset the increase in ADR as a result of the unfavourable market conditions which continue to affect oil-dependent markets in Alberta. In the third quarter of 2018, an increase in ADR within Other Canada and an increase in occupancy within Other Alberta led to an increase in RevPar compared to the third quarter of 2017.
- Cash Provided by Operating Activities – Cash provided by operating activities decreased by $1.5 million during the third quarter of 2018, compared to the third quarter of 2017. Excluding working capital adjustments, cash provided by operating activities decreased by $1.3 million, compared to 2017.
- Funds from Operations ("FFO") – During the third quarter of 2018, FFO decreased by $1.1 million, compared to the third quarter of 2017. The decrease in FFO mainly reflects lower hotel operating income of $1.3 million, partially offset by an increase in other income of $0.2 million. On a basic per common share basis, FFO decreased by $0.04 per common share, compared to the third quarter of 2017.
Liquidity and Financing Activities
- As of September 30, 2018, the unrestricted cash balance of Temple was $19.5 million and working capital was $13.3 million.
- Subsequent to September 30, 2018, Temple redeemed $2.3 million of the principal amount of the Series E debentures outstanding.
Investing Activities
As disclosed in the Statement of Cash Flows in the financial statements, the investing activities of Temple resulted in a net cash outflow of $1.5 million during the third quarter of 2018. Investing activities primarily reflect cash outflows related to capital expenditures on hotel properties.
Debt Covenants
At September 30, 2018, the Company was not in compliance with debt service covenants affecting seven mortgage loans in the aggregate amount of $105.6 million. The loan covenant breaches are expected to be resolved by debt refinancings, loan modification agreements and/or a waiver of the covenant requirements.
ANALYSIS OF OPERATING RESULTS
Analysis of Net Income (Loss) and Comprehensive Net Income (Loss) * | |||||||||||
Three Months Ended | Nine Months Ended | ||||||||||
September 30 | September 30 | ||||||||||
2018 | 2017 | Increase/ | 2018 | 2017 | Increase/ | ||||||
Revenue | |||||||||||
Room revenue | $34,886 | $36,119 | ($1,233) | $92,418 | $93,614 | ($1,196) | |||||
Other hotel revenue | 10,604 | 9,987 | 617 | 33,377 | 32,120 | 1,257 | |||||
Total revenue | 45,490 | 46,106 | (616) | 125,795 | 125,734 | 61 | |||||
Hotel operating costs | 31,569 | 30,916 | (653) | 92,185 | 90,428 | (1,757) | |||||
Hotel operating income | 13,921 | 15,190 | (1,269) | 33,610 | 35,306 | (1,696) | |||||
Interest expense | 6,796 | 6,753 | (43) | 20,782 | 21,431 | 649 | |||||
Other expense (income) | (305) | (71) | 234 | (312) | (1,847) | (1,535) | |||||
Share based compensation | - | 37 | 37 | 74 | 103 | 29 | |||||
General and administrative | |||||||||||
expenses | 924 | 905 | (19) | 2,597 | 2,511 | (86) | |||||
Depreciation and amortization | 4,154 | 4,415 | 261 | 12,733 | 13,383 | 650 | |||||
2,352 | 3,151 | (799) | (2,264) | (275) | (1,989) | ||||||
Equity income on investment in | |||||||||||
hotel properties | 428 | 439 | (11) | 940 | 981 | (41) | |||||
Provision for impairment | - | (235) | 235 | (6,785) | (235) | (6,550) | |||||
Income tax recovery | - | - | - | 2,311 | 24 | 2,287 | |||||
Net income (loss) and | |||||||||||
comprehensive income (loss) | $2,780 | $3,355 | ($575) | ($5,798) | $495 | ($6,293) | |||||
Per Common Share Results: | |||||||||||
Basic and diluted | $0.11 | $0.13 | ($0.23) | $0.02 | |||||||
Hotel Revenue
Analysis of Total Hotel Revenues | |||||||||||||||||
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||
Increase/ | Increase/ | ||||||||||||||||
2018 | 2017 | (Decrease) | 2018 | 2017 | (Decrease) | ||||||||||||
Same Property | |||||||||||||||||
Fort McMurray | |||||||||||||||||
Room revenue | $ | 5,160 | $ | 6,239 | $ | (1,079) | $ | 15,489 | $ | 17,290 | $ | (1,801) | |||||
Other hotel revenue | 371 | 277 | 94 | 968 | 962 | 6 | |||||||||||
$ | 5,531 | $ | 6,516 | $ | (985) | $ | 16,457 | $ | 18,252 | $ | (1,795) | ||||||
Other Alberta | |||||||||||||||||
Room revenue | $ | 4,730 | $ | 4,702 | $ | 28 | $ | 13,545 | $ | 13,109 | $ | 436 | |||||
Other hotel revenue | 3,936 | 3,503 | 433 | 13,740 | 12,812 | 928 | |||||||||||
$ | 8,666 | $ | 8,205 | $ | 461 | $ | 27,285 | $ | 25,921 | $ | 1,364 | ||||||
Other Canada | |||||||||||||||||
Room revenue | $ | 24,996 | $ | 24,691 | $ | 305 | $ | 63,384 | $ | 61,387 | $ | 1,997 | |||||
Other hotel revenue | 6,297 | 6,202 | 95 | 18,669 | 18,317 | 352 | |||||||||||
$ | 31,293 | $ | 30,893 | $ | 400 | $ | 82,053 | $ | 79,704 | $ | 2,349 | ||||||
Total ‑ Same Property | |||||||||||||||||
Room revenue | $ | 34,886 | $ | 35,632 | $ | (746) | $ | 92,418 | $ | 91,786 | $ | 632 | |||||
Other hotel revenue | 10,604 | 9,982 | 622 | 33,377 | 32,091 | 1,286 | |||||||||||
Total hotel revenue | $ | 45,490 | $ | 45,614 | $ | (124) | $ | 125,795 | $ | 123,877 | $ | 1,918 | |||||
Total ‑ Sold Property | |||||||||||||||||
Room revenue | $ | - | $ | 487 | $ | (487) | $ | - | $ | 1,828 | $ | (1,828) | |||||
Other hotel revenue | - | 5 | (5) | - | 29 | (29) | |||||||||||
Total hotel revenue | $ | - | $ | 492 | $ | (492) | $ | - | $ | 1,857 | $ | (1,857) | |||||
Total | |||||||||||||||||
Room revenue | $ | 34,886 | $ | 36,119 | $ | (1,233) | $ | 92,418 | $ | 93,614 | $ | (1,196) | |||||
Other hotel revenue | 10,604 | 9,987 | 617 | 33,377 | 32,120 | 1,257 | |||||||||||
Total hotel revenue | $ | 45,490 | $ | 46,106 | $ | (616) | $ | 125,795 | $ | 125,734 | $ | 61 | |||||
During the third quarter of 2018, Same Property room revenue decreased by $0.7 million, compared to the third quarter of 2017. The decrease is comprised of a $1.1 million (17%) decrease in the Fort McMurray portfolio (of which $0.6 million was due to the expiry of a long-term lease at the Cortona Residence), partly offset by a $0.3 million (1%) increase in the Other Canada portfolio.
The decrease in Same Property room revenue during the third quarter of 2018, compared to the third quarter of 2017, is largely due to reduced occupancy levels within the Fort McMurray segment as a result of the unfavourable market conditions which continue to affect oil-dependent markets in Alberta and the expiry of a long-term lease at the Cortona Residence, partially offset by increases in RevPar within the Other Alberta and Other Canada segments.
Room Revenue Statistics
As disclosed in the following chart, for the third quarter of 2018, RevPar for the Same Property portfolio was $101.80, compared to $102.26 for the third quarter of 2017. RevPar for Same Property portfolio results generally reflect reduced occupancy levels within the Fort McMurray segment, partly offset by increased ADR levels at the Other Canada segment and an increase in occupancy within the Other Alberta segment.
For the nine months ended September 30, 2018, RevPar for the Same Property portfolio was $90.12, compared to $88.54 for the nine months ended September 30, 2017.
Occupancy at the Fort McMurray properties decreased during the third quarter of 2018 compared to the third quarter of 2017, and remains impacted by the unfavour
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