ResortQuest International, Inc. (NYSE: RZT), the first brand name and online booking service (ResortQuest.com) in vacation condominium and home rentals, sales and property management services, today announced results for the third quarter ended September 30, 1999.
Net income for the third quarter rose nearly four times to $5.7 million from net income of $1.5 million in 1998, on revenues that more than doubled to $42.1 million. Net income per diluted share was 31 cents, compared to 9 cents per diluted share in the 1998 third quarter, a 244 percent increase.
“Our strong results are due to the cumulative effect of our ongoing acquisition program, the positive effects of our marketing programs, the implementation of best demonstrated practices and the cost-savings from operating synergies,” said David Sullivan, chairman and chief executive officer. “We are very pleased that our strategies are on target.”
Sullivan noted that since the beginning of the third quarter, ResortQuest completed three acquisitions, increasing the company`s vacation rental portfolio by approximately 2,000 units, or nearly 13 percent. “Based on their historical performance, we expect these acquisitions to exceed $2 million of EBITDA (earning before interest, taxes, depreciation, and amortization) on an annual basis.
“During the third quarter, we entered Orlando, Florida, the world`s most popular resort vacation destination,” Sullivan noted. “Just after the quarter ended, we completed one of our largest acquisitions with the purchase of a well-established management company serving Naples, Bonita Springs, Marco Island and Ft. Myers. Our presence in Florida now includes nearly 5,000 vacation rental units in 12 of the state`s most desirable resort locations. We also nearly doubled our inventory in Hilton Head Island, S.C. and entered the Lake Erie Islands resort area in Ohio. Since our IPO, we have nearly doubled our rental property inventory to more than 17,000 vacation rental units in 39 premier resort destinations in North America.
“During 1999, our geographic diversity and infrastructure enabled us to make significant progress in building brand awareness and expanding the number of vacation rental accommodations under management contract,” Sullivan added.
Solid Operating Results
David Levine, president and chief operating officer, commenting on operating results, said, “Operating income on a same-store basis, excluding corporate expense, was up 40.2 percent on a 14.4 percent increase in revenues. Our internal growth was led by double-digit revenue gains in our Beach segment despite minor disruptions caused by Hurricane Floyd. Abbott Resorts, our largest Beach company, which we acquired September 30, 1998, experienced a tremendous quarter. On a pro forma basis, Abbott Resorts increased operating income for the quarter 62.8 percent to $5.8 million on a 25.2 percent increase in revenues. Our Beach segment reported a 17.6 percent increase in total lodging revenues on a 4.1 percent increase in units while occupancy remained essentially unchanged. Average daily rate (ADR) for the segment increased 12.8 percent.
“Hawaii enjoyed a very successful quarter, led by Aston Hotels & Resorts, our largest company, which reported a 59.5 percent increase in operating income to $2.2 million,” Levine added. “Occupancy in Hawaii continued to rebound—up 6.3 percentage points—partially due to Aston`s ongoing targeted promotions in feeder markets. This trend has continued in October with a 12.7 percent increase in same-store revenue per available unit.
“The positive impact of our web site, ResortQuest.com, on our bookings continues to grow,” Levine stated. “Internet-driven bookings and lead generation already have grown to 6 percent of total business since we launched the site in January, and we are now experiencing around a quarter of a million user sessions each month. Our new virtual tours technology, which allows prospective renters to `experience` the resort area and `walk` the rental unit on the Internet, is especially popular with visitors. In August, we announced partnerships with two leading Internet companies, VacationSpot.com and WorldRes, which will significantly expand our web presence and reach. We remain committed to fully exploiting the enormous potential of this important technology.”
Strong Balance Sheet
Jeff Jarvis, ResortQuest senior vice president and chief financial officer, noted that ResortQuest continues to maintain a conservative capital structure that gives the company substantial financial flexibility. “In July, the Securities and Exchange Commission declared effective our new 5 million share common stock shelf registration statement, which will allow us to continue to issue registered common stock in connection with acquisitions,” Jarvis added.
“Earlier in the year, we completed a $50 million placement of senior secured notes and used the net proceeds to repay the outstanding balance on our existing credit facility. As of September 30, there was more than $40 million available under our credit facility.”
First Nine Months 1999 Results
For the first nine months of 1999, net income from continuing operations rose 136 percent to $10.4 million from net income of $4.4 million in 1998. Revenue rose to $104.7 million from $35.9 million for the same period in 1998.