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 first quarter ended March 31, 2000.
Revenues for the quarter rose 21.8 percent to $38.5 million, compared to $31.7 million in the first quarter of 1999. Net income for the first quarter was $2.9 million, down slightly from $3.0 million in the 1999 first quarter, primarily due to weather-related issues and additional anticipated costs related to certain 1999 summer resort acquisitions whose primary earnings occur during the second and third quarters. For that reason, net income per diluted share was $0.15 compared to $0.17 in 1999. Results were in line with analysts` consensus estimates, which also anticipated the impact from 1999 acquisitions.
Earnings before interest, taxes, depreciation and amortization (EBITDA) was $8.5 million in the first quarter, compared to $7.8 million in 1999, a 10.0 percent increase. EBITDA per diluted share was $0.45 versus $0.44 in the prior year`s first quarter.
“Results for the quarter were in line with analysts` estimates despite the worst snow drought in recent memory and a general slowdown in January leisure travel due to millennium-related issues, including air travel reluctance, which together had a severe impact on our Mountain resorts,” said David Levine, president and chief executive officer. “As the snow drought continued into January, we responded by aggressively marketing the latter portion of the ski season and reducing our operating costs where feasible. The result of our efforts was only a modest decline in same-store results at our Colorado properties, which was offset by very positive results at our Hawaii, Desert and certain Beach resorts during the quarter. As a result of our swift action in the Mountain region and the benefits of our geographic dispersion, our earnings recovered nicely. We were especially pleased with our ability to achieve solid EBITDA growth in light of these weather- and millennium-related issues.
“Our first and fourth quarters will always be impacted by our significantly higher concentration of summer resorts and their related year-round carrying costs,” Levine said. “In the 2000 first quarter, we experienced a 29.3 percent increase in depreciation and goodwill amortization expense that was primarily the result of our 1999 acquisitions. Going forward, we expect to see a greater positive earnings impact from these acquisitions during their traditional peak summer season, which should significantly offset the additional non-peak carrying costs.”
Levine said that ResortQuest is stepping up its efforts to focus on internal growth at existing properties. “We increased the total number of units under management by 1.9 percent during the quarter, led by a 24.2 percent increase at our Desert resorts and a 5.2 percent increase at our Beach resorts,” Levine said.
The Mountain and Beach resorts achieved a 19.7 percent and 31.7 percent increase in revenues, respectively, primarily as a result of contributions from 1999 acquisitions. The new acquisitions also enabled the Mountain resorts to increase EBITDA by 10.1 percent over the 1999 first quarter, while the Beach resorts` EBITDA was relatively flat during the slower, winter season.
Also favorably impacting revenues during the quarter were the Hawaiian resorts, where revenues increased 9.0 percent and EBITDA rose 8.1 percent, primarily due to a 5.9 percent increase in average daily rate (ADR). The Desert resorts, comprising two 1999 first quarter acquisitions, achieved a 41.8 percent increase in EBITDA as a result of a 38.0 percent increase in revenues on a 24.2 percent increase in units under management and a 1.5 point increase in occupancy.
“We are beginning to see the positive benefits of our critical mass and of significant synergies achieved through integration and consolidation of certain operating functions,” Levine noted. “We anticipate that these synergies will accelerate throughout the remainder of the year and into 2001.”
“I am most pleased with the efforts made by our 27 local operating company managers in immediately implementing expense reduction activities when faced with the continued snow drought,” said Jim Olin, chief operating officer. “Their expertise and knowledge within their regions helped greatly in making this quarter a success. Expense reduction programs such as these will continue to springboard our efforts of creating additional synergies throughout the company.”
On a comparable same-store basis, the Beach resorts reported a 14.5 increase in gross lodging revenues, driven by a 5.2 percent increase in units under management and a 13.7 percent increase in total occupied nights. Comparable Hawaii gross lodging revenues increased 2.9 percent during the first quarter. The Mountain resorts experienced a 4.8 percent decline in gross lodging revenues due to the severe snow drought that produced an 8.5 point decline in occupancy that was partially offset by a 10.9 percent increase in ADR.
“ResortQuest continues to maintain a conservative balance sheet with total assets of $252.7 million, of which $33.3 million represents cash and cash equivalents,” said Mitch Collins, chief financial officer. “Since year end, more effective cash management combined with the strong cash flow fundamentals of our business have enabled us to reduce our total debt by $14.7 million, or 21.3 percent, to $54.2 million. We anticipate increased liquidity during the second and third quarters that should allow for us to maintain flexibility in executing strategic acquisitions and integration efforts.”