Gross Lodging Revenues Continue to Improve; Earnings Before Interest, Taxes, Depreciation and Amortization Exceed Prior Year.
ResortQuest International, Inc. (NYSE: RZT), one of the world`s leading vacation rental property management companies, today announced financial results for the third quarter ended September 30, 2002.
Third Quarter Highlights
- Revenues constant at $58.0 million - Total gross lodging revenues decreased 4 percent, the lowest quarterly decline this year - EBITDA, excluding unusual items and other charges, up 2 percent to $12.7 million - EBITDA margin, excluding unusual items and other charges, up 0.8 pts to 26.3 percent (EBITDA as a percentage of revenue before “other revenue from managed entities”) - Hawaii resorts unit count up 4 percent - Mountain resorts unit count up 2 percent - Announced alliance with AAA of the South - Launched “Family & Friends Fly Free”; Four-Night Reservation to the West This Winter Nets Two Companion Airline Tickets to Use on a Future Trip - Repeat Guests rate is up 38 percent this quarter - $1.7 million in gross lodging from Travel Agent consortia bookings of which 30 percent had never before booked with ResortQuest
ResortQuest reported revenues of $58.0 million for the third quarter of 2002, which represents a slight improvement over revenues of $57.6 million for the prior year third quarter. Included in these amounts is other revenue from managed properties that primarily relates to reimbursed payroll expense and related benefits. The Company adopted this presentation format in 2002 in response to a FASB staff announcement; however, this financial statement presentation change has no effect on the Company`s operating cash flows, earnings before interest, taxes, depreciation and amortization (“EBITDA”), or earnings per share. The Company reported net income, excluding unusual items and other charges, for the third quarter of $5.8 million, compared to $5.0 million in the prior year. The unusual items and other charges include $625,000 for third quarter of 2002 and $3.8 million for third quarter of 2001. This translated to diluted earnings per share of $0.30 in the third quarter of 2002, as compared to $0.26 in the third quarter of 2001. Diluted cash earnings per share, which excludes the effect of prior year goodwill amortization and unusual items and other charges, were $0.30 in the third quarter of 2002 compared to $0.33 in the same period last year.
The Company reported EBITDA, excluding unusual items and other charges, of $12.7 million in the third quarter compared to $12.4 million in third quarter of 2001, a 2.4 percent increase. EBITDA per diluted share was $0.66 in the third quarter of 2002 compared to $0.64 in the comparable 2001 period. ResortQuest diluted shares outstanding for the third quarter of 2002 were 19.3 million. The unusual items and other charges recorded during the quarter relate to professional fees and expenses in conjunction with an offer to acquire the Company that was determined by the Board, after appropriate review, not to be in the best interests of the Company and its shareholders.
For the nine months ended September 30, 2002, total revenues declined 3.9 percent to $155.9 million. Excluding unusual items and other charges and the cumulative effect of a change in accounting principle recorded during the first quarter, net income for the nine-month period was $11.0 million and diluted earnings per share was $0.57. EBITDA, excluding unusual items and other charges, declined 17.5 percent to $26.7 million, compared to $32.4 million in the first nine months of 2001. EBITDA per diluted share, excluding unusual items, was $1.38 versus $1.68 in the prior year`s period. The change in accounting principle relates to the Company`s adoption of SFAS No. 142 as discussed in its second quarter 2002 Form 10-Q.
“Notwithstanding the macroeconomic pressures that led to lower operating revenues for the third quarter, ResortQuest benefited from the operational efficiencies realized through disciplined cost controls and technological enhancements that were implemented over the course of the year,” said Jim Olin, president and chief executive officer. “As a result, we were able to deliver higher EBITDA levels despite lower top-line numbers. Our ability to improve and control our cost structure will enable us to weather this historic downturn with a strengthened business model that should increase shareholder value in the long run.”
The condensed table below describes the impact of the unusual items and other charges and the cumulative effect of a change in accounting principle on our actual results for the three months and nine months ended September 30, 2002.
At September 30, 2002, the Company had $15.5 million in total cash and total debt of $81 million, which generates a debt to total capitalization of 36 percent. The Company also recorded deferred revenues and customer deposits of $29 million, a 12 percent decline over the comparable period in 2001.
Total gross lodging revenues were $135.3 million for the third quarter of 2002, compared to $141.3 in the third quarter of 2001, representing a 4.2 percent decline, which is the lowest quarterly decline this year. During the third quarter of 2002, the Beach resorts` same-store gross lodging revenues declined 5.8 percent to $87.3 million as compared to $92.7 million in the third quarter of 2001. The Hawaii resorts` same-store gross lodging revenues increased slightly from $37.5 million in the third quarter of 2001 to $38.0 million in the third quarter of 2002, representing the first time this year that a region surpassed prior year results. The Hawaii resorts benefited from a 4.1 percent increase in rental units during the quarter compared to prior year. The Mountain resorts` same-store gross lodging revenues declined 8.1 percent to $9.5 million; however, this region realized a 1.8 percent increase in rental units during the quarter.
“Overall, our gross lodging revenues held up relatively well as compared to the hospitality industry as a whole,” said Park Brady, chief operating officer. “July was softer than anticipated, but results improved at our properties in August and September as we realized a pick up in the overall travel market. Our Hawaii resorts continue to improve as evidenced by a 1.1 percent increase over the same period last year, versus the first and second quarters trailing prior year results.”
As previously announced, ResortQuest has undergone a series of senior management changes. Joe Vittoria has been appointed chairman and will maintain an active role in providing a long-term growth strategy for the Company. Jim Olin has been promoted to chief executive officer and will continue to manage the day-to-day operations along with working with Mr. Vittoria on strategic initiatives. Park Brady has been promoted to chief operating officer and will assist Jim Olin in managing the Company`s day-to-day operations. Steve Caron has been promoted to chief information officer, and Bob Adams has been promoted to chief marketing officer. Mitch Collins, chief financial officer, has been promoted to executive vice president and will also direct the Company`s development opportunities.
“The long-term success of ResortQuest will be determined by using the technology and infrastructure we have in place to focus on the fundamental operations of running a vacation rental property management business,” commented Vittoria. “Through my experience in the hospitality industry at Avis, Travel Services International and other companies, I recognize the potential for ResortQuest to increase the value of its brand and its industry leadership position, as well as provide increasing value for its shareholders and homeowners by relying on the operational strength of this new management team.”
“The ResortQuest model will be to build through organic growth and not acquisition, and to strengthen our positions in three key areas: marketing, distribution channels and infrastructure,” said Olin. “We will also continue to explore management contract deals that present growth opportunities to ResortQuest with minimal expenditure or risk involved.” FOR MORE _ www.astonhotels.com