MISSISSAUGA, ON, Aug. 8, 2017 /CNW/ - Temple Hotels Inc.
("Temple" or the "Company") (TSX: TPH) today reported its financial
results for the three months ended June 30,
2017 ("second 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 six months ended
June 30, 2017, 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.
Q2 2017 KEY POINTS/HIGHLIGHTS
- Revenue increased by $1.4 million
or 3% during the three months ended June 30,
2017 compared to 2016, primarily due to an increase in
revenue within the Fort McMurray
and Other Canada portfolios of $1.5
million and $0.3 million,
respectively, partially offset by a decrease in revenue within the
Other Alberta portfolio of $0.4
million.
- Hotel operating income decreased by $0.3
million or 2% during the three months ended June 30, 2017 compared to 2016, primarily due to
a decrease in hotel operating income within the Other Alberta and
Other Canada portfolios of $0.4
million and $0.1 million,
respectively, partially offset by an increase in hotel operating
income within the Fort McMurray
portfolio of $0.3 million.
- FFO increased by $2.0 million
during the three months ended June 30,
2017, compared to 2016. On a basic per common share basis,
FFO decreased by $0.10 per common
share, compared to the second quarter of 2016, primarily as a
result of an increase in the weighted average number of common
shares outstanding.
- During 2017, the Company has reduced its level of debt by
$57.1 million through the repayment
of convertible debentures and $7.5
million of amortizing principal repayments. The Company has
strengthened its financial position with the prudent use of capital
and, as of the date hereof, the Company has reduced its number of
covenant violations from ten to five loan breaches.
- Subsequent to June 30, 2017, the
Company refinanced a five loan mortgage portfolio at an interest
rate of 5.20% and included a $7.5
million repayment of the aggregate balance.
- On June 30, 2017, the Company
repaid the 7.75% Series D convertible debentures in the amount of
$34.3 million.
- On June 22, 2017, the common
shares were consolidated on the basis of one (1) post-consolidation
common share for six (6) pre-consolidation common shares (the
"Share Consolidation"). The number of common shares and deferred
common shares, the conversion price and the number of common shares
issuable upon conversion of the outstanding convertible debentures,
the exercise price and the number of common shares issuable upon
exercise of the outstanding options of the Company, and per common
share amounts, were also proportionally adjusted to reflect the
Share Consolidation for all periods presented in this press
release.
OPERATING RESULTS
|
Three Months Ended
June 30
|
|
Six Months Ended June
30
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Total
revenue
|
$43,389
|
|
$41,955
|
|
$79,628
|
|
$77,721
|
Hotel operating
income
|
$12,717
|
|
$12,996
|
|
$20,116
|
|
$20,081
|
Recovery of
(provision for) impairment
|
$ -
|
|
$303
|
|
$ -
|
|
($43,574)
|
Net income
(loss)
|
$2,708
|
|
($980)
|
|
($2,860)
|
|
($69,358)
|
Net income (loss) per
common share - basic and diluted
|
$0.11
|
|
($0.08)
|
|
($0.11)
|
|
($5.34)
|
|
|
|
|
|
|
|
|
Cash flow provided by
operating activities
|
$6,289
|
|
$4,975
|
|
$2,348
|
|
$4,570
|
Funds from
operations
|
$6,673
|
|
$4,654
|
|
$6,458
|
|
$3,405
|
|
|
|
|
|
|
|
|
Per common
share
|
|
|
|
|
|
|
|
‑ Funds from
operations
|
$0.26
|
|
$0.36
|
|
$0.25
|
|
$0.26
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares
|
25,344,413
|
|
12,999,203
|
|
25,341,273
|
|
12,990,686
|
|
|
|
|
|
|
|
|
Occupancy
|
65%
|
|
61%
|
|
60%
|
|
56%
|
ADR
|
$139.00
|
|
$141.51
|
|
$136.19
|
|
$139.14
|
RevPar
|
$90.81
|
|
$86.33
|
|
$81.58
|
|
$78.52
|
Operating Activities
- Net Income (Loss) – Temple completed the second
quarter of 2017 with a net income of $2.7
million, compared to a net loss of $1.0 million during the same period in 2016. The
increase in net income is mainly due to a decrease in depreciation
of $2.3 million, an increase in other
income of $1.6 million, a decrease in
interest expense of $0.6 million,
partially offset by an increase in deferred income tax expense of
$0.4 million, a decrease in recovery
of impairment of $0.3 million, and a
decrease in hotel operating income of $0.4
million. On a per common share basis, net income was
$0.11 for the second quarter of 2017,
compared to a net loss of $0.08
during the second quarter of 2016.
- Occupancy and ADR – The increase in revenue primarily
reflects higher occupancy levels within the Fort McMurray segment as well as higher ADR
levels within the Other Canada segment. In the second quarter of
2017, the occupancy levels of the Fort
McMurray segment increased by 25 percentage points to 57% in
comparison to the second quarter of 2016. In addition, reduced ADR
levels within the Other Alberta and Fort
McMurray segments resulted in a lower operating margin as
unfavourable market conditions continue to affect oil-dependent
markets in Alberta.
- Cash Provided by Operating Activities – Cash provided by
operating activities increased by $1.3
million during the second quarter of 2017, compared to the
second quarter of 2016. Excluding working capital adjustments, cash
provided by operating activities increased by $2.0 million, compared to 2016.
- Funds from Operations ("FFO") – During the second
quarter of 2017, FFO increased by $2.0
million compared to the second quarter of 2016. On a basic
per common share basis, FFO decreased by $0.10 per common share, compared to the second
quarter of 2016. The increase in FFO mainly reflects insurance
proceeds of $2.1 million relating to
a property loss claim as well as lower interest expense, partially
offset by a decrease in net operating income and an increase in
other expenses.
Liquidity and Financing Activities
As of June 30, 2017, the
unrestricted cash balance of Temple was $13.9 million and working capital was
$8.3 million.
- On June 27, 2017, the Company
completed the financing of two properties in the amount of
$15.6 million. The loan bears
interest at either prime plus 2.50% or bankers' acceptance plus
3.50% for a term of 2 years.
- On June 30, 2017, the Company
fully repaid upon maturity the 7.75% Series D convertible
debentures in the amount of $34.3
million.
- During June 2017, the Company
extended a mortgage portfolio comprising three loans at their
maturing amount of $37.5 million, for
a term of one year.
- During June 2017, the Company
refinanced a hotel property located in Sudbury, Ontario, at its maturing amount of
$8.4 million, at an interest rate of
4.69% for a term of 7 years.
- Subsequent to June 30, 2017, the
Company refinanced a five-loan mortgage portfolio with the
incumbent lender. The five loans are cross collateralized and three
of the loans were refinanced for a five year term at an interest
rate of 5.20% and are not subject to any financial covenants during
the first 12 months of the term. As a condition of refinancing, the
Company paid down the maturing, aggregate balance by $7.5 million. The fourth mortgage loan of five in
the portfolio does not mature until November
2019, and the fifth has been extended for 12 months.
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 $1.2 million during
the second quarter of 2017. Investing activities primarily reflect
cash outflows related to capital expenditures on hotel
properties.
ANALYSIS OF OPERATING RESULTS
Analysis of Net
Income (Loss) and Comprehensive Net Income (Loss)
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30
|
|
June 30
|
|
2017
|
|
2016
|
|
Increase/
(Decrease)
in Income
|
|
2017
|
|
2016
|
|
Increase/
(Decrease)
in Income
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Room
revenue
|
$32,113
|
|
$30,517
|
|
$1,596
|
|
$57,495
|
|
$55,579
|
|
$1,916
|
|
Other hotel
revenue
|
11,276
|
|
11,438
|
|
(162)
|
|
22,133
|
|
22,142
|
|
(9)
|
|
Total
revenue
|
43,389
|
|
41,955
|
|
1,434
|
|
79,628
|
|
77,721
|
|
1,907
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel operating
costs
|
30,672
|
|
28,959
|
|
(1,713)
|
|
59,512
|
|
57,640
|
|
(1,872)
|
Hotel operating
income
|
12,717
|
|
12,996
|
|
(279)
|
|
20,116
|
|
20,081
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
7,393
|
|
8,019
|
|
626
|
|
14,678
|
|
15,898
|
|
1,220
|
Other expense
(income)
|
(1,658)
|
|
(76)
|
|
1,582
|
|
(1,776)
|
|
(183)
|
|
1,593
|
Share based
compensation
|
31
|
|
85
|
|
54
|
|
66
|
|
173
|
|
107
|
General and
administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
expenses
|
879
|
|
865
|
|
(14)
|
|
1,606
|
|
1,673
|
|
67
|
Depreciation and
amortization
|
3,764
|
|
6,109
|
|
2,345
|
|
8,968
|
|
12,503
|
|
3,535
|
|
2,308
|
|
(2,006)
|
|
4,314
|
|
(3,426)
|
|
(9,983)
|
|
6,557
|
Equity income on
investment in
|
|
|
|
|
|
|
|
|
|
|
|
|
hotel
properties
|
411
|
|
317
|
|
94
|
|
542
|
|
478
|
|
64
|
Recovery of
(provision for)
|
|
|
|
|
|
|
|
|
|
|
|
|
impairment
|
-
|
|
303
|
|
(303)
|
|
-
|
|
(43,574)
|
|
43,574
|
Change in fair value
of financial
|
|
|
|
|
|
|
|
|
|
|
|
|
instruments:
gain
|
-
|
|
23
|
|
(23)
|
|
-
|
|
90
|
|
(90)
|
Deferred income
tax
|
|
|
|
|
|
|
|
|
|
|
|
|
recovery
(expense)
|
(11)
|
|
383
|
|
(394)
|
|
24
|
|
(16,369)
|
|
16,393
|
Net income (loss)
and
|
|
|
|
|
|
|
|
|
|
|
|
|
comprehensive income
(loss)
|
$2,708
|
|
($980)
|
|
$3,688
|
|
($2,860)
|
|
($69,358)
|
|
$66,498
|
Per Common Share
Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
$0.11
|
|
($0.08)
|
|
|
|
($0.11)
|
|
($5.34)
|
|
|
Hotel Revenue
Analysis of Total
Hotel Revenues
|
|
Three Months Ended
June 30
|
|
Six Months Ended June
30
|
|
|
|
|
Increase/
|
|
|
|
|
Increase/
|
|
2017
|
|
2016
|
|
(Decrease)
|
|
2017
|
|
2016
|
|
(Decrease)
|
Same
Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fort
McMurray
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room
revenue
|
$
|
6,532
|
|
$
|
4,748
|
|
$
|
1,784
|
|
$
|
11,051
|
|
$
|
8,890
|
|
$
|
2,161
|
|
Other hotel
revenue
|
|
324
|
|
|
634
|
|
|
(310)
|
|
|
685
|
|
|
1,226
|
|
|
(541)
|
|
$
|
6,856
|
|
$
|
5,382
|
|
$
|
1,474
|
|
$
|
11,736
|
|
$
|
10,116
|
|
$
|
1,620
|
Other
Alberta
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room
revenue
|
$
|
5,318
|
|
$
|
5,679
|
|
$
|
(361)
|
|
$
|
9,748
|
|
$
|
10,500
|
|
$
|
(752)
|
|
Other hotel
revenue
|
|
4,661
|
|
|
4,699
|
|
|
(38)
|
|
|
9,333
|
|
|
9,512
|
|
|
(179)
|
|
$
|
9,979
|
|
$
|
10,378
|
|
$
|
(399)
|
|
$
|
19,081
|
|
$
|
20,012
|
|
$
|
(931)
|
Other
Canada
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room
revenue
|
$
|
20,263
|
|
$
|
20,090
|
|
$
|
173
|
|
$
|
36,696
|
|
$
|
36,189
|
|
$
|
507
|
|
Other hotel
revenue
|
|
6,291
|
|
|
6,105
|
|
|
186
|
|
|
12,115
|
|
|
11,404
|
|
|
711
|
|
$
|
26,554
|
|
$
|
26,195
|
|
$
|
359
|
|
$
|
48,811
|
|
$
|
47,593
|
|
$
|
1,218
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room
revenue
|
$
|
32,113
|
|
$
|
30,517
|
|
$
|
1,596
|
|
$
|
57,495
|
|
$
|
55,579
|
|
$
|
1,916
|
|
Other hotel
revenue
|
|
11,276
|
|
|
11,438
|
|
|
(162)
|
|
|
22,133
|
|
|
22,142
|
|
|
(9)
|
|
Total hotel
revenue
|
$
|
43,389
|
|
$
|
41,955
|
|
$
|
1,434
|
|
$
|
79,628
|
|
$
|
77,721
|
|
$
|
1,907
|
During the second quarter of 2017, room revenue increased by
$1.6 million or 5%, compared to the
second quarter of 2016. The increase is comprised of a $1.8 million (38%) increase in the Fort McMurray portfolio and a $0.2 million (1%) increase in the Other Canada
portfolio, partially offset by a $0.4
million (6%) decrease in the Other Alberta portfolio.
The increase in Same Property room revenue during the second
quarter of 2017, compared to the second quarter of 2016, is largely
due to an increase in occupancy and RevPar for the Fort McMurray segment, as the second quarter
of 2016 was negatively impacted by wildfires and mandatory
evacuation, which led to a period of hotel closures due to the
repair and remediation of properties in Fort McMurray, partially offset by the
continued unfavourable market conditions affecting oil‑dependent
markets in the Other Alberta segment.
Room Revenue Statistics
As disclosed in the following chart, for the second quarter
ended June 30, 2017, RevPar for the
overall portfolio was $90.81,
compared to $86.33 for the second
quarter ended June 30, 2016.
For the six months ended June 30,
2017, RevPar for the overall portfolio was $81.58, compared to $78.52 for the six months ended 2016.
RevPar for Same Property portfolio results generally reflect
increased occupancy levels in the Fort
McMurray and Other Canada segments, offset by reduced ADR
levels in the Other Alberta segment.
Occupancy at the Fort McMurray
properties increased during the second quarter of 2017 compared to
the second quarter of 2016, but is still impacted by the
unfavourable market conditions in Alberta. Over time, it is expected that those
involved in the rebuilding of the region will create demand for
accommodation, putting upward pressure on occupancy rates.
Room Revenue
Statistics
|
|
|
Three Months Ended
June 30
|
|
|
2017
|
|
2016
|
|
|
Occ
|
|
|
ADR
|
|
RevPar
|
|
Occ
|
|
|
ADR
|
|
RevPar
|
Same
Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fort
McMurray
|
|
57%
|
|
$
|
138.91
|
|
$
|
78.67
|
|
32%
|
|
$
|
171.20
|
|
$
|
55.24
|
Other
Alberta
|
|
57%
|
|
$
|
122.57
|
|
$
|
69.25
|
|
58%
|
|
$
|
127.46
|
|
$
|
73.97
|
Other
Canada
|
|
72%
|
|
$
|
144.09
|
|
$
|
104.03
|
|
73%
|
|
$
|
140.25
|
|
$
|
103.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overall
Portfolio
|
|
65%
|
|
$
|
139.00
|
|
$
|
90.81
|
|
61%
|
|
$
|
141.51
|
|
$
|
86.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room Revenue
Statistics
|
|
|
Six Months Ended June
30
|
|
|
2017
|
|
2016
|
|
|
Occ
|
|
|
ADR
|
|
RevPar
|
|
Occ
|
|
|
ADR
|
|
RevPar
|
Same
Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fort
McMurray
|
|
47%
|
|
$
|
138.91
|
|
$
|
65.72
|
|
32%
|
|
$
|
161.29
|
|
$
|
51.47
|
Other
Alberta
|
|
52%
|
|
$
|
122.72
|
|
$
|
63.81
|
|
53%
|
|
$
|
128.73
|
|
$
|
68.38
|
Other
Canada
|
|
68%
|
|
$
|
139.52
|
|
$
|
94.75
|
|
67%
|
|
$
|
137.20
|
|
$
|
93.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overall
Portfolio
|
|
60%
|
|
$
|
136.19
|
|
$
|
81.58
|
|
56%
|
|
$
|
139.14
|
|
$
|
78.52
|
The above chart does not reflect the operating results for the
Cortona Residence, which is 100% leased at an annual net rent of
$2.1 million.
Operating Income and Profit Margin
Operating Income
and Profit Margin
|
|
Three Months Ended
June 30
|
|
Six Months Ended June
30
|
|
Operating
Income
|
|
Operating Profit
Margin
|
|
Operating
Income
|
|
Operating Profit
Margin
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Same
Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fort
McMurray
|
$2,931
|
|
$2,650
|
|
43%
|
|
49%
|
|
$4,377
|
|
$3,966
|
|
37%
|
|
39%
|
Other
Alberta
|
1,661
|
|
2,092
|
|
17%
|
|
20%
|
|
2,976
|
|
3,622
|
|
16%
|
|
18%
|
Other
Canada
|
8,125
|
|
8,254
|
|
31%
|
|
32%
|
|
12,763
|
|
12,493
|
|
26%
|
|
26%
|
Total
portfolio
|
$12,717
|
|
$12,996
|
|
29%
|
|
31%
|
|
$20,116
|
|
$20,081
|
|
25%
|
|
26%
|
After accounting for the increase in total revenues and the
increase in hotel operating costs, total operating income decreased
by $0.3 million or 2% during the
second quarter of 2017, compared to the second quarter of 2016. The
decrease is comprised of a decrease of $0.4
million or 21% for the Other Alberta segment and a decrease
of $0.1 million or 2% for the Other
Canada segment, partially offset by an increase of $0.3 million or 11% in operating income for the
Fort McMurray segment.
For the first six months of 2017, total operating income was
consistent to the first six months of 2016, which was comprised of
an increase of $0.4 million or 10% in
Fort McMurray segment and an
increase of $0.3 million or 2% for
the Other Canada segment, partially offset by a decrease of
$0.7 million or 18% for the Other
Alberta segment.
As disclosed in the preceding chart, the overall profit margin
of the entire hotel portfolio was at 29% for the second quarter of
2017 compared to 31% for the second quarter of 2016. For the six
months ended June 30, 2017, the
overall profit margin was 25%, compared to 26% for the six months
ended June 30, 2016.
ABOUT TEMPLE
Temple is a growth oriented hotel investment company with hotel
properties located across Canada.
Temple is listed on the Toronto Stock Exchange under the symbols
TPH (common shares), TPH.DB.E and TPH.DB.F (convertible
debentures). The primary long‑term investment objectives of the
Company are to yield stable and growing cash flows and to maximize
the long‑term share value of the Company through the active
management of its assets, accretive acquisitions, and the
performance of value‑added capital improvement programs on selected
properties, as deemed appropriate. For further information on
Temple, please visit our website at www.templehotels.ca.
This press release contains certain statements that could be
considered as forward-looking information. The forward-looking
information is subject to certain risks and uncertainties, which
could result in actual results differing materially from the
forward-looking statements.
SOURCE Temple Hotels Inc.