DiamondRock Reports Debt Repayment and Provides Preliminary Third Quarter RevPAR, Profit Margin and EBITDA Results
October 05 2009 - 7:00AM
PR Newswire (US)
BETHESDA, Md., Oct. 5 /PRNewswire-FirstCall/ -- DiamondRock
Hospitality Company ("DiamondRock") (NYSE:DRH) today announced that
it paid off its $28 million Griffin Gate Marriott mortgage debt and
provided preliminary RevPAR, profit margin and EBITDA results for
its third fiscal quarter ended September 11, 2009. (Logo:
http://www.newscom.com/cgi-bin/prnh/20040708/DCTH028 ) Loan
Repayment and Liquidity Update On October 1, 2009, DiamondRock paid
off the $28 million loan secured by a mortgage on its Griffin Gate
Marriott with cash on hand. Following the satisfaction of the
Griffin Gate Marriott mortgage debt, DiamondRock has over $100
million of unrestricted cash on hand and no amounts outstanding on
its $200 million corporate credit facility. After the repayment of
the $5 million Bethesda Marriott Suites mortgage debt, which is
expected to occur during the fourth quarter of 2009 with cash on
hand, DiamondRock will have no debt maturities until late 2014.
Preliminary Third Quarter Results The projected financial
information for the fiscal quarter ended September 11, 2009 has
been derived from DiamondRock's unaudited financial statements,
which are based on preliminary hotel operating results and
preliminary corporate expenses. These financial statements are
subject to normal and recurring adjustments that may arise during
the financial statement closing process and quarterly review. While
DiamondRock has not finalized its quarterly financial statements or
closing process, it currently expects to report the following for
the third fiscal quarter of 2009; -- RevPAR: DiamondRock expects
its revenue per available room, or RevPAR, for the third fiscal
quarter to be approximately $107.50, which represents a decrease of
16.9 percent compared to the third fiscal quarter of 2008. -- Hotel
Adjusted EBITDA Margins: DiamondRock expects its Hotel Adjusted
EBITDA margins for its third fiscal quarter to have declined
between 400 basis points and 450 basis points compared to its Hotel
Adjusted EBITDA margins of approximately 26.8% in the third fiscal
quarter of 2008. -- Adjusted EBITDA: DiamondRock's Adjusted EBITDA
is expected to be between $27.0 million and $27.5 million, compared
to Adjusted EBITDA of $40.5 million in the third quarter of 2008.
"Although the third quarter results reflect the continuing
challenges in today's operating environment, we were pleased that
our hotels continued to gain market share and our asset managers,
working in concert with our operators, did a solid job implementing
cost containment measures. Moreover, DiamondRock was able to reduce
its leverage in the quarter and further strengthen its balance
sheet to better position itself for the future," stated Mark W.
Brugger, Chief Executive Officer of DiamondRock Hospitality
Company. Non-GAAP Financial Measure DiamondRock presents Adjusted
EBITDA, which is a non-GAAP financial measure, because it believes
it is useful to investors as a key measure of its operating
performance. DiamondRock cautions investors that amounts presented
in accordance with its definition of Adjusted EBITDA may not be
comparable to similar measures disclosed by other companies, since
not all companies calculate Adjusted EBITDA in the same manner.
Adjusted EBITDA should not be considered as an alternative measure
of DiamondRock's net income (loss), operating performance, cash
flow or liquidity. Adjusted EBITDA may include funds that may not
be available for DiamondRock's discretionary use due to functional
requirements to conserve funds for capital expenditures and
property acquisitions and other commitments and uncertainties.
Although DiamondRock believes that Adjusted EBITDA can enhance your
understanding of its results of operations, this non-GAAP financial
measure, when viewed individually, is not necessarily a better
indicator of any trend as compared to GAAP measures such as net
income (loss) or cash flow from operations. In addition, you should
be aware that adverse economic and market conditions may harm
DiamondRock's cash flow. Under this section, as required,
DiamondRock includes a quantitative reconciliation of Adjusted
EBITDA to the most directly comparable GAAP financial performance
measure, which is net income (loss). Adjusted EBITDA is defined as
net income (loss) before interest, taxes, depreciation and
amortization, which is then adjusted for the impact of non-cash
ground rent and non-cash amortization of unfavorable contract
liabilities. DiamondRock believes it is a useful financial
performance measure for it and for its stockholders and is a
complement to net income and other financial performance measures
provided in accordance with GAAP. DiamondRock uses Adjusted EBITDA
to measure the financial performance of its operating hotels
because it excludes expenses such as depreciation and amortization,
taxes and interest expense, which are not indicative of operating
performance. By excluding interest expense, Adjusted EBITDA
measures DiamondRock's financial performance irrespective of its
capital structure or how it finances its properties and operations.
By excluding depreciation and amortization expense, which can vary
from hotel to hotel based on a variety of factors unrelated to the
hotels' financial performance, DiamondRock can more accurately
assess the financial performance of its hotels. Under GAAP, hotels
are recorded at historical cost at the time of acquisition and are
depreciated on a straight-line basis. By excluding depreciation and
amortization, DiamondRock believes Adjusted EBITDA provides a basis
for measuring the financial performance of hotels unrelated to
historical cost. However, because Adjusted EBITDA excludes
depreciation and amortization, it does not measure the capital
DiamondRock requires to maintain or preserve its fixed assets. In
addition, because Adjusted EBITDA does not reflect interest
expense, it does not take into account the total amount of interest
DiamondRock pays on outstanding debt nor does it show trends in
interest costs due to changes in its borrowings or changes in
interest rates. Because DiamondRock uses Adjusted EBITDA to
evaluate its financial performance, DiamondRock reconciles it to
net income (loss) which is the most comparable financial measure
calculated and presented in accordance with GAAP. Adjusted EBITDA
does not represent cash generated from operating activities
determined in accordance with GAAP, and should not be considered as
an alternative to operating income or net income determined in
accordance with GAAP as an indicator of performance or as an
alternative to cash flows from operating activities as an indicator
of liquidity. The following is a reconciliation between net income
(loss) and Adjusted EBITDA (unaudited in thousands): Fiscal Quarter
Ended Fiscal Quarter Ended September 11, 2009 September 5, 2008
(Projected) (Historical) -------------------- --------------------
Low End High End ------- -------- Net income $600 $1,100 $12,212
Interest expense 11,000 11,000 11,632 Income tax benefit (5,000)
(4,500) (2,994) Depreciation and amortization 19,000 19,000 18,257
------ ------ ------ EBITDA 25,600 26,600 39,107 ------ ------
------ Non-cash ground rent 1,800 1,800 1,768 Non-cash amortization
of unfavorable contract liabilities (400) (400) (396) ---- ----
---- Adjusted EBITDA $27,000 $28,000 $40.479 ======= =======
======= About DiamondRock Hospitality Company DiamondRock
Hospitality Company is a self-advised real estate investment trust
(REIT) that is an owner of premium hotel properties. DiamondRock
owns 20 hotels with 9,600 rooms. For further information, please
visit DiamondRock's website at http://www.drhc.com/. This press
release contains forward-looking statements within the meaning of
federal securities laws and regulations. These forward-looking
statements are identified by their use of terms and phrases such as
"anticipate," "believe," "could," "estimate," "expect," "intend,"
"may," "plan," "predict," "project," "should," "will," "continue"
and other similar terms and phrases, including references to
assumptions and forecasts of future results. Forward-looking
statements are not guarantees of future performance and involve
known and unknown risks, uncertainties and other factors which may
cause the actual results to differ materially from those
anticipated at the time the forward-looking statements are made.
These risks include, but are not limited to: changes in preliminary
third quarter results that may arise during the financial statement
closing process and quarterly review; national and local economic
and business conditions that will affect occupancy rates at its
hotels and the demand for hotel products and services; operating
risks associated with the hotel business; risks associated with the
level of its indebtedness and its ability to meet covenants in its
debt agreements; relationships with property managers; its ability
to maintain its properties in a first-class manner, including
meeting capital expenditure requirements; its ability to complete
planned renovation on budget; its ability to compete effectively in
areas such as access, location, quality of accommodations and room
rate structures; changes in travel patterns, taxes and government
regulations which influence or determine wages, prices,
construction procedures and costs; its ability to complete
acquisitions; its ability to raise equity capital; the performance
of acquired properties after they are acquired; necessary capital
expenditures on the acquired properties; and its ability to
continue to satisfy complex rules in order for DiamondRock to
qualify as a REIT for federal income tax purposes; and other risks
and uncertainties associated with its business described from time
to time in its filings with the Securities and Exchange Commission.
Although DiamondRock believes the expectations reflected in such
forward-looking statements are based upon reasonable assumptions,
it can give no assurance that the expectations will be attained or
that any deviation will not be material. All information in this
release is as of the date of this release, and DiamondRock
undertakes no obligation to update any forward-looking statement to
conform the statement to actual results or changes in its
expectations.
http://www.newscom.com/cgi-bin/prnh/20040708/DCTH028DATASOURCE:
DiamondRock Hospitality Company CONTACT: Christopher King,
+1-240-744-1150, Web Site: http://www.drhc.com/
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