Temple Hotels Inc. Reports 2019 Second Quarter Financial Results

MISSISSAUGA, ON, Aug. 6, 2019 /CNW/ - Temple Hotels Inc. ("Temple" or the "Company") (TSX: TPH) today reported its financial results for the three months ended June 30, 2019 ("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, 2019, 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 2019 KEY POINTS/HIGHLIGHTS

• On April 4, 2019, the Company completed a rights offering and issued 25,022,329 common shares at a price of $1.75 per common share for gross proceeds of $43.8 million.
  
  
• On April 8, 2019, the Company fully repaid the 7.25% Series E convertible debentures in the amount of $40.6 million, which will reduce annual cash interest expense by $2.9 million.
  
  
• On June 5, 2019, the Company completed a rights offering and issued 25,022,329 common shares at a price of $1.50 per common share for gross proceeds of $37.5 million. The Company used the proceeds to repay its existing revolving loan agreement with Morguard Corporation ("Credit Facility A").
  
  
• Revenue decreased $2.5 million or 6% during the three months ended June 30, 2019 compared to 2018, due to a decrease in revenue within the Other Alberta and Fort McMurray portfolios of $1.5 million and $1.5 million, respectively, partly offset by an increase in revenue of $0.4 million within the Other Canada portfolio.
  
  
• Hotel operating income decreased by $2.4 million or 20% during the three months ended June 30, 2019 compared to 2018, due to a decrease in hotel operating income within the Fort McMurray and Other Alberta portfolios of $1.5 million and $1.0 million, respectively, partly offset by an increase of $0.2 million within the Other Canada portfolio.
  
  
• FFO decreased by $1.6 million during the three months ended June 30, 2019, compared to the three months ended June 30, 2018. On a basic per common share basis, FFO decreased by $0.14 per common share, compared to the second quarter of 2018. The increase in the weighted average number of common shares outstanding contributed to the decrease on a per common share basis.

OPERATING RESULTS
	Three Months Ended June 30				Six Months Ended June 30
	2019		2018		2019		2018
Total revenue	$40,598		$43,094		$75,129		$80,305
Hotel operating income	$9,766		$12,142		$15,192		$19,689
Recovery of (provision for) impairment	-		($6,785)		$1,228		($6,785)
Net loss	($713)		($3,870)		($5,604)		($8,578)
Cash flow provided by operating activities	$2,371		$1,647		$656		$3,274
Funds from operations	$3,428		$4,989		$1,595		$4,933
Per common share
- Net loss	($0.01)		($0.15)		($0.14)		($0.34)
- FFO	$0.06		$0.20		$0.04		$0.20
Weighted average number of common shares	56,491,535		25,156,767		40,904,801		25,250,940
Occupancy	59%		64%		57%		61%
ADR	$144.26		$144.63		$138.90		$138.88
RevPar	$85.42		$92.33		$78.54		$84.18

Debt Covenants

At June 30, 2019, the Company was not in compliance with debt service covenants affecting seven mortgage loans in the aggregate amount of $102.9 million. The loan covenant breaches are expected to be resolved by debt refinancings, loan modification agreements and/or waiver of the covenant requirements. Subsequent to June 30, 2019, the Company received a waiver in regard to one mortgage loan with an aggregate principal balance of $14.5 million.

Room Revenue Statistics

As disclosed in the following chart, for the three months ended June 30, 2019, RevPar for the Same Property portfolio was $85.42, compared to $92.33 for the three months ended June 30, 2018. RevPar for Same Property portfolio results generally reflect decreased occupancy and ADR levels at the Company's Fort McMurray and Other Alberta segments.

Room Revenue Statistics
		Three Months Ended June 30
		2019								2018
		Occ			ADR		RevPar			Occ			ADR		RevPar
Same Property
Fort McMurray		37%		$	133.49		$	48.93		49%		$	140.38		$	68.15
Other Alberta		46%		$	119.66		$	54.99		54%		$	124.51		$	67.60
Other Canada		73%		$	151.92		$	111.26		73%		$	150.99		$	110.43
Overall Portfolio		59%		$	144.26		$	85.42		64%		$	144.63		$	92.33
Room Revenue Statistics
		Six Months Ended June 30
		2019								2018
		Occ			ADR		RevPar			Occ			ADR		RevPar
Same Property
Fort McMurray		34%		$	135.86		$	45.63		46%		$	139.03		$	63.51
Other Alberta		49%		$	118.92		$	57.67		54%		$	120.65		$	64.59
Other Canada		69%		$	144.41		$	99.46		69%		$	143.83		$	99.10
Overall Portfolio		57%		$	138.90		$	78.54		61%		$	138.88		$	84.18

The above chart reflects 70% of the operating results of the Acclaim Hotel commencing March 11, 2019.

Other Hotel Revenue

During the second quarter of 2019, other hotel revenue in the Same Property portfolio decreased by $0.2 million or 2%, compared to the second quarter of 2018, comprised of a decrease of $0.4 million or 8% from the Other Alberta properties and a decrease of $0.1 million or 18% from the Fort McMurray portfolio, partly offset by an increase of $0.3 million or 4% from the Fort McMurray portfolio.

Notwithstanding the above, the Cambridge Red Deer Hotel & Convention Centre was the most significant contributor to other hotel revenue in the overall portfolio during the second quarter of 2019, accounting for $3.3 million or 29% of other hotel revenue.

During the first six months of 2019, other hotel revenue for the Same Property portfolio decreased $1.1 million or 5% compared to the first six months of 2018, comprised of decreases in the Other Alberta and Other Canada properties of $1.0 million and $0.1 million, respectively.

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
	2019		2018		2019		2018		2019		2018		2019		2018
Same Property ^(1)
Fort McMurray	$420		$1,954		10%		34%		$677		$3,349		9%		31%
Other Alberta	500		1,508		6%		16%		993		2,867		6%		15%
Other Canada	8,846		8,680		31%		31%		13,522		13,473		27%		27%
Total portfolio	$9,766		$12,142		24%		28%		$15,192		$19,689		20%		25%

⁽¹⁾   The above chart reflects 70% of the operating results of the Acclaim Hotel commencing March 11, 2019.

After accounting for the decrease in total revenues and the decrease in hotel operating costs, total operating income decreased by $2.4 million or 20% during the second quarter of 2019, compared to the second quarter of 2018, comprised of decreases of $1.5 million and $1.0 million for the Fort McMurray and Other Alberta segments, respectively, partly offset by an increase of $0.2 million in the Other Canada segment.

As disclosed in the preceding chart, the overall profit margin of the entire hotel portfolio declined from 28% in the second quarter 2018 to 24% in the second quarter of 2019.

ABOUT TEMPLE

Temple is a hotel investment company with hotel properties located across Canada. Temple is listed on the Toronto Stock Exchange under the symbol TPH (common shares). 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.

K. Rai Sahi, FCA, FCGA, Chief Executive Officer, or Paul Miatello, CA, CPA, Chief Financial Officer, Tel: [phone], Fax: [phone], Email: [email protected]

Related Links

http://templehotels.ca/