Ryman Hospitality Properties Inc (RHP) 2002 Q1 法說會逐字稿

This is an unedited realtime transcript. An edited version with proper case and full speaker names will be available shortly.

Please stand by for the commencement of the teleconference of gaylord CONNECT to BD-X Transcript Server at Wed May 8 09:47:55 2002OK - Ticker is GETOK - Call name is Gaylord Entertainment Company Q1 2002 EarningsOK - Start time is 05/08/2002 13:00 GMTREADY - Start transmissionentertainment company, may 8th, 2002. Please stand by. Please stand by for the commencement of the teleconference of gaylord entertainment company. Please stand by. Please stand by for the commencement of the teleconference of the gaylord entertainment company, may 8th, 2002.

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This is premiere conferencing. Please stand by. We are about to begin. Good day, everyone. Welcome to the gaylord entertainment conference call. Today's conference is being recorded. A rebroadcast of this teleconference will be made available starting today at 1 okay p.M. Earn time through 6:00 eastern time through may 15th. To access the rebroadcast at your convenience, please dial area code 719-457-0820 using pass code 581968. At this time, for opening remarks and bro duxs, I would like to turn the conference over to the general counsel of gaylord entertainment, Mr. Carter todd. Please go ahead, sir.

Good morning, my name is carter todd and the general counsel and senior vice president for gaylord entertainment company. Thank you for joining us on our first quarter 2002 earnings call. With me today are colin reed, our president and chief executive officer and david copell our chief financial officer and executive vice president. You should be aware that this conference call may contain forward-looking statements of 1985 including statements among others regarding gaylord entertainment's expected future financial performance. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as believed, anticipates, plans, expects, and similar expressions are intended to identify forward-looking statements. You are hereby cautioned that these statements may be affected by the important factors, among others, set forth in gaylord entertainment's filings with the securities and exchange commission and in its first-quarter 2002 earnings release, and consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. Gaylord entertainment undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. At this time, I would like to turn the call over to our chief executive officer colin reed.

Thanks, carter. Good morning, everyone. And welcome to gaylord entertainment's first-quarter 2002 conference call. I would like to welcome back all of you who know us and acknowledge those investors and interested parties joining us for the first time. We plan on keeping our prepared comments brief to allow ample time for questions. I will begin the call with a recap of the highlights of the first quarter and then discuss the recent initiatives that have been implemented in order to get us to where we are today. Then dave, our chief financial officer, will walk through the operating and financial performance of the company. Finally, I will discuss an outlook for the future. And we will then open up the call for any questions. Investors often look at quarterly results as barometer that gauges the way the business is progressing or declining. In most cases, earnings do reflect the health of the business, but in our case, there's been so many changes over the last few months at gaylord, earnings only cautiously tell the story. Let me explain what I mean about that. While we are very happy with most parts of the business and not so happy with the results posted at our nashville property, the fact remains that substantial progress has been made on multiple fronts that will lead to a profitable and growing gaylord entertainment. As I have stated to the stock hoilders on more than one occasion, we are in the middle of a process that effectively rebuilds the company by jetsoning noncore assets, refocusing the business that are core, eliminating costs with the objective of building a business that will create sustainable value for the stockholders. First of all, let me talk about gaylord palms, our state-of-the-art convention resort property that we officially opened on '02 of this year. The result is at the top of its class in this country and open to very strong results, which continue to improve throughout the quarter despite a very difficult market environment in orlando. Since that time, occupancy at gaylord palms has been very strong, with the overall quarterly rate above 70%. There's much to be pleased about this property, and here is why. First, the customer feedback in florida has been exceptional, with most of the conventions we have hosted having left our premise telling us that their experience was truly outstanding. Second, we continue to book business at a very healthy pace. Third, our occupancy rate in march was slightly over 80%, with a rev par of $159.29. But what was encouraging for us is that our ebitda for this month was approximately $5.6 million with a ebitda margin in the mid 30%. These results put us in line with our competitors set for the quarter at first quarter of operation. I know the old saying goes, one swallow doesn't make a summer, but these results are only the second month of operation, and give me confidence that the economic model of this hotel is tremendous. Given our pace of bookings and conventions booked for the third and fourth quarters of this year, at ebitda projections that we recently provided to you publicly are achievable. And furthermore, at 2003 bookings, lead us to believe that we will see good growth over our forecasted results for 2002. Now let's shift to our nashville property and I want to share some information for you which I hope will give you the confidence that we are moving in the right direction. We previously pointed out that when you are in the convention business, it's difficult to compare one quarter's occupancy versus the period -- the same period in a previous year. In short, one large three-day convention during one year that does not return the next significantly distorts the comparison. Groups traditionally in the convention business book with long lead times, so it is very hard to look at the calm results engage the present health of the business. Conventions that are showing up today are doing so based on decisions that they took on average two to four years ago. Now here is the issue that we have been struggling with at the gaylord opryland. For the financial year of 1997, the nashville hotel experienced an occupancy rate of over 80%. And at the same time, hosted 86 conventions that yielded over 800 room nights per convention. Between '98 and 2001, the occupancy gradually declined to 70% for 2001, where we hosted 56 conventions of over 800 room nights. Now knowing that conventions have long lead times, it is clear that during the '97, '98 and '99 time period, we did not do a good job of retaining the loyalty of the conventions we hosted in those years. Because some conventions did not renew in nashville, it is clear that our service standards through this period had slipped. This is an illustration of what I was discussing earlier when I said today's financials don't really reflect on what's going on in the business, because today's occupancy levels in the convention business are a reflection to a large part on the action taken -- on the actions taken several years ago. I want to come to today, and here is the good news. The business refocused during last year, and our service standards, as measured by the customer, have improved significantly and large groups are now leaving satisfied. Our pace of bookings have improved, and despite group attrition, we still believe that we can accomplish occupancy at the lower end of the range that we discussed with you in february, but our advanced bookings gives us the confidence that 2003 will see growth over 2002. New management and new training programs will continue to raise the satisfaction bar, which will innocent the customer to remain loyal. During the quarter, we have streamlined the communication to the workforce, and at the same time, reduced cost on an annualized basis by approximately $10 million with the elimination of noncustomer service discipline practices and elimination of 120 managerial and supervisory roles. These improvements in efficiency will result in ebitda in the $50 million to 55 million range for 2002. I am very confident that our nashville hotel growing occupancy and profitability substantially in the years to come, and I believe this will happen at a healthy rate. We've also taken a fresh look at our texas hotel project. We have modified the drawings, and we are in the process of rebidding parts of the project to take advantage of the current environment. And I am fairly confident by july of this year, we will be ready to move forward, allowing this hotel to open in the second quarter of 2004. I would like to remind everybody this project will look very similar to the project that we have opened in florida. So the economic model, i believe, will be consistent with florida. We continue to make progress in other core assets by building a strategy that will unlock the brand value associated with assets such as the grand ole opry and our radio station businesses. We will provide updates to you on thiss our plans unfold, but we have exciting things happening in those businesses. And from an asset sale perspective, we continue to make progress in an effort to shed those businesses that we have identified as noncore. And we are optimistic over the next few months, the multiple discussions we are having will materialize into definitive agreements, which will provide capital to fuel our hospitality and entertainment growth strategy. That's the 30,000-foot overview. What I would like to do now is hand the call over to our cfo dave capell who will go over the operating results with you in detail. David.

Thanks, colin. Start with a brief overview of the company's operating performance and go into more detail by business line highlighting energy drivers and efficiency initiatives. Revenues from continuing operations for the quarter were $105 million. Up 25.4% over last year's $83.4 million. Ebitda from continuing operations, excluding hotel operating cost of $5.7 million, noncash straight line expenses of $2 million, and noncash pension and post retirement adjustments of $3.3 million was 10.4 million in the latest quarter compared to 10.6 million in the same quarter of 2001. Results for first quarter of 2001 excluded hotel opening cost of $9.1 and noncash straight line expenses of .3 million. The company had a net loss of 5.7 million or 17 cent per diluted share compared to a net income of 24.1 million or 72 cents per diluted share for the first quarter of 2001. The company's net loss was a share of 17 cent for the first quarter of 2002 includes the following aftertax per share items. Loss of 10 cents and hotel preopening costs, income of 2 cents in discontinued operations, a loss of 6 cents in nonrecurring pension and post retirement benefits expenses, a loss of 16 cents in noncash interest expense due to the amortization of the first financing costs, and income of 31 cents in net impact of the change in the value of viacom class d common stock and derivitives related to the secured foreign exchange contract. The company's net income of diluted share of 72 cents in the first quarter of 2001 includes the following aftertax per share items, a loss of 4 cents and hotel preopening costs, a loss of 23 cents in discontinued operations, income of 36 cents in cumulative effect of accounting changes, income of 2 cents in other gains and losses, loss of 20 cents in noncash interest expense due to the amortization of deferred financing cost, income of 75 cents in net income of the change of the value of viacom class d common stock and secure foreign exchange contract. The company in the first quarter, 675 million or 19 cents per share versus 7.2 million. Cash earnings was calculated as follows. Ebitda as we described above, less cash interest -- plus interest income. Hospitality revenues were 80.3 million in the first quarter of 2002, an increase of 21.8 million over the first quarter of '01. Attraction revenues, 18.8 million in the first quarter of 2002. 600,000 compared to the first quarter of 2001. And media revenues from continuing operations were 5.3 million in the first quarter of 2002. Unchanged from results in the same time period in 2001. Hospitality ebitda, excluding hotel preopening expenses and noncash lease expense in each period was 16.9 million dollars in the first quarter of 2002. Unchanged from the first quarter of 2001. Preopening expenses for the first quarter of 2002 and 2001 were 5.7 million dollars and 1.9 million respectively. Noncash expense for the first quarter of 2002, due to the effect of the recognition of lease payments on our ground lease at the gaylord palms using the straightline methods was 1.7 million. Attraction ebitda decreased to $8 million to approximately break even in the first quarter of 2001. Media ebitda from continuing operations was $500,000 compared to $1 million during the same period in 2001. Hospitality operating loss was $2.8 million for the first quarter of 2002 as compared to the operating income of 8.7 million in the first quarter of 2001. The operating results for the first quarters of 2002 and 2001 include the effect of the preopening expenses we described earlier of $5.7 million and 1.9 million respectively. It also includes noncash lease expenses of $1.7 million in the first quarter of 2002. Operating losses in the attraction segment were half a million dollars in the first quarter of 2002 as compared to operating losses of $1.4 million in the first quarter of 2001. Media operating losses were $100,000 in first quarter of 2002 as compared to operating income of 300,000 in the first quarter of 2001. Now a few comments about the operating performance of our business segments. The hospitality segment, gaylord's fastest growing segment and core of the company's business operations enjoyed strong growth due to the opening of gaylord palms. Gaylord palms enjoyed a strong opening despite a challenging operating environment and january and february were low-rate preopening months. Occupancy rate of 71.5% which together produced rev par of $129.07. Total revenue per available room which includes food and beverage and other revenues was $282.69. As colin stated, we are very pleased with these results as they put us slightly above our competitive set in the market. And remember, this is only our first quarter of operations. Performance at the gaylord opryland slipped due to the economy and attendance. $139.75 and occupancy rate of 64.8%, which together produced ref par of 90.50. Total revenue including food and beverage and other revenues were $176.77. The attraction segment had an excellent quarter as the grand ole opry and corporate posted strong results. Revenues at the opry increased 15.7% while ebitda increased more than 100% increased by .5 million more than 100%. This is due in part to a great lineup of stars that have performed over the last three months which is a testament to the valuable brand, but also a result of a number of management tools and efficiencies we implemented at the opry during the last year. They extend the opry brand through multiple distribution. Corporate magic posted very solid performance and improvement in margins due to operate expenses, trimming of them, and better standards we installed last year. First quarter of 2002, corporate magic revenues increased 5.8 whileebitda increased 76.6% over the same period in 2001. While the attraction segment has posted much-better results, clearly we are not satisfied with its performance. We are in the process of performing detailed business reviews of each of the attractions' entities and our goal over the next 12 months to improve margins in that segment by a total of 6 percentage points. This will equate to approximately $3 million in incremental ebitda. The media segment composed of gaylord's three radio stations and media publishing performed slightly below results posted in 2001 due to lower advertising revenue at the radio stations and a slowly recovering economy. The company has made numerous changes at the radio stations aimed at boosting ratings and advertising sales. The ratings for our stations have improved dramatically. The winter book that was just released showed that our ratings have increased significantly, and we expect stronger results coming in the spring book which is to be released in july. The benefits of these changes and these new ratings should show financial results in the third quarter of 2002 and beyond. In the corporate and other segment, operating losses total $12.9 million for the first quarter of 2002. A 39.1% increase from the 9.3 million dollars in the year earlier period. Corporate and other operating results for the 2002 quarter included a 3.3 million dollar net nonrecurring, noncash charge related changes that the company made and pension and post retirement plans. Corporate expenses in the first quarter of 2002 also include certain nonoccurring items such as consulting studies aimed at increasing the efficiencies of certain of the company's assets. As stated previously, our income statement reflects certain noncash expenses associated with our ground lease of the gaylord palms and our naming rights agreement with the gaylord entertainment center. Because these agreements call for fixed rent increases through the term of the lease. An an annual basis, noncash portion of the ground lease agreement is about $6.7 million and is reflected in the hospitality segment for the naming rights agreement, the noncash portion is about a million dollars on an annual basis. And as recorded in the corporate and other segments. Our quarterly press release, we have highlighted the quarterly amount. Management is actively engaged to eliminate or reduce these difference between income statement expense and cash paid relative to these agreements to provide better clarity for investors going forward. We will report back to you at the conclusion of these efforts. Also, as we have stated previously, gaylord management has begun an initiative to divest certain noncore assets including investments in opry mills, nashville predators nhl hockey, miscellaneous real estate and ownership in the redhawks. The oklahoma red hawks business was classified as discontinued operations in the first quarter of 2002, and the consolidated historical results have been restated accordingly. Our focus is, as always, on our core hospitality and entertainment business. As such, we continue to evaluate the status of all of our noncore businesses and opportunities for those divestiture or repositioning. I would like now like to turn the call back over to colin.

Thanks, dave. In summary, we believe that there is now a solid platform in place for future growth and success at gaylord entertainment. We have fundamentally changed the organization of this company, both at the top and in our operating businesses. We've built strong, solid business plans. We have shot or sold businesses that lose money and we are narrowing this company into a hospitality business with -- with a -- with a good entertainment section to with the grand ole opry and our radio stations. Everything else, except bass pro shops will leave our company, and we will become a very simple business, but one that we believe has good profit dynamics and my goal, personal goal, is to make sure that our conference calls in the months and years ahead become much simpler in the -- in the -- in its -- in their tone. The only other thing I want to say is the recent events with the accounting profession and other management actions here in corporate america has clearly resulted in an erosion of trust of management within the shareholder community. Our goal here at gaylord is to build trust with our investors by communicating clearly and honestly and straightforward in a straightforward way about our strategy and performance. If we haven't done that this morning, we will be happy to answer any questions that you may have. So operator, we will now like to open up the phones for questions.

Thank you. At this time, we will begin today's question-and-answer session. If you would like to ask a question, press the starkey followed by the digit 1 on your touch-tone telephone. Once again, that is star 1 to ask a question. We will take as many questions as time permits. And we will take them in the order that we receive them and will pause for just one moment to assemble our roster. And our first question will come from mike wetwack with salomon smith barney.

Hi, this is jeff davis. Can you give us an update on the potential sale of acuff-rose.

Jeff, good morning, are you mike's surrogate or are you -- is this a question that you have?

My question. Mike had to step off.

Okay, good. Well, jeff, thank you. Let me -- let me sort of give you the 30,000-foot picture, and dave, if you want to jump in. When we met in february with the analyst community and some of the folks that wanted -- that we invited to our operation down in florida, we went through with all of you the list of assets that we considered to be noncore, and we put acuff-rose in that bucket. What we said to you at the time was we were looking at the strategic plan of acuff-rose, and that we were going to contemplate the best course of action with that business. Now what we have decided on since that meeting in february is that clearly acuff-rose, which is an incredibly valuable catalog of wonderful music, is worth so much more to companies that have the distribution capabilities that we do not possess in this organization. And we have been -- and as we publicly disclose that we were going through this evaluation, we have been frankly inundated over the course of the last month with inquiries about the potential for the purchase of acuff-rose. So we -- it will be fair to say, we have engaged in discussions with multed pell parties, and we have -- multiple parties and we have exchanged confidentiality agreements which will prohibit me from disclosing who those parties were, but we are actively discussing a potential sale of this wonderful catalog, and our objective will be to try to do so in a way that would retain acuff-rose in the city of nashville and do the best for the employee base of that company. That -- that's where things stand, jeff. In terms of the question that we get all the time about valuation. If you were going to press me on that, let me just sort of go -- go there straight away. One of things that's obvious to us from the professionals that we've got -- that we've got helping us, not bankers, lawyers that are helping us, that have been part of catalog dispositions before. What we've been told is that the -- that the good catalogs sort of get sold in the 14 to 16 times net publisher share. Great catalogs go over 16 times. And obviously, we believe acuff-rose to be a great catalog. We believe the net publisher share of this business, it can be measured in many ways. Looking back three years, current year, anywhere from 8 and a half to over $9 million. So this is a very -- a very valuable catalog that we believe will provide a lot of capital for our company.

Great, thank you.

Thank you.

Thank you. As a reminder, that is star 1 to ask a question. And Mr. Reid, it does appear there are no further questions at this time. I would like to turn the conference back over to you for any additional or closing remarks.

Well, thank you. Thank you very much, indeed. Again, I would like to thank everybody for jumping -- for coming on this call and taking an interest in our company. It is a company in extraordinary transition, but we believe that we -- we are several courses away from having an organization that will be very clear to the investor group and an organization and business that will be able to provide sustainable long-term growth and I'm pretty excited about the outlook for the future. And I know the management team feels the same way. Thank you all very much indeed for taking the time this morning.

That does conclude today's conference call. Thank you very much for your participation and have a great day.