Orient-Express Hotels Reports Second Quarter 2010 Results
Orient-Express Hotels Reports Second Quarter 2010 Results
HAMILTON, Bermuda, August 3, 2010 /PRNewswire via COMTEX/ --
Orient-Express Hotels Ltd. (NYSE: OEH, http://www.orient-express.com),owners or part-owners and managers of 50 luxury hotel, restaurant, touristtrain and river cruise properties operating in 24 countries, today announcedits results for the second quarter ended June 30, 2010.
Net loss for the period was $0.8 million (loss of $0.01 per common share)on revenue of $173.4 million, compared with a net loss of $24.3 million (lossof $0.36 per common share) on revenue of $129.4 million in the second quarterof 2009. Net earnings from continuing operations for the period were $1.0million (earnings of $0.01 per common share), compared with a net loss of$2.5 million (loss of $0.04 per common share) in the second quarter of 2009.The adjusted net earnings from continuing operations for the period were $3.4million (earnings of $0.04 per common share), compared with an adjusted netloss of $2.5 million (loss of $0.04 per common share) in the second quarterof 2009.
"Overall, we continue to be encouraged," said Paul White, President andChief Executive Officer. "Same store RevPAR in the second quarter grew in allregions, with North America up a healthy 16% and Rest of World 34% up inlocal currency. Total EBITDA for Owned Hotels was up $4.0 million. Trains andCruises revenues and EBITDA were stable year over year despite the impact onPeruRail of the floods that destroyed parts of the track to Machu Picchu.Across the business as a whole, before Real Estate, total revenues were up$16.6 million and EBITDA was up $6.3 million.
"I am pleased to be able to report that significant progress has beenmade in the refinancing of both our European and US assets, most of whichhave loan maturities in the second half of 2011. It is also good to see theeffect of our strategic actions, combined with the fledgling recovery,resulting in our debt to EBITDA ratio continuing to move in the rightdirection."
Revenue, excluding Real Estate revenue, was $146.0 million in the secondquarter of 2010, up $16.6 million from the second quarter of 2009.
Revenue from Owned Hotels for the second quarter was $118.1 million. On asame store basis, Owned Hotels RevPAR was up 12% in local currency and up 13%in US dollars.
Trains and Cruises revenue in the second quarter was $21.9 million, whichincludes the Company's share of PeruRail insurance income (net of costs) of$2.8 million. This was in line with the prior year quarter.
Adjusted EBITDA before Real Estate was $32.4 million compared to $26.6million in the prior year. The principal variances from the second quarter of2009 included Grand Hotel Europe, St. Petersburg, Russia (up $1.8 million),Copacabana Palace, Rio de Janeiro, Brazil (up $1.2 million), CharlestonPlace, Charleston, South Carolina (up $1.4 million), The Westcliff,Johannesburg, South Africa (up $1.8 million) and share of results from HotelRitz Madrid, Spain (up $1.2 million).
On May 27, the Grand Hotel Timeo and Villa Sant'Andrea re-opened onschedule under the Orient-Express flag, following the first phase ofrenovations. The staff, who trained at other Orient-Express hotels in Italyduring the closure, are coping well with the heavy demands of the summerseason, starting with a full house of demanding guests for the annualTaormina Film Festival within two weeks of opening.
During the quarter GBP2.6 million ($3.9 million) was received from thedefendants in the "Cipriani" trademark litigation. This is in addition toGBP0.5 million ($0.8 million) already received in these proceedings. Thebalance of the claim of GBP6.6 million ($9.8 million) is to be settled by adeferred payment arrangement to be received over five years.
On June 1, the Bermuda Supreme Court upheld the Company's class Bshareholding structure and dismissed the petition filed in early 2009 by twohedge fund groups challenging that structure. One of them has indicated anintention to appeal this judgment.
In May, the Company completed the sale of La Cabana restaurant in BuenosAires, Argentina for $2.7 million, which was received in the quarter.
In July, the complete railway track from Cuzco to Machu Picchu reopenedfollowing the heavy flooding on the line in January 2010, which made wholesections of the track impassable. In April, PeruRail established itsoperations at a temporary station in the Sacred Valley and coordinatedtransfers by bus between Cuzco and the Sacred Valley, and onwards to MachuPicchu by rail.
The seventeen terrace rooms under renovation at the Grand Hotel Europewere finished in time for the high season of White Nights which runs from Mayto July. A three year phased restoration of the facade of the hotel commencedin July.
Restoration is progressing on the new 56 key hotel Palacio Nazarenas,adjacent to Hotel Monasterio in Cuzco, Peru, with 50% of basic constructionof listed buildings and 65% of excavation of non-historic areas now complete.Due to some interesting archaeological finds, work on certain sections of thesite is being delayed and completion of the project is now expected in thefirst quarter of 2012.
The volatile political situation in Bangkok has calmed considerably butdemand for the Asian hotels and the Eastern & Oriental Express continues tobe monitored closely because many flights are routed through Bangkok. Atpresent, business has returned to normal during this low season period in theregion.
At the Company's Porto Cupecoy development in St Maarten, the legal titleof 45 units had been transferred at the end of the quarter and a further 28units have been transferred since then. The cumulative number sold is now 105out of a total of 185 units. All third party debt has now been discharged onthis project.
Europe: In the second quarter of 2010, revenues from Owned Hotels were$56.5 million, up 8% from $52.2 million in the second quarter of 2009. Samestore RevPAR increased by 1% in local currency. EBITDA was $17.3 million inthe second quarter 2010 versus $17.2 million in the prior year. The secondquarter 2010 included EBITDA losses of $1.0 million for Grand Hotel Timeo andVilla Sant'Andrea of which $0.5 million were start-up costs. The hotelsopened at the end of May and had only one full month of trading. Grand HotelEurope experienced a $1.8 million gain in EBITDA, driven by a 17% increase inlocal currency RevPAR and strong banqueting business.
North America: Revenue from Owned Hotels was $29.2 million, up 9% from$26.8 million in the second quarter of 2009. EBITDA was $5.4 million in 2010versus $4.3 million in the prior year. Both revenue and EBITDA increases weremainly attributable to Charleston Place Hotel, which had revenue growth of$1.8 million, or 14%, and EBITDA gains of $1.4 million driven by both stronggroup and transient room night demand. Local currency same store RevPAR forthe region increased by 16%.
Southern Africa: Revenue of $9.2 million in the second quarter of 2010was up by $2.6 million, or 39% over the prior year, with local currency samestore RevPAR up 57%. EBITDA of $2.5 million was $1.5 million higher than thesecond quarter of 2009. Revenue was boosted by the World Cup tournament inJune, although business levels in the run up to the World Cup were lower thanthe previous year.
South America: Revenue was $15.7 million in the 2010 second quarter,compared to $11.1 million in the prior year. Same store RevPAR in localcurrency for the region increased by 32%. The Copacabana Palace contributed$3.2 million of the revenue increase, which was driven by rooms and food andbeverage growth, especially from banqueting. Hotel das Cataratas, IguassuFalls, Brazil, on schedule for third phase completion in September,experienced an EBITDA loss in the 2010 quarter of $1.6 million, compared toan EBITDA loss of $1.5 million in the prior year. For the region, EBITDA of$3.0 million was $1.7 million higher than the prior year. This included a$1.8 million adverse impact on costs caused by the strengthening of localcurrencies.
Asia Pacific: Revenue was $7.5 million in the second quarter of 2010, up$1.3 million or 20%. Same store RevPAR in local currency for the regionincreased by 12%. EBITDA was $0.8 million in the current quarter and $1.2 inthe prior year quarter.
Hotel management and part-ownership interests: EBITDA for the secondquarter of 2010 was $2.2 million compared to $1.2 million in the secondquarter of 2009. Of the increase in EBITDA, $1.2 million was attributable tothe Hotel Ritz Madrid, Spain. This was offset by a fall of $0.2 million fromthe Peru hotels, which suffered from the lingering impact of the floods thatoccurred in the first quarter.
Restaurants: Revenue from '21' Club, New York in the second quarter of2010 was $3.8 million, up 15% compared to $3.3 million in the second quarterof 2009, and EBITDA was $0.5 million compared to $0.3 million in the prioryear.
Trains and Cruises: Revenue in the second quarter of 2010 and 2009 wasunchanged at $21.9 million. EBITDA in the second quarter of 2010 was $6.8million, compared to an EBITDA of $6.9 million in the prior year. Bothrevenue and EBITDA included insurance income in the second quarter of 2010 of$2.8 million from PeruRail, which was impacted by the damage to tracks causedby the floods during the first quarter of 2010.
Central costs: In the second quarter of 2010, central costs were $5.7million compared with $6.8 million in the prior year period. The current yearquarter is net of $0.3 million of cost recovery relating to the Bermudalitigation and $0.8 million gain from the favorable settlement of the"Cipriani" trademark litigation, both of which are excluded from adjustedEBITDA.
Real Estate: In the second quarter of 2010, there was an EBITDA loss of$1.4 million from real estate activities compared with $0.5 million in 2009,primarily relating to Porto Cupecoy. During the quarter, the Companyrecognized revenue from units transferred to customers of $27.4 million.
Depreciation and amortization: The depreciation and amortization chargefor the second quarter of 2010 was $11.6 million compared with $9.5 millionin the second quarter of 2009.
Interest: The interest charge for the second quarter of 2010 was $7.4million compared to $7.5 million in the second quarter of 2009.
Tax: The tax charge for the second quarter of 2010 was $7.4 millioncompared with $11.0 million in the same quarter in the prior year. The prioryear included a deferred tax charge of $2.7 million arising in respect offixed asset timing differences following appreciation of local currenciesagainst the US dollar.
Discontinued operations: The loss for the second quarter of 2010 was $1.8million including the results of Bora Bora Lagoon Resort. The loss includedan operating loss in the quarter, net of tax, of $1.4 million and a finalloss on the sale of La Cabana restaurant of $0.4 million.
Investment: The Company invested $3.8 million during the quarter in Hoteldas Cataratas. Payments of a further $1.8 million were made to the New YorkPublic Library and there was additional capital expenditure of $15.9 millionin the second quarter, including $1.3 million at Hotel Cipriani, Venice,Italy, $6.4 million at Grand Hotel Timeo and Villa Sant'Andrea and $1.8million at Le Manoir aux Quat' Saisons.
At June 30, 2010, the Company had term debt (including the currentportion) of $761.6 million, working capital loans of $8.2 million and cashbalances of $129.1 million (including $16.6 million of restricted cash),giving a total net debt of $640.7 million compared with total net debt of$697.8 million at the end of the first quarter of 2010.
At June 30, 2010, undrawn amounts available to the Company undercommitted short-term lines of credit were $18.6 million and undrawn amountsavailable to the Company under secured revolving credit facilities were $12.0million, bringing total cash availability at June 30, 2010 to $159.7 million,including restricted cash of $16.6 million.
At June 30, 2010, approximately 63% of the Company's debt was at fixedinterest rates and 37% was at floating interest rates. The weighted averagematurity of the debt was approximately 2.2 years and the weighted averageinterest rate (including margin and swaps) was approximately 3.5%.
"As we move into the northern hemisphere high season, traditionallyOrient-Express Hotels' strongest trading quarter, we continue to focus ondriving revenue, margins and EBITDA," said Paul White. "This, along with ourstated intention to dispose of non-core assets, four of which have been soldat attractive multiples, and the continued sale of developed Real Estate,should see our net debt reduced to our targeted range of 4-5 x EBITDA by theend of 2011."
Reconciliation and Adjustments $'000 - except per share Three months ended Six months ended amounts June 30 June 30 2010 2009 2010 2009 31,377 26,011 27,790 27,545 EBITDA Adjusted items: Legal costs (1) (279) 114 (170) 629 Cipriani litigation (2) (788) - (788) - Grand Hotel Timeo & Villa 497 - 1,640 - Sant'Andrea (3) Management restructuring (4) 173 - 1,122 458 Impairment (5) - - - 6,500 Adjusted EBITDA 30,980 26,125 29,594 35,132 (820) (24,313) (13,828) (38,952) US GAAP reported net loss Discontinued operations net 1,809 21,812 (3,360) 24,822 of tax Net earnings/(loss) from continuing operations 989 (2,501) (17,188) (14,130) Adjusted items net of tax: Legal costs (1) (279) 114 (170) 629 Cipriani litigation (2) (788) - (788) - Grand Hotel Timeo & Villa 359 - 1,225 - Sant'Andrea (3) Management restructuring (4) 173 - 933 366 Impairment (5) - - - 6,500 Interest rate swaps (6) (22) (229) (5) 852 Foreign exchange (7) 3,001 146 230 2,995 Adjusted net earnings/(loss) 3,433 (2,470) (15,763) (2,788) from continuing operations (0.01) (0.36) (0.15) (0.66) Reported EPS Reported EPS from continuing 0.01 (0.04) (0.19) (0.24) operations Adjusted EPS from continuing 0.04 (0.04) (0.18) (0.05) operations Number of shares (millions) 90.80 67.17 89.32 59.02
1. Legal costs incurred in defending the Company's class B common sharestructure, net of awards or claims for reimbursement.
2. Cash received in excess of costs incurred following settlement of"Cipriani" trademark litigation.
3. Non-recurring costs and purchase transaction costs incurred inrelation to Grand Hotel Timeo and Villa Sant'Andrea.
4. Restructuring and redundancy costs.
5. Impairment charges recorded on three owned properties.
6. Charges on swaps that did not qualify for hedge accounting.
7. Foreign exchange, net of tax, is a non-cash item arising on thetranslation of certain assets and liabilities denominated in currencies otherthan the reporting currency of the entity concerned.
Management evaluates the operating performance of the Company's segmentson the basis of segment net earnings before interest, foreign currency, tax(including tax on unconsolidated companies), depreciation and amortization(EBITDA), and believes that EBITDA is a useful measure of operatingperformance, for example to help determine the ability to incur capitalexpenditure or service indebtedness, because it is not affected bynon-operating factors such as leverage and the historic cost of assets.EBITDA is also a financial performance measure commonly used in the hotel andleisure industry, although the Company's EBITDA may not be comparable in allinstances to that disclosed by other companies. EBITDA does not represent netcash provided by operating, investing and financing activities under USgenerally accepted accounting principles (US GAAP), is not necessarilyindicative of cash available to fund all cash flow needs, and should not beconsidered as an alternative to earnings from operations or net earningsunder US GAAP for purposes of evaluating operating performance.
Adjusted EBITDA and adjusted net earnings of the Company are non-GAAPfinancial measures and do not have any standardized meanings prescribed by USGAAP. They are, therefore, unlikely to be comparable to similar measurespresented by other companies, which may be calculated differently, and shouldnot be considered as an alternative to net earnings, cash flow from operatingactivities or any other measure of performance prescribed by US GAAP.Management considers adjusted EBITDA and adjusted net earnings to bemeaningful indicators of operations and uses them as measures to assessoperating performance because, when comparing current period performance withprior periods and with budgets, management does so after having adjusted fornon-recurring items, foreign exchange (a non-cash item), disposals of assetsor investments, and certain other items (some of which may be recurring)which management does not consider indicative of ongoing operations or whichcould otherwise have a material effect on the comparability of the Company'soperations. Adjusted EBITDA and adjusted net earnings are also used byinvestors, analysts and lenders as measures of financial performance because,as adjusted in the foregoing manner, the measures provide a consistent basison which the performance of the Company can be assessed.
This news release and related oral presentations by management contain,in addition to historical information, forward-looking statements thatinvolve risks and uncertainties. These include statements regarding earningsoutlook, investment plans, debt reduction, asset sales and similar mattersthat are not historical facts. These statements are based on management'scurrent expectations and are subject to a number of uncertainties and risksthat could cause actual results to differ materially from those described inthe forward-looking statements. Factors that may cause a difference include,but are not limited to, those mentioned in the news release, unknown effectson the travel and leisure markets of terrorist activity and any police ormilitary response, varying customer demand and competitive considerations,failure to realize hotel bookings and reservations and planned propertydevelopment sales as actual revenue, inability to sustain price increases orto reduce costs, rising fuel costs adversely impacting customer travel andthe Company's operating costs, fluctuations in interest rates and currencyvalues, uncertainty of negotiating and completing proposed asset sales,capital expenditures and acquisitions, inability to reduce funded debt asplanned or to agree bank loan agreement waivers or amendments, adequatesources of capital and acceptability of finance terms, possible loss oramendment of planning permits and delays in construction schedules forexpansion or development projects, delays in reopening properties closed forrepair or refurbishment and possible cost overruns, shifting patterns oftourism and business travel and seasonality of demand, adverse local weatherconditions, changing global and regional economic conditions in many parts ofthe world and weakness in financial markets, legislative, regulatory andpolitical developments, and possible continuing challenges to the Company'scorporate governance structure. Further information regarding these and otherfactors is included in the filings by the Company with the U.S. Securitiesand Exchange Commission.
Orient-Express Hotels will conduct a conference call on Wednesday, August4, 2010 at 10.00 hrs EDT (15.00 GMT) which is accessible at +1-888-935-4577(US toll free) or +44(0)20-7806-1957 (Standard International access). Theconference ID is 8342746. A re-play of the conference call will be availableuntil 5.00pm (EDT) Wednesday, August 11, 2010 and can be accessed by calling+1-866-932-5017 (US toll free) or +44(0)20-7111-1244 (Standard International)and entering replay access number 8342746#. A re-play will also be availableon the company's website: http://www.orient-expressinvestorinfo.com.
ORIENT-EXPRESS HOTELS LTD Three Months ended June 30, 2010 SUMMARY OF OPERATING RESULTS (Unaudited) Three months ended June 30 $'000 - except per share amount 2010 2009
Revenue and earnings from unconsolidated
companies Owned hotels - Europe 56,505 52,226 - North America 29,215 26,825 - Rest of World 32,382 23,950
Hotel management & part ownership interests 2,182 1,223 Restaurants 3,794 3,275 Trains & Cruises 21,942 21,906 Revenue and earnings from unconsolidated 146,020 129,405
companies before Real Estate
Real Estate 27,414 - Total (1) 173,434 129,405 Analysis of earnings Owned hotels - Europe 17,330 17,177 - North America 5,367 4,299 - Rest of World 6,275 3,490
Hotel management & part ownership interests 2,182 1,223 Restaurants 493 275 Trains & Cruises 6,834 6,854 Central overheads (5,665) (6,833) EBITDA before Real Estate and Impairment 32,816 26,485 Real Estate (1,439) (474) EBITDA before Impairment 31,377 26,011 Impairment - - EBITDA 31,377 26,011 Depreciation & amortization (11,576) (9,545) Interest (7,353) (7,513) Foreign exchange (4,030) (408) Earnings before tax 8,418 8,545 Tax (7,429) (11,046) Net earnings/(loss) from continuing 989 (2,501)
Discontinued operations (1,809) (21,812) Net loss on common shares (820) (24,313) Loss per common share (0.01) (0.36) Number of shares - millions 90.80 67.17
(1) Comprises earnings from unconsolidated companies of $4,725,000 (2009- $2,799,000) and revenue of $168,709,000 (2009 - $126,606,000).
ORIENT-EXPRESS HOTELS LTD Three Months Ended June 30, 2010 SUMMARY OF OPERATING INFORMATION FOR OWNED HOTELS Three months ended June 30 2010 2009 Average Daily Rate (in US dollars) Europe 694 753 North America 325 331 Rest of World 327 271 Worldwide 438 438 Rooms Available (000's) Europe 85 79 North America 68 69 Rest of World 113 111 Worldwide 266 259 Rooms Sold (000's) Europe 44 39 North America 46 40 Rest of World 55 48 Worldwide 145 127 RevPAR (in US dollars) Europe 363 368 North America 221 190 Rest of World 158 116 Worldwide 240 213 Change % Same Store RevPAR Dollar Local (in US dollars) currency Europe 371 368 1% 1% North America 221 190 16% 16% Rest of World 163 118 38% 34% Worldwide 244 215 13% 12% ORIENT-EXPRESS HOTELS LTD Six Months ended June 30, 2010 SUMMARY OF OPERATING RESULTS (Unaudited) Six months ended June 30 $'000 - except per share amount 2010 2009 Revenue and earnings from unconsolidated companies Owned hotels - Europe 69,960 65,677 - North America 56,554 55,980 - Rest of World 70,792 52,068 Hotel management & part ownership interests 874 1,915 Restaurants 6,908 6,566 Trains & Cruises 26,914 28,261 Revenue and earnings from unconsolidated 232,002 210,467 companies before Real Estate Real Estate 31,108 - Total (1) 263,110 210,467 Analysis of earnings Owned hotels - Europe 9,188 11,762 - North America 10,811 12,025 - Rest of World 17,190 12,252 Hotel management & part ownership interests 874 1,915 Restaurants 636 525 Trains & Cruises 5,119 8,297 Central overheads (13,249) (11,938) EBITDA before Real Estate and Impairment 30,569 34,838 Real Estate (2,779) (793) EBITDA before Impairment 27,790 34,045 Impairment - (6,500) EBITDA 27,790 27,545 Depreciation & amortization (22,893) (18,668) Interest (14,110) (16,672) Foreign exchange (208) (4,234) Earnings before tax (9,421) (12,029) Tax (7,767) (2,101) Net loss from continuing operations (17,188) (14,130) Discontinued operations 3,360 (24,822) Net loss on common shares (13,828) (38,952) Loss per common share (0.15) (0.66) Number of shares - millions 89.32 59.02
(1) Comprises earnings from unconsolidated companies of $1,868,000 (2009- $4,350,000) and revenue of $261,242,000 (2009 - $206,117,000).
ORIENT-EXPRESS HOTELS LTD Six Months Ended June 30, 2010 SUMMARY OF OPERATING INFORMATION FOR OWNED HOTELS Six months ended June 30 2010 2009 Average Daily Rate (in US dollars) Europe 618 645 North America 349 370 Rest of World 327 279 Worldwide 397 390 Rooms Available (000's) Europe 135 131 North America 136 137 Rest of World 229 219 Worldwide 500 487 Rooms Sold (000's) Europe 58 54 North America 87 77 Rest of World 126 109 Worldwide 271 240 RevPAR (in US dollars) Europe 267 266 North America 224 210 Rest of World 180 139 Worldwide 215 193 Change % Same Store RevPAR Dollar Local (in US dollars) currency Europe 270 270 0% -1% North America 224 210 7% 6% Rest of World 190 142 34% 24% Worldwide 222 197 13% 9% ORIENT-EXPRESS HOTELS LTD CONSOLIDATED AND CONDENSED BALANCE SHEETS (Unaudited) June 30 December 31 $'000 2010 2009 Assets Cash 129,142 92,045 Accounts receivable 61,337 59,905 Due from related parties 20,785 19,385 Prepaid expenses 23,532 22,331 Inventories 41,958 44,191 Other assets held for sale 12,915 41,770 Real estate assets 109,900 120,288 Total current assets 399,569 399,915 Property, plant & equipment, net book value 1,242,188 1,211,091 Property, plant & equipment, net book value of consolidated variable interest entities 190,692 192,682 Investments 60,123 58,432 Goodwill 176,958 149,180 Other intangible assets 21,026 20,982 Other assets 32,112 40,408 2,122,668 2,072,690 Liabilities and Equity Working capital facilities 8,171 6,666 Accounts payable 29,352 23,575 Accrued liabilities 83,980 74,569 Deferred revenue 68,643 68,784 Due to related parties - - Other liabilities held for sale 2,551 11,847 Current portion of long-term debt and capital 146,779 173,223 leases Current portion of debt of consolidated variable interest entities 67,174 165 Total current liabilities 406,650 358,829 Long-term debt and obligations under capital leases 535,471 559,042 Long-term debt of consolidated variable interest entities 12,213 79,304 Deferred income taxes 93,184 96,642 Deferred income taxes of consolidated variable interest entities 64,100 64,100 Other liabilities 43,604 34,295 Total liabilities 1,155,222 1,192,212 Shareholders' equity 965,451 878,709 Non-controlling interests 1,995 1,769 Total equity 967,446 880,478 2,122,668 2,072,690 Contact: Martin O'Grady Vice President, Chief Financial Officer Tel: +44-20-7921-4038 E: email@example.com Pippa Isbell Vice President, Corporate Communications Tel: +44-20-7921-4065 E: firstname.lastname@example.org
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