Quarterly Report (10-q)

Date : 05/07/2019 @ 8:42PM
Source : Edgar (US Regulatory)
Stock : Ryman Hospitality Properties Inc (RHP)
Quote : 83.21  0.0 (0.00%) @ 9:00AM
Ryman Hospitality Proper... share price Chart

Quarterly Report (10-q)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10‑Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1‑13079

RYMAN HOSPITALITY PROPERTIES, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware

    

73-0664379

(State or Other Jurisdiction of

 

(I.R.S. Employer

Incorporation or Organization)

 

Identification No.)

 

One Gaylord Drive

Nashville, Tennessee 37214

(Address of Principal Executive Offices)

(Zip Code)

(615) 316‑6000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). ☐ Yes ☒ No

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

 

 

 

 

 

Name of Each Exchange on

Title of Each Class

 

Trading Symbol(s)

 

Which Registered

Common stock, par

 

RHP

 

New York Stock Exchange

value $.01

 

 

 

 

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class

    

Outstanding as of April 30, 2019

Common Stock, par value $.01

 

51,436,642 shares

 

 

 

 

 


 

RYMAN HOSPITALITY PROPERTIES, INC.

FORM 10‑Q

For the Quarter Ended March 31, 2019

INDEX

 

    

Page

 

 

 

Part I - Financial Information  

 

3

 

 

 

Item 1. Financial Statements.  

 

3

 

 

 

Co ndensed C onsolidated Balance Sheets (Unaudited) - March 31, 2019 and December 31, 2018  

 

3

 

 

 

Co ndensed C onsolidated Statements of Operations and Comprehensive Income (Unaudited) - For the Three Months Ended March 31, 2019 and 2018  

 

4

 

 

 

Condensed Consolidated Statements of Cash Flows (Unaudited) - For the Three Months Ended March 31, 2019 and 2018  

 

5

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) - For the Three Months Ended March 31, 2019 and 2018  

 

6

 

 

 

Notes to C ondensed Consolidated Financial Statements (Unaudited)  

 

7

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.  

 

23

 

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.  

 

43

 

 

 

Item 4. Controls and Procedures.  

 

44

 

 

 

Part II - Other Information  

 

44

 

 

 

Item 1. Legal Proceedings.  

 

44

 

 

 

Item 1A. Risk Factors.  

 

44

 

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.  

 

44

 

 

 

Item 3. Defaults Upon Senior Securities.  

 

44

 

 

 

Item 4. Mine Safety Disclosures.  

 

44

 

 

 

Item 5. Other Information.  

 

44

 

 

 

Item 6. Exhibits.  

 

45

 

 

 

SIGNATURES  

 

45

 

 

2


 

Part I – FINANCIAL INFORMATION

Item 1. – FINANCIAL STATEMENTS.

RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

    

March 31, 

    

December 31, 

 

 

2019

 

2018

ASSETS:

 

 

  

 

 

  

Property and equipment, net of accumulated depreciation (including $1,010,730 and $1,018,499 from VIEs, respectively)

 

$

3,147,749

 

$

3,149,095

Cash and cash equivalents - unrestricted

 

 

94,873

 

 

103,437

Cash and cash equivalents - restricted

 

 

51,943

 

 

45,652

Notes receivable

 

 

121,923

 

 

122,209

Trade receivables, less allowance of $739 and $763, respectively (including $25,431 and $2,019 from VIEs, respectively)

 

 

109,973

 

 

67,923

Deferred income tax assets, net

 

 

39,463

 

 

40,557

Prepaid expenses and other assets (including $29,406 and $20,419 from VIEs, respectively)

 

 

90,070

 

 

78,240

Intangible assets (including $232,367 and $241,973 from VIEs, respectively)

 

 

237,175

 

 

246,770

Total assets

 

$

3,893,169

 

$

3,853,883

 

 

 

 

 

 

 

LIABILITIES AND EQUITY:

 

 

  

 

 

  

Debt and finance lease obligations (including $526,449 and $494,578 from VIEs, respectively)

 

$

2,485,179

 

$

2,441,895

Accounts payable and accrued liabilities (including $69,696 and $70,215 from VIEs, respectively)

 

 

285,296

 

 

274,890

Dividends payable

 

 

47,010

 

 

45,019

Deferred management rights proceeds

 

 

177,652

 

 

174,026

Operating lease liabilities

 

 

104,265

 

 

 —

Other liabilities

 

 

62,188

 

 

161,043

Commitments and contingencies

 

 

 

 

 

  

Noncontrolling interest in consolidated joint venture

 

 

291,115

 

 

287,433

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, $.01 par value, 100,000 shares authorized, no shares issued or outstanding

 

 

 —

 

 

 —

Common stock, $.01 par value, 400,000 shares authorized, 51,434 and 51,336 shares issued and outstanding, respectively

 

 

514

 

 

513

Additional paid-in capital

 

 

899,164

 

 

900,795

Treasury stock of 599 and 592 shares, at cost

 

 

(15,687)

 

 

(15,183)

Accumulated deficit

 

 

(412,905)

 

 

(388,524)

Accumulated other comprehensive loss

 

 

(30,622)

 

 

(28,024)

Total stockholders' equity

 

 

440,464

 

 

469,577

Total liabilities and stockholders' equity

 

$

3,893,169

 

$

3,853,883

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


 

RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(Unaudited)

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31, 

 

 

    

2019

    

2018

    

Revenues:

 

 

  

 

 

  

 

Rooms

 

$

132,212

 

$

107,564

 

Food and beverage

 

 

171,143

 

 

132,939

 

Other hotel revenue

 

 

34,155

 

 

24,608

 

Entertainment

 

 

33,265

 

 

23,259

 

Total revenues

 

 

370,775

 

 

288,370

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

  

 

 

  

 

Rooms

 

 

34,969

 

 

28,928

 

Food and beverage

 

 

91,359

 

 

71,978

 

Other hotel expenses

 

 

90,939

 

 

75,882

 

Management fees, net

 

 

9,756

 

 

7,130

 

Total hotel operating expenses

 

 

227,023

 

 

183,918

 

Entertainment

 

 

25,641

 

 

19,366

 

Corporate

 

 

9,004

 

 

8,329

 

Preopening costs

 

 

2,134

 

 

2,147

 

Depreciation and amortization

 

 

53,009

 

 

28,666

 

Total operating expenses

 

 

316,811

 

 

242,426

 

 

 

 

 

 

 

 

 

Operating income

 

 

53,964

 

 

45,944

 

Interest expense

 

 

(32,087)

 

 

(16,729)

 

Interest income

 

 

2,908

 

 

2,753

 

Loss from joint ventures

 

 

 —

 

 

(2,588)

 

Other gains and (losses), net

 

 

(141)

 

 

168

 

Income before income taxes

 

 

24,644

 

 

29,548

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

(1,974)

 

 

(2,209)

 

Net income

 

 

22,670

 

 

27,339

 

 

 

 

 

 

 

 

 

Net loss attributable to noncontrolling interest in consolidated joint venture

 

 

6,738

 

 

 —

 

Net income available to common stockholders

 

$

29,408

 

$

27,339

 

 

 

 

 

 

 

 

 

Basic income per share available to common stockholders

 

$

0.57

 

$

0.53

 

Diluted income per share available to common stockholders

 

$

0.57

 

$

0.53

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.90

 

$

0.85

 

 

 

 

 

 

 

 

 

Comprehensive income, net of taxes

 

$

22,779

 

$

27,417

 

Comprehensive loss, net of taxes, attributable to noncontrolling interest

 

 

6,738

 

 

 —

 

Comprehensive income, net of taxes, available to common stockholders

 

$

29,517

 

$

27,417

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


 

RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31, 

 

 

    

2019

    

2018

    

Cash Flows from Operating Activities:

 

 

  

 

 

  

 

Net income

 

$

22,670

 

$

27,339

 

Amounts to reconcile net income to net cash flows provided by operating activities:

 

 

 

 

 

  

 

Provision (benefit) for deferred income taxes

 

 

1,100

 

 

1,779

 

Depreciation and amortization

 

 

53,009

 

 

28,666

 

Amortization of deferred financing costs

 

 

1,927

 

 

1,415

 

(Income) loss from joint ventures

 

 

 —

 

 

2,588

 

Stock-based compensation expense

 

 

2,026

 

 

1,923

 

Changes in:

 

 

 

 

 

  

 

Trade receivables

 

 

(42,050)

 

 

(8,733)

 

Accounts payable and accrued liabilities

 

 

17,632

 

 

(11,385)

 

Other assets and liabilities

 

 

(1,754)

 

 

336

 

Net cash flows provided by operating activities

 

 

54,560

 

 

43,928

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

  

 

 

  

 

Purchases of property and equipment

 

 

(48,873)

 

 

(47,588)

 

Other investing activities

 

 

(229)

 

 

(4,215)

 

Net cash flows used in investing activities

 

 

(49,102)

 

 

(51,803)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

  

 

 

  

 

Net borrowings under revolving credit facility

 

 

10,000

 

 

56,500

 

Borrowings under Gaylord Rockies construction and mezzanine loans

 

 

28,897

 

 

 —

 

Payment of dividends

 

 

(44,420)

 

 

(41,000)

 

Payment of tax withholdings for share-based compensation

 

 

(3,813)

 

 

(602)

 

Other financing activities

 

 

1,605

 

 

(6)

 

Net cash flows provided by (used in) financing activities

 

 

(7,731)

 

 

14,892

 

 

 

 

 

 

 

 

 

Net change in cash, cash equivalents, and restricted cash

 

 

(2,273)

 

 

7,017

 

Cash, cash equivalents, and restricted cash, beginning of period

 

 

149,089

 

 

78,710

 

Cash, cash equivalents, and restricted cash, end of period

 

$

146,816

 

$

85,727

 

 

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents, and restricted cash to balance sheet:

 

 

 

 

 

 

 

Cash and cash equivalents - unrestricted

 

$

94,873

 

$

59,040

 

Cash and cash equivalents - restricted

 

 

51,943

 

 

26,687

 

Cash, cash equivalents, and restricted cash, end of period

 

$

146,816

 

$

85,727

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


 

RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Accumulated

    

 

 

    

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

Other

 

Total

 

 

 

 

Common

 

Paid-in

 

Treasury

 

Accumulated

 

Comprehensive

 

Stockholders'

 

Noncontrolling

 

 

Stock 

 

Capital 

 

Stock

 

Deficit

 

Loss

 

Equity

 

Interest

BALANCE, December 31, 2017

 

$

512

 

$

896,759

 

$

(13,253)

 

$

(479,170)

 

$

(26,692)

 

$

378,156

 

$

 —

Net income

 

 

 —

 

 

 —

 

 

 —

 

 

27,339

 

 

 —

 

 

27,339

 

 

 —

Transition adjustment related to adoption of ASU 2014-09

 

 

 —

 

 

 —

 

 

 —

 

 

(134)

 

 

 —

 

 

(134)

 

 

 —

Other comprehensive income, net of income taxes

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

78

 

 

78

 

 

 —

Payment of dividend

 

 

 —

 

 

167

 

 

(454)

 

 

(43,461)

 

 

 —

 

 

(43,748)

 

 

 —

Restricted stock units and stock options surrendered

 

 

 1

 

 

(3,692)

 

 

 —

 

 

 —

 

 

 —

 

 

(3,691)

 

 

 —

Stock-based compensation expense

 

 

 —

 

 

1,923

 

 

 —

 

 

 —

 

 

 —

 

 

1,923

 

 

 —

BALANCE, March 31, 2018

 

$

513

 

$

895,157

 

$

(13,707)

 

$

(495,426)

 

$

(26,614)

 

$

359,923

 

$

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, December 31, 2018

 

$

513

 

$

900,795

 

$

(15,183)

 

$

(388,524)

 

$

(28,024)

 

$

469,577

 

$

287,433

Net income

 

 

 —

 

 

 —

 

 

 —

 

 

29,408

 

 

 —

 

 

29,408

 

 

(6,738)

Adjustment of noncontrolling interest to redemption value

 

 

 —

 

 

 —

 

 

 —

 

 

(10,420)

 

 

 —

 

 

(10,420)

 

 

10,420

Transition adjustment related to adoption of ASU 2018-02

 

 

 —

 

 

 —

 

 

 —

 

 

2,707

 

 

(2,707)

 

 

 —

 

 

 —

Other comprehensive income, net of income taxes

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

109

 

 

109

 

 

 —

Payment of dividend

 

 

 —

 

 

168

 

 

(504)

 

 

(46,076)

 

 

 —

 

 

(46,412)

 

 

 —

Restricted stock units and stock options surrendered

 

 

 1

 

 

(3,825)

 

 

 —

 

 

 —

 

 

 —

 

 

(3,824)

 

 

 —

Stock-based compensation expense

 

 

 —

 

 

2,026

 

 

 —

 

 

 —

 

 

 —

 

 

2,026

 

 

 —

BALANCE, March 31, 2019

 

$

514

 

$

899,164

 

$

(15,687)

 

$

(412,905)

 

$

(30,622)

 

$

440,464

 

$

291,115

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

6


 

RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. BASIS OF PRESENTATION:

 

On January 1, 2013, Ryman Hospitality Properties, Inc. (“Ryman”) and its subsidiaries (collectively with Ryman, the “Company”) began operating as a real estate investment trust (“REIT”) for federal income tax purposes, specializing in group-oriented, destination hotel assets in urban and resort markets. The Company’s owned assets include a network of upscale, meetings-focused resorts that are managed by Marriott International, Inc. (“Marriott”) under the Gaylord Hotels brand. These resorts, which the Company refers to as the Gaylord Hotels properties, consist of the Gaylord Opryland Resort & Convention Center in Nashville, Tennessee (“Gaylord Opryland”), the Gaylord Palms Resort & Convention Center near Orlando, Florida (“Gaylord Palms”), the Gaylord Texan Resort & Convention Center near Dallas, Texas (“Gaylord Texan”) and the Gaylord National Resort & Convention Center near Washington D.C. (“Gaylord National”). The Company’s other owned hotel assets managed by Marriott include the Inn at Opryland, an overflow hotel adjacent to Gaylord Opryland, and the AC Hotel at National Harbor, Washington D.C. (“AC Hotel”), an overflow hotel adjacent to Gaylord National.

The Company also owns a 61.2% interest in a joint venture (the “Gaylord Rockies joint venture”) that owns the Gaylord Rockies Resort & Convention Center near Denver, Colorado (“Gaylord Rockies”), which opened in December 2018 and is managed by Marriott. As further discussed in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2018, management has concluded that the Company is the primary beneficiary of this variable interest entity. As such, the Company has consolidated the assets, liabilities and results of operations of the Gaylord Rockies joint venture in the accompanying condensed consolidated financial statements. The portion of the joint venture that the Company does not own is recorded as noncontrolling interest in consolidated joint venture in the accompanying condensed consolidated balance sheet, and any adjustment necessary to reflect the noncontrolling interest at its redemption value is shown in the accompanying condensed consolidated statement of stockholders’ equity. Creditors of the Gaylord Rockies joint venture have no recourse to the general credit of the Company, except as discussed in Note 13, “Commitments and Contingencies,” to the condensed consolidated financial statements included herein.

The Company also owns a number of media and entertainment assets, including the Grand Ole Opry, the legendary weekly showcase of country music’s finest performers; the Ryman Auditorium, the storied live music venue and former home of the Grand Ole Opry; WSM-AM, the Opry’s radio home; Ole Red, a brand of Blake Shelton-themed bar, music venue and event spaces, with a flagship location in Nashville that opened in May 2018; and three Nashville-based assets managed by Marriott – Gaylord Springs Golf Links, the Wildhorse Saloon, and the General Jackson Showboat.

The condensed consolidated financial statements include the accounts of Ryman and its subsidiaries and have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted from this report pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2018. In the opinion of management, all adjustments necessary for a fair statement of the results of operations for the interim periods have been included. All adjustments are of a normal, recurring nature. The results of operations for such interim periods are not necessarily indicative of the results for the full year because of seasonal and short-term variations.

The Company principally operates, through its subsidiaries and its property managers, as applicable, in the following business segments: Hospitality, Entertainment, and Corporate and Other.

Newly Issued Accounting Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016‑02, “ Leases ,” that requires lessees to record most leases on their balance sheet but recognize expenses on their income statements in a manner similar to previous accounting. The ASU also eliminates the required use of bright-line

7


 

tests for determining lease classification. The Company adopted this standard as of January 1, 2019 using the modified retrospective approach. Existing leases were recorded at the adoption date and comparative periods were not restated and are presented based on previously existing guidance. The Company also adopted several practical expedients, which allowed the Company to avoid reassessing (i) whether an expired or existing contract meets the definition of a lease; (ii) the lease classification at the adoption date for existing leases; and (iii) whether costs previously capitalized as initial direct costs would continue to be amortized. In addition, the Company elected to adopt a practical expedient that allows the Company to avoid reassessing existing or expired land easements that were not previously accounted for as a lease, as well as a practical expedient that allows the Company to avoid separating nonlease components from lease components and instead to account for each separate lease component and related nonlease component as a single lease component. As permitted, the Company has elected to not apply the recognition requirements of this ASU to short-term leases. Adoption of the new standard resulted in the recording of right-of-use assets and lease liabilities of $100.9 million as of January 1, 2019. However, after consideration of the Company’s previous straight-line lease liability of $100.1 million, as discussed more fully in the Company’s 2018 Annual Report on Form 10-K, the Company recorded $0.8 million in net right-of-use assets related to its operating leases as of January 1, 2019, which are recorded in prepaid expenses and other assets in the accompanying condensed consolidated financial statements. See Note 5 and Note 9 for additional disclosures regarding the Company’s leases.

In June 2016, the FASB issued ASU No. 2016‑13, “ Financial Instruments – Credit Losses – Measurement of Credit Losses on Financial Instruments ,” which will change how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The ASU will replace the current “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. An entity will apply these amendments with a modified-retrospective approach, with a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. For debt securities for which an other-than-temporary impairment has been previously recognized, a prospective transition approach is required. The ASU is effective for the Company in the first quarter of 2020. The Company is currently evaluating the effects of this ASU on its financial statements, and such effects have not yet been determined.

In February 2018, the FASB issued ASU No. 2018-02, “ Income Statement – Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ,” which gives entities the option to reclassify to retained earnings tax effects related to items that have been stranded in accumulated other comprehensive income as a result of the Tax Cuts and Jobs Act (“TCJA”). An entity that elects to reclassify these amounts must reclassify stranded tax effects related to the TCJA’s change in US federal tax rate for all items accounted for in other comprehensive income. These entities can also elect to reclassify other stranded effects that relate to the TCJA but do not directly relate to the change in the federal tax rate. The Company adopted this ASU in the first quarter of 2019, and the Company recorded a transition adjustment of $2.7 million, which is reflected as a reclassification from accumulated other comprehensive loss to accumulated deficit in the accompanying condensed consolidated financial statements.  

2. REVENUES:

Revenues from occupied hotel rooms are recognized over time as the daily hotel stay is provided to hotel groups and guests. Revenues from concessions, food and beverage sales, and group meeting services are recognized over the period or at the point in time those goods or services are delivered to the hotel group or guest. Revenues from ancillary services at the Company’s hotels, such as spa, parking, and transportation services, are generally recognized at the time the goods or services are provided. Cancellation fees and attrition fees, which are charged to groups when they do not fulfill the minimum number of room nights or minimum food and beverage spending requirements originally contracted for, are generally recognized as revenue in the period the Company determines it is probable that a significant reversal in the amount of revenue recognized will not occur, which is typically the period these fees are collected. The Company generally recognizes revenues from the Entertainment segment at the point in time that services are provided or goods are delivered or shipped to the customer, as applicable. Almost all of the Company’s revenues are either cash-based or, for meeting and convention groups who meet the Company’s credit criteria, billed and collected on a short-term receivables basis. The Company is required to collect certain taxes from customers on behalf of government agencies and remit these to the applicable governmental entity on a periodic basis. These taxes are collected from customers at the

8


 

time of purchase but are not included in revenue. The Company records a liability upon collection of such taxes from the customer and relieves the liability when payments are remitted to the applicable governmental agency.

The Company’s revenues disaggregated by major source are as follows (in thousands):

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31, 

 

    

2019

    

2018

Hotel group rooms

 

$

102,692

 

$

83,217

Hotel transient rooms

 

 

29,520

 

 

24,347

Hotel food and beverage - banquets

 

 

126,196

 

 

96,268

Hotel food and beverage - outlets

 

 

44,947

 

 

36,671

Hotel other

 

 

34,155

 

 

24,608

Entertainment admissions/ticketing

 

 

13,623

 

 

10,860

Entertainment food and beverage

 

 

12,039

 

 

6,581

Entertainment retail and other

 

 

7,603

 

 

5,818

Total revenues

 

$

370,775

 

$

288,370

 

The Company’s Hospitality segment revenues disaggregated by location are as follows (in thousands):

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31, 

 

    

2019

    

2018

Gaylord Opryland

 

$

88,958

 

$

82,745

Gaylord Palms

 

 

59,917

 

 

57,896

Gaylord Texan

 

 

72,039

 

 

58,357

Gaylord National

 

 

65,630

 

 

60,756

Gaylord Rockies

 

 

45,243

 

 

 —

AC Hotel

 

 

2,435

 

 

2,371

Inn at Opryland and other

 

 

3,288

 

 

2,986

Total Hospitality segment revenues

 

$

337,510

 

$

265,111

 

Almost all of the Company’s Entertainment segment revenues are concentrated in Nashville, Tennessee.

The Company records deferred revenues when cash payments are received in advance of its performance obligations, primarily related to advanced deposits on hotel rooms in its Hospitality segment and advanced ticketing in its Entertainment segment. At March 31, 2019 and December 31, 2018, the Company had $94.4 million and $69.3 million, respectively, in deferred revenues, which are included in accounts payable and accrued liabilities in the accompanying condensed consolidated balance sheets. Of the amount outstanding at December 31, 2018, approximately $39.2 million was recognized in revenue during the three months ended March 31, 2019.

3. INCOME PER SHARE:                 

The weighted average number of common shares outstanding is calculated as follows (in thousands):

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31, 

 

    

2019

    

2018

Weighted average shares outstanding - basic

 

51,349

 

51,214

Effect of dilutive stock-based compensation

 

215

 

259

Effect of dilutive put rights

 

385

 

 —

Weighted average shares outstanding - diluted

 

51,949

 

51,473

 

As more fully discussed in Note 13, “Commitments and Contingencies,” to the condensed consolidated financial statements included herein, certain affiliates of Ares Management, L.P. (“Ares”) have a put right to require the Company to purchase their joint venture interests in the Gaylord Rockies joint venture in consideration of cash or operating

9


 

partnership units (“OP Units”) of RHP Hotel Properties, LP (the “Operating Partnership”). Any OP Units issued by the Operating Partnership to the certain affiliates of Ares will be redeemable at the option of the holders thereof for cash or shares of the Company’s common stock on a one-for-one basis, subject to certain adjustments.

 

4. ACCUMULATED OTHER COMPREHENSIVE LOSS:

The Company’s balance in accumulated other comprehensive loss is comprised of amounts related to the Company’s minimum pension liability and amounts related to an other-than-temporary impairment of a held-to-maturity investment with respect to the notes receivable discussed in Note 6, “Notes Receivable,” to the condensed consolidated financial statements included herein, and Note 3, “Notes Receivable,” to the consolidated financial statements included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2018. Changes in accumulated other comprehensive loss by component for the three months ended March 31, 2019 and 2018 consisted of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other-Than-

 

 

 

 

 

Minimum

 

Temporary

 

 

 

 

 

Pension

 

Impairment of

 

 

 

 

    

Liability

    

Investment

    

Total

Balance, December 31, 2018

 

$

(21,814)

 

$

(6,210)

 

$

(28,024)

Amounts reclassified from accumulated other comprehensive loss

 

 

20

 

 

83

 

 

103

Income tax benefit

 

 

 6

 

 

 —

 

 

 6

Net other comprehensive income

 

 

26

 

 

83

 

 

109

Transition adjustment related to adoption of ASU 2018-02 (see Note 1)

 

 

(2,707)

 

 

 —

 

 

(2,707)

Balance, March 31, 2019

 

$

(24,495)

 

$

(6,127)

 

$

(30,622)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other-Than-

 

 

 

 

 

Minimum

 

Temporary

 

 

 

 

 

Pension

 

Impairment of

 

 

 

 

    

Liability

    

Investment

    

Total

Balance, December 31, 2017

 

$

(20,149)

 

$

(6,543)

 

$

(26,692)

Amounts reclassified from accumulated other comprehensive loss

 

 

(9)

 

 

83

 

 

74

Income tax benefit

 

 

 4

 

 

 —

 

 

 4

Net other comprehensive income (loss)

 

 

(5)

 

 

83

 

 

78

Balance, March 31, 2018

 

$

(20,154)

 

$

(6,460)

 

$

(26,614)

 

 

5. PROPERTY AND EQUIPMENT:

Property and equipment, including right-of-use finance lease assets, at March 31, 2019 and December 31, 2018 is recorded at cost (except for right-of-use finance lease assets) and summarized as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

March 31, 

 

December 31, 

 

    

2019

    

2018

Land and land improvements

 

$

352,143

 

$

347,654

Buildings

 

 

3,393,725

 

 

3,379,041

Furniture, fixtures and equipment

 

 

929,330

 

 

913,528

Right-of-use finance lease assets

 

 

1,534

 

 

 —

Construction-in-progress

 

 

52,953

 

 

48,295

 

 

 

4,729,685

 

 

4,688,518

Accumulated depreciation and amortization

 

 

(1,581,936)

 

 

(1,539,423)

Property and equipment, net

 

$

3,147,749

 

$

3,149,095

 

 

6. NOTES RECEIVABLE:

As further discussed in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2018, in connection with the development of Gaylord National, the Company is currently holding two issuances of governmental

10


 

bonds with a total carrying value of $110.6 million and $111.0 million at March 31, 2019 and December 31, 2018, respectively. The Company receives debt service and principle payments thereon, payable from property tax increments, hotel taxes and special hotel rental taxes generated from Gaylord National through the maturity dates of July 1, 2034 and September 1, 2037, respectively. The Company records interest income over the life of the notes using the effective interest method.

During the three months ended March 31, 2019 and 2018, the Company recorded interest income of $2.6 million and $2.7 million, respectively, on these bonds. The Company received payments of $3.0 million and $3.1 million during the three months ended March 31, 2019 and 2018, respectively, relating to these notes receivable.

As further discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, in connection with the development of certain infrastructure adjacent to Gaylord Rockies, at March 31, 2019, the Gaylord Rockies joint venture was holding two issuances of governmental bonds with a carrying value of $11.3 million and $11.2 million at March 31, 2019 and December 31, 2018, respectively. The debt service and principal payments on such bonds were payable from tax increments and special hotel rental taxes generated from the surrounding development through the maturity dates of December 1, 2030 and December 1, 2040, respectively. At March 31, 2019, the joint venture had not yet begun receiving the debt service and principal payments on these bonds. In April 2019, these bonds were redeemed by the issuer, and the joint venture received the outstanding principal and interest, which should result in no impact to the Company’s condensed consolidated statement of operations for the Company’s second quarter ending June 30, 2019.

7. DEBT:

The Company’s debt and capital lease obligations at March 31, 2019 and December 31, 2018 consisted of (in thousands):

 

 

 

 

 

 

 

 

 

March 31, 

 

December 31, 

 

    

2019

    

2018

$700M Revolving Credit Facility, interest at LIBOR plus 1.55%, maturing May 23, 2021, less unamortized deferred financing costs of $5,899 and $6,542

 

$

529,101

 

$

518,458

$200M Term Loan A, interest at LIBOR plus 1.50%, maturing May 23, 2022, less unamortized deferred financing costs of $1,134 and $1,220

 

 

198,866

 

 

198,780

$500M Term Loan B, interest at LIBOR plus 2.00%, maturing May 11, 2024, less unamortized deferred financing costs of $5,087 and $5,307

 

 

486,163

 

 

485,943

$350M Senior Notes, interest at 5.0%, maturing April 15, 2021, less unamortized deferred financing costs of $2,134 and $2,385

 

 

347,866

 

 

347,615

$400M Senior Notes, interest at 5.0%, maturing April 15, 2023, less unamortized deferred financing costs of $3,879 and $4,097

 

 

396,121

 

 

395,903

$500M Construction Loan (Gaylord Rockies joint venture), interest at LIBOR plus 3.25%, maturing December 18, 2019, less unamortized deferred financing costs of $1,355 and $1,807

 

 

485,626

 

 

457,090

$39M Mezzanine Loan (Gaylord Rockies joint venture), interest at LIBOR plus 7.00%, maturing December 18, 2019, less unamortized deferred financing costs of $170 and $227

 

 

38,358

 

 

37,488

Finance lease obligations

 

 

1,401

 

 

618

Other

 

 

1,677

 

 

 —

Total debt

 

$

2,485,179

 

$

2,441,895

 

Amounts due within one year consist of amounts outstanding under the $500 million construction loan and the $39 million mezzanine loan for the Gaylord Rockies joint venture, as well as the amortization payments for the $500 million term loan B of 1.0% of the original principal balance, as described in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2018.

At March 31, 2019, the Company was in compliance with all of its covenants related to its outstanding debt.

11


 

8. DEFERRED MANAGEMENT RIGHTS PROCEEDS:

On October 1, 2012, the Company consummated its agreement to sell the Gaylord Hotels brand and rights to manage the Gaylord Hotels properties (the “Management Rights”) to Marriott for $210.0 million in cash. Effective October 1, 2012, Marriott assumed responsibility for managing the day-to-day operations of the Gaylord Hotels properties pursuant to a management agreement for each Gaylord Hotel property. The Company allocated $190.0 million of the purchase price to the Management Rights, based on the Company’s estimates of the fair values for the respective components. For financial accounting purposes, the amount related to the Management Rights was deferred and is amortized on a straight line basis over the 65‑year term of the hotel management agreements, including extensions, as a reduction in management fee expense.

9. LEASES:

The Company is a lessee of a 65.3 acre site in Osceola County, Florida on which Gaylord Palms is located, building or land leases for Ole Red Gatlinburg, Ole Red Orlando and Ole Red Tishomingo, various warehouse, and general office and other equipment leases. The Gaylord Palms land lease has a term through 2074, which may be extended through January 2101, at the Company’s discretion. The leases for Ole Red locations range from three to ten years, with renewal options ranging from one to forty years, at the Company’s discretion. Extension options are not included in the Company’s calculation of its right-of-use assets and lease liabilities.

The terms of the Gaylord Palms lease include variable lease payments based upon net revenues at Gaylord Palms and certain other of the Company’s leases include rental payments adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As the discount rate implicit in the Company’s operating leases is not readily determinable, the Company applied judgments related to the determination of the discount rates used to calculate the lease liability as required by Accounting Standards Codification Topic 842, “ Leases ”. The Company calculated its incremental borrowing rate by utilizing judgments and estimates regarding the Company’s secured borrowing rates, market credit rating, comparable bond yield curve, and adjustments to market yield curves to determine a securitized rate.

The Company’s lease costs for the three months ended March 31, 2019 are as follows (in thousands):

 

 

 

 

Operating lease cost

 

$

3,346

Finance lease cost:

 

 

 

Amortization of right-of-use assets

 

 

41

Interest on lease liabilities

 

 

17

Net lease cost

 

$

3,404

Lease expense for operating leases for the three months ended March 31, 2018 was $3.2 million.

Future minimum lease payments under non-cancelable leases at March 31, 2019 are as follows (in thousands):

 

 

 

 

 

 

 

 

    

Operating

    

Finance

 

 

Leases 

 

Leases 

Year 1

 

$

5,738

 

$

244

Year 2

 

 

5,947

 

 

244

Year 3

 

 

5,735

 

 

235

Year 4

 

 

5,867

 

 

218

Year 5

 

 

5,641

 

 

161

Years thereafter

 

 

578,442

 

 

635

Total future minimum lease payments

 

 

607,370

 

 

1,737

Less amount representing interest

 

 

(503,105)

 

 

(336)

Total present value of minimum payments

 

$

104,265

 

$

1,401

12


 

The remaining lease term and discount rate for the Company’s leases are as follows:

 

 

 

Weighted-average remaining lease term (years):

 

 

Operating leases

51.6

years

Finance leases

10.7

years

Weighted-average discount rate:

 

 

Operating leases

6.8

%

Finance leases

4.0

%

 

10. STOCK PLANS:

During the three months ended March 31, 2019, the Company granted 0.1 million restricted stock units with a weighted-average grant date fair value of $91.05 per unit. There were 0.3 million and 0.4 million restricted stock units outstanding at March 31, 2019 and December 31, 2018, respectively.

The compensation expense that has been charged against pre-tax income for all of the Company’s stock-based compensation plans was $2.0 million and $1.9 million for the three months ended March 31, 2019 and 2018 , respectively .

11. PENSION AND POSTRETIREMENT BENEFITS OTHER THAN PENSION PLANS:

Net periodic pension (income) expense reflected in other gains and (losses), net in the accompanying condensed consolidated statements of operations included the following components for the respective periods (in thousands):

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31, 

 

 

    

2019

    

2018

    

Interest cost

 

$

878

 

$

811

 

Expected return on plan assets

 

 

(944)

 

 

(1,102)

 

Amortization of net actuarial loss

 

 

287

 

 

255

 

Total net periodic pension (income) expense

 

$

221

 

$

(36)

 

 

Net postretirement benefit income reflected in other gains and (losses), net in the accompanying condensed consolidated statements of operations included the following components for the respective periods (in thousands):

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31, 

 

 

    

2019

    

2018

    

Interest cost

 

$

25

 

$

24

 

Amortization of net actuarial loss

 

 

61

 

 

64

 

Amortization of prior service credit

 

 

(328)

 

 

(328)

 

Total net postretirement benefit income

 

$

(242)

 

$

(240)

 

 

 

12. INCOME TAXES:

The Company has elected to be taxed as a REIT effective January 1, 2013, pursuant to the U.S. Internal Revenue Code of 1986, as amended. As a REIT, generally the Company will not be subject to federal corporate income taxes on ordinary taxable income and capital gains income from real estate investments that it distributes to its stockholders. The Company will continue to be required to pay federal and state corporate income taxes on earnings of its taxable REIT subsidiaries.

The Company recorded an income tax provision of $2.0 million and $2.2 million for the three months ended March 31, 2019 and 2018, respectively. These results differ from the statutory rate primarily due to the REIT dividends paid deduction.

13


 

At March 31, 2019 and December 31, 2018, the Company had no unrecognized tax benefits.

13. COMMITMENTS AND CONTINGENCIES:

Pursuant to the Gaylord Rockies joint venture agreements, certain affiliates of Ares have a put right to require the Company to purchase their joint venture interests at a defined appraised value during an annual window period, or under certain other circumstances, in consideration of cash or OP Units of the Operating Partnership. Such OP Units have economic terms that are substantially similar to shares of the Company’s common stock. Any OP Units issued by the Operating Partnership to the Ares affiliates will be redeemable at the option of the holders thereof for cash or shares of the Company’s common stock on a one-for-one basis, subject to certain adjustments.

Affiliates of RIDA Development Corporation (“RIDA”) also have a put right at a defined appraised value for cash, which will become exercisable at the earlier of December 31, 2023 or the date on which a certain change of control of RIDA occurs.

In connection with its investment in the Gaylord Rockies joint venture, the Company has provided a completion guarantee under each of the construction loan and mezzanine loan capped at its pro rata share of all costs necessary to complete the project within the time specified in the Gaylord Rockies joint venture’s loan documents. As of March 31, 2019, the Company had not recorded any liability in the condensed consolidated balance sheet associated with these guarantees.

The Company has entered into employment agreements with certain officers, which provide for severance payments upon certain events, including certain terminations in connection with a change of control.

The Company, in the ordinary course of business, is involved in certain legal actions and claims on a variety of matters. It is the opinion of management that such contingencies will not have a material effect on the financial statements of the Company.

14. STOCKHOLDERS’ EQUITY:

On February 26, 2019, the Company’s board of directors declared the Company’s first quarter 2019 cash dividend in the amount of $0.90 per share of common stock, or an aggregate of approximately $46.3 million in cash, which was paid on April 15, 2019 to stockholders of record as of the close of business on March 29, 2019.

15. FAIR VALUE MEASUREMENTS:

The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

At March 31, 2019 and December 31, 2018, the Company held certain assets that are required to be measured at fair value on a recurring basis. These included investments held in conjunction with the Company’s non-qualified contributory deferred compensation plan. These investments consist of mutual funds traded in an active market. The Company determined the fair value of these mutual funds based on the net asset value per unit of the funds or the portfolio, which is based upon quoted market prices in an active market. Therefore, the Company has categorized these investments as Level 1.

The Company has consistently applied the above valuation techniques in all periods presented and believes it has obtained the most accurate information available for each type of instrument.

14


 

The Company had no liabilities required to be measured at fair value at March 31, 2019 and December 31, 2018. The Company’s assets measured at fair value on a recurring basis at March 31, 2019 and December 31, 2018, were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Markets for

    

Observable

    

Unobservable

 

 

March 31, 

 

Identical Assets

 

Inputs

 

Inputs

 

 

2019

 

(Level 1)

 

(Level 2)

 

(Level 3)

Deferred compensation plan investments

 

$

26,520

 

$

26,520

 

$

 —

 

$

 —

Total assets measured at fair value

 

$

26,520

 

$

26,520

 

$

 —

 

$

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Markets for

    

Observable

    

Unobservable

 

 

December 31, 

 

<