DENVER - Red Lion Hotels Corporation (the 'Company') (NYSE: RLH), a hospitality company doing business as RLH Corporation which franchises midscale and economy hotels, today reported fourth quarter and year-end 2019 results.
Fourth Quarter Highlights
Net loss attributable to RLH Corporation for the fourth quarter of 2019 was $(8.1) million or $(0.32) per share compared to $(7.4) million or $(0.30) per share in the prior year period. In the fourth quarter of 2019, the Company recorded an $8.7 million impairment charge related to its Americas Best Value Inn and Knights Inn brand names, which was partially offset by a $7.1 million gain on the sale of two joint venture hotels. In 2018, the Company recorded a $3.5 million impairment charge related to its Guesthouse brand name.
Adjusted EBITDA for the quarter was $1.0 million, compared to $2.3 million for the prior year period.
In the core franchised hotel segment, fourth quarter revenues grew 2.6% year-over-year to $15.3 million; Adjusted Core EBITDA was $1.6 million, compared to $1.4 million in the prior year period.
Completed the sale of two joint venture owned hotels, Red Lion Hotel Atlanta Airport and Hotel RL Salt Lake City receiving approximately $16.7 million in net proceeds, after closing costs, property level debt repayments, and distributions to joint venture partners.
Full Year Highlights
Net loss attributable to RLH Corporation was $(19.0) million or $(0.76) per share compared to net income of $1.3 million or $0.05 per diluted share in 2018. In 2019, the Company recorded a $14.1 million impairment charge related to its Washington DC hotel, and Americas Best Value Inn and Knights Inn brand names, which was partially offset by a $7.1 million gain on the sale, primarily from two joint venture owned hotels. In 2018, the Company recorded a $10.6 million impairment charge, and $42.0 million in gains on asset sales, primarily from owned hotels.
Adjusted EBITDA for 2019 was $11.6 million, compared to $15.8 million for the prior year period.
In the core franchise segment, revenues grew 10% year-over-year to $59.2 million. Adjusted Core EBITDA for 2019 was $4.2 million versus $0.6 million in 2018.
For the year, the Company executed 169 franchise agreements comprised of 27 midscale hotels and 142 economy hotels, compared to 167 contracts signed in the prior year. Of the 169 contracts signed this year, 43 are for new locations, compared to 61 new locations in the prior year.
'We have focused our efforts on our core franchise business, relationship building, owner satisfaction, and lodging development are our key objectives right now,' said RLH Corporation Interim CEO John Russell. 'Engagement with our existing franchisees is improving as we prioritize return on investment enhancing initiatives for our owners. We have a restructured and refocused franchise development group, which we believe will reinvigorate sales over time. In the near term, we anticipate terminations will likely remain elevated from average industry levels. We believe these rates will show improvement as the year progresses due to our efforts in owner satisfaction. Additionally, we are aligning the cost structure of the business to RLH's current size, revenue and profitability.'
'On behalf of the RLH Corporation Board of Directors, we are committed to improving shareholder value by supporting the initiatives the RLHC management team is pursuing for franchise system stability and other opportunities that may become available,' said Carter Pate, Chairman of the Board of Directors. 'The Board also is continuing the permanent CEO search with a strong due diligence process and active candidates.'
Fourth Quarter 2019 Financial Results
The Company reported a net loss attributable to RLH Corporation of $(8.1) million or $(0.32) per share in the fourth quarter compared to $(7.4) million or $(0.30) per share in the prior year period. The year-over-year change was primarily related to gains from the sale of Company operated hotels in the prior year and a decrease in royalty revenue, partially offset by higher other franchise revenue and a decrease in SG&A costs. The Company recorded an $8.7 million impairment charge on intangible assets related to its Americas Best Value Inn and Knights Inn brands, which was partially offset by $7.1 million in gains on asset sales, primarily from two joint venture owned hotels.
Adjusted EBITDA for the fourth quarter was $1.0 million compared to $2.3 million for the fourth quarter of 2018. The change reflects lower contribution from the sale of the owned hotels in the prior year as well as lower royalty revenues due to the impact of franchise terminations.
Royalty fees decreased 20% to $4.6 million primarily due to terminated agreements in economy hotels. Other franchise fees increased 137% to $2.0 million, primarily due to liquidated damages from terminated agreements.
Selling, general, administrative and other expenses, which include franchise sales, operations and corporate costs and bad debt expense, decreased 9% to $7.0 million. The decrease was primarily driven by a $1.6 million decrease in stock compensation related to recent organizational restructuring and a $1.2 million decrease in labor costs, partially offset by a $1.2 million increase in bad debt expense and $1.1 million related to employee separation costs.
Core Franchise Operations: See details at:
http://ir.redlion.com/news-releases/news-release-details/rlh-corporation-reports-fourth-quarter-and-year-end-2019-results
RED LION HOTELS CORPORATION 
