RYMAN HOSPITALITY PROPERTIES, INC. Ryman Hospitality Properties, Inc. ("Ryman") is aDelaware corporation that conducts its operations so as to maintain its qualification as a real estate investment trust ("REIT") for federal income tax purposes. The Company conducts its business through an umbrella partnership REIT, in which all of its assets are held by, and operations are conducted through,RHP Hotel Properties, LP , a subsidiary operating partnership (the "Operating Partnership").RHP Finance Corporation , aDelaware corporation ("Finco"), was formed as a wholly-owned subsidiary of theOperating Partnership for the sole purpose of being a co-issuer of debt securities with theOperating Partnership . Neither Ryman nor Finco has any material assets, other than Ryman's investment in theOperating Partnership and theOperating Partnership's owned subsidiaries. Neither theOperating Partnership nor Finco has any business, operations, financial results or other material information, other than the business, operations, financial results and other material information described in this Quarterly Report on Form 10-Q and Ryman's other reports, documents or other information filed with theSecurities and Exchange Commission (the "SEC") pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In this report, we use the terms the "Company," "we" or "our" to refer toRyman Hospitality Properties, Inc. and its subsidiaries unless the context indicates otherwise. The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this report and our audited consolidated financial statements and related notes for the year endedDecember 31, 2021 , included in our Annual Report on Form 10-K that was filed with theSEC onFebruary 25, 2022 .
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains "forward-looking statements"
intended to qualify for the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements concern our goals, beliefs, expectations, strategies, objectives,
plans, future operating results and underlying assumptions, and other statements
that are not necessarily based on historical facts. Without limitation, you can
identify these statements by the fact that they do not relate strictly to
historical or current facts, and these statements may contain words such as
"may," "will," "could," "should," "might," "projects," "expects," "believes,"
"anticipates," "intends," "plans," "continue," "estimate," or "pursue," or the
negative or other variations thereof or comparable terms. In particular, they
include statements relating to, among other things, future actions, strategies,
future performance, the outcome of contingencies such as legal proceedings and
future financial results. These also include statements regarding (i) the
expected recovery of travel, transient and group demand from periods affected by
the COVID-19 pandemic, and the expected effects of COVID-19 on our results of
operations and liquidity; (ii) the effect of our election to be taxed as a REIT
and maintain REIT status for federal income tax purposes; (iii) the holding of
our non-qualifying REIT assets in one or more taxable REIT subsidiaries
("TRSs"); (iv) our dividend policy, including the frequency and amount of any
dividend we may pay; (v) our strategic goals and potential growth opportunities,
including future expansion of the geographic diversity of our existing asset
portfolio through acquisitions and investment in joint ventures; (vi) Marriott
International, Inc.'s ("Marriott") ability to effectively manage our hotels and
other properties; (vii) our anticipated capital expenditures and investments;
(viii) the potential operating and financial restrictions imposed on our
activities under existing and future financing agreements including our credit
facility and other contractual arrangements with third parties, including
management agreements with Marriott; (ix) our ability to borrow available funds
under our credit facility; (x) our expectations about successfully amending the
agreements governing our indebtedness should the need arise; (xi) the effects of
inflation and increased costs on our business and on our customers, including
group business at our hotels; and (xii) any other business or operational
matters. We have based these forward-looking statements on our current
expectations and projections about future events.
We caution the reader that forward-looking statements involve risks and
uncertainties that cannot be predicted or quantified, and, consequently, actual
results may differ materially from those expressed or implied by such
forward-looking statements. Important factors that could cause actual results to
differ materially from those in the forward-looking statements include, among
other things, risks and uncertainties associated with the effects of the
COVID-19 pandemic on us and the hospitality and entertainment industries
generally, the effects of the COVID-19 pandemic on the demand for travel,
transient and group business (including government-imposed restrictions or
guidelines), levels of consumer confidence in the safety of travel and group
gatherings as a result of COVID-19, the pace of recovery
24
Table of Contents
following the COVID-19 pandemic, economic conditions affecting the hospitality
business generally, the geographic concentration of our hotel properties,
business levels at our hotels, the effects of inflation on our business,
including the effects on costs of labor and supplies and effects on group
customers at our hotels and customers in our OEG businesses, our ability to
remain qualified as a REIT, our ability to execute our strategic goals as a
REIT, our ability to generate cash flows to support dividends, future board
determinations regarding the timing and amount of dividends and changes to the
dividend policy, our ability to borrow funds pursuant to our credit agreements
and to refinance indebtedness and/or to successfully amend the agreements
governing our indebtedness in the future, changes in interest rates, including
future changes from the London Inter-Bank Offered Rate ("LIBOR") to a different
base rate, and those factors described elsewhere in this Quarterly Report on
Form 10-Q, including in Item 1A, "Risk Factors," and our Annual Report on
Form 10-K for the year ended December 31, 2021 or described from time to time in
our other reports filed with the SEC .
Any forward-looking statement made in this Quarterly Report on Form 10-Q speaks
only as of the date on which the statement is made. New risks and uncertainties
arise from time to time, and it is impossible for us to predict these events or
how they may affect us. We have no duty to, and do not intend to, update or
revise the forward-looking statements we make in this Quarterly Report on
Form 10-Q, except as may be required by law.
Overview
We operate as a REIT for federal income tax purposes, specializing in group-oriented, destination hotel assets in urban and resort markets. Our core holdings include a network of five upscale, meetings-focused resorts totaling 9,917 rooms that are managed by Marriott under the Gaylord Hotels brand. These five resorts, which we refer to as ourGaylord Hotels properties, consist of theGaylord Opryland Resort & Convention Center inNashville, Tennessee ("Gaylord Opryland"), theGaylord Palms Resort & Convention Center nearOrlando, Florida ("Gaylord Palms"), theGaylord Texan Resort & Convention Center nearDallas, Texas ("Gaylord Texan"), theGaylord National Resort & Convention Center nearWashington D.C. ("Gaylord National"), and theGaylord Rockies Resort & Convention Center ("Gaylord Rockies"), which was previously owned by a joint venture (the "Gaylord Rockies joint venture"), in which we owned a 65% interest. OnMay 7, 2021 , we purchased the remaining 35% interest in the Gaylord Rockies joint venture. Our other owned hotel assets managed by Marriott include theInn at Opryland , an overflow hotel adjacent to Gaylord Opryland, and theAC Hotel atNational Harbor ,Washington D.C. ("AC Hotel "), an overflow hotel adjacent to Gaylord National. We also own and operate media and entertainment assets including theGrand Ole Opry , the legendary weekly showcase of country music's finest performers for 96 years; theRyman Auditorium , the storied live music venue and former home of theGrand Ole Opry located in downtownNashville ;WSM-AM , the Opry's radio home;Ole Red , a brand ofBlake Shelton -themed bar, music venue and event spaces; twoNashville -based assets managed by Marriott - theWildhorse Saloon and the General Jackson Showboat; and as ofMay 31, 2022 , Block 21, a mixed-use entertainment, lodging, office, and retail complex located inAustin, Texas ("Block 21"). We also own a 50% interest in a joint venture that creates and distributes a linear multicast and over-the-top channel dedicated to the country music lifestyle ("Circle"). See "OEG Transaction" below for additional disclosure regarding our sale of a 30% interest in the business effectiveJune 16, 2022 . Each of our award-winningGaylord Hotels properties incorporates not only high quality lodging, but also at least 400,000 square feet of meeting, convention and exhibition space, superb food and beverage options and retail and spa facilities within a single self-contained property. As a result, ourGaylord Hotels properties provide a convenient and entertaining environment for convention guests. OurGaylord Hotels properties focus on the large group meetings market inthe United States . See "Cautionary Note Regarding Forward-Looking Statements" in this Item 2 and Item 1A, "Risk Factors," in Part II of this Quarterly Report on Form 10-Q and Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year endedDecember 31, 2021 for important information regarding forward-looking statements made in this report and risks and uncertainties we face.
Ongoing Recovery from the COVID-19 Pandemic; Current Economic Environment
The COVID-19 pandemic has been and continues to be a complex and evolving situation, causing unprecedented levels of disruption to our business. Our assets are currently open and operating without capacity restrictions and business
25
Table of Contents
levels continue to recover, though there remains significant uncertainty
surrounding the full extent of the impact of the COVID-19 pandemic on our future
results of operations and financial position, as increased labor costs and broad
inflationary pressures continue to impact the economy.
The majority of our businesses have been open and operating throughout 2021 and
2022. However, Gaylord National remained closed during the first half of 2021
and reopened July 1, 2021 . The Grand Ole Opry and Ryman Auditorium reopened for
full-capacity publicly attended performances in May 2021 . In addition,
subsequent to the December 2020 downtown Nashville bombing, the Wildhorse saloon
reopened in April 2021 .
Cancelled room nights in the nine months ended September 30, 2022 decreased
50.7% from the nine months ended September 30, 2021 . Occupancy and average daily
rate ("ADR") increased 29.0 points of occupancy and 10.6%, respectively, in the
nine months ended September 30, 2022 as compared to the same period in 2021.
Outside-the-room spend in the nine months ended September 30, 2022 increased
144.5% compared to the same period in 2021. This improved performance has
mitigated increasing costs in the current inflationary environment.
Group stays have steadily increased in 2021 and 2022 and group nights on the
books at September 30, 2022 for the next five years is approximately 96% of
total group room nights that were on the books at September 30, 2019 for the
corresponding following five years. In addition, the ADR of group room nights on
the books at September 30, 2022 is almost 9% higher than the ADR of the
corresponding group room nights at September 30, 2019 .
Throughout the COVID-19 pandemic, we have continued to pay all required debt
service payments on our indebtedness, lease payments, taxes and other payables.
At September 30, 2022 , we had $754.6 million available for borrowing under our
revolving credit facility and the OEG revolving credit facility and $224.7
million in unrestricted cash on hand. We reinstated our cash dividend in
September 2022 . Our interim dividend policy provides that we will make minimum
dividends of 100% of REIT taxable income annually, subject to our board of
directors' future determinations as to the amount of any distributions and the
timing thereof.
For additional discussion of the impact of the COVID-19 pandemic on our
business, see "Risk Factors" under Part I, Item 1A of our Annual Report on Form
10-K for the year ended
OEG Transaction
As more fully described in Note 2, "OEG Transaction," to the condensed consolidated financial statements included herein, onJune 16, 2022 , we and certain of our subsidiaries, includingOEG Attractions Holdings, LLC , which directly or indirectly owns the assets that comprise our Entertainment Segment ("OEG"), consummated the transactions contemplated by an investment agreement (the "Investment Agreement") withAtairos Group, Inc. ("Atairos") andA-OEG Holdings, LLC , an affiliate of Atairos (the "OEG Investor"), pursuant to which OEG issued and sold to the OEG Investor, and the OEG Investor acquired, 30% of the equity interests of OEG for approximately$296.0 million (the "OEG Transaction"). The purchase price for the OEG Transaction may be increased by$30.0 million if OEG achieves certain financial objectives in 2023 or 2024. We retained a controlling 70% equity interest in OEG and will continue to consolidate OEG and the other subsidiaries comprising our Entertainment segment in our consolidated financial statements. After the payment of transaction expenses, we used substantially all of the net proceeds from the OEG Transaction, together with the net proceeds we received from the OEG Term Loan (as defined below), to repay the outstanding balance of our existing$300 million term loan A and to pay down substantially all borrowings outstanding under our revolving credit facility. In connection with the OEG Transaction,OEG Borrower, LLC ("OEG Borrower") andOEG Finance, LLC ("OEG Finance"), each a wholly owned direct or indirect subsidiary of OEG, entered into a credit agreement (the "OEG Credit Agreement") withJPMorgan Chase Bank, N.A ., as administrative agent, that provides for (i) a senior secured term loan facility in an aggregate principal amount of$300.0 million (the "OEG Term Loan") and (ii) a senior secured revolving credit facility in an aggregate principal amount not to exceed$65.0 million (the "OEG Revolver"). The OEG Term Loan matures onJune 16, 2029 and the OEG Revolver matures onJune 16, 2027 . The OEG Term Loan bears interest at a rate equal to either, at OEG Borrower's election, (i) the Alternate Base Rate plus 4.00% or (b) Adjusted Term SOFR plus 5.00% (all as specifically more described in the OEG Credit Agreement). The OEG Revolver bears interest at a rate 26
Table of Contents
equal to either, at OEG Borrower's election, (i) the Alternate Base Rate plus 3.75% or (b) Adjusted Term SOFR plus 4.75%, which shall be subject to reduction in the applicable margin based upon OEG's First Lien Leverage Ratio (all as specifically more described in the OEG Credit Agreement). The OEG Term Loan and OEG Revolver are each secured by substantially all of the assets of OEG Finance and each of its subsidiaries (other than Block 21 and Circle, as more specifically described in the OEG Credit Agreement). No revolving credit advances were made under the OEG Revolver at closing.
Block 21 Acquisition
OnMay 31, 2022 , we purchased Block 21 for a stated purchase price of$260 million , as subsequently adjusted to$255 million pursuant to the terms of the purchase agreement, which includes the assumption of approximately$136 million of existing mortgage debt. Block 21 is the home of theAustin City Limits Live atThe Moody Theater ("ACL Live"), a 2,750-seat entertainment venue that serves as the filming location for theAustin City Limits television series. The Block 21 complex also includes the 251-roomW Austin Hotel , the 3TEN at ACL Live club and approximately 53,000 square feet of other Class A commercial space. We funded the cash portion of the purchase price with cash on hand and borrowings under our revolving credit facility. Block 21 assets are reflected in our Entertainment segment as ofMay 31, 2022 .
Gaylord Rockies Joint Venture
InMay 2021 , we purchased the remaining 35% ownership interest in the Gaylord Rockies joint venture. Prior toMay 2021 , we had a 65% ownership interest in the Gaylord Rockies joint venture, and our management concluded that the Company was the primary beneficiary of this previous variable interest entity ("VIE"). The financial position and results of operations of this previous VIE have been consolidated in the accompanying condensed consolidated financial statements included herein. We also purchased 130 acres of undeveloped land adjacent to Gaylord Rockies inMay 2021 .
Gaylord Palms Expansion
InApril 2021 , we completed a$158 million expansion ofGaylord Palms , which includes an additional 302 guest rooms and 96,000 square feet of meeting space, an expanded resort pool and events lawn, and a new multi-level parking structure.
Circle
In 2019, we acquired a 50% equity interest in Circle, and we have made$31.0 million in capital contributions throughSeptember 30, 2022 . We intend to contribute up to an additional$2.0 million in the remainder of 2022 for working capital needs. Circle launched its broadcast network onJanuary 1, 2020 , with sixteen original shows and two major distribution partnerships. As ofOctober 2022 , Circle is available to more than 70% ofU.S. television households via over-the-air and cable television and is available through multiple online streaming services covering over 193 million monthly average users.
Our Long-Term Strategic Plan
Our goal is to be the nation's premier hospitality REIT for group-oriented meeting hotel assets in urban and resort markets.
Existing Hotel Property Design. OurGaylord Hotels properties focus on the large group meetings market inthe United States and incorporate meeting and exhibition space, signature guest rooms, food and beverage offerings, fitness and spa facilities and other attractions within a large hotel property so attendees' needs are met in one location. This strategy creates a better experience for both meeting planners and guests and has led to our currentGaylord Hotels properties claiming a place among the leading convention hotels in the country. Expansion ofHotel Asset Portfolio . Part of our long-term growth strategy includes acquisitions or developments of other hotels, particularly in the group meetings sector of the hospitality industry, either alone or through joint ventures or alliances with one or more third parties. We will consider attractive investment opportunities which meet our acquisition parameters, specifically, group-oriented large hotels and overflow hotels with existing or potential leisure appeal. We are 27
Table of Contents
generally interested in highly accessible upper-upscale or luxury assets with over 400 hotel rooms in urban and resort group destination markets. We also consider assets that possess significant meeting space or present a repositioning opportunity and/or would significantly benefit from capital investment in additional rooms or meeting space. We plan to expand the geographic diversity of our existing asset portfolio through acquisitions.
Continued Investment in OurExisting Properties . We continuously evaluate and invest in our current portfolio, and consider enhancements or expansions as part of our long-term strategic plan. In 2021, we completed our$158 million expansion ofGaylord Palms and we also completed our renovation of all of the guestrooms at Gaylord National. In 2022, we completed a re-concepting of the food and beverage options at Gaylord National and have begun enhancements at Gaylord Rockies to better position the property for our group customers. Leverage Brand Name Awareness. We believe theGrand Ole Opry is one of the most recognized entertainment brands inthe United States . We promote theGrand Ole Opry name through various media, including ourWSM-AM radio station, the Internet and television, and through performances by theGrand Ole Opry's members, many of whom are renowned country music artists. As such, we have alliances in place with multiple distribution partners in an effort to foster brand extension. We believe that licensing our brand for products may provide an opportunity to increase revenues and cash flow with relatively little capital investment. We are continuously exploring additional products, such as television specials and retail products, through which we can capitalize on our brand affinity and awareness. To this end, we have invested in sixOle Red locations, as well as Circle, and purchased Block 21. Further, we recently completed the OEG Transaction, which we believe will expand the distribution of our OEG brands. Short-Term Capital Allocation. Our short-term capital allocation strategy is focused on returning capital to stockholders through the payment of dividends, in addition to investing in our assets and operations. Due to the COVID-19 pandemic, we previously suspended our regular quarterly dividend payments. We reinstated our cash dividend inSeptember 2022 , and our interim dividend policy provides that we will make minimum dividends of 100% of REIT taxable income annually, subject to the board of directors' future determinations as to the amount of any distributions and the timing thereof.
Our Operations
Our ongoing operations are organized into three principal business segments:
? Hospitality, consisting of our
and the
Entertainment, consisting of the
?
? Corporate and Other, consisting of our corporate expenses.
For the three months and nine months ended
Three Months Ended Nine Months Ended
September 30, September 30,
Segment 2022 2021 2022 2021
Hospitality 84 % 84 % 85 % 82 %
Entertainment 16 % 16 % 15 % 18 %
Corporate and Other 0 % 0 % 0 % 0 %
Key Performance Indicators
The operating results of our Hospitality segment are highly dependent on the
volume of customers at our hotels and the quality of the customer mix at our
hotels, which are managed by Marriott. These factors impact the price that
Marriott can charge for our hotel rooms and other amenities, such as food and
beverage and meeting space. The following key
28
Table of Contents
performance indicators are commonly used in the hospitality industry and are used by management to evaluate hotel performance and allocate capital expenditures:
? hotel occupancy - a volume indicator calculated by dividing total rooms sold by
total rooms available;
? average daily rate ("ADR") - a price indicator calculated by dividing room
revenue by the number of rooms sold;
revenue per available room ("RevPAR") - a summary measure of hotel results
? calculated by dividing room revenue by room nights available to guests for the
period;
total revenue per available room ("Total RevPAR") - a summary measure of hotel
? results calculated by dividing the sum of room, food and beverage and other
ancillary service revenue by room nights available to guests for the period;
and
net definite group room nights booked - a volume indicator which represents the
? total number of definite group bookings for future room nights at our hotels
confirmed during the applicable period, net of cancellations.
For the three months and nine months endedSeptember 30, 2022 and 2021, the method of calculation of these indicators has not been changed as a result of the COVID-19 pandemic and the Gaylord National closure and is consistent with historical periods. As such, performance metrics include closed hotel room nights available. We also use certain "non-GAAP financial measures," which are measures of our historical performance that are not calculated and presented in accordance with GAAP, within the meaning of applicableSEC rules. These measures include:
Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization
? for Real Estate ("EBITDAre"), Adjusted EBITDAre and Adjusted EBITDAre,
Excluding Noncontrolling Interest in Consolidated Joint Venture, and
? Funds From Operations ("FFO") available to common shareholders and unit holders
and Adjusted FFO available to common shareholders and unitholders.
See "Non-GAAP Financial Measures" below for further discussion.
The closure and pandemic-constrained business levels of ourGaylord Hotels properties have resulted in the significant decrease in performance reflected in these key performance indicators and non-GAAP financial measures for the three months and nine months endedSeptember 30, 2021 , as compared to the current period and historical periods prior to 2020. The results of operations of our Hospitality segment are affected by the number and type of group meetings and conventions scheduled to attend our hotels in a given period. A variety of factors can affect the results of any interim period, including the nature and quality of the group meetings and conventions attending our hotels during such period, which meetings and conventions (and applicable room rates) have often been contracted for several years in advance, the level of attrition our hotels experience, and the level of transient business at our hotels during such period. Increases in costs, including labor costs, costs of food and other supplies, and energy costs can negatively affect our results, particularly during an inflationary economic environment. We rely on Marriott, as the manager of our hotels, to manage these factors and to offset any identified shortfalls in occupancy. 29
Table of Contents
Selected Financial Information
The following table contains our unaudited selected summary financial data for the three months and nine months endedSeptember 30, 2022 and 2021. The table also shows the percentage relationships to total revenues and, in the case of segment operating income, its relationship to segment revenues (in thousands, except percentages). Unaudited Unaudited Three Months Ended September 30, Nine Months Ended September 30, 2022 % 2021 % 2022 % 2021 % REVENUES: Rooms$ 154,940 33.1 %$ 113,192 36.9 %$ 418,039 33.8 %$ 203,391 36.2 % Food and beverage 186,188 39.8 % 105,803 34.5 % 486,387 39.3 % 169,597 30.2 % Other hotel revenue 49,474 10.6 % 38,858 12.7 % 149,089 12.1 % 90,355 16.1 % Entertainment 77,153 16.5 % 49,053 16.0 % 183,579 14.8 % 98,599 17.5 % Total revenues 467,755 100.0 % 306,906 100.0 % 1,237,094 100.0 % 561,942 100.0 % OPERATING EXPENSES: Rooms 41,366 8.8 % 30,802 10.0 % 112,740 9.1 % 55,318 9.8 % Food and beverage 103,221 22.1 % 65,205 21.2 % 272,039 22.0 % 118,282 21.0 % Other hotel expenses 103,321 22.1 % 80,203
26.1 % 289,248 23.4 % 196,125 34.9 % Hotel management fees, net
11,276 2.4 % 4,907 1.6 % 27,542 2.2 % 7,809 1.4 %
Entertainment 54,148 11.6 % 33,467 10.9 % 131,549 10.6 % 77,797 13.8 %
Corporate 9,449 2.0 % 10,416 3.4 % 31,423 2.5 % 26,922 4.8 %
Preopening costs - - % 118 0.0 % 525 0.0 % 734 0.1 %Gain (loss) on sale of assets - - % - - % 469 0.0 % (317) (0.1) % Depreciation and amortization: Hospitality 42,517 9.1 % 52,020 16.9 % 146,804 11.9 % 151,655 27.0 % Entertainment 5,249 1.1 % 3,506 1.1 % 13,293 1.1 % 10,728 1.9 % Corporate and Other 203 0.0 % 567 0.2 % 615 0.0 % 1,698 0.3 % Total depreciation and amortization 47,969 10.3 % 56,093
18.3 % 160,712 13.0 % 164,081 29.2 % Total operating expenses
370,750 79.3 % 281,211 91.6 % 1,026,247 83.0 % 646,751 115.1 %
OPERATING INCOME (LOSS):
Hospitality 88,901 22.8 % 24,716 9.6 % 205,142 19.5 % (65,846) (14.2) %
Entertainment 17,756 23.0 % 12,080 24.6 % 38,737 21.1 % 10,074 10.2 %
Corporate and Other (9,652) (A) (10,983) (A) (32,038) (A) (28,620) (A)
Preopening costs - - % (118) (0.0) % (525) (0.0) % (734) (0.1) % Gain (loss) on sale of assets
- - % - - % (469) (0.0) % 317 0.1 %
Total operating income (loss) 97,005 20.7 % 25,695 8.4 % 210,847 17.0 % (84,809) (15.1) %
Interest expense (40,092) (A) (32,413) (A) (105,987) (A) (93,056) (A)
Interest income 1,378 (A) 1,433 (A) 4,138 (A) 4,254 (A)Loss on extinguishment of debt - (A) - (A) (1,547) (A) (2,949) (A) Loss from unconsolidated joint ventures (2,720) (A) (2,312) (A) (8,348) (A) (5,831) (A) Other gains and (losses), net 2,058 (A) 53
(A) 2,222 (A) 254 (A) Provision for income taxes (10,178) (A) (1,063) (A) (27,747) (A) (6,640) (A) Net income (loss) 47,451 (A) (8,607) (A) 73,578 (A) (188,777) (A) Net (income) loss attributable to noncontrolling interest in consolidated joint venture (1,887) (A) - (A) (2,167) (A) 16,501 (A) Net (income) loss attributable to noncontrolling interest in the Operating Partnership (323) (A) 61 (A) (507) (A) 1,290 (A) Net income (loss) available to common stockholders$ 45,241 (A)$ (8,546)
(A)
(A) These amounts have not been shown as a percentage of revenue because they
have no relationship to revenue.
30
Table of Contents
Summary Financial Results
Results of Operations
The following table summarizes our financial results for the three months and
nine months ended September 30, 2022 and 2021 (in thousands, except percentages
and per share data):
Three Months Ended Nine Months Ended
September 30, September 30,
% %
2022 2021 Change 2022 2021 Change
Total revenues $ 467,755 $ 306,906 52.4 % $ 1,237,094 $ 561,942 120.1 %
Total operating expenses 370,750 281,211 31.8 % 1,026,247 646,751 58.7 %
Operating income (loss) 97,005 25,695 277.5 % 210,847 (84,809) 348.6 %
Net income (loss) 47,451 (8,607) 651.3 % 73,578 (188,777) 139.0 %
Net income (loss) available
to common stockholders 45,241 (8,546) 629.4 % 70,904 (170,986) 141.5 %
Net income (loss) available
to common stockholders per
share - diluted 0.79 (0.16) 593.8 % 1.28 (3.11) 141.2 %
Total Revenues
The increase in our total revenues for the three months endedSeptember 30, 2022 , as compared to the same period in 2021, is attributable to increases in our Hospitality segment and Entertainment segment of$132.7 million and$28.1 million , respectively. The increase in our total revenues for the nine months endedSeptember 30, 2022 , as compared to the same period in 2021, is attributable to increases in our Hospitality segment and Entertainment segment of$590.2 million and$85.0 million , respectively.
Total Operating Expenses
The increase in our total operating expenses for the three months endedSeptember 30, 2022 , as compared to the same period in 2021, is primarily the result of increases in our Hospitality segment and Entertainment segment of$78.1 million and$20.7 million , respectively. The increase in our total operating expenses for the nine months endedSeptember 30, 2022 , as compared to the same period in 2021, is primarily the result of increases in our Hospitality segment and Entertainment segment of$324.0 million and$53.8 million , respectively.
Net Income (Loss)
Our net income of$47.5 million for the three months endedSeptember 30, 2022 , as compared to a net loss of$8.6 million for the same period in 2021, was primarily due to the changes in our revenues and operating expenses reflected above, and the following factors, each as described more fully below:
? A
? A
Our net income of$73.6 million for the nine months endedSeptember 30, 2022 , as compared to a net loss of$188.8 million for the same period in 2021, was primarily due to the changes in our revenues and operating expenses reflected above, and the following factors, each as described more fully below:
? A
? A
31
Table of Contents
Operating Results - Detailed Segment Financial Information
Hospitality Segment
Total Segment Results. Increased labor costs and broad inflationary pressures continue to impact the economy, our businesses and our customers. However, increased occupancy, increased ADR from both group and transient guests, and increased outside the room spending from group customers, partially resulting from the investments that we have made into our businesses throughout the COVID-19 pandemic, have mitigated the effects of increased costs in the current inflationary environment on our results of operations and our financial position. The following presents the financial results of our Hospitality segment for the three months and nine months endedSeptember 30, 2022 and 2021 (in thousands, except percentages and performance metrics): Three Months Ended Nine Months Ended September 30, September 30, % % 2022 2021 Change 2022 2021 Change Revenues: Rooms$ 154,940 $ 113,192 36.9 %$ 418,039 $ 203,391 105.5 % Food and beverage 186,188 105,803 76.0 % 486,387 169,597 186.8 % Other hotel revenue 49,474 38,858 27.3 % 149,089 90,355 65.0 % Total hospitality revenue 390,602 257,853 51.5 % 1,053,515 463,343 127.4 % Hospitality operating expenses: Rooms 41,366 30,802 34.3 % 112,740 55,318 103.8 % Food and beverage 103,221 65,205 58.3 % 272,039 118,282 130.0 % Other hotel expenses 103,321 80,203 28.8 % 289,248 196,125 47.5 % Management fees, net 11,276 4,907 129.8 % 27,542 7,809 252.7 %
Depreciation and amortization 42,517 52,020 (18.3) % 146,804 151,655 (3.2) % Total Hospitality operating expenses 301,701 233,137 29.4 % 848,373 529,189 60.3 % Hospitality operating income (loss) (1)$ 88,901 $ 24,716 259.7 %$ 205,142 $ (65,846) 411.5 % Hospitality performance metrics (2): Occupancy 71.5 % 54.5 % 17.0 pts 63.9 % 34.9 % 29.0 pts ADR$ 226.20 $ 216.79 4.3 %$ 230.07 $ 208.02 10.6 % RevPAR (3)$ 161.75 $ 118.17 36.9 %$ 147.07 $ 72.65 102.4 % Total RevPAR (4)$ 407.77 $ 269.19 51.5 %$ 370.63 $ 165.51 123.9 % Net Definite Group Room Nights Booked (5) 416,128 134,717 208.9 %
994,838 472,548 110.5 %
Hospitality segment operating loss does not include preopening costs of
million and
include gain on sale of assets of
(2) Hospitality segment metrics include the addition of 302 additional guest
rooms at Gaylord Palms beginning in
We calculate Hospitality RevPAR by dividing room revenue by room nights (3) available to guests for the period. Room nights available to guests include
nights the hotels are closed. Hospitality RevPAR is not comparable to
similarly titled measures such as revenues.
We calculate Hospitality Total RevPAR by dividing the sum of room, food and
beverage, and other ancillary services revenue (which equals Hospitality (4) segment revenue) by room nights available to guests for the period. Room
nights available to guests include nights the hotels are closed. Hospitality
Total RevPAR is not comparable to similarly titled measures such as revenues.
Net definite group room nights booked includes approximately 93,000 and
(5) 207,000 group room cancellations in the three months ended
and 2021, respectively, and 343,000 and 696,000 group room cancellations in
the nine months ended
Total Hospitality segment revenues in the three months and nine months endedSeptember 30, 2022 include$10.0 million and$45.0 million , respectively, in attrition and cancellation fee revenue, a decrease of$0.2 million and an 32
Table of Contents
increase of
The percentage of group versus transient business based on rooms sold for our Hospitality segment for the periods presented was approximately as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
Group 73 % 59 % 72 % 46 %
Transient 27 % 41 % 28 % 54 %
Other hotel expenses for the three months and nine months ended
Three Months Ended Nine Months Ended
September 30, September 30,
% %
2022 2021 Change 2022 2021 ChangeAdministrative employment costs$ 38,764 $ 29,991 29.3 % $
109,580$ 66,370 65.1 % Utilities 10,653 7,884 35.1 % 27,890 20,035 39.2 % Property taxes 8,377 8,817 (5.0) % 27,397 25,996 5.4 % Other 45,527 33,511 35.9 %
124,381 83,724 48.6 %
Total other hotel expenses
Administrative employment costs include salaries and benefits for hotel administrative functions, including, among others, senior management, accounting, human resources, sales, conference services, engineering and security. Administrative employment costs increased during the three months and nine months endedSeptember 30, 2022 , as compared to the same periods in 2021, primarily due to an increase at Gaylord National, which reopened onJuly 1, 2021 , as well as increases at each of our otherGaylord Hotels properties associated with increased business levels. Utility costs increased during the three months and nine months endedSeptember 30, 2022 , as compared to the same periods in 2021, primarily due to an increase at Gaylord National, which reopened onJuly 1, 2021 , as well as increases at our otherGaylord Hotels properties associated with increased usage. Property taxes decreased slightly during the three months and increased during the nine months endedSeptember 30, 2022 , as compared to the 2021 periods. The increase in the nine month period is primarily due to an increase at Gaylord Palms as a result of increased property taxes related to the 2021 expansion. Other expenses, which include supplies, advertising, maintenance costs and consulting costs, increased during the three months and nine months endedSeptember 30, 2022 , as compared to the same periods in 2021, primarily as a result of various increases at each of ourGaylord Hotels properties. Each of our management agreements with Marriott for ourGaylord Hotels properties, excluding Gaylord Rockies, requires us to pay Marriott a base management fee of approximately 2% of gross revenues from the applicable property for each fiscal year or portion thereof. Additionally, an incentive management fee is based on the profitability of ourGaylord Hotels properties, excluding Gaylord Rockies, calculated on a pooled basis. The Gaylord Rockies's management agreement with Marriott requires Gaylord Rockies to pay a base management fee of 3% of gross revenues for each fiscal year or portion thereof, as well as an incentive management fee based on the profitability of the hotel. In the three months endedSeptember 30, 2022 and 2021, we incurred$8.6 million and$5.7 million , respectively, and in the nine months endedSeptember 30, 2022 and 2021, we incurred$23.2 million and$10.1 million , respectively, related to base management fees for our Hospitality segment. In the three months endedSeptember 30, 2022 and 2021, we incurred$3.4 million and$0 , respectively, and in the nine months endedSeptember 30, 2022 and 2021, we incurred$6.6 million and$0 , respectively, related to incentive management fees for our Hospitality segment. Management fees are presented throughout this Quarterly Report on Form 10-Q net of the amortization of the deferred management rights proceeds discussed in Note 10, "Deferred Management Rights Proceeds," to the accompanying condensed consolidated financial statements included herein. 33
Table of Contents
Total Hospitality segment depreciation and amortization expense decreased in the three months and nine months endedSeptember 30, 2022 , as compared to the same period in 2021, primarily as a result of the intangible asset associated with advanced bookings at Gaylord Rockies when we purchased an additional interest in Gaylord Rockies in 2018 becoming fully amortized during 2022. This decrease was partially offset by the expansion ofGaylord Palms and the rooms renovation at Gaylord National and the associated increase in depreciable asset levels. Property-Level Results. The following presents the property-level financial results of our Hospitality segment for the three months and nine months endedSeptember 30, 2022 and 2021.The Gaylord Hotels properties experienced higher levels of attrition and cancellations and lower occupancy levels, which are directly related to the COVID-19 pandemic, in the three months and nine months endedSeptember 30, 2021 . Therefore, the property-level financial results for the three months and nine months endedSeptember 30, 2021 are not comparable to historical periods or the 2022 periods. Total revenue at each of ourGaylord Hotels properties was lower than that of historical periods for the three months and nine months endedSeptember 30, 2021 due to the COVID-19 pandemic. Operating costs at each of ourGaylord Hotels properties were lower for the three months and nine months endedSeptember 30, 2021 as a result of cost containment initiatives and lower variable costs due to lower occupancies due to the COVID-19 pandemic. Gaylord Opryland Results. The results of Gaylord Opryland for the three months and nine months endedSeptember 30, 2022 and 2021 are as follows (in thousands, except percentages and performance metrics): Three Months Ended Nine Months Ended September 30, September 30, % % 2022 2021 Change 2022 2021 Change Revenues: Rooms$ 45,960 $ 34,767 32.2 %$ 122,491 $ 67,573 81.3 % Food and beverage 42,245 27,742 52.3 % 111,753 45,648 144.8 % Other hotel revenue 18,614 12,974 43.5 % 51,591 29,023 77.8 % Total revenue 106,819 75,483 41.5 % 285,835 142,244 100.9 % Operating expenses: Rooms 10,996 8,649 27.1 % 30,699 16,845 82.2 % Food and beverage 23,229 14,777 57.2 % 61,814 29,372 110.5 % Other hotel expenses 30,608 22,785 34.3 % 81,782 57,642 41.9 % Management fees, net 3,824 1,251 205.7 % 8,806 2,093 320.7 % Depreciation and amortization 8,674 8,507 2.0 % 25,820 25,644 0.7 % Total operating expenses (1) 77,331 55,969 38.2 %
208,921 131,596 58.8 % Performance metrics: Occupancy 73.0 % 56.3 % 16.7 pts 65.7 % 38.4 % 27.3 pts ADR$ 236.83 $ 232.49 1.9 %$ 236.35 $ 223.24 5.9 % RevPAR$ 172.98 $ 130.85 32.2 %$ 155.36 $ 85.71 81.3 % Total RevPAR$ 402.04 $ 284.10 41.5 %$ 362.54 $ 180.42 100.9 %
(1) Gaylord Opryland operating expenses do not include a gain on sale of assets
of $0.3 million in the nine months ended September 30, 2021 .
34
Table of Contents
Gaylord Palms Results.
Three Months Ended Nine Months Ended
September 30, September 30,
% %
2022 2021 Change 2022 2021 Change
Revenues:
Rooms $ 21,982 $ 14,223 54.6 % $ 71,006 $ 34,812 104.0 %
Food and beverage 30,803 15,181 102.9 % 90,245 31,955 182.4 %
Other hotel revenue 7,731 5,072 52.4 % 27,402 15,528 76.5 %
Total revenue 60,516 34,476 75.5 % 188,653 82,295 129.2 %
Operating expenses:
Rooms 5,480 3,557 54.1 % 15,527 8,211 89.1 %
Food and beverage 17,607 9,977 76.5 % 48,469 21,660 123.8 %
Other hotel expenses 20,403 15,305 33.3 % 59,538 39,699 50.0 %
Management fees, net 1,889 546 246.0 % 4,788 1,230 289.3 %Depreciation and amortization 5,526 5,852 (5.6) % 16,644 15,278 8.9 % Total operating expenses (1) 50,905 35,237 44.5 %
144,966 86,078 68.4 % Performance metrics: Occupancy 65.2 % 44.7 % 20.5 pts 65.2 % 41.1 % 24.1 pts ADR$ 213.17 $ 201.18 6.0 %$ 232.26 $ 198.85 16.8 % RevPAR$ 139.08 $ 89.99 54.6 %$ 151.39 $ 81.71 85.3 % Total RevPAR$ 382.88 $ 218.13 75.5 %$ 402.23 $ 193.15 108.2 %
30, 2021. See discussion of this item below.
Gaylord Texan Results. The results of Gaylord Texan for the three months and
nine months ended
Three Months Ended Nine Months Ended
September 30, September 30,
% %
2022 2021 Change 2022 2021 Change
Revenues:
Rooms $ 26,808 $ 24,045 11.5 % $ 76,066 $ 45,735 66.3 %
Food and beverage 34,803 24,848 40.1 % 99,932 42,970 132.6 %
Other hotel revenue 9,123 7,148 27.6 % 29,037 19,763 46.9 %
Total revenue 70,734 56,041 26.2 % 205,035 108,468 89.0 %
Operating expenses:
Rooms 6,530 5,205 25.5 % 17,891 10,348 72.9 %
Food and beverage 19,780 15,569 27.0 % 55,385 29,446 88.1 %
Other hotel expenses 17,932 15,551 15.3 % 51,092 37,346 36.8 %
Management fees, net 1,915 930 105.9 % 5,000 1,622 208.3 %
Depreciation and amortization 5,704 6,146 (7.2) % 18,144 18,569 (2.3) %
Total operating expenses 51,861 43,401 19.5 % 147,512 97,331 51.6 % Performance metrics: Occupancy 70.6 % 66.9 % 3.7 pts 67.6 % 44.6 % 23.0 pts ADR$ 227.40 $ 215.42 5.6 %$ 227.10 $ 207.21 9.6 % RevPAR$ 160.63 $ 144.08 11.5 %$ 153.60 $ 92.35 66.3 % Total RevPAR$ 423.84 $ 335.80 26.2 %$ 414.03 $ 219.03 89.0 % 35 Table of Contents
Gaylord National Results. Gaylord National was closed from lateMarch 2020 and reopenedJuly 1, 2021 . The results of Gaylord National for the three months and nine months endedSeptember 30, 2022 and 2021 are as follows (in thousands, except percentages and performance metrics): Three Months Ended Nine Months Ended September 30, September 30, % % 2022 2021 Change 2022 2021 Change Revenues: Rooms$ 26,462 $ 16,990 55.8 %$ 69,743 $ 16,990 310.5 % Food and beverage 36,402 15,186 139.7 % 87,271 15,243 472.5 % Other hotel revenue 6,061 3,832 58.2 % 16,721 7,343 127.7 % Total revenue 68,925 36,008 91.4 % 173,735 39,576 339.0 % Operating expenses: Rooms 10,065 7,680 31.1 % 27,547 8,715 216.1 % Food and beverage 19,907 11,270 76.6 % 51,322 12,858 299.1 % Other hotel expenses 20,465 16,879 21.2 % 56,138 33,693 66.6 % Management fees, net 1,176 507 132.0 % 2,868 173 1,557.8 % Depreciation and amortization 8,268 8,206 0.8 % 25,267 22,245 13.6 % Total operating expenses 59,881 44,542 34.4 %
163,142 77,684 110.0 % Performance metrics: Occupancy 65.4 % 44.1 % 21.3 pts 55.1 % 14.9 % 40.2 pts ADR$ 220.25 $ 209.77 5.0 %$ 232.23 $ 209.77 10.7 % RevPAR$ 144.11 $ 92.52 55.8 %$ 127.99 $ 31.18 310.5 % Total RevPAR$ 375.35 $ 196.09 91.4 %$ 318.83 $ 72.63 339.0 %
Gaylord Rockies Results. The results of Gaylord Rockies for the three months and
nine months ended
Three Months Ended Nine Months Ended
September 30, 2022 September 30,
% %
2022 2021 Change 2022 2021 Change
Revenues:
Rooms $ 28,536 $ 19,209 48.6 % $ 64,478 $ 30,343 112.5 %
Food and beverage 40,956 22,229 84.2 % 94,484 32,640 189.5 %
Other hotel revenue 7,854 9,771 (19.6) % 23,926 18,534 29.1 %
Total revenue 77,346 51,209 51.0 % 182,888 81,517 124.4 %
Operating expenses:
Rooms 6,833 4,574 49.4 % 17,021 8,656 96.6 %
Food and beverage 21,892 13,040 67.9 % 52,878 23,787 122.3 %
Other hotel expenses 11,652 7,815 49.1 % 34,167 22,489 51.9 %
Management fees, net 2,299 1,515 51.7 % 5,423 2,103 157.9 %Depreciation and amortization 13,703 22,670 (39.6) % 59,001 67,978 (13.2) % Total operating expenses 56,379 49,614 13.6 % 168,490 125,013 34.8 % Performance metrics: Occupancy 86.9 % 61.9 % 25.0 pts 67.7 % 35.2 % 32.5 pts ADR$ 237.69 $ 224.67 5.8 %$ 232.32 $ 210.54 10.3 % RevPAR$ 206.65 $ 139.10 48.6 %$ 157.35 $ 74.05 112.5 % Total RevPAR$ 560.11 $ 370.84 51.0 %$ 446.32 $ 198.93 124.4 % 36 Table of Contents Entertainment Segment Total Segment Results. Due to the COVID-19 pandemic, we temporarily closed our Entertainment segment assets inmid-March 2020 , and they did not return to full capacity untilMay 2021 . In addition, due to theDecember 2020 downtownNashville bombing, theWildhorse Saloon was closed from such event untilApril 2021 . Further, we purchased Block 21 onMay 31, 2022 . Therefore, Entertainment segment financial results for the three months and nine months endedSeptember 30, 2021 are not comparable to historical periods or the 2022 periods. The following presents the financial results of our Entertainment segment for the three months and nine months endedSeptember 30, 2022 and 2021 (in thousands, except percentages): Three Months Ended Nine Months Ended September 30, September 30, % % 2022 2021 Change 2022 2021 Change Revenues$ 77,153 $ 49,053 57.3 %$ 183,579 $ 98,599 86.2 % Operating expenses 54,148 33,467 61.8 % 131,549 77,797 69.1 %
Depreciation and amortization 5,249 3,506 49.7 %
13,293 10,728 23.9 % Operating income (1)$ 17,756 $ 12,080 47.0 %$ 38,737 $ 10,074 284.5 %
Entertainment segment operating income does not include preopening costs of
(1)
this item below.
Corporate and Other Segment
Total Segment Results. The following presents the financial results of our
Corporate and Other segment for the three months and nine months ended
Three Months Ended Nine Months Ended
September 30, September 30,
% %
2022 2021 Change 2022 2021 Change
Operating expenses (1) $ 9,449 $ 10,416 (9.3) % $ 31,423 $ 26,922 16.7 %Depreciation and amortization 203 567 (64.2) %
615 1,698 (63.8) %
Operating loss $ (9,652) $ (10,983) 12.1 % $ (32,038) $ (28,620) (11.9) %
(1) Corporate segment operating expenses do not include a loss on sale of assets
of
Corporate and Other operating expenses consist primarily of costs associated with senior management salaries and benefits, legal, human resources, accounting, pension, information technology, consulting and other administrative costs. Corporate and Other segment operating expenses decreased in the three months and increased in the nine months endedSeptember 30, 2022 , as compared to the prior year periods, primarily as a result of changes in employment expenses.
Operating Results - Preopening Costs
Preopening costs during the nine months endedSeptember 30, 2022 primarily include costs associated withOle Red Nashville International Airport , which was completed inMay 2022 . Preopening costs during the three months and nine months endedSeptember 30, 2021 primarily include costs associated with the Gaylord Palms expansion, which was completed inApril 2021 .
Operating Results - Gain (Loss) on Sale of Assets
Loss on sale of assets during the nine months endedSeptember 30, 2022 includes the sale of a parcel of land inNashville, Tennessee . Gain on sale of assets during the nine months endedSeptember 30, 2021 includes the sale of certain assets at Gaylord Opryland. 37 Table of Contents
Non-Operating Results Affecting Net Income (Loss)
General
The following table summarizes the other factors which affected our net income (loss) for the three months and nine months endedSeptember 30, 2022 and 2021 (in thousands, except percentages): Three Months Ended Nine Months Ended September 30, September 30, % % 2022 2021 Change 2022 2021 Change Interest expense$ 40,092 $ 32,413 23.7 %$ 105,987 $ 93,056 13.9 % Interest income 1,378 1,433 (3.8) % 4,138 4,254 (2.7) % Loss on extinguishment of debt - - - % (1,547) (2,949) 47.5 % Loss from unconsolidated joint ventures (2,720) (2,312) (17.6) % (8,348) (5,831) (43.2) % Other gains and (losses), net 2,058 53 3,783.0 %
2,222 254 774.8 % Provision for income taxes (10,178) (1,063) (857.5) % (27,747) (6,640) (317.9) %
Interest Expense
Interest expense increased
Cash interest expense increased$6.7 million to$37.0 million in the three months and increased$8.8 million to$98.3 million in the nine months endedSeptember 30, 2022 , as compared to the same periods in 2021. Non-cash interest expense, which includes amortization and write-off of deferred financing costs and is offset by capitalized interest, increased$1.0 million to$3.1 million in the three months and increased$4.2 million to$7.7 million in the nine months endedSeptember 30, 2022 , as compared to the same periods in 2021. Our weighted average interest rate on our borrowings, excluding capitalized interest, but including the impact of interest rate swaps, was 5.5% and 4.3% for the three months endedSeptember 30, 2022 and 2021, respectively, and 4.8% and 4.4% for the nine months endedSeptember 30, 2022 and 2021, respectively.
Interest Income
Interest income for the three months and nine months endedSeptember 30, 2022 and 2021 primarily includes amounts earned on the bonds that were received in connection with the development of Gaylord National, which we hold as notes receivable. See Note 8, "Notes Receivable," to the accompanying condensed consolidated financial statements included herein for additional discussion of interest income on these bonds.
Loss on Extinguishment of Debt
As a result of our repayment of our$300 million term loan A with the proceeds from the OEG Term Loan, we recognized a loss on extinguishment of debt of$1.5 million in the nine months endedSeptember 30, 2022 . InFebruary 2021 , we commenced a cash tender offer for any and all outstanding$400 million 5% senior notes due 2023 ("$400 Million 5% Senior Notes") at a redemption price of$1,005.00 per$1,000 principal amount. Pursuant to the tender offer,$161.9 million aggregate principal amount of these notes were validly tendered. As a result of our purchase of these tendered notes, and the subsequent redemption of all untendered$400 Million 5% Senior Notes, we recognized a loss on extinguishment of debt of$2.9 million in the nine months endedSeptember 30, 2021 .
Loss from
The loss from unconsolidated joint ventures for the three months and nine months endedSeptember 30, 2022 and 2021 represents our equity method share of losses associated with Circle. 38 Table of Contents
Other Gains and (Losses), net
Other gains and (losses), net for the three months and nine months endedSeptember 30, 2022 primarily includes a gain of$2.9 million from a fund associated with the Gaylord National bonds to reimburse us for certain marketing and maintenance expenses. Other gains and (losses), net for the three months and nine months endedSeptember 30, 2021 represents various miscellaneous items.
Provision for Income Taxes
As a REIT, we generally are not subject to federal corporate income taxes on ordinary taxable income and capital gains income from real estate investments that we distribute to our stockholders. We are required to pay federal and state corporate income taxes on earnings of our TRSs. For the three months and nine months endedSeptember 30, 2022 , we recorded an income tax provision of$10.2 million and$27.7 million , respectively, related to our TRSs. For the three months and nine months endedSeptember 30, 2021 , we recorded an income tax provision of$1.1 million and$6.6 million , respectively. The income tax provision for the nine months endedSeptember 30, 2021 includes the recording of a valuation allowance of$3.6 million related to our reassessment of the realizability of our deferred tax assets due to the impact of the COVID-19 pandemic.
Non-GAAP Financial Measures
We present the following non-GAAP financial measures, which we believe are useful to investors as key measures of our operating performance:
EBITDAre, Adjusted EBITDAre and Adjusted EBITDAre, Excluding Noncontrolling Interest in Consolidated Joint Venture Definition
We calculate EBITDAre, which is defined by theNational Association of Real Estate Investment Trusts ("NAREIT") in itsSeptember 2017 white paper as net income (calculated in accordance with GAAP) plus interest expense, income tax expense, depreciation and amortization, gains or losses on the disposition of depreciated property (including gains or losses on change in control), impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in the value of depreciated property or the affiliate, and adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates.
Adjusted EBITDAre is then calculated as EBITDAre, plus to the extent the following adjustments occurred during the periods presented:
? Preopening costs; ? Non-cash lease expense;
? Equity-based compensation expense;
? Impairment charges that do not meet the NAREIT definition above;
? Credit losses on held-to-maturity securities;
? Transaction costs of acquisitions;
? Loss on extinguishment of debt;
? Pension settlement charges;
? Pro rata adjusted EBITDAre from unconsolidated joint ventures; and
? Any other adjustments we have identified herein.
We then exclude the pro rata share of Adjusted EBITDAre related to noncontrolling interests in consolidated joint ventures to calculate Adjusted EBITDAre, Excluding Noncontrolling Interest in Consolidated Joint Venture.
39
Table of Contents
We use EBITDAre, Adjusted EBITDAre and Adjusted EBITDAre, Excluding Noncontrolling Interest in Consolidated Joint Venture to evaluate our operating performance. We believe that the presentation of these non-GAAP financial measures provides useful information to investors regarding our operating performance and debt leverage metrics, and that the presentation of these non-GAAP financial measures, when combined with the primary GAAP presentation of net income, is beneficial to an investor's complete understanding of our operating performance. We make additional adjustments to EBITDAre when evaluating our performance because we believe that presenting Adjusted EBITDAre and Adjusted EBITDAre, Excluding Noncontrolling Interest in Consolidated Joint Venture provides useful information to investors regarding our operating performance and debt leverage metrics.
FFO, Adjusted FFO, and Adjusted FFO available to common shareholders and unit holders Definition
We calculate FFO, which definition is clarified by NAREIT in itsDecember 2018 white paper as net income (calculated in accordance with GAAP) excluding depreciation and amortization (excluding amortization of deferred financing costs and debt discounts), gains and losses from the sale of certain real estate assets, gains and losses from a change in control, impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciated real estate held by the entity, income (loss) from consolidated joint ventures attributable to noncontrolling interest, and pro rata adjustments for unconsolidated joint ventures.
To calculate Adjusted FFO available to common shareholders and unit holders, we then exclude, to the extent the following adjustments occurred during the periods presented:
? Right-of-use asset amortization;
? Impairment charges that do not meet the NAREIT definition above;
? Write-offs of deferred financing costs;
? Amortization of debt discounts or premiums and amortization of deferred
financing costs;
? Loss on extinguishment of debt;
? Non-cash lease expense;
? Credit loss on held-to-maturity securities;
? Pension settlement charges;
? Additional pro rata adjustments from unconsolidated joint ventures;
? (Gains) losses on other assets;
? Transaction costs of acquisitions;
? Deferred income tax expense (benefit); and
? Any other adjustments we have identified herein.
FFO available to common shareholders and unit holders and Adjusted FFO available
to common shareholders and unit holders exclude the ownership portion of the
joint ventures not controlled or owned by the Company.
We believe that the presentation of FFO available to common shareholders and
unit holders and Adjusted FFO available to common shareholders and unit holders
provides useful information to investors regarding the performance of our
ongoing operations because they are a measure of our operations without regard
to specified non-cash items such as real estate depreciation and amortization,
gain or loss on sale of assets and certain other items, which we believe are not
indicative of the performance of our underlying hotel properties. We believe
that these items are more representative of our asset base than our ongoing
operations. We also use these non-GAAP financial measures as measures in
determining our results after considering the impact of our capital structure.
We caution investors that amounts presented in accordance with our definitions
of Adjusted EBITDAre, Adjusted EBITDAre, Excluding Noncontrolling Interest, FFO
available to common shareholders and unit holders, and Adjusted FFO available to
common shareholders and unit holders may not be comparable to similar measures
disclosed by other companies, because not all companies calculate these non-GAAP
measures in the same manner. These non-GAAP financial measures, and any related
per share measures, should not be considered as alternative measures of our Net
Income (Loss), operating performance, cash flow or liquidity. These non-GAAP
financial measures may include funds that may not be available for our
discretionary use due to functional requirements to conserve funds for capital
40
Table of Contents
expenditures and property acquisitions and other commitments and uncertainties.
Although we believe that these non-GAAP financial measures can enhance an
investor's understanding of our results of operations, these non-GAAP financial
measures, when viewed individually, are not necessarily better indicators of any
trend as compared to GAAP measures such as Net Income (Loss), Operating Income
(Loss), or cash flow from operations.
The following is a reconciliation of our consolidated GAAP net income (loss) to
EBITDAre and Adjusted EBITDAre for the three months and nine months ended
Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
Net income (loss) $ 47,451 $ (8,607) $ 73,578 $ (188,777)
Interest expense, net 38,714 30,980 101,849 88,802
Provision for income taxes 10,178 1,063 27,747 6,640
Depreciation and amortization 47,969 56,093 160,712 164,081
(Gain) loss on sale of assets - 2 327 (315)
Pro rata EBITDAre from unconsolidated joint
ventures 23 19 68 53
EBITDAre 144,335 79,550 364,281 70,484
Preopening costs - 118 525 734
Non-cash lease expense 1,059 1,081 3,340 3,254
Equity-based compensation expense 3,694 3,276 11,134 8,944
Pension settlement charge 723 443 1,576 1,009
Interest income on Gaylord National bonds 1,314 1,389 3,993 4,114
Loss on extinguishment of debt - - 1,547 2,949
Transaction costs of acquisitions - 135 1,348 210
Adjusted EBITDAre 151,125 85,992 387,744 91,698
Adjusted EBITDAre of noncontrolling
interest in consolidated joint venture (6,345) - (7,476) 1,017
Adjusted EBITDAre, excluding noncontrolling
interest in consolidated joint venture $ 144,780 $ 85,992 $ 380,268 $ 92,715
41
Table of Contents
The following is a reconciliation of our consolidated GAAP net income (loss) to
FFO and Adjusted FFO for the three months and nine months ended September 30,
2022 and 2021 (in thousands):
© Edgar Online, source
