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HAMILTON, Bermuda, August 3, 2010 /PRNewswire/ --
Second Quarter Earnings Summary
- Second quarter total revenues, excluding Real Estate, up 13%
to $146.0 million
- Revenue from owned hotels up 15%
- Same store RevPAR up 12% in local currency, up 13% in US dollars
- Adjusted EBITDA before Real Estate of $32.4 million, up 22%
Key events
- Grand Hotel Timeo and Villa Sant'Andrea in Taormina, Sicily opened on
May 27, as scheduled, following initial renovations
- Sale of La Cabaña, Buenos Aires completed for $2.7 million
- A further $3.9 million received from the defendants in the "Cipriani"
trademark litigation. Deferred payment terms agreed over five years for
the remaining $9.8 million
- Since July 1, all PeruRail services have been restored on the
Cuzco-Machu Picchu line following the devastation of the track due to
floods in January. During the second quarter there were limited
operations, supported by coach services
Orient-Express Hotels Ltd. (NYSE: OEH,http://www.orient-express.com),
owners or part-owners and managers of 50 luxury hotel, restaurant, tourist
train and river cruise properties operating in 24 countries, today announced
its results for the second quarter ended June 30, 2010.
Net loss for the period was $0.8 million (loss of $0.01 per common share)
on revenue of $173.4 million, compared with a net loss of $24.3 million (loss
of $0.36 per common share) on revenue of $129.4 million in the second quarter
of 2009. Net earnings from continuing operations for the period were $1.0
million (earnings of $0.01 per common share), compared with a net loss of
$2.5 million (loss of $0.04 per common share) in the second quarter of 2009.
The adjusted net earnings from continuing operations for the period were $3.4
million (earnings of $0.04 per common share), compared with an adjusted net
loss of $2.5 million (loss of $0.04 per common share) in the second quarter
of 2009.
"Overall, we continue to be encouraged," said Paul White, President and
Chief Executive Officer. "Same store RevPAR in the second quarter grew in all
regions, with North America up a healthy 16% and Rest of World 34% up in
local currency. Total EBITDA for Owned Hotels was up $4.0 million. Trains and
Cruises revenues and EBITDA were stable year over year despite the impact on
PeruRail of the floods that destroyed parts of the track to Machu Picchu.
Across the business as a whole, before Real Estate, total revenues were up
$16.6 million and EBITDA was up $6.3 million.
"I am pleased to be able to report that significant progress has been
made in the refinancing of both our European and US assets, most of which
have loan maturities in the second half of 2011. It is also good to see the
effect of our strategic actions, combined with the fledgling recovery,
resulting in our debt to EBITDA ratio continuing to move in the right
direction."
Business Highlights
Revenue, excluding Real Estate revenue, was $146.0 million in the second
quarter of 2010, up $16.6 million from the second quarter of 2009.
Revenue from Owned Hotels for the second quarter was $118.1 million. On a
same store basis, Owned Hotels RevPAR was up 12% in local currency and up 13%
in US dollars.
Trains and Cruises revenue in the second quarter was $21.9 million, which
includes the Company's share of PeruRail insurance income (net of costs) of
$2.8 million. This was in line with the prior year quarter.
Adjusted EBITDA before Real Estate was $32.4 million compared to $26.6
million in the prior year. The principal variances from the second quarter of
2009 included Grand Hotel Europe, St. Petersburg, Russia (up $1.8 million),
Copacabana Palace, Rio de Janeiro, Brazil (up $1.2 million), Charleston
Place, Charleston, South Carolina (up $1.4 million), The Westcliff,
Johannesburg, South Africa (up $1.8 million) and share of results from Hotel
Ritz Madrid, Spain (up $1.2 million).
On May 27, the Grand Hotel Timeo and Villa Sant'Andrea re-opened on
schedule under the Orient-Express flag, following the first phase of
renovations. The staff, who trained at other Orient-Express hotels in Italy
during the closure, are coping well with the heavy demands of the summer
season, starting with a full house of demanding guests for the annual
Taormina Film Festival within two weeks of opening.
During the quarter GBP2.6 million ($3.9 million) was received from the
defendants in the "Cipriani" trademark litigation. This is in addition to
GBP0.5 million ($0.8 million) already received in these proceedings. The
balance of the claim of GBP6.6 million ($9.8 million) is to be settled by a
deferred payment arrangement to be received over five years.
On June 1, the Bermuda Supreme Court upheld the Company's class B
shareholding structure and dismissed the petition filed in early 2009 by two
hedge fund groups challenging that structure. One of them has indicated an
intention to appeal this judgment.
In May, the Company completed the sale of La Cabaña restaurant in Buenos
Aires, Argentina for $2.7 million, which was received in the quarter.
In July, the complete railway track from Cuzco to Machu Picchu reopened
following the heavy flooding on the line in January 2010, which made whole
sections of the track impassable. In April, PeruRail established its
operations at a temporary station in the Sacred Valley and coordinated
transfers by bus between Cuzco and the Sacred Valley, and onwards to Machu
Picchu by rail.
The seventeen terrace rooms under renovation at the Grand Hotel Europe
were finished in time for the high season of White Nights which runs from May
to July. A three year phased restoration of the facade of the hotel commenced
in July.
Restoration is progressing on the new 56 key hotel Palacio Nazarenas,
adjacent to Hotel Monasterio in Cuzco, Peru, with 50% of basic construction
of listed buildings and 65% of excavation of non-historic areas now complete.
Due to some interesting archaeological finds, work on certain sections of the
site is being delayed and completion of the project is now expected in the
first quarter of 2012.
The volatile political situation in Bangkok has calmed considerably but
demand for the Asian hotels and the Eastern & Oriental Express continues to
be monitored closely because many flights are routed through Bangkok. At
present, business has returned to normal during this low season period in the
region.
At the Company's Porto Cupecoy development in St Maarten, the legal title
of 45 units had been transferred at the end of the quarter and a further 28
units have been transferred since then. The cumulative number sold is now 105
out of a total of 185 units. All third party debt has now been discharged on
this project.
Regional Performance
Europe: In the second quarter of 2010, revenues from Owned Hotels were
$56.5 million, up 8% from $52.2 million in the second quarter of 2009. Same
store RevPAR increased by 1% in local currency. EBITDA was $17.3 million in
the second quarter 2010 versus $17.2 million in the prior year. The second
quarter 2010 included EBITDA losses of $1.0 million for Grand Hotel Timeo and
Villa Sant'Andrea of which $0.5 million were start-up costs. The hotels
opened at the end of May and had only one full month of trading. Grand Hotel
Europe experienced a $1.8 million gain in EBITDA, driven by a 17% increase in
local currency RevPAR and strong banqueting business.
North America: Revenue from Owned Hotels was $29.2 million, up 9% from
$26.8 million in the second quarter of 2009. EBITDA was $5.4 million in 2010
versus $4.3 million in the prior year. Both revenue and EBITDA increases were
mainly attributable to Charleston Place Hotel, which had revenue growth of
$1.8 million, or 14%, and EBITDA gains of $1.4 million driven by both strong
group and transient room night demand. Local currency same store RevPAR for
the region increased by 16%.
Southern Africa: Revenue of $9.2 million in the second quarter of 2010
was up by $2.6 million, or 39% over the prior year, with local currency same
store RevPAR up 57%. EBITDA of $2.5 million was $1.5 million higher than the
second quarter of 2009. Revenue was boosted by the World Cup tournament in
June, although business levels in the run up to the World Cup were lower than
the previous year.
South America: Revenue was $15.7 million in the 2010 second quarter,
compared to $11.1 million in the prior year. Same store RevPAR in local
currency for the region increased by 32%. The Copacabana Palace contributed
$3.2 million of the revenue increase, which was driven by rooms and food and
beverage growth, especially from banqueting. Hotel das Cataratas, Iguassu
Falls, Brazil, on schedule for third phase completion in September,
experienced an EBITDA loss in the 2010 quarter of $1.6 million, compared to
an EBITDA loss of $1.5 million in the prior year. For the region, EBITDA of
$3.0 million was $1.7 million higher than the prior year. This included a
$1.8 million adverse impact on costs caused by the strengthening of local
currencies.
Asia Pacific: Revenue was $7.5 million in the second quarter of 2010, up
$1.3 million or 20%. Same store RevPAR in local currency for the region
increased by 12%. EBITDA was $0.8 million in the current quarter and $1.2 in
the prior year quarter.
Hotel management and part-ownership interests: EBITDA for the second
quarter of 2010 was $2.2 million compared to $1.2 million in the second
quarter of 2009. Of the increase in EBITDA, $1.2 million was attributable to
the Hotel Ritz Madrid, Spain. This was offset by a fall of $0.2 million from
the Peru hotels, which suffered from the lingering impact of the floods that
occurred in the first quarter.
Restaurants: Revenue from '21' Club, New York in the second quarter of
2010 was $3.8 million, up 15% compared to $3.3 million in the second quarter
of 2009, and EBITDA was $0.5 million compared to $0.3 million in the prior
year.
Trains and Cruises: Revenue in the second quarter of 2010 and 2009 was
unchanged at $21.9 million. EBITDA in the second quarter of 2010 was $6.8
million, compared to an EBITDA of $6.9 million in the prior year. Both
revenue and EBITDA included insurance income in the second quarter of 2010 of
$2.8 million from PeruRail, which was impacted by the damage to tracks caused
by the floods during the first quarter of 2010.
Central costs: In the second quarter of 2010, central costs were $5.7
million compared with $6.8 million in the prior year period. The current year
quarter is net of $0.3 million of cost recovery relating to the Bermuda
litigation and $0.8 million gain from the favorable settlement of the
"Cipriani" trademark litigation, both of which are excluded from adjusted
EBITDA.
Real Estate: In the second quarter of 2010, there was an EBITDA loss of
$1.4 million from real estate activities compared with $0.5 million in 2009,
primarily relating to Porto Cupecoy. During the quarter, the Company
recognized revenue from units transferred to customers of $27.4 million.
Depreciation and amortization: The depreciation and amortization charge
for the second quarter of 2010 was $11.6 million compared with $9.5 million
in the second quarter of 2009.
Interest: The interest charge for the second quarter of 2010 was $7.4
million compared to $7.5 million in the second quarter of 2009.
Tax: The tax charge for the second quarter of 2010 was $7.4 million
compared with $11.0 million in the same quarter in the prior year. The prior
year included a deferred tax charge of $2.7 million arising in respect of
fixed asset timing differences following appreciation of local currencies
against the US dollar.
Discontinued operations: The loss for the second quarter of 2010 was $1.8
million including the results of Bora Bora Lagoon Resort. The loss included
an operating loss in the quarter, net of tax, of $1.4 million and a final
loss on the sale of La Cabaña restaurant of $0.4 million.
Investment: The Company invested $3.8 million during the quarter in Hotel
das Cataratas. Payments of a further $1.8 million were made to the New York
Public Library and there was additional capital expenditure of $15.9 million
in the second quarter, including $1.3 million at Hotel Cipriani, Venice,
Italy, $6.4 million at Grand Hotel Timeo and Villa Sant'Andrea and $1.8
million at Le Manoir aux Quat' Saisons.
Liquidity
At June 30, 2010, the Company had term debt (including the current
portion) of $761.6 million, working capital loans of $8.2 million and cash
balances of $129.1 million (including $16.6 million of restricted cash),
giving a total net debt of $640.7 million compared with total net debt of
$697.8 million at the end of the first quarter of 2010.
At June 30, 2010, undrawn amounts available to the Company under
committed short-term lines of credit were $18.6 million and undrawn amounts
available to the Company under secured revolving credit facilities were $12.0
million, bringing total cash availability at June 30, 2010 to $159.7 million,
including restricted cash of $16.6 million.
At June 30, 2010, approximately 63% of the Company's debt was at fixed
interest rates and 37% was at floating interest rates. The weighted average
maturity of the debt was approximately 2.2 years and the weighted average
interest rate (including margin and swaps) was approximately 3.5%.
Outlook
"As we move into the northern hemisphere high season, traditionally
Orient-Express Hotels' strongest trading quarter, we continue to focus on
driving revenue, margins and EBITDA," said Paul White. "This, along with our
stated intention to dispose of non-core assets, four of which have been sold
at attractive multiples, and the continued sale of developed Real Estate,
should see our net debt reduced to our targeted range of 4-5 x EBITDA by the
end of 2011."
Reconciliation and Adjustments
$'000 - except per share Three months ended Six months ended
amounts June 30 June 30
2010 2009 2010 2009
31,377 26,011 27,790 27,545
EBITDA
Adjusted items:
Legal costs (1) (279) 114 (170) 629
Cipriani litigation (2) (788) - (788) -
Grand Hotel Timeo & Villa 497 - 1,640 -
Sant'Andrea (3)
Management restructuring (4) 173 - 1,122 458
Impairment (5) - - - 6,500
Adjusted EBITDA 30,980 26,125 29,594 35,132
(820) (24,313) (13,828) (38,952)
US GAAP reported net loss
Discontinued operations net 1,809 21,812 (3,360) 24,822
of tax
Net earnings/(loss) from
continuing operations 989 (2,501) (17,188) (14,130)
Adjusted items net of tax:
Legal costs (1) (279) 114 (170) 629
Cipriani litigation (2) (788) - (788) -
Grand Hotel Timeo & Villa 359 - 1,225 -
Sant'Andrea (3)
Management restructuring (4) 173 - 933 366
Impairment (5) - - - 6,500
Interest rate swaps (6) (22) (229) (5) 852
Foreign exchange (7) 3,001 146 230 2,995
Adjusted net earnings/(loss) 3,433 (2,470) (15,763) (2,788)
from continuing operations
(0.01) (0.36) (0.15) (0.66)
Reported EPS
Reported EPS from continuing 0.01 (0.04) (0.19) (0.24)
operations
Adjusted EPS from continuing 0.04 (0.04) (0.18) (0.05)
operations
Number of shares (millions) 90.80 67.17 89.32 59.02
1. Legal costs incurred in defending the Company's class B common share
structure, net of awards or claims for reimbursement.
2. Cash received in excess of costs incurred following settlement of
"Cipriani" trademark litigation.
3. Non-recurring costs and purchase transaction costs incurred in
relation to Grand Hotel Timeo and Villa Sant'Andrea.
4. Restructuring and redundancy costs.
5. Impairment charges recorded on three owned properties.
6. Charges on swaps that did not qualify for hedge accounting.
7. Foreign exchange, net of tax, is a non-cash item arising on the
translation of certain assets and liabilities denominated in currencies other
than the reporting currency of the entity concerned.
Management evaluates the operating performance of the Company's segments
on the basis of segment net earnings before interest, foreign currency, tax
(including tax on unconsolidated companies), depreciation and amortization
(EBITDA), and believes that EBITDA is a useful measure of operating
performance, for example to help determine the ability to incur capital
expenditure or service indebtedness, because it is not affected by
non-operating factors such as leverage and the historic cost of assets.
EBITDA is also a financial performance measure commonly used in the hotel and
leisure industry, although the Company's EBITDA may not be comparable in all
instances to that disclosed by other companies. EBITDA does not represent net
cash provided by operating, investing and financing activities under US
generally accepted accounting principles (US GAAP), is not necessarily
indicative of cash available to fund all cash flow needs, and should not be
considered as an alternative to earnings from operations or net earnings
under US GAAP for purposes of evaluating operating performance.
Adjusted EBITDA and adjusted net earnings of the Company are non-GAAP
financial measures and do not have any standardized meanings prescribed by US
GAAP. They are, therefore, unlikely to be comparable to similar measures
presented by other companies, which may be calculated differently, and should
not be considered as an alternative to net earnings, cash flow from operating
activities or any other measure of performance prescribed by US GAAP.
Management considers adjusted EBITDA and adjusted net earnings to be
meaningful indicators of operations and uses them as measures to assess
operating performance because, when comparing current period performance with
prior periods and with budgets, management does so after having adjusted for
non-recurring items, foreign exchange (a non-cash item), disposals of assets
or investments, and certain other items (some of which may be recurring)
which management does not consider indicative of ongoing operations or which
could otherwise have a material effect on the comparability of the Company's
operations. Adjusted EBITDA and adjusted net earnings are also used by
investors, analysts and lenders as measures of financial performance because,
as adjusted in the foregoing manner, the measures provide a consistent basis
on which the performance of the Company can be assessed.
This news release and related oral presentations by management contain,
in addition to historical information, forward-looking statements that
involve risks and uncertainties. These include statements regarding earnings
outlook, investment plans, debt reduction, asset sales and similar matters
that are not historical facts. These statements are based on management's
current expectations and are subject to a number of uncertainties and risks
that could cause actual results to differ materially from those described in
the forward-looking statements. Factors that may cause a difference include,
but are not limited to, those mentioned in the news release, unknown effects
on the travel and leisure markets of terrorist activity and any police or
military response, varying customer demand and competitive considerations,
failure to realize hotel bookings and reservations and planned property
development sales as actual revenue, inability to sustain price increases or
to reduce costs,% |
