Press Release: John Q. Hammons Hotels, Inc.
August 12, 2002
SPRINGFIELD, MO -- John Q. Hammons Hotels, Inc. (AMEX:JQH) August 7 reported on its second quarter 2002 results.
Second Quarter Results
Basic and diluted earnings per share before extraordinary item for the three months ended June 28, 2002 were $0.12,
compared to basic earnings per share of $0.13 and diluted earnings per share of $0.12 for the second quarter of
2001. The extraordinary item in the second quarter of 2002 was related to the refinancing of a significant portion
of our mortgage debt and greatly contributed to the basic and diluted loss per share of $0.20 for the second quarter.
Total revenues for the 2002 second quarter were $115.2 million, a decrease of $1.8 million, or 1.5% compared to
the 2001 second quarter. Although the lingering economic slowdown adversely affected our performance, we continue
to surpass the industry's Revenue Per Available Room (RevPAR) performance. For example, our RevPAR was $67.58 for
the 2002 second quarter, down 0.9% from $68.22 in the 2001 second quarter, compared to an industry decrease of
4.8%. In addition, it should be noted that in July 2002, we completed the conversion of two properties from the
Radisson brand to the Marriott brand. The Company's RevPAR for the quarter would have exceeded prior year by 2.1%
after excluding these properties' results during their renovation periods.
Total earnings before interest expense, taxes, depreciation, and amortization (EBITDA) were $34.0 million for the
2002 second quarter, down 1.7% compared to the 2001 EBITDA of $34.6 million. EBITDA as a percentage of total revenue
was virtually equal to prior year, reflecting continued cost control measures implemented as business volume decreased.
Year-to-Date Results
Basic and diluted earnings per share before extraordinary item for the six months ended June 28, 2002 were $0.17,
compared to basic earnings per share of $0.18 and diluted earnings per share of $0.17 for the first half of 2001.
After giving effect to the extraordinary item (early retirement of debt), basic and diluted loss per share for
the first half of 2002 was $0.15.
Total revenues for the 2002 first half were $222.6 million, a decrease of $9.7 million, or 4.2% compared to the
same period in 2001. Revenue Per Available Room (RevPAR) was $64.72 for the 2002 first half, down 3.6% from $67.15
in the 2001 first half. These results are more than 29% higher than the hotel industry and 5% higher than the RevPAR
in the upscale hotel sector.
Total earnings before interest expense, taxes, depreciation, and amortization (EBITDA) were $65.1 million for the
2002 first half, down 3.7% compared to the 2001 EBITDA of $67.6 million. EBITDA as a percentage of total revenue
was up slightly compared to prior year, once again reflecting cost control measures implemented as business volume
decreased.
Bond Refinancing
On April 22, we announced a cash tender offer to permit a proposed refinancing of the two outstanding First Mortgage
Notes, due in 2004 and 2005. After the successful tender offer, we concluded the process by refinancing our $300m
8 7/8% First Mortgage Notes due 2004, our $90m 9 3/4% First Mortgage Notes due in 2005 and five construction loans.
The new issuance was comprised of $510 million of First Mortgage Notes at 8 7/8% due in 2012. The refinancing established
a debt maturity schedule which we believe will prove favorable for the Company into the future. The existing current
portion of long-term debt ($8.3 million) is attributable only to principal amortization on various mortgages. The
next maturities of $29 million occur in the fourth quarter of 2003.
Chairman Comments
"Our refinancing extends looming maturities and provides flexibility for future debt reduction. With this
transaction now complete and industry stability slowly returning, we are in a great position to accelerate our
cash production. We closed the refinancing at an ideal time, capitalizing on the market's receptiveness to our
high quality hotel assets in strategic locations," stated Mr. John Q. Hammons, chairman and chief executive
officer.
Product Improvements
In accordance with our previously stated plans, we are selectively converting the brands of some of our hotels
to franchises considered more upscale, in order to take advantage of market opportunities. In April 2002, we completed
the planned conversion of our Bowling Green University Plaza from an independent hotel to a Holiday Inn. In addition,
the conversions of our Houston and Coral Springs properties from the Radisson brand to the Marriott brand were
completed in early July.
Operations Outlook
During the first half of 2002, we continued to see softness in business transient demand in most of our markets
compared to the same periods in 2001. Regardless of this weakness, efforts are still being made to improve EBITDA
margins, as shown in our results over the last nine months. We believe the concentration of these efforts will
continue to prove beneficial to operations, particularly when RevPAR gains occur. As previously stated, we believe
that our RevPAR will continue to trend upward as the economy recovers. July RevPAR in 2002 was up 1.0% compared
to July 2001, while EBITDA from hotel operations increased 1.2% over the same period. We expect third quarter revenues
to be 1-2% above 2001 third quarter, and forecast EBITDA to be approximately 2-4% above 2001 for the same period.
We should continue to generate cash and will focus on operational efficiencies.
Although we are not developing new hotels, Mr. Hammons is personally developing two projects that will open in
2003 and 2004. Mr. Hammons is developing a Renaissance Hotel in Tulsa, Oklahoma, and an Embassy Suites in Bentonville,
Arkansas. The Company will manage these two properties personally developed by Mr. Hammons.
We are a leading independent owner and manager of affordable upscale, full service hotels located primarily in
key secondary markets. We own and manage 47 hotels located in 20 states, containing 11,633 guest rooms or suites,
and manage nine additional hotels located in five states, containing 2,078 guest rooms or suites. The majority
of these 56 hotels operate under the Embassy Suites, Holiday Inn and Marriott trade names. Most of our hotels are
located near a state capitol, university, convention center, corporate headquarters, office park or other stable
demand generator. For more information about John Q. Hammons Hotels, please visit our website at www.jqhhotels.com.
NOTE -- FORWARD-LOOKING STATEMENTS: Certain statements in this press release contain "forward-looking statements"
within the meaning of Section 21E of the Securities Exchange Act of 1934, regarding, among other things, our business
strategy, prospects and financial position. These statements contain the words "believes," "anticipates,"
"estimates," "expects," "projects," "intends," "may," "will,"
and similar words. These forward-looking statements involve known and unknown risks, uncertainties and other factors
that may cause our actual results to be materially different from any future results expressed or implied by such
forward looking statements. Such factors include, among others:
These risks and uncertainties should be considered in evaluating any forward looking statements contained in
this press release. We undertake no obligation to update or revise publicly any forward looking statement, whether
as a result of new information, future events or otherwise, other than as required by law.
- Tables Attached - -
JOHN Q. HAMMONS HOTELS, INC.
(Amounts in thousands except earnings per share and operating data)
Three Months Ended Six Months Ended
June 28, June 29, June 28, June 29,
2002 2001 2002 2001
---------- ---------- ---------- ----------
Total Revenue $115,161 $116,950 $222,590 $232,259
EBITDA $33,962 $34,568 $65,107 $67,601
EBITDA Margin (Percentage
of Total Revenue) 29.5% 29.6% 29.2% 29.1%
Income Before Extraordinary
Item $620 $662 $868 $929
Extraordinary Item ($1,633) ($12) ($1,633) ($12)
Net Income (Loss) ($1,013) $650 ($765) $917
Earnings (Loss) Per Share -- Basic and Diluted:
-----------------------------------------------
Basic Earnings per Share
before Extraordinary Item $0.12 $0.13 $0.17 $0.18
Basic Earnings (Loss) per
Share ($0.20) $0.13 ($0.15) $0.18
Basic Weighted Average
Shares Outstanding 5,081,008 5,070,073 5,078,644 5,067,318
Diluted Earnings per Share
before Extraordinary Item $0.12 $0.12 $0.17 $0.17
Diluted Earnings (Loss) per
Share ($0.20) $0.12 ($0.15) $0.17
Diluted Weighted Average
Shares Outstanding 5,081,008 5,284,969 5,078,644 5,282,214
Total Owned Hotels:
Occupancy 68.2% 67.3% 65.3% 65.5%
Average Room Rate $99.11 $101.39 $99.11 $102.50
RevPAR (Room Revenue per
available room) $67.58 $68.22 $64.72 $67.15
June 28, Dec. 28, Dec. 29,
2002 2001 2000
---------- ---------- ----------
Selected Balance Sheet Data
---------------------------
Current Assets $68,022 $60,673 $67,208
Total Assets $886,957 $881,724 $920,884
Current Liabilities
Excluding Debt $44,296 $45,072 $48,387
Total Debt Including
Current Portion $821,601 $813,007 $836,707
Total Cash and Equivalents
and Marketable Securities $53,369 $44,196 $49,171
Net Debt $768,232 $768,811 $787,536
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Contact:
John Q. Hammons Hotels, Inc.
Paul Muellner, 417/864-4300