Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-13079
RYMAN HOSPITALITY PROPERTIES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
73-0664379
(State or Other Jurisdiction of
(I.R.S. Employer
Incorporation or Organization)
Identification No.)
One Gaylord Drive
Nashville, Tennessee 37214
(Address of Principal Executive Offices)
(Zip Code)
(615) 316-6000
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class
Trading Symbol(s)
Which Registered
Common stock, par value $.01
RHP
New York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
Outstanding as of April 30, 2023
Common Stock, par value $.01
55,253,921 shares
For the Quarter Ended March 31, 2023
INDEX
Page
Part I - Financial Information
3
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets (Unaudited) – March 31, 2023 and December 31, 2022
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - For the Three Months Ended March 31, 2023 and 2022
4
Condensed Consolidated Statements of Cash Flows (Unaudited) - For the Three Months Ended March 31, 2023 and 2022
5
Condensed Consolidated Statements of Equity (Deficit) and Noncontrolling Interest (Unaudited) - For the Three Months Ended March 31, 2023 and 2022
6
Notes to Condensed Consolidated Financial Statements (Unaudited)
7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
19
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
41
Item 4. Controls and Procedures.
Part II - Other Information
42
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
43
SIGNATURES
44
2
Part I – FINANCIAL INFORMATION
Item 1. – FINANCIAL STATEMENTS.
RYMAN HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
March 31,
December 31,
2023
2022
ASSETS:
Property and equipment, net
$
3,163,900
3,171,708
Cash and cash equivalents - unrestricted
318,512
334,194
Cash and cash equivalents - restricted
95,113
110,136
Notes receivable, net
64,209
67,628
Trade receivables, net
147,215
116,836
Prepaid expenses and other assets
141,024
134,170
Intangible assets, net
104,706
105,951
Total assets
4,034,679
4,040,623
LIABILITIES AND EQUITY:
Debt and finance lease obligations
2,866,898
2,862,592
Accounts payable and accrued liabilities
332,068
385,159
Dividends payable
42,189
14,121
Deferred management rights proceeds
166,715
167,495
Operating lease liabilities
126,188
125,759
Deferred income tax liabilities, net
13,682
12,915
Other liabilities
66,909
64,824
Total liabilities
3,614,649
3,632,865
Commitments and contingencies
Noncontrolling interest in consolidated joint venture
319,753
311,857
Equity:
Preferred stock, $.01 par value, 100,000 shares authorized, no shares issued or outstanding
—
Common stock, $.01 par value, 400,000 shares authorized, 55,254 and 55,167 shares issued and outstanding, respectively
553
552
Additional paid-in capital
1,093,839
1,102,733
Treasury stock of 648 and 648 shares, at cost
(18,467)
Distributions in excess of retained earnings
(959,199)
(978,619)
Accumulated other comprehensive loss
(17,215)
(10,923)
Total stockholders' equity
99,511
95,276
Noncontrolling interest in Operating Partnership
766
625
Total equity
100,277
95,901
Total liabilities and equity
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(In thousands, except per share data)
Three Months Ended
Revenues:
Rooms
161,251
101,593
Food and beverage
215,804
112,116
Other hotel revenue
47,384
47,402
Entertainment
67,280
38,024
Total revenues
491,719
299,135
Operating expenses:
42,059
30,136
115,181
71,329
Other hotel expenses
103,059
86,643
Management fees, net
15,195
5,064
Total hotel operating expenses
275,494
193,172
51,434
31,731
Corporate
10,594
9,557
Preopening costs
190
304
Loss on sale of assets
469
Depreciation and amortization
48,357
56,028
Total operating expenses
386,069
291,261
Operating income
105,650
7,874
Interest expense
(42,528)
(31,937)
Interest income
2,547
1,381
Loss from unconsolidated joint ventures
(2,806)
(2,627)
Other gains and (losses), net
(236)
447
Income (loss) before income taxes
62,627
(24,862)
(Provision) benefit for income taxes
(1,633)
65
Net income (loss)
60,994
(24,797)
Net loss attributable to noncontrolling interest in consolidated joint venture
763
Net (income) loss attributable to noncontrolling interest in Operating Partnership
(437)
176
Net income (loss) available to common stockholders
61,320
(24,621)
Basic income (loss) per share available to common stockholders
1.11
(0.45)
Diluted income (loss) per share available to common stockholders
1.02
Comprehensive income (loss), net of taxes
54,702
(14,811)
Comprehensive loss, net of taxes, attributable to noncontrolling interest in consolidated joint venture
985
Comprehensive (income) loss, net of taxes, attributable to noncontrolling interest in Operating Partnership
(392)
105
Comprehensive income (loss), net of taxes, available to common stockholders
55,295
(14,706)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash Flows from Operating Activities:
Amounts to reconcile net income (loss) to net cash flows provided by (used in) operating activities:
Provision (benefit) for deferred income taxes
767
(415)
Amortization of deferred financing costs
2,674
2,229
2,806
2,627
Stock-based compensation expense
3,739
3,786
Changes in:
Trade receivables
(30,379)
(8,488)
(56,294)
(17,330)
Other assets and liabilities
(953)
(17,814)
Net cash flows provided by (used in) operating activities
31,711
(4,174)
Cash Flows from Investing Activities:
Purchases of property and equipment
(36,771)
(9,716)
Collection of notes receivable
2,143
2,381
Investment in Circle
(4,000)
(2,045)
Other investing activities, net
(9,916)
816
Net cash flows used in investing activities
(48,544)
(8,564)
Cash Flows from Financing Activities:
Repayments under term loan B
(1,250)
Borrowings under OEG revolving credit facility
7,000
Repayments under OEG term loan
(750)
Repayments under Block 21 CMBS loan
(702)
Payment of dividends
(14,006)
(276)
Payment of tax withholdings for share-based compensation
(4,080)
(3,761)
Other financing activities, net
(84)
(66)
Net cash flows used in financing activities
(13,872)
(5,353)
Net change in cash, cash equivalents, and restricted cash
(30,705)
(18,091)
Cash, cash equivalents, and restricted cash, beginning of period
444,330
163,000
Cash, cash equivalents, and restricted cash, end of period
413,625
144,909
Reconciliation of cash, cash equivalents, and restricted cash to balance sheet:
128,436
16,473
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) AND NONCONTROLLING INTEREST
Distributions
Accumulated
Noncontrolling
Additional
in Excess of
Other
Total
Interest in
Common
Paid-in
Treasury
Retained
Comprehensive
Stockholders'
Operating
Equity
Consolidated
Stock
Capital
Earnings
Loss
Partnership
(Deficit)
Joint Venture
BALANCE, December 31, 2022
437
61,757
(763)
Adjustment of noncontrolling interest to redemption value
(8,659)
8,659
Other comprehensive loss, net of income taxes
(6,292)
Payment of dividends ($0.75 per share)
106
(41,900)
(41,794)
(296)
(42,090)
Restricted stock units and stock options surrendered
1
(4,079)
Equity-based compensation expense
BALANCE, March 31, 2023
Equity (Deficit)
BALANCE, December 31, 2021
551
1,112,867
(1,088,105)
(29,080)
(22,234)
(159)
(22,393)
Net loss
(176)
Other comprehensive income, net of income taxes
9,986
BALANCE, March 31, 2022
1,112,892
(1,112,726)
(19,094)
(36,844)
(335)
(37,179)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION:
On January 1, 2013, Ryman Hospitality Properties, Inc. (“Ryman”) and its subsidiaries (collectively with Ryman, the “Company”) began operating as a real estate investment trust (“REIT”) for federal income tax purposes, specializing in group-oriented, destination hotel assets in urban and resort markets. The Company’s owned assets include a network of upscale, meetings-focused resorts that are managed by Marriott International, Inc. (“Marriott”) under the Gaylord Hotels brand. These five resorts, which the Company refers to as the Gaylord Hotels properties, consist of the Gaylord Opryland Resort & Convention Center in Nashville, Tennessee (“Gaylord Opryland”), the Gaylord Palms Resort & Convention Center near Orlando, Florida (“Gaylord Palms”), the Gaylord Texan Resort & Convention Center near Dallas, Texas (“Gaylord Texan”), the Gaylord National Resort & Convention Center near Washington D.C. (“Gaylord National”), and the Gaylord Rockies Resort & Convention Center near Denver, Colorado (“Gaylord Rockies”). The Company’s other owned hotel assets managed by Marriott include the Inn at Opryland, an overflow hotel adjacent to Gaylord Opryland, and the AC Hotel at National Harbor, Washington D.C. (“AC Hotel”), an overflow hotel adjacent to Gaylord National.
The Company also owns a controlling 70% equity interest in a business comprised of a number of entertainment and media assets, known as the Opry Entertainment Group, which the Company reports as its Entertainment segment. These assets include the Grand Ole Opry, the legendary weekly showcase of country music’s finest performers; the Ryman Auditorium, the storied live music venue and former home of the Grand Ole Opry; WSM-AM, the Opry’s radio home; Ole Red, a brand of Blake Shelton-themed bar, music venue and event spaces; two Nashville-based assets managed by Marriott – the Wildhorse Saloon and the General Jackson Showboat; and as of May 31, 2022, Block 21, a mixed-use entertainment, lodging, office, and retail complex located in Austin, Texas (“Block 21”). See Note 2, “Block 21 Transaction,” for further disclosure regarding Block 21. Opry Entertainment Group also owns 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”).
As further disclosed in Note 1 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, on June 16, 2022, the Company and certain of its subsidiaries, including OEG Attractions Holdings, LLC (“OEG”), which directly or indirectly owns the assets that comprise the Company’s Entertainment segment, consummated the transactions contemplated by an investment agreement with Atairos Group, Inc. (“Atairos”) and A-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 Company retains a controlling 70% equity interest in OEG and continues to consolidate the assets, liabilities and results of operations of OEG in the accompanying condensed consolidated financial statements. The portion of OEG that the Company does not own is recorded as noncontrolling interest in consolidated joint venture, which is classified as mezzanine equity in the accompanying condensed consolidated balance sheet, and any adjustment necessary to reflect the noncontrolling interest at its redemption value is shown in the accompanying condensed consolidated statement of equity (deficit) and noncontrolling interest. See Note 4, “Income (Loss) Per Share,” for further disclosure.
The condensed consolidated financial statements include the accounts of Ryman and its subsidiaries and have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted from this report pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. In the opinion of management, all adjustments necessary for a fair statement of the results of operations for the interim periods have been included. All adjustments are of a normal, recurring nature. The results of operations for such interim periods are not necessarily indicative of the results for the full year because of seasonal and short-term variations.
The Company principally operates, through its subsidiaries and its property managers, as applicable, in the following business segments: Hospitality, Entertainment, and Corporate and Other.
Newly Issued Accounting Standards
In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-04, “Reference Rate Reform – Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which provides temporary optional expedients and exceptions to the existing guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). The guidance in ASU 2020-04 is optional, effective immediately, and may be elected over time as reference rate reform activities occur generally through December 31, 2022. In December 2022, the FASB issued ASU No. 2022-06, “Reference Rate Reform – Deferral of the Sunset Date of Topic 848,” which extends the transition period for the shift from LIBOR to December 2024. During 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of this guidance and may apply other elections as applicable as additional market changes occur.
2. BLOCK 21 TRANSACTION:
As further disclosed in Note 1 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, on May 31, 2022, the Company 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 the Austin City Limits Live at The Moody Theater (“ACL Live”), a 2,750-seat entertainment venue that serves as the filming location for the Austin City Limits television series. The Block 21 complex also includes the 251-room W Austin Hotel, which Marriott manages, the 3TEN at ACL Live club and approximately 53,000 square feet of other Class A commercial space. The Company funded the cash portion of the purchase price with cash on hand and borrowings under its revolving credit facility. The acquisition was accounted for as a business combination, given the different nature of the principal operations acquired (a hotel and an entertainment venue). Block 21 assets are reflected in the Company’s Entertainment segment as of May 31, 2022.
During the current quarter, the Company concluded its valuation of the fair value of the acquired assets and liabilities as of May 31, 2022, and no significant changes were made to the provisional amounts disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
3. REVENUES:
Revenues from occupied hotel rooms are recognized over time as the daily hotel stay is provided to hotel groups and guests. Revenues from concessions, food and beverage sales, and group meeting services are recognized over the period or at the point in time those goods or services are delivered to the hotel group or guest. Revenues from ancillary services at the Company’s hotels, such as spa, parking, and transportation services, are generally recognized at the time the goods or services are provided. Cancellation fees and attrition fees, which are charged to groups when they do not fulfill the minimum number of room nights or minimum food and beverage spending requirements originally contracted for, are generally recognized as revenue in the period the Company determines it is probable that a significant reversal in the amount of revenue recognized will not occur, which is typically the period these fees are collected. The Company generally recognizes revenues from the Entertainment segment at the point in time that services are provided or goods are delivered or shipped to the customer, as applicable. Entertainment segment revenues from licenses of content are recognized at the point in time the content is delivered to the licensee and the licensee can use and benefit from the content. Revenue related to content provided to Circle is eliminated for the portion of Circle that the Company owns. Almost all of the Company’s revenues are either cash-based or, for meeting and convention groups who meet the Company’s credit criteria, billed and collected on a short-term receivables basis. The Company is required to collect certain taxes from customers on behalf of government agencies and remit these to the applicable governmental entity on a periodic basis. These taxes are collected from customers at the time of purchase but are not included in revenue. The
8
Company records a liability upon collection of such taxes from the customer and relieves the liability when payments are remitted to the applicable governmental agency.
The Company’s revenues disaggregated by major source are as follows (in thousands):
Hotel group rooms
120,513
62,478
Hotel transient rooms
40,738
39,115
Hotel food and beverage - banquets
160,499
72,824
Hotel food and beverage - outlets
55,305
39,292
Hotel other
Entertainment admissions/ticketing
22,156
15,549
Entertainment food and beverage
24,066
14,361
Entertainment produced content
1,134
1,468
Entertainment retail and other
19,924
6,646
The Company’s Hospitality segment revenues disaggregated by location are as follows (in thousands):
Gaylord Opryland
111,806
73,519
Gaylord Palms
84,546
59,848
Gaylord Texan
86,398
56,636
Gaylord National
72,772
32,587
Gaylord Rockies
64,047
34,787
AC Hotel
2,211
1,607
Inn at Opryland
2,659
2,127
Total Hospitality segment revenues
424,439
261,111
The majority of the Company’s Entertainment segment revenues are concentrated in Nashville, Tennessee and Austin, Texas.
The Company records deferred revenues when cash payments are received in advance of its performance obligations, primarily related to advanced deposits on hotel rooms and advanced ticketing at its OEG venues. At March 31, 2023 and December 31, 2022, the Company had $163.4 million and $136.5 million, respectively, in deferred revenues, which are included in accounts payable and accrued liabilities in the accompanying condensed consolidated balance sheets. Of the amount outstanding at December 31, 2022, approximately $70.1 million was recognized in revenue during the three months ended March 31, 2023.
9
4. INCOME (LOSS) PER SHARE:
The computation of basic and diluted earnings per common share is as follows (in thousands, except per share data):
Numerator:
Net income (loss) available to common stockholders - if-converted method
60,557
Denominator:
Weighted average shares outstanding - basic
55,182
55,086
Effect of dilutive stock-based compensation
281
Effect of dilutive put rights
3,863
Weighted average shares outstanding - diluted
59,326
For the three months ended March 31, 2022, the effect of dilutive stock-based compensation was the equivalent of 0.3 million shares of common stock outstanding. Because the Company had a loss available to common stockholders in the three months ended March 31, 2022, these incremental shares were excluded from the computation of dilutive earnings per share as the effect of their inclusion would have been anti-dilutive.
As more fully discussed in Note 1 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, although currently not exercisable, the OEG Investor has certain put rights (the “OEG Put Rights”) to require the Company to purchase the OEG Investor’s equity interest in OEG, which the Company may pay in cash or Company stock, at the Company’s option. The Company calculated potential dilution for the OEG Put Rights based on the if-converted method, which assumes the OEG Put Rights were converted on the first day of the period or the date of issuance and the OEG Investor’s noncontrolling equity interest was redeemed in exchange for shares of the Company’s common stock.
The operating partnership units (“OP Units”) held by the noncontrolling interest holders in the Operating Partnership have been excluded from the denominator of the diluted income (loss) per share calculation for the three months ended March 31, 2023 and 2022 as there would be no effect on the calculation of diluted income (loss) per share because the income (loss) attributable to the OP Units held by the noncontrolling interest holders would also be subtracted to derive net income (loss) available to common stockholders.
5. ACCUMULATED OTHER COMPREHENSIVE LOSS:
The Company’s balance in accumulated other comprehensive loss is comprised of amounts related to the Company’s minimum pension liability discussed in Note 12, “Pension Plans,” interest rate derivatives designated as cash flow hedges related to the Company’s outstanding debt as discussed in Note 8, “Debt,” and amounts related to an other-than-temporary impairment of a held-to-maturity investment that existed prior to 2020 with respect to the notes receivable discussed in Note 7, “Notes Receivable,” to the condensed consolidated financial statements included herein.
10
Changes in accumulated other comprehensive loss by component for the three months ended March 31, 2023 and 2022 consisted of the following (in thousands):
Other-Than-
Minimum
Temporary
Pension
Impairment of
Interest Rate
Liability
Investment
Derivatives
Balance, December 31, 2022
(18,021)
(3,087)
10,185
Losses arising during period
(1,010)
Amounts reclassified from accumulated other comprehensive loss
(67)
53
(5,268)
(5,282)
Net other comprehensive income (loss)
(6,278)
Balance, March 31, 2023
(18,088)
(3,034)
3,907
Balance, December 31, 2021
(16,419)
(3,298)
(9,363)
Gains arising during period
6,070
(86)
3,949
3,916
10,019
Balance, March 31, 2022
(16,505)
(3,245)
656
6. PROPERTY AND EQUIPMENT:
Property and equipment, including right-of-use finance lease assets, at March 31, 2023 and December 31, 2022 is recorded at cost (except for right-of-use finance lease assets) and summarized as follows (in thousands):
Land and land improvements
451,422
443,469
Buildings
3,801,386
3,785,968
Furniture, fixtures and equipment
1,027,535
1,015,078
Right-of-use finance lease assets
1,613
Construction-in-progress
53,128
50,312
5,335,084
5,296,440
Accumulated depreciation and amortization
(2,171,184)
(2,124,732)
7. NOTES RECEIVABLE:
As further discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, in connection with the development of Gaylord National, the Company holds two issuances of governmental bonds (“Series A bond” and “Series B bond”) with a total carrying value and approximate fair value of $64.2 million and $67.6 million at March 31, 2023 and December 31, 2022, respectively, net of credit loss reserve of $38.0 million at each of March 31, 2023 and December 31, 2022. The Company receives debt service and principal payments thereon, payable from property tax increments, hotel taxes and special hotel rental taxes generated from Gaylord National through the maturity dates of July 1, 2034 and September 1, 2037, respectively. The Company records interest income over the life of the notes using the effective interest method.
The Company has the intent and ability to hold these bonds to maturity. The Company’s quarterly assessment of credit losses considers the estimate of projected tax revenues that will service the bonds over their remaining terms. These tax revenue projections are updated each quarter to reflect updated industry projections as to future anticipated operations of the hotel. As a result of reduced tax revenue projections over the remaining life of the bonds, the Series B bond is fully reserved. The Series A bond is of higher priority than other tranches which fall between the Company’s two issuances.
11
During each of the three months ended March 31, 2023 and 2022, the Company recorded interest income of $1.3 million on these bonds. The Company received payments of $4.7 million and $5.1 million during the three months ended March 31, 2023 and 2022, respectively, relating to these bonds. At March 31, 2023 and December 31, 2022, before consideration of the credit loss reserve, the Company had accrued interest receivable related to these bonds of $39.8 million and $41.0 million, respectively.
8. DEBT:
The Company’s debt and finance lease obligations at March 31, 2023 and December 31, 2022 consisted of (in thousands):
$700M Revolving Credit Facility, interest at LIBOR plus 1.50%, maturing March 31, 2024
$500M Term Loan B, interest at LIBOR plus 2.00%, maturing May 11, 2024
370,000
371,250
$600M Senior Notes, interest at 4.50%, maturing February 15, 2029
600,000
$700M Senior Notes, interest at 4.75%, maturing October 15, 2027
700,000
$800M Gaylord Rockies Term Loan, interest at LIBOR plus 2.50%, maturing July 2, 2023
800,000
$300M OEG Term Loan, interest at SOFR plus 5.00%, maturing June 16, 2029
298,500
299,250
$65M OEG Revolver, interest at SOFR plus 4.75%, maturing June 16, 2027
Block 21 CMBS Loan, interest at 5.58%, maturing January 5, 2026
133,934
134,636
Finance lease obligations
618
685
Unamortized deferred financing costs
(30,912)
(30,482)
Unamortized discount
(12,242)
(12,747)
Total debt
Amounts due within one year consist of the $800 million Gaylord Rockies term loan, the amortization payments for the $500 million term loan B of 1.0% of the original principal balance, amortization payments for the $300 million OEG term loan of 1.0% of the original principal balance, and amortization of the Block 21 CMBS loan based on a 30-year amortization. The Gaylord Rockies term loan has three, one-year extension options, subject to certain requirements in the Gaylord Rockies term loan. The Company has fulfilled the necessary requirements to exercise the first of these extension options.
At March 31, 2023, there were no defaults under the covenants related to the Company’s outstanding debt.
Interest Rate Derivatives
The Company has entered into interest rate swaps to manage interest rate risk associated with the Company’s $500 million term loan B, the Gaylord Rockies $800 million term loan and the $300 million OEG term loan. Each swap has been designated as a cash flow hedge whereby the Company receives variable-rate amounts in exchange for fixed-rate payments over the life of the agreement without exchange of the underlying principal amount. The Company does not use derivatives for trading or speculative purposes and currently does not hold any derivatives that are not designated as hedges.
For derivatives designated as and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive loss and subsequently reclassified to interest expense in the same period during which the hedged transaction affects earnings. These amounts reported in accumulated other comprehensive loss will be reclassified to interest expense as interest payments are made on the related variable-rate debt. The Company estimates that $5.9 million will be reclassified from accumulated other comprehensive income as a reduction to interest expense in the next twelve months.
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The estimated fair value of the Company’s derivative financial instruments at March 31, 2023 and December 31, 2022 is as follows (in thousands):
Estimated Fair Value
Asset (Liability) Balance
Strike
Notional
Hedged Debt
Type
Rate
Index
Maturity Date
Amount
Term Loan B
Interest Rate Swap
1.2235%
1-month LIBOR
May 11, 2023
87,500
356
1,096
1.2315%
355
1,093
Gaylord Rockies Term Loan
3.3410%
August 1, 2023
4,388
6,969
OEG Term Loan
4.5330%
3-month SOFR
December 18, 2025
100,000
(1,904)
(1,164)
10,186
Derivative financial instruments in an asset position are included in prepaid expenses and other assets, and those in a liability position are included in other liabilities in the accompanying condensed consolidated balance sheets.
The effect of the Company’s derivative financial instruments on the accompanying condensed consolidated statements of operations for the respective periods is as follows (in thousands):
Amount of Gain (Loss)
Recognized in OCI on
Reclassified from Accumulated
Derivative
Location of Gain (Loss)
OCI into Income (Expense)
Reclassified from
Accumulated OCI
into Income (Expense)
Derivatives in Cash Flow Hedging Relationships:
Interest rate swaps
5,268
(3,949)
Total derivatives
Reclassifications from accumulated other comprehensive loss for interest rate swaps are shown in the table above and included in interest expense. Total consolidated interest expense for the three months ended March 31, 2023 and 2022 was $42.5 million and $31.9 million, respectively.
At March 31, 2023, the fair value of derivatives in a net liability position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $1.9 million. As of March 31, 2023, the Company has not posted any collateral related to these agreements and was not in breach of any agreement provisions. If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at the aggregate termination value of $2.0 million. In addition, the Company has an agreement with its derivative counterparty that contains a provision whereby the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness.
9. DEFERRED MANAGEMENT RIGHTS PROCEEDS:
On October 1, 2012, the Company consummated its agreement to sell the Gaylord Hotels brand and rights to manage the Gaylord Hotels properties (the “Management Rights”) to Marriott for $210.0 million in cash. Effective October 1, 2012, Marriott assumed responsibility for managing the day-to-day operations of the Gaylord Hotels properties pursuant to a management agreement for each Gaylord Hotel property. The Company allocated $190.0 million of the purchase price to the Management Rights, based on the Company’s estimates of the fair values for the respective components. For financial accounting purposes, the amount related to the Management Rights was deferred and is amortized on a straight-line basis over the 65-year term of the hotel management agreements, including extensions, as a reduction in management fee expense.
10. LEASES:
The Company is a lessee of a 65.3-acre site in Osceola County, Florida on which Gaylord Palms is located; building or land leases for Ole Red Gatlinburg, Ole Red Orlando, Ole Red Tishomingo, Ole Red Nashville International Airport and
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Ole Red Las Vegas; and various warehouse, general office and other equipment leases. The Gaylord Palms land lease has a term through 2074, which may be extended through January 2101, at the Company’s discretion. The leases for Ole Red locations range from five to ten years, with renewal options ranging from five to fifty-five years, at the Company’s discretion, with the exception of Ole Red Nashville International Airport, which has no extension option. Extension options are not considered reasonably assured and, as a result, are not included in the Company’s calculation of its right-of-use assets and lease liabilities.
The terms of the Gaylord Palms lease include variable lease payments based upon net revenues at Gaylord Palms, and certain other of the Company’s leases include rental payments adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
As the discount rate implicit in the Company’s operating leases is not readily determinable, the Company applies judgments related to the determination of the discount rates used to calculate the lease liability as required by Accounting Standards Codification Topic 842, “Leases”. The Company calculates its incremental borrowing rates by utilizing judgments and estimates regarding the Company’s secured borrowing rates, market credit rating, comparable bond yield curve, and adjustments to market yield curves to determine a securitized rate.
The Company’s lease costs for the three months ended March 31, 2023 and 2022 are as follows (in thousands):
Operating lease cost
4,657
3,536
Finance lease cost:
Amortization of right-of-use assets
31
Interest on lease liabilities
Net lease cost
4,694
3,575
Future minimum lease payments under non-cancelable leases at March 31, 2023 are as follows (in thousands):
Finance
Leases
Year 1
7,883
153
Year 2
8,885
46
Year 3
8,886
Year 4
8,983
Year 5
8,979
Years thereafter
562,853
462
Total future minimum lease payments
606,469
799
Less amount representing interest
(480,281)
(181)
Total present value of minimum payments
The remaining lease term and discount rate for the Company’s leases are as follows:
Weighted-average remaining lease term:
Operating leases
44.0
years
Finance leases
12.4
Weighted-average discount rate:
7.0
%
4.0
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11. STOCK PLANS:
During the three months ended March 31, 2023, the Company granted 0.2 million restricted stock units with a weighted-average grant date fair value of $86.59 per unit. There were 0.6 million restricted stock units outstanding at each of March 31, 2023 and December 31, 2022.
Compensation expense for the Company’s stock-based compensation plans was $3.7 million and $3.8 million for the three months ended March 31, 2023 and 2022, respectively.
12. PENSION PLANS:
Net periodic pension (income) expense reflected in other gains and (losses), net in the accompanying condensed consolidated statements of operations included the following components for the respective periods (in thousands):
Interest cost
825
526
Expected return on plan assets
(730)
(1,031)
Amortization of net actuarial loss
228
200
Total net periodic pension (income) expense
323
(305)
13. INCOME TAXES:
The Company elected to be taxed as a REIT effective January 1, 2013, pursuant to the U.S. Internal Revenue Code of 1986, as amended. As a REIT, generally the Company is not subject to federal corporate income taxes on ordinary taxable income and capital gains income from real estate investments that it distributes to its stockholders. The Company continues to be required to pay federal and state corporate income taxes on earnings of its taxable REIT subsidiaries (“TRSs”).
For the three months ended March 31, 2023 and 2022, the Company recorded an income tax provision (benefit) of $1.6 million and $(0.1) million, respectively, related to its TRSs.
At March 31, 2023 and December 31, 2022, the Company had no unrecognized tax benefits.
14. COMMITMENTS AND CONTINGENCIES:
The Company has entered into limited repayment and carry guaranties related to the Second Amended and Restated Loan Agreement, as amended, related to Gaylord Rockies (the “Gaylord Rockies Loan”) that, in the aggregate, guarantee repayment of 10% of the principal debt, together with interest and operating expenses, which are to be released once Gaylord Rockies achieves a certain debt service coverage threshold as defined in the Gaylord Rockies Loan. Generally, the Gaylord Rockies Loan is non-recourse to the Company, subject to (i) those limited guaranties and (ii) customary non-recourse carve-outs.
In connection with the purchase of Block 21, the Company provided (i) limited guarantees to the Block 21 lenders under the Block 21 CMBS Loan via a guaranty agreement, a guaranty of completion agreement and an environmental indemnity, and (2) a letter of credit drawable by the Block 21 lenders in the event of a default of the Block 21 CMBS Loan.
In April 2019, a subsidiary of the Company acquired a 50% equity interest in Circle and has made capital contributions of $35.0 million through March 31, 2023. In addition, the Company intends to contribute up to an additional $8.2 million through December 31, 2023 for working capital needs. The Company accounts for its investment in this joint venture under the equity method of accounting.
The Company has entered into employment agreements with certain officers, which provide for severance payments upon certain events, including certain terminations in connection with a change of control.
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The Company, in the ordinary course of business, is involved in certain legal actions and claims on a variety of matters. It is the opinion of management that such contingencies will not have a material effect on the financial statements of the Company.
15. EQUITY
Dividends
On February 23, 2023, the Company’s board of directors declared the Company’s first quarter 2023 cash dividend in the amount of $0.75 per share of common stock, or an aggregate of approximately $41.7 million in cash, which was paid on April 17, 2023 to stockholders of record as of the close of business on March 31, 2023. Any future dividend is subject to the Company’s board of directors’ determination as to the amount of distributions and the timing thereof.
Noncontrolling Interest in the Operating Partnership
The Company consolidates the Operating Partnership, which is a majority-owned limited partnership that has a noncontrolling interest. The outstanding OP Units held by the noncontrolling limited partners are redeemable for cash, or if the Company so elects, in shares of the Company’s common stock on a one-for-one basis, subject to certain adjustments. At March 31, 2023, 0.4 million outstanding OP Units, or less than 1% of the outstanding OP Units, were held by the noncontrolling limited partners and are included as a component of equity in the accompanying condensed consolidated balance sheets. The Company owns, directly or indirectly, the remaining 99.3% of the outstanding OP Units.
At-the-Market (“ATM”) Equity Distribution Agreement
On May 27, 2021, the Company entered into an ATM equity distribution agreement (the “ATM Agreement”) with a consortium of banks (each a “Sales Agent” and collectively, the “Sales Agents”), pursuant to which the Company may offer and sell to or through the Sales Agents (the “ATM Offering”), from time to time, up to 4.0 million shares (the “Shares”) of the Company’s common stock in such share amounts as the Company may specify by notice to the Sales Agents, in accordance with the terms and conditions set forth in the ATM Agreement.
Under the ATM Agreement, the Company will set the parameters for the sale of the Shares, including the number of the Shares to be issued, the time period during which sales are requested to be made, limitation on the number of the Shares that may be sold in any one trading day and any minimum price below which sales may not be made. Each Sales Agent will use its commercially reasonable efforts, consistent with its normal trading and sales practices, to sell such Shares up to the amount specified, and otherwise in accordance with mutually agreed terms between the Sales Agent and the Company. Neither the Company nor any of the Sales Agents are obligated to sell any specific number or dollar amount of Shares under the ATM Agreement. The Sales Agents will be paid a commission of up to 2.0% of the gross sales price from the sale of any Shares. The Company intends to use the net proceeds from any sale of Shares for the repayment of outstanding indebtedness, which may include the repayment of amounts outstanding under the Company’s credit agreement governing the Company’s revolving credit facility. Net proceeds which are not used for the repayment of outstanding indebtedness (to the extent then permitted by the Company’s credit agreement) may be used for general corporate purposes.
No shares were issued under the ATM Agreement during the three months ended March 31, 2023.
16. FAIR VALUE MEASUREMENTS:
The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
The investments held by the Company in connection with its deferred compensation plan consist of mutual funds traded in an active market. The Company determined the fair value of these mutual funds based on the net asset value per unit
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of the funds or the portfolio, which is based upon quoted market prices in an active market. Therefore, the Company has categorized these investments as Level 1.
The Company’s interest rate swaps consist of over-the-counter swap contracts, which are not traded on a public exchange. The Company determines the fair value of these swap contracts based on a widely accepted valuation methodology of netting the discounted future fixed cash flows and the discounted expected variable cash flows, using interest rates derived from observable market interest rate curves and volatilities, with appropriate adjustments for any significant impact of non-performance risk of the parties to the swap contracts. Therefore, these swap contracts have been classified as Level 2.
The Company has consistently applied the above valuation techniques in all periods presented and believes it has obtained the most accurate information available for each type of instrument.
The Company’s assets and liabilities measured at fair value on a recurring basis at March 31, 2023 and December 31, 2022, were as follows (in thousands):
Markets for
Observable
Unobservable
Identical Assets
Inputs
(Level 1)
(Level 2)
(Level 3)
Deferred compensation plan investments
30,335
Variable to fixed interest rate swaps
5,811
Total assets measured at fair value
36,146
1,904
Total liabilities measured at fair value
29,245
11,350
40,595
1,164
The remainder of the assets and liabilities held by the Company at March 31, 2023 are not required to be recorded at fair value, and the carrying value of these assets and liabilities approximates fair value, except as described below.
The Company has outstanding $600.0 million in aggregate principal amount of $600 million 4.50% senior notes. The carrying value of these notes at March 31, 2023 was $592.1 million, net of unamortized deferred financing costs (“DFCs”). The fair value of these notes, based upon quoted market prices (Level 1), was $542.2 million at March 31, 2023.
The Company has outstanding $700.0 million in aggregate principal amount of $700 million 4.75% senior notes. The carrying value of these notes at March 31, 2023 was $694.0 million, net of unamortized DFCs and premiums. The fair value of these notes, based upon quoted market prices (Level 1), was $658.9 million at March 31, 2023.
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17. FINANCIAL REPORTING BY BUSINESS SEGMENTS:
The Company’s operations are organized into three principal business segments:
The following information is derived directly from the segments’ internal financial reports used for corporate management purposes (amounts in thousands):
Hospitality
Corporate and Other
Depreciation and amortization:
42,875
52,271
5,265
3,552
217
205
Operating income (loss):
106,070
15,668
10,581
2,741
(10,811)
(9,762)
(190)
(304)
(469)
Total operating income
Identifiable assets:
3,213,984
3,314,444
518,029
502,913
302,666
223,266
Total identifiable assets
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Ryman Hospitality Properties, Inc. (“Ryman”) is a Delaware 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, a Delaware corporation (“Finco”), was formed as a wholly-owned subsidiary of the Operating Partnership for the sole purpose of being a co-issuer of debt securities with the Operating Partnership. Neither Ryman nor Finco has any material assets, other than Ryman’s investment in the Operating Partnership and the Operating Partnership’s owned subsidiaries. Neither the Operating 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 the Securities 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 to Ryman 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 ended December 31, 2022, included in our Annual Report on Form 10-K that was filed with the SEC on February 24, 2023.
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 future performance of our business, anticipated business levels and our anticipated financial results during future periods, and other business or operational issues; (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 use of cash during the remainder of 2023; (x) our ability to borrow available funds under our credit facility; (xi) our expectations about successfully amending the agreements governing our indebtedness should the need arise; (xii) the effects of inflation and increased costs on our business and on our customers, including group customers at our hotels; and (xiii) 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 COVID-19 on us and the hospitality and entertainment industries generally, 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 and our Annual Report on Form 10-K for the year ended December 31, 2022 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 our Gaylord Hotels properties, consist of the Gaylord Opryland Resort & Convention Center in Nashville, Tennessee (“Gaylord Opryland”), the Gaylord Palms Resort & Convention Center near Orlando, Florida (“Gaylord Palms”), the Gaylord Texan Resort & Convention Center near Dallas, Texas (“Gaylord Texan”), the Gaylord National Resort & Convention Center near Washington D.C. (“Gaylord National”), and the Gaylord Rockies Resort & Convention Center (“Gaylord Rockies”). Our other owned hotel assets managed by Marriott include the Inn at Opryland, an overflow hotel adjacent to Gaylord Opryland, and the AC Hotel at National Harbor, Washington D.C. (“AC Hotel”), an overflow hotel adjacent to Gaylord National.
We also own a controlling 70% equity interest in a business comprised of a number of entertainment and media assets, known as the Opry Entertainment Group (“OEG”), which we report as our Entertainment segment. These assets include the Grand Ole Opry, the legendary weekly showcase of country music’s finest performers for 97 years; the Ryman Auditorium, the storied live music venue and former home of the Grand Ole Opry located in downtown Nashville; WSM-AM, the Opry’s radio home; Ole Red, a brand of Blake Shelton-themed bar, music venue and event spaces; two Nashville-based assets managed by Marriott – the Wildhorse Saloon and the General Jackson Showboat; and as of May 31, 2022, Block 21, a mixed-use entertainment, lodging, office, and retail complex located in Austin, 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 OEG effective June 16, 2022.
Each of our award-winning Gaylord 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, our Gaylord Hotels properties provide a convenient and entertaining environment for convention guests. Our Gaylord Hotels properties focus on the large group meetings market in the United States.
See “Cautionary Note Regarding Forward-Looking Statements” in this Item 2 and Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2022 for important information regarding forward-looking statements made in this report and risks and uncertainties we face.
OEG Transaction
As more fully described in Note 1, “OEG Transaction,” to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022, on June 16, 2022, we and certain of our subsidiaries, including OEG Attractions Holdings, LLC, which directly or indirectly owns the assets that comprise our Entertainment Segment, consummated the transactions contemplated by an investment agreement (the “Investment Agreement”) with Atairos Group, Inc. (“Atairos”) and A-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
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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 then-outstanding balance of our former $300 million term loan A and to pay down substantially all borrowings then outstanding under our revolving credit facility.
Dividend Policy
In September 2022, our board of directors approved a dividend policy pursuant to which 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. The dividend policy may be altered at any time by our board of directors (as otherwise permitted by our credit agreement) and certain provisions of our agreements governing our other indebtedness may prohibit us from paying dividends in accordance with any policy we may adopt.
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. Our Gaylord Hotels properties focus on the large group meetings market in the 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 current Gaylord Hotels properties claiming a place among the leading convention hotels in the country.
Expansion of Hotel 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 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 are consistently considering acquisitions that would expand the geographic diversity of our existing asset portfolio.
Continued Investment in Our Existing 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 of Gaylord 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 began a $98 million multi-year interior and exterior enhancement project at Gaylord Rockies to better position the property for our group customers.
Leverage Brand Name Awareness. We believe the Grand Ole Opry is one of the most recognized entertainment brands in the United States. We promote the Grand Ole Opry name through various media, including our WSM-AM radio station, the Internet and television, and through performances by the Grand 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 six Ole Red locations, as well as Circle, purchased Block 21, and in April 2023 announced a partnership with Luke Combs for an entertainment venue concept expected to be completed in 2024. Further, in 2022, we completed a strategic transaction to sell a minority interest in OEG to an affiliate of Atairos and its strategic partner NBCUniversal, who we believe will be able to help us expand the distribution of our OEG brands.
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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. Our 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:
For the three months ended March 31, 2023 and 2022, our total revenues were divided among these business segments as follows:
Segment
86
87
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 performance indicators are commonly used in the hospitality industry and are used by management to evaluate hotel performance and allocate capital expenditures:
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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 applicable SEC rules. These measures include:
See “Non-GAAP Financial Measures” below for further discussion.
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.
Current Economic Environment
Our business levels and financial performance improved in the three months ended March 31, 2023 as compared to the three months ended March 31, 2022, which was impacted by the omicron variant of COVID-19. As described in more detail in “Factors and Trends Contributing to Performance” below, we experienced improved occupancy, ADR, group travel and outside-the-room spending, among other metrics, in the three months ended March 31, 2023, as compared to the three months ended March 31, 2022. This was achieved in spite of general economic uncertainty in the U.S. economy, which continues and may impact our future results of operations and financial position, and this improved performance has mitigated increasing costs in the current inflationary environment.
Based on current demand trends, we expect our businesses to continue to perform well during the remainder of 2023. Demand in our businesses, including our hotels’ group business, is sensitive to changes in macroeconomic factors, including increased labor and other costs, broad inflationary pressures and rising interest rates. The timing and magnitude of any potential economic slowdown or recession and the extent of any negative effects on our business is unknown.
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Selected Financial Information
The following table contains our unaudited selected summary financial data for the three months ended March 31, 2023 and 2022. 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
Three Months Ended March 31,
REVENUES:
32.8
34.0
43.9
37.5
9.6
15.8
13.7
12.7
100.0
OPERATING EXPENSES:
8.6
10.1
23.4
23.8
21.0
29.0
Hotel management fees, net
3.1
1.7
10.5
10.6
2.2
3.2
0.0
0.1
0.2
8.7
17.5
1.1
1.2
Total depreciation and amortization
9.8
18.7
78.5
97.4
OPERATING INCOME (LOSS):
25.0
6.0
15.7
7.2
(A)
(0.0)
(0.1)
(0.2)
21.5
2.6
Net (income) loss attributable to noncontrolling interest in the Operating Partnership
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Summary Financial Results
Results of Operations
The following table summarizes our financial results for the three months ended March 31, 2023 and 2022 (in thousands, except percentages and per share data):
Change
64.4
32.6
1,241.8
346.0
349.1
Net income (loss) available to common stockholders per share - diluted
326.7
Total Revenues
The increase in our total revenues for the three months ended March 31, 2023, as compared to the same period in 2022, is attributable to increases in our Hospitality segment and Entertainment segment of $163.3 million and $29.3 million, respectively, as presented in the tables below.
Total Operating Expenses
The increase in our total operating expenses for the three months ended March 31, 2023, as compared to the same period in 2022, is primarily the result of increases in our Hospitality segment and Entertainment segment of $82.3 million and $19.7 million, respectively, partially offset by a decrease in depreciation expense of $7.7 million, as presented in the tables below.
Net Income (Loss)
Our net income of $61.0 million for the three months ended March 31, 2023, as compared to a net loss of $24.8 million for the same period in 2022, was primarily due to the changes in our revenues and operating expenses reflected above, as well as a $10.6 million increase in interest expense in the 2023 period, as compared to the 2022 period, as described more fully below.
Factors and Trends Contributing to Performance
The most important factors and trends contributing to our performance during the three months ended March 31, 2023 compared to the three months ended March 31, 2022 were:
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Operating Results – Detailed Segment Financial Information
Hospitality Segment
Total Segment Results. The following presents the financial results of our Hospitality segment for the three months ended March 31, 2023 and 2022 (in thousands, except percentages and performance metrics):
58.7
92.5
Total hospitality revenue
62.6
Hospitality operating expenses:
39.6
61.5
18.9
200.1
(18.0)
Total Hospitality operating expenses
318,369
245,443
29.7
Hospitality operating income
577.0
Hospitality performance metrics:
Occupancy
72.3
47.3
pts
ADR
237.95
229.17
3.8
RevPAR (1)
172.08
108.41
Total RevPAR (2)
452.94
278.64
Net Definite Group Room Nights Booked (3)
250,318
165,668
51.1
The increase in total Hospitality segment revenue in the three months ended March 31, 2023, as compared to the same period in 2022, is primarily due to increases of $40.2 million, $38.3 million, $29.8 million, $29.3 million and $24.7 million at Gaylord National, Gaylord Opryland, Gaylord Texan, Gaylord Rockies and Gaylord Palms, respectively, as presented in the tables below.
Total Hospitality segment revenues in the three months ended March 31, 2023 include $9.7 million in attrition and cancellation fee revenue, a decrease of $9.9 million in attrition and cancellation fees from the 2022 period, as collections continue to decline.
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The percentage of group versus transient business based on rooms sold for our Hospitality segment for the periods presented was approximately as follows:
Group
79
66
Transient
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The increase in rooms expenses in the three months ended March 31, 2023, as compared to the same period in 2022, is primarily due to increases of $4.2 million, $2.1 million and $2.0 million at Gaylord National, Gaylord Opryland and Gaylord Rockies, respectively, as presented in the tables below.
The increase in food and beverage expenses in the three months ended March 31, 2023, as compared to the same period in 2022, is primarily due to increases of $10.0 million, $9.1 million, $9.1 million, $8.4 million and $7.1 million at Gaylord National, Gaylord Texan, Gaylord Opryland, Gaylord Rockies and Gaylord Palms, respectively, as presented in the tables below.
Other hotel expenses for the three months ended March 31, 2023 and 2022 consist of the following (in thousands):
Administrative employment costs
39,758
33,212
19.7
Utilities
9,360
7,547
24.0
Property taxes
9,089
9,471
(4.0)
44,852
36,413
23.2
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 ended March 31, 2023, as compared to the same period in 2022, primarily due to increases at Gaylord Opryland and Gaylord National associated with increased business levels. Utility costs increased during the three months ended March 31, 2023, as compared to the same period in 2022, primarily due to increases at Gaylord Opryland, Gaylord Rockies and Gaylord National associated with increased usage. Property taxes decreased during the three months ended March 31, 2023, as compared to the 2022 period, primarily due to a decrease at Gaylord National due to a settlement of an appeal from prior tax years, partially offset by 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 ended March 31, 2023, as compared to the same period in 2022, primarily as a result of various increases at each of our Gaylord Hotels properties.
Each of our management agreements with Marriott for our Gaylord 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 our Gaylord 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 ended March 31, 2023 and 2022, we incurred $9.2 million and $5.6 million, respectively, related to base management fees for our Hospitality segment and $6.7 million and $0.2 million, 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 9, “Deferred Management Rights Proceeds,” to the accompanying condensed consolidated financial statements included herein.
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Total Hospitality segment depreciation and amortization expense decreased in the three months ended March 31, 2023, as compared to the same period in 2022, 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.
Property-Level Results. The following presents the property-level financial results of our Hospitality segment for the three months ended March 31, 2023 and 2022.
Gaylord Opryland Results. The results of Gaylord Opryland for the three months ended March 31, 2023 and 2022 are as follows (in thousands, except percentages and performance metrics):
45,331
30,406
49.1
50,097
27,039
85.3
16,378
16,074
1.9
Total revenue
52.1
10,360
8,242
25.7
25,989
16,913
53.7
29,890
22,850
30.8
5,318
1,370
288.2
8,554
8,589
(0.4)
80,111
57,964
38.2
Performance metrics:
72.6
48.8
240.19
239.77
RevPAR
174.40
116.98
Total RevPAR
430.16
282.85
Gaylord Palms Results. The results of Gaylord Palms for the three months ended March 31, 2023 and 2022 are as follows (in thousands, except percentages and performance metrics):
31,664
22,012
43.8
43,782
27,396
59.8
9,100
10,440
(12.8)
41.3
6,312
4,491
40.5
21,188
14,039
50.9
20,706
18,818
10.0
3,096
1,090
184.0
5,610
5,552
1.0
56,912
43,990
29.4
79.5
55.6
23.9
257.66
256.19
0.6
204.78
142.36
546.80
387.07
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Gaylord Texan Results. The results of Gaylord Texan for the three months ended March 31, 2023 and 2022 are as follows (in thousands, except percentages and performance metrics):
29,044
20,908
38.9
49,342
26,150
88.7
8,012
9,578
(16.3)
52.5
6,402
4,960
29.1
24,550
15,431
59.1
18,244
15,627
16.7
3,348
1,004
233.5
5,766
6,698
(13.9)
58,310
43,720
33.4
77.1
57.8
19.3
230.83
221.38
4.3
177.90
128.06
529.21
346.91
Gaylord National Results. The results of Gaylord National for the three months ended March 31, 2023 and 2022 are as follows (in thousands, except percentages and performance metrics):
28,999
13,964
107.7
36,618
14,553
151.6
7,155
4,070
75.8
123.3
11,559
7,350
57.3
22,503
12,460
80.6
21,107
15,463
36.5
1,254
450
178.7
8,294
8,139
64,717
43,862
47.5
67.3
35.4
31.9
239.70
219.63
9.1
161.43
77.73
405.10
181.40
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Gaylord Rockies Results. The results of Gaylord Rockies for the three months ended March 31, 2023 and 2022 are as follows (in thousands, except percentages and performance metrics):
22,015
11,294
94.9
35,394
16,321
116.9
6,638
7,172
(7.4)
84.1
5,998
3,951
51.8
20,281
11,895
70.5
10,856
12,055
(9.9)
1,999
1,022
95.6
14,045
22,648
(38.0)
53,179
51,571
69.9
39.2
30.7
233.09
213.46
9.2
162.97
83.61
474.10
257.51
Entertainment Segment
Total Segment Results. The following presents the financial results of our Entertainment segment for the three months ended March 31, 2023 and 2022 (in thousands, except percentages):
Revenues
76.9
Operating expenses
62.1
48.2
Operating income (1)
286.0
Revenues, operating expenses and depreciation and amortization increased in our Entertainment segment in the three months ended March 31, 2023, as compared to the prior year period, primarily due to Block 21, which we acquired in May 2022. Entertainment segment revenues also increased in the 2023 period, as compared to the 2022 period, due to
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increased revenue at the Grand Ole Opry primarily due to increased attendance. Entertainment segment operating expenses also increased in the 2023 period, as compared to the 2022 period, primarily from the operation of Block 21, as well as increased variable expenses associated with higher business levels.
Corporate and Other Segment
Total Segment Results. The following presents the financial results of our Corporate and Other segment for the three months ended March 31, 2023 and 2022 (in thousands, except percentages):
10.9
5.9
Operating loss (1)
(10.7)
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 increased in the three months ended March 31, 2023, as compared to the prior year period, primarily as a result of an increase in employment expenses associated with the hiring of additional employees and increased wages to support the Company’s growth.
Operating Results – Preopening Costs
Preopening costs during the three months ended March 31, 2023 primarily include costs associated with Ole Red Las Vegas, which is expected to be completed in the fourth quarter of 2023. Preopening costs during the three months ended March 31, 2022 primarily include costs associated with Ole Red Nashville International Airport, which was completed in May 2022.
Operating Results –Loss on Sale of Assets
Loss on sale of assets during the three months ended March 31, 2022 includes the sale of a parcel of land in Nashville, Tennessee.
Non-Operating Results Affecting Net Income (Loss)
The following table summarizes the other factors which affected our net income (loss) for the three months ended March 31, 2023 and 2022 (in thousands, except percentages):
42,528
31,937
33.2
84.4
(6.8)
(152.8)
(2,612.3)
Interest Expense
Interest expense increased $10.6 million during the three months ended March 31, 2023, as compared to the same period in 2022, due primarily to the new OEG Term Loan and the Block 21 CMBS loan.
Cash interest expense increased $9.9 million to $39.7 million in the three months ended March 31, 2023, as compared to the same period in 2022. Non-cash interest expense, which includes amortization and write-off of deferred financing costs and is offset by capitalized interest, increased $0.7 million to $2.9 million in the three months ended March 31, 2023, as compared to the same period in 2022.
Our weighted average interest rate on our borrowings, excluding capitalized interest, but including the impact of interest rate swaps, was 5.9% and 4.3% for the three months ended March 31, 2023 and 2022, respectively.
Interest Income
Interest income for the three months ended March 31, 2023 and 2022 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 7, “Notes Receivable,” to the accompanying condensed consolidated financial statements included herein for additional discussion of interest income on these bonds.
Loss from Unconsolidated Joint Ventures
The loss from unconsolidated joint ventures for the three months ended March 31, 2023 and 2022 represents our equity method share of losses associated with Circle.
Other Gains and (Losses), net
Other gains and (losses), net for the three months ended March 31, 2023 and 2022 represents various miscellaneous items.
(Provision) benefit 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 ended March 31, 2023 and 2022, we recorded an income tax (provision) benefit of $(1.6) million and $0.1 million, respectively, related to our TRSs.
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 the National Association of Real Estate Investment Trusts (“NAREIT”) in its September 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.
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Adjusted EBITDAre is then calculated as EBITDAre, plus to the extent the following adjustments occurred during the periods presented:
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.
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 stockholders and unit holders Definition
We calculate FFO, which definition is clarified by NAREIT in its December 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 stockholders and unit holders, we then exclude, to the extent the following adjustments occurred during the periods presented:
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FFO available to common stockholders and unit holders and Adjusted FFO available to common stockholders 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 stockholders and unit holders and Adjusted FFO available to common stockholders 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 stockholders and unit holders, and Adjusted FFO available to common stockholders 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 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 ended March 31, 2023 and 2022 (in thousands):
Interest expense, net
39,981
30,556
Provision (benefit) for income taxes
1,633
(65)
Pro rata EBITDAre from unconsolidated joint ventures
EBITDAre
150,974
62,213
Non-cash lease expense
1,501
1,173
Interest income on Gaylord National bonds
1,271
1,340
Transaction costs of acquisitions
178
Adjusted EBITDAre
157,675
68,994
Adjusted EBITDAre of noncontrolling interest in consolidated joint venture
(4,296)
Adjusted EBITDAre, excluding noncontrolling interest in consolidated joint venture
153,379
The following is a reconciliation of our consolidated GAAP net income (loss) to FFO and Adjusted FFO for the three months ended March 31, 2023 and 2022 (in thousands):
Net income (loss) available to common stockholders and unit holders
48,326
55,997
Adjustments for noncontrolling interest
(1,580)
Pro rata adjustments from joint ventures
FFO available to common stockholders and unit holders
108,526
31,222
Right-of-use asset amortization
Loss on other assets
Amortization of debt discounts and premiums
506
(73)
(412)
Deferred tax provision (benefit)
Adjusted FFO available to common stockholders and unit holders
113,593
34,814
Liquidity and Capital Resources
Cash Flows Provided By (Used In) Operating Activities. Historically, cash flow from operating activities has been the principal source of cash used to fund our operating expenses, interest payments on debt, maintenance capital expenditures, and dividends to stockholders. During the three months ended March 31, 2023, our net cash flows provided by operating activities were $31.7 million, primarily reflecting our net income before depreciation expense, amortization expense and other non-cash charges of $119.3 million, partially offset by unfavorable changes in working capital of $87.6 million. The unfavorable changes in working capital primarily resulted from a decrease in accounts payable and accrued liabilities primarily related to compensation and property tax accruals and an increase in accounts receivable due to a seasonal increase in group business, partially offset by an increase in advanced ticket sales at our OEG venues and an increase in advanced deposits at our Gaylord Hotels properties.
During the three months ended March 31, 2022, our net cash flows used in operating activities were $4.2 million, primarily reflecting our net loss before depreciation expense, amortization expense and other non-cash charges of $39.5 million, offset by unfavorable changes in working capital of $43.6 million. The unfavorable changes in working capital primarily resulted from a decrease in accounts payable and accrued liabilities related to compensation accruals and accruals associated with our December holiday programming, as well as an increase in accounts receivable due to an increase in group business at our Gaylord Hotels properties.
Cash Flows Used In Investing Activities. During the three months ended March 31, 2023, our primary uses of funds for investing activities were purchases of property and equipment, which totaled $36.8 million, and consisted primarily of enhancements to the offerings at Block 21, the construction of Ole Red Las Vegas, enhancements at Gaylord Rockies to better position the property for our group customers, and ongoing maintenance capital expenditures for each of our existing properties.
During the three months ended March 31, 2022, our primary use of funds for investing activities were purchases of property and equipment, which totaled $9.7 million, and consisted primarily of a re-concepting of the food and beverage options at Gaylord National and ongoing maintenance capital expenditures for each of our existing properties.
Cash Flows Used In Financing Activities. Our cash flows from financing activities primarily reflect the incurrence of debt, the repayment of long-term debt, and the payment of cash dividends. During the three months ended March 31,
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2023, our net cash flows used in financing activities were $13.9 million, primarily reflecting the payment of $14.0 million in cash dividends.
During the three months ended March 31, 2022, our net cash flows used in financing activities were $5.4 million.
Liquidity
At March 31, 2023, we had $318.5 million in unrestricted cash and $743.4 million available for borrowing in the aggregate under our revolving credit facility and the OEG revolving credit facility. During the three months ended March 31, 2023, we incurred capital expenditures of $36.8 million and paid $14.0 million in cash dividends. These changes, partially offset by the cash flows provided by operations discussed above, were the primary factors in the decrease in our cash balance from December 31, 2022 to March 31, 2023.
We anticipate investing in our operations during the remainder of 2023 by spending between approximately $175 million and $215 million in capital expenditures, which primarily includes enhancements at Gaylord Rockies to better position the property for our group customers, enhancements to the offerings at Block 21, the construction of Ole Red Las Vegas, and ongoing maintenance capital for each of our existing properties. In addition, we intend to contribute up to an additional $8.2 million in capital to the Circle joint venture for working capital needs. Further, our dividend policy provides that we will make minimum dividends of 100% of REIT taxable income annually. Future dividends are subject to our board of directors’ future determinations as to amount and timing. We currently have no debt maturities until July 2023. We believe we will be able to refinance our debt agreements prior to their maturities, including extension options.
We believe that our cash on hand and cash flow from operations, together with amounts available for borrowing under each of our revolving credit facility and the OEG revolving credit facility, will be adequate to fund our general short-term commitments, as well as: (i) current operating expenses, (ii) interest expense on long-term debt obligations, (iii) financing lease and operating lease obligations, (iv) declared dividends and (v) the capital expenditures described above. Our ability to draw on our credit facility and the OEG revolving credit facility is subject to the satisfaction of provisions of the credit facility, as amended, and the OEG revolving credit facility, as applicable.
Our outstanding principal debt agreements are described below. At March 31, 2023, there were no defaults under the covenants related to our outstanding debt.
Principal Debt Agreements
Credit Facility. On October 31, 2019, we entered into a Sixth Amended and Restated Credit Agreement (as amended, the “Credit Agreement”) among the Company, as a guarantor, the Operating Partnership, as borrower, certain other subsidiaries of the Company party thereto, as guarantors, certain subsidiaries of the Company party thereto, as pledgors, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent, which amended and restated the Company’s existing credit facility. As amended, our credit facility consists of a $700.0 million senior secured revolving credit facility (the “Revolver”), prior to its repayment on June 16, 2022, a $300.0 million senior secured term loan A (the “Term Loan A”), and a $500.0 million senior secured term loan B (the “Term Loan B”).
Each of the Revolver and Term Loan B is guaranteed by us, each of our subsidiaries that own the Gaylord Hotels properties, other than Gaylord Rockies, and certain of our other subsidiaries. Each is secured by (i) a first mortgage lien on the real property of each of our Gaylord Hotels properties, excluding Gaylord Rockies, (ii) pledges of equity interests in our subsidiaries that own the Gaylord Hotels properties, excluding Gaylord Rockies, (iii) pledges of equity interests in the Operating Partnership, our subsidiaries that guarantee the Credit Agreement, and certain other of our subsidiaries, (iv) our personal property and the personal property of the Operating Partnership and our guarantor subsidiaries and (v) all proceeds and products from our Gaylord Hotels properties, excluding Gaylord Rockies. Advances are subject to a 55% borrowing base, based on the appraisal value of the Gaylord Hotels properties (reduced to 50% in the event one of the Gaylord Hotels properties is sold), excluding Gaylord Rockies. Assets of Gaylord Rockies are not subject to the liens of our credit facility.
Each of the Revolver and Term Loan B contains certain covenants which, among other things, limit the incurrence of additional indebtedness, investments, dividends, transactions with affiliates, asset sales, acquisitions, mergers and
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consolidations, liens and encumbrances and other matters customarily restricted in such agreements. The material financial covenants, ratios or tests contained in the Credit Agreement are as follows:
The Credit Agreement was amended effective on the closing of the OEG Transaction to exclude OEG from negative covenants and certain restrictions related to certain equity issuances, investments, acquisitions, dispositions and indebtedness.
If an event of default shall occur and be continuing under the Credit Agreement, the commitments under the Credit Agreement may be terminated, and the principal amount outstanding under the Credit Agreement, together with all accrued unpaid interest and other amounts owing in respect thereof, may be declared immediately due and payable.
Revolving Credit Facility. The maturity date of the Revolver is March 31, 2024, with two additional six-month extension options, at our election. Borrowings under the Revolver bear interest at an annual rate equal to, at our option, either (i) LIBOR plus the applicable margin ranging from 1.40% to 1.95%, dependent upon our funded debt to total asset value ratio (as defined in the Credit Agreement) or (ii) a base rate as set forth in the Credit Agreement. At March 31, 2023, the interest rate on LIBOR-based borrowings under the Revolver is LIBOR plus 1.50%. Principal is payable in full at maturity.
At March 31, 2023, no amounts were outstanding under the Revolver, and the lending banks had issued $14.6 million of letters of credit under the Credit Agreement, which left $685.4 million of availability under the Revolver (subject to the satisfaction of debt incurrence tests under the indentures governing our $600 million in aggregate principal amount of senior notes due 2029 (the “$600 Million 4.50% Senior Notes”) and our $700 million in aggregate principal amount of senior notes due 2027 (the “$700 Million 4.75% Senior Notes”), which we met at March 31, 2023).
Term Loan B Facility. The Term Loan B has a maturity date of May 11, 2024. The applicable interest rate margins for borrowings under the Term Loan B are, at our option, either (i) LIBOR plus 2.00% or (ii) a base rate as set forth in the Credit Agreement. At March 31, 2023, the interest rate on the Term Loan B was LIBOR plus 2.00%. In October 2019, we entered into four interest rate swaps with a total notional amount of $350.0 million to fix the LIBOR portion of the interest rate, at rates between 1.2235% and 1.2315%, through May 11, 2023. We have designated these interest rate swaps as effective cash flow hedges. The Term Loan B amortizes in equal quarterly installments in aggregate annual amounts equal to 1.0% of the original principal amount of $500.0 million, with the balance due at maturity. In addition, if for any fiscal year, there is Excess Cash Flow (as defined in the Credit Agreement), an additional principal amount is required. Amounts borrowed under the Term Loan B that are repaid or prepaid may not be reborrowed. At March 31, 2023, $370.0 million in borrowings were outstanding under the Term Loan B.
$700 Million 4.75% Senior Notes. In September 2019, the Operating Partnership and Finco completed the private placement of $500.0 million in aggregate principal amount of senior notes due 2027 (the “$500 Million 4.75% Senior Notes”), which are guaranteed by the Company and its subsidiaries that guarantee the Credit Agreement. The $500 Million 4.75% Senior Notes and guarantees were issued pursuant to an indenture by and among the issuing subsidiaries and the guarantors and U.S. Bank National Association as trustee. The $500 Million 4.75% Senior Notes have a maturity date of October 15, 2027 and bear interest at 4.75% per annum, payable semi-annually in cash in arrears on April 15 and October 15 of each year. The $500 Million 4.75% Senior Notes are general unsecured and unsubordinated obligations of the issuing subsidiaries and rank equal in right of payment with such subsidiaries’ existing and future senior unsecured indebtedness, including the $600 Million 4.50% Senior Notes, and senior in right of payment to future subordinated indebtedness, if any. The $500 Million 4.75% Senior Notes are effectively subordinated to the issuing subsidiaries’
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secured indebtedness to the extent of the value of the assets securing such indebtedness. The guarantees rank equally in right of payment with the applicable guarantor’s existing and future senior unsecured indebtedness and senior in right of payment to any future subordinated indebtedness of such guarantor. The $500 Million 4.75% Senior Notes are effectively subordinated to any secured indebtedness of any guarantor to the extent of the value of the assets securing such indebtedness and structurally subordinated to all indebtedness and other obligations of the Operating Partnership’s subsidiaries that do not guarantee the $500 Million 4.75% Senior Notes.
In October 2019, we completed a tack-on private placement of $200.0 million in aggregate principal amount of 4.75% senior notes due 2027 (the “additional 2027 notes”) at an issue price of 101.250% of their aggregate principal amount plus accrued interest from the September 19, 2019 issue date for the $500 Million 4.75% Senior Notes. The additional 2027 notes and the $500 Million 4.75% Senior Notes constitute a single class of securities (collectively, the “$700 Million 4.75% Senior Notes”). All other terms and conditions of the additional 2027 notes are identical to the $500 Million 4.75% Senior Notes.
The $700 Million 4.75% Senior Notes are redeemable, in whole or in part, at any time on or after October 15, 2022 at a redemption price expressed as a percentage of the principal amount thereof, which percentage is 103.563%, 102.375%, 101.188%, and 100.00% beginning on October 15 of 2022, 2023, 2024, and 2025, respectively, plus accrued and unpaid interest thereon to, but not including, the redemption date.
We completed a registered offer to exchange the $700 Million 4.75% Senior Notes for registered notes with substantially identical terms as the $700 Million 4.75% Senior Notes in July 2020.
$600 Million 4.50% Senior Notes. On February 17, 2021, the Operating Partnership and Finco completed the private placement of $600.0 million in aggregate principal amount of 4.50% senior notes due 2029, which are guaranteed by the Company and its subsidiaries that guarantee the Credit Agreement. The $600 Million 4.50% Senior Notes and guarantees were issued pursuant to an indenture by and among the issuing subsidiaries and the guarantors and U.S. Bank National Association as trustee. The $600 Million 5% Senior Notes have a maturity date of February 15, 2029 and bear interest at 4.50% per annum, payable semi-annually in cash in arrears on February 15 and August 15 each year. The $600 Million 4.50% Senior Notes are general unsecured and unsubordinated obligations of the issuing subsidiaries and rank equal in right of payment with such subsidiaries’ existing and future senior unsecured indebtedness, including the $700 Million 4.75% Senior Notes, and senior in right of payment to future subordinated indebtedness, if any. The $600 Million 4.50% Senior Notes are effectively subordinated to the issuing subsidiaries’ secured indebtedness to the extent of the value of the assets securing such indebtedness. The guarantees rank equally in right of payment with the applicable guarantor’s existing and future senior unsecured indebtedness and senior in right of payment to any future subordinated indebtedness of such guarantor. The $600 Million 4.50% Senior Notes are effectively subordinated to any secured indebtedness of any guarantor to the extent of the value of the assets securing such indebtedness and structurally subordinated to all indebtedness and other obligations of the Operating Partnership’s subsidiaries that do not guarantee the $600 Million 4.50% Senior Notes.
The $600 Million 4.50% Senior Notes are redeemable before February 15, 2024, in whole or in part, at 100.00%, plus accrued and unpaid interest thereon to, but not including, the redemption date, plus a make-whole premium. The $600 Million 4.50% Senior Notes will be redeemable, in whole or in part, at any time on or after February 15, 2024 at a redemption price expressed as a percentage of the principal amount thereof, which percentage is 102.250%, 101.500%, 100.750%, and 100.000% beginning on February 15 of 2024, 2025, 2026, and 2027, respectively, plus accrued and unpaid interest thereon to, but not including, the redemption date.
$800 Million Term Loan (Gaylord Rockies). On July 2, 2019, Aurora Convention Center Hotel, LLC (“Hotel Owner”) and Aurora Convention Center Hotel Lessee, LLC (“Tenant” and collectively, with Hotel Owner, the “Loan Parties”), subsidiaries of the entities that comprised the joint venture that owned Gaylord Rockies (the “Gaylord Rockies joint venture”), entered into a Second Amended and Restated Loan Agreement (the “Gaylord Rockies Loan”) with Wells Fargo Bank, National Association, as administrative agent, which refinanced the Gaylord Rockies joint venture’s existing $500 million construction loan and $39 million mezzanine loan, which were scheduled to mature in December 2019. The Gaylord Rockies Loan consists of an $800.0 million secured term loan facility, matures July 2, 2023 with three, one-year extension options, subject to certain requirements in the Gaylord Rockies Loan. We have fulfilled the necessary requirements to exercise the first of these extension options. The Gaylord Rockies Loan bears interest at
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LIBOR plus 2.50% and, simultaneous with closing, the Gaylord Rockies joint venture entered into an interest rate swap to fix the LIBOR portion of the interest rate at 1.65% for the first three years of the loan. Additionally, we have entered into an additional interest rate swap to fix the LIBOR portion of the interest rate at 3.3410% for the fourth year of the loan. We have designated these interest rate swaps as effective cash flow hedges.
The Gaylord Rockies Loan is secured by a deed of trust lien on the Gaylord Rockies real estate and related assets. We have entered into limited repayment and carry guaranties that, in the aggregate, guarantee repayment of 10% of the principal debt, together with interest and operating expenses, which are to be released once Gaylord Rockies achieves a certain debt service coverage threshold as defined in the Gaylord Rockies Loan. Generally, the Gaylord Rockies Loan is non-recourse to the Company, subject to (i) those limited guaranties and (ii) customary non-recourse carve-outs.
On June 30, 2020, the Loan Parties entered into Amendment No. 1 (the “Loan Amendment”) to the Gaylord Rockies Loan, by and among the Loan Parties, Wells Fargo Bank, National Association, as administrative agent, and the lenders from time to time party thereto.
The Loan Amendment modified the Gaylord Rockies Loan to (i) provide for the ability to use cash for certain purposes, even during a Cash Sweep Period (as defined in the Loan Agreement) and (ii) provide favorable changes to the debt service coverage ratio provisions.
The Loan Amendment includes restrictions on distributions to our subsidiaries that own Gaylord Rockies.
OEG Credit Agreement. On June 16, 2022, OEG Borrower, LLC (“OEG Borrower”) and OEG Finance, LLC (“OEG Finance”), each a wholly owned direct or indirect subsidiary of OEG, entered into a credit agreement (the “OEG Credit Agreement”) among OEG Borrower, as borrower, OEG Finance, certain subsidiaries of OEG Borrower from time to time party thereto as guarantors, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. The OEG Credit Agreement provides for (i) a senior secured term loan facility in the 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 on June 16, 2029 and the OEG Revolver matures on June 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 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) and include customary financial covenants and restrictions. The net proceeds we received from the OEG Term Loan were used to repay the outstanding balance of our former $300 million Term Loan A. At March 31, 2023, $7.0 million was outstanding under the OEG Revolver.
Block 21 CMBS Loan. At the closing of the purchase of Block 21 on May 31, 2022, a subsidiary of the Company a assumed the $136 million, ten-year, non-recourse term loan secured by a mortgage on Block 21 (the “Block 21 CMBS Loan”). The Block 21 CMBS Loan has a fixed interest rate of 5.58% per annum, payable monthly, matures January 5, 2026, and payments are due monthly based on a 30-year amortization.
The Block 21 CMBS Loan contains customary financial covenants and other restrictions, including sponsor net worth and liquidity requirements, and debt service coverage ratio targets that Block 21 must meet in order to avoid a “Trigger Period,” the occurrence of which does not constitute a default. During a Trigger Period, any cash generated in excess of amounts necessary to fund loan obligations, budgeted operating expenses and specified reserves will not be distributed to Block 21. Block 21 was in a Trigger Period as of our purchase date but exited the Trigger Period in the first quarter of 2023.
Additional Debt Limitations. Pursuant to the terms of the management agreements and pooling agreement with Marriott for our Gaylord Hotels properties, excluding Gaylord Rockies, we are subject to certain debt limitations described below.
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The management agreements provide for the following limitations on indebtedness encumbering a hotel:
The pooled limitations on Secured Debt (as defined in the pooling agreement) are as follows:
Gaylord Rockies is not a Pooled Hotel for this purpose.
Estimated Interest on Principal Debt Agreements
Based on the stated interest rates on our fixed-rate debt and the rates in effect at March 31, 2023 for our variable-rate debt after considering interest rate swaps, our estimated interest obligations through 2027 are $474.7 million. These estimated obligations are $100.6 million for the remainder of 2023, $106.6 million in 2024, $96.7 million in 2025, $89.2 million in 2026, and $81.6 million in 2027. Variable rates, as well as outstanding principal balances, could change in future periods. See “Principal Debt Agreements” above for a discussion of our outstanding long-term debt. See “Supplemental Cash Flow Information” in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of the interest we paid during 2022, 2021 and 2020.
Inflation
Inflation has had a more meaningful impact on our business during recent periods than in historical periods. However, favorable occupancy, ADR and outside-the-room spend in our Hospitality segment and business levels in our Entertainment segment have reduced the impact of increased operating costs, including increased wages and food and beverage costs, on our financial position and results of operations. We continue to monitor inflationary pressures and may need to consider potential mitigation actions in future periods. A prolonged inflationary environment could adversely affect our operating costs, customer spending and bookings, and our financial results.
Supplemental Guarantor Financial Information
The Company’s $600 Million 4.50% Senior Notes and $700 Million 4.75% Senior Notes were each issued by the Operating Partnership and RHP Finance Corporation, a Delaware corporation (collectively, the “Issuers”), and are guaranteed on a senior unsecured basis by the Company (as the parent company), each of the Operating Partnership’s subsidiaries that own the Gaylord Hotels properties, excluding Gaylord Rockies, and certain other of the Company’s subsidiaries, each of which also guarantees the Operating Partnership’s Credit Agreement, as amended (such subsidiary guarantors, together with the Company, the “Guarantors”). The Guarantors are 100% owned by the Operating Partnership or the Company, and the guarantees are full and unconditional and joint and several. The guarantees rank equally in right of payment with each Guarantor’s existing and future senior unsecured indebtedness and senior in right of payment to all future subordinated indebtedness, if any, of such Guarantor. Not all of the Company’s subsidiaries have guaranteed the Company’s $600 Million 4.50% Senior Notes and $700 Million 4.75% Senior Notes, and the guarantees are structurally subordinated to all indebtedness and other obligations of such subsidiaries that have not guaranteed the Company’s $600 Million 4.50% Senior Notes and $700 Million 4.75% Senior Notes.
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The following tables present summarized financial information for the Issuers and the Guarantors on a combined basis. The intercompany balances and transactions between these parties, as well as any investments in or equity in earnings from non-guarantor subsidiaries, have been eliminated (amounts in thousands).
Net receivables due from non-guarantor subsidiaries
21,361
Other assets
1,655,854
1,677,215
1,835,480
Total noncontrolling interest
March 31, 2023
Revenues from non-guarantor subsidiaries
106,475
Operating expenses (excluding expenses to non-guarantor subsidiaries)
30,604
Expenses to non-guarantor subsidiaries
3,563
72,308
Interest income from non-guarantor subsidiaries
831
Net income
52,922
Net income available to common stockholders
53,515
Critical Accounting Policies and Estimates
We prepare our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States. Certain of our accounting policies, including those related to revenue recognition, impairment of long-lived and other assets, credit losses on financial assets, depreciation and amortization, income taxes, pension plans, acquisitions and purchase price allocations, and legal contingencies, require that we apply significant judgment in defining the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. Our judgments are based on our historical experience, our observance of trends in the industry, and information available from other outside sources, as appropriate. There can be no assurance that actual results will not differ from our estimates. For a discussion of our critical accounting policies and estimates, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Notes to Consolidated Financial Statements” presented in our Annual Report on Form 10-K for the year ended December 31, 2022. There were no newly identified critical accounting policies in the first three months of 2023, nor were there any material changes to the critical accounting policies and estimates discussed in our Annual Report on Form 10-K for the year ended December 31, 2022.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our quantitative and qualitative market risks since December 31, 2022. For a discussion of the Company’s exposure to market risk, refer to the Company’s market risk disclosures set forth in Part II, Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
ITEM 4. CONTROLS AND PROCEDURES.
The Company maintains disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Exchange Act, that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of
our disclosure controls and procedures as of the end of the period covered by this report. Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
There has been no change in our internal control over financial reporting that occurred during the period covered by this report that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is a party to certain litigation in the ordinary course, as described in Note 14, “Commitments and Contingencies,” to our condensed consolidated financial statements included herein and which our management deems will not have a material effect on our financial statements.
ITEM 1A. RISK FACTORS.
There have been no material changes from the risk factors disclosed in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Inapplicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
ITEM 4. MINE SAFETY DISCLOSURES.
ITEM 5. OTHER INFORMATION.
Rule 10b5-1 Selling Plan
Colin V. Reed, Executive Chairman of the Board of Directors, entered into a pre-arranged stock selling plan on March 1, 2023. Mr. Reed’s plan provides for the sale of up to 109,089 shares of the Company’s common stock between May 30, 2023 and December 5, 2023. Sales of the shares of the Company’s common stock set forth in Mr. Reed’s trading plan, if any, will be made at or above a specified market price, which price is in excess of the market price of the Company’s common stock immediately prior to this filing. Mr. Reed’s trading plan was entered into during an open insider trading window and is intended to satisfy Rule 10b5-1(c) under the Exchange Act and the Company’s policies regarding insider transactions.
ITEM 6. EXHIBITS.
Exhibit Number
Description
Amended and Restated Certificate of Incorporation of Ryman Hospitality Properties, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed October 1, 2012).
Second Amended and Restated Bylaws of Ryman Hospitality Properties, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K filed February 24, 2023).
10.1*#†
Form of Restricted Stock Unit Award Agreement with respect to time-based vesting restricted stock units granted pursuant to the Company’s 2016 Omnibus Incentive Plan.
10.2*#††
Form of Restricted Stock Unit Award Agreement with respect to performance-based vesting restricted stock units granted pursuant to the Company’s 2016 Omnibus Incentive Plan.
List of Parent and Subsidiary Guarantors (incorporated by reference to Exhibit 22 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed February 24, 2023).
31.1*
Certification of Mark Fioravanti pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
31.2*
Certification of Jennifer Hutcheson pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
32.1**
Certification of Mark Fioravanti and Jennifer Hutcheson pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
101*
The following materials from Ryman Hospitality Properties, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets (unaudited) at March 31, 2023 and December 31, 2022, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited) for the three months ended March 31, 2023 and 2022, (iii) Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2023 and 2022, (iv) Condensed Consolidated Statements of Equity (Deficit) (unaudited) for the three months ended March 31, 2023 and 2022, and (v) Notes to Condensed Consolidated Financial Statements (unaudited).
104*
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
* Filed herewith.
** Furnished herewith.
#
Management contract or compensatory plan or arrangement.
†
Certain schedules and similar attachments have been omitted in reliance on Item 601(a)(5) of Regulation S-K. The Company will provide, on a supplemental basis, a copy of any omitted schedule or attachment to the Securities and Exchange Commission or its staff upon request.
††
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: May 4, 2023
By:
/s/ Mark Fioravanti
Mark Fioravanti
President and Chief Executive Officer
/s/ Jennifer Hutcheson
Jennifer Hutcheson
Executive Vice President, Chief Financial
Officer and Chief Accounting Officer