ResortQuest Reports Record Year Strong Revenue Growth Reported in Mountain and Hawaii Resorts
AOL Marketing Arrangement Receiving Strong Consumer Interest
ResortQuest International, Inc.
"In the fourth quarter 2000, we were on target and improved our net operating results by 45 percent versus prior year, excluding unusual items," said David Levine, ResortQuest chairman, president and chief executive officer. "We made tremendous progress during the period, led by excellent results at our Mountain and Hawaii resorts. Fourth quarter revenues increased 10 percent to $25.6 million. Net loss per diluted share improved 46 percent from $(0.24), excluding unusual items, in the 1999 fourth quarter to $(0.13) in the 2000 fourth quarter. Cash loss per diluted share, being defined as loss per share excluding the effect of goodwill amortization, improved 67 percent from $(0.18), excluding unusual items, in the 1999 fourth quarter to $(0.06) in the 2000 fourth quarter. For the full year, earnings per diluted share increased 42 percent from $0.36, excluding unusual items, in 1999 to $0.51 in 2000, and cash earnings per diluted share increased 27 percent from $0.60, excluding unusual items, in 1999 to $0.76 in 2000. We met First Call analysts' expectations for both the quarter and full year, after exceeding analysts' estimates for the past two quarters. Our new team and growth strategies are producing solid returns, and our business outlook remains positive."
For the 2000 fourth quarter, ResortQuest reduced its net loss 44 percent, or $2.0 million, from $(4.5) million in the 1999 fourth quarter, before unusual items, to $(2.5) million. Same-store gross lodging revenues rose 12.6 percent to $60.3 million in the 2000 fourth quarter. Occupancy increased 5.4 points to 47.5 percent and our average daily rate increased 2.4 percent to $101.07. Revenue per available unit (RevPAU) rose 15.6 percent during the period. EBITDA for the fourth quarter improved 77 percent to $(1.0) million in the 2000 fourth quarter, compared to $(4.4) million, before unusual items, in the 1999 fourth quarter. EBITDA per diluted share was $(0.05) for the fourth quarter, compared to $(0.23) for the 1999 fourth quarter, before unusual items.
"We benefited from a more normal snowfall in our Mountain resorts, compared to a severe drought last year, with RevPAU up a very positive 17.5 percent," said Jim Olin, executive vice president and chief operating officer. "Hawaii continues to rebound as lodging revenues rose 18.2 percent and total units were up 7.6 percent. Our Beach resorts posted an 8.7 percent increase in RevPAU, with a slight increase in gross lodging revenues. Our Desert resorts posted a 1.0 percent increase in RevPAU, with a modest increase in gross lodging revenues. We continue to benefit from economies of scale, enhanced marketing and cross-marketing of our resorts, integration of best practices and e-commerce strategies, and we believe there are still significant opportunities ahead of us."
Fred Farmer, executive vice president and president of ResortQuest Technologies, said that the company's Web site,
AOL Agreement
Farmer noted that a new, multi-year travel marketing agreement with America Online (AOL Keyword: ResortQuest), announced in January 2001, already is generating significant new traffic on ResortQuest's Web site. Under the program, ResortQuest's inventory of approximately 18,000 vacation home rentals now is available to the more than 29 million subscribers to America Online's Web Brands, which include AOL, AOL Anywhere, CompuServe, Netscape and Digital Cities. "We are assisting AOL in the development of its vacation rental area, and we anticipate using this channel for our inventory distribution beginning in February 2001. Although the program is just under way, we are very excited about its long-term potential for ResortQuest."
Commenting on the company's agreement with America Online, Levine said, "Expanding our distribution is key to our continued success. AOL has superior reach and distribution, and we are the only vacation rental company in the industry with the broad-based, real-time booking capability and technological capability to deliver inventory to the major travel portals. Through a special advertising program on AOL's Web site, we expect to create tremendous demand among highly targeted, travel-oriented customers."
According to Levine, ResortQuest plans to leverage the AOL relationship by aggregating other vacation rental inventory, reaching out to vacation rental companies in areas where ResortQuest does not have a presence. "We will offer them the opportunity to join our Web marketing channel and gain access to the same widespread distribution. We will provide all the technical support and protocols and charge a fee for this service, creating an important new revenue stream for ResortQuest."
Strong Financial Foundation
"We continue to strengthen our balance sheet and operational controls," said Mitch Collins, senior vice president and chief financial officer. In January 2001, the company closed on a new, three-year credit facility, which will allow the company to borrow, based on certain limitations, up to $50 million. "This new, three-year facility includes improved covenants that will allow us to continue to enhance our technology infrastructure and to pursue strategic acquisitions. As of year-end 2000, our former credit facility was completely untapped partially due to better cash management." Collins also noted that, under the new credit facility, ResortQuest has the ability to buy back a limited number of common shares but has no specific plans to do so at this time.
Commenting on the company's progress in implementing the company's new ERP System, Collins said, "We have migrated 13 of our 28 operating companies onto J. D. Edwards' One World, our new financial management technology platform, and we already are beginning to see positive benefits. We still anticipate that all of our companies will be converted to this platform by mid-2001, which will transition ResortQuest from a decentralized reporting structure to a fully integrated, consolidated reporting structure, thus strengthening our transactional processing, reporting, forecasting and budgeting functions.
Levine said that ResortQuest intends to pursue further avenues of integration to improve results in 2001. "Our new technology infrastructure should result in at least $2 million in cost synergies over the next 18 months. We also expect to benefit from enhanced forecasting that will allow us to adjust rental rates more swiftly, according to demand patterns, which will better enable us to optimize returns for our property owners and shareholders."
Expanding Real Estate Operations
Levine said that the company intends to expand its real estate sales operations in 2001. "Recently, we tested the addition of real estate sales capabilities at two of our resorts, and acceptance of the new service was excellent," he said. "It is a complementary business to our rental operations, and a low-cost entry for us with substantial potential. We have a built-in inventory of both buyers and sellers from our existing rental pools. In fact, our guests are the best buyer group for vacation rentals. About half of our resorts already offer real estate services, and we expect to expand this service to additional resort locations during 2001.
Levine said the company will continue to focus on internal growth. "We increased our total units under management by nearly 4 percent in 2000 and believe we still have substantial opportunities in this area."
Levine noted that the company had completed a major update of its approximately 1.5 million-guest database and is using it to increase cross-selling, target special offers, execute direct mail campaigns and build shoulder season occupancy.
"We also expect to be more aggressive with our acquisition program in 2001," Levine said. "We are in a highly fragmented, $10 billion industry, with more than 4,000 property management companies in the U.S. alone. We have first mover advantages, and we intend to acquire companies whose economic models most closely match our most successful operations. Currently, we have a full and active pipeline. However, the precise timing of acquisitions is always difficult to predict, and we have not factored them into our 2001 earnings estimates for that reason."
2000 Results
For the year ended December 31, 2000, total revenues rose 19 percent to $152.0 million. Excluding unusual items recorded in the prior year, net income for the year increased 48 percent to $9.6 million. Earnings per diluted share improved 42 percent to $0.51 per share, compared to $0.36 in 1999, excluding unusual items. Cash earnings per diluted share increased 27 percent to $0.76 in 2000 versus $0.60 in 1999, excluding unusual items. EBITDA increased 30 percent to $30.8 million, compared to $23.6 million in 1999, excluding unusual items. EBITDA per diluted share advanced 25 percent to $1.62, compared to $1.30 for the prior year, excluding unusual items.
2001 Earnings Outlook
Levine noted that ResortQuest remains comfortable with First Call's consensus estimate of $0.58 for 2001 and expects revenue growth of 7 to 10 percent, excluding any acquisitions that may occur. "At this time, based on early January results and current booking levels, we estimate that first quarter 2001 earnings per diluted share should be in the $0.17 to $0.21 range, as compared to $0.15 reported in the first quarter of 2000."
"We also are comfortable with long-term, internal earnings growth targets of 15 to 18 percent per year," said Levine. "Combined with strategic acquisitions and operating cost synergies, we expect to achieve annual earnings growth of 20 to 30 percent over the next three to five years."
ResortQuest International provides a one-stop resource for vacation home and condominium rentals in 42 premier resort destinations in the U.S. and Canada. ResortQuest is the world's largest vacation rental property management company based on a portfolio of approximately 18,000 vacation rental properties, with a combined real estate value estimated at $6.5 billion. ResortQuest is the first branded vacation rental, property management and real estate sales company to offer online booking through
ResortQuest's locations include Gulf Shores, Ala.; Scottsdale and Tucson, Ariz.; Palm Desert and Palm Springs, Calif.; Aspen, Breckenridge, Crested Butte, Dillon, Snowmass Village and Telluride, Colo.; Bethany Beach, Del.; Beaches of South Walton, Bonita Springs, Captiva Island, Destin, Ft. Myers, Ft. Myers Beach, Marco Island, Naples, Navarre Beach, Okaloosa Island/Ft. Walton Beach, Orlando, Pensacola, Sanibel Island and Vanderbilt Beach, Fla.; St. Simons Island, Ga.; Hawaii, Maui, Oahu, and Kauai, Hawaii; Sun Valley, Idaho; Nantucket, Mass.; Big Sky, Mont.; the Outer Banks of North Carolina; Lake Erie Islands, Ohio; Sunriver, Ore.; Hilton Head Island, S.C.; Deer Valley, Park City and The Canyons, Utah; and Whistler, British Columbia.
This filing contains certain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including but not limited to the risks associated with: successful integration of the Founding Companies and additional required companies factors affecting internal growth and management of growth, ResortQuest's acquisition strategy and availability of financing, the tour and travel industry, seasonality, quarterly fluctuations and general economic conditions, dependence on technology and travel providers, and other factors discussed in the Registration Statement.
Although the company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and, therefore, there can be no assurance that the forward-looking statements included in this filing will prove to be accurate. Indeed, actual results may differ materially from those expressed or implied in these statements. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by ResortQuest or any other person that the objectives and plans of the company will be achieved.
RESORTQUEST INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In thousands, except share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
Dec 31, Dec 31, Dec 31, Dec 31,
1999 2000 1999 2000
------ ------ ------
Revenues
Property management
fees $9,297 $10,267 $65,795 $78,543
Service fees 8,395 9,613 38,608 47,080
Real estate and other 5,515 5,733 23,509 26,391
------- -------- --------
Total revenues 23,207 25,613 127,912 152,014
Operating expenses
Direct operating 16,601 17,613 65,804 80.314
General and
administrative 13,214(1) 9,021 41,669(1) 40,940
Depreciation 611 936 2,556 3,549
Goodwill amortization 1,212 1,281 4,353 4,934
------- -------- --------
Total operating
expenses 31,638 28,851 114,382 129,737
Operating income (loss) (8,431) (3,238) 13,530 22,277
Interest and other
expense, net 1,432 1,270 4,228 4,814
------- -------- --------
Income (loss) before
income taxes (9,863) (4,508) 9,302 17,463
Provision (benefit) for
income taxes (3,897) (2,028) 4,873 7,857
------- -------- --------
Net income (loss) $(5,966) $(2,480) $4,429 $9,606
======= ========= ======== ========
Earnings (loss) per share
Basic $(0.32) $(0.13) $0.25 $0.51
======= ======== ======== ========
Diluted $(0.32) $(0.13) $0.24 $0.51
======= ======== ======== ========
Diluted cash earnings
(loss) per
share (2) $(0.25) $(0.06) $0.48 $0.76
======= ======== ========= ========
EBITDA per diluted
share (3) $(0.35) $(0.05) $1.12 $1.62
======= ======== ========= ========
(1) General and administrative expenses include unusual items of
$2.2 million (pre-tax) for the three months ended December 31, 1999
and $3.1 million (pre-tax) for the year ended December 31, 1999.
Excluding these amounts, net of tax, diluted earnings per share would
have been $(0.24) and $0.36, respectively; diluted cash earnings per
share would have been $(0.18) and $0.60, respectively; and EBITDA per
diluted share would have been $(0.23) and $1.30, respectively.
(2) Excludes the effect of goodwill amortization for respective
periods.
(3) EBITDA is defined as earnings (loss) before interest, taxes,
depreciation and amortization.
The accompanying notes are an integral part of these consolidated
condensed financial statements.
ResortQuest International, Inc.
Performance Statistics
December 31, 2000
(Unaudited)
Three Months Ended
Dec 31, Dec 31,
1999 2000 Variance
------- -------
Mountain
Lodging Revenues(1) $6,103 $6,881 12.7 %
Occupancy 17.2% 21.0% 3.8 pts
ADR $175.27 $168.55 (3.8)%
RevPAU $30.13 $35.40 17.5 %
Total Units 2,510 2,393 (4.7)%
Beach
Lodging Revenues(1) $13,933 $14,089 1.1 %
Occupancy 29.3% 33.4% 4.1 pts
ADR $78.51 $74.82 (4.7)%
RevPAU $22.97 $24.97 8.7 %
Total Units 7,705 7,687 (0.2)%
Desert
Lodging Revenues(1) $1,554 $1,558 0.3%
Occupancy 33.4% 33.7% 0.3 pts
ADR $102.74 $102.88 0.1 %
RevPAU $34.31 $34.66 1.0 %
Total Units 583 579 (0.7)%
Hawaii
Lodging Revenues(1) $31,922 $37,738 18.2 %
Occupancy 72.6% 77.9% 5.3 pts
ADR $101.36 $107.20 5.8 %
RevPAU $73.59 $83.56 13.5 %
Total Units 4,976 5,352 7.6 %
Total
Lodging Revenues(1) $53,512 $60,266 12.6 %
Occupancy 42.1% 47.5% 5.4 pts
ADR $98.67 $101.07 2.4 %
RevPAU $41.54 $48.01 15.6 %
Total Units 15,774 16,011 1.5 %
(1) Lodging revenues are in thousands and represent the total
rental charged to property rental customers. Our revenue represents
from 3% to over 40% of the lodging revenues based on the services
provided by us.
For better comparability, the above statistics exclude all
non-exclusive management contracts as well as all properties that were
not acquired by ResortQuest prior to fourth quarter 1999, which
approximated 1,900 units as of December 31, 2000. Also excluded from
these statistics are owner use nights and renovation nights, which
were approximately 14.9% of gross available nights in the three months
ended December 31, 2000 and 13.3% of gross available nights in the
three months ended, December 31, 1999.
ResortQuest International, Inc.
Performance Statistics
December 31, 2000
(Unaudited)
Twelve Months Ended
Dec 31, Dec 31,
1999 2000 Variance
-------- --------
Mountain
Lodging Revenues(1) $41,222 $40,130 (2.6)%
Occupancy 33.6% 32.5% (1.1)pts
ADR $158.39 $162.70 2.7 %
RevPAU $53.17 $52.83 (0.6)%
Total Units 2,510 2,393 (4.7)%
Beach
Lodging Revenues(1) $118,685 $131,428 10.7 %
Occupancy 53.2% 54.8% 1.6 pts
ADR $139.31 $144.43 3.7 %
RevPAU $74.04 $79.15 6.9 %
Total Units 5,308 5,423 2.2 %
Desert
Lodging Revenues(1) $7,522 $8,835 17.5 %
Occupancy 42.1% 44.0% 1.9 pts
ADR $110.14 $110.54 0.4 %
RevPAU $46.35 $48.62 4.9 %
Total Units 583 579 (0.7)%
Hawaii
Lodging Revenues(1) $136,788 $155,520 13.7 %
Occupancy 76.0% 79.3% 3.3 pts
ADR $102.21 $109.32 7.0 %
RevPAU $77.71 $86.69 11.6 %
Total Units 4,976 5,352 7.6 %
Total
Lodging Revenues(1) $304,218 $335,913 10.4 %
Occupancy 58.6% 60.5% 1.9 pts
ADR $120.78 $126.32 4.6 %
RevPAU $70.73 $76.42 8.0 %
Total Units 13,377 13,747 2.8 %
(1) Lodging revenues are in thousands and represent the total
rental charged to property rental customers. Our revenue represents
from 3% to over 40% of the lodging revenues based on the services
provided by us.
For better comparability, the above statistics exclude all
non-exclusive management contracts as well as all properties that were
not acquired by ResortQuest prior to first quarter 1999, which
approximated 4,200 units as of December 31, 2000. Also excluded from
these statistics are owner use nights and renovation nights, which
were approximately 11.7% of gross available nights in the twelve
months ended December 31, 2000 and 11.6% of gross available nights in
the twelve months ended December 31, 1999.