Orient-Express Hotels' CEO Discusses Q1 2012 Results - Earnings Call Transcript

Orient-Express Hotels Ltd. (OEH)

Q1 2012 Earnings Call

May 4, 2012 10:00 AM ET


Amy Brandt – Director, IR

Bob Lovejoy – Chairman and Interim CEO

Filip Boyen – VP and COO

Martin O’Grady – VP and CFO


Joe Greff – JP Morgan

Sule Sauvigne – Barclays Capital

Carlo Santarelli – Deutsche Bank

Richard Stone – Beuben Brothers

Josh Etas – Citigroup



Good day, ladies and gentlemen, and welcome to the First Quarter 2012 Earnings Call for Orient-Express Hotels. For your information, today’s conference is being recorded. At this time I would like to turn the call over to Amy Brandt, Director, Investor Relations. Please go ahead.

Amy Brandt

Thanks, Melik. Good morning, everyone, and thank you for joining us today for the First Quarter 2012 Earnings Conference Call for Orient-Express Hotels.

We issued our earnings release last night. The release is available on our website at orient-expresshotelsltd.com as well as on the SEC website. On the call today are Bob Lovejoy, Chairman and Interim Chief Executive Officer; Filip Boyen, Chief Operating Officer; and Martin O’Grady, Chief Financial Officer.

Before we get started today I would like to read our usual cautionary statement under the Private Securities Litigation Reform Act of 1995 in the United States. In the course of remarks to you today for Orient-Express Hotels’ management and in answer to your questions they make may forward-looking statements concerning Orient-Express Hotels such as its earnings outlook, future investment plans and other matters that are not historic facts. We caution that actual results of Orient-Express Hotels may differ materially from these forward-looking statements.

Information about factors that could cause actual results to differ is set out in yesterday’s news release, the company’s latest annual reports to shareholders and the filings of the company with the Securities and Exchange Commission.

I’d now like to turn the call over to Bob.

Bob Lovejoy

Thank you very much, Amy. Good morning, Ladies and gentlemen, and thank you for joining us.

The first quarter of 2012 has provided a positive start to the year for Orient-Express Hotels. As you know, several of our important properties are closed during most or all of the first quarter, so this period traditionally constitutes a small part of our annual results. We are pleased to report that revenues for the quarter increased by 10% over the first quarter of last year, to a total of $107 million and adjusted EBITDA before real estate grew from $2.3 million last year to $3.7 million this year.

Same store RevPAR increased by 10% in U.S. dollars and 11% in local currency over last year. The company’s adjusted net loss from continuing operations for the first quarter was $16.2 million U.S. dollars or $0.16 per common share, compared with a loss of $13.6 million or $0.13 per common share in the first quarter of 2011. Please note however, that the 2011 first quarter benefited from a tax credit of $5 million or about $0.05 per share, whereas the first quarter of this year, we incurred a tax cost of about $200,000.

The latest revenue and booking figures show an overall positive demand picture. Revenue from owned hotels achieved and on the books, for the full year of 2012 is currently running at about 6% above where we were at this point last year.

This number has come down a bit from a few months ago, reflecting the early bookings pattern of group revenue, which is running far ahead of last year and the relatively shorter booking window for the individual luxury vacation traveler who was just now starting to book for the traditional vacation season in the second and third quarters. In addition, while demand remains good in many areas, including North and South America, Asia and the emerging markets generally, we are now beginning to see some softening in demand coming out of the sluggish economies of the U.K. and Europe.

All that said, booking pace for all of the company’s owned properties and joint ventures, both hotels, trains and cruises, is currently about 10% above the same figure last year at this time. For the month of April 2012 total revenue before real estate was flat compared to last year. This was affected by extremely poor weather in Italy where it rained on 24 of the 30 days of April including all of the weekends and the dollar number was also reduced by about 4% at the result of the weakening Europe.

At the end of the first quarter of 2012 the company’s net debt to adjusted EBITDA before real estate was about 4.9 times. We are pleased to report that this ratio remained below 5 times through the first quarter which is our low operating season with relatively high investment expenditures. During the first quarter we disposed of one of our Peruvian joint venture properties worth $5.6 million. These funds are being used to improve the financial condition of the Peruvian venture and to continue our ongoing program of investments in our Peruvian hotels.

We have now received the final governmental consent and expect to complete the disposition of our property in Bora Bora in the next few weeks. These transactions are part of our continuing program of portfolio enhancement through which we are monetizing selected assets and retaining management where we consider a strategically and financially advantageous to do so.

We continue to have an interim objective to bring net debt down to under 3.5 times adjusted EBITDA before real estate by the end of 2013. For the year 2012 investments are a very important part of our story. We will open the exciting new all-suite property at Palacio Nazarenas in Cuzco in June. We also will undertake a major renovation of 121 rooms and suites and the entrance and arrival experience at the Copacabana Palace over the Brazilian low season beginning next month.

Read the rest of this transcript for free on seekingalpha.com

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