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La Quinta Holdings Inc. Reports Fourth Quarter And Full Year 2016 Results

IRVING, Texas, Feb. 28, 2017 /PRNewswire/ -- La Quinta Holdings Inc. ("La Quinta" or the "Company") (LQ) today reported its fourth quarter and full year results, for the period ended December 31, 2016.

Fourth Quarter 2016 Highlights

  • System-wide comparable RevPAR increased 1.8 percent, and excluding properties located in STR-defined "oil tracts", RevPAR increased 2.9 percent and grew RevPAR index by 108 bps
  • Grew franchise and other fee based revenue 7.2 percent
  • Net Loss was $(28) thousand and Adjusted Net Income was $0.9 million; Net Loss per Share was flat and Adjusted Earnings per Share was $0.01
  • Generated total Adjusted EBITDA of $69.9 million
  • Opened 12 franchised hotels, totaling over 1,000 rooms, including key locations in downtown Dallas, Texas, and Colorado Springs, Colorado
  • Increased franchise pipeline to 248 hotels, the Company's highest level since 2008, representing approximately 23,100 additional rooms by signing 35 franchise agreements, including key locations in Indianapolis and Seattle, and an agreement which brings the total pipeline in Mexico to 22 hotels

Full Year 2016 Highlights

  • Open and operating franchise unit base grew 4 percent while the development pipeline increased by 9 percent
  • Grew franchise and other fee based revenue 6.4 percent
  • Net Loss was $(1.3) million and Adjusted Net Income was $58.3 million; Net Loss per Share was $(0.01) and Adjusted Earnings per Share was $0.49
  • Cash flow generation remained strong, as demonstrated by $360.4 million of Total Adjusted EBITDA
  • Sold 19 owned hotels and exited 25 franchised properties, as part of the Company's key strategic priority to drive consistency of product
  • Launched several new loyalty program enhancements for La Quinta ReturnsTM, with the program being  ranked in the top 5 by U.S. News and World Report as a Best Travel Rewards program in U.S. News's Best Travel Rewards 2016-17 rankings

Overview

"This was a year of significant investment at La Quinta. We invested in our people, in our properties and in laying the foundation for the future of our brand. We made these investments because we believe they will propel us forward and position La Quinta for long-term growth – and we are already starting to see the benefits of our work," said Keith A. Cline, President and Chief Executive Officer of La Quinta.

"During the fourth quarter and throughout 2016, we made meaningful progress on the Company's strategic initiatives to drive consistency in our product and in the delivery of an outstanding guest experience, as well as to drive increased engagement with the La Quinta brand. We saw growth in comparable RevPAR and RevPAR index, as well as improvement in Net Promoter Scores again this quarter, reflecting our ongoing investment in the guest experience. We continued to drive product consistency by removing both owned and franchised hotels from the brand, and beginning a significant repositioning program within our owned hotels. We also introduced several enhancements to our loyalty program to drive guest engagement.

Mr. Cline continued, "We announced in January that we are pursuing the separation of our real estate business from our franchise and management businesses, which could involve spinning off our owned real estate assets as a separate company. This could be the next logical step as we execute on our key initiatives. We believe this separation could allow us to take advantage of growth opportunities that naturally flow from each business model and could prove to be the best path to maximizing the return on our investments in capital and people."

The Company's system-wide portfolio, as of December 31, 2016, is located across 48 states in the U.S., as well as in Canada, Mexico, Honduras and Colombia. The portfolio includes:



December 31, 2016



December 31, 2015




# of hotels



# of rooms



# of hotels



# of rooms


Owned (1)



321




41,000




340




43,400


Joint Venture



1




200




1




200


Franchised(2)



566




46,000




545




43,900


Totals



888




87,200




886




87,500




(1)

As of December 31, 2016 and 2015, Owned included five hotels (700 rooms) and 13 hotels (1,500 rooms), respectively, designated as assets held for sale, which are subject to definitive purchase agreements.

(2)

As of December 31, 2016 and 2015, Franchised included five hotels (600 rooms) and one hotel (100 rooms), respectively, under temporary franchise agreements related to formerly owned hotels which are in the process of leaving the system.

 

The results of operations for the Company for the three months ended December 31, 2016 and 2015 include the following highlights  ($ in thousands, except per share amounts):


Three months ended December 31,




2016



2015



% chg



Total Revenue

$

222,616



$

228,877




-2.7

%


Franchise and Management Segment Adj. EBITDA


27,585




27,253




1.2

%


Owned Hotels Segment Adj. EBITDA


51,382




60,356




-14.9

%


Total Adj. EBITDA


69,933




77,971




-10.3

%


Total Adj. EBITDA margin


31.4

%



34.1

%






Operating Income


22,214




27,241




-18.5

%


Operating Income Margin


10.0

%



11.9

%






Adj. Operating Income


23,716




33,041




-28.2

%


Adj. Operating Income Margin


10.7

%



14.4

%






 



Three Months Ended



Three Months Ended








December 31, 2016



December 31, 2015



% Change





Net (Loss)

Income



Basic

and

Diluted

EPS



Net

Income



Basic

and

Diluted

EPS



Net

Income



Basic

and

Diluted

EPS



Net (Loss) Income Attributable to La Quinta Holdings' stockholders


$

(28)



$

-



$

7,828



$

0.06



NM


 (1)


-100.0

%


Adjusted Net Income Attributable to La Quinta Holdings' stockholders


$

873



$

0.01



$

11,308



$

0.09




-92.3

%



-91.6

%




























(1)

Change in terms of percentage is not meaningful.

 

The results of operations for the Company for the full year ended December 31, 2016 and 2015 include the following highlights ($ in thousands, except per share amounts):


Twelve months ended December 31,




2016 (1)



2015



% chg



Total Revenue

$

1,006,254



$

1,029,974




-2.3

%


Franchise and Management Segment Adj. EBITDA


116,806




114,610




1.9

%


Owned Hotels Segment Adj. EBITDA


279,536




314,278




-11.1

%


Total Adj. EBITDA


360,378




394,042




-8.5

%


Total Adj. EBITDA margin


35.8

%



38.3

%






Operating Income


78,464




128,071




-38.7

%


Operating Income Margin


7.8

%



12.4

%






Adj. Operating Income


177,814




200,243




-11.2

%


Adj. Operating Income Margin


17.7

%



19.4

%








(1)

The Company sold 19 and 12 owned hotels during 2016 and 2015, respectively.

 



Year ended



Year ended








December 31, 2016



December 31, 2015



% Change





Net (Loss)

Income



Basic

and

Diluted

EPS



Net

Income



Basic

and

Diluted

EPS



Net

Income



Basic

and

Diluted

EPS



Net (Loss) Income Attributable to La Quinta Holdings' stockholders



(1,288)




(0.01)




26,365




0.20



NM


 (1)

NM


 (1)

Adjusted Net Income Attributable to La Quinta Holdings' stockholders


$

58,322



$

0.49



$

70,147



$

0.54




-16.9

%



-9.3

%






























(1)

Change in terms of percentage is not meaningful.

 

Comparable hotel statistics


Three months ended December 31, 2016



Variance three months ended December 31, 2016 vs. 2015




Year ended December 31, 2016



Variance year ended December 31, 2016 vs. 2015



Owned Hotels



















Occupancy



60.7

%



-127


bps



65.5

%



-185


bps

ADR


$

80.98




3.1


%


$

84.68




2.1


%

RevPAR


$

49.17




1.0


%


$

55.44




-0.7


%

Franchised Hotels



















Occupancy



63.7

%



86


bps



67.7

%



-8


bps

ADR


$

88.61




1.2


%


$

92.99




0.9


%

RevPAR


$

56.47




2.6


%


$

62.92




0.7


%

System-wide



















Occupancy



62.2

%



-25


bps



66.5

%



-100


bps

ADR


$

84.73




2.2


%


$

88.73




1.5


%

RevPAR


$

52.67




1.8


%


$

59.03




0.0


%




















 



Three months ended December 31, 2016



Variance three months ended December 31, 2016 vs. 2015



Year ended December 31, 2016



Variance year ended December 31, 2016 vs. 2015

RevPAR Index(1)



95.6

%


108 bps




95.2

%


-43 bps















(1)

Information based on the STR competitive set of hotels existing as of December 31, 2016.

 

Development

During the fourth quarter, the Company opened a total of 13 franchised hotels (1,100 rooms), including one temporary franchised hotel related to a formerly owned hotel that is in the process of leaving the system.  These 13 openings, together with 14 terminations, led the Company to a net decline of one franchised hotel during the quarter. For the full year 2016, the Company opened a total of 50 franchised hotels, including nine temporary hotels, and had 29 terminations including four temporary hotels, resulting in a net increase of 21 franchised hotels. The elevated level of franchise terminations were in keeping with the Company's overall strategy to drive consistency in its product. As of December 31, 2016 the Company had a pipeline of 248 franchised hotels totaling approximately 23,100 rooms, to be located in the United States, Mexico, Colombia, Nicaragua, Guatemala, Chile, and El Salvador.

Owned Hotel Portfolio

During 2016, the Company completed the sale of 19 owned hotels, including the final 13 of the 24 hotels from the definitive purchase and sale agreement entered into in the third quarter of 2015.  The sale of the 19 hotels generated $71.1 million in proceeds, net of selling costs.  As of December 31, 2016, the Company had five hotels held for sale.  Subsequent to December 31, 2016, the Company has closed the sale of three of these properties. 

Balance Sheet and Liquidity

As of December 31, 2016, the Company had approximately $1.7 billion of outstanding indebtedness with a weighted average interest rate of approximately 4.3%, including the impact of an interest rate swap.  Total cash and cash equivalents was $160.6 million as of December 31, 2016.

Outlook

Based upon management's current estimates, the Company is introducing its guidance for full year 2017:



Guidance

RevPAR growth on a system-wide comparable hotel basis


0.0 percent to 2.0 percent

Adjusted EBITDA


$320 million to $340 million

 

Please see the schedules to this press release for a reconciliation of Adjusted EBITDA to Adjusted Net (Loss) Income Attributable to La Quinta Holdings' stockholders.  A reconciliation of Adjusted EBITDA to the closest GAAP financial measure is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to impairment charges, gains or losses on sales of assets, and secondary offering expenses excluded from these non-GAAP financial measures.  For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could have a potentially unpredictable, and potentially significant, impact on its future GAAP financial results.

Webcast and Conference Call

La Quinta Holdings Inc. will host a conference call to discuss fourth quarter and full year 2016 results on Tuesday, February 28, 2017 at 5:00 p.m. Eastern Time. Participants may listen to the live webcast by dialing (844) 395-9252, or (478) 219-0505 for international participants, and enter passcode 65017429, or by logging onto the La Quinta Investor Relations website at www.lq.com/investorrelations. Participants are encouraged to dial into the call or link to the webcast at least fifteen minutes prior to the scheduled start time.

The replay of the call will be available from approximately 8 p.m. Eastern Time on February 28, 2017 through midnight Eastern Time on March 7, 2017. To access the replay, the domestic dial-in number is (855) 859-2056, the international dial-in number is (404) 537-3406, and the passcode is 65017429. The archive of the webcast will be available on the Company's website for a limited time.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934. These statements include, but are not limited to, statements related to the Company's expectations regarding the performance of its business, its financial results, its liquidity and capital resources, the outcome of the Company's strategic initiatives and the potential separation of its businesses and other non-historical statements, including the statements in the "Outlook" section of this press release. You can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "projects," "predicts," "intends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including those described under the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, which is expected to be filed with the Securities and Exchange Commission ("SEC") on or about the date of this press release, as such factors may be updated from time to time in the Company's periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in the Company's filings with the SEC. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Non-GAAP Financial Measures

The Company refers to certain non-GAAP financial measures in this press release including Adjusted EBITDA, Adjusted EBITDA margins, Segment Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings Per Share. Please see the schedules to this press release for additional information and reconciliations of such non-GAAP financial measures.

About La Quinta Holdings Inc.

La Quinta Holdings Inc. (LQ) is a leading owner, operator and franchisor of select-service hotels primarily serving the upper-midscale and midscale segments. The Company's owned and franchised portfolio consists of more than 885 properties representing approximately 87,500 rooms located in 48 states in the U.S., and in Canada, Mexico, Honduras and Colombia. These properties operate under the La Quinta Inn & Suites™, La Quinta Inn™ and LQ Hotel™ brands. La Quinta's team is committed to providing guests with a refreshing and engaging experience. For more information, please visit: www.LQ.com.

From time to time, La Quinta may use its website as a distribution channel of material company information. Financial and other important information regarding the Company is routinely accessible through and posted on its website at www.lq.com/investorrelations. In addition, you may automatically receive email alerts and other information about La Quinta when you enroll your email address by visiting the Email Notification section at www.lq.com/investorrelations.

 

LA QUINTA HOLDINGS INC.


HISTORICAL BALANCE SHEETS


(in thousands, except share data)






December 31, 2016



December 31, 2015


ASSETS









Current Assets:









Cash and cash equivalents


$

160,596



$

86,709


Accounts receivable, net of allowance for doubtful accounts of $4,022 and $4,773



45,337




37,625


Assets held for sale



29,544




35,523


Other current assets



9,943




12,066


Total Current Assets



245,420




171,923


Property and equipment, net of accumulated depreciation



2,456,780




2,623,472


Intangible assets, net of accumulated amortization



177,002




178,095


Other non-current assets



13,321




12,354


Total Non-Current Assets



2,647,103




2,813,921


Total Assets


$

2,892,523



$

2,985,844


LIABILITIES AND EQUITY









Current Liabilities:









Current portion of long-term debt


$

17,514



$

17,514


Accounts payable



38,130




27,572


Accrued expenses and other liabilities



64,581




63,120


Accrued payroll and employee benefits



38,467




30,918


Accrued real estate taxes



21,400




21,705


Total Current Liabilities



180,092




160,829


Long-term debt



1,682,436




1,694,585


Other long-term liabilities



29,130




30,330


Deferred tax liabilities



343,028




353,588


Total Liabilities



2,234,686




2,239,332


Commitments and Contingencies









Equity:









Preferred Stock, $0.01 par value; 100,000,000 shares authorized and none

     outstanding as of December 31, 2016 and 2015







Common Stock, $0.01 par value; 2,000,000,000 shares authorized at

     December 31, 2016 and 2015, 131,750,715 shares issued

     and 116,790,470 shares outstanding as of December 31, 2016 and

     130,974,073 shares issued and 124,302,318 shares outstanding

     as of December 31, 2015



1,318




1,310


Additional paid-in-capital



1,165,651




1,152,155


Accumulated deficit



(296,006)




(294,718)


Treasury stock at cost, 14,960,245 shares at December 31, 2016 and 6,671,755

    shares at December 31, 2015



(209,523)




(107,699)


Accumulated other comprehensive loss



(6,372)




(7,436)


Noncontrolling interests



2,769




2,900


Total Equity



657,837




746,512


Total Liabilities and Equity


$

2,892,523



$

2,985,844


 

LA QUINTA HOLDINGS INC.


HISTORICAL STATEMENTS OF OPERATIONS


(in thousands)






Three months ended December 31,



Year ended December 31,




2016



2015



2016



2015




(unaudited)










REVENUES:

















Room revenues


$

185,880



$

194,465



$

855,302



$

887,358


Franchise and other fee-based revenues



26,272




24,511




106,468




100,069


Other hotel revenues



4,590




4,657




19,334




19,343





216,742




223,633




981,104




1,006,770


Brand marketing fund revenues from franchise properties



5,874




5,244




25,150




23,204


Total Revenues



222,616




228,877




1,006,254




1,029,974


OPERATING EXPENSES:

















Direct lodging expenses



98,747




96,053




409,886




398,828


Depreciation and amortization



36,108




40,472




147,081




166,642


General and administrative expenses



29,264




26,900




115,715




125,697


Other lodging and operating expenses



16,433




14,391




62,281




63,513


Marketing, promotional and other advertising expenses



12,474




12,776




68,327




69,810


Impairment loss



3,640




5,800




104,258




50,121


(Gain) loss on sales



(2,138)







(4,908)




4,088





194,528




196,392




902,640




878,699


Brand marketing fund expenses from franchise properties



5,874




5,244




25,150




23,204


Total Operating Expenses



200,402




201,636




927,790




901,903


Operating Income



22,214




27,241




78,464




128,071


OTHER INCOME (EXPENSES):

















Interest expense, net



(20,400)




(20,572)




(81,419)




(86,504)


Other income



57




6,334




2,345




7,632


Total Other (Expenses) Income, net



(20,343)




(14,238)




(79,074)




(78,872)


 Income (Loss) Before Income Taxes



1,871




13,003




(610)




49,199


Income tax (expense) benefit



(1,852)




(5,121)




(493)




(22,487)


NET INCOME (LOSS)



19




7,882




(1,103)




26,712


Less: net income attributable to noncontrolling interests



(47)




(54)




(185)




(347)


Net (Loss) Income Attributable to La Quinta Holdings' Stockholders


$

(28)



$

7,828



$

(1,288)



$

26,365


 

RECONCILIATIONS

The tables below provide a reconciliation of EBITDA and Adjusted EBITDA to Net (Loss) Income, a reconciliation of Adjusted Operating Income to Operating Income, a reconciliation of Adjusted Net Income and Adjusted Earnings Per Share to Net (Loss) Income and Earnings Per Share, and a reconciliation of Adjusted EBITDA to Adjusted Net Income with respect to the Company's outlook. The Company believes this financial information provides meaningful supplemental information. The Company further believes the presentation of Adjusted EBITDA, Adjusted Operating Income, Adjusted Net Income and Adjusted Earnings Per Share provides meaningful information because it excludes the impact of certain special items and/or certain items that are not expected to have an ongoing effect on its operations. This represents how management views the business and reviews its operating performance. It is also used by management when publicly providing the business outlook. 

"EBITDA" and "Adjusted EBITDA." Earnings before interest, taxes, depreciation and amortization ("EBITDA") is a commonly used measure in many industries. The Company adjust EBITDA when evaluating its performance because the Company believes that the adjustment for certain items, such as restructuring and acquisition transaction expenses, impairment charges related to long-lived assets, non-cash equity-based compensation, discontinued operations, and other items not indicative of ongoing operating performance, provides useful supplemental information to management and investors regarding its ongoing operating performance. The Company believes that EBITDA and Adjusted EBITDA provide useful information to investors about it and its financial condition and results of operations for the following reasons: (i) EBITDA and Adjusted EBITDA are among the measures used by the Company's management team to evaluate its operating performance and make day-to-day operating decisions; and (ii) EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors, lenders and other interested parties as a common performance measure to compare results or estimate valuations across companies in the Company's industry.

EBITDA and Adjusted EBITDA are not recognized terms under GAAP, have limitations as analytical tools and should not be considered either in isolation or as a substitute for net (loss) income, cash flow or other methods of analyzing the Company's results as reported under GAAP. Some of these limitations are:

  • EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, the Company's working capital needs;
  • EBITDA and Adjusted EBITDA do not reflect the Company's interest expense, or the cash requirements necessary to service interest or principal payments, on its indebtedness;
  • EBITDA and Adjusted EBITDA do not reflect the Company's tax expense or the cash requirements to pay its taxes;
  • EBITDA and Adjusted EBITDA do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;
  • EBITDA and Adjusted EBITDA do not reflect the impact on earnings or changes resulting from matters that the Company considers not to be indicative of its future operations;
  • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; and
  • other companies in the Company's industry may calculate EBITDA and Adjusted EBITDA differently, limiting their usefulness as comparative measures.

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as discretionary cash available to the Company to reinvest in the growth of its business or as measures of cash that will be available to the Company to meet its obligations.

"Adjusted EBITDA margin" represents the ratio of Adjusted EBITDA to total revenues.

"Adjusted operating (loss) income" represents the Company's reported operating (loss) income, adjusted to exclude the impact of items not indicative of ongoing operating performance. Adjusted operating (loss) income is presented to provide additional perspective on underlying trends in the Company's operating results.

 "Adjusted Net Income" and "Adjusted Earnings Per Share" are not recognized terms under U.S. GAAP and should not be considered as alternatives to net (loss) income, earnings per share, or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. In addition, the Company's definitions of Adjusted Net Income and Adjusted Earnings Per Share may not be comparable to similarly titled measures of other companies.

Adjusted Net Income and Adjusted Earnings Per Share are included to assist investors in performing meaningful comparisons of past, present and future operating results and as a means of highlighting the results of the Company's ongoing operations in a comparable format.

ADJUSTED EBITDA NON-GAAP RECONCILIATION

(unaudited, in thousands)




Three months ended December 31, 2016



Three months ended December 31, 2015



Year ended December 31, 2016



Year ended December 31, 2015


Operating income


$

22,214



$

27,241



$

78,464



$

128,071


Interest expense, net



(20,400)




(20,572)




(81,419)




(86,504)


Other income



57




6,334




2,345




7,632


Income tax expense



(1,852)




(5,121)




(493)




(22,487)


Income from noncontrolling interest



(47)




(54)




(185)




(347)


Net (Loss) Income attributable to La Quinta

   Holdings' Stockholders



(28)




7,828




(1,288)




26,365


Interest expense



20,476




20,593




81,666




86,614


Income tax expense



1,852




5,121




493




22,487


Depreciation and amortization



36,376




40,708




147,996




167,920


Noncontrolling interest



47




54




185




347


EBITDA



58,723




74,304




229,052




303,733


Impairment loss



3,640




5,800




104,258




50,121


(Gain) loss on sales



(2,138)







(4,908)




4,088


Loss on retirement of assets






284







445


(Gain) loss related to casualty disasters



3,333




760




3,051




1,824


Equity based compensation



3,342




2,350




14,153




18,814


Amortization of software service agreements



2,144




2,220




9,050




8,343


Severance charges (1)












11,021


Other (gains) losses, net



889




(7,747)




5,722




(4,347)


Adjusted EBITDA


$

69,933



$

77,971



$

360,378



$

394,042




(1)

During the year ended December 31, 2015, the Company incurred $8.0 million of cash and $3.0 million of non-cash expenses related to the departure of the Company's former President and Chief Executive Officer in general and administrative expenses.

 

SEGMENT REVENUES AND ADJUSTED EBITDA RECONCILIATION


(unaudited, in thousands)






Three months ended December 31, 2016



Three months ended December 31, 2015



Year ended December 31, 2016



Year ended December 31, 2015


Revenues

















Owned hotels


$

191,308



$

200,040



$

879,653



$

911,491


Franchise and management



27,585




27,253




116,806




114,610


Segment revenues



218,893




227,293




996,459




1,026,101


Other fee-based revenues from franchised properties



5,874




5,244




25,150




23,204


Corporate and other



28,802




28,607




124,757




126,469


Intersegment elimination



(30,953)




(32,267)




(140,112)




(145,800)


Total revenues


$

222,616



$

228,877



$

1,006,254



$

1,029,974


Adjusted EBITDA

















Owned hotels


$

51,382



$

60,356



$

279,536



$

314,278


Franchise and management



27,585




27,253




116,806




114,610


Segment Adjusted EBITDA



78,967




87,609




396,342




428,888


Corporate and other



(9,034)




(9,638)




(35,964)




(34,846)


Total Adjusted EBITDA


$

69,933



$

77,971



$

360,378



$

394,042


 

ADJUSTED OPERATING INCOME NON-GAAP RECONCILIATION


(unaudited, in thousands)






Three months ended December 31, 2016



Three months ended December 31, 2015



Year ended December 31, 2016



Year ended December 31, 2015


Operating income


$

22,214



$

27,241



$

78,464



$

128,071


Expense for the conversion of long term incentives (1)












5,564


Secondary offering (2)












1,378


Severance charges (3)












11,021


Impairment loss



3,640




5,800




104,258




50,121


(Gain) loss on sales



(2,138)







(4,908)




4,088


Adjusted operating  income


$

23,716



$

33,041



$

177,814



$

200,243




(1)

During the year ended December 31, 2015, the Company incurred $5.6 million in general and administrative expenses related to the issuance of unvested restricted stock related to long term incentives on April 14, 2014, the date of the Company's initial public offering.  These shares fully vested on April 14, 2015.   

(2)

During the year ended December 31, 2015, the Company incurred general and administrative expenses related to costs incurred in connection with the secondary equity offering by certain selling stockholders.

(3)

During the year ended December 31, 2015, the Company incurred $8.0 million of cash and $3.0 million of non-cash expenses related to the departure of the Company's former President and Chief Executive Officer in general and administrative expenses.

 

ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE

NON-GAAP RECONCILIATION

(unaudited, in thousands, except per share data)




Three months ended December 31, 2016



Three months ended December 31, 2015





















Net (Loss) Income



Basic and

Diluted (Loss)

Earnings

Per

Share



Net Income



Basic and

Diluted

Earnings

Per

Share


Net (Loss) Income attributable to La Quinta Holdings' Stockholders


$

(28)



$



$

7,828



$

0.06


Impairment loss



3,640




0.03




5,800




0.05


Gain on sales



(2,138)




(0.02)








Tax impact of adjustments



(601)







(2,320)




(0.02)


Adjusted Net Income attributable to La Quinta

      Holdings' Stockholders


$

873



$

0.01



$

11,308



$

0.09


Weighted average common shares outstanding, basic







115,815








125,327


Weighted average common shares outstanding, diluted







116,079








125,377






































Year ended December 31, 2016



Year ended December 31, 2015





















Net (Loss) Income



Basic and

Diluted

(Loss) Earnings

Per

Share



Net Income



Basic and

Diluted

Earnings

Per

Share


Net (Loss) Income attributable to La Quinta Holdings'

      Stockholders


$

(1,288)



$

(0.01)



$

26,365



$

0.20


      Expense for the conversion of long term incentives (1)









5,564




0.04


Secondary offering expenses(2)









1,378




0.01


Severance charges (3)









11,021




0.09


Impairment loss



104,258




0.88




50,121




0.39


(Gain) loss on sales



(4,908)




(0.04)




4,088




0.03


Tax impact of adjustments



(39,740)




(0.34)




(28,390)




(0.22)


Adjusted Net Income attributable to La Quinta

      Holdings' Stockholders


$

58,322



$

0.49



$

70,147



$

0.54


Weighted average common shares outstanding, basic







118,114








128,272


Weighted average common shares outstanding, diluted







118,233








129,172




(1)

During the year ended December 31, 2015, the Company incurred $5.6 million in general and administrative expenses related to the issuance of unvested restricted stock related to long term incentives on April 14, 2014, the date of the Company's initial public offering.  These shares fully vested on April 14, 2015.   

(2)

During the year ended December 31, 2015, the Company incurred general and administrative expenses related to costs incurred in connection with the secondary equity offering by certain selling stockholders.

(3)

During the year ended December 31, 2015, the Company incurred $8.0 million of cash and $3.0 million of non-cash expenses related to the departure of the Company's former President and Chief Executive Officer in general and administrative expenses.

 

ADJUSTED EBITDA NON-GAAP RECONCILIATION


OUTLOOK: FORECASTED 2017


(unaudited, in thousands)






Year Ending December 31, 2017




Low Case



High Case


Adjusted Net income attributable to La Quinta Holdings' Stockholders (1)


$

42,420



$

54,420


Interest expense (2)



84,000




84,000


Income tax provision



28,280




36,280


Depreciation and amortization (3)



152,000




152,000


Noncontrolling interest



300




300


EBITDA



307,000




327,000


Share based compensation expense (4)



13,000




13,000


Adjusted EBITDA


$

320,000



$

340,000



This table provides a reconciliation of forward-looking forecasted Adjusted EBITDA to Adjusted Net income attributable to La Quinta Holdings' stockholders that excludes the impact of certain items that are not expected to have an ongoing effect on the Company's operations.

(2)

Includes interest expense for $1.7 billion of outstanding indebtedness with a weighted average interest rate of approximately 4.3%, including the impact of an interest rate swap, commitment fees for the undrawn balance of the Company's revolving credit facility, and amortization of deferred financing costs.

(3)

Includes the amortization of software service agreements.

(4)

Reflects equity based compensation expense.

 

LA QUINTA HOLDINGS INC.
CERTAIN DEFINED TERMS

"ADR" or "average daily rate" means hotel room revenues divided by total number of rooms sold in a given period.

"comparable hotels" means hotels that: were active and operating in the Company's system for at least one full calendar year as of the end of the applicable period and were active and operating as of January 1st of the previous year; except for (i) hotels that sustained substantial property damage or other business interruption, (ii) owned hotels that become subject to a purchase and sale agreement, or (iii) hotels in which comparable results are otherwise not available.. Management uses comparable hotels as the basis upon which to evaluate ADR, occupancy, RevPAR and RevPAR Index on a system-wide basis and for each of the Company's reportable segments.

"occupancy" means the total number of rooms sold in a given period divided by the total number of rooms available at a hotel or group of hotels.

"RevPAR" or "revenue per available room" means the product of the ADR charged and the average daily occupancy achieved.

"RevPAR Index" measures a hotel's fair market share of its competitive set's revenue per available room.

"system-wide" refers collectively to the Company's owned, franchised and managed hotel portfolios.

 

 

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