10-Q 1 pk-20210930.htm 10-Q 10-Q
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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 September 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-37795

 

Park Hotels & Resorts Inc.

(Exact name of Registrant as specified in its Charter)

 

Delaware

 

36-2058176

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S Employer

Identification No.)

 

1775 Tysons Boulevard., 7th Floor, Tysons, VA

 

22102

(Address of principal executive offices)

 

(Zip Code)

(Registrant’s telephone number, including area code): (571) 302-5757

 

 

Securities registered pursuant to Section 12(b) of the Act.

 

Title of each class

Trading Symbol

Name of exchange on which registered

Common Stock, $0.01 par value per share

PK

New York Stock Exchange

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 ☒

 

The number of shares of common stock outstanding on October 29, 2021 was 236,479,179.

.

 

 

 


 

Table of Contents

 

PART I. FINANCIAL INFORMATION

 

Page

 

 

 

 

Item 1.

Financial Statements (unaudited)

 

3

 

Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020

 

3

 

Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2021 and 2020

 

4

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020

 

5

 

Condensed Consolidated Statements of Equity for the Three and Nine Months Ended September 30, 2021 and 2020

 

6

 

Notes to Condensed Consolidated Financial Statements

 

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

27

Item 4.

Controls and Procedures

 

27

 

 

 

 

PART II. OTHER INFORMATION

 

 

Item 1.

Legal Proceedings

 

28

Item 1A.

Risk Factors

 

28

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

28

Item 3.

Defaults Upon Senior Securities

 

28

Item 4.

Mine Safety Disclosures

 

29

Item 5.

Other Information

 

29

Item 6.

Exhibits

 

30

 

Signatures

 

31

 

 

2


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

PARK HOTELS & RESORTS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share data)

 

 

 

September 30, 2021

 

 

December 31, 2020

 

 

 

(unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

Property and equipment, net

 

$

8,549

 

 

 

9,193

 

Investments in affiliates

 

 

14

 

 

 

14

 

Intangibles, net

 

 

44

 

 

 

45

 

Cash and cash equivalents

 

 

772

 

 

 

951

 

Restricted cash

 

 

70

 

 

 

30

 

Accounts receivable, net of allowance for doubtful accounts of $2 and $3

 

 

62

 

 

 

26

 

Prepaid expenses

 

 

34

 

 

 

39

 

Other assets

 

 

34

 

 

 

60

 

Operating lease right-of-use assets

 

 

215

 

 

 

229

 

TOTAL ASSETS (variable interest entities - $239 and $229)

 

$

9,794

 

 

$

10,587

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Debt

 

$

4,670

 

 

 

5,121

 

Accounts payable and accrued expenses

 

 

204

 

 

 

147

 

Due to hotel managers

 

 

96

 

 

 

88

 

Deferred income tax liabilities

 

 

9

 

 

 

10

 

Other liabilities

 

 

115

 

 

 

134

 

Operating lease liabilities

 

 

232

 

 

 

244

 

Total liabilities (variable interest entities - $218 and $213)

 

 

5,326

 

 

 

5,744

 

Commitments and contingencies - refer to Note 13

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

Common stock, par value $0.01 per share, 6,000,000,000 shares
   authorized,
236,884,447 shares issued and 236,479,696 shares outstanding
   as of September 30, 2021 and
236,217,344 shares issued and 235,915,749
   shares outstanding as of December 31, 2020

 

 

2

 

 

 

2

 

Additional paid-in capital

 

 

4,529

 

 

 

4,519

 

(Accumulated deficit) retained earnings

 

 

(16

)

 

 

376

 

Accumulated other comprehensive loss

 

 

 

 

 

(4

)

Total stockholders' equity

 

 

4,515

 

 

 

4,893

 

Noncontrolling interests

 

 

(47

)

 

 

(50

)

Total equity

 

 

4,468

 

 

 

4,843

 

TOTAL LIABILITIES AND EQUITY

 

$

9,794

 

 

$

10,587

 

 

Refer to the notes to the unaudited condensed consolidated financial statements.

 

3


 

PARK HOTELS & RESORTS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited, in millions, except per share data)

 

 

 

Three Months Ended September 30,

 

 

 Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Rooms

 

$

274

 

 

$

70

 

 

$

587

 

 

$

453

 

Food and beverage

 

 

76

 

 

 

10

 

 

 

152

 

 

 

174

 

Ancillary hotel

 

 

58

 

 

 

15

 

 

 

137

 

 

 

87

 

Other

 

 

15

 

 

 

3

 

 

 

35

 

 

 

25

 

Total revenues

 

 

423

 

 

 

98

 

 

 

911

 

 

 

739

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Rooms

 

 

76

 

 

 

30

 

 

 

170

 

 

 

162

 

Food and beverage

 

 

63

 

 

 

18

 

 

 

126

 

 

 

155

 

Other departmental and support

 

 

119

 

 

 

64

 

 

 

298

 

 

 

296

 

Other property-level

 

 

51

 

 

 

84

 

 

 

151

 

 

 

200

 

Management fees

 

 

19

 

 

 

2

 

 

 

40

 

 

 

27

 

Impairment and casualty loss, net

 

 

2

 

 

 

2

 

 

 

7

 

 

 

696

 

Depreciation and amortization

 

 

68

 

 

 

75

 

 

 

213

 

 

 

225

 

Corporate general and administrative

 

 

14

 

 

 

13

 

 

 

48

 

 

 

42

 

Acquisition costs

 

 

 

 

 

9

 

 

 

 

 

 

10

 

Other

 

 

14

 

 

 

6

 

 

 

34

 

 

 

31

 

Total expenses

 

 

426

 

 

 

303

 

 

 

1,087

 

 

 

1,844

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) gain on sales of assets, net

 

 

(11

)

 

 

(1

)

 

 

(5

)

 

 

62

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(14

)

 

 

(206

)

 

 

(181

)

 

 

(1,043

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

 

 

 

 

 

 

 

 

2

 

Interest expense

 

 

(66

)

 

 

(59

)

 

 

(195

)

 

 

(149

)

Equity in losses from investments in affiliates

 

 

 

 

 

(7

)

 

 

(6

)

 

 

(16

)

Other loss, net

 

 

(5

)

 

 

(3

)

 

 

(7

)

 

 

(6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

(85

)

 

 

(275

)

 

 

(389

)

 

 

(1,212

)

Income tax benefit (expense)

 

 

3

 

 

 

(1

)

 

 

2

 

 

 

(14

)

Net loss

 

 

(82

)

 

 

(276

)

 

 

(387

)

 

 

(1,226

)

Net (income) loss attributable to noncontrolling interests

 

 

(4

)

 

 

 

 

(5

)

 

 

3

 

Net loss attributable to stockholders

 

$

(86

)

 

$

(276

)

 

$

(392

)

 

$

(1,223

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss), net of tax expense:

 

 

 

 

 

 

 

 

 

 

 

 

Currency translation adjustment, net of tax expense of $0

 

 

 

 

 

1

 

 

 

 

 

 

4

 

Change in fair value of interest rate swap, net of tax expense
    of $
0

 

 

1

 

 

 

 

 

 

2

 

 

 

(6

)

Loss from interest rate swap reclassified into earnings

 

 

2

 

 

 

 

 

 

2

 

 

 

 

Total other comprehensive income (loss)

 

 

3

 

 

 

1

 

 

 

4

 

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss

 

 

(79

)

 

 

(275

)

 

 

(383

)

 

 

(1,228

)

Comprehensive (loss) income attributable to noncontrolling
   interests

 

 

(4

)

 

   —

 

 

 

(5

)

 

 

3

 

Comprehensive loss attributable to stockholders

 

$

(83

)

 

$

(275

)

 

$

(388

)

 

$

(1,225

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share – Basic

 

$

(0.36

)

 

$

(1.17

)

 

$

(1.66

)

 

$

(5.19

)

Loss per share – Diluted

 

$

(0.36

)

 

$

(1.17

)

 

$

(1.66

)

 

$

(5.19

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding – Basic

 

 

236

 

 

 

235

 

 

 

236

 

 

 

236

 

Weighted average shares outstanding – Diluted

 

 

236

 

 

 

235

 

 

 

236

 

 

 

236

 

 

Refer to the notes to the unaudited condensed consolidated financial statements.

4


 

PARK HOTELS & RESORTS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2021

 

 

2020

 

Operating Activities:

 

 

 

 

 

 

Net loss

 

$

(387

)

 

$

(1,226

)

Adjustments to reconcile net loss to net cash used in operating
   activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

213

 

 

 

225

 

Loss (gain) on sales of assets, net

 

 

5

 

 

 

(62

)

Impairment and casualty loss, net

 

 

7

 

 

 

696

 

Equity in losses from investments in affiliates

 

 

6

 

 

 

16

 

Other loss, net

 

 

7

 

 

 

6

 

Share-based compensation expense

 

 

15

 

 

 

10

 

Amortization of deferred financing costs

 

 

9

 

 

 

6

 

Distributions from unconsolidated affiliates

 

 

 

 

 

5

 

Deferred income taxes

 

 

(1

)

 

 

2

 

Changes in operating assets and liabilities

 

 

31

 

 

 

48

 

Net cash used in operating activities

 

 

(95

)

 

 

(274

)

Investing Activities:

 

 

 

 

 

 

Capital expenditures for property and equipment

 

 

(28

)

 

 

(70

)

Proceeds from asset dispositions, net

 

 

454

 

 

 

207

 

Contributions to unconsolidated affiliates

 

 

(5

)

 

 

(2

)

Insurance proceeds for property damage claims

 

 

4

 

 

 

1

 

Net cash provided by investing activities

 

 

425

 

 

 

136

 

Financing Activities:

 

 

 

 

 

 

Borrowings from credit facilities

 

 

 

 

 

1,000

 

Repayments of credit facilities

 

 

(1,193

)

 

 

(1,099

)

Proceeds from issuance of Senior Secured Notes

 

 

750

 

 

 

1,376

 

Proceeds from issuance of mortgage debt

 

 

14

 

 

 

 

Repayments of mortgage debt

 

 

(18

)

 

 

(4

)

Debt issuance costs

 

 

(15

)

 

 

(39

)

Dividends paid

 

 

 

 

 

(241

)

Distributions to noncontrolling interests, net

 

 

(2

)

 

 

(1

)

Tax withholdings on share-based compensation

 

 

(5

)

 

 

(5

)

Repurchase of common stock

 

 

 

 

 

(66

)

Net cash (used in) provided by financing activities

 

 

(469

)

 

 

921

 

Net (decrease) increase in cash and cash equivalents and restricted cash

 

 

(139

)

 

 

783

 

Cash and cash equivalents and restricted cash, beginning of period

 

 

981

 

 

 

386

 

Cash and cash equivalents and restricted cash, end of period

 

$

842

 

 

$

1,169

 

 

 

 

 

 

 

 

 

 

Refer to the notes to the unaudited condensed consolidated financial statements.

5


 

PARK HOTELS & RESORTS INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(unaudited, in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Retained Earnings

 

 

Other

 

 

Non-

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

(Accumulated

 

 

Comprehensive

 

 

controlling

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit)

 

 

(Loss) Income

 

 

Interests

 

 

Total

 

Balance as of December 31, 2020

 

 

236

 

 

$

2

 

 

$

4,519

 

 

$

376

 

 

$

(4

)

 

$

(50

)

 

$

4,843

 

Share-based compensation, net

 

 

 

 

 

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(190

)

 

 

 

 

 

(1

)

 

 

(191

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Balance as of March 31, 2021

 

 

236

 

 

$

2

 

 

$

4,520

 

 

$

185

 

 

$

(3

)

 

$

(51

)

 

$

4,653

 

Share-based compensation, net

 

 

 

 

 

 

 

 

5

 

 

 

1

 

 

 

 

 

 

 

 

 

6

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(116

)

 

 

 

 

 

2

 

 

 

(114

)

Balance as of June 30, 2021

 

 

236

 

 

 

2

 

 

 

4,525

 

 

 

70

 

 

 

(3

)

 

 

(49

)

 

 

4,545

 

Share-based compensation, net

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

4

 

Net loss