Park Hotels & Resorts Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

pk-10q_20200630.htm

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 June 30, 2020

☐	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., 7^th 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 July 31, 2020 was 235,604,666.

Table of Contents

PART I. FINANCIAL INFORMATION		Page

Item 1.	Financial Statements (unaudited)	2
	Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019	2
	Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three and Six Months Ended June 30, 2020 and 2019	3
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019	4
	Condensed Consolidated Statements of Equity for the Three and Six Months Ended June 30, 2020 and 2019	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
	Signatures	36

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

PARK HOTELS & RESORTS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share data)

	June 30, 2020			December 31, 2019
	(unaudited)
ASSETS
Property and equipment, net	$	9,323		$	9,594
Assets held for sale, net		—			71
Investments in affiliates		23			35
Goodwill		—			607
Intangibles, net		45			46
Cash and cash equivalents		1,274			346
Restricted cash		35			40
Accounts receivable, net of allowance for doubtful accounts of $7 and $2		31			180
Prepaid expenses		43			83
Other assets		46			40
Operating lease right-of-use assets		239			248
TOTAL ASSETS (variable interest entities - $231 and $242)	$	11,059		$	11,290
LIABILITIES AND EQUITY
Liabilities
Debt	$	5,118		$	3,871
Accounts payable and accrued expenses		129			217
Due to hotel managers		74			159
Deferred income tax liabilities		36			50
Other liabilities		123			282
Operating lease liabilities		253			260
Total liabilities (variable interest entities - $215 and $219)		5,733			4,839
Commitments and contingencies - refer to Note 13
Stockholders' Equity
Common stock, par value $0.01 per share, 6,000,000,000 shares authorized, 235,900,906 shares issued and 235,604,979 shares outstanding as of June 30, 2020 and 239,589,639 shares issued and 239,386,877 shares outstanding as of December 31, 2019		2			2
Additional paid-in capital		4,508			4,575
Retained earnings		871			1,922
Accumulated other comprehensive loss		(6	)		(3	)
Total stockholders' equity		5,375			6,496
Noncontrolling interests		(49	)		(45	)
Total equity		5,326			6,451
TOTAL LIABILITIES AND EQUITY	$	11,059		$	11,290

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

PARK HOTELS & RESORTS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(unaudited, in millions, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Revenues
Rooms	$	21		$	434		$	383		$	837
Food and beverage		3			195			164			378
Ancillary hotel		15			55			72			110
Other		3			19			22			37
Total revenues		42			703			641			1,362

Operating expenses
Rooms		20			113			132			220
Food and beverage		14			130			137			254
Other departmental and support		60			151			232			300
Other property-level		56			49			116			98
Management fees		—			36			25			69
Impairment loss and casualty gain, net		—			—			694			—
Depreciation and amortization		75			61			150			123
Corporate general and administrative		14			22			30			39
Other		4			18			25			38
Total expenses		243			580			1,541			1,141

Gain (loss) on sales of assets, net		1			(12	)		63			19

Operating (loss) income		(200	)		111			(837	)		240

Interest income		1			2			2			3
Interest expense		(50	)		(33	)		(90	)		(65	)
Equity in (losses) earnings from investments in affiliates		(8	)		10			(9	)		15
Other loss, net		(1	)		(1	)		(3	)		—

(Loss) income before income taxes		(258	)		89			(937	)		193
Income tax expense		(3	)		(5	)		(13	)		(12	)
Net (loss) income		(261	)		84			(950	)	$	181
Net loss (income) attributable to noncontrolling interests		2			(2	)		3			(3	)
Net (loss) income attributable to stockholders	$	(259	)	$	82		$	(947	)	$	178

Other comprehensive (loss) income, net of tax expense:
Currency translation adjustment, net of tax expense of $0		(1	)		1			(3	)		1
Total other comprehensive (loss) income		(1	)		1			(3	)		1

Comprehensive (loss) income		(262	)		85			(953	)		182
Comprehensive loss (income) attributable to noncontrolling interests		2			(2	)		3			(3	)
Comprehensive (loss) income attributable to stockholders	$	(260	)	$	83		$	(950	)	$	179

(Loss) Earnings per share:
(Loss) earnings per share - Basic	$	(1.10	)	$	0.40		$	(4.01	)	$	0.88
(Loss) earnings per share - Diluted	$	(1.10	)	$	0.40		$	(4.01	)	$	0.88

Weighted average shares outstanding - Basic		235			201			236			201
Weighted average shares outstanding - Diluted		235			202			236			202

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

PARK HOTELS & RESORTS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)

	Six Months Ended
	June 30,
	2020			2019
Operating Activities:
Net (loss) income	$	(950	)	$	181
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization		150			123
Gain on sales of assets, net		(63	)		(19	)
Impairment loss and casualty gain, net		694			—
Equity in loss (earnings) from investments in affiliates		9			(15	)
Other loss, net		3			—
Share-based compensation expense		6			8
Amortization of deferred financing costs		3			2
Distributions from unconsolidated affiliates		5			13
Deferred income taxes		2			—
Changes in operating assets and liabilities		(17	)		(49	)
Net cash (used in) provided by operating activities		(158	)		244
Investing Activities:
Capital expenditures for property and equipment		(56	)		(120	)
Proceeds from asset dispositions, net		207			229
Contributions to unconsolidated affiliates		(2	)		—
Insurance proceeds for property damage claims		1			2
Net cash provided by investing activities		150			111
Financing Activities:
Borrowings on Revolver		1,000			—
Repayments of Revolver		(319	)		—
Proceeds from issuance of Senior Secured Notes		652			—
Repayment of 2016 Term Loan		(69	)		—
Repayment of mortgage debt		(4	)		—
Debt issuance costs		(15	)		—
Dividends paid		(241	)		(291	)
Distributions to noncontrolling interests, net		(1	)		(3	)
Tax withholdings on share-based compensation		(6	)		(6	)
Repurchase of common stock		(66	)		—
Net cash provided by (used in) financing activities		931			(300	)
Net increase in cash and cash equivalents and restricted cash		923			55
Cash and cash equivalents and restricted cash, beginning of period		386			425
Cash and cash equivalents and restricted cash, end of period	$	1,309		$	480

Supplemental Disclosures
Non-cash financing activities:
Dividends declared but unpaid	$	—		$	90

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

PARK HOTELS & RESORTS INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(unaudited, in millions)

Accumulated

Additional

Other

Non-

Common Stock

Paid-in

Retained

Comprehensive

controlling

Amount

Capital

Earnings

(Loss) Income

Interests

Total

Balance as of December 31, 2019

Price	24.80	EPS	1
Shares	239	P/E	24
MCap	5,937	P/FCF	17
Net Debt	3,754	EBIT	355
TEV	9,691	TEV/EBIT	27
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-08-06
10-Q	2020-03-31	Filed 2020-05-11
10-K	2019-12-31	Filed 2020-02-27
10-Q	2019-09-30	Filed 2019-11-07
10-Q	2019-06-30	Filed 2019-08-01
10-Q	2019-03-31	Filed 2019-05-06
10-K	2018-12-31	Filed 2019-02-28
10-Q	2018-09-30	Filed 2018-11-02
10-Q	2018-06-30	Filed 2018-08-02
10-Q	2018-03-31	Filed 2018-05-04
10-K	2017-12-31	Filed 2018-03-01
10-Q	2017-09-30	Filed 2017-11-03
10-Q	2017-06-30	Filed 2017-08-03
10-Q	2017-03-31	Filed 2017-05-04
10-K	2016-12-31	Filed 2017-03-02

8-K	2020-08-05	Earnings, Exhibits
8-K	2020-05-29
8-K	2020-05-27
8-K	2020-05-19
8-K	2020-05-18
8-K	2020-05-11
8-K	2020-05-08
8-K	2020-04-24
8-K	2020-03-20
8-K	2020-03-16
8-K	2020-02-26
8-K	2020-02-20
8-K	2020-01-27
8-K	2020-01-15
8-K	2019-11-06
8-K	2019-09-13
8-K	2019-09-02
8-K	2019-08-28
8-K	2019-07-31
8-K	2019-05-06
8-K	2019-05-05
8-K	2019-04-26
8-K	2019-02-27
8-K	2019-02-22
8-K	2019-01-25
8-K	2018-11-01
8-K	2018-06-30
8-K	2018-04-27
8-K	2018-03-31
8-K	2018-03-06
8-K	2018-03-05
8-K	2017-12-31

EX-31.1	pk-ex311_8.htm
EX-31.2	pk-ex312_9.htm
EX-32.1	pk-ex321_10.htm
EX-32.2	pk-ex322_6.htm

PK 10Q Quarterly Report

Park Hotels & Resorts Earnings 2020-06-30