Park Hotels & Resorts Earnings 2020-03-31

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

pk-10q_20200331.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 March 31, 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 May 8, 2020 was 235,594,251.

Table of Contents

PART I. FINANCIAL INFORMATION		Page

Item 1.	Financial Statements (unaudited)	2
	Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019	2
	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2020 and 2019	3
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019	4
	Condensed Consolidated Statements of Equity for the Three Months Ended March 31, 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	29
Item 4.	Controls and Procedures	29

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34
	Signatures	35

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

PARK HOTELS & RESORTS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share data)

	March 31, 2020			December 31, 2019
	(unaudited)
ASSETS
Property and equipment, net	$	9,383		$	9,594
Assets held for sale, net		—			71
Investments in affiliates		30			35
Goodwill		—			607
Intangibles, net		46			46
Cash and cash equivalents		1,304			346
Restricted cash		38			40
Accounts receivable, net of allowance for doubtful accounts of $2 and $2		113			180
Prepaid expenses		73			83
Other assets		46			40
Operating lease right-of-use assets		244			248
TOTAL ASSETS (variable interest entities - $237 and $242)	$	11,277		$	11,290
LIABILITIES AND EQUITY
Liabilities
Debt	$	4,870		$	3,871
Accounts payable and accrued expenses		188			217
Due to hotel managers		103			159
Deferred income tax liabilities		35			50
Other liabilities		241			282
Operating lease liabilities		257			260
Total liabilities (variable interest entities - $218 and $219)		5,694			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, 235,721,204 shares issued and 235,427,598 shares outstanding as of March 31, 2020 and 239,589,639 shares issued and 239,386,877 shares outstanding as of December 31, 2019		2			2
Additional paid-in capital		4,504			4,575
Retained earnings		1,129			1,922
Accumulated other comprehensive loss		(5	)		(3	)
Total stockholders' equity		5,630			6,496
Noncontrolling interests		(47	)		(45	)
Total equity		5,583			6,451
TOTAL LIABILITIES AND EQUITY	$	11,277		$	11,290

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

PARK HOTELS & RESORTS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in millions, except per share data)


	Three Months Ended March 31,
	2020			2019
Revenues
Rooms	$	362		$	403
Food and beverage		161			183
Ancillary hotel		57			55
Other		19			18
Total revenues		599			659

Operating expenses
Rooms		112			107
Food and beverage		123			124
Other departmental and support		172			149
Other property-level		60			49
Management fees		25			33
Impairment loss and casualty gain, net		694			—
Depreciation and amortization		75			62
Corporate general and administrative		16			17
Other		21			20
Total expenses		1,298			561

Gain on sales of assets, net		62			31

Operating (loss) income		(637	)		129

Interest income		1			1
Interest expense		(40	)		(32	)
Equity in (losses) earnings from investments in affiliates		(1	)		5
Loss on foreign currency transactions		(2	)		—
Other gain, net		—			1

(Loss) income before income taxes		(679	)		104
Income tax expense		(10	)		(7	)
Net (loss) income		(689	)		97
Net loss (income) attributable to noncontrolling interests		1			(1	)
Net (loss) income attributable to stockholders	$	(688	)	$	96

Other comprehensive (loss) income, net of tax expense:
Currency translation adjustment, net of tax expense of $0		(2	)		—
Total other comprehensive (loss) income		(2	)		—

Comprehensive (loss) income		(691	)		97
Comprehensive loss (income) attributable to noncontrolling interests		1			(1	)
Comprehensive (loss) income attributable to stockholders	$	(690	)	$	96

(Loss) Earnings per share:
(Loss) earnings per share - Basic	$	(2.89	)	$	0.48
(Loss) earnings per share - Diluted	$	(2.89	)	$	0.48

Weighted average shares outstanding - Basic		238			201
Weighted average shares outstanding - Diluted		238			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)

	Three Months Ended
	March 31,
	2020			2019
Operating Activities:
Net (loss) income	$	(689	)	$	97
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	75				62
Gain on sales of assets, net		(62	)		(31	)
Impairment loss and casualty gain, net		694			—
Equity in (loss) earnings from investments in affiliates		1			(5	)
Loss on foreign currency transactions		2			—
Other gain, net		(1	)		(1	)
Share-based compensation expense		2			4
Amortization of deferred financing costs		1			1
Distributions from unconsolidated affiliates		4			6
Deferred income taxes		—			(1	)
Changes in operating assets and liabilities		(40	)		(60	)
Net cash (used in) provided by operating activities		(13	)		72
Investing Activities:
Capital expenditures for property and equipment		(26	)		(64	)
Proceeds from asset dispositions, net		205			65
Insurance proceeds for property damage claims		1			1
Net cash provided by investing activities		180			2
Financing Activities:
Borrowings under Revolver		1,000			—
Repayment of debt		(2	)		—
Dividends paid		(136	)		(201	)
Distributions to noncontrolling interests		(1	)		(3	)
Tax withholdings on share-based compensation		(6	)		(5	)
Repurchase of common stock		(66	)		—
Net cash provided by (used in) financing activities		789			(209	)
Effect of exchange rate changes on cash and cash equivalents and restricted cash		—			—
Net increase (decrease) in cash and cash equivalents and restricted cash		956			(135	)
Cash and cash equivalents and restricted cash, beginning of period		386			425
Cash and cash equivalents and restricted cash, end of period	$	1,342		$	290

Supplemental Disclosures
Non-cash financing activities:
Dividends declared but unpaid	$	106		$	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
	Shares			Amount		Capital			Earnings			(Loss) Income			Interests			Total
Balance as of December 31, 2019		239		$	2	$	4,575		$	1,922		$	(3	)	$	(45	)	$	6,451
Share-based compensation, net		—			—		(5	)		1			—			—			(4	)
Net loss		—			—		—			(688	)		—			(1	)		(689	)
Other comprehensive loss		—			—		—			—			(2	)					(2	)
Dividends and dividend equivalents⁽¹⁾		—			—		—			(106	)		—			—			(106	)
Distributions to noncontrolling interests		—			—		—			—			—			(1	)		(1	)
Repurchase of common stock		(4	)		—		(66	)		—			—			—			(66	)
Balance as of March 31, 2020		235		$	2	$	4,504		$	1,129		$	(5	)	$	(47	)	$	5,583

												Accumulated
						Additional						Other			Non-
	Common Stock					Paid-in			Retained			Comprehensive			controlling
	Shares			Amount		Capital			Earnings			Loss			Interests			Total
Balance as of December 31, 2018		201		$	2	$	3,589		$	2,047		$	(6	)	$	(46	)	$	5,586
Share-based compensation, net		—			—		(1	)		—			—			—			(1	)
Net income		—			—		—			96			—			1			97
Dividends and dividend equivalents⁽¹⁾		—			—		—			(91	)		—			—			(91	)
Distributions to noncontrolling interests		—			—		—			—			—			(3	)		(3	)
Cumulative effect of change in accounting principle		—			—		—			(8	)								(8	)
Balance as of March 31, 2019		201

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	2020-03-31	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	2020-05-29
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-10	pk-ex10_172.htm
EX-31.1	pk-ex311_6.htm
EX-31.2	pk-ex312_8.htm
EX-32.1	pk-ex321_7.htm
EX-32.2	pk-ex322_9.htm

PK 10Q Quarterly Report

Park Hotels & Resorts Earnings 2020-03-31