Park Hotels & Resorts Earnings 2020-09-30

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

pk-10q_20200930.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 September 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 October 30, 2020 was 235,612,787.

Table of Contents

PART I. FINANCIAL INFORMATION		Page

Item 1.	Financial Statements (unaudited)	2
	Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019	2
	Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three and Nine Months Ended September 30, 2020 and 2019	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019	4
	Condensed Consolidated Statements of Equity for the Three and Nine Months Ended September 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	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	37
	Signatures	38

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, 2020			December 31, 2019
	(unaudited)
ASSETS
Property and equipment, net	$	9,255		$	9,594
Assets held for sale, net		—			71
Investments in affiliates		17			35
Goodwill		—			607
Intangibles, net		45			46
Cash and cash equivalents		1,134			346
Restricted cash		35			40
Accounts receivable, net of allowance for doubtful accounts of $4 and $2		36			180
Prepaid expenses		43			83
Other assets		53			40
Operating lease right-of-use assets		235			248
TOTAL ASSETS (variable interest entities - $234 and $242)	$	10,853		$	11,290
LIABILITIES AND EQUITY
Liabilities
Debt	$	5,121		$	3,871
Accounts payable and accrued expenses		168			217
Due to hotel managers		102			159
Deferred income tax liabilities		34			50
Other liabilities		124			282
Operating lease liabilities		249			260
Total liabilities (variable interest entities - $217 and $219)		5,798			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, 235,914,952 shares issued and 235,613,445 shares outstanding as of September 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		4,512			4,575
Retained earnings		595			1,922
Accumulated other comprehensive loss		(5	)		(3	)
Total stockholders' equity		5,104			6,496
Noncontrolling interests		(49	)		(45	)
Total equity		5,055			6,451
TOTAL LIABILITIES AND EQUITY	$	10,853		$	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 September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Revenues
Rooms	$	70		$	430		$	453		$	1,267
Food and beverage		10			156			174			534
Ancillary hotel		15			64			87			174
Other		3			22			25			59
Total revenues		98			672			739			2,034

Operating expenses
Rooms		30			114			162			334
Food and beverage		18			117			155			371
Other departmental and support		64			153			296			453
Other property-level		84			54			200			152
Management fees		2			32			27			101
Impairment and casualty loss, net		2			8			696			8
Depreciation and amortization		75			61			225			184
Corporate general and administrative		13			14			42			47
Acquisition costs		9			59			10			65
Other		6			23			31			61
Total expenses		303			635			1,844			1,776

(Loss) gain on sales of assets, net		(1	)		1			62			20

Operating (loss) income		(206	)		38			(1,043	)		278

Interest income		—			2			2			5
Interest expense		(59	)		(33	)		(149	)		(98	)
Equity in (losses) earnings from investments in affiliates		(7	)		3			(16	)		18
Other loss, net		(3	)		(1	)		(6	)		(1	)

(Loss) income before income taxes		(275	)		9			(1,212	)		202
Income tax expense		(1	)		—			(14	)		(12	)
Net (loss) income		(276	)		9			(1,226	)		190
Net loss (income) attributable to noncontrolling interests		—			(4	)		3			(7	)
Net (loss) income attributable to stockholders	$	(276	)	$	5		$	(1,223	)	$	183

Other comprehensive income (loss), net of tax expense:
Currency translation adjustment, net of tax expense of $0		1			(3	)		4			(2	)
Change in fair value of interest rate swap, net of tax expense of $0		—			—			(6	)		—
Total other comprehensive income (loss)		1			(3	)		(2	)		(2	)

Comprehensive (loss) income		(275	)		6			(1,228	)		188
Comprehensive (income) loss attributable to noncontrolling interests		—			(4	)		3			(7	)
Comprehensive (loss) income attributable to stockholders	$	(275	)	$	2		$	(1,225	)	$	181

(Loss) Earnings per share:
(Loss) Earnings per share - Basic	$	(1.17	)	$	0.02		$	(5.19	)	$	0.90
(Loss) Earnings per share - Diluted	$	(1.17	)	$	0.02		$	(5.19	)	$	0.90

Weighted average shares outstanding - Basic		235			206			236			203
Weighted average shares outstanding - Diluted		235			207			236			204

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

PARK HOTELS & RESORTS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)

	Nine Months Ended
	September 30,
	2020			2019
Operating Activities:
Net (loss) income	$	(1,226	)	$	190
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization		225			184
Gain on sales of assets, net		(62	)		(20	)
Impairment and casualty loss, net		696			8
Equity in losses (earnings) from investments in affiliates		16			(18	)
Other loss, net		6			1
Share-based compensation expense		10			12
Amortization of deferred financing costs		6			3
Distributions from unconsolidated affiliates		5			16
Deferred income taxes		2			—
Changes in operating assets and liabilities		48			(27	)
Net cash (used in) provided by operating activities		(274	)		349
Investing Activities:
Acquisitions, net of cash and restricted cash acquired		—			(913	)
Capital expenditures for property and equipment		(70	)		(182	)
Proceeds from asset dispositions, net		207			230
Contributions to unconsolidated affiliates		(2	)		—
Insurance proceeds for property damage claims		1			10
Net cash provided by (used in) investing activities		136			(855	)
Financing Activities:
Proceeds from issuance of Senior Secured Notes		1,376			—
Borrowings from credit facilities		1,000			850
Repayments of credit facilities		(1,099	)		—
Repayment of mortgage debt		(4	)		—
Debt issuance costs		(39	)		(11	)
Dividends paid		(241	)		(382	)
Distributions to noncontrolling interests, net		(1	)		(5	)
Tax withholdings on share-based compensation		(5	)		(7	)
Repurchase of common stock		(66	)		—
Net cash provided by financing activities		921			445
Net increase (decrease) in cash and cash equivalents and restricted cash		783			(61	)
Cash and cash equivalents and restricted cash, beginning of period		386			425
Cash and cash equivalents and restricted cash, end of period	$	1,169		$	364

Supplemental Disclosures

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	2020-09-30	Filed 2020-11-06
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	2020-11-07
8-K	2020-11-05
8-K	2020-10-23
8-K	2020-09-18
8-K	2020-09-15
8-K	2020-09-14
8-K	2020-08-05
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_6.htm
EX-32.1	pk-ex321_9.htm
EX-32.2	pk-ex322_7.htm

PK 10Q Quarterly Report

Park Hotels & Resorts Earnings 2020-09-30