Ryman Hospitality Properties, Inc. (REIT)

Stand by, your program is about to begin. If you need assistance during the conference today, please press star zero. Welcome to Ryman Hospitality Properties second quarter 2022 earnings conference call. Hosting the call today for Ryman Hospitality Properties are Mr. Colin Reed, Chairman and Chief Executive Officer, Mr. Mark Forianci, with President, Ms. Jennifer Hutchinson, Chief Financial Officer, and Mr. Patrick Chafin, Chief Financial Officer. This call will be available for digital replay. The number is 800-839-1246, with no conference ID required. At this time, all participants have been placed in a listen-only mode. It is now my pleasure to turn the floor over to Ms. Jennifer Hutchinson. Ma'am, you may begin.

Good morning. Thank you for joining us today. This call may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, including statements about the company's expected financial performance. Any statements we make today that are not statements of historical fact may be deemed to be forward-looking statements. Words such as believes or expects are intended to identify these statements, which may be affected by many factors, including those listed in the company's SEC filings and in today's release. The company's actual results may differ materially from the results we discuss or project today. We will not update any forward-looking statements, whether as a result of new information, future events, or any other reason. We will also discuss non-GAAP financial measures today. We reconcile each non-GAAP measure to the most comparable GAAP measure and exhibit to today's release. I will now turn the call over to Colin.

Thank you, Jan, and good morning, everyone. The second quarter was another remarkable quarter for our company and our hospitality business. in particular. The momentum we generated in our hospitality business during the first quarter as we rebounded from the low point of the Omnicom wave in January carried through to several new record performances in the second quarter. Let me list some of these milestones for you. Second quarter was our best quarter ever in the history of the Gaylord brand for transient ADR. At 283, this was an increase of 31% over the second quarter of both 19 and 21. The second quarter was also a record all time for us for both total revenue and total adjusted EBITDA RE for our hospitality segment. And those records were not by a narrow margin. Second quarter adjusted EBITDA was a total of 22 million higher than the next best quarter. and our adjusted EBITDA RE margin was also in an all-time record up 125 basis points above the next best quarter. Regarding our forward production, this second quarter saw the highest ADR on new definite bookings for all future years at $243. On a monthly basis, we also saw a few records within the quarter. For example, April was the single best, most profitable month for adjusted EBITDA RE for the Gaylord Hotel brand and the second highest margin month on record. And at the individual hotel level, the Gaylord Rockies gained a distinction of setting the single highest occupancy month on record for any Gaylord Hotel when it reached 92.4% for the month of June. From just about every angle you look, our results this quarter were a testament to our capital allocation strategy and the actions that we've taken over the last several years to meet the challenge of the pandemic head-on and to position our hotel business to thrive in the eventual recovery. These steps included retaining over 80% of our sales force, even as the hotels were closed. and working hand in hand with our core customer, the meeting planner, to rebook their business. We also continued critical plan capital investments into expansions, rooms, and meeting space upgrades, reconfigured F&B outlets, and other amenities. We streamlined our operating models for improved efficiency to better face rising wages and other inflationary costs. And we reimagined, in many respects, our approach to leisure programming, finding new ways to attract and retain premium leisure demand around our traditional group business. All this work was manifested in the second quarter in these figures that I've just shared with you, and I couldn't be more pleased with the job that our team and the Marriott teams in our hotels could pull to produce these results. This is a good moment to remind everyone that this indeed was still in essence a recovery quarter for us despite all of these records. We accomplished this performance with five fewer occupancy points in the quarter than in the second quarter of 19, our last pre-pandemic year. This tells us we have more opportunity ahead to build on this success as occupancy finally gets back to pre-pandemic levels and we continue to set our sights on new records in the years to come, particularly in an environment where new supply growth remains limited and our own pace for group rooms revenue in the years ahead exceeds pre-pandemic levels. Now, I know what some of you folks are thinking about, so let's address it head on before I go into any more detail about the quarter and our outlook. Now, some of you are thinking, well, these records are nice, but that's a few weeks ago. And don't you know there's a big recession coming, inflation is out of control, and so on. And I think that reflects some misunderstanding around our business and the current backdrop compared to past economic cycles. As I just noted, our hospitality business is still in a recovery period. The desire and the demand to meet amongst the majority of our customers remains high and pent up. Many of our customers have not held their annual meetings, events critical to their mission and even financial health in many cases for literally over two years. That is a very different set of circumstances than we were going into the 2009 period and the great financial crisis was unfolding. What we're hearing from our customers right now, and Patrick can go into that a little bit more, is that they are proceeding with their plans. Certainly, they read the news too, and a few have noted that they're keeping an eye on the equity markets, on the macroeconomic data. But right now, on a net basis, the need and the pressure to resume meetings is winning out. And that is evidence, for example, in our recent production. In the second quarter, we booked 600,000 group room nights, which was only 8% below the second quarter of 2019. And as I mentioned at the top of the call, ADR on these new bookings was at an all-time record, 15% higher than the second quarter of 2019 and 14% higher than the second quarter of last year. And by the way, our production for July again showed a pretty strong segment of play. So we are seeing solid interest from our customers and our forward book of business as a result remains in excellent shape. As of June 30th, we had 43.9 points of net occupancy, net group occupancy on the books for 2023. This is 1.2 points higher than we had at the same time last year looking ahead to 22. and it's only 0.07 points less than we had in 18 for 19. And that is despite 3% more rooms inventory for the Gaylord Palms expansion in the denominator today compared to this point in 2018. But more importantly, you must factor in the rate growth that we've seen over the last couple of years in our production. Our net group ADR on the Brooks for next year is 3.8% higher than our T1 position at this time last year and 10% higher than our T1 position in 18. In total, we had on June 30th 6.6% more group revenue on the books for next year compared to this time in 21 and 11.5% more than we had at the midpoint of 18 looking into 19. So bottom line, we feel great about where we stand right now and about our business and the fundamentals behind it, regardless of the economic backdrop that we can't control. And perhaps this is a good time to note that we also collected $15 million in cancellation, $15 million, I should say, in cancellation attrition fees in the second quarter, putting our running total to over $110 million mark since the start of the pandemic. Now, of course, we were glad to see that this number trended down month to month in the quarter as we moved further away from the Omnicron impact. And we'd like to see this continue downwards as the group recovery continues. But these fees are an important feature of how we design our business to weather tough times. So I want to remind you of it as long as I'm addressing concerns about recessionary risks. Now, Mark will discuss some additional color by each property, but suffice for me to say we were very pleased with our hospitality business this quarter. And it almost makes you forget that it was only six months ago where we were 32 points of occupancy for the month of January. Yet here we are, even after the bite that the Omicron wave took out of our first quarter, giving four-year guidance, adjusted guidance for EBITDA RE, for this segment that is still on par with 2019 levels, which I'll let Jennifer walk through in more detail. Turning to entertainment, the most exciting news was the execution of the acquisition of Block 21 in the quarter and the subsequent closing of our strategic investment with Ateros and NBC Universal, which valued the new combined Opry Entertainment Group and Block 21 at just over $1.4 billion. On a segment basis, our entertainment business delivered $22 million of adjusted EBITDA RE in the second quarter, which, while it ended up being towards the lower end of our guidance, was nevertheless a record quarter for this segment as well, both as reported and on the same store basis. Compared to our initial expectations, a few factors contributed to the result not being an even bigger record. One is the slight delay in closing block 21 versus our original timetable, which not only reduced the contributions of block 21 to the second quarter, but also means we will get a bit later start on the many growth initiatives we have planned for this asset, some of which will now be felt more in 23 instead of later this year as we originally had planned for. Turning to our grand old Opry business, we've seen a slow recovery than expected in the customer segment that we call tour and travel, or what is more easily described as organized bus tours that buy tickets as part of the packaged itineraries. Also at the Opry, we've experienced some reduced availability of top-drawing artists in Nashville during the summer, as many of them have accelerated their pent-up national and international touring activity due to the faster recovery from Omicron. Sorry, I'm reading too quickly here. While that's certainly great news for the artists and the millions of country lifestyle consumers visiting their shows, it does take away some availability for us to showcase them at home as often we would like here in Nashville. And finally, there's been widespread softness right now in the advertising market. which is down from top line revenue at our Circle joint venture. Even as Circle ratings have shown nice increases around our original content, and the venture's costs have been following the plan that we had in place. This confluence of factors is why we brought our guidance for this segment down a bit to reflect that impact for the full year. They're still expecting a record year for profitability for this business. When you compare what we've achieved in the second quarter to the same time in 2019 on a same-store basis, our core entertainment portfolio delivered no less than 35% adjusted EBITDA RE growth compared to pre-pandemic levels. Now, our focus is solidly on getting to work implementing exciting plans for Block 21 and the ACL Live Theater under our ownership. We're also cleared to commence construction on our old red Las Vegas location right in the heart of the Strip, which we expect to complete in the early fall of next year. And we now actively engage with our partners at Terrace and NBC Universal on a roadmap of strategic initiatives across the business on which we look forward to sharing more as we move forward together. I will pause here to hand over to Mark to get into a little bit deeper information on the hotel business and then to Jennifer to update our balance sheet. Mark Fioravanti.