Attention Seeking Stock: Red Lion Hotels Corporation (NYSE: RLH)

Shares of Red Lion Hotels Corporation (NYSE: RLH) closed the trading at a price of $7.94 with the positive/negative change of -0.63%. In the past session approximately 65,573 shares were exchanged against the average daily trading volume of 61,544 shares. The stock touched to the maximum level of $8.18, and it reached the lower level of $7.87 in past session.

Red Lion Hotels Corporation (RLH) recently stated first quarter 2019 results.

 First Quarter Highlights

  • Adjusted EBITDA for the first quarter was $998,000, as contrast to $1.1M in the first quarter of 2018.  With the elimination of the $865,000 of EBITDA from the nine hotels sold throughout 2018, Adjusted EBITDA raised $803,000 over the previous year. 
  • Net loss for the quarter was $4.1M or ($0.17) per share contrast to net income of $2.6M or $0.10 per diluted share in the previous year period. 
  • Royalty fees raised 34% year-over-year to $5.7M reflecting the organic growth and the acquisition of the Knights Inn.
  • Franchised Section Adjusted EBITDA raised 51% year-over-year to $3.7M while Franchise Section Adjusted EBITDA margin raised 400 bps.
  • Recapitalized Salt Lake City and Olympia, WA hotels with $16.6M of mortgage debt.
  • Executed 56 franchise contracts in the first quarter comprised of 8 upscale and midscale hotels and 48 select service hotels.       
  • Released its wholly owned subsidiary RLabs, a lodging technology innovator that will leverage the Company’s groundbreaking RevPak platform, creating additional asset light revenue streams.             

First Quarter 2019 Financial Results 

The Company stated a net loss of $4.1M or $(0.17) per share in the first quarter as contrast to net income of $2.6M or $0.10 per diluted share in the previous year period. The year-over-year change in operating results was primarily Because of an about $14M gain on the sale of assets related to five hotels sold during the first quarter 2018. In addition, the net loss for the quarter also reflects the loss of $0.9M of EBITDA from the nine hotels sold in 2018.

Adjusted EBITDA, which is adjusted for non-cash and certain one-time items, was $1.0M for the first quarter as contrast to $1.1M in previous year period.  The change in Adjusted EBITDA primarily reflects the growth of the franchise business offset by EBITDA contribution from the hotels sold in 2018.

Royalty fees raised 34% to $5.7M primarily reflecting the strong organic growth and the acquisition of Knights Inn.

Marketing, reservations and reimbursable revenue, which are fees from franchised properties associated with the Company’s brands and shared services, raised 28% to $6.7M reflecting the growth of our core business from new and purchased franchise contracts as well as additional revenue initiatives building on our technology initiatives.   

Selling, general, and administrative expenses, which include franchise sales, operations and corporate costs, remained relatively flat to previous year at $7.2M, but reduced from the fourth quarter of 2018 total of $8.5M, reflecting our continued focus on cost reductions and the benefits of our asset light model. 


The Company is reiterating expectations for 2019 that do not contemplate incremental sales of the owned hotels. However, the Company expects that in the event of any sales of the remaining hotels, there will be a reduction in the Company’s profitability in 2019. As sales are closed, the Company will disclose the material terms of each transaction in 8K filings including the historical Adjusted EBITDA relating to the hotels sold. In addition, the Company will provide updated guidance to account for the sales of the hotels at the time it reports quarterly results.

  • The Company expects to execute between 160 and 200 franchise license contracts in 2019.
  • Corporate Selling, General and Administrative expenses are predictable to be $29.5M to $31.5M, including stock compensation expense.
  • Adjusted EBITDA from continuing operations is predictable to be between $20.5M and $22.5M in 2019.

The Company has 24.65 million shares outstanding and 21.42 million shares were floated in market. The short ratio in the company’s stock is documented at 8.72 and the short float is around of 2.51%. The average true range of the stock is observed at 0.35 and the relative strength index of the stock is recorded at 51.68.

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