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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, 2023

OR

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, 7th 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 28, 2023 was 215,733,384.

 

 

 


 

Table of Contents

 

PART I. FINANCIAL INFORMATION

Page

Item 1.

Financial Statements (unaudited)

3

Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022

3

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022

4

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022

5

Condensed Consolidated Statements of Equity for the Three and Six Months Ended June 30, 2023 and 2022

6

Notes to Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

25

Item 4.

Controls and Procedures

25

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

26

Item 1A.

Risk Factors

26

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

26

Item 3.

Defaults Upon Senior Securities

27

Item 4.

Mine Safety Disclosures

27

Item 5.

Other Information

27

Item 6.

Exhibits

27

 

Signatures

28

 

 

2


 

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, 2023

 

 

December 31, 2022

 

 

 

(unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

Property and equipment, net

 

$

8,002

 

 

$

8,301

 

Intangibles, net

 

 

43

 

 

 

43

 

Cash and cash equivalents

 

 

797

 

 

 

906

 

Restricted cash

 

 

45

 

 

 

33

 

Accounts receivable, net of allowance for doubtful accounts of $2 and $2

 

 

134

 

 

 

129

 

Prepaid expenses

 

 

83

 

 

 

58

 

Other assets

 

 

35

 

 

 

47

 

Operating lease right-of-use assets

 

 

205

 

 

 

214

 

TOTAL ASSETS (variable interest entities  $241 and $237)

 

$

9,344

 

 

$

9,731

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Debt

 

$

4,490

 

 

$

4,617

 

Accounts payable and accrued expenses

 

 

279

 

 

 

220

 

Due to hotel managers

 

 

131

 

 

 

141

 

Other liabilities

 

 

203

 

 

 

228

 

Operating lease liabilities

 

 

228

 

 

 

234

 

Total liabilities (variable interest entities  $220 and $219)

 

 

5,331

 

 

 

5,440

 

Commitments and contingencies  refer to Note 12

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

Common stock, par value $0.01 per share, 6,000,000,000 shares
   authorized,
216,425,670 shares issued and 215,738,036 shares outstanding
   as of June 30, 2023 and
224,573,858 shares issued and 224,061,745
   shares outstanding as of December 31, 2022

 

 

2

 

 

 

2

 

Additional paid-in capital

 

 

4,221

 

 

 

4,321

 

(Accumulated deficit) retained earnings

 

 

(165

)

 

 

16

 

Total stockholders' equity

 

 

4,058

 

 

 

4,339

 

Noncontrolling interests

 

 

(45

)

 

 

(48

)

Total equity

 

 

4,013

 

 

 

4,291

 

TOTAL LIABILITIES AND EQUITY

 

$

9,344

 

 

$

9,731

 

 

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

 

3


 

PARK HOTELS & RESORTS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in millions, except per share data)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Rooms

 

$

442

 

 

$

433

 

 

$

824

 

 

$

725

 

Food and beverage

 

 

178

 

 

 

173

 

 

 

359

 

 

 

283

 

Ancillary hotel

 

 

72

 

 

 

70

 

 

 

137

 

 

 

131

 

Other

 

 

22

 

 

 

19

 

 

 

42

 

 

 

35

 

Total revenues

 

 

714

 

 

 

695

 

 

 

1,362

 

 

 

1,174

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

Rooms

 

 

117

 

 

 

98

 

 

 

224

 

 

 

183

 

Food and beverage

 

 

128

 

 

 

119

 

 

 

255

 

 

 

206

 

Other departmental and support

 

 

165

 

 

 

158

 

 

 

323

 

 

 

291

 

Other property-level

 

 

63

 

 

 

65

 

 

 

123

 

 

 

115

 

Management fees

 

 

34

 

 

 

32

 

 

 

64

 

 

 

54

 

Impairment and casualty loss

 

 

203

 

 

 

1

 

 

 

204

 

 

 

1

 

Depreciation and amortization

 

 

64

 

 

 

68

 

 

 

128

 

 

 

137

 

Corporate general and administrative

 

 

16

 

 

 

16

 

 

 

32

 

 

 

32

 

Other

 

 

22

 

 

 

18

 

 

 

42

 

 

 

34

 

Total expenses

 

 

812

 

 

 

575

 

 

 

1,395

 

 

 

1,053

 

 

 

 

 

 

 

 

 

 

 

(Loss) gain on sales of assets, net

 

 

 

 

 

(1

)

 

 

15

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

Operating (loss) income

 

 

(98

)

 

 

119

 

 

 

(18

)

 

 

120

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

10

 

 

 

1

 

 

 

20

 

 

 

1

 

Interest expense

 

 

(61

)

 

 

(62

)

 

 

(121

)

 

 

(124

)

Equity in earnings from investments in affiliates

 

 

3

 

 

 

5

 

 

 

7

 

 

 

5

 

Other gain, net

 

 

3

 

 

 

92

 

 

 

4

 

 

 

97

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income before income taxes

 

 

(143

)

 

 

155

 

 

 

(108

)

 

 

99

 

Income tax expense

 

 

(3

)

 

 

(1

)

 

 

(5

)

 

 

(1

)

Net (loss) income

 

 

(146

)

 

 

154

 

 

 

(113

)

 

 

98

 

Net income attributable to noncontrolling interests

 

 

(4

)

 

 

(4

)

 

 

(4

)

 

 

(5

)

Net (loss) income attributable to stockholders

 

$

(150

)

 

$

150

 

 

$

(117

)

 

$

93

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) earnings per share – Basic

 

$

(0.70

)

 

$

0.66

 

 

$

(0.54

)

 

$

0.40

 

(Loss) earnings per share – Diluted

 

$

(0.70

)

 

$

0.66

 

 

$

(0.54

)

 

$

0.40

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding – Basic

 

 

215

 

 

 

228

 

 

 

217

 

 

 

232

 

Weighted average shares outstanding – Diluted

 

 

215

 

 

 

228

 

 

 

218

 

 

 

232

 

 

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

4


 

PARK HOTELS & RESORTS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in millions)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2023

 

 

2022

 

Operating Activities:

 

 

 

 

 

 

Net (loss) income

 

$

(113

)

 

$

98

 

Adjustments to reconcile net (loss) income to net cash provided by operating
   activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

128

 

 

 

137

 

(Gain) loss on sales of assets, net

 

 

(15

)

 

 

1

 

Impairment and casualty loss

 

 

204

 

 

 

1

 

Equity in earnings from investments in affiliates

 

 

(7

)

 

 

(5

)

Other gain, net

 

 

 

 

 

(93

)

Share-based compensation expense

 

 

9

 

 

 

9

 

Amortization of deferred financing costs

 

 

4

 

 

 

6

 

Distributions from unconsolidated affiliates

 

 

7

 

 

 

6

 

Changes in operating assets and liabilities

 

 

33

 

 

 

31

 

Net cash provided by operating activities

 

 

250

 

 

 

191

 

Investing Activities:

 

 

 

 

 

 

Capital expenditures for property and equipment

 

 

(124

)

 

 

(52

)

Acquisitions, net

 

 

(11

)

 

 

 

Proceeds from asset dispositions, net

 

 

116

 

 

 

98

 

Proceeds from the sale of investments in affiliates, net

 

 

3

 

 

 

101

 

Contributions to unconsolidated affiliates

 

 

(4

)

 

 

 

Net cash (used in) provided by investing activities

 

 

(20

)

 

 

147

 

Financing Activities:

 

 

 

 

 

 

Repayments of credit facilities

 

 

(50

)

 

 

 

Proceeds from issuance of mortgage debt

 

 

 

 

 

30

 

Repayments of mortgage debt

 

 

(80

)

 

 

(34

)

Debt issuance costs

 

 

(1

)

 

 

(3

)

Dividends paid

 

 

(88

)

 

 

(2

)

Distributions to noncontrolling interests, net

 

 

(1

)

 

 

(4

)

Tax withholdings on share-based compensation

 

 

(2

)

 

 

(3

)

Repurchase of common stock

 

 

(105

)

 

 

(218

)

Net cash used in financing activities

 

 

(327

)

 

 

(234

)

Net (decrease) increase in cash and cash equivalents and restricted cash

 

 

(97

)

 

 

104

 

Cash and cash equivalents and restricted cash, beginning of period

 

 

939

 

 

 

763

 

Cash and cash equivalents and restricted cash, end of period

 

$

842

 

 

$

867

 

 

 

 

 

 

 

Supplemental Disclosures

 

 

 

 

 

 

Non-cash financing activities:

 

 

 

 

 

 

Dividends declared but unpaid

 

$

32

 

 

 

2

 

 

 

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

5


 

PARK HOTELS & RESORTS INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(unaudited, in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Retained

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Earnings

 

 

Non-

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

(Accumulated

 

 

controlling

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit)

 

 

Interests

 

 

Total

 

Balance as of December 31, 2022

 

 

224

 

 

$

2

 

 

$

4,321

 

 

$

16

 

 

$

(48

)

 

$

4,291

 

Share-based compensation, net

 

 

1

 

 

 

 

 

 

 

 

 

2

 

 

 

 

 

 

2

 

Net income

 

 

 

 

 

 

 

 

 

 

 

33

 

 

 

 

 

 

33

 

Dividends and dividend
    equivalents
(1)

 

 

 

 

 

 

 

 

 

 

 

(32

)

 

 

 

 

 

(32

)

Distributions to noncontrolling
    interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

(1

)

Repurchase of common stock

 

 

(9

)

 

 

 

 

 

(105

)

 

 

 

 

 

 

 

 

(105

)

Balance as of March 31, 2023

 

 

216

 

 

 

2

 

 

 

4,216

 

 

 

19

 

 

 

(49

)

 

 

4,188

 

Share-based compensation, net

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

 

5

 

Net (loss) income

 

 

 

 

 

 

 

 

 

 

 

(150

)

 

 

4

 

 

 

(146

)

Dividends and dividend
    equivalents
(1)

 

 

 

 

 

 

 

 

 

 

 

(34

)

 

 

 

 

 

(34

)

Balance as of June 30, 2023

 

 

216

 

 

$

2

 

 

$

4,221

 

 

$

(165

)

 

$

(45

)

 

$

4,013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Deficit)

 

 

Non-

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Retained

 

 

controlling

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Interests

 

 

Total

 

Balance as of December 31, 2021

 

 

236

 

 

$

2

 

 

$

4,533

 

 

$

(83

)

 

$

(49

)

 

$

4,403

 

Share-based compensation, net

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

1

 

Net (loss) income