Red Lion Hotels Corp (RLH) SEC Filing 10-Q Quarterly report for the period ending Saturday, June 30, 2018

Net loss was $2.3 million for the three months ended June 30, 2018 compared to a net loss of $66,000 in the prior year period. The increased loss was tied to the lost income from seven hotels that have been sold in the first half of 2018.

The Company reported Adjusted EBITDA of $5.6 million for the three months ended June 30, 2018 and $6.0 million for the six months ended June 30, 2018. These results are in line with the Company’s expectations for the first six months of 2018. The second half of the year is expected to be positively affected by the Knights Inn acquisition which closed on May 15, 2018 and from reductions in costs associated with the Company transitioning out of the hotel ownership business and concentrating on growing more profitable franchise operations.

Through July 2018, the Company has completed the sales of nine of the 11 hotels previously identified for disposal with eight of the buyers entering into new franchise agreements. These sales are expected to generate a gain of approximately $40 million. The sales to date have generated gross proceeds of more than $116 million and the prices achieved are in line with the guidance we provided earlier in the year. The $73 million of debt held by the joint venture at December 31, 2017 was repaid fully with the proceeds. The Company also received a joint venture distribution of more than $20 million that will be used strategically to reduce debt.

Given continued strong market conditions, the Company decided to market three additional hotels in Anaheim, Atlanta and Kalispell and anticipates gross proceeds in excess of $40 million.

The Company expects the completed hotel sales will provide cash reserves that can be used to execute additional franchise acquisitions in the future.

The Company has executed 93 franchise agreements through the date of this release against its target of 150 to 200 for 2018, excluding the 361 Knights Inn franchises strategically acquired in May 2018.