Q3 2009 Earnings Call

November 5, 2009 12:30 p.m. ET

We want to see three other things from hotel companies in these times. We want to make sure interest payments are, in the aggregate, being made. We want that preferred dividend payment being made. We want capex kept to a minimum. Ashford had already been smart enough to suspend their common dividend last December, saving them upwards of $80 million annually -- and every such dollar is precious.

Q2 2009 Earnings Call

August 6, 2009, 11:00 am ET

The company sits on $240 million of unrestricted cash.

Long Answer: There was much sturm und drang over Extended Stay America’s (ESA) Chapter 11 bankruptcy filing on Monday. Of primary concern to this investor is how the filing may affect Ashford Hospitality Trust’s (AHT) $98 million mezzanine loan that was made to ESA last year.

Any reader of my blog recognizes that I generally have an affinity for consumer products and retail facing stocks. In this recession, I’ve also become quite the fan of dividends as manifested in my recent investments - General Electric (GE), detailed here, Valero Energy (VLO), detailed here, Altria Group (MO), detailed here, and Linn Energy (LINN), detailed here. As such, this investment idea probably comes as no surprise - Hotel REITS.

What are Hotel REITs?

Q1 2009 Earnings Call

May 6, 2009; 11:00 am ET

Sure, who wouldn’t like the market to show its true bottom and start a new climb to the stars? However, it’s not happening now. So, are there any lemonade recipes out there for the lemons we’re drowning in?

Good recipes usually have their roots in the concoctions of the master chefs. One of the aromas emanating from Chez Buffett lately has been preference shares. Now I’m as eager to follow him (and as battered by the Dow) as the next person, so I considered the idea of following his lead. But how? Picture the reaction from Goldman Sachs to my offer to invest $5,000 of my precious IRA in these preferred shares paying 15% per year. Yeah, right.

Ashford Hospitality Trust (AHT) currently owns 103 hotels with 96% brand affiliations and 22,913 rooms. As opposed to the market, I'm in favor of its decision to cut dividend payments. Its credit facility modification plan is a solid one and the board's decision to move with it was thoughtful. Obama's tax policies will favor long term capital gains at an even more aggressive degree.

This past week I noted in the Financial Times that NYSE Euronext (NYX) has sounded the alarm for another retreat. Apparently it is working with US regulators to ease its listing requirement* of a minimum $1 share price in order to protect itself (and overall market confidence) from a wave of delistings. As of Sunday, 86 companies or about 4% of NYSE listed stocks may not meet this requirement. If one also includes its listings trading at or below $2 per share, which may already be trapped in this bear market’s capital sucking vortex, then the danger list increases to 191 companies or about 8.75% of its listings. (Note that this NYSE stock list excludes preferred stocks and exchange traded funds.)

At Hillbent, a lot of research work is focused on price-volume analysis (for asset classes, indexes, sectors, industry groups/ETFs, and individual stocks/securities) and its impact or projected impact on the market direction. One of my basic tenets for price-volume analysis is that contrary to popular belief, falling prices on less volume is not the best of a bad situation, but instead reflects the most bearish of all relationships. For the sake of brevity (and also the fact that I am only sharing summary conclusions from a proprietary premium research report), the net effect on stocks that are currently eligible for delisting or spiraling towards this direction has been an extreme contraction in average daily trading volume relative to past historical periods.

Q4 2008 Earnings Call

February 26, 2009 1:00 pm ET

It is interesting to see a company dance around a dividend cut in its press release. You can see from the title of the release (Ashford Hospitality Trust Enhances Liquidity Position Through Strategic Transactions) that Ashford Hospitality (AHT) went for the euphemism “Enhancing liquidity”. The suspension of the dividend is not mentioned until about the 6th paragraph of the press release.

I have noticed a couple of interesting items over the last few weeks. First, both AHT and Aircastle Ltd. (AYR) were significantly later (a week or so) than the previous year to announce their dividend position for the current quarter. It appears that boards of directors will drag their feet a little before announcing bad news. Or maybe it just takes them a while to come up with the best terminology.

Q3 2008 Earnings Call

November 06, 2008; 11:00 am ET

Its strategy of making mezzanine loans to other hotel companies also gives it far more flexibility in how it allocates its capital, unlike pure-play hotel companies like Starwood (NYSE: HOT), Marriott (NYSE: MAR), Felcor (NYSE: FCH), Hospitality Properties Trust (NYSE: HPT), Host Hotels (NYSE: HST), and LaSalle (NYSE: LHO).

Market Analysis Commentary:  Relative Price Volume Momentum Tracks scans the Russell 3000 components for stocks that are moving up or down on relatively strong surging volume. Such stocks may signal institutional buying or selling and have a tendency to continue further in their current market direction. From a contrarian perspective, buying and selling on extreme volume also has a tendency to produce short term reversals of a stock’s market direction on the following day of trading.

Moving Up on Surging Volume

Wall Street has never understood Ashford Hospitality Trust (NYSE: AHT), and consequently, the market has never properly valued this hotel REIT.  This has never been more true as the stock was taken down indiscriminately, along with far more inferior real estate companies.  Ashford was down to $0.89 per share recently, and as of this writing, is trading at $1.35, giving it a market cap of only $161.65 million.

Q2 2008 Earnings Call Transcript

August 07, 2008 11:00 am ET

Ashford Hospitality Trust, Inc. (AHT)

Q1 2008 Earnings Call

• Fed cuts to 2%, likely to stay there. The FOMC announced a much-anticipated 25 BP cut to 2%, and lowered the discount rate to 2.25%. The former decision was endorsed by 8 of the Fed's 10 voting governors; Richard Fisher and Charles Plosser preferred no change. In its statement, the Fed stressed the dual tensions of weak economic activity and credit market stress vs. notable inflationary pressure. Pimco's Bill Gross noted the neutrality of the Fed's statement, which leads many to believe interest rates will stay put at 2% for the foreseeable future.
• GDP et al. Q1 GDP growth was 0.6%, just beating estimates of 0.5%. The six-month rate of growth is at its lowest since 2001. Consumer spending, which accounts for 70% of the economy, rose at an annual pace of just 1%, vs. 2.3% last quarter. ADP's job report said employers added 10,000 workers in April, up from 3,000 in March. The National Association of Purchasing Management-Chicago's business activity index came in at 48.3, just up from last month's 48.2.
• Lennar plunges. Lennar (LEN) fell almost 9% amid concerns its joint-venture partner LandSource will file for bankruptcy protection, after S&P said it is likely to do so within the next 2-3 weeks. There are concerns of a spill over from the LandSource project to other joint ventures.
• Continental looking around. Continental Airlines (CAL) is exploring an alliance with American Airlines (AMR) and British Airways (BAIRY.PK), which could lead to it dropping out of its membership in the SkyTeam airline marketing group next year. SkyTeam includes soon-to-be-merged Delta Air Lines (DAL) and Northwest Airlines (NWA). Sources say Continental will be wooed by all three major airline marketing groups. It could remain with SkyTeam if its terms are improved, join British Air and AMR, or move to UAL's (UAUA) Star Alliance.
• Cablevision jumps into fray for Newsday. Sources say Cablevision (CVC) will bid up to $650M for Tribune's Newsday, trumping bids by News Corp. (NWS) and Daily News owner Mortimer Zuckerman. News Corp. informaly agreed to buy Newsday last month for $580M. Wondering what Cablevision plans to do with a newspaper company? So are many investors. One possibility: Bundling Newsday subscriptions with other services.
• Atom in short supply. Intel (INTC)'s new Diamondville chip, which targets low-cost "Netbook" computers, is in short supply due to heavier-than-expected orders. Intel plans to produce "millions" of the chips, members of its Atom product line, in 2008.
• TV on the go. AT&T (T) will launch a cellphone TV service next week that will compete with a similar offering from Verizon Wireless (VZ) (VOD). A lineup of 150 shows includes CSI and The Daily Show. AT&T also has exclusive rights to CNN News. The shows will be carried on the MediaFLO network, which is owned by Qualcomm (QCOM). Analysts are skeptical about how strong the demand for pint-size TV will be; they say only 5% of consumers are currently willing to pay for it.
• Good memories. Hewlett-Packard (HPQ) Labs engineers say a recent discover called "memristor" could allow future memory chips to retain information, unlike today's DRAM. They could ultimately succeed the flash-memory chips used in digital cameras and other devices. The discovery, documented in May's Nature journal, is the first major announcement since HP revamped its labs in March. Memristors will have to compete with the emerging Numonyx technology jointly developed by Intel (INTC) and ST Microelectronics (STM), among others.

Earnings: Wednesday After Close

• Akamai (AKAM): Q1 EPS of $0.41 beats consensus of $0.39. Revenue of $187M vs. consensus of $188.2M. Shares: -0.3%.
• Allegheny Energy (AYE): Q1 EPS of $0.80 beats consensus of $0.78. Revenue of $875M vs. consensus of $951M. Shares: -1%.
• Allied Waste Industries (AW): Q1 EPS of $0.17 in line. Revenue of $1.5B in line. Shares: +1.9%.
• Ashford Hospitality (AHT): Adjusted FFO of $0.29 misses consensus of $0.32. Revenue of $314.5M vs. consensus of $301M. Shares: -1%.
• Atmel (ATML): Q1 EPS of $0.03 beats consensus of $0.01. Revenue of $411M vs. consensus of $404M. Shares: flat.
• Cabot (CBT): FQ2 EPS of $0.36 misses consensus of $0.41. Revenue of $786M vs. consensus of $728M. Shares: -0.15%.
• Centex (CTX): FQ4 EPS of -$7.34 misses consensus of -$2.43. Revenue of $2.31M vs. consensus of $2.2B. Shares: -3.8%.
• Duke Realty (DRE): FFO of $0.58 misses consensus of $0.62. Revenue of $243M vs. consensus of $203M. Sees full-year FFO of $2.60-2.90, better than consensus of $2.69. Shares: -0.4%.
• Fiserv (FISV): EPS of $0.78 beats consensus of $0.76. Revenue of $1.31B vs. consensus of $1.26B. Sees 2008 EPS of $3.28-3.40, short of consensus of $3.41. Shares: +0.7%.
• iRobot (IRBT): EPS of -$0.16 in line. Revenue of $57M vs. consensus of $55M. Lowers full-year EPS guidance to $0.12-0.17 from $0.18-0.23 vs. consensus of $0.23. Lowers full-year revenue guidance to $295-305M from $300-310M vs. consensus of $298M. Shares -10.5%.
• Itron (ITRI): Q1 EPS of $0.82 beats consensus of $0.70. Revenue of $478M vs. consensus of $454M. Sees full-year EPS of $3.25-3.45 vs. consensus of $3.36, and full-year revenue of $1.88-1.93B vs. consensus of $1.89B. Shares: +4.4%.
• JDS Uniphase (JDSU): FQ3 EPS of $0.14 in line. Revenue of $384M vs. consensus of $394M. Sees Q4 revenue of $381-403M, short of consensus of $406M. Shares: -10.1%.
• Las Vegas Sands (LVS): Q1 EPS of $0.07 misses consensus of $0.36. Revenue of $1.08B vs. consensus $1.24B. Shares: -8.55%.
• Murphy Oil (MUR): Q1 EPS of $2.14 beats consensus of $1.94. Revenue of $6.53B vs. consensus of $6.23B. Shares: -1%.
• Prudential Financial (PRU): Q1 EPS of $1.62 misses consensus of $1.82. Sees full-year EPS of $7.50-7.80, short of consensus of $7.77. Shares: -2.4%.
• Shutterfly (SFLY): EPS of -$0.15 in line. Revenue of $34.3M vs. consensus of $35.6M. Sees Q2 revenue of $35-38M vs. consensus of $39.8M, and EPS of -$0.19 to -$0.24 vs. consensus of -$0.15. Sees full-year EPS of $0.30-0.50 vs. consensus of $0.44, and revenue of $225-245M vs. consensus of $252M. Shares: +2.7%
• Starbucks (SBUX): FQ2 EPS of $0.15 in line. Revenue of $2.5B in line. Sees full-year EPS of less than $0.87 vs. consensus of $0.85, and full-year revenue growth of 13%-14%. Shares: -0.7%.
• Sunoco (SUN): Q1 EPS of -$0.50 misses consensus of -$0.41. Revenue of $12.81B vs. consensus of $6.28B. Shares: +0.2%.
• Symantec (SYMC): FQ4 EPS of $0.36 beats consensus of $0.34. Revenue of $1.55B in line. Sees FQ1 EPS of $0.34-0.36, better than consensus of $0.31, and revenue of $1.555-1.595B vs. consensus of $1.5B. Shares: +3.7%
• Trinity Industries (TRN): Q1 EPS of $0.81 beats consensus of $0.73. Revenue of $899M vs. consensus of $828.5M. Sees Q2 EPS of $0.85-0.90, better than consensus of $0.86. Sees full-year EPS of $3.20-3.45, short of consensus of $3.37. Shares: +3.95%.
• Unum Group (UNM): Q1 EPS of $0.59 beats consensus of $0.57. Revenue of $2.54B vs. consensus of $2.65B. Shares: +2%.

Earnings: Thursday Before Open

• Adobe (ADBE): Sees full-year EPS of $1.86-1.92 vs. consensus of $1.89, and full-year revenue growth of about 13%.
• Burger King (BKC): FQ3 EPS of $0.30 beats consensus of $0.27. Revenue of $594M vs. consensus of $580M. Sees full-year EPS of $1.33-1.35, better than consensus of $1.32.
• Cardinal Health (CAH): FQ3 EPS of $1.08 beats consensus of $1.01. Revenue of $22.9B vs. $23.42 consensus.
• CIGNA (CI): Q1 EPS of $0.94 misses consensus of $0.96. Revenue of $4.57B in-line. Full-year EPS guidance of $4.05-4.25 falls short of $4.25 consensus.
• CVS Corp. (CVS): Q1 EPS of $0.55 in-line. Revenue of $21.33B in line.
• Dominion Resources (D): Q1 EPS of $1.00 beats consensus of $0.89. Revenue of $4.39B vs. consensus of $4.08B. Sees Q2 EPS of $0.47-0.52, lower than consensus of $0.54.
• Eastman Kodak (EK): Q1 EPS of -$0.39 vs. consensus of -$0.04 (not comparable). Revenue of $2.09B vs. consensus of $2.03B. Sees full-year revenue of $10.3-10.5B vs. consensus of $10.2B.
• Herbalife (HLF): Q1 EPS of $0.93 beats consensus of $0.80. Revenue of $604M vs. consensus of $581M. Sees Q2 EPS of $0.89-0.92, better than consensus of $0.83. Raises full-year EPS guidance to $3.52-3.57 vs. consensus of $3.32.
• Noble Energy (NBL): Q1 EPS of $2.05 beats consensus of $1.71. Revenue of $1.02B vs. consensus of $0.89B.
• Nymex (NMX): EPS of $0.83 just beats consensus of $0.82. Revenue of $209M in-line.
• Revlon (REV): Q1 EPS of $0.00 beats consensus of -$0.01. Revenue of $320M in line.
• Sepracor (SEPR): Q1 EPS of $0.53 beats consensus of $0.47. Revenue of $321M vs. consensus of $335M.
• Tyco Electronics (TEL): FQ2 EPS of $0.67 beats consensus of $0.61. Revenue of $3.66B in line. Sees FQ3 EPS of $0.66-0.68, better than consensus of $0.63. Sees full-year EPS of $2.60-2.66, better than consensus of $2.53.
• Tyco International (TYC): FQ2 EPS of $0.67 beats consensus of $0.57. Revenue of $4.87B vs. consensus of $4.94B. Full-year EPS guidance of $2.65-2.75, better than consensus of $2.67.
• Williams Companies (WMB): Q1 EPS of $0.57 beats consensus of $0.52. Williams increased its consolidated segment profit for 2008.
• Wyndham Worldwide (WYN): Q1 EPS of $0.35 beats consensus of $0.33. Revenue of $1.01B vs. consensus of $1.04B.
• Xcel Energy (XEL): Q1 EPS of $0.35 beats consensus of $0.31. Revenue of $3.03B vs. $2.84B consensus.

Q4 2007 Earnings Call

February 28, 2008 11:00 am ET