Marriott International, Inc. (MAR, Financial) released its first-quarter results on May 11 before the market opened. The company surpassed quarterly revenue projections, but posted an earnings miss.
By the numbers
Marriott recorded adjusted earnings of 26 cents per share in the first quarter, down 81.6% from the same period last year. Analysts had predicted earnings of 84 cents per share. Revenue of $4.68 billion was down 6.6% on a year-over-year basis, but beat analysts’ projections of $4.06 billion.
Base management and franchise fees came in at $629 million. This was lower than the $732 million reported in the year-ago quarter. The decline in fees was mainly driven by decline in revenue per available room (RevPAR). This was only partially offset by a rise in non-RevPAR related franchise fees.
RevPAR details
Global RevPAR plummeted 22.5% in constant dollars (down 22.7% in actual dollars). A decline of 14.5% in the occupancy rate and 1.5% in the average daily rate (ADR) were responsible for the decline.
In North America, RevPAR tumbled 19.5% in constant dollars (down 19.5% in actual dollars). The company cited a 12.4% slump in occupancy rate and a 1.8% decline in ADR.
Owing to a 19.6% decline in occupancy rate and 0.9% fall in ADR, international RevPAR plunged 30.4% in constant currency (down 31.3% in actual dollars).
During the quarter, Marriott added as many as 88 properties (14,525 rooms) under its worldwide lodging system. At the end of the quarter, the company had 7,400 properties and timeshare resorts with approximately 1,392,000 rooms under its lodging portfolio.
Efforts to preserve liquidity
At the end of the quarter, the company’s cash balance stood at $12.23 billion. The company has increased liquidity by $4.3 billion as of May 8 by issuing debt and modifying its co-brand credit card arrangements. Cash on hand was $3.9 billion, $1.3 billion of which was borrowed under a revolving credit facility and $0.9 billion of which is commercial paper outstanding.
To strengthen its financial position, the company announced in February that it is temporarily halting its stock buyback program. Additionally, the company has suspended the quarterly dividend beginning in the second quarter.
Guidance
The company did not issue 2020 profit guidance, citing the global uncertainty caused by the Covid-19 pandemic.
Disclosure: I do not hold any positions in the stocks mentioned.
Read more here:
- AutoNation Reports 1st-Quarter Earnings
- Boise Cascade Posts Mixed 1st-Quarter Results
- Kontoor Brands Beats 1st-Quarter Earnings Projections, but Posts Revenue Miss
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
