Hospitality Properties Trust (NYSE:HPT.PRD) Q1 2016 Earnings Conference Call - Final Transcript

May 10, 2016 • 10:00 am ET


Hospitality Properties Trust (NYSE:HPT.PRD) Q1 2016 Earnings Conference Call - Final Transcript


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Welcome to the Hospitality Property Trust First Quarter Financial Results Conference Call. [Operator Instructions].

I would now like to turn the conference over to Katie Strohacker, Senior Director of Investor Relations. Please go ahead, ma'am.

Katie Strohacker

Good morning. On today's call, John Murray, President and Mark Kleifges, Chief Financial Officer will make a short presentation which will be followed by a question-and-answer session. Please note the recording, retransmission and transcription of today's conference call is prohibited without the prior written consent of HPT. Today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities law. These forward-looking statements are based on HPT's present beliefs and expectations as of today May 10, 2016. The Company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's call other than through filings with the Securities and Exchange Commission or SEC.

In addition, the call may contain non-GAAP financial measures including the normalized funds from operations or normalized FFO. A reconciliation of normalized FFO and adjusted EBITDA to net income as well as components to calculate AFFO are available in our supplemental package filed in the Investor Relations section of the Company's website. Actual results may differ materially from those projected in these forward-looking statements. Additional information concerning factors that could cause those differences is contained in our Form 10-Q to be filed later today with the SEC and in our supplemental operating and financial data found, once again, on our website at Investors are cautioned not to place undue reliance upon any forward-looking statements.

And with that, I'll turn the call over to John.

John Murray

Thank you, Katie. Good morning and welcome to our first quarter 2016 earnings call. It was another solid operating quarter for HPT. This morning I'm going to provide a summary of our performance, discuss our investment activity and our outlook for the balance of 2016 and then Mark will provide a more detailed look at this quarter's financial results. Earlier today, HPT reported first quarter normalized FFO of $0.93 per share, a12% increase compared to the $0.83 reported in the first quarter of 2015 due primarily to the impact of HPT's Travel Center and hotel acquisitions and improved hotel operating results.

We believe this reflects the continued execution of our strategy to own a diverse portfolio of well-maintained Travel Centers and hotels predominantly Select Service and Extended Stay hotels in near-urban locations operated under long term lease and management agreements. Our geographically diverse, recently renovated, primarily upscale hotel portfolio and our continued asset management focus on revenue and flow-through improvement were the principal factors behind our hotel portfolio's performance during the quarter.

First quarter results for HPT's Travel Centers reflected flat fuel volumes sold and per gallon fuel margins that declined as expected versus the comparable 2015 period which had unusually favorable purchasing and pricing environment. The decline in fuel gross margin more than offset increases in non-fuel sales and