Management believes that the measurement of earnings before interest payments and before charging depreciation and amortization is a useful benchmark for the Company as it provides an indication of the hotels’ ability to generate cash to service debt and replace capital assets. Defining "EBITDA" (a non-GAAP measure) as earnings before interest, tax and depreciation and amortization, the Company’s operating results from continuing operations over the last eight quarters are summarized as follows (expressed in thousands of dollars):
|
Q4-2006 |
Q3-2006 |
Q2-2006 |
Q1-2006 |
Q4-2005 |
Q3-2005 |
Q2-2005 |
Q1-2005 |
| Room revenue |
$4,352 |
$4,992 |
$4,832 |
$3,762 |
$4,087 |
$7,414 |
$7,184 |
$4,668 |
| Total revenue |
$8,261 |
$8,148 |
$8,338 |
$6,454 |
$7,827 |
$10,808 |
$11,248 |
$7,880 |
| EBITDA |
$1,413 |
$1,734 |
$2,071 |
$320 |
$15 |
$5,422 |
$3,182 |
$(57) |
The Company’s definition of EBITDA may differ from that used by other entities and readers are cautioned that it is unlikely to be comparable to similar measures presented by other entities. A reconciliation of net income or loss (a GAAP measure, as disclosed in the consolidated statement of earnings) to EBITDA follows:
|
Q4-2006 |
Q3-2006 |
Q2-2006 |
Q1-2006 |
Q4-2005 |
Q3-2005 |
Q2-2005 |
Q1-2005 |
| Net earnings (loss) for the period |
$3,667 |
$407 |
$849 |
$(976) |
$(1,169) |
$6,771 |
$1,593 |
$(2,292) |
| Earnings from discontinued operations, net of income taxes |
(21) |
(12) |
79 |
- |
360 |
2,931 |
347 |
(279) |
| Earnings (loss) from continuing operations |
3,688 |
419 |
770 |
(976) |
(1,529) |
3,840 |
(1,246) |
(2,013) |
| Income tax expense (recovery) |
(3,501) |
(1) |
(14) |
- |
282 |
(2) |
77 |
24 |
| Interest expense |
778 |
787 |
947 |
865 |
761 |
1,067 |
1,421 |
1,339 |
| Depreciation and amortization |
448 |
529 |
368 |
431 |
501 |
517 |
592 |
595 |
| EBITDA |
$1,734 |
$1,734 |
$2,071 |
$320 |
$15 |
$5,422 |
$3,182 |
$(57) |
Comparing each quarter with the comparable quarter of the prior year, a general trend of improved results is evident, somewhat offset by the reduction from four to two hotel properties over the period. The large increase in EBITDA in the third quarter of 2005 was partially a result of equity earnings of an investee of $2.7 million (2006 Q3 – Nil).
Seasonality is a major factor in the hospitality industry. From the above table, the highest EBITDA was recorded in the 2nd or 3rd quarter of the year (April through September). The 4th or 1st quarter (October through March) have generally been the weakest quarters for EBITDA. |
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