Skyline posts continued improvement in operational results during the year ended December 31, 2022

Q4 and 2022 Highlights

• 2022 same asset revenue1 increased by 43 per cent to $129.3 million compared to $90.2 million in 2021, due to continued improvement in demand and a relaxation in operating restrictions related to COVID-19. Total revenue from hotels and resorts was $132.1 million compared to $129.3 million in 2021;
• 2022 same asset NOI1 increased to $25.9 million compared to $22.2 million in 2021. Excluding the impact of government grants received in the prior year, same asset NOI for the year ended December 31, 2021 would have been $14.7 million. The increase over prior year results from continued improvement of our US operations exiting the COVID-19 pandemic;
• 2022 Adjusted EBITDA2 was $19.7 million compared to $24.5 million in 2021. 2021 figures include earnings from the Canadian resorts, which were sold in December 2021 and are therefore not included in 2022 figures, as well as government grants of $13.9 million. Excluding these grants, 2021 adjusted EBITDA would have been $10.6 million;
• 2022 Funds from Operations (“FFO”)1 was positive $9.3 million (or $0.56) per share, compared to 2021 FFO of $12.3 million or $0.74 per share. 2021 FFO had government subsidies of $14.2 million, excluding the impact of the government subsidies received in 2021, FFO would have been ($1.9 million);
• On July 11, 2022, the Company completed the transaction for the purchase of the Courtyard by Marriott hotel in Ithaca, New York (the “Courtyard Ithaca”) for US $11.25 million plus customary closing costs;
• On October 7, 2022, the Company closed an agreement extending the US $20 million loan on the Renaissance Hotel until June 2029, at 2.75 per cent over the 30-day SOFR. It was also agreed that an additional loan of US $16.6 million would be provided for upgrading and improving the Hotel, at 3.50 per cent over SOFR, to be used as necessary. The Company entered into a transaction with a global industrial products company to sell the tax credits that will be generated as a result of the upgrading and improving, for approximate consideration of US $11 million. The hotel upgrading and improving is well underway and will continue through 2023.
• The Company has agreed with the current lender of the Hyatt hotel on an extension to June 13, 2023. The interest rate on the loan for the extension period will be BSBY plus 4.5 per cent. All other terms of the loan remain the same.
• Then company’s shareholder equity continued to improve. Since 2020, the shareholders equity has increase $54.41 million or 24.07 per cent. The book value per share of the shareholder equity is 43.61 NIS ($16.79), per share, which is 64.8 per cent above the closing price of its shares at December 31, 2022.

Blake Lyon, Skyline’s chief executive officer commented “Skyline’s operational progress continued during the fourth quarter and 2022. Same asset NOI improved compared to 2021, as travel activity continues to rebound and Skyline continues to focus on efficiency initiatives. We reinvested some of the proceeds received during Q4 2021 from the sale of our Canadian resorts, with the acquisition of the Courtyard Ithaca, on July 11, 2022. Our strong balance sheet will allow us to build on this success, while we continue to carefully manage our business in this environment of global volatility. In light of the recent rapid rise in interest rates, the company remains cautious.”

INCOME STATEMENT HIGHLIGHTS

All amounts in millions of Canadian dollars unless otherwise stated

• Total revenue for 2022 was $133.7, compared to $136.7 in 2021. Revenue from hotels and resorts increased by 2.19 per cent to $132.1 due to continued improvement in demand, and 2021 includes the effect of Skyline’s Canadian resorts, which were sold in December 2021 and are therefore not reflected in 2022 figures. Same asset revenue increased by 43 per cent relative to 2021.
• Same asset NOI for 2022 was $25.9, compared to $22.2 in 2021. Excluding the impact of government grants received in prior year. same asset NOI for the year ended December 31, 2021 would have been $14.7. The increase over prior year results from continued improvement of our US operations exiting the COVID-19 pandemic.
• Adjusted EBITDA for 2022 was $19.7, compared to $24.5 in 2021. Adjusted EBITDA in 2021 includes the effect of Skyline’s Canadian resorts, which were sold in 2021 and are therefore not reflected in 2022 figures. In addition, the prior year included the benefit of government assistance. Without the government subsidies, 2021 EBITDA would have been $10.6.
• Net financial expense for 2022 totalled $13.6, compared to $17.5 in 2021. Interest expense was $14.04 compared to $16.6 in 2021, mainly due to lower debt balances, partially offset by higher interest rates. Non-cash foreign exchange impact of the Company’s bonds was a loss of $2.9, compared to a loss of $0.95 in 2021. Interest income increased by $3.6 and primarily related to the vendor take back loan (“VTB”) associated with the sale of Skyline’s Canadian resorts in December 2021.
• FFO for 2022 was $ 9.3 compared to $12.3 in 2021. Excluding the impact of government grants received in 2021, there is an improvement in FFO due to the strong recovery in hotel demand, as discussed above, which positively impacted earnings. 2021 FFO also includes the effect of Skyline’s Canadian resorts, which were sold in December 2021 and are therefore not reflected in 2022 figures. Without the government grant, 2021 FFO would have been (1.9).
• Net income (loss) for 2022 was ($2.03), compared to $29.6 in 2021. Excluding minority interests, the Company had net income (loss) of ($1.55) in 2022, compared to net income of $22.9 in 2021. The 2021 result includes the pre-tax gain on the sale of the Canadian resorts in the amount of $30.7.
• Total comprehensive income for 2022 was $15.12 compared to total comprehensive income of $48.02 in 2021.

BALANCE SHEET HIGHLIGHTS

• Total assets as at December 31, 2022 were $609.35 compared to $579.7 as at December 31, 2021. The increase was primarily driven by the impact of foreign exchange and increased fair value of Property Plant and Equipment balances, including the purchase of the Ithaca Courtyard and land at Bear Valley.
• Cash and cash equivalents were $19.5 as at December 31, 2022 compared to $61.5 as at December 31, 2021. The decrease was driven by capital expenditures, and payments on debt and taxes.
• Net debt as at December 31, 2022 totalled $221, an increase of $59, or 36.32 per cent compared to net debt of $162.1 as at December 31, 2021. The increase was primarily driven by a reduction in cash and cash equivalents, as well as higher debt balances.
• Total equity attributable to shareholders was $280.46 ($315.97 including non-controlling interest), representing 46.03 per cent of total assets. Equity per share attributable to shareholders was 43.61 NIS ($16.79), compared to the closing share price on December 31, 2022 of 15.34 NIS ($5.91), a discount of 64.8 per cent.