Moody's downgrades Gaylord Entertainment

Moody's Investors Service downgraded ratings for Gaylord Entertainment Co. on Friday after the convention resort operator posted a weak quarterly report a few days earlier and lowered its guidance for the full year.

Moody's downgraded the company's corporate family rating and its probability of default rating to "B3" from "B2." That's one notch lower in the ratings agency's junk category, indicating debt that is speculative and subject to high risk. Moody's said it reflects Gaylord's limited diversification, modest size and aggressive growth and acquisition strategy.

"The ratings downgrade reflects Moody's view that despite the ramp-up of the Gaylord National, weaker than expected operating performance will result in weaker than anticipated debt protection measures for a period longer than first believed and which are more representative of the revised ratings," said Bill Fahy, a Moody's analyst, in a statement.

Gaylord National is a hotel and convention center in Maryland that opened in April 2008.

Moody's said its outlook for Gaylord is stable, which means it expects the company to generate free cash flow despite weaker profits to come.

Moody's also lowered ratings for the company's senior unsecured debt to "Caa2" from "Caa1," or very high risk.

On Tuesday, Gaylord reported a first-quarter profit of $3.4 million, or 8 cents per share. In the same period last year, the Nashville, Tenn.-based company posted a loss of $7.3 million, or 18 cents per share.

Analysts surveyed by Thomson Reuters had forecast a loss of 6 cents per share.

Sales increased 9 percent to $212.3 million from $195.2 million in the year-ago quarter. Analysts were looking for slightly higher revenue of $223.4 million.

Gaylord's guidance for the full year called for total sales per available room to fall 13 percent to 18 percent, a steeper decline than the 9 percent to 12 percent it had previously forecast.

Shares of Gaylord jumped $1.30, or 8.4 percent, to $16.86 in afternoon trading.