ROCKVILLE, Md., Oct. 27, 2016 (hospitalitybusinessnews.com) — Choice Hotels International, Inc. today reported the following highlights for the third quarter 2016:
- Diluted earnings per share (“EPS”) for the three months ended September 30, 2016 totaled $0.84 per share, an increase of 17 percent from the same period of 2015.
- Net income for the three months ended September 30, 2016 totaled $47.6 million, an increase of 15 percent from the same period of 2015.
- Revenues for the three months ended September 30, 2016 totaled $267.6 million, an increase of 11 percent from the same period of 2015.
- Franchising revenues for the three months ended September 30, 2016 totaled $113.1 million, an increase of 7 percent from the same period of 2015 and domestic system-wide gross room revenues for the three months ended September 30, 2016 totaled approximately $2.1 billion.
- Domestic royalty fees for the three months ended September 30, 2016 totaled $90.7 million, an increase of 7 percent from the same period of 2015.
- Domestic system-wide revenue per available room (“RevPAR”) increased 4.5 percent in the third quarter of 2016, as occupancy and average daily rates increased 70 basis points and 3.4 percent, respectively, from the same period of 2015.
- Domestic RevPAR performance for the third quarter of 2016 exceeded total industry results by 120 basis points and also exceeded growth reported by Smith Travel Research for the primary chain scale segments in which the company competes.
- Effective domestic royalty rate for the three months ended September 30, 2016 was 4.39 percent, an increase of 12 basis points from the same period of 2015.
- Domestic hotel executed franchise agreements totaled 161 for the three months ended September 30, 2016, an increase of 25 percent from the same period of 2015, including a 13 percent and 30 percent increase in new construction and conversion agreements, respectively.
- Comfort family of brands recorded its 24th consecutive month of RevPAR index gains compared to its competition and over the last two years the company has executed 162 new construction franchise agreements which is more than double the number of agreements executed in the prior two year period.
- The company’s domestic pipeline of hotels awaiting conversion, under construction or approved for development as of September 30, 2016 increased 20 percent from September 30, 2015. The domestic new construction pipeline for the company’s Comfort brand as of September 30, 2016 totaled 180 hotels, a 30 percent increase from September 30, 2015.
- Adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) from hotel franchising activities for the three months ended September 30, 2016 totaled $85.5 million, an increase of 5 percent over the prior year period.
“We are pleased with our results for the third quarter, which were highlighted by a 17 percent increase in diluted earnings per share and a 4.5% increase in our domestic RevPAR which continues to outpace the RevPAR performance of the industry,” said Stephen P. Joyce, chief executive officer, Choice Hotels. “In addition, our efforts to rejuvenate the Comfort brand are working, including the implementation of higher standards for hotels joining the brand, requiring meaningful property improvement plans at contract windows and targeting underperforming Comforts for termination and replacement with new construction product. These efforts have resulted in 24 consecutive months of RevPAR index gains and are helping to fuel the growth of our new construction development pipeline.”During the nine months ended September 30, 2016, the company recorded an executive termination benefit charge of approximately $2.2 million. This special item impacted diluted EPS by $0.02 per share for the nine months ended September 30, 2016. The company uses non-GAAP measures that exclude executive termination benefits because those non-GAAP measures allow for period-over-period comparison of on-going core operations before the impact of these charges. These non-GAAP measures, which are reconciled to the comparable GAAP measures in Exhibit 8, include adjusted net income, adjusted diluted EPS, adjusted hotel franchising selling, general and administrative expenses, adjusted EBITDA and adjusted hotel franchising margins.
Use of Cash Flows
Dividends
During the nine months ended September 30, 2016, the company paid cash dividends totaling approximately $35 million. Based on the current quarterly dividend rate of $0.205 per common share, the company expects to pay dividends of approximately $46 million during 2016.
Share Repurchases
The company repurchased 0.6 million shares of common stock under its share repurchase program during the nine months ended September 30, 2016, at a total cost of approximately $29 million. The company currently has authorization to purchase up to 1.1 million additional shares under this program.
Hotel Development & Financing
Pursuant to its program to encourage acceleration of the growth of our upscale select-service Cambria hotels & suites brand, the company advanced approximately $78 million in support of the Cambria brand during the nine months ended September 30, 2016. The company also recycled approximately $25 million of investments in support of Cambria resulting in net advances of $53 million for the current year. These advances are primarily in the form of joint venture investments, forgivable key money loans, senior and mezzanine lending and site acquisitions. On September 30, 2016, the company had approximately $181 million reflected in its consolidated balance sheet pursuant to these financial support activities. With respect to lending and joint venture investments, the company generally expects to recycle these loans and investments within a five year period.
Outlook
The company’s consolidated 2016 outlook reflects the following assumptions:
Hotel Franchising
- Adjusted EBITDA from franchising activities for full-year 2016 are expected to range between $272 million and $274 million;
- Net domestic unit growth for 2016 is expected to be approximately 2%;
- RevPAR is expected to increase between 4% and 5% for the fourth quarter and range between 3.5% and 4.25% for full-year 2016; and
- The effective royalty rate is expected to increase between 10 and 11 basis points for full-year 2016 as compared to full-year 2015.
Non-Hotel Franchising Activities
- Net reductions in full-year 2016 EBITDA relating to our non-hotel franchising operations, which primarily relate to SkyTouch and vacation rental activities are expected to range between approximately $18 million and $19 million.
Other Items
- The effective tax rate is expected to be approximately 33% for the fourth quarter and approximately 31.5% for full-year 2016.
- Adjusted EBITDA and adjusted EPS estimates exclude executive termination benefits incurred in the nine months ended September 30, 2016 as discussed above under Special Item.
- Diluted EPS estimates are based on the current number of shares outstanding and thus do not factor in any changes that may occur due to new equity grants or any further repurchases of common stock under the company’s share repurchase program.
Consolidated Outlook
The company’s fourth quarter 2016 diluted EPS is expected to be at least $0.51. The company expects full-year 2016 adjusted diluted EPS to range between $2.43 and $2.46 and full year 2016 adjusted EBITDA to range between $253 million and $256 million.
Choice Hotels International, Inc. |
Exhibit 1 |
|||||||||||||||
Consolidated Statements of Income |
||||||||||||||||
(Unaudited) |
||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
Variance |
Variance |
|||||||||||||||
2016 |
2015 |
$ |
% |
2016 |
2015 |
$ |
% |
|||||||||
(In thousands, except per share amounts) |
||||||||||||||||
REVENUES: |
||||||||||||||||
Royalty fees |
$ 96,114 |
$ 89,929 |
$ 6,185 |
7% |
$ 247,168 |
$ 233,543 |
$ 13,625 |
6% |
||||||||
Initial franchise and relicensing fees |
6,284 |
6,170 |
114 |
2% |
17,146 |
17,703 |
(557) |
(3%) |
||||||||
Procurement services |
7,615 |
6,271 |
1,344 |
21% |
23,719 |
19,667 |
4,052 |
21% |
||||||||
Marketing and reservation system |
152,018 |
134,463 |
17,555 |
13% |
412,193 |
366,298 |
45,895 |
13% |
||||||||
Other |
5,546 |
4,693 |
853 |
18% |
16,220 |
11,716 |
4,504 |
38% |
||||||||
Total revenues |
267,577 |
241,526 |
26,051 |
11% |
716,446 |
648,927 |
67,519 |
10% |
||||||||
OPERATING EXPENSES: |
||||||||||||||||
Selling, general and administrative |
34,357 |
30,152 |
4,205 |
14% |
109,515 |
95,712 |
13,803 |
14% |
||||||||
Depreciation and amortization |
2,986 |
3,108 |
(122) |
(4%) |
8,707 |
8,793 |
(86) |
(1%) |
||||||||
Marketing and reservation system |
152,018 |
134,463 |
17,555 |
13% |
412,193 |
366,298 |
45,895 |
13% |
||||||||
Total operating expenses |
189,361 |
167,723 |
21,638 |
13% |
530,415 |
470,803 |
59,612 |
13% |
||||||||
Gain on sale of assets, net |
402 |
– |
402 |
NM |
402 |
– |
402 |
NM |
||||||||
Operating income |
78,618 |
73,803 |
4,815 |
7% |
186,433 |
178,124 |
8,309 |
5% |
||||||||
OTHER INCOME AND EXPENSES, NET: |
||||||||||||||||
Interest expense |
11,150 |
10,821 |
329 |
3% |
33,466 |
32,057 |
1,409 |
4% |
||||||||
Interest income |
(836) |
(359) |
(477) |
133% |
(2,502) |
(982) |
(1,520) |
155% |
||||||||
Other (gains) losses |
(746) |
1,402 |
(2,148) |
(153%) |
(1,005) |
(239) |
(766) |
321% |
||||||||
Equity in net (income) loss of affiliates |
(1,150) |
(329) |
(821) |
250% |
286 |
1,107 |
(821) |
(74%) |
||||||||
Total other income and expenses, net |
8,418 |
11,535 |
(3,117) |
(27%) |
30,245 |
31,943 |
(1,698) |
(5%) |
||||||||
Income before income taxes |
70,200 |
62,268 |
7,932 |
13% |
156,188 |
146,181 |
10,007 |
7% |
||||||||
Income taxes |
22,635 |
20,849 |
1,786 |
9% |
48,638 |
47,355 |
1,283 |
3% |
||||||||
Net income |
$ 47,565 |
$ 41,419 |
$ 6,146 |
15% |
$ 107,550 |
$ 98,826 |
$ 8,724 |
9% |
||||||||
Basic earnings per share |
$ 0.85 |
$ 0.72 |
$ 0.13 |
18% |
$ 1.91 |
$ 1.72 |
$ 0.19 |
11% |
||||||||
Diluted earnings per share |
$ 0.84 |
$ 0.72 |
$ 0.12 |
17% |
$ 1.90 |
$ 1.71 |
$ 0.19 |
11% |
Choice Hotels International, Inc. |
Exhibit 2 |
||||||
Consolidated Balance Sheets |
|||||||
(In thousands, except per share amounts) |
September 30, |
December 31, |
|||||
2016 |
2015 |
||||||
(Unaudited) |
|||||||
ASSETS |
|||||||
Cash and cash equivalents |
$ 205,953 |
$ 193,441 |
|||||
Accounts receivable, net |
129,422 |
89,352 |
|||||
Other current assets |
36,554 |
28,160 |
|||||
Total current assets |
371,929 |
310,953 |
|||||
Fixed assets and intangibles, net |
178,078 |
179,433 |
|||||
Notes receivable, net of allowances |
98,450 |
82,572 |
|||||
Investments in unconsolidated entities |
83,740 |
67,037 |
|||||
Investments, employee benefit plans, at fair value |
16,414 |
17,674 |
|||||
Other assets |
97,665 |
59,341 |
|||||
Total assets |
$ 846,276 |
$ 717,010 |
|||||
LIABILITIES AND SHAREHOLDERS’ DEFICIT |
|||||||
Accounts payable |
$ 60,363 |
$ 64,431 |
|||||
Accrued expenses and other current liabilities |
75,880 |
70,807 |
|||||
Deferred revenue |
121,592 |
71,587 |
|||||
Current portion of long-term debt |
660 |
1,191 |
|||||
Total current liabilities |
258,495 |
208,016 |
|||||
Long-term debt |
866,247 |
812,945 |
|||||
Deferred compensation & retirement plan obligations |
20,890 |
22,859 |
|||||
Other liabilities |
38,086 |
69,089 |
|||||
Total liabilities |
1,183,718 |
1,112,909 |
|||||
Total shareholders’ deficit |
(337,442) |
(395,899) |
|||||
Total liabilities and shareholders’ deficit |
$ 846,276 |
$ 717,010 |
Choice Hotels International, Inc. |
Exhibit 3 |
||||
Consolidated Statements of Cash Flows |
|||||
(Unaudited) |
|||||
(In thousands) |
Nine Months Ended September 30, |
||||
2016 |
2015* |
||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||||
Net income |
$ 107,550 |
$ 98,826 |
|||
Adjustments to reconcile net income to net cash provided |
|||||
by operating activities: |
|||||
Depreciation and amortization |
8,707 |
8,793 |
|||
Gain on disposal of assets |
(377) |
(1,519) |
|||
Provision for bad debts, net |
1,093 |
1,540 |
|||
Non-cash stock compensation and other charges |
11,037 |
8,929 |
|||
Excess tax benefits from stock-based compensation |
2,149 |
4,885 |
|||
Non-cash interest and other loss |
807 |
3,168 |
|||
Deferred income taxes |
(4,329) |
(1,799) |
|||
Equity in net losses from unconsolidated joint ventures less distributions received |
1,654 |
2,917 |
|||
Changes in assets and liabilities, net of acquisition: |
|||||
Receivables |
(42,426) |
(24,532) |
|||
Advances to/from marketing and reservation activities, net |
(25,783) |
18,341 |
|||
Forgivable notes receivable, net |
(15,109) |
(21,029) |
|||
Accounts payable |
(3,532) |
5,111 |
|||
Accrued expenses and other current liabilities |
(14,261) |
(14,083) |
|||
Income taxes payable/receivable |
19,219 |
11,066 |
|||
Deferred revenue |
49,976 |
2,122 |
|||
Other assets |
(9,958) |
(4,826) |
|||
Other liabilities |
1,992 |
5,748 |
|||
NET CASH PROVIDED BY OPERATING ACTIVITIES |
88,409 |
103,658 |
|||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||||
Investment in property and equipment |
(17,584) |
(21,810) |
|||
Proceeds from sales of assets |
8,360 |
6,347 |
|||
Acquisitions of real estate |
(25,263) |
(8,767) |
|||
Business acquisiton, net of cash acquired |
(1,341) |
(13,269) |
|||
Contributions to equity method investments |
(24,179) |
(3,811) |
|||
Distributions from equity method investments |
3,700 |
270 |
|||
Purchases of investments, employee benefit plans |
(1,430) |
(2,977) |
|||
Proceeds from sales of investments, employee benefit plans |
1,395 |
2,920 |
|||
Issuance of mezzanine and other notes receivable |
(20,281) |
(25,253) |
|||
Collections of mezzanine and other notes receivable |
11,040 |
3,697 |
|||
Other items, net |
(422) |
(445) |
|||
NET CASH USED BY INVESTING ACTIVITIES |
(66,005) |
(63,098) |
|||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|||||
Net borrowings pursuant to revolving credit facilities |
52,814 |
162,032 |
|||
Principal payments on long-term debt |
(836) |
(130,194) |
|||
Proceeds from the issuance of long-term debt |
– |
176 |
|||
Debt issuance costs |
(284) |
(2,169) |
|||
Purchases of treasury stock |
(33,958) |
(56,450) |
|||
Dividends paid |
(34,690) |
(34,173) |
|||
Proceeds from exercise of stock options |
6,802 |
6,381 |
|||
NET CASH USED BY FINANCING ACTIVITIES |
(10,152) |
(54,397) |
|||
Net change in cash and cash equivalents |
12,252 |
(13,837) |
|||
Effect of foreign exchange rate changes on cash and cash equivalents |
260 |
(1,781) |
|||
Cash and cash equivalents at beginning of period |
193,441 |
214,879 |
|||
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ 205,953 |
$ 199,261 |
|||
* Year to date results for September 30, 2015 reflect the adoption of ASU No. 2016-09, which requires companies to recognize excess tax benefits related to the exercise of share based awards as operating activities in the statement of cash flows. The company has elected to apply the ASU retrospectively and as a result excess tax benefits totaling $4.9 million for the nine months ended September 30, 2015 have been reclassified from cash flows from financing activities to cash flows from operating activities. |
CHOICE HOTELS INTERNATIONAL, INC. |
Exhibit 4 |
||||||||||||||||||||
SUPPLEMENTAL OPERATING INFORMATION |
|||||||||||||||||||||
DOMESTIC HOTEL SYSTEM |
|||||||||||||||||||||
(UNAUDITED) |
|||||||||||||||||||||
For the Nine Months Ended September 30, 2016 |
For the Nine Months Ended September 30, 2015 |
Change |
|||||||||||||||||||
Average Daily |
Average Daily |
Average Daily |
|||||||||||||||||||
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
|||||||||||||
Comfort Inn |
$ 93.78 |
67.2% |
$ 63.00 |
$ 90.65 |
66.8% |
$ 60.52 |
3.5% |
40 |
bps |
4.1% |
|||||||||||
Comfort Suites |
97.44 |
70.8% |
69.01 |
94.83 |
69.9% |
66.25 |
2.8% |
90 |
bps |
4.2% |
|||||||||||
Sleep |
83.09 |
66.4% |
55.14 |
81.34 |
65.7% |
53.45 |
2.2% |
70 |
bps |
3.2% |
|||||||||||
Quality |
78.97 |
60.8% |
48.00 |
76.02 |
60.2% |
45.75 |
3.9% |
60 |
bps |
4.9% |
|||||||||||
Clarion |
83.67 |
59.7% |
49.95 |
80.93 |
58.9% |
47.68 |
3.4% |
80 |
bps |
4.8% |
|||||||||||
Econo Lodge |
62.33 |
55.3% |
34.47 |
60.44 |
55.1% |
33.30 |
3.1% |
20 |
bps |
3.5% |
|||||||||||
Rodeway |
64.14 |
57.3% |
36.74 |
60.56 |
58.5% |
35.44 |
5.9% |
(120) |
bps |
3.7% |
|||||||||||
MainStay |
77.34 |
66.2% |
51.18 |
78.03 |
69.7% |
54.35 |
(0.9%) |
(350) |
bps |
(5.8%) |
|||||||||||
Suburban |
50.15 |
76.0% |
38.11 |
47.75 |
77.0% |
36.78 |
5.0% |
(100) |
bps |
3.6% |
|||||||||||
Ascend Hotel Collection |
130.34 |
59.0% |
76.95 |
127.38 |
59.9% |
76.34 |
2.3% |
(90) |
bps |
0.8% |
|||||||||||
Total |
$ 83.22 |
63.1% |
$ 52.50 |
$ 80.77 |
62.9% |
$ 50.79 |
3.0% |
20 |
bps |
3.4% |
|||||||||||
For the Three Months Ended September 30, 2016 |
For the Three Months Ended September 30, 2015 |
Change |
|||||||||||||||||||
Average Daily |
Average Daily |
Average Daily |
|||||||||||||||||||
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
|||||||||||||
Comfort Inn |
$ 100.02 |
73.4% |
$ 73.41 |
$ 96.35 |
73.2% |
$ 70.54 |
3.8% |
20 |
bps |
4.1% |
|||||||||||
Comfort Suites |
100.95 |
74.6% |
75.35 |
98.06 |
73.2% |
71.79 |
2.9% |
140 |
bps |
5.0% |
|||||||||||
Sleep |
86.59 |
70.6% |
61.15 |
84.44 |
69.1% |
58.31 |
2.5% |
150 |
bps |
4.9% |
|||||||||||
Quality |
84.31 |
66.4% |
55.96 |
80.80 |
65.3% |
52.79 |
4.3% |
110 |
bps |
6.0% |
|||||||||||
Clarion |
88.98 |
66.4% |
59.08 |
85.46 |
63.9% |
54.61 |
4.1% |
250 |
bps |
8.2% |
|||||||||||
Econo Lodge |
67.44 |
60.9% |
41.08 |
65.32 |
60.1% |
39.27 |
3.2% |
80 |
bps |
4.6% |
|||||||||||
Rodeway |
69.72 |
62.3% |
43.45 |
66.00 |
63.7% |
42.02 |
5.6% |
(140) |
bps |
3.4% |
|||||||||||
MainStay |
79.91 |
71.5% |
57.13 |
81.26 |
71.8% |
58.36 |
(1.7%) |
(30) |
bps |
(2.1%) |
|||||||||||
Suburban |
51.09 |
78.2% |
39.96 |
48.77 |
78.1% |
38.09 |
4.8% |
10 |
bps |
4.9% |
|||||||||||
Ascend Hotel Collection |
138.97 |
63.0% |
87.50 |
134.88 |
60.1% |
81.07 |
3.0% |
290 |
bps |
7.9% |
|||||||||||
Total |
$ 88.27 |
68.4% |
$ 60.39 |
$ 85.38 |
67.7% |
$ 57.80 |
3.4% |
70 |
bps |
4.5% |
|||||||||||
For the Quarter Ended |
For the Nine Months Ended |
||||||||||||||||||||
9/30/2016 |
9/30/2015 |
9/30/2016 |
9/30/2015 |
||||||||||||||||||
System-wide effective royalty rate |
4.39% |
4.27% |
4.39% |
4.28% |
CHOICE HOTELS INTERNATIONAL, INC. |
Exhibit 5 |
||||||||||||||||
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA |
|||||||||||||||||
(UNAUDITED) |
|||||||||||||||||
September 30, 2016 |
September 30, 2015 |
Variance |
|||||||||||||||
Hotels |
Rooms |
Hotels |
Rooms |
Hotels |
Rooms |
% |
% |
||||||||||
Comfort Inn |
1,126 |
87,346 |
1,188 |
92,029 |
(62) |
(4,683) |
(5.2%) |
(5.1%) |
|||||||||
Comfort Suites |
565 |
43,610 |
574 |
44,311 |
(9) |
(701) |
(1.6%) |
(1.6%) |
|||||||||
Sleep |
378 |
27,035 |
374 |
26,913 |
4 |
122 |
1.1% |
0.5% |
|||||||||
Quality |
1,407 |
111,564 |
1,325 |
105,950 |
82 |
5,614 |
6.2% |
5.3% |
|||||||||
Clarion |
164 |
22,456 |
176 |
24,626 |
(12) |
(2,170) |
(6.8%) |
(8.8%) |
|||||||||
Econo Lodge |
853 |
52,773 |
854 |
52,963 |
(1) |
(190) |
(0.1%) |
(0.4%) |
|||||||||
Rodeway |
526 |
30,058 |
488 |
27,095 |
38 |
2,963 |
7.8% |
10.9% |
|||||||||
MainStay |
54 |
4,020 |
48 |
3,656 |
6 |
364 |
12.5% |
10.0% |
|||||||||
Suburban |
58 |
6,471 |
63 |
7,065 |
(5) |
(594) |
(7.9%) |
(8.4%) |
|||||||||
Ascend Hotel Collection |
119 |
9,761 |
112 |
9,407 |
7 |
354 |
6.3% |
3.8% |
|||||||||
Cambria hotel & suites |
25 |
3,113 |
24 |
2,917 |
1 |
196 |
4.2% |
6.7% |
|||||||||
Domestic Franchises |
5,275 |
398,207 |
5,226 |
396,932 |
49 |
1,275 |
0.9% |
0.3% |
|||||||||
International Franchises |
1,144 |
110,945 |
1,153 |
107,425 |
(9) |
3,520 |
(0.8%) |
3.3% |
|||||||||
Total Franchises |
6,419 |
509,152 |
6,379 |
504,357 |
40 |
4,795 |
0.6% |
1.0% |
Exhibit 6 |
|||||||||||||||||||
CHOICE HOTELS INTERNATIONAL, INC. |
|||||||||||||||||||
SUPPLEMENTAL INFORMATION BY BRAND |
|||||||||||||||||||
DEVELOPMENT RESULTS — DOMESTIC NEW HOTEL CONTRACTS |
|||||||||||||||||||
(UNAUDITED) |
|||||||||||||||||||
For the Nine Months Ended September 30, 2016 |
For the Nine Months Ended September 30, 2015 |
% Change |
|||||||||||||||||
New |
New |
New |
|||||||||||||||||
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
|||||||||||
Comfort Inn |
20 |
26 |
46 |
17 |
28 |
45 |
18% |
(7%) |
2% |
||||||||||
Comfort Suites |
17 |
1 |
18 |
18 |
3 |
21 |
(6%) |
(67%) |
(14%) |
||||||||||
Sleep |
26 |
1 |
27 |
19 |
– |
19 |
37% |
NM |
42% |
||||||||||
Quality |
– |
118 |
118 |
3 |
114 |
117 |
(100%) |
4% |
1% |
||||||||||
Clarion |
3 |
15 |
18 |
– |
7 |
7 |
NM |
114% |
157% |
||||||||||
Econo Lodge |
1 |
41 |
42 |
– |
39 |
39 |
NM |
5% |
8% |
||||||||||
Rodeway |
– |
60 |
60 |
– |
57 |
57 |
NM |
5% |
5% |
||||||||||
MainStay |
15 |
– |
15 |
16 |
– |
16 |
(6%) |
NM |
(6%) |
||||||||||
Suburban |
– |
1 |
1 |
1 |
4 |
5 |
(100%) |
(75%) |
(80%) |
||||||||||
Ascend Hotel Collection |
2 |
15 |
17 |
3 |
22 |
25 |
(33%) |
(32%) |
(32%) |
||||||||||
Cambria hotel & suites |
16 |
– |
16 |
14 |
2 |
16 |
14% |
(100%) |
0% |
||||||||||
Total Domestic System |
100 |
278 |
378 |
91 |
276 |
367 |
10% |
1% |
3% |
||||||||||
For the Three Months Ended September 30, 2016 |
For the Three Months Ended September 30, 2015 |
% Change |
|||||||||||||||||
New |
New |
New |
|||||||||||||||||
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
|||||||||||
Comfort Inn |
8 |
12 |
20 |
4 |
8 |
12 |
100% |
50% |
67% |
||||||||||
Comfort Suites |
9 |
– |
9 |
5 |
1 |
6 |
80% |
(100%) |
50% |
||||||||||
Sleep |
12 |
1 |
13 |
10 |
– |
10 |
20% |
NM |
30% |
||||||||||
Quality |
– |
45 |
45 |
– |
39 |
39 |
NM |
15% |
15% |
||||||||||
Clarion |
– |
6 |
6 |
– |
1 |
1 |
NM |
500% |
500% |
||||||||||
Econo Lodge |
– |
12 |
12 |
– |
11 |
11 |
NM |
9% |
9% |
||||||||||
Rodeway |
– |
33 |
33 |
– |
22 |
22 |
NM |
50% |
50% |
||||||||||
MainStay |
9 |
– |
9 |
10 |
– |
10 |
(10%) |
NM |
(10%) |
||||||||||
Suburban |
– |
– |
– |
– |
1 |
1 |
NM |
(100%) |
(100%) |
||||||||||
Ascend Hotel Collection |
– |
9 |
9 |
2 |
6 |
8 |
(100%) |
50% |
13% |
||||||||||
Cambria hotel & suites |
5 |
– |
5 |
7 |
2 |
9 |
(29%) |
(100%) |
(44%) |
||||||||||
Total Domestic System |
43 |
118 |
161 |
38 |
91 |
129 |
13% |
30% |
25% |
Exhibit 7 |
||||||||||||||||||||||||
CHOICE HOTELS INTERNATIONAL, INC. |
||||||||||||||||||||||||
DOMESTIC PIPELINE OF HOTELS UNDER CONSTRUCTION, AWAITING CONVERSION OR APPROVED FOR DEVELOPMENT |
||||||||||||||||||||||||
(UNAUDITED) |
||||||||||||||||||||||||
A hotel in the domestic pipeline does not always result in an open and operating hotel due to various factors. |
||||||||||||||||||||||||
Variance |
||||||||||||||||||||||||
September 30, 2016 |
September 30, 2015 |
|||||||||||||||||||||||
Units |
Units |
Conversion |
New Construction |
Total |
||||||||||||||||||||
Conversion |
New |
Total |
Conversion |
New |
Total |
Units |
% |
Units |
% |
Units |
% |
|||||||||||||
Comfort Inn |
39 |
83 |
122 |
39 |
63 |
102 |
– |
0% |
20 |
32% |
20 |
20% |
||||||||||||
Comfort Suites |
3 |
97 |
100 |
1 |
75 |
76 |
2 |
200% |
22 |
29% |
24 |
32% |
||||||||||||
Sleep Inn |
1 |
89 |
90 |
– |
72 |
72 |
1 |
NM |
17 |
24% |
18 |
25% |
||||||||||||
Quality |
57 |
3 |
60 |
56 |
5 |
61 |
1 |
2% |
(2) |
(40%) |
(1) |
(2%) |
||||||||||||
Clarion |
11 |
5 |
16 |
9 |
2 |
11 |
2 |
22% |
3 |
150% |
5 |
45% |
||||||||||||
Econo Lodge |
28 |
3 |
31 |
26 |
4 |
30 |
2 |
8% |
(1) |
(25%) |
1 |
3% |
||||||||||||
Rodeway |
45 |
1 |
46 |
44 |
2 |
46 |
1 |
2% |
(1) |
(50%) |
– |
0% |
||||||||||||
MainStay |
– |
66 |
66 |
1 |
54 |
55 |
(1) |
(100%) |
12 |
22% |
11 |
20% |
||||||||||||
Suburban |
5 |
6 |
11 |
4 |
10 |
14 |
1 |
25% |
(4) |
(40%) |
(3) |
(21%) |
||||||||||||
Ascend Hotel Collection |
33 |
17 |
50 |
21 |
18 |
39 |
12 |
57% |
(1) |
(6%) |
11 |
28% |
||||||||||||
Cambria hotel & suites |
5 |
52 |
57 |
2 |
32 |
34 |
3 |
150% |
20 |
63% |
23 |
68% |
||||||||||||
227 |
422 |
649 |
203 |
337 |
540 |
24 |
12% |
85 |
25% |
109 |
20% |
CHOICE HOTELS INTERNATIONAL, INC. |
Exhibit 8 |
||||||||||||
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION |
|||||||||||||
(UNAUDITED) |
|||||||||||||
HOTEL FRANCHISING REVENUES AND ADJUSTED HOTEL FRANCHISING MARGINS |
|||||||||||||
(dollar amounts in thousands) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||
Hotel Franchising Revenues: |
|||||||||||||
Total Revenues |
$ 267,577 |
$ 241,526 |
$ 716,446 |
$ 648,927 |
|||||||||
Adjustments: |
|||||||||||||
Marketing and reservation system revenues |
(152,018) |
(134,463) |
(412,193) |
(366,298) |
|||||||||
Non-hotel franchising activities |
(2,424) |
(1,459) |
(6,521) |
(2,473) |
|||||||||
Hotel Franchising Revenues |
$ 113,135 |
$ 105,604 |
$ 297,732 |
$ 280,156 |
|||||||||
Adjusted Hotel Franchising Margins: |
|||||||||||||
Operating Margin: |
|||||||||||||
Total Revenues |
$ 267,577 |
$ 241,526 |
$ 716,446 |
$ 648,927 |
|||||||||
Operating Income |
$ 78,618 |
$ 73,803 |
$ 186,433 |
$ 178,124 |
|||||||||
Operating Margin |
29.4% |
30.6% |
26.0% |
27.4% |
|||||||||
Adjusted Hotel Franchising Margin: |
|||||||||||||
Hotel Franchising Revenues |
$ 113,135 |
$ 105,604 |
$ 297,732 |
$ 280,156 |
|||||||||
Operating Income |
$ 78,618 |
$ 73,803 |
$ 186,433 |
$ 178,124 |
|||||||||
Executive termination benefits |
– |
– |
2,206 |
– |
|||||||||
Non-hotel franchising activities operating loss |
5,400 |
5,034 |
17,140 |
15,322 |
|||||||||
Adjusted Hotel Franchising Operating Income |
$ 84,018 |
$ 78,837 |
$ 205,779 |
$ 193,446 |
|||||||||
Adjusted Hotel Franchising Margins |
74.3% |
74.7% |
69.1% |
69.0% |
|||||||||
ADJUSTED HOTEL FRANCHISING SELLING, GENERAL AND ADMINISTRATION EXPENSES |
|||||||||||||
(dollar amounts in thousands) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||
Total Selling, General and Administrative Expenses |
$ 34,357 |
$ 30,152 |
$ 109,515 |
$ 95,712 |
|||||||||
Executive termination benefits |
– |
– |
(2,206) |
– |
|||||||||
Non-hotel franchising activities |
(6,723) |
(5,724) |
(20,438) |
(16,145) |
|||||||||
Adjusted Hotel Franchising Selling, General and Administration Expenses |
$ 27,634 |
$ 24,428 |
$ 86,871 |
$ 79,567 |
|||||||||
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (“EBITDA”) |
|||||||||||||
(dollar amounts in thousands) |
|||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||
Net income |
$ 47,565 |
$ 41,419 |
$ 107,550 |
$ 98,826 |
|||||||||
Income taxes |
22,635 |
20,849 |
48,638 |
47,355 |
|||||||||
Interest expense |
11,150 |
10,821 |
33,466 |
32,057 |
|||||||||
Interest income |
(836) |
(359) |
(2,502) |
(982) |
|||||||||
Other (gains) losses |
(746) |
1,402 |
(1,005) |
(239) |
|||||||||
Equity in net (income) loss of affiliates |
(1,150) |
(329) |
286 |
1,107 |
|||||||||
Gain on sale of assets |
(402) |
– |
(402) |
– |
|||||||||
Depreciation and amortization |
2,986 |
3,108 |
8,707 |
8,793 |
|||||||||
Executive termination benefits |
– |
– |
2,206 |
– |
|||||||||
Adjusted EBITDA |
$ 81,202 |
$ 76,911 |
$ 196,944 |
$ 186,917 |
|||||||||
Hotel franchising |
$ 85,500 |
$ 81,177 |
$ 210,861 |
$ 200,589 |
|||||||||
Non-hotel franchising activities |
(4,298) |
(4,266) |
(13,917) |
(13,672) |
|||||||||
$ 81,202 |
$ 76,911 |
$ 196,944 |
$ 186,917 |
||||||||||
ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS) |
|||||||||||||
(dollar amounts in thousands, except per share amounts) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||
Net Income |
$ 47,565 |
$ 41,419 |
$ 107,550 |
$ 98,826 |
|||||||||
Adjustments: |
|||||||||||||
Executive termination benefits, net of income taxes |
– |
– |
1,394 |
– |
|||||||||
Adjusted Net Income |
$ 47,565 |
$ 41,419 |
$ 108,944 |
$ 98,826 |
|||||||||
Diluted Earnings Per Share |
$ 0.84 |
$ 0.72 |
$ 1.90 |
$ 1.71 |
|||||||||
Adjustments: |
|||||||||||||
Executive termination benefits |
– |
– |
0.02 |
– |
|||||||||
Adjusted Diluted Earnings Per Share (EPS) |
$ 0.84 |
$ 0.72 |
$ 1.92 |
$ 1.71 |
|||||||||
ADJUSTED EBITDA AND DILUTED EPS FULL YEAR FORECAST |
|||||||||||||
(dollar amounts in thousands) |
|||||||||||||
Range |
|||||||||||||
Estimated Adjusted EBITDA |
|||||||||||||
Fiscal Year 2016 |
|||||||||||||
Net income |
$ 135,000 |
$ 137,100 |
|||||||||||
Income taxes |
63,100 |
64,000 |
|||||||||||
Interest expense |
45,100 |
45,100 |
|||||||||||
Interest income |
(3,300) |
(3,300) |
|||||||||||
Gain on sale of assets |
(400) |
(400) |
|||||||||||
Other gains |
(1,000) |
(1,000) |
|||||||||||
Equity in net loss of affiliates |
500 |
500 |
|||||||||||
Depreciation and amortization |
11,800 |
11,800 |
|||||||||||
Executive termination benefits |
2,200 |
2,200 |
|||||||||||
Adjusted EBITDA |
$ 253,000 |
$ 256,000 |
|||||||||||
Hotel franchising |
$ 272,000 |
$ 274,000 |
|||||||||||
Non-hotel franchising activities |
(19,000) |
(18,000) |
|||||||||||
$ 253,000 |
$ 256,000 |
||||||||||||
Range |
|||||||||||||
Estimated Adjusted Diluted EPS |
|||||||||||||
Fiscal Year 2016 |
|||||||||||||
Diluted EPS |
$ 2.41 |
$ 2.44 |
|||||||||||
Adjustments: |
|||||||||||||
Executive termination benefits |
0.02 |
0.02 |
|||||||||||
Adjusted Diluted EPS |
$ 2.43 |
$ 2.46 |