SILVER SPRING, Md., Oct. 27 /PRNewswire-FirstCall/ -- Choice Hotels International, Inc., (NYSE: CHH) today reported the following highlights for third quarter 2010:
-- Adjusted diluted earnings per share ("EPS") for third quarter 2010 were
$0.68 compared to $0.56 for the same period of the prior year. Diluted
EPS were $0.68 for third quarter 2010 compared to $0.55 for third
quarter 2009. Adjusted diluted EPS for third quarter 2009 exclude
certain special items, as described below, totaling $0.01.
-- Excluding special items, adjusted earnings before interest, taxes,
depreciation and amortization ("EBITDA") were $57.3 million for the
three months ended September 30, 2010, compared to $51.7 million for the
same period of 2009. Operating income for the three months ended
September 30, 2010 and 2009 was $54.9 million and $48.1 million,
respectively.
-- Franchising revenues increased 7% from $74.6 million for the three
months ended September 30, 2009 to $79.9 million for the same period of
2010. Total revenues for the three months ended September 30, 2010
increased 11% compared to the same period of 2009.
-- Domestic unit and room growth increased 1.2% and 0.7%, respectively,
from September 30, 2009.
-- Domestic system-wide revenue per available room ("RevPAR") increased
7.4% for the third quarter of 2010 compared to the same period of 2009
primarily as a result of occupancy rates increasing 420 basis points.
-- The effective royalty rate increased 7 basis points to 4.30% for the
three months ended September 30, 2010 compared to 4.23% for the same
period of the prior year.
-- The company executed 79 new domestic hotel franchise contracts for both
the three months ended September 30, 2010 and 2009.
-- The number of domestic hotels under construction, awaiting conversion or
approved for development declined 27% from September 30, 2009 to 545
hotels representing 44,627 rooms; the worldwide pipeline declined 26%
from September 30, 2009 to 638 hotels representing 52,723 rooms.
-- On August 25, 2010, the company completed and issued unsecured senior
notes in an aggregate principal amount of $250 million, in an
underwritten, registered public offering. The notes will mature in
August 2020 and bear a coupon rate of interest of 5.7%. Considering bond
issuance and related interest rate hedging costs, the company's
effective interest cost is approximately 6.2%. The proceeds from these
senior notes were utilized to repay other outstanding indebtedness under
the company's unsecured revolving credit facility.
-- The effective income tax rate for the three months ended September 30,
2010 was 26.4% compared to 35.0% for the same period of the prior year.
Excluding discrete items, totaling $3.8 million (approximately $0.06
diluted earnings per share), recorded during the three months ended
September 30, 2010, the company's effective income tax rate was
approximately 34.7%.
"During the third quarter, we were pleased to see strong gains in RevPAR domestically across every brand in the Choice family, enabling us to post positive year-to-date domestic RevPAR performance," said Stephen P. Joyce, president and chief executive officer. "While the hotel transaction environment and lack of access to financing continues to impact our franchise sales results, our recently launched incentive program for the Quality, Clarion, and Econo Lodge brands has been well-received by developers. With our roster of strong, well-known brands and proven ability to deliver reservations to our franchisees' hotels, we are well-positioned for growth as the hotel development environment improves."
Special Items
During the three and nine months ended September 30, 2010, the company recorded employee termination benefits charges of approximately $0.3 million and $0.5 million, respectively. These special items did not have an impact on diluted EPS for the three and nine months ended September 30, 2010.
During the three and nine months ended September 30, 2009, the company recorded employee termination benefits of approximately $1.5 million and $2.3 million, respectively. During the nine months ended September 30, 2009, the company also recorded a $1.5 million charge related to the sublease of a portion of its office space. These special items represent diluted EPS of $0.01 and $0.03 for the three and nine months ended September 30, 2009.
Outlook for 2010
The company's fourth quarter 2010 adjusted diluted EPS is expected to be $0.38. The company expects full-year 2010 adjusted diluted EPS to be between $1.77 and $1.79. Adjusted EBITDA for full-year 2010 are expected to be between $168.5 million and $170.5 million. These estimates include the following assumptions:
-- The company expects net domestic unit growth of approximately 1% in
2010;
-- RevPAR is expected to increase approximately 7% to 8% for fourth quarter
of 2010 and increase approximately 2% for full-year 2010;
-- The effective royalty rate is expected to increase 6 basis points for
full-year 2010;
-- All figures assume the existing share count and an effective tax rate of
34.7% for the fourth quarter and 32.3% for full-year 2010.
-- Adjusted EBITDA and adjusted diluted EPS for the fourth quarter and full
year 2010 exclude $1.0 million and $1.5 million, respectively of
operating expenses related to employee termination benefits which
represent approximately $0.01 diluted EPS for both periods.
Use of Free Cash Flow
The company has historically used its free cash flow (cash flow from operations less capital expenditures) to return value to shareholders, primarily through share repurchases and dividends.
For the nine months ended September 30, 2010 the company paid $32.9 million of cash dividends to shareholders. The current quarterly dividend rate per common share is $0.185, subject to declaration by our board of directors.
During the nine months ended September 30, 2010, the company purchased approximately 0.3 million shares of its common stock at an average price of $32.36 for a total cost of $8.7 million under the share repurchase program and has authorization to purchase up to an additional 3.6 million shares under this program. During the three months ended September 30, 2010 the Company purchased approximately 0.1 million shares of its common stock for a total cost of $1.9 million at an average price of $34.85. We expect to continue making repurchases in the open market and through privately negotiated transactions, subject to market and other conditions. No minimum number of share repurchases has been fixed. Since Choice announced its stock repurchase program on June 25, 1998, the company has repurchased 43.2 million shares of its common stock for a total cost of $1 billion through September 30, 2010. Considering the effect of a two-for-one stock split in October 2005, the company had repurchased 76.2 million shares through September 30, 2010 under the share repurchase program at an average price of $13.35 per share.
Our Board previously authorized us to enter into programs which permit us to offer financing, investment and guaranty support to qualified franchisees as well as to acquire and resell real estate to incent franchise development for certain brands in top markets. Recent market conditions have resulted in an increase in opportunities to incent development under these programs. As a result, during the nine months ended September 30, 2010, the Company has advanced approximately $18.9 million pursuant to these programs (of which $5 million has been repaid to the Company).
Over the next several years, we expect to continue to opportunistically deploy capital pursuant to these programs to promote growth of our emerging brands. The amount and timing of the investment in these programs will be dependent on market and other conditions. Our current expectation is that our annual investment in these programs will range between $20 million to $40 million. Notwithstanding these programs, the company expects to continue to return value to its shareholders through a combination of share repurchases and dividends, subject to market and other conditions.
Conference Call
Choice will conduct a conference call on Thursday, October 28, 2010 at 10:15 a.m. EDT to discuss the company's third quarter 2010 results. The dial-in number to listen to the call is 1-866-314-5232, and the access code is 99130444. International callers should dial 1-617-213-8052 and enter the access code 99130444. The conference call also will be Webcast simultaneously via the company's Web site, www.choicehotels.com. Interested investors and other parties wishing to access the call via the Webcast should go to the Web site and click on the Investor Info link. The Investor Information page will feature a conference call microphone icon to access the call.
The call will be recorded and available for replay beginning at 1:15 p.m. EDT on October 28, 2010 through November 28, 2010 by calling 1-888-286-8010 and entering access code 42827909. The international dial-in number for the replay is 617-801-6888, access code 42827909. In addition, the call will be archived and available on www.choicehotels.com via the Investor Info link.
About Choice Hotels
Choice Hotels International, Inc. franchises more than 6,000 hotels, representing more than 490,000 rooms, in the United States and more than 35 other countries and territories. As of September 30, 2010, more than 540 hotels are under construction, awaiting conversion or approved for development in the United States, representing more than 44,000 rooms, and approximately 90 hotels, representing approximately 8,000 rooms, are under construction, awaiting conversion or approved for development in 20 other countries and territories. The company's Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge and Rodeway Inn brands serve guests worldwide. In addition, via its Ascend Collection membership program, travelers in the United States, Canada and the Caribbean have upscale lodging options at historic, boutique and unique hotels.
Additional corporate information may be found on the Choice Hotels International, Inc. web site, which may be accessed at www.choicehotels.com.
Forward-Looking Statements
Certain matters discussed in this press release constitute forward-looking statements within the meaning of the federal securities law. Generally, our use of words such as "expect," "estimate," "believe," "anticipate," "will," "forecast," "plan"," project," "assume" or similar words of futurity identify statements that are forward-looking and that we intend to be included within the Safe Harbor protections provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are based on management's current beliefs, assumptions and expectations regarding future events, which in turn are based on information currently available to management. Such statements may relate to projections of the company's revenue, earnings and other financial and operational measures, company debt levels, payment of stock dividends, and future operations, among other matters. We caution you not to place undue reliance on any such forward-looking statements. Forward-looking statements do not guarantee future performance and involve known and unknown risks, uncertainties and other factors.
Several factors could cause actual results, performance or achievements of the company to differ materially from those expressed in or contemplated by the forward-looking statements. Such risks include, but are not limited to, changes to general, domestic and foreign economic conditions; operating risks common in the lodging and franchising industries; changes to the desirability of our brands as viewed by hotel operators and customers; changes to the terms or termination of our contracts with franchisees; our ability to keep pace with improvements in technology utilized for reservations systems and other operating systems; fluctuations in the supply and demand for hotels rooms; and our ability to manage effectively our indebtedness. These and other risk factors are discussed in detail in the Risk Factors section of the company's Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission on March 1, 2010. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Statement Concerning Non-GAAP Financial Measurements
Adjusted diluted EPS, adjusted EBITDA, adjusted SG&A, franchising revenues and adjusted franchising margins are non-GAAP financial measurements. This information should not be considered as an alternative to any measure of performance as promulgated under accounting principles generally accepted in the United States ("GAAP"), such as diluted earnings per share, operating income, total revenues and operating margins. The company's calculation of these measurements may be different from the calculations used by other companies and therefore comparability may be limited. The company has included an exhibit accompanying this release that reconciles these measures to the comparable GAAP measurement. We discuss management's reasons for reporting these non-GAAP measures below.
Earnings Before Interest, Taxes, Depreciation and Amortization: EBITDA reflects earnings excluding the impact of interest expense, tax expense, depreciation and amortization. Our management considers EBITDA to be an indicator of operating performance because it can be used to measure our ability to service debt, fund capital expenditures, and expand our business. EBITDA is a commonly used measure of performance in our industry. In addition, it is used by analysts, lenders, investors and others, as well as by us, to facilitate comparisons between the company and its competitors because it excludes certain items that can vary widely across different industries or among companies within the same industry.
Franchising Revenues and Margins: The company reports franchising revenues and margins which exclude marketing and reservation revenues and hotel operations. Marketing and reservation activities are excluded from revenues and operating margins since the company is contractually required by its franchise agreements to use these fees collected for marketing and reservation activities. Cumulative reservation and marketing fees not expended are recorded as a payable on the company's financial statements and are carried over to the next fiscal year and expended in accordance with the franchise agreements. Cumulative marketing and reservation expenditures in excess of fees collected for marketing and reservation activities are recorded as a receivable on the company's financial statements. In addition, the company has the contractual authority to require that the franchisees in the system at any given point repay the company for any deficits related to marketing and reservation activities. Hotel operations are excluded since they do not reflect the most accurate measure of the company's core franchising business. These non-GAAP measures are a commonly used measure of performance in our industry and facilitate comparisons between the company and its competitors.
Adjusted Diluted EPS, Adjusted EBITDA, Adjusted SG&A and Adjusted Franchising Margins: The company's management also uses adjusted diluted EPS, adjusted EBITDA, adjusted SG&A and adjusted franchising margins which exclude employee termination benefits for the three and nine months September 30, 2010 and 2009 as well as a loss on the sublease of a portion of the Company's office space during the nine months ended September 30, 2009. The company utilizes these non-GAAP measures to enable investors to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of on-going operations.
Choice Hotels, Choice Hotels International, Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge, Rodeway Inn and Ascend Collection are proprietary trademarks and service marks of Choice Hotels International.
Choice Hotels International, Inc. Exhibit 1
Consolidated Statements of Income
(Unaudited)
Three Months Ended September 30,
--------------------------------
Variance
2010 2009 $ %
---- ---- --- ---
(In thousands,
except per share
amounts)
REVENUES:
Royalty fees $72,565 $66,401 $6,164 9%
Initial franchise
and relicensing
fees 1,970 2,957 (987) (33%)
Procurement
services 3,756 3,922 (166) (4%)
Marketing and
reservation 102,867 90,465 12,402 14%
Hotel operations 1,068 934 134 14%
Other 1,575 1,297 278 21%
----- ----- --- ---
Total revenues 183,801 165,976 17,825 11%
OPERATING
EXPENSES:
Selling, general
and
administrative 23,156 24,517 (1,361) (6%)
Depreciation and
amortization 2,078 2,105 (27) (1%)
Marketing and
reservation 102,867 90,465 12,402 14%
Hotel operations 823 764 59 8%
--- ---
Total operating
expenses 128,924 117,851 11,073 9%
Operating income 54,877 48,125 6,752 14%
OTHER INCOME AND
EXPENSES:
Interest expense 1,864 926 938 101%
Interest and other
investment income (1,671) (2,961) 1,290 (44%)
Equity in net
income of
affiliates (342) (336) (6) 2%
Total other income
and expenses, net (149) (2,371) 2,222 (94%)
---- ------ ----- -----
Income before
income taxes 55,026 50,496 4,530 9%
Income taxes 14,532 17,688 (3,156) (18%)
------ ------ ------ -----
Net income $40,494 $32,808 $7,686 23%
======= ======= ====== ===
Basic earnings per
share $0.68 $0.55 $0.13 24%
===== ===== ===== ===
Diluted earnings
per share $0.68 $0.55 $0.13 24%
===== ===== ===== ===
Nine Months Ended September 30,
-------------------------------
Variance
2010 2009 $ %
---- ---- --- ---
(In thousands,
except per share
amounts)
REVENUES:
Royalty fees $171,029 $164,771 $6,258 4%
Initial franchise
and relicensing
fees 6,537 9,599 (3,062) (32%)
Procurement
services 13,612 14,084 (472) (3%)
Marketing and
reservation 242,096 227,803 14,293 6%
Hotel operations 3,044 3,231 (187) (6%)
Other 4,752 3,989 763 19%
----- ----- --- ---
Total revenues 441,070 423,477 17,593 4%
OPERATING
EXPENSES:
Selling, general
and
administrative 67,796 73,054 (5,258) (7%)
Depreciation and
amortization 6,470 6,252 218 3%
Marketing and
reservation 242,096 227,803 14,293 6%
Hotel operations 2,387 2,378 9 0%
----- ----- --- ---
Total operating
expenses 318,749 309,487 9,262 3%
Operating income 122,321 113,990 8,331 7%
OTHER INCOME AND
EXPENSES:
Interest expense 3,160 3,731 (571) (15%)
Interest and other
investment income (1,645) (5,302) 3,657 (69%)
Equity in net
income of
affiliates (890) (779) (111) 14%
Total other income
and expenses, net 625 (2,350) 2,975 (127%)
--- ------ ----- ------
Income before
income taxes 121,696 116,340 5,356 5%
Income taxes 38,398 41,721 (3,323) (8%)
------ ------ ------
Net income $83,298 $74,619 $8,679 12%
======= ======= ====== ===
Basic earnings per
share $1.40 $1.24 $0.16 13%
===== ===== ===== ===
Diluted earnings
per share $1.40 $1.24 $0.16 13%
===== ===== ===== ===
Choice Hotels International, Inc. Exhibit 2
Consolidated Balance Sheets
(In thousands, except per share September December
amounts) 30, 31,
2010 2009
---- ----
(Unaudited)
ASSETS
Cash and cash equivalents $79,548 $67,870
Accounts receivable, net 53,682 41,898
Deferred income taxes 7,980 7,980
Other current assets 23,980 10,114
------ ------
Total current assets 165,190 127,862
Fixed assets and intangibles, net 140,657 133,999
Receivable --marketing and
reservation fees 46,127 33,872
Investments, employee benefit plans,
at fair value 22,370 20,931
Other assets 28,963 23,373
------ ------
Total assets $403,307 $340,037
-------- --------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Accounts payable and accrued expenses $76,240 $70,933
Deferred revenue 71,296 51,765
Revolving credit facility 6,600 -
Deferred compensation & retirement
plan obligations 2,510 2,798
Current portion of long-term debt 294 -
Income taxes payable 19,775 6,310
------ -----
Total current liabilities 176,715 131,806
Long-term debt 251,613 277,700
Deferred compensation & retirement
plan obligations 34,579 34,956
Other liabilities 15,894 9,787
------ -----
Total liabilities 478,801 454,249
Common stock, $0.01 par value 596 595
Additional paid-in-capital 89,611 90,731
Accumulated other comprehensive income
(loss) (7,545) 333
Treasury stock, at cost (872,999) (870,302)
Retained earnings 714,843 664,431
------- -------
Total shareholders' deficit (75,494) (114,212)
Total liabilities and
shareholders' deficit $403,307 $340,037
-------- --------
Choice Hotels International, Inc. Exhibit 3
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
(In thousands) September 30,
-----------------
2010 2009
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $83,298 $74,619
Adjustments to reconcile net income to net
cash provided
by operating activities:
Depreciation and amortization 6,470 6,252
Provision for bad debts 2,421 1,643
Non-cash stock compensation and other
charges 6,969 8,796
Non-cash interest and other income (987) (4,953)
Dividends received from equity method
investments 618 819
Equity in net income of affiliates (890) (779)
Changes in assets and liabilities, net of
acquisitions:
Receivables (14,511) (9,409)
Receivable -marketing and reservation fees,
net (2,594) (13,742)
Accounts payable 6,274 (2,061)
Accrued expenses (1,210) (5,754)
Income taxes payable/receivable 11,940 22,314
Deferred income taxes (2,704) -
Deferred revenue 19,443 5,349
Other assets (11,755) 2,087
Other liabilities 5,457 (5,215)
----- ------
NET CASH PROVIDED BY OPERATING ACTIVITIES 108,239 79,966
------- ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment (17,673) (7,539)
Acquisitions, net of cash acquired (466) -
Issuance of notes receivable (8,901) (1,731)
Collections of notes receivable 5,055 190
Purchases of investments, employee benefit
plans (1,396) (3,239)
Proceeds from sales of investments, employee
benefit plans 1,018 13,839
Other items, net (296) (447)
---- ----
NET CASH PROVIDED (USED) IN INVESTING
ACTIVITIES (22,659) 1,073
------- -----
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of long-term debt 247,733 -
Net borrowings (repayments) pursuant to
revolving credit facility (271,100) 7,900
Principal payments on long-term debt (20) -
Settlement of forward starting interest rate
swap agreement (8,663) -
Debt issuance costs (804) -
Purchase of treasury stock (11,171) (57,042)
Excess tax benefits from stock-based
compensation 331 4,374
Dividends paid (32,884) (33,335)
Proceeds from exercise of stock options 1,321 6,744
----- -----
NET CASH USED IN FINANCING ACTIVITIES (75,257) (71,359)
------- -------
Net change in cash and cash equivalents 10,323 9,680
Effect of foreign exchange rate changes on
cash and cash equivalents 1,355 1,285
Cash and cash equivalents at beginning of
period 67,870 52,680
------ ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $79,548 $63,645
======= =======
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 4
SUPPLEMENTAL OPERATING INFORMATION
DOMESTIC HOTEL SYSTEM
(UNAUDITED)
For the Nine Months Ended
September 30, 2010*
-------------------------
Average
Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn $77.16 55.4% $42.72
Comfort Suites 82.92 55.1% 45.72
Sleep 68.94 51.8% 35.69
Midscale without Food &
Beverage 77.47 54.8% 42.42
----- ---- -----
Quality 67.30 48.0% 32.31
Clarion 75.54 43.3% 32.73
Midscale with Food &
Beverage 68.98 47.0% 32.40
----- ---- -----
Econo Lodge 54.26 45.7% 24.81
Rodeway 51.42 46.0% 23.64
----- ---- -----
Economy 53.39 45.8% 24.45
----- ---- -----
MainStay 66.03 63.8% 42.09
Suburban 39.24 64.2% 25.20
Extended Stay 46.76 64.1% 29.97
----- ---- -----
Total $70.36 51.2% $36.02
====== ==== ======
For the Nine Months Ended
September 30, 2009*
-------------------------
Average
Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn $77.48 54.7% $42.36
Comfort Suites 85.72 54.2% 46.50
Sleep 70.16 52.5% 36.80
Midscale without Food &
Beverage 78.41 54.2% 42.53
----- ---- -----
Quality 68.73 46.9% 32.20
Clarion 77.95 43.0% 33.55
Midscale with Food &
Beverage 70.54 46.1% 32.48
----- ---- -----
Econo Lodge 54.96 43.9% 24.15
Rodeway 53.24 43.9% 23.35
----- ---- -----
Economy 54.46 43.9% 23.92
----- ---- -----
MainStay 71.68 58.1% 41.65
Suburban 42.37 56.0% 23.72
Extended Stay 50.76 56.6% 28.71
----- ---- -----
Total $71.59 50.1% $35.85
====== ==== ======
Change
------
Average
Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn (0.4%) 70 bps 0.8%
Comfort Suites (3.3%) 90 bps (1.7%)
Sleep (1.7%) (70) bps (3.0%)
Midscale without Food &
Beverage (1.2%) 60 bps (0.3%)
------ --- --- ------
Quality (2.1%) 110 bps 0.3%
Clarion (3.1%) 30 bps (2.4%)
Midscale with Food &
Beverage (2.2%) 90 bps (0.2%)
------ --- --- ------
Econo Lodge (1.3%) 180 bps 2.7%
Rodeway (3.4%) 210 bps 1.2%
------ --- --- ---
Economy (2.0%) 190 bps 2.2%
------ --- --- ---
MainStay (7.9%) 570 bps 1.1%
Suburban (7.4%) 820 bps 6.2%
Extended Stay (7.9%) 750 bps 4.4%
------ --- --- ---
Total (1.7%) 110 bps 0.5%
====== === === ===
* Operating statistics represent hotel operations from December
through August
For the Three Months Ended
September 30, 2010*
--------------------------
Average
Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn $82.46 66.7% $54.99
Comfort Suites 85.78 64.2% 55.03
Sleep 72.03 60.4% 43.52
Midscale without Food &
Beverage 81.84 65.1% 53.28
----- ---- -----
Quality 71.76 58.3% 41.84
Clarion 80.18 51.5% 41.27
Midscale with Food &
Beverage 73.44 56.8% 41.72
----- ---- -----
Econo Lodge 58.62 55.4% 32.47
Rodeway 57.40 56.0% 32.15
----- ---- -----
Economy 58.24 55.6% 32.37
----- ---- -----
MainStay 68.96 72.5% 49.98
Suburban 40.61 67.8% 27.52
Extended Stay 49.01 69.1% 33.87
----- ---- -----
Total $74.79 61.1% $45.71
====== ==== ======
For the Three Months Ended
September 30, 2009*
--------------------------
Average
Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn $81.35 62.7% $51.04
Comfort Suites 86.67 60.0% 52.02
Sleep 72.14 57.9% 41.74
Midscale without Food &
Beverage 81.32 61.4% 49.89
----- ---- -----
Quality 72.71 53.7% 39.02
Clarion 81.07 47.8% 38.75
Midscale with Food &
Beverage 74.33 52.4% 38.97
----- ---- -----
Econo Lodge 58.54 51.2% 29.94
Rodeway 57.37 51.1% 29.30
----- ---- -----
Economy 58.19 51.1% 29.75
----- ---- -----
MainStay 73.01 63.6% 46.44
Suburban 41.68 60.1% 25.06
Extended Stay 50.88 61.1% 31.10
----- ---- -----
Total $74.77 56.9% $42.56
====== ==== ======
Change
------
Average
Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn 1.4% 400 bps 7.7%
Comfort Suites (1.0%) 420 bps 5.8%
Sleep (0.2%) 250 bps 4.3%
Midscale without Food &
Beverage 0.6% 370 bps 6.8%
--- --- --- ---
Quality (1.3%) 460 bps 7.2%
Clarion (1.1%) 370 bps 6.5%
Midscale with Food &
Beverage (1.2%) 440 bps 7.1%
------ --- --- ---
Econo Lodge 0.1% 420 bps 8.5%
Rodeway 0.1% 490 bps 9.7%
--- --- --- ---
Economy 0.1% 450 bps 8.8%
--- --- --- ---
MainStay (5.5%) 890 bps 7.6%
Suburban (2.6%) 770 bps 9.8%
Extended Stay (3.7%) 800 bps 8.9%
------ --- --- ---
Total 0.0% 420 bps 7.4%
=== === === ===
* Operating statistics represent hotel operations from June through August
For the Quarter For the Nine Months
Ended Ended
--------------- -------------------
9/30/2010 9/30/2009 9/30/2010 9/30/2009
System-wide effective
royalty rate 4.30% 4.23% 4.32% 4.25%
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 5
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA
(UNAUDITED)
September 30, September 30,
2010 2009
-------------- --------------
Hotels Rooms Hotels Rooms
------ ----- ------ -----
Comfort Inn 1,450 113,952 1,457 114,377
Comfort Suites 624 48,411 601 46,853
Sleep 394 28,714 389 28,459
Midscale without Food &
Beverage 2,468 191,077 2,447 189,689
----- ------- ----- -------
Quality 990 88,831 963 88,129
Clarion 176 25,208 167 24,063
Midscale with Food &
Beverage 1,166 114,039 1,130 112,192
----- ------- ----- -------
Econo Lodge 774 48,022 795 49,504
Rodeway 387 21,522 374 21,834
--- ------ --- ------
Economy 1,161 69,544 1,169 71,338
----- ------ ----- ------
MainStay 37 2,868 37 2,866
Suburban 63 7,608 63 7,531
Extended Stay 100 10,476 100 10,397
--- ------ --- ------
Ascend Collection 34 2,821 26 1,941
Cambria Suites 22 2,558 18 2,073
--- ----- --- -----
Domestic Franchises 4,951 390,515 4,890 387,630
International Franchises 1,140 101,637 1,116 99,582
----- ------- ----- ------
Total Franchises 6,091 492,152 6,006 487,212
===== ======= ===== =======
Variance
--------
Hotels Rooms % %
------ ----- --- ---
Comfort Inn (7) (425) (0.5%) (0.4%)
Comfort Suites 23 1,558 3.8% 3.3%
Sleep 5 255 1.3% 0.9%
Midscale without Food &
Beverage 21 1,388 0.9% 0.7%
--- ----- --- ---
Quality 27 702 2.8% 0.8%
Clarion 9 1,145 5.4% 4.8%
Midscale with Food &
Beverage 36 1,847 3.2% 1.6%
--- ----- --- ---
Econo Lodge (21) (1,482) (2.6%) (3.0%)
Rodeway 13 (312) 3.5% (1.4%)
--- ---- ---
Economy (8) (1,794) (0.7%) (2.5%)
--- ------ ------ ------
MainStay - 2 0.0% 0.1%
Suburban - 77 0.0% 1.0%
Extended Stay - 79 0.0% 0.8%
--- --- --- ---
Ascend Collection 8 880 30.8% 45.3%
Cambria Suites 4 485 22.2% 23.4%
--- --- ---- ----
Domestic Franchises 61 2,885 1.2% 0.7%
International Franchises 24 2,055 2.2% 2.1%
--- ----- --- ---
Total Franchises 85 4,940 1.4% 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, 2010
-------------------------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn 4 22 26
Comfort Suites 13 1 14
Sleep 3 3
Midscale without
Food & Beverage 20 23 43
--- --- ---
Quality 1 54 55
Clarion 17 17
Midscale with
Food & Beverage 1 71 72
--- --- ---
Econo Lodge - 38 38
Rodeway 1 26 27
Economy 1 64 65
MainStay 4 - 4
Suburban 1 1
Extended Stay 5 - 5
Ascend Collection 1 5 6
Cambria Suites 5 5
---
Total Domestic
System 33 163 196
=== === ===
For the Nine Months Ended
September 30, 2009
-------------------------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn 4 22 26
Comfort Suites 9 1 10
Sleep 11 2 13
Midscale without Food &
Beverage 24 25 49
--- --- ---
Quality 3 87 90
Clarion 1 23 24
Midscale with Food &
Beverage 4 110 114
--- --- ---
Econo Lodge - 45 45
Rodeway 1 36 37
Economy 1 81 82
MainStay 1 1 2
Suburban 2 2
Extended Stay 3 1 4
Ascend Collection 1 5 6
Cambria Suites 2 2
---
Total Domestic System 35 222 257
=
% Change
--------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn 0% 0% 0%
Comfort Suites 44% 0% 40%
Sleep (73%) (100%) (77%)
Midscale without Food &
Beverage (17%) (8%) (12%)
----- ---- -----
Quality (67%) (38%) (39%)
Clarion (100%) (26%) (29%)
Midscale with Food &
Beverage (75%) (35%) (37%)
----- ----- -----
Econo Lodge NM (16%) (16%)
Rodeway 0% (28%) (27%)
Economy 0% (21%) (21%)
--- ----- -----
MainStay 300% (100%) 100%
Suburban (50%) NM (50%)
Extended Stay 67% (100%) 25%
--- ------ ---
Ascend Collection 0% 0% 0%
Cambria Suites 150% NM 150%
--- --- ---
Total Domestic System (6%) (27%) (24%)
==== ===== =====
For the Three Months Ended
September 30, 2010
--------------------------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn 1 9 10
Comfort Suites 5 - 5
Sleep 1 - 1
Midscale without Food &
Beverage 7 9 16
--- --- ---
Quality - 23 23
Clarion - 11 11
Midscale with Food &
Beverage - 34 34
--- --- ---
Econo Lodge - 16 16
Rodeway - 7 7
Economy - 23 23
--- --- ---
MainStay 1 - 1
Suburban - - -
Extended Stay 1 - 1
--- --- ---
Ascend Collection 1 2 3
Cambria Suites 2 - 2
--- --- ---
Total Domestic System 11 68 79
=== === ===
For the Three Months Ended
September 30, 2009
--------------------------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn 3 7 10
Comfort Suites 3 - 3
Sleep 4 - 4
Midscale without Food &
Beverage 10 7 17
--- --- ---
Quality 1 23 24
Clarion 1 9 10
Midscale with Food &
Beverage 2 32 34
--- --- ---
Econo Lodge - 16 16
Rodeway - 8 8
Economy - 24 24
--- --- ---
MainStay - - -
Suburban - - -
Extended Stay - - -
--- --- ---
Ascend Collection 1 3 4
Cambria Suites - - -
--- --- ---
Total Domestic System 13 66 79
=== === ===
% Change
--------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn (67%) 29% 0%
Comfort Suites 67% NM 67%
Sleep (75%) NM (75%)
Midscale without Food &
Beverage (30%) 29% (6%)
----- --- ----
Quality (100%) 0% (4%)
Clarion (100%) 22% 10%
Midscale with Food &
Beverage (100%) 6% 0%
------ --- ---
Econo Lodge NM 0% 0%
Rodeway NM (13%) (13%)
Economy NM (4%) (4%)
--- ---- ----
MainStay NM NM NM
Suburban NM NM NM
Extended Stay NM NM NM
--- --- ---
Ascend Collection 0% (33%) (25%)
Cambria Suites NM NM NM
--- --- ---
Total Domestic System (15%) 3% 0%
===== === ===
Exhibit 7
CHOICE HOTELS INTERNATIONAL, INC.
DOMESTIC HOTEL 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.
September 30, 2010
Units
-----
New
Conversion Construction Total
---------- ------------- -----
Comfort Inn 35 64 99
Comfort Suites 1 126 127
Sleep Inn 1 81 82
--- --- ---
Midscale without Food &
Beverage 37 271 308
--- --- ---
Quality 38 9 47
Clarion 20 4 24
--- --- ---
Midscale with Food &
Beverage 58 13 71
--- --- ---
Econo Lodge 37 2 39
Rodeway 16 2 18
--- --- ---
Economy 53 4 57
--- --- ---
MainStay - 40 40
Suburban - 26 26
--- --- ---
Extended Stay - 66 66
--- --- ---
Ascend Collection 3 5 8
Cambria Suites - 35 35
--- --- ---
151 394 545
=== === ===
September 30, 2009
Units
-----
New
Conversion Construction Total
---------- ------------- -----
Comfort Inn 37 97 134
Comfort Suites - 194 194
Sleep Inn 1 129 130
--- --- ---
Midscale without Food &
Beverage 38 420 458
--- --- ---
Quality 49 16 65
Clarion 23 6 29
--- --- ---
Midscale with Food &
Beverage 72 22 94
--- --- ---
Econo Lodge 40 4 44
Rodeway 35 2 37
--- --- ---
Economy 75 6 81
--- --- ---
MainStay - 34 34
Suburban - 31 31
--- --- ---
Extended Stay - 65 65
--- --- ---
Ascend Collection 1 2 3
Cambria Suites - 43 43
--- --- ---
186 558 744
=== === ===
Variance
--------
New
Conversion Construction
---------- -------------
Units % Units %
----- --- ----- ---
Comfort Inn (2) (5%) (33) (34%)
Comfort Suites 1 NM (68) (35%)
Sleep Inn - 0% (48) (37%)
--- --- --- -----
Midscale without
Food & Beverage (1) (3%) (149) (35%)
--- ---- ---- -----
Quality (11) (22%) (7) (44%)
Clarion (3) (13%) (2) (33%)
--- ----- --- -----
Midscale with Food
& Beverage (14) (19%) (9) (41%)
--- ----- --- -----
Econo Lodge (3) (8%) (2) (50%)
Rodeway (19) (54%) - 0%
--- ----- --- ---
Economy (22) (29%) (2) (33%)
--- ----- --- -----
MainStay - NM 6 18%
Suburban - NM (5) (16%)
--- --- --- -----
Extended Stay - NM 1 2%
--- --- --- ---
Ascend Collection 2 200% 3 150%
Cambria Suites - NM (8) (19%)
--- --- --- -----
(35) (19%) (164) (29%)
=== ===== ==== =====
Variance
--------
Total
-----
Units %
----- ---
Comfort Inn (35) (26%)
Comfort Suites (67) (35%)
Sleep Inn (48) (37%)
--- -----
Midscale without Food &
Beverage (150) (33%)
---- -----
Quality (18) (28%)
Clarion (5) (17%)
--- -----
Midscale with Food &
Beverage (23) (24%)
--- -----
Econo Lodge (5) (11%)
Rodeway (19) (51%)
--- -----
Economy (24) (30%)
--- -----
MainStay 6 18%
Suburban (5) (16%)
--- -----
Extended Stay 1 2%
--- ---
Ascend Collection 5 167%
Cambria Suites (8) (19%)
--- -----
(199) (27%)
==== =====
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 8
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
(UNAUDITED)
CALCULATION OF FRANCHISING REVENUES AND
ADJUSTED FRANCHISING MARGINS
Three Months Ended
(dollar amounts in thousands) September 30,
------------------
2010 2009
---- ----
Franchising Revenues:
Total Revenues $183,801 $165,976
Adjustments:
Marketing and reservation revenues (102,867) (90,465)
Hotel operations (1,068) (934)
Franchising Revenues $79,866 $74,577
------- -------
Franchising Margins:
Operating Margin:
Total Revenues $183,801 $165,976
Operating Income $54,877 $48,125
Operating Margin 29.9% 29.0%
---- ----
Adjusted Franchising Margin:
Franchising Revenues $79,866 $74,577
Operating Income $54,877 $48,125
Employee termination benefits 263 1,496
Loss on sublease of office space - -
Hotel operations (245) (170)
$54,895 $49,451
------- -------
Adjusted Franchising Margins 68.7% 66.3%
---- ----
CALCULATION OF FRANCHISING REVENUES AND
ADJUSTED FRANCHISING MARGINS
Nine Months Ended September
(dollar amounts in thousands) 30,
----------------------------
2010 2009
---- ----
Franchising Revenues:
Total Revenues $441,070 $423,477
Adjustments:
Marketing and reservation revenues (242,096) (227,803)
Hotel operations (3,044) (3,231)
------ ------
Franchising Revenues $195,930 $192,443
-------- --------
Franchising Margins:
Operating Margin:
Total Revenues $441,070 $423,477
Operating Income $122,321 $113,990
-------- --------
Operating Margin 27.7% 26.9%
---- ----
Adjusted Franchising Margin:
Franchising Revenues $195,930 $192,443
Operating Income $122,321 $113,990
Employee termination benefits 497 2,270
Loss on sublease of office space - 1,503
Hotel operations (657) (853)
---- ----
$122,161 $116,910
-------- --------
Adjusted Franchising Margins 62.3% 60.8%
---- ----
CALCULATION OF ADJUSTED SELLING, GENERAL AND
ADMINISTRATIVE COSTS
Three Months Ended
(dollar amounts in thousands) September 30,
-------------------
2010 2009
---- ----
Selling, general and administrative costs $23,156 $24,517
Employee termination benefits (263) (1,496)
Loss on sublease of office space - -
Adjusted Selling, General and Administrative
Costs $22,893 $23,021
======= =======
CALCULATION OF ADJUSTED SELLING,
GENERAL AND ADMINISTRATIVE COSTS
(dollar amounts in thousands) Nine Months Ended September 30,
-------------------------------
2010 2009
---- ----
Selling, general and
administrative costs $67,796 $73,054
Employee termination benefits (497) (2,270)
Loss on sublease of office space - (1,503)
Adjusted Selling, General and
Administrative Costs $67,299 $69,281
======= =======
CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED
DILUTED EARNINGS PER SHARE (EPS)
Three Months Ended
(In thousands, except per share amounts) September 30,
------------------
2010 2009
---- ----
Net Income $40,494 $32,808
Adjustments:
Employee termination benefits 165 936
Loss on sublease of office space - -
--- ---
Adjusted Net Income $40,659 $33,744
------- -------
Weighted average shares outstanding-diluted 59,658 59,818
Diluted Earnings Per Share $0.68 $0.55
Adjustments:
Employee termination benefits - 0.01
Loss on sublease of office space - -
--- ---
Adjusted Diluted Earnings Per Share (EPS) $0.68 $0.56
----- -----
CALCULATION OF ADJUSTED NET INCOME
AND ADJUSTED DILUTED EARNINGS PER
SHARE (EPS)
(In thousands, except per share
amounts) Nine Months Ended September 30,
-------------------------------
2010 2009
---- ----
Net Income $83,298 $74,619
Adjustments:
Employee termination benefits 311 1,421
Loss on sublease of office space - 941
--- ---
Adjusted Net Income $83,609 $76,981
------- -------
Weighted average shares
outstanding-diluted 59,646 60,412
Diluted Earnings Per Share $1.40 $1.24
Adjustments:
Employee termination benefits - 0.02
Loss on sublease of office space - 0.01
--- ----
Adjusted Diluted Earnings Per
Share (EPS) $1.40 $1.27
----- -----
Adjusted EBITDA Reconciliation
(in millions)
Q3 2010 Q3 2009
Actuals Actuals
-------- --------
Operating Income (per GAAP) $54.9 $48.1
Employee termination benefits 0.3 1.5
Loss on sublease of office space - -
Depreciation and amortization 2.1 2.1
Adjusted Earnings before interest, taxes,
depreciation & amortization (non-GAAP) $57.3 $51.7
===== =====
Adjusted EBITDA Reconciliation
(in millions)
Nine Months Nine Months
Ended Ended
September 30, September 30,
2010 Actuals 2009 Actuals
-------------- --------------
Operating Income (per GAAP) $122.3 $114.0
Employee termination benefits 0.5 2.3
Loss on sublease of office space - 1.5
Depreciation and amortization 6.5 6.3
Adjusted Earnings before interest, taxes,
depreciation & amortization (non-GAAP) $129.3 $124.1
====== ======
Adjusted EBITDA Reconciliation
(in millions)
Full-Year
2010
Outlook
----------
Operating Income (per GAAP) $158.5-$160.5
Employee termination benefits 1.5
Loss on sublease of office space -
Depreciation and amortization 8.5
Adjusted Earnings before interest, taxes,
depreciation & amortization (non-GAAP) $168.5-$170.5
=============
SOURCE Choice Hotels International, Inc.
SOURCE: Choice Hotels International, Inc.
PR Newswire
SILVER SPRING, Md., Oct. 27
SILVER SPRING, Md., Oct. 27 /PRNewswire-FirstCall/ -- Choice Hotels International, Inc., (NYSE: CHH) today reported the following highlights for third quarter 2010:
“During the third quarter, we were pleased to see strong gains in RevPAR domestically across every brand in the Choice family, enabling us to post positive year-to-date domestic RevPAR performance,” said Stephen P. Joyce, president and chief executive officer. “While the hotel transaction environment and lack of access to financing continues to impact our franchise sales results, our recently launched incentive program for the Quality, Clarion, and Econo Lodge brands has been well-received by developers. With our roster of strong, well-known brands and proven ability to deliver reservations to our franchisees’ hotels, we are well-positioned for growth as the hotel development environment improves.”
Special Items
During the three and nine months ended September 30, 2010, the company recorded employee termination benefits charges of approximately $0.3 million and $0.5 million, respectively. These special items did not have an impact on diluted EPS for the three and nine months ended September 30, 2010.
During the three and nine months ended September 30, 2009, the company recorded employee termination benefits of approximately $1.5 million and $2.3 million, respectively. During the nine months ended September 30, 2009, the company also recorded a $1.5 million charge related to the sublease of a portion of its office space. These special items represent diluted EPS of $0.01 and $0.03 for the three and nine months ended September 30, 2009.
Outlook for 2010
The company’s fourth quarter 2010 adjusted diluted EPS is expected to be $0.38. The company expects full-year 2010 adjusted diluted EPS to be between $1.77 and $1.79. Adjusted EBITDA for full-year 2010 are expected to be between $168.5 million and $170.5 million. These estimates include the following assumptions:
Use of Free Cash Flow
The company has historically used its free cash flow (cash flow from operations less capital expenditures) to return value to shareholders, primarily through share repurchases and dividends.
For the nine months ended September 30, 2010 the company paid $32.9 million of cash dividends to shareholders. The current quarterly dividend rate per common share is $0.185, subject to declaration by our board of directors.
During the nine months ended September 30, 2010, the company purchased approximately 0.3 million shares of its common stock at an average price of $32.36 for a total cost of $8.7 million under the share repurchase program and has authorization to purchase up to an additional 3.6 million shares under this program. During the three months ended September 30, 2010 the Company purchased approximately 0.1 million shares of its common stock for a total cost of $1.9 million at an average price of $34.85. We expect to continue making repurchases in the open market and through privately negotiated transactions, subject to market and other conditions. No minimum number of share repurchases has been fixed. Since Choice announced its stock repurchase program on June 25, 1998, the company has repurchased 43.2 million shares of its common stock for a total cost of $1 billion through September 30, 2010. Considering the effect of a two-for-one stock split in October 2005, the company had repurchased 76.2 million shares through September 30, 2010 under the share repurchase program at an average price of $13.35 per share.
Our Board previously authorized us to enter into programs which permit us to offer financing, investment and guaranty support to qualified franchisees as well as to acquire and resell real estate to incent franchise development for certain brands in top markets. Recent market conditions have resulted in an increase in opportunities to incent development under these programs. As a result, during the nine months ended September 30, 2010, the Company has advanced approximately $18.9 million pursuant to these programs (of which $5 million has been repaid to the Company).
Over the next several years, we expect to continue to opportunistically deploy capital pursuant to these programs to promote growth of our emerging brands. The amount and timing of the investment in these programs will be dependent on market and other conditions. Our current expectation is that our annual investment in these programs will range between $20 million to $40 million. Notwithstanding these programs, the company expects to continue to return value to its shareholders through a combination of share repurchases and dividends, subject to market and other conditions.
Conference Call
Choice will conduct a conference call on Thursday, October 28, 2010 at 10:15 a.m. EDT to discuss the company’s third quarter 2010 results. The dial-in number to listen to the call is 1-866-314-5232, and the access code is 99130444. International callers should dial 1-617-213-8052 and enter the access code 99130444. The conference call also will be Webcast simultaneously via the company’s Web site, www.choicehotels.com. Interested investors and other parties wishing to access the call via the Webcast should go to the Web site and click on the Investor Info link. The Investor Information page will feature a conference call microphone icon to access the call.
The call will be recorded and available for replay beginning at 1:15 p.m. EDT on October 28, 2010 through November 28, 2010 by calling 1-888-286-8010 and entering access code 42827909. The international dial-in number for the replay is 617-801-6888, access code 42827909. In addition, the call will be archived and available on www.choicehotels.com via the Investor Info link.
About Choice Hotels
Choice Hotels International, Inc. franchises more than 6,000 hotels, representing more than 490,000 rooms, in the United States and more than 35 other countries and territories. As of September 30, 2010, more than 540 hotels are under construction, awaiting conversion or approved for development in the United States, representing more than 44,000 rooms, and approximately 90 hotels, representing approximately 8,000 rooms, are under construction, awaiting conversion or approved for development in 20 other countries and territories. The company's Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge and Rodeway Inn brands serve guests worldwide. In addition, via its Ascend Collection membership program, travelers in the United States, Canada and the Caribbean have upscale lodging options at historic, boutique and unique hotels.
Additional corporate information may be found on the Choice Hotels International, Inc. web site, which may be accessed at www.choicehotels.com.
Forward-Looking Statements
Certain matters discussed in this press release constitute forward-looking statements within the meaning of the federal securities law. Generally, our use of words such as "expect," "estimate," "believe," "anticipate," "will," "forecast," "plan”," project," "assume" or similar words of futurity identify statements that are forward-looking and that we intend to be included within the Safe Harbor protections provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are based on management's current beliefs, assumptions and expectations regarding future events, which in turn are based on information currently available to management. Such statements may relate to projections of the company’s revenue, earnings and other financial and operational measures, company debt levels, payment of stock dividends, and future operations, among other matters. We caution you not to place undue reliance on any such forward-looking statements. Forward-looking statements do not guarantee future performance and involve known and unknown risks, uncertainties and other factors.
Several factors could cause actual results, performance or achievements of the company to differ materially from those expressed in or contemplated by the forward-looking statements. Such risks include, but are not limited to, changes to general, domestic and foreign economic conditions; operating risks common in the lodging and franchising industries; changes to the desirability of our brands as viewed by hotel operators and customers; changes to the terms or termination of our contracts with franchisees; our ability to keep pace with improvements in technology utilized for reservations systems and other operating systems; fluctuations in the supply and demand for hotels rooms; and our ability to manage effectively our indebtedness. These and other risk factors are discussed in detail in the Risk Factors section of the company's Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission on March 1, 2010. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Statement Concerning Non-GAAP Financial Measurements
Adjusted diluted EPS, adjusted EBITDA, adjusted SG&A, franchising revenues and adjusted franchising margins are non-GAAP financial measurements. This information should not be considered as an alternative to any measure of performance as promulgated under accounting principles generally accepted in the United States (“GAAP”), such as diluted earnings per share, operating income, total revenues and operating margins. The company’s calculation of these measurements may be different from the calculations used by other companies and therefore comparability may be limited. The company has included an exhibit accompanying this release that reconciles these measures to the comparable GAAP measurement. We discuss management’s reasons for reporting these non-GAAP measures below.
Earnings Before Interest, Taxes, Depreciation and Amortization: EBITDA reflects earnings excluding the impact of interest expense, tax expense, depreciation and amortization. Our management considers EBITDA to be an indicator of operating performance because it can be used to measure our ability to service debt, fund capital expenditures, and expand our business. EBITDA is a commonly used measure of performance in our industry. In addition, it is used by analysts, lenders, investors and others, as well as by us, to facilitate comparisons between the company and its competitors because it excludes certain items that can vary widely across different industries or among companies within the same industry.
Franchising Revenues and Margins: The company reports franchising revenues and margins which exclude marketing and reservation revenues and hotel operations. Marketing and reservation activities are excluded from revenues and operating margins since the company is contractually required by its franchise agreements to use these fees collected for marketing and reservation activities. Cumulative reservation and marketing fees not expended are recorded as a payable on the company’s financial statements and are carried over to the next fiscal year and expended in accordance with the franchise agreements. Cumulative marketing and reservation expenditures in excess of fees collected for marketing and reservation activities are recorded as a receivable on the company’s financial statements. In addition, the company has the contractual authority to require that the franchisees in the system at any given point repay the company for any deficits related to marketing and reservation activities. Hotel operations are excluded since they do not reflect the most accurate measure of the company’s core franchising business. These non-GAAP measures are a commonly used measure of performance in our industry and facilitate comparisons between the company and its competitors.
Adjusted Diluted EPS, Adjusted EBITDA, Adjusted SG&A and Adjusted Franchising Margins: The company’s management also uses adjusted diluted EPS, adjusted EBITDA, adjusted SG&A and adjusted franchising margins which exclude employee termination benefits for the three and nine months September 30, 2010 and 2009 as well as a loss on the sublease of a portion of the Company’s office space during the nine months ended September 30, 2009. The company utilizes these non-GAAP measures to enable investors to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of on-going operations.
Choice Hotels, Choice Hotels International, Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge, Rodeway Inn and Ascend Collection are proprietary trademarks and service marks of Choice Hotels International.
|
Choice Hotels International, Inc. |
Exhibit 1 |
||||||||||||||||
|
Consolidated Statements of Income |
|||||||||||||||||
|
(Unaudited) |
|||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||
|
Variance |
Variance |
||||||||||||||||
|
2010 |
2009 |
$ |
% |
2010 |
2009 |
$ |
% |
||||||||||
|
(In thousands, except per share amounts) |
|||||||||||||||||
|
REVENUES: |
|||||||||||||||||
|
Royalty fees |
$ 72,565 |
$ 66,401 |
$ 6,164 |
9% |
$ 171,029 |
$ 164,771 |
$ 6,258 |
4% |
|||||||||
|
Initial franchise and relicensing fees |
1,970 |
2,957 |
(987) |
(33%) |
6,537 |
9,599 |
(3,062) |
(32%) |
|||||||||
|
Procurement services |
3,756 |
3,922 |
(166) |
(4%) |
13,612 |
14,084 |
(472) |
(3%) |
|||||||||
|
Marketing and reservation |
102,867 |
90,465 |
12,402 |
14% |
242,096 |
227,803 |
14,293 |
6% |
|||||||||
|
Hotel operations |
1,068 |
934 |
134 |
14% |
3,044 |
3,231 |
(187) |
(6%) |
|||||||||
|
Other |
1,575 |
1,297 |
278 |
21% |
4,752 |
3,989 |
763 |
19% |
|||||||||
|
Total revenues |
183,801 |
165,976 |
17,825 |
11% |
441,070 |
423,477 |
17,593 |
4% |
|||||||||
|
OPERATING EXPENSES: |
|||||||||||||||||
|
Selling, general and administrative |
23,156 |
24,517 |
(1,361) |
(6%) |
67,796 |
73,054 |
(5,258) |
(7%) |
|||||||||
|
Depreciation and amortization |
2,078 |
2,105 |
(27) |
(1%) |
6,470 |
6,252 |
218 |
3% |
|||||||||
|
Marketing and reservation |
102,867 |
90,465 |
12,402 |
14% |
242,096 |
227,803 |
14,293 |
6% |
|||||||||
|
Hotel operations |
823 |
764 |
59 |
8% |
2,387 |
2,378 |
9 |
0% |
|||||||||
|
Total operating expenses |
128,924 |
117,851 |
11,073 |
9% |
318,749 |
309,487 |
9,262 |
3% |
|||||||||
|
Operating income |
54,877 |
48,125 |
6,752 |
14% |
122,321 |
113,990 |
8,331 |
7% |
|||||||||
|
OTHER INCOME AND EXPENSES: |
|||||||||||||||||
|
Interest expense |
1,864 |
926 |
938 |
101% |
3,160 |
3,731 |
(571) |
(15%) |
|||||||||
|
Interest and other investment income |
(1,671) |
(2,961) |
1,290 |
(44%) |
(1,645) |
(5,302) |
3,657 |
(69%) |
|||||||||
|
Equity in net income of affiliates |
(342) |
(336) |
(6) |
2% |
(890) |
(779) |
(111) |
14% |
|||||||||
|
Total other income and expenses, net |
(149) |
(2,371) |
2,222 |
(94%) |
625 |
(2,350) |
2,975 |
(127%) |
|||||||||
|
Income before income taxes |
55,026 |
50,496 |
4,530 |
9% |
121,696 |
116,340 |
5,356 |
5% |
|||||||||
|
Income taxes |
14,532 |
17,688 |
(3,156) |
(18%) |
38,398 |
41,721 |
(3,323) |
(8%) |
|||||||||
|
Net income |
$ 40,494 |
$ 32,808 |
$ 7,686 |
23% |
$ 83,298 |
$ 74,619 |
$ 8,679 |
12% |
|||||||||
|
Basic earnings per share |
$ 0.68 |
$ 0.55 |
$ 0.13 |
24% |
$ 1.40 |
$ 1.24 |
$ 0.16 |
13% |
|||||||||
|
Diluted earnings per share |
$ 0.68 |
$ 0.55 |
$ 0.13 |
24% |
$ 1.40 |
$ 1.24 |
$ 0.16 |
13% |
|||||||||
|
Choice Hotels International, Inc. |
Exhibit 2 |
||||||
|
Consolidated Balance Sheets |
|||||||
|
(In thousands, except per share amounts) |
September 30, |
December 31, |
|||||
|
2010 |
2009 |
||||||
|
(Unaudited) |
|||||||
|
ASSETS |
|||||||
|
Cash and cash equivalents |
$ 79,548 |
$ 67,870 |
|||||
|
Accounts receivable, net |
53,682 |
41,898 |
|||||
|
Deferred income taxes |
7,980 |
7,980 |
|||||
|
Other current assets |
23,980 |
10,114 |
|||||
|
Total current assets |
165,190 |
127,862 |
|||||
|
Fixed assets and intangibles, net |
140,657 |
133,999 |
|||||
|
Receivable -- marketing and reservation fees |
46,127 |
33,872 |
|||||
|
Investments, employee benefit plans, at fair value |
22,370 |
20,931 |
|||||
|
Other assets |
28,963 |
23,373 |
|||||
|
Total assets |
$ 403,307 |
$ 340,037 |
|||||
|
LIABILITIES AND SHAREHOLDERS' DEFICIT |
|||||||
|
Accounts payable and accrued expenses |
$ 76,240 |
$ 70,933 |
|||||
|
Deferred revenue |
71,296 |
51,765 |
|||||
|
Revolving credit facility |
6,600 |
- |
|||||
|
Deferred compensation & retirement plan obligations |
2,510 |
2,798 |
|||||
|
Current portion of long-term debt |
294 |
- |
|||||
|
Income taxes payable |
19,775 |
6,310 |
|||||
|
Total current liabilities |
176,715 |
131,806 |
|||||
|
Long-term debt |
251,613 |
277,700 |
|||||
|
Deferred compensation & retirement plan obligations |
34,579 |
34,956 |
|||||
|
Other liabilities |
15,894 |
9,787 |
|||||
|
Total liabilities |
478,801 |
454,249 |
|||||
|
Common stock, $0.01 par value |
596 |
595 |
|||||
|
Additional paid-in-capital |
89,611 |
90,731 |
|||||
|
Accumulated other comprehensive income (loss) |
(7,545) |
333 |
|||||
|
Treasury stock, at cost |
(872,999) |
(870,302) |
|||||
|
Retained earnings |
714,843 |
664,431 |
|||||
|
Total shareholders' deficit |
(75,494) |
(114,212) |
|||||
|
Total liabilities and shareholders' deficit |
$ 403,307 |
$ 340,037 |
|||||
|
Choice Hotels International, Inc. |
Exhibit 3 |
|||
|
Consolidated Statements of Cash Flows |
||||
|
(Unaudited) |
||||
|
(In thousands) |
Nine Months Ended September 30, |
|||
|
2010 |
2009 |
|||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||
|
Net income |
$ 83,298 |
$ 74,619 |
||
|
Adjustments to reconcile net income to net cash provided |
||||
|
by operating activities: |
||||
|
Depreciation and amortization |
6,470 |
6,252 |
||
|
Provision for bad debts |
2,421 |
1,643 |
||
|
Non-cash stock compensation and other charges |
6,969 |
8,796 |
||
|
Non-cash interest and other income |
(987) |
(4,953) |
||
|
Dividends received from equity method investments |
618 |
819 |
||
|
Equity in net income of affiliates |
(890) |
(779) |
||
|
Changes in assets and liabilities, net of acquisitions: |
||||
|
Receivables |
(14,511) |
(9,409) |
||
|
Receivable - marketing and reservation fees, net |
(2,594) |
(13,742) |
||
|
Accounts payable |
6,274 |
(2,061) |
||
|
Accrued expenses |
(1,210) |
(5,754) |
||
|
Income taxes payable/receivable |
11,940 |
22,314 |
||
|
Deferred income taxes |
(2,704) |
- |
||
|
Deferred revenue |
19,443 |
5,349 |
||
|
Other assets |
(11,755) |
2,087 |
||
|
Other liabilities |
5,457 |
(5,215) |
||
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
108,239 |
79,966 |
||
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||
|
Investment in property and equipment |
(17,673) |
(7,539) |
||
|
Acquisitions, net of cash acquired |
(466) |
- |
||
|
Issuance of notes receivable |
(8,901) |
(1,731) |
||
|
Collections of notes receivable |
5,055 |
190 |
||
|
Purchases of investments, employee benefit plans |
(1,396) |
(3,239) |
||
|
Proceeds from sales of investments, employee benefit plans |
1,018 |
13,839 |
||
|
Other items, net |
(296) |
(447) |
||
|
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES |
(22,659) |
1,073 |
||
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||
|
Proceeds from the issuance of long-term debt |
247,733 |
- |
||
|
Net borrowings (repayments) pursuant to revolving credit facility |
(271,100) |
7,900 |
||
|
Principal payments on long-term debt |
(20) |
- |
||
|
Settlement of forward starting interest rate swap agreement |
(8,663) |
- |
||
|
Debt issuance costs |
(804) |
- |
||
|
Purchase of treasury stock |
(11,171) |
(57,042) |
||
|
Excess tax benefits from stock-based compensation |
331 |
4,374 |
||
|
Dividends paid |
(32,884) |
(33,335) |
||
|
Proceeds from exercise of stock options |
1,321 |
6,744 |
||
|
NET CASH USED IN FINANCING ACTIVITIES |
(75,257) |
(71,359) |
||
|
Net change in cash and cash equivalents |
10,323 |
9,680 |
||
|
Effect of foreign exchange rate changes on cash and cash equivalents |
1,355 |
1,285 |
||
|
Cash and cash equivalents at beginning of period |
67,870 |
52,680 |
||
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ 79,548 |
$ 63,645 |
||
|
CHOICE HOTELS INTERNATIONAL, INC. |
Exhibit 4 |
|||||||||||||||||||
|
SUPPLEMENTAL OPERATING INFORMATION |
||||||||||||||||||||
|
DOMESTIC HOTEL SYSTEM |
||||||||||||||||||||
|
(UNAUDITED) |
||||||||||||||||||||
|
For the Nine Months Ended September 30, 2010* |
For the Nine Months Ended September 30, 2009* |
Change |
||||||||||||||||||
|
Average Daily |
Average Daily |
Average Daily |
||||||||||||||||||
|
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
||||||||||||
|
Comfort Inn |
$ 77.16 |
55.4% |
$ 42.72 |
$ 77.48 |
54.7% |
$ 42.36 |
(0.4%) |
70 |
bps |
0.8% |
||||||||||
|
Comfort Suites |
82.92 |
55.1% |
45.72 |
85.72 |
54.2% |
46.50 |
(3.3%) |
90 |
bps |
(1.7%) |
||||||||||
|
Sleep |
68.94 |
51.8% |
35.69 |
70.16 |
52.5% |
36.80 |
(1.7%) |
(70) |
bps |
(3.0%) |
||||||||||
|
Midscale without Food & Beverage |
77.47 |
54.8% |
42.42 |
78.41 |
54.2% |
42.53 |
(1.2%) |
60 |
bps |
(0.3%) |
||||||||||
|
Quality |
67.30 |
48.0% |
32.31 |
68.73 |
46.9% |
32.20 |
(2.1%) |
110 |
bps |
0.3% |
||||||||||
|
Clarion |
75.54 |
43.3% |
32.73 |
77.95 |
43.0% |
33.55 |
(3.1%) |
30 |
bps |
(2.4%) |
||||||||||
|
Midscale with Food & Beverage |
68.98 |
47.0% |
32.40 |
70.54 |
46.1% |
32.48 |
(2.2%) |
90 |
bps |
(0.2%) |
||||||||||
|
Econo Lodge |
54.26 |
45.7% |
24.81 |
54.96 |
43.9% |
24.15 |
(1.3%) |
180 |
bps |
2.7% |
||||||||||
|
Rodeway |
51.42 |
46.0% |
23.64 |
53.24 |
43.9% |
23.35 |
(3.4%) |
210 |
bps |
1.2% |
||||||||||
|
Economy |
53.39 |
45.8% |
24.45 |
54.46 |
43.9% |
23.92 |
(2.0%) |
190 |
bps |
2.2% |
||||||||||
|
MainStay |
66.03 |
63.8% |
42.09 |
71.68 |
58.1% |
41.65 |
(7.9%) |
570 |
bps |
1.1% |
||||||||||
|
Suburban |
39.24 |
64.2% |
25.20 |
42.37 |
56.0% |
23.72 |
(7.4%) |
820 |
bps |
6.2% |
||||||||||
|
Extended Stay |
46.76 |
64.1% |
29.97 |
50.76 |
56.6% |
28.71 |
(7.9%) |
750 |
bps |
4.4% |
||||||||||
|
Total |
$ 70.36 |
51.2% |
$ 36.02 |
$ 71.59 |
50.1% |
$ 35.85 |
(1.7%) |
110 |
bps |
0.5% |
||||||||||
|
* Operating statistics represent hotel operations from December through August |
||||||||||||||||||||
|
For the Three Months Ended September 30, 2010* |
For the Three Months Ended September 30, 2009* |
Change |
||||||||||||||||||
|
Average Daily |
Average Daily |
Average Daily |
||||||||||||||||||
|
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
||||||||||||
|
Comfort Inn |
$ 82.46 |
66.7% |
$ 54.99 |
$ 81.35 |
62.7% |
$ 51.04 |
1.4% |
400 |
bps |
7.7% |
||||||||||
|
Comfort Suites |
85.78 |
64.2% |
55.03 |
86.67 |
60.0% |
52.02 |
(1.0%) |
420 |
bps |
5.8% |
||||||||||
|
Sleep |
72.03 |
60.4% |
43.52 |
72.14 |
57.9% |
41.74 |
(0.2%) |
250 |
bps |
4.3% |
||||||||||
|
Midscale without Food & Beverage |
81.84 |
65.1% |
53.28 |
81.32 |
61.4% |
49.89 |
0.6% |
370 |
bps |
6.8% |
||||||||||
|
Quality |
71.76 |
58.3% |
41.84 |
72.71 |
53.7% |
39.02 |
(1.3%) |
460 |
bps |
7.2% |
||||||||||
|
Clarion |
80.18 |
51.5% |
41.27 |
81.07 |
47.8% |
38.75 |
(1.1%) |
370 |
bps |
6.5% |
||||||||||
|
Midscale with Food & Beverage |
73.44 |
56.8% |
41.72 |
74.33 |
52.4% |
38.97 |
(1.2%) |
440 |
bps |
7.1% |
||||||||||
|
Econo Lodge |
58.62 |
55.4% |
32.47 |
58.54 |
51.2% |
29.94 |
0.1% |
420 |
bps |
8.5% |
||||||||||
|
Rodeway |
57.40 |
56.0% |
32.15 |
57.37 |
51.1% |
29.30 |
0.1% |
490 |
bps |
9.7% |
||||||||||
|
Economy |
58.24 |
55.6% |
32.37 |
58.19 |
51.1% |
29.75 |
0.1% |
450 |
bps |
8.8% |
||||||||||
|
MainStay |
68.96 |
72.5% |
49.98 |
73.01 |
63.6% |
46.44 |
(5.5%) |
890 |
bps |
7.6% |
||||||||||
|
Suburban |
40.61 |
67.8% |
27.52 |
41.68 |
60.1% |
25.06 |
(2.6%) |
770 |
bps |
9.8% |
||||||||||
|
Extended Stay |
49.01 |
69.1% |
33.87 |
50.88 |
61.1% |
31.10 |
(3.7%) |
800 |
bps |
8.9% |
||||||||||
|
Total |
$ 74.79 |
61.1% |
$ 45.71 |
$ 74.77 |
56.9% |
$ 42.56 |
0.0% |
420 |
bps |
7.4% |
||||||||||
|
* Operating statistics represent hotel operations from June through August |
||||||||||||||||||||
|
For the Quarter Ended |
For the Nine Months Ended |
||||||||||
|
9/30/2010 |
9/30/2009 |
9/30/2010 |
9/30/2009 |
||||||||
|
System-wide effective royalty rate |
4.30% |
4.23% |
4.32% |
4.25% |
|||||||
|
CHOICE HOTELS INTERNATIONAL, INC. |
Exhibit 5 |
||||||||||||||||
|
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA |
|||||||||||||||||
|
(UNAUDITED) |
|||||||||||||||||
|
September 30, 2010 |
September 30, 2009 |
Variance |
|||||||||||||||
|
Hotels |
Rooms |
Hotels |
Rooms |
Hotels |
Rooms |
% |
% |
||||||||||
|
Comfort Inn |
1,450 |
113,952 |
1,457 |
114,377 |
(7) |
(425) |
(0.5%) |
(0.4%) |
|||||||||
|
Comfort Suites |
624 |
48,411 |
601 |
46,853 |
23 |
1,558 |
3.8% |
3.3% |
|||||||||
|
Sleep |
394 |
28,714 |
389 |
28,459 |
5 |
255 |
1.3% |
0.9% |
|||||||||
|
Midscale without Food & Beverage |
2,468 |
191,077 |
2,447 |
189,689 |
21 |
1,388 |
0.9% |
0.7% |
|||||||||
|
Quality |
990 |
88,831 |
963 |
88,129 |
27 |
702 |
2.8% |
0.8% |
|||||||||
|
Clarion |
176 |
25,208 |
167 |
24,063 |
9 |
1,145 |
5.4% |
4.8% |
|||||||||
|
Midscale with Food & Beverage |
1,166 |
114,039 |
1,130 |
112,192 |
36 |
1,847 |
3.2% |
1.6% |
|||||||||
|
Econo Lodge |
774 |
48,022 |
795 |
49,504 |
(21) |
(1,482) |
(2.6%) |
(3.0%) |
|||||||||
|
Rodeway |
387 |
21,522 |
374 |
21,834 |
13 |
(312) |
3.5% |
(1.4%) |
|||||||||
|
Economy |
1,161 |
69,544 |
1,169 |
71,338 |
(8) |
(1,794) |
(0.7%) |
(2.5%) |
|||||||||
|
MainStay |
37 |
2,868 |
37 |
2,866 |
- |
2 |
0.0% |
0.1% |
|||||||||
|
Suburban |
63 |
7,608 |
63 |
7,531 |
- |
77 |
0.0% |
1.0% |
|||||||||
|
Extended Stay |
100 |
10,476 |
100 |
10,397 |
- |
79 |
0.0% |
0.8% |
|||||||||
|
Ascend Collection |
34 |
2,821 |
26 |
1,941 |
8 |
880 |
30.8% |
45.3% |
|||||||||
|
Cambria Suites |
22 |
2,558 |
18 |
2,073 |
4 |
485 |
22.2% |
23.4% |
|||||||||
|
Domestic Franchises |
4,951 |
390,515 |
4,890 |
387,630 |
61 |
2,885 |
1.2% |
0.7% |
|||||||||
|
International Franchises |
1,140 |
101,637 |
1,116 |
99,582 |
24 |
2,055 |
2.2% |
2.1% |
|||||||||
|
Total Franchises |
6,091 |
492,152 |
6,006 |
487,212 |
85 |
4,940 |
1.4% |
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, 2010 |
For the Nine Months Ended September 30, 2009 |
% Change |
|||||||||||||||||
|
New |
New |
New |
|||||||||||||||||
|
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
|||||||||||
|
Comfort Inn |
4 |
22 |
26 |
4 |
22 |
26 |
0% |
0% |
0% |
||||||||||
|
Comfort Suites |
13 |
1 |
14 |
9 |
1 |
10 |
44% |
0% |
40% |
||||||||||
|
Sleep |
3 |
- |
3 |
11 |
2 |
13 |
(73%) |
(100%) |
(77%) |
||||||||||
|
Midscale without Food & Beverage |
20 |
23 |
43 |
24 |
25 |
49 |
(17%) |
(8%) |
(12%) |
||||||||||
|
Quality |
1 |
54 |
55 |
3 |
87 |
90 |
(67%) |
(38%) |
(39%) |
||||||||||
|
Clarion |
- |
17 |
17 |
1 |
23 |
24 |
(100%) |
(26%) |
(29%) |
||||||||||
|
Midscale with Food & Beverage |
1 |
71 |
72 |
4 |
110 |
114 |
(75%) |
(35%) |
(37%) |
||||||||||
|
Econo Lodge |
- |
38 |
38 |
- |
45 |
45 |
NM |
(16%) |
(16%) |
||||||||||
|
Rodeway |
1 |
26 |
27 |
1 |
36 |
37 |
0% |
(28%) |
(27%) |
||||||||||
|
Economy |
1 |
64 |
65 |
1 |
81 |
82 |
0% |
(21%) |
(21%) |
||||||||||
|
MainStay |
4 |
- |
4 |
1 |
1 |
2 |
300% |
(100%) |
100% |
||||||||||
|
Suburban |
1 |
- |
1 |
2 |
- |
2 |
(50%) |
NM |
(50%) |
||||||||||
|
Extended Stay |
5 |
- |
5 |
3 |
1 |
4 |
67% |
(100%) |
25% |
||||||||||
|
Ascend Collection |
1 |
5 |
6 |
1 |
5 |
6 |
0% |
0% |
0% |
||||||||||
|
Cambria Suites |
5 |
- |
5 |
2 |
- |
2 |
150% |
NM |
150% |
||||||||||
|
Total Domestic System |
33 |
163 |
196 |
35 |
222 |
257 |
(6%) |
(27%) |
(24%) |
||||||||||
|
For the Three Months Ended September 30, 2010 |
For the Three Months Ended September 30, 2009 |
% Change |
|||||||||||||||||
|
New |
New |
New |
|||||||||||||||||
|
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
|||||||||||
|
Comfort Inn |
1 |
9 |
10 |
3 |
7 |
10 |
(67%) |
29% |
0% |
||||||||||
|
Comfort Suites |
5 |
- |
5 |
3 |
- |
3 |
67% |
NM |
67% |
||||||||||
|
Sleep |
1 |
- |
1 |
4 |
- |
4 |
(75%) |
NM |
(75%) |
||||||||||
|
Midscale without Food & Beverage |
7 |
9 |
16 |
10 |
7 |
17 |
(30%) |
29% |
(6%) |
||||||||||
|
Quality |
- |
23 |
23 |
1 |
23 |
24 |
(100%) |
0% |
(4%) |
||||||||||
|
Clarion |
- |
11 |
11 |
1 |
9 |
10 |
(100%) |
22% |
10% |
||||||||||
|
Midscale with Food & Beverage |
- |
34 |
34 |
2 |
32 |
34 |
(100%) |
6% |
0% |
||||||||||
|
Econo Lodge |
- |
16 |
16 |
- |
16 |
16 |
NM |
0% |
0% |
||||||||||
|
Rodeway |
- |
7 |
7 |
- |
8 |
8 |
NM |
(13%) |
(13%) |
||||||||||
|
Economy |
- |
23 |
23 |
- |
24 |
24 |
NM |
(4%) |
(4%) |
||||||||||
|
MainStay |
1 |
- |
1 |
- |
- |
- |
NM |
NM |
NM |
||||||||||
|
Suburban |
- |
- |
- |
- |
- |
- |
NM |
NM |
NM |
||||||||||
|
Extended Stay |
1 |
- |
1 |
- |
- |
- |
NM |
NM |
NM |
||||||||||
|
Ascend Collection |
1 |
2 |
3 |
1 |
3 |
4 |
0% |
(33%) |
(25%) |
||||||||||
|
Cambria Suites |
2 |
- |
2 |
- |
- |
- |
NM |
NM |
NM |
||||||||||
|
Total Domestic System |
11 |
68 |
79 |
13 |
66 |
79 |
(15%) |
3% |
0% |
||||||||||
|
Exhibit 7 |
|
|
CHOICE HOTELS INTERNATIONAL, INC. |
|
|
DOMESTIC HOTEL 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, 2010 |
September 30, 2009 |
||||||||||||||||||||||||
|
Units |
Units |
Conversion |
New Construction |
Total |
|||||||||||||||||||||
|
Conversion |
New Construction |
Total |
Conversion |
New Construction |
Total |
Units |
% |
Units |
% |
Units |
% |
||||||||||||||
|
Comfort Inn |
35 |
64 |
99 |
37 |
97 |
134 |
(2) |
(5%) |
(33) |
(34%) |
(35) |
(26%) |
|||||||||||||
|
Comfort Suites |
1 |
126 |
127 |
- |
194 |
194 |
1 |
NM |
(68) |
(35%) |
(67) |
(35%) |
|||||||||||||
|
Sleep Inn |
1 |
81 |
82 |
1 |
129 |
130 |
- |
0% |
(48) |
(37%) |
(48) |
(37%) |
|||||||||||||
|
Midscale without Food & Beverage |
37 |
271 |
308 |
38 |
420 |
458 |
(1) |
(3%) |
(149) |
(35%) |
(150) |
(33%) |
|||||||||||||
|
Quality |
38 |
9 |
47 |
49 |
16 |
65 |
(11) |
(22%) |
(7) |
(44%) |
(18) |
(28%) |
|||||||||||||
|
Clarion |
20 |
4 |
24 |
23 |
6 |
29 |
(3) |
(13%) |
(2) |
(33%) |
(5) |
(17%) |
|||||||||||||
|
Midscale with Food & Beverage |
58 |
13 |
71 |
72 |
22 |
94 |
(14) |
(19%) |
(9) |
(41%) |
(23) |
(24%) |
|||||||||||||
|
Econo Lodge |
37 |
2 |
39 |
40 |
4 |
44 |
(3) |
(8%) |
(2) |
(50%) |
(5) |
(11%) |
|||||||||||||
|
Rodeway |
16 |
2 |
18 |
35 |
2 |
37 |
(19) |
(54%) |
- |
0% |
(19) |
(51%) |
|||||||||||||
|
Economy |
53 |
4 |
57 |
75 |
6 |
81 |
(22) |
(29%) |
(2) |
(33%) |
(24) |
(30%) |
|||||||||||||
|
MainStay |
- |
40 |
40 |
- |
34 |
34 |
- |
NM |
6 |
18% |
6 |
18% |
|||||||||||||
|
Suburban |
- |
26 |
26 |
- |
31 |
31 |
- |
NM |
(5) |
(16%) |
(5) |
(16%) |
|||||||||||||
|
Extended Stay |
- |
66 |
66 |
- |
65 |
65 |
- |
NM |
1 |
2% |
1 |
2% |
|||||||||||||
|
Ascend Collection |
3 |
5 |
8 |
1 |
2 |
3 |
2 |
200% |
3 |
150% |
5 |
167% |
|||||||||||||
|
Cambria Suites |
- |
35 |
35 |
- |
43 |
43 |
- |
NM |
(8) |
(19%) |
(8) |
(19%) |
|||||||||||||
|
151 |
394 |
545 |
186 |
558 |
744 |
(35) |
(19%) |
(164) |
(29%) |
(199) |
(27%) |
||||||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. |
Exhibit 8 |
||||||||||
|
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION |
|||||||||||
|
(UNAUDITED) |
|||||||||||
|
CALCULATION OF FRANCHISING REVENUES AND ADJUSTED FRANCHISING MARGINS |
|||||||||||
|
(dollar amounts in thousands) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||
|
2010 |
2009 |
2010 |
2009 |
||||||||
|
Franchising Revenues: |
|||||||||||
|
Total Revenues |
$ 183,801 |
$ 165,976 |
$ 441,070 |
$ 423,477 |
|||||||
|
Adjustments: |
|||||||||||
|
Marketing and reservation revenues |
(102,867) |
(90,465) |
(242,096) |
(227,803) |
|||||||
|
Hotel operations |
(1,068) |
(934) |
(3,044) |
(3,231) |
|||||||
|
Franchising Revenues |
$ 79,866 |
$ 74,577 |
$ 195,930 |
$ 192,443 |
|||||||
|
Franchising Margins: |
|||||||||||
|
Operating Margin: |
|||||||||||
|
Total Revenues |
$ 183,801 |
$ 165,976 |
$ 441,070 |
$ 423,477 |
|||||||
|
Operating Income |
$ 54,877 |
$ 48,125 |
$ 122,321 |
$ 113,990 |
|||||||
|
Operating Margin |
29.9% |
29.0% |
27.7% |
26.9% |
|||||||
|
Adjusted Franchising Margin: |
|||||||||||
|
Franchising Revenues |
$ 79,866 |
$ 74,577 |
$ 195,930 |
$ 192,443 |
|||||||
|
Operating Income |
$ 54,877 |
$ 48,125 |
$ 122,321 |
$ 113,990 |
|||||||
|
Employee termination benefits |
263 |
1,496 |
497 |
2,270 |
|||||||
|
Loss on sublease of office space |
- |
- |
- |
1,503 |
|||||||
|
Hotel operations |
(245) |
(170) |
(657) |
(853) |
|||||||
|
$ 54,895 |
$ 49,451 |
$ 122,161 |
$ 116,910 |
||||||||
|
Adjusted Franchising Margins |
68.7% |
66.3% |
62.3% |
60.8% |
|||||||
|
CALCULATION OF ADJUSTED SELLING, GENERAL AND ADMINISTRATIVE COSTS |
||||||||||||
|
(dollar amounts in thousands) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||
|
2010 |
2009 |
2010 |
2009 |
|||||||||
|
Selling, general and administrative costs |
$ 23,156 |
$ 24,517 |
$ 67,796 |
$ 73,054 |
||||||||
|
Employee termination benefits |
(263) |
(1,496) |
(497) |
(2,270) |
||||||||
|
Loss on sublease of office space |
- |
- |
- |
(1,503) |
||||||||
|
Adjusted Selling, General and Administrative Costs |
$ 22,893 |
$ 23,021 |
$ 67,299 |
$ 69,281 |
||||||||
|
CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS) |
||||||||||||
|
(In thousands, except per share amounts) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||
|
2010 |
2009 |
2010 |
2009 |
|||||||||
|
Net Income |
$ 40,494 |
$ 32,808 |
$ 83,298 |
$ 74,619 |
||||||||
|
Adjustments: |
||||||||||||
|
Employee termination benefits |
165 |
936 |
311 |
1,421 |
||||||||
|
Loss on sublease of office space |
- |
- |
- |
941 |
||||||||
|
Adjusted Net Income |
$ 40,659 |
$ 33,744 |
$ 83,609 |
$ 76,981 |
||||||||
|
Weighted average shares outstanding-diluted |
59,658 |
59,818 |
59,646 |
60,412 |
||||||||
|
Diluted Earnings Per Share |
$ 0.68 |
$ 0.55 |
$ 1.40 |
$ 1.24 |
||||||||
|
Adjustments: |
||||||||||||
|
Employee termination benefits |
- |
0.01 |
- |
0.02 |
||||||||
|
Loss on sublease of office space |
- |
- |
- |
0.01 |
||||||||
|
Adjusted Diluted Earnings Per Share (EPS) |
$ 0.68 |
$ 0.56 |
$ 1.40 |
$ 1.27 |
||||||||
|
Adjusted EBITDA Reconciliation |
||||||||||||
|
(in millions) |
||||||||||||
|
Q3 2010 Actuals |
Q3 2009 Actuals |
Nine Months Ended September 30, 2010 Actuals |
Nine Months Ended September 30, 2009 Actuals |
Full-Year 2010 Outlook |
||||||||
|
Operating Income (per GAAP) |
$ 54.9 |
$ 48.1 |
$ 122.3 |
$ 114.0 |
$158.5-$160.5 |
|||||||
|
Employee termination benefits |
0.3 |
1.5 |
0.5 |
2.3 |
1.5 |
|||||||
|
Loss on sublease of office space |
- |
- |
- |
1.5 |
- |
|||||||
|
Depreciation and amortization |
2.1 |
2.1 |
6.5 |
6.3 |
8.5 |
|||||||
|
Adjusted Earnings before interest, taxes, depreciation & amortization (non-GAAP) |
$ 57.3 |
$ 51.7 |
$ 129.3 |
$ 124.1 |
$168.5-$170.5 |
|||||||
SOURCE Choice Hotels International, Inc.
CONTACT: David White, Senior Vice President, Chief Financial Officer & Treasurer, +1-301-592-5117, or David Peikin, Senior Director, Corporate Communications, +1-301-592-6361, both of Choice Hotels International, Inc.
Web Site: http://www.choicehotels.com
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