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Choice Hotels' News

Choice Hotels Reports First Quarter 2012 Diluted EPS of $0.34, Domestic RevPAR Growth of 8.6%
PR Newswire
SILVER SPRING, Md.

SILVER SPRING, Md., April 26, 2012 /PRNewswire/ -- Choice Hotels International, Inc., (NYSE:CHH) today reported the following highlights for first quarter 2012:

    --  Diluted earnings per share ("EPS") for first quarter 2012 were $0.34
        compared to adjusted diluted EPS of $0.28 for the first quarter of 2011.
        Adjusted diluted EPS for the first quarter of 2011 excludes certain
        special items, as described below, totaling $0.02.  Diluted EPS were
        $0.26 for the three months ended March 31, 2011.
    --  Earnings before interest, taxes, depreciation and amortization
        ("EBITDA") increased 19% to $33.1 million for the three months ended
        March 31, 2012, compared to $27.7 million for the three months ended
        March 31, 2011. Operating income increased 21% from $25.7 million for
        the three months ended March 31, 2011 to $31.1 million for the same
        period of 2012.
    --  Franchising revenues increased 11% to $57.3 million for the three months
        ended March 31, 2012 from $51.5 million for the same period of 2011. 
        Total revenues increased 12% to $129.2 million for the three months
        ended March 31, 2012 compared to the same period of 2011.
    --  Worldwide unit growth increased 0.8 percent from March 31, 2011
        comprised of domestic and international unit growth of 0.7 percent and
        0.9 percent, respectively.
    --  Domestic system-wide revenue per available room ("RevPAR") increased
        8.6% for the three months ended March 31, 2012 compared to the same
        period of 2011 as occupancy and average daily rates increased 250 basis
        points and 2.5 percent, respectively.
    --  The company executed 64 new domestic hotel franchise contracts for the
        quarter ended March 31, 2012 compared to 56 new domestic hotel franchise
        contracts in the same period of the prior year, a 14% increase.
    --  The number of worldwide hotels under construction, awaiting conversion
        or approved for development as of March 31, 2012 was 471 hotels
        representing 38,210 rooms;

"Domestic RevPAR growth exceeded our expectations due to a combination of strong occupancy gains and increases in average daily rates," said Stephen P. Joyce, president and chief executive officer. "While the development environment continues to be challenging, we are pleased with the continued strengthening of leisure travel and the success of our programs designed to drive business through our central reservation channels which deliver guests at the highest average daily rates."

Special Items

During the three months ended March 31, 2011, the company reduced the carrying amount of a parcel of land held for sale resulting in a loss of $1.8 million included in other gains and losses. This amount represented diluted EPS of $0.02 for the three months ended March 31, 2011.

Outlook for 2012

The company's second quarter 2012 diluted EPS is expected to be $0.51. The company expects full-year 2012 diluted EPS to range between $2.03 and $2.08. EBITDA for full-year 2012 are expected to range between $200 million and $203 million. These estimates include the following assumptions:

    --  The company expects net domestic unit growth to be relatively flat in
        2012;
    --  RevPAR is expected to increase approximately 7% for second quarter of
        2012 and increase between approximately 5% and 7% for full-year 2012;
    --  The effective royalty rate is expected to increase 1 basis point for
        full-year 2012;
    --  All figures assume the existing share count and an effective tax rate of
        34.5% for the second quarter and full-year 2012.

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 three months ended March 31, 2012, the company paid $10.7 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 three months ended March 31, 2012, the company purchased approximately 0.3 million shares of its common stock at an average price of $36.81 for a total cost of $12.9 million under the share repurchase program. Subsequent to March 31, 2012 and through April 26, 2012, the company repurchased an additional 0.1 million shares for a total cost of $5.3 million at an average price of $37.28 and has authorization to purchase up to an additional 1.5 million shares under this program. 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 45.1 million shares of its common stock for a total cost of $1.1 billion through March 31, 2012. Considering the effect of a two-for-one stock split in October 2005, the company had repurchased 78.1 million shares through March 31, 2012 under the share repurchase program at an average price of $13.83 per share.

Our board of directors 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 strategic markets. 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. 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 Friday, April 27, 2012 at 10:00 a.m. EDT to discuss the company's first quarter 2012 results. The dial-in number to listen to the call is 1-888-396-2356, and the access code is 79227006. International callers should dial 1-617-847-8709 and enter the access code 79227006. 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 12:00 p.m. EDT on Friday, April 27, 2012 through Sunday, May 27, 2012 by calling 1-888-286-8010 and entering access code 90956223. The international dial-in number for the replay is 1-617-801-6888, access code 90956223. 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 6,100 hotels, representing more than 495,000 rooms, in the United States and more than 30 other countries and territories. As of March 31, 2012, more than 350 hotels were under construction, awaiting conversion or approved for development in the United States, representing more than 30,000 rooms, and approximately 80 hotels, representing approximately 7,000 rooms, were under construction, awaiting conversion or approved for development in approximately 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 Private Securities Litigation Reform Act of 1995. Generally, our use of words such as "expect," "estimate," "believe," "anticipate," "will," "forecast," "plan"," project," "assume" or similar words of futurity identify such forward-looking statements. These 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, 2011, filed with the Securities and Exchange Commission on February 29, 2012. 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, EBITDA, franchising revenues and 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 required by its franchise agreements to use these fees collected for marketing and reservation activities. Cumulative reservation and marketing system fees not expended are recorded as a liability 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 system 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: The company's management uses adjusted diluted EPS, which excludes a reduction in the carrying amount of land held for sale during the three months ended March 31, 2011. The company utilizes this non-GAAP measure 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.

© 2012 Choice Hotels International, Inc. All rights reserved.

 

    Choice Hotels International, Inc.                                                                Exhibit 1
    Consolidated Statements of Income
    (Unaudited)



                                              Three Months Ended March 31,
                                              ----------------------------
                                                                                    Variance
                                                             2012             2011                $          %
                                                             ----             ----              ---         ---
    (In thousands, except per share amounts)

    REVENUES:

    Royalty fees                                          $47,853          $43,794           $4,059                 9%
    Initial franchise and relicensing fees                  2,528            2,721             (193)              (7%)
    Procurement services                                    3,315            3,261               54                 2%
    Marketing and reservation                              70,929           62,967            7,962                13%
    Hotel operations                                          978              864              114                13%
    Other                                                   3,566            1,674            1,892               113%
                                                            -----            -----            -----               ---
          Total revenues                                  129,169          115,281           13,888                12%

    OPERATING EXPENSES:

    Selling, general and administrative                    24,349           23,847              502                 2%
    Depreciation and amortization                           2,017            1,955               62                 3%
    Marketing and reservation                              70,929           62,967            7,962                13%
    Hotel operations                                          809              833              (24)              (3%)
                                                              ---              ---              ---               ---
    Total operating expenses                               98,104           89,602            8,502                 9%

    Operating income                                       31,065           25,679            5,386                21%

    OTHER INCOME AND EXPENSES:
    Interest expense                                        3,117            3,224             (107)              (3%)
    Interest income                                          (337)            (210)            (127)               60%
    Other (gains) and losses                               (2,003)           1,043           (3,046)            (292%)
    Equity in net (income) loss of affiliates                  55             (301)             356             (118%)
    Total other income and expenses, net                      832            3,756           (2,924)             (78%)
                                                              ---            -----           ------              ----

    Income before income taxes                             30,233           21,923            8,310                38%
    Income taxes                                           10,236            6,193            4,043                65%
                                                           ------            -----            -----
    Net income                                            $19,997          $15,730           $4,267                27%
                                                          =======          =======           ======               ===


    Basic earnings per share                                $0.34            $0.26            $0.08                31%
                                                            =====            =====            =====               ===

    Diluted earnings per share                              $0.34            $0.26            $0.08                31%
                                                            =====            =====            =====               ===

 

 

    Choice Hotels International, Inc.                                                                                   Exhibit 2
    Consolidated Balance Sheets
                                                                                                                                                    
                                                                                                                                                    
    (In thousands, except per share amounts)                                            March 31,                                December 31,
                                                                                                      2012                                    2011
                                                                                                      ----                                    ----
                                                                                     (Unaudited)
                                                                                                                                                    
    ASSETS
                                                                                                                                                    
    Cash and cash equivalents                                                                      $91,312                                $107,057
    Accounts receivable, net                                                                        53,290                                  53,012
    Investments, employee benefit plans, at fair value                                               5,241                                  12,094
    Other current assets                                                                            28,635                                  22,633
                                                                                                    ------                                  ------
                               Total
                               current
                               assets                                                              178,478                                 194,796
                                                                                                                                                    
    Fixed assets and intangibles, net                                                              133,717                                 135,252
    Receivable -- marketing and reservation fees                                                    63,690                                  54,014
    Investments, employee benefit plans, at fair value                                              12,625                                  11,678
    Other assets                                                                                    54,722                                  51,949
                                                                                                    ------                                  ------
                                                                                                                                                    
                               Total
                               assets                           $443,232                                    $447,689
                                                                --------                                    --------
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    
                                                                                                                                                    
    LIABILITIES AND SHAREHOLDERS' DEFICIT
                                                                                                                                                    
    Accounts payable and accrued expenses                                                          $73,658                                 $92,240
    Deferred revenue                                                                                70,830                                  68,825
    Deferred compensation & retirement plan obligations                                             19,184                                  18,935
    Current portion of long-term debt                                                                  679                                     673
    Other current liabilities                                                                       12,004                                   3,892
                                                                                                    ------                                   -----
                               Total current
                               liabilities                       176,355                                     184,565
                                                                                                                                                    
    Long-term debt                                                                                 257,780                                 252,032
    Deferred compensation & retirement plan obligations                                             19,640                                  20,593
    Other liabilities                                                                               15,633                                  16,060
                                                                                                    ------                                  ------
                                                                                                                                                    
                               Total
                               liabilities                                                         469,408                                 473,250
                                                                                                                      
                                                                                                                                                    
    Common stock, $0.01 par value                                                                      581                                     583
    Additional paid-in-capital                                                                     100,900                                 102,665
    Accumulated other comprehensive loss                                                            (6,154)                                 (6,801)
    Treasury stock, at cost                                                                       (925,763)                               (916,955)
    Retained earnings                                                                              804,260                                 794,947
                                                                                                   -------                                 -------
                                                                                                                                                    
                               Total
                               shareholders'
                               deficit                           (26,176)                                   (25,561)
                                                                                                            
                                                                                                                                                    
                               Total
                               liabilities
                               and
                               shareholders'
                               deficit                          $443,232                                    $447,689
                                                                --------                                    --------

 

 

    Choice Hotels
     International, Inc.                               Exhibit 3
    Consolidated Statements of
     Cash Flows
    (Unaudited)



    (In thousands)               Three Months Ended
                                     March 31,
                                -------------------

                                                 2012               2011
                                                 ----               ----
    CASH FLOWS FROM OPERATING
     ACTIVITIES:

    Net income                                $19,997            $15,730

    Adjustments to reconcile
     net income to net cash
     provided (used)
     by operating activities:
      Depreciation and
       amortization                             2,017              1,955
      Provision for bad debts                     679                778
      Non-cash stock
       compensation and other
       charges                                  2,543              4,513
      Non-cash interest and
       other income                            (1,593)              (350)
      Equity in net (income)
       loss of affiliates                          55               (301)

    Changes in assets and
     liabilities:
      Receivables                                (870)            (1,250)
      Receivable -marketing and
       reservation fees, net                   (6,187)            (8,979)
      Accounts payable                          6,712             (1,775)
      Accrued expenses                        (25,342)           (18,931)
      Income taxes payable/
       receivable                               8,180              1,182
      Deferred income taxes                       (30)               (12)
      Deferred revenue                          1,997              4,709
      Other assets                             (2,611)            (1,147)
      Other liabilities                        (1,135)            (1,339)
                                               ------             ------

     NET CASH PROVIDED (USED)
      BY OPERATING ACTIVITIES                   4,412             (5,217)
                                                -----             ------

    CASH FLOWS FROM INVESTING
     ACTIVITIES:

    Investment in property and
     equipment                                 (3,129)            (1,835)
    Equity method investments                  (2,600)            (1,600)
    Purchases of investments,
     employee benefit plans                      (743)              (897)
    Proceeds from sales of
     investments, employee
     benefit plans                              8,652                310
    Issuance of notes
     receivable                                (3,719)            (1,477)
    Collections of notes
     receivable                                   151                  7
    Other items, net                             (108)               (95)
                                                 ----                ---

     NET CASH USED IN INVESTING
      ACTIVITIES                               (1,496)            (5,587)
                                               ------             ------

    CASH FLOWS FROM FINANCING
     ACTIVITIES:

    Net borrowings pursuant to
     revolving credit
     facilities                                 5,900              7,900
    Repayments of long-term
     debt                                        (166)                (5)
    Purchase of treasury stock                (14,854)            (2,207)
    Dividends paid                            (10,713)           (10,950)
    Excess tax benefits from
     stock-based compensation                     422                834
    Debt issuance costs                             -             (2,207)
    Proceeds from exercise of
     stock options                                389              2,238
                                                  ---              -----

     NET CASH USED IN FINANCING
      ACTIVITIES                              (19,022)            (4,397)
                                              -------             ------

    Net change in cash and
     cash equivalents                         (16,106)           (15,201)
    Effect of foreign exchange
     rate changes on cash and
     cash equivalents                             361                347
    Cash and cash equivalents
     at beginning of period                   107,057             91,259
                                              -------             ------

    CASH AND CASH EQUIVALENTS
     AT END OF PERIOD                         $91,312            $76,405
                                              =======            =======

 

                                                                                                                                   CHOICE HOTELS INTERNATIONAL, INC.                                                                                 Exhibit 4
                                                                                                                                  SUPPLEMENTAL OPERATING INFORMATION
                                                                                                                                         DOMESTIC HOTEL SYSTEM
                                                                                                                                              (UNAUDITED)




                       For the Three Months Ended March 31, 2012*                      For the Three Months Ended March 31, 2011*           Change
                       -----------------------------------------                       -----------------------------------------            ------

                              Average Daily                                                                                          Average Daily                                                 Average Daily
                                  Rate                            Occupancy                                 RevPAR                       Rate                        Occupancy       RevPAR            Rate           Occupancy         RevPAR
                                  ----                            ---------                                 ------                       ----                        ---------       ------            ----           ---------         ------

    Comfort Inn                                   $74.29                         46.8%                                     $34.76                        $72.21                44.3%        $32.00               2.9%           250 bps         8.6%
    Comfort Suites                                 79.88                         51.0%                                      40.72                         79.08                47.0%         37.18               1.0%           400 bps         9.5%
    Sleep                                          66.39                         45.0%                                      29.90                         64.94                42.2%         27.43               2.2%           280 bps         9.0%
    Quality                                        63.39                         40.8%                                      25.87                         61.58                38.6%         23.80               2.9%           220 bps         8.7%
    Clarion                                        67.90                         38.7%                                      26.26                         67.72                36.6%         24.75               0.3%           210 bps         6.1%
    Econo Lodge                                    50.31                         38.7%                                      19.45                         49.61                37.3%         18.49               1.4%           140 bps         5.2%
    Rodeway                                        47.08                         41.7%                                      19.61                         45.77                38.6%         17.65               2.9%           310 bps        11.1%
    MainStay                                       64.60                         61.8%                                      39.94                         60.97                53.9%         32.85               6.0%           790 bps        21.6%
    Suburban                                       39.15                         62.5%                                      24.47                         38.29                60.7%         23.24               2.2%           180 bps         5.3%
    Ascend Collection                             104.02                         52.0%                                      54.11                         98.46                49.9%         49.09               5.6%           210 bps        10.2%
                                                  ------                         ----                                       -----                         -----                ----          -----               ---            --- ---        ----

    Total                                         $67.32                         44.5%                                     $29.95                        $65.69                42.0%        $27.58               2.5%           250 bps         8.6%
                                                  ======                         ====                                      ======                        ======                ====         ======               ===            === ===         ===




                         For the Quarter Ended*
                          ---------------------
                                               3/31/2012                    3/31/2011

    System-wide                                     4.34%                        4.35%
     effective royalty
     rate

 

     * Operating statistics represent hotel operations from December through February

 

 


                                                                       CHOICE HOTELS INTERNATIONAL, INC.                                                                  Exhibit 5
                                                                    SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA
                                                                                  (UNAUDITED)



                             March 31, 2012    March 31, 2011                  Variance
                             --------------    --------------                  --------

                                 Hotels             Rooms                Hotels                             Rooms         Hotels      Rooms          %          %
                                 ------             -----                ------                             -----         ------      -----         ---        ---

    Comfort Inn                          1,392              108,777              1,422                            110,932        (30)       (2,155)     (2.1%)     (1.9%)
    Comfort Suites                         613               47,506                621                             48,096         (8)         (590)     (1.3%)     (1.2%)
    Sleep                                  394               28,564                397                             28,895         (3)         (331)     (0.8%)     (1.1%)
    Quality                              1,054               91,942              1,015                             88,967         39         2,975        3.8%       3.3%
    Clarion                                188               27,550                192                             28,259         (4)         (709)     (2.1%)     (2.5%)
    Econo Lodge                            797               49,254                779                             48,245         18         1,009        2.3%       2.1%
    Rodeway                                396               22,183                381                             20,940         15         1,243        3.9%       5.9%
    MainStay                                39                3,024                 38                              2,943          1            81        2.6%       2.8%
    Suburban                                61                7,191                 63                              7,543         (2)         (352)     (3.2%)     (4.7%)
    Ascend Collection                       53                4,671                 42                              3,259         11         1,412       26.2%      43.3%
    Cambria Suites                          19                2,215                 20                              2,328         (1)         (113)     (5.0%)     (4.9%)
                                           ---                -----                ---                              -----        ---          ----      -----      -----

    Domestic Franchises                  5,006              392,877              4,970                            390,407         36         2,470        0.7%       0.6%

    International Franchises             1,168              103,491              1,158                            102,326         10         1,165        0.9%       1.1%
                                         -----              -------              -----                            -------        ---         -----        ---        ---

    Total Franchises                     6,174              496,368              6,128                            492,733         46         3,635        0.8%       0.7%
                                         =====              =======              =====                            =======        ===         =====        ===        ===

 

                                                                                                                                                                                                                                          Exhibit 6
                                                                                                                                 CHOICE HOTELS INTERNATIONAL, INC.
                                                                                                                                 SUPPLEMENTAL INFORMATION BY BRAND
                                                                                                                        DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS
                                                                                                                                            (UNAUDITED)




                          For the Three Months Ended March 31, 2012  For the Three Months Ended March 31,
                                                                                     2011                       % Change
                          ----------------------------------------- -------------------------------------     --------

                                              New                                                                                                 New                                                     New
                                         Construction                             Conversion              Total                              Construction                   Conversion     Total     Construction        Conversion                 Total
                                         ------------                             ----------              -----                              ------------                   ----------     -----     ------------        ----------                 -----

    Comfort Inn                                                   1                                     8           9                                             2                      7         9               (50%)              14%                     0%
    Comfort Suites                                                1                                     2           3                                             -                      2         2          NM                       0%                    50%
    Sleep                                                         3                                     -           3                                             2                      -         2                 50%        NM                           50%
    Quality                                                       -                                    27          27                                             -                     24        24           NM                     13%                    13%
    Clarion                                                       -                                     2           2                                             -                      5         5           NM                   (60%)                  (60%)
    Econo Lodge                                                   -                                     4           4                                             -                      6         6           NM                   (33%)                  (33%)
    Rodeway                                                       -                                    12          12                                             -                      5         5           NM                    140%                   140%
    MainStay                                                      -                                     -           -                                             1                      -         1              (100%)        NM                        (100%)
    Suburban                                                      -                                     -           -                                             -                      -         -           NM               NM                     NM
    Ascend Collection                                             1                                     2           3                                             -                      1         1           NM                    100%                   200%
    Cambria Suites                                                1                                     -           1                                             1                      -         1                  0%         NM                           0%
                                                                ---                                   ---         ---                                           ---                    ---       ---                ---     ---                             ---

    Total Domestic System                                         7                                    57          64                                             6                     50        56                 17%              14%                    14%
                                                                ===                                   ===         ===                                           ===                    ===       ===                ===              ===                    ===

 

 

                                                                                                                                                                                                                                                                                                                    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
                                                                                                                                                                                                                                                                           --------
                                                                                      March 31, 2012                March 31, 2011
                                                                                          Units                          Units          Conversion          New Construction                                  Total
                                                                                          -----                          -----          ----------          ----------------                                  -----
                                                                                        Conversion                 New Construction       Total                Conversion                               New Construction                            Total       Units          %              Units       %                   Units       %
                                                                                        ----------                 ----------------       -----                ----------                               ----------------                            -----       -----          ---            -----       ---                 -----       ---

    Comfort Inn                                                                                            28                        44            72                           31                                            58                             89        (3)              (10%)        (14)     (24%)                  (17)     (19%)
    Comfort Suites                                                                                          3                        83            86                            3                                           117                            120         -                  0%        (34)     (29%)                  (34)     (28%)
    Sleep Inn                                                                                               1                        44            45                            -                                            70                             70         1            NM              (26)     (37%)                  (25)     (36%)
    Quality                                                                                                40                         4            44                           47                                             6                             53        (7)              (15%)         (2)     (33%)                   (9)     (17%)
    Clarion                                                                                                12                         1            13                           20                                             2                             22        (8)              (40%)         (1)     (50%)                   (9)     (41%)
    Econo Lodge                                                                                            18                         2            20                           35                                             2                             37       (17)              (49%)          -         0%                  (17)     (46%)
    Rodeway                                                                                                25                         1            26                           14                                             2                             16        11                 79%         (1)     (50%)                   10        63%
    MainStay                                                                                                2                        22            24                            2                                            39                             41         -                  0%        (17)     (44%)                  (17)     (41%)
    Suburban                                                                                                2                        16            18                            -                                            20                             20         2            NM               (4)     (20%)                   (2)     (10%)
    Ascend Collection                                                                                       7                         4            11                            4                                             4                              8         3                 75%          -         0%                    3        38%
    Cambria Suites                                                                                          -                        29            29                            -                                            32                             32         -            NM               (3)      (9%)                   (3)      (9%)
                                                                                                          ---                       ---           ---                          ---                                           ---                            ---       ---           ---              ---       ---                   ---       ---

    Total Domestic Pipeline                                                                               138                       250           388                          156                                           352                            508       (18)              (12%)       (102)     (29%)                 (120)     (24%)
                                                                                                          ===                       ===           ===                          ===                                           ===                            ===       ===               ====        ====      ====                  ====      ====

 

                       CHOICE HOTELS INTERNATIONAL, INC.         Exhibit 8
                  SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
                                  (UNAUDITED)

    CALCULATION OF FRANCHISING REVENUES AND FRANCHISING MARGINS

    (dollar amounts in thousands)                                         Three Months Ended March 31,
                                                                          ----------------------------

                                                                                                           2012                      2011
                                                                                                           ----                      ----
                Franchising Revenues:

                Total Revenues                                                                        $129,169                  $115,281
                Adjustments:
                     Marketing and reservation
                      revenues                                                                         (70,929)                  (62,967)
                     Hotel operations                                                                     (978)                     (864)
                Franchising Revenues                                                                   $57,262                   $51,450


                Franchising Margins:

                Operating Margin:

                Total Revenues                                                                        $129,169                  $115,281
                Operating Income                                                                       $31,065                   $25,679
                     Operating Margin                                                                     24.0%                     22.3%


                Franchising Margin:

                Franchising Revenues                                                                   $57,262                   $51,450

                Operating Income                                                                       $31,065                   $25,679
                Hotel operations                                                                          (169)                      (31)
                                                                                                       $30,896                   $25,648
                                                                                                       -------                   -------

                     Franchising Margins                                                                  54.0%                     49.9%





    CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS)

    (In thousands, except per share
     amounts)                                                            Three Months Ended March 31,
                                                                         ----------------------------

                                                                                                          2012                      2011
                                                                                                          ----                      ----

    Net Income                                                                                         $19,997                   $15,730
    Adjustments:
                Loss on land held for sale                                                                   -                     1,111
    Adjusted Net Income                                                                                $19,997                   $16,841
                                                                                                       -------                   -------

    Weighted average shares outstanding-
     diluted                                                                                            58,317                    59,825

    Diluted Earnings Per Share                                                                           $0.34                     $0.26
    Adjustments:
                Loss on land held for sale                                                                   -                      0.02
    Adjusted Diluted Earnings Per Share
     (EPS)                                                                                               $0.34                     $0.28
                                                                                                         =====                     =====



    EBITDA Reconciliation

    (in millions)
                                                                                Q1 2012 Actuals                 Q1 2011 Actuals           Full-Year 2012 Outlook
                                                                                ---------------                 ---------------           ----------------------

                Operating Income (per GAAP)                                                              $31.1                     $25.7          $191.5 - $194.5
                Depreciation and amortization                                                              2.0                       2.0                      8.5
                 Earnings before interest, taxes,
                 depreciation & amortization
                 (non-GAAP)                                                                              $33.1                     $27.7               $200 -$203

 

SOURCE Choice Hotels International, Inc.

 

SOURCE: Choice Hotels International, Inc.

 

Choice Hotels Reports First Quarter 2012 Diluted EPS of $0.34, Domestic RevPAR Growth of 8.6%

PR Newswire

SILVER SPRING, Md., April 26, 2012 /PRNewswire/ -- Choice Hotels International, Inc., (NYSE:CHH) today reported the following highlights for first quarter 2012:

  • Diluted earnings per share ("EPS") for first quarter 2012 were $0.34 compared to adjusted diluted EPS of $0.28 for the first quarter of 2011.  Adjusted diluted EPS for the first quarter of 2011 excludes certain special items, as described below, totaling $0.02.  Diluted EPS were $0.26 for the three months ended March 31, 2011. 
  • Earnings before interest, taxes, depreciation and amortization ("EBITDA") increased 19% to $33.1 million for the three months ended March 31, 2012, compared to $27.7 million for the three months ended March 31, 2011. Operating income increased 21% from $25.7 million for the three months ended March 31, 2011 to $31.1 million for the same period of 2012.
  • Franchising revenues increased 11% to $57.3 million for the three months ended March 31, 2012 from $51.5 million for the same period of 2011.  Total revenues increased 12% to $129.2 million for the three months ended March 31, 2012 compared to the same period of 2011.
  • Worldwide unit growth increased 0.8 percent from March 31, 2011 comprised of domestic and international unit growth of 0.7 percent and 0.9 percent, respectively. 
  • Domestic system-wide revenue per available room ("RevPAR") increased 8.6% for the three months ended March 31, 2012 compared to the same period of 2011 as occupancy and average daily rates increased 250 basis points and 2.5 percent, respectively.   
  • The company executed 64 new domestic hotel franchise contracts for the quarter ended March 31, 2012 compared to 56 new domestic hotel franchise contracts in the same period of the prior year, a 14% increase.
  • The number of worldwide hotels under construction, awaiting conversion or approved for development as of March 31, 2012 was 471 hotels representing 38,210 rooms;

"Domestic RevPAR growth exceeded our expectations due to a combination of strong occupancy gains and increases in average daily rates," said Stephen P. Joyce, president and chief executive officer. "While the development environment continues to be challenging, we are pleased with the continued strengthening of leisure travel and the success of our programs designed to drive business through our central reservation channels which deliver guests at the highest average daily rates."

Special Items

During the three months ended March 31, 2011, the company reduced the carrying amount of a parcel of land held for sale resulting in a loss of $1.8 million included in other gains and losses.  This amount represented diluted EPS of $0.02 for the three months ended March 31, 2011.

Outlook for 2012

The company's second quarter 2012 diluted EPS is expected to be $0.51. The company expects full-year 2012 diluted EPS to range between $2.03 and $2.08.  EBITDA for full-year 2012 are expected to range between $200 million and $203 million. These estimates include the following assumptions:

  • The company expects net domestic unit growth to be relatively flat in 2012;
  • RevPAR is expected to increase approximately 7% for second quarter of 2012 and increase between approximately 5% and 7% for full-year 2012;
  • The effective royalty rate is expected to increase 1 basis point for full-year 2012;
  • All figures assume the existing share count and an effective tax rate of 34.5% for the second quarter and full-year 2012.

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 three months ended March 31, 2012, the company paid $10.7 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 three months ended March 31, 2012, the company purchased approximately 0.3 million shares of its common stock at an average price of $36.81 for a total cost of $12.9 million under the share repurchase program. Subsequent to March 31, 2012 and through April 26, 2012, the company repurchased an additional 0.1 million shares for a total cost of $5.3 million at an average price of $37.28 and has authorization to purchase up to an additional 1.5 million shares under this program.  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 45.1 million shares of its common stock for a total cost of $1.1 billion through March 31, 2012. Considering the effect of a two-for-one stock split in October 2005, the company had repurchased 78.1 million shares through March 31, 2012 under the share repurchase program at an average price of $13.83 per share.

Our board of directors 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 strategic markets.  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.  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 Friday, April 27, 2012 at 10:00 a.m. EDT to discuss the company's first quarter 2012 results. The dial-in number to listen to the call is 1-888-396-2356, and the access code is 79227006. International callers should dial 1-617-847-8709 and enter the access code 79227006.  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 12:00 p.m. EDT on Friday, April 27, 2012 through Sunday, May 27, 2012 by calling 1-888-286-8010 and entering access code 90956223. The international dial-in number for the replay is 1-617-801-6888, access code 90956223. 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 6,100 hotels, representing more than 495,000 rooms, in the United States and more than 30 other countries and territories.  As of March 31, 2012, more than 350 hotels were under construction, awaiting conversion or approved for development in the United States, representing more than 30,000 rooms, and approximately 80 hotels, representing approximately 7,000 rooms, were under construction, awaiting conversion or approved for development in approximately 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 Private Securities Litigation Reform Act of 1995.  Generally, our use of words such as "expect," "estimate," "believe," "anticipate," "will," "forecast," "plan"," project," "assume" or similar words of futurity identify such forward-looking statements.  These 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, 2011, filed with the Securities and Exchange Commission on February 29, 2012.  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, EBITDA, franchising revenues and 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 required by its franchise agreements to use these fees collected for marketing and reservation activities. Cumulative reservation and marketing system fees not expended are recorded as a liability 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 system 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: The company's management uses adjusted diluted EPS, which excludes a reduction in the carrying amount of land held for sale during the three months ended March 31, 2011.   The company utilizes this non-GAAP measure 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.

© 2012 Choice Hotels International, Inc.  All rights reserved.

 

Choice Hotels International, Inc.

           

Exhibit 1

Consolidated Statements of Income

             

(Unaudited)

                   
                       
                       
                   
         

Three Months Ended March 31,

                 

Variance

         

2012

 

2011

 

$

 

%

(In thousands, except per share amounts)

               
                       

REVENUES:

                   
                       

Royalty fees

     

$                47,853

 

$                43,794

 

$       4,059

 

9%

Initial franchise and relicensing fees

 

2,528

 

2,721

 

(193)

 

(7%)

Procurement services

   

3,315

 

3,261

 

54

 

2%

Marketing and reservation 

   

70,929

 

62,967

 

7,962

 

13%

Hotel operations

     

978

 

864

 

114

 

13%

Other

       

3,566

 

1,674

 

1,892

 

113%

      Total revenues

   

129,169

 

115,281

 

13,888

 

12%

                       

OPERATING EXPENSES:

                 
                       

Selling, general and administrative

 

24,349

 

23,847

 

502

 

2%

Depreciation and amortization

   

2,017

 

1,955

 

62

 

3%

Marketing and reservation

   

70,929

 

62,967

 

7,962

 

13%

Hotel operations

     

809

 

833

 

(24)

 

(3%)

Total operating expenses

   

98,104

 

89,602

 

8,502

 

9%

                       

Operating income

     

31,065

 

25,679

 

5,386

 

21%

                       

OTHER INCOME AND EXPENSES:

               

Interest expense

     

3,117

 

3,224

 

(107)

 

(3%)

Interest income

     

(337)

 

(210)

 

(127)

 

60%

Other (gains) and losses

   

(2,003)

 

1,043

 

(3,046)

 

(292%)

Equity in net (income) loss of affiliates

 

55

 

(301)

 

356

 

(118%)

Total other income and expenses, net

832

 

3,756

 

(2,924)

 

(78%)

                       

Income before income taxes

   

30,233

 

21,923

 

8,310

 

38%

Income taxes

     

10,236

 

6,193

 

4,043

 

65%

Net income

     

$                19,997

 

$                15,730

 

$       4,267

 

27%

                       
                       

Basic earnings per share

   

$                   0.34

 

$                    0.26

 

$        0.08

 

31%

                       

Diluted earnings per share

   

$                   0.34

 

$                    0.26

 

$        0.08

 

31%

                       

 

 

Choice Hotels International, Inc.

     

Exhibit 2

Consolidated Balance Sheets

       
               
               

(In thousands, except per share amounts)

 March 31, 

 

 December 31, 

         

2012

 

2011

         

(Unaudited)

   
               

ASSETS

           
               

Cash and cash equivalents

   

$              91,312

 

$         107,057

Accounts receivable, net

   

53,290

 

53,012

Investments, employee benefit plans, at fair value

5,241

 

12,094

Other current assets

   

28,635

 

22,633

 

Total current assets

   

178,478

 

194,796

               

Fixed assets and intangibles, net

 

133,717

 

135,252

Receivable -- marketing and reservation fees

63,690

 

54,014

Investments, employee benefit plans, at fair value

12,625

 

11,678

Other assets

     

54,722

 

51,949

               
   

Total assets

 

$           443,232

 

$         447,689

               
               
               
               

LIABILITIES AND SHAREHOLDERS' DEFICIT

     
               

Accounts payable and accrued expenses

$              73,658

 

$            92,240

Deferred revenue

   

70,830

 

68,825

Deferred compensation & retirement plan obligations

19,184

 

18,935

Current portion of long-term debt

 

679

 

673

Other current liabilities

   

12,004

 

3,892

 

Total current liabilities

 

176,355

 

184,565

               

Long-term debt

   

257,780

 

252,032

Deferred compensation & retirement plan obligations  

19,640

 

20,593

Other liabilities

     

15,633

 

16,060

               
 

Total liabilities

   

469,408

 

473,250

               

Common stock, $0.01 par value

 

581

 

583

Additional paid-in-capital

   

100,900

 

102,665

Accumulated other comprehensive loss

(6,154)

 

(6,801)

Treasury stock, at cost

   

(925,763)

 

(916,955)

Retained earnings

   

804,260

 

794,947

               
 

Total shareholders' deficit

 

(26,176)

 

(25,561)

               
   

Total liabilities and shareholders' deficit

$           443,232

 

$         447,689

               

 

 

Choice Hotels International, Inc.

   

Exhibit 3

Consolidated Statements of Cash Flows

     

(Unaudited)

     
       
       
   

(In thousands)

Three Months Ended March 31,

       
 

2012

 

2011

CASH FLOWS FROM OPERATING ACTIVITIES:

     
       

Net income

$                    19,997

 

$              15,730

       

Adjustments to reconcile net income to net cash provided (used)

     

 by operating activities:

     

  Depreciation and amortization  

2,017

 

1,955

  Provision for bad debts

679

 

778

  Non-cash stock compensation and other charges

2,543

 

4,513

  Non-cash interest and other income

(1,593)

 

(350)

  Equity in net (income) loss of affiliates

55

 

(301)

       

Changes in assets and liabilities:

     

  Receivables

(870)

 

(1,250)

  Receivable - marketing and reservation fees, net

(6,187)

 

(8,979)

  Accounts payable

6,712

 

(1,775)

  Accrued expenses

(25,342)

 

(18,931)

  Income taxes payable/receivable

8,180

 

1,182

  Deferred income taxes

(30)

 

(12)

  Deferred revenue

1,997

 

4,709

  Other assets

(2,611)

 

(1,147)

  Other liabilities

(1,135)

 

(1,339)

       

 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES

4,412

 

(5,217)

       

CASH FLOWS FROM INVESTING ACTIVITIES:

     
       

Investment in property and equipment

(3,129)

 

(1,835)

Equity method investments

(2,600)

 

(1,600)

Purchases of investments, employee benefit plans

(743)

 

(897)

Proceeds from sales of investments, employee benefit plans

8,652

 

310

Issuance of notes receivable

(3,719)

 

(1,477)

Collections of notes receivable

151

 

7

Other items, net

(108)

 

(95)

       

 NET CASH USED IN INVESTING ACTIVITIES

(1,496)

 

(5,587)

       

CASH FLOWS FROM FINANCING ACTIVITIES:

     
       

Net borrowings pursuant to revolving credit facilities

5,900

 

7,900

Repayments of long-term debt

(166)

 

(5)

Purchase of treasury stock

(14,854)

 

(2,207)

Dividends paid

(10,713)

 

(10,950)

Excess tax benefits from stock-based compensation

422

 

834

Debt issuance costs

-

 

(2,207)

Proceeds from exercise of stock options

389

 

2,238

       

 NET CASH USED IN FINANCING ACTIVITIES

(19,022)

 

(4,397)

       

Net change in cash and cash equivalents

(16,106)

 

(15,201)

Effect of foreign exchange rate changes on cash and cash equivalents

361

 

347

Cash and cash equivalents at beginning of period

107,057

 

91,259

       

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$                    91,312

 

$              76,405

       

 

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 4

SUPPLEMENTAL OPERATING INFORMATION 

 

DOMESTIC HOTEL SYSTEM

 

(UNAUDITED)

 
                                           
                                           
                                           
                                           
   

For the Three Months Ended March 31, 2012*

 

For the Three Months Ended March 31, 2011*

 

Change

   
                                           
   

Average Daily

         

Average Daily

         

Average Daily

             
   

Rate

 

Occupancy

 

RevPAR

 

Rate

 

Occupancy

 

RevPAR

 

Rate

 

Occupancy

 

RevPAR

   
                                           

Comfort Inn

 

$             74.29

 

46.8%

 

$          34.76

 

$             72.21

 

44.3%

 

$         32.00

 

2.9%

 

250

bps

 

8.6%

   

Comfort Suites

 

79.88

 

51.0%

 

40.72

 

79.08

 

47.0%

 

37.18

 

1.0%

 

400

bps

 

9.5%

   

Sleep

 

66.39

 

45.0%

 

29.90

 

64.94

 

42.2%

 

27.43

 

2.2%

 

280

bps

 

9.0%

   

Quality

 

63.39

 

40.8%

 

25.87

 

61.58

 

38.6%

 

23.80

 

2.9%

 

220

bps

 

8.7%

   

Clarion

 

67.90

 

38.7%

 

26.26

 

67.72

 

36.6%

 

24.75

 

0.3%

 

210

bps

 

6.1%

   

Econo Lodge

 

50.31

 

38.7%

 

19.45

 

49.61

 

37.3%

 

18.49

 

1.4%

 

140

bps

 

5.2%

   

Rodeway

 

47.08

 

41.7%

 

19.61

 

45.77

 

38.6%

 

17.65

 

2.9%

 

310

bps

 

11.1%

   

MainStay

 

64.60

 

61.8%

 

39.94

 

60.97

 

53.9%

 

32.85

 

6.0%

 

790

bps

 

21.6%

   

Suburban

 

39.15

 

62.5%

 

24.47

 

38.29

 

60.7%

 

23.24

 

2.2%

 

180

bps

 

5.3%

   

Ascend Collection

 

104.02

 

52.0%

 

54.11

 

98.46

 

49.9%

 

49.09

 

5.6%

 

210

bps

 

10.2%

   
                                           

Total 

 

$             67.32

 

44.5%

 

$          29.95

 

$             65.69

 

42.0%

 

$         27.58

 

2.5%

 

250

bps

 

8.6%

   
                                           
                                           
                                           
                                           
   

For the Quarter Ended*

                             
   

3/31/2012

 

3/31/2011

                                 
                                           

System-wide

 effective royalty

 rate

 

4.34%

 

4.35%

                                 
                                           
                                           
                                           
                                           
 

* Operating statistics represent hotel operations from December through February

                                 

 

 

                                   

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 5

SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA

 

(UNAUDITED)

 
                                   
                                   
                                   
   

March 31, 2012

 

March 31, 2011

 

Variance

 
                                   
   

Hotels

 

Rooms

 

Hotels

 

Rooms

 

Hotels

 

Rooms

 

%

 

%

 
                                   

Comfort Inn

 

1,392

 

108,777

 

1,422

 

110,932

 

(30)

 

(2,155)

 

(2.1%)

 

(1.9%)

 

Comfort Suites

 

613

 

47,506

 

621

 

48,096

 

(8)

 

(590)

 

(1.3%)

 

(1.2%)

 

Sleep

 

394

 

28,564

 

397

 

28,895

 

(3)

 

(331)

 

(0.8%)

 

(1.1%)

 

Quality

 

1,054

 

91,942

 

1,015

 

88,967

 

39

 

2,975

 

3.8%

 

3.3%

 

Clarion

 

188

 

27,550

 

192

 

28,259

 

(4)

 

(709)

 

(2.1%)

 

(2.5%)

 

Econo Lodge

 

797

 

49,254

 

779

 

48,245

 

18

 

1,009

 

2.3%

 

2.1%

 

Rodeway

 

396

 

22,183

 

381

 

20,940

 

15

 

1,243

 

3.9%

 

5.9%

 

MainStay

 

39

 

3,024

 

38

 

2,943

 

1

 

81

 

2.6%

 

2.8%

 

Suburban

 

61

 

7,191

 

63

 

7,543

 

(2)

 

(352)

 

(3.2%)

 

(4.7%)

 

Ascend Collection

 

53

 

4,671

 

42

 

3,259

 

11

 

1,412

 

26.2%

 

43.3%

 

Cambria Suites

 

19

 

2,215

 

20

 

2,328

 

(1)

 

(113)

 

(5.0%)

 

(4.9%)

 
                                   

Domestic Franchises

 

5,006

 

392,877

 

4,970

 

390,407

 

36

 

2,470

 

0.7%

 

0.6%

 
                                   

International Franchises

 

1,168

 

103,491

 

1,158

 

102,326

 

10

 

1,165

 

0.9%

 

1.1%

 
                                   

Total Franchises

 

6,174

 

496,368

 

6,128

 

492,733

 

46

 

3,635

 

0.8%

 

0.7%

 
                                   

 

                                   

Exhibit 6

 

CHOICE HOTELS INTERNATIONAL, INC.

SUPPLEMENTAL INFORMATION BY BRAND

DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS

(UNAUDITED)

                                       
                                       
                                       
                                       
   

For the Three Months Ended March 31, 2012

 

For the Three Months Ended March 31, 2011

 

% Change

 
                                       
   

New

         

New

         

New

         
   

Construction

 

Conversion

 

Total

 

Construction

 

Conversion

 

Total

 

Construction

 

Conversion

 

Total

 
                                       

Comfort Inn

 

1

 

8

 

9

 

2

 

7

 

9

 

(50%)

 

14%

 

0%

 

Comfort Suites

 

1

 

2

 

3

 

-

 

2

 

2

 

        NM

 

0%

 

50%

 

Sleep

 

3

 

-

 

3

 

2

 

-

 

2

 

50%

 

      NM

 

50%

 

Quality

 

-

 

27

 

27

 

-

 

24

 

24

 

         NM

 

13%

 

13%

 

Clarion

 

-

 

2

 

2

 

-

 

5

 

5

 

         NM

 

(60%)

 

(60%)

 

Econo Lodge

 

-

 

4

 

4

 

-

 

6

 

6

 

         NM

 

(33%)

 

(33%)

 

Rodeway

 

-

 

12

 

12

 

-

 

5

 

5

 

         NM

 

140%

 

140%

 

MainStay

 

-

 

-

 

-

 

1

 

-

 

1

 

(100%)

 

       NM

 

(100%)

 

Suburban

 

-

 

-

 

-

 

-

 

-

 

-

 

         NM

 

       NM

 

  NM

 

Ascend Collection

 

1

 

2

 

3

 

-

 

1

 

1

 

         NM

 

100%

 

200%

 

Cambria Suites

 

1

 

-

 

1

 

1

 

-

 

1

 

0%

 

        NM

 

0%

 
                                       

Total Domestic System

 

7

 

57

 

64

 

6

 

50

 

56

 

17%

 

14%

 

14%

 
                                       

 

 

                                           

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

   

March 31, 2012

 

March 31, 2011

                       
   

Units

 

Units

 

Conversion

 

New Construction

 

Total

   

Conversion

 

New Construction

 

Total

 

Conversion

 

New Construction

 

Total

 

Units

 

%

 

Units

 

%

 

Units

 

%

                                                 

Comfort Inn

 

28

 

44

 

72

 

31

 

58

 

89

 

(3)

 

(10%)

 

(14)

 

(24%)

 

(17)

 

(19%)

Comfort Suites

 

3

 

83

 

86

 

3

 

117

 

120

 

-

 

0%

 

(34)

 

(29%)

 

(34)

 

(28%)

Sleep Inn

 

1

 

44

 

45

 

-

 

70

 

70

 

1

 

NM

 

(26)

 

(37%)

 

(25)

 

(36%)

Quality

 

40

 

4

 

44

 

47

 

6

 

53

 

(7)

 

(15%)

 

(2)

 

(33%)

 

(9)

 

(17%)

Clarion

 

12

 

1

 

13

 

20

 

2

 

22

 

(8)

 

(40%)

 

(1)

 

(50%)

 

(9)

 

(41%)

Econo Lodge

 

18

 

2

 

20

 

35

 

2

 

37

 

(17)

 

(49%)

 

-

 

0%

 

(17)

 

(46%)

Rodeway

 

25

 

1

 

26

 

14

 

2

 

16

 

11

 

79%

 

(1)

 

(50%)

 

10

 

63%

MainStay

 

2

 

22

 

24

 

2

 

39

 

41

 

-

 

0%

 

(17)

 

(44%)

 

(17)

 

(41%)

Suburban

 

2

 

16

 

18

 

-

 

20

 

20

 

2

 

NM

 

(4)

 

(20%)

 

(2)

 

(10%)

Ascend Collection

 

7

 

4

 

11

 

4

 

4

 

8

 

3

 

75%

 

-

 

0%

 

3

 

38%

Cambria Suites

 

-

 

29

 

29

 

-

 

32

 

32

 

-

 

NM

 

(3)

 

(9%)

 

(3)

 

(9%)

                                                 

Total Domestic Pipeline

 

138

 

250

 

388

 

156

 

352

 

508

 

(18)

 

(12%)

 

(102)

 

(29%)

 

(120)

 

(24%)

                                                 

 

 

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 8

 

SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION

   
 

(UNAUDITED)

   
                       

CALCULATION OF FRANCHISING REVENUES AND FRANCHISING MARGINS

               
                       

(dollar amounts in thousands)

 

Three Months Ended March 31, 

       
                       
     

2012

 

2011

           
 

Franchising Revenues:

                   
                       
 

Total Revenues

 

$              129,169

 

$               115,281

           
 

Adjustments:

                   
 

     Marketing and reservation revenues

 

(70,929)

 

(62,967)

           
 

     Hotel operations

 

(978)

 

(864)

           
 

Franchising Revenues

 

$                57,262

 

$                 51,450

           
                       
 

Franchising Margins:

                   
                       
 

Operating Margin:

                   
                       
 

Total Revenues

 

$              129,169

 

$               115,281

           
 

Operating Income

 

$                31,065

 

$                 25,679

           
 

     Operating Margin

 

24.0%

 

22.3%

           
                       
 

Franchising Margin:

                   
                       
 

Franchising Revenues

 

$                57,262

 

$                 51,450

           
                       
 

Operating Income

 

$                31,065

 

$                 25,679

           
 

Hotel operations

 

(169)

 

(31)

           
     

$                30,896

 

$                 25,648

           
                       
 

     Franchising Margins

 

54.0%

 

49.9%

           
                       
                       
                       
                       

CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS)

           
                       

(In thousands, except per share amounts)

 

Three Months Ended March 31, 

       
                       
     

2012

 

2011

           
                       

Net Income

 

$                19,997

 

$                 15,730

           

Adjustments:

                   
 

Loss on land held for sale

 

-

 

1,111

           

Adjusted Net Income

 

$                19,997

 

$                 16,841

           
                       

Weighted average shares outstanding-diluted

 

58,317

 

59,825

           
                       

Diluted Earnings Per Share

 

$                   0.34

 

$                     0.26

           

Adjustments:

                   
 

Loss on land held for sale

 

-

 

0.02

           

Adjusted Diluted Earnings Per Share (EPS)

 

$                   0.34

 

$                     0.28

           
                       
                       
                       

EBITDA Reconciliation

                   
                       

(in millions)

                   
     

Q1 2012 Actuals

 

Q1 2011 Actuals

 

Full-Year 2012 Outlook

       
                       
 

Operating Income (per GAAP)

 

$                   31.1

 

$                     25.7

 

  $191.5 - $194.5  

       
 

Depreciation and amortization

 

2.0

 

2.0

 

8.5

       
 

Earnings before interest, taxes, depreciation & amortization (non-GAAP)

 

$                   33.1

 

$                     27.7

 

  $200 -$203  

       
                       

 

SOURCE Choice Hotels International, Inc.

CONTACT: David White, Senior Vice President, Chief Financial Officer & Treasurer, +1-301-592-5117; Heather Soule, Director, Public Relations, +1-301-628-4361

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The Radisson brands, including Park Plaza, Country Inn & Suites, and Park Inn by Radisson, are owned in the Americas regions by Choice Hotels.
Outside of the Americas, the brands are owned by Radisson Hotel Group, an unaffiliated company headquartered in Belgium.