SILVER SPRING, Md., July 26, 2012 /PRNewswire/ -- Choice Hotels International, Inc., (NYSE: CHH) today reported the following highlights for the second quarter of 2012:
-- Diluted earnings per share ("EPS") for the second quarter of 2012 of
$0.55 compared to diluted EPS of $0.46 for the second quarter of 2011, a
20% increase.
-- Earnings before interest, taxes, depreciation and amortization
("EBITDA") increased 14% to $53.6 million for the three months ended
June 30, 2012, compared to $47.0 million for the three months ended June
30, 2011. Operating income increased 14% from $45.1 million for the
three months ended June 30, 2011 to $51.6 million for the same period of
2012.
-- Franchising revenues increased 6% to $77.8 million for the three months
ended June 30, 2012 from $73.4 million for the same period of 2011.
Total revenues increased 5% to $173.6 million for the three months ended
June 30, 2012 compared to the same period of 2011.
-- Domestic royalty fees for the three months ended June 30, 2012 increased
$4.4 million to $59.8 million from $55.4 million in the three months
ended June 30, 2011, an increase of 8%.
-- Franchising margins increased from 61.2% for the three months ended June
30, 2011 to 65.9% for the same period of the current year.
-- Worldwide unit growth increased 1.3 percent from June 30, 2011 comprised
of domestic and international unit growth of 1.3 percent and 1.6
percent, respectively.
-- Domestic system-wide revenue per available room ("RevPAR") increased
7.7% for the three months ended June 30, 2012 compared to the same
period of 2011 as occupancy and average daily rates increased 250 basis
points and 2.8 percent, respectively.
-- The company executed 106 new domestic hotel franchise contracts for the
three months ended June 30, 2012 compared to 69 new domestic hotel
franchise contracts in the same period of the prior year, a 54%
increase.
-- The number of worldwide hotels under construction, awaiting conversion
or approved for development as of June 30, 2012 was 453 hotels
representing 37,380 rooms.
"We are very pleased with our results for the quarter. People are traveling, we are driving record traffic to our hotels and the development environment is improving. Our second quarter results, in fact, were highlighted by the 106 new domestic franchise agreements we executed in the second quarter of 2012, a 54% increase over the prior year," said Stephen P. Joyce, president and chief executive officer. "These results demonstrate our ability to attract owners to our family of eleven brands due to our size, scale and distribution which allow us to deliver guests and create opportunities for our franchisees to achieve exceptional returns on investment. We are also excited about our recent announcement of the declaration of a $600 million special cash dividend to shareholders which further illustrates our commitment and adds to our already strong history of returning value to our shareholders over time."
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.
Dividends
For the six months ended June 30, 2012, the company paid $21.4 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.
On July 26, 2012, the company announced that its board of directors declared a special cash dividend in the amount of $10.41 per share or approximately $600 million in the aggregate. The record date for the special cash dividend is August 20, 2012 and the special cash dividend will be paid on August 23, 2012. The company has been informed by the New York Stock Exchange that, in accordance with its rules, the ex-dividend date is expected to be August 24, 2012. Accordingly, stockholders who sell their shares on or before the payment date will not be entitled to receive the special cash dividend.
The special cash dividend is being paid with the proceeds from the company's recent offering of $400 million, 5.75% unsecured senior notes and its new senior secured credit facility. On June 27, 2012, the company issued unsecured senior notes in an aggregate principal amount of $400 million, in an underwritten, registered public offering. The notes will mature in July 2022 and bear a coupon rate of interest of 5.75%. Considering bond issuance costs, the company's effective interest cost related to these senior notes is approximately 5.94%.
On July 25, 2012, the company entered into a senior secured credit facility consisting of a $200 million revolving credit tranche and a $150 million term loan tranche, with a four year term. The company expects to utilize the proceeds from the term loan as well as approximately $50 million under the revolving credit tranche for payment of the special dividend. As a result of entering into the senior secured credit facility, the company's existing $300 million senior unsecured revolving credit facility was terminated.
The senior secured credit facility is secured by a first priority pledge of equity by certain wholly-owned subsidiaries and contains customary financial covenants, including with respect to restrictions on liens, incurring indebtedness, making investments, restricted payments and effecting mergers and/or asset sales. In addition, the senior secured credit facility imposes certain financial maintenance covenants. The company may elect to have borrowings under the senior secured credit facility bear interest at (i) a base rate plus a margin ranging from 100 to 325 basis points based on the company's total leverage ratio or (ii) LIBOR plus a margin ranging from 200 to 425 basis points based on the company's total leverage ratio.
Share Repurchases
During the three months ended June 30, 2012, the company purchased approximately 0.2 million shares of its common stock at an average price of $37.39 for a total cost of $7.0 million under the share repurchase program. During the six months ended June 30, 2012, the company repurchased 0.5 million shares for a total cost of $19.9 million at an average price of $37.02 and has authorization to purchase up to an additional 1.4 million shares under this program. We expect to continue making repurchases under our share repurchase program 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 45.3 million shares of its common stock for a total cost of $1.1 billion through June 30, 2012. Considering the effect of a two-for-one stock split in October 2005, the company had repurchased 78.3 million shares through June 30, 2012 under the share repurchase program at an average price of $13.89 per share.
Other
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.
Outlook for 2012
The company's third quarter 2012 diluted EPS is expected to be $0.61. The company expects full-year 2012 diluted EPS to range between $1.91 and $1.94. EBITDA for full-year 2012 are expected to range between $201.0 million and $203.5 million. These estimates include the following assumptions:
-- The company expects net domestic unit growth to range between flat and a
1% increase in 2012;
-- RevPAR is expected to increase approximately 5% for third quarter of
2012 and increase between 6% and 7% for full-year 2012;
-- The effective royalty rate is expected to remain flat for full-year
2012;
-- All figures assume the existing share count and an effective tax rate of
34.0% for the third quarter and 33.8% for full-year 2012.
-- Diluted EPS guidance for full-year 2012 reflects the impact of increased
borrowing costs to be incurred as the result of the declaration of a
$600 million special cash dividend to be paid in the third quarter of
2012 which is expected to total approximately $14 million or $0.16 per
share.
Conference Call
Choice will conduct a conference call on Friday, July 27, 2012 at 9:30 a.m. EST to discuss the company's second quarter 2012 results. The dial-in number to listen to the call is 1-866-730-5767, and the access code is 51535988. International callers should dial 1-857-350-1591 and enter the access code 51535988. 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. EST on Friday, July 27, 2012 through Monday, August 27, 2012 by calling 1-888-286-8010 and entering access code 76425859. The international dial-in number for the replay is 1-617-801-6888, access code 76425859. 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 approximately 6,200 hotels, representing more than 495,000 rooms, in the United States and more than 30 other countries and territories. As of June 30, 2012, more than 375 hotels were under construction, awaiting conversion or approved for development in the United States, representing more than 30,000 rooms, and 75 hotels, representing approximately 6,700 rooms, were under construction, awaiting conversion or approved for development in 15 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 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, ability to repay outstanding indebtedness, payment of 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 and our quarterly reports filed on Form 10-Q. 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 Presented in Exhibit 8
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 resulting in a loss of $1.8 million included in other gains and losses during the six months ended June 30, 2011. This amount represented net income of $1.1 million and diluted EPS of $0.02 for the six months ended June 30, 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 June 30, Six Months Ended June 30,
--------------------------- -------------------------
Variance Variance
2012 2011 $ % 2012 2011 $ %
---- ---- --- --- ---- ---- --- ---
(In thousands, except
per share amounts)
REVENUES:
Royalty fees $66,064 $61,620 $4,444 7% $113,917 $105,414 $8,503 8%
Initial franchise and
relicensing fees 3,178 2,779 399 14% 5,706 5,500 206 4%
Procurement services 6,836 6,673 163 2% 10,151 9,934 217 2%
Marketing and
reservation 94,633 90,832 3,801 4% 165,562 153,799 11,763 8%
Hotel operations 1,224 1,073 151 14% 2,202 1,937 265 14%
Other 1,686 2,324 (638) (27%) 5,252 3,998 1,254 31%
----- ----- ---- ---- ----- ----- ----- ---
Total revenues 173,621 165,301 8,320 5% 302,790 280,582 22,208 8%
OPERATING EXPENSES:
Selling, general and
administrative 24,554 26,539 (1,985) (7%) 48,903 50,386 (1,483) (3%)
Depreciation and
amortization 1,977 1,948 29 1% 3,994 3,903 91 2%
Marketing and
reservation 94,633 90,832 3,801 4% 165,562 153,799 11,763 8%
Hotel operations 867 860 7 1% 1,676 1,693 (17) (1%)
--- --- --- --- ----- ----- --- ---
Total operating
expenses 122,031 120,179 1,852 2% 220,135 209,781 10,354 5%
Operating income 51,590 45,122 6,468 14% 82,655 70,801 11,854 17%
OTHER INCOME AND
EXPENSES, NET:
Interest expense 3,540 3,267 273 8% 6,657 6,491 166 3%
Interest income (394) (221) (173) 78% (731) (431) (300) 70%
Other (gains) and
losses 377 (38) 415 (1092%) (1,626) 1,005 (2,631) (262%)
Equity in net (income)
loss of affiliates 128 - 128 NM 183 (301) 484 (161%)
Total other income and
expenses, net 3,651 3,008 643 21% 4,483 6,764 (2,281) (34%)
----- ----- --- --- ----- ----- ------ ----
Income before income
taxes 47,939 42,114 5,825 14% 78,172 64,037 14,135 22%
Income taxes 16,077 14,536 1,541 11% 26,313 20,729 5,584 27%
------ ------ ----- --- ------ ------ -----
Net income $31,862 $27,578 $4,284 16% $51,859 $43,308 $8,551 20%
======= ======= ====== === ======= ======= ====== ===
Basic earnings per
share $0.55 $0.46 $0.09 20% $0.89 $0.72 $0.17 24%
===== ===== ===== === ===== ===== ===== ===
Diluted earnings per
share $0.55 $0.46 $0.09 20% $0.89 $0.72 $0.17 24%
===== ===== ===== === ===== ===== ===== ===
Choice Hotels International, Inc. Exhibit 2
Consolidated Balance Sheets
(In thousands, except per share amounts) June 30, December 31,
2012 2011
---- ----
(Unaudited)
ASSETS
Cash and cash equivalents $485,390 $107,057
Accounts receivable, net 62,643 53,012
Investments, employee benefit plans, at fair value 5,184 12,094
Other current assets 30,656 22,633
------ ------
Total current assets 583,873 194,796
Fixed assets and intangibles, net 131,992 135,252
Receivable -- marketing and reservation fees 64,838 54,014
Investments, employee benefit plans, at fair value 12,221 11,678
Other assets 64,814 51,949
------ ------
Total assets $857,738 $447,689
-------- --------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Accounts payable and accrued expenses $81,685 $92,240
Deferred revenue 64,422 68,825
Deferred compensation & retirement plan obligations 19,276 18,935
Current portion of long-term debt 683 673
Other current liabilities 15,674 3,892
------ -----
Total current
liabilities 181,740 184,565
Long-term debt 651,717 252,032
Deferred compensation & retirement plan obligations 19,482 20,593
Other liabilities 16,042 16,060
------ ------
Total liabilities 868,981 473,250
-------------
Common stock, $0.01 par value 580 583
Additional paid-in-capital 101,719 102,665
Accumulated other comprehensive loss (6,350) (6,801)
Treasury stock, at cost (932,663) (916,955)
Retained earnings 825,471 794,947
------- -------
Total shareholders'
deficit (11,243) (25,561)
-------------
Total liabilities and shareholders'
deficit $857,738 $447,689
-------- --------
Choice Hotels International,
Inc. Exhibit 3
Consolidated Statements of Cash
Flows
(Unaudited)
(In thousands) Six Months Ended June
30,
----------------------
2012 2011
---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $51,859 $43,308
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 3,994 3,903
Provision for bad debts 1,236 1,340
Non-cash stock compensation and
other charges 4,868 7,436
Non-cash interest and other
(income) loss (820) 22
Dividends received from equity
method investments 399 159
Equity in net (income) loss of
affiliates 183 (301)
Changes in assets and
liabilities:
Receivables (12,258) (11,058)
Receivable -marketing and
reservation fees, net (2,389) (11,387)
Accounts payable 6,330 6,026
Accrued expenses (17,659) (11,004)
Income taxes payable/receivable 11,808 11,404
Deferred income taxes (194) 40
Deferred revenue (4,404) (6,463)
Other assets (4,331) (750)
Other liabilities (820) (624)
---- ----
NET CASH PROVIDED BY OPERATING
ACTIVITIES 37,802 32,051
------ ------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Investment in property and
equipment (6,236) (5,110)
Equity method investments (6,315) (1,600)
Purchases of investments,
employee benefit plans (969) (1,139)
Proceeds from sales of
investments, employee benefit
plans 8,969 347
Issuance of notes receivable (5,820) (2,651)
Collections of notes receivable 210 13
Other items, net (226) (192)
---- ----
NET CASH USED IN INVESTING
ACTIVITIES (10,387) (10,332)
------- -------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net repayments pursuant to
revolving credit facilities - (200)
Repayments of long-term debt (333) (13)
Proceeds from the issuance of
long-term debt 393,444 75
Purchase of treasury stock (22,173) (2,527)
Dividends paid (21,396) (21,922)
Excess tax benefits from stock-
based compensation 641 1,061
Debt issuance costs (153) (2,356)
Proceeds from exercise of stock
options 445 3,132
--- -----
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES 350,475 (22,750)
------- -------
Net change in cash and cash
equivalents 377,890 (1,031)
Effect of foreign exchange rate
changes on cash and cash
equivalents 443 733
Cash and cash equivalents at
beginning of period 107,057 91,259
------- ------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $485,390 $90,961
======== =======
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 4
SUPPLEMENTAL OPERATING INFORMATION
DOMESTIC HOTEL SYSTEM
(UNAUDITED)
For the Six Months Ended June 30, 2012* For the Six Months Ended June 30, 2011* Change
-------------------------------------- -------------------------------------- ------
Average Daily Average Daily Average Daily
Rate Occupancy RevPAR Rate Occupancy RevPAR Rate Occupancy RevPAR
---- --------- ------ ---- --------- ------ ---- --------- ------
Comfort Inn $77.48 53.6% $41.52 $75.27 51.1% $38.47 2.9% 250 bps 7.9%
Comfort Suites 83.15 57.6% 47.92 81.82 53.7% 43.96 1.6% 390 bps 9.0%
Sleep 69.90 52.0% 36.32 67.81 48.7% 33.03 3.1% 330 bps 10.0%
Quality 66.29 46.8% 31.03 64.47 44.7% 28.81 2.8% 210 bps 7.7%
Clarion 71.85 44.6% 32.07 70.89 42.4% 30.07 1.4% 220 bps 6.7%
Econo Lodge 52.48 44.0% 23.09 51.60 42.4% 21.89 1.7% 160 bps 5.5%
Rodeway 49.36 46.2% 22.81 47.78 43.2% 20.66 3.3% 300 bps 10.4%
MainStay 67.02 67.4% 45.16 64.06 61.8% 39.57 4.6% 560 bps 14.1%
Suburban 40.48 67.3% 27.24 39.82 65.3% 25.99 1.7% 200 bps 4.8%
Ascend Collection 109.96 59.4% 65.28 106.96 55.3% 59.19 2.8% 410 bps 10.3%
------ ---- ----- ------ ---- ----- --- --- --- ----
Total $70.38 50.7% $35.66 $68.57 48.2% $33.02 2.6% 250 bps 8.0%
====== ==== ====== ====== ==== ====== === === === ===
* Operating statistics represent hotel operations from December through May
For the Three Months Ended June 30, 2012* For the Three Months Ended June 30,
2011* Change
----------------------------------------- ------------------------------------ ------
Average Daily Average Daily Average Daily
Rate Occupancy RevPAR Rate Occupancy RevPAR Rate Occupancy RevPAR
---- --------- ------ ---- --------- ------ ---- --------- ------
Comfort Inn $79.87 60.2% $48.05 $77.54 57.7% $44.73 3.0% 250 bps 7.4%
Comfort Suites 85.71 64.2% 55.01 83.89 60.3% 50.55 2.2% 390 bps 8.8%
Sleep 72.52 58.7% 42.56 69.95 55.0% 38.45 3.7% 370 bps 10.7%
Quality 68.43 52.5% 35.95 66.58 50.4% 33.58 2.8% 210 bps 7.1%
Clarion 74.71 50.2% 37.53 73.14 47.9% 35.01 2.1% 230 bps 7.2%
Econo Lodge 54.14 49.2% 26.62 53.10 47.4% 25.14 2.0% 180 bps 5.9%
Rodeway 51.10 50.4% 25.76 49.34 47.7% 23.55 3.6% 270 bps 9.4%
MainStay 69.06 72.9% 50.32 66.31 69.2% 45.87 4.1% 370 bps 9.7%
Suburban 41.58 71.9% 29.89 41.13 69.7% 28.68 1.1% 220 bps 4.2%
Ascend Collection 114.40 66.4% 75.94 113.44 60.4% 68.50 0.8% 600 bps 10.9%
------ ---- ----- ------ ---- ----- --- --- --- ----
Total $72.69 56.6% $41.16 $70.72 54.1% $38.22 2.8% 250 bps 7.7%
====== ==== ====== ====== ==== ====== === === === ===
* Operating statistics represent hotel operations from March through May
For the Quarter Ended For the Six Months Ended
--------------------- ------------------------
6/30/2012 6/30/2011 6/30/2012 6/30/2011
System-wide effective
royalty rate 4.32% 4.33% 4.33% 4.34%
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 5
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA
(UNAUDITED)
June 30, 2012 June 30, 2011 Variance
------------- ------------- --------
Hotels Rooms Hotels Rooms Hotels Rooms % %
------ ----- ------ ----- ------ ----- --- ---
Comfort Inn 1,379 107,895 1,416 110,736 (37) (2,841) (2.6%) (2.6%)
Comfort Suites 608 46,903 613 47,441 (5) (538) (0.8%) (1.1%)
Sleep 391 28,327 394 28,625 (3) (298) (0.8%) (1.0%)
Quality 1,082 93,655 1,027 89,571 55 4,084 5.4% 4.6%
Clarion 189 27,534 193 28,335 (4) (801) (2.1%) (2.8%)
Econo Lodge 801 49,114 778 48,197 23 917 3.0% 1.9%
Rodeway 401 22,671 377 20,506 24 2,165 6.4% 10.6%
MainStay 40 3,083 39 3,007 1 76 2.6% 2.5%
Suburban 62 7,260 61 7,255 1 5 1.6% 0.1%
Ascend Collection 52 4,652 44 3,392 8 1,260 18.2% 37.1%
Cambria Suites 19 2,221 19 2,215 - 6 0.0% 0.3%
--- ----- --- ----- --- --- --- ---
Domestic Franchises 5,024 393,315 4,961 389,280 63 4,035 1.3% 1.0%
International
Franchises 1,175 104,522 1,156 102,086 19 2,436 1.6% 2.4%
----- ------- ----- ------- --- ----- --- ---
Total Franchises 6,199 497,837 6,117 491,366 82 6,471 1.3% 1.3%
===== ======= ===== ======= === ===== === ===
Exhibit 6
CHOICE HOTELS INTERNATIONAL, INC.
SUPPLEMENTAL INFORMATION BY BRAND
DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS
(UNAUDITED)
For the Six Months Ended June 30, 2012 For the Six Months Ended June 30, 2011 % Change
-------------------------------------- -------------------------------------- --------
New New New
Construction Conversion Total Construction Conversion Total Construction Conversion Total
------------ ---------- ----- ------------ ---------- ----- ------------ ---------- -----
Comfort Inn 6 12 18 5 18 23 20% (33%) (22%)
Comfort Suites 7 4 11 1 4 5 600% 0% 120%
Sleep 11 1 12 3 1 4 267% 0% 200%
Quality - 63 63 - 35 35 NM 80% 80%
Clarion - 7 7 - 8 8 NM (13%) (13%)
Econo Lodge - 18 18 - 18 18 NM 0% 0%
Rodeway - 31 31 - 18 18 NM 72% 72%
MainStay 1 1 2 1 3 4 0% (67%) (50%)
Suburban - 1 1 2 1 3 (100%) 0% (67%)
Ascend
Collection 1 4 5 - 5 5 NM (20%) 0%
Cambria Suites 2 - 2 2 - 2 0% NM 0%
--- --- --- --- --- --- --- --- ---
Total Domestic
System 28 142 170 14 111 125 100% 28% 36%
=== === === === === === === === ===
For the Three Months Ended June 30, 2012 For the Three Months Ended June 30,
2011 % Change
---------------------------------------- ------------------------------------ --------
New New New
Construction Conversion Total Construction Conversion Total Construction Conversion Total
------------ ---------- ----- ------------ ---------- ----- ------------ ---------- -----
Comfort Inn 5 4 9 3 11 14 67% (64%) (36%)
Comfort Suites 6 2 8 1 2 3 500% 0% 167%
Sleep 8 1 9 1 1 2 700% 0% 350%
Quality - 36 36 - 11 11 NM 227% 227%
Clarion - 5 5 - 3 3 NM 67% 67%
Econo Lodge - 14 14 - 12 12 NM 17% 17%
Rodeway - 19 19 - 13 13 NM 46% 46%
MainStay 1 1 2 - 3 3 NM (67%) (33%)
Suburban - 1 1 2 1 3 (100%) 0% (67%)
Ascend
Collection - 2 2 - 4 4 NM (50%) (50%)
Cambria Suites 1 - 1 1 - 1 0% NM 0%
--- --- --- --- --- --- --- --- ---
Total Domestic
System 21 85 106 8 61 69 163% 39% 54%
=== === === === === === === === ===
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
--------
June 30, 2012 June 30, 2011
Units Units Conversion New Construction Total
----- ----- ---------- ---------------- -----
Conversion New Construction Total Conversion New Construction Total Units % Units % Units %
---------- ---------------- ----- ---------- ---------------- ----- ----- --- ----- --- ----- ---
Comfort Inn 25 40 65 27 50 77 (2) (7%) (10) (20%) (12) (16%)
Comfort Suites 2 82 84 3 108 111 (1) (33%) (26) (24%) (27) (24%)
Sleep Inn 1 40 41 - 62 62 1 NM (22) (35%) (21) (34%)
Quality 39 3 42 25 5 30 14 56% (2) (40%) 12 40%
Clarion 14 1 15 16 2 18 (2) (13%) (1) (50%) (3) (17%)
Econo Lodge 20 1 21 34 1 35 (14) (41%) - 0% (14) (40%)
Rodeway 31 1 32 15 1 16 16 107% - 0% 16 100%
MainStay 1 22 23 4 37 41 (3) (75%) (15) (41%) (18) (44%)
Suburban 2 14 16 - 22 22 2 NM (8) (36%) (6) (27%)
Ascend
Collection 8 5 13 5 3 8 3 60% 2 67% 5 63%
Cambria Suites - 26 26 - 31 31 - NM (5) (16%) (5) (16%)
--- --- --- --- --- --- --- --- --- ---- --- ----
143 235 378 129 322 451 14 11% (87) (27%) (73) (16%)
=== === === === === === === === === ==== === ====
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 June 30, Six Months Ended June 30,
--------------------------- -------------------------
2012 2011 2012 2011
---- ---- ---- ----
Franchising Revenues:
$173,621 $165,301 $302,790 $280,582
Total Revenues
Adjustments:
(94,633) (90,832) (165,562) (153,799)
Marketing and reservation revenues
(1,224) (1,073) (2,202) (1,937)
Hotel operations
$77,764 $73,396 $135,026 $124,846
Franchising Revenues
Franchising Margins:
Operating Margin:
$173,621 $165,301 $302,790 $280,582
Total Revenues
$51,590 $45,122 $82,655 $70,801
Operating Income
29.7% 27.3% 27.3% 25.2%
Operating Margin
Franchising Margin:
$77,764 $73,396 $135,026 $124,846
Franchising Revenues
$51,590 $45,122 $82,655 $70,801
Operating Income
(357) (213) (526) (244)
Hotel operations
$51,233 $44,909 $82,129 $70,557
------- ------- ------- -------
65.9% 61.2% 60.8% 56.5%
Franchising Margins
CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS)
(In thousands, except per share
amounts) Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2012 2011 2012 2011
---- ---- ---- ----
Net Income $31,862 $27,578 $51,859 $43,308
Adjustments, net of tax:
Loss on
land
held for
sale - - - 1,111
Adjusted Net Income $31,862 $27,578 $51,859 $44,419
------- ------- ------- -------
Weighted average shares
outstanding-diluted 58,088 59,918 58,204 59,854
Diluted Earnings Per Share $0.55 $0.46 $0.89 $0.72
Adjustments:
Loss on
land
held for
sale - - - 0.02
Adjusted Diluted Earnings Per
Share (EPS) $0.55 $0.46 $0.89 $0.74
----- ----- ----- -----
EBITDA Reconciliation
(in millions)
Q2 2012 Actuals Q2 2011 Actuals Six Months Ended June 30, Six Months Ended June 30,
2012 Actuals 2011 Actuals Full-Year 2012 Outlook
--------------- --------------- -------------------------- -------------------------- ----------------------
$51.6 $45.1 $82.7 $70.8 $192.7-$195.2
Operating Income (per GAAP)
2.0 1.9 4.0 3.9 8.3
Depreciation and amortization
$53.6 $47.0 $86.7 $74.7 $201.0-$203.5
Earnings before interest, taxes, depreciation & amortization
(non-GAAP)
===
SOURCE Choice Hotels International, Inc.
SOURCE: Choice Hotels International, Inc.
PR Newswire
SILVER SPRING, Md., July 26, 2012
SILVER SPRING, Md., July 26, 2012 /PRNewswire/ -- Choice Hotels International, Inc., (NYSE: CHH) today reported the following highlights for the second quarter of 2012:
"We are very pleased with our results for the quarter. People are traveling, we are driving record traffic to our hotels and the development environment is improving. Our second quarter results, in fact, were highlighted by the 106 new domestic franchise agreements we executed in the second quarter of 2012, a 54% increase over the prior year," said Stephen P. Joyce, president and chief executive officer. "These results demonstrate our ability to attract owners to our family of eleven brands due to our size, scale and distribution which allow us to deliver guests and create opportunities for our franchisees to achieve exceptional returns on investment. We are also excited about our recent announcement of the declaration of a $600 million special cash dividend to shareholders which further illustrates our commitment and adds to our already strong history of returning value to our shareholders over time."
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.
Dividends
For the six months ended June 30, 2012, the company paid $21.4 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.
On July 26, 2012, the company announced that its board of directors declared a special cash dividend in the amount of $10.41 per share or approximately $600 million in the aggregate. The record date for the special cash dividend is August 20, 2012 and the special cash dividend will be paid on August 23, 2012. The company has been informed by the New York Stock Exchange that, in accordance with its rules, the ex-dividend date is expected to be August 24, 2012. Accordingly, stockholders who sell their shares on or before the payment date will not be entitled to receive the special cash dividend.
The special cash dividend is being paid with the proceeds from the company's recent offering of $400 million, 5.75% unsecured senior notes and its new senior secured credit facility. On June 27, 2012, the company issued unsecured senior notes in an aggregate principal amount of $400 million, in an underwritten, registered public offering. The notes will mature in July 2022 and bear a coupon rate of interest of 5.75%. Considering bond issuance costs, the company's effective interest cost related to these senior notes is approximately 5.94%.
On July 25, 2012, the company entered into a senior secured credit facility consisting of a $200 million revolving credit tranche and a $150 million term loan tranche, with a four year term. The company expects to utilize the proceeds from the term loan as well as approximately $50 million under the revolving credit tranche for payment of the special dividend. As a result of entering into the senior secured credit facility, the company's existing $300 million senior unsecured revolving credit facility was terminated.
The senior secured credit facility is secured by a first priority pledge of equity by certain wholly-owned subsidiaries and contains customary financial covenants, including with respect to restrictions on liens, incurring indebtedness, making investments, restricted payments and effecting mergers and/or asset sales. In addition, the senior secured credit facility imposes certain financial maintenance covenants. The company may elect to have borrowings under the senior secured credit facility bear interest at (i) a base rate plus a margin ranging from 100 to 325 basis points based on the company's total leverage ratio or (ii) LIBOR plus a margin ranging from 200 to 425 basis points based on the company's total leverage ratio.
Share Repurchases
During the three months ended June 30, 2012, the company purchased approximately 0.2 million shares of its common stock at an average price of $37.39 for a total cost of $7.0 million under the share repurchase program. During the six months ended June 30, 2012, the company repurchased 0.5 million shares for a total cost of $19.9 million at an average price of $37.02 and has authorization to purchase up to an additional 1.4 million shares under this program. We expect to continue making repurchases under our share repurchase program 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 45.3 million shares of its common stock for a total cost of $1.1 billion through June 30, 2012. Considering the effect of a two-for-one stock split in October 2005, the company had repurchased 78.3 million shares through June 30, 2012 under the share repurchase program at an average price of $13.89 per share.
Other
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.
Outlook for 2012
The company's third quarter 2012 diluted EPS is expected to be $0.61. The company expects full-year 2012 diluted EPS to range between $1.91 and $1.94. EBITDA for full-year 2012 are expected to range between $201.0 million and $203.5 million. These estimates include the following assumptions:
Conference Call
Choice will conduct a conference call on Friday, July 27, 2012 at 9:30 a.m. EST to discuss the company's second quarter 2012 results. The dial-in number to listen to the call is 1-866-730-5767, and the access code is 51535988. International callers should dial 1-857-350-1591 and enter the access code 51535988. 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. EST on Friday, July 27, 2012 through Monday, August 27, 2012 by calling 1-888-286-8010 and entering access code 76425859. The international dial-in number for the replay is 1-617-801-6888, access code 76425859. 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 approximately 6,200 hotels, representing more than 495,000 rooms, in the United States and more than 30 other countries and territories. As of June 30, 2012, more than 375 hotels were under construction, awaiting conversion or approved for development in the United States, representing more than 30,000 rooms, and 75 hotels, representing approximately 6,700 rooms, were under construction, awaiting conversion or approved for development in 15 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 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, ability to repay outstanding indebtedness, payment of 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 and our quarterly reports filed on Form 10-Q. 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 Presented in Exhibit 8
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 resulting in a loss of $1.8 million included in other gains and losses during the six months ended June 30, 2011. This amount represented net income of $1.1 million and diluted EPS of $0.02 for the six months ended June 30, 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 June 30, |
Six Months Ended June 30, |
||||||||||||||
|
Variance |
Variance |
||||||||||||||
|
2012 |
2011 |
$ |
% |
2012 |
2011 |
$ |
% |
||||||||
|
(In thousands, except per share amounts) |
|||||||||||||||
|
REVENUES: |
|||||||||||||||
|
Royalty fees |
$ 66,064 |
$ 61,620 |
$4,444 |
7% |
$113,917 |
$105,414 |
$8,503 |
8% |
|||||||
|
Initial franchise and relicensing fees |
3,178 |
2,779 |
399 |
14% |
5,706 |
5,500 |
206 |
4% |
|||||||
|
Procurement services |
6,836 |
6,673 |
163 |
2% |
10,151 |
9,934 |
217 |
2% |
|||||||
|
Marketing and reservation |
94,633 |
90,832 |
3,801 |
4% |
165,562 |
153,799 |
11,763 |
8% |
|||||||
|
Hotel operations |
1,224 |
1,073 |
151 |
14% |
2,202 |
1,937 |
265 |
14% |
|||||||
|
Other |
1,686 |
2,324 |
(638) |
(27%) |
5,252 |
3,998 |
1,254 |
31% |
|||||||
|
Total revenues |
173,621 |
165,301 |
8,320 |
5% |
302,790 |
280,582 |
22,208 |
8% |
|||||||
|
OPERATING EXPENSES: |
|||||||||||||||
|
Selling, general and administrative |
24,554 |
26,539 |
(1,985) |
(7%) |
48,903 |
50,386 |
(1,483) |
(3%) |
|||||||
|
Depreciation and amortization |
1,977 |
1,948 |
29 |
1% |
3,994 |
3,903 |
91 |
2% |
|||||||
|
Marketing and reservation |
94,633 |
90,832 |
3,801 |
4% |
165,562 |
153,799 |
11,763 |
8% |
|||||||
|
Hotel operations |
867 |
860 |
7 |
1% |
1,676 |
1,693 |
(17) |
(1%) |
|||||||
|
Total operating expenses |
122,031 |
120,179 |
1,852 |
2% |
220,135 |
209,781 |
10,354 |
5% |
|||||||
|
Operating income |
51,590 |
45,122 |
6,468 |
14% |
82,655 |
70,801 |
11,854 |
17% |
|||||||
|
OTHER INCOME AND EXPENSES, NET: |
|||||||||||||||
|
Interest expense |
3,540 |
3,267 |
273 |
8% |
6,657 |
6,491 |
166 |
3% |
|||||||
|
Interest income |
(394) |
(221) |
(173) |
78% |
(731) |
(431) |
(300) |
70% |
|||||||
|
Other (gains) and losses |
377 |
(38) |
415 |
(1092%) |
(1,626) |
1,005 |
(2,631) |
(262%) |
|||||||
|
Equity in net (income) loss of affiliates |
128 |
- |
128 |
NM |
183 |
(301) |
484 |
(161%) |
|||||||
|
Total other income and expenses, net |
3,651 |
3,008 |
643 |
21% |
4,483 |
6,764 |
(2,281) |
(34%) |
|||||||
|
Income before income taxes |
47,939 |
42,114 |
5,825 |
14% |
78,172 |
64,037 |
14,135 |
22% |
|||||||
|
Income taxes |
16,077 |
14,536 |
1,541 |
11% |
26,313 |
20,729 |
5,584 |
27% |
|||||||
|
Net income |
$ 31,862 |
$ 27,578 |
$4,284 |
16% |
$ 51,859 |
$ 43,308 |
$8,551 |
20% |
|||||||
|
Basic earnings per share |
$ 0.55 |
$ 0.46 |
$ 0.09 |
20% |
$ 0.89 |
$ 0.72 |
$ 0.17 |
24% |
|||||||
|
Diluted earnings per share |
$ 0.55 |
$ 0.46 |
$ 0.09 |
20% |
$ 0.89 |
$ 0.72 |
$ 0.17 |
24% |
|||||||
|
Choice Hotels International, Inc. |
Exhibit 2 |
||||
|
Consolidated Balance Sheets |
|||||
|
(In thousands, except per share amounts) |
June 30, |
December 31, |
|||
|
2012 |
2011 |
||||
|
(Unaudited) |
|||||
|
ASSETS |
|||||
|
Cash and cash equivalents |
$ 485,390 |
$ 107,057 |
|||
|
Accounts receivable, net |
62,643 |
53,012 |
|||
|
Investments, employee benefit plans, at fair value |
5,184 |
12,094 |
|||
|
Other current assets |
30,656 |
22,633 |
|||
|
Total current assets |
583,873 |
194,796 |
|||
|
Fixed assets and intangibles, net |
131,992 |
135,252 |
|||
|
Receivable -- marketing and reservation fees |
64,838 |
54,014 |
|||
|
Investments, employee benefit plans, at fair value |
12,221 |
11,678 |
|||
|
Other assets |
64,814 |
51,949 |
|||
|
Total assets |
$ 857,738 |
$ 447,689 |
|||
|
LIABILITIES AND SHAREHOLDERS' DEFICIT |
|||||
|
Accounts payable and accrued expenses |
$ 81,685 |
$ 92,240 |
|||
|
Deferred revenue |
64,422 |
68,825 |
|||
|
Deferred compensation & retirement plan obligations |
19,276 |
18,935 |
|||
|
Current portion of long-term debt |
683 |
673 |
|||
|
Other current liabilities |
15,674 |
3,892 |
|||
|
Total current liabilities |
181,740 |
184,565 |
|||
|
Long-term debt |
651,717 |
252,032 |
|||
|
Deferred compensation & retirement plan obligations |
19,482 |
20,593 |
|||
|
Other liabilities |
16,042 |
16,060 |
|||
|
Total liabilities |
868,981 |
473,250 |
|||
|
Common stock, $0.01 par value |
580 |
583 |
|||
|
Additional paid-in-capital |
101,719 |
102,665 |
|||
|
Accumulated other comprehensive loss |
(6,350) |
(6,801) |
|||
|
Treasury stock, at cost |
(932,663) |
(916,955) |
|||
|
Retained earnings |
825,471 |
794,947 |
|||
|
Total shareholders' deficit |
(11,243) |
(25,561) |
|||
|
Total liabilities and shareholders' deficit |
$ 857,738 |
$ 447,689 |
|||
|
Choice Hotels International, Inc. |
Exhibit 3 |
||
|
Consolidated Statements of Cash Flows |
|||
|
(Unaudited) |
|||
|
(In thousands) |
Six Months Ended June 30, |
||
|
2012 |
2011 |
||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||
|
Net income |
$ 51,859 |
$ 43,308 |
|
|
Adjustments to reconcile net income to net cash provided |
|||
|
by operating activities: |
|||
|
Depreciation and amortization |
3,994 |
3,903 |
|
|
Provision for bad debts |
1,236 |
1,340 |
|
|
Non-cash stock compensation and other charges |
4,868 |
7,436 |
|
|
Non-cash interest and other (income) loss |
(820) |
22 |
|
|
Dividends received from equity method investments |
399 |
159 |
|
|
Equity in net (income) loss of affiliates |
183 |
(301) |
|
|
Changes in assets and liabilities: |
|||
|
Receivables |
(12,258) |
(11,058) |
|
|
Receivable - marketing and reservation fees, net |
(2,389) |
(11,387) |
|
|
Accounts payable |
6,330 |
6,026 |
|
|
Accrued expenses |
(17,659) |
(11,004) |
|
|
Income taxes payable/receivable |
11,808 |
11,404 |
|
|
Deferred income taxes |
(194) |
40 |
|
|
Deferred revenue |
(4,404) |
(6,463) |
|
|
Other assets |
(4,331) |
(750) |
|
|
Other liabilities |
(820) |
(624) |
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
37,802 |
32,051 |
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||
|
Investment in property and equipment |
(6,236) |
(5,110) |
|
|
Equity method investments |
(6,315) |
(1,600) |
|
|
Purchases of investments, employee benefit plans |
(969) |
(1,139) |
|
|
Proceeds from sales of investments, employee benefit plans |
8,969 |
347 |
|
|
Issuance of notes receivable |
(5,820) |
(2,651) |
|
|
Collections of notes receivable |
210 |
13 |
|
|
Other items, net |
(226) |
(192) |
|
|
NET CASH USED IN INVESTING ACTIVITIES |
(10,387) |
(10,332) |
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|||
|
Net repayments pursuant to revolving credit facilities |
- |
(200) |
|
|
Repayments of long-term debt |
(333) |
(13) |
|
|
Proceeds from the issuance of long-term debt |
393,444 |
75 |
|
|
Purchase of treasury stock |
(22,173) |
(2,527) |
|
|
Dividends paid |
(21,396) |
(21,922) |
|
|
Excess tax benefits from stock-based compensation |
641 |
1,061 |
|
|
Debt issuance costs |
(153) |
(2,356) |
|
|
Proceeds from exercise of stock options |
445 |
3,132 |
|
|
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES |
350,475 |
(22,750) |
|
|
Net change in cash and cash equivalents |
377,890 |
(1,031) |
|
|
Effect of foreign exchange rate changes on cash and cash equivalents |
443 |
733 |
|
|
Cash and cash equivalents at beginning of period |
107,057 |
91,259 |
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ 485,390 |
$ 90,961 |
|
|
CHOICE HOTELS INTERNATIONAL, INC. |
Exhibit 4 |
|||||||||||||||||||
|
SUPPLEMENTAL OPERATING INFORMATION |
||||||||||||||||||||
|
DOMESTIC HOTEL SYSTEM |
||||||||||||||||||||
|
(UNAUDITED) |
||||||||||||||||||||
|
For the Six Months Ended June 30, 2012* |
For the Six Months Ended June 30, 2011* |
Change |
||||||||||||||||||
|
Average Daily |
Average Daily |
Average Daily |
||||||||||||||||||
|
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
||||||||||||
|
Comfort Inn |
$ 77.48 |
53.6% |
$41.52 |
$ 75.27 |
51.1% |
$38.47 |
2.9% |
250 |
bps |
7.9% |
||||||||||
|
Comfort Suites |
83.15 |
57.6% |
47.92 |
81.82 |
53.7% |
43.96 |
1.6% |
390 |
bps |
9.0% |
||||||||||
|
Sleep |
69.90 |
52.0% |
36.32 |
67.81 |
48.7% |
33.03 |
3.1% |
330 |
bps |
10.0% |
||||||||||
|
Quality |
66.29 |
46.8% |
31.03 |
64.47 |
44.7% |
28.81 |
2.8% |
210 |
bps |
7.7% |
||||||||||
|
Clarion |
71.85 |
44.6% |
32.07 |
70.89 |
42.4% |
30.07 |
1.4% |
220 |
bps |
6.7% |
||||||||||
|
Econo Lodge |
52.48 |
44.0% |
23.09 |
51.60 |
42.4% |
21.89 |
1.7% |
160 |
bps |
5.5% |
||||||||||
|
Rodeway |
49.36 |
46.2% |
22.81 |
47.78 |
43.2% |
20.66 |
3.3% |
300 |
bps |
10.4% |
||||||||||
|
MainStay |
67.02 |
67.4% |
45.16 |
64.06 |
61.8% |
39.57 |
4.6% |
560 |
bps |
14.1% |
||||||||||
|
Suburban |
40.48 |
67.3% |
27.24 |
39.82 |
65.3% |
25.99 |
1.7% |
200 |
bps |
4.8% |
||||||||||
|
Ascend Collection |
109.96 |
59.4% |
65.28 |
106.96 |
55.3% |
59.19 |
2.8% |
410 |
bps |
10.3% |
||||||||||
|
Total |
$ 70.38 |
50.7% |
$35.66 |
$ 68.57 |
48.2% |
$33.02 |
2.6% |
250 |
bps |
8.0% |
||||||||||
|
* Operating statistics represent hotel operations from December through May |
||||||||||||||||||||
|
For the Three Months Ended June 30, 2012* |
For the Three Months Ended June 30, 2011* |
Change |
||||||||||||||||||
|
Average Daily |
Average Daily |
Average Daily |
||||||||||||||||||
|
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
||||||||||||
|
Comfort Inn |
$ 79.87 |
60.2% |
$48.05 |
$ 77.54 |
57.7% |
$44.73 |
3.0% |
250 |
bps |
7.4% |
||||||||||
|
Comfort Suites |
85.71 |
64.2% |
55.01 |
83.89 |
60.3% |
50.55 |
2.2% |
390 |
bps |
8.8% |
||||||||||
|
Sleep |
72.52 |
58.7% |
42.56 |
69.95 |
55.0% |
38.45 |
3.7% |
370 |
bps |
10.7% |
||||||||||
|
Quality |
68.43 |
52.5% |
35.95 |
66.58 |
50.4% |
33.58 |
2.8% |
210 |
bps |
7.1% |
||||||||||
|
Clarion |
74.71 |
50.2% |
37.53 |
73.14 |
47.9% |
35.01 |
2.1% |
230 |
bps |
7.2% |
||||||||||
|
Econo Lodge |
54.14 |
49.2% |
26.62 |
53.10 |
47.4% |
25.14 |
2.0% |
180 |
bps |
5.9% |
||||||||||
|
Rodeway |
51.10 |
50.4% |
25.76 |
49.34 |
47.7% |
23.55 |
3.6% |
270 |
bps |
9.4% |
||||||||||
|
MainStay |
69.06 |
72.9% |
50.32 |
66.31 |
69.2% |
45.87 |
4.1% |
370 |
bps |
9.7% |
||||||||||
|
Suburban |
41.58 |
71.9% |
29.89 |
41.13 |
69.7% |
28.68 |
1.1% |
220 |
bps |
4.2% |
||||||||||
|
Ascend Collection |
114.40 |
66.4% |
75.94 |
113.44 |
60.4% |
68.50 |
0.8% |
600 |
bps |
10.9% |
||||||||||
|
Total |
$ 72.69 |
56.6% |
$41.16 |
$ 70.72 |
54.1% |
$38.22 |
2.8% |
250 |
bps |
7.7% |
||||||||||
|
* Operating statistics represent hotel operations from March through May |
||||||||||||||||||||
|
For the Quarter Ended |
For the Six Months Ended |
|||||||||||||||||||
|
6/30/2012 |
6/30/2011 |
6/30/2012 |
6/30/2011 |
|||||||||||||||||
|
System-wide effective royalty rate |
4.32% |
4.33% |
4.33% |
4.34% |
||||||||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. |
Exhibit 5 |
|||||||||||||||
|
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA |
||||||||||||||||
|
(UNAUDITED) |
||||||||||||||||
|
June 30, 2012 |
June 30, 2011 |
Variance |
||||||||||||||
|
Hotels |
Rooms |
Hotels |
Rooms |
Hotels |
Rooms |
% |
% |
|||||||||
|
Comfort Inn |
1,379 |
107,895 |
1,416 |
110,736 |
(37) |
(2,841) |
(2.6%) |
(2.6%) |
||||||||
|
Comfort Suites |
608 |
46,903 |
613 |
47,441 |
(5) |
(538) |
(0.8%) |
(1.1%) |
||||||||
|
Sleep |
391 |
28,327 |
394 |
28,625 |
(3) |
(298) |
(0.8%) |
(1.0%) |
||||||||
|
Quality |
1,082 |
93,655 |
1,027 |
89,571 |
55 |
4,084 |
5.4% |
4.6% |
||||||||
|
Clarion |
189 |
27,534 |
193 |
28,335 |
(4) |
(801) |
(2.1%) |
(2.8%) |
||||||||
|
Econo Lodge |
801 |
49,114 |
778 |
48,197 |
23 |
917 |
3.0% |
1.9% |
||||||||
|
Rodeway |
401 |
22,671 |
377 |
20,506 |
24 |
2,165 |
6.4% |
10.6% |
||||||||
|
MainStay |
40 |
3,083 |
39 |
3,007 |
1 |
76 |
2.6% |
2.5% |
||||||||
|
Suburban |
62 |
7,260 |
61 |
7,255 |
1 |
5 |
1.6% |
0.1% |
||||||||
|
Ascend Collection |
52 |
4,652 |
44 |
3,392 |
8 |
1,260 |
18.2% |
37.1% |
||||||||
|
Cambria Suites |
19 |
2,221 |
19 |
2,215 |
- |
6 |
0.0% |
0.3% |
||||||||
|
Domestic Franchises |
5,024 |
393,315 |
4,961 |
389,280 |
63 |
4,035 |
1.3% |
1.0% |
||||||||
|
International Franchises |
1,175 |
104,522 |
1,156 |
102,086 |
19 |
2,436 |
1.6% |
2.4% |
||||||||
|
Total Franchises |
6,199 |
497,837 |
6,117 |
491,366 |
82 |
6,471 |
1.3% |
1.3% |
||||||||
|
Exhibit 6 |
||||||||||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. |
||||||||||||||||||
|
SUPPLEMENTAL INFORMATION BY BRAND |
||||||||||||||||||
|
DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS |
||||||||||||||||||
|
(UNAUDITED) |
||||||||||||||||||
|
For the Six Months Ended June 30, 2012 |
For the Six Months Ended June 30, 2011 |
% Change |
||||||||||||||||
|
New |
New |
New |
||||||||||||||||
|
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
||||||||||
|
Comfort Inn |
6 |
12 |
18 |
5 |
18 |
23 |
20% |
(33%) |
(22%) |
|||||||||
|
Comfort Suites |
7 |
4 |
11 |
1 |
4 |
5 |
600% |
0% |
120% |
|||||||||
|
Sleep |
11 |
1 |
12 |
3 |
1 |
4 |
267% |
0% |
200% |
|||||||||
|
Quality |
- |
63 |
63 |
- |
35 |
35 |
NM |
80% |
80% |
|||||||||
|
Clarion |
- |
7 |
7 |
- |
8 |
8 |
NM |
(13%) |
(13%) |
|||||||||
|
Econo Lodge |
- |
18 |
18 |
- |
18 |
18 |
NM |
0% |
0% |
|||||||||
|
Rodeway |
- |
31 |
31 |
- |
18 |
18 |
NM |
72% |
72% |
|||||||||
|
MainStay |
1 |
1 |
2 |
1 |
3 |
4 |
0% |
(67%) |
(50%) |
|||||||||
|
Suburban |
- |
1 |
1 |
2 |
1 |
3 |
(100%) |
0% |
(67%) |
|||||||||
|
Ascend Collection |
1 |
4 |
5 |
- |
5 |
5 |
NM |
(20%) |
0% |
|||||||||
|
Cambria Suites |
2 |
- |
2 |
2 |
- |
2 |
0% |
NM |
0% |
|||||||||
|
Total Domestic System |
28 |
142 |
170 |
14 |
111 |
125 |
100% |
28% |
36% |
|||||||||
|
For the Three Months Ended June 30, 2012 |
For the Three Months Ended June 30, 2011 |
% Change |
||||||||||||||||
|
New |
New |
New |
||||||||||||||||
|
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
||||||||||
|
Comfort Inn |
5 |
4 |
9 |
3 |
11 |
14 |
67% |
(64%) |
(36%) |
|||||||||
|
Comfort Suites |
6 |
2 |
8 |
1 |
2 |
3 |
500% |
0% |
167% |
|||||||||
|
Sleep |
8 |
1 |
9 |
1 |
1 |
2 |
700% |
0% |
350% |
|||||||||
|
Quality |
- |
36 |
36 |
- |
11 |
11 |
NM |
227% |
227% |
|||||||||
|
Clarion |
- |
5 |
5 |
- |
3 |
3 |
NM |
67% |
67% |
|||||||||
|
Econo Lodge |
- |
14 |
14 |
- |
12 |
12 |
NM |
17% |
17% |
|||||||||
|
Rodeway |
- |
19 |
19 |
- |
13 |
13 |
NM |
46% |
46% |
|||||||||
|
MainStay |
1 |
1 |
2 |
- |
3 |
3 |
NM |
(67%) |
(33%) |
|||||||||
|
Suburban |
- |
1 |
1 |
2 |
1 |
3 |
(100%) |
0% |
(67%) |
|||||||||
|
Ascend Collection |
- |
2 |
2 |
- |
4 |
4 |
NM |
(50%) |
(50%) |
|||||||||
|
Cambria Suites |
1 |
- |
1 |
1 |
- |
1 |
0% |
NM |
0% |
|||||||||
|
Total Domestic System |
21 |
85 |
106 |
8 |
61 |
69 |
163% |
39% |
54% |
|||||||||
|
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 |
||||||||||||||||||||||||
|
June 30, 2012 |
June 30, 2011 |
|||||||||||||||||||||||
|
Units |
Units |
Conversion |
New Construction |
Total |
||||||||||||||||||||
|
Conversion |
New Construction |
Total |
Conversion |
New Construction |
Total |
Units |
% |
Units |
% |
Units |
% |
|||||||||||||
|
Comfort Inn |
25 |
40 |
65 |
27 |
50 |
77 |
(2) |
(7%) |
(10) |
(20%) |
(12) |
(16%) |
||||||||||||
|
Comfort Suites |
2 |
82 |
84 |
3 |
108 |
111 |
(1) |
(33%) |
(26) |
(24%) |
(27) |
(24%) |
||||||||||||
|
Sleep Inn |
1 |
40 |
41 |
- |
62 |
62 |
1 |
NM |
(22) |
(35%) |
(21) |
(34%) |
||||||||||||
|
Quality |
39 |
3 |
42 |
25 |
5 |
30 |
14 |
56% |
(2) |
(40%) |
12 |
40% |
||||||||||||
|
Clarion |
14 |
1 |
15 |
16 |
2 |
18 |
(2) |
(13%) |
(1) |
(50%) |
(3) |
(17%) |
||||||||||||
|
Econo Lodge |
20 |
1 |
21 |
34 |
1 |
35 |
(14) |
(41%) |
- |
0% |
(14) |
(40%) |
||||||||||||
|
Rodeway |
31 |
1 |
32 |
15 |
1 |
16 |
16 |
107% |
- |
0% |
16 |
100% |
||||||||||||
|
MainStay |
1 |
22 |
23 |
4 |
37 |
41 |
(3) |
(75%) |
(15) |
(41%) |
(18) |
(44%) |
||||||||||||
|
Suburban |
2 |
14 |
16 |
- |
22 |
22 |
2 |
NM |
(8) |
(36%) |
(6) |
(27%) |
||||||||||||
|
Ascend Collection |
8 |
5 |
13 |
5 |
3 |
8 |
3 |
60% |
2 |
67% |
5 |
63% |
||||||||||||
|
Cambria Suites |
- |
26 |
26 |
- |
31 |
31 |
- |
NM |
(5) |
(16%) |
(5) |
(16%) |
||||||||||||
|
143 |
235 |
378 |
129 |
322 |
451 |
14 |
11% |
(87) |
(27%) |
(73) |
(16%) |
|||||||||||||
|
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 June 30, |
Six Months Ended June 30, |
|||||||||
|
2012 |
2011 |
2012 |
2011 |
||||||||
|
Franchising Revenues: |
|||||||||||
|
Total Revenues |
$173,621 |
$165,301 |
$302,790 |
$ 280,582 |
|||||||
|
Adjustments: |
|||||||||||
|
Marketing and reservation revenues |
(94,633) |
(90,832) |
(165,562) |
(153,799) |
|||||||
|
Hotel operations |
(1,224) |
(1,073) |
(2,202) |
(1,937) |
|||||||
|
Franchising Revenues |
$ 77,764 |
$ 73,396 |
$135,026 |
$ 124,846 |
|||||||
|
Franchising Margins: |
|||||||||||
|
Operating Margin: |
|||||||||||
|
Total Revenues |
$173,621 |
$165,301 |
$302,790 |
$ 280,582 |
|||||||
|
Operating Income |
$ 51,590 |
$ 45,122 |
$ 82,655 |
$ 70,801 |
|||||||
|
Operating Margin |
29.7% |
27.3% |
27.3% |
25.2% |
|||||||
|
Franchising Margin: |
|||||||||||
|
Franchising Revenues |
$ 77,764 |
$ 73,396 |
$135,026 |
$ 124,846 |
|||||||
|
Operating Income |
$ 51,590 |
$ 45,122 |
$ 82,655 |
$ 70,801 |
|||||||
|
Hotel operations |
(357) |
(213) |
(526) |
(244) |
|||||||
|
$ 51,233 |
$ 44,909 |
$ 82,129 |
$ 70,557 |
||||||||
|
Franchising Margins |
65.9% |
61.2% |
60.8% |
56.5% |
|||||||
|
CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS) |
|||||||||||
|
(In thousands, except per share amounts) |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||
|
2012 |
2011 |
2012 |
2011 |
||||||||
|
Net Income |
$ 31,862 |
$ 27,578 |
$ 51,859 |
$ 43,308 |
|||||||
|
Adjustments, net of tax: |
|||||||||||
|
Loss on land held for sale |
- |
- |
- |
1,111 |
|||||||
|
Adjusted Net Income |
$ 31,862 |
$ 27,578 |
$ 51,859 |
$ 44,419 |
|||||||
|
Weighted average shares outstanding-diluted |
58,088 |
59,918 |
58,204 |
59,854 |
|||||||
|
Diluted Earnings Per Share |
$ 0.55 |
$ 0.46 |
$ 0.89 |
$ 0.72 |
|||||||
|
Adjustments: |
|||||||||||
|
Loss on land held for sale |
- |
- |
- |
0.02 |
|||||||
|
Adjusted Diluted Earnings Per Share (EPS) |
$ 0.55 |
$ 0.46 |
$ 0.89 |
$ 0.74 |
|||||||
|
EBITDA Reconciliation |
|||||||||||
|
(in millions) |
|||||||||||
|
Q2 2012 Actuals |
Q2 2011 Actuals |
Six Months Ended June 30, 2012 Actuals |
Six Months Ended June 30, 2011 Actuals |
Full-Year 2012 Outlook |
|||||||
|
Operating Income (per GAAP) |
$ 51.6 |
$ 45.1 |
$ 82.7 |
$ 70.8 |
$192.7-$195.2 |
||||||
|
Depreciation and amortization |
2.0 |
1.9 |
4.0 |
3.9 |
8.3 |
||||||
|
Earnings before interest, taxes, depreciation & amortization (non-GAAP) |
$ 53.6 |
$ 47.0 |
$ 86.7 |
$ 74.7 |
$201.0-$203.5 |
||||||
SOURCE Choice Hotels International, Inc.
CONTACT: David White, Senior Vice President, Chief Financial Officer & Treasurer, +1-301-592-5117, or Robin Pence, Vice President, Public Relations, +1-301-592-5186
Web Site: http://www.choicehotels.com
We redesigned the new CH.com with the latest technology. This makes it way faster and easier for you to use.
Sadly, the browser you are currently using does not support our new technology. Please download one of the awesome browsers below and you'll be on your way.