SILVER SPRING, Md., Oct. 24, 2012 /PRNewswire/ -- Choice Hotels International, Inc., (NYSE: CHH) today reported the following highlights for the third quarter of 2012:
-- Diluted earnings per share ("EPS") for the third quarter of 2012 of
$0.76 compared to diluted EPS of $0.71 for the third quarter of 2011, a
7% increase.
-- Earnings before interest, taxes, depreciation and amortization
("EBITDA") increased 4% to $67.3 million for the three months ended
September 30, 2012, compared to $64.5 million for the three months ended
September 30, 2011. Operating income increased 5% from $62.4 million for
the three months ended September 30, 2011 to $65.3 million for the same
period of 2012.
-- Franchising revenues increased 4% to $90.1 million for the three months
ended September 30, 2012 from $86.7 million for the same period of 2011.
Total revenues increased 9% to $210.4 million for the three months ended
September 30, 2012 compared to the same period of 2011.
-- Domestic royalty fees for the three months ended September 30, 2012
increased $4.1 million to $74.3 million from $70.2 million in the three
months ended September 30, 2011, an increase of 6%.
-- Franchising margins increased 50 basis points from 71.6% for the three
months ended September 30, 2011 to 72.1% for the same period of the
current year.
-- The effective income tax rate for the three months ended September 30,
2012 was 20.3% compared to 25.7% for the same period of the prior year.
-- Income tax expense for the three months ended September 30, 2012
includes discrete items and current tax benefits totaling $7.7 million
or $0.13 EPS that were not contemplated in the company's previous EPS
guidance.
-- Domestic unit and room growth increased 1.3 percent and 1.0 percent from
September 30, 2011, respectively.
-- Domestic system-wide revenue per available room ("RevPAR") increased
5.6% for the three months ended September 30, 2012 compared to the same
period of 2011 as occupancy and average daily rates increased 180 basis
points and 2.7 percent, respectively.
-- The company executed 89 new domestic hotel franchise contracts for the
three months ended September 30, 2012 compared to 79 new domestic hotel
franchise contracts in the same period of the prior year, a 13%
increase.
-- The number of worldwide hotels under construction, awaiting conversion
or approved for development as of September 30, 2012 was 435 hotels
representing 36,150 rooms.
-- A special cash dividend in the amount of $10.41 per share or
approximately $600.7 million in the aggregate was paid on August 23,
2012. The special cash dividend was paid with the proceeds of the
company's recent offering of $400 million 5.75% unsecured senior notes
and its new $350 million senior credit facility entered into on July 25,
2012. As a result of these transactions, and as contemplated in the
company's previously provided EPS guidance, interest expense increased
$6.9 million to $10.2 million for the three months ended September 30,
2012 compared to the same period of the prior year.
"The lodging industry continues to improve despite challenging global economic conditions and this is reflected in our third quarter results," said Stephen P. Joyce, president and chief executive officer. "Our RevPAR increased by approximately 6%, driven by a further improvement of hotel occupancy levels and the pricing power of our brands. We are also pleased by the continued improvement of the development environment. We will continue to invest in programs designed to drive more reservations through our central channels, improve guest loyalty and improve the value of our brands in an effort to drive incremental business to our franchisees."
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 nine months ended September 30, 2012, the company paid $632.8 million of cash dividends to shareholders which included a special cash dividend in the amount of $10.41 per share or approximately $600.7 million paid on August 23, 2012. The company's current quarterly dividend rate per common share is $0.185, subject to declaration by our board of directors.
Share Repurchases
During the nine months ended September 30, 2012, the company repurchased 0.5 million shares for a total cost of $19.9 million and has authorization to purchase up to an additional 1.4 million shares under this program. The company did not repurchase any shares of common stock under the share repurchase program during the three months ended September 30, 2012. 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 September 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.
Balance Sheet
At September 30, 2012, the company had gross debt of $819.0 million and cash and cash equivalents totaling $115.1 million resulting in net debt of $703.9 million.
On June 27, 2012, the company issued unsecured senior notes in an aggregate principal amount of $400 million, in an underwritten, registered public offering. These 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 costs 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 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. As a result of entering into the senior secured credit facility, the company's existing $300 million senior unsecured revolving credit facility was terminated. Under the $300 million senior unsecured revolving credit facility the company could elect to have borrowings bear interest at (i) a base rate plus a margin ranging from 5 to 80 basis points based on the company's credit rating or (ii) LIBOR plus a margin ranging from 105 to 180 basis points based on the company's credit rating.
The proceeds from the issuance of the $400 million senior notes and the company's new senior secured credit facility were utilized to pay the special cash dividend.
Outlook
The company's fourth quarter 2012 diluted EPS is expected to be at least $0.40. The company expects full-year 2012 diluted EPS to range between $2.05 and $2.07. EBITDA for full-year 2012 are expected to range between $201 million and $202.5 million. These estimates include the following assumptions:
-- The company expects net domestic unit growth to increase by
approximately 1% in 2012;
-- RevPAR is expected to increase approximately 4% for fourth quarter of
2012 and increase between 6% and 6.5% for full-year 2012;
-- The effective royalty rate is expected to remain flat for full-year
2012;
-- All figures assume the existing share count;
-- An effective tax rate of 33.0% for the fourth quarter and 29.1% for
full-year 2012 and we expect our recurring effective tax rate for future
periods to be approximately 31.5%.
Conference Call
Choice will conduct a conference call on Thursday, October 25, 2012 at 9:30 a.m. EDT to discuss the company's third quarter 2012 results. The dial-in number to listen to the call is 1-866-383-8003, and the access code is 78277943. International callers should dial 1-617-597-5330 and enter the access code 78277943. 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 12:30 p.m. EDT on Thursday, October 25, 2012 through Thursday, November 1, 2012 by calling 1-888-286-8010 and entering access code 20807104. The international dial-in number for the replay is 1-617-801-6888, access code 20807104. 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 September 30, 2012, 360 hotels, representing 29,000 rooms, were under construction, awaiting conversion or approved for development in the United States. Additionally, 75 hotels, representing approximately 7,000 rooms, were under construction, awaiting conversion or approved for development in more than 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 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
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 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.
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 Collectionare proprietary trademarks and service marks of Choice Hotels International.
Choice Hotels International, Inc.
Exhibit 1
Consolidated Statements of Income
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
Variance Variance
2012 2011 $ % 2012 2011 $ %
---- ---- --- --- ---- ---- --- ---
(In thousands, except per share amounts)
REVENUES:
Royalty fees $80,845 $77,090 $3,755 5% $194,762 $182,504 $12,258 7%
Initial franchise and relicensing fees 3,247 3,583 (336) (9%) 8,953 9,083 (130) (1%)
Procurement services 3,839 4,103 (264) (6%) 13,990 14,037 (47) (0%)
Marketing and reservation 119,062 104,393 14,669 14% 284,624 258,192 26,432 10%
Hotel operations 1,238 1,236 2 0% 3,440 3,173 267 8%
Other 2,182 1,916 266 14% 7,434 5,914 1,520 26%
----- ----- --- --- ----- ----- ----- ---
Total revenues 210,413 192,321 18,092 9% 513,203 472,903 40,300 9%
OPERATING EXPENSES:
Selling, general and administrative 23,170 22,555 615 3% 72,073 72,941 (868) (1%)
Depreciation and amortization 1,995 2,073 (78) (4%) 5,989 5,976 13 0%
Marketing and reservation 119,062 104,393 14,669 14% 284,624 258,192 26,432 10%
Hotel operations 933 900 33 4% 2,609 2,593 16 1%
--- --- --- --- ----- ----- --- ---
Total operating expenses 145,160 129,921 15,239 12% 365,295 339,702 25,593 8%
Operating income 65,253 62,400 2,853 5% 147,908 133,201 14,707 11%
OTHER INCOME AND EXPENSES, NET:
Interest expense 10,166 3,228 6,938 215% 16,823 9,719 7,104 73%
Interest income (425) (506) 81 (16%) (1,156) (937) (219) 23%
Loss on extinguishment of debt 526 - 526 NM 526 - 526 NM
Other (gains) and losses (511) 2,673 (3,184) (119%) (2,137) 3,678 (5,815) (158%)
Equity in net (income) loss of affiliates (171) 39 (210) (538%) 12 (262) 274 (105%)
Total other income and expenses, net 9,585 5,434 4,151 76% 14,068 12,198 1,870 15%
----- ----- ----- --- ------ ------ ----- ---
Income before income taxes 55,668 56,966 (1,298) (2%) 133,840 121,003 12,837 11%
Income taxes 11,291 14,664 (3,373) (23%) 37,604 35,393 2,211 6%
------ ------ ------ ------ ------ -----
Net income $44,377 $42,302 $2,075 5% $96,236 $85,610 $10,626 12%
======= ======= ====== === ======= ======= ======= ===
Basic earnings per share $0.77 $0.71 $0.06 8% $1.66 $1.43 $0.23 16%
===== ===== ===== === ===== ===== ===== ===
Diluted earnings per share $0.76 $0.71 $0.05 7% $1.65 $1.43 $0.22 15%
===== ===== ===== === ===== ===== ===== ===
Choice Hotels International, Inc. Exhibit 2
Consolidated Balance Sheets
(In thousands, except per share amounts) September 30, December 31,
2012 2011
---- ----
(Unaudited)
ASSETS
Cash and cash equivalents $115,064 $107,057
Accounts receivable, net 66,196 53,012
Investments, employee benefit plans, at fair value 3,668 12,094
Other current assets 29,749 22,633
------ ------
Total
current
assets 214,677 194,796
Fixed assets and intangibles, net 133,382 135,252
Receivable -- marketing and reservation fees 46,249 54,014
Investments, employee benefit plans, at fair value 12,530 11,678
Other assets 76,233 51,949
------ ------
Total
assets $483,071 $447,689
-------- --------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Accounts payable and accrued expenses $87,784 $92,240
Deferred revenue 76,949 68,825
Deferred compensation & retirement plan obligations 17,870 18,935
Current portion of long-term debt 10,065 673
Other current liabilities 14,506 3,892
------ -----
Total current
liabilities 207,174 184,565
Long-term debt 808,911 252,032
Deferred compensation & retirement plan obligations 19,992 20,593
Other liabilities 16,391 16,060
------ ------
Total
liabilities 1,052,468 473,250
Common stock, $0.01 par value 581 583
Additional paid-in-capital 107,939 102,665
Accumulated other comprehensive loss (5,904) (6,801)
Treasury stock, at cost (930,487) (916,955)
Retained earnings 258,474 794,947
------- -------
Total
shareholders'
deficit (569,397) (25,561)
Total
liabilities
and
shareholders'
deficit $483,071 $447,689
-------- --------
Choice Hotels International,
Inc. Exhibit 3
Consolidated Statements of
Cash Flows
(Unaudited)
(In thousands) Nine Months Ended September 30,
-------------------------------
2012 2011
---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $96,236 $85,610
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 5,989 5,976
Provision for bad debts, net 1,802 845
Non-cash stock compensation
and other charges 7,306 10,262
Non-cash interest and other
(income) loss (633) 3,079
Loss on extinguishment of
debt 526 -
Dividends received from
equity method investments 855 316
Equity in net (income) loss
of affiliates 12 (262)
Changes in assets and
liabilities:
Receivables (17,405) (15,494)
Receivable -marketing and
reservation fees, net 20,811 (1,474)
Accounts payable 5,980 4,468
Accrued expenses (10,309) (10,584)
Income taxes payable/
receivable 12,786 14,354
Deferred income taxes (1,627) 2,839
Deferred revenue 8,018 9,375
Other assets (7,458) (556)
Other liabilities (1,613) (2,861)
------ ------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 121,276 105,893
------- -------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Investment in property and
equipment (12,525) (8,129)
Equity method investments (9,454) (3,600)
Purchases of investments,
employee benefit plans (1,191) (1,051)
Proceeds from sales of
investments, employee
benefit plans 10,909 566
Issuance of notes receivable (7,305) (4,320)
Collections of notes
receivable 326 15
Other items, net (322) (312)
---- ----
NET CASH USED IN INVESTING
ACTIVITIES (19,562) (16,831)
------- -------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net borrowings (repayments)
pursuant to revolving credit
facilities 16,725 (200)
Repayments of long-term debt (502) (74)
Proceeds from the issuance of
long-term debt 543,500 75
Purchase of treasury stock (22,227) (24,796)
Dividends paid (632,751) (32,923)
Excess tax benefits from
stock-based compensation 793 1,108
Debt issuance costs (4,753) (2,356)
Proceeds from exercise of
stock options 4,695 3,726
----- -----
NET CASH USED IN FINANCING
ACTIVITIES (94,520) (55,440)
------- -------
Net change in cash and cash
equivalents 7,194 33,622
Effect of foreign exchange
rate changes on cash and
cash equivalents 813 (147)
Cash and cash equivalents at
beginning of period 107,057 91,259
------- ------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $115,064 $124,734
======== ========
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 4
SUPPLEMENTAL OPERATING INFORMATION
DOMESTIC HOTEL SYSTEM
(UNAUDITED)
For the Nine Months Ended September 30, 2012* For the Nine Months Ended September 30, 2011* Change
-------------------------------------------- -------------------------------------------- ------
Average Daily Average Daily Average Daily
Rate Occupancy RevPAR Rate Occupancy RevPAR Rate Occupancy RevPAR
---- --------- ------ ---- --------- ------ ---- --------- ------
Comfort Inn $81.52 59.2% $48.24 $79.24 57.0% $45.18 2.9% 220 bps 6.8%
Comfort Suites 85.62 61.8% 52.92 83.92 58.4% 49.05 2.0% 340 bps 7.9%
Sleep 72.29 56.3% 40.68 69.92 53.5% 37.39 3.4% 280 bps 8.8%
Quality 69.84 51.8% 36.14 67.95 49.9% 33.90 2.8% 190 bps 6.6%
Clarion 74.98 49.4% 37.00 73.76 46.7% 34.42 1.7% 270 bps 7.5%
Econo Lodge 55.76 48.7% 27.13 54.75 47.2% 25.83 1.8% 150 bps 5.0%
Rodeway 53.59 51.3% 27.48 52.13 48.6% 25.33 2.8% 270 bps 8.5%
MainStay 69.27 70.4% 48.79 66.17 67.1% 44.38 4.7% 330 bps 9.9%
Suburban 41.24 69.9% 28.82 40.24 67.7% 27.25 2.5% 220 bps 5.8%
Ascend Collection 112.27 63.5% 71.25 109.82 59.9% 65.81 2.2% 360 bps 8.3%
------ ---- ----- ------ ---- ----- --- --- --- ---
Total $73.65 55.5% $40.89 $71.78 53.3% $38.24 2.6% 220 bps 6.9%
====== ==== ====== ====== ==== ====== === === === ===
* Operating statistics represent hotel operations from December through August
For the Three Months Ended September 30, 2012* For the Three Months Ended September 30, 2011* Change
--------------------------------------------- --------------------------------------------- ------
Average Daily Average Daily Average Daily
Rate Occupancy RevPAR Rate Occupancy RevPAR Rate Occupancy RevPAR
---- --------- ------ ---- --------- ------ ---- --------- ------
Comfort Inn $87.58 70.2% $61.46 $85.05 68.6% $58.31 3.0% 160 bps 5.4%
Comfort Suites 89.69 70.2% 62.93 87.23 67.8% 59.13 2.8% 240 bps 6.4%
Sleep 76.09 64.8% 49.32 73.15 62.9% 46.02 4.0% 190 bps 7.2%
Quality 75.02 61.2% 45.88 72.90 59.8% 43.60 2.9% 140 bps 5.2%
Clarion 79.73 58.7% 46.82 78.13 55.1% 43.01 2.0% 360 bps 8.9%
Econo Lodge 60.60 57.7% 34.97 59.32 56.4% 33.45 2.2% 130 bps 4.5%
Rodeway 59.62 60.8% 36.23 58.23 58.8% 34.22 2.4% 200 bps 5.9%
MainStay 73.17 76.5% 55.96 69.45 77.3% 53.68 5.4% (80) bps 4.2%
Suburban 42.62 75.1% 32.03 41.00 72.8% 29.85 4.0% 230 bps 7.3%
Ascend Collection 115.98 71.4% 82.77 113.61 67.3% 76.50 2.1% 410 bps 8.2%
------ ---- ----- ------ ---- ----- --- --- --- ---
Total $78.63 65.0% $51.09 $76.53 63.2% $48.39 2.7% 180 bps 5.6%
====== ==== ====== ====== ==== ====== === === === ===
* Operating statistics represent hotel operations from June through August
For the Quarter Ended For the Nine Months Ended
--------------------- -------------------------
9/30/2012 9/30/2011 9/30/2012 9/30/2011
System-wide effective royalty rate 4.29% 4.29% 4.31% 4.32%
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 5
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA
(UNAUDITED)
September 30, 2012 September 30, 2011 Variance
------------------ ------------------ --------
Hotels Rooms Hotels Rooms Hotels Rooms % %
------ ----- ------ ----- ------ ----- --- ---
Comfort Inn 1,367 106,970 1,413 110,652 (46) (3,682) (3.3%) (3.3%)
Comfort Suites 603 46,647 616 47,667 (13) (1,020) (2.1%) (2.1%)
Sleep 390 28,232 392 28,431 (2) (199) (0.5%) (0.7%)
Quality 1,101 95,469 1,037 90,368 64 5,101 6.2% 5.6%
Clarion 187 26,943 189 27,448 (2) (505) (1.1%) (1.8%)
Econo Lodge 803 49,248 782 48,381 21 867 2.7% 1.8%
Rodeway 409 23,336 378 20,820 31 2,516 8.2% 12.1%
MainStay 39 2,997 39 3,027 - (30) 0.0% (1.0%)
Suburban 60 6,978 58 6,934 2 44 3.4% 0.6%
Ascend Collection 56 4,946 46 4,084 10 862 21.7% 21.1%
Cambria Suites 19 2,221 19 2,215 - 6 0.0% 0.3%
--- ----- --- ----- --- --- --- ---
Domestic Franchises 5,034 393,987 4,969 390,027 65 3,960 1.3% 1.0%
International Franchises 1,165 102,942 1,169 103,473 (4) (531) (0.3%) (0.5%)
----- ------- ----- ------- --- ---- ----- -----
Total Franchises 6,199 496,929 6,138 493,500 61 3,429 1.0% 0.7%
===== ======= ===== ======= === ===== === ===
Exhibit 6
CHOICE HOTELS INTERNATIONAL, INC.
SUPPLEMENTAL INFORMATION BY BRAND
DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS
(UNAUDITED)
For the Nine Months Ended September 30, 2012 For the Nine Months Ended September 30,
2011 % Change
-------------------------------------------- --------------------------------------- --------
New New New
Construction Conversion Total Construction Conversion Total Construction Conversion Total
------------ ---------- ----- ------------ ---------- ----- ------------ ---------- -----
Comfort Inn 10 17 27 6 28 34 67% (39%) (21%)
Comfort Suites 11 4 15 7 4 11 57% 0% 36%
Sleep 17 1 18 6 1 7 183% 0% 157%
Quality - 88 88 - 49 49 NM 80% 80%
Clarion - 14 14 - 12 12 NM 17% 17%
Econo Lodge - 33 33 - 36 36 NM (8%) (8%)
Rodeway - 46 46 - 32 32 NM 44% 44%
MainStay 2 1 3 1 3 4 100% (67%) (25%)
Suburban 1 1 2 2 2 4 (50%) (50%) (50%)
Ascend Collection 1 8 9 2 9 11 (50%) (11%) (18%)
Cambria Suites 4 - 4 4 - 4 0% NM 0%
--- --- --- --- --- --- --- --- ---
Total Domestic System 46 213 259 28 176 204 64% 21% 27%
=== === === === === === === === ===
For the Three Months Ended September 30, 2012 For the Three Months Ended September
30, 2011 % Change
--------------------------------------------- ------------------------------------- --------
New New New
Construction Conversion Total Construction Conversion Total Construction Conversion Total
------------ ---------- ----- ------------ ---------- ----- ------------ ---------- -----
Comfort Inn 4 5 9 1 10 11 300% (50%) (18%)
Comfort Suites 4 - 4 6 - 6 (33%) NM (33%)
Sleep 6 - 6 3 - 3 100% NM 100%
Quality - 25 25 - 14 14 NM 79% 79%
Clarion - 7 7 - 4 4 NM 75% 75%
Econo Lodge - 15 15 - 18 18 NM (17%) (17%)
Rodeway - 15 15 - 14 14 NM 7% 7%
MainStay 1 - 1 - - - NM NM NM
Suburban 1 - 1 - 1 1 NM (100%) 0%
Ascend Collection - 4 4 2 4 6 (100%) 0% (33%)
Cambria Suites 2 - 2 2 - 2 0% NM 0%
--- --- --- --- --- --- --- --- ---
Total Domestic System 18 71 89 14 65 79 29% 9% 13%
=== === === === === === === === ===
Exhibit 7
CHOICE HOTELS INTERNATIONAL, INC.
DOMESTIC HOTEL PIPELINE OF HOTELS UNDER CONSTRUCTION, AWAITING CONVERSION OR APPROVED FOR DEVELOPMENT
(UNAUDITED)
A hotel in the domestic pipeline does not always result in an open and operating hotel due to various factors.
Variance
--------
September 30, 2012 September 30, 2011
Units Units Conversion New Construction Total
----- ----- ---------- ---------------- -----
Conversion New Construction Total Conversion New Construction Total Units % Units % Units %
---------- ---------------- ----- ---------- ---------------- ----- ----- --- ----- --- ----- ---
Comfort Inn 23 39 62 23 47 70 - 0% (8) (17%) (8) (11%)
Comfort Suites 1 77 78 1 105 106 - 0% (28) (27%) (28) (26%)
Sleep 1 38 39 - 62 62 1 NM (24) (39%) (23) (37%)
Quality 37 3 40 29 5 34 8 28% (2) (40%) 6 18%
Clarion 18 1 19 10 1 11 8 80% - 0% 8 73%
Econo Lodge 23 1 24 31 1 32 (8) (26%) - 0% (8) (25%)
Rodeway 25 - 25 18 1 19 7 39% (1) (100%) 6 32%
MainStay 1 18 19 3 28 31 (2) (67%) (10) (36%) (12) (39%)
Suburban 2 14 16 1 20 21 1 100% (6) (30%) (5) (24%)
Ascend Collection 9 4 13 7 5 12 2 29% (1) (20%) 1 8%
Cambria Suites - 25 25 - 32 32 - NM (7) (22%) (7) (22%)
--- --- --- --- --- --- --- --- --- ---- --- ----
140 220 360 123 307 430 17 14% (87) (28%) (70) (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 September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2012 2011 2012 2011
---- ---- ---- ----
Franchising Revenues:
Total Revenues $210,413 $192,321 $513,203 $472,903
Adjustments:
Marketing and reservation revenues (119,062) (104,393) (284,624) (258,192)
Hotel operations (1,238) (1,236) (3,440) (3,173)
Franchising Revenues $90,113 $86,692 $225,139 $211,538
Franchising Margins:
Operating Margin:
Total Revenues $210,413 $192,321 $513,203 $472,903
Operating Income $65,253 $62,400 $147,908 $133,201
Operating Margin 31.0% 32.4% 28.8% 28.2%
Franchising Margin:
Franchising Revenues $90,113 $86,692 $225,139 $211,538
Operating Income $65,253 $62,400 $147,908 $133,201
Hotel operations (305) (336) (831) (580)
$64,948 $62,064 $147,077 $132,621
------- ------- -------- --------
Franchising Margins 72.1% 71.6% 65.3% 62.7%
EBITDA Reconciliation
(in millions)
Q3 2012 Actuals Q3 2011 Actuals Nine Months Ended Nine Months Ended September 30, 2011 Actuals Full-Year 2012
September 30, 2012 Outlook
Actuals
-------
Operating Income (per GAAP) $65.3 $62.4 $147.9 $133.2 $192.9 - $194.4
Depreciation and amortization 2.0 2.1 6.0 6.0 8.1
Earnings before interest, taxes, depreciation & amortization (non-GAAP) $67.3 $64.5 $153.9 $139.2 $201 - $202.5
SOURCE Choice Hotels International, Inc.
SOURCE: Choice Hotels International, Inc.
PR Newswire
SILVER SPRING, Md., Oct. 24, 2012
SILVER SPRING, Md., Oct. 24, 2012 /PRNewswire/ -- Choice Hotels International, Inc., (NYSE: CHH) today reported the following highlights for the third quarter of 2012:
"The lodging industry continues to improve despite challenging global economic conditions and this is reflected in our third quarter results," said Stephen P. Joyce, president and chief executive officer. "Our RevPAR increased by approximately 6%, driven by a further improvement of hotel occupancy levels and the pricing power of our brands. We are also pleased by the continued improvement of the development environment. We will continue to invest in programs designed to drive more reservations through our central channels, improve guest loyalty and improve the value of our brands in an effort to drive incremental business to our franchisees."
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 nine months ended September 30, 2012, the company paid $632.8 million of cash dividends to shareholders which included a special cash dividend in the amount of $10.41 per share or approximately $600.7 million paid on August 23, 2012. The company's current quarterly dividend rate per common share is $0.185, subject to declaration by our board of directors.
Share Repurchases
During the nine months ended September 30, 2012, the company repurchased 0.5 million shares for a total cost of $19.9 million and has authorization to purchase up to an additional 1.4 million shares under this program. The company did not repurchase any shares of common stock under the share repurchase program during the three months ended September 30, 2012. 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 September 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.
Balance Sheet
At September 30, 2012, the company had gross debt of $819.0 million and cash and cash equivalents totaling $115.1 million resulting in net debt of $703.9 million.
On June 27, 2012, the company issued unsecured senior notes in an aggregate principal amount of $400 million, in an underwritten, registered public offering. These 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 costs 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 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. As a result of entering into the senior secured credit facility, the company's existing $300 million senior unsecured revolving credit facility was terminated. Under the $300 million senior unsecured revolving credit facility the company could elect to have borrowings bear interest at (i) a base rate plus a margin ranging from 5 to 80 basis points based on the company's credit rating or (ii) LIBOR plus a margin ranging from 105 to 180 basis points based on the company's credit rating.
The proceeds from the issuance of the $400 million senior notes and the company's new senior secured credit facility were utilized to pay the special cash dividend.
Outlook
The company's fourth quarter 2012 diluted EPS is expected to be at least $0.40. The company expects full-year 2012 diluted EPS to range between $2.05 and $2.07. EBITDA for full-year 2012 are expected to range between $201 million and $202.5 million. These estimates include the following assumptions:
Conference Call
Choice will conduct a conference call on Thursday, October 25, 2012 at 9:30 a.m. EDT to discuss the company's third quarter 2012 results. The dial-in number to listen to the call is 1-866-383-8003, and the access code is 78277943. International callers should dial 1-617-597-5330 and enter the access code 78277943. 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 12:30 p.m. EDT on Thursday, October 25, 2012 through Thursday, November 1, 2012 by calling 1-888-286-8010 and entering access code 20807104. The international dial-in number for the replay is 1-617-801-6888, access code 20807104. 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 September 30, 2012, 360 hotels, representing 29,000 rooms, were under construction, awaiting conversion or approved for development in the United States. Additionally, 75 hotels, representing approximately 7,000 rooms, were under construction, awaiting conversion or approved for development in more than 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 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
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 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.
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 Collectionare proprietary trademarks and service marks of Choice Hotels International.
|
Choice Hotels International, Inc. |
Exhibit 1 |
|||||||||||||||||
|
Consolidated Statements of Income |
||||||||||||||||||
|
(Unaudited) |
||||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||
|
Variance |
Variance |
|||||||||||||||||
|
2012 |
2011 |
$ |
% |
2012 |
2011 |
$ |
% |
|||||||||||
|
(In thousands, except per share amounts) |
||||||||||||||||||
|
REVENUES: |
||||||||||||||||||
|
Royalty fees |
$ 80,845 |
$ 77,090 |
$ 3,755 |
5% |
$ 194,762 |
$ 182,504 |
$ 12,258 |
7% |
||||||||||
|
Initial franchise and relicensing fees |
3,247 |
3,583 |
(336) |
(9%) |
8,953 |
9,083 |
(130) |
(1%) |
||||||||||
|
Procurement services |
3,839 |
4,103 |
(264) |
(6%) |
13,990 |
14,037 |
(47) |
(0%) |
||||||||||
|
Marketing and reservation |
119,062 |
104,393 |
14,669 |
14% |
284,624 |
258,192 |
26,432 |
10% |
||||||||||
|
Hotel operations |
1,238 |
1,236 |
2 |
0% |
3,440 |
3,173 |
267 |
8% |
||||||||||
|
Other |
2,182 |
1,916 |
266 |
14% |
7,434 |
5,914 |
1,520 |
26% |
||||||||||
|
Total revenues |
210,413 |
192,321 |
18,092 |
9% |
513,203 |
472,903 |
40,300 |
9% |
||||||||||
|
OPERATING EXPENSES: |
||||||||||||||||||
|
Selling, general and administrative |
23,170 |
22,555 |
615 |
3% |
72,073 |
72,941 |
(868) |
(1%) |
||||||||||
|
Depreciation and amortization |
1,995 |
2,073 |
(78) |
(4%) |
5,989 |
5,976 |
13 |
0% |
||||||||||
|
Marketing and reservation |
119,062 |
104,393 |
14,669 |
14% |
284,624 |
258,192 |
26,432 |
10% |
||||||||||
|
Hotel operations |
933 |
900 |
33 |
4% |
2,609 |
2,593 |
16 |
1% |
||||||||||
|
Total operating expenses |
145,160 |
129,921 |
15,239 |
12% |
365,295 |
339,702 |
25,593 |
8% |
||||||||||
|
Operating income |
65,253 |
62,400 |
2,853 |
5% |
147,908 |
133,201 |
14,707 |
11% |
||||||||||
|
OTHER INCOME AND EXPENSES, NET: |
||||||||||||||||||
|
Interest expense |
10,166 |
3,228 |
6,938 |
215% |
16,823 |
9,719 |
7,104 |
73% |
||||||||||
|
Interest income |
(425) |
(506) |
81 |
(16%) |
(1,156) |
(937) |
(219) |
23% |
||||||||||
|
Loss on extinguishment of debt |
526 |
- |
526 |
NM |
526 |
- |
526 |
NM |
||||||||||
|
Other (gains) and losses |
(511) |
2,673 |
(3,184) |
(119%) |
(2,137) |
3,678 |
(5,815) |
(158%) |
||||||||||
|
Equity in net (income) loss of affiliates |
(171) |
39 |
(210) |
(538%) |
12 |
(262) |
274 |
(105%) |
||||||||||
|
Total other income and expenses, net |
9,585 |
5,434 |
4,151 |
76% |
14,068 |
12,198 |
1,870 |
15% |
||||||||||
|
Income before income taxes |
55,668 |
56,966 |
(1,298) |
(2%) |
133,840 |
121,003 |
12,837 |
11% |
||||||||||
|
Income taxes |
11,291 |
14,664 |
(3,373) |
(23%) |
37,604 |
35,393 |
2,211 |
6% |
||||||||||
|
Net income |
$ 44,377 |
$ 42,302 |
$ 2,075 |
5% |
$ 96,236 |
$ 85,610 |
$ 10,626 |
12% |
||||||||||
|
Basic earnings per share |
$ 0.77 |
$ 0.71 |
$ 0.06 |
8% |
$ 1.66 |
$ 1.43 |
$ 0.23 |
16% |
||||||||||
|
Diluted earnings per share |
$ 0.76 |
$ 0.71 |
$ 0.05 |
7% |
$ 1.65 |
$ 1.43 |
$ 0.22 |
15% |
||||||||||
|
Choice Hotels International, Inc. |
Exhibit 2 |
||||||
|
Consolidated Balance Sheets |
|||||||
|
(In thousands, except per share amounts) |
September 30, |
December 31, |
|||||
|
2012 |
2011 |
||||||
|
(Unaudited) |
|||||||
|
ASSETS |
|||||||
|
Cash and cash equivalents |
$ 115,064 |
$ 107,057 |
|||||
|
Accounts receivable, net |
66,196 |
53,012 |
|||||
|
Investments, employee benefit plans, at fair value |
3,668 |
12,094 |
|||||
|
Other current assets |
29,749 |
22,633 |
|||||
|
Total current assets |
214,677 |
194,796 |
|||||
|
Fixed assets and intangibles, net |
133,382 |
135,252 |
|||||
|
Receivable -- marketing and reservation fees |
46,249 |
54,014 |
|||||
|
Investments, employee benefit plans, at fair value |
12,530 |
11,678 |
|||||
|
Other assets |
76,233 |
51,949 |
|||||
|
Total assets |
$ 483,071 |
$ 447,689 |
|||||
|
LIABILITIES AND SHAREHOLDERS' DEFICIT |
|||||||
|
Accounts payable and accrued expenses |
$ 87,784 |
$ 92,240 |
|||||
|
Deferred revenue |
76,949 |
68,825 |
|||||
|
Deferred compensation & retirement plan obligations |
17,870 |
18,935 |
|||||
|
Current portion of long-term debt |
10,065 |
673 |
|||||
|
Other current liabilities |
14,506 |
3,892 |
|||||
|
Total current liabilities |
207,174 |
184,565 |
|||||
|
Long-term debt |
808,911 |
252,032 |
|||||
|
Deferred compensation & retirement plan obligations |
19,992 |
20,593 |
|||||
|
Other liabilities |
16,391 |
16,060 |
|||||
|
Total liabilities |
1,052,468 |
473,250 |
|||||
|
Common stock, $0.01 par value |
581 |
583 |
|||||
|
Additional paid-in-capital |
107,939 |
102,665 |
|||||
|
Accumulated other comprehensive loss |
(5,904) |
(6,801) |
|||||
|
Treasury stock, at cost |
(930,487) |
(916,955) |
|||||
|
Retained earnings |
258,474 |
794,947 |
|||||
|
Total shareholders' deficit |
(569,397) |
(25,561) |
|||||
|
Total liabilities and shareholders' deficit |
$ 483,071 |
$ 447,689 |
|||||
|
Choice Hotels International, Inc. |
Exhibit 3 |
||
|
Consolidated Statements of Cash Flows |
|||
|
(Unaudited) |
|||
|
(In thousands) |
Nine Months Ended September 30, |
||
|
2012 |
2011 |
||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||
|
Net income |
$ 96,236 |
$ 85,610 |
|
|
Adjustments to reconcile net income to net cash provided |
|||
|
by operating activities: |
|||
|
Depreciation and amortization |
5,989 |
5,976 |
|
|
Provision for bad debts, net |
1,802 |
845 |
|
|
Non-cash stock compensation and other charges |
7,306 |
10,262 |
|
|
Non-cash interest and other (income) loss |
(633) |
3,079 |
|
|
Loss on extinguishment of debt |
526 |
- |
|
|
Dividends received from equity method investments |
855 |
316 |
|
|
Equity in net (income) loss of affiliates |
12 |
(262) |
|
|
Changes in assets and liabilities: |
|||
|
Receivables |
(17,405) |
(15,494) |
|
|
Receivable - marketing and reservation fees, net |
20,811 |
(1,474) |
|
|
Accounts payable |
5,980 |
4,468 |
|
|
Accrued expenses |
(10,309) |
(10,584) |
|
|
Income taxes payable/receivable |
12,786 |
14,354 |
|
|
Deferred income taxes |
(1,627) |
2,839 |
|
|
Deferred revenue |
8,018 |
9,375 |
|
|
Other assets |
(7,458) |
(556) |
|
|
Other liabilities |
(1,613) |
(2,861) |
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
121,276 |
105,893 |
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||
|
Investment in property and equipment |
(12,525) |
(8,129) |
|
|
Equity method investments |
(9,454) |
(3,600) |
|
|
Purchases of investments, employee benefit plans |
(1,191) |
(1,051) |
|
|
Proceeds from sales of investments, employee benefit plans |
10,909 |
566 |
|
|
Issuance of notes receivable |
(7,305) |
(4,320) |
|
|
Collections of notes receivable |
326 |
15 |
|
|
Other items, net |
(322) |
(312) |
|
|
NET CASH USED IN INVESTING ACTIVITIES |
(19,562) |
(16,831) |
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|||
|
Net borrowings (repayments) pursuant to revolving credit facilities |
16,725 |
(200) |
|
|
Repayments of long-term debt |
(502) |
(74) |
|
|
Proceeds from the issuance of long-term debt |
543,500 |
75 |
|
|
Purchase of treasury stock |
(22,227) |
(24,796) |
|
|
Dividends paid |
(632,751) |
(32,923) |
|
|
Excess tax benefits from stock-based compensation |
793 |
1,108 |
|
|
Debt issuance costs |
(4,753) |
(2,356) |
|
|
Proceeds from exercise of stock options |
4,695 |
3,726 |
|
|
NET CASH USED IN FINANCING ACTIVITIES |
(94,520) |
(55,440) |
|
|
Net change in cash and cash equivalents |
7,194 |
33,622 |
|
|
Effect of foreign exchange rate changes on cash and cash equivalents |
813 |
(147) |
|
|
Cash and cash equivalents at beginning of period |
107,057 |
91,259 |
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ 115,064 |
$ 124,734 |
|
|
CHOICE HOTELS INTERNATIONAL, INC. |
Exhibit 4 |
||||||||||||||||||||
|
SUPPLEMENTAL OPERATING INFORMATION |
|||||||||||||||||||||
|
DOMESTIC HOTEL SYSTEM |
|||||||||||||||||||||
|
(UNAUDITED) |
|||||||||||||||||||||
|
For the Nine Months Ended September 30, 2012* |
For the Nine Months Ended September 30, 2011* |
Change |
|||||||||||||||||||
|
Average Daily |
Average Daily |
Average Daily |
|||||||||||||||||||
|
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
|||||||||||||
|
Comfort Inn |
$ 81.52 |
59.2% |
$ 48.24 |
$ 79.24 |
57.0% |
$ 45.18 |
2.9% |
220 |
bps |
6.8% |
|||||||||||
|
Comfort Suites |
85.62 |
61.8% |
52.92 |
83.92 |
58.4% |
49.05 |
2.0% |
340 |
bps |
7.9% |
|||||||||||
|
Sleep |
72.29 |
56.3% |
40.68 |
69.92 |
53.5% |
37.39 |
3.4% |
280 |
bps |
8.8% |
|||||||||||
|
Quality |
69.84 |
51.8% |
36.14 |
67.95 |
49.9% |
33.90 |
2.8% |
190 |
bps |
6.6% |
|||||||||||
|
Clarion |
74.98 |
49.4% |
37.00 |
73.76 |
46.7% |
34.42 |
1.7% |
270 |
bps |
7.5% |
|||||||||||
|
Econo Lodge |
55.76 |
48.7% |
27.13 |
54.75 |
47.2% |
25.83 |
1.8% |
150 |
bps |
5.0% |
|||||||||||
|
Rodeway |
53.59 |
51.3% |
27.48 |
52.13 |
48.6% |
25.33 |
2.8% |
270 |
bps |
8.5% |
|||||||||||
|
MainStay |
69.27 |
70.4% |
48.79 |
66.17 |
67.1% |
44.38 |
4.7% |
330 |
bps |
9.9% |
|||||||||||
|
Suburban |
41.24 |
69.9% |
28.82 |
40.24 |
67.7% |
27.25 |
2.5% |
220 |
bps |
5.8% |
|||||||||||
|
Ascend Collection |
112.27 |
63.5% |
71.25 |
109.82 |
59.9% |
65.81 |
2.2% |
360 |
bps |
8.3% |
|||||||||||
|
Total |
$ 73.65 |
55.5% |
$ 40.89 |
$ 71.78 |
53.3% |
$ 38.24 |
2.6% |
220 |
bps |
6.9% |
|||||||||||
|
* Operating statistics represent hotel operations from December through August |
|||||||||||||||||||||
|
For the Three Months Ended September 30, 2012* |
For the Three Months Ended September 30, 2011* |
Change |
|||||||||||||||||||
|
Average Daily |
Average Daily |
Average Daily |
|||||||||||||||||||
|
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
|||||||||||||
|
Comfort Inn |
$ 87.58 |
70.2% |
$ 61.46 |
$ 85.05 |
68.6% |
$ 58.31 |
3.0% |
160 |
bps |
5.4% |
|||||||||||
|
Comfort Suites |
89.69 |
70.2% |
62.93 |
87.23 |
67.8% |
59.13 |
2.8% |
240 |
bps |
6.4% |
|||||||||||
|
Sleep |
76.09 |
64.8% |
49.32 |
73.15 |
62.9% |
46.02 |
4.0% |
190 |
bps |
7.2% |
|||||||||||
|
Quality |
75.02 |
61.2% |
45.88 |
72.90 |
59.8% |
43.60 |
2.9% |
140 |
bps |
5.2% |
|||||||||||
|
Clarion |
79.73 |
58.7% |
46.82 |
78.13 |
55.1% |
43.01 |
2.0% |
360 |
bps |
8.9% |
|||||||||||
|
Econo Lodge |
60.60 |
57.7% |
34.97 |
59.32 |
56.4% |
33.45 |
2.2% |
130 |
bps |
4.5% |
|||||||||||
|
Rodeway |
59.62 |
60.8% |
36.23 |
58.23 |
58.8% |
34.22 |
2.4% |
200 |
bps |
5.9% |
|||||||||||
|
MainStay |
73.17 |
76.5% |
55.96 |
69.45 |
77.3% |
53.68 |
5.4% |
(80) |
bps |
4.2% |
|||||||||||
|
Suburban |
42.62 |
75.1% |
32.03 |
41.00 |
72.8% |
29.85 |
4.0% |
230 |
bps |
7.3% |
|||||||||||
|
Ascend Collection |
115.98 |
71.4% |
82.77 |
113.61 |
67.3% |
76.50 |
2.1% |
410 |
bps |
8.2% |
|||||||||||
|
Total |
$ 78.63 |
65.0% |
$ 51.09 |
$ 76.53 |
63.2% |
$ 48.39 |
2.7% |
180 |
bps |
5.6% |
|||||||||||
|
* Operating statistics represent hotel operations from June through August |
|||||||||||||||||||||
|
For the Quarter Ended |
For the Nine Months Ended |
||||||||||||||||||||
|
9/30/2012 |
9/30/2011 |
9/30/2012 |
9/30/2011 |
||||||||||||||||||
|
System-wide effective royalty rate |
4.29% |
4.29% |
4.31% |
4.32% |
|||||||||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. |
Exhibit 5 |
||||||||||||||||
|
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA |
|||||||||||||||||
|
(UNAUDITED) |
|||||||||||||||||
|
September 30, 2012 |
September 30, 2011 |
Variance |
|||||||||||||||
|
Hotels |
Rooms |
Hotels |
Rooms |
Hotels |
Rooms |
% |
% |
||||||||||
|
Comfort Inn |
1,367 |
106,970 |
1,413 |
110,652 |
(46) |
(3,682) |
(3.3%) |
(3.3%) |
|||||||||
|
Comfort Suites |
603 |
46,647 |
616 |
47,667 |
(13) |
(1,020) |
(2.1%) |
(2.1%) |
|||||||||
|
Sleep |
390 |
28,232 |
392 |
28,431 |
(2) |
(199) |
(0.5%) |
(0.7%) |
|||||||||
|
Quality |
1,101 |
95,469 |
1,037 |
90,368 |
64 |
5,101 |
6.2% |
5.6% |
|||||||||
|
Clarion |
187 |
26,943 |
189 |
27,448 |
(2) |
(505) |
(1.1%) |
(1.8%) |
|||||||||
|
Econo Lodge |
803 |
49,248 |
782 |
48,381 |
21 |
867 |
2.7% |
1.8% |
|||||||||
|
Rodeway |
409 |
23,336 |
378 |
20,820 |
31 |
2,516 |
8.2% |
12.1% |
|||||||||
|
MainStay |
39 |
2,997 |
39 |
3,027 |
- |
(30) |
0.0% |
(1.0%) |
|||||||||
|
Suburban |
60 |
6,978 |
58 |
6,934 |
2 |
44 |
3.4% |
0.6% |
|||||||||
|
Ascend Collection |
56 |
4,946 |
46 |
4,084 |
10 |
862 |
21.7% |
21.1% |
|||||||||
|
Cambria Suites |
19 |
2,221 |
19 |
2,215 |
- |
6 |
0.0% |
0.3% |
|||||||||
|
Domestic Franchises |
5,034 |
393,987 |
4,969 |
390,027 |
65 |
3,960 |
1.3% |
1.0% |
|||||||||
|
International Franchises |
1,165 |
102,942 |
1,169 |
103,473 |
(4) |
(531) |
(0.3%) |
(0.5%) |
|||||||||
|
Total Franchises |
6,199 |
496,929 |
6,138 |
493,500 |
61 |
3,429 |
1.0% |
0.7% |
|||||||||
|
Exhibit 6 |
|||||||||||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. |
|||||||||||||||||||
|
SUPPLEMENTAL INFORMATION BY BRAND |
|||||||||||||||||||
|
DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS |
|||||||||||||||||||
|
(UNAUDITED) |
|||||||||||||||||||
|
For the Nine Months Ended September 30, 2012 |
For the Nine Months Ended September 30, 2011 |
% Change |
|||||||||||||||||
|
New |
New |
New |
|||||||||||||||||
|
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
|||||||||||
|
Comfort Inn |
10 |
17 |
27 |
6 |
28 |
34 |
67% |
(39%) |
(21%) |
||||||||||
|
Comfort Suites |
11 |
4 |
15 |
7 |
4 |
11 |
57% |
0% |
36% |
||||||||||
|
Sleep |
17 |
1 |
18 |
6 |
1 |
7 |
183% |
0% |
157% |
||||||||||
|
Quality |
- |
88 |
88 |
- |
49 |
49 |
NM |
80% |
80% |
||||||||||
|
Clarion |
- |
14 |
14 |
- |
12 |
12 |
NM |
17% |
17% |
||||||||||
|
Econo Lodge |
- |
33 |
33 |
- |
36 |
36 |
NM |
(8%) |
(8%) |
||||||||||
|
Rodeway |
- |
46 |
46 |
- |
32 |
32 |
NM |
44% |
44% |
||||||||||
|
MainStay |
2 |
1 |
3 |
1 |
3 |
4 |
100% |
(67%) |
(25%) |
||||||||||
|
Suburban |
1 |
1 |
2 |
2 |
2 |
4 |
(50%) |
(50%) |
(50%) |
||||||||||
|
Ascend Collection |
1 |
8 |
9 |
2 |
9 |
11 |
(50%) |
(11%) |
(18%) |
||||||||||
|
Cambria Suites |
4 |
- |
4 |
4 |
- |
4 |
0% |
NM |
0% |
||||||||||
|
Total Domestic System |
46 |
213 |
259 |
28 |
176 |
204 |
64% |
21% |
27% |
||||||||||
|
For the Three Months Ended September 30, 2012 |
For the Three Months Ended September 30, 2011 |
% Change |
|||||||||||||||||
|
New |
New |
New |
|||||||||||||||||
|
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
|||||||||||
|
Comfort Inn |
4 |
5 |
9 |
1 |
10 |
11 |
300% |
(50%) |
(18%) |
||||||||||
|
Comfort Suites |
4 |
- |
4 |
6 |
- |
6 |
(33%) |
NM |
(33%) |
||||||||||
|
Sleep |
6 |
- |
6 |
3 |
- |
3 |
100% |
NM |
100% |
||||||||||
|
Quality |
- |
25 |
25 |
- |
14 |
14 |
NM |
79% |
79% |
||||||||||
|
Clarion |
- |
7 |
7 |
- |
4 |
4 |
NM |
75% |
75% |
||||||||||
|
Econo Lodge |
- |
15 |
15 |
- |
18 |
18 |
NM |
(17%) |
(17%) |
||||||||||
|
Rodeway |
- |
15 |
15 |
- |
14 |
14 |
NM |
7% |
7% |
||||||||||
|
MainStay |
1 |
- |
1 |
- |
- |
- |
NM |
NM |
NM |
||||||||||
|
Suburban |
1 |
- |
1 |
- |
1 |
1 |
NM |
(100%) |
0% |
||||||||||
|
Ascend Collection |
- |
4 |
4 |
2 |
4 |
6 |
(100%) |
0% |
(33%) |
||||||||||
|
Cambria Suites |
2 |
- |
2 |
2 |
- |
2 |
0% |
NM |
0% |
||||||||||
|
Total Domestic System |
18 |
71 |
89 |
14 |
65 |
79 |
29% |
9% |
13% |
||||||||||
|
Exhibit 7 |
||||||||||||||||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. |
||||||||||||||||||||||||
|
DOMESTIC HOTEL PIPELINE OF HOTELS UNDER CONSTRUCTION, AWAITING CONVERSION OR APPROVED FOR DEVELOPMENT |
||||||||||||||||||||||||
|
(UNAUDITED) |
||||||||||||||||||||||||
|
A hotel in the domestic pipeline does not always result in an open and operating hotel due to various factors. |
||||||||||||||||||||||||
|
Variance |
||||||||||||||||||||||||
|
September 30, 2012 |
September 30, 2011 |
|||||||||||||||||||||||
|
Units |
Units |
Conversion |
New Construction |
Total |
||||||||||||||||||||
|
Conversion |
New Construction |
Total |
Conversion |
New Construction |
Total |
Units |
% |
Units |
% |
Units |
% |
|||||||||||||
|
Comfort Inn |
23 |
39 |
62 |
23 |
47 |
70 |
- |
0% |
(8) |
(17%) |
(8) |
(11%) |
||||||||||||
|
Comfort Suites |
1 |
77 |
78 |
1 |
105 |
106 |
- |
0% |
(28) |
(27%) |
(28) |
(26%) |
||||||||||||
|
Sleep |
1 |
38 |
39 |
- |
62 |
62 |
1 |
NM |
(24) |
(39%) |
(23) |
(37%) |
||||||||||||
|
Quality |
37 |
3 |
40 |
29 |
5 |
34 |
8 |
28% |
(2) |
(40%) |
6 |
18% |
||||||||||||
|
Clarion |
18 |
1 |
19 |
10 |
1 |
11 |
8 |
80% |
- |
0% |
8 |
73% |
||||||||||||
|
Econo Lodge |
23 |
1 |
24 |
31 |
1 |
32 |
(8) |
(26%) |
- |
0% |
(8) |
(25%) |
||||||||||||
|
Rodeway |
25 |
- |
25 |
18 |
1 |
19 |
7 |
39% |
(1) |
(100%) |
6 |
32% |
||||||||||||
|
MainStay |
1 |
18 |
19 |
3 |
28 |
31 |
(2) |
(67%) |
(10) |
(36%) |
(12) |
(39%) |
||||||||||||
|
Suburban |
2 |
14 |
16 |
1 |
20 |
21 |
1 |
100% |
(6) |
(30%) |
(5) |
(24%) |
||||||||||||
|
Ascend Collection |
9 |
4 |
13 |
7 |
5 |
12 |
2 |
29% |
(1) |
(20%) |
1 |
8% |
||||||||||||
|
Cambria Suites |
- |
25 |
25 |
- |
32 |
32 |
- |
NM |
(7) |
(22%) |
(7) |
(22%) |
||||||||||||
|
140 |
220 |
360 |
123 |
307 |
430 |
17 |
14% |
(87) |
(28%) |
(70) |
(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 September 30, |
Nine Months Ended September 30, |
|||||||||
|
2012 |
2011 |
2012 |
2011 |
||||||||
|
Franchising Revenues: |
|||||||||||
|
Total Revenues |
$ 210,413 |
$ 192,321 |
$ 513,203 |
$ 472,903 |
|||||||
|
Adjustments: |
|||||||||||
|
Marketing and reservation revenues |
(119,062) |
(104,393) |
(284,624) |
(258,192) |
|||||||
|
Hotel operations |
(1,238) |
(1,236) |
(3,440) |
(3,173) |
|||||||
|
Franchising Revenues |
$ 90,113 |
$ 86,692 |
$ 225,139 |
$ 211,538 |
|||||||
|
Franchising Margins: |
|||||||||||
|
Operating Margin: |
|||||||||||
|
Total Revenues |
$ 210,413 |
$ 192,321 |
$ 513,203 |
$ 472,903 |
|||||||
|
Operating Income |
$ 65,253 |
$ 62,400 |
$ 147,908 |
$ 133,201 |
|||||||
|
Operating Margin |
31.0% |
32.4% |
28.8% |
28.2% |
|||||||
|
Franchising Margin: |
|||||||||||
|
Franchising Revenues |
$ 90,113 |
$ 86,692 |
$ 225,139 |
$ 211,538 |
|||||||
|
Operating Income |
$ 65,253 |
$ 62,400 |
$ 147,908 |
$ 133,201 |
|||||||
|
Hotel operations |
(305) |
(336) |
(831) |
(580) |
|||||||
|
$ 64,948 |
$ 62,064 |
$ 147,077 |
$ 132,621 |
||||||||
|
Franchising Margins |
72.1% |
71.6% |
65.3% |
62.7% |
|||||||
|
EBITDA Reconciliation |
|||||||||||
|
(in millions) |
|||||||||||
|
Q3 2012 Actuals |
Q3 2011 Actuals |
Nine Months Ended September 30, 2012 Actuals |
Nine Months Ended September 30, 2011 Actuals |
Full-Year 2012 Outlook |
|||||||
|
Operating Income (per GAAP) |
$ 65.3 |
$ 62.4 |
$ 147.9 |
$ 133.2 |
$192.9 - $194.4 |
||||||
|
Depreciation and amortization |
2.0 |
2.1 |
6.0 |
6.0 |
8.1 |
||||||
|
Earnings before interest, taxes, depreciation & amortization (non-GAAP) |
$ 67.3 |
$ 64.5 |
$ 153.9 |
$ 139.2 |
$201 - $202.5 |
||||||
SOURCE Choice Hotels International, Inc.
CONTACT: David White, Senior Vice President, Chief Financial Officer & Treasurer, +1-301-592-5117; Robin Pence, Vice President, Public Relations, +1-301-592-5186
Web Site: http://www.choicehotels.com
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