SILVER SPRING, Md., Feb. 11, 2013 /PRNewswire/ -- Choice Hotels International, Inc., (NYSE:CHH) today reported the following highlights for the fourth quarter and full year 2012:
"2012 was a record breaking year for the company in terms of operating performance. We established new company records for the size of the domestic franchise system, total franchising revenues, franchising margins, operating cash flows, operating income and earnings per share," said Stephen P. Joyce, president and chief executive officer. "We are very pleased with our development results which increased 42 percent over the prior year, highlighted by the conversion of 46 properties, formerly operated as Jameson Inns, to our system and the execution of several Cambria Suites agreements in key markets important for Cambria's long-term success. We remain optimistic that the development and RevPAR environments will continue to improve and result in further growth of our business in 2013."
Full Year Highlights
-- Adjusted diluted earnings per share ("EPS") for full year 2012 were
$2.11 compared to $1.92 for full year 2011, a 10% increase. Adjusted
diluted EPS for full year 2012 and 2011 exclude certain special items,
as described below, totaling $0.04 and $0.07, respectively.
-- Excluding special items, adjusted earnings before interest, taxes,
depreciation and amortization ("EBITDA") increased 10% to $203.7 million
for the year ended December 31, 2012, compared to the prior year.
Operating income increased 12% from $171.9 million for the year ended
December 31, 2011 to $193.1 million for full year 2012.
-- Franchising revenues increased 6% to $302.2 million for the year ended
December 31, 2012 from $285.4 million for the same period of 2011.
Total revenues increased 8% to $691.5 million for the year ended
December 31, 2012 compared to the same period of 2011.
-- Adjusted franchising margins increased 280 basis points from 61.5% for
the year ended December 31, 2011 to 64.3% for the same period of the
current year.
-- Domestic royalty fees for the year ended December 31, 2012 increased
$15.4 million to $235.7 million from $220.3 million for the year ended
December 31, 2011, an increase of 7%.
-- Domestic unit and room growth increased 1.6 percent and 0.8 percent from
December 31, 2011, respectively.
-- Domestic system-wide revenue per available room ("RevPAR") increased
6.2% for the year ended December 31, 2012 compared to the year ended
December 31, 2011 as occupancy and average daily rates increased 200
basis points and 2.5 percent, respectively.
-- The effective royalty rate increased 1 basis point to 4.33% for the year
ended December 31, 2012 compared to 4.32% for the same period of the
prior year.
-- The company executed 473 new domestic hotel franchise contracts for the
year ended December 31, 2012 compared to 332 new domestic hotel
franchise contracts in the same period of the prior year, a 42%
increase.
-- The number of worldwide hotels under construction, awaiting conversion
or approved for development as of December 31, 2012 was 482 hotels
representing 38,969 rooms.
-- The effective income tax rate for the year ended December 31, 2012 was
28.7% compared to 30.1% for the same period of 2011.
-- During the year ended December 31, 2012, the company paid cash dividends
totaling approximately $654.1 million, including a special cash dividend
of $10.41 per share or approximately $600.7 million and purchased
approximately 0.5 million shares of its common stock for a total cost of
$19.9 million under the share repurchase program.
Fourth Quarter Highlights
-- Adjusted diluted EPS for fourth quarter 2012 were $0.45 compared to
$0.46 for the same period of the prior year. Diluted EPS were $0.42 for
the fourth quarter of 2012 compared to $0.42 for the same period of
2011. Adjusted diluted EPS for fourth quarter 2012 and 2011 exclude
certain special items, as described below, totaling $0.03 and $0.04,
respectively.
-- Excluding special items, adjusted EBITDA increased 11% to $49.3 million
for the three months ended December 31, 2012 compared to the same period
of the prior year. Operating income for the three months ended December
31, 2012 increased 17% from the same period of the prior year to $45.2
million.
-- Franchising revenues increased 4% from $73.9 million for the three
months ended December 31, 2011 to $77.0 million for the same period of
2012. Total revenues for the three months ended December 31, 2012
increased 7% compared to the same period of the prior year.
-- Domestic system-wide revenue per available room ("RevPAR") increased
4.2% for the three months ended December 31, 2012 compared to the same
period of 2011 as occupancy and average daily rates increased 120 basis
points and 2.0 percent, respectively.
-- The effective royalty rate increased 5 basis points to 4.36% for the
three months ended December 31, 2012 compared to 4.31% for the same
period of the prior year.
-- The company executed 214 new domestic hotel franchise contracts for the
three months ended December 31, 2012 compared to 128 new domestic hotel
franchise contracts in the same period of the prior year, a 67%
increase.
-- Reached an agreement with affiliates of Colony Capital, LLC, including
Colony Financial, Inc., and hospitality management company Aimbridge
Hospitality, to convert 46 properties, formerly operated as Jameson
Inns, to the company's Quality Inn, Comfort Inn and Econo Lodge brands,
representing the company's largest single conversion transaction,
excluding brand acquisitions.
-- Expanded Cambria Suites into additional major markets with new franchise
agreements executed for hotels in New York City, Phoenix, Arizona and
Plano, Texas.
-- Interest expense for the three months ended December 31, 2012 increased
$7.1 million over the same period of the prior reflecting the financing
transactions entered into during the second and third quarter of 2012 in
conjunction with the payment of the $600 million special cash dividend
paid on August 23, 2012.
Special Items
On December 27, 2012, the company settled its supplemental executive retirement plan and paid the actuarial equivalent of the lump sum value of the full accrued benefit to each participant. As a result of the settlement, the company recognized a settlement loss in SG&A expense totaling $1.8 million for the three months and year ended December 31, 2012. In addition, during the year ended December 31, 2012, the company recorded employee termination benefits charges in SG&A of approximately $0.5 million and recognized a loss on the extinguishment of debt totaling $0.5 million. These special items represent diluted EPS of $0.03 and $0.04 for the three months and year ended December 31, 2012, respectively.
During the three months and year ended December 31, 2011, the company recorded employee termination benefit charges included in SG&A expenses of approximately $3.6 million and $4.4 million, respectively. In addition, during the year ended December 31, 2011, the company reduced the carrying amount of a parcel of land held for sale resulting in a loss of $1.8 million included in other gains and losses. These special items represent diluted EPS of $0.04 and $0.07 for the three months and year ended December 31, 2011, respectively.
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 year ended December 31, 2012, the company paid $654.1 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 year ended December 31, 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 December 31, 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 December 31, 2012. Considering the effect of a two-for-one stock split in October 2005, the company had repurchased 78.3 million shares through December 31, 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. During the year ended December 31, 2012, the company advanced, net of repayments, approximately $41 million related to mezzanine financing and sliver equity investments to construct Cambria Suites in such markets as New York City and White Plains, New York, Phoenix, Arizona and Plano, Texas. At December 31, 2012 the company had approximately $68 million outstanding related to this program. Over the next several years, we expect to continue to opportunistically deploy capital pursuant to these programs to promote growth of our emerging brands. We expect these advances to range between $20 million and $40 million per year, however, 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 December 31, 2012, the company had gross debt of $855.3 million and cash and cash equivalents totaling $134.2 million resulting in net debt of $721.1 million. At December 31, 2011, the company had gross debt of $252.7 million and cash equivalents totaling $107.1 million resulting in net debt of $145.6 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 paid on August 23, 2012.
At December 31, 2012 and 2011, the company had outstanding mezzanine financing, real estate investments and sliver equity investments totaling $68 million and $27 million, respectively pursuant to its program to offer financing and investment support to incent franchise development for the Cambria Suites brand in strategic markets. These investments are reported in other current assets and other assets on the company's consolidated balance sheet.
Outlook
The company's first quarter 2013 diluted EPS is expected to be $0.26. The company expects full-year 2013 diluted EPS to range between $1.96 and $1.98. EBITDA for full-year 2013 are expected to range between $215 million and $217 million. These estimates include the following assumptions:
-- The company expects net domestic unit growth to increase by
approximately 1.5% in 2013;
-- RevPAR is expected to increase approximately 5% for first quarter of
2013 and increase between 4.5% and 5.5% for full-year 2013;
-- The effective royalty rate is expected to increase 3 basis points for
full-year 2013;
-- All figures assume the existing share count;
-- An effective tax rate of 28.5% and 30.6% for the first quarter and
full-year 2013, respectively.
Conference Call
Choice will conduct a conference call on Tuesday, February 12, 2013 at 9:00 a.m. EST to discuss the company's fourth quarter 2012 results. The dial-in number to listen to the call is 1-800-591-6930, and the access code is 96459022. International callers should dial 1-617-614-4908 and enter the access code 96459022. 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 11:00 a.m. EST on Tuesday, February 12, 2013 through Tuesday, February 19, 2013 by calling 1-888-286-8010 and entering access code 56450518. The international dial-in number for the replay is 1-617-801-6888, access code 56450518. 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 499,000 rooms, in the United States and more than 30 other countries and territories. As of December 31, 2012, 394 hotels, representing more than 31,000 rooms, were under construction, awaiting conversion or approved for development in the United States. Additionally, 88 hotels, representing approximately 7,800 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, as well as its Ascend Hotel Collection membership program, serve guests worldwide.
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, adjusted EBITDA, franchising revenues, adjusted franchising margins and adjusted SG&A expenses 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 EPS, 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, Adjusted EBITDA, Adjusted SG&A and Adjusted Franchising Margins: The company's management also uses adjusted diluted EPS, adjusted EBITDA, adjusted SG&A and adjusted franchising margins which exclude the loss on settlement of a pension plan, employee termination benefits, a loss on extinguishment of debt as well as a reduction in the carrying amount of land held for sale. The company utilizes these non-GAAP measures to enable investors to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of on-going operations.
Choice Hotels, Choice Hotels International, Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge, Rodeway Inn and Ascend Collectionare proprietary trademarks and service marks of Choice Hotels International.
© 2013 Choice Hotels International, Inc. All rights reserved.
Choice Hotels International, Inc. Exhibit 1
Consolidated Statements of Income
(Unaudited)
Three Months Ended December 31, Year Ended December 31,
------------------------------- -----------------------
Variance Variance
2012 2011 $ % 2012 2011 $ %
---- ---- --- --- ---- ---- --- ---
(In thousands, except per share amounts)
REVENUES:
Royalty fees $66,020 $62,922 $3,098 5% $260,782 $245,426 $15,356 6%
Initial franchise and relicensing fees 5,250 4,969 281 6% 14,203 14,052 151 1%
Procurement services 3,972 4,074 (102) (3%) 17,962 18,111 (149) (1%)
Marketing and reservation 100,160 90,844 9,316 10% 384,784 349,036 35,748 10%
Hotel operations 1,133 1,183 (50) (4%) 4,573 4,356 217 5%
Other 1,771 1,898 (127) (7%) 9,205 7,812 1,393 18%
----- ----- ---- --- ----- ----- ----- ---
Total revenues 178,306 165,890 12,416 7% 691,509 638,793 52,716 8%
OPERATING EXPENSES:
Selling, general and administrative 29,779 33,463 (3,684) (11%) 101,852 106,404 (4,552) (4%)
Depreciation and amortization 2,237 2,048 189 9% 8,226 8,024 202 3%
Marketing and reservation 100,160 90,844 9,316 10% 384,784 349,036 35,748 10%
Hotel operations 896 873 23 3% 3,505 3,466 39 1%
--- --- --- --- ----- ----- --- ---
Total operating expenses 133,072 127,228 5,844 5% 498,367 466,930 31,437 7%
Operating income 45,234 38,662 6,572 17% 193,142 171,863 21,279 12%
OTHER INCOME AND EXPENSES, NET:
Interest expense 10,366 3,220 7,146 222% 27,189 12,939 14,250 110%
Interest income (384) (369) (15) 4% (1,540) (1,306) (234) 18%
Loss on extinguishment of debt - - - NM 526 - 526 NM
Other (gains) and losses 148 (1,236) 1,384 (112%) (1,989) 2,442 (4,431) (181%)
Equity in net income of affiliates (224) (7) (217) 3100% (212) (269) 57 (21%)
Total other income and expenses, net 9,906 1,608 8,298 516% 23,974 13,806 10,168 74%
----- ----- ----- --- ------ ------ ------ ---
Income before income taxes 35,328 37,054 (1,726) (5%) 169,168 158,057 11,111 7%
Income taxes 10,877 12,268 (1,391) (11%) 48,481 47,661 820 2%
------ ------ ------ ------ ------ ---
Net income $24,451 $24,786 $(335) (1%) $120,687 $110,396 $10,291 9%
======= ======= ===== === ======== ======== ======= ===
Basic earnings per share $0.42 $0.42 $ - 0% $2.08 $1.86 $0.22 12%
===== ===== ============ === ===== ===== ===== ===
Diluted earnings per share $0.42 $0.42 $ - 0% $2.07 $1.85 $0.22 12%
===== ===== ============ === ===== ===== ===== ===
Choice Hotels International, Inc. Exhibit 2
Consolidated Balance Sheets
(In thousands, except per share amounts) December 31, December 31,
2012 2011
---- ----
(Unaudited)
ASSETS
Cash and cash equivalents $134,177 $107,057
Accounts receivable, net 52,270 53,012
Investments, employee benefit plans, at fair value 3,486 12,094
Other current assets 43,537 22,633
------ ------
Total current assets 233,470 194,796
Fixed assets and intangibles, net 130,937 135,252
Receivable -- marketing and reservation fees 42,179 54,014
Investments, employee benefit plans, at fair value 12,755 11,678
Other assets 91,431 51,949
------ ------
Total assets $510,772 $447,689
-------- --------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Accounts payable and accrued expenses $94,266 $92,240
Deferred revenue 71,154 68,825
Deferred compensation & retirement plan obligations 2,522 18,935
Current portion of long-term debt 8,195 673
Other current liabilities - 3,892
--- -----
Total current
liabilities 176,137 184,565
Long-term debt 847,150 252,032
Deferred compensation & retirement plan obligations 20,399 20,593
Other liabilities 15,990 16,060
------ ------
Total liabilities 1,059,676 473,250
----------------
Common stock, $0.01 par value 582 583
Additional paid-in-capital 110,246 102,665
Accumulated other comprehensive loss (4,216) (6,801)
Treasury stock, at cost (927,776) (916,955)
Retained earnings 272,260 794,947
------- -------
Total shareholders'
deficit (548,904) (25,561)
----------------
Total liabilities and shareholders'
deficit $510,772 $447,689
-------- --------
Choice Hotels International, Inc. Exhibit 3
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands) Year Ended December 31,
-----------------------
2012 2011
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $120,687 $110,396
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 8,226 8,024
Provision for bad debts, net 2,896 2,160
Non-cash stock compensation and other charges 12,375 14,511
Non-cash interest and other loss 292 2,208
Loss on extinguishment of debt 526 -
Dividends received from equity method investments 1,310 1,139
Equity in net income of affiliates (212) (269)
Changes in assets and liabilities:
Receivables (5,239) (7,785)
Receivable - marketing and reservation fees, net 30,313 623
Accounts payable 11 (1,851)
Accrued expenses 12,376 6,346
Income taxes payable/receivable (3,193) (4,562)
Deferred income taxes (540) 5,514
Deferred revenue 2,188 1,523
Other assets (3,476) (3,162)
Other liabilities (17,520) 29
------- ---
NET CASH PROVIDED BY OPERATING ACTIVITIES 161,020 134,844
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment (15,443) (10,924)
Equity method investments (20,285) (5,000)
Issuance of notes receivable (34,925) (12,766)
Collections of notes receivable 3,561 4,754
Purchases of investments, employee benefit plans (1,697) (1,602)
Proceeds from sales of investments, employee benefit plans 11,223 644
Proceeds from sale of assets - 1,654
Other items, net (433) (564)
---- ----
NET CASH USED IN INVESTING ACTIVITIES (57,999) (23,804)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of long-term debt 543,500 75
Net borrowings (repayments) pursuant to revolving credit facilities 57,000 (200)
Principal payments on long-term debt (4,422) (297)
Debt issuance costs (4,759) (2,356)
Dividends paid (654,092) (43,747)
Purchase of treasury stock (22,586) (53,617)
Excess tax benefits from stock-based compensation 1,559 1,227
Proceeds from exercise of stock options 7,090 3,845
----- -----
NET CASH USED IN FINANCING ACTIVITIES (76,710) (95,070)
------- -------
Net change in cash and cash equivalents 26,311 15,970
Effect of foreign exchange rate changes on cash and cash equivalents 809 (172)
Cash and cash equivalents at beginning of period 107,057 91,259
------- ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $134,177 $107,057
======== ========
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 4
SUPPLEMENTAL OPERATING INFORMATION
DOMESTIC HOTEL SYSTEM
(UNAUDITED)
For the Year Ended December 31, 2012* For the Year Ended December 31, 2011* Change
------------------------------------ ------------------------------------ ------
Average Daily Average Daily Average Daily
Rate Occupancy RevPAR Rate Occupancy RevPAR Rate Occupancy RevPAR
---- --------- ------ ---- --------- ------ ---- --------- ------
Comfort Inn $81.55 59.4% $48.42 $79.41 57.5% $45.62 2.7% 190 bps 6.1%
Comfort Suites 85.47 61.7% 52.74 83.72 58.6% 49.09 2.1% 310 bps 7.4%
Sleep 72.40 56.3% 40.77 69.96 53.6% 37.49 3.5% 270 bps 8.7%
Quality 69.46 51.6% 35.85 67.75 50.0% 33.86 2.5% 160 bps 5.9%
Clarion 74.94 49.4% 37.03 73.89 46.9% 34.64 1.4% 250 bps 6.9%
Econo Lodge 55.78 48.5% 27.05 54.71 47.5% 25.96 2.0% 100 bps 4.2%
Rodeway 53.36 50.8% 27.13 51.87 48.7% 25.27 2.9% 210 bps 7.4%
MainStay 69.34 70.4% 48.81 66.16 67.7% 44.80 4.8% 270 bps 9.0%
Suburban 41.61 69.7% 29.01 40.26 67.5% 27.15 3.4% 220 bps 6.9%
Ascend Collection 113.33 64.4% 72.94 113.59 60.3% 68.44 (0.2%) 410 bps 6.6%
------ ---- ----- ------ ---- ----- ----- --- --- ---
Total $73.60 55.5% $40.84 $71.83 53.5% $38.44 2.5% 200 bps 6.2%
====== ==== ====== ====== ==== ====== === === === ===
* Operating statistics represent hotel operations from December through November
For the Three Months Ended December 31, 2012* For the Three Months Ended December 31, 2011* Change
-------------------------------------------- -------------------------------------------- ------
Average Daily Average Daily Average Daily
Rate Occupancy RevPAR Rate Occupancy RevPAR Rate Occupancy RevPAR
---- --------- ------ ---- --------- ------ ---- --------- ------
Comfort Inn $81.67 60.0% $48.98 $79.92 58.8% $46.98 2.2% 120 bps 4.3%
Comfort Suites 85.01 61.4% 52.21 83.13 59.2% 49.23 2.3% 220 bps 6.1%
Sleep 72.70 56.5% 41.05 70.06 54.0% 37.80 3.8% 250 bps 8.6%
Quality 68.34 51.2% 35.02 67.17 50.2% 33.74 1.7% 100 bps 3.8%
Clarion 74.81 49.6% 37.12 74.27 47.6% 35.32 0.7% 200 bps 5.1%
Econo Lodge 55.84 48.0% 26.80 54.62 48.3% 26.37 2.2% (30) bps 1.6%
Rodeway 52.64 49.5% 26.07 51.12 49.1% 25.11 3.0% 40 bps 3.8%
MainStay 69.54 70.3% 48.85 66.12 69.7% 46.06 5.2% 60 bps 6.1%
Suburban 42.78 69.2% 29.61 40.31 66.6% 26.84 6.1% 260 bps 10.3%
Ascend Collection 116.26 67.0% 77.86 122.22 61.0% 74.56 (4.9%) 600 bps 4.4%
------ ---- ----- ------ ---- ----- ----- --- --- ---
Total $73.44 55.4% $40.68 $71.98 54.2% $39.03 2.0% 120 bps 4.2%
====== ==== ====== ====== ==== ====== === === === ===
* Operating statistics represent hotel operations from September through November
For the Quarter Ended For the Year Ended
--------------------- ------------------
12/31/2012 12/31/2011 12/31/2012 12/31/2011
System-wide effective royalty rate 4.36% 4.31% 4.33% 4.32%
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 5
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA
(UNAUDITED)
December 31, 2012 December 31, 2011 Variance
----------------- ----------------- --------
Hotels Rooms Hotels Rooms Hotels Rooms % %
------ ----- ------ ----- ------ ----- --- ---
Comfort Inn 1,349 105,471 1,399 109,330 (50) (3,859) (3.6%) (3.5%)
Comfort Suites 597 46,045 616 47,738 (19) (1,693) (3.1%) (3.5%)
Sleep 387 28,087 394 28,568 (7) (481) (1.8%) (1.7%)
Quality 1,152 98,078 1,047 91,502 105 6,576 10.0% 7.2%
Clarion 191 27,441 189 27,527 2 (86) 1.1% (0.3%)
Econo Lodge 817 49,951 797 49,483 20 468 2.5% 0.9%
Rodeway 410 23,370 388 21,627 22 1,743 5.7% 8.1%
MainStay 41 3,165 40 3,093 1 72 2.5% 2.3%
Suburban 63 7,291 60 7,126 3 165 5.0% 2.3%
Ascend Collection 57 4,982 52 4,617 5 365 9.6% 7.9%
Cambria Suites 19 2,221 19 2,215 - 6 0.0% 0.3%
--- ----- --- ----- --- --- --- ---
Domestic Franchises 5,083 396,102 5,001 392,826 82 3,276 1.6% 0.8%
International Franchises 1,160 103,151 1,177 104,379 (17) (1,228) (1.4%) (1.2%)
----- ------- ----- ------- --- ------ ----- -----
Total Franchises 6,243 499,253 6,178 497,205 65 2,048 1.1% 0.4%
===== ======= ===== ======= === ===== === ===
Exhibit 6
CHOICE HOTELS INTERNATIONAL, INC.
SUPPLEMENTAL INFORMATION BY BRAND
DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS
(UNAUDITED)
For the Year Ended December 31, 2012 For the Year Ended December 31, 2011 % Change
------------------------------------ ------------------------------------ --------
New New New
Construction Conversion Total Construction Conversion Total Construction Conversion Total
------------ ---------- ----- ------------ ---------- ----- ------------ ---------- -----
Comfort Inn 23 36 59 12 46 58 92% (22%) 2%
Comfort Suites 12 5 17 12 4 16 0% 25% 6%
Sleep 25 2 27 9 2 11 178% 0% 145%
Quality - 170 170 - 80 80 NM 113% 113%
Clarion - 22 22 - 19 19 NM 16% 16%
Econo Lodge - 59 59 1 56 57 (100%) 5% 4%
Rodeway - 71 71 - 49 49 NM 45% 45%
MainStay 12 1 13 6 3 9 100% (67%) 44%
Suburban 3 4 7 5 4 9 (40%) 0% (22%)
Ascend Collection 4 17 21 2 14 16 100% 21% 31%
Cambria Suites 7 - 7 8 - 8 (13%) NM (13%)
--- --- --- --- --- --- ---- --- ----
Total Domestic System 86 387 473 55 277 332 56% 40% 42%
=== === === === === === === === ===
For the Three Months Ended December 31, 2012 For the Three Months Ended December 31,
2011 % Change
-------------------------------------------- ---------------------------------------- --------
New New New
Construction Conversion Total Construction Conversion Total Construction Conversion Total
------------ ---------- ----- ------------ ---------- ----- ------------ ---------- -----
Comfort Inn 13 19 32 6 18 24 117% 6% 33%
Comfort Suites 1 1 2 5 - 5 (80%) NM (60%)
Sleep 8 1 9 3 1 4 167% 0% 125%
Quality - 82 82 - 31 31 NM 165% 165%
Clarion - 8 8 - 7 7 NM 14% 14%
Econo Lodge - 26 26 1 20 21 (100%) 30% 24%
Rodeway - 25 25 - 17 17 NM 47% 47%
MainStay 10 - 10 5 - 5 100% NM 100%
Suburban 2 3 5 3 2 5 (33%) 50% 0%
Ascend Collection 3 9 12 - 5 5 NM 80% 140%
Cambria Suites 3 - 3 4 - 4 (25%) NM (25%)
--- --- --- --- --- --- ---- --- ----
Total Domestic System 40 174 214 27 101 128 48% 72% 67%
=== === === === === === === === ===
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
--------
December 31, 2012 December 31, 2011
Units Units Conversion New Construction Total
----- ----- ---------- ---------------- -----
Conversion New Construction Total Conversion New Construction Total Units % Units % Units %
---------- ---------------- ----- ---------- ---------------- ----- ----- --- ----- --- ----- ---
Comfort Inn 33 49 82 29 46 75 4 14% 3 7% 7 9%
Comfort Suites 1 72 73 1 90 91 - 0% (18) (20%) (18) (20%)
Sleep Inn 1 43 44 1 49 50 - 0% (6) (12%) (6) (12%)
Quality 36 3 39 29 5 34 7 24% (2) (40%) 5 15%
Clarion 12 1 13 14 1 15 (2) (14%) - 0% (2) (13%)
Econo Lodge 24 - 24 25 2 27 (1) (4%) (2) (100%) (3) (11%)
Rodeway 35 - 35 22 1 23 13 59% (1) (100%) 12 52%
MainStay - 25 25 2 28 30 (2) (100%) (3) (11%) (5) (17%)
Suburban 1 15 16 2 20 22 (1) (50%) (5) (25%) (6) (27%)
Ascend Collection 11 7 18 6 4 10 5 83% 3 75% 8 80%
Cambria Suites - 25 25 - 31 31 - NM (6) (19%) (6) (19%)
--- --- --- --- --- --- --- --- --- ---- --- ----
Total Domestic Pipeline 154 240 394 131 277 408 23 18% (37) (13%) (14) (3%)
=== === === === === === === === === ==== === ===
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 8
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
(UNAUDITED)
CALCULATION OF FRANCHISING REVENUES AND ADJUSTED FRANCHISING MARGINS
(dollar amounts in thousands) Three Months Ended December 31, Year Ended December 31,
------------------------------- -----------------------
2012 2011 2012 2011
---- ---- ---- ----
Franchising Revenues:
Total Revenues $178,306 $165,890 $691,509 $638,793
Adjustments:
Marketing and reservation revenues (100,160) (90,844) (384,784) (349,036)
Hotel operations (1,133) (1,183) (4,573) (4,356)
Franchising Revenues $77,013 $73,863 $302,152 $285,401
-------
Franchising Margins:
Operating Margin:
Total Revenues $178,306 $165,890 $691,509 $638,793
Operating Income $45,234 $38,662 $193,142 $171,863
Operating Margin 25.4% 23.3% 27.9% 26.9%
-----
Adjusted Franchising Margin:
Franchising Revenues $77,013 $73,863 $302,152 $285,401
Operating Income $45,234 $38,662 $193,142 $171,863
Employee termination benefits - 3,619 491 4,444
Loss on settlement of pension plan 1,818 - 1,818 -
Hotel operations (237) (310) (1,068) (890)
$46,815 $41,971 $194,383 $175,417
------- ------- -------- --------
Adjusted Franchising Margins 60.8% 56.8% 64.3% 61.5%
-----
CALCULATION OF ADJUSTED SELLING, GENERAL AND ADMINISTRATIVE COSTS
(dollar amounts in thousands) Three Months Ended December 31, Year Ended December 31,
------------------------------- -----------------------
2012 2011 2012 2011
---- ---- ---- ----
Selling, general and administrative expense $29,779 $33,463 $101,852 $106,404
Employee termination benefits - (3,619) (491) (4,444)
Loss on settlement of pension plan (1,818) - (1,818) -
Adjusted Selling, General and Administrative Expense $27,961 $29,844 $99,543 $101,960
======= ======= ======= ========
CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS)
(In thousands, except per share amounts) Three Months Ended December 31, Year Ended December 31,
------------------------------- -----------------------
2012 2011 2012 2011
---- ---- ---- ----
Net Income $24,451 $24,786 $120,687 $110,396
Adjustments:
Employee termination benefits - 2,291 312 2,813
Less on settlement of pension plan 1,774 - 1,774 -
Loss on extinguishment of debt - - 334 -
Loss on land held for sale - - - 1,119
Adjusted Net Income $26,225 $27,077 $123,107 $114,328
------- ------- -------- --------
Weighted average shares outstanding-diluted 58,377 58,608 58,265 59,525
Diluted Earnings Per Share $0.42 $0.42 $2.07 $1.85
Adjustments:
Employee termination benefits - 0.04 - 0.05
Loss on settlement of pension plan 0.03 - 0.03 -
Loss on extinguishment of debt - - 0.01 -
Loss on land held for sale - - - 0.02
Adjusted Diluted Earnings Per Share (EPS) $0.45 $0.46 $2.11 $1.92
----- ----- ----- -----
Adjusted EBITDA Reconciliation
(in thousands)
Q4 2012 Actuals Q4 2011 Actuals Year Ended December Year Ended December Full-Year 2013 Outlook
31, 2012 Actuals 31, 2011 Actuals Range
---------------- ---------------- -----
Operating Income (per GAAP) $45,234 $38,662 $193,142 $171,863 $205,100 - $207,100
Employee termination benefits - 3,619 491 4,444 - -
Loss on settlement of pension plan 1,818 - 1,818 - - -
Depreciation and amortization 2,237 2,048 8,226 8,024 9,900 - 9,900
Adjusted Earnings before interest, taxes, depreciation & amortization (non-GAAP) $49,289 $44,329 $203,677 $184,331 $215,000 $217,000
=======
SOURCE Choice Hotels International, Inc.
SOURCE: Choice Hotels International, Inc.
PR Newswire
SILVER SPRING, Md., Feb. 11, 2013
SILVER SPRING, Md., Feb. 11, 2013 /PRNewswire/ -- Choice Hotels International, Inc., (NYSE:CHH) today reported the following highlights for the fourth quarter and full year 2012:
"2012 was a record breaking year for the company in terms of operating performance. We established new company records for the size of the domestic franchise system, total franchising revenues, franchising margins, operating cash flows, operating income and earnings per share," said Stephen P. Joyce, president and chief executive officer. "We are very pleased with our development results which increased 42 percent over the prior year, highlighted by the conversion of 46 properties, formerly operated as Jameson Inns, to our system and the execution of several Cambria Suites agreements in key markets important for Cambria's long-term success. We remain optimistic that the development and RevPAR environments will continue to improve and result in further growth of our business in 2013."
Full Year Highlights
Fourth Quarter Highlights
Special Items
On December 27, 2012, the company settled its supplemental executive retirement plan and paid the actuarial equivalent of the lump sum value of the full accrued benefit to each participant. As a result of the settlement, the company recognized a settlement loss in SG&A expense totaling $1.8 million for the three months and year ended December 31, 2012. In addition, during the year ended December 31, 2012, the company recorded employee termination benefits charges in SG&A of approximately $0.5 million and recognized a loss on the extinguishment of debt totaling $0.5 million. These special items represent diluted EPS of $0.03 and $0.04 for the three months and year ended December 31, 2012, respectively.
During the three months and year ended December 31, 2011, the company recorded employee termination benefit charges included in SG&A expenses of approximately $3.6 million and $4.4 million, respectively. In addition, during the year ended December 31, 2011, the company reduced the carrying amount of a parcel of land held for sale resulting in a loss of $1.8 million included in other gains and losses. These special items represent diluted EPS of $0.04 and $0.07 for the three months and year ended December 31, 2011, respectively.
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 year ended December 31, 2012, the company paid $654.1 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 year ended December 31, 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 December 31, 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 December 31, 2012. Considering the effect of a two-for-one stock split in October 2005, the company had repurchased 78.3 million shares through December 31, 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. During the year ended December 31, 2012, the company advanced, net of repayments, approximately $41 million related to mezzanine financing and sliver equity investments to construct Cambria Suites in such markets as New York City and White Plains, New York, Phoenix, Arizona and Plano, Texas. At December 31, 2012 the company had approximately $68 million outstanding related to this program. Over the next several years, we expect to continue to opportunistically deploy capital pursuant to these programs to promote growth of our emerging brands. We expect these advances to range between $20 million and $40 million per year, however, 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 December 31, 2012, the company had gross debt of $855.3 million and cash and cash equivalents totaling $134.2 million resulting in net debt of $721.1 million. At December 31, 2011, the company had gross debt of $252.7 million and cash equivalents totaling $107.1 million resulting in net debt of $145.6 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 paid on August 23, 2012.
At December 31, 2012 and 2011, the company had outstanding mezzanine financing, real estate investments and sliver equity investments totaling $68 million and $27 million, respectively pursuant to its program to offer financing and investment support to incent franchise development for the Cambria Suites brand in strategic markets. These investments are reported in other current assets and other assets on the company's consolidated balance sheet.
Outlook
The company's first quarter 2013 diluted EPS is expected to be $0.26. The company expects full-year 2013 diluted EPS to range between $1.96 and $1.98. EBITDA for full-year 2013 are expected to range between $215 million and $217 million. These estimates include the following assumptions:
Conference Call
Choice will conduct a conference call on Tuesday, February 12, 2013 at 9:00 a.m. EST to discuss the company's fourth quarter 2012 results. The dial-in number to listen to the call is 1-800-591-6930, and the access code is 96459022. International callers should dial 1-617-614-4908 and enter the access code 96459022. 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 11:00 a.m. EST on Tuesday, February 12, 2013 through Tuesday, February 19, 2013 by calling 1-888-286-8010 and entering access code 56450518. The international dial-in number for the replay is 1-617-801-6888, access code 56450518. 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 499,000 rooms, in the United States and more than 30 other countries and territories. As of December 31, 2012, 394 hotels, representing more than 31,000 rooms, were under construction, awaiting conversion or approved for development in the United States. Additionally, 88 hotels, representing approximately 7,800 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, as well as its Ascend Hotel Collection membership program, serve guests worldwide.
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, adjusted EBITDA, franchising revenues, adjusted franchising margins and adjusted SG&A expenses 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 EPS, 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, Adjusted EBITDA, Adjusted SG&A and Adjusted Franchising Margins: The company's management also uses adjusted diluted EPS, adjusted EBITDA, adjusted SG&A and adjusted franchising margins which exclude the loss on settlement of a pension plan, employee termination benefits, a loss on extinguishment of debt as well as a reduction in the carrying amount of land held for sale. The company utilizes these non-GAAP measures to enable investors to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of on-going operations.
Choice Hotels, Choice Hotels International, Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge, Rodeway Inn and Ascend Collectionare proprietary trademarks and service marks of Choice Hotels International.
© 2013 Choice Hotels International, Inc. All rights reserved.
|
Choice Hotels International, Inc. |
Exhibit 1 |
||||||||||||||
|
Consolidated Statements of Income |
|||||||||||||||
|
(Unaudited) |
|||||||||||||||
|
Three Months Ended December 31, |
Year Ended December 31, |
||||||||||||||
|
Variance |
Variance |
||||||||||||||
|
2012 |
2011 |
$ |
% |
2012 |
2011 |
$ |
% |
||||||||
|
(In thousands, except per share amounts) |
|||||||||||||||
|
REVENUES: |
|||||||||||||||
|
Royalty fees |
$ 66,020 |
$ 62,922 |
$ 3,098 |
5% |
$ 260,782 |
$ 245,426 |
$ 15,356 |
6% |
|||||||
|
Initial franchise and relicensing fees |
5,250 |
4,969 |
281 |
6% |
14,203 |
14,052 |
151 |
1% |
|||||||
|
Procurement services |
3,972 |
4,074 |
(102) |
(3%) |
17,962 |
18,111 |
(149) |
(1%) |
|||||||
|
Marketing and reservation |
100,160 |
90,844 |
9,316 |
10% |
384,784 |
349,036 |
35,748 |
10% |
|||||||
|
Hotel operations |
1,133 |
1,183 |
(50) |
(4%) |
4,573 |
4,356 |
217 |
5% |
|||||||
|
Other |
1,771 |
1,898 |
(127) |
(7%) |
9,205 |
7,812 |
1,393 |
18% |
|||||||
|
Total revenues |
178,306 |
165,890 |
12,416 |
7% |
691,509 |
638,793 |
52,716 |
8% |
|||||||
|
OPERATING EXPENSES: |
|||||||||||||||
|
Selling, general and administrative |
29,779 |
33,463 |
(3,684) |
(11%) |
101,852 |
106,404 |
(4,552) |
(4%) |
|||||||
|
Depreciation and amortization |
2,237 |
2,048 |
189 |
9% |
8,226 |
8,024 |
202 |
3% |
|||||||
|
Marketing and reservation |
100,160 |
90,844 |
9,316 |
10% |
384,784 |
349,036 |
35,748 |
10% |
|||||||
|
Hotel operations |
896 |
873 |
23 |
3% |
3,505 |
3,466 |
39 |
1% |
|||||||
|
Total operating expenses |
133,072 |
127,228 |
5,844 |
5% |
498,367 |
466,930 |
31,437 |
7% |
|||||||
|
Operating income |
45,234 |
38,662 |
6,572 |
17% |
193,142 |
171,863 |
21,279 |
12% |
|||||||
|
OTHER INCOME AND EXPENSES, NET: |
|||||||||||||||
|
Interest expense |
10,366 |
3,220 |
7,146 |
222% |
27,189 |
12,939 |
14,250 |
110% |
|||||||
|
Interest income |
(384) |
(369) |
(15) |
4% |
(1,540) |
(1,306) |
(234) |
18% |
|||||||
|
Loss on extinguishment of debt |
- |
- |
- |
NM |
526 |
- |
526 |
NM |
|||||||
|
Other (gains) and losses |
148 |
(1,236) |
1,384 |
(112%) |
(1,989) |
2,442 |
(4,431) |
(181%) |
|||||||
|
Equity in net income of affiliates |
(224) |
(7) |
(217) |
3100% |
(212) |
(269) |
57 |
(21%) |
|||||||
|
Total other income and expenses, net |
9,906 |
1,608 |
8,298 |
516% |
23,974 |
13,806 |
10,168 |
74% |
|||||||
|
Income before income taxes |
35,328 |
37,054 |
(1,726) |
(5%) |
169,168 |
158,057 |
11,111 |
7% |
|||||||
|
Income taxes |
10,877 |
12,268 |
(1,391) |
(11%) |
48,481 |
47,661 |
820 |
2% |
|||||||
|
Net income |
$ 24,451 |
$ 24,786 |
$ (335) |
(1%) |
$ 120,687 |
$ 110,396 |
$ 10,291 |
9% |
|||||||
|
Basic earnings per share |
$ 0.42 |
$ 0.42 |
$ - |
0% |
$ 2.08 |
$ 1.86 |
$ 0.22 |
12% |
|||||||
|
Diluted earnings per share |
$ 0.42 |
$ 0.42 |
$ - |
0% |
$ 2.07 |
$ 1.85 |
$ 0.22 |
12% |
|||||||
|
Choice Hotels International, Inc. |
Exhibit 2 |
||||
|
Consolidated Balance Sheets |
|||||
|
(In thousands, except per share amounts) |
December 31, |
December 31, |
|||
|
2012 |
2011 |
||||
|
(Unaudited) |
|||||
|
ASSETS |
|||||
|
Cash and cash equivalents |
$ 134,177 |
$ 107,057 |
|||
|
Accounts receivable, net |
52,270 |
53,012 |
|||
|
Investments, employee benefit plans, at fair value |
3,486 |
12,094 |
|||
|
Other current assets |
43,537 |
22,633 |
|||
|
Total current assets |
233,470 |
194,796 |
|||
|
Fixed assets and intangibles, net |
130,937 |
135,252 |
|||
|
Receivable -- marketing and reservation fees |
42,179 |
54,014 |
|||
|
Investments, employee benefit plans, at fair value |
12,755 |
11,678 |
|||
|
Other assets |
91,431 |
51,949 |
|||
|
Total assets |
$ 510,772 |
$ 447,689 |
|||
|
LIABILITIES AND SHAREHOLDERS' DEFICIT |
|||||
|
Accounts payable and accrued expenses |
$ 94,266 |
$ 92,240 |
|||
|
Deferred revenue |
71,154 |
68,825 |
|||
|
Deferred compensation & retirement plan obligations |
2,522 |
18,935 |
|||
|
Current portion of long-term debt |
8,195 |
673 |
|||
|
Other current liabilities |
- |
3,892 |
|||
|
Total current liabilities |
176,137 |
184,565 |
|||
|
Long-term debt |
847,150 |
252,032 |
|||
|
Deferred compensation & retirement plan obligations |
20,399 |
20,593 |
|||
|
Other liabilities |
15,990 |
16,060 |
|||
|
Total liabilities |
1,059,676 |
473,250 |
|||
|
Common stock, $0.01 par value |
582 |
583 |
|||
|
Additional paid-in-capital |
110,246 |
102,665 |
|||
|
Accumulated other comprehensive loss |
(4,216) |
(6,801) |
|||
|
Treasury stock, at cost |
(927,776) |
(916,955) |
|||
|
Retained earnings |
272,260 |
794,947 |
|||
|
Total shareholders' deficit |
(548,904) |
(25,561) |
|||
|
Total liabilities and shareholders' deficit |
$ 510,772 |
$ 447,689 |
|||
|
Choice Hotels International, Inc. |
Exhibit 3 |
||
|
Consolidated Statements of Cash Flows |
|||
|
(Unaudited) |
|||
|
(In thousands) |
Year Ended December 31, |
||
|
2012 |
2011 |
||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||
|
Net income |
$ 120,687 |
$ 110,396 |
|
|
Adjustments to reconcile net income to net cash provided |
|||
|
by operating activities: |
|||
|
Depreciation and amortization |
8,226 |
8,024 |
|
|
Provision for bad debts, net |
2,896 |
2,160 |
|
|
Non-cash stock compensation and other charges |
12,375 |
14,511 |
|
|
Non-cash interest and other loss |
292 |
2,208 |
|
|
Loss on extinguishment of debt |
526 |
- |
|
|
Dividends received from equity method investments |
1,310 |
1,139 |
|
|
Equity in net income of affiliates |
(212) |
(269) |
|
|
Changes in assets and liabilities: |
|||
|
Receivables |
(5,239) |
(7,785) |
|
|
Receivable - marketing and reservation fees, net |
30,313 |
623 |
|
|
Accounts payable |
11 |
(1,851) |
|
|
Accrued expenses |
12,376 |
6,346 |
|
|
Income taxes payable/receivable |
(3,193) |
(4,562) |
|
|
Deferred income taxes |
(540) |
5,514 |
|
|
Deferred revenue |
2,188 |
1,523 |
|
|
Other assets |
(3,476) |
(3,162) |
|
|
Other liabilities |
(17,520) |
29 |
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
161,020 |
134,844 |
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||
|
Investment in property and equipment |
(15,443) |
(10,924) |
|
|
Equity method investments |
(20,285) |
(5,000) |
|
|
Issuance of notes receivable |
(34,925) |
(12,766) |
|
|
Collections of notes receivable |
3,561 |
4,754 |
|
|
Purchases of investments, employee benefit plans |
(1,697) |
(1,602) |
|
|
Proceeds from sales of investments, employee benefit plans |
11,223 |
644 |
|
|
Proceeds from sale of assets |
- |
1,654 |
|
|
Other items, net |
(433) |
(564) |
|
|
NET CASH USED IN INVESTING ACTIVITIES |
(57,999) |
(23,804) |
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|||
|
Proceeds from the issuance of long-term debt |
543,500 |
75 |
|
|
Net borrowings (repayments) pursuant to revolving credit facilities |
57,000 |
(200) |
|
|
Principal payments on long-term debt |
(4,422) |
(297) |
|
|
Debt issuance costs |
(4,759) |
(2,356) |
|
|
Dividends paid |
(654,092) |
(43,747) |
|
|
Purchase of treasury stock |
(22,586) |
(53,617) |
|
|
Excess tax benefits from stock-based compensation |
1,559 |
1,227 |
|
|
Proceeds from exercise of stock options |
7,090 |
3,845 |
|
|
NET CASH USED IN FINANCING ACTIVITIES |
(76,710) |
(95,070) |
|
|
Net change in cash and cash equivalents |
26,311 |
15,970 |
|
|
Effect of foreign exchange rate changes on cash and cash equivalents |
809 |
(172) |
|
|
Cash and cash equivalents at beginning of period |
107,057 |
91,259 |
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ 134,177 |
$ 107,057 |
|
|
CHOICE HOTELS INTERNATIONAL, INC. |
Exhibit 4 |
||||||||||||||||||||
|
SUPPLEMENTAL OPERATING INFORMATION |
|||||||||||||||||||||
|
DOMESTIC HOTEL SYSTEM |
|||||||||||||||||||||
|
(UNAUDITED) |
|||||||||||||||||||||
|
For the Year Ended December 31, 2012* |
For the Year Ended December 31, 2011* |
Change |
|||||||||||||||||||
|
Average Daily |
Average Daily |
Average Daily |
|||||||||||||||||||
|
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
|||||||||||||
|
Comfort Inn |
$ 81.55 |
59.4% |
$ 48.42 |
$ 79.41 |
57.5% |
$ 45.62 |
2.7% |
190 |
bps |
6.1% |
|||||||||||
|
Comfort Suites |
85.47 |
61.7% |
52.74 |
83.72 |
58.6% |
49.09 |
2.1% |
310 |
bps |
7.4% |
|||||||||||
|
Sleep |
72.40 |
56.3% |
40.77 |
69.96 |
53.6% |
37.49 |
3.5% |
270 |
bps |
8.7% |
|||||||||||
|
Quality |
69.46 |
51.6% |
35.85 |
67.75 |
50.0% |
33.86 |
2.5% |
160 |
bps |
5.9% |
|||||||||||
|
Clarion |
74.94 |
49.4% |
37.03 |
73.89 |
46.9% |
34.64 |
1.4% |
250 |
bps |
6.9% |
|||||||||||
|
Econo Lodge |
55.78 |
48.5% |
27.05 |
54.71 |
47.5% |
25.96 |
2.0% |
100 |
bps |
4.2% |
|||||||||||
|
Rodeway |
53.36 |
50.8% |
27.13 |
51.87 |
48.7% |
25.27 |
2.9% |
210 |
bps |
7.4% |
|||||||||||
|
MainStay |
69.34 |
70.4% |
48.81 |
66.16 |
67.7% |
44.80 |
4.8% |
270 |
bps |
9.0% |
|||||||||||
|
Suburban |
41.61 |
69.7% |
29.01 |
40.26 |
67.5% |
27.15 |
3.4% |
220 |
bps |
6.9% |
|||||||||||
|
Ascend Collection |
113.33 |
64.4% |
72.94 |
113.59 |
60.3% |
68.44 |
(0.2%) |
410 |
bps |
6.6% |
|||||||||||
|
Total |
$ 73.60 |
55.5% |
$ 40.84 |
$ 71.83 |
53.5% |
$ 38.44 |
2.5% |
200 |
bps |
6.2% |
|||||||||||
|
* Operating statistics represent hotel operations from December through November |
|||||||||||||||||||||
|
For the Three Months Ended December 31, 2012* |
For the Three Months Ended December 31, 2011* |
Change |
|||||||||||||||||||
|
Average Daily |
Average Daily |
Average Daily |
|||||||||||||||||||
|
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
|||||||||||||
|
Comfort Inn |
$ 81.67 |
60.0% |
$ 48.98 |
$ 79.92 |
58.8% |
$ 46.98 |
2.2% |
120 |
bps |
4.3% |
|||||||||||
|
Comfort Suites |
85.01 |
61.4% |
52.21 |
83.13 |
59.2% |
49.23 |
2.3% |
220 |
bps |
6.1% |
|||||||||||
|
Sleep |
72.70 |
56.5% |
41.05 |
70.06 |
54.0% |
37.80 |
3.8% |
250 |
bps |
8.6% |
|||||||||||
|
Quality |
68.34 |
51.2% |
35.02 |
67.17 |
50.2% |
33.74 |
1.7% |
100 |
bps |
3.8% |
|||||||||||
|
Clarion |
74.81 |
49.6% |
37.12 |
74.27 |
47.6% |
35.32 |
0.7% |
200 |
bps |
5.1% |
|||||||||||
|
Econo Lodge |
55.84 |
48.0% |
26.80 |
54.62 |
48.3% |
26.37 |
2.2% |
(30) |
bps |
1.6% |
|||||||||||
|
Rodeway |
52.64 |
49.5% |
26.07 |
51.12 |
49.1% |
25.11 |
3.0% |
40 |
bps |
3.8% |
|||||||||||
|
MainStay |
69.54 |
70.3% |
48.85 |
66.12 |
69.7% |
46.06 |
5.2% |
60 |
bps |
6.1% |
|||||||||||
|
Suburban |
42.78 |
69.2% |
29.61 |
40.31 |
66.6% |
26.84 |
6.1% |
260 |
bps |
10.3% |
|||||||||||
|
Ascend Collection |
116.26 |
67.0% |
77.86 |
122.22 |
61.0% |
74.56 |
(4.9%) |
600 |
bps |
4.4% |
|||||||||||
|
Total |
$ 73.44 |
55.4% |
$ 40.68 |
$ 71.98 |
54.2% |
$ 39.03 |
2.0% |
120 |
bps |
4.2% |
|||||||||||
|
* Operating statistics represent hotel operations from September through November |
|||||||||||||||||||||
|
For the Quarter Ended |
For the Year Ended |
||||||||||||||||||||
|
12/31/2012 |
12/31/2011 |
12/31/2012 |
12/31/2011 |
||||||||||||||||||
|
System-wide effective royalty rate |
4.36% |
4.31% |
4.33% |
4.32% |
|||||||||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. |
Exhibit 5 |
|||||||||||||||
|
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA |
||||||||||||||||
|
(UNAUDITED) |
||||||||||||||||
|
December 31, 2012 |
December 31, 2011 |
Variance |
||||||||||||||
|
Hotels |
Rooms |
Hotels |
Rooms |
Hotels |
Rooms |
% |
% |
|||||||||
|
Comfort Inn |
1,349 |
105,471 |
1,399 |
109,330 |
(50) |
(3,859) |
(3.6%) |
(3.5%) |
||||||||
|
Comfort Suites |
597 |
46,045 |
616 |
47,738 |
(19) |
(1,693) |
(3.1%) |
(3.5%) |
||||||||
|
Sleep |
387 |
28,087 |
394 |
28,568 |
(7) |
(481) |
(1.8%) |
(1.7%) |
||||||||
|
Quality |
1,152 |
98,078 |
1,047 |
91,502 |
105 |
6,576 |
10.0% |
7.2% |
||||||||
|
Clarion |
191 |
27,441 |
189 |
27,527 |
2 |
(86) |
1.1% |
(0.3%) |
||||||||
|
Econo Lodge |
817 |
49,951 |
797 |
49,483 |
20 |
468 |
2.5% |
0.9% |
||||||||
|
Rodeway |
410 |
23,370 |
388 |
21,627 |
22 |
1,743 |
5.7% |
8.1% |
||||||||
|
MainStay |
41 |
3,165 |
40 |
3,093 |
1 |
72 |
2.5% |
2.3% |
||||||||
|
Suburban |
63 |
7,291 |
60 |
7,126 |
3 |
165 |
5.0% |
2.3% |
||||||||
|
Ascend Collection |
57 |
4,982 |
52 |
4,617 |
5 |
365 |
9.6% |
7.9% |
||||||||
|
Cambria Suites |
19 |
2,221 |
19 |
2,215 |
- |
6 |
0.0% |
0.3% |
||||||||
|
Domestic Franchises |
5,083 |
396,102 |
5,001 |
392,826 |
82 |
3,276 |
1.6% |
0.8% |
||||||||
|
International Franchises |
1,160 |
103,151 |
1,177 |
104,379 |
(17) |
(1,228) |
(1.4%) |
(1.2%) |
||||||||
|
Total Franchises |
6,243 |
499,253 |
6,178 |
497,205 |
65 |
2,048 |
1.1% |
0.4% |
||||||||
|
Exhibit 6 |
||||||||||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. |
||||||||||||||||||
|
SUPPLEMENTAL INFORMATION BY BRAND |
||||||||||||||||||
|
DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS |
||||||||||||||||||
|
(UNAUDITED) |
||||||||||||||||||
|
For the Year Ended December 31, 2012 |
For the Year Ended December 31, 2011 |
% Change |
||||||||||||||||
|
New |
New |
New |
||||||||||||||||
|
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
||||||||||
|
Comfort Inn |
23 |
36 |
59 |
12 |
46 |
58 |
92% |
(22%) |
2% |
|||||||||
|
Comfort Suites |
12 |
5 |
17 |
12 |
4 |
16 |
0% |
25% |
6% |
|||||||||
|
Sleep |
25 |
2 |
27 |
9 |
2 |
11 |
178% |
0% |
145% |
|||||||||
|
Quality |
- |
170 |
170 |
- |
80 |
80 |
NM |
113% |
113% |
|||||||||
|
Clarion |
- |
22 |
22 |
- |
19 |
19 |
NM |
16% |
16% |
|||||||||
|
Econo Lodge |
- |
59 |
59 |
1 |
56 |
57 |
(100%) |
5% |
4% |
|||||||||
|
Rodeway |
- |
71 |
71 |
- |
49 |
49 |
NM |
45% |
45% |
|||||||||
|
MainStay |
12 |
1 |
13 |
6 |
3 |
9 |
100% |
(67%) |
44% |
|||||||||
|
Suburban |
3 |
4 |
7 |
5 |
4 |
9 |
(40%) |
0% |
(22%) |
|||||||||
|
Ascend Collection |
4 |
17 |
21 |
2 |
14 |
16 |
100% |
21% |
31% |
|||||||||
|
Cambria Suites |
7 |
- |
7 |
8 |
- |
8 |
(13%) |
NM |
(13%) |
|||||||||
|
Total Domestic System |
86 |
387 |
473 |
55 |
277 |
332 |
56% |
40% |
42% |
|||||||||
|
For the Three Months Ended December 31, 2012 |
For the Three Months Ended December 31, 2011 |
% Change |
||||||||||||||||
|
New |
New |
New |
||||||||||||||||
|
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
||||||||||
|
Comfort Inn |
13 |
19 |
32 |
6 |
18 |
24 |
117% |
6% |
33% |
|||||||||
|
Comfort Suites |
1 |
1 |
2 |
5 |
- |
5 |
(80%) |
NM |
(60%) |
|||||||||
|
Sleep |
8 |
1 |
9 |
3 |
1 |
4 |
167% |
0% |
125% |
|||||||||
|
Quality |
- |
82 |
82 |
- |
31 |
31 |
NM |
165% |
165% |
|||||||||
|
Clarion |
- |
8 |
8 |
- |
7 |
7 |
NM |
14% |
14% |
|||||||||
|
Econo Lodge |
- |
26 |
26 |
1 |
20 |
21 |
(100%) |
30% |
24% |
|||||||||
|
Rodeway |
- |
25 |
25 |
- |
17 |
17 |
NM |
47% |
47% |
|||||||||
|
MainStay |
10 |
- |
10 |
5 |
- |
5 |
100% |
NM |
100% |
|||||||||
|
Suburban |
2 |
3 |
5 |
3 |
2 |
5 |
(33%) |
50% |
0% |
|||||||||
|
Ascend Collection |
3 |
9 |
12 |
- |
5 |
5 |
NM |
80% |
140% |
|||||||||
|
Cambria Suites |
3 |
- |
3 |
4 |
- |
4 |
(25%) |
NM |
(25%) |
|||||||||
|
Total Domestic System |
40 |
174 |
214 |
27 |
101 |
128 |
48% |
72% |
67% |
|||||||||
|
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 |
||||||||||||||||||||||||
|
December 31, 2012 |
December 31, 2011 |
|||||||||||||||||||||||
|
Units |
Units |
Conversion |
New Construction |
Total |
||||||||||||||||||||
|
Conversion |
New Construction |
Total |
Conversion |
New Construction |
Total |
Units |
% |
Units |
% |
Units |
% |
|||||||||||||
|
Comfort Inn |
33 |
49 |
82 |
29 |
46 |
75 |
4 |
14% |
3 |
7% |
7 |
9% |
||||||||||||
|
Comfort Suites |
1 |
72 |
73 |
1 |
90 |
91 |
- |
0% |
(18) |
(20%) |
(18) |
(20%) |
||||||||||||
|
Sleep Inn |
1 |
43 |
44 |
1 |
49 |
50 |
- |
0% |
(6) |
(12%) |
(6) |
(12%) |
||||||||||||
|
Quality |
36 |
3 |
39 |
29 |
5 |
34 |
7 |
24% |
(2) |
(40%) |
5 |
15% |
||||||||||||
|
Clarion |
12 |
1 |
13 |
14 |
1 |
15 |
(2) |
(14%) |
- |
0% |
(2) |
(13%) |
||||||||||||
|
Econo Lodge |
24 |
- |
24 |
25 |
2 |
27 |
(1) |
(4%) |
(2) |
(100%) |
(3) |
(11%) |
||||||||||||
|
Rodeway |
35 |
- |
35 |
22 |
1 |
23 |
13 |
59% |
(1) |
(100%) |
12 |
52% |
||||||||||||
|
MainStay |
- |
25 |
25 |
2 |
28 |
30 |
(2) |
(100%) |
(3) |
(11%) |
(5) |
(17%) |
||||||||||||
|
Suburban |
1 |
15 |
16 |
2 |
20 |
22 |
(1) |
(50%) |
(5) |
(25%) |
(6) |
(27%) |
||||||||||||
|
Ascend Collection |
11 |
7 |
18 |
6 |
4 |
10 |
5 |
83% |
3 |
75% |
8 |
80% |
||||||||||||
|
Cambria Suites |
- |
25 |
25 |
- |
31 |
31 |
- |
NM |
(6) |
(19%) |
(6) |
(19%) |
||||||||||||
|
Total Domestic Pipeline |
154 |
240 |
394 |
131 |
277 |
408 |
23 |
18% |
(37) |
(13%) |
(14) |
(3%) |
||||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. |
Exhibit 8 |
||||||||||||
|
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION |
|||||||||||||
|
(UNAUDITED) |
|||||||||||||
|
CALCULATION OF FRANCHISING REVENUES AND ADJUSTED FRANCHISING MARGINS |
|||||||||||||
|
(dollar amounts in thousands) |
Three Months Ended December 31, |
Year Ended December 31, |
|||||||||||
|
2012 |
2011 |
2012 |
2011 |
||||||||||
|
Franchising Revenues: |
|||||||||||||
|
Total Revenues |
$ 178,306 |
$ 165,890 |
$ 691,509 |
$ 638,793 |
|||||||||
|
Adjustments: |
|||||||||||||
|
Marketing and reservation revenues |
(100,160) |
(90,844) |
(384,784) |
(349,036) |
|||||||||
|
Hotel operations |
(1,133) |
(1,183) |
(4,573) |
(4,356) |
|||||||||
|
Franchising Revenues |
$ 77,013 |
$ 73,863 |
$ 302,152 |
$ 285,401 |
|||||||||
|
Franchising Margins: |
|||||||||||||
|
Operating Margin: |
|||||||||||||
|
Total Revenues |
$ 178,306 |
$ 165,890 |
$ 691,509 |
$ 638,793 |
|||||||||
|
Operating Income |
$ 45,234 |
$ 38,662 |
$ 193,142 |
$ 171,863 |
|||||||||
|
Operating Margin |
25.4% |
23.3% |
27.9% |
26.9% |
|||||||||
|
Adjusted Franchising Margin: |
|||||||||||||
|
Franchising Revenues |
$ 77,013 |
$ 73,863 |
$ 302,152 |
$ 285,401 |
|||||||||
|
Operating Income |
$ 45,234 |
$ 38,662 |
$ 193,142 |
$ 171,863 |
|||||||||
|
Employee termination benefits |
- |
3,619 |
491 |
4,444 |
|||||||||
|
Loss on settlement of pension plan |
1,818 |
- |
1,818 |
- |
|||||||||
|
Hotel operations |
(237) |
(310) |
(1,068) |
(890) |
|||||||||
|
$ 46,815 |
$ 41,971 |
$ 194,383 |
$ 175,417 |
||||||||||
|
Adjusted Franchising Margins |
60.8% |
56.8% |
64.3% |
61.5% |
|||||||||
|
CALCULATION OF ADJUSTED SELLING, GENERAL AND ADMINISTRATIVE COSTS |
|||||||||||||
|
(dollar amounts in thousands) |
Three Months Ended December 31, |
Year Ended December 31, |
|||||||||||
|
2012 |
2011 |
2012 |
2011 |
||||||||||
|
Selling, general and administrative expense |
$ 29,779 |
$ 33,463 |
$ 101,852 |
$ 106,404 |
|||||||||
|
Employee termination benefits |
- |
(3,619) |
(491) |
(4,444) |
|||||||||
|
Loss on settlement of pension plan |
(1,818) |
- |
(1,818) |
- |
|||||||||
|
Adjusted Selling, General and Administrative Expense |
$ 27,961 |
$ 29,844 |
$ 99,543 |
$ 101,960 |
|||||||||
|
CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS) |
|||||||||||||
|
(In thousands, except per share amounts) |
Three Months Ended December 31, |
Year Ended December 31, |
|||||||||||
|
2012 |
2011 |
2012 |
2011 |
||||||||||
|
Net Income |
$ 24,451 |
$ 24,786 |
$ 120,687 |
$ 110,396 |
|||||||||
|
Adjustments: |
|||||||||||||
|
Employee termination benefits |
- |
2,291 |
312 |
2,813 |
|||||||||
|
Less on settlement of pension plan |
1,774 |
- |
1,774 |
- |
|||||||||
|
Loss on extinguishment of debt |
- |
- |
334 |
- |
|||||||||
|
Loss on land held for sale |
- |
- |
- |
1,119 |
|||||||||
|
Adjusted Net Income |
$ 26,225 |
$ 27,077 |
$ 123,107 |
$ 114,328 |
|||||||||
|
Weighted average shares outstanding-diluted |
58,377 |
58,608 |
58,265 |
59,525 |
|||||||||
|
Diluted Earnings Per Share |
$ 0.42 |
$ 0.42 |
$ 2.07 |
$ 1.85 |
|||||||||
|
Adjustments: |
|||||||||||||
|
Employee termination benefits |
- |
0.04 |
- |
0.05 |
|||||||||
|
Loss on settlement of pension plan |
0.03 |
- |
0.03 |
- |
|||||||||
|
Loss on extinguishment of debt |
- |
- |
0.01 |
- |
|||||||||
|
Loss on land held for sale |
- |
- |
- |
0.02 |
|||||||||
|
Adjusted Diluted Earnings Per Share (EPS) |
$ 0.45 |
$ 0.46 |
$ 2.11 |
$ 1.92 |
|||||||||
|
Adjusted EBITDA Reconciliation |
|||||||||||||
|
(in thousands) |
|||||||||||||
|
Q4 2012 Actuals |
Q4 2011 Actuals |
Year Ended December 31, 2012 Actuals |
Year Ended December 31, 2011 Actuals |
Full-Year 2013 Outlook Range |
|||||||||
|
Operating Income (per GAAP) |
$ 45,234 |
$ 38,662 |
$ 193,142 |
$ 171,863 |
$ 205,100 |
- |
$ 207,100 |
||||||
|
Employee termination benefits |
- |
3,619 |
491 |
4,444 |
- |
- |
|||||||
|
Loss on settlement of pension plan |
1,818 |
- |
1,818 |
- |
- |
- |
|||||||
|
Depreciation and amortization |
2,237 |
2,048 |
8,226 |
8,024 |
9,900 |
- |
9,900 |
||||||
|
Adjusted Earnings before interest, taxes, depreciation & amortization (non-GAAP) |
$ 49,289 |
$ 44,329 |
$ 203,677 |
$ 184,331 |
$ 215,000 |
$ 217,000 |
|||||||
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
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