ROCKVILLE, Md., Oct. 30, 2015 /PRNewswire/ -- Choice Hotels International, Inc. (NYSE:CHH) today reported the following highlights for the third quarter 2015:
-- Revenues for the three months ended September 30, 2015 totaled $241.5
million, an increase of 12 percent from the same period of 2014.
-- Earnings before interest, taxes, depreciation and amortization
("EBITDA") from franchising activities for the three months ended
September 30, 2015, totaled $81.1 million, an increase of 10 percent
from the same period of 2014.
-- Franchising margins for the three months ended September 30, 2015, were
74.6 percent, an increase of 230 basis points from the same period of
2014.
-- Domestic royalty fees for the three months ended September 30, 2015,
totaled $84.7 million, an increase of 6.5 percent from the same period
of 2014.
-- Domestic system-wide revenue per available room ("RevPAR") increased 5.8
percent in the third quarter of 2015, as occupancy and average daily
rates increased 120 basis points and 4 percent, respectively from the
same period of 2014.
-- Domestic units increased 0.2 percent from September 30, 2014.
-- Effective royalty rate for the three months ended September 30, 2015
increased 3 basis points to 4.27 percent from the same period of 2014.
-- Initial and relicensing fees for the three months ended September 30,
2015, totaled $6.2 million, an increase of 44 percent from the same
period of 2014.
-- Domestic hotel executed franchise agreements totaled 129 for the three
months ended September 30, 2015, an increase of 14 percent from the same
period of 2014.
-- Executed 9 new domestic franchise agreements during the three months
ended September 30, 2015 for the Cambria hotels & suites brand including
2 conversion projects in Chicago, Illinois and Atlanta, Georgia.
-- Domestic relicensing and contract renewal transactions totaled 119 for
the three months ended September 30, 2015, an increase of 40 percent
from the same period of 2014.
-- The company's new construction domestic pipeline of hotels under
construction or approved for development increased 29 percent from
September 30, 2014, and the total pipeline increased 28 percent.
-- Diluted earnings per share ("EPS") from continuing operations for the
three months ended September 30, 2015, totaled $0.72, an increase of 7
percent from the same period of 2014.
-- The company purchased 1.0 million shares of common stock under its share
repurchase program during the three months ended September 30, 2015, at
a total cost of approximately $50 million.
"We are very pleased with our performance in the third quarter, with double-digit percentage growth in both total revenues and EBITDA. We were pleased with our year-over-year increase in domestic royalty revenue driven by growth in all 3 critical levers - RevPAR, system-size and effective royalty rate. We had a terrific quarter on the development front with improvements in domestic franchise contracts for both new construction and conversion hotels demonstrating that the demand for our brands is strong," said Stephen P. Joyce, president and chief executive officer, Choice Hotels. "The fundamental strength of our operating model enables us to generate strong free cash flows, which allows us to return value to our shareholders through a disciplined and prudent capital allocation strategy."
Discontinued Operations
During 2014, the company entered into and completed a plan to sell its three owned hotels operated under the MainStay Suites brand. The company determined that the sale of these hotels met the definition of a discontinued operation since the operations and cash flows of these components have been eliminated from the on-going operations of the company and the company does not have significant continuing involvement in the operations of the hotels after the transaction. As a result, the company's consolidated statement of income for the three and nine months ended September 30, 2014, reflects these three company-owned hotels as discontinued operations.
Summarized financial information related to these discontinued operations is presented in Exhibit 9 of this press release.
Outlook
The company's consolidated 2015 outlook reflects the following assumptions:
Franchising
-- EBITDA from franchising activities for full-year 2015 are expected to
range between $255 million and $257 million;
-- Net domestic unit growth for 2015 is expected to be approximately 1%;
-- RevPAR is expected to increase approximately 5.5% and 7% for fourth
quarter and full-year 2015, respectively; and
-- The effective royalty rate is expected to increase 2 basis points for
full-year 2015 as compared to full-year 2014.
SkyTouch
-- Net reductions in EBITDA relating to our investment in the SkyTouch
division for full-year 2015 are expected to be approximately $17
million.
Other Items
-- The effective tax rate for continuing operations is expected to be
approximately 31% and 32% for the fourth quarter and full-year 2015,
respectively; and
-- All figures assume no further repurchases of common stock under the
company's share repurchase program.
Consolidated Outlook
The company's fourth quarter 2015 diluted EPS is expected to be at least $0.47. The company expects full-year 2015 diluted EPS to range between $2.18 and $2.20 and full year 2015 EBITDA to range between $237 million and $241 million.
Conference Call
Choice will conduct a conference call on Friday, October 30, 2015 at 10:00 a.m. EDT to discuss the company's third quarter 2015 results. The dial-in number to listen to the call is 1-855-638-5678, and the access code is 52809803. International callers should dial 1-920-663-6286 and enter the access code 52809803. The conference call also will be webcast simultaneously via the company's website, www.choicehotels.com. Interested investors and other parties wishing to access the call via the webcast should go to the website and click on the Investor Info link. The Investor page will feature a conference call microphone icon to access the call.
The call will be recorded and available for replay beginning at 1:00 p.m. EDT on Friday, October 30, 2015 through Friday, November 6, 2015 by calling 1-855-859-2056 and entering access code 52809803. The international dial-in number for the replay is 1-404-537-3406 and the access code is 52809803. 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.(®) (NYSE: CHH) is one of the world's largest lodging companies. With more than 6,300 hotels franchised in more than 35 countries and territories, we represent more than 500,000 rooms around the globe. As of September 30, 2015, 638 hotels were in our development pipeline. Our company's Ascend Hotel Collection(®), Cambria® hotels & suites, Comfort Inn(®), Comfort Suites(®), Sleep Inn(®), Quality(®), Clarion(®), MainStay Suites(®), Suburban Extended Stay Hotel(®), Econo Lodge(®) and Rodeway Inn(®) brands provide a spectrum of lodging choices to meet guests' needs. With more than 24 million members and counting, check out our Choice Privileges® rewards program to see how you can reap the benefits of being a member of the Choice Hotels(®) family. Visit us at www.choicehotels.com for more information.
SkyTouch Technology(®) is a business division of Choice Hotels that develops and markets cloud-based technology products, including inventory management, pricing and connectivity to third party channels, to hoteliers not under franchise agreements with the company.
Additional corporate information can 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," "should," "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, repurchases of common stock 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; foreign currency fluctuations; 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 marketing and reservations systems and other operating systems; or ability to grow our franchise system; exposure to risks related to development activities; fluctuations in the supply and demand for hotels rooms; our ability to realize anticipated benefits from acquired businesses; the level of acceptance of alternative growth strategies we may implement; operating risks associated with our international operations; the outcome of litigation; and our ability to manage our indebtedness. These and other risk factors are discussed in detail in the company's filings with the Securities and Exchange Commission including our annual reports on Form 10-K 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 this Press Release
EBITDA, franchising revenues, franchising SG&A, EBITDA from franchising activities and franchising margins are non-GAAP financial measurements. These measures should not be considered as an alternative to any measure of performance or liquidity as promulgated under or authorized by generally accepted accounting principles 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 EBITDA, franchising revenues, franchising SG&A and franchising margins to the most comparable GAAP financial measures. We discuss management's reasons for reporting these non-GAAP measures below.
Earnings Before Interest, Taxes, Depreciation and Amortization: EBITDA reflects income from continuing operations excluding the impact of interest expense, interest income, provision for income taxes, depreciation and amortization, other (gains) and losses and equity in net income of unconsolidated affiliates. We consider EBITDA to be an indicator of operating performance because we use it to measure our ability to service debt, fund capital expenditures, and expand our business. We also use EBITDA, as do analysts, lenders, investors and others, to evaluate companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company's capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. EBITDA also excludes depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.
Franchising Revenues, Operating Income, EBITDA, SG&A and Margins: The company reports franchising revenues, operating income, EBITDA, SG&A and margins which exclude marketing and reservation revenues, the SkyTouch Technology division, recently acquired operations that provide SaaS technology solutions to vacation rental management companies and revenue generated from the ownership of an office building that is leased to a third-party. Marketing and reservation activities are excluded since the company is required by its franchise agreements to use the fees collected for marketing and reservation activities; as such, no income or loss to the company is generated. Cumulative marketing and reservation system fees not expended are recorded as a liability in the company's financial statements and are carried over to the next year and expended in accordance with the franchise agreements. Cumulative marketing and reservation expenditures in excess of fees collected for marketing and reservation activities are deferred and recorded as an asset in the company's financial statements and recovered in future periods. SkyTouch Technology is a division of the company that develops and markets cloud-based technology products, including inventory management, pricing and connectivity to third party channels, to hoteliers not under franchise agreements with the company. The operations for SkyTouch Technology and our vacation rental technology solutions provider are excluded since they do not reflect the company's core franchising business but are adjacent, complimentary lines of business. These non-GAAP measures are a commonly used measure of performance in our industry and facilitate comparisons between the company and its competitors.
© 2015 Choice Hotels International, Inc. All rights reserved.
Choice Hotels International, Inc.
Exhibit 1
Consolidated Statements of Income
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
Variance Variance
2015 2014 $ % 2015 2014 $ %
---- ---- --- --- ---- ---- --- ---
(In thousands, except per share amounts)
REVENUES:
Royalty fees $89,929 $86,091 $3,838 4% $233,543 $222,301 $11,242 5%
Initial franchise and relicensing fees 6,170 4,299 1,871 44% 17,703 12,761 4,942 39%
Procurement services 6,271 5,495 776 14% 19,667 18,293 1,374 8%
Marketing and reservation 134,463 115,653 18,810 16% 366,298 309,025 57,273 19%
Other 4,693 3,630 1,063 29% 11,716 10,188 1,528 15%
----- ----- ----- --- ------ ------ ----- ---
Total revenues 241,526 215,168 26,358 12% 648,927 572,568 76,359 13%
OPERATING EXPENSES:
Selling, general and administrative 30,152 30,236 (84) (0%) 95,712 88,329 7,383 8%
Depreciation and amortization 3,108 2,293 815 36% 8,793 6,903 1,890 27%
Marketing and reservation 134,463 115,653 18,810 16% 366,298 309,025 57,273 19%
------- ------- ------ --- ------- ------- ------ ---
Total operating expenses 167,723 148,182 19,541 13% 470,803 404,257 66,546 16%
Operating income 73,803 66,986 6,817 10% 178,124 168,311 9,813 6%
OTHER INCOME AND EXPENSES, NET:
Interest expense 10,821 10,495 326 3% 32,057 31,376 681 2%
Interest income (359) (355) (4) 1% (982) (1,205) 223 (19%)
Other (gains) and losses 1,402 375 1,027 274% (239) (158) (81) 51%
Equity in net (income) loss of affiliates (329) 513 (842) (164%) 1,107 578 529 92%
Total other income and expenses, net 11,535 11,028 507 5% 31,943 30,591 1,352 4%
------ ------ --- --- ------ ------ ----- ---
Income from continuing operations before income taxes 62,268 55,958 6,310 11% 146,181 137,720 8,461 6%
Income taxes 20,849 16,542 4,307 26% 47,355 41,556 5,799 14%
------ ------ ----- --- ------ ------ ----- ---
Income from continuing operations, net of income taxes 41,419 39,416 2,003 5% 98,826 96,164 2,662 3%
Income from discontinued operations, net of income taxes - (51) 51 (100%) - 1,711 (1,711) (100%)
--- --- --- ----- --- ----- ------ -----
Net income $41,419 $39,365 $2,054 5% $98,826 $97,875 $951 1%
======= ======= ====== === ======= ======= ==== ===
Basic earnings per share
Continuing operations $0.72 $0.67 $0.05 7% $1.72 $1.65 $0.07 4%
Discontinued operations - - - NM - 0.03 (0.03) (100%)
$0.72 $0.67 $0.05 7% $1.72 $1.68 $0.04 2%
===== ===== ===== === ===== ===== ===== ===
Diluted earnings per share
Continuing operations $0.72 $0.67 $0.05 7% $1.71 $1.63 $0.08 5%
Discontinued operations - - - NM - 0.03 (0.03) (100%)
$0.72 $0.67 $0.05 7% $1.71 $1.66 $0.05 3%
===== ===== ===== === ===== ===== ===== ===
Choice Hotels International, Inc. Exhibit 2
Consolidated Balance Sheets
(In thousands, except per share amounts) September 30, December 31,
2015 2014
---- ----
(Unaudited)
ASSETS
Cash and cash equivalents $199,261 $214,879
Accounts receivable, net 114,623 91,681
Other current assets 45,649 42,729
------ ------
Total current
assets 359,533 349,289
Fixed assets and intangibles, net 178,462 152,034
Notes receivable, net of allowances 73,756 40,441
Investments, employee benefit plans, at fair value 17,102 17,539
Other assets 83,909 78,614
------ ------
Total assets $712,762 $637,917
-------- --------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Accounts payable $59,922 $57,124
Accrued expenses and other current liabilities 61,051 64,243
Deferred revenue 68,439 66,382
Current portion of long-term debt 1,706 12,349
Total current
liabilities 191,118 200,098
Long-term debt 815,858 772,729
Deferred compensation & retirement plan obligations 22,145 23,987
Other liabilities 84,284 69,904
------ ------
Total
liabilities 1,113,405 1,066,718
Total shareholders'
deficit (400,643) (428,801)
Total liabilities
and shareholders'
deficit $712,762 $637,917
-------- --------
Choice Hotels
International, Inc. Exhibit 3
Consolidated Statements of
Cash Flows
(Unaudited)
(In thousands) Nine Months Ended September 30,
-------------------------------
2015 2014
---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $98,826 $97,875
Adjustments to reconcile
net income to net cash
provided
by operating activities:
Depreciation and
amortization 8,793 6,903
Gain on sale of assets (1,519) (2,809)
Provision for bad debts,
net 1,540 1,676
Non-cash stock
compensation and other
charges 8,929 8,093
Non-cash interest and
other (income) loss 3,168 1,836
Deferred income taxes (1,799) (19,216)
Equity (earnings) losses
from unconsolidated joint
ventures, net of
distributions received 2,917 1,679
Changes in assets and
liabilities, net of
acquisition:
Receivables (24,532) (30,497)
Advances to/from marketing
and reservation
activities, net 18,341 60,187
Forgivable notes
receivable, net (21,029) (8,776)
Accounts payable 5,111 21,845
Accrued expenses and other
current liabilities (14,083) (11,082)
Income taxes payable/
receivable 11,066 7,981
Deferred revenue 2,122 4,751
Other assets (4,826) (1,125)
Other liabilities 5,748 (943)
----- ----
NET CASH PROVIDED BY
OPERATING ACTIVITIES 98,773 138,378
------ -------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Investment in property and
equipment (21,810) (11,886)
Proceeds from sales of
assets 6,347 15,612
Acquisition, net of cash
acquired (13,269) -
Issuance of mezzanine and
other notes receivable (25,253) (3,340)
Collections of mezzanine
and other notes receivable 3,697 9,832
Contributions to equity
method investments (3,811) (14,362)
Distributions from equity
method investments 270 -
Purchases of investments,
employee benefit plans (2,977) (1,520)
Proceeds from sales of
investments, employee
benefit plans 2,920 966
Other items, net (9,212) (592)
------ ----
NET CASH USED BY INVESTING
ACTIVITIES (63,098) (5,290)
------- ------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net borrowings pursuant to
revolving credit
facilities 162,032 -
Principal payments on long-
term debt (130,194) (7,110)
Proceeds from the issuance
of long-term debt 176 226
Debt issuance costs (2,169) -
Purchase of treasury stock (56,450) (23,757)
Dividends paid (34,173) (32,767)
Excess tax benefits from
stock-based compensation 4,885 2,297
Proceeds from exercise of
stock options 6,381 4,984
----- -----
NET CASH USED BY FINANCING
ACTIVITIES (49,512) (56,127)
------- -------
Net change in cash and cash
equivalents (13,837) 76,961
Effect of foreign exchange
rate changes on cash and
cash equivalents (1,781) (364)
Cash and cash equivalents
at beginning of period 214,879 167,795
------- -------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $199,261 $244,392
======== ========
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 4
SUPPLEMENTAL OPERATING INFORMATION
DOMESTIC HOTEL SYSTEM
(UNAUDITED)
For the Nine Months Ended September 30, 2015 For the Nine Months Ended September 30, 2014 Change
-------------------------------------------- -------------------------------------------- ------
Average Daily Average Daily Average Daily
Rate Occupancy RevPAR Rate Occupancy RevPAR Rate Occupancy RevPAR
---- --------- ------ ---- --------- ------ ---- --------- ------
Comfort Inn $90.65 66.8% $60.52 $86.92 64.9% $56.43 4.3% 190 bps 7.2%
Comfort Suites 94.83 69.9% 66.25 91.06 67.8% 61.78 4.1% 210 bps 7.2%
Sleep 81.34 65.7% 53.45 77.75 63.7% 49.52 4.6% 200 bps 7.9%
Quality 76.02 60.2% 45.75 72.87 57.7% 42.05 4.3% 250 bps 8.8%
Clarion 80.93 58.9% 47.68 78.05 55.9% 43.59 3.7% 300 bps 9.4%
Econo Lodge 60.44 55.1% 33.30 58.64 52.9% 31.01 3.1% 220 bps 7.4%
Rodeway 60.56 58.5% 35.44 57.46 56.5% 32.48 5.4% 200 bps 9.1%
MainStay 78.03 69.7% 54.35 75.52 72.9% 55.03 3.3% (320) bps (1.2%)
Suburban 47.75 77.0% 36.78 45.29 73.3% 33.19 5.4% 370 bps 10.8%
Ascend Hotel Collection 127.38 59.9% 76.34 120.64 59.8% 72.10 5.6% 10 bps 5.9%
------ ---- ----- ------ ---- ----- --- --- --- ---
Total $80.77 62.9% $50.79 $77.80 60.9% $47.36 3.8% 200 bps 7.2%
====== ==== ====== ====== ==== ====== === === === ===
For the Three Months Ended September 30, 2015 For the Three Months Ended September 30, 2014 Change
--------------------------------------------- --------------------------------------------- ------
Average Daily Average Daily Average Daily
Rate Occupancy RevPAR Rate Occupancy RevPAR Rate Occupancy RevPAR
---- --------- ------ ---- --------- ------ ---- --------- ------
Comfort Inn $96.35 73.2% $70.54 $92.33 72.0% $66.44 4.4% 120 bps 6.2%
Comfort Suites 98.06 73.2% 71.79 94.13 72.1% 67.86 4.2% 110 bps 5.8%
Sleep 84.44 69.1% 58.31 80.95 68.4% 55.35 4.3% 70 bps 5.3%
Quality 80.80 65.3% 52.79 77.05 63.3% 48.78 4.9% 200 bps 8.2%
Clarion 85.46 63.9% 54.61 83.40 61.8% 51.49 2.5% 210 bps 6.1%
Econo Lodge 65.32 60.1% 39.27 63.31 59.0% 37.33 3.2% 110 bps 5.2%
Rodeway 66.00 63.7% 42.02 62.71 62.8% 39.35 5.2% 90 bps 6.8%
MainStay 81.26 71.8% 58.36 78.58 77.3% 60.70 3.4% (550) bps (3.9%)
Suburban 48.77 78.1% 38.09 46.78 74.6% 34.88 4.3% 350 bps 9.2%
Ascend Hotel Collection 134.88 60.1% 81.07 127.43 61.0% 77.68 5.8% (90) bps 4.4%
------ ---- ----- ------ ---- ----- --- --- --- ---
Total $85.38 67.7% $57.80 $82.12 66.5% $54.64 4.0% 120 bps 5.8%
====== ==== ====== ====== ==== ====== === === === ===
For the Three Months Ended For the Nine Months Ended
-------------------------- -------------------------
9/30/2015 9/30/2014 9/30/2015 9/30/2014
System-wide effective royalty rate 4.27% 4.24% 4.28% 4.28%
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 5
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA
(UNAUDITED)
September 30, 2015 September 30, 2014 Variance
------------------ ------------------ --------
Hotels Rooms Hotels Rooms Hotels Rooms % %
------ ----- ------ ----- ------ ----- --- ---
Comfort Inn 1,188 92,029 1,266 98,119 (78) (6,090) (6.2%) (6.2%)
Comfort Suites 574 44,311 593 45,873 (19) (1,562) (3.2%) (3.4%)
Sleep 374 26,913 374 27,065 - (152) 0.0% (0.6%)
Quality 1,325 105,950 1,262 103,358 63 2,592 5.0% 2.5%
Clarion 176 24,626 183 26,182 (7) (1,556) (3.8%) (5.9%)
Econo Lodge 854 52,963 846 52,304 8 659 0.9% 1.3%
Rodeway 488 27,095 460 25,235 28 1,860 6.1% 7.4%
MainStay 48 3,656 42 3,304 6 352 14.3% 10.7%
Suburban 63 7,065 64 7,164 (1) (99) (1.6%) (1.4%)
Ascend Hotel Collection 112 9,407 107 9,271 5 136 4.7% 1.5%
Cambria hotel & suites 24 2,917 21 2,534 3 383 14.3% 15.1%
--- ----- --- ----- --- --- ---- ----
Domestic Franchises 5,226 396,932 5,218 400,409 8 (3,477) 0.2% (0.9%)
International Franchises 1,153 107,425 1,168 106,905 (15) 520 (1.3%) 0.5%
----- ------- ----- ------- --- --- ----- ---
Total Franchises 6,379 504,357 6,386 507,314 (7) (2,957) (0.1%) (0.6%)
===== ======= ===== ======= === ====== ===== =====
Exhibit 6
CHOICE HOTELS INTERNATIONAL, INC.
SUPPLEMENTAL INFORMATION BY BRAND
DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS
(UNAUDITED)
For the Nine Months Ended September 30, 2015 For the Nine Months Ended September 30,
2014 % Change
-------------------------------------------- ---------------------------------------- --------
New New New
Construction Conversion Total Construction Conversion Total Construction Conversion Total
------------ ---------- ----- ------------ ---------- ----- ------------ ---------- -----
Comfort Inn 17 28 45 16 11 27 6% 155% 67%
Comfort Suites 18 3 21 11 - 11 64% NM 91%
Sleep 19 - 19 21 1 22 (10%) (100%) (14%)
Quality 3 114 117 3 82 85 0% 39% 38%
Clarion - 7 7 1 15 16 (100%) (53%) (56%)
Econo Lodge - 39 39 1 46 47 (100%) (15%) (17%)
Rodeway - 57 57 3 48 51 (100%) 19% 12%
MainStay 16 - 16 10 1 11 60% (100%) 45%
Suburban 1 4 5 2 3 5 (50%) 33% 0%
Ascend Hotel Collection 3 22 25 6 11 17 (50%) 100% 47%
Cambria hotel & suites 14 2 16 5 - 5 180% NM 220%
--- --- --- --- --- --- --- --- ---
Total Domestic System 91 276 367 79 218 297 15% 27% 24%
=== === === === === === === === ===
For the Three Months Ended September 30, 2015 For the Three Months Ended September 30,
2014 % Change
--------------------------------------------- ---------------------------------------- --------
New New New
Construction Conversion Total Construction Conversion Total Construction Conversion Total
------------ ---------- ----- ------------ ---------- ----- ------------ ---------- -----
Comfort Inn 4 8 12 6 3 9 (33%) 167% 33%
Comfort Suites 5 1 6 4 - 4 25% NM 50%
Sleep 10 - 10 7 - 7 43% NM 43%
Quality - 39 39 - 34 34 NM 15% 15%
Clarion - 1 1 1 4 5 (100%) (75%) (80%)
Econo Lodge - 11 11 1 19 20 (100%) (42%) (45%)
Rodeway - 22 22 2 17 19 (100%) 29% 16%
MainStay 10 - 10 5 - 5 100% NM 100%
Suburban - 1 1 1 - 1 (100%) NM 0%
Ascend Hotel Collection 2 6 8 - 5 5 NM 20% 60%
Cambria hotel & suites 7 2 9 4 - 4 75% NM 125%
--- --- --- --- --- --- --- --- ---
Total Domestic System 38 91 129 31 82 113 23% 11% 14%
=== === === === === === === === ===
Exhibit 7
CHOICE HOTELS INTERNATIONAL, INC.
DOMESTIC 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, 2015 September 30, 2014
Units Units Conversion New Construction Total
----- ----- ---------- ---------------- -----
Conversion New Total Conversion New Total Units % Units % Units %
Construction Construction
------------ ------------
Comfort Inn 39 63 102 33 51 84 6 18% 12 24% 18 21%
Comfort Suites 1 75 76 - 47 47 1 NM 28 60% 29 62%
Sleep Inn - 72 72 2 62 64 (2) (100%) 10 16% 8 13%
Quality 56 5 61 34 6 40 22 65% (1) (17%) 21 53%
Clarion 9 2 11 9 3 12 - 0% (1) (33%) (1) (8%)
Econo Lodge 26 4 30 36 3 39 (10) (28%) 1 33% (9) (23%)
Rodeway 44 2 46 31 4 35 13 42% (2) (50%) 11 31%
MainStay 1 54 55 2 39 41 (1) (50%) 15 38% 14 34%
Suburban 4 10 14 6 11 17 (2) (33%) (1) (9%) (3) (18%)
Ascend Hotel Collection 21 18 39 8 15 23 13 163% 3 20% 16 70%
Cambria hotel & suites 2 32 34 - 20 20 2 NM 12 60% 14 70%
--- --- --- --- --- --- --- --- --- --- --- ---
203 337 540 161 261 422 42 26% 76 29% 118 28%
=== === === === === === === === === === === ===
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,
-------------------------------- -------------------------------
2015 2014 2015 2014
---- ---- ---- ----
Franchising Revenues:
Total Revenues $241,526 $215,168 $648,927 $572,568
Adjustments:
Marketing and reservation revenues (134,463) (115,653) (366,298) (309,025)
Non-franchising activities (1,458) (92) (2,473) (213)
Franchising Revenues $105,605 $99,423 $280,156 $263,330
Franchising Margins:
Operating Margin:
Total Revenues $241,526 $215,168 $648,927 $572,568
Operating Income $73,803 $66,986 $178,124 $168,311
Operating Margin 30.6% 31.1% 27.4% 29.4%
Franchising Margin:
Franchising Revenues $105,605 $99,423 $280,156 $263,330
Operating Income $73,803 $66,986 $178,124 $168,311
Non-franchising activities operating loss 4,943 4,928 14,807 12,794
$78,746 $71,914 $192,931 $181,105
------- ------- -------- --------
Franchising Margins 74.6% 72.3% 68.9% 68.8%
CALCULATION OF FRANCHISING SELLING, GENERAL AND ADMINISTRATION EXPENSES
(dollar amounts in thousands) Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2015 2014 2015 2014
---- ---- ---- ----
Total Selling, General and Administrative Expenses $30,152 $30,236 $95,712 $88,329
Non-Franchising Activities (5,632) (4,786) (15,630) (12,322)
Franchising Selling, General and Administration Expenses $24,520 $25,450 $80,082 $76,007
CALCULATION OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA")
(dollar amounts in thousands)
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2015 2014 2015 2014
---- ---- ---- ----
Income from continuing operations, net of income taxes $41,419 $39,416 $98,826 $96,164
Income taxes 20,849 16,542 47,355 41,556
Interest expense 10,821 10,495 32,057 31,376
Interest income (359) (355) (982) (1,205)
Other (gains) and losses 1,402 375 (239) (158)
Equity in net (income) loss of affiliates (329) 513 1,107 578
Depreciation and amortization 3,108 2,293 8,793 6,903
EBITDA $76,911 $69,279 $186,917 $175,214
======= ======= ======== ========
Franchising $81,085 $73,973 $200,074 $187,323
Non-Franchising activities (4,174) (4,694) (13,157) (12,109)
$76,911 $69,279 $186,917 $175,214
======= ======= ======== ========
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 9
DISCONTINUED OPERATIONS
(UNAUDITED)
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
(In thousands) 2015 2014 2015 2014
---- ---- ---- ----
REVENUES:
Hotel operations $ - $ - $ - $801
------------------------- ---------------------------- -------------------------- ----
Total revenues - - - 801
OPERATING EXPENSES:
Hotel operations - 52 - 884
--- --- --- ---
Total operating expenses - 52 - 884
Operating income (loss) - (52) - (83)
Gain (loss) on disposal of discontinued operations - (30) - 2,803
--- --- --- -----
Income (loss) from discontinued operations before income taxes - (82) - 2,720
Income tax (benefit) - (31) - 1,009
Income (loss) from discontinued operations $ - $(51) $ - $1,711
========================= ==== ========================== ======
http://photos.prnewswire.com/prnvar/20140807/134515
Photo - http://photos.prnewswire.com/prnh/20140807/134515
SOURCE Choice Hotels International, Inc.
SOURCE: Choice Hotels International, Inc.
PR Newswire
ROCKVILLE, Md., Oct. 30, 2015
ROCKVILLE, Md., Oct. 30, 2015 /PRNewswire/ -- Choice Hotels International, Inc. (NYSE:CHH) today reported the following highlights for the third quarter 2015:
"We are very pleased with our performance in the third quarter, with double-digit percentage growth in both total revenues and EBITDA. We were pleased with our year-over-year increase in domestic royalty revenue driven by growth in all 3 critical levers – RevPAR, system-size and effective royalty rate. We had a terrific quarter on the development front with improvements in domestic franchise contracts for both new construction and conversion hotels demonstrating that the demand for our brands is strong," said Stephen P. Joyce, president and chief executive officer, Choice Hotels. "The fundamental strength of our operating model enables us to generate strong free cash flows, which allows us to return value to our shareholders through a disciplined and prudent capital allocation strategy."
Discontinued Operations
During 2014, the company entered into and completed a plan to sell its three owned hotels operated under the MainStay Suites brand. The company determined that the sale of these hotels met the definition of a discontinued operation since the operations and cash flows of these components have been eliminated from the on-going operations of the company and the company does not have significant continuing involvement in the operations of the hotels after the transaction. As a result, the company's consolidated statement of income for the three and nine months ended September 30, 2014, reflects these three company-owned hotels as discontinued operations.
Summarized financial information related to these discontinued operations is presented in Exhibit 9 of this press release.
Outlook
The company's consolidated 2015 outlook reflects the following assumptions:
Franchising
SkyTouch
Other Items
Consolidated Outlook
The company's fourth quarter 2015 diluted EPS is expected to be at least $0.47. The company expects full-year 2015 diluted EPS to range between $2.18 and $2.20 and full year 2015 EBITDA to range between $237 million and $241 million.
Conference Call
Choice will conduct a conference call on Friday, October 30, 2015 at 10:00 a.m. EDT to discuss the company's third quarter 2015 results. The dial-in number to listen to the call is 1-855-638-5678, and the access code is 52809803. International callers should dial 1-920-663-6286 and enter the access code 52809803. The conference call also will be webcast simultaneously via the company's website, www.choicehotels.com. Interested investors and other parties wishing to access the call via the webcast should go to the website and click on the Investor Info link. The Investor page will feature a conference call microphone icon to access the call.
The call will be recorded and available for replay beginning at 1:00 p.m. EDT on Friday, October 30, 2015 through Friday, November 6, 2015 by calling 1-855-859-2056 and entering access code 52809803. The international dial-in number for the replay is 1-404-537-3406 and the access code is 52809803. 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.® (NYSE: CHH) is one of the world's largest lodging companies. With more than 6,300 hotels franchised in more than 35 countries and territories, we represent more than 500,000 rooms around the globe. As of September 30, 2015, 638 hotels were in our development pipeline. Our company's Ascend Hotel Collection®, Cambria® hotels & suites, Comfort Inn®, Comfort Suites®, Sleep Inn®, Quality®, Clarion®, MainStay Suites®, Suburban Extended Stay Hotel®, Econo Lodge® and Rodeway Inn® brands provide a spectrum of lodging choices to meet guests' needs. With more than 24 million members and counting, check out our Choice Privileges® rewards program to see how you can reap the benefits of being a member of the Choice Hotels® family. Visit us at www.choicehotels.com for more information.
SkyTouch Technology® is a business division of Choice Hotels that develops and markets cloud-based technology products, including inventory management, pricing and connectivity to third party channels, to hoteliers not under franchise agreements with the company.
Additional corporate information can 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," "should," "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, repurchases of common stock 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; foreign currency fluctuations; 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 marketing and reservations systems and other operating systems; or ability to grow our franchise system; exposure to risks related to development activities; fluctuations in the supply and demand for hotels rooms; our ability to realize anticipated benefits from acquired businesses; the level of acceptance of alternative growth strategies we may implement; operating risks associated with our international operations; the outcome of litigation; and our ability to manage our indebtedness. These and other risk factors are discussed in detail in the company's filings with the Securities and Exchange Commission including our annual reports on Form 10-K 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 this Press Release
EBITDA, franchising revenues, franchising SG&A, EBITDA from franchising activities and franchising margins are non-GAAP financial measurements. These measures should not be considered as an alternative to any measure of performance or liquidity as promulgated under or authorized by generally accepted accounting principles 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 EBITDA, franchising revenues, franchising SG&A and franchising margins to the most comparable GAAP financial measures. We discuss management's reasons for reporting these non-GAAP measures below.
Earnings Before Interest, Taxes, Depreciation and Amortization: EBITDA reflects income from continuing operations excluding the impact of interest expense, interest income, provision for income taxes, depreciation and amortization, other (gains) and losses and equity in net income of unconsolidated affiliates. We consider EBITDA to be an indicator of operating performance because we use it to measure our ability to service debt, fund capital expenditures, and expand our business. We also use EBITDA, as do analysts, lenders, investors and others, to evaluate companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company's capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. EBITDA also excludes depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.
Franchising Revenues, Operating Income, EBITDA, SG&A and Margins: The company reports franchising revenues, operating income, EBITDA, SG&A and margins which exclude marketing and reservation revenues, the SkyTouch Technology division, recently acquired operations that provide SaaS technology solutions to vacation rental management companies and revenue generated from the ownership of an office building that is leased to a third-party. Marketing and reservation activities are excluded since the company is required by its franchise agreements to use the fees collected for marketing and reservation activities; as such, no income or loss to the company is generated. Cumulative marketing and reservation system fees not expended are recorded as a liability in the company's financial statements and are carried over to the next year and expended in accordance with the franchise agreements. Cumulative marketing and reservation expenditures in excess of fees collected for marketing and reservation activities are deferred and recorded as an asset in the company's financial statements and recovered in future periods. SkyTouch Technology is a division of the company that develops and markets cloud-based technology products, including inventory management, pricing and connectivity to third party channels, to hoteliers not under franchise agreements with the company. The operations for SkyTouch Technology and our vacation rental technology solutions provider are excluded since they do not reflect the company's core franchising business but are adjacent, complimentary lines of business. These non-GAAP measures are a commonly used measure of performance in our industry and facilitate comparisons between the company and its competitors.
© 2015 Choice Hotels International, Inc. All rights reserved.
|
Choice Hotels International, Inc. |
Exhibit 1 |
|||||||||||||||
|
Consolidated Statements of Income |
||||||||||||||||
|
(Unaudited) |
||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|
Variance |
Variance |
|||||||||||||||
|
2015 |
2014 |
$ |
% |
2015 |
2014 |
$ |
% |
|||||||||
|
(In thousands, except per share amounts) |
||||||||||||||||
|
REVENUES: |
||||||||||||||||
|
Royalty fees |
$ 89,929 |
$ 86,091 |
$ 3,838 |
4% |
$ 233,543 |
$ 222,301 |
$ 11,242 |
5% |
||||||||
|
Initial franchise and relicensing fees |
6,170 |
4,299 |
1,871 |
44% |
17,703 |
12,761 |
4,942 |
39% |
||||||||
|
Procurement services |
6,271 |
5,495 |
776 |
14% |
19,667 |
18,293 |
1,374 |
8% |
||||||||
|
Marketing and reservation |
134,463 |
115,653 |
18,810 |
16% |
366,298 |
309,025 |
57,273 |
19% |
||||||||
|
Other |
4,693 |
3,630 |
1,063 |
29% |
11,716 |
10,188 |
1,528 |
15% |
||||||||
|
Total revenues |
241,526 |
215,168 |
26,358 |
12% |
648,927 |
572,568 |
76,359 |
13% |
||||||||
|
OPERATING EXPENSES: |
||||||||||||||||
|
Selling, general and administrative |
30,152 |
30,236 |
(84) |
(0%) |
95,712 |
88,329 |
7,383 |
8% |
||||||||
|
Depreciation and amortization |
3,108 |
2,293 |
815 |
36% |
8,793 |
6,903 |
1,890 |
27% |
||||||||
|
Marketing and reservation |
134,463 |
115,653 |
18,810 |
16% |
366,298 |
309,025 |
57,273 |
19% |
||||||||
|
Total operating expenses |
167,723 |
148,182 |
19,541 |
13% |
470,803 |
404,257 |
66,546 |
16% |
||||||||
|
Operating income |
73,803 |
66,986 |
6,817 |
10% |
178,124 |
168,311 |
9,813 |
6% |
||||||||
|
OTHER INCOME AND EXPENSES, NET: |
||||||||||||||||
|
Interest expense |
10,821 |
10,495 |
326 |
3% |
32,057 |
31,376 |
681 |
2% |
||||||||
|
Interest income |
(359) |
(355) |
(4) |
1% |
(982) |
(1,205) |
223 |
(19%) |
||||||||
|
Other (gains) and losses |
1,402 |
375 |
1,027 |
274% |
(239) |
(158) |
(81) |
51% |
||||||||
|
Equity in net (income) loss of affiliates |
(329) |
513 |
(842) |
(164%) |
1,107 |
578 |
529 |
92% |
||||||||
|
Total other income and expenses, net |
11,535 |
11,028 |
507 |
5% |
31,943 |
30,591 |
1,352 |
4% |
||||||||
|
Income from continuing operations before income taxes |
62,268 |
55,958 |
6,310 |
11% |
146,181 |
137,720 |
8,461 |
6% |
||||||||
|
Income taxes |
20,849 |
16,542 |
4,307 |
26% |
47,355 |
41,556 |
5,799 |
14% |
||||||||
|
Income from continuing operations, net of income taxes |
41,419 |
39,416 |
2,003 |
5% |
98,826 |
96,164 |
2,662 |
3% |
||||||||
|
Income from discontinued operations, net of income taxes |
- |
(51) |
51 |
(100%) |
- |
1,711 |
(1,711) |
(100%) |
||||||||
|
Net income |
$ 41,419 |
$ 39,365 |
$ 2,054 |
5% |
$ 98,826 |
$ 97,875 |
$ 951 |
1% |
||||||||
|
Basic earnings per share |
||||||||||||||||
|
Continuing operations |
$ 0.72 |
$ 0.67 |
$ 0.05 |
7% |
$ 1.72 |
$ 1.65 |
$ 0.07 |
4% |
||||||||
|
Discontinued operations |
- |
- |
- |
NM |
- |
0.03 |
(0.03) |
(100%) |
||||||||
|
$ 0.72 |
$ 0.67 |
$ 0.05 |
7% |
$ 1.72 |
$ 1.68 |
$ 0.04 |
2% |
|||||||||
|
Diluted earnings per share |
||||||||||||||||
|
Continuing operations |
$ 0.72 |
$ 0.67 |
$ 0.05 |
7% |
$ 1.71 |
$ 1.63 |
$ 0.08 |
5% |
||||||||
|
Discontinued operations |
- |
- |
- |
NM |
- |
0.03 |
(0.03) |
(100%) |
||||||||
|
$ 0.72 |
$ 0.67 |
$ 0.05 |
7% |
$ 1.71 |
$ 1.66 |
$ 0.05 |
3% |
|||||||||
|
Choice Hotels International, Inc. |
Exhibit 2 |
||||||
|
Consolidated Balance Sheets |
|||||||
|
(In thousands, except per share amounts) |
September 30, |
December 31, |
|||||
|
2015 |
2014 |
||||||
|
(Unaudited) |
|||||||
|
ASSETS |
|||||||
|
Cash and cash equivalents |
$ 199,261 |
$ 214,879 |
|||||
|
Accounts receivable, net |
114,623 |
91,681 |
|||||
|
Other current assets |
45,649 |
42,729 |
|||||
|
Total current assets |
359,533 |
349,289 |
|||||
|
Fixed assets and intangibles, net |
178,462 |
152,034 |
|||||
|
Notes receivable, net of allowances |
73,756 |
40,441 |
|||||
|
Investments, employee benefit plans, at fair value |
17,102 |
17,539 |
|||||
|
Other assets |
83,909 |
78,614 |
|||||
|
Total assets |
$ 712,762 |
$ 637,917 |
|||||
|
LIABILITIES AND SHAREHOLDERS' DEFICIT |
|||||||
|
Accounts payable |
$ 59,922 |
$ 57,124 |
|||||
|
Accrued expenses and other current liabilities |
61,051 |
64,243 |
|||||
|
Deferred revenue |
68,439 |
66,382 |
|||||
|
Current portion of long-term debt |
1,706 |
12,349 |
|||||
|
Total current liabilities |
191,118 |
200,098 |
|||||
|
Long-term debt |
815,858 |
772,729 |
|||||
|
Deferred compensation & retirement plan obligations |
22,145 |
23,987 |
|||||
|
Other liabilities |
84,284 |
69,904 |
|||||
|
Total liabilities |
1,113,405 |
1,066,718 |
|||||
|
Total shareholders' deficit |
(400,643) |
(428,801) |
|||||
|
Total liabilities and shareholders' deficit |
$ 712,762 |
$ 637,917 |
|||||
|
Choice Hotels International, Inc. |
Exhibit 3 |
||
|
Consolidated Statements of Cash Flows |
|||
|
(Unaudited) |
|||
|
(In thousands) |
Nine Months Ended September 30, |
||
|
2015 |
2014 |
||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||
|
Net income |
$ 98,826 |
$ 97,875 |
|
|
Adjustments to reconcile net income to net cash provided |
|||
|
by operating activities: |
|||
|
Depreciation and amortization |
8,793 |
6,903 |
|
|
Gain on sale of assets |
(1,519) |
(2,809) |
|
|
Provision for bad debts, net |
1,540 |
1,676 |
|
|
Non-cash stock compensation and other charges |
8,929 |
8,093 |
|
|
Non-cash interest and other (income) loss |
3,168 |
1,836 |
|
|
Deferred income taxes |
(1,799) |
(19,216) |
|
|
Equity (earnings) losses from unconsolidated joint ventures, net of distributions received |
2,917 |
1,679 |
|
|
Changes in assets and liabilities, net of acquisition: |
|||
|
Receivables |
(24,532) |
(30,497) |
|
|
Advances to/from marketing and reservation activities, net |
18,341 |
60,187 |
|
|
Forgivable notes receivable, net |
(21,029) |
(8,776) |
|
|
Accounts payable |
5,111 |
21,845 |
|
|
Accrued expenses and other current liabilities |
(14,083) |
(11,082) |
|
|
Income taxes payable/receivable |
11,066 |
7,981 |
|
|
Deferred revenue |
2,122 |
4,751 |
|
|
Other assets |
(4,826) |
(1,125) |
|
|
Other liabilities |
5,748 |
(943) |
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
98,773 |
138,378 |
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||
|
Investment in property and equipment |
(21,810) |
(11,886) |
|
|
Proceeds from sales of assets |
6,347 |
15,612 |
|
|
Acquisition, net of cash acquired |
(13,269) |
- |
|
|
Issuance of mezzanine and other notes receivable |
(25,253) |
(3,340) |
|
|
Collections of mezzanine and other notes receivable |
3,697 |
9,832 |
|
|
Contributions to equity method investments |
(3,811) |
(14,362) |
|
|
Distributions from equity method investments |
270 |
- |
|
|
Purchases of investments, employee benefit plans |
(2,977) |
(1,520) |
|
|
Proceeds from sales of investments, employee benefit plans |
2,920 |
966 |
|
|
Other items, net |
(9,212) |
(592) |
|
|
NET CASH USED BY INVESTING ACTIVITIES |
(63,098) |
(5,290) |
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|||
|
Net borrowings pursuant to revolving credit facilities |
162,032 |
- |
|
|
Principal payments on long-term debt |
(130,194) |
(7,110) |
|
|
Proceeds from the issuance of long-term debt |
176 |
226 |
|
|
Debt issuance costs |
(2,169) |
- |
|
|
Purchase of treasury stock |
(56,450) |
(23,757) |
|
|
Dividends paid |
(34,173) |
(32,767) |
|
|
Excess tax benefits from stock-based compensation |
4,885 |
2,297 |
|
|
Proceeds from exercise of stock options |
6,381 |
4,984 |
|
|
NET CASH USED BY FINANCING ACTIVITIES |
(49,512) |
(56,127) |
|
|
Net change in cash and cash equivalents |
(13,837) |
76,961 |
|
|
Effect of foreign exchange rate changes on cash and cash equivalents |
(1,781) |
(364) |
|
|
Cash and cash equivalents at beginning of period |
214,879 |
167,795 |
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ 199,261 |
$ 244,392 |
|
|
CHOICE HOTELS INTERNATIONAL, INC. |
Exhibit 4 |
||||||||||||||||||||
|
SUPPLEMENTAL OPERATING INFORMATION |
|||||||||||||||||||||
|
DOMESTIC HOTEL SYSTEM |
|||||||||||||||||||||
|
(UNAUDITED) |
|||||||||||||||||||||
|
For the Nine Months Ended September 30, 2015 |
For the Nine Months Ended September 30, 2014 |
Change |
|||||||||||||||||||
|
Average Daily |
Average Daily |
Average Daily |
|||||||||||||||||||
|
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
|||||||||||||
|
Comfort Inn |
$ 90.65 |
66.8% |
$ 60.52 |
$ 86.92 |
64.9% |
$ 56.43 |
4.3% |
190 |
bps |
7.2% |
|||||||||||
|
Comfort Suites |
94.83 |
69.9% |
66.25 |
91.06 |
67.8% |
61.78 |
4.1% |
210 |
bps |
7.2% |
|||||||||||
|
Sleep |
81.34 |
65.7% |
53.45 |
77.75 |
63.7% |
49.52 |
4.6% |
200 |
bps |
7.9% |
|||||||||||
|
Quality |
76.02 |
60.2% |
45.75 |
72.87 |
57.7% |
42.05 |
4.3% |
250 |
bps |
8.8% |
|||||||||||
|
Clarion |
80.93 |
58.9% |
47.68 |
78.05 |
55.9% |
43.59 |
3.7% |
300 |
bps |
9.4% |
|||||||||||
|
Econo Lodge |
60.44 |
55.1% |
33.30 |
58.64 |
52.9% |
31.01 |
3.1% |
220 |
bps |
7.4% |
|||||||||||
|
Rodeway |
60.56 |
58.5% |
35.44 |
57.46 |
56.5% |
32.48 |
5.4% |
200 |
bps |
9.1% |
|||||||||||
|
MainStay |
78.03 |
69.7% |
54.35 |
75.52 |
72.9% |
55.03 |
3.3% |
(320) |
bps |
(1.2%) |
|||||||||||
|
Suburban |
47.75 |
77.0% |
36.78 |
45.29 |
73.3% |
33.19 |
5.4% |
370 |
bps |
10.8% |
|||||||||||
|
Ascend Hotel Collection |
127.38 |
59.9% |
76.34 |
120.64 |
59.8% |
72.10 |
5.6% |
10 |
bps |
5.9% |
|||||||||||
|
Total |
$ 80.77 |
62.9% |
$ 50.79 |
$ 77.80 |
60.9% |
$ 47.36 |
3.8% |
200 |
bps |
7.2% |
|||||||||||
|
For the Three Months Ended September 30, 2015 |
For the Three Months Ended September 30, 2014 |
Change |
|||||||||||||||||||
|
Average Daily |
Average Daily |
Average Daily |
|||||||||||||||||||
|
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
|||||||||||||
|
Comfort Inn |
$ 96.35 |
73.2% |
$ 70.54 |
$ 92.33 |
72.0% |
$ 66.44 |
4.4% |
120 |
bps |
6.2% |
|||||||||||
|
Comfort Suites |
98.06 |
73.2% |
71.79 |
94.13 |
72.1% |
67.86 |
4.2% |
110 |
bps |
5.8% |
|||||||||||
|
Sleep |
84.44 |
69.1% |
58.31 |
80.95 |
68.4% |
55.35 |
4.3% |
70 |
bps |
5.3% |
|||||||||||
|
Quality |
80.80 |
65.3% |
52.79 |
77.05 |
63.3% |
48.78 |
4.9% |
200 |
bps |
8.2% |
|||||||||||
|
Clarion |
85.46 |
63.9% |
54.61 |
83.40 |
61.8% |
51.49 |
2.5% |
210 |
bps |
6.1% |
|||||||||||
|
Econo Lodge |
65.32 |
60.1% |
39.27 |
63.31 |
59.0% |
37.33 |
3.2% |
110 |
bps |
5.2% |
|||||||||||
|
Rodeway |
66.00 |
63.7% |
42.02 |
62.71 |
62.8% |
39.35 |
5.2% |
90 |
bps |
6.8% |
|||||||||||
|
MainStay |
81.26 |
71.8% |
58.36 |
78.58 |
77.3% |
60.70 |
3.4% |
(550) |
bps |
(3.9%) |
|||||||||||
|
Suburban |
48.77 |
78.1% |
38.09 |
46.78 |
74.6% |
34.88 |
4.3% |
350 |
bps |
9.2% |
|||||||||||
|
Ascend Hotel Collection |
134.88 |
60.1% |
81.07 |
127.43 |
61.0% |
77.68 |
5.8% |
(90) |
bps |
4.4% |
|||||||||||
|
Total |
$ 85.38 |
67.7% |
$ 57.80 |
$ 82.12 |
66.5% |
$ 54.64 |
4.0% |
120 |
bps |
5.8% |
|||||||||||
|
For the Three Months Ended |
For the Nine Months Ended |
||||||||||||||||||||
|
9/30/2015 |
9/30/2014 |
9/30/2015 |
9/30/2014 |
||||||||||||||||||
|
System-wide effective royalty rate |
4.27% |
4.24% |
4.28% |
4.28% |
|||||||||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. |
Exhibit 5 |
||||||||||||||||
|
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA |
|||||||||||||||||
|
(UNAUDITED) |
|||||||||||||||||
|
September 30, 2015 |
September 30, 2014 |
Variance |
|||||||||||||||
|
Hotels |
Rooms |
Hotels |
Rooms |
Hotels |
Rooms |
% |
% |
||||||||||
|
Comfort Inn |
1,188 |
92,029 |
1,266 |
98,119 |
(78) |
(6,090) |
(6.2%) |
(6.2%) |
|||||||||
|
Comfort Suites |
574 |
44,311 |
593 |
45,873 |
(19) |
(1,562) |
(3.2%) |
(3.4%) |
|||||||||
|
Sleep |
374 |
26,913 |
374 |
27,065 |
- |
(152) |
0.0% |
(0.6%) |
|||||||||
|
Quality |
1,325 |
105,950 |
1,262 |
103,358 |
63 |
2,592 |
5.0% |
2.5% |
|||||||||
|
Clarion |
176 |
24,626 |
183 |
26,182 |
(7) |
(1,556) |
(3.8%) |
(5.9%) |
|||||||||
|
Econo Lodge |
854 |
52,963 |
846 |
52,304 |
8 |
659 |
0.9% |
1.3% |
|||||||||
|
Rodeway |
488 |
27,095 |
460 |
25,235 |
28 |
1,860 |
6.1% |
7.4% |
|||||||||
|
MainStay |
48 |
3,656 |
42 |
3,304 |
6 |
352 |
14.3% |
10.7% |
|||||||||
|
Suburban |
63 |
7,065 |
64 |
7,164 |
(1) |
(99) |
(1.6%) |
(1.4%) |
|||||||||
|
Ascend Hotel Collection |
112 |
9,407 |
107 |
9,271 |
5 |
136 |
4.7% |
1.5% |
|||||||||
|
Cambria hotel & suites |
24 |
2,917 |
21 |
2,534 |
3 |
383 |
14.3% |
15.1% |
|||||||||
|
Domestic Franchises |
5,226 |
396,932 |
5,218 |
400,409 |
8 |
(3,477) |
0.2% |
(0.9%) |
|||||||||
|
International Franchises |
1,153 |
107,425 |
1,168 |
106,905 |
(15) |
520 |
(1.3%) |
0.5% |
|||||||||
|
Total Franchises |
6,379 |
504,357 |
6,386 |
507,314 |
(7) |
(2,957) |
(0.1%) |
(0.6%) |
|||||||||
|
Exhibit 6 |
|||||||||||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. |
|||||||||||||||||||
|
SUPPLEMENTAL INFORMATION BY BRAND |
|||||||||||||||||||
|
DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS |
|||||||||||||||||||
|
(UNAUDITED) |
|||||||||||||||||||
|
For the Nine Months Ended September 30, 2015 |
For the Nine Months Ended September 30, 2014 |
% Change |
|||||||||||||||||
|
New |
New |
New |
|||||||||||||||||
|
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
|||||||||||
|
Comfort Inn |
17 |
28 |
45 |
16 |
11 |
27 |
6% |
155% |
67% |
||||||||||
|
Comfort Suites |
18 |
3 |
21 |
11 |
- |
11 |
64% |
NM |
91% |
||||||||||
|
Sleep |
19 |
- |
19 |
21 |
1 |
22 |
(10%) |
(100%) |
(14%) |
||||||||||
|
Quality |
3 |
114 |
117 |
3 |
82 |
85 |
0% |
39% |
38% |
||||||||||
|
Clarion |
- |
7 |
7 |
1 |
15 |
16 |
(100%) |
(53%) |
(56%) |
||||||||||
|
Econo Lodge |
- |
39 |
39 |
1 |
46 |
47 |
(100%) |
(15%) |
(17%) |
||||||||||
|
Rodeway |
- |
57 |
57 |
3 |
48 |
51 |
(100%) |
19% |
12% |
||||||||||
|
MainStay |
16 |
- |
16 |
10 |
1 |
11 |
60% |
(100%) |
45% |
||||||||||
|
Suburban |
1 |
4 |
5 |
2 |
3 |
5 |
(50%) |
33% |
0% |
||||||||||
|
Ascend Hotel Collection |
3 |
22 |
25 |
6 |
11 |
17 |
(50%) |
100% |
47% |
||||||||||
|
Cambria hotel & suites |
14 |
2 |
16 |
5 |
- |
5 |
180% |
NM |
220% |
||||||||||
|
Total Domestic System |
91 |
276 |
367 |
79 |
218 |
297 |
15% |
27% |
24% |
||||||||||
|
For the Three Months Ended September 30, 2015 |
For the Three Months Ended September 30, 2014 |
% Change |
|||||||||||||||||
|
New |
New |
New |
|||||||||||||||||
|
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
|||||||||||
|
Comfort Inn |
4 |
8 |
12 |
6 |
3 |
9 |
(33%) |
167% |
33% |
||||||||||
|
Comfort Suites |
5 |
1 |
6 |
4 |
- |
4 |
25% |
NM |
50% |
||||||||||
|
Sleep |
10 |
- |
10 |
7 |
- |
7 |
43% |
NM |
43% |
||||||||||
|
Quality |
- |
39 |
39 |
- |
34 |
34 |
NM |
15% |
15% |
||||||||||
|
Clarion |
- |
1 |
1 |
1 |
4 |
5 |
(100%) |
(75%) |
(80%) |
||||||||||
|
Econo Lodge |
- |
11 |
11 |
1 |
19 |
20 |
(100%) |
(42%) |
(45%) |
||||||||||
|
Rodeway |
- |
22 |
22 |
2 |
17 |
19 |
(100%) |
29% |
16% |
||||||||||
|
MainStay |
10 |
- |
10 |
5 |
- |
5 |
100% |
NM |
100% |
||||||||||
|
Suburban |
- |
1 |
1 |
1 |
- |
1 |
(100%) |
NM |
0% |
||||||||||
|
Ascend Hotel Collection |
2 |
6 |
8 |
- |
5 |
5 |
NM |
20% |
60% |
||||||||||
|
Cambria hotel & suites |
7 |
2 |
9 |
4 |
- |
4 |
75% |
NM |
125% |
||||||||||
|
Total Domestic System |
38 |
91 |
129 |
31 |
82 |
113 |
23% |
11% |
14% |
||||||||||
|
Exhibit 7 |
||||||||||||||||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. |
||||||||||||||||||||||||
|
DOMESTIC 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, 2015 |
September 30, 2014 |
|||||||||||||||||||||||
|
Units |
Units |
Conversion |
New Construction |
Total |
||||||||||||||||||||
|
Conversion |
New |
Total |
Conversion |
New |
Total |
Units |
% |
Units |
% |
Units |
% |
|||||||||||||
|
Comfort Inn |
39 |
63 |
102 |
33 |
51 |
84 |
6 |
18% |
12 |
24% |
18 |
21% |
||||||||||||
|
Comfort Suites |
1 |
75 |
76 |
- |
47 |
47 |
1 |
NM |
28 |
60% |
29 |
62% |
||||||||||||
|
Sleep Inn |
- |
72 |
72 |
2 |
62 |
64 |
(2) |
(100%) |
10 |
16% |
8 |
13% |
||||||||||||
|
Quality |
56 |
5 |
61 |
34 |
6 |
40 |
22 |
65% |
(1) |
(17%) |
21 |
53% |
||||||||||||
|
Clarion |
9 |
2 |
11 |
9 |
3 |
12 |
- |
0% |
(1) |
(33%) |
(1) |
(8%) |
||||||||||||
|
Econo Lodge |
26 |
4 |
30 |
36 |
3 |
39 |
(10) |
(28%) |
1 |
33% |
(9) |
(23%) |
||||||||||||
|
Rodeway |
44 |
2 |
46 |
31 |
4 |
35 |
13 |
42% |
(2) |
(50%) |
11 |
31% |
||||||||||||
|
MainStay |
1 |
54 |
55 |
2 |
39 |
41 |
(1) |
(50%) |
15 |
38% |
14 |
34% |
||||||||||||
|
Suburban |
4 |
10 |
14 |
6 |
11 |
17 |
(2) |
(33%) |
(1) |
(9%) |
(3) |
(18%) |
||||||||||||
|
Ascend Hotel Collection |
21 |
18 |
39 |
8 |
15 |
23 |
13 |
163% |
3 |
20% |
16 |
70% |
||||||||||||
|
Cambria hotel & suites |
2 |
32 |
34 |
- |
20 |
20 |
2 |
NM |
12 |
60% |
14 |
70% |
||||||||||||
|
203 |
337 |
540 |
161 |
261 |
422 |
42 |
26% |
76 |
29% |
118 |
28% |
|||||||||||||
|
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, |
|||||||||||
|
2015 |
2014 |
2015 |
2014 |
||||||||||
|
Franchising Revenues: |
|||||||||||||
|
Total Revenues |
$ 241,526 |
$ 215,168 |
$ 648,927 |
$ 572,568 |
|||||||||
|
Adjustments: |
|||||||||||||
|
Marketing and reservation revenues |
(134,463) |
(115,653) |
(366,298) |
(309,025) |
|||||||||
|
Non-franchising activities |
(1,458) |
(92) |
(2,473) |
(213) |
|||||||||
|
Franchising Revenues |
$ 105,605 |
$ 99,423 |
$ 280,156 |
$ 263,330 |
|||||||||
|
Franchising Margins: |
|||||||||||||
|
Operating Margin: |
|||||||||||||
|
Total Revenues |
$ 241,526 |
$ 215,168 |
$ 648,927 |
$ 572,568 |
|||||||||
|
Operating Income |
$ 73,803 |
$ 66,986 |
$ 178,124 |
$ 168,311 |
|||||||||
|
Operating Margin |
30.6% |
31.1% |
27.4% |
29.4% |
|||||||||
|
Franchising Margin: |
|||||||||||||
|
Franchising Revenues |
$ 105,605 |
$ 99,423 |
$ 280,156 |
$ 263,330 |
|||||||||
|
Operating Income |
$ 73,803 |
$ 66,986 |
$ 178,124 |
$ 168,311 |
|||||||||
|
Non-franchising activities operating loss |
4,943 |
4,928 |
14,807 |
12,794 |
|||||||||
|
$ 78,746 |
$ 71,914 |
$ 192,931 |
$ 181,105 |
||||||||||
|
Franchising Margins |
74.6% |
72.3% |
68.9% |
68.8% |
|||||||||
|
CALCULATION OF FRANCHISING SELLING, GENERAL AND ADMINISTRATION EXPENSES |
|||||||||||||
|
(dollar amounts in thousands) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||
|
2015 |
2014 |
2015 |
2014 |
||||||||||
|
Total Selling, General and Administrative Expenses |
$ 30,152 |
$ 30,236 |
$ 95,712 |
$ 88,329 |
|||||||||
|
Non-Franchising Activities |
(5,632) |
(4,786) |
(15,630) |
(12,322) |
|||||||||
|
Franchising Selling, General and Administration Expenses |
$ 24,520 |
$ 25,450 |
$ 80,082 |
$ 76,007 |
|||||||||
|
CALCULATION OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA") |
|||||||||||||
|
(dollar amounts in thousands) |
|||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||
|
2015 |
2014 |
2015 |
2014 |
||||||||||
|
Income from continuing operations, net of income taxes |
$ 41,419 |
$ 39,416 |
$ 98,826 |
$ 96,164 |
|||||||||
|
Income taxes |
20,849 |
16,542 |
47,355 |
41,556 |
|||||||||
|
Interest expense |
10,821 |
10,495 |
32,057 |
31,376 |
|||||||||
|
Interest income |
(359) |
(355) |
(982) |
(1,205) |
|||||||||
|
Other (gains) and losses |
1,402 |
375 |
(239) |
(158) |
|||||||||
|
Equity in net (income) loss of affiliates |
(329) |
513 |
1,107 |
578 |
|||||||||
|
Depreciation and amortization |
3,108 |
2,293 |
8,793 |
6,903 |
|||||||||
|
EBITDA |
$ 76,911 |
$ 69,279 |
$ 186,917 |
$ 175,214 |
|||||||||
|
Franchising |
$ 81,085 |
$ 73,973 |
$ 200,074 |
$ 187,323 |
|||||||||
|
Non-Franchising activities |
(4,174) |
(4,694) |
(13,157) |
(12,109) |
|||||||||
|
$ 76,911 |
$ 69,279 |
$ 186,917 |
$ 175,214 |
||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. |
Exhibit 9 |
||||||||
|
DISCONTINUED OPERATIONS |
|||||||||
|
(UNAUDITED) |
|||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||
|
(In thousands) |
2015 |
2014 |
2015 |
2014 |
|||||
|
REVENUES: |
|||||||||
|
Hotel operations |
$ - |
$ - |
$ - |
$ 801 |
|||||
|
Total revenues |
- |
- |
- |
801 |
|||||
|
OPERATING EXPENSES: |
|||||||||
|
Hotel operations |
- |
52 |
- |
884 |
|||||
|
Total operating expenses |
- |
52 |
- |
884 |
|||||
|
Operating income (loss) |
- |
(52) |
- |
(83) |
|||||
|
Gain (loss) on disposal of discontinued operations |
- |
(30) |
- |
2,803 |
|||||
|
Income (loss) from discontinued operations before income taxes |
- |
(82) |
- |
2,720 |
|||||
|
Income tax (benefit) |
- |
(31) |
- |
1,009 |
|||||
|
Income (loss) from discontinued operations |
$ - |
$ (51) |
$ - |
$ 1,711 |
|||||
Photo - http://photos.prnewswire.com/prnh/20140807/134515
SOURCE Choice Hotels International, Inc.
CONTACT: David White, Senior Vice President, Chief Financial Officer & Treasurer, (301) 592-5117, or Scott Carman, Director, Public Relations, (301) 592-6361
Web Site: http://www.choicehotels.com
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