ROCKVILLE, Md., Feb. 15, 2017 /PRNewswire/ -- Choice Hotels International, Inc. (NYSE: CHH) today reported its results for the three months and year ended December 31, 2016. Net income for the fourth quarter of 2016 was $31.8 million or $0.56 per diluted share, compared with $29.2 million or $0.51 per diluted share for the fourth quarter of 2015. Fourth quarter adjusted earnings before income taxes, depreciation and amortization (EBITDA) was $56.0 million, compared with $50.6 million in the prior year, an increase of 11 percent.
"We are pleased to report another record year of revenue, operating income and net income performance. 2016 was a strong year for Choice Hotels highlighted by our domestic RevPAR growth which continues to outpace industry performance and strong development results," said Stephen P. Joyce, chief executive officer of Choice Hotels. "There are many contributing factors to our success highlighted by our efforts to deliver new strategic programs and tools designed to increase reservation delivery to our franchisees, the acceleration of our growth and performance in the upscale category, and our strong development momentum. We are optimistic that our expanded programs and services will result in continued strong RevPAR performance and developer interest in 2017 and beyond."
Highlights of the company's fourth quarter and full-year 2016 results are as follows:
Overall Results
-- Diluted earnings per share (EPS) for the fourth quarter totaled $0.56,
an increase of 10 percent from the comparable period of the prior year,
and increased 11 percent for the full year to $2.46; excluding executive
termination benefits, full year adjusted diluted EPS increased 12
percent over the prior year.
-- Net income totaled $31.8 million for the fourth quarter and $139.4
million for the full year.
-- Adjusted EBITDA from hotel franchising activities for the fourth quarter
increased 8 percent from the prior year fourth quarter to $61.4 million
and increased 7 percent to $273.3 million for the full year.
-- Adjusted hotel franchising margins for the fourth quarter increased 110
basis points from the prior year fourth quarter to 64.4 percent, and
increased 90 basis points to 68.2 percent for the full year.
Royalties
-- Domestic royalty fees for fourth quarter totaled $68.4 million, an
increase of 8.4 percent from the comparable period of the prior year;
full year domestic royalties increased 6.9 percent to $300.7 million
from the same period of 2015.
-- Domestic system-wide revenue per available room (RevPAR) increased 5
percent and 3.9 percent for the fourth quarter and full year,
respectively. Occupancy and average daily rates increased 150 basis
points and 2.3 percent, respectively in the fourth quarter from the same
period of 2015.
-- Domestic RevPAR performance for the fourth quarter of 2016 exceeded
total industry results by 180 basis points, and also exceeded growth
reported by Smith Travel Research for the primary chain scale segments
in which the company competes.
-- Comfort family of brands and Sleep recorded 27 and 31 consecutive months
of RevPAR index gains compared to its competition, respectively.
-- Cambria hotel & suites achieved full year RevPAR of over $100.
-- Effective royalty rate increased 13 basis points and 11 basis points for
the fourth quarter and full year 2016, respectively.
-- Domestic hotels as of December 31, 2016, increased 1.6 percent from
December 31, 2015.
Development
-- Approved 267 new franchised hotels for development in the fourth
quarter, bringing full year new franchise agreements to 645 hotels. New
construction franchise agreements increased 23 percent in the fourth
quarter of 2016 from the comparable period of 2015.
-- Cambria hotel & suites continued to enter major markets with
groundbreakings and openings in Philadelphia, two projects in Chicago,
Nashville and New York's Times Square.
-- The company's domestic pipeline of hotels awaiting conversion, under
construction or approved for development as of December 31, 2016,
increased 19 percent from December 31, 2015.
-- The domestic new construction pipeline for Cambria hotel & suites as of
December 31, 2016, totaled 66 hotels, a 53 percent increase from
December 31, 2015.
"We continue to have great success in executing and opening new construction hotels in top markets, as developers have taken note of our strong RevPAR performance and the brand strategies that we have implemented to improve hotel performance," said Patrick Pacious, president and chief operating officer, Choice Hotels. "We are particularly pleased that Cambria hotel & suites and the Comfort brands continue to draw attention from top hotel developers, resulting in an increase in new construction projects in prime urban locations. We expect to see continued interest and development of these brands in highly desirable markets."
Special Item
During the year ended December 31, 2016, the company recorded an executive termination benefit charge of approximately $2.2 million. This special item impacted diluted EPS by $0.03 per share for the year ended December 31, 2016. The company uses non-GAAP measures that exclude executive termination benefits because those non-GAAP measures allow for period-over-period comparison of on-going core operations before the impact of these charges. These non-GAAP measures, which are reconciled to the comparable GAAP measures in Exhibit 8, include adjusted net income, adjusted diluted EPS, adjusted hotel franchising selling, general and administrative expenses, adjusted EBITDA and adjusted hotel franchising margins.
Use of Cash Flows
Dividends
During the fourth quarter of 2016, the company's board of directors announced a 5 percent increase, effective the first quarter of 2017, of the current quarterly dividend rate per common share to $0.215 per share. During the year ended December 31, 2016, the company paid cash dividends totaling approximately $46 million.
Share Repurchases
The company repurchased 0.6 million shares of common stock under its share repurchase program during the year ended December 31, 2016, at a total cost of approximately $30 million. During the fourth quarter, the company's board of directors approved increasing the number of shares authorized under its long-standing share repurchase program by 3 million shares. Thus, the company currently has authorization to purchase up to 4.0 million additional shares under this program.
Hotel Development & Financing
Pursuant to its program to encourage acceleration of the growth of our upscale select-service Cambria hotels & suites brand, the company advanced approximately $104 million in support of the brand's development during the year ended December 31, 2016. The company also recycled approximately $28 million of investments in support of Cambria development projects resulting in net advances of $76 million for the current year. These advances are primarily in the form of joint venture investments, forgivable key money loans, senior and mezzanine lending and site acquisitions. On December 31, 2016, the company had approximately $204 million reflected in its consolidated balance sheet pursuant to these financial support activities. With respect to lending and joint venture investments, the company generally expects to recycle these loans and investments within a five-year period.
Outlook
The company's consolidated 2017 outlook reflects the following assumptions:
Consolidated Outlook
-- Net income for full year 2017 is expected to range between $157 million
and $160 million.
-- Adjusted EBITDA for full year 2017 is expected to range between $292
million and $297 million.
-- The company's first quarter 2017 diluted EPS is expected to be at least
$0.49.
-- The company expects full year 2017 diluted EPS to range between $2.78
and $2.84.
-- The recurring effective tax rate is expected to be approximately 33.5%
for the first quarter and full year 2017.
-- Diluted EPS estimates are based on the current number of shares
outstanding and thus do not factor in any changes that may occur due to
new equity grants or any further repurchases of common stock under the
company's share repurchase program.
-- The EPS and consolidated EBITDA estimates assume that we incur net
reductions in EBITDA related to non-hotel franchising activities at the
midpoint of the range for these investments.
Hotel Franchising
-- Adjusted EBITDA from hotel franchising activities for full year 2017 are
expected to range between $297 million and $302 million.
-- Net domestic unit growth for 2017 is expected to range between
approximately 2% and 3%.
-- RevPAR is expected to increase between 3.5% and 4.5% for the first
quarter and range between 3.0% and 4.0% for full year 2017.
-- The effective royalty rate is expected to increase between 12 and 14
basis points for full year 2017 as compared to full year 2016.
Non-Hotel Franchising Activities
-- Net reductions in full year 2017 EBITDA relating to our non-hotel
franchising operations, which primarily relate to SkyTouch and vacation
rental activities are expected to range between approximately $4 million
and $6 million.
Conference Call
Choice will conduct a conference call on Thursday, February 16, 2017, at 9:00 a.m. ET to discuss the company's fourth quarter 2016 and full-year results. The dial-in number to listen to the call domestically is 1-855-638-5678 and the number for international participants is 1-920-663-6286. 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 12:00 p.m. ET on Thursday, February 16, 2017, by calling 1-855-859-2056 (domestic) or 1-404-537-3406 (international) and entering access code 48329007. In addition, the call will be archived and available on 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 6,500 hotels franchised in more than 40 countries and territories, Choice Hotels International represents more than 500,000 rooms around the globe. As of December 31, 2016, 775 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®, Rodeway Inn®, and Vacation Rentals by Choice Hotels(TM) brands provide a spectrum of lodging choices to meet guests' needs. With more than 30 million members and counting, our Choice Privileges® rewards program enhances every trip a guest takes, with benefits ranging from instant, every day rewards to exceptional experiences, starting right when they join. All hotels and vacation rentals are independently owned and operated. 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.
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; our 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
Adjusted EBITDA, Adjusted diluted EPS, hotel franchising revenues, adjusted hotel franchising SG&A, Adjusted EBITDA from hotel franchising activities and adjusted hotel 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 net 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 items to the most comparable GAAP financial measures. We discuss management's reasons for reporting these non-GAAP measures below.
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization: Adjusted EBITDA reflects net income excluding the impact of interest expense, interest income, provision for income taxes, depreciation and amortization, other (gains) and losses, equity in net income of unconsolidated affiliates, mark to market adjustments on non-qualified retirement plan investments and executive termination benefits. We consider adjusted 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 adjusted 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. Adjusted 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. Mark to market adjustments on non-qualified retirement plan investments recorded in SG&A are excluded from EBITDA as the company accounts for these investments in accordance with accounting for deferred compensation arrangements when investments are held in a rabbi trust and invested. Changes in the fair value of the investments are recognized as both compensation expense in SG&A and other gains and losses. As a result, the changes in the fair value of the investments do not have an impact on the company's net income. These amounts are excluded from EBITDA as they can vary widely across reporting periods based on the performance of the investments and are not an indicator of the operating performance of the company.
Hotel Franchising Revenues, Adjusted Hotel Franchising EBITDA, Adjusted Hotel Franchising SG&A and Margins: The company reports hotel franchising revenues, adjusted hotel franchising EBITDA, adjusted franchising hotel SG&A and margins which exclude marketing and reservation revenues; the SkyTouch Technology division; recently acquired operations that provide Software as a Service ("SaaS") technology solutions to vacation rental management companies; revenue generated from the ownership of an office building that is leased to a third-party and executive termination benefits. These non-GAAP measures are a commonly used measure of performance in our industry and facilitate comparisons between the company and its competitors. 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, complementary lines of business.
© 2017 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
2016 2015 $ % 2016 2015 $ %
---- ---- --- --- ---- ---- --- ---
(In thousands, except per share amounts)
REVENUES:
Royalty fees $73,379 $67,965 $5,414 8% $320,547 $301,508 $19,039 6%
Initial franchise and relicensing fees 6,807 6,977 (170) (2%) 23,953 24,680 (727) (3%)
Procurement services 7,507 7,404 103 1% 31,226 27,071 4,155 15%
Marketing and reservation system 113,523 122,465 (8,942) (7%) 525,716 488,763 36,953 8%
Other 6,979 6,140 839 14% 23,199 17,856 5,343 30%
----- ----- --- --- ------ ------ ----- ---
Total revenues 208,195 210,951 (2,756) (1%) 924,641 859,878 64,763 8%
OPERATING EXPENSES:
Selling, general and administrative 39,213 38,542 671 2% 148,728 134,254 14,474 11%
Depreciation and amortization 2,998 2,749 249 9% 11,705 11,542 163 1%
Marketing and reservation system 113,523 122,465 (8,942) (7%) 525,716 488,763 36,953 8%
------- ------- ------ --- ------- ------- ------ ---
Total operating expenses 155,734 163,756 (8,022) (5%) 686,149 634,559 51,590 8%
Gain on sale of assets, net 1 - 1 NM 403 - 403 NM
Operating income 52,462 47,195 5,267 11% 238,895 225,319 13,576 6%
OTHER INCOME AND EXPENSES, NET:
Interest expense 10,980 10,776 204 2% 44,446 42,833 1,613 4%
Interest income (1,033) (598) (435) 73% (3,535) (1,580) (1,955) 124%
Other (gains) losses (499) (581) 82 (14%) (1,504) (820) (684) 83%
Equity in net (income) loss of affiliates (778) (206) (572) 278% (492) 901 (1,393) (155%)
Total other income and expenses, net 8,670 9,391 (721) (8%) 38,915 41,334 (2,419) (6%)
----- ----- ---- --- ------ ------ ------ ---
Income before income taxes 43,792 37,804 5,988 16% 199,980 183,985 15,995 9%
Income taxes 11,971 8,601 3,370 39% 60,609 55,956 4,653 8%
------ ----- ----- --- ------ ------ ----- ---
Net income $31,821 $29,203 $2,618 9% $139,371 $128,029 $11,342 9%
======= ======= ====== === ======== ======== ======= ===
Basic earnings per share $0.57 $0.52 $0.05 10% $2.48 $2.24 $0.24 11%
===== ===== ===== === ===== ===== ===== ===
Diluted earnings per share $0.56 $0.51 $0.05 10% $2.46 $2.22 $0.24 11%
===== ===== ===== === ===== ===== ===== ===
Choice Hotels International, Inc. Exhibit 2
Consolidated Balance Sheets
(In thousands, except per share amounts) December 31, December 31,
2016 2015
---- ----
(Unaudited)
ASSETS
Cash and cash equivalents $202,463 $193,441
Accounts receivable, net 107,336 89,352
Other current assets 35,074 28,160
------ ------
Total current assets 344,873 310,953
Fixed assets and intangibles, net 178,704 179,433
Notes receivable, net of allowances 110,608 82,572
Investments in unconsolidated entities 94,839 67,037
Investments, employee benefit plans, at fair value 16,975 17,674
Other assets 106,469 59,341
------- ------
Total assets $852,468 $717,010
-------- --------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Accounts payable $48,071 $64,431
Accrued expenses and other current liabilities 81,184 70,807
Deferred revenue 133,218 71,587
Current portion of long-term debt 1,195 1,191
Total current liabilities 263,668 208,016
Long-term debt 839,409 812,945
Deferred compensation & retirement plan obligations 21,595 22,859
Other liabilities 39,145 69,089
------ ------
Total liabilities 1,163,817 1,112,909
Total shareholders' deficit (311,349) (395,899)
Total liabilities and shareholders'
deficit $852,468 $717,010
-------- --------
Choice Hotels International, Inc. Exhibit 3
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands) Year Ended December 31,
-----------------------
2016 2015*
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $139,371 $128,029
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 11,705 11,542
Gain on disposal of assets (346) (1,521)
Provision for bad debts, net 2,151 1,704
Non-cash stock compensation and other charges 15,458 11,805
Non-cash interest and other loss 1,059 3,229
Deferred income taxes (10,542) 615
Equity in net losses from unconsolidated joint ventures less distributions received 1,025 3,279
Changes in assets and liabilities, net of acquisition:
Receivables (21,919) 401
Advances to/from marketing and reservation activities, net (21,449) 11,074
Forgivable notes receivable, net (17,410) (23,066)
Accounts payable (13,689) 6,493
Accrued expenses and other current liabilities 5,225 5,166
Income taxes payable/receivable 5,775 808
Deferred revenue 61,646 5,251
Other assets (8,703) (5,792)
Other liabilities 2,678 6,062
----- -----
NET CASH PROVIDED BY OPERATING ACTIVITIES 152,035 165,079
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment (25,191) (27,765)
Investment in intangible assets (2,580) (733)
Proceeds from sales of assets 11,462 6,347
Acquisitions of real estate (28,583) (9,200)
Business acquisiton, net of cash acquired (1,341) (13,269)
Contributions to equity method investments (34,661) (23,737)
Distributions from equity method investments 3,700 518
Purchases of investments, employee benefit plans (1,661) (3,220)
Proceeds from sales of investments, employee benefit plans 1,911 3,170
Issuance of mezzanine and other notes receivable (32,604) (36,884)
Collections of mezzanine and other notes receivable 11,070 4,849
Other items, net 11 114
--- ---
NET CASH USED BY INVESTING ACTIVITIES (98,467) (99,810)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings pursuant to revolving credit facilities 25,795 158,867
Principal payments on long-term debt (988) (130,501)
Proceeds from other debt agreements 550 -
Proceeds from the issuance of long-term debt - 176
Debt issuance costs (284) (2,169)
Purchases of treasury stock (35,926) (72,873)
Dividends paid (46,182) (45,214)
Proceeds from exercise of stock options 12,951 7,056
------ -----
NET CASH USED BY FINANCING ACTIVITIES (44,084) (84,658)
------- -------
Net change in cash and cash equivalents 9,484 (19,389)
Effect of foreign exchange rate changes on cash and cash equivalents (462) (2,049)
Cash and cash equivalents at beginning of period 193,441 214,879
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $202,463 $193,441
======== ========
* Year end results for December 31, 2015 reflect the adoption of ASU No. 2016-09, which requires companies to recognize excess tax benefits related to the exercise of share based awards as operating activities in the statement of cash flows. The company
has elected to apply the ASU retrospectively and as a result excess tax benefits totaling $5.2 million for the year ended December 31, 2015 have been reclassified from cash flows from financing activities to cash flows from operating activities.
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 4
SUPPLEMENTAL OPERATING INFORMATION
DOMESTIC HOTEL SYSTEM
(UNAUDITED)
For the Year Ended December 31, 2016 For the Year Ended December 31, 2015 Change
------------------------------------ ------------------------------------ ------
Average Daily Average Daily Average Daily
Rate Occupancy RevPAR Rate Occupancy RevPAR Rate Occupancy RevPAR
---- --------- ------ ---- --------- ------ ---- --------- ------
Comfort Inn $92.56 65.6% $60.70 $89.68 65.0% $58.25 3.2% 60 bps 4.2%
Comfort Suites 96.32 69.3% 66.74 93.89 68.3% 64.16 2.6% 100 bps 4.0%
Sleep 82.08 65.1% 53.47 80.41 63.9% 51.41 2.1% 120 bps 4.0%
Quality 77.80 59.1% 45.99 75.06 58.2% 43.69 3.7% 90 bps 5.3%
Clarion 82.35 58.3% 48.01 79.85 57.2% 45.63 3.1% 110 bps 5.2%
Econo Lodge 61.41 54.1% 33.22 59.61 53.5% 31.90 3.0% 60 bps 4.1%
Rodeway 63.04 55.7% 35.08 59.75 56.3% 33.64 5.5% (60) bps 4.3%
MainStay 76.29 65.2% 49.70 77.02 67.1% 51.71 (0.9%) (190) bps (3.9%)
Suburban 49.96 75.5% 37.72 47.61 75.5% 35.95 4.9% - bps 4.9%
Cambria hotel & suites 131.73 76.3% 100.46 NA NA NA NA NA NA
Ascend Hotel Collection 129.97 58.1% 75.52 127.27 58.5% 74.47 2.1% (40) bps 1.4%
------ ---- ----- ------ ---- ----- --- --- --- ---
Total (1) $82.64 61.7% $51.00 $80.24 61.2% $49.08 3.0% 50 bps 3.9%
====== ==== ====== ====== ==== ====== === === === ===
For the Three Months Ended December 31, 2016 For the Three Months Ended December 31, 2015 Change
-------------------------------------------- -------------------------------------------- ------
Average Daily Average Daily Average Daily
Rate Occupancy RevPAR Rate Occupancy RevPAR Rate Occupancy RevPAR
---- --------- ------ ---- --------- ------ ---- --------- ------
Comfort Inn $88.45 60.7% $53.66 $86.31 59.4% $51.25 2.5% 130 bps 4.7%
Comfort Suites 92.67 64.7% 59.92 90.85 63.7% 57.90 2.0% 100 bps 3.5%
Sleep 78.82 61.5% 48.44 77.35 58.7% 45.41 1.9% 280 bps 6.7%
Quality 73.92 54.2% 40.05 71.82 52.5% 37.68 2.9% 170 bps 6.3%
Clarion 77.74 53.9% 41.93 76.13 51.8% 39.43 2.1% 210 bps 6.3%
Econo Lodge 58.37 50.4% 29.43 56.79 48.8% 27.72 2.8% 160 bps 6.2%
Rodeway 59.42 50.9% 30.22 57.00 49.9% 28.47 4.2% 100 bps 6.1%
MainStay 73.06 62.2% 45.42 73.73 60.1% 44.30 (0.9%) 210 bps 2.5%
Suburban 49.36 74.0% 36.55 47.15 71.1% 33.51 4.7% 290 bps 9.1%
Cambria hotel & suites 135.36 73.1% 98.90 NA NA NA NA NA NA
Ascend Hotel Collection 128.82 55.3% 71.29 126.92 54.4% 69.09 1.5% 90 bps 3.2%
------ ---- ----- ------ ---- ----- --- --- --- ---
Total (1) $79.10 57.3% $45.28 $77.30 55.8% $43.13 2.3% 150 bps 5.0%
====== ==== ====== ====== ==== ====== === === === ===
For the Quarter Ended For the Year Ended
--------------------- ------------------
12/31/2016 12/31/2015 12/31/2016 12/31/2015
System-wide effective royalty rate 4.49% 4.36% (1) 4.41% 4.30%
(1)Totals for the three months and year ended December 31, 2015 have been revised from previous disclosures to include the operating statistics for the Cambria hotel & suites brand
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 5
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA
(UNAUDITED)
December 31, 2016 December 31, 2015 Variance
----------------- ----------------- --------
Hotels Rooms Hotels Rooms Hotels Rooms % %
------ ----- ------ ----- ------ ----- --- ---
Comfort Inn 1,113 86,310 1,156 89,545 (43) (3,235) (3.7%) (3.6%)
Comfort Suites 565 43,610 569 43,949 (4) (339) (0.7%) (0.8%)
Sleep 379 27,097 377 27,047 2 50 0.5% 0.2%
Quality 1,447 114,582 1,379 110,116 68 4,466 4.9% 4.1%
Clarion 167 22,941 175 24,449 (8) (1,508) (4.6%) (6.2%)
Econo Lodge 857 52,791 856 52,978 1 (187) 0.1% (0.4%)
Rodeway 565 32,515 513 28,880 52 3,635 10.1% 12.6%
MainStay 56 4,108 52 3,846 4 262 7.7% 6.8%
Suburban 59 6,561 62 6,994 (3) (433) (4.8%) (6.2%)
Cambria hotel & suites 27 3,503 25 3,113 2 390 8.0% 12.5%
Ascend Hotel Collection 127 10,480 112 9,455 15 1,025 13.4% 10.8%
--- ------ --- ----- --- ----- ---- ----
Domestic Franchises 5,362 404,498 5,276 400,372 86 4,126 1.6% 1.0%
International Franchises 1,152 111,624 1,147 107,111 5 4,513 0.4% 4.2%
----- ------- ----- ------- --- ----- --- ---
Total Franchises 6,514 516,122 6,423 507,483 91 8,639 1.4% 1.7%
===== ======= ===== ======= === ===== === ===
Exhibit 6
CHOICE HOTELS INTERNATIONAL, INC.
SUPPLEMENTAL INFORMATION BY BRAND
DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS
(UNAUDITED)
For the Year Ended December 31, 2016 For the Year Ended December 31, 2015 % Change
------------------------------------ ------------------------------------ --------
New New New
Construction Conversion Total Construction Conversion Total Construction Conversion Total
------------ ---------- ----- ------------ ---------- ----- ------------ ---------- -----
Comfort Inn 37 38 75 37 39 76 0% (3%) (1%)
Comfort Suites 43 3 46 45 6 51 (4%) (50%) (10%)
Sleep 50 1 51 34 - 34 47% NM 50%
Quality 2 174 176 3 193 196 (33%) (10%) (10%)
Clarion 3 32 35 - 12 12 NM 167% 192%
Econo Lodge 2 65 67 - 60 60 NM 8% 12%
Rodeway - 102 102 - 104 104 NM (2%) (2%)
MainStay 29 - 29 27 - 27 7% NM 7%
Suburban - 2 2 1 6 7 (100%) (67%) (71%)
Ascend Hotel Collection 9 25 34 5 32 37 80% (22%) (8%)
Cambria hotel & suites 26 2 28 21 5 26 24% (60%) 8%
--- --- --- --- --- --- --- ---- ---
Total Domestic System 201 444 645 173 457 630 16% (3%) 2%
=== === === === === === === === ===
For the Three Months Ended December 31, 2016 For the Three Months Ended December 31,
2015 % Change
-------------------------------------------- ---------------------------------------- --------
New New New
Construction Conversion Total Construction Conversion Total Construction Conversion Total
------------ ---------- ----- ------------ ---------- ----- ------------ ---------- -----
Comfort Inn 17 12 29 20 11 31 (15%) 9% (6%)
Comfort Suites 26 2 28 27 3 30 (4%) (33%) (7%)
Sleep 24 - 24 15 - 15 60% NM 60%
Quality 2 56 58 - 79 79 NM (29%) (27%)
Clarion - 17 17 - 5 5 NM 240% 240%
Econo Lodge 1 24 25 - 21 21 NM 14% 19%
Rodeway - 42 42 - 47 47 NM (11%) (11%)
MainStay 14 - 14 11 - 11 27% NM 27%
Suburban - 1 1 - 2 2 NM (50%) (50%)
Ascend Hotel Collection 7 10 17 2 10 12 250% 0% 42%
Cambria hotel & suites 10 2 12 7 3 10 43% (33%) 20%
--- --- --- --- --- --- --- ---- ---
Total Domestic System 101 166 267 82 181 263 23% (8%) 2%
=== === === === === === === === ===
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
--------
December 31, 2016 December 31, 2015
Units Units Conversion New Construction Total
----- ----- ---------- ---------------- -----
Conversion New Total Conversion New Total Units % Units % Units %
Construction Construction
------------ ------------
Comfort Inn 38 94 132 38 83 121 - 0% 11 13% 11 9%
Comfort Suites 3 114 117 3 95 98 - 0% 19 20% 19 19%
Sleep Inn 1 108 109 - 81 81 1 NM 27 33% 28 35%
Quality 54 5 59 53 5 58 1 2% - 0% 1 2%
Clarion 17 4 21 7 2 9 10 143% 2 100% 12 133%
Econo Lodge 33 4 37 23 4 27 10 43% - 0% 10 37%
Rodeway 37 1 38 47 2 49 (10) (21%) (1) (50%) (11) (22%)
MainStay - 75 75 - 60 60 - NM 15 25% 15 25%
Suburban 5 5 10 5 8 13 - 0% (3) (38%) (3) (23%)
Ascend Hotel Collection 35 22 57 28 19 47 7 25% 3 16% 10 21%
Cambria hotel & suites 6 60 66 5 38 43 1 20% 22 58% 23 53%
--- --- --- --- --- --- --- --- --- --- --- ---
229 492 721 209 397 606 20 10% 95 24% 115 19%
=== === === === === === === === === === === ===
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 8
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
(UNAUDITED)
HOTEL FRANCHISING REVENUES AND ADJUSTED HOTEL FRANCHISING MARGINS
(dollar amounts in thousands) Three Months Ended December 31, Year Ended December 31,
------------------------------- -----------------------
2016 2015 2016 2015
---- ---- ---- ----
Hotel Franchising Revenues:
Total Revenues $208,195 $210,951 $924,641 $859,878
Adjustments:
Marketing and reservation system revenues (113,523) (122,465) (525,716) (488,763)
Non-hotel franchising activities (2,295) (1,943) (8,816) (4,416)
Hotel Franchising Revenues $92,377 $86,543 $390,109 $366,699
Adjusted Hotel Franchising Margins:
Operating Margin:
Total Revenues $208,195 $210,951 $924,641 $859,878
Operating Income $52,462 $47,195 $238,895 $225,319
Operating Margin 25.2% 22.4% 25.8% 26.2%
Adjusted Hotel Franchising Margin:
Hotel Franchising Revenues $92,377 $86,543 $390,109 $366,699
Operating Income $52,462 $47,195 $238,895 $225,319
Mark to market adjustments on non-qualified retirement plan
investments $531 $619 $1,534 $(732)
Executive termination benefits - - 2,206 -
Non-hotel franchising activities operating loss 6,453 6,952 23,593 22,274
Adjusted Hotel Franchising Operating Income $59,446 $54,766 $266,228 $246,861
Adjusted Hotel Franchising Margins 64.4% 63.3% 68.2% 67.3%
ADJUSTED HOTEL FRANCHISING SELLING, GENERAL AND ADMINISTRATION EXPENSES
(dollar amounts in thousands) Three Months Ended December 31, Year Ended December 31,
------------------------------- -----------------------
2016 2015 2016 2015
---- ---- ---- ----
Total Selling, General and Administrative Expenses $39,213 $38,542 $148,728 $134,254
Mark to market adjustments on non-qualified retirement plan
investments $(531) $(619) $(1,534) $732
Executive termination benefits - - (2,206) -
Non-hotel franchising activities (7,703) (7,976) (28,141) (24,121)
Adjusted Hotel Franchising Selling, General and
Administration Expenses $30,979 $29,947 $116,847 $110,865
===============================================
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA")
(dollar amounts in thousands)
Three Months Ended December 31, Year Ended December 31,
------------------------------- -----------------------
2016 2015 2016 2015
---- ---- ---- ----
Net income $31,821 $29,203 $139,371 $128,029
Income taxes 11,971 8,601 60,609 55,956
Interest expense 10,980 10,776 44,446 42,833
Interest income (1,033) (598) (3,535) (1,580)
Other (gains) losses (499) (581) (1,504) (820)
Equity in net (income) loss of affiliates (778) (206) (492) 901
Gain on sale of assets (1) - (403) -
Depreciation and amortization 2,998 2,749 11,705 11,542
Mark to market adjustments on non-qualified retirement plan
investments 531 619 1,534 (732)
Executive termination benefits - - 2,206 -
Adjusted EBITDA $55,990 $50,563 $253,937 $236,129
======= ======= ======== ========
Hotel franchising $61,398 $56,596 $273,262 $255,834
Non-hotel franchising activities (5,408) (6,033) (19,325) (19,705)
$55,990 $50,563 $253,937 $236,129
======= ======= ======== ========
ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS)
(dollar amounts in thousands, except per share amounts) Three Months Ended December 31, Year Ended December 31,
------------------------------- -----------------------
2016 2015 2016 2015
---- ---- ---- ----
Net Income $31,821 $29,203 $139,371 $128,029
Adjustments:
Executive termination benefits, net of income taxes - - 1,394 -
Adjusted Net Income $31,821 $29,203 $140,765 $128,029
======= ======= ======== ========
Diluted Earnings Per Share $0.56 $0.51 $2.46 $2.22
Adjustments:
Executive termination benefits - - 0.03 -
Adjusted Diluted Earnings Per Share (EPS) $0.56 $0.51 $2.49 $2.22
===== ===== ===== =====
ADJUSTED EBITDA FULL YEAR FORECAST
(dollar amounts in thousands)
Range
-----
Estimated Adjusted EBITDA
Fiscal Year 2017
----------------
Net income $156,900 $160,200
Income taxes 79,000 80,700
Interest expense 47,800 47,800
Interest income (4,700) (4,700)
Gain on sale of assets - -
Other gains - -
Equity in net loss of affiliates (200) (200)
Depreciation and amortization 13,200 13,200
Mark to market adjustments on non-qualified retirement plan
investments - -
Adjusted EBITDA $292,000 $297,000
======== ========
Hotel franchising $297,000 $302,000
Non-hotel franchising activities (5,000) (5,000)
$292,000 $297,000
======== ========
SOURCE Choice Hotels International, Inc.
SOURCE: Choice Hotels International, Inc.
PR Newswire
ROCKVILLE, Md., Feb. 15, 2017
ROCKVILLE, Md., Feb. 15, 2017 /PRNewswire/ -- Choice Hotels International, Inc. (NYSE: CHH) today reported its results for the three months and year ended December 31, 2016. Net income for the fourth quarter of 2016 was $31.8 million or $0.56 per diluted share, compared with $29.2 million or $0.51 per diluted share for the fourth quarter of 2015. Fourth quarter adjusted earnings before income taxes, depreciation and amortization (EBITDA) was $56.0 million, compared with $50.6 million in the prior year, an increase of 11 percent.
"We are pleased to report another record year of revenue, operating income and net income performance. 2016 was a strong year for Choice Hotels highlighted by our domestic RevPAR growth which continues to outpace industry performance and strong development results," said Stephen P. Joyce, chief executive officer of Choice Hotels. "There are many contributing factors to our success highlighted by our efforts to deliver new strategic programs and tools designed to increase reservation delivery to our franchisees, the acceleration of our growth and performance in the upscale category, and our strong development momentum. We are optimistic that our expanded programs and services will result in continued strong RevPAR performance and developer interest in 2017 and beyond."
Highlights of the company's fourth quarter and full-year 2016 results are as follows:
Overall Results
Royalties
Development
"We continue to have great success in executing and opening new construction hotels in top markets, as developers have taken note of our strong RevPAR performance and the brand strategies that we have implemented to improve hotel performance," said Patrick Pacious, president and chief operating officer, Choice Hotels. "We are particularly pleased that Cambria hotel & suites and the Comfort brands continue to draw attention from top hotel developers, resulting in an increase in new construction projects in prime urban locations. We expect to see continued interest and development of these brands in highly desirable markets."
Special Item
During the year ended December 31, 2016, the company recorded an executive termination benefit charge of approximately $2.2 million. This special item impacted diluted EPS by $0.03 per share for the year ended December 31, 2016. The company uses non-GAAP measures that exclude executive termination benefits because those non-GAAP measures allow for period-over-period comparison of on-going core operations before the impact of these charges. These non-GAAP measures, which are reconciled to the comparable GAAP measures in Exhibit 8, include adjusted net income, adjusted diluted EPS, adjusted hotel franchising selling, general and administrative expenses, adjusted EBITDA and adjusted hotel franchising margins.
Use of Cash Flows
Dividends
During the fourth quarter of 2016, the company's board of directors announced a 5 percent increase, effective the first quarter of 2017, of the current quarterly dividend rate per common share to $0.215 per share. During the year ended December 31, 2016, the company paid cash dividends totaling approximately $46 million.
Share Repurchases
The company repurchased 0.6 million shares of common stock under its share repurchase program during the year ended December 31, 2016, at a total cost of approximately $30 million. During the fourth quarter, the company's board of directors approved increasing the number of shares authorized under its long-standing share repurchase program by 3 million shares. Thus, the company currently has authorization to purchase up to 4.0 million additional shares under this program.
Hotel Development & Financing
Pursuant to its program to encourage acceleration of the growth of our upscale select-service Cambria hotels & suites brand, the company advanced approximately $104 million in support of the brand's development during the year ended December 31, 2016. The company also recycled approximately $28 million of investments in support of Cambria development projects resulting in net advances of $76 million for the current year. These advances are primarily in the form of joint venture investments, forgivable key money loans, senior and mezzanine lending and site acquisitions. On December 31, 2016, the company had approximately $204 million reflected in its consolidated balance sheet pursuant to these financial support activities. With respect to lending and joint venture investments, the company generally expects to recycle these loans and investments within a five-year period.
Outlook
The company's consolidated 2017 outlook reflects the following assumptions:
Consolidated Outlook
Hotel Franchising
Non-Hotel Franchising Activities
Conference Call
Choice will conduct a conference call on Thursday, February 16, 2017, at 9:00 a.m. ET to discuss the company's fourth quarter 2016 and full-year results. The dial-in number to listen to the call domestically is 1-855-638-5678 and the number for international participants is 1-920-663-6286. 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 12:00 p.m. ET on Thursday, February 16, 2017, by calling 1-855-859-2056 (domestic) or 1-404-537-3406 (international) and entering access code 48329007. In addition, the call will be archived and available on 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 6,500 hotels franchised in more than 40 countries and territories, Choice Hotels International represents more than 500,000 rooms around the globe. As of December 31, 2016, 775 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®, Rodeway Inn®, and Vacation Rentals by Choice Hotels™ brands provide a spectrum of lodging choices to meet guests' needs. With more than 30 million members and counting, our Choice Privileges® rewards program enhances every trip a guest takes, with benefits ranging from instant, every day rewards to exceptional experiences, starting right when they join. All hotels and vacation rentals are independently owned and operated. 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.
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; our 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
Adjusted EBITDA, Adjusted diluted EPS, hotel franchising revenues, adjusted hotel franchising SG&A, Adjusted EBITDA from hotel franchising activities and adjusted hotel 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 net 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 items to the most comparable GAAP financial measures. We discuss management's reasons for reporting these non-GAAP measures below.
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization: Adjusted EBITDA reflects net income excluding the impact of interest expense, interest income, provision for income taxes, depreciation and amortization, other (gains) and losses, equity in net income of unconsolidated affiliates, mark to market adjustments on non-qualified retirement plan investments and executive termination benefits. We consider adjusted 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 adjusted 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. Adjusted 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. Mark to market adjustments on non-qualified retirement plan investments recorded in SG&A are excluded from EBITDA as the company accounts for these investments in accordance with accounting for deferred compensation arrangements when investments are held in a rabbi trust and invested. Changes in the fair value of the investments are recognized as both compensation expense in SG&A and other gains and losses. As a result, the changes in the fair value of the investments do not have an impact on the company's net income. These amounts are excluded from EBITDA as they can vary widely across reporting periods based on the performance of the investments and are not an indicator of the operating performance of the company.
Hotel Franchising Revenues, Adjusted Hotel Franchising EBITDA, Adjusted Hotel Franchising SG&A and Margins: The company reports hotel franchising revenues, adjusted hotel franchising EBITDA, adjusted franchising hotel SG&A and margins which exclude marketing and reservation revenues; the SkyTouch Technology division; recently acquired operations that provide Software as a Service ("SaaS") technology solutions to vacation rental management companies; revenue generated from the ownership of an office building that is leased to a third-party and executive termination benefits. These non-GAAP measures are a commonly used measure of performance in our industry and facilitate comparisons between the company and its competitors. 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, complementary lines of business.
© 2017 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 |
|||||||||||||||
|
2016 |
2015 |
$ |
% |
2016 |
2015 |
$ |
% |
|||||||||
|
(In thousands, except per share amounts) |
||||||||||||||||
|
REVENUES: |
||||||||||||||||
|
Royalty fees |
$ 73,379 |
$ 67,965 |
$ 5,414 |
8% |
$ 320,547 |
$ 301,508 |
$ 19,039 |
6% |
||||||||
|
Initial franchise and relicensing fees |
6,807 |
6,977 |
(170) |
(2%) |
23,953 |
24,680 |
(727) |
(3%) |
||||||||
|
Procurement services |
7,507 |
7,404 |
103 |
1% |
31,226 |
27,071 |
4,155 |
15% |
||||||||
|
Marketing and reservation system |
113,523 |
122,465 |
(8,942) |
(7%) |
525,716 |
488,763 |
36,953 |
8% |
||||||||
|
Other |
6,979 |
6,140 |
839 |
14% |
23,199 |
17,856 |
5,343 |
30% |
||||||||
|
Total revenues |
208,195 |
210,951 |
(2,756) |
(1%) |
924,641 |
859,878 |
64,763 |
8% |
||||||||
|
OPERATING EXPENSES: |
||||||||||||||||
|
Selling, general and administrative |
39,213 |
38,542 |
671 |
2% |
148,728 |
134,254 |
14,474 |
11% |
||||||||
|
Depreciation and amortization |
2,998 |
2,749 |
249 |
9% |
11,705 |
11,542 |
163 |
1% |
||||||||
|
Marketing and reservation system |
113,523 |
122,465 |
(8,942) |
(7%) |
525,716 |
488,763 |
36,953 |
8% |
||||||||
|
Total operating expenses |
155,734 |
163,756 |
(8,022) |
(5%) |
686,149 |
634,559 |
51,590 |
8% |
||||||||
|
Gain on sale of assets, net |
1 |
- |
1 |
NM |
403 |
- |
403 |
NM |
||||||||
|
Operating income |
52,462 |
47,195 |
5,267 |
11% |
238,895 |
225,319 |
13,576 |
6% |
||||||||
|
OTHER INCOME AND EXPENSES, NET: |
||||||||||||||||
|
Interest expense |
10,980 |
10,776 |
204 |
2% |
44,446 |
42,833 |
1,613 |
4% |
||||||||
|
Interest income |
(1,033) |
(598) |
(435) |
73% |
(3,535) |
(1,580) |
(1,955) |
124% |
||||||||
|
Other (gains) losses |
(499) |
(581) |
82 |
(14%) |
(1,504) |
(820) |
(684) |
83% |
||||||||
|
Equity in net (income) loss of affiliates |
(778) |
(206) |
(572) |
278% |
(492) |
901 |
(1,393) |
(155%) |
||||||||
|
Total other income and expenses, net |
8,670 |
9,391 |
(721) |
(8%) |
38,915 |
41,334 |
(2,419) |
(6%) |
||||||||
|
Income before income taxes |
43,792 |
37,804 |
5,988 |
16% |
199,980 |
183,985 |
15,995 |
9% |
||||||||
|
Income taxes |
11,971 |
8,601 |
3,370 |
39% |
60,609 |
55,956 |
4,653 |
8% |
||||||||
|
Net income |
$ 31,821 |
$ 29,203 |
$ 2,618 |
9% |
$ 139,371 |
$ 128,029 |
$ 11,342 |
9% |
||||||||
|
Basic earnings per share |
$ 0.57 |
$ 0.52 |
$ 0.05 |
10% |
$ 2.48 |
$ 2.24 |
$ 0.24 |
11% |
||||||||
|
Diluted earnings per share |
$ 0.56 |
$ 0.51 |
$ 0.05 |
10% |
$ 2.46 |
$ 2.22 |
$ 0.24 |
11% |
||||||||
|
Choice Hotels International, Inc. |
Exhibit 2 |
||||||
|
Consolidated Balance Sheets |
|||||||
|
(In thousands, except per share amounts) |
December 31, |
December 31, |
|||||
|
2016 |
2015 |
||||||
|
(Unaudited) |
|||||||
|
ASSETS |
|||||||
|
Cash and cash equivalents |
$ 202,463 |
$ 193,441 |
|||||
|
Accounts receivable, net |
107,336 |
89,352 |
|||||
|
Other current assets |
35,074 |
28,160 |
|||||
|
Total current assets |
344,873 |
310,953 |
|||||
|
Fixed assets and intangibles, net |
178,704 |
179,433 |
|||||
|
Notes receivable, net of allowances |
110,608 |
82,572 |
|||||
|
Investments in unconsolidated entities |
94,839 |
67,037 |
|||||
|
Investments, employee benefit plans, at fair value |
16,975 |
17,674 |
|||||
|
Other assets |
106,469 |
59,341 |
|||||
|
Total assets |
$ 852,468 |
$ 717,010 |
|||||
|
LIABILITIES AND SHAREHOLDERS' DEFICIT |
|||||||
|
Accounts payable |
$ 48,071 |
$ 64,431 |
|||||
|
Accrued expenses and other current liabilities |
81,184 |
70,807 |
|||||
|
Deferred revenue |
133,218 |
71,587 |
|||||
|
Current portion of long-term debt |
1,195 |
1,191 |
|||||
|
Total current liabilities |
263,668 |
208,016 |
|||||
|
Long-term debt |
839,409 |
812,945 |
|||||
|
Deferred compensation & retirement plan obligations |
21,595 |
22,859 |
|||||
|
Other liabilities |
39,145 |
69,089 |
|||||
|
Total liabilities |
1,163,817 |
1,112,909 |
|||||
|
Total shareholders' deficit |
(311,349) |
(395,899) |
|||||
|
Total liabilities and shareholders' deficit |
$ 852,468 |
$ 717,010 |
|||||
|
Choice Hotels International, Inc. |
Exhibit 3 |
||
|
Consolidated Statements of Cash Flows |
|||
|
(Unaudited) |
|||
|
(In thousands) |
Year Ended December 31, |
||
|
2016 |
2015* |
||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||
|
Net income |
$ 139,371 |
$ 128,029 |
|
|
Adjustments to reconcile net income to net cash provided |
|||
|
by operating activities: |
|||
|
Depreciation and amortization |
11,705 |
11,542 |
|
|
Gain on disposal of assets |
(346) |
(1,521) |
|
|
Provision for bad debts, net |
2,151 |
1,704 |
|
|
Non-cash stock compensation and other charges |
15,458 |
11,805 |
|
|
Non-cash interest and other loss |
1,059 |
3,229 |
|
|
Deferred income taxes |
(10,542) |
615 |
|
|
Equity in net losses from unconsolidated joint ventures less distributions received |
1,025 |
3,279 |
|
|
Changes in assets and liabilities, net of acquisition: |
|||
|
Receivables |
(21,919) |
401 |
|
|
Advances to/from marketing and reservation activities, net |
(21,449) |
11,074 |
|
|
Forgivable notes receivable, net |
(17,410) |
(23,066) |
|
|
Accounts payable |
(13,689) |
6,493 |
|
|
Accrued expenses and other current liabilities |
5,225 |
5,166 |
|
|
Income taxes payable/receivable |
5,775 |
808 |
|
|
Deferred revenue |
61,646 |
5,251 |
|
|
Other assets |
(8,703) |
(5,792) |
|
|
Other liabilities |
2,678 |
6,062 |
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
152,035 |
165,079 |
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||
|
Investment in property and equipment |
(25,191) |
(27,765) |
|
|
Investment in intangible assets |
(2,580) |
(733) |
|
|
Proceeds from sales of assets |
11,462 |
6,347 |
|
|
Acquisitions of real estate |
(28,583) |
(9,200) |
|
|
Business acquisiton, net of cash acquired |
(1,341) |
(13,269) |
|
|
Contributions to equity method investments |
(34,661) |
(23,737) |
|
|
Distributions from equity method investments |
3,700 |
518 |
|
|
Purchases of investments, employee benefit plans |
(1,661) |
(3,220) |
|
|
Proceeds from sales of investments, employee benefit plans |
1,911 |
3,170 |
|
|
Issuance of mezzanine and other notes receivable |
(32,604) |
(36,884) |
|
|
Collections of mezzanine and other notes receivable |
11,070 |
4,849 |
|
|
Other items, net |
11 |
114 |
|
|
NET CASH USED BY INVESTING ACTIVITIES |
(98,467) |
(99,810) |
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|||
|
Net borrowings pursuant to revolving credit facilities |
25,795 |
158,867 |
|
|
Principal payments on long-term debt |
(988) |
(130,501) |
|
|
Proceeds from other debt agreements |
550 |
- |
|
|
Proceeds from the issuance of long-term debt |
- |
176 |
|
|
Debt issuance costs |
(284) |
(2,169) |
|
|
Purchases of treasury stock |
(35,926) |
(72,873) |
|
|
Dividends paid |
(46,182) |
(45,214) |
|
|
Proceeds from exercise of stock options |
12,951 |
7,056 |
|
|
NET CASH USED BY FINANCING ACTIVITIES |
(44,084) |
(84,658) |
|
|
Net change in cash and cash equivalents |
9,484 |
(19,389) |
|
|
Effect of foreign exchange rate changes on cash and cash equivalents |
(462) |
(2,049) |
|
|
Cash and cash equivalents at beginning of period |
193,441 |
214,879 |
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ 202,463 |
$ 193,441 |
|
|
* Year end results for December 31, 2015 reflect the adoption of ASU No. 2016-09, which requires companies to recognize excess tax benefits related to the exercise of share based awards as operating activities in the statement of cash flows. The company has elected to apply the ASU retrospectively and as a result excess tax benefits totaling $5.2 million for the year ended December 31, 2015 have been reclassified from cash flows from financing activities to cash flows from operating activities. |
|||
|
CHOICE HOTELS INTERNATIONAL, INC. |
Exhibit 4 |
||||||||||||||||||||
|
SUPPLEMENTAL OPERATING INFORMATION |
|||||||||||||||||||||
|
DOMESTIC HOTEL SYSTEM |
|||||||||||||||||||||
|
(UNAUDITED) |
|||||||||||||||||||||
|
For the Year Ended December 31, 2016 |
For the Year Ended December 31, 2015 |
Change |
|||||||||||||||||||
|
Average Daily |
Average Daily |
Average Daily |
|||||||||||||||||||
|
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
|||||||||||||
|
Comfort Inn |
$ 92.56 |
65.6% |
$ 60.70 |
$ 89.68 |
65.0% |
$ 58.25 |
3.2% |
60 |
bps |
4.2% |
|||||||||||
|
Comfort Suites |
96.32 |
69.3% |
66.74 |
93.89 |
68.3% |
64.16 |
2.6% |
100 |
bps |
4.0% |
|||||||||||
|
Sleep |
82.08 |
65.1% |
53.47 |
80.41 |
63.9% |
51.41 |
2.1% |
120 |
bps |
4.0% |
|||||||||||
|
Quality |
77.80 |
59.1% |
45.99 |
75.06 |
58.2% |
43.69 |
3.7% |
90 |
bps |
5.3% |
|||||||||||
|
Clarion |
82.35 |
58.3% |
48.01 |
79.85 |
57.2% |
45.63 |
3.1% |
110 |
bps |
5.2% |
|||||||||||
|
Econo Lodge |
61.41 |
54.1% |
33.22 |
59.61 |
53.5% |
31.90 |
3.0% |
60 |
bps |
4.1% |
|||||||||||
|
Rodeway |
63.04 |
55.7% |
35.08 |
59.75 |
56.3% |
33.64 |
5.5% |
(60) |
bps |
4.3% |
|||||||||||
|
MainStay |
76.29 |
65.2% |
49.70 |
77.02 |
67.1% |
51.71 |
(0.9%) |
(190) |
bps |
(3.9%) |
|||||||||||
|
Suburban |
49.96 |
75.5% |
37.72 |
47.61 |
75.5% |
35.95 |
4.9% |
- |
bps |
4.9% |
|||||||||||
|
Cambria hotel & suites |
131.73 |
76.3% |
100.46 |
NA |
NA |
NA |
NA |
NA |
NA |
||||||||||||
|
Ascend Hotel Collection |
129.97 |
58.1% |
75.52 |
127.27 |
58.5% |
74.47 |
2.1% |
(40) |
bps |
1.4% |
|||||||||||
|
Total (1) |
$ 82.64 |
61.7% |
$ 51.00 |
$ 80.24 |
61.2% |
$ 49.08 |
3.0% |
50 |
bps |
3.9% |
|||||||||||
|
For the Three Months Ended December 31, 2016 |
For the Three Months Ended December 31, 2015 |
Change |
|||||||||||||||||||
|
Average Daily |
Average Daily |
Average Daily |
|||||||||||||||||||
|
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
|||||||||||||
|
Comfort Inn |
$ 88.45 |
60.7% |
$ 53.66 |
$ 86.31 |
59.4% |
$ 51.25 |
2.5% |
130 |
bps |
4.7% |
|||||||||||
|
Comfort Suites |
92.67 |
64.7% |
59.92 |
90.85 |
63.7% |
57.90 |
2.0% |
100 |
bps |
3.5% |
|||||||||||
|
Sleep |
78.82 |
61.5% |
48.44 |
77.35 |
58.7% |
45.41 |
1.9% |
280 |
bps |
6.7% |
|||||||||||
|
Quality |
73.92 |
54.2% |
40.05 |
71.82 |
52.5% |
37.68 |
2.9% |
170 |
bps |
6.3% |
|||||||||||
|
Clarion |
77.74 |
53.9% |
41.93 |
76.13 |
51.8% |
39.43 |
2.1% |
210 |
bps |
6.3% |
|||||||||||
|
Econo Lodge |
58.37 |
50.4% |
29.43 |
56.79 |
48.8% |
27.72 |
2.8% |
160 |
bps |
6.2% |
|||||||||||
|
Rodeway |
59.42 |
50.9% |
30.22 |
57.00 |
49.9% |
28.47 |
4.2% |
100 |
bps |
6.1% |
|||||||||||
|
MainStay |
73.06 |
62.2% |
45.42 |
73.73 |
60.1% |
44.30 |
(0.9%) |
210 |
bps |
2.5% |
|||||||||||
|
Suburban |
49.36 |
74.0% |
36.55 |
47.15 |
71.1% |
33.51 |
4.7% |
290 |
bps |
9.1% |
|||||||||||
|
Cambria hotel & suites |
135.36 |
73.1% |
98.90 |
NA |
NA |
NA |
NA |
NA |
NA |
||||||||||||
|
Ascend Hotel Collection |
128.82 |
55.3% |
71.29 |
126.92 |
54.4% |
69.09 |
1.5% |
90 |
bps |
3.2% |
|||||||||||
|
Total (1) |
$ 79.10 |
57.3% |
$ 45.28 |
$ 77.30 |
55.8% |
$ 43.13 |
2.3% |
150 |
bps |
5.0% |
|||||||||||
|
For the Quarter Ended |
For the Year Ended |
||||||||||||||||||||
|
12/31/2016 |
12/31/2015 |
12/31/2016 |
12/31/2015 |
||||||||||||||||||
|
System-wide effective royalty rate |
4.49% |
4.36% |
(1) |
4.41% |
4.30% |
||||||||||||||||
|
(1)Totals for the three months and year ended December 31, 2015 have been revised from previous disclosures to include the operating statistics for the Cambria hotel & suites brand |
|||||||||||||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. |
Exhibit 5 |
||||||||||||||||
|
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA |
|||||||||||||||||
|
(UNAUDITED) |
|||||||||||||||||
|
December 31, 2016 |
December 31, 2015 |
Variance |
|||||||||||||||
|
Hotels |
Rooms |
Hotels |
Rooms |
Hotels |
Rooms |
% |
% |
||||||||||
|
Comfort Inn |
1,113 |
86,310 |
1,156 |
89,545 |
(43) |
(3,235) |
(3.7%) |
(3.6%) |
|||||||||
|
Comfort Suites |
565 |
43,610 |
569 |
43,949 |
(4) |
(339) |
(0.7%) |
(0.8%) |
|||||||||
|
Sleep |
379 |
27,097 |
377 |
27,047 |
2 |
50 |
0.5% |
0.2% |
|||||||||
|
Quality |
1,447 |
114,582 |
1,379 |
110,116 |
68 |
4,466 |
4.9% |
4.1% |
|||||||||
|
Clarion |
167 |
22,941 |
175 |
24,449 |
(8) |
(1,508) |
(4.6%) |
(6.2%) |
|||||||||
|
Econo Lodge |
857 |
52,791 |
856 |
52,978 |
1 |
(187) |
0.1% |
(0.4%) |
|||||||||
|
Rodeway |
565 |
32,515 |
513 |
28,880 |
52 |
3,635 |
10.1% |
12.6% |
|||||||||
|
MainStay |
56 |
4,108 |
52 |
3,846 |
4 |
262 |
7.7% |
6.8% |
|||||||||
|
Suburban |
59 |
6,561 |
62 |
6,994 |
(3) |
(433) |
(4.8%) |
(6.2%) |
|||||||||
|
Cambria hotel & suites |
27 |
3,503 |
25 |
3,113 |
2 |
390 |
8.0% |
12.5% |
|||||||||
|
Ascend Hotel Collection |
127 |
10,480 |
112 |
9,455 |
15 |
1,025 |
13.4% |
10.8% |
|||||||||
|
Domestic Franchises |
5,362 |
404,498 |
5,276 |
400,372 |
86 |
4,126 |
1.6% |
1.0% |
|||||||||
|
International Franchises |
1,152 |
111,624 |
1,147 |
107,111 |
5 |
4,513 |
0.4% |
4.2% |
|||||||||
|
Total Franchises |
6,514 |
516,122 |
6,423 |
507,483 |
91 |
8,639 |
1.4% |
1.7% |
|||||||||
|
Exhibit 6 |
|||||||||||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. |
|||||||||||||||||||
|
SUPPLEMENTAL INFORMATION BY BRAND |
|||||||||||||||||||
|
DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS |
|||||||||||||||||||
|
(UNAUDITED) |
|||||||||||||||||||
|
For the Year Ended December 31, 2016 |
For the Year Ended December 31, 2015 |
% Change |
|||||||||||||||||
|
New |
New |
New |
|||||||||||||||||
|
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
|||||||||||
|
Comfort Inn |
37 |
38 |
75 |
37 |
39 |
76 |
0% |
(3%) |
(1%) |
||||||||||
|
Comfort Suites |
43 |
3 |
46 |
45 |
6 |
51 |
(4%) |
(50%) |
(10%) |
||||||||||
|
Sleep |
50 |
1 |
51 |
34 |
- |
34 |
47% |
NM |
50% |
||||||||||
|
Quality |
2 |
174 |
176 |
3 |
193 |
196 |
(33%) |
(10%) |
(10%) |
||||||||||
|
Clarion |
3 |
32 |
35 |
- |
12 |
12 |
NM |
167% |
192% |
||||||||||
|
Econo Lodge |
2 |
65 |
67 |
- |
60 |
60 |
NM |
8% |
12% |
||||||||||
|
Rodeway |
- |
102 |
102 |
- |
104 |
104 |
NM |
(2%) |
(2%) |
||||||||||
|
MainStay |
29 |
- |
29 |
27 |
- |
27 |
7% |
NM |
7% |
||||||||||
|
Suburban |
- |
2 |
2 |
1 |
6 |
7 |
(100%) |
(67%) |
(71%) |
||||||||||
|
Ascend Hotel Collection |
9 |
25 |
34 |
5 |
32 |
37 |
80% |
(22%) |
(8%) |
||||||||||
|
Cambria hotel & suites |
26 |
2 |
28 |
21 |
5 |
26 |
24% |
(60%) |
8% |
||||||||||
|
Total Domestic System |
201 |
444 |
645 |
173 |
457 |
630 |
16% |
(3%) |
2% |
||||||||||
|
For the Three Months Ended December 31, 2016 |
For the Three Months Ended December 31, 2015 |
% Change |
|||||||||||||||||
|
New |
New |
New |
|||||||||||||||||
|
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
|||||||||||
|
Comfort Inn |
17 |
12 |
29 |
20 |
11 |
31 |
(15%) |
9% |
(6%) |
||||||||||
|
Comfort Suites |
26 |
2 |
28 |
27 |
3 |
30 |
(4%) |
(33%) |
(7%) |
||||||||||
|
Sleep |
24 |
- |
24 |
15 |
- |
15 |
60% |
NM |
60% |
||||||||||
|
Quality |
2 |
56 |
58 |
- |
79 |
79 |
NM |
(29%) |
(27%) |
||||||||||
|
Clarion |
- |
17 |
17 |
- |
5 |
5 |
NM |
240% |
240% |
||||||||||
|
Econo Lodge |
1 |
24 |
25 |
- |
21 |
21 |
NM |
14% |
19% |
||||||||||
|
Rodeway |
- |
42 |
42 |
- |
47 |
47 |
NM |
(11%) |
(11%) |
||||||||||
|
MainStay |
14 |
- |
14 |
11 |
- |
11 |
27% |
NM |
27% |
||||||||||
|
Suburban |
- |
1 |
1 |
- |
2 |
2 |
NM |
(50%) |
(50%) |
||||||||||
|
Ascend Hotel Collection |
7 |
10 |
17 |
2 |
10 |
12 |
250% |
0% |
42% |
||||||||||
|
Cambria hotel & suites |
10 |
2 |
12 |
7 |
3 |
10 |
43% |
(33%) |
20% |
||||||||||
|
Total Domestic System |
101 |
166 |
267 |
82 |
181 |
263 |
23% |
(8%) |
2% |
||||||||||
|
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 |
||||||||||||||||||||||||
|
December 31, 2016 |
December 31, 2015 |
|||||||||||||||||||||||
|
Units |
Units |
Conversion |
New Construction |
Total |
||||||||||||||||||||
|
Conversion |
New |
Total |
Conversion |
New |
Total |
Units |
% |
Units |
% |
Units |
% |
|||||||||||||
|
Comfort Inn |
38 |
94 |
132 |
38 |
83 |
121 |
- |
0% |
11 |
13% |
11 |
9% |
||||||||||||
|
Comfort Suites |
3 |
114 |
117 |
3 |
95 |
98 |
- |
0% |
19 |
20% |
19 |
19% |
||||||||||||
|
Sleep Inn |
1 |
108 |
109 |
- |
81 |
81 |
1 |
NM |
27 |
33% |
28 |
35% |
||||||||||||
|
Quality |
54 |
5 |
59 |
53 |
5 |
58 |
1 |
2% |
- |
0% |
1 |
2% |
||||||||||||
|
Clarion |
17 |
4 |
21 |
7 |
2 |
9 |
10 |
143% |
2 |
100% |
12 |
133% |
||||||||||||
|
Econo Lodge |
33 |
4 |
37 |
23 |
4 |
27 |
10 |
43% |
- |
0% |
10 |
37% |
||||||||||||
|
Rodeway |
37 |
1 |
38 |
47 |
2 |
49 |
(10) |
(21%) |
(1) |
(50%) |
(11) |
(22%) |
||||||||||||
|
MainStay |
- |
75 |
75 |
- |
60 |
60 |
- |
NM |
15 |
25% |
15 |
25% |
||||||||||||
|
Suburban |
5 |
5 |
10 |
5 |
8 |
13 |
- |
0% |
(3) |
(38%) |
(3) |
(23%) |
||||||||||||
|
Ascend Hotel Collection |
35 |
22 |
57 |
28 |
19 |
47 |
7 |
25% |
3 |
16% |
10 |
21% |
||||||||||||
|
Cambria hotel & suites |
6 |
60 |
66 |
5 |
38 |
43 |
1 |
20% |
22 |
58% |
23 |
53% |
||||||||||||
|
229 |
492 |
721 |
209 |
397 |
606 |
20 |
10% |
95 |
24% |
115 |
19% |
|||||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. |
Exhibit 8 |
|||||||||
|
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION |
||||||||||
|
(UNAUDITED) |
||||||||||
|
HOTEL FRANCHISING REVENUES AND ADJUSTED HOTEL FRANCHISING MARGINS |
||||||||||
|
(dollar amounts in thousands) |
Three Months Ended December 31, |
Year Ended December 31, |
||||||||
|
2016 |
2015 |
2016 |
2015 |
|||||||
|
Hotel Franchising Revenues: |
||||||||||
|
Total Revenues |
$ 208,195 |
$ 210,951 |
$ 924,641 |
$ 859,878 |
||||||
|
Adjustments: |
||||||||||
|
Marketing and reservation system revenues |
(113,523) |
(122,465) |
(525,716) |
(488,763) |
||||||
|
Non-hotel franchising activities |
(2,295) |
(1,943) |
(8,816) |
(4,416) |
||||||
|
Hotel Franchising Revenues |
$ 92,377 |
$ 86,543 |
$ 390,109 |
$ 366,699 |
||||||
|
Adjusted Hotel Franchising Margins: |
||||||||||
|
Operating Margin: |
||||||||||
|
Total Revenues |
$ 208,195 |
$ 210,951 |
$ 924,641 |
$ 859,878 |
||||||
|
Operating Income |
$ 52,462 |
$ 47,195 |
$ 238,895 |
$ 225,319 |
||||||
|
Operating Margin |
25.2% |
22.4% |
25.8% |
26.2% |
||||||
|
Adjusted Hotel Franchising Margin: |
||||||||||
|
Hotel Franchising Revenues |
$ 92,377 |
$ 86,543 |
$ 390,109 |
$ 366,699 |
||||||
|
Operating Income |
$ 52,462 |
$ 47,195 |
$ 238,895 |
$ 225,319 |
||||||
|
Mark to market adjustments on non-qualified retirement plan investments |
$ 531 |
$ 619 |
$ 1,534 |
$ (732) |
||||||
|
Executive termination benefits |
- |
- |
2,206 |
- |
||||||
|
Non-hotel franchising activities operating loss |
6,453 |
6,952 |
23,593 |
22,274 |
||||||
|
Adjusted Hotel Franchising Operating Income |
$ 59,446 |
$ 54,766 |
$ 266,228 |
$ 246,861 |
||||||
|
Adjusted Hotel Franchising Margins |
64.4% |
63.3% |
68.2% |
67.3% |
||||||
|
ADJUSTED HOTEL FRANCHISING SELLING, GENERAL AND ADMINISTRATION EXPENSES |
||||||||||
|
(dollar amounts in thousands) |
Three Months Ended December 31, |
Year Ended December 31, |
||||||||
|
2016 |
2015 |
2016 |
2015 |
|||||||
|
Total Selling, General and Administrative Expenses |
$ 39,213 |
$ 38,542 |
$ 148,728 |
$ 134,254 |
||||||
|
Mark to market adjustments on non-qualified retirement plan investments |
$ (531) |
$ (619) |
$ (1,534) |
$ 732 |
||||||
|
Executive termination benefits |
- |
- |
(2,206) |
- |
||||||
|
Non-hotel franchising activities |
(7,703) |
(7,976) |
(28,141) |
(24,121) |
||||||
|
Adjusted Hotel Franchising Selling, General and Administration Expenses |
$ 30,979 |
$ 29,947 |
$ 116,847 |
$ 110,865 |
||||||
|
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA") |
||||||||||
|
(dollar amounts in thousands) |
||||||||||
|
Three Months Ended December 31, |
Year Ended December 31, |
|||||||||
|
2016 |
2015 |
2016 |
2015 |
|||||||
|
Net income |
$ 31,821 |
$ 29,203 |
$ 139,371 |
$ 128,029 |
||||||
|
Income taxes |
11,971 |
8,601 |
60,609 |
55,956 |
||||||
|
Interest expense |
10,980 |
10,776 |
44,446 |
42,833 |
||||||
|
Interest income |
(1,033) |
(598) |
(3,535) |
(1,580) |
||||||
|
Other (gains) losses |
(499) |
(581) |
(1,504) |
(820) |
||||||
|
Equity in net (income) loss of affiliates |
(778) |
(206) |
(492) |
901 |
||||||
|
Gain on sale of assets |
(1) |
- |
(403) |
- |
||||||
|
Depreciation and amortization |
2,998 |
2,749 |
11,705 |
11,542 |
||||||
|
Mark to market adjustments on non-qualified retirement plan investments |
531 |
619 |
1,534 |
(732) |
||||||
|
Executive termination benefits |
- |
- |
2,206 |
- |
||||||
|
Adjusted EBITDA |
$ 55,990 |
$ 50,563 |
$ 253,937 |
$ 236,129 |
||||||
|
Hotel franchising |
$ 61,398 |
$ 56,596 |
$ 273,262 |
$ 255,834 |
||||||
|
Non-hotel franchising activities |
(5,408) |
(6,033) |
(19,325) |
(19,705) |
||||||
|
$ 55,990 |
$ 50,563 |
$ 253,937 |
$ 236,129 |
|||||||
|
ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS) |
||||||||||
|
(dollar amounts in thousands, except per share amounts) |
Three Months Ended December 31, |
Year Ended December 31, |
||||||||
|
2016 |
2015 |
2016 |
2015 |
|||||||
|
Net Income |
$ 31,821 |
$ 29,203 |
$ 139,371 |
$ 128,029 |
||||||
|
Adjustments: |
||||||||||
|
Executive termination benefits, net of income taxes |
- |
- |
1,394 |
- |
||||||
|
Adjusted Net Income |
$ 31,821 |
$ 29,203 |
$ 140,765 |
$ 128,029 |
||||||
|
Diluted Earnings Per Share |
$ 0.56 |
$ 0.51 |
$ 2.46 |
$ 2.22 |
||||||
|
Adjustments: |
||||||||||
|
Executive termination benefits |
- |
- |
0.03 |
- |
||||||
|
Adjusted Diluted Earnings Per Share (EPS) |
$ 0.56 |
$ 0.51 |
$ 2.49 |
$ 2.22 |
||||||
|
ADJUSTED EBITDA FULL YEAR FORECAST |
||||||||||
|
(dollar amounts in thousands) |
||||||||||
|
Range |
||||||||||
|
Estimated Adjusted EBITDA |
||||||||||
|
Fiscal Year 2017 |
||||||||||
|
Net income |
$ 156,900 |
$ 160,200 |
||||||||
|
Income taxes |
79,000 |
80,700 |
||||||||
|
Interest expense |
47,800 |
47,800 |
||||||||
|
Interest income |
(4,700) |
(4,700) |
||||||||
|
Gain on sale of assets |
- |
- |
||||||||
|
Other gains |
- |
- |
||||||||
|
Equity in net loss of affiliates |
(200) |
(200) |
||||||||
|
Depreciation and amortization |
13,200 |
13,200 |
||||||||
|
Mark to market adjustments on non-qualified retirement plan investments |
- |
- |
||||||||
|
Adjusted EBITDA |
$ 292,000 |
$ 297,000 |
||||||||
|
Hotel franchising |
$ 297,000 |
$ 302,000 |
||||||||
|
Non-hotel franchising activities |
(5,000) |
(5,000) |
||||||||
|
$ 292,000 |
$ 297,000 |
|||||||||
SOURCE Choice Hotels International, Inc.
CONTACT: Scott Oaksmith, Senior Vice President, Finance & Chief Accounting Officer, (301) 592-6659, Scott Carman, Director, Public Relations, (301) 592-6361
Web Site: http://www.choicehotels.com
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