ROCKVILLE, Md., Nov. 5, 2020 /PRNewswire/ -- Choice Hotels International, Inc. (NYSE: CHH), one of the world's largest lodging franchisors, today reported its results for the three and nine months ended September 30, 2020.
"Choice Hotels' proven portfolio of well-segmented brands, geographic footprint, and strength in leisure travel continued to drive results that outperformed the industry and position the company to benefit from the recent shifts in consumer behavior," said Patrick Pacious, president and chief executive officer, Choice Hotels. "We believe that our strategy of growing our limited-service brands in the right segments and the right locations will allow us to continue to grow our share of travel demand over the long term."
In the third quarter of 2020, Choice Hotels continued to provide a broad range of support to its franchisees, guests, and communities while improving its overall financial and liquidity position. Highlights of third quarter and year to date 2020 results include:
Performance Trends
Additional details for the company's third quarter 2020 results are as follows:
Revenues
Development
Balance Sheet and Liquidity
The company ended the third quarter of 2020 with a strong balance sheet and continues to benefit from its primarily franchise-only business model, which has historically provided a relatively stable earnings stream, low capital expenditure requirements, and significant free cash flow.
In July 2020, the company capitalized on favorable credit markets to issue $450 million in an aggregate principal amount of new 3.700% senior notes due 2031. The net proceeds from the offering were used to repay the 364-day, $250 million term loan obtained in April 2020, and to fund the early repurchase of a portion of the company's 5.750% senior notes due 2022, reducing the company's effective borrowing costs.
During the third quarter of 2020, the company's net debt decreased approximately $50 million for total net debt of $886 million as of September 30, 2020, compared to $936 million as of June 30, 2020. The company reported cash flow from operations of $70 million for the nine months ended September 30, of which over $68 million was generated in the third quarter alone. As of September 30, 2020, the company's total available liquidity consisting of cash and available borrowing capacity through the revolving credit facility was approximately $792 million.
Shareholder Returns
During the three months ended September 30, 2020, the company repurchased approximately 8,000 shares of common stock for approximately $0.7 million through repurchases from employees in connection with tax withholding and option exercises relating to awards under the company's equity incentive plans. As of September 30, 2020, the company had 3.4 million shares remaining under the current share repurchase authorization. The company has temporarily suspended share repurchases under the stock repurchase program as previously disclosed on April 8, 2020 but may continue to repurchase stock from employees in conjunction with tax withholding and option exercises under the company's equity incentive plans.
As previously disclosed, the company suspended the payout of future dividends for at least the remainder of 2020. As a result, total dividends paid during 2020 will be approximately $25 million.
The company continues to follow a prudent and disciplined capital allocation strategy, ensuring the level of investment activity is aligned with the current environment.
Outlook
On March 17, 2020, the company announced that it withdrew its previously issued outlook for 2020. The ultimate and precise impact of COVID-19 on full year 2020 is still unknown at this time and will depend on the level of resurgence in COVID-19 cases, duration and scope of mandated travel and other restrictions, confidence level of consumers to travel and the pace, and level of the broader macroeconomic recovery. As a result, the company is not providing formal guidance for 2020 at this time.
The company currently expects the impact of COVID-19 on its year-over-year RevPAR change will be less significant for the quarter ended December 31, 2020 than the quarter ended September 30, 2020 based on the continued resilience of leisure demand and Choice's relative outperformance versus the industry.
The company will continue to evaluate the impact of COVID-19 across its business and will provide further updates in the next earnings report based on the best information then available.
Conference Call
Choice Hotels International will conduct a conference call on Thursday, November 5, 2020, at 10:00 a.m. Eastern Time to discuss the company's third quarter 2020 earnings results. The dial-in number to listen to the call domestically is (888) 428-7458 and the number for international participants is (862) 298-0702. A live webcast will also be available on the company's investor relations website, http://investor.choicehotels.com/, and can be accessed via the Financial Performance and Presentations tab.
About Choice Hotels
Choice Hotels International, Inc. (NYSE: CHH) is one of the largest lodging franchisors in the world. With more than 7,100 hotels, representing nearly 600,000 rooms, in over 40 countries and territories as of September 30, 2020, the Choice® family of hotel brands provide business and leisure travelers with a range of high-quality lodging options from limited service to full-service hotels in the upscale, midscale, extended-stay and economy segments. The award-winning Choice Privileges® loyalty program offers members benefits ranging from everyday rewards to exceptional experiences. For more information, visit www.choicehotels.com.
Forward-Looking Statements
Certain matters discussed in this presentation 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, expenses, earnings, debt levels, ability to repay outstanding indebtedness, payment of dividends, repurchases of common stock, and other financial and operational measures, including occupancy and open hotels, the company's ability to benefit from any rebound in travel demand, the company's liquidity, the company's ability to assist franchisees through relief or other financial measures, the company's ability to minimize or manage disruptions posed by COVID-19, the company's ability to achieve cost savings and reduce discretionary spending and investments, and the impact of COVID-19 and economic conditions on our 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, continuation, resurgence, or worsening of the COVID-19 pandemic, including quarantines, "shelter-in-place" orders, or other travel restrictions; new information which may emerge concerning the severity or impact of the COVID-19 pandemic and the development of vaccines and treatments for COVID-19; changes in consumer demand and confidence, including the impact of the COVID-19 pandemic on unemployment rates, consumer discretionary spending, and the demand for travel, transient, and group business; volatility or increases in oil and gas prices that may deter consumers from using their vehicles and impact the demand for leisure travel; the impact of COVID-19 on the global hospitality industry, particularly but not exclusively in the U.S. travel market; the success of our mitigation efforts in response to the COVID-19 pandemic; the performance of our brands and categories in any recovery from the COVID-19 pandemic disruption; the timing and amount of future dividends and share repurchases; changes to general, domestic, and foreign economic conditions, including access to liquidity and capital as a result of COVID-19; future domestic or global outbreaks of COVID-19 or other epidemics, pandemics, or contagious diseases, or fear of such outbreaks; changes in law and regulation applicable to the travel, lodging, or franchising industries; foreign currency fluctuations; impairments or declines in the value of the company's assets; operating risks common in the travel, lodging, or 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 and our relationships with our franchisees; our ability to keep pace with improvements in technology utilized for marketing and reservations systems and other operating systems; the commercial acceptance of our software as a service technology solutions division's products and services; our ability to grow our franchise system; exposure to risks related to our hotel development, financing, and ownership activities; exposures to risks associated with our investments in new businesses; fluctuations in the supply and demand for hotel rooms; our ability to realize anticipated benefits from acquired businesses; impairments or losses relating to acquired businesses; the level of acceptance of alternative growth strategies we may implement; cyber security and data breach risks; ownership and financing activities; hotel closures or financial difficulties of our franchisees; operating risks associated with our international operations, especially in areas currently most affected by COVID-19; the outcome of litigation; our ability to effectively manage our indebtedness and secure our indebtedness; and any future resurgence of COVID-19. These and other risk factors are discussed in detail in the company's filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K and our Quarterly Reports 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, except as required by law.
Non-GAAP Financial Measurements
The company evaluates its operations utilizing the performance metrics of adjusted EBITDA, revenues excluding marketing and reservation system activities, adjusted net income, and adjusted EPS, which are all non-GAAP financial measurements. These measures, which are reconciled to the comparable GAAP measures in Exhibit 6, should not be considered as an alternative to any measure of performance or liquidity as promulgated under or authorized by GAAP, such as net income, EPS, and total revenues. The company's calculation of these measurements may be different from the calculations used by other companies and comparability may therefore be limited. We discuss management's reasons for reporting these non-GAAP measures and how each non-GAAP measure is calculated below.
In addition to the specific adjustments noted below with respect to each measure, the non-GAAP measures presented herein also exclude restructuring of the company's operations including employee severance benefit, income taxes and legal costs, debt-restructuring costs, tax credits related to the rehabilitation and re-use of historic buildings, exceptional allowances recorded as a result of COVID-19's impact on the collectability of receivables and gains and losses on sale/disposal and impairment of assets primarily related to the company's operations that provide Software as a Service ("SaaS") technology solutions to vacation-rental management companies, an abandoned hotel development project; and an office building leased to a third-party to allow for period-over-period comparison of ongoing core operations before the impact of these discrete and infrequent charges.
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, franchise-agreement acquisition cost amortization, other (gains) and losses, equity in net income (loss) of unconsolidated affiliates, mark-to-market adjustments on non-qualified retirement plan investments, share based compensation expense (benefit) and surplus or deficits generated by marketing and reservation-system activities. We consider adjusted EBITDA to be an indicator of operating performance because it measures 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 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 and share based compensation expense (benefit) is dependent on the design of compensation plans in place and the usage of them. Accordingly, the impact of interest expense and share based compensation expense (benefit) 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 or amortizing franchise-agreement acquisition costs. These differences can result in considerable variability in the relative asset costs and estimated lives and, therefore, 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 a material impact on the company's net income. Surpluses and deficits generated from marketing and reservation activities are excluded, as the company's franchise agreements require the marketing and reservation-system revenues to be used exclusively for expenses associated with providing franchise services, such as central reservation and property-management systems, reservation delivery, and national marketing and media advertising. Franchisees are required to reimburse the company for any deficits generated from these marketing and reservation-system activities and the company is required to spend any surpluses generated in future periods. Since these activities will be managed to break-even over time, quarterly or annual surpluses and deficits have been excluded from the measurements utilized to assess the company's operating performance.
Adjusted Net Income and Adjusted Earnings Per Share: Adjusted net income and EPS exclude the impact of surpluses or deficits generated from marketing and reservation-system activities. Surpluses and deficits generated from marketing and reservation activities are excluded, as the company's franchise agreements require the marketing and reservation system revenues to be used exclusively for expenses associated with providing franchise services, such as central reservation and property-management systems, reservation delivery, and national marketing and media advertising. Franchisees are required to reimburse the company for any deficits generated from these marketing and reservation-system activities and the company is required to spend any surpluses generated in future periods. Since these activities will be managed to break-even over time, quarterly or annual surpluses and deficits have been excluded from the measurements utilized to assess the company's operating performance. We consider adjusted net income and adjusted EPS to be indicators of operating performance because excluding these items allow for period-over-period comparisons of our ongoing operations.
Revenues, Excluding Marketing and Reservation System Activities: The company reports revenues, excluding marketing and reservation-system activities. These non-GAAP measures we present are commonly used measures of performance in our industry and facilitate comparisons between the company and its competitors. Marketing and reservation-system activities are excluded, as the company's franchise agreements require the marketing and reservation-system revenues to be used exclusively for expenses associated with providing franchise services, such as central reservation and property-management systems, reservation delivery, and national marketing and media advertising. Franchisees are required to reimburse the company for any deficits generated from these marketing and reservation-system activities and the company is required to spend any surpluses generated in future periods. Since these activities will be managed to break-even over time, quarterly or annual surpluses and deficits have been excluded from the measurements utilized to assess the company's operating performance.
Net Debt: The company's net debt is calculated as total long-term debt (including current portion) excluding unamortized financing costs and discounts minus cash and cash equivalents. Net Debt is a non-GAAP financial measure.
© 2020 Choice Hotels International, Inc. All rights reserved.
|
Choice Hotels International, Inc. and Subsidiaries |
Exhibit 1 |
||||||||||||||||
|
Condensed Consolidated Statements of Income |
|||||||||||||||||
|
(Unaudited) |
|||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||
|
Variance |
Variance |
||||||||||||||||
|
2020 |
2019 |
$ |
% |
2020 |
2019 |
$ |
% |
||||||||||
|
(In thousands, except per share amounts) |
|||||||||||||||||
|
REVENUES |
|||||||||||||||||
|
Royalty fees |
$ 79,666 |
$ 113,688 |
$ (34,022) |
(30%) |
$ 200,157 |
$ 300,468 |
$ (100,311) |
(33%) |
|||||||||
|
Initial franchise and relicensing fees |
6,071 |
6,741 |
(670) |
(10%) |
20,031 |
20,223 |
(192) |
(1%) |
|||||||||
|
Procurement services |
10,115 |
14,814 |
(4,699) |
(32%) |
34,609 |
47,590 |
(12,981) |
(27%) |
|||||||||
|
Marketing and reservation system |
107,141 |
157,024 |
(49,883) |
(32%) |
297,203 |
439,553 |
(142,350) |
(32%) |
|||||||||
|
Owned hotels |
4,201 |
8,710 |
(4,509) |
(52%) |
15,731 |
8,710 |
7,021 |
81% |
|||||||||
|
Other |
3,577 |
9,755 |
(6,178) |
(63%) |
12,948 |
30,192 |
(17,244) |
(57%) |
|||||||||
|
Total revenues |
210,771 |
310,732 |
(99,961) |
(32%) |
580,679 |
846,736 |
(266,057) |
(31%) |
|||||||||
|
OPERATING EXPENSES |
|||||||||||||||||
|
Selling, general and administrative |
31,413 |
38,308 |
(6,895) |
(18%) |
104,212 |
124,802 |
(20,590) |
(16%) |
|||||||||
|
Depreciation and amortization |
6,382 |
5,568 |
814 |
15% |
19,309 |
12,589 |
6,720 |
53% |
|||||||||
|
Marketing and reservation system |
113,808 |
158,430 |
(44,622) |
(28%) |
333,564 |
438,390 |
(104,826) |
(24%) |
|||||||||
|
Owned hotels |
3,812 |
6,014 |
(2,202) |
(37%) |
12,822 |
6,014 |
6,808 |
113% |
|||||||||
|
Total operating expenses |
155,415 |
208,320 |
(52,905) |
(25%) |
469,907 |
581,795 |
(111,888) |
(19%) |
|||||||||
|
Gain (loss) on sale, disposition and impairment of assets, net |
(4,290) |
8 |
(4,298) |
NM |
(5,516) |
(14,934) |
9,418 |
63% |
|||||||||
|
Operating income |
51,066 |
102,420 |
(51,354) |
(50%) |
105,256 |
250,007 |
(144,751) |
(58%) |
|||||||||
|
OTHER INCOME AND EXPENSES, NET |
|||||||||||||||||
|
Interest expense |
12,691 |
12,431 |
260 |
2% |
37,153 |
34,735 |
2,418 |
7% |
|||||||||
|
Interest income |
(1,744) |
(2,220) |
476 |
(21%) |
(6,277) |
(7,617) |
1,340 |
(18%) |
|||||||||
|
Loss on extinguishment of debt |
15,958 |
- |
15,958 |
NM |
16,565 |
- |
16,565 |
NM |
|||||||||
|
Other gains |
(1,664) |
(115) |
(1,549) |
1347% |
(972) |
(3,219) |
2,247 |
(70%) |
|||||||||
|
Equity in net loss of affiliates |
1,731 |
6,400 |
(4,669) |
(73%) |
7,172 |
9,551 |
(2,379) |
(25%) |
|||||||||
|
Total other income and expenses, net |
26,972 |
16,496 |
10,476 |
64% |
53,641 |
33,450 |
20,191 |
60% |
|||||||||
|
Income before income taxes |
24,094 |
85,924 |
(61,830) |
(72%) |
51,615 |
216,557 |
(164,942) |
(76%) |
|||||||||
|
Income tax (benefit) expense |
9,594 |
9,685 |
(91) |
(1%) |
(15,907) |
35,848 |
(51,755) |
(144%) |
|||||||||
|
Net (loss) income |
$ 14,500 |
$ 76,239 |
$ (61,739) |
(81%) |
$ 67,522 |
$ 180,709 |
$ (113,187) |
(63%) |
|||||||||
|
Basic earnings per share |
$ 0.26 |
$ 1.37 |
$ (1.11) |
(81%) |
$ 1.22 |
$ 3.25 |
$ (2.03) |
(62%) |
|||||||||
|
Diluted earnings per share |
$ 0.26 |
$ 1.36 |
$ (1.10) |
(81%) |
$ 1.21 |
$ 3.23 |
$ (2.02) |
(63%) |
|||||||||
|
Choice Hotels International, Inc. and Subsidiaries |
Exhibit 2 |
|||||||
|
Condensed Consolidated Balance Sheets |
||||||||
|
(Unaudited) |
||||||||
|
(In thousands, except per share amounts) |
September 30, |
December 31, |
||||||
|
2020 |
2019 |
|||||||
|
ASSETS |
||||||||
|
Cash and cash equivalents |
$ 191,967 |
$ 33,766 |
||||||
|
Accounts receivable, net |
175,375 |
141,566 |
||||||
|
Other current assets |
48,228 |
61,257 |
||||||
|
Total current assets |
415,570 |
236,589 |
||||||
|
Intangible assets, net |
290,913 |
290,421 |
||||||
|
Goodwill |
159,196 |
159,196 |
||||||
|
Property and equipment, net |
339,000 |
351,502 |
||||||
|
Investments in unconsolidated entities |
72,571 |
78,655 |
||||||
|
Notes receivable, net of allowances |
97,809 |
103,054 |
||||||
|
Investments, employee benefit plans, at fair value |
26,454 |
24,978 |
||||||
|
Operating lease right-of-use-assets |
19,774 |
24,088 |
||||||
|
Other assets |
148,859 |
118,189 |
||||||
|
Total assets |
$ 1,570,146 |
$ 1,386,672 |
||||||
|
LIABILITIES AND SHAREHOLDERS' DEFICIT |
||||||||
|
Accounts payable |
$ 80,191 |
$ 73,449 |
||||||
|
Accrued expenses and other current liabilities |
67,699 |
90,364 |
||||||
|
Deferred revenue |
51,487 |
71,594 |
||||||
|
Current portion of long-term debt |
6,977 |
7,511 |
||||||
|
Liability for guest loyalty program |
46,066 |
82,970 |
||||||
|
Total current liabilities |
252,420 |
325,888 |
||||||
|
Long-term debt |
1,058,309 |
844,102 |
||||||
|
Deferred revenue |
122,285 |
112,662 |
||||||
|
Liability for guest loyalty program |
79,777 |
46,698 |
||||||
|
Operating lease liabilities |
15,037 |
21,270 |
||||||
|
Deferred compensation and retirement plan obligations |
31,039 |
29,949 |
||||||
|
Other liabilities |
32,683 |
29,614 |
||||||
|
Total liabilities |
1,591,550 |
1,410,183 |
||||||
|
Total shareholders' deficit |
(21,404) |
(23,511) |
||||||
|
Total liabilities and shareholders' deficit |
$ 1,570,146 |
$ 1,386,672 |
||||||
|
Choice Hotels International, Inc. and Subsidiaries |
Exhibit 3 |
|||||
|
Condensed Consolidated Statements of Cash Flows |
||||||
|
(Unaudited) |
||||||
|
(In thousands) |
Nine Months Ended September 30, |
|||||
|
2020 |
2019 |
|||||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||
|
Net income |
$ 67,522 |
$ 180,709 |
||||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||
|
Depreciation and amortization |
19,309 |
12,589 |
||||
|
Depreciation and amortization - marketing and reservation system |
14,994 |
12,355 |
||||
|
Franchise agreement acquisition cost amortization |
8,343 |
7,537 |
||||
|
Gain on disposal of assets |
- |
(2,181) |
||||
|
Loss on asset disposition and impairment of long-lived assets |
5,516 |
15,034 |
||||
|
Loss on extinguishment of debt |
16,565 |
- |
||||
|
Non-cash stock compensation and other charges |
4,748 |
12,433 |
||||
|
Non-cash interest and other income |
(465) |
(2,615) |
||||
|
Deferred income taxes |
(31,411) |
3,268 |
||||
|
Equity in net losses from unconsolidated joint ventures, less distributions received |
7,320 |
12,234 |
||||
|
Franchise agreement acquisition costs, net of reimbursements |
(16,960) |
(25,592) |
||||
|
Change in working capital and other, net of acquisition |
(25,801) |
(34,794) |
||||
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
69,680 |
190,977 |
||||
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||
|
Investment in property and equipment |
(32,176) |
(46,135) |
||||
|
Investment in intangible assets |
(1,212) |
(3,659) |
||||
|
Proceeds from sales of assets |
- |
10,585 |
||||
|
Payment on business disposition, net |
- |
(10,783) |
||||
|
Asset acquisition, net of cash acquired |
- |
(168,954) |
||||
|
Proceeds from sale of unconsolidated joint venture |
- |
8,937 |
||||
|
Contributions to equity method investments |
(4,620) |
(17,329) |
||||
|
Distributions from equity method investments |
3,362 |
9,841 |
||||
|
Purchases of investments, employee benefit plans |
(2,254) |
(2,748) |
||||
|
Proceeds from sales of investments, employee benefit plans |
2,372 |
2,197 |
||||
|
Issuance of notes receivable |
(9,845) |
(10,767) |
||||
|
Collections of notes receivable |
5,113 |
10,491 |
||||
|
Proceeds from sale of tax credits |
9,197 |
- |
||||
|
Other items, net |
(473) |
(1,842) |
||||
|
NET CASH USED IN INVESTING ACTIVITIES |
(30,536) |
(220,166) |
||||
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||
|
Net (repayments) borrowings pursuant to revolving credit facilities |
(18,200) |
97,800 |
||||
|
Proceeds from issuance of term loan |
249,500 |
- |
||||
|
Proceeds from issuance of 2020 Senior Notes |
447,723 |
- |
||||
|
Principal payments on long-term debt |
(466,915) |
(371) |
||||
|
Payments to extinguish long-term debt |
(14,347) |
- |
||||
|
Purchase of treasury stock |
(55,158) |
(44,770) |
||||
|
Dividends paid |
(25,274) |
(36,103) |
||||
|
Debt issuance costs |
(4,620) |
(300) |
||||
|
Proceeds from issuance of long-term debt |
- |
23,863 |
||||
|
Payments on transfer of interest in notes receivable |
- |
(24,409) |
||||
|
Proceeds from exercise of stock options |
6,615 |
18,519 |
||||
|
NET CASH PROVIDED BY FINANCING ACTIVITIES |
119,324 |
34,229 |
||||
|
Net change in cash and cash equivalents |
158,468 |
5,040 |
||||
|
Effect of foreign exchange rate changes on cash and cash equivalents |
(267) |
(113) |
||||
|
Cash and cash equivalents at beginning of period |
33,766 |
26,642 |
||||
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ 191,967 |
$ 31,569 |
||||
|
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES |
Exhibit 4 |
||||||||||||||||||||
|
SUPPLEMENTAL OPERATING INFORMATION |
|||||||||||||||||||||
|
DOMESTIC HOTEL SYSTEM(1) |
|||||||||||||||||||||
|
(UNAUDITED) |
|||||||||||||||||||||
|
For the Nine Months Ended September 30, 2020 |
For the Nine Months Ended September 30, 2019 |
Change |
|||||||||||||||||||
|
Average Daily |
Average Daily |
Average Daily |
|||||||||||||||||||
|
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
|||||||||||||
|
Comfort(2) |
$ 85.22 |
46.2% |
$ 39.40 |
$ 97.39 |
63.9% |
$ 62.26 |
(12.5%) |
(1,770) |
bps |
(36.7%) |
|||||||||||
|
Sleep |
77.36 |
46.5% |
35.98 |
86.50 |
63.0% |
54.48 |
(10.6%) |
(1,650) |
bps |
(34.0%) |
|||||||||||
|
Quality |
73.23 |
42.1% |
30.81 |
81.51 |
55.9% |
45.55 |
(10.2%) |
(1,380) |
bps |
(32.4%) |
|||||||||||
|
Clarion(3) |
74.79 |
33.4% |
24.97 |
86.31 |
51.3% |
44.32 |
(13.3%) |
(1,790) |
bps |
(43.7%) |
|||||||||||
|
Econo Lodge |
59.65 |
41.2% |
24.55 |
64.75 |
49.1% |
31.78 |
(7.9%) |
(790) |
bps |
(22.8%) |
|||||||||||
|
Rodeway |
60.15 |
44.0% |
26.45 |
65.29 |
50.4% |
32.89 |
(7.9%) |
(640) |
bps |
(19.6%) |
|||||||||||
|
WoodSpring Suites |
46.15 |
72.0% |
33.23 |
47.34 |
76.9% |
36.40 |
(2.5%) |
(490) |
bps |
(8.7%) |
|||||||||||
|
MainStay |
77.38 |
55.1% |
42.61 |
86.38 |
65.8% |
56.86 |
(10.4%) |
(1,070) |
bps |
(25.1%) |
|||||||||||
|
Suburban |
52.14 |
63.7% |
33.22 |
58.36 |
68.9% |
40.18 |
(10.7%) |
(520) |
bps |
(17.3%) |
|||||||||||
|
Cambria Hotels |
116.78 |
38.3% |
44.78 |
145.08 |
69.5% |
100.88 |
(19.5%) |
(3,120) |
bps |
(55.6%) |
|||||||||||
|
Ascend Hotel Collection |
120.21 |
43.9% |
52.73 |
126.66 |
62.7% |
79.41 |
(5.1%) |
(1,880) |
bps |
(33.6%) |
|||||||||||
|
Total |
$ 72.71 |
45.9% |
$ 33.36 |
$ 83.07 |
59.3% |
$ 49.26 |
(12.5%) |
(1,340) |
bps |
(32.3%) |
|||||||||||
|
For the Three Months Ended September 30, 2020 |
For the Three Months Ended September 30, 2019 |
Change |
|||||||||||||||||||
|
Average Daily |
Average Daily |
Average Daily |
|||||||||||||||||||
|
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
|||||||||||||
|
Comfort(2) |
$ 86.81 |
53.3% |
$ 46.26 |
$ 101.48 |
68.4% |
$ 69.39 |
(14.5%) |
(1,510) |
bps |
(33.3%) |
|||||||||||
|
Sleep |
78.07 |
52.4% |
40.89 |
88.32 |
66.4% |
58.62 |
(11.6%) |
(1,400) |
bps |
(30.2%) |
|||||||||||
|
Quality |
76.57 |
48.7% |
37.25 |
85.60 |
60.6% |
51.87 |
(10.5%) |
(1,190) |
bps |
(28.2%) |
|||||||||||
|
Clarion(3) |
78.58 |
37.3% |
29.34 |
91.80 |
55.7% |
51.16 |
(14.4%) |
(1,840) |
bps |
(42.7%) |
|||||||||||
|
Econo Lodge |
63.63 |
47.2% |
30.01 |
68.67 |
53.3% |
36.62 |
(7.3%) |
(610) |
bps |
(18.1%) |
|||||||||||
|
Rodeway |
63.02 |
50.2% |
31.62 |
68.98 |
54.3% |
37.45 |
(8.6%) |
(410) |
bps |
(15.6%) |
|||||||||||
|
WoodSpring Suites |
46.42 |
76.5% |
35.50 |
48.69 |
77.4% |
37.67 |
(4.7%) |
(90) |
bps |
(5.8%) |
|||||||||||
|
MainStay |
79.23 |
62.4% |
49.43 |
88.05 |
70.5% |
62.07 |
(10.0%) |
(810) |
bps |
(20.4%) |
|||||||||||
|
Suburban |
51.46 |
68.3% |
35.16 |
57.55 |
67.9% |
39.11 |
(10.6%) |
40 |
bps |
(10.1%) |
|||||||||||
|
Cambria Hotels |
110.04 |
41.3% |
45.44 |
145.78 |
72.0% |
104.95 |
(24.5%) |
(3,070) |
bps |
(56.7%) |
|||||||||||
|
Ascend Hotel Collection |
126.71 |
51.2% |
64.84 |
135.09 |
67.6% |
91.29 |
(6.2%) |
(1,640) |
bps |
(29.0%) |
|||||||||||
|
Total |
$ 75.30 |
52.1% |
$ 39.25 |
$ 86.95 |
63.4% |
$ 55.10 |
(13.4%) |
(1,130) |
bps |
(28.8%) |
|||||||||||
|
Effective Royalty Rate |
|||||||||||||||||||||
|
For the Quarter Ended |
For the Nine Months Ended |
||||||||||||||||||||
|
09/30/2020 |
09/30/2019 |
09/30/2020 |
09/30/2019 |
||||||||||||||||||
|
System-wide(4) |
4.91% |
4.84% |
4.93% |
4.84% |
|||||||||||||||||
|
(1)In response to partial hotel closures resulting from the COVID-19 pandemic, the Company revised its calculation of Occupancy to be reflective of full room availability. |
|||||||||||||||||||||
|
Additionally, the Company also made minor revisions to its ADR calculations, with respect to complimentary rooms. The revised ADR, Occupancy and RevPAR are reflected in the tables above for all periods noted. |
|||||||||||||||||||||
|
(2)Includes Comfort family of brand extensions including Comfort and Comfort Suites |
|||||||||||||||||||||
|
(3)Includes Clarion family of brand extensions including Clarion and Clarion Pointe |
|||||||||||||||||||||
|
(4)Includes United States and Caribbean countries and territories |
|||||||||||||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES |
Exhibit 5 |
||||||||||||||||
|
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA |
|||||||||||||||||
|
(UNAUDITED) |
|||||||||||||||||
|
September 30, 2020 |
September 30, 2019 |
Variance |
|||||||||||||||
|
Hotels |
Rooms |
Hotels |
Rooms |
Hotels |
Rooms |
% |
% |
||||||||||
|
Comfort(1) |
1,629 |
128,213 |
1,618 |
126,931 |
11 |
1,282 |
0.7% |
1.0% |
|||||||||
|
Sleep |
403 |
28,534 |
398 |
28,072 |
5 |
462 |
1.3% |
1.6% |
|||||||||
|
Quality |
1,688 |
128,751 |
1,670 |
128,092 |
18 |
659 |
1.1% |
0.5% |
|||||||||
|
Clarion(2) |
179 |
22,364 |
176 |
22,113 |
3 |
251 |
1.7% |
1.1% |
|||||||||
|
Econo Lodge |
781 |
47,036 |
815 |
49,197 |
(34) |
(2,161) |
(4.2%) |
(4.4%) |
|||||||||
|
Rodeway |
567 |
32,251 |
585 |
34,090 |
(18) |
(1,839) |
(3.1%) |
(5.4%) |
|||||||||
|
WoodSpring Suites |
285 |
34,290 |
266 |
31,927 |
19 |
2,363 |
7.1% |
7.4% |
|||||||||
|
MainStay |
74 |
4,673 |
72 |
4,642 |
2 |
31 |
2.8% |
0.7% |
|||||||||
|
Suburban |
62 |
6,236 |
59 |
6,026 |
3 |
210 |
5.1% |
3.5% |
|||||||||
|
Cambria Hotels |
53 |
7,599 |
47 |
6,679 |
6 |
920 |
12.8% |
13.8% |
|||||||||
|
Ascend Hotel Collection |
213 |
22,192 |
187 |
15,670 |
26 |
6,522 |
13.9% |
41.6% |
|||||||||
|
Domestic Franchises(3) |
5,934 |
462,139 |
5,893 |
453,439 |
41 |
8,700 |
0.7% |
1.9% |
|||||||||
|
International Franchises |
1,192 |
134,316 |
1,181 |
121,287 |
11 |
13,029 |
0.9% |
10.7% |
|||||||||
|
Total Franchises |
7,126 |
596,455 |
7,074 |
574,726 |
52 |
21,729 |
0.7% |
3.8% |
|||||||||
|
(1)Includes Comfort family of brand extensions including Comfort and Comfort Suites |
|||||||||||||||||
|
(2)Includes Clarion family of brand extensions including Clarion and Clarion Pointe |
|||||||||||||||||
|
(3)Includes United States and Caribbean countries and territories |
|||||||||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES |
Exhibit 6 |
||||||||||
|
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION |
|||||||||||
|
(UNAUDITED) |
|||||||||||
|
REVENUES AND ADJUSTED OPERATING MARGINS, EXCLUDING MARKETING AND RESERVATION ACTIVITIES |
|||||||||||
|
(dollar amounts in thousands) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||
|
2020 |
2019 |
2020 |
2019 |
||||||||
|
Revenues, Excluding Marketing and Reservation Activities |
|||||||||||
|
Total Revenues |
$ 210,771 |
$ 310,732 |
$ 580,679 |
$ 846,736 |
|||||||
|
Adjustments: |
|||||||||||
|
Marketing and reservation system revenues |
(107,141) |
(157,024) |
(297,203) |
(439,553) |
|||||||
|
Revenues, excluding marketing and reservation activities |
$ 103,630 |
$ 153,708 |
$ 283,476 |
$ 407,183 |
|||||||
|
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA") |
|||||||||||
|
(dollar amounts in thousands) |
|||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||
|
2020 |
2019 |
2020 |
2019 |
||||||||
|
Net income |
$ 14,500 |
$ 76,239 |
$ 67,522 |
$ 180,709 |
|||||||
|
Income tax (benefit) expense |
9,594 |
9,685 |
(15,907) |
35,848 |
|||||||
|
Interest expense |
12,691 |
12,431 |
37,153 |
34,735 |
|||||||
|
Interest income |
(1,744) |
(2,220) |
(6,277) |
(7,617) |
|||||||
|
Other gains |
(1,664) |
(115) |
(972) |
(3,219) |
|||||||
|
Loss on extinguishment of debt |
15,958 |
- |
16,565 |
- |
|||||||
|
Equity in net loss of affiliates |
1,731 |
6,400 |
7,172 |
9,551 |
|||||||
|
Depreciation and amortization |
6,382 |
5,568 |
19,309 |
12,589 |
|||||||
|
Loss (gain) on sale and dispositions & impairment of assets, net |
4,290 |
(8) |
5,516 |
14,934 |
|||||||
|
Mark to market adjustments on non-qualified retirement plan investments |
1,709 |
97 |
928 |
3,152 |
|||||||
|
Operational restructuring charges |
128 |
- |
8,646 |
- |
|||||||
|
Share-based compensation |
1,765 |
2,020 |
1,624 |
6,211 |
|||||||
|
Exceptional allowances attributable to COVID-19 |
1,285 |
- |
3,963 |
- |
|||||||
|
Marketing and reservation system reimbursable (surplus) deficit |
6,667 |
1,406 |
36,361 |
(1,163) |
|||||||
|
Franchise agreement acquisition costs amortization |
1,582 |
1,487 |
4,759 |
4,329 |
|||||||
|
Adjusted EBITDA |
$ 74,874 |
$ 112,990 |
$ 186,362 |
$ 290,059 |
|||||||
|
ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS) |
|||||||||||
|
(dollar amounts in thousands, except per share amounts) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||
|
2020 |
2019 |
2020 |
2019 |
||||||||
|
Net income |
$ 14,500 |
$ 76,239 |
$ 67,522 |
$ 180,709 |
|||||||
|
Adjustments: |
|||||||||||
|
Marketing and reservation system reimbursable (surplus) deficit |
3,376 |
1,095 |
28,431 |
(932) |
|||||||
|
Operational restructuring charges |
97 |
- |
6,392 |
- |
|||||||
|
Loss on sale and disposition & impairment of assets, net |
3,123 |
5,187 |
4,087 |
16,516 |
|||||||
|
Loss on extinguishment of debt |
11,617 |
- |
12,275 |
- |
|||||||
|
Exceptional allowances attributable to COVID-19 |
651 |
- |
2,937 |
- |
|||||||
|
Sale of tax credits on historic building |
(1,688) |
(6,035) |
(1,857) |
(6,035) |
|||||||
|
Foreign tax benefit on international restructuring |
5,118 |
- |
(25,454) |
- |
|||||||
|
Adjusted Net Income |
$ 36,794 |
$ 76,486 |
$ 94,333 |
$ 190,258 |
|||||||
|
Diluted Earnings Per Share |
$ 0.26 |
$ 1.36 |
$ 1.21 |
$ 3.23 |
|||||||
|
Adjustments: |
|||||||||||
|
Marketing and reservation system reimbursable (surplus) deficit |
0.06 |
0.02 |
0.51 |
(0.02) |
|||||||
|
Operational restructuring charges |
- |
- |
0.12 |
- |
|||||||
|
Loss on sale and disposition & impairment of assets, net |
0.06 |
0.09 |
0.07 |
0.29 |
|||||||
|
Loss on extinguishment of debt |
0.21 |
- |
0.22 |
- |
|||||||
|
Exceptional allowances attributable to COVID-19 |
0.01 |
- |
0.05 |
- |
|||||||
|
Sale of tax credits on historic building |
(0.03) |
(0.10) |
(0.03) |
(0.10) |
|||||||
|
Foreign tax benefit on international restructuring |
0.09 |
- |
(0.46) |
- |
|||||||
|
Adjusted Diluted Earnings Per Share (EPS) |
$ 0.66 |
$ 1.37 |
$ 1.69 |
$ 3.40 |
|||||||
|
NET DEBT |
|||||||||||
|
(dollar amounts in thousands) |
September 30, |
June 30, |
|||||||||
|
2020 |
2020 |
||||||||||
|
Long-term debt |
$ 1,058,309 |
$ 1,232,136 |
|||||||||
|
Current portion of long-term debt |
6,977 |
7,157 |
|||||||||
|
Total Debt |
1,065,286 |
1,239,293 |
|||||||||
|
Adjustments: |
|||||||||||
|
Unamortized financing fees and discounts |
12,678 |
10,780 |
|||||||||
|
1,077,964 |
1,250,073 |
||||||||||
|
Cash and cash equivalents |
191,967 |
314,139 |
|||||||||
|
Net Debt |
$ 885,997 |
$ 935,934 |
|||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES |
Exhibit 7 |
|||||||
|
DOMESTIC SYSTEM-WIDE REVPAR YEAR OVER YEAR |
||||||||
|
FLUCTUATION VERSUS INDUSTRY(1) |
||||||||
|
(UNAUDITED) |
||||||||
|
Week beginning |
Choice Hotels |
Total Industry |
||||||
|
03/08/2020 |
-22.4% |
-32.4% |
||||||
|
03/15/2020 |
-46.4% |
-69.5% |
||||||
|
03/22/2020 |
-60.9% |
-80.6% |
||||||
|
03/29/2020 |
-63.1% |
-81.3% |
||||||
|
04/05/2020 |
-65.7% |
-83.0% |
||||||
|
04/12/2020 |
-57.5% |
-78.7% |
||||||
|
04/19/2020 |
-60.4% |
-78.2% |
||||||
|
04/26/2020 |
-56.8% |
-76.5% |
||||||
|
05/03/2020 |
-53.5% |
-74.1% |
||||||
|
05/10/2020 |
-54.6% |
-73.4% |
||||||
|
05/17/2020 |
-50.8% |
-69.6% |
||||||
|
05/24/2020 |
-44.0% |
-62.1% |
||||||
|
05/31/2020 |
-44.0% |
-64.8% |
||||||
|
06/07/2020 |
-42.4% |
-62.5% |
||||||
|
06/14/2020 |
-42.2% |
-60.0% |
||||||
|
06/21/2020 |
-37.9% |
-56.3% |
||||||
|
06/28/2020 |
-27.9% |
-44.5% |
||||||
|
07/05/2020 |
-35.8% |
-54.4% |
||||||
|
07/12/2020 |
-38.3% |
-55.9% |
||||||
|
07/19/2020 |
-37.5% |
-54.8% |
||||||
|
07/262020 |
-33.1% |
-51.1% |
||||||
|
08/02/2020 |
-29.5% |
-49.1% |
||||||
|
08/09/2020 |
-26.6% |
-45.9% |
||||||
|
08/16/2020 |
-25.8% |
-45.9% |
||||||
|
08/23/2020 |
-25.6% |
-44.3% |
||||||
|
08/30/2020 |
-14.0% |
-32.7% |
||||||
|
09/06/2020 |
-26.2% |
-48.1% |
||||||
|
09/13/2020 |
-28.6% |
-51.6% |
||||||
|
09/20/2020 |
-28.3% |
-51.7% |
||||||
|
09/27/2020 |
-26.9% |
-48.0% |
||||||
|
10/04/2020 |
-27.0% |
-47.5% |
||||||
|
10/11/2020 |
-27.4% |
-50.3% |
||||||
|
10/18/2020 |
-26.7% |
-51.8% |
||||||
|
(1) Source: Smith Travel Research (STR) Weekly Hotel Review |
||||||||
SOURCE Choice Hotels International, Inc.
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