ROCKVILLE, Md., Aug. 2, 2016 /PRNewswire/ -- Choice Hotels International, Inc. (NYSE: CHH) today reported the following highlights for the second quarter 2016:
-- Net income and diluted earnings per share ("EPS") for the three months
ended June 30, 2016, totaled $38.8 million and $0.68 per share,
respectively. Adjusted net income and adjusted diluted EPS for the three
months ended June 30, 2016, which exclude certain special items as
described below, increased 12 percent and 15 percent, respectively, over
the prior year period.
-- Adjusted earnings before interest, taxes, depreciation and amortization
("EBITDA") from hotel franchising activities, excluding special items,
for the three months ended June 30, 2016 totaled $75.1 million, an
increase of 7 percent over the prior year period.
-- Revenues for the three months ended June 30, 2016 totaled $241.8
million, an increase of 4 percent from the same period of 2015.
-- Franchising revenues for the three months ended June 30, 2016 totaled
$105.9 million, an increase of 7 percent from the same period of 2015.
-- Domestic royalty fees for the three months ended June 30, 2016, totaled
$81.1 million, an increase of 7 percent from the same period of 2015.
-- Domestic system-wide revenue per available room ("RevPAR") increased 4.3
percent in the second quarter of 2016, as occupancy and average daily
rates increased 80 basis points and 3 percent, respectively from the
same period of 2015.
-- Domestic RevPAR performance for the second quarter of 2016 exceeded
total industry results by 80 basis points and also exceeded growth
reported by Smith Travel Research for the primary chain scale segments
in which the company competes.
-- Effective domestic royalty rate for the three months ended June 30, 2016
was 4.40 percent, an increase of 12 basis points from the same period of
2015.
-- Domestic hotel executed franchise agreements totaled 147 for the three
months ended June 30, 2016, an increase of 6 percent from the same
period of 2015.
-- Executed 9 new domestic franchise agreements during the three months
ended June 30, 2016 for the Cambria hotels & suites brand including
projects in Boston, MA, Los Angeles, CA and Seattle, WA.
-- Domestic relicensing and contract renewal transactions totaled 107 for
the three months ended June 30, 2016, an increase of 26 percent from the
same period of 2015.
-- The company's domestic pipeline of hotels awaiting conversion, under
construction or approved for development as of June 30, 2016 increased
14 percent from June 30, 2015. The domestic pipeline for the company's
Cambria brand as of June 30, 2016 totaled 53 hotels, a 112 percent
increase from June 30, 2015.
-- The company purchased 0.4 million shares of common stock under its share
repurchase program during the three months ended June 30, 2016 at a
total cost of approximately $19.4 million.
"We are pleased with our results for the second quarter, which were highlighted by a 15 percent increase in adjusted diluted earnings per share," said Stephen P. Joyce, chief executive officer, Choice Hotels. "In addition, we delivered strong RevPAR gains to our domestic franchise system which continue to exceed the growth levels experienced by the overall industry and primary chain scale segments in which we compete. Demand for our brands remains strong and we will continue to invest in programs designed to drive more reservations through our central channels, improve guest loyalty and improve the value of our brands in an effort to drive incremental business to our franchisees."
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Special Item
During the three and six months ended June 30, 2016, the company recorded an executive termination benefit charge of approximately $2.2 million. This special item impacted diluted EPS by $0.03 and $0.02 per share for the three and six months ended June 30, 2016, respectively. The company evaluates certain 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.
Adoption of New Accounting Standard
On April 1, 2016, the company adopted Accounting Standards Update ("ASU") Compensation--Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU No. 2016-09"), which requires that excess tax benefits and deficiencies related to stock compensation be recognized as income tax expense or benefit in the company's income statement. Adoption of the standard required that the company retrospectively apply the requirement to the beginning of the year of adoption, January 1, 2016. As a result, the company has reduced is previously reported income tax expense for the first quarter of 2016 by $1.6 million.
Use of Cash Flows
Dividends
During the six months ended June 30, 2016, the company paid cash dividends totaling approximately $23 million. Based on the current quarterly dividend rate of $0.205 per common share, the company expects to pay dividends of approximately $46 million during 2016.
Share Repurchases
The company repurchased 0.5 million shares of common stock under its share repurchase program during the six months ended June 30, 2016, at a total cost of approximately $23 million. The company currently has authorization to purchase up to 1.1 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 $67 million in support of the Cambria brand during the six months ended June 30, 2016. The company also recycled approximately $18 million of investments in support of Cambria resulting in net advances of $49 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. At June 30, 2016, the company had approximately $176 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 2016 outlook reflects the following assumptions:
Hotel Franchising
-- Adjusted EBITDA from franchising activities for full-year 2016 are
expected to range between $270 million and $274 million;
-- Net domestic unit growth for 2016 is expected to be between 2% and 3%;
-- RevPAR is expected to increase between 3.5% and 4.0% for third quarter
and range between 3.5% and 4.0% for full-year 2016; and
-- The effective royalty rate is expected to increase between 7 and 9 basis
points for full-year 2016 as compared to full-year 2015.
Non-Hotel Franchising Activities
-- Net reductions in full-year 2016 EBITDA relating to our non-hotel
franchising operations, which primarily relate to SkyTouch and vacation
rental activities are expected to range between approximately $16
million and $19 million.
Other Items
-- The effective tax rate is expected to be approximately 32.5% and 31.7%
for the third quarter and full-year 2016.
-- Adjusted EBITDA and adjusted EPS estimates exclude executive termination
benefits incurred in the second quarter of 2016 as discussed above under
Special Item.
-- 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.
Consolidated Outlook
The company's third quarter 2016 diluted EPS is expected to be at least $0.78. The company expects full-year 2016 adjusted diluted EPS to range between $2.38 and $2.43 and full year 2016 adjusted EBITDA to range between $252 million and $256 million. The adjusted EPS and adjusted 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.
Conference Call
Choice will conduct a conference call on Tuesday, August 2, 2016 at 10:00 a.m. EDT to discuss the company's second quarter 2016 results. The dial-in number to listen to the call domestically is 1-855-638-5678 and the number for international participants is 1-404-537-3406. The conference call also will be webcast simultaneously via the company's website, www.choicehotels.com. Interested investors and other parties wishing to access the call via the webcast should go to the website and click on the Investor Info link. The Investor page will feature a conference call microphone icon to access the call.
The call will be recorded and available for replay beginning at 1:00 p.m. EDT on Tuesday, August 2, 2016 by calling 1-855-859-2056 (domestic) or 1-404-537-3406 (international) and entering access code 50406350. 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 6,400 hotels franchised in more than 40 countries and territories, Choice Hotels International® represents more than 500,000 rooms around the globe. As of June 30, 2016, 673 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 27 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, 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 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.
Franchising Revenues, Adjusted Hotel Franchising EBITDA, Adjusted Hotel Franchising SG&A and Margins: The company reports 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.
© 2016 Choice Hotels International, Inc. All rights reserved.
Choice Hotels International, Inc.
Exhibit 1
Consolidated Statements of Income
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
Variance Variance
2016 2015 $ % 2016* 2015 $ %
---- ---- --- --- ---- ---- --- ---
(In thousands, except per share
amounts)
REVENUES:
Royalty fees $86,195 $81,183 $5,012 6% $151,054 $143,614 $7,440 5%
Initial franchise and relicensing
fees 5,706 5,816 (110) (2%) 10,862 11,533 (671) (6%)
Procurement services 10,308 8,589 1,719 20% 16,104 13,396 2,708 20%
Marketing and reservation system 133,814 133,122 692 1% 260,175 231,835 28,340 12%
Other 5,728 3,446 2,282 66% 10,674 7,023 3,651 52%
----- ----- ----- --- ------ ----- ----- ---
Total revenues 241,751 232,156 9,595 4% 448,869 407,401 41,468 10%
OPERATING EXPENSES:
Selling, general and
administrative 40,039 33,122 6,917 21% 75,158 65,560 9,598 15%
Depreciation and amortization 2,956 2,995 (39) (1%) 5,721 5,685 36 1%
Marketing and reservation system 133,814 133,122 692 1% 260,175 231,835 28,340 12%
------- ------- --- --- ------- ------- ------ ---
Total operating expenses 176,809 169,239 7,570 4% 341,054 303,080 37,974 13%
Operating income 64,942 62,917 2,025 3% 107,815 104,321 3,494 3%
OTHER INCOME AND EXPENSES, NET:
Interest expense 11,224 11,057 167 2% 22,316 21,236 1,080 5%
Interest income (827) (277) (550) 199% (1,666) (623) (1,043) 167%
Other gains (321) (1,173) 852 (73%) (259) (1,641) 1,382 (84%)
Equity in net (income) loss of
affiliates (744) 431 (1,175) (273%) 1,436 1,436 - 0%
Total other income and expenses,
net 9,332 10,038 (706) (7%) 21,827 20,408 1,419 7%
----- ------ ---- --- ------ ------ ----- ---
Income before income taxes 55,610 52,879 2,731 5% 85,988 83,913 2,075 2%
Income taxes 16,788 17,066 (278) (2%) 26,003 26,506 (503) (2%)
------ ------ ---- --- ------ ------ ---- ---
Net income $38,822 $35,813 $3,009 8% $59,985 $57,407 $2,578 4%
======= ======= ====== === ======= ======= ====== ===
Basic earnings per share $0.69 $0.62 $0.07 11% $1.06 $1.00 $0.06 6%
===== ===== ===== === ===== ===== ===== ===
Diluted earnings per share $0.68 $0.62 $0.06 10% $1.06 $0.99 $0.07 7%
===== ===== ===== === ===== ===== ===== ===
* Year to date results for June 30,
2016 reflect the adoption of
Accounting Standards Update
Compensation-Stock Compensation
(Topic 718): Improvements to
Employee Share-Based Payment
Accounting ("ASU No. 2016-09"),
which requires companies to
recognize excess tax benefits and
deficiencies as income tax expense
or benefit in the income statement.
Adoption of the standard required
that the company retrospectively
apply the requirement to the
beginning of the year of adoption,
January 1, 2016. As a result, the
company has reduced its previously
reported income tax expense for the
first quarter of 2016 by $1.6
million.
Choice Hotels International, Inc.
Exhibit 2
Consolidated Balance Sheets
(In thousands, except per share amounts) June 30, December 31,
2016 2015
---- ----
(Unaudited)
ASSETS
Cash and cash equivalents $207,888 $193,441
Accounts receivable, net 126,689 89,352
Other current assets 43,466 28,160
------ ------
Total current assets 378,043 310,953
Fixed assets and intangibles, net 178,089 179,433
Notes receivable, net of allowances 92,195 82,572
Investments in unconsolidated entities 78,801 67,037
Investments, employee benefit plans, at fair value 16,516 17,674
Other assets 99,746 59,341
------ ------
Total assets $843,390 $717,010
-------- --------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Accounts payable $74,925 $64,431
Accrued expenses and other current liabilities 69,776 70,807
Deferred revenue 113,763 71,587
Current portion of long-term debt 833 1,191
Total current
liabilities 259,297 208,016
Long-term debt 901,352 812,945
Deferred compensation & retirement plan obligations 20,873 22,859
Other liabilities 35,696 69,089
------ ------
Total liabilities 1,217,218 1,112,909
Total shareholders'
deficit (373,828) (395,899)
Total liabilities and shareholders'
deficit $843,390 $717,010
-------- --------
Choice Hotels International, Inc.
Exhibit 3
Consolidated Statements of Cash Flows
(Unaudited)
(In
thousands) Six Months Ended June 30,
-------------------------
2016 2015*
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $59,985 $57,407
Adjustments to reconcile net income to net
cash provided
by operating activities:
Depreciation
and
amortization 5,721 5,685
(Gain) loss
on sale of
assets 7 (1,595)
Provision
for bad
debts, net 962 1,197
Non-cash
stock
compensation
and other
charges 7,966 5,399
Excess tax
benefits
from stock-
based
compensation 1,404 4,613
Non-cash
interest
and other
(income)
loss 958 1,340
Deferred
income
taxes 4,030 (2,095)
Equity
(earnings)
losses from
unconsolidated
joint
ventures,
net of
distributions
received 2,193 2,781
Changes in assets and liabilities:
Receivables (39,058) (28,856)
Advances to/
from
marketing
and
reservation
activities,
net (42,671) 3,724
Forgivable
notes
receivable,
net (13,174) (19,186)
Accounts
payable 10,567 16,990
Accrued
expenses
and other
current
liabilities (8,842) (6,969)
Income taxes
payable/
receivable 9,059 2,450
Deferred
revenue 42,164 4,041
Other assets (10,834) (5,152)
Other
liabilities (2,576) 769
------ ---
NET CASH
PROVIDED BY
OPERATING
ACTIVITIES 27,861 42,543
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment
in property
and
equipment (10,912) (14,554)
Proceeds
from sales
of assets 1,700 6,283
Acquisitions
of real
estate (25,389) -
Contributions
to equity
method
investments (19,688) (2,446)
Distributions
from equity
method
investments 3,619 270
Purchases of
investments,
employee
benefit
plans (1,140) (1,736)
Proceeds
from sales
of
investments,
employee
benefit
plans 1,136 1,087
Issuance of
mezzanine
and other
notes
receivable (13,048) (1,500)
Collections
of
mezzanine
and other
notes
receivable 10,158 3,567
Other items,
net (311) (261)
---- ----
NET CASH
USED BY
INVESTING
ACTIVITIES (53,875) (9,290)
------- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net
borrowings
pursuant to
revolving
credit
facilities 87,950 13,000
Principal
payments on
long-term
debt (623) (6,169)
Purchases of
treasury
stock (28,278) (6,244)
Dividends
paid (23,193) (22,940)
Proceeds
from
exercise of
stock
options 4,234 5,696
----- -----
NET CASH
PROVIDED
(USED) BY
FINANCING
ACTIVITIES 40,090 (16,657)
------ -------
Net change
in cash and
cash
equivalents 14,076 16,596
Effect of
foreign
exchange
rate
changes on
cash and
cash
equivalents 371 (825)
Cash and
cash
equivalents
at
beginning
of period 193,441 214,879
------- -------
CASH AND
CASH
EQUIVALENTS
AT END OF
PERIOD $207,888 $230,650
======== ========
* Year to date results for June 30,
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 $4.6 million for the six
months ended June 30, 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 Six Months Ended June 30, 2016 For the Six Months Ended June 30, 2015 Change
-------------------------------------- -------------------------------------- ------
Average Daily Average Daily Average Daily
Rate Occupancy RevPAR Rate Occupancy RevPAR Rate Occupancy RevPAR
---- --------- ------ ---- --------- ------ ---- --------- ------
Comfort Inn $90.11 64.0% $57.67 $87.35 63.5% $55.48 3.2% 50 bps 3.9%
Comfort Suites 95.51 68.9% 65.80 93.06 68.2% 63.43 2.6% 70 bps 3.7%
Sleep 81.13 64.2% 52.08 79.60 64.0% 50.93 1.9% 20 bps 2.3%
Quality 75.79 57.9% 43.88 73.16 57.5% 42.05 3.6% 40 bps 4.4%
Clarion 80.52 56.3% 45.35 78.25 56.3% 44.07 2.9% - bps 2.9%
Econo Lodge 59.24 52.4% 31.03 57.47 52.4% 30.13 3.1% - bps 3.0%
Rodeway 60.72 54.6% 33.15 57.22 55.8% 31.90 6.1% (120) bps 3.9%
MainStay 75.80 63.4% 48.02 76.24 68.5% 52.23 (0.6%) (510) bps (8.1%)
Suburban 49.67 74.9% 37.21 47.25 76.5% 36.15 5.1% (160) bps 2.9%
Ascend Hotel Collection 125.21 56.9% 71.28 122.78 59.8% 73.45 2.0% (290) bps (3.0%)
------ ---- ----- ------ ---- ----- --- ---- --- -----
Total $80.26 60.3% $48.43 $78.08 60.4% $47.15 2.8% (10) bps 2.7%
====== ==== ====== ====== ==== ====== === === === ===
For the Three Months Ended June 30, 2016 For the Three Months Ended June 30, 2015 Change
---------------------------------------- ---------------------------------------- ------
Average Daily Average Daily Average Daily
Rate Occupancy RevPAR Rate Occupancy RevPAR Rate Occupancy RevPAR
---- --------- ------ ---- --------- ------ ---- --------- ------
Comfort Inn $93.87 70.1% $65.84 $90.92 69.5% $63.16 3.2% 60 bps 4.2%
Comfort Suites 98.19 73.6% 72.24 95.59 71.8% 68.64 2.7% 180 bps 5.2%
Sleep 83.93 69.5% 58.35 82.23 68.3% 56.11 2.1% 120 bps 4.0%
Quality 78.61 63.3% 49.79 75.52 62.0% 46.83 4.1% 130 bps 6.3%
Clarion 84.14 62.3% 52.46 80.54 60.8% 48.95 4.5% 150 bps 7.2%
Econo Lodge 61.84 57.3% 35.46 59.86 56.6% 33.87 3.3% 70 bps 4.7%
Rodeway 63.13 57.9% 36.56 59.92 58.4% 35.01 5.4% (50) bps 4.4%
MainStay 78.07 68.4% 53.40 78.53 70.4% 55.32 (0.6%) (200) bps (3.5%)
Suburban 51.07 76.9% 39.27 47.96 78.9% 37.86 6.5% (200) bps 3.7%
Ascend Hotel Collection 133.28 60.0% 79.94 129.04 59.2% 76.41 3.3% 80 bps 4.6%
------ ---- ----- ------ ---- ----- --- --- --- ---
Total $83.35 65.5% $54.61 $80.89 64.7% $52.36 3.0% 80 bps 4.3%
====== ==== ====== ====== ==== ====== === === === ===
For the Quarter Ended For the Six Months Ended
--------------------- ------------------------
6/30/2016 6/30/2015 6/30/2016 6/30/2015
System-wide effective royalty rate 4.40% 4.28% 4.39% 4.29%
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 5
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA
(UNAUDITED)
June 30, 2016 June 30, 2015 Variance
------------- ------------- --------
Hotels Rooms Hotels Rooms Hotels Rooms % %
------ ----- ------ ----- ------ ----- --- ---
Comfort Inn 1,138 88,085 1,215 93,904 (77) (5,819) (6.3%) (6.2%)
Comfort Suites 564 43,522 575 44,447 (11) (925) (1.9%) (2.1%)
Sleep 380 27,188 377 27,207 3 (19) 0.8% (0.1%)
Quality 1,395 110,952 1,311 105,761 84 5,191 6.4% 4.9%
Clarion 168 23,033 175 24,587 (7) (1,554) (4.0%) (6.3%)
Econo Lodge 847 52,385 853 52,835 (6) (450) (0.7%) (0.9%)
Rodeway 528 29,771 481 26,544 47 3,227 9.8% 12.2%
MainStay 54 4,020 47 3,629 7 391 14.9% 10.8%
Suburban 58 6,471 62 6,959 (4) (488) (6.5%) (7.0%)
Ascend Hotel Collection 116 9,650 110 9,408 6 242 5.5% 2.6%
Cambria hotel & suites 25 3,113 24 2,917 1 196 4.2% 6.7%
--- ----- --- ----- --- --- --- ---
Domestic Franchises 5,273 398,190 5,230 398,198 43 (8) 0.8% (0.0%)
International Franchises 1,156 111,366 1,146 106,763 10 4,603 0.9% 4.3%
----- ------- ----- ------- --- ----- --- ---
Total Franchises 6,429 509,556 6,376 504,961 53 4,595 0.8% 0.9%
===== ======= ===== ======= === ===== === ===
Exhibit 6
CHOICE HOTELS INTERNATIONAL, INC.
SUPPLEMENTAL INFORMATION BY BRAND
DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS
(UNAUDITED)
For the Six Months Ended June 30, 2016 For the Six Months Ended June 30, 2015 % Change
-------------------------------------- -------------------------------------- --------
New New New
Construction Conversion Total Construction Conversion Total Construction Conversion Total
------------ ---------- ----- ------------ ---------- ----- ------------ ---------- -----
Comfort Inn 12 14 26 13 20 33 (8%) (30%) (21%)
Comfort Suites 8 1 9 13 2 15 (38%) (50%) (40%)
Sleep 14 - 14 9 - 9 56% NM 56%
Quality - 73 73 3 75 78 (100%) (3%) (6%)
Clarion 3 9 12 - 6 6 NM 50% 100%
Econo Lodge 1 29 30 - 28 28 NM 4% 7%
Rodeway - 27 27 - 35 35 NM (23%) (23%)
MainStay 6 - 6 6 - 6 0% NM 0%
Suburban - 1 1 1 3 4 (100%) (67%) (75%)
Ascend Hotel Collection 2 6 8 1 16 17 100% (63%) (53%)
Cambria hotel & suites 11 - 11 7 - 7 57% NM 57%
--- --- --- --- --- --- --- --- ---
Total Domestic System 57 160 217 53 185 238 8% (14%) (9%)
=== === === === === === === ==== ===
For the Three Months Ended June 30, 2016 For the Three Months Ended June 30,
2015 % Change
---------------------------------------- ------------------------------------ --------
New New New
Construction Conversion Total Construction Conversion Total Construction Conversion Total
------------ ---------- ----- ------------ ---------- ----- ------------ ---------- -----
Comfort Inn 6 10 16 9 13 22 (33%) (23%) (27%)
Comfort Suites 6 1 7 8 - 8 (25%) NM (13%)
Sleep 12 - 12 4 - 4 200% NM 200%
Quality - 50 50 1 46 47 (100%) 9% 6%
Clarion 2 6 8 - 3 3 NM 100% 167%
Econo Lodge 1 15 16 - 19 19 NM (21%) (16%)
Rodeway - 17 17 - 21 21 NM (19%) (19%)
MainStay 5 - 5 2 - 2 150% NM 150%
Suburban - 1 1 1 1 2 (100%) 0% (50%)
Ascend Hotel Collection 1 5 6 - 6 6 NM (17%) 0%
Cambria hotel & suites 9 - 9 5 - 5 80% NM 80%
--- --- --- --- --- --- --- --- ---
Total Domestic System 42 105 147 30 109 139 40% (4%) 6%
=== === === === === === === === ===
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
--------
June 30, 2016 June 30, 2015
Units Units Conversion New Construction Total
----- ----- ---------- ---------------- -----
Conversion New Construction Total Conversion New Construction Total Units % Units % Units %
---------- ---------------- ----- ---------- ---------------- ----- ----- --- ----- --- ----- ---
Comfort Inn 34 80 114 38 64 102 (4) (11%) 16 25% 12 12%
Comfort Suites 4 95 99 3 76 79 1 33% 19 25% 20 25%
Sleep Inn - 83 83 1 65 66 (1) (100%) 18 28% 17 26%
Quality 47 5 52 54 5 59 (7) (13%) - 0% (7) (12%)
Clarion 9 5 14 11 2 13 (2) (18%) 3 150% 1 8%
Econo Lodge 26 3 29 24 4 28 2 8% (1) (25%) 1 4%
Rodeway 29 2 31 34 3 37 (5) (15%) (1) (33%) (6) (16%)
MainStay - 57 57 1 47 48 (1) (100%) 10 21% 9 19%
Suburban 5 6 11 6 12 18 (1) (17%) (6) (50%) (7) (39%)
Ascend Hotel Collection 29 19 48 25 18 43 4 16% 1 6% 5 12%
Cambria hotel & suites 5 48 53 - 25 25 5 NM 23 92% 28 112%
--- --- --- --- --- --- --- --- --- --- --- ---
188 403 591 197 321 518 (9) (5%) 82 26% 73 14%
=== === === === === === === === === === === ===
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 June 30, Six Months Ended June 30,
--------------------------- -------------------------
2016 2015 2016 2015
---- ---- ---- ----
Hotel Franchising Revenues:
Total Revenues $241,751 $232,156 $448,869 $407,401
Adjustments:
Marketing and reservation system revenues (133,814) (133,122) (260,175) (231,835)
Non-hotel franchising activities (2,068) (411) (4,097) (1,014)
Hotel Franchising Revenues $105,869 $98,623 $184,597 $174,552
Adjusted Hotel Franchising Margins:
Operating Margin:
Total Revenues $241,751 $232,156 $448,869 $407,401
Operating Income $64,942 $62,917 $107,815 $104,321
Operating Margin 26.9% 27.1% 24.0% 25.6%
Adjusted Hotel Franchising Margin:
Hotel Franchising Revenues $105,869 $98,623 $184,597 $174,552
Operating Income $64,942 $62,917 $107,815 $104,321
Executive termination benefits 2,206 - 2,206 -
Non-hotel franchising activities operating loss 6,084 4,699 11,740 10,000
$73,232 $67,616 $121,761 $114,321
------- ------- -------- --------
Adjusted Hotel Franchising Margins 69.2% 68.6% 66.0% 65.5%
ADJUSTED HOTEL FRANCHISING SELLING, GENERAL AND ADMINISTRATION EXPENSES
(dollar amounts in thousands) Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2016 2015 2016 2015
---- ---- ---- ----
Total Selling, General and Administrative Expenses $40,039 $33,122 $75,158 $65,560
Executive termination benefits (2,206) - (2,206) -
Non-hotel franchising activities (7,045) (4,638) (13,715) (10,133)
Adjusted Hotel Franchising Selling, General and
Administration Expenses $30,788 $28,484 $59,237 $55,427
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA")
(dollar amounts in thousands)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2016 2015 2016 2015
---- ---- ---- ----
Net income $38,822 $35,813 $59,985 $57,407
Income taxes 16,788 17,066 26,003 26,506
Interest expense 11,224 11,057 22,316 21,236
Interest income (827) (277) (1,666) (623)
Other gains (321) (1,173) (259) (1,641)
Equity in net (income) loss of affiliates (744) 431 1,436 1,436
Depreciation and amortization 2,956 2,995 5,721 5,685
Executive termination benefits 2,206 - 2,206 -
Adjusted EBITDA $70,104 $65,912 $115,742 $110,006
======= ======= ======== ========
Hotel franchising $75,082 $70,138 $125,361 $119,124
Non-hotel franchising activities (4,978) (4,226) (9,619) (9,118)
$70,104 $65,912 $115,742 $110,006
======= ======= ======== ========
ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS)
(dollar amounts in thousands, except per share amounts) Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2016 2015 2016 2015
---- ---- ---- ----
Net Income $38,822 $35,813 $59,985 $57,407
Adjustments:
Executive termination benefits 1,394 - 1,394 -
Adjusted Net Income $40,216 $35,813 $61,379 $57,407
======= ======= ======= =======
Diluted Earnings Per Share $0.68 $0.62 $1.06 $0.99
Adjustments:
Executive termination benefits 0.03 - 0.02 -
Adjusted Diluted Earnings Per Share (EPS) $0.71 $0.62 $1.08 $0.99
===== ===== ===== =====
ADJUSTED EBITDA AND DILUTED EPS FULL YEAR FORECAST
(dollar amounts in thousands)
Range
-----
Estimated Adjusted EBITDA
Fiscal Year 2016
----------------
Net income $133,500 $136,300
Income taxes 62,000 63,200
Interest expense 45,600 45,600
Interest income (3,200) (3,200)
Other gains (600) (600)
Equity in net loss of affiliates 500 500
Depreciation and amortization 12,000 12,000
Executive termination benefits 2,200 2,200
Adjusted EBITDA $252,000 $256,000
======== ========
Hotel franchising $269,500 $273,500
Non-hotel franchising activities (17,500) (17,500)
$252,000 $256,000
======== ========
Range
-----
Estimated Adjusted Diluted EPS
Fiscal Year 2016
----------------
Diluted EPS $2.36 $2.41
Adjustments:
Executive termination benefits 0.02 0.02
Adjusted Diluted EPS $2.38 $2.43
===== =====
Logo - http://photos.prnewswire.com/prnh/20140807/134515
SOURCE Choice Hotels International, Inc.
SOURCE: Choice Hotels International, Inc.
PR Newswire
ROCKVILLE, Md., Aug. 2, 2016
ROCKVILLE, Md., Aug. 2, 2016 /PRNewswire/ -- Choice Hotels International, Inc. (NYSE: CHH) today reported the following highlights for the second quarter 2016:
"We are pleased with our results for the second quarter, which were highlighted by a 15 percent increase in adjusted diluted earnings per share," said Stephen P. Joyce, chief executive officer, Choice Hotels. "In addition, we delivered strong RevPAR gains to our domestic franchise system which continue to exceed the growth levels experienced by the overall industry and primary chain scale segments in which we compete. Demand for our brands remains strong and we will continue to invest in programs designed to drive more reservations through our central channels, improve guest loyalty and improve the value of our brands in an effort to drive incremental business to our franchisees."
Special Item
During the three and six months ended June 30, 2016, the company recorded an executive termination benefit charge of approximately $2.2 million. This special item impacted diluted EPS by $0.03 and $0.02 per share for the three and six months ended June 30, 2016, respectively. The company evaluates certain 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.
Adoption of New Accounting Standard
On April 1, 2016, the company adopted Accounting Standards Update ("ASU") Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU No. 2016-09"), which requires that excess tax benefits and deficiencies related to stock compensation be recognized as income tax expense or benefit in the company's income statement. Adoption of the standard required that the company retrospectively apply the requirement to the beginning of the year of adoption, January 1, 2016. As a result, the company has reduced is previously reported income tax expense for the first quarter of 2016 by $1.6 million.
Use of Cash Flows
Dividends
During the six months ended June 30, 2016, the company paid cash dividends totaling approximately $23 million. Based on the current quarterly dividend rate of $0.205 per common share, the company expects to pay dividends of approximately $46 million during 2016.
Share Repurchases
The company repurchased 0.5 million shares of common stock under its share repurchase program during the six months ended June 30, 2016, at a total cost of approximately $23 million. The company currently has authorization to purchase up to 1.1 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 $67 million in support of the Cambria brand during the six months ended June 30, 2016. The company also recycled approximately $18 million of investments in support of Cambria resulting in net advances of $49 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. At June 30, 2016, the company had approximately $176 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 2016 outlook reflects the following assumptions:
Hotel Franchising
Non-Hotel Franchising Activities
Other Items
Consolidated Outlook
The company's third quarter 2016 diluted EPS is expected to be at least $0.78. The company expects full-year 2016 adjusted diluted EPS to range between $2.38 and $2.43 and full year 2016 adjusted EBITDA to range between $252 million and $256 million. The adjusted EPS and adjusted 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.
Conference Call
Choice will conduct a conference call on Tuesday, August 2, 2016 at 10:00 a.m. EDT to discuss the company's second quarter 2016 results. The dial-in number to listen to the call domestically is 1-855-638-5678 and the number for international participants is 1-404-537-3406. The conference call also will be webcast simultaneously via the company's website, www.choicehotels.com. Interested investors and other parties wishing to access the call via the webcast should go to the website and click on the Investor Info link. The Investor page will feature a conference call microphone icon to access the call.
The call will be recorded and available for replay beginning at 1:00 p.m. EDT on Tuesday, August 2, 2016 by calling 1-855-859-2056 (domestic) or 1-404-537-3406 (international) and entering access code 50406350. 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 6,400 hotels franchised in more than 40 countries and territories, Choice Hotels International® represents more than 500,000 rooms around the globe. As of June 30, 2016, 673 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 27 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, 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 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.
Franchising Revenues, Adjusted Hotel Franchising EBITDA, Adjusted Hotel Franchising SG&A and Margins: The company reports 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.
© 2016 Choice Hotels International, Inc. All rights reserved.
|
Choice Hotels International, Inc. |
Exhibit 1 |
|||||||||||||||
|
Consolidated Statements of Income |
||||||||||||||||
|
(Unaudited) |
||||||||||||||||
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
|
Variance |
Variance |
|||||||||||||||
|
2016 |
2015 |
$ |
% |
2016* |
2015 |
$ |
% |
|||||||||
|
(In thousands, except per share amounts) |
||||||||||||||||
|
REVENUES: |
||||||||||||||||
|
Royalty fees |
$ 86,195 |
$ 81,183 |
$ 5,012 |
6% |
$ 151,054 |
$ 143,614 |
$ 7,440 |
5% |
||||||||
|
Initial franchise and relicensing fees |
5,706 |
5,816 |
(110) |
(2%) |
10,862 |
11,533 |
(671) |
(6%) |
||||||||
|
Procurement services |
10,308 |
8,589 |
1,719 |
20% |
16,104 |
13,396 |
2,708 |
20% |
||||||||
|
Marketing and reservation system |
133,814 |
133,122 |
692 |
1% |
260,175 |
231,835 |
28,340 |
12% |
||||||||
|
Other |
5,728 |
3,446 |
2,282 |
66% |
10,674 |
7,023 |
3,651 |
52% |
||||||||
|
Total revenues |
241,751 |
232,156 |
9,595 |
4% |
448,869 |
407,401 |
41,468 |
10% |
||||||||
|
OPERATING EXPENSES: |
||||||||||||||||
|
Selling, general and administrative |
40,039 |
33,122 |
6,917 |
21% |
75,158 |
65,560 |
9,598 |
15% |
||||||||
|
Depreciation and amortization |
2,956 |
2,995 |
(39) |
(1%) |
5,721 |
5,685 |
36 |
1% |
||||||||
|
Marketing and reservation system |
133,814 |
133,122 |
692 |
1% |
260,175 |
231,835 |
28,340 |
12% |
||||||||
|
Total operating expenses |
176,809 |
169,239 |
7,570 |
4% |
341,054 |
303,080 |
37,974 |
13% |
||||||||
|
Operating income |
64,942 |
62,917 |
2,025 |
3% |
107,815 |
104,321 |
3,494 |
3% |
||||||||
|
OTHER INCOME AND EXPENSES, NET: |
||||||||||||||||
|
Interest expense |
11,224 |
11,057 |
167 |
2% |
22,316 |
21,236 |
1,080 |
5% |
||||||||
|
Interest income |
(827) |
(277) |
(550) |
199% |
(1,666) |
(623) |
(1,043) |
167% |
||||||||
|
Other gains |
(321) |
(1,173) |
852 |
(73%) |
(259) |
(1,641) |
1,382 |
(84%) |
||||||||
|
Equity in net (income) loss of affiliates |
(744) |
431 |
(1,175) |
(273%) |
1,436 |
1,436 |
- |
0% |
||||||||
|
Total other income and expenses, net |
9,332 |
10,038 |
(706) |
(7%) |
21,827 |
20,408 |
1,419 |
7% |
||||||||
|
Income before income taxes |
55,610 |
52,879 |
2,731 |
5% |
85,988 |
83,913 |
2,075 |
2% |
||||||||
|
Income taxes |
16,788 |
17,066 |
(278) |
(2%) |
26,003 |
26,506 |
(503) |
(2%) |
||||||||
|
Net income |
$ 38,822 |
$ 35,813 |
$ 3,009 |
8% |
$ 59,985 |
$ 57,407 |
$ 2,578 |
4% |
||||||||
|
Basic earnings per share |
$ 0.69 |
$ 0.62 |
$ 0.07 |
11% |
$ 1.06 |
$ 1.00 |
$ 0.06 |
6% |
||||||||
|
Diluted earnings per share |
$ 0.68 |
$ 0.62 |
$ 0.06 |
10% |
$ 1.06 |
$ 0.99 |
$ 0.07 |
7% |
||||||||
|
* Year to date results for June 30, 2016 reflect the adoption of Accounting Standards Update Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU No. 2016-09"), which requires companies to recognize excess tax benefits and deficiencies as income tax expense or benefit in the income statement. Adoption of the standard required that the company retrospectively apply the requirement to the beginning of the year of adoption, January 1, 2016. As a result, the company has reduced its previously reported income tax expense for the first quarter of 2016 by $1.6 million. |
|
Choice Hotels International, Inc. |
Exhibit 2 |
|||||
|
Consolidated Balance Sheets |
||||||
|
(In thousands, except per share amounts) |
June 30, |
December 31, |
||||
|
2016 |
2015 |
|||||
|
(Unaudited) |
||||||
|
ASSETS |
||||||
|
Cash and cash equivalents |
$ 207,888 |
$ 193,441 |
||||
|
Accounts receivable, net |
126,689 |
89,352 |
||||
|
Other current assets |
43,466 |
28,160 |
||||
|
Total current assets |
378,043 |
310,953 |
||||
|
Fixed assets and intangibles, net |
178,089 |
179,433 |
||||
|
Notes receivable, net of allowances |
92,195 |
82,572 |
||||
|
Investments in unconsolidated entities |
78,801 |
67,037 |
||||
|
Investments, employee benefit plans, at fair value |
16,516 |
17,674 |
||||
|
Other assets |
99,746 |
59,341 |
||||
|
Total assets |
$ 843,390 |
$ 717,010 |
||||
|
LIABILITIES AND SHAREHOLDERS' DEFICIT |
||||||
|
Accounts payable |
$ 74,925 |
$ 64,431 |
||||
|
Accrued expenses and other current liabilities |
69,776 |
70,807 |
||||
|
Deferred revenue |
113,763 |
71,587 |
||||
|
Current portion of long-term debt |
833 |
1,191 |
||||
|
Total current liabilities |
259,297 |
208,016 |
||||
|
Long-term debt |
901,352 |
812,945 |
||||
|
Deferred compensation & retirement plan obligations |
20,873 |
22,859 |
||||
|
Other liabilities |
35,696 |
69,089 |
||||
|
Total liabilities |
1,217,218 |
1,112,909 |
||||
|
Total shareholders' deficit |
(373,828) |
(395,899) |
||||
|
Total liabilities and shareholders' deficit |
$ 843,390 |
$ 717,010 |
||||
|
Choice Hotels International, Inc. |
Exhibit 3 |
||
|
Consolidated Statements of Cash Flows |
|||
|
(Unaudited) |
|||
|
(In thousands) |
Six Months Ended June 30, |
||
|
2016 |
2015* |
||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||
|
Net income |
$ 59,985 |
$ 57,407 |
|
|
Adjustments to reconcile net income to net cash provided |
|||
|
by operating activities: |
|||
|
Depreciation and amortization |
5,721 |
5,685 |
|
|
(Gain) loss on sale of assets |
7 |
(1,595) |
|
|
Provision for bad debts, net |
962 |
1,197 |
|
|
Non-cash stock compensation and other charges |
7,966 |
5,399 |
|
|
Excess tax benefits from stock-based compensation |
1,404 |
4,613 |
|
|
Non-cash interest and other (income) loss |
958 |
1,340 |
|
|
Deferred income taxes |
4,030 |
(2,095) |
|
|
Equity (earnings) losses from unconsolidated joint ventures, net of distributions received |
2,193 |
2,781 |
|
|
Changes in assets and liabilities: |
|||
|
Receivables |
(39,058) |
(28,856) |
|
|
Advances to/from marketing and reservation activities, net |
(42,671) |
3,724 |
|
|
Forgivable notes receivable, net |
(13,174) |
(19,186) |
|
|
Accounts payable |
10,567 |
16,990 |
|
|
Accrued expenses and other current liabilities |
(8,842) |
(6,969) |
|
|
Income taxes payable/receivable |
9,059 |
2,450 |
|
|
Deferred revenue |
42,164 |
4,041 |
|
|
Other assets |
(10,834) |
(5,152) |
|
|
Other liabilities |
(2,576) |
769 |
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
27,861 |
42,543 |
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||
|
Investment in property and equipment |
(10,912) |
(14,554) |
|
|
Proceeds from sales of assets |
1,700 |
6,283 |
|
|
Acquisitions of real estate |
(25,389) |
- |
|
|
Contributions to equity method investments |
(19,688) |
(2,446) |
|
|
Distributions from equity method investments |
3,619 |
270 |
|
|
Purchases of investments, employee benefit plans |
(1,140) |
(1,736) |
|
|
Proceeds from sales of investments, employee benefit plans |
1,136 |
1,087 |
|
|
Issuance of mezzanine and other notes receivable |
(13,048) |
(1,500) |
|
|
Collections of mezzanine and other notes receivable |
10,158 |
3,567 |
|
|
Other items, net |
(311) |
(261) |
|
|
NET CASH USED BY INVESTING ACTIVITIES |
(53,875) |
(9,290) |
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|||
|
Net borrowings pursuant to revolving credit facilities |
87,950 |
13,000 |
|
|
Principal payments on long-term debt |
(623) |
(6,169) |
|
|
Purchases of treasury stock |
(28,278) |
(6,244) |
|
|
Dividends paid |
(23,193) |
(22,940) |
|
|
Proceeds from exercise of stock options |
4,234 |
5,696 |
|
|
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES |
40,090 |
(16,657) |
|
|
Net change in cash and cash equivalents |
14,076 |
16,596 |
|
|
Effect of foreign exchange rate changes on cash and cash equivalents |
371 |
(825) |
|
|
Cash and cash equivalents at beginning of period |
193,441 |
214,879 |
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ 207,888 |
$ 230,650 |
|
|
* Year to date results for June 30, 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 $4.6 million for the six months ended June 30, 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 Six Months Ended June 30, 2016 |
For the Six Months Ended June 30, 2015 |
Change |
|||||||||||||||||||
|
Average Daily |
Average Daily |
Average Daily |
|||||||||||||||||||
|
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
|||||||||||||
|
Comfort Inn |
$ 90.11 |
64.0% |
$ 57.67 |
$ 87.35 |
63.5% |
$ 55.48 |
3.2% |
50 |
bps |
3.9% |
|||||||||||
|
Comfort Suites |
95.51 |
68.9% |
65.80 |
93.06 |
68.2% |
63.43 |
2.6% |
70 |
bps |
3.7% |
|||||||||||
|
Sleep |
81.13 |
64.2% |
52.08 |
79.60 |
64.0% |
50.93 |
1.9% |
20 |
bps |
2.3% |
|||||||||||
|
Quality |
75.79 |
57.9% |
43.88 |
73.16 |
57.5% |
42.05 |
3.6% |
40 |
bps |
4.4% |
|||||||||||
|
Clarion |
80.52 |
56.3% |
45.35 |
78.25 |
56.3% |
44.07 |
2.9% |
- |
bps |
2.9% |
|||||||||||
|
Econo Lodge |
59.24 |
52.4% |
31.03 |
57.47 |
52.4% |
30.13 |
3.1% |
- |
bps |
3.0% |
|||||||||||
|
Rodeway |
60.72 |
54.6% |
33.15 |
57.22 |
55.8% |
31.90 |
6.1% |
(120) |
bps |
3.9% |
|||||||||||
|
MainStay |
75.80 |
63.4% |
48.02 |
76.24 |
68.5% |
52.23 |
(0.6%) |
(510) |
bps |
(8.1%) |
|||||||||||
|
Suburban |
49.67 |
74.9% |
37.21 |
47.25 |
76.5% |
36.15 |
5.1% |
(160) |
bps |
2.9% |
|||||||||||
|
Ascend Hotel Collection |
125.21 |
56.9% |
71.28 |
122.78 |
59.8% |
73.45 |
2.0% |
(290) |
bps |
(3.0%) |
|||||||||||
|
Total |
$ 80.26 |
60.3% |
$ 48.43 |
$ 78.08 |
60.4% |
$ 47.15 |
2.8% |
(10) |
bps |
2.7% |
|||||||||||
|
For the Three Months Ended June 30, 2016 |
For the Three Months Ended June 30, 2015 |
Change |
|||||||||||||||||||
|
Average Daily |
Average Daily |
Average Daily |
|||||||||||||||||||
|
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
|||||||||||||
|
Comfort Inn |
$ 93.87 |
70.1% |
$ 65.84 |
$ 90.92 |
69.5% |
$ 63.16 |
3.2% |
60 |
bps |
4.2% |
|||||||||||
|
Comfort Suites |
98.19 |
73.6% |
72.24 |
95.59 |
71.8% |
68.64 |
2.7% |
180 |
bps |
5.2% |
|||||||||||
|
Sleep |
83.93 |
69.5% |
58.35 |
82.23 |
68.3% |
56.11 |
2.1% |
120 |
bps |
4.0% |
|||||||||||
|
Quality |
78.61 |
63.3% |
49.79 |
75.52 |
62.0% |
46.83 |
4.1% |
130 |
bps |
6.3% |
|||||||||||
|
Clarion |
84.14 |
62.3% |
52.46 |
80.54 |
60.8% |
48.95 |
4.5% |
150 |
bps |
7.2% |
|||||||||||
|
Econo Lodge |
61.84 |
57.3% |
35.46 |
59.86 |
56.6% |
33.87 |
3.3% |
70 |
bps |
4.7% |
|||||||||||
|
Rodeway |
63.13 |
57.9% |
36.56 |
59.92 |
58.4% |
35.01 |
5.4% |
(50) |
bps |
4.4% |
|||||||||||
|
MainStay |
78.07 |
68.4% |
53.40 |
78.53 |
70.4% |
55.32 |
(0.6%) |
(200) |
bps |
(3.5%) |
|||||||||||
|
Suburban |
51.07 |
76.9% |
39.27 |
47.96 |
78.9% |
37.86 |
6.5% |
(200) |
bps |
3.7% |
|||||||||||
|
Ascend Hotel Collection |
133.28 |
60.0% |
79.94 |
129.04 |
59.2% |
76.41 |
3.3% |
80 |
bps |
4.6% |
|||||||||||
|
Total |
$ 83.35 |
65.5% |
$ 54.61 |
$ 80.89 |
64.7% |
$ 52.36 |
3.0% |
80 |
bps |
4.3% |
|||||||||||
|
For the Quarter Ended |
For the Six Months Ended |
||||||||||||||||||||
|
6/30/2016 |
6/30/2015 |
6/30/2016 |
6/30/2015 |
||||||||||||||||||
|
System-wide effective royalty rate |
4.40% |
4.28% |
4.39% |
4.29% |
|||||||||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. |
Exhibit 5 |
|||||||||||||||
|
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA |
||||||||||||||||
|
(UNAUDITED) |
||||||||||||||||
|
June 30, 2016 |
June 30, 2015 |
Variance |
||||||||||||||
|
Hotels |
Rooms |
Hotels |
Rooms |
Hotels |
Rooms |
% |
% |
|||||||||
|
Comfort Inn |
1,138 |
88,085 |
1,215 |
93,904 |
(77) |
(5,819) |
(6.3%) |
(6.2%) |
||||||||
|
Comfort Suites |
564 |
43,522 |
575 |
44,447 |
(11) |
(925) |
(1.9%) |
(2.1%) |
||||||||
|
Sleep |
380 |
27,188 |
377 |
27,207 |
3 |
(19) |
0.8% |
(0.1%) |
||||||||
|
Quality |
1,395 |
110,952 |
1,311 |
105,761 |
84 |
5,191 |
6.4% |
4.9% |
||||||||
|
Clarion |
168 |
23,033 |
175 |
24,587 |
(7) |
(1,554) |
(4.0%) |
(6.3%) |
||||||||
|
Econo Lodge |
847 |
52,385 |
853 |
52,835 |
(6) |
(450) |
(0.7%) |
(0.9%) |
||||||||
|
Rodeway |
528 |
29,771 |
481 |
26,544 |
47 |
3,227 |
9.8% |
12.2% |
||||||||
|
MainStay |
54 |
4,020 |
47 |
3,629 |
7 |
391 |
14.9% |
10.8% |
||||||||
|
Suburban |
58 |
6,471 |
62 |
6,959 |
(4) |
(488) |
(6.5%) |
(7.0%) |
||||||||
|
Ascend Hotel Collection |
116 |
9,650 |
110 |
9,408 |
6 |
242 |
5.5% |
2.6% |
||||||||
|
Cambria hotel & suites |
25 |
3,113 |
24 |
2,917 |
1 |
196 |
4.2% |
6.7% |
||||||||
|
Domestic Franchises |
5,273 |
398,190 |
5,230 |
398,198 |
43 |
(8) |
0.8% |
(0.0%) |
||||||||
|
International Franchises |
1,156 |
111,366 |
1,146 |
106,763 |
10 |
4,603 |
0.9% |
4.3% |
||||||||
|
Total Franchises |
6,429 |
509,556 |
6,376 |
504,961 |
53 |
4,595 |
0.8% |
0.9% |
||||||||
|
Exhibit 6 |
|||||||||||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. |
|||||||||||||||||||
|
SUPPLEMENTAL INFORMATION BY BRAND |
|||||||||||||||||||
|
DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS |
|||||||||||||||||||
|
(UNAUDITED) |
|||||||||||||||||||
|
For the Six Months Ended June 30, 2016 |
For the Six Months Ended June 30, 2015 |
% Change |
|||||||||||||||||
|
New |
New |
New |
|||||||||||||||||
|
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
|||||||||||
|
Comfort Inn |
12 |
14 |
26 |
13 |
20 |
33 |
(8%) |
(30%) |
(21%) |
||||||||||
|
Comfort Suites |
8 |
1 |
9 |
13 |
2 |
15 |
(38%) |
(50%) |
(40%) |
||||||||||
|
Sleep |
14 |
- |
14 |
9 |
- |
9 |
56% |
NM |
56% |
||||||||||
|
Quality |
- |
73 |
73 |
3 |
75 |
78 |
(100%) |
(3%) |
(6%) |
||||||||||
|
Clarion |
3 |
9 |
12 |
- |
6 |
6 |
NM |
50% |
100% |
||||||||||
|
Econo Lodge |
1 |
29 |
30 |
- |
28 |
28 |
NM |
4% |
7% |
||||||||||
|
Rodeway |
- |
27 |
27 |
- |
35 |
35 |
NM |
(23%) |
(23%) |
||||||||||
|
MainStay |
6 |
- |
6 |
6 |
- |
6 |
0% |
NM |
0% |
||||||||||
|
Suburban |
- |
1 |
1 |
1 |
3 |
4 |
(100%) |
(67%) |
(75%) |
||||||||||
|
Ascend Hotel Collection |
2 |
6 |
8 |
1 |
16 |
17 |
100% |
(63%) |
(53%) |
||||||||||
|
Cambria hotel & suites |
11 |
- |
11 |
7 |
- |
7 |
57% |
NM |
57% |
||||||||||
|
Total Domestic System |
57 |
160 |
217 |
53 |
185 |
238 |
8% |
(14%) |
(9%) |
||||||||||
|
For the Three Months Ended June 30, 2016 |
For the Three Months Ended June 30, 2015 |
% Change |
|||||||||||||||||
|
New |
New |
New |
|||||||||||||||||
|
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
|||||||||||
|
Comfort Inn |
6 |
10 |
16 |
9 |
13 |
22 |
(33%) |
(23%) |
(27%) |
||||||||||
|
Comfort Suites |
6 |
1 |
7 |
8 |
- |
8 |
(25%) |
NM |
(13%) |
||||||||||
|
Sleep |
12 |
- |
12 |
4 |
- |
4 |
200% |
NM |
200% |
||||||||||
|
Quality |
- |
50 |
50 |
1 |
46 |
47 |
(100%) |
9% |
6% |
||||||||||
|
Clarion |
2 |
6 |
8 |
- |
3 |
3 |
NM |
100% |
167% |
||||||||||
|
Econo Lodge |
1 |
15 |
16 |
- |
19 |
19 |
NM |
(21%) |
(16%) |
||||||||||
|
Rodeway |
- |
17 |
17 |
- |
21 |
21 |
NM |
(19%) |
(19%) |
||||||||||
|
MainStay |
5 |
- |
5 |
2 |
- |
2 |
150% |
NM |
150% |
||||||||||
|
Suburban |
- |
1 |
1 |
1 |
1 |
2 |
(100%) |
0% |
(50%) |
||||||||||
|
Ascend Hotel Collection |
1 |
5 |
6 |
- |
6 |
6 |
NM |
(17%) |
0% |
||||||||||
|
Cambria hotel & suites |
9 |
- |
9 |
5 |
- |
5 |
80% |
NM |
80% |
||||||||||
|
Total Domestic System |
42 |
105 |
147 |
30 |
109 |
139 |
40% |
(4%) |
6% |
||||||||||
|
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 |
||||||||||||||||||||||||
|
June 30, 2016 |
June 30, 2015 |
|||||||||||||||||||||||
|
Units |
Units |
Conversion |
New Construction |
Total |
||||||||||||||||||||
|
Conversion |
New Construction |
Total |
Conversion |
New Construction |
Total |
Units |
% |
Units |
% |
Units |
% |
|||||||||||||
|
Comfort Inn |
34 |
80 |
114 |
38 |
64 |
102 |
(4) |
(11%) |
16 |
25% |
12 |
12% |
||||||||||||
|
Comfort Suites |
4 |
95 |
99 |
3 |
76 |
79 |
1 |
33% |
19 |
25% |
20 |
25% |
||||||||||||
|
Sleep Inn |
- |
83 |
83 |
1 |
65 |
66 |
(1) |
(100%) |
18 |
28% |
17 |
26% |
||||||||||||
|
Quality |
47 |
5 |
52 |
54 |
5 |
59 |
(7) |
(13%) |
- |
0% |
(7) |
(12%) |
||||||||||||
|
Clarion |
9 |
5 |
14 |
11 |
2 |
13 |
(2) |
(18%) |
3 |
150% |
1 |
8% |
||||||||||||
|
Econo Lodge |
26 |
3 |
29 |
24 |
4 |
28 |
2 |
8% |
(1) |
(25%) |
1 |
4% |
||||||||||||
|
Rodeway |
29 |
2 |
31 |
34 |
3 |
37 |
(5) |
(15%) |
(1) |
(33%) |
(6) |
(16%) |
||||||||||||
|
MainStay |
- |
57 |
57 |
1 |
47 |
48 |
(1) |
(100%) |
10 |
21% |
9 |
19% |
||||||||||||
|
Suburban |
5 |
6 |
11 |
6 |
12 |
18 |
(1) |
(17%) |
(6) |
(50%) |
(7) |
(39%) |
||||||||||||
|
Ascend Hotel Collection |
29 |
19 |
48 |
25 |
18 |
43 |
4 |
16% |
1 |
6% |
5 |
12% |
||||||||||||
|
Cambria hotel & suites |
5 |
48 |
53 |
- |
25 |
25 |
5 |
NM |
23 |
92% |
28 |
112% |
||||||||||||
|
188 |
403 |
591 |
197 |
321 |
518 |
(9) |
(5%) |
82 |
26% |
73 |
14% |
|||||||||||||
|
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 June 30, |
Six Months Ended June 30, |
|||||||
|
2016 |
2015 |
2016 |
2015 |
||||||
|
Hotel Franchising Revenues: |
|||||||||
|
Total Revenues |
$ 241,751 |
$ 232,156 |
$ 448,869 |
$ 407,401 |
|||||
|
Adjustments: |
|||||||||
|
Marketing and reservation system revenues |
(133,814) |
(133,122) |
(260,175) |
(231,835) |
|||||
|
Non-hotel franchising activities |
(2,068) |
(411) |
(4,097) |
(1,014) |
|||||
|
Hotel Franchising Revenues |
$ 105,869 |
$ 98,623 |
$ 184,597 |
$ 174,552 |
|||||
|
Adjusted Hotel Franchising Margins: |
|||||||||
|
Operating Margin: |
|||||||||
|
Total Revenues |
$ 241,751 |
$ 232,156 |
$ 448,869 |
$ 407,401 |
|||||
|
Operating Income |
$ 64,942 |
$ 62,917 |
$ 107,815 |
$ 104,321 |
|||||
|
Operating Margin |
26.9% |
27.1% |
24.0% |
25.6% |
|||||
|
Adjusted Hotel Franchising Margin: |
|||||||||
|
Hotel Franchising Revenues |
$ 105,869 |
$ 98,623 |
$ 184,597 |
$ 174,552 |
|||||
|
Operating Income |
$ 64,942 |
$ 62,917 |
$ 107,815 |
$ 104,321 |
|||||
|
Executive termination benefits |
2,206 |
- |
2,206 |
- |
|||||
|
Non-hotel franchising activities operating loss |
6,084 |
4,699 |
11,740 |
10,000 |
|||||
|
$ 73,232 |
$ 67,616 |
$ 121,761 |
$ 114,321 |
||||||
|
Adjusted Hotel Franchising Margins |
69.2% |
68.6% |
66.0% |
65.5% |
|||||
|
ADJUSTED HOTEL FRANCHISING SELLING, GENERAL AND ADMINISTRATION EXPENSES |
|||||||||
|
(dollar amounts in thousands) |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||
|
2016 |
2015 |
2016 |
2015 |
||||||
|
Total Selling, General and Administrative Expenses |
$ 40,039 |
$ 33,122 |
$ 75,158 |
$ 65,560 |
|||||
|
Executive termination benefits |
(2,206) |
- |
(2,206) |
- |
|||||
|
Non-hotel franchising activities |
(7,045) |
(4,638) |
(13,715) |
(10,133) |
|||||
|
Adjusted Hotel Franchising Selling, General and Administration Expenses |
$ 30,788 |
$ 28,484 |
$ 59,237 |
$ 55,427 |
|||||
|
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA") |
|||||||||
|
(dollar amounts in thousands) |
|||||||||
|
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||
|
2016 |
2015 |
2016 |
2015 |
||||||
|
Net income |
$ 38,822 |
$ 35,813 |
$ 59,985 |
$ 57,407 |
|||||
|
Income taxes |
16,788 |
17,066 |
26,003 |
26,506 |
|||||
|
Interest expense |
11,224 |
11,057 |
22,316 |
21,236 |
|||||
|
Interest income |
(827) |
(277) |
(1,666) |
(623) |
|||||
|
Other gains |
(321) |
(1,173) |
(259) |
(1,641) |
|||||
|
Equity in net (income) loss of affiliates |
(744) |
431 |
1,436 |
1,436 |
|||||
|
Depreciation and amortization |
2,956 |
2,995 |
5,721 |
5,685 |
|||||
|
Executive termination benefits |
2,206 |
- |
2,206 |
- |
|||||
|
Adjusted EBITDA |
$ 70,104 |
$ 65,912 |
$ 115,742 |
$ 110,006 |
|||||
|
Hotel franchising |
$ 75,082 |
$ 70,138 |
$ 125,361 |
$ 119,124 |
|||||
|
Non-hotel franchising activities |
(4,978) |
(4,226) |
(9,619) |
(9,118) |
|||||
|
$ 70,104 |
$ 65,912 |
$ 115,742 |
$ 110,006 |
||||||
|
ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS) |
|||||||||
|
(dollar amounts in thousands, except per share amounts) |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||
|
2016 |
2015 |
2016 |
2015 |
||||||
|
Net Income |
$ 38,822 |
$ 35,813 |
$ 59,985 |
$ 57,407 |
|||||
|
Adjustments: |
|||||||||
|
Executive termination benefits |
1,394 |
- |
1,394 |
- |
|||||
|
Adjusted Net Income |
$ 40,216 |
$ 35,813 |
$ 61,379 |
$ 57,407 |
|||||
|
Diluted Earnings Per Share |
$ 0.68 |
$ 0.62 |
$ 1.06 |
$ 0.99 |
|||||
|
Adjustments: |
|||||||||
|
Executive termination benefits |
0.03 |
- |
0.02 |
- |
|||||
|
Adjusted Diluted Earnings Per Share (EPS) |
$ 0.71 |
$ 0.62 |
$ 1.08 |
$ 0.99 |
|||||
|
ADJUSTED EBITDA AND DILUTED EPS FULL YEAR FORECAST |
|||||||||
|
(dollar amounts in thousands) |
|||||||||
|
Range |
|||||||||
|
Estimated Adjusted EBITDA |
|||||||||
|
Fiscal Year 2016 |
|||||||||
|
Net income |
$ 133,500 |
$ 136,300 |
|||||||
|
Income taxes |
62,000 |
63,200 |
|||||||
|
Interest expense |
45,600 |
45,600 |
|||||||
|
Interest income |
(3,200) |
(3,200) |
|||||||
|
Other gains |
(600) |
(600) |
|||||||
|
Equity in net loss of affiliates |
500 |
500 |
|||||||
|
Depreciation and amortization |
12,000 |
12,000 |
|||||||
|
Executive termination benefits |
2,200 |
2,200 |
|||||||
|
Adjusted EBITDA |
$ 252,000 |
$ 256,000 |
|||||||
|
Hotel franchising |
$ 269,500 |
$ 273,500 |
|||||||
|
Non-hotel franchising activities |
(17,500) |
(17,500) |
|||||||
|
$ 252,000 |
$ 256,000 |
||||||||
|
Range |
|||||||||
|
Estimated Adjusted Diluted EPS |
|||||||||
|
Fiscal Year 2016 |
|||||||||
|
Diluted EPS |
$ 2.36 |
$ 2.41 |
|||||||
|
Adjustments: |
|||||||||
|
Executive termination benefits |
0.02 |
0.02 |
|||||||
|
Adjusted Diluted EPS |
$ 2.38 |
$ 2.43 |
|||||||
Logo - http://photos.prnewswire.com/prnh/20140807/134515
SOURCE Choice Hotels International, Inc.
CONTACT: Scott Oaksmith, Senior Vice President, Finance & Chief Accounting Officer, (301) 592-6659, or Scott Carman, Director, Public Relations, (301) 592-6361
Web Site: http://www.choicehotels.com
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