ROCKVILLE, Md., May 4, 2017 /PRNewswire/ -- Choice Hotels International, Inc. (NYSE: CHH), one of the world's largest hotel companies, today reported its results for the three months ended March 31, 2017. Net income for the first quarter of 2017 was $28.7 million or $0.51 per diluted share, compared with $21.2 million or $0.37 per diluted share for the first quarter of 2016. First quarter adjusted earnings before income taxes, depreciation and amortization (EBITDA) was $56.4 million, compared with $45.6 million in the prior year first quarter, a 24-percent increase.
"Choice Hotels continues to be a leader in the hospitality industry, representing 1 in 10 hotels in the U.S. The success of our first quarter financial and development results builds on our 2016 momentum," said Stephen P. Joyce, chief executive officer. "Our strategic focus to help increase franchisee profitability, grow our development pipeline, and strengthen our core business is reflected in our operating results, highlighted by our continued RevPAR growth and the 51-percent increase in new domestic franchise agreements from the first quarter 2016. More importantly, Choice is optimistic that these positive outcomes will continue for both our franchisees and shareholders."
Highlights of the company's first quarter 2017 results are as follows:
Overall Results
-- Diluted earnings per share (EPS) for the first quarter totaled $0.51, an
increase of 38 percent from the first quarter of the prior year.
-- Net income totaled $28.7 million for the first quarter, an increase of
36 percent from the comparable period of the prior year.
-- Adjusted EBITDA from hotel franchising activities for the first quarter
increased 15 percent from the prior year first quarter to $57.6 million.
-- Adjusted hotel franchising margins for the first quarter increased 300
basis points from the prior year first quarter to 64.6 percent.
Royalties
-- Domestic royalty fees for first quarter totaled $64.5 million, an
increase of 6.6 percent from the first quarter of the prior year.
-- Domestic system-wide revenue per available room (RevPAR) increased 3.8
percent for the first quarter. Occupancy and average daily rates
increased 100 basis points and 1.9 percent, respectively in the first
quarter from the same period of 2016.
-- Domestic RevPAR performance for the first quarter of 2017 exceeded total
industry results by 40 basis points and also exceeded growth reported by
Smith Travel Research for the primary chain scale segments in which the
company competes.
-- The Comfort brands and Sleep Inn recorded 30 and 34 consecutive months
of RevPAR index gains, respectively, compared to its focused
competition.
-- Effective royalty rate increased 17 basis points for the first quarter
of 2017, compared to the same period of the prior year.
-- Domestic franchised hotels, as of March 31, 2017, increased 1.3 percent
from March 31, 2016. Excluding the impact of our Comfort transformation
strategy, our domestic franchised hotels on March 31, 2017, increased
3.0 percent from March 31, 2016.
-- Domestic and international rooms, as of March 31, 2017, increased 0.9
percent and 1.5 percent, respectively, from March 31, 2016.
Development
-- New, approved franchised hotel development contracts totaled 106 in the
first quarter, an increase of 51 percent from the comparable period of
the prior year.
-- New construction and conversion franchise agreements increased 153
percent and 24 percent, respectively, in the first quarter of 2017,
compared to the first quarter of the prior year.
-- The Comfort brands and Sleep Inn represent nearly 70 percent of the
company's new construction franchise agreements, and the number of
Comfort new construction agreements nearly doubled from the comparable
period of the prior year.
-- The domestic new construction pipeline for the company's Sleep Inn brand
as of March 31, 2017, totaled 114 hotels, a 50-percent increase from
March 31, 2016.
-- The company's total domestic pipeline of hotels awaiting conversion,
under construction or approved for development, as of March 31, 2017,
increased 24 percent from March 31, 2016.
-- Domestic relicensing and contract renewal transactions totaled 116 for
the three months ended March 31, 2017, an increase of 8 percent from the
same period of 2016.
Use of Cash Flows
Dividends
During the three months ended March 31, 2017, the company paid cash dividends totaling approximately $12 million. Based on the current quarterly dividend rate of $0.215 per common share, the company expects to pay dividends of approximately $49 million during 2017.
Share Repurchases
The company did not repurchase shares of common stock under its share repurchase program during the three months ended March 31, 2017. The company currently has authorization to purchase up to 4.0 million additional shares under this program.
Hotel Development & Financing
Pursuant to its program to encourage acceleration of the growth of our upscale Cambria hotels & suites brand, the company advanced approximately $43 million in support of the brand's development during the three months ended March 31, 2017. The company also recycled approximately $1 million of prior investments in Cambria development projects, resulting in net advances of $42 million for the current year. Advances under this program are primarily in the form of joint venture investments, forgivable key money loans, senior mortgage loans, development loans, mezzanine lending, and through the operation of a land-banking program. On March 31, 2017, the company had approximately $244 million reflected in its consolidated balance sheet pursuant to these financial support activities. With respect to lending and joint venture investments, the company generally expects to recycle these loans and investments within a five-year period.
Outlook
The company's consolidated 2017 outlook reflects the following assumptions:
Consolidated Outlook
-- Net income for full-year 2017 is expected to range between $157 million
and $160 million.
-- Adjusted EBITDA for full-year 2017 is expected to range between $292
million and $297 million.
-- The company's second-quarter 2017 diluted EPS is expected to range
between $0.75 and $0.77.
-- The company expects full-year 2017 diluted EPS to range between $2.78
and $2.84.
-- The effective tax rate is expected to be approximately 34 percent and 33
percent for the second quarter and full-year 2017, respectively.
-- Diluted EPS estimates are based on the current number of shares
outstanding, and thus do not factor in any changes that may occur due to
new equity grants or any further repurchases of common stock, under the
company's share repurchase program.
-- The EPS and consolidated Adjusted EBITDA estimates assume that we incur
net reductions in Adjusted EBITDA related to non-hotel franchising
activities at the midpoint of the range for these investments.
Hotel Franchising
-- Adjusted EBITDA from hotel franchising activities for full-year 2017 is
expected to range between $297 million and $302 million.
-- Net domestic unit growth for 2017 is expected to range between
approximately 2 percent and 3 percent.
-- RevPAR is expected to increase between 2 percent and 3 percent for the
second quarter and range between 3 percent and 4 percent for full-year
2017.
-- The effective royalty rate is expected to increase between 12 and 14
basis points for full-year 2017 as compared to full-year 2016.
Non-Hotel Franchising Activities
-- Net reductions in full-year 2017 Adjusted EBITDA, relating to our
non-hotel franchising operations, which primarily relate to SkyTouch and
vacation rental activities are expected to range between approximately
$4 million and $6 million.
Conference Call
Choice will conduct a conference call on Thursday, May 4, 2017, at 10:00 a.m. ET to discuss the company's 2017 first quarter results. The dial-in number to listen to the call domestically is 1-855-638-5678 and the number for international participants is 1-920-663-6286. The conference call also will be webcast simultaneously via the company's website, www.choicehotels.com. Interested investors and other parties wishing to access the call via the webcast should go to the website and click on the Investor Info link. The Investor page will feature a conference call microphone icon to access the call.
The call will be recorded and available for replay beginning at 1:00 p.m. ET on Thursday, May 4, 2017, by calling 1-855-859-2056 (domestic) or 1-404-537-3406 (international) and entering access code 3091150. 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 hotel companies. With approximately 6,500 hotels franchised in more than 40 countries and territories, Choice Hotels International represents more than 500,000 rooms around the globe. As of March 31, 2017, 795 hotels were in our development pipeline. Our company's Ascend Hotel Collection®, Cambria® hotels & suites, Comfort Inn®, Comfort Suites®, Sleep Inn®, Quality®, Clarion®, MainStay Suites®, Suburban Extended Stay Hotel®, Econo Lodge®, Rodeway Inn®, and Vacation Rentals by Choice Hotels(TM) brands provide a spectrum of lodging choices to meet guests' needs. With more than 30 million members and counting, our Choice Privileges® rewards program enhances every trip a guest takes, with benefits ranging from instant, every day rewards to exceptional experiences, starting right when they join. All hotels and vacation rentals are independently owned and operated. Visit us at www.choicehotels.com for more information.
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, hotel franchising revenues, adjusted hotel franchising SG&A, Adjusted EBITDA from hotel franchising activities and adjusted hotel franchising margins are non-GAAP financial measurements. These measures should not be considered as an alternative to any measure of performance or liquidity as promulgated under or authorized by generally accepted accounting principles in the United States ("GAAP"), such as net income, total revenues and operating margins. The company's calculation of these measurements may be different from the calculations used by other companies and therefore comparability may be limited. The company has included an exhibit accompanying this release that reconciles these items to the most comparable GAAP financial measures. We discuss management's reasons for reporting these non-GAAP measures below.
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization: Adjusted EBITDA reflects net income excluding the impact of interest expense, interest income, provision for income taxes, depreciation and amortization, other (gains) and losses, equity in net income of unconsolidated affiliates and mark to market adjustments on non-qualified retirement plan investments. We consider adjusted EBITDA to be an indicator of operating performance because we use it to measure our ability to service debt, fund capital expenditures, and expand our business. We also use adjusted EBITDA, as do analysts, lenders, investors and others, to evaluate companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company's capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. Adjusted EBITDA also excludes depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. Mark to market adjustments on non-qualified retirement plan investments recorded in SG&A are excluded from EBITDA as the company accounts for these investments in accordance with accounting for deferred compensation arrangements when investments are held in a rabbi trust and invested. Changes in the fair value of the investments are recognized as both compensation expense in SG&A and other gains and losses. As a result, the changes in the fair value of the investments do not have a material impact on the company's net income. These amounts are excluded from EBITDA as they can vary widely across reporting periods based on the performance of the investments and are not an indicator of the operating performance of the company.
Hotel Franchising Revenues, Adjusted Hotel Franchising EBITDA, Adjusted Hotel Franchising SG&A and Margins: The company reports hotel franchising revenues, adjusted hotel franchising EBITDA, adjusted franchising hotel SG&A and margins which exclude marketing and reservation system revenues; the SkyTouch Technology division; vacation rental activities including operations that provide Software as a Service ("SaaS") technology solutions to vacation rental management companies; and revenue generated from the ownership of an office building that is leased to a third-party. 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 system 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 activities are excluded since they do not reflect the company's core franchising business but are adjacent, complementary lines of business.
© 2017 Choice Hotels International, Inc. All rights reserved.
Choice Hotels International, Inc. and Subsidiaries Exhibit 1
Consolidated Statements of Income
(Unaudited)
Three Months Ended March 31,
----------------------------
Variance
2017 2016 (1) $ %
---- ------- --- ---
(In thousands, except per share amounts)
REVENUES:
Royalty fees $68,989 $64,859 $4,130 6%
Initial franchise and relicensing fees 5,006 5,156 (150) (3%)
Procurement services 6,476 5,796 680 12%
Marketing and reservation system 109,475 126,361 (16,886) (13%)
Other 7,952 4,946 3,006 61%
----- ----- ----- ---
Total revenues 197,898 207,118 (9,220) (4%)
OPERATING EXPENSES:
Selling, general and administrative 32,846 35,119 (2,273) (6%)
Depreciation and amortization 3,070 2,765 305 11%
Marketing and reservation system 109,475 126,361 (16,886) (13%)
------- ------- ------- ----
Total operating expenses 145,391 164,245 (18,854) (11%)
Operating income 52,507 42,873 9,634 22%
OTHER INCOME AND EXPENSES, NET:
Interest expense 11,205 11,092 113 1%
Interest income (1,264) (839) (425) 51%
Other (gains) losses (897) 62 (959) (1547%)
Equity in net (income) loss of affiliates 2,080 2,180 (100) (5%)
Total other income and expenses, net 11,124 12,495 (1,371) (11%)
------ ------ ------ ----
Income before income taxes 41,383 30,378 11,005 36%
Income taxes 12,639 9,215 3,424 37%
------ ----- ----- ---
Net income $28,744 $21,163 $7,581 36%
======= ======= ====== ===
Basic earnings per share $0.51 $0.38 $0.13 34%
===== ===== ===== ===
Diluted earnings per share $0.51 $0.37 $0.14 38%
===== ===== ===== ===
(1)Results for the three months ended March 31, 2016 reflect the adoption of Accounting Standards Update Compensation-Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting ("ASU No. 2016-09") in the second quarter of 2016. ASU 2016-09 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. and Subsidiaries Exhibit 2
Consolidated Balance Sheets
(In thousands, except per share amounts) March 31, December 31,
2017 2016
---- ----
(Unaudited)
ASSETS
Cash and cash equivalents $187,472 $202,463
Accounts receivable, net 117,878 107,336
Other current assets 37,512 35,074
------ ------
342,862 344,873
Total current assets
Fixed assets and intangibles, net 177,075 178,704
Notes receivable, net of allowances 123,878 110,608
Investments in unconsolidated entities 123,550 94,839
Investments, employee benefit plans, at fair value 18,755 16,975
Other assets 118,012 106,469
------- -------
$904,132 $852,468
Total assets
---
LIABILITIES AND SHAREHOLDERS' DEFICIT
Accounts payable $59,090 $48,071
Accrued expenses and other current liabilities 67,933 81,184
Deferred revenue 145,833 133,218
Current portion of long-term debt 1,225 1,195
----- -----
274,081 263,668
Total current liabilities
Long-term debt 862,389 839,409
Deferred compensation & retirement plan obligations 23,044 21,595
Other liabilities 37,105 39,145
------ ------
1,196,619 1,163,817
Total liabilities
(292,487) (311,349)
Total shareholders' deficit
$904,132 $852,468
Total liabilities and shareholders' deficit
---
Choice Hotels International, Inc. and Subsidiaries Exhibit 3
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands) Three Months Ended March 31,
----------------------------
2017 2016 (1)
---- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $28,744 $21,163
Adjustments to reconcile net income to net cash provided (used)
by operating activities:
Depreciation and amortization 3,070 2,765
(Gain) loss on disposal of assets - 9
Provision for bad debts, net 561 655
Non-cash stock compensation and other charges 3,681 3,354
Non-cash interest and other (income) loss (301) 667
Deferred income taxes (1,900) 6,198
Equity in net losses from unconsolidated joint ventures less distributions received 2,386 2,471
Changes in assets and liabilities:
Receivables (11,365) (14,473)
Advances to/from marketing and reservation activities, net (216) (39,804)
Forgivable notes receivable, net (4,483) (6,464)
Accounts payable 9,203 (3,980)
Accrued expenses and other current liabilities (25,048) (24,521)
Income taxes payable/receivable 13,012 (1,788)
Deferred revenue 12,579 40,458
Other assets (4,958) (7,238)
Other liabilities (751) (842)
---- ----
NET CASH PROVIDED BY (USED) IN OPERATING ACTIVITIES 24,214 (21,370)
------ -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment (4,718) (5,306)
Investment in intangible assets (2,088) (162)
Proceeds from sales of assets - 1,700
Acquisitions of real estate - (25,389)
Contributions to equity method investments (31,610) (4,293)
Distributions from equity method investments 510 67
Purchases of investments, employee benefit plans (1,424) (896)
Proceeds from sales of investments, employee benefit plans 843 363
Issuance of mezzanine and other notes receivable (9,863) (7,487)
Collections of mezzanine and other notes receivable 522 109
Other items, net (4) 26
--- ---
NET CASH USED IN INVESTING ACTIVITIES (47,832) (41,268)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings pursuant to revolving credit facilities 22,800 79,267
Principal payments on long-term debt (153) (318)
Purchases of treasury stock (7,271) (8,857)
Dividends paid (12,139) (11,612)
Proceeds from exercise of stock options 4,963 4,137
----- -----
NET CASH PROVIDED BY FINANCING ACTIVITIES 8,200 62,617
----- ------
Net change in cash and cash equivalents (15,418) (21)
Effect of foreign exchange rate changes on cash and cash equivalents 427 652
Cash and cash equivalents at beginning of period 202,463 193,441
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $187,472 $194,072
======== ========
(1) Results for the three months ended March 31, 2016 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 adopted this ASU in the second quarter of 2016 and elected to apply the ASU retrospectively. As a result,
excess tax benefits totaling $1.6 million for the three months ended March 31, 2016 have been reclassified from cash flows from
financing activities to cash flows from operating activities
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES Exhibit 4
SUPPLEMENTAL OPERATING INFORMATION
DOMESTIC HOTEL SYSTEM
(UNAUDITED)
For the Three Months Ended March 31, 2017 For the Three Months Ended March 31, 2016 Change
----------------------------------------- ----------------------------------------- ------
Average Daily Average Daily Average Daily
Rate Occupancy RevPAR Rate Occupancy RevPAR Rate Occupancy RevPAR
---- --------- ------ ---- --------- ------ ---- --------- ------
Comfort Inn $87.03 58.5% $50.90 $85.39 57.7% $49.27 1.9% 80 bps 3.3%
Comfort Suites 93.40 65.1% 60.84 92.40 64.1% 59.26 1.1% 100 bps 2.7%
Sleep 79.20 60.0% 47.54 77.71 58.7% 45.61 1.9% 130 bps 4.2%
Quality 73.76 53.1% 39.20 72.23 52.2% 37.72 2.1% 90 bps 3.9%
Clarion 78.05 53.6% 41.83 75.90 50.1% 38.06 2.8% 350 bps 9.9%
Econo Lodge 57.33 48.6% 27.84 55.99 47.3% 26.46 2.4% 130 bps 5.2%
Rodeway 59.63 51.1% 30.49 57.77 51.0% 29.47 3.2% 10 bps 3.5%
MainStay 71.66 61.7% 44.21 72.91 57.9% 42.23 (1.7%) 380 bps 4.7%
Suburban 51.01 74.2% 37.82 48.28 73.0% 35.26 5.7% 120 bps 7.3%
Cambria hotel & suites 122.24 68.1% 83.26 NA NA NA NA NA NA
Ascend Hotel Collection 117.29 51.3% 60.21 115.55 53.7% 62.01 1.5% (240) bps (2.9%)
------ ---- ----- ------ ---- ----- --- ---- --- -----
Total (1) $78.41 56.1% $43.98 $76.92 55.1% $42.39 1.9% 100 bps 3.8%
====== ==== ====== ====== ==== ====== === === === ===
For the Quarter Ended
---------------------
3/31/2017 3/31/2016
System-wide effective royalty rate 4.55% 4.38% (1)
(1)Totals for the three months ended March 31, 2016 have been revised from previous disclosures to include the operating statistics for the Cambria hotel & suites brand
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES Exhibit 5
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA
(UNAUDITED)
March 31, 2017 March 31, 2016 Variance
-------------- -------------- --------
Hotels Rooms Hotels Rooms Hotels Rooms % %
------ ----- ------ ----- ------ ----- --- ---
Comfort Inn 1,103 85,583 1,143 88,294 (40) (2,711) (3.5%) (3.1%)
Comfort Suites 566 43,740 566 43,669 - 71 0.0% 0.2%
Sleep 382 27,301 379 27,139 3 162 0.8% 0.6%
Quality 1,457 114,837 1,394 111,124 63 3,713 4.5% 3.3%
Clarion 161 22,159 172 23,893 (11) (1,734) (6.4%) (7.3%)
Econo Lodge 845 52,113 853 52,784 (8) (671) (0.9%) (1.3%)
Rodeway 558 32,103 519 28,931 39 3,172 7.5% 11.0%
MainStay 57 4,148 54 4,019 3 129 5.6% 3.2%
Suburban 59 6,598 59 6,634 - (36) 0.0% (0.5%)
Cambria hotel & suites 28 3,667 25 3,113 3 554 12.0% 17.8%
Ascend Hotel Collection 127 10,451 112 9,378 15 1,073 13.4% 11.4%
--- ------ --- ----- --- ----- ---- ----
Domestic Franchises 5,343 402,700 5,276 398,978 67 3,722 1.3% 0.9%
International Franchises 1,151 112,672 1,169 110,984 (18) 1,688 (1.5%) 1.5%
----- ------- ----- ------- --- ----- ----- ---
Total Franchises 6,494 515,372 6,445 509,962 49 5,410 0.8% 1.1%
===== ======= ===== ======= === ===== === ===
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES Exhibit 6
SUPPLEMENTAL INFORMATION BY BRAND
DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS
(UNAUDITED)
For the Three Months Ended March 31, 2017 For the Three Months Ended March 31,
2016 % Change
----------------------------------------- ------------------------------------- --------
New New New
Construction Conversion Total Construction Conversion Total Construction Conversion Total
------------ ---------- ----- ------------ ---------- ----- ------------ ---------- -----
Comfort Inn 7 10 17 6 4 10 17% 150% 70%
Comfort Suites 8 - 8 2 - 2 300% NM 300%
Sleep 11 2 13 2 - 2 450% NM 550%
Quality 1 21 22 - 23 23 NM (9%) (4%)
Clarion - 3 3 1 3 4 (100%) 0% (25%)
Econo Lodge - 7 7 - 14 14 NM (50%) (50%)
Rodeway - 21 21 - 10 10 NM 110% 110%
MainStay 9 - 9 1 - 1 800% NM 800%
Suburban - - - - - - NM NM NM
Ascend Hotel Collection 1 4 5 1 1 2 0% 300% 150%
Cambria hotel & suites 1 - 1 2 - 2 (50%) NM (50%)
--- --- --- --- --- --- ---- --- ----
Total Domestic System 38 68 106 15 55 70 153% 24% 51%
=== === === === === === === === ===
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES Exhibit 7
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
--------
March 31, 2017 March 31, 2016
Units Units Conversion New Construction Total
----- ----- ---------- ---------------- -----
Conversion New Total Conversion New Total Units % Units % Units %
Construction Construction
------------ ------------
Comfort Inn 40 96 136 35 84 119 5 14% 12 14% 17 14%
Comfort Suites 3 117 120 3 92 95 - 0% 25 27% 25 26%
Sleep Inn 2 114 116 - 76 76 2 NM 38 50% 40 53%
Quality 51 6 57 47 5 52 4 9% 1 20% 5 10%
Clarion 17 4 21 7 3 10 10 143% 1 33% 11 110%
Econo Lodge 25 4 29 26 4 30 (1) (4%) - 0% (1) (3%)
Rodeway 38 1 39 40 2 42 (2) (5%) (1) (50%) (3) (7%)
MainStay - 80 80 - 55 55 - NM 25 45% 25 45%
Suburban 4 4 8 4 8 12 - 0% (4) (50%) (4) (33%)
Ascend Hotel Collection 34 23 57 27 20 47 7 26% 3 15% 10 21%
Cambria hotel & suites 5 56 61 5 39 44 - 0% 17 44% 17 39%
--- --- --- --- --- --- --- --- --- --- --- ---
219 505 724 194 388 582 25 13% 117 30% 142 24%
=== === === === === === === === === === === ===
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES Exhibit 8
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
(UNAUDITED)
HOTEL FRANCHISING REVENUES AND ADJUSTED HOTEL FRANCHISING MARGINS
(dollar amounts in thousands) Three Months Ended March 31,
----------------------------
2017 2016
---- ----
Hotel Franchising Revenues:
$197,898 $207,118
Total Revenues
Adjustments:
Marketing and reservation system revenues (109,475) (126,361)
Non-hotel franchising activities (2,555) (2,029)
$85,868 $78,728
Hotel Franchising Revenues
Adjusted Hotel Franchising Margins:
Operating Margin:
$197,898 $207,118
Total Revenues
$52,507 $42,873
Operating Income
Operating Margin 26.5% 20.7%
---- ----
Adjusted Hotel Franchising Margin:
$85,868 $78,728
Hotel Franchising Revenues
$52,507 $42,873
Operating Income
$851 $(60)
Mark to market adjustments on non-qualified retirement plan investments
2,105 5,656
Non-hotel franchising activities operating loss
$55,463 $48,469
Adjusted Hotel Franchising Operating Income
64.6% 61.6%
Adjusted Hotel Franchising Margins
---
ADJUSTED HOTEL FRANCHISING SELLING, GENERAL AND ADMINISTRATION EXPENSES
(dollar amounts in thousands) Three Months Ended March 31,
----------------------------
2017 2016
---- ----
$32,846 $35,119
Total Selling, General and Administrative Expenses
$(851) $60
Mark to market adjustments on non-qualified retirement plan investments
(3,680) (6,670)
Non-hotel franchising activities
$28,315 $28,509
Adjusted Hotel Franchising Selling, General and Administration Expenses
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA")
(dollar amounts in thousands)
Three Months Ended March 31,
----------------------------
2017 2016
---- ----
Net income $28,744 $21,163
12,639 9,215
Income taxes
11,205 11,092
Interest expense
(1,264) (839)
Interest income
(897) 62
Other (gains) losses
2,080 2,180
Equity in net (income) loss of affiliates
3,070 2,765
Depreciation and amortization
851 (60)
Mark to market adjustments on non-qualified retirement plan investments
---
Adjusted EBITDA $56,428 $45,578
======= =======
Hotel franchising $57,553 $50,219
Non-hotel franchising activities (1,125) (4,641)
$56,428 $45,578
======= =======
ADJUSTED EBITDA FULL YEAR FORECAST
(dollar amounts in thousands)
Range
-----
Estimated Adjusted EBITDA
Fiscal Year 2017
----------------
Net income $157,100 $160,500
77,400 79,000
Income taxes
47,300 47,300
Interest expense
(4,500) (4,500)
Interest income
- -
Gain on sale of assets
(850) (850)
Other gains
1,600 1,600
Equity in net loss of affiliates
13,100 13,100
Depreciation and amortization
850 850
Mark to market adjustments on non-qualified retirement plan investments
Adjusted EBITDA $292,000 $297,000
======== ========
Hotel franchising $297,000 $302,000
Non-hotel franchising activities (5,000) (5,000)
$292,000 $297,000
======== ========
SOURCE Choice Hotels International, Inc.
SOURCE: Choice Hotels International, Inc.
PR Newswire
ROCKVILLE, Md., May 4, 2017
ROCKVILLE, Md., May 4, 2017 /PRNewswire/ -- Choice Hotels International, Inc. (NYSE: CHH), one of the world's largest hotel companies, today reported its results for the three months ended March 31, 2017. Net income for the first quarter of 2017 was $28.7 million or $0.51 per diluted share, compared with $21.2 million or $0.37 per diluted share for the first quarter of 2016. First quarter adjusted earnings before income taxes, depreciation and amortization (EBITDA) was $56.4 million, compared with $45.6 million in the prior year first quarter, a 24-percent increase.
"Choice Hotels continues to be a leader in the hospitality industry, representing 1 in 10 hotels in the U.S. The success of our first quarter financial and development results builds on our 2016 momentum," said Stephen P. Joyce, chief executive officer. "Our strategic focus to help increase franchisee profitability, grow our development pipeline, and strengthen our core business is reflected in our operating results, highlighted by our continued RevPAR growth and the 51-percent increase in new domestic franchise agreements from the first quarter 2016. More importantly, Choice is optimistic that these positive outcomes will continue for both our franchisees and shareholders."
Highlights of the company's first quarter 2017 results are as follows:
Overall Results
Royalties
Development
Use of Cash Flows
Dividends
During the three months ended March 31, 2017, the company paid cash dividends totaling approximately $12 million. Based on the current quarterly dividend rate of $0.215 per common share, the company expects to pay dividends of approximately $49 million during 2017.
Share Repurchases
The company did not repurchase shares of common stock under its share repurchase program during the three months ended March 31, 2017. The company currently has authorization to purchase up to 4.0 million additional shares under this program.
Hotel Development & Financing
Pursuant to its program to encourage acceleration of the growth of our upscale Cambria hotels & suites brand, the company advanced approximately $43 million in support of the brand's development during the three months ended March 31, 2017. The company also recycled approximately $1 million of prior investments in Cambria development projects, resulting in net advances of $42 million for the current year. Advances under this program are primarily in the form of joint venture investments, forgivable key money loans, senior mortgage loans, development loans, mezzanine lending, and through the operation of a land-banking program. On March 31, 2017, the company had approximately $244 million reflected in its consolidated balance sheet pursuant to these financial support activities. With respect to lending and joint venture investments, the company generally expects to recycle these loans and investments within a five-year period.
Outlook
The company's consolidated 2017 outlook reflects the following assumptions:
Consolidated Outlook
Hotel Franchising
Non-Hotel Franchising Activities
Conference Call
Choice will conduct a conference call on Thursday, May 4, 2017, at 10:00 a.m. ET to discuss the company's 2017 first quarter results. The dial-in number to listen to the call domestically is 1-855-638-5678 and the number for international participants is 1-920-663-6286. The conference call also will be webcast simultaneously via the company's website, www.choicehotels.com. Interested investors and other parties wishing to access the call via the webcast should go to the website and click on the Investor Info link. The Investor page will feature a conference call microphone icon to access the call.
The call will be recorded and available for replay beginning at 1:00 p.m. ET on Thursday, May 4, 2017, by calling 1-855-859-2056 (domestic) or 1-404-537-3406 (international) and entering access code 3091150. 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 hotel companies. With approximately 6,500 hotels franchised in more than 40 countries and territories, Choice Hotels International represents more than 500,000 rooms around the globe. As of March 31, 2017, 795 hotels were in our development pipeline. Our company's Ascend Hotel Collection®, Cambria® hotels & suites, Comfort Inn®, Comfort Suites®, Sleep Inn®, Quality®, Clarion®, MainStay Suites®, Suburban Extended Stay Hotel®, Econo Lodge®, Rodeway Inn®, and Vacation Rentals by Choice Hotels™ brands provide a spectrum of lodging choices to meet guests' needs. With more than 30 million members and counting, our Choice Privileges® rewards program enhances every trip a guest takes, with benefits ranging from instant, every day rewards to exceptional experiences, starting right when they join. All hotels and vacation rentals are independently owned and operated. Visit us at www.choicehotels.com for more information.
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, hotel franchising revenues, adjusted hotel franchising SG&A, Adjusted EBITDA from hotel franchising activities and adjusted hotel franchising margins are non-GAAP financial measurements. These measures should not be considered as an alternative to any measure of performance or liquidity as promulgated under or authorized by generally accepted accounting principles in the United States ("GAAP"), such as net income, total revenues and operating margins. The company's calculation of these measurements may be different from the calculations used by other companies and therefore comparability may be limited. The company has included an exhibit accompanying this release that reconciles these items to the most comparable GAAP financial measures. We discuss management's reasons for reporting these non-GAAP measures below.
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization: Adjusted EBITDA reflects net income excluding the impact of interest expense, interest income, provision for income taxes, depreciation and amortization, other (gains) and losses, equity in net income of unconsolidated affiliates and mark to market adjustments on non-qualified retirement plan investments. We consider adjusted EBITDA to be an indicator of operating performance because we use it to measure our ability to service debt, fund capital expenditures, and expand our business. We also use adjusted EBITDA, as do analysts, lenders, investors and others, to evaluate companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company's capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. Adjusted EBITDA also excludes depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. Mark to market adjustments on non-qualified retirement plan investments recorded in SG&A are excluded from EBITDA as the company accounts for these investments in accordance with accounting for deferred compensation arrangements when investments are held in a rabbi trust and invested. Changes in the fair value of the investments are recognized as both compensation expense in SG&A and other gains and losses. As a result, the changes in the fair value of the investments do not have a material impact on the company's net income. These amounts are excluded from EBITDA as they can vary widely across reporting periods based on the performance of the investments and are not an indicator of the operating performance of the company.
Hotel Franchising Revenues, Adjusted Hotel Franchising EBITDA, Adjusted Hotel Franchising SG&A and Margins: The company reports hotel franchising revenues, adjusted hotel franchising EBITDA, adjusted franchising hotel SG&A and margins which exclude marketing and reservation system revenues; the SkyTouch Technology division; vacation rental activities including operations that provide Software as a Service ("SaaS") technology solutions to vacation rental management companies; and revenue generated from the ownership of an office building that is leased to a third-party. 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 system 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 activities are excluded since they do not reflect the company's core franchising business but are adjacent, complementary lines of business.
© 2017 Choice Hotels International, Inc. All rights reserved.
|
Choice Hotels International, Inc. and Subsidiaries |
Exhibit 1 |
||||||
|
Consolidated Statements of Income |
|||||||
|
(Unaudited) |
|||||||
|
Three Months Ended March 31, |
|||||||
|
Variance |
|||||||
|
2017 |
2016 (1) |
$ |
% |
||||
|
(In thousands, except per share amounts) |
|||||||
|
REVENUES: |
|||||||
|
Royalty fees |
$ 68,989 |
$ 64,859 |
$ 4,130 |
6% |
|||
|
Initial franchise and relicensing fees |
5,006 |
5,156 |
(150) |
(3%) |
|||
|
Procurement services |
6,476 |
5,796 |
680 |
12% |
|||
|
Marketing and reservation system |
109,475 |
126,361 |
(16,886) |
(13%) |
|||
|
Other |
7,952 |
4,946 |
3,006 |
61% |
|||
|
Total revenues |
197,898 |
207,118 |
(9,220) |
(4%) |
|||
|
OPERATING EXPENSES: |
|||||||
|
Selling, general and administrative |
32,846 |
35,119 |
(2,273) |
(6%) |
|||
|
Depreciation and amortization |
3,070 |
2,765 |
305 |
11% |
|||
|
Marketing and reservation system |
109,475 |
126,361 |
(16,886) |
(13%) |
|||
|
Total operating expenses |
145,391 |
164,245 |
(18,854) |
(11%) |
|||
|
Operating income |
52,507 |
42,873 |
9,634 |
22% |
|||
|
OTHER INCOME AND EXPENSES, NET: |
|||||||
|
Interest expense |
11,205 |
11,092 |
113 |
1% |
|||
|
Interest income |
(1,264) |
(839) |
(425) |
51% |
|||
|
Other (gains) losses |
(897) |
62 |
(959) |
(1547%) |
|||
|
Equity in net (income) loss of affiliates |
2,080 |
2,180 |
(100) |
(5%) |
|||
|
Total other income and expenses, net |
11,124 |
12,495 |
(1,371) |
(11%) |
|||
|
Income before income taxes |
41,383 |
30,378 |
11,005 |
36% |
|||
|
Income taxes |
12,639 |
9,215 |
3,424 |
37% |
|||
|
Net income |
$ 28,744 |
$ 21,163 |
$ 7,581 |
36% |
|||
|
Basic earnings per share |
$ 0.51 |
$ 0.38 |
$ 0.13 |
34% |
|||
|
Diluted earnings per share |
$ 0.51 |
$ 0.37 |
$ 0.14 |
38% |
|||
|
(1)Results for the three months ended March 31, 2016 reflect the adoption of Accounting Standards Update Compensation-Stock Compensation (Topic 718): |
|||||||
|
Improvements to Employee Share-Based Payment Accounting ("ASU No. 2016-09") in the second quarter of 2016. ASU 2016-09 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. and Subsidiaries |
Exhibit 2 |
||
|
Consolidated Balance Sheets |
|||
|
(In thousands, except per share amounts) |
March 31, |
December 31, |
|
|
2017 |
2016 |
||
|
(Unaudited) |
|||
|
ASSETS |
|||
|
Cash and cash equivalents |
$ 187,472 |
$ 202,463 |
|
|
Accounts receivable, net |
117,878 |
107,336 |
|
|
Other current assets |
37,512 |
35,074 |
|
|
Total current assets |
342,862 |
344,873 |
|
|
Fixed assets and intangibles, net |
177,075 |
178,704 |
|
|
Notes receivable, net of allowances |
123,878 |
110,608 |
|
|
Investments in unconsolidated entities |
123,550 |
94,839 |
|
|
Investments, employee benefit plans, at fair value |
18,755 |
16,975 |
|
|
Other assets |
118,012 |
106,469 |
|
|
Total assets |
$ 904,132 |
$ 852,468 |
|
|
LIABILITIES AND SHAREHOLDERS' DEFICIT |
|||
|
Accounts payable |
$ 59,090 |
$ 48,071 |
|
|
Accrued expenses and other current liabilities |
67,933 |
81,184 |
|
|
Deferred revenue |
145,833 |
133,218 |
|
|
Current portion of long-term debt |
1,225 |
1,195 |
|
|
Total current liabilities |
274,081 |
263,668 |
|
|
Long-term debt |
862,389 |
839,409 |
|
|
Deferred compensation & retirement plan obligations |
23,044 |
21,595 |
|
|
Other liabilities |
37,105 |
39,145 |
|
|
Total liabilities |
1,196,619 |
1,163,817 |
|
|
Total shareholders' deficit |
(292,487) |
(311,349) |
|
|
Total liabilities and shareholders' deficit |
$ 904,132 |
$ 852,468 |
|
|
Choice Hotels International, Inc. and Subsidiaries |
Exhibit 3 |
||
|
Consolidated Statements of Cash Flows |
|||
|
(Unaudited) |
|||
|
(In thousands) |
Three Months Ended March 31, |
||
|
2017 |
2016 (1) |
||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||
|
Net income |
$ 28,744 |
$ 21,163 |
|
|
Adjustments to reconcile net income to net cash provided (used) |
|||
|
by operating activities: |
|||
|
Depreciation and amortization |
3,070 |
2,765 |
|
|
(Gain) loss on disposal of assets |
- |
9 |
|
|
Provision for bad debts, net |
561 |
655 |
|
|
Non-cash stock compensation and other charges |
3,681 |
3,354 |
|
|
Non-cash interest and other (income) loss |
(301) |
667 |
|
|
Deferred income taxes |
(1,900) |
6,198 |
|
|
Equity in net losses from unconsolidated joint ventures less distributions received |
2,386 |
2,471 |
|
|
Changes in assets and liabilities: |
|||
|
Receivables |
(11,365) |
(14,473) |
|
|
Advances to/from marketing and reservation activities, net |
(216) |
(39,804) |
|
|
Forgivable notes receivable, net |
(4,483) |
(6,464) |
|
|
Accounts payable |
9,203 |
(3,980) |
|
|
Accrued expenses and other current liabilities |
(25,048) |
(24,521) |
|
|
Income taxes payable/receivable |
13,012 |
(1,788) |
|
|
Deferred revenue |
12,579 |
40,458 |
|
|
Other assets |
(4,958) |
(7,238) |
|
|
Other liabilities |
(751) |
(842) |
|
|
NET CASH PROVIDED BY (USED) IN OPERATING ACTIVITIES |
24,214 |
(21,370) |
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||
|
Investment in property and equipment |
(4,718) |
(5,306) |
|
|
Investment in intangible assets |
(2,088) |
(162) |
|
|
Proceeds from sales of assets |
- |
1,700 |
|
|
Acquisitions of real estate |
- |
(25,389) |
|
|
Contributions to equity method investments |
(31,610) |
(4,293) |
|
|
Distributions from equity method investments |
510 |
67 |
|
|
Purchases of investments, employee benefit plans |
(1,424) |
(896) |
|
|
Proceeds from sales of investments, employee benefit plans |
843 |
363 |
|
|
Issuance of mezzanine and other notes receivable |
(9,863) |
(7,487) |
|
|
Collections of mezzanine and other notes receivable |
522 |
109 |
|
|
Other items, net |
(4) |
26 |
|
|
NET CASH USED IN INVESTING ACTIVITIES |
(47,832) |
(41,268) |
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|||
|
Net borrowings pursuant to revolving credit facilities |
22,800 |
79,267 |
|
|
Principal payments on long-term debt |
(153) |
(318) |
|
|
Purchases of treasury stock |
(7,271) |
(8,857) |
|
|
Dividends paid |
(12,139) |
(11,612) |
|
|
Proceeds from exercise of stock options |
4,963 |
4,137 |
|
|
NET CASH PROVIDED BY FINANCING ACTIVITIES |
8,200 |
62,617 |
|
|
Net change in cash and cash equivalents |
(15,418) |
(21) |
|
|
Effect of foreign exchange rate changes on cash and cash equivalents |
427 |
652 |
|
|
Cash and cash equivalents at beginning of period |
202,463 |
193,441 |
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ 187,472 |
$ 194,072 |
|
|
(1) |
Results for the three months ended March 31, 2016 reflect the adoption of ASU No. 2016-09, which requires companies to recognize |
|
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES |
Exhibit 4 |
|||||||||||||||||
|
SUPPLEMENTAL OPERATING INFORMATION |
||||||||||||||||||
|
DOMESTIC HOTEL SYSTEM |
||||||||||||||||||
|
(UNAUDITED) |
||||||||||||||||||
|
For the Three Months Ended March 31, 2017 |
For the Three Months Ended March 31, 2016 |
Change |
||||||||||||||||
|
Average Daily |
Average Daily |
Average Daily |
||||||||||||||||
|
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
||||||||||
|
Comfort Inn |
$ 87.03 |
58.5% |
$ 50.90 |
$ 85.39 |
57.7% |
$ 49.27 |
1.9% |
80 |
bps |
3.3% |
||||||||
|
Comfort Suites |
93.40 |
65.1% |
60.84 |
92.40 |
64.1% |
59.26 |
1.1% |
100 |
bps |
2.7% |
||||||||
|
Sleep |
79.20 |
60.0% |
47.54 |
77.71 |
58.7% |
45.61 |
1.9% |
130 |
bps |
4.2% |
||||||||
|
Quality |
73.76 |
53.1% |
39.20 |
72.23 |
52.2% |
37.72 |
2.1% |
90 |
bps |
3.9% |
||||||||
|
Clarion |
78.05 |
53.6% |
41.83 |
75.90 |
50.1% |
38.06 |
2.8% |
350 |
bps |
9.9% |
||||||||
|
Econo Lodge |
57.33 |
48.6% |
27.84 |
55.99 |
47.3% |
26.46 |
2.4% |
130 |
bps |
5.2% |
||||||||
|
Rodeway |
59.63 |
51.1% |
30.49 |
57.77 |
51.0% |
29.47 |
3.2% |
10 |
bps |
3.5% |
||||||||
|
MainStay |
71.66 |
61.7% |
44.21 |
72.91 |
57.9% |
42.23 |
(1.7%) |
380 |
bps |
4.7% |
||||||||
|
Suburban |
51.01 |
74.2% |
37.82 |
48.28 |
73.0% |
35.26 |
5.7% |
120 |
bps |
7.3% |
||||||||
|
Cambria hotel & suites |
122.24 |
68.1% |
83.26 |
NA |
NA |
NA |
NA |
NA |
NA |
|||||||||
|
Ascend Hotel Collection |
117.29 |
51.3% |
60.21 |
115.55 |
53.7% |
62.01 |
1.5% |
(240) |
bps |
(2.9%) |
||||||||
|
Total (1) |
$ 78.41 |
56.1% |
$ 43.98 |
$ 76.92 |
55.1% |
$ 42.39 |
1.9% |
100 |
bps |
3.8% |
||||||||
|
For the Quarter Ended |
||||||||||||||||||
|
3/31/2017 |
3/31/2016 |
|||||||||||||||||
|
System-wide effective royalty rate |
4.55% |
4.38% |
(1) |
|||||||||||||||
|
(1)Totals for the three months ended March 31, 2016 have been revised from previous disclosures to include the operating statistics for the Cambria hotel & suites brand |
||||||||||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES |
Exhibit 5 |
||||||||||||||
|
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA |
|||||||||||||||
|
(UNAUDITED) |
|||||||||||||||
|
March 31, 2017 |
March 31, 2016 |
Variance |
|||||||||||||
|
Hotels |
Rooms |
Hotels |
Rooms |
Hotels |
Rooms |
% |
% |
||||||||
|
Comfort Inn |
1,103 |
85,583 |
1,143 |
88,294 |
(40) |
(2,711) |
(3.5%) |
(3.1%) |
|||||||
|
Comfort Suites |
566 |
43,740 |
566 |
43,669 |
- |
71 |
0.0% |
0.2% |
|||||||
|
Sleep |
382 |
27,301 |
379 |
27,139 |
3 |
162 |
0.8% |
0.6% |
|||||||
|
Quality |
1,457 |
114,837 |
1,394 |
111,124 |
63 |
3,713 |
4.5% |
3.3% |
|||||||
|
Clarion |
161 |
22,159 |
172 |
23,893 |
(11) |
(1,734) |
(6.4%) |
(7.3%) |
|||||||
|
Econo Lodge |
845 |
52,113 |
853 |
52,784 |
(8) |
(671) |
(0.9%) |
(1.3%) |
|||||||
|
Rodeway |
558 |
32,103 |
519 |
28,931 |
39 |
3,172 |
7.5% |
11.0% |
|||||||
|
MainStay |
57 |
4,148 |
54 |
4,019 |
3 |
129 |
5.6% |
3.2% |
|||||||
|
Suburban |
59 |
6,598 |
59 |
6,634 |
- |
(36) |
0.0% |
(0.5%) |
|||||||
|
Cambria hotel & suites |
28 |
3,667 |
25 |
3,113 |
3 |
554 |
12.0% |
17.8% |
|||||||
|
Ascend Hotel Collection |
127 |
10,451 |
112 |
9,378 |
15 |
1,073 |
13.4% |
11.4% |
|||||||
|
Domestic Franchises |
5,343 |
402,700 |
5,276 |
398,978 |
67 |
3,722 |
1.3% |
0.9% |
|||||||
|
International Franchises |
1,151 |
112,672 |
1,169 |
110,984 |
(18) |
1,688 |
(1.5%) |
1.5% |
|||||||
|
Total Franchises |
6,494 |
515,372 |
6,445 |
509,962 |
49 |
5,410 |
0.8% |
1.1% |
|||||||
|
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES |
Exhibit 6 |
||||||||||||||||
|
SUPPLEMENTAL INFORMATION BY BRAND |
|||||||||||||||||
|
DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS |
|||||||||||||||||
|
(UNAUDITED) |
|||||||||||||||||
|
For the Three Months Ended March 31, 2017 |
For the Three Months Ended March 31, 2016 |
% Change |
|||||||||||||||
|
New |
New |
New |
|||||||||||||||
|
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
Construction |
Conversion |
Total |
|||||||||
|
Comfort Inn |
7 |
10 |
17 |
6 |
4 |
10 |
17% |
150% |
70% |
||||||||
|
Comfort Suites |
8 |
- |
8 |
2 |
- |
2 |
300% |
NM |
300% |
||||||||
|
Sleep |
11 |
2 |
13 |
2 |
- |
2 |
450% |
NM |
550% |
||||||||
|
Quality |
1 |
21 |
22 |
- |
23 |
23 |
NM |
(9%) |
(4%) |
||||||||
|
Clarion |
- |
3 |
3 |
1 |
3 |
4 |
(100%) |
0% |
(25%) |
||||||||
|
Econo Lodge |
- |
7 |
7 |
- |
14 |
14 |
NM |
(50%) |
(50%) |
||||||||
|
Rodeway |
- |
21 |
21 |
- |
10 |
10 |
NM |
110% |
110% |
||||||||
|
MainStay |
9 |
- |
9 |
1 |
- |
1 |
800% |
NM |
800% |
||||||||
|
Suburban |
- |
- |
- |
- |
- |
- |
NM |
NM |
NM |
||||||||
|
Ascend Hotel Collection |
1 |
4 |
5 |
1 |
1 |
2 |
0% |
300% |
150% |
||||||||
|
Cambria hotel & suites |
1 |
- |
1 |
2 |
- |
2 |
(50%) |
NM |
(50%) |
||||||||
|
Total Domestic System |
38 |
68 |
106 |
15 |
55 |
70 |
153% |
24% |
51% |
||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES |
Exhibit 7 |
|||||||||||||||||||||||
|
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 |
||||||||||||||||||||||||
|
March 31, 2017 |
March 31, 2016 |
|||||||||||||||||||||||
|
Units |
Units |
Conversion |
New Construction |
Total |
||||||||||||||||||||
|
Conversion |
New |
Total |
Conversion |
New |
Total |
Units |
% |
Units |
% |
Units |
% |
|||||||||||||
|
Comfort Inn |
40 |
96 |
136 |
35 |
84 |
119 |
5 |
14% |
12 |
14% |
17 |
14% |
||||||||||||
|
Comfort Suites |
3 |
117 |
120 |
3 |
92 |
95 |
- |
0% |
25 |
27% |
25 |
26% |
||||||||||||
|
Sleep Inn |
2 |
114 |
116 |
- |
76 |
76 |
2 |
NM |
38 |
50% |
40 |
53% |
||||||||||||
|
Quality |
51 |
6 |
57 |
47 |
5 |
52 |
4 |
9% |
1 |
20% |
5 |
10% |
||||||||||||
|
Clarion |
17 |
4 |
21 |
7 |
3 |
10 |
10 |
143% |
1 |
33% |
11 |
110% |
||||||||||||
|
Econo Lodge |
25 |
4 |
29 |
26 |
4 |
30 |
(1) |
(4%) |
- |
0% |
(1) |
(3%) |
||||||||||||
|
Rodeway |
38 |
1 |
39 |
40 |
2 |
42 |
(2) |
(5%) |
(1) |
(50%) |
(3) |
(7%) |
||||||||||||
|
MainStay |
- |
80 |
80 |
- |
55 |
55 |
- |
NM |
25 |
45% |
25 |
45% |
||||||||||||
|
Suburban |
4 |
4 |
8 |
4 |
8 |
12 |
- |
0% |
(4) |
(50%) |
(4) |
(33%) |
||||||||||||
|
Ascend Hotel Collection |
34 |
23 |
57 |
27 |
20 |
47 |
7 |
26% |
3 |
15% |
10 |
21% |
||||||||||||
|
Cambria hotel & suites |
5 |
56 |
61 |
5 |
39 |
44 |
- |
0% |
17 |
44% |
17 |
39% |
||||||||||||
|
219 |
505 |
724 |
194 |
388 |
582 |
25 |
13% |
117 |
30% |
142 |
24% |
|||||||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES |
Exhibit 8 |
||
|
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION |
|||
|
(UNAUDITED) |
|||
|
HOTEL FRANCHISING REVENUES AND ADJUSTED HOTEL FRANCHISING MARGINS |
|||
|
(dollar amounts in thousands) |
Three Months Ended March 31, |
||
|
2017 |
2016 |
||
|
Hotel Franchising Revenues: |
|||
|
Total Revenues |
$ 197,898 |
$ 207,118 |
|
|
Adjustments: |
|||
|
Marketing and reservation system revenues |
(109,475) |
(126,361) |
|
|
Non-hotel franchising activities |
(2,555) |
(2,029) |
|
|
Hotel Franchising Revenues |
$ 85,868 |
$ 78,728 |
|
|
Adjusted Hotel Franchising Margins: |
|||
|
Operating Margin: |
|||
|
Total Revenues |
$ 197,898 |
$ 207,118 |
|
|
Operating Income |
$ 52,507 |
$ 42,873 |
|
|
Operating Margin |
26.5% |
20.7% |
|
|
Adjusted Hotel Franchising Margin: |
|||
|
Hotel Franchising Revenues |
$ 85,868 |
$ 78,728 |
|
|
Operating Income |
$ 52,507 |
$ 42,873 |
|
|
Mark to market adjustments on non-qualified retirement plan investments |
$ 851 |
$ (60) |
|
|
Non-hotel franchising activities operating loss |
2,105 |
5,656 |
|
|
Adjusted Hotel Franchising Operating Income |
$ 55,463 |
$ 48,469 |
|
|
Adjusted Hotel Franchising Margins |
64.6% |
61.6% |
|
|
ADJUSTED HOTEL FRANCHISING SELLING, GENERAL AND ADMINISTRATION EXPENSES |
|||
|
(dollar amounts in thousands) |
Three Months Ended March 31, |
||
|
2017 |
2016 |
||
|
Total Selling, General and Administrative Expenses |
$ 32,846 |
$ 35,119 |
|
|
Mark to market adjustments on non-qualified retirement plan investments |
$ (851) |
$ 60 |
|
|
Non-hotel franchising activities |
(3,680) |
(6,670) |
|
|
Adjusted Hotel Franchising Selling, General and Administration Expenses |
$ 28,315 |
$ 28,509 |
|
|
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA") |
|||
|
(dollar amounts in thousands) |
|||
|
Three Months Ended March 31, |
|||
|
2017 |
2016 |
||
|
Net income |
$ 28,744 |
$ 21,163 |
|
|
Income taxes |
12,639 |
9,215 |
|
|
Interest expense |
11,205 |
11,092 |
|
|
Interest income |
(1,264) |
(839) |
|
|
Other (gains) losses |
(897) |
62 |
|
|
Equity in net (income) loss of affiliates |
2,080 |
2,180 |
|
|
Depreciation and amortization |
3,070 |
2,765 |
|
|
Mark to market adjustments on non-qualified retirement plan investments |
851 |
(60) |
|
|
Adjusted EBITDA |
$ 56,428 |
$ 45,578 |
|
|
Hotel franchising |
$ 57,553 |
$ 50,219 |
|
|
Non-hotel franchising activities |
(1,125) |
(4,641) |
|
|
$ 56,428 |
$ 45,578 |
||
|
ADJUSTED EBITDA FULL YEAR FORECAST |
|||
|
(dollar amounts in thousands) |
|||
|
Range |
|||
|
Estimated Adjusted EBITDA |
|||
|
Fiscal Year 2017 |
|||
|
Net income |
$ 157,100 |
$ 160,500 |
|
|
Income taxes |
77,400 |
79,000 |
|
|
Interest expense |
47,300 |
47,300 |
|
|
Interest income |
(4,500) |
(4,500) |
|
|
Gain on sale of assets |
- |
- |
|
|
Other gains |
(850) |
(850) |
|
|
Equity in net loss of affiliates |
1,600 |
1,600 |
|
|
Depreciation and amortization |
13,100 |
13,100 |
|
|
Mark to market adjustments on non-qualified retirement plan investments |
850 |
850 |
|
|
Adjusted EBITDA |
$ 292,000 |
$ 297,000 |
|
|
Hotel franchising |
$ 297,000 |
$ 302,000 |
|
|
Non-hotel franchising activities |
(5,000) |
(5,000) |
|
|
$ 292,000 |
$ 297,000 |
||
SOURCE Choice Hotels International, Inc.
CONTACT: Scott Oaksmith, SVP, Finance & Chief Accounting Officer, (301) 592-6659; Scott Carman, Director, Public Relations, (301) 592-6361
Web Site: http://www.choicehotels.com
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