ROCKVILLE, Md., Aug. 2, 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 June 30, 2017. Net income for the 2017 second quarter was $45.0 million, or $0.79 per diluted share, compared to $38.8 million, or $0.68 per diluted share for the 2016 second quarter, representing a 16-percent increase. Second quarter adjusted earnings before income taxes, depreciation and amortization (EBITDA) was $81.1 million compared to $70.4 million in the prior-year second quarter, a 15-percent increase.
"Choice Hotels' overall strategy to successfully focus on franchisee profitability has led to our robust development pipeline and continues to deliver strong financial results," said Stephen P. Joyce, chief executive officer, Choice Hotels. "For second quarter of 2017, 176 new domestic franchise agreements were executed, a 20-percent increase when compared to second quarter of 2016. In fact, we have experienced one of the strongest January through June development periods in our company's history, as new franchise agreements increased 30-percent and new construction agreements increased 65-percent, versus the first six months of 2016."
"Our midscale and upscale brands continue to be core areas of strength and expansion," said Patrick Pacious, Choice Hotel's president, chief operating officer and incoming chief executive officer. "The brands in our midscale segment, including Comfort, Quality and Sleep Inn, are experiencing continued growth in both RevPAR and our development pipeline. In addition, our upscale brands - Cambria Hotels and The Ascend Hotel Collection - are aggressively expanding. These results reinforce that we have very effective distribution channels and a high-performing franchisee business model."
Highlights of the company's second quarter 2017 results are as follows:
Overall Results
-- Diluted earnings per share (EPS) for the second quarter was $0.79, a
16-percent increase from the second quarter of the prior year; Diluted
EPS increased 11-percent compared to our adjusted diluted EPS for the
second quarter of 2016, which excluded executive termination benefits
incurred in 2016.
-- Total revenues and hotel franchising revenues for the second quarter
increased 14 percent and 10 percent, respectively, from the second
quarter of the prior year.
-- Adjusted EBITDA totaled $81.1 million for the second quarter, a
15-percent increase from the second quarter of the prior year.
-- Adjusted EBITDA from hotel franchising activities for the second quarter
increased 11 percent from the prior year second quarter to $84.0
million.
-- Adjusted hotel franchising margins for the second quarter increased 100
basis points from the prior year second quarter to 70.5 percent.
Royalties
-- Domestic royalty fees for second quarter totaled $87.0 million, a
7.2-percent increase from the second quarter of the prior year.
-- Domestic system-wide revenue per available room (RevPAR) increased 2.0
percent for the second quarter compared to the prior year second
quarter. Occupancy and average daily rates increased 30 basis points
and 1.5 percent, respectively, in the second quarter compared to the
same period of 2016.
-- The Comfort brands extended their consecutive months of RevPAR index
gains, compared to their focused competition, to 33 months.
-- Effective royalty rate increased 19 basis points for the second quarter
of 2017, compared to the second quarter of the prior year.
-- Domestic franchised hotels, as of June 30, 2017, increased 2.6 percent
from June 30, 2016.
-- Cambria Hotels surpassed 30 open hotels with three new Cambria Hotels
opening during the second quarter, including our first Los Angeles
property and our second hotel in Chicago.
-- Domestic and international rooms, as of June 30, 2017, increased 2.2
percent and 1.8 percent, respectively, from June 30, 2016.
Development
-- New, executed franchised hotel development contracts totaled 176 in the
second quarter, a 20-percent increase from the comparable period of the
prior year.
-- New construction and conversion franchise agreements increased 33
percent and 14 percent, respectively, in the second quarter of 2017,
compared to the second quarter of the prior year.
-- The company executed 11 Cambria Hotels new construction franchise
agreements in the second quarter of 2017, a 22-percent increase compared
to the second quarter of the prior year. The domestic new construction
pipeline for the Cambria Hotels brand now totals nearly 70 hotels.
-- Domestic relicensing and contract renewal transactions totaled 127 for
the three months ended June 30, 2017, a 19-percent increase from the
same period of 2016.
-- The company's total domestic pipeline of hotels awaiting conversion,
under construction or approved for development, as of June 30, 2017,
increased 22 percent to 721 hotels from June 30, 2016.
-- The new construction and conversion domestic pipelines totaled 523 and
198 hotels, respectively at June 30, 2017, representing increases of 30
percent and 5 percent from June 30, 2016.
Use of Cash Flows
Dividends
During the six months ended June 30, 2017, the company paid cash dividends totaling approximately $24 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 six months ended June 30, 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 brand, the company advanced approximately $64 million in support of the brand's development during the six months ended June 30, 2017. The company also recycled approximately $2 million of prior investments in Cambria development projects, resulting in net advances of $62 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 June 30, 2017, the company had approximately $261 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.
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 the non-GAAP measures presented herein that exclude executive termination benefits because those non-GAAP measures allow for period-over-period comparison of ongoing core operations before the impact of these charges. These non-GAAP measures, which are reconciled to the comparable GAAP measures in Exhibit 6, include adjusted net income, adjusted diluted EPS, adjusted hotel franchising selling, general and administrative expenses, adjusted EBITDA, adjusted hotel franchising EBITDA and adjusted hotel franchising margins.
Outlook
The company's consolidated 2017 outlook reflects the following assumptions:
Consolidated Outlook
-- Net income for full-year 2017 is expected to range between $160 million
and $163 million.
-- Adjusted EBITDA for full-year 2017 is expected to range between $293
million and $297 million.
-- The company's third-quarter 2017 adjusted diluted EPS is expected to
range between $0.90 and $0.92.
-- The company expects full-year 2017 adjusted diluted EPS to range between
$2.81 and $2.86.
-- The effective tax rate is expected to be approximately 33 percent for
both the third quarter and full-year 2017.
-- All estimates for 2017 exclude any potential costs associated with the
company's recently announced executive succession plan.
-- Adjusted 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 adjusted diluted 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 $299 million and $303 million.
-- Net domestic unit growth for 2017 is expected to range between
approximately 2 percent and 3 percent.
-- RevPAR is expected to increase between 1 percent and 2 percent for the
third quarter and range between 2 percent and 3 percent for full-year
2017.
-- The effective royalty rate is expected to increase between 17 and 19
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
$5 million and $7 million.
Conference Call
Choice will conduct a conference call on Wednesday, August 2, 2017, at 10:00 a.m. ET to discuss the company's 2017 second 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 Wednesday, August 2, 2017, by calling 1-855-859-2056 (domestic) or 1-404-537-3406 (international) and entering access code 43105678. 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 over 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 June 30, 2017, 792 hotels were in our development pipeline. Our company's Ascend Hotel Collection®, Cambria® Hotels, 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 32 million members, 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 our hotel development and financing 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 report on Form 10-K for 2016 and our quarterly reports filed on Form 10-Q. Except as may be required by law, 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, adjusted hotel franchising margins and adjusted diluted EPS are non-GAAP financial measurements. These measures should not be considered as an alternative to any measure of performance or liquidity as promulgated under or authorized by generally accepted accounting principles in the United States ("GAAP"), such as net income, total revenues and operating margins. The company's calculation of these measurements may be different from the calculations used by other companies and therefore comparability may be limited. The company has included an exhibit accompanying this release that reconciles these items to the most comparable GAAP financial measures. We discuss management's reasons for reporting these non-GAAP measures below.
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization: Adjusted EBITDA reflects net income excluding the impact of interest expense, interest income, provision for income taxes, depreciation and amortization, other (gains) and losses, equity in net income of unconsolidated affiliates, mark to market adjustments on non-qualified retirement plan investments and executive termination benefits. We consider adjusted EBITDA to be an indicator of operating performance because we use it to measure our ability to service debt, fund capital expenditures, and expand our business. We also use adjusted EBITDA, as do analysts, lenders, investors and others, to evaluate companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company's capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. Adjusted EBITDA also excludes depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. Mark to market adjustments on non-qualified retirement plan investments recorded in SG&A are excluded from EBITDA as the company accounts for these investments in accordance with accounting for deferred compensation arrangements when investments are held in a rabbi trust and invested. Changes in the fair value of the investments are recognized as both compensation expense in SG&A and other gains and losses. As a result, the changes in the fair value of the investments do not have 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 from these measures 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 June 30, Six Months Ended June 30,
--------------------------- -------------------------
Variance Variance
2017 2016 $ % 2017 2016 $ %
---- ---- --- --- ---- ---- --- ---
(In thousands, except
per share amounts)
REVENUES:
Royalty fees $92,486 $86,195 $6,291 7% $161,475 $151,054 $10,421 7%
Initial franchise and
relicensing fees 6,981 5,706 1,275 22% 11,987 10,862 1,125 10%
Procurement services 11,068 10,308 760 7% 17,544 16,104 1,440 9%
Marketing and
reservation system 158,035 133,814 24,221 18% 267,510 260,175 7,335 3%
Other 8,229 5,728 2,501 44% 16,181 10,674 5,507 52%
----- ----- ----- --- ------ ------ ----- ---
Total revenues 276,799 241,751 35,048 14% 474,697 448,869 25,828 6%
OPERATING EXPENSES:
Selling, general and
administrative 38,208 40,039 (1,831) (5%) 71,054 75,158 (4,104) (5%)
Depreciation and
amortization 3,050 2,956 94 3% 6,120 5,721 399 7%
Marketing and
reservation system 158,035 133,814 24,221 18% 267,510 260,175 7,335 3%
------- ------- ------ --- ------- ------- ----- ---
Total operating
expenses 199,293 176,809 22,484 13% 344,684 341,054 3,630 1%
Operating income 77,506 64,942 12,564 19% 130,013 107,815 22,198 21%
OTHER INCOME AND
EXPENSES, NET:
Interest expense 11,280 11,224 56 0% 22,485 22,316 169 1%
Interest income (1,438) (827) (611) 74% (2,702) (1,666) (1,036) 62%
Other (gains) losses (576) (321) (255) 79% (1,473) (259) (1,214) 469%
Equity in net (income)
loss of affiliates 859 (744) 1,603 (215%) 2,939 1,436 1,503 105%
Total other income and
expenses, net 10,125 9,332 793 8% 21,249 21,827 (578) (3%)
------ ----- --- --- ------ ------ ---- ---
Income before income
taxes 67,381 55,610 11,771 21% 108,764 85,988 22,776 26%
Income taxes 22,386 16,788 5,598 33% 35,025 26,003 9,022 35%
------ ------ ----- --- ------ ------ ----- ---
Net income $44,995 $38,822 $6,173 16% $73,739 $59,985 $13,754 23%
======= ======= ====== === ======= ======= ======= ===
Basic earnings per
share $0.80 $0.69 $0.11 16% $1.31 $1.06 $0.25 24%
===== ===== ===== === ===== ===== ===== ===
Diluted earnings per
share $0.79 $0.68 $0.11 16% $1.30 $1.06 $0.24 23%
===== ===== ===== === ===== ===== ===== ===
Choice Hotels International, Inc. and
Subsidiaries Exhibit 2
Consolidated Balance Sheets
(In thousands, except per share amounts) June 30, December 31,
2017 2016
---- ----
(Unaudited)
ASSETS
Cash and cash equivalents $197,957 $202,463
Accounts receivable, net 146,653 107,336
Other current assets 35,617 35,074
------ ------
Total
current
assets 380,227 344,873
Fixed assets and intangibles, net 178,271 178,704
Notes receivable, net of allowances 132,004 110,608
Investments in unconsolidated entities 131,722 94,839
Investments, employee benefit plans, at fair
value 19,451 16,975
Other assets 106,298 106,469
------- -------
Total
assets $947,973 $852,468
-------- --------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Accounts payable $67,736 $48,071
Accrued expenses and other current liabilities 71,973 81,184
Deferred revenue 135,350 133,218
Current portion of long-term debt 1,302 1,195
Total current
liabilities 276,361 263,668
Long-term debt 862,965 839,409
Deferred compensation & retirement plan
obligations 23,927 21,595
Other liabilities 37,337 39,145
------ ------
Total
liabilities 1,200,590 1,163,817
Total
shareholders'
deficit (252,617) (311,349)
Total
liabilities
and
shareholders'
deficit $947,973 $852,468
-------- --------
Choice Hotels
International,
Inc. and
Subsidiaries Exhibit 3
Consolidated
Statements
of Cash
Flows
(Unaudited)
(In
thousands) Six Months Ended June 30,
-------------------------
2017 2016
---- ----
CASH FLOWS
FROM
OPERATING
ACTIVITIES:
Net income $73,739 $59,985
Adjustments
to reconcile
net income
to net cash
provided
by operating
activities:
Depreciation
and
amortization 6,120 5,721
Loss on
disposal of
assets 4 7
Provision for
bad debts,
net 916 962
Non-cash
stock
compensation
and other
charges 6,809 7,966
Non-cash
interest and
other
(income)
loss (274) 958
Deferred
income taxes (1,446) 4,030
Equity in net
losses from
unconsolidated
joint
ventures
less
distributions
received 3,543 2,193
Changes in
assets and
liabilities:
Receivables (40,673) (39,058)
Advances to/
from
marketing
and
reservation
activities,
net 17,407 (42,671)
Forgivable
notes
receivable,
net (14,108) (13,174)
Accounts
payable 18,955 10,567
Accrued
expenses and
other
current
liabilities (11,286) (8,842)
Income taxes
payable/
receivable 5,629 10,463
Deferred
revenue 2,061 42,164
Other assets (1,764) (10,834)
Other
liabilities (1,524) (2,576)
------ ------
NET CASH
PROVIDED BY
OPERATING
ACTIVITIES 64,108 27,861
------ ------
CASH FLOWS
FROM
INVESTING
ACTIVITIES:
Investment in
property and
equipment (10,687) (10,912)
Investment in
intangible
assets (2,228) (322)
Proceeds from
sales of
assets - 1,700
Acquisitions
of real
estate - (25,389)
Contributions
to equity
method
investments (42,127) (19,688)
Distributions
from equity
method
investments 1,696 3,619
Purchases of
investments,
employee
benefit
plans (1,736) (1,140)
Proceeds from
sales of
investments,
employee
benefit
plans 2,094 1,136
Issuance of
mezzanine
and other
notes
receivable (14,977) (13,048)
Collections
of mezzanine
and other
notes
receivable 552 10,158
Other items,
net 110 11
--- ---
NET CASH USED
IN INVESTING
ACTIVITIES (67,303) (53,875)
------- -------
CASH FLOWS
FROM
FINANCING
ACTIVITIES:
Net
borrowings
pursuant to
revolving
credit
facilities 23,200 87,950
Principal
payments on
long-term
debt (309) (623)
Purchases of
treasury
stock (7,414) (28,278)
Dividends
paid (24,333) (23,193)
Proceeds from
exercise of
stock
options 6,590 4,234
----- -----
NET CASH
PROVIDED
(USED) BY
FINANCING
ACTIVITIES (2,266) 40,090
------ ------
Net change in
cash and
cash
equivalents (5,461) 14,076
Effect of
foreign
exchange
rate changes
on cash and
cash
equivalents 955 371
Cash and cash
equivalents
at beginning
of period 202,463 193,441
------- -------
CASH AND CASH
EQUIVALENTS
AT END OF
PERIOD $197,957 $207,888
======== ========
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES Exhibit 4
SUPPLEMENTAL OPERATING INFORMATION
DOMESTIC HOTEL SYSTEM
(UNAUDITED)
For the Six Months Ended June 30, 2017 For the Six Months Ended June 30, 2016 Change
-------------------------------------- -------------------------------------- ------
Average Daily Average Daily Average Daily
Rate Occupancy RevPAR Rate Occupancy RevPAR Rate Occupancy RevPAR
---- --------- ------ ---- --------- ------ ---- --------- ------
Comfort Inn $92.00 64.7% $59.48 $90.11 64.0% $57.67 2.1% 70 bps 3.1%
Comfort Suites 96.16 69.3% 66.65 95.51 68.9% 65.80 0.7% 40 bps 1.3%
Sleep 82.29 65.0% 53.51 81.13 64.2% 52.08 1.4% 80 bps 2.7%
Quality 77.45 58.5% 45.32 75.79 57.9% 43.88 2.2% 60 bps 3.3%
Clarion 82.30 58.9% 48.45 80.52 56.3% 45.35 2.2% 260 bps 6.8%
Econo Lodge 60.64 53.2% 32.26 59.24 52.4% 31.03 2.4% 80 bps 4.0%
Rodeway 62.61 55.1% 34.51 60.72 54.6% 33.15 3.1% 50 bps 4.1%
MainStay 74.51 67.1% 49.99 75.80 63.4% 48.02 (1.7%) 370 bps 4.1%
Suburban 51.74 76.2% 39.44 49.67 74.9% 37.21 4.2% 130 bps 6.0%
Cambria hotel & suites 133.34 72.9% 97.16 NA NA NA NA NA NA
Ascend Hotel Collection 123.71 54.1% 66.96 125.21 56.9% 71.28 (1.2%) (280) bps (6.1%)
------ ---- ----- ------ ---- ----- ----- ---- --- -----
Total (1) $82.16 61.1% $50.22 $80.77 60.5% $48.84 1.7% 60 bps 2.8%
====== ==== ====== ====== ==== ====== === === === ===
For the Three Months Ended June 30, 2017 For the Three Months Ended June 30, 2016 Change
---------------------------------------- ---------------------------------------- ------
Average Daily Average Daily Average Daily
Rate Occupancy RevPAR Rate Occupancy RevPAR Rate Occupancy RevPAR
---- --------- ------ ---- --------- ------ ---- --------- ------
Comfort Inn $95.96 70.6% $67.76 $93.87 70.1% $65.84 2.2% 50 bps 2.9%
Comfort Suites 98.54 73.4% 72.32 98.19 73.6% 72.24 0.4% (20) bps 0.1%
Sleep 84.84 69.9% 59.27 83.93 69.5% 58.35 1.1% 40 bps 1.6%
Quality 80.36 63.6% 51.12 78.61 63.3% 49.79 2.2% 30 bps 2.7%
Clarion 85.70 63.9% 54.76 84.14 62.3% 52.46 1.9% 160 bps 4.4%
Econo Lodge 63.31 57.6% 36.48 61.84 57.3% 35.46 2.4% 30 bps 2.9%
Rodeway 64.94 58.7% 38.12 63.13 57.9% 36.56 2.9% 80 bps 4.3%
MainStay 76.88 72.4% 55.62 78.07 68.4% 53.40 (1.5%) 400 bps 4.2%
Suburban 52.42 78.2% 41.00 51.07 76.9% 39.27 2.6% 130 bps 4.4%
Cambria hotel & suites 142.23 77.2% 109.78 NA NA NA NA NA NA
Ascend Hotel Collection 129.17 56.8% 73.32 133.28 60.0% 79.94 (3.1%) (320) bps (8.3%)
------ ---- ----- ------ ---- ----- ----- ---- --- -----
Total (1) $85.19 65.9% $56.17 $83.89 65.6% $55.07 1.5% 30 bps 2.0%
====== ==== ====== ====== ==== ====== === === === ===
For the Quarter Ended For the Six Months Ended
--------------------- ------------------------
6/30/2017 6/30/2016 6/30/2017 6/30/2016
System-wide effective royalty rate 4.58% 4.39% (1) 4.56% 4.39% (1)
(1)Totals for the three and six months ended June 30, 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)
June 30, 2017 June 30, 2016 Variance
------------- ------------- --------
Hotels Rooms Hotels Rooms Hotels Rooms % %
------ ----- ------ ----- ------ ----- --- ---
Comfort Inn 1,093 84,956 1,138 88,085 (45) (3,129) (4.0%) (3.6%)
Comfort Suites 565 43,721 564 43,522 1 199 0.2% 0.5%
Sleep 385 27,574 380 27,188 5 386 1.3% 1.4%
Quality 1,493 116,961 1,395 110,952 98 6,009 7.0% 5.4%
Clarion 163 22,159 168 23,033 (5) (874) (3.0%) (3.8%)
Econo Lodge 843 51,757 847 52,385 (4) (628) (0.5%) (1.2%)
Rodeway 586 34,085 528 29,771 58 4,314 11.0% 14.5%
MainStay 56 4,074 54 4,020 2 54 3.7% 1.3%
Suburban 59 6,578 58 6,471 1 107 1.7% 1.7%
Cambria hotel & suites 31 4,160 25 3,113 6 1,047 24.0% 33.6%
Ascend Hotel Collection 135 10,877 116 9,650 19 1,227 16.4% 12.7%
--- ------ --- ----- --- ----- ---- ----
Domestic Franchises 5,409 406,902 5,273 398,190 136 8,712 2.6% 2.2%
International Franchises 1,144 113,322 1,156 111,366 (12) 1,956 (1.0%) 1.8%
----- ------- ----- ------- --- ----- ----- ---
Total Franchises 6,553 520,224 6,429 509,556 124 10,668 1.9% 2.1%
===== ======= ===== ======= === ====== === ===
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES Exhibit 6
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,
--------------------------- -------------------------
2017 2016 2017 2016
---- ---- ---- ----
Hotel Franchising Revenues:
Total Revenues $276,799 $241,751 $474,697 $448,869
Adjustments:
Marketing and reservation system
revenues (158,035) (133,814) (267,510) (260,175)
Non-hotel franchising activities (2,557) (2,068) (5,112) (4,097)
Hotel Franchising Revenues $116,207 $105,869 $202,075 $184,597
Adjusted Hotel Franchising Margins:
Operating Margin:
Total Revenues $276,799 $241,751 $474,697 $448,869
Operating Income $77,506 $64,942 $130,013 $107,815
Operating Margin 28.0% 26.9% 27.4% 24.0%
Adjusted Hotel Franchising Margin:
Hotel Franchising Revenues $116,207 $105,869 $202,075 $184,597
Operating Income $77,506 $64,942 $130,013 $107,815
Mark to market
adjustments on
non-qualified
retirement plan
investments $590 $315 $1,441 $255
Executive termination benefits $ - $2,206 $ - $2,206
Non-hotel franchising activities
operating loss 3,801 6,084 5,906 11,740
Adjusted Hotel Franchising
Operating Income $81,897 $73,547 $137,360 $122,016
Adjusted Hotel Franchising Margins 70.5% 69.5% 68.0% 66.1%
ADJUSTED HOTEL FRANCHISING SELLING, GENERAL AND ADMINISTRATION EXPENSES
(dollar amounts in thousands) Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2017 2016 2017 2016
---- ---- ---- ----
Total Selling, General and
Administrative Expenses $38,208 $40,039 $71,054 $75,158
Mark to market
adjustments on
non-qualified
retirement plan
investments $(590) $(315) $(1,441) $(255)
Executive termination benefits $ - $(2,206) $ - $(2,206)
Non-hotel franchising activities (5,415) (7,045) (9,095) (13,715)
Adjusted Hotel
Franchising
Selling, General
and
Administration
Expenses $32,203 $30,473 $60,518 $58,982
=================
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA")
(dollar amounts in thousands)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2017 2016 2017 2016
---- ---- ---- ----
Net income $44,995 $38,822 $73,739 $59,985
Income taxes 22,386 16,788 35,025 26,003
Interest expense 11,280 11,224 22,485 22,316
Interest income (1,438) (827) (2,702) (1,666)
Other (gains) losses (576) (321) (1,473) (259)
Equity in net (income) loss of
affiliates 859 (744) 2,939 1,436
Depreciation and amortization 3,050 2,956 6,120 5,721
Executive termination benefits - 2,206 - 2,206
Mark to market
adjustments on
non-qualified
retirement plan
investments 590 315 1,441 255
---------------
Adjusted EBITDA $81,146 $70,419 $137,574 $115,997
======= ======= ======== ========
Hotel franchising $84,004 $75,397 $141,557 $125,616
Non-hotel franchising activities (2,858) (4,978) (3,983) (9,619)
$81,146 $70,419 $137,574 $115,997
======= ======= ======== ========
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,
--------------------------- -------------------------
2017 2016 2017 2016
---- ---- ---- ----
Net Income $44,995 $38,822 $73,739 $59,985
Adjustments:
Executive termination benefits - 1,394 - 1,394
Adjusted Net Income $44,995 $40,216 $73,739 $61,379
======= ======= ======= =======
Diluted Earnings Per Share $0.79 $0.68 $1.30 $1.06
Adjustments:
Executive termination benefits - 0.03 - 0.02
Adjusted Diluted Earnings Per Share
(EPS) $0.79 $0.71 $1.30 $1.08
===== ===== ===== =====
ADJUSTED EBITDA FULL YEAR FORECAST
(dollar amounts in thousands)
Range
-----
Estimated Adjusted EBITDA
Fiscal Year 2017
----------------
Net income $160,000 $163,000
Income taxes 77,500 78,500
Interest expense 45,900 45,900
Interest income (5,100) (5,100)
Gain on sale of assets - -
Other gains (1,500) (1,500)
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 1,500 1,500
Adjusted EBITDA $293,000 $297,000
======== ========
Hotel franchising $299,000 $303,000
Non-hotel franchising activities (6,000) (6,000)
$293,000 $297,000
======== ========
View original content with multimedia:http://www.prnewswire.com/news-releases/choice-hotels-international-reports-a-16-percent-increase-in-second-quarter-diluted-earnings-per-share-300497928.html
SOURCE Choice Hotels International, Inc.
SOURCE: Choice Hotels International, Inc.
PR Newswire
ROCKVILLE, Md., Aug. 2, 2017
ROCKVILLE, Md., Aug. 2, 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 June 30, 2017. Net income for the 2017 second quarter was $45.0 million, or $0.79 per diluted share, compared to $38.8 million, or $0.68 per diluted share for the 2016 second quarter, representing a 16-percent increase. Second quarter adjusted earnings before income taxes, depreciation and amortization (EBITDA) was $81.1 million compared to $70.4 million in the prior-year second quarter, a 15-percent increase.
"Choice Hotels' overall strategy to successfully focus on franchisee profitability has led to our robust development pipeline and continues to deliver strong financial results," said Stephen P. Joyce, chief executive officer, Choice Hotels. "For second quarter of 2017, 176 new domestic franchise agreements were executed, a 20-percent increase when compared to second quarter of 2016. In fact, we have experienced one of the strongest January through June development periods in our company's history, as new franchise agreements increased 30-percent and new construction agreements increased 65-percent, versus the first six months of 2016."
"Our midscale and upscale brands continue to be core areas of strength and expansion," said Patrick Pacious, Choice Hotel's president, chief operating officer and incoming chief executive officer. "The brands in our midscale segment, including Comfort, Quality and Sleep Inn, are experiencing continued growth in both RevPAR and our development pipeline. In addition, our upscale brands – Cambria Hotels and The Ascend Hotel Collection – are aggressively expanding. These results reinforce that we have very effective distribution channels and a high-performing franchisee business model."
Highlights of the company's second quarter 2017 results are as follows:
Overall Results
Royalties
Development
Use of Cash Flows
Dividends
During the six months ended June 30, 2017, the company paid cash dividends totaling approximately $24 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 six months ended June 30, 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 brand, the company advanced approximately $64 million in support of the brand's development during the six months ended June 30, 2017. The company also recycled approximately $2 million of prior investments in Cambria development projects, resulting in net advances of $62 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 June 30, 2017, the company had approximately $261 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.
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 the non-GAAP measures presented herein that exclude executive termination benefits because those non-GAAP measures allow for period-over-period comparison of ongoing core operations before the impact of these charges. These non-GAAP measures, which are reconciled to the comparable GAAP measures in Exhibit 6, include adjusted net income, adjusted diluted EPS, adjusted hotel franchising selling, general and administrative expenses, adjusted EBITDA, adjusted hotel franchising EBITDA and adjusted hotel franchising margins.
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 Wednesday, August 2, 2017, at 10:00 a.m. ET to discuss the company's 2017 second 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 Wednesday, August 2, 2017, by calling 1-855-859-2056 (domestic) or 1-404-537-3406 (international) and entering access code 43105678. 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 over 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 June 30, 2017, 792 hotels were in our development pipeline. Our company's Ascend Hotel Collection®, Cambria® Hotels, 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 32 million members, 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 our hotel development and financing 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 report on Form 10-K for 2016 and our quarterly reports filed on Form 10-Q. Except as may be required by law, 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, adjusted hotel franchising margins and adjusted diluted EPS are non-GAAP financial measurements. These measures should not be considered as an alternative to any measure of performance or liquidity as promulgated under or authorized by generally accepted accounting principles in the United States ("GAAP"), such as net income, total revenues and operating margins. The company's calculation of these measurements may be different from the calculations used by other companies and therefore comparability may be limited. The company has included an exhibit accompanying this release that reconciles these items to the most comparable GAAP financial measures. We discuss management's reasons for reporting these non-GAAP measures below.
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization: Adjusted EBITDA reflects net income excluding the impact of interest expense, interest income, provision for income taxes, depreciation and amortization, other (gains) and losses, equity in net income of unconsolidated affiliates, mark to market adjustments on non-qualified retirement plan investments and executive termination benefits. We consider adjusted EBITDA to be an indicator of operating performance because we use it to measure our ability to service debt, fund capital expenditures, and expand our business. We also use adjusted EBITDA, as do analysts, lenders, investors and others, to evaluate companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company's capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. Adjusted EBITDA also excludes depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. Mark to market adjustments on non-qualified retirement plan investments recorded in SG&A are excluded from EBITDA as the company accounts for these investments in accordance with accounting for deferred compensation arrangements when investments are held in a rabbi trust and invested. Changes in the fair value of the investments are recognized as both compensation expense in SG&A and other gains and losses. As a result, the changes in the fair value of the investments do not have 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 from these measures 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 June 30, |
Six Months Ended June 30, |
|||||||||||||||||
|
Variance |
Variance |
|||||||||||||||||
|
2017 |
2016 |
$ |
% |
2017 |
2016 |
$ |
% |
|||||||||||
|
(In thousands, except per share amounts) |
||||||||||||||||||
|
REVENUES: |
||||||||||||||||||
|
Royalty fees |
$ 92,486 |
$ 86,195 |
$ 6,291 |
7% |
$ 161,475 |
$ 151,054 |
$ 10,421 |
7% |
||||||||||
|
Initial franchise and relicensing fees |
6,981 |
5,706 |
1,275 |
22% |
11,987 |
10,862 |
1,125 |
10% |
||||||||||
|
Procurement services |
11,068 |
10,308 |
760 |
7% |
17,544 |
16,104 |
1,440 |
9% |
||||||||||
|
Marketing and reservation system |
158,035 |
133,814 |
24,221 |
18% |
267,510 |
260,175 |
7,335 |
3% |
||||||||||
|
Other |
8,229 |
5,728 |
2,501 |
44% |
16,181 |
10,674 |
5,507 |
52% |
||||||||||
|
Total revenues |
276,799 |
241,751 |
35,048 |
14% |
474,697 |
448,869 |
25,828 |
6% |
||||||||||
|
OPERATING EXPENSES: |
||||||||||||||||||
|
Selling, general and administrative |
38,208 |
40,039 |
(1,831) |
(5%) |
71,054 |
75,158 |
(4,104) |
(5%) |
||||||||||
|
Depreciation and amortization |
3,050 |
2,956 |
94 |
3% |
6,120 |
5,721 |
399 |
7% |
||||||||||
|
Marketing and reservation system |
158,035 |
133,814 |
24,221 |
18% |
267,510 |
260,175 |
7,335 |
3% |
||||||||||
|
Total operating expenses |
199,293 |
176,809 |
22,484 |
13% |
344,684 |
341,054 |
3,630 |
1% |
||||||||||
|
Operating income |
77,506 |
64,942 |
12,564 |
19% |
130,013 |
107,815 |
22,198 |
21% |
||||||||||
|
OTHER INCOME AND EXPENSES, NET: |
||||||||||||||||||
|
Interest expense |
11,280 |
11,224 |
56 |
0% |
22,485 |
22,316 |
169 |
1% |
||||||||||
|
Interest income |
(1,438) |
(827) |
(611) |
74% |
(2,702) |
(1,666) |
(1,036) |
62% |
||||||||||
|
Other (gains) losses |
(576) |
(321) |
(255) |
79% |
(1,473) |
(259) |
(1,214) |
469% |
||||||||||
|
Equity in net (income) loss of affiliates |
859 |
(744) |
1,603 |
(215%) |
2,939 |
1,436 |
1,503 |
105% |
||||||||||
|
Total other income and expenses, net |
10,125 |
9,332 |
793 |
8% |
21,249 |
21,827 |
(578) |
(3%) |
||||||||||
|
Income before income taxes |
67,381 |
55,610 |
11,771 |
21% |
108,764 |
85,988 |
22,776 |
26% |
||||||||||
|
Income taxes |
22,386 |
16,788 |
5,598 |
33% |
35,025 |
26,003 |
9,022 |
35% |
||||||||||
|
Net income |
$ 44,995 |
$ 38,822 |
$ 6,173 |
16% |
$ 73,739 |
$ 59,985 |
$ 13,754 |
23% |
||||||||||
|
Basic earnings per share |
$ 0.80 |
$ 0.69 |
$ 0.11 |
16% |
$ 1.31 |
$ 1.06 |
$ 0.25 |
24% |
||||||||||
|
Diluted earnings per share |
$ 0.79 |
$ 0.68 |
$ 0.11 |
16% |
$ 1.30 |
$ 1.06 |
$ 0.24 |
23% |
||||||||||
|
Choice Hotels International, Inc. and Subsidiaries |
Exhibit 2 |
||||||
|
Consolidated Balance Sheets |
|||||||
|
(In thousands, except per share amounts) |
June 30, |
December 31, |
|||||
|
2017 |
2016 |
||||||
|
(Unaudited) |
|||||||
|
ASSETS |
|||||||
|
Cash and cash equivalents |
$ 197,957 |
$ 202,463 |
|||||
|
Accounts receivable, net |
146,653 |
107,336 |
|||||
|
Other current assets |
35,617 |
35,074 |
|||||
|
Total current assets |
380,227 |
344,873 |
|||||
|
Fixed assets and intangibles, net |
178,271 |
178,704 |
|||||
|
Notes receivable, net of allowances |
132,004 |
110,608 |
|||||
|
Investments in unconsolidated entities |
131,722 |
94,839 |
|||||
|
Investments, employee benefit plans, at fair value |
19,451 |
16,975 |
|||||
|
Other assets |
106,298 |
106,469 |
|||||
|
Total assets |
$ 947,973 |
$ 852,468 |
|||||
|
LIABILITIES AND SHAREHOLDERS' DEFICIT |
|||||||
|
Accounts payable |
$ 67,736 |
$ 48,071 |
|||||
|
Accrued expenses and other current liabilities |
71,973 |
81,184 |
|||||
|
Deferred revenue |
135,350 |
133,218 |
|||||
|
Current portion of long-term debt |
1,302 |
1,195 |
|||||
|
Total current liabilities |
276,361 |
263,668 |
|||||
|
Long-term debt |
862,965 |
839,409 |
|||||
|
Deferred compensation & retirement plan obligations |
23,927 |
21,595 |
|||||
|
Other liabilities |
37,337 |
39,145 |
|||||
|
Total liabilities |
1,200,590 |
1,163,817 |
|||||
|
Total shareholders' deficit |
(252,617) |
(311,349) |
|||||
|
Total liabilities and shareholders' deficit |
$ 947,973 |
$ 852,468 |
|||||
|
Choice Hotels International, Inc. and Subsidiaries |
Exhibit 3 |
||
|
Consolidated Statements of Cash Flows |
|||
|
(Unaudited) |
|||
|
(In thousands) |
Six Months Ended June 30, |
||
|
2017 |
2016 |
||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||
|
Net income |
$ 73,739 |
$ 59,985 |
|
|
Adjustments to reconcile net income to net cash provided |
|||
|
by operating activities: |
|||
|
Depreciation and amortization |
6,120 |
5,721 |
|
|
Loss on disposal of assets |
4 |
7 |
|
|
Provision for bad debts, net |
916 |
962 |
|
|
Non-cash stock compensation and other charges |
6,809 |
7,966 |
|
|
Non-cash interest and other (income) loss |
(274) |
958 |
|
|
Deferred income taxes |
(1,446) |
4,030 |
|
|
Equity in net losses from unconsolidated joint ventures less distributions received |
3,543 |
2,193 |
|
|
Changes in assets and liabilities: |
|||
|
Receivables |
(40,673) |
(39,058) |
|
|
Advances to/from marketing and reservation activities, net |
17,407 |
(42,671) |
|
|
Forgivable notes receivable, net |
(14,108) |
(13,174) |
|
|
Accounts payable |
18,955 |
10,567 |
|
|
Accrued expenses and other current liabilities |
(11,286) |
(8,842) |
|
|
Income taxes payable/receivable |
5,629 |
10,463 |
|
|
Deferred revenue |
2,061 |
42,164 |
|
|
Other assets |
(1,764) |
(10,834) |
|
|
Other liabilities |
(1,524) |
(2,576) |
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
64,108 |
27,861 |
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||
|
Investment in property and equipment |
(10,687) |
(10,912) |
|
|
Investment in intangible assets |
(2,228) |
(322) |
|
|
Proceeds from sales of assets |
- |
1,700 |
|
|
Acquisitions of real estate |
- |
(25,389) |
|
|
Contributions to equity method investments |
(42,127) |
(19,688) |
|
|
Distributions from equity method investments |
1,696 |
3,619 |
|
|
Purchases of investments, employee benefit plans |
(1,736) |
(1,140) |
|
|
Proceeds from sales of investments, employee benefit plans |
2,094 |
1,136 |
|
|
Issuance of mezzanine and other notes receivable |
(14,977) |
(13,048) |
|
|
Collections of mezzanine and other notes receivable |
552 |
10,158 |
|
|
Other items, net |
110 |
11 |
|
|
NET CASH USED IN INVESTING ACTIVITIES |
(67,303) |
(53,875) |
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|||
|
Net borrowings pursuant to revolving credit facilities |
23,200 |
87,950 |
|
|
Principal payments on long-term debt |
(309) |
(623) |
|
|
Purchases of treasury stock |
(7,414) |
(28,278) |
|
|
Dividends paid |
(24,333) |
(23,193) |
|
|
Proceeds from exercise of stock options |
6,590 |
4,234 |
|
|
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES |
(2,266) |
40,090 |
|
|
Net change in cash and cash equivalents |
(5,461) |
14,076 |
|
|
Effect of foreign exchange rate changes on cash and cash equivalents |
955 |
371 |
|
|
Cash and cash equivalents at beginning of period |
202,463 |
193,441 |
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ 197,957 |
$ 207,888 |
|
|
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES |
Exhibit 4 |
||||||||||||||||||||
|
SUPPLEMENTAL OPERATING INFORMATION |
|||||||||||||||||||||
|
DOMESTIC HOTEL SYSTEM |
|||||||||||||||||||||
|
(UNAUDITED) |
|||||||||||||||||||||
|
For the Six Months Ended June 30, 2017 |
For the Six Months Ended June 30, 2016 |
Change |
|||||||||||||||||||
|
Average Daily |
Average Daily |
Average Daily |
|||||||||||||||||||
|
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
|||||||||||||
|
Comfort Inn |
$ 92.00 |
64.7% |
$ 59.48 |
$ 90.11 |
64.0% |
$ 57.67 |
2.1% |
70 |
bps |
3.1% |
|||||||||||
|
Comfort Suites |
96.16 |
69.3% |
66.65 |
95.51 |
68.9% |
65.80 |
0.7% |
40 |
bps |
1.3% |
|||||||||||
|
Sleep |
82.29 |
65.0% |
53.51 |
81.13 |
64.2% |
52.08 |
1.4% |
80 |
bps |
2.7% |
|||||||||||
|
Quality |
77.45 |
58.5% |
45.32 |
75.79 |
57.9% |
43.88 |
2.2% |
60 |
bps |
3.3% |
|||||||||||
|
Clarion |
82.30 |
58.9% |
48.45 |
80.52 |
56.3% |
45.35 |
2.2% |
260 |
bps |
6.8% |
|||||||||||
|
Econo Lodge |
60.64 |
53.2% |
32.26 |
59.24 |
52.4% |
31.03 |
2.4% |
80 |
bps |
4.0% |
|||||||||||
|
Rodeway |
62.61 |
55.1% |
34.51 |
60.72 |
54.6% |
33.15 |
3.1% |
50 |
bps |
4.1% |
|||||||||||
|
MainStay |
74.51 |
67.1% |
49.99 |
75.80 |
63.4% |
48.02 |
(1.7%) |
370 |
bps |
4.1% |
|||||||||||
|
Suburban |
51.74 |
76.2% |
39.44 |
49.67 |
74.9% |
37.21 |
4.2% |
130 |
bps |
6.0% |
|||||||||||
|
Cambria hotel & suites |
133.34 |
72.9% |
97.16 |
NA |
NA |
NA |
NA |
NA |
NA |
||||||||||||
|
Ascend Hotel Collection |
123.71 |
54.1% |
66.96 |
125.21 |
56.9% |
71.28 |
(1.2%) |
(280) |
bps |
(6.1%) |
|||||||||||
|
Total (1) |
$ 82.16 |
61.1% |
$ 50.22 |
$ 80.77 |
60.5% |
$ 48.84 |
1.7% |
60 |
bps |
2.8% |
|||||||||||
|
For the Three Months Ended June 30, 2017 |
For the Three Months Ended June 30, 2016 |
Change |
|||||||||||||||||||
|
Average Daily |
Average Daily |
Average Daily |
|||||||||||||||||||
|
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
|||||||||||||
|
Comfort Inn |
$ 95.96 |
70.6% |
$ 67.76 |
$ 93.87 |
70.1% |
$ 65.84 |
2.2% |
50 |
bps |
2.9% |
|||||||||||
|
Comfort Suites |
98.54 |
73.4% |
72.32 |
98.19 |
73.6% |
72.24 |
0.4% |
(20) |
bps |
0.1% |
|||||||||||
|
Sleep |
84.84 |
69.9% |
59.27 |
83.93 |
69.5% |
58.35 |
1.1% |
40 |
bps |
1.6% |
|||||||||||
|
Quality |
80.36 |
63.6% |
51.12 |
78.61 |
63.3% |
49.79 |
2.2% |
30 |
bps |
2.7% |
|||||||||||
|
Clarion |
85.70 |
63.9% |
54.76 |
84.14 |
62.3% |
52.46 |
1.9% |
160 |
bps |
4.4% |
|||||||||||
|
Econo Lodge |
63.31 |
57.6% |
36.48 |
61.84 |
57.3% |
35.46 |
2.4% |
30 |
bps |
2.9% |
|||||||||||
|
Rodeway |
64.94 |
58.7% |
38.12 |
63.13 |
57.9% |
36.56 |
2.9% |
80 |
bps |
4.3% |
|||||||||||
|
MainStay |
76.88 |
72.4% |
55.62 |
78.07 |
68.4% |
53.40 |
(1.5%) |
400 |
bps |
4.2% |
|||||||||||
|
Suburban |
52.42 |
78.2% |
41.00 |
51.07 |
76.9% |
39.27 |
2.6% |
130 |
bps |
4.4% |
|||||||||||
|
Cambria hotel & suites |
142.23 |
77.2% |
109.78 |
NA |
NA |
NA |
NA |
NA |
NA |
||||||||||||
|
Ascend Hotel Collection |
129.17 |
56.8% |
73.32 |
133.28 |
60.0% |
79.94 |
(3.1%) |
(320) |
bps |
(8.3%) |
|||||||||||
|
Total (1) |
$ 85.19 |
65.9% |
$ 56.17 |
$ 83.89 |
65.6% |
$ 55.07 |
1.5% |
30 |
bps |
2.0% |
|||||||||||
|
For the Quarter Ended |
For the Six Months Ended |
||||||||||||||||||||
|
6/30/2017 |
6/30/2016 |
6/30/2017 |
6/30/2016 |
||||||||||||||||||
|
System-wide effective royalty rate |
4.58% |
4.39% |
(1) |
4.56% |
4.39% |
(1) |
|||||||||||||||
|
(1)Totals for the three and six months ended June 30, 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) |
|||||||||||||||||
|
June 30, 2017 |
June 30, 2016 |
Variance |
|||||||||||||||
|
Hotels |
Rooms |
Hotels |
Rooms |
Hotels |
Rooms |
% |
% |
||||||||||
|
Comfort Inn |
1,093 |
84,956 |
1,138 |
88,085 |
(45) |
(3,129) |
(4.0%) |
(3.6%) |
|||||||||
|
Comfort Suites |
565 |
43,721 |
564 |
43,522 |
1 |
199 |
0.2% |
0.5% |
|||||||||
|
Sleep |
385 |
27,574 |
380 |
27,188 |
5 |
386 |
1.3% |
1.4% |
|||||||||
|
Quality |
1,493 |
116,961 |
1,395 |
110,952 |
98 |
6,009 |
7.0% |
5.4% |
|||||||||
|
Clarion |
163 |
22,159 |
168 |
23,033 |
(5) |
(874) |
(3.0%) |
(3.8%) |
|||||||||
|
Econo Lodge |
843 |
51,757 |
847 |
52,385 |
(4) |
(628) |
(0.5%) |
(1.2%) |
|||||||||
|
Rodeway |
586 |
34,085 |
528 |
29,771 |
58 |
4,314 |
11.0% |
14.5% |
|||||||||
|
MainStay |
56 |
4,074 |
54 |
4,020 |
2 |
54 |
3.7% |
1.3% |
|||||||||
|
Suburban |
59 |
6,578 |
58 |
6,471 |
1 |
107 |
1.7% |
1.7% |
|||||||||
|
Cambria hotel & suites |
31 |
4,160 |
25 |
3,113 |
6 |
1,047 |
24.0% |
33.6% |
|||||||||
|
Ascend Hotel Collection |
135 |
10,877 |
116 |
9,650 |
19 |
1,227 |
16.4% |
12.7% |
|||||||||
|
Domestic Franchises |
5,409 |
406,902 |
5,273 |
398,190 |
136 |
8,712 |
2.6% |
2.2% |
|||||||||
|
International Franchises |
1,144 |
113,322 |
1,156 |
111,366 |
(12) |
1,956 |
(1.0%) |
1.8% |
|||||||||
|
Total Franchises |
6,553 |
520,224 |
6,429 |
509,556 |
124 |
10,668 |
1.9% |
2.1% |
|||||||||
|
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES |
Exhibit 6 |
||||||||||||
|
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, |
|||||||||||
|
2017 |
2016 |
2017 |
2016 |
||||||||||
|
Hotel Franchising Revenues: |
|||||||||||||
|
Total Revenues |
$ 276,799 |
$ 241,751 |
$ 474,697 |
$ 448,869 |
|||||||||
|
Adjustments: |
|||||||||||||
|
Marketing and reservation system revenues |
(158,035) |
(133,814) |
(267,510) |
(260,175) |
|||||||||
|
Non-hotel franchising activities |
(2,557) |
(2,068) |
(5,112) |
(4,097) |
|||||||||
|
Hotel Franchising Revenues |
$ 116,207 |
$ 105,869 |
$ 202,075 |
$ 184,597 |
|||||||||
|
Adjusted Hotel Franchising Margins: |
|||||||||||||
|
Operating Margin: |
|||||||||||||
|
Total Revenues |
$ 276,799 |
$ 241,751 |
$ 474,697 |
$ 448,869 |
|||||||||
|
Operating Income |
$ 77,506 |
$ 64,942 |
$ 130,013 |
$ 107,815 |
|||||||||
|
Operating Margin |
28.0% |
26.9% |
27.4% |
24.0% |
|||||||||
|
Adjusted Hotel Franchising Margin: |
|||||||||||||
|
Hotel Franchising Revenues |
$ 116,207 |
$ 105,869 |
$ 202,075 |
$ 184,597 |
|||||||||
|
Operating Income |
$ 77,506 |
$ 64,942 |
$ 130,013 |
$ 107,815 |
|||||||||
|
Mark to market adjustments on non-qualified retirement plan investments |
$ 590 |
$ 315 |
$ 1,441 |
$ 255 |
|||||||||
|
Executive termination benefits |
$ - |
$ 2,206 |
$ - |
$ 2,206 |
|||||||||
|
Non-hotel franchising activities operating loss |
3,801 |
6,084 |
5,906 |
11,740 |
|||||||||
|
Adjusted Hotel Franchising Operating Income |
$ 81,897 |
$ 73,547 |
$ 137,360 |
$ 122,016 |
|||||||||
|
Adjusted Hotel Franchising Margins |
70.5% |
69.5% |
68.0% |
66.1% |
|||||||||
|
ADJUSTED HOTEL FRANCHISING SELLING, GENERAL AND ADMINISTRATION EXPENSES |
|||||||||||||
|
(dollar amounts in thousands) |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||
|
2017 |
2016 |
2017 |
2016 |
||||||||||
|
Total Selling, General and Administrative Expenses |
$ 38,208 |
$ 40,039 |
$ 71,054 |
$ 75,158 |
|||||||||
|
Mark to market adjustments on non-qualified retirement plan investments |
$ (590) |
$ (315) |
$ (1,441) |
$ (255) |
|||||||||
|
Executive termination benefits |
$ - |
$ (2,206) |
$ - |
$ (2,206) |
|||||||||
|
Non-hotel franchising activities |
(5,415) |
(7,045) |
(9,095) |
(13,715) |
|||||||||
|
Adjusted Hotel Franchising Selling, General and Administration Expenses |
$ 32,203 |
$ 30,473 |
$ 60,518 |
$ 58,982 |
|||||||||
|
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA") |
|||||||||||||
|
(dollar amounts in thousands) |
|||||||||||||
|
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||
|
2017 |
2016 |
2017 |
2016 |
||||||||||
|
Net income |
$ 44,995 |
$ 38,822 |
$ 73,739 |
$ 59,985 |
|||||||||
|
Income taxes |
22,386 |
16,788 |
35,025 |
26,003 |
|||||||||
|
Interest expense |
11,280 |
11,224 |
22,485 |
22,316 |
|||||||||
|
Interest income |
(1,438) |
(827) |
(2,702) |
(1,666) |
|||||||||
|
Other (gains) losses |
(576) |
(321) |
(1,473) |
(259) |
|||||||||
|
Equity in net (income) loss of affiliates |
859 |
(744) |
2,939 |
1,436 |
|||||||||
|
Depreciation and amortization |
3,050 |
2,956 |
6,120 |
5,721 |
|||||||||
|
Executive termination benefits |
- |
2,206 |
- |
2,206 |
|||||||||
|
Mark to market adjustments on non-qualified retirement plan investments |
590 |
315 |
1,441 |
255 |
|||||||||
|
Adjusted EBITDA |
$ 81,146 |
$ 70,419 |
$ 137,574 |
$ 115,997 |
|||||||||
|
Hotel franchising |
$ 84,004 |
$ 75,397 |
$ 141,557 |
$ 125,616 |
|||||||||
|
Non-hotel franchising activities |
(2,858) |
(4,978) |
(3,983) |
(9,619) |
|||||||||
|
$ 81,146 |
$ 70,419 |
$ 137,574 |
$ 115,997 |
||||||||||
|
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, |
|||||||||||
|
2017 |
2016 |
2017 |
2016 |
||||||||||
|
Net Income |
$ 44,995 |
$ 38,822 |
$ 73,739 |
$ 59,985 |
|||||||||
|
Adjustments: |
|||||||||||||
|
Executive termination benefits |
- |
1,394 |
- |
1,394 |
|||||||||
|
Adjusted Net Income |
$ 44,995 |
$ 40,216 |
$ 73,739 |
$ 61,379 |
|||||||||
|
Diluted Earnings Per Share |
$ 0.79 |
$ 0.68 |
$ 1.30 |
$ 1.06 |
|||||||||
|
Adjustments: |
|||||||||||||
|
Executive termination benefits |
- |
0.03 |
- |
0.02 |
|||||||||
|
Adjusted Diluted Earnings Per Share (EPS) |
$ 0.79 |
$ 0.71 |
$ 1.30 |
$ 1.08 |
|||||||||
|
ADJUSTED EBITDA FULL YEAR FORECAST |
|||||||||||||
|
(dollar amounts in thousands) |
|||||||||||||
|
Range |
|||||||||||||
|
Estimated Adjusted EBITDA |
|||||||||||||
|
Fiscal Year 2017 |
|||||||||||||
|
Net income |
$ 160,000 |
$ 163,000 |
|||||||||||
|
Income taxes |
77,500 |
78,500 |
|||||||||||
|
Interest expense |
45,900 |
45,900 |
|||||||||||
|
Interest income |
(5,100) |
(5,100) |
|||||||||||
|
Gain on sale of assets |
- |
- |
|||||||||||
|
Other gains |
(1,500) |
(1,500) |
|||||||||||
|
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 |
1,500 |
1,500 |
|||||||||||
|
Adjusted EBITDA |
$ 293,000 |
$ 297,000 |
|||||||||||
|
Hotel franchising |
$ 299,000 |
$ 303,000 |
|||||||||||
|
Non-hotel franchising activities |
(6,000) |
(6,000) |
|||||||||||
|
$ 293,000 |
$ 297,000 |
||||||||||||
View original content with multimedia:http://www.prnewswire.com/news-releases/choice-hotels-international-reports-a-16-percent-increase-in-second-quarter-diluted-earnings-per-share-300497928.html
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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