Press Releases

Choice Hotels International Reports 2019 Third Quarter Results
Cambria Hotels expanded rooms by over 20%

ROCKVILLE, Md., Nov. 5, 2019 /PRNewswire/ -- Choice Hotels International, Inc. (NYSE: CHH), one of the world's largest lodging franchisors, today reported its results for the three months ended September 30, 2019. Highlights include:

Choice Hotels International.  (PRNewsFoto/Choice Hotels International) (PRNewsfoto/CHOICE HOTELS INTERNATIONAL)

  • Net income was $76.2 million for third quarter 2019, representing diluted earnings per share (EPS) of $1.36.
  • Adjusted net income, excluding certain items described in Exhibit 6, increased 9% to $76.5 million from third quarter 2018.
  • Adjusted EPS was $1.37, a 10% increase from third quarter 2018.
  • The company exceeded the top end of its third quarter 2019 adjusted EPS guidance by $0.08 per share and raised its full year adjusted EPS guidance.
  • Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the third quarter were $111.0 million, an increase of 7% from the same period of 2018.
  • The company's upscale, midscale, and extended stay segments reported a 3.1% aggregate increase in unit growth compared to third quarter 2018.
  • The company's board of directors approved an increase in the company's share repurchase authorization by approximately 2.3 million shares, bringing the total program to 4.0 million shares authorized.

Additionally, during the third quarter of 2019, the company continued to strengthen its presence in the higher growth and more revenue intense upscale, midscale and extended stay chain scale segments. In particular, the company:

  • Achieved 13% growth in the number of domestic rooms in its upscale brands, Cambria and Ascend, as of September 30, 2019, from third quarter 2018.
  • Installed the 500th new sign for newly refreshed Comfort hotels, announcing to guests the significant transformation of the brand. Under this $2.5 billion transformation of the brand, revenue per available room (RevPAR) for Comfort hotels that have completed renovations outpaced their competitive set by 60 basis points and franchise agreements awarded in 2019 are expected to generate higher revenues throughout the life of the contracts, compared to the pipeline of the same period of the prior year period.
  • Continued its leadership in the midscale segment with 25 Clarion Pointe franchise agreements awarded year-to-date, bringing the number of Clarion Pointe hotels open or awaiting conversion to 45 hotels. Additionally, the Sleep Inn brand achieved 2.6% growth in the number of domestic hotels and 10% domestic pipeline growth, bringing the total Sleep Inn pipeline to 150 hotels.
  • Expanded the number of domestic hotels in its extended stay brands to nearly 400, a 10% increase from September 30, 2018, and increased the extended stay domestic pipeline by 11% to over 250 hotels.

"We're pleased to report another quarter of strong financial performance and a positive outlook for the growth of the business," said Patrick Pacious, president and chief executive officer, Choice Hotels. "We are successfully leveraging our strong customer base and growing our franchising platform to drive revenue in high-value segments. Specifically, Cambria is leading the evolution of our portfolio to become more revenue intense by attracting business travelers in top RevPAR markets. Our investments in Cambria are not only driving the brand's growth, but also benefitting the entire portfolio through new technology, increased brand recognition, and other key franchisee resources."

Additional details from the company's 2019 third quarter results are as follows:

Revenues

  • Total revenues for the three months ended September 30, 2019 were $310.7 million, an increase of 7% from total revenues reported for the same period of 2018.
  • Total revenues, excluding marketing and reservation system fees, for the third quarter increased 10% over the prior year comparable period to $153.7 million.
  • Domestic royalty fees for the third quarter totaled $107.8 million, a 3% increase from third quarter 2018.
  • The company's effective domestic royalty rate increased 12 basis points to 4.84% for the third quarter, compared to the same period of the prior year.
  • Domestic systemwide revenue per available room (RevPAR) declined 0.7% for the third quarter, compared to the same period of the prior year.
  • Procurement services revenue increased 27% in the third quarter to $14.8 million, compared to the same period of the prior year.

Development

  • International hotels and rooms, as of September 30, 2019, increased 4.1% and 4.5%, respectively, from September 30, 2018.
  • The number of domestic hotels and rooms, as of September 30, 2019, both increased 1.8% from September 30, 2018.
  • The company awarded 100 domestic franchise agreements in the third quarter of 2019.
  • The company's total domestic pipeline awaiting conversion, under construction, or approved for development increased to 975 hotels and 82,390 rooms as of September 30, 2019.
  • The new-construction domestic pipeline totaled 741 hotels as of September 30, 2019, a 5% increase from September 30, 2018.
  • The company's total international pipeline of hotels awaiting conversion, under construction, or approved for development totaled 94 as of September 30, 2019 versus 82 hotels as of September 30, 2018.

Use of Cash Flows

Dividends

During the nine months ended September 30, 2019, the company paid cash dividends totaling approximately $36 million. Based on the current quarterly dividend rate of $0.215 per share of common stock, the company expects to pay dividends totaling approximately $48 million during 2019.

Stock Repurchases

During the nine months ended September 30, 2019, the company repurchased approximately 0.6 million shares of common stock for approximately $45 million under its stock repurchase program, as well as through repurchases from employees in connection with tax withholding and option exercises relating to awards under the company's equity incentive plans. As of September 30, 2019, the company had authorization to purchase up to 4.0 million additional shares of common stock under its share repurchase program. 

Hotel Development & Financing

The company has allocated up to $725 million to its program that encourages growth of the upscale Cambria Hotels brand. Investments under this program may include joint-venture investments, forgivable key-money loans, senior mortgage loans, development loans and mezzanine lending, as well as hotel ownership and the operation of a land-banking program. With respect to lending, hotel ownership and joint-venture investments, the company generally expects to recycle these investments within a five-year period.

Aligned with the continued investment in accelerating Cambria's development, in the beginning of the third quarter, the company redeemed a third party's remaining equity stake in joint ventures that held four key Cambria hotels. These hotels not only provide a strategic benefit to the brand but are also expected to generate financial returns for the company's shareholders. The company does not anticipate owning these hotels on a permanent basis and will consider a sale to a franchisee in the future.

As of September 30, 2019, the company had approximately $555 million reflected on its consolidated balance sheet pursuant to the Cambria financial support activities.

Outlook

The adjusted numbers in the company's outlook below exclude the net surplus or deficit generated from the company's marketing and reservation system activities, the gain (loss) on sale and impairment of assets as well as other items. See Exhibit 7 for the calculation of adjusted forecasted results and the reconciliation to the comparable GAAP measures.

  • Net income for full-year 2019 is expected to range between $209 million and $213 million, or $3.74 and $3.80 per share.
  • Adjusted EPS for full-year 2019 is expected to range between $4.21 and $4.27. The company expects full-year 2019 adjusted net income to range between $235 million and $239 million.
  • Fourth quarter 2019 adjusted EPS is expected to range between $0.82 and $0.86.
  • Adjusted EBITDA for full-year 2019, including owned hotel operations, is expected to range between $362 million and $365 million.
  • The company's outlook for adjusted EBITDA and adjusted EPS is based on the current number of shares of common stock outstanding and, therefore, do not reflect any subsequent changes that may occur due to new equity grants or further repurchases of common stock under the company's stock repurchase program.
  • Net domestic units for 2019 are expected to increase by approximately 2%.
  • Domestic RevPAR for the fourth quarter of 2019 is expected to decline between a range of 0% and 2% versus the same period of the prior year. Domestic RevPAR is expected to decline between a range of 0% and 1% for full-year 2019.
  • The domestic effective royalty rate is expected to increase between 9 and 12 basis points for full-year 2019, as compared to full-year 2018.
  • The effective tax rate is expected to be approximately 23% for fourth quarter 2019 and 18% for full-year 2019, respectively.  

Conference Call

Choice Hotels International will conduct a conference call on Tuesday, November 5, 2019, at 10:00 a.m. Eastern Time to discuss the company's 2019 third quarter results. The dial-in number to listen to the call domestically is 888-349-0087 and the number for international participants is 412-317-5259. A live webcast will be available on the company's investor relations website, http://investor.choicehotels.com/, and can be accessed via the Financial Performance and Presentations tab. 

About Choice Hotels 

Choice Hotels International, Inc. (NYSE: CHH) is one of the largest lodging franchisors in the world. With more than 7,000 hotels, representing nearly 575,000 rooms, in over 40 countries and territories as of September 30, 2019, the Choice® family of hotel brands provides business and leisure travelers with a range of high-quality lodging options from limited-service to full-service hotels in the upscale, midscale, extended stay and economy segments. The award-winning Choice Privileges® loyalty program offers members benefits ranging from everyday rewards to exceptional experiences. For more information, visit www.choicehotels.com.

Forward-Looking Statements

Certain matters discussed in this 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, future operations, and expected benefits from the Tax Cuts and Jobs Act, 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; impairments or losses relating to acquired businesses, 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 and our quarterly reports filed on Form 10-Q. Except as may be required by law, we undertake no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Non-GAAP Financial Measurements

The company evaluates its operations utilizing the performance metrics of adjusted EBITDA, revenues excluding marketing and reservation system activities, adjusted SG&A, adjusted net income, and adjusted EPS, which are all non-GAAP financial measurements. These measures, which are reconciled to the comparable GAAP measures in Exhibit 6, should not be considered as an alternative to any measure of performance or liquidity as promulgated under or authorized by GAAP, such as net income, EPS, and total revenues. The company's calculation of these measurements may be different from the calculations used by other companies and comparability may therefore be limited. 

We discuss management's reasons for reporting these non-GAAP measures and how each non-GAAP measure is calculated below.

In addition to the specific adjustments noted below with respect to each measure, the non-GAAP measures presented herein also exclude acquisition-related transition and transaction costs, estimated one-time transition taxes on tax legislation enacted into law on December 22, 2017, debt-restructuring costs, federal tax credits related to the rehabilitation and reuse of historic buildings and gains and losses on sale and impairment of assets primarily related to the company's operations that provide Software as a Service ("SaaS") technology solutions to vacation rental management companies and the sale of an equity stake in a joint venture to allow for period-over-period comparison of ongoing core operations before the impact of these discrete and infrequent charges.

Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization: Adjusted EBITDA reflects net income excluding the impact of interest expense, interest income, provision for income taxes, depreciation and amortization, franchise agreement acquisition cost amortization, other (gains) and losses, equity in net income (loss) of unconsolidated affiliates, mark-to-market adjustments on non-qualified retirement plan investments, and surplus or deficits generated by marketing and reservation system activities. We consider adjusted EBITDA to be an indicator of operating performance because it measures our ability to service debt, fund capital expenditures, and expand our business. We also use adjusted EBITDA, as do analysts, lenders, investors, and others, to evaluate companies because it excludes certain items that can vary widely across industries or among companies within the same industry. For example, interest expense can be dependent on a company's capital structure, debt levels, and credit ratings. 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 or amortizing franchise agreement acquisition costs. These differences can result in considerable variability in the relative asset costs and estimated lives and, therefore, the depreciation and amortization expense among companies. Mark-to-market adjustments on non-qualified retirement plan investments recorded in SG&A are excluded from EBITDA, as the company accounts for these investments in accordance with accounting for deferred compensation arrangements when investments are held in a rabbi trust and invested. Changes in the fair value of the investments are recognized as both compensation expense in SG&A and other gains and losses. As a result, the changes in the fair value of the investments do not have a material impact on the company's net income. Surpluses and deficits generated from marketing and reservation activities are excluded, as the company's franchise agreements require the marketing and reservation system revenues to be used exclusively for expenses associated with providing franchise services, such as central reservation and property management systems, reservation delivery, and national marketing and media advertising. Franchisees are required to reimburse the company for any deficits generated from these marketing and reservation system activities and the company is required to spend any surpluses generated in future periods. Since these activities will be managed to breakeven over time, quarterly or annual surpluses and deficits have been excluded from the measurements utilized to assess the company's operating performance.

Adjusted Net Income and Adjusted Earnings Per Share: Adjusted net income and EPS exclude the impact of surpluses or deficits generated from marketing and reservation system activities. Surpluses and deficits generated from marketing and reservation activities are excluded, as the company's franchise agreements require the marketing and reservation system revenues to be used exclusively for expenses associated with providing franchise services, such as central reservation and property management systems, reservation delivery, and national marketing and media advertising. Franchisees are required to reimburse the company for any deficits generated from these marketing and reservation system activities and the company is required to spend any surpluses generated in future periods. Since these activities will be managed to breakeven over time, quarterly or annual surpluses and deficits have been excluded from the measurements utilized to assess the company's operating performance. We consider adjusted net income and adjusted EPS to be indicators of operating performance because excluding these items allow for period-over-period comparisons of our ongoing operations.

Revenues, Excluding Marketing and Reservation System Activities: The company reports revenues, excluding marketing and reservation system activities. The company is no longer excluding the other non-hotel franchising revenues from these measures because their impact is insignificant on the company's overall results. These non-GAAP measures we present are commonly used measures of performance in our industry and facilitate comparisons between the company and its competitors. Marketing and reservation system activities are excluded, as the company's franchise agreements require the marketing and reservation system revenues to be used exclusively for expenses associated with providing franchise services, such as central reservation and property management systems, reservation delivery, and national marketing and media advertising. Franchisees are required to reimburse the company for any deficits generated from these marketing and reservation system activities and the company is required to spend any surpluses generated in future periods. Since these activities will be managed to breakeven over time, quarterly or annual surpluses and deficits have been excluded from the measurements utilized to assess the company's operating performance.

© 2019 Choice Hotels International, Inc. All rights reserved.

Choice Hotels International, Inc. and Subsidiaries













Exhibit 1

Condensed Consolidated Statements of Income














(Unaudited)






































































Three Months Ended September 30,


Nine Months Ended September 30,







Variance






Variance



2019


2018


$


%


2019


2018


$


%

(In thousands, except per share amounts)


































REVENUES


































Royalty fees


$            113,688


$            111,009


$     2,679


2%


$            300,468


$            290,926


$     9,542


3%

Initial franchise and relicensing fees


6,741


6,262


479


8%


20,223


18,957


1,266


7%

Procurement services


14,814


11,620


3,194


27%


47,590


39,391


8,199


21%

Marketing and reservation system


157,024


152,367


4,657


3%


439,553


416,715


22,838


5%

Owned hotels


8,710


-


8,710


NM


8,710


-


8,710


NM

Other


9,755


10,232


(477)


(5%)


30,192


30,336


(144)


(0%)

      Total revenues


310,732


291,490


19,242


7%


846,736


796,325


50,411


6%


















OPERATING EXPENSES


































Selling, general and administrative


38,308


38,191


117


0%


124,802


125,325


(523)


(0%)

Owned hotels


6,014


-


6,014


NM


6,014


-


6,014


NM

Depreciation and amortization


5,568


3,815


1,753


46%


12,589


10,537


2,052


19%

Marketing and reservation system


158,430


138,316


20,114


15%


438,390


394,112


44,278


11%

Total operating expenses


208,320


180,322


27,998


16%


581,795


529,974


51,821


10%


















Gain (loss) on sale & impairment of assets, net

8


-


8


NM


(14,934)


82


(15,016)


NM


















Operating income


102,420


111,168


(8,748)


(8%)


250,007


266,433


(16,426)


(6%)


















OTHER INCOME AND EXPENSES, NET

















Interest expense


12,431


11,706


725


6%


34,735


34,720


15


0%

Interest income


(2,220)


(1,966)


(254)


13%


(7,617)


(5,218)


(2,399)


46%

Other (gains) losses


(115)


(972)


857


(88%)


(3,219)


(1,355)


(1,864)


138%

Equity in net (income) loss of affiliates


6,400


(43)


6,443


(14984%)


9,551


5,358


4,193


78%

Total other income and expenses, net


16,496


8,725


7,771


89%


33,450


33,505


(55)


(0%)


















Income before income taxes


85,924


102,443


(16,519)


(16%)


216,557


232,928


(16,371)


(7%)

Income taxes


9,685


22,484


(12,799)


(57%)


35,848


48,044


(12,196)


(25%)

Net income 


$              76,239


$              79,959


$    (3,720)


(5%)


$            180,709


$            184,884


$    (4,175)


(2%)



































Basic earnings per share


$                  1.37


$                  1.42


$      (0.05)


(4%)


$                  3.25


$                  3.27


$      (0.02)


(1%)



































Diluted earnings per share


$                  1.36


$                  1.41


$      (0.05)


(4%)


$                  3.23


$                  3.24


$      (0.01)


(0%)

 

Choice Hotels International, Inc. and Subsidiaries



Exhibit 2

Condensed Consolidated Balance Sheets




(Unaudited)















(In thousands, except per share amounts)

 September 30 


 December 31, 






2019


2018















ASSETS















Cash and cash equivalents



$              31,569


$            26,642

Accounts receivable, net



171,802


138,018

Other current assets



56,893


79,124


Total current assets



260,264


243,784









Property and equipment, net


347,343


127,535

Intangible assets, net



279,484


271,188

Goodwill




159,197


168,996

Notes receivable, net of allowances


92,995


83,440

Investments in unconsolidated entities

69,190


109,016

Operating lease right-of-use-asset


26,251


-

Investments, employee benefit plans, at fair value

23,489


19,398

Other assets




116,049


115,013











Total assets


$        1,374,262


$      1,138,370

























LIABILITIES AND SHAREHOLDERS' DEFICIT












Accounts payable 



$              84,512


$            73,511

Accrued expenses and other current liabilities

73,680


92,651

Deferred revenue



77,337


67,614

Liability for guest loyalty program


80,268


83,566

Current portion of long-term debt


507


1,097


Total current liabilities


316,304


318,439









Long-term debt



875,843


753,514

Deferred revenue



110,997


110,278

Liability for guest loyalty program


45,882


52,327

Operating lease liabilities



23,768


-

Deferred compensation & retirement plan obligations  

28,306


24,212

Other liabilities




29,897


63,372










Total liabilities



1,430,997


1,322,142










Total shareholders' deficit


(56,735)


(183,772)











Total liabilities and shareholders' deficit

$        1,374,262


$      1,138,370

 

Choice Hotels International, Inc. and Subsidiaries



Exhibit 3

Condensed Consolidated Statements of Cash Flows




(Unaudited)














(In thousands)

Nine Months Ended September 30,






2019


2018

CASH FLOWS FROM OPERATING ACTIVITIES:








Net income

$                  180,709


$            184,884





Adjustments to reconcile net income to net cash provided




 by operating activities:




Depreciation and amortization  

12,589


10,537

Depreciation and amortization - marketing and reservation system 

12,355


14,687

Franchise agreement acquisition cost amortization

7,537


6,662

Impairment of goodwill and long-lived assets

15,034


-

Gain on sale of assets, net

(2,181)


(58)

Provision for bad debts, net

5,722


6,279

Non-cash stock compensation and other charges

12,433


11,455

Non-cash interest and other (income) loss

(2,615)


492

Deferred income taxes

3,268


(5,610)

Equity in net losses from unconsolidated joint ventures, less distributions received

12,234


7,122

Franchise agreement acquisition costs, net of reimbursements

(25,592)


(40,554)

Change in working capital & other, net of acquisition

(40,516)


(49,059)





 NET CASH PROVIDED BY OPERATING ACTIVITIES 

190,977


146,837





CASH FLOWS FROM INVESTING ACTIVITIES:








Investment in property and equipment

(46,135)


(34,129)

Investment in intangible assets

(3,659)


(1,665)

Business acquisition, net of cash acquired

-


(231,317)

Asset acquisitions, net of cash acquired

(168,954)


(3,179)

Proceeds from sales of assets

10,585


3,053

Proceeds from sale of unconsolidated joint venture

8,937


-

Payment on business disposition, net

(10,783)


-

Contributions to equity method investments

(17,329)


(9,050)

Distributions from equity method investments

9,841


1,429

Purchases of investments, employee benefit plans

(2,748)


(2,441)

Proceeds from sales of investments, employee benefit plans

2,197


2,646

Issuance of notes receivable

(10,767)


(28,876)

Collections of notes receivable

10,491


4,747

Other items, net

(1,842)


(1,065)





 NET CASH USED IN INVESTING ACTIVITIES 

(220,166)


(299,847)





CASH FLOWS FROM FINANCING ACTIVITIES:








Net borrowings pursuant to revolving credit facilities

97,800


56,400

Proceeds from the issuance of long-term debt

23,863


528

Principal payments on long-term debt

(371)


(477)

Debt issuance costs

(300)


(2,590)

Purchase of treasury stock

(44,770)


(109,266)

Dividends paid

(36,103)


(36,628)

(Payments on) proceeds from transfer of interest in notes receivable

(24,409)


173

Proceeds from exercise of stock options

18,519


41,155





 NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES

34,229


(50,705)





Net change in cash and cash equivalents

5,040


(203,715)

Effect of foreign exchange rate changes on cash and cash equivalents

(113)


(705)

Cash and cash equivalents at beginning of period

26,642


235,336





CASH AND CASH EQUIVALENTS AT END OF PERIOD

$                    31,569


$              30,916

 

CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES

Exhibit 4

SUPPLEMENTAL OPERATING INFORMATION 


DOMESTIC HOTEL SYSTEM(1)


(UNAUDITED)




























































































For the Nine Months Ended September 30, 2019


For the Nine Months Ended September 30, 2018


Change



























Average Daily






Average Daily






Average Daily










Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR

























Comfort Inn


$               95.95


66.5%


$            63.82


$             96.34


66.8%


$       64.37


(0.4%)


(30)

bps


(0.9%)



Comfort Suites


99.18


71.0%


70.40


99.21


71.0%


70.48


(0.0%)


-

bps


(0.1%)



Sleep


85.39


66.5%


56.79


85.82


66.6%


57.19


(0.5%)


(10)

bps


(0.7%)



Quality


80.93


61.7%


49.95


81.51


61.7%


50.33


(0.7%)


-

bps


(0.8%)



Clarion


86.54


58.8%


50.91


86.25


59.8%


51.55


0.3%


(100)

bps


(1.2%)



Econo Lodge


64.08


56.2%


36.00


64.25


56.0%


36.00


(0.3%)


20

bps


0.0%



Rodeway


64.28


57.1%


36.70


65.36


58.0%


37.88


(1.7%)


(90)

bps


(3.1%)



WoodSpring(2)


47.34


80.4%


38.08


46.19


80.9%


37.37


2.5%


(50)

bps


1.9%



MainStay


85.61


70.5%


60.35


83.32


71.3%


59.44


2.7%


(80)

bps


1.5%



Suburban


57.75


75.2%


43.44


55.69


76.8%


42.77


3.7%


(160)

bps


1.6%



Cambria Hotels


143.81


73.8%


106.08


146.11


72.3%


105.68


(1.6%)


150

bps


0.4%



Ascend Hotel Collection

127.90


58.6%


74.94


129.21


58.7%


75.79


(1.0%)


(10)

bps


(1.1%)



Total


$               82.66


64.6%


$            53.36


$             82.86


64.8%


$       53.65


(0.2%)


(20)

bps


(0.5%)



















































































































For the Three Months Ended September 30, 2019


For the Three Months Ended September 30, 2018


Change



























Average Daily






Average Daily






Average Daily










Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR

























Comfort Inn


$             100.86


71.6%


$            72.26


$           101.37


71.8%


$       72.74


(0.5%)


(20)

bps


(0.7%)



Comfort Suites


101.31


73.4%


74.37


101.55


73.5%


74.59


(0.2%)


(10)

bps


(0.3%)



Sleep


87.08


69.6%


60.56


87.95


69.6%


61.24


(1.0%)


-

bps


(1.1%)



Quality


85.03


66.2%


56.30


85.61


66.2%


56.66


(0.7%)


-

bps


(0.6%)



Clarion


92.23


63.3%


58.36


90.98


63.9%


58.12


1.4%


(60)

bps


0.4%



Econo Lodge


67.97


60.3%


40.95


68.56


60.2%


41.26


(0.9%)


10

bps


(0.8%)



Rodeway


68.17


61.2%


41.74


69.75


61.9%


43.18


(2.3%)


(70)

bps


(3.3%)



WoodSpring


48.69


81.0%


39.46


46.89


82.6%


38.74


3.8%


(160)

bps


1.9%



MainStay


87.23


73.9%


64.49


86.69


75.1%


65.13


0.6%


(120)

bps


(1.0%)



Suburban


56.85


74.6%


42.40


57.42


78.3%


44.98


(1.0%)


(370)

bps


(5.7%)



Cambria Hotels


144.54


75.9%


109.63


149.48


75.0%


112.06


(3.3%)


90

bps


(2.2%)



Ascend Hotel Collection

135.17


62.4%


84.31


135.93


62.1%


84.35


(0.6%)


30

bps


(0.0%)



Total


$               86.47


68.4%


$            59.12


$             86.83


68.6%


$       59.52


(0.4%)


(20)

bps


(0.7%)



























































































Effective Royalty Rate






































For the Quarter Ended


For the Nine Months Ended
















9/30/2019


9/30/2018


9/30/2019


9/30/2018




































System-wide(2)


4.84%


4.72%


4.84%


4.73%


























































(1) Includes United States and Caribbean countries and territories



(2) WoodSpring was acquired on February 1, 2018, however, ADR, Occupancy, RevPAR and effective royalty rate reflect operating performance for the nine months ended September 30, 2018 



     as if the brand had been acquired on January 1, 2018



 

CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES

Exhibit 5

SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA


(UNAUDITED)


























































September 30, 2019


September 30, 2018


Variance






















Hotels


Rooms


Hotels


Rooms


Hotels


Rooms


%


%




















Comfort Inn


1,053


83,114


1,060


82,998


(7)


116


(0.7%)


0.1%


Comfort Suites


565


43,817


574


44,661


(9)


(844)


(1.6%)


(1.9%)


Sleep


398


28,072


388


27,614


10


458


2.6%


1.7%


Quality


1,670


128,092


1,602


124,271


68


3,821


4.2%


3.1%


Clarion


176


22,113


166


21,641


10


472


6.0%


2.2%


Econo Lodge


815


49,197


824


49,978


(9)


(781)


(1.1%)


(1.6%)


Rodeway


585


34,090


606


34,824


(21)


(734)


(3.5%)


(2.1%)


WoodSpring 


266


31,927


247


29,632


19


2,295


7.7%


7.7%


MainStay


72


4,642


62


4,273


10


369


16.1%


8.6%


Suburban


59


6,026


52


5,529


7


497


13.5%


9.0%


Cambria Hotels


47


6,679


39


5,563


8


1,116


20.5%


20.1%


Ascend Hotel Collection


187


15,670


167


14,290


20


1,380


12.0%


9.7%




















Domestic Franchises(1)


5,893


453,439


5,787


445,274


106


8,165


1.8%


1.8%




















International Franchises


1,181


121,287


1,135


116,106


46


5,181


4.1%


4.5%




















Total Franchises


7,074


574,726


6,922


561,380


152


13,346


2.2%


2.4%




























































































(1)Includes United States and Caribbean countries and territories











 


CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES





Exhibit 6




SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION









(UNAUDITED)


































REVENUES, EXCLUDING MARKETING AND RESERVATION ACTIVITIES

















(dollar amounts in thousands)


Three Months Ended September 30, 


Nine Months Ended September 30, 




















2019


2018


2019


2018





Revenues, Excluding Marketing and Reservation Activities


























Total Revenues


$              310,732


$               291,490


$              846,736


$               796,325





Adjustments:













     Marketing and reservation system revenues


(157,024)


(152,367)


(439,553)


(416,715)





Revenues, excluding marketing and reservation activities


$              153,708


$               139,123


$              407,183


$               379,610











































ADJUSTED SELLING, GENERAL AND ADMINISTRATION EXPENSES

























(dollar amounts in thousands)


Three Months Ended September 30, 


Nine Months Ended September 30, 




















2019


2018


2019


2018


















Total Selling, General and Administrative Expenses


$                38,308


$                 38,191


$              124,802


$               125,325





Mark to market adjustments on non-qualified retirement plan investments


(97)


(965)


(3,152)


(1,351)





Acquisition related transition and transaction costs


-


(574)


-


(5,530)





Adjusted Selling, General and Administration Expenses


$                38,211


$                 36,652


$              121,650


$               118,444











































ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA")

















(dollar amounts in thousands)















Three Months Ended September 30, 


Nine Months Ended September 30, 


















2019


2018


2019


2018

















Net income 


$                76,239


$                 79,959


$              180,709


$               184,884





Income taxes


9,685


22,484


35,848


48,044





Interest expense


12,431


11,706


34,735


34,720





Interest income


(2,220)


(1,966)


(7,617)


(5,218)





Other (gains) losses


(115)


(972)


(3,219)


(1,355)





Equity in net (income) loss of affiliates


6,400


(43)


9,551


5,358





Depreciation and amortization


5,568


3,815


12,589


10,537





(Gain) loss on sale & impairment of assets, net


(8)


-


14,934


(82)





Marketing and reservation system reimbursable (surplus) deficit


1,406


(14,051)


(1,163)


(22,603)





Franchise agreement acquisition costs amortization


1,487


1,165


4,329


3,655





Acquisition related transition and transaction costs


-


574


-


5,530





Mark to market adjustments on non-qualified retirement plan investments


97


965


3,152


1,351




Adjusted EBITDA


$              110,970


$               103,636


$              283,848


$               264,821











































ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS)

















(dollar amounts in thousands, except per share amounts)


Three Months Ended September 30, 


Nine Months Ended September 30, 




















2019


2018


2019


2018

















Net income 


$                76,239


$                 79,959


$              180,709


$               184,884




Adjustments:













Marketing and reservation system reimbursable (surplus) deficit


1,095


(11,071)


(932)


(17,947)





Loss on sale & impairment of assets, net


5,187


-


16,516


(66)





Owned hotels - rehabilitation and re-use of historic buildings federal tax credit


(6,035)


-


(6,035)


-





Debt restructuring costs


-


86


-


86





Transition costs on previously deferred foreign earnings and impact of tax legislation on deferred tax balances


-


874


-


874





Acquisition related transition and transaction costs


-


435


-


4,231




Adjusted Net Income


$                76,486


$                 70,283


$              190,258


$               172,062






























Diluted Earnings Per Share


$                   1.36


$                     1.41


$                   3.23


$                     3.24




Adjustments:













Marketing and reservation system reimbursable (surplus) deficit


0.02


(0.20)


(0.02)


(0.32)





Loss on sale & impairment of assets, net


0.09


-


0.29


-





Owned hotels - rehabilitation and re-use of historic buildings federal tax credit


(0.10)


-


(0.10)


-





Debt restructuring costs


-


-


-


-





Transition costs on previously deferred foreign earnings and impact of tax legislation on deferred tax balances


-


0.02


-


0.02





Acquisition related transition and transaction costs


-


0.01


-


0.07




Adjusted Diluted Earnings Per Share (EPS)


$                   1.37


$                     1.24


$                   3.40


$                     3.01




 

CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES

Exhibit 7

SUPPLEMENTAL INFORMATION - 2019 OUTLOOK


(UNAUDITED)


















Guidance represents the midpoint of the company's range of estimated outcomes for the year ended December 31, 2019

















ADJUSTED EBITDA FULL YEAR FORECAST







(dollar amounts in thousands)


Midpoint








2019 Guidance













Net income 


$           210,700






Income taxes


46,200






Interest expense


47,100






Interest income


(9,900)






Other (gains) losses


(3,200)






Depreciation and amortization


20,100






Loss on sale & impairment of assets, net


14,900






Franchise agreement acquisition costs amortization


5,900






Equity in net loss of affiliates


8,700






Marketing and reservation system reimbursable deficit


19,800






Mark to market adjustments on non-qualified retirement plan investments


3,200





Adjusted EBITDA


$           363,500





































ADJUSTED DILUTED EARNINGS PER SHARE (EPS) FULL YEAR FORECAST














(dollar amounts in thousands, except per share amounts)


























Midpoint








2019 Guidance













Net income 


$           210,700





Adjustments








Marketing and reservation system reimbursable deficit


15,860






Loss on sale & impairment of assets, net


16,516






Owned hotels - rehabilitation and re-use of historic buildings federal tax credit

(6,035)





Adjusted Net Income


$           237,041













Diluted Earnings Per Share 


$                3.77





Adjustments:








Marketing and reservation system reimbursable deficit


0.28






Loss on sale & impairment of assets, net


0.30






Owned hotels - rehabilitation and re-use of historic buildings federal tax credit

(0.11)





Adjusted Diluted Earnings Per Share (EPS)


$                4.24





 

SOURCE Choice Hotels International, Inc.

For further information: Scott Oaksmith, Senior Vice President, Finance & Chief Accounting Officer, 301-592-6659; Oscar Oliveros, Investor Relations Director, 301-628-4360