Choice Hotels International Reports a 10% Increase in Third Quarter EBITDA from Franchising Activities

New Executed Domestic Franchise Agreements Increase 14%

Company Repurchases 1 Million Shares of Stock During Third Quarter

Oct 30, 2015, 09:00 ET from Choice Hotels International, Inc.

ROCKVILLE, Md., Oct. 30, 2015 /PRNewswire/ -- Choice Hotels International, Inc. (NYSE: CHH) today reported the following highlights for the third quarter 2015:

  • Revenues for the three months ended September 30, 2015 totaled $241.5 million, an increase of 12 percent from the same period of 2014.
  • Earnings before interest, taxes, depreciation and amortization ("EBITDA") from franchising activities for the three months ended September 30, 2015, totaled $81.1 million, an increase of 10 percent from the same period of 2014.
  • Franchising margins for the three months ended September 30, 2015, were 74.6 percent, an increase of 230 basis points from the same period of 2014.
  • Domestic royalty fees for the three months ended September 30, 2015, totaled $84.7 million, an increase of 6.5 percent from the same period of 2014.
  • Domestic system-wide revenue per available room ("RevPAR") increased 5.8 percent in the third quarter of 2015, as occupancy and average daily rates increased 120 basis points and 4 percent, respectively from the same period of 2014.
  • Domestic units increased 0.2 percent from September 30, 2014.
  • Effective royalty rate for the three months ended September 30, 2015 increased 3 basis points to 4.27 percent from the same period of 2014.
  • Initial and relicensing fees for the three months ended September 30, 2015, totaled $6.2 million, an increase of 44 percent from the same period of 2014.
  • Domestic hotel executed franchise agreements totaled 129 for the three months ended September 30, 2015, an increase of 14 percent from the same period of 2014.
  • Executed 9 new domestic franchise agreements during the three months ended September 30, 2015 for the Cambria hotels & suites brand including 2 conversion projects in Chicago, Illinois and Atlanta, Georgia.
  • Domestic relicensing and contract renewal transactions totaled 119 for the three months ended September 30, 2015, an increase of 40 percent from the same period of 2014.
  • The company's new construction domestic pipeline of hotels under construction or approved for development increased 29 percent from September 30, 2014, and the total pipeline increased 28 percent.
  • Diluted earnings per share ("EPS") from continuing operations for the three months ended September 30, 2015, totaled $0.72, an increase of 7 percent from the same period of 2014.
  • The company purchased 1.0 million shares of common stock under its share repurchase program during the three months ended September 30, 2015, at a total cost of approximately $50 million.

"We are very pleased with our performance in the third quarter, with double-digit percentage growth in both total revenues and EBITDA. We were pleased with our year-over-year increase in domestic royalty revenue driven by growth in all 3 critical levers – RevPAR, system-size and effective royalty rate. We had a terrific quarter on the development front with improvements in domestic franchise contracts for both new construction and conversion hotels demonstrating that the demand for our brands is strong," said Stephen P. Joyce, president and chief executive officer, Choice Hotels. "The fundamental strength of our operating model enables us to generate strong free cash flows, which allows us to return value to our shareholders through a disciplined and prudent capital allocation strategy."

Discontinued Operations

During 2014, the company entered into and completed a plan to sell its three owned hotels operated under the MainStay Suites brand. The company determined that the sale of these hotels met the definition of a discontinued operation since the operations and cash flows of these components have been eliminated from the on-going operations of the company and the company does not have significant continuing involvement in the operations of the hotels after the transaction. As a result, the company's consolidated statement of income for the three and nine months ended September 30, 2014, reflects these three company-owned hotels as discontinued operations.

Summarized financial information related to these discontinued operations is presented in Exhibit 9 of this press release.                  

Outlook

The company's consolidated 2015 outlook reflects the following assumptions:

Franchising

  • EBITDA from franchising activities for full-year 2015 are expected to range between $255 million and $257 million;
  • Net domestic unit growth for 2015 is expected to be approximately 1%;
  • RevPAR is expected to increase approximately 5.5% and 7% for fourth quarter and full-year 2015, respectively; and
  • The effective royalty rate is expected to increase 2 basis points for full-year 2015 as compared to full-year 2014.

SkyTouch

  • Net reductions in EBITDA relating to our investment in the SkyTouch division for full-year 2015 are expected to be approximately $17 million.

Other Items

  • The effective tax rate for continuing operations is expected to be approximately 31% and 32% for the fourth quarter and full-year 2015, respectively; and
  • All figures assume no further repurchases of common stock under the company's share repurchase program.

Consolidated Outlook

The company's fourth quarter 2015 diluted EPS is expected to be at least $0.47. The company expects full-year 2015 diluted EPS to range between $2.18 and $2.20 and full year 2015 EBITDA to range between $237 million and $241 million.

Conference Call

Choice will conduct a conference call on Friday, October 30, 2015 at 10:00 a.m. EDT to discuss the company's third quarter 2015 results. The dial-in number to listen to the call is 1-855-638-5678, and the access code is 52809803. International callers should dial 1-920-663-6286 and enter the access code 52809803.  The conference call also will be webcast simultaneously via the company's website, www.choicehotels.com.  Interested investors and other parties wishing to access the call via the webcast should go to the website and click on the Investor Info link.  The Investor page will feature a conference call microphone icon to access the call.

The call will be recorded and available for replay beginning at 1:00 p.m. EDT on Friday, October 30, 2015 through Friday, November 6, 2015 by calling 1-855-859-2056 and entering access code 52809803. The international dial-in number for the replay is 1-404-537-3406 and the access code is 52809803. In addition, the call will be archived and available on www.choicehotels.com via the Investor Info link.

About Choice Hotels

Choice Hotels International, Inc.® (NYSE: CHH) is one of the world's largest lodging companies. With more than 6,300 hotels franchised in more than 35 countries and territories, we represent more than 500,000 rooms around the globe. As of September 30, 2015, 638 hotels were in our development pipeline. Our company's Ascend Hotel Collection®, Cambria® hotels & suites, Comfort Inn®, Comfort Suites®, Sleep Inn®, Quality®, Clarion®, MainStay Suites®, Suburban Extended Stay Hotel®, Econo Lodge® and Rodeway Inn® brands provide a spectrum of lodging choices to meet guests' needs. With more than 24 million members and counting, check out our Choice Privileges® rewards program to see how you can reap the benefits of being a member of the Choice Hotels® family. Visit us at www.choicehotels.com for more information.

SkyTouch Technology® is a business division of Choice Hotels that develops and markets cloud-based technology products, including inventory management, pricing and connectivity to third party channels, to hoteliers not under franchise agreements with the company.

Additional corporate information can be found on the Choice Hotels International, Inc. web site, which may be accessed at 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 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; or ability to grow our franchise system; exposure to risks related to development activities; fluctuations in the supply and demand for hotels rooms; our ability to realize anticipated benefits from acquired businesses; the level of acceptance of alternative growth strategies we may implement; operating risks associated with our international operations; the outcome of litigation; and our ability to manage our indebtedness.  These and other risk factors are discussed in detail in the company's filings with the Securities and Exchange Commission including our annual reports on Form 10-K and our quarterly reports filed on Form 10-Q.  We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Statement Concerning Non-GAAP Financial Measurements Presented in this Press Release

EBITDA, franchising revenues, franchising SG&A, EBITDA from franchising activities and franchising margins are non-GAAP financial measurements.  These measures should not be considered as an alternative to any measure of performance or liquidity as promulgated under or authorized by generally accepted accounting principles in the United States ("GAAP"), such as operating 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 EBITDA, franchising revenues, franchising SG&A and franchising margins to the most comparable GAAP financial measures. We discuss management's reasons for reporting these non-GAAP measures below.

Earnings Before Interest, Taxes, Depreciation and Amortization: EBITDA reflects income from continuing operations excluding the impact of interest expense, interest income, provision for income taxes, depreciation and amortization, other (gains) and losses and equity in net income of unconsolidated affiliates. We consider 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 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. EBITDA also excludes depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.

Franchising Revenues, Operating Income, EBITDA, SG&A and Margins:  The company reports franchising revenues, operating income, EBITDA, SG&A and margins which exclude marketing and reservation revenues, the SkyTouch Technology division, recently acquired operations that provide 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.  Marketing and reservation activities are excluded since the company is required by its franchise agreements to use the fees collected for marketing and reservation activities; as such, no income or loss to the company is generated. Cumulative marketing and reservation system fees not expended are recorded as a liability in the company's financial statements and are carried over to the next year and expended in accordance with the franchise agreements. Cumulative marketing and reservation expenditures in excess of fees collected for marketing and reservation activities are deferred and recorded as an asset in the company's financial statements and recovered in future periods.  SkyTouch Technology is a division of the company that develops and markets cloud-based technology products, including inventory management, pricing and connectivity to third party channels, to hoteliers not under franchise agreements with the company. The operations for SkyTouch Technology and our vacation rental technology solutions provider are excluded since they do not reflect the company's core franchising business but are adjacent, complimentary lines of business. These non-GAAP measures are a commonly used measure of performance in our industry and facilitate comparisons between the company and its competitors.

© 2015 Choice Hotels International, Inc.  All rights reserved.

 

Choice Hotels International, Inc.

Exhibit 1

Consolidated Statements of Income

(Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

Variance

Variance

2015

2014

$

%

2015

2014

$

%

(In thousands, except per share amounts)

REVENUES:

Royalty fees

$                 89,929

$              86,091

$     3,838

4%

$              233,543

$               222,301

$     11,242

5%

Initial franchise and relicensing fees

6,170

4,299

1,871

44%

17,703

12,761

4,942

39%

Procurement services

6,271

5,495

776

14%

19,667

18,293

1,374

8%

Marketing and reservation 

134,463

115,653

18,810

16%

366,298

309,025

57,273

19%

Other

4,693

3,630

1,063

29%

11,716

10,188

1,528

15%

      Total revenues

241,526

215,168

26,358

12%

648,927

572,568

76,359

13%

OPERATING EXPENSES:

Selling, general and administrative

30,152

30,236

(84)

(0%)

95,712

88,329

7,383

8%

Depreciation and amortization

3,108

2,293

815

36%

8,793

6,903

1,890

27%

Marketing and reservation

134,463

115,653

18,810

16%

366,298

309,025

57,273

19%

Total operating expenses

167,723

148,182

19,541

13%

470,803

404,257

66,546

16%

Operating income

73,803

66,986

6,817

10%

178,124

168,311

9,813

6%

OTHER INCOME AND EXPENSES, NET:

Interest expense

10,821

10,495

326

3%

32,057

31,376

681

2%

Interest income

(359)

(355)

(4)

1%

(982)

(1,205)

223

(19%)

Other (gains) and losses

1,402

375

1,027

274%

(239)

(158)

(81)

51%

Equity in net (income) loss of affiliates

(329)

513

(842)

(164%)

1,107

578

529

92%

Total other income and expenses, net

11,535

11,028

507

5%

31,943

30,591

1,352

4%

Income from continuing operations before income taxes

62,268

55,958

6,310

11%

146,181

137,720

8,461

6%

Income taxes

20,849

16,542

4,307

26%

47,355

41,556

5,799

14%

Income from continuing operations, net of income taxes

41,419

39,416

2,003

5%

98,826

96,164

2,662

3%

Income from discontinued operations, net of income taxes

-

(51)

51

(100%)

-

1,711

(1,711)

(100%)

Net income

$                 41,419

$              39,365

$     2,054

5%

$                98,826

$                97,875

$         951

1%

Basic earnings per share

Continuing operations

$                     0.72

$                  0.67

$      0.05

7%

$                   1.72

$                    1.65

$        0.07

4%

Discontinued operations

-

-

-

NM

-

0.03

(0.03)

(100%)

$                     0.72

$                  0.67

$      0.05

7%

$                   1.72

$                    1.68

$        0.04

2%

Diluted earnings per share

Continuing operations

$                     0.72

$                  0.67

$      0.05

7%

$                   1.71

$                    1.63

$        0.08

5%

Discontinued operations

-

-

-

NM

-

0.03

(0.03)

(100%)

$                     0.72

$                  0.67

$      0.05

7%

$                   1.71

$                    1.66

$        0.05

3%

 

 

Choice Hotels International, Inc.

Exhibit 2

Consolidated Balance Sheets

(In thousands, except per share amounts)

 September 30, 

 December 31, 

2015

2014

(Unaudited)

ASSETS

Cash and cash equivalents

$           199,261

$         214,879

Accounts receivable, net

114,623

91,681

Other current assets

45,649

42,729

Total current assets

359,533

349,289

Fixed assets and intangibles, net

178,462

152,034

Notes receivable, net of allowances

73,756

40,441

Investments, employee benefit plans, at fair value

17,102

17,539

Other assets

83,909

78,614

Total assets

$           712,762

$         637,917

LIABILITIES AND SHAREHOLDERS' DEFICIT

Accounts payable 

$              59,922

$            57,124

Accrued expenses and other current liabilities

61,051

64,243

Deferred revenue

68,439

66,382

Current portion of long-term debt

1,706

12,349

Total current liabilities

191,118

200,098

Long-term debt

815,858

772,729

Deferred compensation & retirement plan obligations  

22,145

23,987

Other liabilities

84,284

69,904

Total liabilities

1,113,405

1,066,718

Total shareholders' deficit

(400,643)

(428,801)

Total liabilities and shareholders' deficit

$           712,762

$         637,917

 

 

Choice Hotels International, Inc.

Exhibit 3

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

Nine Months Ended September 30,

2015

2014

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$                    98,826

$              97,875

Adjustments to reconcile net income to net cash provided 

 by operating activities:

  Depreciation and amortization  

8,793

6,903

  Gain on sale of assets

(1,519)

(2,809)

  Provision for bad debts, net

1,540

1,676

  Non-cash stock compensation and other charges

8,929

8,093

  Non-cash interest and other (income) loss

3,168

1,836

  Deferred income taxes

(1,799)

(19,216)

  Equity (earnings) losses from unconsolidated joint ventures, net of distributions received

2,917

1,679

Changes in assets and liabilities, net of acquisition:

  Receivables

(24,532)

(30,497)

  Advances to/from marketing and reservation activities, net

18,341

60,187

  Forgivable notes receivable, net

(21,029)

(8,776)

  Accounts payable

5,111

21,845

  Accrued expenses and other current liabilities

(14,083)

(11,082)

  Income taxes payable/receivable

11,066

7,981

  Deferred revenue

2,122

4,751

  Other assets

(4,826)

(1,125)

  Other liabilities

5,748

(943)

 NET CASH PROVIDED BY OPERATING ACTIVITIES 

98,773

138,378

CASH FLOWS FROM INVESTING ACTIVITIES:

Investment in property and equipment

(21,810)

(11,886)

Proceeds from sales of assets

6,347

15,612

Acquisition, net of cash acquired

(13,269)

-

Issuance of mezzanine and other notes receivable

(25,253)

(3,340)

Collections of mezzanine and other notes receivable

3,697

9,832

Contributions to equity method investments

(3,811)

(14,362)

Distributions from equity method investments

270

-

Purchases of investments, employee benefit plans

(2,977)

(1,520)

Proceeds from sales of investments, employee benefit plans

2,920

966

Other items, net

(9,212)

(592)

 NET CASH USED BY INVESTING ACTIVITIES 

(63,098)

(5,290)

CASH FLOWS FROM FINANCING ACTIVITIES:

Net borrowings pursuant to revolving credit facilities

162,032

-

Principal payments on long-term debt

(130,194)

(7,110)

Proceeds from the issuance of long-term debt

176

226

Debt issuance costs

(2,169)

-

Purchase of treasury stock

(56,450)

(23,757)

Dividends paid

(34,173)

(32,767)

Excess tax benefits from stock-based compensation

4,885

2,297

Proceeds from exercise of stock options

6,381

4,984

 NET CASH USED BY FINANCING ACTIVITIES

(49,512)

(56,127)

Net change in cash and cash equivalents

(13,837)

76,961

Effect of foreign exchange rate changes on cash and cash equivalents

(1,781)

(364)

Cash and cash equivalents at beginning of period

214,879

167,795

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$                  199,261

$            244,392

 

 

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 4

SUPPLEMENTAL OPERATING INFORMATION 

DOMESTIC HOTEL SYSTEM

(UNAUDITED)

For the Nine Months Ended September 30, 2015

For the Nine Months Ended September 30, 2014

Change

Average Daily

Average Daily

Average Daily

Rate

Occupancy

RevPAR

Rate

Occupancy

RevPAR

Rate

Occupancy

RevPAR

Comfort Inn

$             90.65

66.8%

$          60.52

$             86.92

64.9%

$         56.43

4.3%

190

bps

7.2%

Comfort Suites

94.83

69.9%

66.25

91.06

67.8%

61.78

4.1%

210

bps

7.2%

Sleep

81.34

65.7%

53.45

77.75

63.7%

49.52

4.6%

200

bps

7.9%

Quality

76.02

60.2%

45.75

72.87

57.7%

42.05

4.3%

250

bps

8.8%

Clarion

80.93

58.9%

47.68

78.05

55.9%

43.59

3.7%

300

bps

9.4%

Econo Lodge

60.44

55.1%

33.30

58.64

52.9%

31.01

3.1%

220

bps

7.4%

Rodeway

60.56

58.5%

35.44

57.46

56.5%

32.48

5.4%

200

bps

9.1%

MainStay

78.03

69.7%

54.35

75.52

72.9%

55.03

3.3%

(320)

bps

(1.2%)

Suburban

47.75

77.0%

36.78

45.29

73.3%

33.19

5.4%

370

bps

10.8%

Ascend Hotel Collection

127.38

59.9%

76.34

120.64

59.8%

72.10

5.6%

10

bps

5.9%

Total 

$             80.77

62.9%

$          50.79

$             77.80

60.9%

$         47.36

3.8%

200

bps

7.2%

For the Three Months Ended September 30, 2015

For the Three Months Ended September 30, 2014

Change

Average Daily

Average Daily

Average Daily

Rate

Occupancy

RevPAR

Rate

Occupancy

RevPAR

Rate

Occupancy

RevPAR

Comfort Inn

$             96.35

73.2%

$          70.54

$             92.33

72.0%

$         66.44

4.4%

120

bps

6.2%

Comfort Suites

98.06

73.2%

71.79

94.13

72.1%

67.86

4.2%

110

bps

5.8%

Sleep

84.44

69.1%

58.31

80.95

68.4%

55.35

4.3%

70

bps

5.3%

Quality

80.80

65.3%

52.79

77.05

63.3%

48.78

4.9%

200

bps

8.2%

Clarion

85.46

63.9%

54.61

83.40

61.8%

51.49

2.5%

210

bps

6.1%

Econo Lodge

65.32

60.1%

39.27

63.31

59.0%

37.33

3.2%

110

bps

5.2%

Rodeway

66.00

63.7%

42.02

62.71

62.8%

39.35

5.2%

90

bps

6.8%

MainStay

81.26

71.8%

58.36

78.58

77.3%

60.70

3.4%

(550)

bps

(3.9%)

Suburban

48.77

78.1%

38.09

46.78

74.6%

34.88

4.3%

350

bps

9.2%

Ascend Hotel Collection

134.88

60.1%

81.07

127.43

61.0%

77.68

5.8%

(90)

bps

4.4%

Total 

$             85.38

67.7%

$          57.80

$             82.12

66.5%

$         54.64

4.0%

120

bps

5.8%

For the Three Months Ended

For the Nine Months Ended

9/30/2015

9/30/2014

9/30/2015

9/30/2014

System-wide effective royalty rate

4.27%

4.24%

4.28%

4.28%

 

 

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 5

SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA

(UNAUDITED)

September 30, 2015

September 30, 2014

Variance

Hotels

Rooms

Hotels

Rooms

Hotels

Rooms

%

%

Comfort Inn

1,188

92,029

1,266

98,119

(78)

(6,090)

(6.2%)

(6.2%)

Comfort Suites

574

44,311

593

45,873

(19)

(1,562)

(3.2%)

(3.4%)

Sleep

374

26,913

374

27,065

-

(152)

0.0%

(0.6%)

Quality

1,325

105,950

1,262

103,358

63

2,592

5.0%

2.5%

Clarion

176

24,626

183

26,182

(7)

(1,556)

(3.8%)

(5.9%)

Econo Lodge

854

52,963

846

52,304

8

659

0.9%

1.3%

Rodeway

488

27,095

460

25,235

28

1,860

6.1%

7.4%

MainStay

48

3,656

42

3,304

6

352

14.3%

10.7%

Suburban

63

7,065

64

7,164

(1)

(99)

(1.6%)

(1.4%)

Ascend Hotel Collection

112

9,407

107

9,271

5

136

4.7%

1.5%

Cambria hotel & suites

24

2,917

21

2,534

3

383

14.3%

15.1%

Domestic Franchises

5,226

396,932

5,218

400,409

8

(3,477)

0.2%

(0.9%)

International Franchises

1,153

107,425

1,168

106,905

(15)

520

(1.3%)

0.5%

Total Franchises

6,379

504,357

6,386

507,314

(7)

(2,957)

(0.1%)

(0.6%)

 

 

Exhibit 6

CHOICE HOTELS INTERNATIONAL, INC.

SUPPLEMENTAL INFORMATION BY BRAND

DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS

(UNAUDITED)

For the Nine Months Ended September 30, 2015

For the Nine Months Ended September 30, 2014

% Change

New

New

New

Construction

Conversion

Total

Construction

Conversion

Total

Construction

Conversion

Total

Comfort Inn

17

28

45

16

11

27

6%

155%

67%

Comfort Suites

18

3

21

11

-

11

64%

NM

91%

Sleep

19

-

19

21

1

22

(10%)

(100%)

(14%)

Quality

3

114

117

3

82

85

0%

39%

38%

Clarion

-

7

7

1

15

16

(100%)

(53%)

(56%)

Econo Lodge

-

39

39

1

46

47

(100%)

(15%)

(17%)

Rodeway

-

57

57

3

48

51

(100%)

19%

12%

MainStay

16

-

16

10

1

11

60%

(100%)

45%

Suburban

1

4

5

2

3

5

(50%)

33%

0%

Ascend Hotel Collection

3

22

25

6

11

17

(50%)

100%

47%

Cambria hotel & suites

14

2

16

5

-

5

180%

NM

220%

Total Domestic System

91

276

367

79

218

297

15%

27%

24%

For the Three Months Ended September 30, 2015

For the Three Months Ended September 30, 2014

% Change

New

New

New

Construction

Conversion

Total

Construction

Conversion

Total

Construction

Conversion

Total

Comfort Inn

4

8

12

6

3

9

(33%)

167%

33%

Comfort Suites

5

1

6

4

-

4

25%

NM

50%

Sleep

10

-

10

7

-

7

43%

NM

43%

Quality

-

39

39

-

34

34

NM

15%

15%

Clarion

-

1

1

1

4

5

(100%)

(75%)

(80%)

Econo Lodge

-

11

11

1

19

20

(100%)

(42%)

(45%)

Rodeway

-

22

22

2

17

19

(100%)

29%

16%

MainStay

10

-

10

5

-

5

100%

NM

100%

Suburban

-

1

1

1

-

1

(100%)

NM

0%

Ascend Hotel Collection

2

6

8

-

5

5

NM

20%

60%

Cambria hotel & suites

7

2

9

4

-

4

75%

NM

125%

Total Domestic System

38

91

129

31

82

113

23%

11%

14%

 

 

Exhibit 7

CHOICE HOTELS INTERNATIONAL, INC.

DOMESTIC PIPELINE OF HOTELS UNDER CONSTRUCTION, AWAITING CONVERSION OR APPROVED FOR DEVELOPMENT

(UNAUDITED)

A hotel in the domestic pipeline does not always result in an open and operating hotel due to various factors.

Variance

September 30, 2015

September 30, 2014

Units

Units

Conversion

New Construction

Total

Conversion

New Construction

Total

Conversion

New Construction

Total

Units

%

Units

%

Units

%

Comfort Inn

39

63

102

33

51

84

6

18%

12

24%

18

21%

Comfort Suites

1

75

76

-

47

47

1

NM

28

60%

29

62%

Sleep Inn

-

72

72

2

62

64

(2)

(100%)

10

16%

8

13%

Quality

56

5

61

34

6

40

22

65%

(1)

(17%)

21

53%

Clarion

9

2

11

9

3

12

-

0%

(1)

(33%)

(1)

(8%)

Econo Lodge

26

4

30

36

3

39

(10)

(28%)

1

33%

(9)

(23%)

Rodeway

44

2

46

31

4

35

13

42%

(2)

(50%)

11

31%

MainStay

1

54

55

2

39

41

(1)

(50%)

15

38%

14

34%

Suburban

4

10

14

6

11

17

(2)

(33%)

(1)

(9%)

(3)

(18%)

Ascend Hotel Collection

21

18

39

8

15

23

13

163%

3

20%

16

70%

Cambria hotel & suites

2

32

34

-

20

20

2

NM

12

60%

14

70%

203

337

540

161

261

422

42

26%

76

29%

118

28%

 

 

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 8

SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION

(UNAUDITED)

CALCULATION OF FRANCHISING REVENUES AND FRANCHISING MARGINS

(dollar amounts in thousands)

Three Months Ended September 30, 

Nine Months Ended September 30, 

2015

2014

2015

2014

Franchising Revenues:

Total Revenues

$              241,526

$               215,168

$               648,927

$              572,568

Adjustments:

     Marketing and reservation revenues

(134,463)

(115,653)

(366,298)

(309,025)

     Non-franchising activities

(1,458)

(92)

(2,473)

(213)

Franchising Revenues

$              105,605

$                 99,423

$               280,156

$              263,330

Franchising Margins:

Operating Margin:

Total Revenues

$              241,526

$               215,168

$               648,927

$              572,568

Operating Income

$                73,803

$                 66,986

$               178,124

$              168,311

     Operating Margin

30.6%

31.1%

27.4%

29.4%

Franchising Margin:

Franchising Revenues

$              105,605

$                 99,423

$               280,156

$              263,330

Operating Income

$                73,803

$                 66,986

$               178,124

$              168,311

Non-franchising activities operating loss

4,943

4,928

14,807

12,794

$                78,746

$                 71,914

$               192,931

$              181,105

     Franchising Margins

74.6%

72.3%

68.9%

68.8%

CALCULATION OF FRANCHISING SELLING, GENERAL AND ADMINISTRATION EXPENSES

(dollar amounts in thousands)

Three Months Ended September 30, 

Nine Months Ended September 30, 

2015

2014

2015

2014

Total Selling, General and Administrative Expenses

$                30,152

$                 30,236

$                 95,712

$                88,329

Non-Franchising Activities

(5,632)

(4,786)

(15,630)

(12,322)

Franchising Selling, General and Administration Expenses

$                24,520

$                 25,450

$                 80,082

$                76,007

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

(dollar amounts in thousands)

Three Months Ended September 30, 

Nine Months Ended September 30, 

2015

2014

2015

2014

Income from continuing operations, net of income taxes

$                41,419

$                 39,416

$                 98,826

$                96,164

Income taxes

20,849

16,542

47,355

41,556

Interest expense

10,821

10,495

32,057

31,376

Interest income

(359)

(355)

(982)

(1,205)

Other (gains) and losses

1,402

375

(239)

(158)

Equity in net (income) loss of affiliates

(329)

513

1,107

578

Depreciation and amortization

3,108

2,293

8,793

6,903

EBITDA

$                76,911

$                 69,279

$               186,917

$              175,214

Franchising 

$                81,085

$                 73,973

$               200,074

$              187,323

Non-Franchising activities

(4,174)

(4,694)

(13,157)

(12,109)

$                76,911

$                 69,279

$               186,917

$              175,214

 

 

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 9

DISCONTINUED OPERATIONS

(UNAUDITED)

Three Months Ended September 30,

Nine Months Ended September 30, 

(In thousands)

2015

2014

2015

2014

REVENUES:

Hotel operations

$                       -

$                          -

$                        -

$                  801

      Total revenues

-

-

-

801

OPERATING EXPENSES:

Hotel operations

-

52

-

884

Total operating expenses

-

52

-

884

Operating income (loss)

-

(52)

-

(83)

Gain (loss) on disposal of discontinued operations

-

(30)

-

2,803

Income (loss) from discontinued operations before income taxes

-

(82)

-

2,720

Income tax  (benefit)

-

(31)

-

1,009

Income (loss) from discontinued operations

$                       -

$                      (51)

$                        -

$               1,711

 

 

Photo - http://photos.prnewswire.com/prnh/20140807/134515

SOURCE Choice Hotels International, Inc.



RELATED LINKS

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