Choice Hotels Reports Full Year 2011 Adjusted Diluted EPS of $1.92, Fourth Quarter Domestic RevPAR Growth of 7.8%

SILVER SPRING, Md., Feb. 20, 2012 // PRNewswire // --Choice Hotels International, Inc., (NYSE: CHH) today reported the following highlights for fourth quarter and full year 2011:

Full Year Results

  • Adjusted diluted earnings per share ("EPS") for full year 2011 were $1.92 compared to $1.82 for full year 2010. Diluted EPS were $1.85 for 2011 compared to $1.80 for 2010. Adjusted diluted EPS for full year 2011 and 2010 exclude certain special items, as described below, totaling $0.07 and $0.02, respectively.
  • Excluding special items, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") increased 8% to $184.3 million for the year ended December 31, 2011, compared to $170.8 million for the year ended December 31, 2010. Operating income increased 7% from $160.8 million for the year ended December 31, 2010 to $171.9 million for same period of 2011.
  • Franchising revenues increased 9% from $262.8 million for the year ended December 31, 2010 to $285.4 million for the same period of 2011. Total revenues increased 7% to $638.8 million for the year ended December 31, 2011 compared to the same period of 2010.
  • The effective income tax rate for the year ended December 31, 2011 was 30.1% compared to 32.1% for the same period of the prior year. Excluding discrete items, totaling $5.1 million and $3.2 million recorded during the years ended December 31, 2011 and 2010, the company's effective income tax rate was approximately 33.4% and 34.2%, respectively.
  • Worldwide unit growth increased 0.6 percent from December 31, 2010 comprised of domestic and international unit growth of 0.2 percent and 2.4 percent, respectively.
  • Domestic system-wide revenue per available room ("RevPAR") increased 6.2% for full year 2011 compared to the same period of 2010 as occupancy and average daily rates increased 220 basis points and 1.9 percent, respectively.
  • The effective royalty rate increased 3 basis points to 4.32% for the year ended December 31, 2011 compared to 4.29% for the same period of the prior year.
  • The company executed 332 new domestic hotel franchise contracts for the year ended December 31, 2011 compared to 357 new domestic hotel franchise contracts in the prior year.
  • The number of worldwide hotels under construction, awaiting conversion or approved for development at December 31, 2011 was 490 hotels representing 39,675 rooms;
  • During the year ended December 31, 2011, the company purchased approximately 1.6 million shares of its common stock at an average price of $31.59 for a total cost of $51.0 million under the share repurchase program.

Fourth Quarter Results

  • Adjusted EPS for fourth quarter 2011 increased 10% to $0.46 compared to $0.42 for the same period of the prior year. Diluted EPS were $0.42 for the fourth quarter of 2011 compared to $0.40 for the same period of 2010. Adjusted diluted EPS for fourth quarter 2011 and 2010 exclude certain special items, as described below, totaling $0.04 and $0.02, respectively.
  • Excluding special items, adjusted EBITDA were $44.3 million for the three months ended December 31, 2011, compared to $41.5 million for the same period of 2010. Operating income for the three months ended December 31, 2011 and 2010 was $38.7 million and $38.4 million, respectively.
  • Franchising revenues increased 10% from $66.9 million for the three months ended December 31, 2010 to $73.9 million for the same period of 2011. Total revenues for the three months ended December 31, 2011 increased 7% compared to the same period of 2010.
  • Domestic system-wide RevPAR increased 7.8% for the fourth quarter of 2011 compared to the same period of 2010 as a result of occupancy rates increasing 260 basis points and a 2.7% increase in average daily rates.
  • The company executed 128 new domestic hotel franchise contracts for the three months ended December 31, 2011 compared to 161 contracts executed in the same period of the prior year.

"We are pleased with the continued strong gains we achieved in domestic RevPAR during the fourth quarter and the growth of our global franchise system," said Stephen P. Joyce, president and chief executive officer. "While the near term franchise sales environment remains challenging, we believe that our well-known diversified brands will continue to resonate with developers and hotel owners due to our focus on owners' property-level profitability and return on investment. We remain focused on prudently managing our brands, gaining operating efficiencies and returning value to our shareholders."

Special Items

During the three months and year ended December 31, 2011, the company recorded employee termination benefit charges included in selling, general and administration ("SG&A") expenses of approximately $3.6 million and $4.4 million, respectively. In addition, during the year ended December 31, 2011, the company reduced the carrying amount of a parcel of land held for sale resulting in a loss of $1.8 million included in other gains and losses. These special items represent diluted EPS of $0.04 and $0.07 for the three months and year ended December 31, 2011, respectively.

During the three months and year ended December 31, 2010, the company recorded employee termination benefit charges in SG&A of approximately $1.2 million and $1.7 million, respectively. These special items represent diluted EPS of $0.02 for both the three months and year ended December 31, 2010.

Outlook for 2012

The company's first quarter 2012 diluted EPS is expected to be at least $0.30. The company expects full-year 2012 diluted EPS to range between $1.99 and $2.04. EBITDA for full-year 2012 are expected to range between $199 million and $203 million. These estimates include the following assumptions:

  • The company expects net domestic unit growth to be relatively flat in 2012;
  • RevPAR is expected to increase approximately 8% for first quarter of 2012 and increase between approximately 4% and 6% for full-year 2012;
  • The effective royalty rate is expected to increase 1 basis point for full-year 2012;
  • During the fourth quarter of 2011, the company implemented measures to increase its productivity and streamline services that are projected to result in future cost savings. As a result of these measures as well as expected reduction of certain variable incentive compensation and employee termination benefits, the company's 2012 SG&A is projected to decline approximately $15 million from the $106.4 million incurred during the year ended December 31, 2011.
  • All figures assume the existing share count and an effective tax rate of 34.5% for the first quarter and full-year 2012.

Use of Free Cash Flow

The company has historically used its free cash flow (cash flow from operations less capital expenditures) to return value to shareholders, primarily through share repurchases and dividends.

For the year ended December 31, 2011 the company paid $43.7 million of cash dividends to shareholders. The current quarterly dividend rate per common share is $0.185, subject to declaration by our board of directors.

During the year ended December 31, 2011, the company purchased approximately 1.6 million shares of its common stock at an average price of $31.59 for a total cost of $51.0 million under the share repurchase program. Subsequent to December 31, 2011 and through February 20, 2012, the company repurchased an additional 0.2 million shares for a total cost of $5.9 million at an average price of $36.49 and has authorization to purchase up to an additional 1.8 million shares under this program. We expect to continue making repurchases in the open market and through privately negotiated transactions, subject to market and other conditions. No minimum number of share repurchases has been fixed. Since Choice announced its stock repurchase program on June 25, 1998, the company has repurchased 44.8 million shares of its common stock for a total cost of $1.1 billion through December 31, 2011. Considering the effect of a two-for-one stock split in October 2005, the company had repurchased 77.8 million shares through December 31, 2011 under the share repurchase program at an average price of $13.73 per share.

Our board of directors previously authorized us to enter into programs which permit us to offer financing, investment and guaranty support to qualified franchisees as well as to acquire and resell real estate to incent franchise development for certain brands in top markets. Over the next several years, we expect to continue to opportunistically deploy capital pursuant to these programs to promote growth of our emerging brands. The amount and timing of the investment in these programs will be dependent on market and other conditions. Notwithstanding these programs, the company expects to continue to return value to its shareholders through a combination of share repurchases and dividends, subject to market and other conditions.

Conference Call

Choice will conduct a conference call on Tuesday, February 21, 2012 at 9:30 a.m. EST to discuss the company's fourth quarter and full-year 2011 results. The dial-in number to listen to the call is 1-866-383-7989, and the access code is 60035894. International callers should dial 1-617-597-5328 and enter the access code 60035894. The conference call also will be Webcast simultaneously via the company's Web site, www.choicehotels.com. Interested investors and other parties wishing to access the call via the Webcast should go to the Web site and click on the Investor Info link. The Investor Information page will feature a conference call microphone icon to access the call.

The call will be recorded and available for replay beginning at 11:30 a.m. EST on Tuesday, February 21, 2012 through Wednesday, March 28, 2012 by calling 1-888-286-8010 and entering access code 88211651. The international dial-in number for the replay is 617-801-6888, access code 88211651. 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. franchises more than 6,100 hotels, representing more than 495,000 rooms, in the United States and more than 30 other countries and territories. As of December 31, 2011, more than 400 hotels were under construction, awaiting conversion or approved for development in the United States, representing more than 30,000 rooms, and approximately 80 hotels, representing approximately 7,000 rooms, were under construction, awaiting conversion or approved for development in 20 other countries and territories. The company's Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge and Rodeway Inn brands serve guests worldwide. In addition, via its Ascend Collection membership program, travelers in the United States, Canada and the Caribbean have upscale lodging options at historic, boutique and unique hotels.

Additional corporate information may 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 federal securities law. Generally, our use of words such as "expect," "estimate," "believe," "anticipate," "will," "forecast," "plan"," project," "assume" or similar words of futurity identify statements that are forward-looking and that we intend to be included within the Safe Harbor protections provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such 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, payment of stock dividends, 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; 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 reservations systems and other operating systems; fluctuations in the supply and demand for hotels rooms; and our ability to manage effectively our indebtedness. These and other risk factors are discussed in detail in the Risk Factors section of the company's Form 10-K for the year ended December 31, 2010, filed with the Securities and Exchange Commission on March 1, 2011. 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

Adjusted diluted EPS, adjusted EBITDA, adjusted SG&A, franchising revenues and adjusted franchising margins are non-GAAP financial measurements. This information should not be considered as an alternative to any measure of performance as promulgated under accounting principles generally accepted in the United States ("GAAP"), such as diluted earnings per share, 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 these measures to the comparable GAAP measurement. We discuss management's reasons for reporting these non-GAAP measures below.

Earnings Before Interest, Taxes, Depreciation and Amortization: EBITDA reflects earnings excluding the impact of interest expense, tax expense, depreciation and amortization. Our management considers EBITDA to be an indicator of operating performance because it can be used to measure our ability to service debt, fund capital expenditures, and expand our business. EBITDA is a commonly used measure of performance in our industry. In addition, it is used by analysts, lenders, investors and others, as well as by us, to facilitate comparisons between the company and its competitors because it excludes certain items that can vary widely across different industries or among companies within the same industry.

Franchising Revenues and Margins: The company reports franchising revenues and margins which exclude marketing and reservation revenues and hotel operations. Marketing and reservation activities are excluded from revenues and operating margins since the company is contractually required by its franchise agreements to use these fees collected for marketing and reservation activities. Cumulative reservation and marketing system fees not expended are recorded as a payable on the company's financial statements and are carried over to the next fiscal year and expended in accordance with the franchise agreements. Cumulative marketing and reservation expenditures in excess of system fees collected for marketing and reservation activities are recorded as a receivable on the company's financial statements. In addition, the company has the contractual authority to require that the franchisees in the system at any given point repay the company for any deficits related to marketing and reservation activities. Hotel operations are excluded since they do not reflect the most accurate measure of the company's core franchising business. These non-GAAP measures are a commonly used measure of performance in our industry and facilitate comparisons between the company and its competitors.

Adjusted Diluted EPS, Adjusted EBITDA, Adjusted SG&A and Adjusted Franchising Margins: The company's management also uses adjusted diluted EPS, adjusted EBITDA, adjusted SG&A and adjusted franchising margins which exclude employee termination benefits for the years ended December 31, 2011 and 2010 as well as a reduction in the carrying amount of land held for sale during the year ended December 31, 2011. The company utilizes these non-GAAP measures to enable investors to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of on-going operations.

Choice Hotels International, Inc.

                         

Exhibit 1

 

Consolidated Statements of Income

                             

(Unaudited)

                             
                                         
                                         
                                     
         

Three Months Ended December 31,

 

Year Ended December 31,

 
                 

Variance

         

Variance

 
         

2011

 

2010

 

$

 

%

 

2011

 

2010

 

$

 

%

 

(In thousands, except per share amounts)

                                 
                                         

REVENUES:

                                       
                                         

Royalty fees

     

$ 63,344

 

$ 59,067

 

$ 4,277

 

7%

 

$ 247,240

 

$ 230,096

 

$ 17,144

 

7%

 

Initial franchise and relicensing fees

   

4,889

 

2,758

 

2,131

 

77%

 

13,557

 

9,295

 

4,262

 

46%

 

Procurement services

     

3,913

 

3,595

 

318

 

9%

 

17,619

 

17,207

 

412

 

2%

 

Marketing and reservation

   

90,844

 

87,150

 

3,694

 

4%

 

349,036

 

329,246

 

19,790

 

6%

 

Hotel operations

     

1,183

 

987

 

196

 

20%

 

4,356

 

4,031

 

325

 

8%

 

Other

       

1,717

 

1,449

 

268

 

18%

 

6,985

 

6,201

 

784

 

13%

 

Total revenues

     

165,890

 

155,006

 

10,884

 

7%

 

638,793

 

596,076

 

42,717

 

7%

 
                                         

OPERATING EXPENSES:

                                     
                                         

Selling, general and administrative

   

33,463

 

26,744

 

6,719

 

25%

 

106,404

 

94,540

 

11,864

 

13%

 

Depreciation and amortization

   

2,048

 

1,872

 

176

 

9%

 

8,024

 

8,342

 

(318)

 

(4%)

 

Marketing and reservation

   

90,844

 

87,150

 

3,694

 

4%

 

349,036

 

329,246

 

19,790

 

6%

 

Hotel operations

     

873

 

799

 

74

 

9%

 

3,466

 

3,186

 

280

 

9%

 

Total operating expenses

   

127,228

 

116,565

 

10,663

 

9%

 

466,930

 

435,314

 

31,616

 

7%

 
                                         

Operating income

     

38,662

 

38,441

 

221

 

1%

 

171,863

 

160,762

 

11,101

 

7%

 
                                         

OTHER INCOME AND EXPENSES:

                                   

Interest expense

     

3,220

 

3,520

 

(300)

 

(9%)

 

12,939

 

6,680

 

6,259

 

94%

 

Interest income

     

(369)

 

(192)

 

(177)

 

92%

 

(1,306)

 

(548)

 

(758)

 

138%

 

Other (gains) and losses

   

(1,236)

 

(1,066)

 

(170)

 

16%

 

2,442

 

(2,355)

 

4,797

 

(204%)

 

Equity in net income of affiliates

   

(7)

 

(336)

 

329

 

(98%)

 

(269)

 

(1,226)

 

957

 

(78%)

 

Total other income and expenses, net

 

1,608

 

1,926

 

(318)

 

(17%)

 

13,806

 

2,551

 

11,255

 

441%

 
                                         

Income before income taxes

   

37,054

 

36,515

 

539

 

1%

 

158,057

 

158,211

 

(154)

 

(0%)

 

Income taxes

     

12,268

 

12,372

 

(104)

 

(1%)

 

47,661

 

50,770

 

(3,109)

 

(6%)

 

Net income

     

$ 24,786

 

$ 24,143

 

$ 643

 

3%

 

$ 110,396

 

$ 107,441

 

$ 2,955

 

3%

 
                                         
                                         

Basic earnings per share

   

$ 0.42

 

$ 0.41

 

$ 0.01

 

2%

 

$ 1.86

 

$ 1.80

 

$ 0.06

 

3%

 
                                         

Diluted earnings per share

   

$ 0.42

 

$ 0.40

 

$ 0.02

 

5%

 

$ 1.85

 

$ 1.80

 

$ 0.05

 

3%

 
                                       



Choice Hotels International, Inc.

       

Exhibit 2

 

Consolidated Balance Sheets

           
                 
                 

(In thousands, except per share amounts)

 

December 31,

 

December 31,

 
         

2011

 

2010

 
         

(Unaudited)

     
                 

ASSETS

             
                 

Cash and cash equivalents

   

$ 107,057

 

$ 91,259

 

Accounts receivable, net

   

53,012

 

47,638

 

Investments, employee benefit plans, at fair value

 

12,094

 

-

 

Deferred income taxes

   

-

 

429

 

Other current assets

     

22,633

 

24,256

 
 

Total current assets

   

194,796

 

163,582

 
                 

Fixed assets and intangibles, net

   

135,252

 

142,528

 

Receivable -- marketing and reservation fees

 

54,014

 

42,507

 

Investments, employee benefit plans, at fair value

 

11,678

 

23,365

 

Other assets

     

51,949

 

39,740

 
                 
   

Total assets

   

$ 447,689

 

$ 411,722

 
                 
                 
                 

LIABILITIES AND SHAREHOLDERS' DEFICIT

         
                 

Accounts payable and accrued expenses

 

$ 92,240

 

$ 88,986

 

Deferred revenue

     

68,825

 

67,322

 

Revolving credit facility

   

-

 

200

 

Deferred compensation & retirement plan obligations

 

18,935

 

2,552

 

Current portion of long-term debt

   

673

 

420

 

Other current liabilities

   

3,892

 

5,778

 
 

Total current liabilities

   

184,565

 

165,258

 
                 

Long-term debt

     

252,032

 

251,554

 

Deferred compensation & retirement plan obligations

 

20,593

 

35,707

 

Other liabilities

     

16,060

 

17,274

 
                 
 

Total liabilities

   

473,250

 

469,793

 
                 

Common stock, $0.01 par value

   

583

 

596

 

Additional paid-in-capital

   

102,665

 

92,774

 

Accumulated other comprehensive loss

   

(6,801)

 

(7,192)

 

Treasury stock, at cost

   

(916,955)

 

(872,306)

 

Retained earnings

     

794,947

 

728,057

 
 

Total shareholders' deficit

   

(25,561)

 

(58,071)

 
                 
   

Total liabilities and shareholders' deficit

$ 447,689

 

$ 411,722

 
               


Choice Hotels International, Inc.

   

Exhibit 3

 

Consolidated Statements of Cash Flows

       

(Unaudited)

       
         
         
     

(In thousands)

Year Ended December 31,

 
         
 

2011

 

2010

 

CASH FLOWS FROM OPERATING ACTIVITIES:

       
         

Net income

$ 110,396

 

$ 107,441

 
         

Adjustments to reconcile net income to net cash provided

       

by operating activities:

       

Depreciation and amortization

8,024

 

8,342

 

Provision for bad debts

2,160

 

3,547

 

Non-cash stock compensation and other charges

14,511

 

9,304

 

Non-cash interest and other (income) loss

2,208

 

(1,711)

 

Dividends received from equity method investments

1,139

 

1,155

 

Equity in net income of affiliates

(269)

 

(1,226)

 
         

Changes in assets and liabilities, net of acquisitions:

       

Receivables

(7,785)

 

(9,229)

 

Receivable - marketing and reservation fees, net

623

 

4,654

 

Accounts payable

(1,851)

 

5,744

 

Accrued expenses

6,346

 

10,630

 

Income taxes payable/receivable

(4,562)

 

(1,417)

 

Deferred income taxes

5,514

 

(2,381)

 

Deferred revenue

1,523

 

15,413

 

Other assets

(3,162)

 

(12,705)

 

Other liabilities

29

 

7,374

 
         

NET CASH PROVIDED BY OPERATING ACTIVITIES

134,844

 

144,935

 
         

CASH FLOWS FROM INVESTING ACTIVITIES:

       
         

Investment in property and equipment

(10,924)

 

(24,368)

 

Equity method investments

(5,000)

 

-

 

Issuance of notes receivable

(12,766)

 

(11,786)

 

Collections of notes receivable

4,754

 

5,083

 

Proceeds from sale of assets

1,654

 

-

 

Purchases of investments, employee benefit plans

(1,602)

 

(1,948)

 

Proceeds from sales of investments, employee benefit plans

644

 

1,649

 

Acquisitions, net of cash acquired

-

 

(466)

 

Other items, net

(564)

 

(319)

 
         

NET CASH USED IN INVESTING ACTIVITIES

(23,804)

 

(32,155)

 
         

CASH FLOWS FROM FINANCING ACTIVITIES:

       
         

Proceeds from the issuance of long-term debt

75

 

247,733

 

Net repayments pursuant to revolving credit facilities

(200)

 

(277,500)

 

Principal payments on long-term debt

(297)

 

(25)

 

Settlement of forward starting interest rate swap agreement

-

 

(8,663)

 

Debt issuance costs

(2,356)

 

(800)

 

Purchase of treasury stock

(53,617)

 

(11,212)

 

Excess tax benefits from stock-based compensation

1,227

 

625

 

Dividends paid

(43,747)

 

(43,808)

 

Proceeds from exercise of stock options

3,845

 

2,457

 
         

NET CASH USED IN FINANCING ACTIVITIES

(95,070)

 

(91,193)

 
         

Net change in cash and cash equivalents

15,970

 

21,587

 

Effect of foreign exchange rate changes on cash and cash equivalents

(172)

 

1,802

 

Cash and cash equivalents at beginning of period

91,259

 

67,870

 
         

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$ 107,057

 

$ 91,259

 
       


CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 4

 

SUPPLEMENTAL OPERATING INFORMATION

   

DOMESTIC HOTEL SYSTEM

   

(UNAUDITED)

   
                                             
                                             
                                             
                                             
   

For the Year Ended December 31, 2011*

 

For the Year Ended December 31, 2010*

 

Change

     
                                             
   

Average Daily

         

Average Daily

         

Average Daily

               
   

Rate

 

Occupancy

 

RevPAR

 

Rate

 

Occupancy

 

RevPAR

 

Rate

 

Occupancy

 

RevPAR

     
                                             

Comfort Inn

 

$ 79.41

 

57.5%

 

$ 45.62

 

$ 77.21

 

55.6%

 

$ 42.93

 

2.8%

 

190

bps

 

6.3%

     

Comfort Suites

 

83.72

 

58.6%

 

49.09

 

82.48

 

55.2%

 

45.53

 

1.5%

 

340

bps

 

7.8%

     

Sleep

 

69.96

 

53.6%

 

37.49

 

68.82

 

51.6%

 

35.52

 

1.7%

 

200

bps

 

5.5%

     

Quality

 

67.75

 

50.0%

 

33.86

 

66.81

 

48.1%

 

32.11

 

1.4%

 

190

bps

 

5.5%

     

Clarion

 

73.89

 

46.9%

 

34.64

 

75.15

 

43.7%

 

32.86

 

(1.7%)

 

320

bps

 

5.4%

     

Econo Lodge

 

54.71

 

47.5%

 

25.96

 

54.10

 

45.8%

 

24.80

 

1.1%

 

170

bps

 

4.7%

     

Rodeway

 

51.87

 

48.7%

 

25.27

 

51.07

 

45.8%

 

23.38

 

1.6%

 

290

bps

 

8.1%

     

MainStay

 

66.16

 

67.7%

 

44.80

 

65.60

 

63.6%

 

41.71

 

0.9%

 

410

bps

 

7.4%

     

Suburban

 

40.26

 

67.5%

 

27.15

 

39.23

 

63.8%

 

25.03

 

2.6%

 

370

bps

 

8.5%

     

Ascend Collection

 

113.59

 

60.3%

 

68.44

 

112.50

 

57.6%

 

64.81

 

1.0%

 

270

bps

 

5.6%

     
                                             

Total

 

$ 71.83

 

53.5%

 

$ 38.44

 

$ 70.50

 

51.3%

 

$ 36.18

 

1.9%

 

220

bps

 

6.2%

     
                                             

* Operating statistics represent hotel operations from December through November

     
                                             
                                             
   

For the Three Months Ended December 31, 2011*

 

For the Three Months Ended December 31, 2010*

 

Change

     
                                             
   

Average Daily

         

Average Daily

         

Average Daily

               
   

Rate

 

Occupancy

 

RevPAR

 

Rate

 

Occupancy

 

RevPAR

 

Rate

 

Occupancy

 

RevPAR

     
                                             

Comfort Inn

 

$ 79.92

 

58.8%

 

$ 46.98

 

$ 77.36

 

56.3%

 

$ 43.54

 

3.3%

 

250

bps

 

7.9%

     

Comfort Suites

 

83.13

 

59.2%

 

49.23

 

81.17

 

55.4%

 

44.96

 

2.4%

 

380

bps

 

9.5%

     

Sleep

 

70.06

 

54.0%

 

37.80

 

68.47

 

51.2%

 

35.04

 

2.3%

 

280

bps

 

7.9%

     

Quality

 

67.17

 

50.2%

 

33.74

 

65.35

 

48.2%

 

31.52

 

2.8%

 

200

bps

 

7.0%

     

Clarion

 

74.27

 

47.6%

 

35.32

 

74.05

 

44.9%

 

33.23

 

0.3%

 

270

bps

 

6.3%

     

Econo Lodge

 

54.62

 

48.3%

 

26.37

 

53.59

 

46.2%

 

24.77

 

1.9%

 

210

bps

 

6.5%

     

Rodeway

 

51.12

 

49.1%

 

25.11

 

50.00

 

45.2%

 

22.60

 

2.2%

 

390

bps

 

11.1%

     

MainStay

 

66.12

 

69.7%

 

46.06

 

64.30

 

63.1%

 

40.56

 

2.8%

 

660

bps

 

13.6%

     

Suburban

 

40.31

 

66.6%

 

26.84

 

39.20

 

62.5%

 

24.50

 

2.8%

 

410

bps

 

9.6%

     

Ascend Collection

 

122.22

 

61.0%

 

74.56

 

127.73

 

60.4%

 

77.12

 

(4.3%)

 

60

bps

 

(3.3%)

     
                                             

Total

 

$ 71.98

 

54.2%

 

$ 39.03

 

$ 70.09

 

51.6%

 

$ 36.19

 

2.7%

 

260

bps

 

7.8%

     
                                             
                                             

* Operating statistics represent hotel operations from September through November

     
                                             
                                             
                                           


                         
   

For the Quarter Ended

     

For the Year Ended

   
   

12/31/2011

 

12/31/2010

     

12/31/2011

 

12/31/2010

   
                         

System-wide effective royalty rate

 

4.31%

 

4.31%

     

4.32%

 

4.29%

   
                       


CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 5

 

SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA

   

(UNAUDITED)

   
                                     
                                     
                                     
   

December 31, 2011

 

December 31, 2010

 

Variance

   
                                     
   

Hotels

 

Rooms

 

Hotels

 

Rooms

 

Hotels

 

Rooms

 

%

 

%

   
                                     

Comfort Inn

 

1,399

 

109,330

 

1,435

 

112,169

 

(36)

 

(2,839)

 

(2.5%)

 

(2.5%)

   

Comfort Suites

 

616

 

47,738

 

623

 

48,246

 

(7)

 

(508)

 

(1.1%)

 

(1.1%)

   

Sleep

 

394

 

28,568

 

398

 

28,957

 

(4)

 

(389)

 

(1.0%)

 

(1.3%)

   

Quality

 

1,047

 

91,502

 

1,012

 

89,185

 

35

 

2,317

 

3.5%

 

2.6%

   

Clarion

 

189

 

27,527

 

192

 

28,711

 

(3)

 

(1,184)

 

(1.6%)

 

(4.1%)

   

Econo Lodge

 

797

 

49,483

 

784

 

48,728

 

13

 

755

 

1.7%

 

1.5%

   

Rodeway

 

388

 

21,627

 

387

 

21,261

 

1

 

366

 

0.3%

 

1.7%

   

MainStay

 

40

 

3,093

 

37

 

2,868

 

3

 

225

 

8.1%

 

7.8%

   

Suburban

 

60

 

7,126

 

64

 

7,685

 

(4)

 

(559)

 

(6.3%)

 

(7.3%)

   

Ascend Collection

 

52

 

4,617

 

38

 

3,025

 

14

 

1,592

 

36.8%

 

52.6%

   

Cambria Suites

 

19

 

2,215

 

23

 

2,700

 

(4)

 

(485)

 

(17.4%)

 

(18.0%)

   
                                     

Domestic Franchises

 

5,001

 

392,826

 

4,993

 

393,535

 

8

 

(709)

 

0.2%

 

(0.2%)

   
                                     

International Franchises

 

1,177

 

104,379

 

1,149

 

101,610

 

28

 

2,769

 

2.4%

 

2.7%

   
                                     

Total Franchises

 

6,178

 

497,205

 

6,142

 

495,145

 

36

 

2,060

 

0.6%

 

0.4%

   
                                   


                                   

Exhibit 6

 

CHOICE HOTELS INTERNATIONAL, INC.

 

SUPPLEMENTAL INFORMATION BY BRAND

 

DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS

 

(UNAUDITED)

 
                                       
                                       
                                       
                                       
   

For the Year Ended December 31, 2011

 

For the Year Ended December 31, 2010

 

% Change

 
                                       
   

New

         

New

         

New

         
   

Construction

 

Conversion

 

Total

 

Construction

 

Conversion

 

Total

 

Construction

 

Conversion

 

Total

 
                                       

Comfort Inn

 

12

 

46

 

58

 

7

 

32

 

39

 

71%

 

44%

 

49%

 

Comfort Suites

 

12

 

4

 

16

 

21

 

2

 

23

 

(43%)

 

100%

 

(30%)

 

Sleep

 

9

 

2

 

11

 

9

 

1

 

10

 

0%

 

100%

 

10%

 

Quality

 

-

 

80

 

80

 

1

 

104

 

105

 

(100%)

 

(23%)

 

(24%)

 

Clarion

 

-

 

19

 

19

 

-

 

37

 

37

 

NM

 

(49%)

 

(49%)

 

Econo Lodge

 

1

 

56

 

57

 

-

 

67

 

67

 

NM

 

(16%)

 

(15%)

 

Rodeway

 

-

 

49

 

49

 

1

 

39

 

40

 

(100%)

 

26%

 

23%

 

MainStay

 

6

 

3

 

9

 

8

 

2

 

10

 

(25%)

 

50%

 

(10%)

 

Suburban

 

5

 

4

 

9

 

5

 

1

 

6

 

0%

 

300%

 

50%

 

Ascend Collection

 

2

 

14

 

16

 

1

 

13

 

14

 

100%

 

8%

 

14%

 

Cambria Suites

 

8

 

-

 

8

 

6

 

-

 

6

 

33%

 

NM

 

33%

 
                                       

Total Domestic System

 

55

 

277

 

332

 

59

 

298

 

357

 

(7%)

 

(7%)

 

(7%)

 
                                       
                                       
                                       
                                       
                                       
   

For the Three Months Ended December 31, 2011

 

For the Three Months Ended December 31, 2010

 

% Change

 
                                       
   

New

         

New

         

New

         
   

Construction

 

Conversion

 

Total

 

Construction

 

Conversion

 

Total

 

Construction

 

Conversion

 

Total

 
                                       

Comfort Inn

 

6

 

18

 

24

 

3

 

10

 

13

 

100%

 

80%

 

85%

 

Comfort Suites

 

5

 

-

 

5

 

8

 

1

 

9

 

(38%)

 

(100%)

 

(44%)

 

Sleep

 

3

 

1

 

4

 

6

 

1

 

7

 

(50%)

 

0%

 

(43%)

 

Quality

 

-

 

31

 

31

 

-

 

50

 

50

 

NM

 

(38%)

 

(38%)

 

Clarion

 

-

 

7

 

7

 

-

 

20

 

20

 

NM

 

(65%)

 

(65%)

 

Econo Lodge

 

1

 

20

 

21

 

-

 

29

 

29

 

NM

 

(31%)

 

(28%)

 

Rodeway

 

-

 

17

 

17

 

-

 

13

 

13

 

NM

 

31%

 

31%

 

MainStay

 

5

 

-

 

5

 

4

 

2

 

6

 

25%

 

(100%)

 

(17%)

 

Suburban

 

3

 

2

 

5

 

4

 

1

 

5

 

(25%)

 

100%

 

0%

 

Ascend Collection

 

-

 

5

 

5

 

-

 

8

 

8

 

NM

 

(38%)

 

(38%)

 

Cambria Suites

 

4

 

-

 

4

 

1

 

-

 

1

 

300%

 

NM

 

300%

 
                                       

Total Domestic System

 

27

 

101

 

128

 

26

 

135

 

161

 

4%

 

(25%)

 

(20%)

 
                                       
                                     


                                           

Exhibit 7

     

CHOICE HOTELS INTERNATIONAL, INC.

 

DOMESTIC HOTEL 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

 
   

December 31, 2011

 

December 31, 2010

                         
   

Units

 

Units

 

Conversion

 

New Construction

 

Total

 
   

Conversion

 

New Construction

 

Total

 

Conversion

 

New Construction

 

Total

 

Units

 

%

 

Units

 

%

 

Units

 

%

 
                                                   

Comfort Inn

 

29

 

46

 

75

 

30

 

62

 

92

 

(1)

 

(3%)

 

(16)

 

(26%)

 

(17)

 

(18%)

 

Comfort Suites

 

1

 

90

 

91

 

1

 

122

 

123

 

-

 

0%

 

(32)

 

(26%)

 

(32)

 

(26%)

 

Sleep Inn

 

1

 

49

 

50

 

-

 

75

 

75

 

1

 

NM

 

(26)

 

(35%)

 

(25)

 

(33%)

 

Quality

 

29

 

5

 

34

 

33

 

8

 

41

 

(4)

 

(12%)

 

(3)

 

(38%)

 

(7)

 

(17%)

 

Clarion

 

14

 

1

 

15

 

18

 

2

 

20

 

(4)

 

(22%)

 

(1)

 

(50%)

 

(5)

 

(25%)

 

Econo Lodge

 

25

 

2

 

27

 

35

 

2

 

37

 

(10)

 

(29%)

 

-

 

0%

 

(10)

 

(27%)

 

Rodeway

 

22

 

1

 

23

 

12

 

2

 

14

 

10

 

83%

 

(1)

 

(50%)

 

9

 

64%

 

MainStay

 

2

 

28

 

30

 

1

 

42

 

43

 

1

 

100%

 

(14)

 

(33%)

 

(13)

 

(30%)

 

Suburban

 

2

 

20

 

22

 

-

 

27

 

27

 

2

 

NM

 

(7)

 

(26%)

 

(5)

 

(19%)

 

Ascend Collection

 

6

 

4

 

10

 

6

 

4

 

10

 

-

 

0%

 

-

 

0%

 

-

 

0%

 

Cambria Suites

 

-

 

31

 

31

 

-

 

34

 

34

 

-

 

NM

 

(3)

 

(9%)

 

(3)

 

(9%)

 
                                                   

Total Domestic Pipeline

 

131

 

277

 

408

 

136

 

380

 

516

 

(5)

 

(4%)

 

(103)

 

(27%)

 

(108)

 

(21%)

 
                                                 


 

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 8

 
 

SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION

     
 

(UNAUDITED)

     
                         

CALCULATION OF FRANCHISING REVENUES AND ADJUSTED FRANCHISING MARGINS

     
                         

(dollar amounts in thousands)

 

Three Months Ended December 31,

 

Year Ended December 31,

     
                         
     

2011

 

2010

 

2011

 

2010

     
 

Franchising Revenues:

                     
                         
 

Total Revenues

 

$ 165,890

 

$ 155,006

 

$ 638,793

 

$ 596,076

     
 

Adjustments:

                     
 

Marketing and reservation revenues

 

(90,844)

 

(87,150)

 

(349,036)

 

(329,246)

     
 

Hotel operations

 

(1,183)

 

(987)

 

(4,356)

 

(4,031)

     
 

Franchising Revenues

 

$ 73,863

 

$ 66,869

 

$ 285,401

 

$ 262,799

     
                         
 

Franchising Margins:

                     
                         
 

Operating Margin:

                     
                         
 

Total Revenues

 

$ 165,890

 

$ 155,006

 

$ 638,793

 

$ 596,076

     
 

Operating Income

 

$ 38,662

 

$ 38,441

 

$ 171,863

 

$ 160,762

     
 

Operating Margin

 

23.3%

 

24.8%

 

26.9%

 

27.0%

     
                         
 

Adjusted Franchising Margin:

                     
                         
 

Franchising Revenues

 

$ 73,863

 

$ 66,869

 

$ 285,401

 

$ 262,799

     
                         
 

Operating Income

 

$ 38,662

 

$ 38,441

 

$ 171,863

 

$ 160,762

     
 

Employee termination benefits

 

3,619

 

1,233

 

4,444

 

1,730

     
 

Hotel operations

 

(310)

 

(188)

 

(890)

 

(845)

     
     

$ 41,971

 

$ 39,486

 

$ 175,417

 

$ 161,647

     
                         
 

Adjusted Franchising Margins

 

56.8%

 

59.0%

 

61.5%

 

61.5%

     
                         
                         
                         

CALCULATION OF ADJUSTED SELLING, GENERAL AND ADMINISTRATIVE COSTS

     
                         

(dollar amounts in thousands)

 

Three Months Ended December 31,

 

Year Ended December 31,

     
                         
     

2011

 

2010

 

2011

 

2010

     
                         
 

Selling, general and administrative expense

 

$ 33,463

 

$ 26,744

 

$ 106,404

 

$ 94,540

     
 

Employee termination benefits

 

(3,619)

 

(1,233)

 

(4,444)

 

(1,730)

     
 

Adjusted Selling, General and Administrative Expense

 

$ 29,844

 

$ 25,511

 

$ 101,960

 

$ 92,810

     
                         
                         
                         

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

     
                         

(In thousands, except per share amounts)

 

Three Months Ended December 31,

 

Year Ended December 31,

     
                         
     

2011

 

2010

 

2011

 

2010

     
                         

Net Income

 

$ 24,786

 

$ 24,143

 

$ 110,396

 

$ 107,441

     

Adjustments:

                     
 

Employee termination benefits

 

2,291

 

772

 

2,813

 

1,083

     
 

Loss on land held for sale

 

-

 

-

 

1,119

 

-

     

Adjusted Net Income

 

$ 27,077

 

$ 24,915

 

$ 114,328

 

$ 108,524

     
                         

Weighted average shares outstanding-diluted

 

58,608

 

59,706

 

59,525

 

59,656

     
                         

Diluted Earnings Per Share

 

$ 0.42

 

$ 0.40

 

$ 1.85

 

$ 1.80

     

Adjustments:

                     
 

Employee termination benefits

 

0.04

 

0.02

 

0.05

 

0.02

     
 

Loss on land held for sale

 

-

 

-

 

0.02

 

-

     

Adjusted Diluted Earnings Per Share (EPS)

 

$ 0.46

 

$ 0.42

 

$ 1.92

 

$ 1.82

     
                         
                         
                         

Adjusted EBITDA Reconciliation

     
                         

(in millions)

                     
     

Q4 2011 Actuals

 

Q4 2010 Actuals

 

Year Ended December
31, 2011 Actuals

 

Year Ended December
31, 2010 Actuals

 

Full-Year 2012
Outlook

 
                         
 

Operating Income (per GAAP)

 

$ 38.7

 

$ 38.4

 

$ 171.9

 

$ 160.8

 

$190 - $194

 
 

Employee termination benefits

 

3.6

 

1.2

 

4.4

 

1.7

 

-

 
 

Depreciation and amortization

 

2.0

 

1.9

 

8.0

 

8.3

 

9

 
 

Adjusted Earnings before interest, taxes, depreciation &

amortization (non-GAAP)

 

$ 44.3

 

$ 41.5

 

$ 184.3

 

$ 170.8

 

$199 - $203

 
                       

Choice Hotels, Choice Hotels International, Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge, Rodeway Inn and Ascend Collection are proprietary trademarks and service marks of Choice Hotels International.

2012 Choice Hotels International, Inc. All rights reserved.

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