Choice Hotels International Reports First Quarter 2013 Diluted EPS Of $0.26 Per Share

New Domestic Hotel Franchise Contracts Rise 30%

ROCKVILLE, Md. - April 29, 2013 // PRNewswire // - Choice Hotels International, Inc., (NYSE: CHH) today reported the following highlights for the first quarter 2013:

  • Franchising revenues increased 4% to $59.5 million for the three months ended March 31, 2013 from $57.3 million for the same period of 2012.  Total revenues increased 6% to $136.9 million for the three months ended March 31, 2013 compared to the same period of 2012.
  • Domestic royalty fees for the three months ended March 31, 2013 increased $2.0 million to $44.3 million from $42.3 millionfor the three months ended March 31, 2012, an increase of 5%.
  • Domestic system-wide revenue per available room ("RevPAR") increased 4.6% for the three months ended March 31, 2013compared to the same quarter of the prior year as occupancy and average daily rates increased 100 basis points and 2.3 percent, respectively.  
  • Domestic unit and room growth increased 1.7 percent and 0.8 percent from March 31, 2012, respectively. 
  • The effective royalty rate increased 5 basis points to 4.39% for the three months ended March 31, 2013 compared to 4.34% for the same period of the prior year.
  • Initial and relicensing fees for the three months ended March 31, 2013 increased $1.2 million or 49% to $3.8 million from the same period of the prior year.
  • The company executed 83 new domestic hotel franchise contracts for the three months ended March 31, 2013 compared to 64 new domestic hotel franchise contracts in the same period of the prior year, a 30% increase.
  • The company entered into a multi-faceted strategic marketing alliance with Bluegreen Corporation which will add 21 Bluegreen Vacation Club® Resorts in top vacation destinations to the company's Ascend Hotel Collection.
  • Domestic relicensing and contract renewal transactions increased from 49 contracts during the three months ended March 31, 2012 to 69 in the current period, a 41% increase.
  • The number of worldwide hotels under construction, awaiting conversion or approved for development as of March 31, 2013was 476 hotels representing 37,977 rooms.
  • Earnings before interest, taxes, depreciation and amortization ("EBITDA") was $32.6 million for the three months endedMarch 31, 2013, compared to $33.1 million in the same period of the prior year. The first quarter 2013 EBITDA results reflect certain one-time costs related to the company's recent corporate headquarters relocation as well as additional investments in alternative growth strategies.
  • The effective income tax rate for the three months ended March 31, 2013 was 25.8% compared to 33.9% for the same period of 2012.
  • Diluted earnings per share ("EPS") for first quarter 2013 were $0.26 compared to $0.34 for the first quarter of 2012.  EPS for the first quarter of 2013 reflect $7.7 million of additional interest expense compared to the prior year reflecting the financing transactions entered into during the second and third quarters of 2012 in conjunction with the payment of the $600 millionspecial cash dividend on August 23, 2012.
  • The company launched SkyTouch Technology, a new division that develops and markets cloud-based technology products to help industry-wide hoteliers improve their efficiency and profitability.

"Our development results continued to build on the momentum that started last year, increasing by 30% over the same period of the prior year," said Stephen P. Joyce, president and chief executive officer. "We are also encouraged by our RevPAR results which still reflect a strong mix of both occupancy and average daily rate increases. We remain optimistic that our core hotel franchising business will continue to improve and we are excited about our new alliance with Bluegreen Corporation and the launch of our new SkyTouch Technology initiative."

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.

Dividends

The company did not pay dividends during the three months ended March 31, 2013 as the company's regular first quarter dividend was paid in December 2012. The company's current quarterly dividend rate per common share is $0.185, subject to declaration by our board of directors.

Share Repurchases

The company did not repurchase any shares of common stock under the share repurchase program during the three months ended March 31, 2013 but has authorization to purchase up to an additional 1.4 million shares under this program. We expect we will continue to make repurchases under our share repurchase program 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 45.3 million shares of its common stock for a total cost of $1.1 billion through March 31, 2013. Considering the effect of a two-for-one stock split in October 2005, the company has repurchased 78.3 million shares through March 31, 2013 under the share repurchase program at an average price of $13.89 per share.

Other

Our board of directors previously authorized us to enter into a program which permits 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 strategic markets. At March 31, 2013 and December 31, 2012, the company had approximately $69 million and $68 million outstanding related to this program, respectively. Over the next several years, we expect to continue to opportunistically deploy capital pursuant to this program to promote growth of our emerging brands. We expect these advances to range between $20 million and $40 million per year, however, the amount and timing of the investments will be dependent on market and other conditions. Notwithstanding this program, 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.

Balance Sheet

At March 31, 2013, the company had gross debt of $871.3 million and cash and cash equivalents totaling $140.2 million resulting in net debt of $731.1 million. At December 31, 2012, the company had gross debt of $855.3 million and cash equivalents totaling $134.2 million resulting in net debt of $721.1 million.

At March 31, 2013 and December 31, 2012, the company had outstanding mezzanine financing, real estate investments and sliver equity investments totaling $69 million and $68 million, respectively pursuant to its program to offer financing and investment support to incent franchise development for the Cambria Suites brand in strategic markets. These investments are reported in other current assets and other assets on the company's consolidated balance sheet.

Outlook

The company's second quarter 2013 diluted EPS is expected to be $0.45. The company expects full-year 2013 diluted EPS to range between $1.87 and $1.91. EBITDA for full-year 2013 are expected to range between $206 million and $210 million. These estimates include the following assumptions:

  • The company expects net domestic unit growth to increase by approximately 1.5% in 2013;
  • RevPAR is expected to increase approximately 4% for the second quarter of 2013 and increase between 4.5% and 5.5% for full-year 2013;
  • The effective royalty rate is expected to increase 3 basis points for full-year 2013;
  • All figures assume the existing share count;
  • An effective tax rate of 30.8% and 30.6% for the second quarter and full-year 2013, respectively;
  • Our EBITDA outlook for full year 2013 reflects additional expenses related to the company's recently announced SkyTouch Technology initiative. The company expects to deploy additional resources towards this growth opportunity and as a result expects to incur operating expenses in 2013 not contemplated in the company's previous outlook ranging between $6 million and $8 million for investment in the infrastructure of this division including business development, sales and marketing and other costs as well as continued software development expenditures related to the division's technology related products and services.

Conference Call

Choice will conduct a conference call on Monday, April 29, 2013 at 10:00 a.m. EDT to discuss the company's first quarter 2013 results. The dial-in number to listen to the call is 1-800-884-5695, and the access code is 85035046. International callers should dial 1-617-786-2960 and enter the access code 85035046. 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 12:00 p.m. EDT on Monday April 29, 2013 through Monday, May 6, 2013 by calling 1-888-286-8010 and entering access code 97633732. The international dial-in number for the replay is 1-617-801-6888, access code 97633732. 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 over 6,200 hotels, representing more than 500,000 rooms, in the United States and more than 30 other countries and territories. As of March 31, 2013, 395 hotels, representing more than 30,000 rooms, were under construction, awaiting conversion or approved for development in the United States. Additionally, 81 hotels, representing approximately 7,000 rooms, were under construction, awaiting conversion or approved for development in more than 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, as well as its Ascend Hotel Collection membership program, serve guests worldwide.
SkyTouch Technology is an initiative of Choice Hotels International, Inc. that develops and markets cloud-based technology products to help industry-wide hoteliers improve their efficiency and profitability.

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," "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, 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, 2012, filed with the Securities and Exchange Commission on February 28, 2013 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 Exhibit 8

EBITDA, franchising revenues and franchising margins are non-GAAP financial measurements. This information should not be considered as an alternative to any measure of performance as promulgated under generally accepted accounting principles in the United States ("GAAP"), 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 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 liability on 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 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.

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, Ascend Hotel Collection and SkyTouch Technologyare proprietary trademarks and service marks of Choice Hotels International.

©2013 Choice Hotels International, Inc. All rights reserved.

Choice Hotels International, Inc.

           

Exhibit 1

Consolidated Statements of Income

             

(Unaudited)

                   
                       
                       
                   
         

Three Months Ended March 31,

                 

Variance

         

2013

 

2012

 

$

 

%

(In thousands, except per share amounts)

               
                       

REVENUES:

                   
                       

Royalty fees

     

$              49,736

 

$              47,853

 

$       1,883

 

4%

Initial franchise and relicensing fees

 

3,777

 

2,528

 

1,249

 

49%

Procurement services

   

3,950

 

3,315

 

635

 

19%

Marketing and reservation 

   

76,440

 

70,929

 

5,511

 

8%

Hotel operations

     

956

 

978

 

(22)

 

(2%)

Other

       

2,013

 

3,566

 

(1,553)

 

(44%)

      Total revenues

   

136,872

 

129,169

 

7,703

 

6%

                       

OPERATING EXPENSES:

                 
                       

Selling, general and administrative

 

26,916

 

24,349

 

2,567

 

11%

Depreciation and amortization

   

2,175

 

2,017

 

158

 

8%

Marketing and reservation

   

76,440

 

70,929

 

5,511

 

8%

Hotel operations

     

875

 

809

 

66

 

8%

Total operating expenses

   

106,406

 

98,104

 

8,302

 

8%

                       

Operating income

     

30,466

 

31,065

 

(599)

 

(2%)

                       

OTHER INCOME AND EXPENSES, NET:

               

Interest expense

     

10,770

 

3,117

 

7,653

 

246%

Interest income

     

(644)

 

(337)

 

(307)

 

91%

Other (gains) and losses

   

(710)

 

(2,003)

 

1,293

 

(65%)

Equity in net loss of affiliates

   

141

 

55

 

86

 

156%

Total other income and expenses, net

9,557

 

832

 

8,725

 

1049%

                       

Income before income taxes

   

20,909

 

30,233

 

(9,324)

 

(31%)

Income taxes

     

5,386

 

10,236

 

(4,850)

 

(47%)

Net income

     

$              15,523

 

$              19,997

 

$      (4,474)

 

(22%)

                       
                       

Basic earnings per share

   

$                  0.27

 

$                  0.34

 

$       (0.07)

 

(21%)

                       

Diluted earnings per share

   

$                  0.26

 

$                  0.34

 

$       (0.08)

 

(24%)

                       

 

Choice Hotels International, Inc.

     

Exhibit 2

Consolidated Balance Sheets

       
               
               

(In thousands, except per share amounts)

 March 31, 

 

 December 31, 

         

2013

 

2012

         

(Unaudited)

   
               

ASSETS

           
               

Cash and cash equivalents

   

$           140,225

 

$         134,177

Accounts receivable, net

   

54,202

 

52,270

Investments, employee benefit plans, at fair value

378

 

3,486

Other current assets

   

44,968

 

43,537

 

Total current assets

   

239,773

 

233,470

               

Fixed assets and intangibles, net

 

149,652

 

130,937

Receivable -- marketing and reservation fees

51,297

 

42,179

Investments, employee benefit plans, at fair value

13,933

 

12,755

Other assets

     

91,318

 

91,431

               
   

Total assets

 

$           545,973

 

$         510,772

               
               
               

LIABILITIES AND SHAREHOLDERS' DEFICIT

     
               

Accounts payable and accrued expenses

$              94,563

 

$            94,266

Deferred revenue

   

76,316

 

71,154

Deferred compensation & retirement plan obligations

2,361

 

2,522

Current portion of long-term debt

 

8,201

 

8,195

Other current liabilities

   

1,550

 

-

 

Total current liabilities

 

182,991

 

176,137

               

Long-term debt

   

863,114

 

847,150

Deferred compensation & retirement plan obligations  

19,940

 

20,399

Other liabilities

     

19,257

 

15,990

               
 

Total liabilities

   

1,085,302

 

1,059,676

               

Common stock, $0.01 par value

 

585

 

582

Additional paid-in-capital

   

108,995

 

110,246

Accumulated other comprehensive loss

(4,233)

 

(4,216)

Treasury stock, at cost

   

(921,421)

 

(927,776)

Retained earnings

   

276,745

 

272,260

 

Total shareholders' deficit

 

(539,329)

 

(548,904)

               
   

Total liabilities and shareholders' deficit       

$           545,973

 

$         510,772

               

 

Choice Hotels International, Inc.

   

Exhibit 3

Consolidated Statements of Cash Flows

     

(Unaudited)

     
       
       
   

(In thousands)

Three Months Ended March 31,

       
 

2013

 

2012

CASH FLOWS FROM OPERATING ACTIVITIES:

     
       

Net income

$                    15,523

 

$              19,997

       

Adjustments to reconcile net income to net cash provided 

     

 by operating activities:

     

  Depreciation and amortization  

2,175

 

2,017

  Provision for bad debts, net

844

 

679

  Non-cash stock compensation and other charges

2,549

 

2,543

  Non-cash interest and other (income) loss

76

 

(1,593)

  Deferred income taxes

446

 

(30)

  Dividends received from equity method investments

146

 

-

  Equity in net loss of affiliates

141

 

55

       

Changes in assets and liabilities:

     

  Receivables

(3,531)

 

(870)

  Receivable - marketing and reservation fees, net

(4,101)

 

(6,187)

  Accounts payable

10,471

 

6,712

  Accrued expenses

(31,145)

 

(25,342)

  Income taxes payable/receivable

4,367

 

8,180

  Deferred revenue

5,160

 

1,997

  Other assets

(3,869)

 

(2,611)

  Other liabilities

2,622

 

(1,135)

       

 NET CASH PROVIDED BY OPERATING ACTIVITIES

1,874

 

4,412

       

CASH FLOWS FROM INVESTING ACTIVITIES:

     
       

Investment in property and equipment

(13,645)

 

(3,129)

Equity method investments

(1,000)

 

(2,600)

Issuance of notes receivable

(1,729)

 

(3,719)

Collections of notes receivable

19

 

151

Purchases of investments, employee benefit plans

(1,242)

 

(743)

Proceeds from sales of investments, employee benefit plans

3,882

 

8,652

Other items, net

(101)

 

(108)

       

 NET CASH USED IN INVESTING ACTIVITIES

(13,816)

 

(1,496)

       

CASH FLOWS FROM FINANCING ACTIVITIES:

     
       

Net borrowings pursuant to revolving credit facilities

18,000

 

5,900

Principal payments on long-term debt

(2,046)

 

(166)

Dividends paid

(503)

 

(10,713)

Purchase of treasury stock

(3,634)

 

(14,854)

Excess tax benefits from stock-based compensation

952

 

422

Proceeds from exercise of stock options

5,367

 

389

       

 NET CASH PROVIDED (USED) IN FINANCING ACTIVITIES

18,136

 

(19,022)

       

Net change in cash and cash equivalents

6,194

 

(16,106)

Effect of foreign exchange rate changes on cash and cash equivalents    

(146)

 

361

Cash and cash equivalents at beginning of period

134,177

 

107,057

       

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$                  140,225

 

$              91,312

       

 

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 4

SUPPLEMENTAL OPERATING INFORMATION 

 

DOMESTIC HOTEL SYSTEM

 

(UNAUDITED)

 
                                           
                                           
                                           
                                           
   

For the Three Months Ended March 31, 2013*

 

For the Three Months Ended March 31, 2012*

 

Change

   
                                           
   

Average Daily

         

Average Daily

         

Average Daily

             
   

Rate

 

Occupancy

 

RevPAR

 

Rate

 

Occupancy

 

RevPAR

 

Rate

 

Occupancy

 

RevPAR

   
                                           

Comfort Inn

 

$             76.30

 

47.5%

 

$          36.24

 

$             74.29

 

46.8%

 

$34.76

 

2.7%

 

70

bps

 

4.3%

   

Comfort Suites

 

81.82

 

52.6%

 

43.04

 

79.88

 

51.0%

 

40.72

 

2.4%

 

160

bps

 

5.7%

   

Sleep

 

69.07

 

47.6%

 

32.85

 

66.39

 

45.0%

 

29.90

 

4.0%

 

260

bps

 

9.9%

   

Quality

 

64.20

 

42.2%

 

27.08

 

63.39

 

40.8%

 

25.87

 

1.3%

 

140

bps

 

4.7%

   

Clarion

 

68.84

 

41.1%

 

28.32

 

67.90

 

38.7%

 

26.26

 

1.4%

 

240

bps

 

7.8%

   

Econo Lodge

 

51.67

 

38.6%

 

19.95

 

50.31

 

38.7%

 

19.45

 

2.7%

 

(10)

bps

 

2.6%

   

Rodeway

 

47.96

 

42.2%

 

20.25

 

47.08

 

41.7%

 

19.61

 

1.9%

 

50

bps

 

3.3%

   

MainStay

 

68.55

 

57.0%

 

39.05

 

64.60

 

61.8%

 

39.94

 

6.1%

 

(480)

bps

 

(2.2%)

   

Suburban

 

40.90

 

63.4%

 

25.94

 

39.15

 

62.5%

 

24.47

 

4.5%

 

90

bps

 

6.0%

   

Ascend Collection

 

113.87

 

56.1%

 

63.84

 

104.02

 

52.0%

 

54.11

 

9.5%

 

410

bps

 

18.0%

   
                                           

Total 

 

$             68.87

 

45.5%

 

$          31.34

 

$             67.32

 

44.5%

 

$29.95

 

2.3%

 

100

bps

 

4.6%

   
                                           
                                           
                                           
                                           
   

For the Quarter Ended

                             
   

3/31/2013

 

3/31/2012

                                 
                                           

System-wide effective royalty rate

 

4.39%

 

4.34%

                                 
                                           
                                           
                                           
                                           

* Operating statistics represent hotel operations from December through February

                             
                                           

 

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 5

SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA

 

(UNAUDITED)

 
                                   
                                   
                                   
   

March 31, 2013

 

March 31, 2012

 

Variance

 
                                   
   

Hotels

 

Rooms

 

Hotels

 

Rooms

 

Hotels

 

Rooms

 

%

 

%

 
                                   

Comfort Inn

 

1,332

 

104,159

 

1,392

 

108,777

 

(60)

 

(4,618)

 

(4.3%)

 

(4.2%)

 

Comfort Suites

 

597

 

46,079

 

613

 

47,506

 

(16)

 

(1,427)

 

(2.6%)

 

(3.0%)

 

Sleep

 

382

 

27,685

 

394

 

28,564

 

(12)

 

(879)

 

(3.0%)

 

(3.1%)

 

Quality

 

1,172

 

99,090

 

1,054

 

91,942

 

118

 

7,148

 

11.2%

 

7.8%

 

Clarion

 

190

 

27,268

 

188

 

27,550

 

2

 

(282)

 

1.1%

 

(1.0%)

 

Econo Lodge

 

811

 

49,244

 

797

 

49,254

 

14

 

(10)

 

1.8%

 

(0.0%)

 

Rodeway

 

421

 

24,269

 

396

 

22,183

 

25

 

2,086

 

6.3%

 

9.4%

 

MainStay

 

41

 

3,165

 

39

 

3,024

 

2

 

141

 

5.1%

 

4.7%

 

Suburban

 

63

 

7,241

 

61

 

7,191

 

2

 

50

 

3.3%

 

0.7%

 

Ascend Collection

 

63

 

5,481

 

53

 

4,671

 

10

 

810

 

18.9%

 

17.3%

 

Cambria Suites

 

19

 

2,221

 

19

 

2,215

 

-

 

6

 

0.0%

 

0.3%

 
                                   

Domestic Franchises

 

5,091

 

395,902

 

5,006

 

392,877

 

85

 

3,025

 

1.7%

 

0.8%

 
                                   

International Franchises

 

1,173

 

104,474

 

1,168

 

103,491

 

5

 

983

 

0.4%

 

0.9%

 
                                   

Total Franchises

 

6,264

 

500,376

 

6,174

 

496,368

 

90

 

4,008

 

1.5%

 

0.8%

 
                                   

 

                                   

Exhibit 6

 

CHOICE HOTELS INTERNATIONAL, INC.

SUPPLEMENTAL INFORMATION BY BRAND

DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS

(UNAUDITED)

                                       
                                       
                                       
                                       
   

For the Three Months Ended March 31, 2013

 

For the Three Months Ended March 31, 2012

 

% Change

 
                                       
   

New

         

New

         

New

         
   

Construction

 

Conversion

 

Total

 

Construction

 

Conversion

 

Total

 

Construction

 

Conversion

 

Total

 
                                       

Comfort Inn

 

3

 

5

 

8

 

1

 

8

 

9

 

200%

 

(38%)

 

(11%)

 

Comfort Suites

 

2

 

2

 

4

 

1

 

2

 

3

 

100%

 

0%

 

33%

 

Sleep

 

1

 

-

 

1

 

3

 

-

 

3

 

(67%)

 

NM

 

(67%)

 

Quality

 

-

 

19

 

19

 

-

 

27

 

27

 

NM

 

(30%)

 

(30%)

 

Clarion

 

-

 

3

 

3

 

-

 

2

 

2

 

NM

 

50%

 

50%

 

Econo Lodge

 

-

 

8

 

8

 

-

 

4

 

4

 

NM

 

100%

 

100%

 

Rodeway

 

-

 

9

 

9

 

-

 

12

 

12

 

NM

 

(25%)

 

(25%)

 

MainStay

 

1

 

-

 

1

 

-

 

-

 

-

 

NM

 

NM

 

NM

 

Suburban

 

-

 

1

 

1

 

-

 

-

 

-

 

NM

 

NM

 

NM

 

Ascend Collection

 

2

 

26

 

28

 

1

 

2

 

3

 

100%

 

1200%

 

833%

 

Cambria Suites

 

1

 

-

 

1

 

1

 

-

 

1

 

0%

 

NM

 

0%

 
                                       

Total Domestic System

 

10

 

73

 

83

 

7

 

57

 

64

 

43%

 

28%

 

30%

 
                                       

 

                                           

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

   

March 31, 2013

 

March 31, 2012

                       
   

Units

 

Units

 

Conversion

 

New Construction

 

Total

   

Conversion

 

New

Construction

 

Total

 

Conversion

 

New

Construction

 

Total

 

Units

 

%

 

Units

 

%

 

Units

 

%

                                                 

Comfort Inn

 

30

 

49

 

79

 

28

 

44

 

72

 

2

 

7%

 

5

 

11%

 

7

 

10%

Comfort Suites

 

2

 

67

 

69

 

3

 

83

 

86

 

(1)

 

(33%)

 

(16)

 

(19%)

 

(17)

 

(20%)

Sleep Inn

 

1

 

44

 

45

 

1

 

44

 

45

 

-

 

0%

 

-

 

0%

 

-

 

0%

Quality

 

35

 

2

 

37

 

40

 

4

 

44

 

(5)

 

(13%)

 

(2)

 

(50%)

 

(7)

 

(16%)

Clarion

 

9

 

-

 

9

 

12

 

1

 

13

 

(3)

 

(25%)

 

(1)

 

(100%)

 

(4)

 

(31%)

Econo Lodge

 

23

 

-

 

23

 

18

 

2

 

20

 

5

 

28%

 

(2)

 

(100%)

 

3

 

15%

Rodeway

 

30

 

-

 

30

 

25

 

1

 

26

 

5

 

20%

 

(1)

 

(100%)

 

4

 

15%

MainStay

 

-

 

25

 

25

 

2

 

22

 

24

 

(2)

 

(100%)

 

3

 

14%

 

1

 

4%

Suburban

 

3

 

12

 

15

 

2

 

16

 

18

 

1

 

50%

 

(4)

 

(25%)

 

(3)

 

(17%)

Ascend Collection

 

30

 

9

 

39

 

7

 

4

 

11

 

23

 

329%

 

5

 

125%

 

28

 

255%

Cambria Suites

 

-

 

24

 

24

 

-

 

29

 

29

 

-

 

NM

 

(5)

 

(17%)

 

(5)

 

(17%)

                                                 

Total Domestic Pipeline

 

163

 

232

 

395

 

138

 

250

 

388

 

25

 

18%

 

(18)

 

(7%)

 

7

 

2%

                                                 

 

 

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 March 31, 

       
                       
     

2013

 

2012

           
 

Franchising Revenues:

                   
                       
 

Total Revenues

 

$              136,872

 

$               129,169

           
 

Adjustments:

                   
 

     Marketing and reservation revenues

 

(76,440)

 

(70,929)

           
 

     Hotel operations

 

(956)

 

(978)

           
 

Franchising Revenues

 

$                59,476

 

$                 57,262

           
                       
 

Franchising Margins:

                   
                       
 

Operating Margin:

                   
                       
 

Total Revenues

 

$              136,872

 

$               129,169

           
 

Operating Income

 

$                30,466

 

$                 31,065

           
 

     Operating Margin

 

22.3%

 

24.0%

           
                       
 

Franchising Margin:

                   
                       
 

Franchising Revenues

 

$                59,476

 

$                 57,262

           
                       
 

Operating Income

 

$                30,466

 

$                 31,065

           
 

Hotel operations

 

(81)

 

(169)

           
     

$                30,385

 

$                 30,896

           
                       
 

     Franchising Margins

 

51.1%

 

54.0%

           
                       
                       
                       
                       
                       

EBITDA Reconciliation

                   
                       

(in thousands)

                   
     

Q1 2013 Actuals

 

Q1 2012 Actuals

 

Full-Year 2013 Outlook Range

   
                       
 

Operating Income (per GAAP)

 

$                30,466

 

$                 31,065

 

$                196

 

$               200

   
 

Depreciation and amortization

 

2,175

 

2,017

 

10

 

10

   
 

Earnings before interest, taxes, depreciation & amortization

(non-GAAP)

 

$                32,641

 

$                 33,082

 

$                206

 

$               210

   
                       

###

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