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Choice Hotels International Reports A 23% Increase In First Quarter 2014 Diluted EPS

By: Choice Hotels |  0 Shares     96 Reads

First Quarter Franchising EBITDA Increases 15%

ROCKVILLE, Md., April 28, 2014 // PRNewswire // -- Choice Hotels International, Inc. (NYSE: CHH) today reported the following highlights for the first quarter of 2014:

• Diluted earnings per share ("EPS") for the three months ended March 31, 2014 totaled $0.32, an increase of 23 percent from the same period of 2013.
• Diluted EPS from continuing operations for the three months ended March 31, 2014 totaled $0.29, an increase of 12 percent from the same period of 2013.
• Earnings before interest, taxes, depreciation and amortization ("EBITDA") from franchising activities for the three months ended March 31, 2014 totaled $40.1 million, an increase of 15 percent from the same period of 2013.
• Franchising revenues for the three months ended March 31, 2014 totaled $63.2 million, an increase of 6 percent from the same period of 2013.
• Franchising margins for the three months ended March 31, 2014 were 60.2 percent, an increase of 510 basis points from the same period of 2013.
• Domestic royalty fees for the three months ended March 31, 2014 totaled $46.5 million, an increase of 5 percent from the same period of 2013.
• Domestic unit and room growth increased 2.4 percent and 1.6 percent from March 31, 2013, respectively.
• Domestic system-wide revenue per available room ("RevPAR") increased 5.6 percent in the first quarter of 2014 as occupancy and average daily rates increased 200 basis points and 1.1 percent, respectively from the same period of 2013.
• The company executed 59 new domestic hotel franchise contracts for the three months ended March 31, 2014 compared to 83 new domestic hotel franchise contracts for the same period of 2013. Domestic hotel contracts executed during the three months ended March 31, 2013 reflect a multi-faceted strategic marketing alliance with Bluegreen Corporation which resulted in the addition of 21 Bluegreen Vacation Club® Resorts to the company's Ascend Hotel Collection. Excluding this transaction, domestic franchise agreements executed during the first quarter of 2014 totaled 59 compared to 62 new domestic hotel franchise contracts in the same period of 2013.
• Domestic relicensing and contract renewal transactions for the three months ended March 31, 2014 totaled 83 contracts, an increase of 20 percent from the same period of 2013.
• The company sold two of its three company-owned Mainstay Suites hotels during the three months ended March 31, 2014 resulting in a $2.6 million gain.

"We are very pleased with the first quarter performance of our franchising business which exceeded our expectations and resulted in a 15 percent increase in franchising EBITDA and an expansion of our franchising margins due to our strong RevPAR growth and disciplined cost management," said Stephen P. Joyce, president and chief executive officer. "We are optimistic that we are well positioned to benefit from strong consumer and developer demand for our brands."

Discontinued Operations

In the first quarter of 2014, the company entered into a plan to sell its three owned hotels operated under the MainStay Suites brand. The company determined that the disposal of these hotels met the definition of a discontinued operation since the operations and cash flows of these components will be eliminated from the on-going operations of the company and the company will not have significant continuing involvement in the operations of the hotels after the disposal transaction.

At March 31, 2014, the company had disposed of two of the three owned hotels and expects the third hotel to be sold during the year ended December 31, 2014. The new owners of the two MainStay Suites hotels have executed new franchise agreements with the company and we expect that following the sale of the third hotel the new owner will also execute a new franchise agreement.

The company's consolidated statement of income for the three months ended March 31, 2014 and the company's consolidated balance sheet as of March 31, 2014 reflect these three company-owned hotels as discontinued operations. In addition, the company's statement of income for the three months ended March 31, 2013 has been reclassified to account for these operations as discontinued. Summarized financial information related to these discontinued operations is presented in Exhibit 9 of this press release.

Outlook

The company's consolidated 2014 outlook reflects continued growth of the company's core hotel franchising business, continued investment in and expanded revenue contribution from the SkyTouch division and the sale of the three company-owned Mainstay Suites hotels described below as well as the following assumptions:

• All figures assume no repurchases of common stock under the company's share repurchase program; and
• The effective tax rate for continuing operations is expected to be 30.8% for the second quarter and full-year 2014.

Franchising

• EBITDA from franchising activities for full-year 2014 are expected to range between $227 million and $232 million;
• Net domestic unit growth for 2014 is expected to increase between 1% and 2%;
• RevPAR is expected to increase approximately 5% for the second quarter and 4.5% to 5.5% for full-year 2014; and
• The effective royalty rate is expected to decline 3 basis points for full-year 2014.

SkyTouch

• Reductions in EBITDA from our investment in the SkyTouch division for full-year 2014 are expected to be approximately $20 million;
• Execution of third-party contracts results in annualized revenue ranging between $4 million and $6 million with realized revenues for the year ended December 31, 2014 totaling approximately $2 million; and
• SG&A expenses are forecasted to be approximately $22 million related to investment in business development, sales and marketing and continued software development expenditures related to the division's cloud-based hotel operating system technology related products and services.

Discontinued Operations

• Company EBITDA projections exclude the three company-owned Mainstay Suites hotels which generated EBITDA of approximately $1.1 million in 2013; and
• Diluted EPS projections for the full-year 2014 include a gain on sale of the three company-owned Mainstay Suites hotels totaling $0.03 per share.

Consolidated Outlook

The company's second quarter 2014 diluted EPS is expected to be $0.48. The company expects full-year 2014 diluted EPS to range between $1.87 and $1.93. EBITDA for full-year 2014 are expected to range between $207 million and $212 million.

Conference Call

Choice will conduct a conference call on Monday, April 28, 2014 at 10:00 a.m. EDT to discuss the company's first quarter 2014 results. The dial-in number to listen to the call is 1-800-591-6942, and the access code is 70683172. International callers should dial 1-617-614-4909 and enter the access code 70683172. 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 page will feature a conference call microphone icon to access the call.

The call will be recorded and available for replay beginning at 2:00 p.m. EDT on Monday, April 28, 2014 through Monday, May 5, 2014 by calling 1-888-286-8010 and entering access code 19637446. The international dial-in number for the replay is 1-617-801-6888, access code 1963746. In addition, the call will be archived for approximately one-year and available on www.choicehotels.com via the Investor Info link.

About Choice Hotels

Choice Hotels International, Inc. franchises more than 6,300 hotels, representing more than 500,000 rooms, in the United States and more than 35 other countries and territories. As of March 31, 2014, 398 hotels, representing more than 30,000 rooms, were under construction, awaiting conversion or approved for development in the United States. Additionally, 95 hotels, representing approximately 8,900 rooms, were under construction, awaiting conversion or approved for development in more than 15 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 a division of Choice Hotels International, Inc. 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," "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 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, franchising EBITDA 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 and SkyTouch Technology operations. 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 are excluded since they do not reflect the company's core franchising business but are an adjacent, complimentary line 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.

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 Technology are proprietary trademarks and service marks of Choice Hotels International.

© 2014 Choice Hotels International, Inc. All rights reserved. 

Choice Hotels International, Inc.							Exhibit 1
Consolidated Statements of Income
(Unaudited)
	Three Months Ended March 31,
					Variance
	2014		2013		$		%
(In thousands, except per share amounts)
REVENUES:
Royalty fees	$ 51,681		$ 49,736		$ 1,945		4%
Initial franchise and relicensing fees	3,740		3,777		(37)		(1%)
Procurement services	4,778		3,950		828		21%
Marketing and reservation	84,012		76,440		7,572		10%
Other	3,072		2,013		1,059		53%
Total revenues	147,283		135,916		11,367		8%
OPERATING EXPENSES:
Selling, general and administrative	26,463		26,916		(453)		(2%)
Depreciation and amortization	2,122		2,041		81		4%
Marketing and reservation	84,012		76,440		7,572		10%
Total operating expenses	112,597		105,397		7,200		7%
Operating income	34,686		30,519		4,167		14%
OTHER INCOME AND EXPENSES, NET:
Interest expense	10,171		10,770		(599)		(6%)
Interest income	(503)		(644)		141		(22%)
Other (gains) and losses	(59)		(710)		651		(92%)
Equity in net loss of affiliates	35		141		(106)		(75%)
Total other income and expenses, net	9,644		9,557		87		1%
Income from continuing operations before income taxes	25,042		20,962		4,080		19%
Income taxes	7,711		5,406		2,305		43%
Income from continuing operations	17,331		15,556		1,775		11%
Income (loss) from discontinued operations, net of income taxes	1,641		(33)		1,674		(5073%)
Net income	$ 18,972		$ 15,523		$ 3,449		22%
Basic earnings per share
Continuing operations	$    0.30		$    0.27		$  0.03		11%
Discontinued operations	0.03		-		0.03		NM
	$    0.33		$    0.27		$  0.06		22%
Diluted earnings per share
Continuing operations	$    0.29		$    0.26		$  0.03		12%
Discontinued operations	0.03		-		0.03		NM
	$    0.32		$    0.26		$  0.06		23%

 

Choice Hotels International, Inc.					Exhibit 2
Consolidated Balance Sheets
(In thousands, except per share amounts)			March 31,		December 31,
			2014		2013
			(Unaudited)
ASSETS
Cash and cash equivalents			$    174,878		$           167,795
Accounts receivable, net			59,241		53,521
Other current assets			43,595		37,330
	Total current assets		277,714		258,646
Fixed assets and intangibles, net			131,681		141,858
Notes receivable, net of allowances			34,223		31,872
Advances, marketing and reservations activities			18,856		19,127
Investments, employee benefit plans, at fair value			16,852		15,950
Other assets			75,574		72,446
		Total assets	$    554,900		$           539,899
LIABILITIES AND SHAREHOLDERS' DEFICIT
Accounts payable and accrued expenses			$       82,037		$              98,288
Deferred revenue			69,155		61,188
Current portion of long-term debt			11,026		10,088
Other current liabilities			6,039		4,774
	Total current liabilities		168,257		174,338
Long-term debt			795,497		783,471
Deferred compensation & retirement plan obligations			22,387		22,527
Other liabilities			23,392		23,808
	Total liabilities		1,009,533		1,004,144
Common stock, $0.01 par value			584		586
Additional paid-in-capital			118,020		117,768
Accumulated other comprehensive loss			(5,469)		(6,217)
Treasury stock, at cost			(917,226)		(918,031)
Retained earnings			349,458		341,649
	Total shareholders' deficit		(454,633)		(464,245)
		Total liabilities and shareholders' deficit	$    554,900		$           539,899

 

Choice Hotels International, Inc.			Exhibit 3
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)	Three Months Ended March 31,
	2014		2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$   18,972		$   15,523
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization	2,122		2,175
Gain on sale of assets	(2,572)		-
Provision for bad debts, net	1,182		844
Non-cash stock compensation and other charges	2,887		2,549
Non-cash interest and other (income) loss	416		76
Deferred income taxes	(3)		446
Dividends received from equity method investments	181		146
Equity in net loss of affiliates	35		141
Changes in assets and liabilities:
Receivables	(7,491)		(3,531)
Advances to/from marketing and reservation activities, net	5,309		(4,101)
Forgivable notes receivable, net	(3,623)		(1,729)
Accounts payable	2,080		10,471
Accrued expenses	(19,861)		(31,145)
Income taxes payable/receivable	3,160		4,367
Deferred revenue	7,932		5,160
Other assets	(3,103)		(3,869)
Other liabilities	(2,359)		2,622
NET CASH PROVIDED BY OPERATING ACTIVITIES	5,264		145
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment	(3,015)		(13,645)
Proceeds from sales of assets	8,703		-
Equity method investments	(3,379)		(1,000)
Issuance of mezzanine and other notes receivable	(587)		-
Collections of mezzanine and other notes receivable	68		19
Purchases of investments, employee benefit plans	(890)		(1,242)
Proceeds from sales of investments, employee benefit plans	281		3,882
Other items, net	(154)		(101)
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES	1,027		(12,087)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings pursuant to revolving credit facility	15,000		18,000
Principal payments on long-term debt	(2,052)		(2,046)
Dividends paid	(10,784)		(503)
Purchase of treasury stock	(4,530)		(3,634)
Excess tax benefits from stock-based compensation	1,024		952
Proceeds from exercise of stock options	1,547		5,367
NET CASH PROVIDED BY FINANCING ACTIVITIES	205		18,136
Net change in cash and cash equivalents	6,496		6,194
Effect of foreign exchange rate changes on cash and cash equivalents	587		(146)
Cash and cash equivalents at beginning of period	167,795		134,177
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$ 174,878		$ 140,225

 

																		Exhibit 4
CHOICE HOTELS INTERNATIONAL, INC. SUPPLEMENTAL OPERATING INFORMATION
DOMESTIC HOTEL SYSTEM
(UNAUDITED)
	For the Three Months Ended March 31, 2014*						For the Three Months Ended March 31, 2013*						Change
	Average Daily						Average Daily						Average Daily
	Rate		Occupancy		RevPAR		Rate		Occupancy		RevPAR		Rate		Occupancy			RevPAR
Comfort Inn	$          77.34		49.5%		$       38.25		$          76.30		47.5%		$        36.24		1.4%		200	bps		5.5%
Comfort Suites	83.59		54.5%		45.52		81.82		52.6%		43.04		2.2%		190	bps		5.8%
Sleep	70.05		49.8%		34.90		69.07		47.6%		32.85		1.4%		220	bps		6.2%
Quality	65.33		44.2%		28.90		64.20		42.2%		27.08		1.8%		200	bps		6.7%
Clarion	68.61		43.9%		30.14		68.84		41.1%		28.32		(0.3%)		280	bps		6.4%
Econo Lodge	51.49		40.2%		20.70		51.67		38.6%		19.95		(0.3%)		160	bps		3.8%
Rodeway	49.67		45.5%		22.58		47.96		42.2%		20.25		3.6%		330	bps		11.5%
MainStay	69.31		59.7%		41.35		68.55		57.0%		39.05		1.1%		270	bps		5.9%
Suburban	41.56		64.6%		26.85		40.90		63.4%		25.94		1.6%		120	bps		3.5%
Ascend Hotel Collection	104.61		56.3%		58.88		113.87		56.1%		63.84		(8.1%)		20	bps		(7.8%)
Total	$          69.63		47.5%		$       33.09		$          68.87		45.5%		$        31.34		1.1%		200	bps		5.6%
	For the Quarter Ended
	3/31/2014		3/31/2013
System-wide effective royalty rate	4.35%		4.39%
* Operating statistics represent hotel operations from December through February

 

																Exhibit 5
CHOICE HOTELS INTERNATIONAL, INC. SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA
(UNAUDITED)
		March 31, 2014				March 31, 2013				Variance
		Hotels		Rooms		Hotels		Rooms		Hotels		Rooms		%		%
Comfort Inn		1,297		101,099		1,332		104,159		(35)		(3,060)		(2.6%)		(2.9%)
Comfort Suites		590		45,609		597		46,079		(7)		(470)		(1.2%)		(1.0%)
Sleep		381		27,517		382		27,685		(1)		(168)		(0.3%)		(0.6%)
Quality		1,236		102,327		1,172		99,090		64		3,237		5.5%		3.3%
Clarion		191		27,393		190		27,268		1		125		0.5%		0.5%
Econo Lodge		840		51,544		811		49,244		29		2,300		3.6%		4.7%
Rodeway		449		25,077		421		24,269		28		808		6.7%		3.3%
MainStay		43		3,329		41		3,165		2		164		4.9%		5.2%
Suburban		63		7,152		63		7,241		-		(89)		0.0%		(1.2%)
Ascend Hotel Collection		103		9,251		63		5,481		40		3,770		63.5%		68.8%
Cambria Suites		18		2,119		19		2,221		(1)		(102)		(5.3%)		(4.6%)
Domestic Franchises		5,211		402,417		5,091		395,902		120		6,515		2.4%		1.6%
International Franchises		1,153		104,735		1,173		104,474		(20)		261		(1.7%)		0.2%
Total Franchises		6,364		507,152		6,264		500,376		100		6,776		1.6%		1.4%

 

																	Exhibit 6
CHOICE HOTELS INTERNATIONAL, INC.
SUPPLEMENTAL INFORMATION BY BRAND
DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS
(UNAUDITED)
	For the Three Months Ended March 31, 2014						For the Three Months Ended March 31, 2013						% Change
	New						New						New
	Construction		Conversion		Total		Construction		Conversion		Total		Construction		Conversion		Total
Comfort Inn	3		3		6		3		5		8		0%		(40%)		(25%)
Comfort Suites	1		-		1		2		2		4		(50%)		(100%)		(75%)
Sleep	4		-		4		1		-		1		300%		NM		300%
Quality	1		10		11		-		19		19		NM		(47%)		(42%)
Clarion	-		2		2		-		3		3		NM		(33%)		(33%)
Econo Lodge	-		6		6		-		8		8		NM		(25%)		(25%)
Rodeway	1		15		16		-		9		9		NM		67%		78%
MainStay	4		-		4		1		-		1		300%		NM		300%
Suburban	1		1		2		-		1		1		NM		0%		100%
Ascend Hotel Collection	3		3		6		2		26		28		50%		(88%)		(79%)
Cambria Suites	1		-		1		1		-		1		0%		NM		0%
Total Domestic System	19		40		59		10		73		83		90%		(45%)		(29%)

 

																					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, 2014						March 31, 2013
	Units						Units						Conversion				New Construction				Total
	Conversion		New Construction		Total		Conversion		New Construction		Total		Units		%		Units		%		Units		%
Comfort Inn	39		51		90		30		49		79		9		30%		2		4%		11		14%
Comfort Suites	2		46		48		2		67		69		-		0%		(21)		(31%)		(21)		(30%)
Sleep Inn	1		48		49		1		44		45		-		0%		4		9%		4		9%
Quality	38		4		42		35		2		37		3		9%		2		100%		5		14%
Clarion	6		2		8		9		-		9		(3)		(33%)		2		NM		(1)		(11%)
Econo Lodge	20		2		22		23		-		23		(3)		(13%)		2		NM		(1)		(4%)
Rodeway	33		2		35		30		-		30		3		10%		2		NM		5		17%
MainStay	2		35		37		-		25		25		2		NM		10		40%		12		48%
Suburban	6		17		23		3		12		15		3		100%		5		42%		8		53%
Ascend Hotel Collection	11		12		23		30		9		39		(19)		(63%)		3		33%		(16)		(41%)
Cambria Suites	-		21		21		-		24		24		-		NM		(3)		(13%)		(3)		(13%)
Total Domestic Pipeline	158		240		398		163		232		395		(5)		(3%)		8		3%		3		1%

 

	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,
		2014		2013
	Franchising Revenues:
	Total Revenues	$          147,283		$          135,916
	Adjustments:
	Marketing and reservation revenues	(84,012)		(76,440)
	Other	(53)		-
	Franchising Revenues	$            63,218		$            59,476
	Franchising Margins:
	Operating Margin:
	Total Revenues	$          147,283		$          135,916
	Operating Income	$            34,686		$            30,519
	Operating Margin	23.6%		22.5%
	Franchising Margin:
	Franchising Revenues	$            63,218		$            59,476
	Operating Income	$            34,686		$            30,519
	SkyTouch Division operating loss	3,350		2,255
		$            38,036		$            32,774
	Franchising Margins	60.2%		55.1%
CALCULATION OF FRANCHISING SELLING, GENERAL AND ADMINISTRATION EXPENSES
(dollar amounts in thousands)		Three Months Ended March 31,
		2014		2013
	Total Selling, General and Administrative Expenses	$            26,463		$            26,916
	SkyTouch Division	(3,336)		(2,241)
	Franchising Selling, General and Administration Expenses	$            23,127		$            24,675
CALCULATION OF EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA")
(dollar amounts in thousands)
		Q1 2014 Actuals		Q1 2013 Actuals
Income from continuing operations		$            17,331		$            15,556
	Income taxes	7,711		5,406
	Interest expense	10,171		10,770
	Interest income	(503)		(644)
	Other (gains) and losses	(59)		(710)
	Equity in net loss of affiliates	35		141
	Depreciation and amortization	2,122		2,041
EBITDA		$            36,808		$            32,560
Franchising		$            40,091		$            34,801
SkyTouch		(3,283)		(2,241)
		$            36,808		$            32,560

 

	CHOICE HOTELS INTERNATIONAL, INC.				Exhibit 9
	DISCONTINUED OPERATIONS
	(UNAUDITED)
		Three Months Ended March 31,
(In thousands)		2014		2013
REVENUES:
Hotel operations		$    690		$  956
Total revenues		690		956
OPERATING EXPENSES:
Hotel operations		662		875
Depreciation and amortization		-		134
Total operating expenses		662		1,009
Operating income (loss)		28		(53)
Gain on disposal of discontinued operations		2,581		-
Income (loss) from discontinued operations before income taxes		2,609		(53)
Income tax (benefit)		968		(20)
Income (loss) from discontinued operations		$  1,641		$   (33)

SOURCE Choice Hotels International, Inc.

Contacts:

David White
Senior Vice President
Chief Financial Officer & Treasurer
(301) 592-5117

Scott Carman
Director
Public Relations
(301) 592-6361

###

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