Choice Hotels International Reports Third Quarter 2023 Results
Choice Hotels International, Inc. (NYSE: CHH), one of the world’s largest lodging franchisors, today reported its third quarter 2023 results.
“We generated another record quarter of impressive financial growth, driven by our best-in-class business delivery engine, the successful integration of Radisson Americas, and organic growth of our brand portfolio focused on hotels that generate higher royalties per unit,” said Patrick Pacious, President and Chief Executive Officer of Choice Hotels. “We believe we are well-positioned to effectively grow our business in the current hotel development environment with a superior hotel conversion capability. We will continue to execute our robust organic earnings growth strategy and pursue inorganic growth to drive long-term shareholder value.”
Mr. Pacious continued, “At its core, our proposed combination with Wyndham is about the natural fit of the two companies coming together to accelerate value creation for all stakeholders. We made our proposal public so that all groups could evaluate its benefits. For Wyndham shareholders, we provide a substantial premium and immediate value for their shares with participation in the future value of the combined entity. For Wyndham franchisees, we provide a proven model to lower costs and increase direct revenue to their hotels. We urge the Wyndham Board of Directors to resume discussions for the benefit of both companies’ franchisees, shareholders, associates, and guests.”
Highlights of third quarter 2023 results include:1
- Total revenues were $425.6 million for third quarter 2023, a third quarter record and a 3% increase compared to the same period of 2022.
- Total revenues, excluding reimbursable revenue from franchised and managed properties, increased 9% to $219.6 million for third quarter 2023 compared to the same period of 2022.
- Net income was $92.0 million for third quarter 2023, representing diluted earnings per share (EPS) of $1.81. As a result of one-time items, including Radisson Hotels Americas integration costs, gains from the sale of the Cambria Hotel Nashville owned asset and extraordinary franchisee termination fees in third quarter 2022, and the timing of net reimbursable expenses, net income and diluted EPS were 11% and 2% lower, respectively, for third quarter 2023 compared to the same period of 2022.
- Third quarter 2023 adjusted net income, excluding certain items described in Exhibit 6, increased 6% to $92.4 million compared to the same period of 2022, and adjusted diluted EPS increased 17% to $1.82 compared to the same period of 2022.
- Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for third quarter 2023 grew to $155.9 million, a third quarter record and a 12% increase compared to the same period of 2022.
- Global rooms pipeline as of September 30, 2023 increased 6% to over 99,000 rooms from June 30, 2023. Global rooms pipeline for conversion rooms increased 11% from September 30, 2022 and 27% from June 30, 2023.
- Expanded international pipeline as of September 30, 2023, nearly doubling rooms count from September 30, 2022, inclusive of over 30 properties representing approximately 6,000 rooms associated with the company’s strategic alliance with one of the largest hotel operators in Mexico known for its portfolio of upscale, upper-upscale, luxury hotels and resorts in Mexico and the Caribbean.
- Achieved $84 million of annual recurring synergies through the integration of Radisson Hotels Americas, exceeding prior target by 5%.
- The company raised its financial guidance for full-year 2023.
Financial Performance
- Platform and procurement services fees increased 8% to $15.5 million for third quarter 2023 compared to the same period of 2022.
- Royalty, licensing, and management fees increased 3% to $148.5 million for third quarter 2023 compared to the same period of 2022. Excluding the one-time exit of the 110 Woodspring Suites hotels in third quarter 2022, royalty, licensing, and management fees for third quarter increased 6% compared to the same period of 2022.
- Domestic revenue per available room (RevPAR) decreased 80 basis points and increased 140 basis points for the three and nine-month periods ended September 30, 2023, respectively, compared to the same periods of 2022. The company’s third quarter average daily rate increased 1.3% compared to the same period of 2022 while occupancy reached 62%.
- Domestic effective royalty rate for both the three-month and nine-month periods ended September 30, 2023 increased 6 basis points to 4.99% compared to the respective 2022 periods.
Development
- The company executed an average of more than four hotel openings per week, for a total of 159 hotel openings year-to-date through September 30, 2023, a 24% increase compared to the same period of 2022. For the first nine months of 2023, the company grew hotel openings across all segments, increasing openings in the upscale segment by 50%, the extended stay segment by 38%, the midscale segment by 14%, and the economy segment by 27% compared to the same period of 2022.
- Of the total domestic franchise agreements awarded in the nine months ended September 30, 2023, 84% were for the company’s upscale, extended stay, and midscale brands, and 72% were for conversion hotels. Of the domestic franchise agreements awarded for conversion hotels in the nine months ended September 30, 2023, 67% have already opened or are expected to open by December 31, 2023.
- Domestic upscale and extended-stay portfolio grew by 11% and 13%, respectively, since September 30, 2022, driven by an increase in the number of Cambria Hotels, Ascend Hotel Collection, WoodSpring Suites, MainStay Suites, and Suburban Studios units. The company’s total domestic system size was over 6,200 hotels and 490,000 rooms as of September 30, 2023.
- The total number of international upscale hotels, as of September 30, 2023, increased 13% from September 30, 2022. The company’s total international system size approached 1,200 hotels as of September 30, 2023.
- The extended stay domestic pipeline increased 12% to over 47,000 rooms from September 30, 2022. Domestic pipeline reached nearly 86,000 rooms as of September 30, 2023.
Shareholder Returns
During the nine months ended September 30, 2023, the company paid cash dividends of $42.1 million and $54.8 million over the trailing twelve months ended September 30, 2023.
During the nine months ended September 30, 2023, the company repurchased 2.5 million shares of common stock for $306.9 million under its stock repurchase program as well as through repurchases from employees in connection with tax withholding and option exercises relating to awards under the company’s equity incentive plans. Over the trailing twelve months ended September 30, 2023, the company repurchased 4.1 million shares of common stock totaling $495.2 million, representing nearly 8% of the shares outstanding as of September 30, 2022.
As of September 30, 2023, the company had 2.3 million shares of common stock remaining under the current share repurchase authorization.
Outlook
The outlook information provided below is inclusive of the Radisson Hotels Americas acquisition, which was completed in August 2022, and includes forward-looking non-GAAP financial measures, which management uses in measuring performance. The adjusted numbers in the company’s outlook below exclude the net surplus or deficit generated from reimbursable revenue from franchised and managed properties, due diligence and transition costs, and other items:
Full-Year 2023 |
Prior Outlook |
|
Net Income |
$259 – $264 million |
$251 – $259 million |
Adjusted Net Income |
$302 – $308 million |
$298 – $306 million |
Adjusted EBITDA |
$535 – $540 million |
$530 – $540 million |
Adjusted Diluted EPS |
$5.95 – $6.03 |
$5.86 – $6.01 |
Effective Income Tax Rate |
24 % |
24 % |
Full-Year 2023 |
Prior Outlook |
|
vs. Full-Year 2022 |
||
Domestic RevPAR Growth2 |
Approximately 1% |
Approximately 2% |
Domestic Effective Royalty Rate Growth3 |
Mid-single digits |
Mid-single digits |
Domestic Net Unit Growth |
Approximately 1% |
Approximately 1% |
(upscale, extended stay, and midscale segments) |
Proposed Transaction with Wyndham Resorts & Hotels
On October 17, 2023, Choice Hotels made public its highly compelling proposal to acquire all outstanding shares of Wyndham Resorts & Hotels at an implied value of $90.00 per share, payable in a mix of cash and stock. The proposal represented a 14.9x multiple of Wyndham’s consensus 2023 EBITDA, a forward multiple that Wyndham has never achieved absent COVID disruptions. The offer represents a meaningful premium for Wyndham shareholders, while also providing the opportunity for further upside through shared value creation.
A combination of Choice and Wyndham creates a premier hotel franchising company that would bring Choice’s proven franchisee success system to a broader set of owners. With an asset-light, fee-for-service model, the combined company would generate predictable, high free cash flow, and impressive returns, providing resiliency through all economic cycles. The combination is expected to generate approximately $150 million in annual run-rate synergies through rationalization of operational redundancies, duplicate public company costs, and topline growth potential. The $150 million synergy opportunity is expected to translate into more than $2 billion in incremental shareholder value.
Choice’s management team has a strong history in maximizing value to shareholders through organic growth and acquisitions, delivering market leading revenue and adjusted EBITDA growth. We believe this growth will continue going forward, demonstrated by our forecasted adjusted EBITDA growth in 2024 and today’s upward revision in our 2023 financial guidance. The proposed transaction creates additional capacity to further support Choice’s distinct strategy focused on hotels that generate higher royalties per unit, ultimately helping drive growth across its organic revenue levers.
Choice has attempted to engage with Wyndham for nearly six months and urges Wyndham’s Board of Directors to resume discussions toward reaching an agreement for the benefit of all stakeholders.
About Choice Hotels
Choice Hotels International, Inc. (NYSE: CHH) is one of the largest lodging franchisors in the world, with nearly 7,500 hotels, representing nearly 630,000 rooms, in 46 countries and territories as of September 30, 2023. A diverse portfolio of 22 brands that run the gamut from full-service, upper upscale properties to midscale, extended stay, and economy enables Choice to meet travelers’ needs in more places and for more occasions while driving more value for franchise owners and shareholders.
___________________________ |
1 For comparative purposes, domestic RevPAR and the effective royalty rate assume the Radisson Hotels Americas brands were acquired on January 1, 2022. |
2 For comparative purposes, domestic RevPAR baseline for full-year 2022 is inclusive of the Radisson Hotels Americas acquisition. |
3 For comparative purposes, the domestic effective royalty rate 4.93% baseline for full-year 2022 is inclusive of the Radisson Hotels Americas acquisition. |
Choice Hotels International, Inc. |
Exhibit 1 |
|||||||||||||||
Condensed Consolidated Statements of Income |
||||||||||||||||
(Unaudited) |
||||||||||||||||
(In thousands, except per share amounts) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
Variance |
Variance |
|||||||||||||||
2023 |
2022 |
$ |
% |
2023 |
2022 |
$ |
% |
|||||||||
REVENUES |
||||||||||||||||
Royalty, licensing and management fees |
$ 148,512 |
$ 144,020 |
$ 4,492 |
3 % |
$ 396,503 |
$ 356,208 |
$ 40,295 |
11 % |
||||||||
Initial franchise fees |
6,194 |
7,011 |
(817) |
(12) % |
21,240 |
21,635 |
(395) |
(2) % |
||||||||
Platform and procurement services fees |
15,542 |
14,401 |
1,141 |
8 % |
58,186 |
47,887 |
10,299 |
22 % |
||||||||
Owned hotels |
26,239 |
19,992 |
6,247 |
31 % |
74,075 |
49,220 |
24,855 |
50 % |
||||||||
Other |
11,436 |
31,432 |
(19,996) |
(64) % |
33,211 |
51,588 |
(18,377) |
(36) % |
||||||||
Other revenues from franchised and managed properties |
217,634 |
197,410 |
20,224 |
10 % |
602,554 |
513,429 |
89,125 |
17 % |
||||||||
Total revenues |
425,557 |
414,266 |
11,291 |
3 % |
1,185,769 |
1,039,967 |
255,307 |
14 % |
||||||||
OPERATING EXPENSES |
||||||||||||||||
Selling, general and administrative |
54,913 |
70,202 |
(15,289) |
(22) % |
182,000 |
144,414 |
37,586 |
26 % |
||||||||
Depreciation and amortization |
9,633 |
8,726 |
907 |
10 % |
29,468 |
20,436 |
9,032 |
44 % |
||||||||
Owned hotels |
18,628 |
13,158 |
5,470 |
42 % |
53,924 |
32,004 |
21,920 |
68 % |
||||||||
Other expenses from franchised and managed properties |
207,341 |
190,541 |
16,800 |
9 % |
583,095 |
458,037 |
125,058 |
27 % |
||||||||
Total operating expenses |
290,515 |
282,627 |
7,888 |
3 % |
848,487 |
654,891 |
193,596 |
30 % |
||||||||
Gain on sale of business and assets, net |
— |
13,379 |
(13,379) |
(100) % |
— |
16,688 |
(16,688) |
(100) % |
||||||||
Operating income |
135,042 |
145,018 |
(9,976) |
(7) % |
337,282 |
401,764 |
45,023 |
(16) % |
||||||||
OTHER INCOME AND EXPENSES, NET |
||||||||||||||||
Interest expense |
16,168 |
9,362 |
6,806 |
73 % |
46,522 |
32,084 |
14,438 |
45 % |
||||||||
Interest income |
(1,897) |
(2,348) |
451 |
(19) % |
(5,836) |
(5,256) |
(580) |
11 % |
||||||||
Other loss (gain) |
1,343 |
2,303 |
(960) |
(42) % |
(2,752) |
9,578 |
(12,330) |
(129) % |
||||||||
Equity in net gain of affiliates |
(1,801) |
(1,075) |
(726) |
68 % |
(1,923) |
(1,279) |
(644) |
50 % |
||||||||
Total other income and expenses, net |
13,813 |
8,242 |
5,571 |
68 % |
36,011 |
35,127 |
884 |
3 % |
||||||||
Income before income taxes |
121,229 |
136,776 |
(15,547) |
(11) % |
301,271 |
366,637 |
(65,366) |
(18) % |
||||||||
Income tax expense |
29,205 |
33,696 |
(4,491) |
(13) % |
71,717 |
89,998 |
(18,281) |
(20) % |
||||||||
Net income |
$ 92,024 |
$ 103,080 |
$ (11,056) |
(11) % |
$ 229,554 |
$ 276,639 |
$ (47,085) |
(17) % |
||||||||
Basic earnings per share |
$ 1.83 |
$ 1.87 |
$ (0.04) |
(2) % |
$ 4.51 |
$ 4.98 |
$ (0.47) |
(9) % |
||||||||
Diluted earnings per share |
$ 1.81 |
$ 1.85 |
$ (0.04) |
(2) % |
$ 4.47 |
$ 4.93 |
$ (0.46) |
(9) % |
Choice Hotels International, Inc. |
Exhibit 2 |
|||||
Condensed Consolidated Balance Sheets |
||||||
(Unaudited) |
||||||
(In thousands) |
September 30, |
December 31, |
||||
2023 |
2022 |
|||||
ASSETS |
||||||
Cash and cash equivalents |
$ 36,432 |
$ 41,566 |
||||
Accounts receivable, net |
223,781 |
216,614 |
||||
Other current assets |
92,599 |
89,742 |
||||
Total current assets |
352,812 |
347,922 |
||||
Property and equipment, net |
469,771 |
427,306 |
||||
Intangible assets, net |
781,101 |
742,190 |
||||
Goodwill |
220,187 |
218,653 |
||||
Notes receivable, net of allowances |
49,831 |
55,577 |
||||
Investments in affiliates |
55,081 |
30,647 |
||||
Operating lease right-of-use assets |
90,474 |
68,985 |
||||
Investments, employee benefit plans, at fair value |
35,815 |
31,645 |
||||
Other assets |
177,165 |
179,250 |
||||
Total assets |
$ 2,232,237 |
$ 2,102,175 |
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||
Accounts payable |
$ 124,113 |
$ 118,863 |
||||
Accrued expenses and other current liabilities |
96,523 |
131,410 |
||||
Deferred revenue |
107,802 |
92,695 |
||||
Current portion of long-term debt |
4,416 |
2,976 |
||||
Liability for guest loyalty program |
86,140 |
89,954 |
||||
Total current liabilities |
418,994 |
435,898 |
||||
Long-term debt |
1,391,272 |
1,200,547 |
||||
Deferred revenue |
135,009 |
134,149 |
||||
Liability for guest loyalty program |
44,320 |
47,381 |
||||
Operating lease liabilities |
109,746 |
70,994 |
||||
Deferred compensation & retirement plan obligations |
41,200 |
36,673 |
||||
Other liabilities |
19,283 |
21,873 |
||||
Total liabilities |
2,159,824 |
1,947,515 |
||||
Total shareholders’ equity |
72,413 |
154,660 |
||||
Total liabilities and |
$ 2,232,237 |
$ 2,102,175 |
||||
Choice Hotels International, Inc. |
Exhibit 3 |
||
Condensed Consolidated Statements of Cash Flows |
|||
(Unaudited) |
|||
(In thousands) |
Nine Months Ended September 30, |
||
2023 |
2022 |
||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||
Net income |
$ 229,554 |
$ 276,639 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|||
Depreciation and amortization |
29,468 |
20,436 |
|
Depreciation and amortization – marketing and reservation system |
27,544 |
23,237 |
|
Gain on sale of business and assets, net |
— |
(16,688) |
|
Franchise agreement acquisition cost amortization |
14,616 |
11,558 |
|
Non-cash share-based compensation and other charges |
34,670 |
28,621 |
|
Non-cash interest, investment, and affiliate (income) loss, net |
(1,709) |
9,135 |
|
Deferred income taxes |
(4,315) |
(22,402) |
|
Equity in net (gain) loss of affiliates, less distributions received |
(621) |
2,451 |
|
Franchise agreement acquisition costs, net of reimbursements |
(72,867) |
(32,947) |
|
Change in working capital and other |
(9,150) |
(34,838) |
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
247,190 |
265,202 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||
Investments in property and equipment |
(81,403) |
(66,084) |
|
Investments in intangible assets |
(1,893) |
(3,247) |
|
Asset acquisitions, net of cash paid |
— |
(856) |
|
Proceeds from the sale of assets and business |
— |
140,554 |
|
Proceeds from the termination of intangible assets |
— |
5,698 |
|
Business acquisitions, net of cash acquired |
— |
(550,431) |
|
Contributions to investments in affiliates |
(24,573) |
(4,264) |
|
Proceeds from the sale of affiliates |
868 |
— |
|
Purchases of investments for employee benefit plans |
(3,678) |
(3,719) |
|
Proceeds from sales of investments for employee benefit plans |
1,263 |
1,896 |
|
Issuances of notes receivable |
(4,319) |
(5,617) |
|
Collections of notes receivable |
9,923 |
701 |
|
Other items, net |
547 |
1,708 |
|
NET CASH USED IN INVESTING ACTIVITIES |
(103,265) |
(483,661) |
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|||
Payments to extinguish acquired debt |
— |
(55,975) |
|
Proceeds from acquired derivative |
— |
1,943 |
|
Net borrowings pursuant to revolving credit facilities |
191,500 |
315,000 |
|
Principal payments on 2012 senior notes |
— |
(216,571) |
|
Debt issuance costs |
(755) |
(24) |
|
Purchases of treasury stock |
(304,400) |
(246,530) |
|
Proceeds from exercise of stock options |
6,719 |
2,361 |
|
Dividends paid |
(42,073) |
(39,697) |
|
NET CASH USED IN FINANCING ACTIVITIES |
(149,009) |
(239,493) |
|
Net change in cash and cash equivalents |
(5,084) |
(457,952) |
|
Effect of foreign exchange rate changes on cash and cash equivalents |
(50) |
(1,112) |
|
Cash and cash equivalents at beginning of period |
41,566 |
511,605 |
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ 36,432 |
$ 52,541 |
Exhibit 4 |
|||||||||||||||||||
CHOICE HOTELS INTERNATIONAL, INC. |
|||||||||||||||||||
SUPPLEMENTAL OPERATING INFORMATION |
|||||||||||||||||||
DOMESTIC HOTEL SYSTEM |
|||||||||||||||||||
(UNAUDITED) |
|||||||||||||||||||
For the Three Months Ended September 30, |
For the Three Months Ended September 30, |
Change |
|||||||||||||||||
Average Daily |
Average Daily |
Average Daily |
|||||||||||||||||
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
|||||||||||
Upscale & Above(1) |
$ 160.49 |
63.1 % |
$ 101.29 |
$ 157.10 |
62.4 % |
$ 98.09 |
2.2 % |
70 |
bps |
3.3 % |
|||||||||
Midscale & Upper Midscale(2) |
107.77 |
62.2 % |
67.07 |
107.49 |
63.1 % |
67.88 |
0.3 % |
(90) |
bps |
(1.2) % |
|||||||||
Extended Stay(3) |
64.64 |
74.5 % |
48.18 |
63.83 |
77.5 % |
49.46 |
1.3 % |
(300) |
bps |
(2.6) % |
|||||||||
Economy(4) |
77.00 |
51.6 % |
39.74 |
77.51 |
54.5 % |
42.25 |
(0.7) % |
(290) |
bps |
(5.9) % |
|||||||||
Total(5) |
$ 103.33 |
62.0 % |
$ 64.02 |
$ 101.99 |
63.3 % |
$ 64.53 |
1.3 % |
(130) |
bps |
(0.8) % |
|||||||||
For the Nine Months Ended September 30, |
For the Nine Months Ended September 30, |
Change |
|||||||||||||||||
Average Daily |
Average Daily |
Average Daily |
|||||||||||||||||
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
Rate |
Occupancy |
RevPAR |
|||||||||||
Upscale & Above(1) |
$ 152.58 |
58.2 % |
$ 88.86 |
$ 146.91 |
56.7 % |
$ 83.26 |
3.9 % |
150 |
bps |
6.7 % |
|||||||||
Midscale & Upper Midscale(2) |
102.91 |
58.3 % |
60.02 |
101.47 |
58.7 % |
59.52 |
1.4 % |
(40) |
bps |
0.8 % |
|||||||||
Extended Stay(3) |
64.26 |
73.5 % |
47.23 |
61.85 |
76.9 % |
47.58 |
3.9 % |
(340) |
bps |
(0.7) % |
|||||||||
Economy(4) |
72.66 |
49.0 % |
35.57 |
72.44 |
51.1 % |
36.99 |
0.3 % |
(210) |
bps |
(3.8) % |
|||||||||
Total(5) |
$ 98.60 |
58.3 % |
$ 57.52 |
$ 95.75 |
59.3 % |
$ 56.74 |
3.0 % |
(100) |
bps |
1.4 % |
|||||||||
Effective Royalty Rate |
|||||||||||||||||||
For the Three Months Ended |
For the Nine Months Ended |
||||||||||||||||||
September 30, |
September 30, |
September 30, |
September 30, |
||||||||||||||||
System-wide(5) |
4.99 % |
4.93 % |
4.99 % |
4.93 % |
|||||||||||||||
(1) Includes Cambria, Ascend, Radisson Blu, Radisson Red, Park Plaza, Radisson Individuals and Radisson brands. |
|||||||||||||||||||
(2) Includes Country, Comfort, Clarion, Sleep, Quality, Park Inn, and Radisson Inn brands. |
|||||||||||||||||||
(3) Includes WoodSpring, Mainstay, Suburban and Everhome brands. |
|||||||||||||||||||
(4) Includes Econo Lodge and Rodeway brands. |
|||||||||||||||||||
(5) Radisson Hotels Americas was acquired on August 11, 2022. To enhance comparability, ADR, Occupancy, RevPAR, and effective royalty rate reflect operating performance for the three and nine months ended September 30, 2022 as if the legacy Radisson brands were acquired on January 1, 2022. |
Exhibit 5 |
||||||||||||||||
CHOICE HOTELS INTERNATIONAL, INC. |
||||||||||||||||
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA |
||||||||||||||||
(UNAUDITED) |
||||||||||||||||
September 30, 2023 |
September 30, 2022 |
Variance |
||||||||||||||
Hotels |
Rooms |
Hotels |
Rooms |
Hotels |
Rooms |
% |
% |
|||||||||
Ascend Hotel Collection |
231 |
24,955 |
192 |
20,069 |
39 |
4,886 |
20.3 % |
24.3 % |
||||||||
Cambria Hotels |
69 |
9,398 |
61 |
8,433 |
8 |
965 |
13.1 % |
11.4 % |
||||||||
Radisson(1) |
66 |
15,499 |
77 |
17,643 |
(11) |
(2,144) |
(14.3) % |
(12.2) % |
||||||||
Comfort(2) |
1,660 |
130,380 |
1,668 |
131,140 |
(8) |
(760) |
(0.5) % |
(0.6) % |
||||||||
Country(3) |
426 |
33,928 |
439 |
35,179 |
(13) |
(1,251) |
(3.0) % |
(3.6) % |
||||||||
Clarion(4) |
177 |
19,327 |
185 |
20,642 |
(8) |
(1,315) |
(4.3) % |
(6.4) % |
||||||||
Quality |
1,611 |
118,874 |
1,625 |
120,708 |
(14) |
(1,834) |
(0.9) % |
(1.5) % |
||||||||
Sleep |
425 |
30,005 |
423 |
29,770 |
2 |
235 |
0.5 % |
0.8 % |
||||||||
Park Inn |
4 |
363 |
4 |
363 |
— |
— |
0.0 % |
0.0 % |
||||||||
Everhome |
1 |
98 |
1 |
98 |
— |
— |
0.0 % |
0.0 % |
||||||||
MainStay |
123 |
8,471 |
113 |
7,843 |
10 |
628 |
8.8 % |
8.0 % |
||||||||
WoodSpring(5) |
231 |
27,862 |
206 |
24,890 |
25 |
2,972 |
12.1 % |
11.9 % |
||||||||
Suburban |
90 |
7,888 |
73 |
6,565 |
17 |
1,323 |
23.3 % |
20.2 % |
||||||||
Econo Lodge |
671 |
39,429 |
704 |
42,323 |
(33) |
(2,894) |
(4.7) % |
(6.8) % |
||||||||
Rodeway |
471 |
26,557 |
491 |
27,569 |
(20) |
(1,012) |
(4.1) % |
(3.7) % |
||||||||
Domestic Franchises |
6,256 |
493,034 |
6,262 |
493,235 |
(6) |
(201) |
(0.1) % |
— % |
||||||||
International Franchises |
1,207 |
134,660 |
1,196 |
133,947 |
11 |
713 |
0.9 % |
0.5 % |
||||||||
Total Franchises |
7,463 |
627,694 |
7,458 |
627,182 |
5 |
512 |
0.1 % |
0.1 % |
||||||||
(1) Includes Radisson Blu, Radisson Red, Radisson Individuals and Radisson brands. |
||||||||||||||||
(2) Includes Comfort family of brand extensions including Comfort and Comfort Suites. |
||||||||||||||||
(3) Includes Country Inn & Suites, Park Plaza, and Radisson Inn brands. |
||||||||||||||||
(4) Includes Clarion family of brand extensions including Clarion and Clarion Pointe. |
||||||||||||||||
(5) In July 2022, the Company received notice from an ownership group of its intent to exit 110 WoodSpring properties from the Choice system, which occurred in September 2022. |
Exhibit 6 |
|||||||||
CHOICE HOTELS INTERNATIONAL, INC. |
|||||||||
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION |
|||||||||
(UNAUDITED) |
|||||||||
REVENUES EXCLUDING REIMBURSABLE REVENUE FROM FRANCHISED AND MANAGED PROPERTIES AND |
|||||||||
(dollar amounts in thousands) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
2023 |
2022 |
2023 |
2022 |
||||||
Total Revenues |
$ 425,557 |
$ 414,266 |
$ 1,185,769 |
$ 1,039,967 |
|||||
Adjustments: |
|||||||||
Reimbursable revenue from franchised and managed properties |
(205,965) |
(190,627) |
(563,391) |
(506,646) |
|||||
Extraordinary termination fees from franchisee |
— |
(22,647) |
— |
(22,647) |
|||||
Revenues excluding reimbursable revenue from franchised and managed properties |
$ 219,592 |
$ 200,992 |
$ 622,378 |
$ 510,674 |
|||||
ADJUSTED SELLING, GENERAL AND ADMINISTRATIVE EXPENSES |
|||||||||
(dollar amounts in thousands) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
2023 |
2022 |
2023 |
2022 |
||||||
Total Selling, General and Administrative Expenses |
$ 54,913 |
$ 70,202 |
$ 182,000 |
144,414 |
|||||
Mark to market adjustments on non-qualified retirement plan investments |
913 |
1,419 |
(2,955) |
7,979 |
|||||
Operational restructuring charges |
(1,448) |
(5,416) |
(6,788) |
(5,416) |
|||||
Share-based compensation |
(5,890) |
(4,662) |
(16,503) |
(12,869) |
|||||
Due diligence and transition costs |
(9,698) |
(19,496) |
(25,669) |
(23,557) |
|||||
Limited payment guarantee charge |
— |
— |
(1,551) |
— |
|||||
Adjusted Selling, General and Administrative Expenses |
$ 38,790 |
$ 42,047 |
$ 128,534 |
$ 110,551 |
|||||
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (“EBITDA”) |
|||||||||
(dollar amounts in thousands) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
2023 |
2022 |
2023 |
2022 |
||||||
Net income |
$ 92,024 |
$ 103,080 |
$ 229,554 |
$ 276,639 |
|||||
Income tax expense |
29,205 |
33,696 |
71,717 |
89,998 |
|||||
Interest expense |
16,168 |
9,362 |
46,522 |
32,084 |
|||||
Interest income |
(1,897) |
(2,348) |
(5,836) |
(5,256) |
|||||
Other loss (gain) |
1,343 |
2,303 |
(2,752) |
9,578 |
|||||
Equity in net gain of affiliates |
(1,801) |
(1,075) |
(1,923) |
(1,279) |
|||||
Gain on sale of business and assets, net |
— |
(13,379) |
— |
(16,688) |
|||||
Depreciation and amortization |
9,633 |
8,726 |
29,468 |
20,436 |
|||||
Mark to market adjustments on non-qualified retirement plan investments |
(913) |
(1,419) |
2,955 |
(7,979) |
|||||
Operational restructuring charges |
1,448 |
5,416 |
6,788 |
5,416 |
|||||
Share-based compensation |
5,890 |
4,662 |
16,503 |
12,869 |
|||||
Due diligence and transition costs |
9,698 |
19,496 |
25,669 |
23,557 |
|||||
Extraordinary termination fees from franchisee |
— |
(22,647) |
— |
(22,647) |
|||||
Limited payment guarantee charge |
— |
— |
1,551 |
— |
|||||
Net reimbursable surplus from franchised and managed properties |
(7,889) |
(8,760) |
(13,150) |
(57,283) |
|||||
Franchise agreement acquisition costs amortization |
2,972 |
2,262 |
8,368 |
6,620 |
|||||
Adjusted EBITDA |
$ 155,881 |
$ 139,375 |
$ 415,434 |
$ 366,065 |
|||||
ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS) |
|||||||||
(dollar amounts in thousands, except per share amounts) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
2023 |
2022 |
2023 |
2022 |
||||||
Net income |
$ 92,024 |
$ 103,080 |
$ 229,554 |
$ 276,639 |
|||||
Adjustments: |
|||||||||
Gain on sale of business and assets, net |
— |
(10,087) |
— |
(12,583) |
|||||
Operational restructuring charges |
1,083 |
4,084 |
5,125 |
4,084 |
|||||
Extraordinary termination fees from franchisee |
— |
(17,076) |
— |
(17,076) |
|||||
Due diligence and transition costs |
7,290 |
14,700 |
19,380 |
17,762 |
|||||
Limited payment guarantee charge |
— |
— |
1,174 |
— |
|||||
Net reimbursable surplus from franchised and managed properties |
(7,975) |
(7,238) |
(15,525) |
(43,436) |
|||||
Adjusted Net Income |
$ 92,422 |
$ 87,463 |
$ 239,708 |
$ 225,390 |
|||||
Diluted Earnings Per Share |
$ 1.81 |
$ 1.85 |
$ 4.47 |
$ 4.93 |
|||||
Adjustments: |
|||||||||
Gain on sale of business and assets, net |
— |
(0.18) |
— |
(0.22) |
|||||
Operational restructuring charges |
0.02 |
0.07 |
0.10 |
0.07 |
|||||
Due diligence and transition costs |
0.14 |
0.26 |
0.38 |
0.32 |
|||||
Extraordinary termination fees from franchisee |
— |
(0.31) |
— |
(0.30) |
|||||
Limited payment guarantee charge |
— |
— |
0.02 |
— |
|||||
Net reimbursable surplus from franchised and managed properties |
(0.15) |
(0.13) |
(0.30) |
(0.78) |
|||||
Adjusted Diluted Earnings Per Share (EPS) |
$ 1.82 |
$ 1.56 |
$ 4.67 |
$ 4.02 |
Exhibit 7 |
|||
CHOICE HOTELS INTERNATIONAL, INC. |
|||
SUPPLEMENTAL INFORMATION – 2023 OUTLOOK |
|||
(UNAUDITED) |
|||
Guidance represents the midpoint of the company’s range of estimated outcomes for the year ended December 31, 2023 |
|||
ADJUSTED EBITDA FULL YEAR FORECAST |
|||
(in thousands) |
Midpoint |
||
2023 Guidance |
|||
Net income |
$ 261,400 |
||
Income tax expense |
81,800 |
||
Interest expense |
63,300 |
||
Interest income |
(7,300) |
||
Other gain |
(2,500) |
||
Equity in net gain of affiliates |
(2,200) |
||
Depreciation and amortization |
38,900 |
||
Mark to market adjustments on non-qualified retirement plan investments |
3,000 |
||
Share-based compensation |
21,500 |
||
Operational restructuring, due diligence and transition costs |
43,100 |
||
Limited payment guarantee charge |
1,600 |
||
Net reimbursable deficit from franchised and managed properties |
24,000 |
||
Franchise agreement acquisition costs amortization |
10,900 |
||
Adjusted EBITDA |
$ 537,500 |
||
ADJUSTED NET INCOME & DILUTED EARNINGS PER SHARE (EPS) FULL YEAR FORECAST |
|||
(in thousands, except per share amounts) |
Midpoint |
||
2023 Guidance |
|||
Net income |
$ 261,400 |
||
Adjustments: |
|||
Operational restructuring, due diligence and transition costs |
32,600 |
||
Limited payment guarantee charge |
1,200 |
||
Net reimbursable deficit from franchised and managed properties |
10,100 |
||
Adjusted Net Income |
$ 305,300 |
||
Diluted Earnings Per Share |
$ 5.11 |
||
Adjustments: |
|||
Operational restructuring, due diligence and transition costs |
0.64 |
||
Limited payment guarantee charge |
0.02 |
||
Net reimbursable deficit from franchised and managed properties |
0.22 |
||
Adjusted Diluted Earnings Per Share (EPS) |
$ 5.99 |
||
SOURCE Choice Hotels International, Inc.
Categories: Financial