Delaware | 001-13393 | 52-1209792 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
1 Choice Hotels Circle, Suite 400, Rockville, Maryland | 20850 | |
(Address of principal executive offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition. |
Item 9.01. | Financial Statements and Exhibits. |
Date: | February 15, 2017 | /s/ Scott E. Oaksmith | ||||
Scott E. Oaksmith | ||||||
Senior Vice President, Finance & Chief Accounting Officer |
• | Diluted earnings per share (EPS) for the fourth quarter totaled $0.56, an increase of 10 percent from the comparable period of the prior year, and increased 11 percent for the full year to $2.46; excluding executive termination benefits, full year adjusted diluted EPS increased 12 percent over the prior year. |
• | Net income totaled $31.8 million for the fourth quarter and $139.4 million for the full year. |
• | Adjusted EBITDA from hotel franchising activities for the fourth quarter increased 8 percent from the prior year fourth quarter to $61.4 million and increased 7 percent to $273.3 million for the full year. |
• | Adjusted hotel franchising margins for the fourth quarter increased 110 basis points from the prior year fourth quarter to 64.4 percent, and increased 90 basis points to 68.2 percent for the full year. |
• | Domestic royalty fees for fourth quarter totaled $68.4 million, an increase of 8.4 percent from the comparable period of the prior year; full year domestic royalties increased 6.9 percent to $300.7 million from the same period of 2015. |
• | Domestic system-wide revenue per available room (RevPAR) increased 5 percent and 3.9 percent for the fourth quarter and full year, respectively. Occupancy and average daily rates increased 150 basis points and 2.3 percent, respectively in the fourth quarter from the same period of 2015. |
• | Domestic RevPAR performance for the fourth quarter of 2016 exceeded total industry results by 180 basis points, and also exceeded growth reported by Smith Travel Research for the primary chain scale segments in which the company competes. |
• | Comfort family of brands and Sleep recorded 27 and 31 consecutive months of RevPAR index gains compared to its competition, respectively. |
• | Cambria hotel & suites achieved full year RevPAR of over $100. |
• | Effective royalty rate increased 13 basis points and 11 basis points for the fourth quarter and full year 2016, respectively. |
• | Domestic hotels as of December 31, 2016, increased 1.6 percent from December 31, 2015. |
• | Approved 267 new franchised hotels for development in the fourth quarter, bringing full year new franchise agreements to 645 hotels. New construction franchise agreements increased 23 percent in the fourth quarter of 2016 from the comparable period of 2015. |
• | Cambria hotel & suites continued to enter major markets with groundbreakings and openings in Philadelphia, two projects in Chicago, Nashville and New York’s Times Square. |
• | The company’s domestic pipeline of hotels awaiting conversion, under construction or approved for development as of December 31, 2016, increased 19 percent from December 31, 2015. |
• | The domestic new construction pipeline for Cambria hotel & suites as of December 31, 2016, totaled 66 hotels, a 53 percent increase from December 31, 2015. |
• | Net income for full year 2017 is expected to range between $157 million and $160 million. |
• | Adjusted EBITDA for full year 2017 is expected to range between $292 million and $297 million. |
• | The company’s first quarter 2017 diluted EPS is expected to be at least $0.49. |
• | The company expects full year 2017 diluted EPS to range between $2.78 and $2.84. |
• | The recurring effective tax rate is expected to be approximately 33.5% for the first quarter and full year 2017. |
• | Diluted EPS estimates are based on the current number of shares outstanding and thus do not factor in any changes that may occur due to new equity grants or any further repurchases of common stock under the company’s share repurchase program. |
• | The EPS and consolidated EBITDA estimates assume that we incur net reductions in EBITDA related to non-hotel franchising activities at the midpoint of the range for these investments. |
• | Adjusted EBITDA from hotel franchising activities for full year 2017 are expected to range between $297 million and $302 million. |
• | Net domestic unit growth for 2017 is expected to range between approximately 2% and 3%. |
• | RevPAR is expected to increase between 3.5% and 4.5% for the first quarter and range between 3.0% and 4.0% for full year 2017. |
• | The effective royalty rate is expected to increase between 12 and 14 basis points for full year 2017 as compared to full year 2016. |
• | Net reductions in full year 2017 EBITDA relating to our non-hotel franchising operations, which primarily relate to SkyTouch and vacation rental activities are expected to range between approximately $4 million and $6 million. |
Choice Hotels International, Inc. | Exhibit 1 | |||||||||||||||||||||||||||||
Consolidated Statements of Income | ||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||
Variance | Variance | |||||||||||||||||||||||||||||
2016 | 2015 | $ | % | 2016 | 2015 | $ | % | |||||||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||||||||||||
REVENUES: | ||||||||||||||||||||||||||||||
Royalty fees | $ | 73,379 | $ | 67,965 | $ | 5,414 | 8 | % | $ | 320,547 | $ | 301,508 | $ | 19,039 | 6 | % | ||||||||||||||
Initial franchise and relicensing fees | 6,807 | 6,977 | (170 | ) | (2 | )% | 23,953 | 24,680 | (727 | ) | (3 | )% | ||||||||||||||||||
Procurement services | 7,507 | 7,404 | 103 | 1 | % | 31,226 | 27,071 | 4,155 | 15 | % | ||||||||||||||||||||
Marketing and reservation system | 113,523 | 122,465 | (8,942 | ) | (7 | )% | 525,716 | 488,763 | 36,953 | 8 | % | |||||||||||||||||||
Other | 6,979 | 6,140 | 839 | 14 | % | 23,199 | 17,856 | 5,343 | 30 | % | ||||||||||||||||||||
Total revenues | 208,195 | 210,951 | (2,756 | ) | (1 | )% | 924,641 | 859,878 | 64,763 | 8 | % | |||||||||||||||||||
OPERATING EXPENSES: | ||||||||||||||||||||||||||||||
Selling, general and administrative | 39,213 | 38,542 | 671 | 2 | % | 148,728 | 134,254 | 14,474 | 11 | % | ||||||||||||||||||||
Depreciation and amortization | 2,998 | 2,749 | 249 | 9 | % | 11,705 | 11,542 | 163 | 1 | % | ||||||||||||||||||||
Marketing and reservation system | 113,523 | 122,465 | (8,942 | ) | (7 | )% | 525,716 | 488,763 | 36,953 | 8 | % | |||||||||||||||||||
Total operating expenses | 155,734 | 163,756 | (8,022 | ) | (5 | )% | 686,149 | 634,559 | 51,590 | 8 | % | |||||||||||||||||||
Gain on sale of assets, net | 1 | — | 1 | NM | 403 | — | 403 | NM | ||||||||||||||||||||||
Operating income | 52,462 | 47,195 | 5,267 | 11 | % | 238,895 | 225,319 | 13,576 | 6 | % | ||||||||||||||||||||
OTHER INCOME AND EXPENSES, NET: | ||||||||||||||||||||||||||||||
Interest expense | 10,980 | 10,776 | 204 | 2 | % | 44,446 | 42,833 | 1,613 | 4 | % | ||||||||||||||||||||
Interest income | (1,033 | ) | (598 | ) | (435 | ) | 73 | % | (3,535 | ) | (1,580 | ) | (1,955 | ) | 124 | % | ||||||||||||||
Other (gains) losses | (499 | ) | (581 | ) | 82 | (14 | )% | (1,504 | ) | (820 | ) | (684 | ) | 83 | % | |||||||||||||||
Equity in net (income) loss of affiliates | (778 | ) | (206 | ) | (572 | ) | 278 | % | (492 | ) | 901 | (1,393 | ) | (155 | )% | |||||||||||||||
Total other income and expenses, net | 8,670 | 9,391 | (721 | ) | (8 | )% | 38,915 | 41,334 | (2,419 | ) | (6 | )% | ||||||||||||||||||
Income before income taxes | 43,792 | 37,804 | 5,988 | 16 | % | 199,980 | 183,985 | 15,995 | 9 | % | ||||||||||||||||||||
Income taxes | 11,971 | 8,601 | 3,370 | 39 | % | 60,609 | 55,956 | 4,653 | 8 | % | ||||||||||||||||||||
Net income | $ | 31,821 | $ | 29,203 | $ | 2,618 | 9 | % | $ | 139,371 | $ | 128,029 | $ | 11,342 | 9 | % | ||||||||||||||
Basic earnings per share | $ | 0.57 | $ | 0.52 | $ | 0.05 | 10 | % | $ | 2.48 | $ | 2.24 | $ | 0.24 | 11 | % | ||||||||||||||
Diluted earnings per share | $ | 0.56 | $ | 0.51 | $ | 0.05 | 10 | % | $ | 2.46 | $ | 2.22 | $ | 0.24 | 11 | % | ||||||||||||||
Choice Hotels International, Inc. | Exhibit 2 | ||||||||||
Consolidated Balance Sheets | |||||||||||
(In thousands, except per share amounts) | December 31, | December 31, | |||||||||
2016 | 2015 | ||||||||||
(Unaudited) | |||||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | 202,463 | $ | 193,441 | |||||||
Accounts receivable, net | 107,336 | 89,352 | |||||||||
Other current assets | 35,074 | 28,160 | |||||||||
Total current assets | 344,873 | 310,953 | |||||||||
Fixed assets and intangibles, net | 178,704 | 179,433 | |||||||||
Notes receivable, net of allowances | 110,608 | 82,572 | |||||||||
Investments in unconsolidated entities | 94,839 | 67,037 | |||||||||
Investments, employee benefit plans, at fair value | 16,975 | 17,674 | |||||||||
Other assets | 106,469 | 59,341 | |||||||||
Total assets | $ | 852,468 | $ | 717,010 | |||||||
LIABILITIES AND SHAREHOLDERS' DEFICIT | |||||||||||
Accounts payable | $ | 48,071 | $ | 64,431 | |||||||
Accrued expenses and other current liabilities | 81,184 | 70,807 | |||||||||
Deferred revenue | 133,218 | 71,587 | |||||||||
Current portion of long-term debt | 1,195 | 1,191 | |||||||||
Total current liabilities | 263,668 | 208,016 | |||||||||
Long-term debt | 839,409 | 812,945 | |||||||||
Deferred compensation & retirement plan obligations | 21,595 | 22,859 | |||||||||
Other liabilities | 39,145 | 69,089 | |||||||||
Total liabilities | 1,163,817 | 1,112,909 | |||||||||
Total shareholders' deficit | (311,349 | ) | (395,899 | ) | |||||||
Total liabilities and shareholders' deficit | $ | 852,468 | $ | 717,010 | |||||||
Choice Hotels International, Inc. | Exhibit 3 | ||||||
Consolidated Statements of Cash Flows | |||||||
(Unaudited) | |||||||
(In thousands) | Year Ended December 31, | ||||||
2016 | 2015* | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 139,371 | $ | 128,029 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 11,705 | 11,542 | |||||
Gain on disposal of assets | (346 | ) | (1,521 | ) | |||
Provision for bad debts, net | 2,151 | 1,704 | |||||
Non-cash stock compensation and other charges | 15,458 | 11,805 | |||||
Non-cash interest and other loss | 1,059 | 3,229 | |||||
Deferred income taxes | (10,542 | ) | 615 | ||||
Equity in net losses from unconsolidated joint ventures less distributions received | 1,025 | 3,279 | |||||
Changes in assets and liabilities, net of acquisition: | |||||||
Receivables | (21,919 | ) | 401 | ||||
Advances to/from marketing and reservation activities, net | (21,449 | ) | 11,074 | ||||
Forgivable notes receivable, net | (17,410 | ) | (23,066 | ) | |||
Accounts payable | (13,689 | ) | 6,493 | ||||
Accrued expenses and other current liabilities | 5,225 | 5,166 | |||||
Income taxes payable/receivable | 5,775 | 808 | |||||
Deferred revenue | 61,646 | 5,251 | |||||
Other assets | (8,703 | ) | (5,792 | ) | |||
Other liabilities | 2,678 | 6,062 | |||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 152,035 | 165,079 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Investment in property and equipment | (25,191 | ) | (27,765 | ) | |||
Investment in intangible assets | (2,580 | ) | (733 | ) | |||
Proceeds from sales of assets | 11,462 | 6,347 | |||||
Acquisitions of real estate | (28,583 | ) | (9,200 | ) | |||
Business acquisiton, net of cash acquired | (1,341 | ) | (13,269 | ) | |||
Contributions to equity method investments | (34,661 | ) | (23,737 | ) | |||
Distributions from equity method investments | 3,700 | 518 | |||||
Purchases of investments, employee benefit plans | (1,661 | ) | (3,220 | ) | |||
Proceeds from sales of investments, employee benefit plans | 1,911 | 3,170 | |||||
Issuance of mezzanine and other notes receivable | (32,604 | ) | (36,884 | ) | |||
Collections of mezzanine and other notes receivable | 11,070 | 4,849 | |||||
Other items, net | 11 | 114 | |||||
NET CASH USED BY INVESTING ACTIVITIES | (98,467 | ) | (99,810 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Net borrowings pursuant to revolving credit facilities | 25,795 | 158,867 | |||||
Principal payments on long-term debt | (988 | ) | (130,501 | ) | |||
Proceeds from other debt agreements | 550 | — | |||||
Proceeds from the issuance of long-term debt | — | 176 | |||||
Debt issuance costs | (284 | ) | (2,169 | ) | |||
Purchases of treasury stock | (35,926 | ) | (72,873 | ) | |||
Dividends paid | (46,182 | ) | (45,214 | ) | |||
Proceeds from exercise of stock options | 12,951 | 7,056 | |||||
NET CASH USED BY FINANCING ACTIVITIES | (44,084 | ) | (84,658 | ) | |||
Net change in cash and cash equivalents | 9,484 | (19,389 | ) | ||||
Effect of foreign exchange rate changes on cash and cash equivalents | (462 | ) | (2,049 | ) | |||
Cash and cash equivalents at beginning of period | 193,441 | 214,879 | |||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 202,463 | $ | 193,441 | |||
* Year to date results for December 31, 2015 reflect the adoption of ASU No. 2016-09, which requires companies to recognize excess tax benefits related to the exercise of share based awards as operating activities in the statement of cash flows. The company has elected to apply the ASU retrospectively and as a result excess tax benefits totaling $5.2 million for the year ended December 31, 2015 have been reclassified from cash flows from financing activities to cash flows from operating activities. |
CHOICE HOTELS INTERNATIONAL, INC. | Exhibit 4 | |||||||||||||||||||||||||||||||
SUPPLEMENTAL OPERATING INFORMATION | ||||||||||||||||||||||||||||||||
DOMESTIC HOTEL SYSTEM | ||||||||||||||||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||||||||||||||||
For the Year Ended December 31, 2016 | For the Year Ended December 31, 2015 | Change | ||||||||||||||||||||||||||||||
Average Daily | Average Daily | Average Daily | ||||||||||||||||||||||||||||||
Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | ||||||||||||||||||||||||
Comfort Inn | $ | 92.56 | 65.6 | % | $ | 60.70 | $ | 89.68 | 65.0 | % | $ | 58.25 | 3.2 | % | 60 | bps | 4.2 | % | ||||||||||||||
Comfort Suites | 96.32 | 69.3 | % | 66.74 | 93.89 | 68.3 | % | 64.16 | 2.6 | % | 100 | bps | 4.0 | % | ||||||||||||||||||
Sleep | 82.08 | 65.1 | % | 53.47 | 80.41 | 63.9 | % | 51.41 | 2.1 | % | 120 | bps | 4.0 | % | ||||||||||||||||||
Quality | 77.80 | 59.1 | % | 45.99 | 75.06 | 58.2 | % | 43.69 | 3.7 | % | 90 | bps | 5.3 | % | ||||||||||||||||||
Clarion | 82.35 | 58.3 | % | 48.01 | 79.85 | 57.2 | % | 45.63 | 3.1 | % | 110 | bps | 5.2 | % | ||||||||||||||||||
Econo Lodge | 61.41 | 54.1 | % | 33.22 | 59.61 | 53.5 | % | 31.90 | 3.0 | % | 60 | bps | 4.1 | % | ||||||||||||||||||
Rodeway | 63.04 | 55.7 | % | 35.08 | 59.75 | 56.3 | % | 33.64 | 5.5 | % | (60 | ) | bps | 4.3 | % | |||||||||||||||||
MainStay | 76.29 | 65.2 | % | 49.70 | 77.02 | 67.1 | % | 51.71 | (0.9 | )% | (190 | ) | bps | (3.9 | )% | |||||||||||||||||
Suburban | 49.96 | 75.5 | % | 37.72 | 47.61 | 75.5 | % | 35.95 | 4.9 | % | — | bps | 4.9 | % | ||||||||||||||||||
Cambria hotel & suites | 131.73 | 76.3 | % | 100.46 | NA | NA | NA | NA | NA | NA | ||||||||||||||||||||||
Ascend Hotel Collection | 129.97 | 58.1 | % | 75.52 | 127.27 | 58.5 | % | 74.47 | 2.1 | % | (40 | ) | bps | 1.4 | % | |||||||||||||||||
Total (1) | $ | 82.64 | 61.7 | % | $ | 51.00 | $ | 80.24 | 61.2 | % | $ | 49.08 | 3.0 | % | 50 | bps | 3.9 | % | ||||||||||||||
For the Three Months Ended December 31, 2016 | For the Three Months Ended December 31, 2015 | Change | ||||||||||||||||||||||||||||||
Average Daily | Average Daily | Average Daily | ||||||||||||||||||||||||||||||
Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | ||||||||||||||||||||||||
Comfort Inn | $ | 88.45 | 60.7 | % | $ | 53.66 | $ | 86.31 | 59.4 | % | $ | 51.25 | 2.5 | % | 130 | bps | 4.7 | % | ||||||||||||||
Comfort Suites | 92.67 | 64.7 | % | 59.92 | 90.85 | 63.7 | % | 57.90 | 2.0 | % | 100 | bps | 3.5 | % | ||||||||||||||||||
Sleep | 78.82 | 61.5 | % | 48.44 | 77.35 | 58.7 | % | 45.41 | 1.9 | % | 280 | bps | 6.7 | % | ||||||||||||||||||
Quality | 73.92 | 54.2 | % | 40.05 | 71.82 | 52.5 | % | 37.68 | 2.9 | % | 170 | bps | 6.3 | % | ||||||||||||||||||
Clarion | 77.74 | 53.9 | % | 41.93 | 76.13 | 51.8 | % | 39.43 | 2.1 | % | 210 | bps | 6.3 | % | ||||||||||||||||||
Econo Lodge | 58.37 | 50.4 | % | 29.43 | 56.79 | 48.8 | % | 27.72 | 2.8 | % | 160 | bps | 6.2 | % | ||||||||||||||||||
Rodeway | 59.42 | 50.9 | % | 30.22 | 57.00 | 49.9 | % | 28.47 | 4.2 | % | 100 | bps | 6.1 | % | ||||||||||||||||||
MainStay | 73.06 | 62.2 | % | 45.42 | 73.73 | 60.1 | % | 44.30 | (0.9 | )% | 210 | bps | 2.5 | % | ||||||||||||||||||
Suburban | 49.36 | 74.0 | % | 36.55 | 47.15 | 71.1 | % | 33.51 | 4.7 | % | 290 | bps | 9.1 | % | ||||||||||||||||||
Cambria hotel & suites | 135.36 | 73.1 | % | 98.90 | NA | NA | NA | NA | NA | bps | NA | |||||||||||||||||||||
Ascend Hotel Collection | 128.82 | 55.3 | % | 71.29 | 126.92 | 54.4 | % | 69.09 | 1.5 | % | 90 | bps | 3.2 | % | ||||||||||||||||||
Total (1) | $ | 79.10 | 57.3 | % | $ | 45.28 | $ | 77.30 | 55.8 | % | $ | 43.13 | 2.3 | % | 150 | bps | 5.0 | % | ||||||||||||||
For the Quarter Ended | For the Year Ended | |||||||||||||||||||||||||||||||
12/31/2016 | 12/31/2015 | 12/31/2016 | 12/31/2015 | |||||||||||||||||||||||||||||
System-wide effective royalty rate | 4.49% | 4.36% | 4.41% | 4.3% | ||||||||||||||||||||||||||||
(1) Totals for the three months and year ended December 31, 2015 have been revised from previous disclosures to include the operating statistics for the Cambria hotel & suites brand |
CHOICE HOTELS INTERNATIONAL, INC. | Exhibit 5 | |||||||||||||||||||||||
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA | ||||||||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||||||||
December 31, 2016 | December 31, 2015 | Variance | ||||||||||||||||||||||
Hotels | Rooms | Hotels | Rooms | Hotels | Rooms | % | % | |||||||||||||||||
Comfort Inn | 1,113 | 86,310 | 1,156 | 89,545 | (43 | ) | (3,235 | ) | (3.7 | )% | (3.6 | )% | ||||||||||||
Comfort Suites | 565 | 43,610 | 569 | 43,949 | (4 | ) | (339 | ) | (0.7 | )% | (0.8 | )% | ||||||||||||
Sleep | 379 | 27,097 | 377 | 27,047 | 2 | 50 | 0.5 | % | 0.2 | % | ||||||||||||||
Quality | 1,447 | 114,582 | 1,379 | 110,116 | 68 | 4,466 | 4.9 | % | 4.1 | % | ||||||||||||||
Clarion | 167 | 22,941 | 175 | 24,449 | (8 | ) | (1,508 | ) | (4.6 | )% | (6.2 | )% | ||||||||||||
Econo Lodge | 857 | 52,791 | 856 | 52,978 | 1 | (187 | ) | 0.1 | % | (0.4 | )% | |||||||||||||
Rodeway | 565 | 32,515 | 513 | 28,880 | 52 | 3,635 | 10.1 | % | 12.6 | % | ||||||||||||||
MainStay | 56 | 4,108 | 52 | 3,846 | 4 | 262 | 7.7 | % | 6.8 | % | ||||||||||||||
Suburban | 59 | 6,561 | 62 | 6,994 | (3 | ) | (433 | ) | (4.8 | )% | (6.2 | )% | ||||||||||||
Cambria hotel & suites | 27 | 3,503 | 25 | 3,113 | 2 | 390 | 8.0 | % | 12.5 | % | ||||||||||||||
Ascend Hotel Collection | 127 | 10,480 | 112 | 9,455 | 15 | 1,025 | 13.4 | % | 10.8 | % | ||||||||||||||
Domestic Franchises | 5,362 | 404,498 | 5,276 | 400,372 | 86 | 4,126 | 1.6 | % | 1.0 | % | ||||||||||||||
International Franchises | 1,152 | 111,624 | 1,147 | 107,111 | 5 | 4,513 | 0.4 | % | 4.2 | % | ||||||||||||||
Total Franchises | 6,514 | 516,122 | 6,423 | 507,483 | 91 | 8,639 | 1.4 | % | 1.7 | % |
Exhibit 6 | ||||||||||||||||||||||||
CHOICE HOTELS INTERNATIONAL, INC. | ||||||||||||||||||||||||
SUPPLEMENTAL INFORMATION BY BRAND | ||||||||||||||||||||||||
DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS | ||||||||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||||||||
For the Year Ended December 31, 2016 | For the Year Ended December 31, 2015 | % Change | ||||||||||||||||||||||
New Construction | Conversion | Total | New Construction | Conversion | Total | New Construction | Conversion | Total | ||||||||||||||||
Comfort Inn | 37 | 38 | 75 | 37 | 39 | 76 | 0% | (3)% | (1)% | |||||||||||||||
Comfort Suites | 43 | 3 | 46 | 45 | 6 | 51 | (4)% | (50)% | (10)% | |||||||||||||||
Sleep | 50 | 1 | 51 | 34 | — | 34 | 47% | NM | 50% | |||||||||||||||
Quality | 2 | 174 | 176 | 3 | 193 | 196 | (33)% | (10)% | (10)% | |||||||||||||||
Clarion | 3 | 32 | 35 | — | 12 | 12 | NM | 167% | 192% | |||||||||||||||
Econo Lodge | 2 | 65 | 67 | — | 60 | 60 | NM | 8% | 12% | |||||||||||||||
Rodeway | — | 102 | 102 | — | 104 | 104 | NM | (2)% | (2)% | |||||||||||||||
MainStay | 29 | — | 29 | 27 | — | 27 | 7% | NM | 7% | |||||||||||||||
Suburban | — | 2 | 2 | 1 | 6 | 7 | (100)% | (67)% | (71)% | |||||||||||||||
Ascend Hotel Collection | 9 | 25 | 34 | 5 | 32 | 37 | 80% | (22)% | (8)% | |||||||||||||||
Cambria hotel & suites | 26 | 2 | 28 | 21 | 5 | 26 | 24% | (60%) | 8% | |||||||||||||||
Total Domestic System | 201 | 444 | 645 | 173 | 457 | 630 | 16% | (3)% | 2% | |||||||||||||||
For the Three Months Ended December 31, 2016 | For the Three Months Ended December 31, 2015 | % Change | ||||||||||||||||||||||
New Construction | Conversion | Total | New Construction | Conversion | Total | New Construction | Conversion | Total | ||||||||||||||||
Comfort Inn | 17 | 12 | 29 | 20 | 11 | 31 | (15)% | 9% | (6)% | |||||||||||||||
Comfort Suites | 26 | 2 | 28 | 27 | 3 | 30 | (4)% | (33)% | (7)% | |||||||||||||||
Sleep | 24 | — | 24 | 15 | — | 15 | 60% | NM | 60% | |||||||||||||||
Quality | 2 | 56 | 58 | — | 79 | 79 | NM | (29)% | (27)% | |||||||||||||||
Clarion | — | 17 | 17 | — | 5 | 5 | NM | 240% | 240% | |||||||||||||||
Econo Lodge | 1 | 24 | 25 | — | 21 | 21 | NM | 14% | 19% | |||||||||||||||
Rodeway | — | 42 | 42 | — | 47 | 47 | NM | (11)% | (11)% | |||||||||||||||
MainStay | 14 | — | 14 | 11 | — | 11 | 27% | NM | 27% | |||||||||||||||
Suburban | — | 1 | 1 | — | 2 | 2 | NM | (50)% | (50)% | |||||||||||||||
Ascend Hotel Collection | 7 | 10 | 17 | 2 | 10 | 12 | 250% | 0% | 42% | |||||||||||||||
Cambria hotel & suites | 10 | 2 | 12 | 7 | 3 | 10 | 43% | (33%) | 20% | |||||||||||||||
Total Domestic System | 101 | 166 | 267 | 82 | 181 | 263 | 23% | (8)% | 2% | |||||||||||||||
Exhibit 7 | |||||||||||||||||||||||||||||||||
CHOICE HOTELS INTERNATIONAL, INC. | |||||||||||||||||||||||||||||||||
DOMESTIC PIPELINE OF HOTELS UNDER CONSTRUCTION, AWAITING CONVERSION OR APPROVED FOR DEVELOPMENT | |||||||||||||||||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||||||||||||||||
A hotel in the domestic pipeline does not always result in an open and operating hotel due to various factors. | |||||||||||||||||||||||||||||||||
Variance | |||||||||||||||||||||||||||||||||
December 31, 2016 Units | December 31, 2015 Units | Conversion | New Construction | Total | |||||||||||||||||||||||||||||
Conversion | New Construction | Total | Conversion | New Construction | Total | Units | % | Units | % | Units | % | ||||||||||||||||||||||
Comfort Inn | 38 | 94 | 132 | 38 | 83 | 121 | — | 0% | 11 | 13% | 11 | 9% | |||||||||||||||||||||
Comfort Suites | 3 | 114 | 117 | 3 | 95 | 98 | — | 0% | 19 | 20% | 19 | 19% | |||||||||||||||||||||
Sleep Inn | 1 | 108 | 109 | — | 81 | 81 | 1 | NM | 27 | 33% | 28 | 35% | |||||||||||||||||||||
Quality | 54 | 5 | 59 | 53 | 5 | 58 | 1 | 2% | — | 0% | 1 | 2% | |||||||||||||||||||||
Clarion | 17 | 4 | 21 | 7 | 2 | 9 | 10 | 143% | 2 | 100% | 12 | 133% | |||||||||||||||||||||
Econo Lodge | 33 | 4 | 37 | 23 | 4 | 27 | 10 | 43% | — | 0% | 10 | 37% | |||||||||||||||||||||
Rodeway | 37 | 1 | 38 | 47 | 2 | 49 | (10 | ) | (21)% | (1 | ) | (50)% | (11 | ) | (22)% | ||||||||||||||||||
MainStay | — | 75 | 75 | — | 60 | 60 | — | NM | 15 | 25% | 15 | 25% | |||||||||||||||||||||
Suburban | 5 | 5 | 10 | 5 | 8 | 13 | — | 0% | (3 | ) | (38)% | (3 | ) | (23)% | |||||||||||||||||||
Ascend Hotel Collection | 35 | 22 | 57 | 28 | 19 | 47 | 7 | 25% | 3 | 16% | 10 | 21% | |||||||||||||||||||||
Cambria hotel & suites | 6 | 60 | 66 | 5 | 38 | 43 | 1 | 20% | 22 | 58% | 23 | 53% | |||||||||||||||||||||
229 | 492 | 721 | 209 | 397 | 606 | 20 | 10% | 95 | 24% | 115 | 19% | ||||||||||||||||||||||
CHOICE HOTELS INTERNATIONAL, INC. | Exhibit 8 | |||||||||||||||||
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION | ||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||
HOTEL FRANCHISING REVENUES AND ADJUSTED HOTEL FRANCHISING MARGINS | ||||||||||||||||||
(dollar amounts in thousands) | Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Hotel Franchising Revenues: | ||||||||||||||||||
Total Revenues | $ | 208,195 | $ | 210,951 | $ | 924,641 | $ | 859,878 | ||||||||||
Adjustments: | ||||||||||||||||||
Marketing and reservation system revenues | (113,523 | ) | (122,465 | ) | (525,716 | ) | (488,763 | ) | ||||||||||
Non-hotel franchising activities | (2,295 | ) | (1,943 | ) | (8,816 | ) | (4,416 | ) | ||||||||||
Hotel Franchising Revenues | $ | 92,377 | $ | 86,543 | $ | 390,109 | $ | 366,699 | ||||||||||
Adjusted Hotel Franchising Margins: | ||||||||||||||||||
Operating Margin: | ||||||||||||||||||
Total Revenues | $ | 208,195 | $ | 210,951 | $ | 924,641 | $ | 859,878 | ||||||||||
Operating Income | $ | 52,462 | $ | 47,195 | $ | 238,895 | $ | 225,319 | ||||||||||
Operating Margin | 25.2 | % | 22.4 | % | 25.8 | % | 26.2 | % | ||||||||||
Adjusted Hotel Franchising Margin: | ||||||||||||||||||
Hotel Franchising Revenues | $ | 92,377 | $ | 86,543 | $ | 390,109 | $ | 366,699 | ||||||||||
Operating Income | $ | 52,462 | $ | 47,195 | $ | 238,895 | $ | 225,319 | ||||||||||
Mark to market adjustments on non-qualified retirement plan investments | $ | 531 | $ | 619 | $ | 1,534 | $ | (732 | ) | |||||||||
Executive termination benefits | — | — | 2,206 | — | ||||||||||||||
Non-hotel franchising activities operating loss | 6,453 | 6,952 | 23,593 | 22,274 | ||||||||||||||
Adjusted Hotel Franchising Operating Income | $ | 59,446 | $ | 54,766 | $ | 266,228 | $ | 246,861 | ||||||||||
Adjusted Hotel Franchising Margins | 64.4 | % | 63.3 | % | 68.2 | % | 67.3 | % | ||||||||||
ADJUSTED HOTEL FRANCHISING SELLING, GENERAL AND ADMINISTRATION EXPENSES | ||||||||||||||||||
(dollar amounts in thousands) | Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Total Selling, General and Administrative Expenses | $ | 39,213 | $ | 38,542 | $ | 148,728 | $ | 134,254 | ||||||||||
Mark to market adjustments on non-qualified retirement plan investments | $ | (531 | ) | $ | (619 | ) | $ | (1,534 | ) | $ | 732 | |||||||
Executive termination benefits | — | — | (2,206 | ) | — | |||||||||||||
Non-hotel franchising activities | (7,703 | ) | (7,976 | ) | (28,141 | ) | (24,121 | ) | ||||||||||
Adjusted Hotel Franchising Selling, General and Administration Expenses | $ | 30,979 | $ | 29,947 | $ | 116,847 | $ | 110,865 | ||||||||||
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA") | ||||||||||||||||||
(dollar amounts in thousands) | ||||||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Net income | $ | 31,821 | $ | 29,203 | $ | 139,371 | $ | 128,029 | ||||||||||
Income taxes | 11,971 | 8,601 | 60,609 | 55,956 | ||||||||||||||
Interest expense | 10,980 | 10,776 | 44,446 | 42,833 | ||||||||||||||
Interest income | (1,033 | ) | (598 | ) | (3,535 | ) | (1,580 | ) | ||||||||||
Other (gains) losses | (499 | ) | (581 | ) | (1,504 | ) | (820 | ) | ||||||||||
Equity in net (income) loss of affiliates | (778 | ) | (206 | ) | (492 | ) | 901 | |||||||||||
Gain on sale of assets | (1 | ) | — | (403 | ) | — | ||||||||||||
Depreciation and amortization | 2,998 | 2,749 | 11,705 | 11,542 | ||||||||||||||
Mark to market adjustments on non-qualified retirement plan investments | 531 | 619 | 1,534 | (732 | ) | |||||||||||||
Executive termination benefits | — | — | 2,206 | — | ||||||||||||||
Adjusted EBITDA | $ | 55,990 | $ | 50,563 | $ | 253,937 | $ | 236,129 | ||||||||||
Hotel franchising | $ | 61,398 | $ | 56,596 | $ | 273,262 | $ | 255,834 | ||||||||||
Non-hotel franchising activities | (5,408 | ) | (6,033 | ) | (19,325 | ) | (19,705 | ) | ||||||||||
$ | 55,990 | $ | 50,563 | $ | 253,937 | $ | 236,129 | |||||||||||
ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS) | ||||||||||||||||||
(dollar amounts in thousands, except per share amounts) | Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Net Income | $ | 31,821 | $ | 29,203 | $ | 139,371 | $ | 128,029 | ||||||||||
Adjustments: | ||||||||||||||||||
Executive termination benefits, net of income taxes | — | — | 1,394 | — | ||||||||||||||
Adjusted Net Income | $ | 31,821 | $ | 29,203 | $ | 140,765 | $ | 128,029 | ||||||||||
Diluted Earnings Per Share | $ | 0.56 | $ | 0.51 | $ | 2.46 | $ | 2.22 | ||||||||||
Adjustments: | ||||||||||||||||||
Executive termination benefits | — | — | 0.03 | — | ||||||||||||||
Adjusted Diluted Earnings Per Share (EPS) | $ | 0.56 | $ | 0.51 | $ | 2.49 | $ | 2.22 | ||||||||||
ADJUSTED EBITDA FULL YEAR FORECAST | ||||||||||||||||||
(dollar amounts in thousands) | ||||||||||||||||||
Range | ||||||||||||||||||
Estimated Adjusted EBITDA | ||||||||||||||||||
Fiscal Year 2017 | ||||||||||||||||||
Net income | $ | 156,900 | $ | 160,200 | ||||||||||||||
Income taxes | 79,000 | 80,700 | ||||||||||||||||
Interest expense | 47,800 | 47,800 | ||||||||||||||||
Interest income | (4,700 | ) | (4,700 | ) | ||||||||||||||
Gain on sale of assets | — | — | ||||||||||||||||
Other gains | — | — | ||||||||||||||||
Equity in net loss of affiliates | (200 | ) | (200 | ) | ||||||||||||||
Depreciation and amortization | 13,200 | 13,200 | ||||||||||||||||
Mark to market adjustments on non-qualified retirement plan investments | — | — | ||||||||||||||||
Adjusted EBITDA | $ | 292,000 | $ | 297,000 | ||||||||||||||
Hotel franchising | $ | 297,000 | $ | 302,000 | ||||||||||||||
Non-hotel franchising activities | (5,000 | ) | (5,000 | ) | ||||||||||||||
$ | 292,000 | $ | 297,000 | |||||||||||||||