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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | |
Emerging growth company o | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o |
Item 2.02. | Results of Operations and Financial Condition. |
Item 9.01. | Financial Statements and Exhibits. |
Date: | May 4, 2017 | /s/ Dominic E. Dragisich | ||||
Dominic E. Dragisich | ||||||
Chief Financial Officer |
• | Diluted earnings per share (EPS) for the first quarter totaled $0.51, an increase of 38 percent from the first quarter of the prior year. |
• | Net income totaled $28.7 million for the first quarter, an increase of 36 percent from the comparable period of the prior year. |
• | Adjusted EBITDA from hotel franchising activities for the first quarter increased 15 percent from the prior year first quarter to $57.6 million. |
• | Adjusted hotel franchising margins for the first quarter increased 300 basis points from the prior year first quarter to 64.6 percent. |
• | Domestic royalty fees for first quarter totaled $64.5 million, an increase of 6.6 percent from the first quarter of the prior year. |
• | Domestic system-wide revenue per available room (RevPAR) increased 3.8 percent for the first quarter. Occupancy and average daily rates increased 100 basis points and 1.9 percent, respectively in the first quarter from the same period of 2016. |
• | Domestic RevPAR performance for the first quarter of 2017 exceeded total industry results by 40 basis points and also exceeded growth reported by Smith Travel Research for the primary chain scale segments in which the company competes. |
• | The Comfort brands and Sleep Inn recorded 30 and 34 consecutive months of RevPAR index gains, respectively, compared to its focused competition. |
• | Effective royalty rate increased 17 basis points for the first quarter of 2017, compared to the same period of the prior year. |
• | Domestic franchised hotels, as of March 31, 2017, increased 1.3 percent from March 31, 2016. Excluding the impact of our Comfort transformation strategy, our domestic franchised hotels on March 31, 2017, increased 3.0 percent from March 31, 2016. |
• | Domestic and international rooms, as of March 31, 2017, increased 0.9 percent and 1.5 percent, respectively, from March 31, 2016. |
• | New, approved franchised hotel development contracts totaled 106 in the first quarter, an increase of 51 percent from the comparable period of the prior year. |
• | New construction and conversion franchise agreements increased 153 percent and 24 percent, respectively, in the first quarter of 2017, compared to the first quarter of the prior year. |
• | The Comfort brands and Sleep Inn represent nearly 70 percent of the company’s new construction franchise agreements, and the number of Comfort new construction agreements nearly doubled from the comparable period of the prior year. |
• | The domestic new construction pipeline for the company’s Sleep Inn brand as of March 31, 2017, totaled 114 hotels, a 50-percent increase from March 31, 2016. |
• | The company’s total domestic pipeline of hotels awaiting conversion, under construction or approved for development, as of March 31, 2017, increased 24 percent from March 31, 2016. |
• | Domestic relicensing and contract renewal transactions totaled 116 for the three months ended March 31, 2017, an increase of 8 percent from the same period of 2016. |
• | 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 second-quarter 2017 diluted EPS is expected to range between $0.75 and $0.77. |
• | The company expects full-year 2017 diluted EPS to range between $2.78 and $2.84. |
• | The effective tax rate is expected to be approximately 34 percent and 33 percent for the second quarter and full-year 2017, respectively. |
• | 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 Adjusted EBITDA estimates assume that we incur net reductions in Adjusted 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 is expected to range between $297 million and $302 million. |
• | Net domestic unit growth for 2017 is expected to range between approximately 2 percent and 3 percent. |
• | RevPAR is expected to increase between 2 percent and 3 percent for the second quarter and range between 3 percent and 4 percent 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 Adjusted 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. and Subsidiaries | Exhibit 1 | |||||||||||||||
Consolidated Statements of Income | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Year Ended December 31, | ||||||||||||||||
Variance | ||||||||||||||||
2017 | 2016 (1) | $ | % | |||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
REVENUES: | ||||||||||||||||
Royalty fees | $ | 68,989 | $ | 64,859 | $ | 4,130 | 6 | % | ||||||||
Initial franchise and relicensing fees | 5,006 | 5,156 | (150 | ) | (3 | )% | ||||||||||
Procurement services | 6,476 | 5,796 | 680 | 12 | % | |||||||||||
Marketing and reservation system | 109,475 | 126,361 | (16,886 | ) | (13 | )% | ||||||||||
Other | 7,952 | 4,946 | 3,006 | 61 | % | |||||||||||
Total revenues | 197,898 | 207,118 | (9,220 | ) | (4 | )% | ||||||||||
OPERATING EXPENSES: | ||||||||||||||||
Selling, general and administrative | 32,846 | 35,119 | (2,273 | ) | (6 | )% | ||||||||||
Depreciation and amortization | 3,070 | 2,765 | 305 | 11 | % | |||||||||||
Marketing and reservation system | 109,475 | 126,361 | (16,886 | ) | (13 | )% | ||||||||||
Total operating expenses | 145,391 | 164,245 | (18,854 | ) | (11 | )% | ||||||||||
Operating income | 52,507 | 42,873 | 9,634 | 22 | % | |||||||||||
OTHER INCOME AND EXPENSES, NET: | ||||||||||||||||
Interest expense | 11,205 | 11,092 | 113 | 1 | % | |||||||||||
Interest income | (1,264 | ) | (839 | ) | (425 | ) | 51 | % | ||||||||
Other (gains) losses | (897 | ) | 62 | (959 | ) | (1,547 | )% | |||||||||
Equity in net (income) loss of affiliates | 2,080 | 2,180 | (100 | ) | (5 | )% | ||||||||||
Total other income and expenses, net | 11,124 | 12,495 | (1,371 | ) | (11 | )% | ||||||||||
Income before income taxes | 41,383 | 30,378 | 11,005 | 36 | % | |||||||||||
Income taxes | 12,639 | 9,215 | 3,424 | 37 | % | |||||||||||
Net income | $ | 28,744 | $ | 21,163 | $ | 7,581 | 36 | % | ||||||||
Basic earnings per share | $ | 0.51 | $ | 0.38 | $ | 0.13 | 34 | % | ||||||||
Diluted earnings per share | $ | 0.51 | $ | 0.37 | $ | 0.14 | 38 | % | ||||||||
(1) Results for the three months ended March 31, 2016 reflect the adoption of Accounting Standards Update Compensation-Stock Compensation (Topic 718): | ||||||||||||||||
Improvements to Employee Share-Based Payment Accounting ("ASU No. 2016-09") in the second quarter of 2016. ASU 2016-09 requires companies | ||||||||||||||||
to recognize excess tax benefits and deficiencies as income tax expense or benefit in the income statement. Adoption of the standard required that the | ||||||||||||||||
company retrospectively apply the requirement to the beginning of the year of adoption, January 1, 2016. As a result, the company has reduced its | ||||||||||||||||
previously reported income tax expense for the first quarter of 2016 by $1.6 million. | ||||||||||||||||
Choice Hotels International, Inc. and Subsidiaries | Exhibit 2 | ||||||||||
Consolidated Balance Sheets | |||||||||||
(In thousands, except per share amounts) | March 31, | December 31, | |||||||||
2017 | 2016 | ||||||||||
(Unaudited) | |||||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | 187,472 | $ | 202,463 | |||||||
Accounts receivable, net | 117,878 | 107,336 | |||||||||
Other current assets | 37,512 | 35,074 | |||||||||
Total current assets | 342,862 | 344,873 | |||||||||
Fixed assets and intangibles, net | 177,075 | 178,704 | |||||||||
Notes receivable, net of allowances | 123,878 | 110,608 | |||||||||
Investments in unconsolidated entities | 123,550 | 94,839 | |||||||||
Investments, employee benefit plans, at fair value | 18,755 | 16,975 | |||||||||
Other assets | 118,012 | 106,469 | |||||||||
Total assets | $ | 904,132 | $ | 852,468 | |||||||
LIABILITIES AND SHAREHOLDERS' DEFICIT | |||||||||||
Accounts payable | $ | 59,090 | $ | 48,071 | |||||||
Accrued expenses and other current liabilities | 67,933 | 81,184 | |||||||||
Deferred revenue | 145,833 | 133,218 | |||||||||
Current portion of long-term debt | 1,225 | 1,195 | |||||||||
Total current liabilities | 274,081 | 263,668 | |||||||||
Long-term debt | 862,389 | 839,409 | |||||||||
Deferred compensation & retirement plan obligations | 23,044 | 21,595 | |||||||||
Other liabilities | 37,105 | 39,145 | |||||||||
Total liabilities | 1,196,619 | 1,163,817 | |||||||||
Total shareholders' deficit | (292,487 | ) | (311,349 | ) | |||||||
Total liabilities and shareholders' deficit | $ | 904,132 | $ | 852,468 | |||||||
Choice Hotels International, Inc. and Subsidiaries | Exhibit 3 | ||||||
Consolidated Statements of Cash Flows | |||||||
(Unaudited) | |||||||
(In thousands) | Three Months Ended March 31, | ||||||
2017 | 2016 (1) | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 28,744 | $ | 21,163 | |||
Adjustments to reconcile net income to net cash provided (used) by operating activities: | |||||||
Depreciation and amortization | 3,070 | 2,765 | |||||
(Gain) loss on disposal of assets | — | 9 | |||||
Provision for bad debts, net | 561 | 655 | |||||
Non-cash stock compensation and other charges | 3,681 | 3,354 | |||||
Non-cash interest and other (income) loss | (301 | ) | 667 | ||||
Deferred income taxes | (1,900 | ) | 6,198 | ||||
Equity in net losses from unconsolidated joint ventures less distributions received | 2,386 | 2,471 | |||||
Changes in assets and liabilities, net of acquisition: | |||||||
Receivables | (11,365 | ) | (14,473 | ) | |||
Advances to/from marketing and reservation activities, net | (216 | ) | (39,804 | ) | |||
Forgivable notes receivable, net | (4,483 | ) | (6,464 | ) | |||
Accounts payable | 9,203 | (3,980 | ) | ||||
Accrued expenses and other current liabilities | (25,048 | ) | (24,521 | ) | |||
Income taxes payable/receivable | 13,012 | (1,788 | ) | ||||
Deferred revenue | 12,579 | 40,458 | |||||
Other assets | (4,958 | ) | (7,238 | ) | |||
Other liabilities | (751 | ) | (842 | ) | |||
NET CASH PROVIDED BY (USED) IN OPERATING ACTIVITIES | 24,214 | (21,370 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Investment in property and equipment | (4,718 | ) | (5,306 | ) | |||
Investment in intangible assets | (2,088 | ) | (162 | ) | |||
Proceeds from sales of assets | — | 1,700 | |||||
Acquisitions of real estate | — | (25,389 | ) | ||||
Contributions to equity method investments | (31,610 | ) | (4,293 | ) | |||
Distributions from equity method investments | 510 | 67 | |||||
Purchases of investments, employee benefit plans | (1,424 | ) | (896 | ) | |||
Proceeds from sales of investments, employee benefit plans | 843 | 363 | |||||
Issuance of mezzanine and other notes receivable | (9,863 | ) | (7,487 | ) | |||
Collections of mezzanine and other notes receivable | 522 | 109 | |||||
Other items, net | (4 | ) | 26 | ||||
NET CASH USED IN INVESTING ACTIVITIES | (47,832 | ) | (41,268 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Net borrowings pursuant to revolving credit facilities | 22,800 | 79,267 | |||||
Principal payments on long-term debt | (153 | ) | (318 | ) | |||
Purchases of treasury stock | (7,271 | ) | (8,857 | ) | |||
Dividends paid | (12,139 | ) | (11,612 | ) | |||
Proceeds from exercise of stock options | 4,963 | 4,137 | |||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 8,200 | 62,617 | |||||
Net change in cash and cash equivalents | (15,418 | ) | (21 | ) | |||
Effect of foreign exchange rate changes on cash and cash equivalents | 427 | 652 | |||||
Cash and cash equivalents at beginning of period | 202,463 | 193,441 | |||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 187,472 | $ | 194,072 | |||
(1) Results for the three months ended March 31, 2016 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 adopted this ASU in the second quarter of 2016 and elected to apply the ASU retrospectively. As a result, excess tax benefits totaling $1.6 million for the three months ended March 31, 2016 have been reclassified from cash flows from financing activities to cash flows from operating activities. |
CHOICE HOTELS INTERNATIONAL, INC AND SUBSIDIARIES | Exhibit 4 | |||||||||||||||||||||||||||||||
SUPPLEMENTAL OPERATING INFORMATION | ||||||||||||||||||||||||||||||||
DOMESTIC HOTEL SYSTEM | ||||||||||||||||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||||||||||||||||
For the Three Months Ended March 31, 2017 | For the Three Months Ended March 31, 2016 | Change | ||||||||||||||||||||||||||||||
Average Daily | Average Daily | Average Daily | ||||||||||||||||||||||||||||||
Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | ||||||||||||||||||||||||
Comfort Inn | $ | 87.03 | 58.5 | % | $ | 50.90 | $ | 85.39 | 57.7 | % | $ | 49.27 | 1.9 | % | 80 | bps | 3.3 | % | ||||||||||||||
Comfort Suites | 93.40 | 65.1 | % | 60.84 | 92.40 | 64.1 | % | 59.26 | 1.1 | % | 100 | bps | 2.7 | % | ||||||||||||||||||
Sleep | 79.20 | 60.0 | % | 47.54 | 77.71 | 58.7 | % | 45.61 | 1.9 | % | 130 | bps | 4.2 | % | ||||||||||||||||||
Quality | 73.76 | 53.1 | % | 39.20 | 72.23 | 52.2 | % | 37.72 | 2.1 | % | 90 | bps | 3.9 | % | ||||||||||||||||||
Clarion | 78.05 | 53.6 | % | 41.83 | 75.90 | 50.1 | % | 38.06 | 2.8 | % | 350 | bps | 9.9 | % | ||||||||||||||||||
Econo Lodge | 57.33 | 48.6 | % | 27.84 | 55.99 | 47.3 | % | 26.46 | 2.4 | % | 130 | bps | 5.2 | % | ||||||||||||||||||
Rodeway | 59.63 | 51.1 | % | 30.49 | 57.77 | 51.0 | % | 29.47 | 3.2 | % | 10 | bps | 3.5 | % | ||||||||||||||||||
MainStay | 71.66 | 61.7 | % | 44.21 | 72.91 | 57.9 | % | 42.23 | (1.7 | )% | 380 | bps | 4.7 | % | ||||||||||||||||||
Suburban | 51.01 | 74.2 | % | 37.82 | 48.28 | 73.0 | % | 35.26 | 5.7 | % | 120 | bps | 7.3 | % | ||||||||||||||||||
Cambria hotel & suites | 122.24 | 68.1 | % | 83.26 | NA | NA | NA | NA | NA | NA | ||||||||||||||||||||||
Ascend Hotel Collection | 117.29 | 51.3 | % | 60.21 | 115.55 | 53.7 | % | 62.01 | 1.5 | % | (240 | ) | bps | (2.9 | )% | |||||||||||||||||
Total (1) | $ | 78.41 | 56.1 | % | $ | 43.98 | $ | 76.92 | 55.1 | % | $ | 42.39 | 1.9 | % | 100 | bps | 3.8 | % | ||||||||||||||
For the Quarter Ended | ||||||||||||||||||||||||||||||||
3/31/2017 | 3/31/2016 | |||||||||||||||||||||||||||||||
System-wide effective royalty rate | 4.55% | 4.38% | (1) | |||||||||||||||||||||||||||||
(1) Totals for the three months ended March 31, 2016 have been revised from previous disclosures to include the operating statistics for the Cambria hotel & suites brand |
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES | Exhibit 5 | |||||||||||||||||||||||
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA | ||||||||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||||||||
March 31, 2017 | March 31, 2016 | Variance | ||||||||||||||||||||||
Hotels | Rooms | Hotels | Rooms | Hotels | Rooms | % | % | |||||||||||||||||
Comfort Inn | 1,103 | 85,583 | 1,143 | 88,294 | (40 | ) | (2,711 | ) | (3.5 | )% | (3.1 | )% | ||||||||||||
Comfort Suites | 566 | 43,740 | 566 | 43,669 | — | 71 | 0.0 | % | 0.2 | % | ||||||||||||||
Sleep | 382 | 27,301 | 379 | 27,139 | 3 | 162 | 0.8 | % | 0.6 | % | ||||||||||||||
Quality | 1,457 | 114,837 | 1,394 | 111,124 | 63 | 3,713 | 4.5 | % | 3.3 | % | ||||||||||||||
Clarion | 161 | 22,159 | 172 | 23,893 | (11 | ) | (1,734 | ) | (6.4 | )% | (7.3 | )% | ||||||||||||
Econo Lodge | 845 | 52,113 | 853 | 52,784 | (8 | ) | (671 | ) | (0.9 | )% | (1.3 | )% | ||||||||||||
Rodeway | 558 | 32,103 | 519 | 28,931 | 39 | 3,172 | 7.5 | % | 11.0 | % | ||||||||||||||
MainStay | 57 | 4,148 | 54 | 4,019 | 3 | 129 | 5.6 | % | 3.2 | % | ||||||||||||||
Suburban | 59 | 6,598 | 59 | 6,634 | — | (36 | ) | 0.0 | % | (0.5 | )% | |||||||||||||
Cambria hotel & suites | 28 | 3,667 | 25 | 3,113 | 3 | 554 | 12.0 | % | 17.8 | % | ||||||||||||||
Ascend Hotel Collection | 127 | 10,451 | 112 | 9,378 | 15 | 1,073 | 13.4 | % | 11.4 | % | ||||||||||||||
Domestic Franchises | 5,343 | 402,700 | 5,276 | 398,978 | 67 | 3,722 | 1.3 | % | 0.9 | % | ||||||||||||||
International Franchises | 1,151 | 112,672 | 1,169 | 110,984 | (18 | ) | 1,688 | (1.5 | )% | 1.5 | % | |||||||||||||
Total Franchises | 6,494 | 515,372 | 6,445 | 509,962 | 49 | 5,410 | 0.8 | % | 1.1 | % |
Exhibit 6 | ||||||||||||||||||||||||
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||
SUPPLEMENTAL INFORMATION BY BRAND | ||||||||||||||||||||||||
DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS | ||||||||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||||||||
For the Three Months Ended March 31, 2017 | For the Three Months Ended March 31, 2016 | % Change | ||||||||||||||||||||||
New Construction | Conversion | Total | New Construction | Conversion | Total | New Construction | Conversion | Total | ||||||||||||||||
Comfort Inn | 7 | 10 | 17 | 6 | 4 | 10 | 17% | 150% | 70% | |||||||||||||||
Comfort Suites | 8 | — | 8 | 2 | — | 2 | 300% | NM | 300% | |||||||||||||||
Sleep | 11 | 2 | 13 | 2 | — | 2 | 450% | NM | 550% | |||||||||||||||
Quality | 1 | 21 | 22 | — | 23 | 23 | NM | (9)% | (4)% | |||||||||||||||
Clarion | — | 3 | 3 | 1 | 3 | 4 | (100)% | 0% | (25)% | |||||||||||||||
Econo Lodge | — | 7 | 7 | — | 14 | 14 | NM | (50)% | (50)% | |||||||||||||||
Rodeway | — | 21 | 21 | — | 10 | 10 | NM | 110% | 110% | |||||||||||||||
MainStay | 9 | — | 9 | 1 | — | 1 | 800% | NM | 800% | |||||||||||||||
Suburban | — | — | — | — | — | — | NM | NM | NM | |||||||||||||||
Ascend Hotel Collection | 1 | 4 | 5 | 1 | 1 | 2 | 0% | 300% | 150% | |||||||||||||||
Cambria hotel & suites | 1 | — | 1 | 2 | — | 2 | (50)% | NM | (50)% | |||||||||||||||
Total Domestic System | 38 | 68 | 106 | 15 | 55 | 70 | 153% | 24% | 51% | |||||||||||||||
Exhibit 7 | |||||||||||||||||||||||||||||||||
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
March 31, 2017 Units | March 31, 2016 Units | Conversion | New Construction | Total | |||||||||||||||||||||||||||||
Conversion | New Construction | Total | Conversion | New Construction | Total | Units | % | Units | % | Units | % | ||||||||||||||||||||||
Comfort Inn | 40 | 96 | 136 | 35 | 84 | 119 | 5 | 14% | 12 | 14% | 17 | 14% | |||||||||||||||||||||
Comfort Suites | 3 | 117 | 120 | 3 | 92 | 95 | — | 0% | 25 | 27% | 25 | 26% | |||||||||||||||||||||
Sleep Inn | 2 | 114 | 116 | — | 76 | 76 | 2 | NM | 38 | 50% | 40 | 53% | |||||||||||||||||||||
Quality | 51 | 6 | 57 | 47 | 5 | 52 | 4 | 9% | 1 | 20% | 5 | 10% | |||||||||||||||||||||
Clarion | 17 | 4 | 21 | 7 | 3 | 10 | 10 | 143% | 1 | 33% | 11 | 110% | |||||||||||||||||||||
Econo Lodge | 25 | 4 | 29 | 26 | 4 | 30 | (1 | ) | (4)% | — | 0% | (1 | ) | (3)% | |||||||||||||||||||
Rodeway | 38 | 1 | 39 | 40 | 2 | 42 | (2 | ) | (5)% | (1 | ) | (50)% | (3 | ) | (7)% | ||||||||||||||||||
MainStay | — | 80 | 80 | — | 55 | 55 | — | NM | 25 | 45% | 25 | 45% | |||||||||||||||||||||
Suburban | 4 | 4 | 8 | 4 | 8 | 12 | — | 0% | (4 | ) | (50)% | (4 | ) | (33)% | |||||||||||||||||||
Ascend Hotel Collection | 34 | 23 | 57 | 27 | 20 | 47 | 7 | 26% | 3 | 15% | 10 | 21% | |||||||||||||||||||||
Cambria hotel & suites | 5 | 56 | 61 | 5 | 39 | 44 | — | 0% | 17 | 44% | 17 | 39% | |||||||||||||||||||||
219 | 505 | 724 | 194 | 388 | 582 | 25 | 13% | 117 | 30% | 142 | 24% | ||||||||||||||||||||||
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES | Exhibit 8 | ||||||||||
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION | |||||||||||
(UNAUDITED) | |||||||||||
HOTEL FRANCHISING REVENUES AND ADJUSTED HOTEL FRANCHISING MARGINS | |||||||||||
(dollar amounts in thousands) | Three Months Ended March 31, | ||||||||||
2017 | 2016 | ||||||||||
Hotel Franchising Revenues: | |||||||||||
Total Revenues | $ | 197,898 | $ | 207,118 | |||||||
Adjustments: | |||||||||||
Marketing and reservation system revenues | (109,475 | ) | (126,361 | ) | |||||||
Non-hotel franchising activities | (2,555 | ) | (2,029 | ) | |||||||
Hotel Franchising Revenues | $ | 85,868 | $ | 78,728 | |||||||
Adjusted Hotel Franchising Margins: | |||||||||||
Operating Margin: | |||||||||||
Total Revenues | $ | 197,898 | $ | 207,118 | |||||||
Operating Income | $ | 52,507 | $ | 42,873 | |||||||
Operating Margin | 26.5 | % | 20.7 | % | |||||||
Adjusted Hotel Franchising Margin: | |||||||||||
Hotel Franchising Revenues | $ | 85,868 | $ | 78,728 | |||||||
Operating Income | $ | 52,507 | $ | 42,873 | |||||||
Mark to market adjustments on non-qualified retirement plan investments | $ | 851 | $ | (60 | ) | ||||||
Non-hotel franchising activities operating loss | 2,105 | 5,656 | |||||||||
Adjusted Hotel Franchising Operating Income | $ | 55,463 | $ | 48,469 | |||||||
Adjusted Hotel Franchising Margins | 64.6 | % | 61.6 | % | |||||||
ADJUSTED HOTEL FRANCHISING SELLING, GENERAL AND ADMINISTRATION EXPENSES | |||||||||||
(dollar amounts in thousands) | Three Months Ended March 31, | ||||||||||
2017 | 2016 | ||||||||||
Total Selling, General and Administrative Expenses | $ | 32,846 | $ | 35,119 | |||||||
Mark to market adjustments on non-qualified retirement plan investments | $ | (851 | ) | $ | 60 | ||||||
Non-hotel franchising activities | (3,680 | ) | (6,670 | ) | |||||||
Adjusted Hotel Franchising Selling, General and Administration Expenses | $ | 28,315 | $ | 28,509 | |||||||
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA") | |||||||||||
(dollar amounts in thousands) | |||||||||||
Three Months Ended March 31, | |||||||||||
2017 | 2016 | ||||||||||
Net income | $ | 28,744 | $ | 21,163 | |||||||
Income taxes | 12,639 | 9,215 | |||||||||
Interest expense | 11,205 | 11,092 | |||||||||
Interest income | (1,264 | ) | (839 | ) | |||||||
Other (gains) losses | (897 | ) | 62 | ||||||||
Equity in net (income) loss of affiliates | 2,080 | 2,180 | |||||||||
Depreciation and amortization | 3,070 | 2,765 | |||||||||
Mark to market adjustments on non-qualified retirement plan investments | 851 | (60 | ) | ||||||||
Adjusted EBITDA | $ | 56,428 | $ | 45,578 | |||||||
Hotel franchising | $ | 57,553 | $ | 50,219 | |||||||
Non-hotel franchising activities | (1,125 | ) | (4,641 | ) | |||||||
$ | 56,428 | $ | 45,578 | ||||||||
ADJUSTED EBITDA FULL YEAR FORECAST | ||||||||||||||
(dollar amounts in thousands) | ||||||||||||||
Range | ||||||||||||||
Estimated Adjusted EBITDA | ||||||||||||||
Fiscal Year 2017 | ||||||||||||||
Net income | $ | 157,100 | $ | 160,500 | ||||||||||
Income taxes | 77,400 | 79,000 | ||||||||||||
Interest expense | 47,300 | 47,300 | ||||||||||||
Interest income | (4,500 | ) | (4,500 | ) | ||||||||||
Gain on sale of assets | — | — | ||||||||||||
Other gains | (850 | ) | (850 | ) | ||||||||||
Equity in net loss of affiliates | 1,600 | 1,600 | ||||||||||||
Depreciation and amortization | 13,100 | 13,100 | ||||||||||||
Mark to market adjustments on non-qualified retirement plan investments | 850 | 850 | ||||||||||||
Adjusted EBITDA | $ | 292,000 | $ | 297,000 | ||||||||||
Hotel franchising | $ | 297,000 | $ | 302,000 | ||||||||||
Non-hotel franchising activities | (5,000 | ) | (5,000 | ) | ||||||||||
$ | 292,000 | $ | 297,000 | |||||||||||