CHOICE HOTELS INTERNATIONAL REPORTS SECOND QUARTER 2023 RESULTS
- Total revenues reached a quarterly record of $427.4 million, a 16% increase compared to Q2 2022
- Net income reached $84.7 million for Q2 2023, representing diluted EPS of $1.65
- The global rooms pipeline increased 10%, with a 14% growth in the pipeline for conversion hotels compared to Q2 2022
- The company achieved $80 million of annual recurring synergies through the Radisson Hotels Americas integration, exceeding the company's original synergy target ahead of schedule
- None.
New quarterly record for total revenues; global rooms pipeline increased
Highlights of second quarter 2023 results include:1
- Total revenues reached
for second quarter 2023, a quarterly record and a$427.4 million 16% increase compared to the same period of 2022. - Net income reached
million for second quarter 2023, representing diluted earnings per share (EPS) of$84.7 $1.65 . As a result of one-time items, including Radisson Hotels Americas integration costs and the timing of net reimbursable expenses, net income and diluted EPS were20% and13% lower, respectively, for second quarter 2023 compared to the same period of 2022. - Second quarter 2023 adjusted net income, excluding certain items described in Exhibit 6, increased
12% to compared to the same period of 2022 and the company's adjusted diluted EPS increased$89.1 million 22% to compared to the same period of 2022.$1.75 - Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for second quarter 2023 reached
, a quarterly record and an$153.1 million 18% increase compared to the same period of 2022. - The company further refined its financial guidance for full-year 2023, as described in the outlook section below.
- The company's domestic effective royalty rate for both the three-month and six-month periods ended June 30, 2023 increased 6 basis points to
4.99% compared to the respective 2022 periods. - The company's Cambria Hotels and WoodSpring Suites brands were ranked number one in guest satisfaction among upscale and economy extended stay hotel brands, respectively, in the J.D. Power 2023 North America Hotel Guest Satisfaction Index Study.2
- The company's global pipeline as of June 30, 2023 increased
10% to over 93,000 rooms. The company's global rooms pipeline for conversion hotels as of June 30, 2023 increased14% from June 30, 2022 and25% from March 31, 2023. The company's domestic rooms pipeline for conversion hotels as of June 30, 2023 increased10% from June 30, 2022 and28% from March 31, 2023. - The company achieved
of annual recurring synergies through the Radisson Hotels Americas integration, exceeding the company's original synergy target ahead of schedule. In July 2023, the company onboarded the nearly 600 Radisson Hotels Americas hotels onto its world-class reservation delivery engine and integrated the two award-winning loyalty programs.$80 million - During the first six months of 2023, the company returned approximately
to shareholders in the form of cash dividends and share repurchases. Over the trailing twelve months ended June 30, 2023, the company repurchased 5.6 million shares of common stock totaling over$264 million , representing$655 million 10% of the shares outstanding as of June 30, 2022.
"Choice Hotels generated record revenues, fueled by our best-in-class hotel conversion and reservation-delivery capabilities as well as our success in integrating Radisson Hotels Americas ahead of schedule," said Patrick Pacious, president and chief executive officer. "The exceptional speed with which we are able to move conversion projects through the pipeline has driven impressive revenue-intense hotel openings in the first half of 2023 and further strengthened our award-winning brand portfolio, reinforcing our confidence in the company's ability to drive significant growth in 2023 and beyond."
Financial Performance
- Total revenues, excluding reimbursable revenue from franchised and managed properties, increased
28% to for second quarter 2023 compared to the same period of 2022.$227.8 million - Platform and procurement services fees increased
32% to for second quarter 2023 compared to the same period of 2022.$28.8 million - Royalty, licensing, and management fees increased
16% to for second quarter 2023 compared to the same period of 2022.$140.5 million - Domestic royalties increased
7% to for second quarter 2023 compared to the same period of 2022.$125.1 million - Domestic revenue per available room (RevPAR) increased 50 basis points for second quarter 2023 compared to the same period of 2022, driven by a
2.8% increase in average daily rate. The company's second quarter 2023 occupancy levels exceeded60% .
Development
- The company's upscale, extended-stay, and midscale segments reported a
10.0% increase in hotels and an11.7% increase in rooms since June 30, 2022. The company's total number of domestic hotels and rooms as of June 30, 2023 increased6.9% and8.8% , respectively, from June 30, 2022. - The total number of international hotels and rooms, as of June 30, 2023 increased
9.0% and11.8% , respectively, from June 30, 2022. - As of June 30, 2023, the domestic system size for the company's upscale and upper-midscale segments grew by approximately
32% and24% , respectively, since June 30, 2022, driven by an increase in the number of Radisson Hotels Americas units and the growth of the Ascend Hotel Collection, Cambria Hotels, and the Comfort family of brands. - The company executed an average of more than four hotel openings per week, for a total of 107 hotel openings year-to-date through June 30, 2023, a
39% increase compared to the same period of 2022. For the first half of 2023, the company grew hotel openings across all segments, increasing openings in the upscale segment by83% , the midscale segment by42% , the extended stay segment by50% , and the economy segment by11% compared to the same period of 2022. - Of the total domestic franchise agreements awarded in the six months ended June 30, 2023,
85% were for the company's upscale, extended-stay, and midscale brands and77% were for conversion hotels. Of the 126 franchise agreements awarded for conversion hotels in the six months ended June 30, 2023,65% have already opened or are expected to open by December 31, 2023. - The company's domestic pipeline increased
9% to over 87,000 rooms, representing 899 hotels, and the international pipeline increased29% to over 6,300 rooms, representing 61 hotels. The company's extended stay and upscale domestic pipelines increased17% to 450 hotels and27% to 127 hotels, respectively.
Shareholder Returns
During the six months ended June 30, 2023, the company paid cash dividends totaling approximately
During the six months ended June 30, 2023, the company repurchased 1.8 million shares of common stock for
As of June 30, 2023, the company had 2.8 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 unless otherwise noted 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 | ||
Adjusted Net Income | ||
Adjusted EBITDA | ||
Adjusted Diluted EPS | ||
Effective Income Tax Rate | 24 % | 24 % |
Full-Year 2023 | Prior Outlook | |
vs. Full-Year 2022 | ||
Domestic RevPAR Growth3 | Approximately | Approximately |
Domestic Effective Royalty Rate Growth4 | Mid-single digits | Mid-single digits |
Domestic Net Unit Growth | Approximately | Approximately |
(upscale, extended-stay, and midscale segments) |
Conference Call
Choice Hotels International will conduct a conference call on August 8, 2023, at 10:00 a.m. Eastern Time to discuss the company's second quarter 2023 earnings results. The dial-in number to listen to the call domestically is (888) 886-7786 and the number for international participants is (416) 764-8658 and use conference ID 81409019. A live webcast and accompanying materials will also be available on the company's investor relations website, http://investor.choicehotels.com/ and can be accessed via the Events and Presentations tab. A replay and transcript of the event will be available on the company's investor relations website within 24 hours at https://investor.choicehotels.com/events-and-presentations/.
About Choice Hotels®
Choice Hotels International, Inc. (NYSE: CHH) is one of the largest lodging franchisors in the world, with approximately 7,500 hotels, representing nearly 630,000 rooms, in 46 countries and territories as of June 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. The award-winning Choice Privileges® loyalty program and co-brand credit card options provide members with a fast and easy way to earn reward nights and personalized perks. For more information, visit 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. Certain, but not necessarily all, of such forward-looking statements can be identified by the use of forward-looking terminology, such as "expect," "estimate," "believe," "anticipate," "should," "will," "forecast," "plan," "project," "assume," or similar words of futurity. All statements other than historical facts are 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, expenses, adjusted EBITDA, earnings, debt levels, ability to repay outstanding indebtedness, payment of dividends, repurchases of common stock and other financial and operational measures, including occupancy and open hotels, RevPAR, the company's ability to benefit from any rebound in travel demand, and the company's liquidity, 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, including access to liquidity and capital; the company's ability to successfully integrate Radisson Hotels Americas' employees and operations; the ability to realize the anticipated benefits and synergies of the acquisition of Radisson Hotels Americas as rapidly or to the extent anticipated; the resurgence of the COVID-19 pandemic, including with respect to new strains or variants, and the related impact on the global hospitality industry, particularly but not exclusively the
Non-GAAP Financial Measurements and Other Definitions
The company evaluates its operations utilizing the performance metrics of adjusted EBITDA, adjusted selling, general and administrative (SG&A) expenses, revenues excluding reimbursable revenue from franchised and managed properties, adjusted net income, and adjusted EPS, which are all non-GAAP financial measurements. These measures, which are reconciled to the comparable GAAP measures in Exhibit 6, should not be considered as an alternative to any measure of performance or liquidity as promulgated under or authorized by GAAP, such as net income, SG&A, EPS and total revenues. The company's calculation of these measurements may be different from the calculations used by other companies and comparability may therefore be limited. We discuss management's reasons for reporting these non-GAAP measures and how each non-GAAP measure is calculated below.
In addition to the specific adjustments noted below with respect to each measure, the non-GAAP measures presented herein also exclude restructuring of the company's operations including employee severance benefit, income taxes and legal costs, acquisition related due diligence, transition and transaction costs, and gains/losses on sale/disposal, performance under limited debt payment guaranties and impairment of assets primarily related to hotel ownership and development activities to allow for period-over-period comparison of ongoing core operations before the impact of these discrete and infrequent charges.
Adjusted SG&A, Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization: Adjusted SG&A and Adjusted EBITDA reflects net income excluding the impact of interest expense, interest income, provision for income taxes, depreciation and amortization, franchise-agreement acquisition cost amortization, other (gains) and losses, equity in net income (loss) of unconsolidated affiliates, mark-to-market adjustments on non-qualified retirement plan investments, share based compensation expense (benefit) and surplus or deficits generated by reimbursable revenue from franchised and managed properties. We consider adjusted EBITDA and adjusted EBITDA margins to be an indicator of operating performance because it measures our ability to service debt, fund capital expenditures, and expand our business. We also use these measures, as do analysts, lenders, investors, and others, to evaluate companies because it excludes certain items that can vary widely across 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, and share based compensation expense (benefit) is dependent on the design of compensation plans in place and the usage of them. Accordingly, the impact of interest expense and share based compensation expense (benefit) 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. These measures also exclude depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets or amortizing franchise-agreement acquisition costs. These differences can result in considerable variability in the relative asset costs and estimated lives and, therefore, the depreciation and amortization expense among companies. Mark-to-market adjustments on non-qualified retirement-plan investments recorded in SG&A are excluded from EBITDA, as the company accounts for these investments in accordance with accounting for deferred-compensation arrangements when investments are held in a rabbi trust and invested. Changes in the fair value of the investments are recognized as both compensation expense in SG&A and other gains and losses. As a result, the changes in the fair value of the investments do not have a material impact on the company's net income. Surpluses and deficits generated from reimbursable revenues from franchised and managed properties are excluded, as the company's franchise and management agreements require these revenues to be used exclusively for expenses associated with providing franchise and management services, such as central reservation and property-management systems, hotel employee and operating costs, reservation delivery and national marketing and media advertising. Franchised and managed property owners are required to reimburse the company for any deficits generated from these activities and the company is required to spend any surpluses generated in future periods. Since these activities will be managed to break-even over time, quarterly or annual surpluses and deficits have been excluded from the measurements utilized to assess the company's operating performance.
Adjusted Net Income and Adjusted Earnings Per Share: Adjusted net income and EPS exclude the impact of surpluses or deficits generated from reimbursable revenue from franchised and managed properties. Surpluses and deficits generated from reimbursable revenue from franchised and managed properties are excluded, as the company's franchise agreements require these revenues to be used exclusively for expenses associated with providing franchised and managed services, such as central reservation and property-management systems, hotel employee and operating costs, reservation delivery and national marketing and media advertising. Franchised and managed property owners are required to reimburse the company for any deficits generated from activities and the company is required to spend any surpluses generated in future periods. Since these activities will be managed to break-even over time, quarterly or annual surpluses and deficits have been excluded from the measurements utilized to assess the company's operating performance. We consider adjusted net income and adjusted EPS to be indicators of operating performance because excluding these items allow for period-over-period comparisons of our ongoing operations.
Revenues, Excluding Reimbursable Revenue from Franchised and Managed Properties: The company reports revenues, excluding reimbursable revenue from franchised and managed properties. These non-GAAP measures we present are commonly used measures of performance in our industry and facilitate comparisons between the company and its competitors. Reimbursable revenues from franchised and managed properties are excluded, as the company's franchise and management agreements require revenues to be used exclusively for expenses associated with providing franchise and management services, such as central reservation and property-management systems, hotel employee and operating costs, reservation delivery and national marketing and media advertising. Franchisees are required to reimburse the company for any deficits generated from these activities and the company is required to spend any surpluses generated in future periods. Since these activities will be managed to break-even over time, quarterly or annual surpluses and deficits have been excluded from the measurements utilized to assess the company's operating performance.
Occupancy
Occupancy represents the total number of room nights sold divided by the total number of room nights available at a hotel for a given period. Occupancy measures the utilization of the hotels' available capacity. Management uses occupancy to gauge demand at a specific hotel or group of hotels in a given period. The company calculates occupancy based on information as reported by its franchisees. To accurately reflect occupancy, the company may revise its prior years' operating statistics for the most current information provided.
Average Daily Rate (ADR)
ADR represents hotel room revenue divided by the total number of room nights sold for a given period. ADR measures the average room price attained by a hotel and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. ADR is a commonly used performance measure in the industry, and management uses ADR to assess pricing levels that the company is able to generate. The company calculates ADR based on information as reported by its franchisees. To accurately reflect ADR, the company may revise its prior years' operating statistics for the most current information provided.
RevPAR
RevPAR is calculated by dividing hotel room revenue by the total number of room nights available to guests for a given period. Management considers RevPAR to be a meaningful indicator of hotel performance and therefore company royalty and system revenues as it provides a metric correlated to the two key drivers of operations at a hotel: occupancy and ADR. The company calculates RevPAR based on information as reported by its franchisees. To accurately reflect RevPAR, the company may revise its prior years' operating statistics for the most current information provided. RevPAR is also a useful indicator in measuring performance over comparable periods.
Pipeline
Pipeline is defined as hotels awaiting conversion, under construction or approved for development, and master development agreements committing owners to future franchise development.
© 2023 Choice Hotels International, Inc. All rights reserved.
1 All figures are inclusive of Radisson Hotels Americas, except where otherwise noted. For comparative purposes, domestic RevPAR and the effective royalty rate assume the Radisson Hotels Americas brands were acquired on January 1, 2022. |
Choice Hotels International, Inc. and Subsidiaries | Exhibit 1 | |||||||||||||||
Condensed Consolidated Statements of Income | ||||||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands, except per share amounts) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
Variance | Variance | |||||||||||||||
2023 | 2022 | $ | % | 2023 | 2022 | $ | % | |||||||||
REVENUES | ||||||||||||||||
Royalty, licensing and management fees | $ 140,499 | $ 121,449 | $ 19,050 | 16 % | $ 247,991 | $ 212,188 | $ 35,803 | 17 % | ||||||||
Initial franchise fees | 7,164 | 6,222 | 942 | 15 % | 15,046 | 14,624 | 422 | 3 % | ||||||||
Platform and procurement services fees | 28,801 | 21,803 | 6,998 | 32 % | 42,644 | 33,486 | 9,158 | 27 % | ||||||||
Owned hotels | 25,504 | 17,191 | 8,313 | 48 % | 47,836 | 29,228 | 18,608 | 64 % | ||||||||
Other | 11,148 | 11,927 | (779) | (7) % | 21,775 | 20,156 | 1,619 | 8 % | ||||||||
Other revenues from franchised and managed properties | 214,304 | 189,382 | 24,922 | 13 % | 384,920 | 316,019 | 68,901 | 22 % | ||||||||
Total revenues | 427,420 | 367,974 | 59,446 | 16 % | 760,212 | 625,701 | 255,307 | 21 % | ||||||||
OPERATING EXPENSES | ||||||||||||||||
Selling, general and administrative | 67,804 | 43,888 | 23,916 | 54 % | 127,087 | 74,212 | 52,875 | 71 % | ||||||||
Depreciation and amortization | 9,812 | 5,479 | 4,333 | 79 % | 19,835 | 11,710 | 8,125 | 69 % | ||||||||
Owned hotels | 18,150 | 10,692 | 7,458 | 70 % | 35,296 | 18,846 | 16,450 | 87 % | ||||||||
Other expenses from franchised and managed properties | 207,265 | 153,846 | 53,419 | 35 % | 375,754 | 267,496 | 108,258 | 40 % | ||||||||
Total operating expenses | 303,031 | 213,905 | 89,126 | 42 % | 557,972 | 372,264 | 185,708 | 50 % | ||||||||
Gain on sale of business and assets, net | — | 3,280 | (3,280) | (100) % | — | 3,309 | (3,309) | (100) % | ||||||||
Operating income | 124,389 | 157,349 | (32,960) | (21) % | 202,240 | 256,746 | 66,290 | (21) % | ||||||||
OTHER INCOME AND EXPENSES, NET | ||||||||||||||||
Interest expense | 16,270 | 11,252 | 5,018 | 45 % | 30,354 | 22,722 | 7,632 | 34 % | ||||||||
Interest income | (2,056) | (1,628) | (428) | 26 % | (3,939) | (2,908) | (1,031) | 35 % | ||||||||
Other (gain) loss | (2,187) | 5,559 | (7,746) | (139) % | (4,095) | 7,275 | (11,370) | (156) % | ||||||||
Equity in net (gain) loss of affiliates | (185) | 40 | (225) | (563) % | (122) | (204) | 82 | (40) % | ||||||||
Total other income and expenses, net | 11,842 | 15,223 | (3,381) | (22) % | 22,198 | 26,885 | (4,687) | (17) % | ||||||||
Income before income taxes | 112,547 | 142,126 | (29,579) | (21) % | 180,042 | 229,861 | (49,819) | (22) % | ||||||||
Income tax expense | 27,837 | 35,958 | (8,121) | (23) % | 42,512 | 56,302 | (13,790) | (24) % | ||||||||
Net income | $ 84,710 | $ 106,168 | $ (21,458) | (20) % | $ 137,530 | $ 173,559 | $ (36,029) | (21) % | ||||||||
Basic earnings per share | $ 1.66 | $ 1.90 | $ (0.24) | (13) % | $ 2.68 | $ 3.11 | $ (0.43) | (14) % | ||||||||
Diluted earnings per share | $ 1.65 | $ 1.89 | $ (0.24) | (13) % | $ 2.66 | $ 3.08 | $ (0.42) | (14) % |
Choice Hotels International, Inc. and Subsidiaries | Exhibit 2 | |||||
Condensed Consolidated Balance Sheets | ||||||
(Unaudited) | ||||||
(In thousands) | June 30, | December 31, | ||||
2023 | 2022 | |||||
ASSETS | ||||||
Cash and cash equivalents | $ 36,167 | $ 41,566 | ||||
Accounts receivable, net | 220,100 | 216,614 | ||||
Other current assets | 91,867 | 89,742 | ||||
Total current assets | 348,134 | 347,922 | ||||
Property and equipment, net | 449,313 | 427,306 | ||||
Intangible assets, net | 764,377 | 742,190 | ||||
Goodwill | 220,187 | 218,653 | ||||
Notes receivable, net of allowances | 50,022 | 55,577 | ||||
Investments in affiliates | 44,946 | 30,647 | ||||
Operating lease right-of-use assets | 63,902 | 68,985 | ||||
Investments, employee benefit plans, at fair value | 36,278 | 31,645 | ||||
Other assets | 173,164 | 179,250 | ||||
Total assets | $ 2,150,323 | $ 2,102,175 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
Accounts payable | $ 120,977 | $ 118,863 | ||||
Accrued expenses and other current liabilities | 98,791 | 131,410 | ||||
Deferred revenue | 95,658 | 92,695 | ||||
Current portion of long-term debt | 4,416 | 2,976 | ||||
Liability for guest loyalty program | 86,844 | 89,954 | ||||
Total current liabilities | 406,686 | 435,898 | ||||
Long-term debt | 1,384,293 | 1,200,547 | ||||
Deferred revenue | 131,873 | 134,149 | ||||
Liability for guest loyalty program | 46,316 | 47,381 | ||||
Operating lease liabilities | 68,785 | 70,994 | ||||
Deferred compensation & retirement plan obligations | 41,283 | 36,673 | ||||
Other liabilities | 16,396 | 21,873 | ||||
Total liabilities | 2,095,632 | 1,947,515 | ||||
Total shareholders' equity | 54,691 | 154,660 | ||||
Total liabilities and shareholders' equity | $ 2,150,323 | $ 2,102,175 | ||||
Choice Hotels International, Inc. and Subsidiaries | Exhibit 3 | ||
Condensed Consolidated Statements of Cash Flows | |||
(Unaudited) | |||
(In thousands) | Six Months Ended June 30, | ||
2023 | 2022 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | $ 137,530 | $ 173,559 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 19,835 | 11,710 | |
Depreciation and amortization – marketing and reservation system | 18,581 | 14,608 | |
Gain on sale and disposal of business and assets, net | — | (3,309) | |
Franchise agreement acquisition cost amortization | 9,380 | 7,623 | |
Non-cash stock compensation and other charges | 23,689 | 17,770 | |
Non-cash interest, investment, and affiliate (income) loss, net | (3,098) | 7,459 | |
Deferred income taxes | 2,157 | (5,493) | |
Equity in net gain of affiliates, less distributions received | 637 | 745 | |
Franchise agreement acquisition costs, net of reimbursements | (46,150) | (27,016) | |
Change in working capital and other | (36,822) | (38,307) | |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 125,739 | 159,349 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Investment in property and equipment | (45,684) | (49,866) | |
Investment in intangible assets | (1,385) | (1,824) | |
Proceeds from sale of assets and business | — | 32,893 | |
Asset acquisition, net of cash acquired | — | (856) | |
Contributions to investments in affiliates | (15,328) | (669) | |
Proceeds from sale of equity method investments | 868 | — | |
Purchases of investments, employee benefit plans | (3,206) | (3,294) | |
Proceeds from sales of investments, employee benefit plans | 1,099 | 1,854 | |
Issuance of notes receivable | (4,284) | (1,987) | |
Collections of notes receivable | 9,296 | 63 | |
Other items, net | (526) | (305) | |
NET CASH USED IN INVESTING ACTIVITIES | (59,150) | (23,991) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Net borrowings pursuant to revolving credit facilities | 185,000 | — | |
Debt issuance costs | (755) | (24) | |
Purchases of treasury stock | (234,455) | (15,140) | |
Proceeds from exercise of stock options | 5,616 | 2,359 | |
Dividends paid | (27,534) | (26,453) | |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (72,128) | (39,258) | |
Net change in cash and cash equivalents | (5,539) | 96,100 | |
Effect of foreign exchange rate changes on cash and cash equivalents | 140 | (520) | |
Cash and cash equivalents at beginning of period | 41,566 | 511,605 | |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 36,167 | $ 607,185 |
Exhibit 4 | ||||||||||||||||||
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES | ||||||||||||||||||
SUPPLEMENTAL OPERATING INFORMATION | ||||||||||||||||||
DOMESTIC HOTEL SYSTEM | ||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||
For the Three Months Ended June 30, 2023 | For the Three Months Ended June 30, 2022 | Change | ||||||||||||||||
Average Daily | Average Daily | Average Daily | ||||||||||||||||
Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | ||||||||||
Upscale & Above(1) | $ 155.07 | 59.9 % | $ 92.94 | $ 149.60 | 58.0 % | $ 86.84 | 3.7 % | 190 | bps | 7.0 % | ||||||||
Midscale & Upper Midscale(2) | 104.50 | 60.5 % | 63.18 | 103.42 | 61.2 % | 63.33 | 1.0 % | (70) | bps | (0.2) % | ||||||||
Extended Stay(3) | 65.24 | 74.6 % | 48.64 | 62.44 | 78.8 % | 49.23 | 4.5 % | (420) | bps | (1.2) % | ||||||||
Economy(4) | 72.72 | 50.5 % | 36.74 | 72.94 | 53.0 % | 38.67 | (0.3) % | (250) | bps | (5.0) % | ||||||||
Total(5) | $ 100.10 | 60.3 % | $ 60.32 | $ 97.42 | 61.6 % | $ 60.04 | 2.8 % | (130) | bps | 0.5 % | ||||||||
For the Six Months Ended June 30, 2023 | For the Six Months Ended June 30, 2022 | Change | ||||||||||||||||
Average Daily | Average Daily | Average Daily | ||||||||||||||||
Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | ||||||||||
Upscale & Above(1) | $ 148.02 | 55.6 % | $ 82.34 | $ 141.20 | 52.6 % | $ 74.32 | 4.8 % | 300 | bps | 10.8 % | ||||||||
Midscale & Upper Midscale(2) | 100.19 | 56.4 % | 56.46 | 98.06 | 56.3 % | 55.24 | 2.2 % | 10 | bps | 2.2 % | ||||||||
Extended Stay(3) | 64.07 | 72.9 % | 46.73 | 60.88 | 76.7 % | 46.67 | 5.2 % | (380) | bps | 0.1 % | ||||||||
Economy(4) | 70.35 | 47.7 % | 33.53 | 69.69 | 49.4 % | 34.40 | 0.9 % | (170) | bps | (2.5) % | ||||||||
Total(5) | $ 95.97 | 56.5 % | $ 54.22 | $ 92.30 | 57.1 % | $ 52.73 | 4.0 % | (60) | bps | 2.8 % | ||||||||
Effective Royalty Rate | ||||||||||||||||||
For the Three Months Ended | For the Six Months Ended | |||||||||||||||||
June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | |||||||||||||||
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 and Park 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 six months ended June 30, 2022 as if the legacy Radisson brands were acquired on January 1, 2022. |
Exhibit 5 | ||||||||||||||||
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES | ||||||||||||||||
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
June 30, 2023 | June 30, 2022 | Variance | ||||||||||||||
Hotels | Rooms | Hotels | Rooms | Hotels | Rooms | % | % | |||||||||
Ascend Hotel Collection | 200 | 22,665 | 197 | 20,381 | 3 | 2,284 | 1.5 % | 11.2 % | ||||||||
Cambria Hotels | 69 | 9,399 | 60 | 8,303 | 9 | 1,096 | 15.0 % | 13.2 % | ||||||||
Radisson(1) | 68 | 15,887 | — | — | 68 | 15,887 | NM | NM | ||||||||
Comfort(2) | 1,688 | 132,572 | 1,659 | 130,637 | 29 | 1,935 | 1.7 % | 1.5 % | ||||||||
Country(3) | 430 | 34,326 | — | — | 430 | 34,326 | NM | NM | ||||||||
Clarion(4) | 176 | 19,329 | 188 | 21,100 | (12) | (1,771) | (6.4) % | (8.4) % | ||||||||
Quality | 1,618 | 119,590 | 1,630 | 121,149 | (12) | (1,559) | (0.7) % | (1.3) % | ||||||||
Sleep | 427 | 30,149 | 418 | 29,419 | 9 | 730 | 2.2 % | 2.5 % | ||||||||
Park | 4 | 363 | — | — | 4 | 363 | NM | NM | ||||||||
Everhome | 1 | 98 | — | — | 1 | 98 | NM | NM | ||||||||
MainStay | 119 | 8,152 | 107 | 7,549 | 12 | 603 | 11.2 % | 8.0 % | ||||||||
WoodSpring | 224 | 27,005 | 312 | 37,586 | (88) | (10,581) | (28.2) % | (28.2) % | ||||||||
Suburban | 83 | 7,408 | 70 | 6,246 | 13 | 1,162 | 18.6 % | 18.6 % | ||||||||
Econo Lodge | 676 | 39,906 | 718 | 43,161 | (42) | (3,255) | (5.8) % | (7.5) % | ||||||||
Rodeway | 484 | 27,286 | 505 | 28,783 | (21) | (1,497) | (4.2) % | (5.2) % | ||||||||
Domestic Franchises(5) | 6,267 | 494,135 | 5,864 | 454,314 | 403 | 39,821 | 6.9 % | 8.8 % | ||||||||
International Franchises(5) | 1,205 | 134,766 | 1,106 | 120,574 | 99 | 14,192 | 9.0 % | 11.8 % | ||||||||
Total Franchises | 7,472 | 628,901 | 6,970 | 574,888 | 502 | 54,013 | 7.2 % | 9.4 % |
(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 and Park Plaza brands. | |||||||||||||||||
(4) Includes Clarion family of brand extensions including Clarion and Clarion Pointe. | |||||||||||||||||
(5) The Company reclassified six properties located in the |
Exhibit 6 | |||||||||
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION | |||||||||
(UNAUDITED) | |||||||||
REVENUES EXCLUDING REIMBURSABLE REVENUE FROM FRANCHISED AND MANAGED PROPERTIES | |||||||||
(dollar amounts in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2023 | 2022 | 2023 | 2022 | ||||||
Total Revenues | $ 427,420 | $ 367,974 | $ 760,212 | $ 625,701 | |||||
Adjustments: | |||||||||
Reimbursable revenue from franchised and managed properties | (199,645) | (189,382) | (357,427) | (316,019) | |||||
Revenues excluding reimbursable revenue from franchised and managed properties | $ 227,775 | $ 178,592 | $ 402,785 | $ 309,682 | |||||
ADJUSTED SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | |||||||||
(dollar amounts in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2023 | 2022 | 2023 | 2022 | ||||||
Total Selling, General and Administrative Expenses | $ 67,804 | $ 43,888 | $ 127,087 | 74,212 | |||||
Mark to market adjustments on non-qualified retirement plan investments | (2,051) | 4,835 | (3,868) | 6,560 | |||||
Operational restructuring charges | (3,082) | — | (5,340) | — | |||||
Share-based compensation | (6,007) | (4,613) | (10,613) | (8,207) | |||||
Due diligence and transition costs | (7,867) | (3,569) | (15,971) | (3,970) | |||||
Limited payment guarantee charge | (1,551) | — | (1,551) | — | |||||
Adjusted Selling, General and Administrative Expenses | $ 47,246 | $ 40,541 | $ 89,744 | $ 68,595 | |||||
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA") | |||||||||
(dollar amounts in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2023 | 2022 | 2023 | 2022 | ||||||
Net income | $ 84,710 | $ 106,168 | $ 137,530 | $ 173,559 | |||||
Income tax expense | 27,837 | 35,958 | 42,512 | 56,302 | |||||
Interest expense | 16,270 | 11,252 | 30,354 | 22,722 | |||||
Interest income | (2,056) | (1,628) | (3,939) | (2,908) | |||||
Other (gain) loss | (2,187) | 5,559 | (4,095) | 7,275 | |||||
Equity in net (gain) loss of affiliates | (185) | 40 | (122) | (204) | |||||
Gain on sale of business and assets, net | — | (3,280) | — | (3,309) | |||||
Depreciation and amortization | 9,812 | 5,479 | 19,835 | 11,710 | |||||
Mark to market adjustments on non-qualified retirement plan investments | 2,051 | (4,835) | 3,868 | (6,560) | |||||
Operational restructuring charges | 3,082 | — | 5,340 | — | |||||
Share-based compensation | 6,007 | 4,613 | 10,613 | 8,207 | |||||
Due diligence and transition costs | 7,867 | 3,569 | 15,971 | 3,970 | |||||
Limited payment guarantee charge | 1,551 | — | 1,551 | — | |||||
Net reimbursable surplus from franchised and managed properties | (4,388) | (35,536) | (5,262) | (48,523) | |||||
Franchise agreement acquisition costs amortization | 2,736 | 2,196 | 5,397 | 4,358 | |||||
Adjusted EBITDA | $ 153,107 | $ 129,555 | $ 259,553 | $ 226,599 | |||||
ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS) | |||||||||
(dollar amounts in thousands, except per share amounts) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2023 | 2022 | 2023 | 2022 | ||||||
Net income | $ 84,710 | $ 106,168 | $ 137,530 | $ 173,559 | |||||
Adjustments: | |||||||||
Gain on sale of business and assets, net | — | (2,473) | — | (2,495) | |||||
Operational restructuring charges | 2,331 | — | 4,042 | — | |||||
Due diligence and transition costs | 5,947 | 2,691 | 12,090 | 2,993 | |||||
Limited payment guarantee charge | 1,174 | — | 1,174 | — | |||||
Net reimbursable surplus from franchised and managed properties | (5,050) | (26,510) | (7,550) | (36,198) | |||||
Adjusted Net Income | $ 89,112 | $ 79,876 | $ 147,286 | $ 137,859 | |||||
Diluted Earnings Per Share | $ 1.65 | $ 1.89 | $ 2.66 | $ 3.08 | |||||
Adjustments: | |||||||||
Gain on sale of business and assets, net | — | (0.04) | — | (0.04) | |||||
Operational restructuring charges | 0.05 | — | 0.08 | — | |||||
Due diligence and transition costs | 0.12 | 0.05 | 0.24 | 0.05 | |||||
Limited payment guarantee charge | 0.02 | — | 0.02 | — | |||||
Net reimbursable surplus from franchised and managed properties | (0.09) | (0.47) | (0.13) | (0.64) | |||||
Adjusted Diluted Earnings Per Share (EPS) | $ 1.75 | $ 1.43 | $ 2.87 | $ 2.45 |
Exhibit 7 | |||
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES | |||
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 | |||
(dollar amounts in thousands) | Midpoint | ||
2023 Guidance | |||
Net income | $ 254,800 | ||
Income tax expense | 81,800 | ||
Interest expense | 64,200 | ||
Interest income | (7,100) | ||
Other gain | (3,700) | ||
Equity in net gain of affiliates | (1,600) | ||
Limited payment guarantee charge | 1,600 | ||
Depreciation and amortization | 49,200 | ||
Mark to market adjustments on non-qualified retirement plan investments | 3,900 | ||
Operational restructuring, due diligence and transition costs | 42,100 | ||
Share-based compensation | 20,400 | ||
Franchise agreement acquisition costs amortization | 10,800 | ||
Net reimbursable deficit from franchised and managed properties | 18,600 | ||
Adjusted EBITDA | $ 535,000 | ||
ADJUSTED NET INCOME & DILUTED EARNINGS PER SHARE (EPS) FULL YEAR FORECAST | |||
(dollar amounts in thousands, except per share amounts) | Midpoint | ||
2023 Guidance | |||
Net income | $ 254,800 | ||
Adjustments: | |||
Operational restructuring, due diligence and transition costs | 31,900 | ||
Limited payment guarantee charge | 1,200 | ||
Net reimbursable deficit from franchised and managed properties | 13,900 | ||
Adjusted Net Income | $ 301,800 | ||
Diluted Earnings Per Share | $ 5.01 | ||
Adjustments: | |||
Operational restructuring, due diligence and transition costs | 0.63 | ||
Limited payment guarantee charge | 0.02 | ||
Net reimbursable deficit from franchised and managed properties | 0.28 | ||
Adjusted Diluted Earnings Per Share (EPS) | $ 5.94 | ||
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SOURCE Choice Hotels International, Inc.
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