Choice Hotels International Reports a 10% Increase in Third Quarter EBITDA from Franchising Activities
New Executed Domestic Franchise Agreements Increase 14% Company Repurchases 1 Million Shares of Stock During Third Quarter
Highlights:
- Revenues for the three months ended September 30, 2015 totaled $241.5 million, an increase of 12 percent from the same period of 2014.
- Earnings before interest, taxes, depreciation and amortization ("EBITDA") from franchising activities for the three months ended September 30, 2015, totaled $81.1 million, an increase of 10 percent from the same period of 2014.
- Franchising margins for the three months ended September 30, 2015, were 74.6 percent, an increase of 230 basis points from the same period of 2014.
- Domestic royalty fees for the three months ended September 30, 2015, totaled $84.7 million, an increase of 6.5 percent from the same period of 2014.
- Domestic system-wide revenue per available room ("RevPAR") increased 5.8 percent in the third quarter of 2015, as occupancy and average daily rates increased 120 basis points and 4 percent, respectively from the same period of 2014.
- Domestic units increased 0.2 percent from September 30, 2014.
- Effective royalty rate for the three months ended September 30, 2015 increased 3 basis points to 4.27 percent from the same period of 2014.
- Initial and relicensing fees for the three months ended September 30, 2015, totaled $6.2 million, an increase of 44 percent from the same period of 2014.
- Domestic hotel executed franchise agreements totaled 129 for the three months ended September 30, 2015, an increase of 14 percent from the same period of 2014.
- Executed 9 new domestic franchise agreements during the three months ended September 30, 2015 for the Cambria hotels & suites brand including 2 conversion projects in Chicago, Illinois and Atlanta, Georgia.
- Domestic relicensing and contract renewal transactions totaled 119 for the three months ended September 30, 2015, an increase of 40 percent from the same period of 2014.
- The company's new construction domestic pipeline of hotels under construction or approved for development increased 29 percent from September 30, 2014, and the total pipeline increased 28 percent.
- Diluted earnings per share ("EPS") from continuing operations for the three months ended September 30, 2015, totaled $0.72, an increase of 7 percent from the same period of 2014.
- The company purchased 1.0 million shares of common stock under its share repurchase program during the three months ended September 30, 2015, at a total cost of approximately $50 million.
"We are very pleased with our performance in the third quarter, with double-digit percentage growth in both total revenues and EBITDA. We were pleased with our year-over-year increase in domestic royalty revenue driven by growth in all 3 critical levers – RevPAR, system-size and effective royalty rate. We had a terrific quarter on the development front with improvements in domestic franchise contracts for both new construction and conversion hotels demonstrating that the demand for our brands is strong," said Stephen P. Joyce, president and chief executive officer, Choice Hotels. "The fundamental strength of our operating model enables us to generate strong free cash flows, which allows us to retuSunstone Hotel Investors Reports Results For Third Quarter 2015rn value to our shareholders through a disciplined and prudent capital allocation strategy."
Discontinued Operations
During 2014, the company entered into and completed a plan to sell its three owned hotels operated under the MainStay Suites brand. The company determined that the sale of these hotels met the definition of a discontinued operation since the operations and cash flows of these components have been eliminated from the on-going operations of the company and the company does not have significant continuing involvement in the operations of the hotels after the transaction. As a result, the company's consolidated statement of income for the three and nine months ended September 30, 2014, reflects these three company-owned hotels as discontinued operations.
To view full third quarter financial results and tables please visit:
http://media.choicehotels.com/phoenix.zhtml?c=217856&p=irol-newsArticle&ID=2104730
Sunstone Hotel Investors report third qurater 2015 net income of of $58.8 million compared to $29.5 million in the year ago quarter. RevPAR increased 3.9% for the quarter.
Third Quarter 2015 Operational Results (as compared to Third Quarter 2014):
- Comparable Hotel RevPAR, including adoption of the industry's Uniform System of Accounts for the Lodging Industry, Eleventh Revised Edition ("USALI Eleventh Revised Edition"), which became effective January 1, 2015, increased 3.9% to $177.49.
- Comparable Hotel Adjusted EBITDA Margin, including the effects of $2.9 million in property tax increases at the Company's Chicago and Orlando hotels combined with the USALI Eleventh Revised Edition adoption, and excluding prior year property taxes, net decreased 40 basis points to 31.4%.
- Adjusted EBITDA increased 3.0% to $94.2 million.
- Adjusted FFO attributable to common stockholders per diluted share increased 5.9% to $0.36.
- Income attributable to common stockholders increased 99.1% to $58.8 million.
- Income attributable to common stockholders per diluted share increased 100% to $0.28.
John Arabia, President and Chief Executive Officer, stated, “Our portfolio met the high-end of our expectations for the third quarter despite a tougher year over year comparison due to anticipated calendar shifts and a material unanticipated increase to real estate taxes. We continue to see strength with the group customer which, combined with the imbedded growth from our on-going hotel repositionings, causes us to currently believe that we will see strong operating results for the next few years. In addition to the organic growth in our portfolio, we will continue to seek opportunities to selectively dispose of assets when we can realize a value in excess of our internal valuation.”
UNAUDITED SELECTED STATISTICAL AND FINANCIAL DATA
($ in millions, except RevPAR, ADR and per share amounts)
Three Months Ended September 30,
Nine Months Ended September 30,
2015
2014
Change
2015
2014
Change
Comparable Hotel RevPAR
$
177.49
$
171.47
3.5
%
$
170.74
$
161.71
5.6
%
Comparable Hotel RevPAR, including USALI Eleventh Revised Edition adoption
$
170.87
3.9
%
$
161.19
5.9
%
Comparable Hotel Occupancy
86.0
%
86.4
%
(40)
bps
84.2
%
83.7
%
50
bps
Comparable Hotel ADR
$
206.38
$
198.46
4.0
%
$
202.78
$
193.20
5.0
%
Comparable Hotel ADR, including USALI Eleventh Revised Edition adoption
$
197.77
4.4
%
$
192.58
5.3
%
Comparable Hotel Adjusted EBITDA Margin
31.4
%
32.2
%
(80)
bps
31.1
%
30.5
%
60
bps
Comparable Hotel Adjusted EBITDA Margin, including USALI Eleventh Revised Edition adoption
31.8
%
(40)
bps
30.1
%
100
bps
Net Income
$
63.1
$
33.6
$
117.9
$
73.7
Income Attributable to Common Stockholders per Diluted Share
$
0.28
$
0.14
$
0.50
$
0.32
Adjusted EBITDA
$
94.2
$
91.4
$
270.3
$
235.2
Adjusted FFO Attributable to Common Stockholders
$
74.8
$
69.5
$
209.4
$
169.3
Adjusted FFO Attributable to Common Stockholders per Diluted Share
$
0.36
$
0.34
