Choice Hotels International Reports Full Year 2012 Adjusted Diluted EPS of $2.11 Per Share
Choice Hotels International Reports Full Year 2012 Adjusted Diluted EPS of
$2.11 Per Share
Full Year New Domestic Hotel Franchise Contracts Rise 42%
PR Newswire
SILVER SPRING, Md., Feb. 11, 2013
SILVER SPRING, Md., Feb. 11, 2013 /PRNewswire/ -- Choice Hotels International,
Inc., (NYSE:CHH) today reported the following highlights for the fourth
quarter and full year 2012:
"2012 was a record breaking year for the company in terms of operating
performance. We established new company records for the size of the domestic
franchise system, total franchising revenues, franchising margins, operating
cash flows, operating income and earnings per share," said Stephen P. Joyce,
president and chief executive officer. "We are very pleased with our
development results which increased 42 percent over the prior year,
highlighted by the conversion of 46 properties, formerly operated as Jameson
Inns, to our system and the execution of several Cambria Suites agreements in
key markets important for Cambria's long-term success. We remain optimistic
that the development and RevPAR environments will continue to improve and
result in further growth of our business in 2013."
Full Year Highlights
o Adjusted diluted earnings per share ("EPS") for full year 2012 were $2.11
compared to $1.92 for full year 2011, a 10% increase. Adjusted diluted
EPS for full year 2012 and 2011 exclude certain special items, as
described below, totaling $0.04 and $0.07, respectively.
o Excluding special items, adjusted earnings before interest, taxes,
depreciation and amortization ("EBITDA") increased 10% to $203.7 million
for the year ended December 31, 2012, compared to the prior year.
Operating income increased 12% from $171.9 million for the year ended
December 31, 2011 to $193.1 million for full year 2012.
o Franchising revenues increased 6% to $302.2 million for the year ended
December 31, 2012 from $285.4 million for the same period of 2011. Total
revenues increased 8% to $691.5 million for the year ended December 31,
2012 compared to the same period of 2011.
o Adjusted franchising margins increased 280 basis points from 61.5% for the
year ended December 31, 2011 to 64.3% for the same period of the current
year.
o Domestic royalty fees for the year ended December 31, 2012 increased $15.4
million to $235.7 million from $220.3 million for the year ended December
31, 2011, an increase of 7%.
o Domestic unit and room growth increased 1.6 percent and 0.8 percent from
December 31, 2011, respectively.
o Domestic system-wide revenue per available room ("RevPAR") increased 6.2%
for the year ended December 31, 2012 compared to the year ended December
31, 2011 as occupancy and average daily rates increased 200 basis points
and 2.5 percent, respectively.
o The effective royalty rate increased 1 basis point to 4.33% for the year
ended December 31, 2012 compared to 4.32% for the same period of the prior
year.
o The company executed 473 new domestic hotel franchise contracts for the
year ended December 31, 2012 compared to 332 new domestic hotel franchise
contracts in the same period of the prior year, a 42% increase.
o The number of worldwide hotels under construction, awaiting conversion or
approved for development as of December 31, 2012 was 482 hotels
representing 38,969 rooms.
o The effective income tax rate for the year ended December 31, 2012 was
28.7% compared to 30.1% for the same period of 2011.
o During the year ended December 31, 2012, the company paid cash dividends
totaling approximately $654.1 million, including a special cash dividend
of $10.41 per share or approximately $600.7 million and purchased
approximately 0.5 million shares of its common stock for a total cost of
$19.9 million under the share repurchase program.
Fourth Quarter Highlights
o Adjusted diluted EPS for fourth quarter 2012 were $0.45 compared to $0.46
for the same period of the prior year. Diluted EPS were $0.42 for the
fourth quarter of 2012 compared to $0.42 for the same period of 2011.
Adjusted diluted EPS for fourth quarter 2012 and 2011 exclude certain
special items, as described below, totaling $0.03 and $0.04, respectively.
o Excluding special items, adjusted EBITDA increased 11% to $49.3 million
for the three months ended December 31, 2012 compared to the same period
of the prior year. Operating income for the three months ended December
31, 2012 increased 17% from the same period of the prior year to $45.2
million.
o Franchising revenues increased 4% from $73.9 million for the three months
ended December 31, 2011 to $77.0 million for the same period of 2012.
Total revenues for the three months ended December 31, 2012 increased 7%
compared to the same period of the prior year.
o Domestic system-wide revenue per available room ("RevPAR") increased 4.2%
for the three months ended December 31, 2012 compared to the same period
of 2011 as occupancy and average daily rates increased 120 basis points
and 2.0 percent, respectively.
o The effective royalty rate increased 5 basis points to 4.36% for the three
months ended December 31, 2012 compared to 4.31% for the same period of
the prior year.
o The company executed 214 new domestic hotel franchise contracts for the
three months ended December 31, 2012 compared to 128 new domestic hotel
franchise contracts in the same period of the prior year, a 67% increase.
o Reached an agreement with affiliates of Colony Capital, LLC, including
Colony Financial, Inc., and hospitality management company Aimbridge
Hospitality, to convert 46 properties, formerly operated as Jameson Inns,
to the company's Quality Inn, Comfort Inn and Econo Lodge brands,
representing the company's largest single conversion transaction,
excluding brand acquisitions.
o Expanded Cambria Suites into additional major markets with new franchise
agreements executed for hotels in New York City, Phoenix, Arizona and
Plano, Texas.
o Interest expense for the three months ended December 31, 2012 increased
$7.1 million over the same period of the prior reflecting the financing
transactions entered into during the second and third quarter of 2012 in
conjunction with the payment of the $600 million special cash dividend
paid on August 23, 2012.
Special Items
On December 27, 2012, the company settled its supplemental executive
retirement plan and paid the actuarial equivalent of the lump sum value of the
full accrued benefit to each participant. As a result of the settlement, the
company recognized a settlement loss in SG&A expense totaling $1.8 million for
the three months and year ended December 31, 2012. In addition, during the
year ended December 31, 2012, the company recorded employee termination
benefits charges in SG&A of approximately $0.5 million and recognized a loss
on the extinguishment of debt totaling $0.5 million. These special items
represent diluted EPS of $0.03 and $0.04 for the three months and year ended
December 31, 2012, respectively.
During the three months and year ended December 31, 2011, the company recorded
employee termination benefit charges included in SG&A expenses of
approximately $3.6 million and $4.4 million, respectively. In addition, during
the year ended December 31, 2011, the company reduced the carrying amount of a
parcel of land held for sale resulting in a loss of $1.8 million included in
other gains and losses. These special items represent diluted EPS of $0.04 and
$0.07 for the three months and year ended December 31, 2011, respectively.
Use of Free Cash Flow
The company has historically used its free cash flow (cash flow from
operations less capital expenditures) to return value to shareholders,
primarily through share repurchases and dividends.
Dividends
For the year ended December 31, 2012, the company paid $654.1 million of cash
dividends to shareholders which included a special cash dividend in the amount
of $10.41 per share or approximately $600.7 million paid on August 23, 2012.
The company's current quarterly dividend rate per common share is $0.185,
subject to declaration by our board of directors.
Share Repurchases
During the year ended December 31, 2012, the company repurchased 0.5 million
shares for a total cost of $19.9 million and has authorization to purchase up
to an additional 1.4 million shares under this program. The company did not
repurchase any shares of common stock under the share repurchase program
during the three months ended December 31, 2012. We expect to continue making
repurchases under our share repurchase program in the open market and through
privately negotiated transactions, subject to market and other conditions. No
minimum number of share repurchases has been fixed. Since Choice announced its
stock repurchase program on June 25, 1998, the company has repurchased 45.3
million shares of its common stock for a total cost of $1.1 billion through
December 31, 2012. Considering the effect of a two-for-one stock split in
October 2005, the company had repurchased 78.3 million shares through December
31, 2012 under the share repurchase program at an average price of $13.89 per
share.
Other
Our board of directors previously authorized us to enter into programs which
permit us to offer financing, investment and guaranty support to qualified
franchisees as well as to acquire and resell real estate to incent franchise
development for certain brands in strategic markets. During the year ended
December 31, 2012, the company advanced, net of repayments, approximately $41
million related to mezzanine financing and sliver equity investments to
construct Cambria Suites in such markets as New York City and White Plains,
New York, Phoenix, Arizona and Plano, Texas. At December 31, 2012 the company
had approximately $68 million outstanding related to this program. Over the
next several years, we expect to continue to opportunistically deploy capital
pursuant to these programs to promote growth of our emerging brands. We
expect these advances to range between $20 million and $40 million per year,
however, the amount and timing of the investment in these programs will be
dependent on market and other conditions. Notwithstanding these programs, the
company expects to continue to return value to its shareholders through a
combination of share repurchases and dividends, subject to market and other
conditions.
Balance Sheet
At December 31, 2012, the company had gross debt of $855.3 million and cash
and cash equivalents totaling $134.2 million resulting in net debt of $721.1
million. At December 31, 2011, the company had gross debt of $252.7 million
and cash equivalents totaling $107.1 million resulting in net debt of $145.6
million.
On June 27, 2012, the company issued unsecured senior notes in an aggregate
principal amount of $400 million, in an underwritten, registered public
offering. These notes will mature in July 2022 and bear a coupon rate of
interest of 5.75%. Considering bond issuance costs, the company's effective
interest costs related to these senior notes is approximately 5.94%.
On July 25, 2012, the company entered into a senior secured credit facility
consisting of a $200 million revolving credit tranche and a $150 million term
loan tranche, with a four year term. The company may elect to have borrowings
under the senior secured credit facility bear interest at (i) a base rate plus
a margin ranging from 100 to 325 basis points based on the company's total
leverage ratio or (ii) LIBOR plus a margin ranging from 200 to 425 basis
points based on the company's total leverage ratio. As a result of entering
into the senior secured credit facility, the company's existing $300 million
senior unsecured revolving credit facility was terminated. Under the $300
million senior unsecured revolving credit facility the company could elect to
have borrowings bear interest at (i) a base rate plus a margin ranging from 5
to 80 basis points based on the company's credit rating or (ii) LIBOR plus a
margin ranging from 105 to 180 basis points based on the company's credit
rating.
The proceeds from the issuance of the $400 million senior notes and the
company's new senior secured credit facility were utilized to pay the special
cash dividend paid on August 23, 2012.
At December 31, 2012 and 2011, the company had outstanding mezzanine
financing, real estate investments and sliver equity investments totaling $68
million and $27 million, respectively pursuant to its program to offer
financing and investment support to incent franchise development for the
Cambria Suites brand in strategic markets. These investments are reported in
other current assets and other assets on the company's consolidated balance
sheet.
Outlook
The company's first quarter 2013 diluted EPS is expected to be $0.26. The
company expects full-year 2013 diluted EPS to range between $1.96 and $1.98.
EBITDA for full-year 2013 are expected to range between $215 million and $217
million. These estimates include the following assumptions:
o The company expects net domestic unit growth to increase by approximately
1.5% in 2013;
o RevPAR is expected to increase approximately 5% for first quarter of 2013
and increase between 4.5% and 5.5% for full-year 2013;
o The effective royalty rate is expected to increase 3 basis points for
full-year 2013;
o All figures assume the existing share count;
o An effective tax rate of 28.5% and 30.6% for the first quarter and
full-year 2013, respectively.
Conference Call
Choice will conduct a conference call on Tuesday, February 12, 2013 at 9:00
a.m. EST to discuss the company's fourth quarter 2012 results. The dial-in
number to listen to the call is 1-800-591-6930, and the access code is
96459022. International callers should dial 1-617-614-4908 and enter the
access code 96459022. The conference call also will be Webcast simultaneously
via the company's Web site, www.choicehotels.com. Interested investors and
other parties wishing to access the call via the Webcast should go to the Web
site and click on the Investor Info link. The Investor Information page will
feature a conference call microphone icon to access the call.
The call will be recorded and available for replay beginning at 11:00 a.m. EST
on Tuesday, February 12, 2013 through Tuesday, February 19, 2013 by calling
1-888-286-8010 and entering access code 56450518. The international dial-in
number for the replay is 1-617-801-6888, access code 56450518. In addition,
the call will be archived and available on www.choicehotels.com via the
Investor Info link.
About Choice Hotels
Choice Hotels International, Inc. franchises approximately 6,200 hotels,
representing more than 499,000 rooms, in the United States and more than 30
other countries and territories. As of December 31, 2012, 394 hotels,
representing more than 31,000 rooms, were under construction, awaiting
conversion or approved for development in the United States. Additionally, 88
hotels, representing approximately 7,800 rooms, were under construction,
awaiting conversion or approved for development in more than 20 other
countries and territories. The company's Comfort Inn, Comfort Suites,
Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban
Extended Stay Hotel, Econo Lodge and Rodeway Inn brands, as well as its Ascend
Hotel Collection membership program, serve guests worldwide.
Additional corporate information may be found on the Choice Hotels
International, Inc. web site, which may be accessed at 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. Generally, our use of words such as "expect," "estimate," "believe,"
"anticipate," "will," "forecast," "plan"," project," "assume" or similar words
of futurity identify such 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, earnings and other financial and
operational measures, company debt levels, ability to repay outstanding
indebtedness, payment of dividends, and future operations, 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; operating risks
common in the lodging and franchising industries; changes to the desirability
of our brands as viewed by hotel operators and customers; changes to the terms
or termination of our contracts with franchisees; our ability to keep pace
with improvements in technology utilized for reservations systems and other
operating systems; fluctuations in the supply and demand for hotels rooms;
and our ability to manage effectively our indebtedness. These and other risk
factors are discussed in detail in the Risk Factors section of the company's
Form 10-K for the year ended December 31, 2011, filed with the Securities and
Exchange Commission on February 29, 2012 and our quarterly reports filed on
Form 10-Q. We undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future
events or otherwise.
Statement Concerning Non-GAAP Financial Measurements Presented in Exhibit 8
Adjusted diluted EPS, adjusted EBITDA, franchising revenues, adjusted
franchising margins and adjusted SG&A expenses are non-GAAP financial
measurements. This information should not be considered as an alternative to
any measure of performance as promulgated under accounting principles
generally accepted in the United States ("GAAP"), such as diluted EPS,
operating income, total revenues and operating margins. The company's
calculation of these measurements may be different from the calculations used
by other companies and therefore comparability may be limited. The company
has included an exhibit accompanying this release that reconciles these
measures to the comparable GAAP measurement. We discuss management's reasons
for reporting these non-GAAP measures below.
Earnings Before Interest, Taxes, Depreciation and Amortization: EBITDA
reflects earnings excluding the impact of interest expense, tax expense,
depreciation and amortization. Our management considers EBITDA to be an
indicator of operating performance because it can be used to measure our
ability to service debt, fund capital expenditures, and expand our business.
EBITDA is a commonly used measure of performance in our industry. In addition,
it is used by analysts, lenders, investors and others, as well as by us, to
facilitate comparisons between the company and its competitors because it
excludes certain items that can vary widely across different industries or
among companies within the same industry.
Franchising Revenues and Margins: The company reports franchising revenues
and margins which exclude marketing and reservation revenues and hotel
operations. Marketing and reservation activities are excluded from revenues
and operating margins since the company is required by its franchise
agreements to use these fees collected for marketing and reservation
activities. Cumulative reservation and marketing system fees not expended are
recorded as a liability on the company's financial statements and are carried
over to the next fiscal year and expended in accordance with the franchise
agreements. Cumulative marketing and reservation expenditures in excess of
system fees collected for marketing and reservation activities are recorded as
a receivable on the company's financial statements. In addition, the company
has the contractual authority to require that the franchisees in the system at
any given point repay the company for any deficits related to marketing and
reservation activities. Hotel operations are excluded since they do not
reflect the most accurate measure of the company's core franchising business.
These non-GAAP measures are a commonly used measure of performance in our
industry and facilitate comparisons between the company and its competitors.
Adjusted Diluted EPS, Adjusted EBITDA, Adjusted SG&A and Adjusted Franchising
Margins: The company's management also uses adjusted diluted EPS, adjusted
EBITDA, adjusted SG&A and adjusted franchising margins which exclude the loss
on settlement of a pension plan, employee termination benefits, a loss on
extinguishment of debt as well as a reduction in the carrying amount of land
held for sale. The company utilizes these non-GAAP measures to enable
investors to perform meaningful comparisons of past, present and future
operating results and as a means to emphasize the results of on-going
operations.
Choice Hotels, Choice Hotels International, Comfort Inn, Comfort Suites,
Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban
Extended Stay Hotel, Econo Lodge, Rodeway Inn and Ascend Collectionare
proprietary trademarks and service marks of Choice Hotels International.
© 2013 Choice Hotels International, Inc. All rights reserved.
Choice Hotels Exhibit
International, 1
Inc.
Consolidated
Statements of
Income
(Unaudited)
Three Months Ended December 31, Year Ended December 31,
Variance Variance
2012 2011 $ % 2012 2011 $ %
(In thousands,
except per
share amounts)
REVENUES:
$ $ $ $ $ $
Royalty fees 3,098 5% 15,356 6%
66,020 62,922 260,782 245,426
Initial
franchise and 5,250 4,969 281 6% 14,203 14,052 151 1%
relicensing
fees
Procurement 3,972 4,074 (102) (3%) 17,962 18,111 (149) (1%)
services
Marketing and 100,160 90,844 9,316 10% 384,784 349,036 35,748 10%
reservation
Hotel 1,133 1,183 (50) (4%) 4,573 4,356 217 5%
operations
Other 1,771 1,898 (127) (7%) 9,205 7,812 1,393 18%
Total 178,306 165,890 12,416 7% 691,509 638,793 52,716 8%
revenues
OPERATING
EXPENSES:
Selling,
general and 29,779 33,463 (3,684) (11%) 101,852 106,404 (4,552) (4%)
administrative
Depreciation
and 2,237 2,048 189 9% 8,226 8,024 202 3%
amortization
Marketing and 100,160 90,844 9,316 10% 384,784 349,036 35,748 10%
reservation
Hotel 896 873 23 3% 3,505 3,466 39 1%
operations
Total
operating 133,072 127,228 5,844 5% 498,367 466,930 31,437 7%
expenses
Operating 45,234 38,662 6,572 17% 193,142 171,863 21,279 12%
income
OTHER INCOME
AND EXPENSES,
NET:
Interest 10,366 3,220 7,146 222% 27,189 12,939 14,250 110%
expense
Interest (384) (369) (15) 4% (1,540) (1,306) (234) 18%
income
Loss on
extinguishment - - - NM 526 - 526 NM
of debt
Other (gains) 148 (1,236) 1,384 (112%) (1,989) 2,442 (4,431) (181%)
and losses
Equity in net
income of (224) (7) (217) 3100% (212) (269) 57 (21%)
affiliates
Total other
income and 9,906 1,608 8,298 516% 23,974 13,806 10,168 74%
expenses, net
Income before 35,328 37,054 (1,726) (5%) 169,168 158,057 11,111 7%
income taxes
Income taxes 10,877 12,268 (1,391) (11%) 48,481 47,661 820 2%
$ $ $ $ $ $
Net income (335) (1%) 10,291 9%
24,451 24,786 120,687 110,396
Basic earnings $ $ $ $ $ $
per share - 0% 0.22 12%
0.42 0.42 2.08 1.86
Diluted $ $ $ $ $ $
earnings per - 0% 0.22 12%
share 0.42 0.42 2.07 1.85
Choice Hotels International, Inc. Exhibit 2
Consolidated Balance Sheets
(In thousands, except per share amounts) December 31, December 31,
2012 2011
(Unaudited)
ASSETS
Cash and cash equivalents $ $
134,177 107,057
Accounts receivable, net 52,270 53,012
Investments, employee benefit plans, at fair 3,486 12,094
value
Other current assets 43,537 22,633
Total current assets 233,470 194,796
Fixed assets and intangibles, net 130,937 135,252
Receivable -- marketing and reservation fees 42,179 54,014
Investments, employee benefit plans, at fair 12,755 11,678
value
Other assets 91,431 51,949
Total assets $ $
510,772 447,689
LIABILITIES AND SHAREHOLDERS' DEFICIT
Accounts payable and accrued expenses $ $
94,266 92,240
Deferred revenue 71,154 68,825
Deferred compensation & retirement plan 2,522 18,935
obligations
Current portion of long-term debt 8,195 673
Other current liabilities - 3,892
Total current liabilities 176,137 184,565
Long-term debt 847,150 252,032
Deferred compensation & retirement plan 20,399 20,593
obligations
Other liabilities 15,990 16,060
Total liabilities 1,059,676 473,250
Common stock, $0.01 par value 582 583
Additional paid-in-capital 110,246 102,665
Accumulated other comprehensive loss (4,216) (6,801)
Treasury stock, at cost (927,776) (916,955)
Retained earnings 272,260 794,947
Total shareholders' deficit (548,904) (25,561)
Total liabilities and $ $
shareholders' deficit 510,772 447,689
Choice Hotels International, Inc. Exhibit 3
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands) Year Ended December 31,
2012 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ $
120,687 110,396
Adjustments to reconcile net income to net cash
provided
by operating activities:
Depreciation and amortization 8,226 8,024
Provision for bad debts, net 2,896 2,160
Non-cash stock compensation and other charges 12,375 14,511
Non-cash interest and other loss 292 2,208
Loss on extinguishment of debt 526 -
Dividends received from equity method 1,310 1,139
investments
Equity in net income of affiliates (212) (269)
Changes in assets and liabilities:
Receivables (5,239) (7,785)
Receivable - marketing and reservation fees, 30,313 623
net
Accounts payable 11 (1,851)
Accrued expenses 12,376 6,346
Income taxes payable/receivable (3,193) (4,562)
Deferred income taxes (540) 5,514
Deferred revenue 2,188 1,523
Other assets (3,476) (3,162)
Other liabilities (17,520) 29
NET CASH PROVIDED BY OPERATING ACTIVITIES 161,020 134,844
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment (15,443) (10,924)
Equity method investments (20,285) (5,000)
Issuance of notes receivable (34,925) (12,766)
Collections of notes receivable 3,561 4,754
Purchases of investments, employee benefit (1,697) (1,602)
plans
Proceeds from sales of investments, employee 11,223 644
benefit plans
Proceeds from sale of assets - 1,654
Other items, net (433) (564)
NET CASH USED IN INVESTING ACTIVITIES (57,999) (23,804)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of long-term debt 543,500 75
Net borrowings (repayments) pursuant to 57,000 (200)
revolving credit facilities
Principal payments on long-term debt (4,422) (297)
Debt issuance costs (4,759) (2,356)
Dividends paid (654,092) (43,747)
Purchase of treasury stock (22,586) (53,617)
Excess tax benefits from stock-based 1,559 1,227
compensation
Proceeds from exercise of stock options 7,090 3,845
NET CASH USED IN FINANCING ACTIVITIES (76,710) (95,070)
Net change in cash and cash equivalents 26,311 15,970
Effect of foreign exchange rate changes on cash 809 (172)
and cash equivalents
Cash and cash equivalents at beginning of 107,057 91,259
period
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ $
134,177 107,057
CHOICE HOTELS INTERNATIONAL, INC. Exhibit
4
SUPPLEMENTAL OPERATING INFORMATION
DOMESTIC HOTEL SYSTEM
(UNAUDITED)
For the Year Ended December For the Year Ended December Change
31, 2012* 31, 2011*
Average Average Average
Daily Daily Daily
Rate Occupancy RevPAR Rate Occupancy RevPAR Rate Occupancy RevPAR
$ $ $ $
Comfort Inn 81.55 59.4% 79.41 57.5% 2.7% 190 bps 6.1%
48.42 45.62
Comfort 85.47 61.7% 52.74 83.72 58.6% 49.09 2.1% 310 bps 7.4%
Suites
Sleep 72.40 56.3% 40.77 69.96 53.6% 37.49 3.5% 270 bps 8.7%
Quality 69.46 51.6% 35.85 67.75 50.0% 33.86 2.5% 160 bps 5.9%
Clarion 74.94 49.4% 37.03 73.89 46.9% 34.64 1.4% 250 bps 6.9%
Econo Lodge 55.78 48.5% 27.05 54.71 47.5% 25.96 2.0% 100 bps 4.2%
Rodeway 53.36 50.8% 27.13 51.87 48.7% 25.27 2.9% 210 bps 7.4%
MainStay 69.34 70.4% 48.81 66.16 67.7% 44.80 4.8% 270 bps 9.0%
Suburban 41.61 69.7% 29.01 40.26 67.5% 27.15 3.4% 220 bps 6.9%
Ascend 113.33 64.4% 72.94 113.59 60.3% 68.44 (0.2%) 410 bps 6.6%
Collection
$ $ $ $
Total 73.60 55.5% 71.83 53.5% 2.5% 200 bps 6.2%
40.84 38.44
* Operating statistics represent hotel
operations from December through November
For the Three Months Ended For the Three Months Ended Change
December 31, 2012* December 31, 2011*
Average Average Average
Daily Daily Daily
Rate Occupancy RevPAR Rate Occupancy RevPAR Rate Occupancy RevPAR
$ $ $ $
Comfort Inn 81.67 60.0% 79.92 58.8% 2.2% 120 bps 4.3%
48.98 46.98
Comfort 85.01 61.4% 52.21 83.13 59.2% 49.23 2.3% 220 bps 6.1%
Suites
Sleep 72.70 56.5% 41.05 70.06 54.0% 37.80 3.8% 250 bps 8.6%
Quality 68.34 51.2% 35.02 67.17 50.2% 33.74 1.7% 100 bps 3.8%
Clarion 74.81 49.6% 37.12 74.27 47.6% 35.32 0.7% 200 bps 5.1%
Econo Lodge 55.84 48.0% 26.80 54.62 48.3% 26.37 2.2% (30) bps 1.6%
Rodeway 52.64 49.5% 26.07 51.12 49.1% 25.11 3.0% 40 bps 3.8%
MainStay 69.54 70.3% 48.85 66.12 69.7% 46.06 5.2% 60 bps 6.1%
Suburban 42.78 69.2% 29.61 40.31 66.6% 26.84 6.1% 260 bps 10.3%
Ascend 116.26 67.0% 77.86 122.22 61.0% 74.56 (4.9%) 600 bps 4.4%
Collection
$ $ $ $
Total 73.44 55.4% 71.98 54.2% 2.0% 120 bps 4.2%
40.68 39.03
* Operating statistics represent hotel
operations from September through November
For the Quarter Ended For the Year Ended
12/31/2012 12/31/2011 12/31/2012 12/31/2011
System-wide
effective 4.36% 4.31% 4.33% 4.32%
royalty
rate
CHOICE HOTELS INTERNATIONAL, INC. Exhibit
5
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA
(UNAUDITED)
December 31, December 31, Variance
2012 2011
Hotels Rooms Hotels Rooms Hotels Rooms % %
Comfort Inn 1,349 105,471 1,399 109,330 (50) (3,859) (3.6%) (3.5%)
Comfort 597 46,045 616 47,738 (19) (1,693) (3.1%) (3.5%)
Suites
Sleep 387 28,087 394 28,568 (7) (481) (1.8%) (1.7%)
Quality 1,152 98,078 1,047 91,502 105 6,576 10.0% 7.2%
Clarion 191 27,441 189 27,527 2 (86) 1.1% (0.3%)
Econo Lodge 817 49,951 797 49,483 20 468 2.5% 0.9%
Rodeway 410 23,370 388 21,627 22 1,743 5.7% 8.1%
MainStay 41 3,165 40 3,093 1 72 2.5% 2.3%
Suburban 63 7,291 60 7,126 3 165 5.0% 2.3%
Ascend 57 4,982 52 4,617 5 365 9.6% 7.9%
Collection
Cambria 19 2,221 19 2,215 - 6 0.0% 0.3%
Suites
Domestic 5,083 396,102 5,001 392,826 82 3,276 1.6% 0.8%
Franchises
International 1,160 103,151 1,177 104,379 (17) (1,228) (1.4%) (1.2%)
Franchises
Total 6,243 499,253 6,178 497,205 65 2,048 1.1% 0.4%
Franchises
Exhibit
6
CHOICE HOTELS INTERNATIONAL, INC.
SUPPLEMENTAL INFORMATION BY BRAND
DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS
(UNAUDITED)
For the Year Ended December 31, For the Year Ended December 31, % Change
2012 2011
New New New
Construction Conversion Total Construction Conversion Total Construction Conversion Total
Comfort 23 36 59 12 46 58 92% (22%) 2%
Inn
Comfort 12 5 17 12 4 16 0% 25% 6%
Suites
Sleep 25 2 27 9 2 11 178% 0% 145%
Quality - 170 170 - 80 80 NM 113% 113%
Clarion - 22 22 - 19 19 NM 16% 16%
Econo - 59 59 1 56 57 (100%) 5% 4%
Lodge
Rodeway - 71 71 - 49 49 NM 45% 45%
MainStay 12 1 13 6 3 9 100% (67%) 44%
Suburban 3 4 7 5 4 9 (40%) 0% (22%)
Ascend 4 17 21 2 14 16 100% 21% 31%
Collection
Cambria 7 - 7 8 - 8 (13%) NM (13%)
Suites
Total
Domestic 86 387 473 55 277 332 56% 40% 42%
System
For the Three Months Ended For the Three Months Ended % Change
December 31, 2012 December 31, 2011
New New New
Construction Conversion Total Construction Conversion Total Construction Conversion Total
Comfort 13 19 32 6 18 24 117% 6% 33%
Inn
Comfort 1 1 2 5 - 5 (80%) NM (60%)
Suites
Sleep 8 1 9 3 1 4 167% 0% 125%
Quality - 82 82 - 31 31 NM 165% 165%
Clarion - 8 8 - 7 7 NM 14% 14%
Econo - 26 26 1 20 21 (100%) 30% 24%
Lodge
Rodeway - 25 25 - 17 17 NM 47% 47%
MainStay 10 - 10 5 - 5 100% NM 100%
Suburban 2 3 5 3 2 5 (33%) 50% 0%
Ascend 3 9 12 - 5 5 NM 80% 140%
Collection
Cambria 3 - 3 4 - 4 (25%) NM (25%)
Suites
Total
Domestic 40 174 214 27 101 128 48% 72% 67%
System
Exhibit
7
CHOICE HOTELS INTERNATIONAL, INC.
DOMESTIC HOTEL 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, 2012 December 31, 2011
Units Units Conversion New Total
Construction
Conversion New Total Conversion New Total Units % Units % Units %
Construction Construction
Comfort 33 49 82 29 46 75 4 14% 3 7% 7 9%
Inn
Comfort 1 72 73 1 90 91 - 0% (18) (20%) (18) (20%)
Suites
Sleep Inn 1 43 44 1 49 50 - 0% (6) (12%) (6) (12%)
Quality 36 3 39 29 5 34 7 24% (2) (40%) 5 15%
Clarion 12 1 13 14 1 15 (2) (14%) - 0% (2) (13%)
Econo 24 - 24 25 2 27 (1) (4%) (2) (100%) (3) (11%)
Lodge
Rodeway 35 - 35 22 1 23 13 59% (1) (100%) 12 52%
MainStay - 25 25 2 28 30 (2) (100%) (3) (11%) (5) (17%)
Suburban 1 15 16 2 20 22 (1) (50%) (5) (25%) (6) (27%)
Ascend 11 7 18 6 4 10 5 83% 3 75% 8 80%
Collection
Cambria - 25 25 - 31 31 - NM (6) (19%) (6) (19%)
Suites
Total
Domestic 154 240 394 131 277 408 23 18% (37) (13%) (14) (3%)
Pipeline
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 8
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
(UNAUDITED)
CALCULATION OF FRANCHISING REVENUES AND
ADJUSTED FRANCHISING MARGINS
(dollar amounts in Three Months Ended Year Ended December
thousands) December 31, 31,
2012 2011 2012 2011
Franchising
Revenues:
$ $ $ $
Total Revenues
178,306 165,890 638,793
691,509
Adjustments:
Marketing
and reservation (100,160) (90,844) (384,784) (349,036)
revenues
Hotel (1,133) (1,183) (4,573) (4,356)
operations
$ $ $ $
Franchising
Revenues 77,013 73,863 285,401
302,152
Franchising
Margins:
Operating Margin:
$ $ $ $
Total Revenues
178,306 165,890 638,793
691,509
$ $ $ $
Operating Income
45,234 38,662 171,863
193,142
Operating 25.4% 23.3% 27.9% 26.9%
Margin
Adjusted
Franchising
Margin:
$ $ $ $
Franchising
Revenues 77,013 73,863 285,401
302,152
$ $ $ $
Operating Income
45,234 38,662 171,863
193,142
Employee
termination - 3,619 491 4,444
benefits
Loss on
settlement of 1,818 - 1,818 -
pension plan
Hotel operations (237) (310) (1,068) (890)
$ $ $ $
46,815 41,971 175,417
194,383
Adjusted
Franchising 60.8% 56.8% 64.3% 61.5%
Margins
CALCULATION OF ADJUSTED SELLING, GENERAL
AND ADMINISTRATIVE COSTS
(dollar amounts in Three Months Ended Year Ended December
thousands) December 31, 31,
2012 2011 2012 2011
Selling, general $ $ $ $
and administrative
expense 29,779 33,463 106,404
101,852
Employee
termination - (3,619) (491) (4,444)
benefits
Loss on
settlement of (1,818) - (1,818) -
pension plan
Adjusted Selling, $ $ $ $
General and
Administrative 27,961 29,844 101,960
Expense 99,543
CALCULATION OF ADJUSTED NET INCOME AND
ADJUSTED DILUTED EARNINGS PER SHARE
(EPS)
(In thousands, Three Months Ended Year Ended December
except per share December 31, 31,
amounts)
2012 2011 2012 2011
$ $ $ $
Net Income
24,451 24,786 110,396
120,687
Adjustments:
Employee
termination - 2,291 312 2,813
benefits
Less on
settlement of 1,774 - 1,774 -
pension plan
Loss on
extinguishment of - - 334 -
debt
Loss on land held - - - 1,119
for sale
$ $ $ $
Adjusted Net Income
26,225 27,077 114,328
123,107
Weighted average
shares 58,377 58,608 58,265 59,525
outstanding-diluted
$ $ $ $
Diluted Earnings
Per Share 0.42 1.85
0.42 2.07
Adjustments:
Employee
termination - 0.04 - 0.05
benefits
Loss on
settlement of 0.03 - 0.03 -
pension plan
Loss on
extinguishment of - - 0.01 -
debt
Loss on land held - - - 0.02
for sale
Adjusted Diluted $ $ $ $
Earnings Per Share
(EPS) 0.45 1.92
0.46 2.11
Adjusted EBITDA
Reconciliation
(in thousands)
Year Year
Ended Ended Full-Year 2013
Q4 2012 Q4 2011 December December Outlook
Actuals Actuals
31, 2012 31, 2011 Range
Actuals Actuals
$ $ $ $
Operating Income $ - $
(per GAAP) 45,234 38,662 171,863 205,100 207,100
193,142
Employee
termination - 3,619 491 4,444 - -
benefits
Loss on
settlement of 1,818 - 1,818 - - -
pension plan
Depreciation and 2,237 2,048 8,226 8,024 9,900 - 9,900
amortization
Adjusted Earnings
before interest, $ $ $ $
taxes, $ $
depreciation & 49,289 44,329 184,331 215,000 217,000
amortization 203,677
(non-GAAP)
SOURCE Choice Hotels International, Inc.
Website: http://www.choicehotels.com
Contact: David White, Senior Vice President, Chief Financial Officer &
Treasurer, +1-301-592-5117, or Robin Pence, Vice President, Public Relations,
+1-301-592-5186
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