Exhibit 99.1
For Immediate Release
CHOICE HOTELS REPORTS FIRST QUARTER 2007 DILUTED EPS OF $0.24,
DOMESTIC UNIT GROWTH OF 4.5%
Company Opens First Cambria Suites Hotel in Boise, Idaho
SILVER SPRING, Md. (April 25, 2007) – Choice Hotels International, Inc., (NYSE:CHH) today reported the following highlights for the first quarter 2007:
• | Diluted earnings per share (“EPS”) for first quarter 2007 were $0.24 compared to $0.26 in the same period of the prior year. Operating income for first quarter 2007 was $27.4 million compared to $30.1 million for first quarter 2006. First quarter 2007 results include termination benefits expense totaling $3.7 million (approximately $0.03 diluted EPS) resulting from previously announced separations of certain executive officers. |
• | Earnings before interest, taxes and depreciation (“EBITDA”) were $29.5 million for first quarter 2007, including the termination benefits expense described above, compared to $32.4 million for first quarter 2006. |
• | Domestic unit growth increased 4.5 percent in first quarter 2007. |
• | Domestic system-wide revenue per available room (RevPAR) increased 1.4% for the first quarter of 2007 compared to 9.4% for the first quarter of 2006. The first quarter 2006 RevPAR results include the Hurricane Katrina-induced favorable impact on property-level performance in the southern regions of the United States. Domestic RevPAR for the company’s mid-market brands (Comfort Inn, Comfort Suites and Sleep Inn) increased approximately 4% for the first quarter of 2007, with average daily rate increasing 5% for those brands. |
• | Executed 111 new domestic hotel franchise contracts with new construction contracts comprising 37% of executed agreements. |
• | The number of domestic hotels under construction, awaiting conversion or approved for development increased 28% to 833 hotels representing 64,078 rooms; the worldwide pipeline increased 25% to 903 hotels representing 70,541 rooms. |
• | Six domestic hotel franchise contracts were executed for the Cambria Suites brand during the first quarter of 2007, bringing the total to 49 executed since the brand introduction in early 2005. |
• | Franchising revenues increased 5% and total revenues increased 6% for first quarter 2007 compared to the same period of the prior year. |
• | Franchising margins for the three months ended March 31, 2007 were 51.0% compared to 59.1% for the first quarter of 2006. First quarter 2007 franchising margin reflects the impact of the $3.7 million of termination benefits described above and the commencement of direct franchising operations in continental Europe. |
• | The company purchased approximately 0.5 million shares of its common stock at an average price of $37.72 for a total cost of $17.8 million under its share repurchase program during the first quarter 2007. |
“During our first quarter, we were very pleased with our net domestic unit growth and the continued significant interest in our Cambria Suites brand among hotel developers,” said Charles A. Ledsinger, Jr., vice chairman and chief executive officer. “We recently surpassed the 50-contract milestone for the Cambria Suites brand, with the execution of franchise agreements to build two hotels in Toronto, the brand’s first international properties. Across our entire family of brands, we see tremendous opportunities for growth in 2007. Additionally, we remain committed to returning value to our shareholders through a combination of share repurchases and dividends.”
Items Affecting Comparability
Fourth Quarter 2006 Acquisition of Continental Europe Franchising Operations
During the fourth quarter of 2006, the company terminated the master franchising agreement covering continental Europe and acquired the direct franchising operations in this region from the former master franchisor. As a result of the acquisition, franchising revenues and selling, general and administrative costs for the three months ended March 31, 2007 increased approximately $0.7 million and $0.9 million, respectively, compared to first quarter 2006.
Outlook for 2007
The company’s second quarter 2007 diluted EPS is expected to be $0.41. The company expects full year 2007 diluted EPS of $1.61. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for full-year 2007 is expected to be approximately $187.5 million. These estimates include the following assumptions.
• | The company expects net domestic unit growth of approximately 4% in 2007; |
• | RevPAR is expected to increase approximately 3.5% for second quarter 2007 and approximately 4% for full-year 2007; |
• | The effective royalty rate is expected to increase 3 basis points for full-year 2007; |
• | All figures assume the existing share count and an effective tax rate of 36.7% for second quarter 2007 and 36% for full year 2007; |
• | All figures assume approximately $3.7 million ($0.03 diluted EPS) of termination benefits expense resulting from the previously announced separations of certain executive officers. |
Use of Free Cash Flow
The company has consistently used its free cash flow (cash flow from operations less capital expenditures) generated from its operations to return value to shareholders, primarily through share repurchases and dividends.
For the three months ended March 31, 2007, the company paid $9.9 million of cash dividends to shareholders. The annual dividend rate per common share is $0.60.
For the three months ended March 31, 2007, the company purchased approximately 0.5 million shares of its common stock at an average price of $37.72 for a total cost of $17.8 million under its share repurchase program. The company has authorization to purchase up to an additional 4.6 million shares under the share repurchase program. Repurchases will continue to be made in the open market and through privately negotiated transactions subject to market and other conditions. No minimum number of shares has been fixed. Since Choice announced its stock repurchase program on June 25, 1998, the company has repurchased 34.1 million shares of its common stock for a total cost of $729.7 million through March 31, 2007. Considering the effect of a two-for-one stock split in October 2005, the company has repurchased 67.1 million shares under the share repurchase program at an average price of $10.87 per share.
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.
Conference Call
Choice will conduct a conference call on Thursday, April 26, 2007 at 10:00 a.m. EDT to discuss the company’s first quarter results. The call-in number to listen to the call is 1-888-400-7916. International callers should dial 703-925-2612. The conference call also will be Web cast simultaneously via the company’s Web site, www.choicehotels.com. Interested investors and other parties wishing to access the call on the Web 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 audio of the call will be archived and available on www.choicehotels.com beginning at 1:30 p.m. EDT on April 26 and will be available through May 26 by calling 1-800-475-6701, access code 869362. International callers should dial 320-365-3844 and enter access code 869362.
About Choice Hotels
Choice Hotels International franchises more than 5,400 hotels, representing more than 440,000 rooms, in the United States and 39 countries and territories. As of March 31, 2007, 833 hotels are under development in the United States, representing 64,078 rooms, and an additional 70 hotels, representing 6,463 rooms, are under development in more than 15 countries and territories. The company’s Cambria Suites, Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn, MainStay Suites and Suburban Extended Stay Hotel brands serve guests worldwide.
Additional corporate information may be found on Choice Hotels’ Internet site, which may be accessed at www.choicehotels.com.
Forward-Looking Statements
Certain matters discussed in this press release may constitute forward-looking statements within the meaning of the federal securities law. Such statements are based on management’s beliefs, assumptions and expectations, which in turn are based on information currently available to management. Actual performance and results could differ from those expressed in or contemplated by the forward-looking statements due to a number of risks, uncertainties and other factors, many of which are beyond Choice’s ability to predict or control. The company’s Form 10-K for the year ended December 31, 2006 details some of the important risk factors that you should review.
Statement Concerning Non-GAAP Financial Measurements
Franchising revenues, franchising margins, and EBITDA are non-GAAP financial measurements. These financial measurements are presented as supplemental disclosures because they are used by management in reviewing and analyzing the company’s performance. 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 total revenues, operating income, and operating margins. The company’s calculation of these measurements may be different from the calculation used by other companies and therefore comparability may be limited. The company has included exhibits accompanying this release that reconcile these measures to the comparable GAAP measurement.
Contacts
David White, Chief Financial Officer
(301) 592-5117
David Peikin, Senior Director, Corporate Communications
(301) 592-6361
(301) 706-9996 (cell)
Cambria Suites, Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge, and Rodeway Inn are proprietary trademarks and service marks of Choice Hotels International, Inc.
© 2007 Choice Hotels International, Inc. All rights reserved.
Exhibit 1
Choice Hotels International, Inc.
Consolidated Statements of Income
(Unaudited)
Three Months Ended March 31, | |||||||||||||||
Variance | |||||||||||||||
(In thousands, except per share amounts) | 2007 | 2006 | $ | % | |||||||||||
REVENUES: | |||||||||||||||
Royalty fees | $ | 43,328 | $ | 39,864 | $ | 3,464 | 9 | % | |||||||
Initial franchise and relicensing fees | 4,931 | 5,643 | (712 | ) | (13 | )% | |||||||||
Brand solutions | 2,986 | 2,782 | 204 | 7 | % | ||||||||||
Marketing and reservation | 62,041 | 57,976 | 4,065 | 7 | % | ||||||||||
Hotel operations | 1,096 | 980 | 116 | 12 | % | ||||||||||
Other | 1,801 | 2,173 | (372 | ) | (17 | )% | |||||||||
Total revenues | 116,183 | 109,418 | 6,765 | 6 | % | ||||||||||
OPERATING EXPENSES: | |||||||||||||||
Selling, general and administrative | 23,900 | 18,275 | 5,625 | 31 | % | ||||||||||
Depreciation and amortization | 2,115 | 2,349 | (234 | ) | (10 | )% | |||||||||
Marketing and reservation | 62,041 | 57,976 | 4,065 | 7 | % | ||||||||||
Hotel operations | 741 | 745 | (4 | ) | (1 | )% | |||||||||
Total operating expenses | 88,797 | 79,345 | 9,452 | 12 | % | ||||||||||
Operating income | 27,386 | 30,073 | (2,687 | ) | (9 | )% | |||||||||
OTHER INCOME AND EXPENSES: | |||||||||||||||
Interest expense | 2,997 | 4,040 | (1,043 | ) | (26 | )% | |||||||||
Interest and other investment income | (601 | ) | (704 | ) | 103 | (15 | )% | ||||||||
Equity in net income of affiliates | (194 | ) | (258 | ) | 64 | (25 | )% | ||||||||
Total other income and expenses, net | 2,202 | 3,078 | (876 | ) | (28 | )% | |||||||||
Income before income taxes | 25,184 | 26,995 | (1,811 | ) | (7 | )% | |||||||||
Income taxes | 8,869 | 9,330 | (461 | ) | (5 | )% | |||||||||
Net income | $ | 16,315 | $ | 17,665 | $ | (1,350 | ) | (8 | )% | ||||||
Weighted average shares outstanding-basic | 65,782 | 64,781 | |||||||||||||
Weighted average shares outstanding-diluted | 67,048 | 66,728 | |||||||||||||
Basic earnings per share | $ | 0.25 | $ | 0.27 | $ | (0.02 | ) | (7 | )% | ||||||
Diluted earnings per share | $ | 0.24 | $ | 0.26 | $ | (0.02 | ) | (8 | )% | ||||||
Exhibit 2
Choice Hotels International, Inc.
Consolidated Balance Sheets
(In thousands) | March 31, 2007 | December 31, 2006 | ||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 35,380 | $ | 35,841 | ||||
Accounts receivable, net | 37,406 | 41,694 | ||||||
Deferred income taxes | 3,060 | 1,790 | ||||||
Other current assets | 6,930 | 7,757 | ||||||
Total current assets | 82,776 | 87,082 | ||||||
Fixed assets and intangibles, net | 143,770 | 144,124 | ||||||
Receivable — marketing fees | 12,172 | 6,662 | ||||||
Investments, employee benefit plans, at fair value | 35,415 | 31,529 | ||||||
Other assets | 31,137 | 33,912 | ||||||
Total assets | $ | 305,270 | $ | 303,309 | ||||
LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||
Current portion of long-term debt | $ | 146 | $ | 146 | ||||
Other current liabilities | 137,852 | 139,645 | ||||||
Total current liabilities | 137,998 | 139,791 | ||||||
Long-term debt | 184,370 | 172,390 | ||||||
Deferred compensation & retirement plan obligations | 39,687 | 40,101 | ||||||
Other liabilities | 13,704 | 13,407 | ||||||
Total liabilities | 375,759 | 365,689 | ||||||
Total shareholders’ deficit | (70,489 | ) | (62,380 | ) | ||||
Total liabilities and shareholders’ deficit | $ | 305,270 | $ | 303,309 | ||||
Exhibit 3
Choice Hotels International, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands) | Three months ended March 31, | |||||||
2007 | 2006 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 16,315 | $ | 17,665 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 2,115 | 2,349 | ||||||
Provision for bad debts | (570 | ) | (409 | ) | ||||
Non-cash stock compensation and other charges | 4,698 | 3,369 | ||||||
Non-cash interest and other income | (319 | ) | (505 | ) | ||||
Dividends received from equity method investees | 295 | 169 | ||||||
Equity in net income of affiliates | (194 | ) | (258 | ) | ||||
Changes in assets and liabilities, net of acquisitions: | ||||||||
Receivables | 4,995 | 3,231 | ||||||
Receivable—marketing and reservation fees, net | (7,131 | ) | (8,319 | ) | ||||
Accounts payable | (1,046 | ) | 5,785 | |||||
Accrued expenses and other | (11,502 | ) | (8,665 | ) | ||||
Income taxes payable | 3,914 | 708 | ||||||
Deferred income taxes | 299 | 1,799 | ||||||
Deferred revenue | 2,586 | 2,450 | ||||||
Other assets | 897 | 808 | ||||||
Other liabilities | 5,101 | 4,275 | ||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 20,453 | 24,452 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Investment in property and equipment | (3,020 | ) | (1,193 | ) | ||||
Acquisitions, net of cash acquired | (343 | ) | — | |||||
Purchases of investments | (4,496 | ) | (4,353 | ) | ||||
Proceeds from sales of investments | 961 | 859 | ||||||
Issuance of notes receivable | (131 | ) | (649 | ) | ||||
Collection of notes receivable | 306 | 190 | ||||||
Other items, net | (300 | ) | (228 | ) | ||||
NET CASH USED IN INVESTING ACTIVITIES | (7,023 | ) | (5,374 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Principal payments of long-term debt | (36 | ) | (37 | ) | ||||
Net (repayments) borrowings pursuant to revolving credit facility | 12,000 | (14,800 | ) | |||||
Excess tax benefits from stock-based compensation | 1,362 | 5,050 | ||||||
Purchase of treasury stock | (19,001 | ) | (1,277 | ) | ||||
Dividends paid | (9,895 | ) | (8,436 | ) | ||||
Proceeds from exercise of stock options | 1,679 | 3,437 | ||||||
NET CASH USED IN FINANCING ACTIVITIES | (13,891 | ) | (16,063 | ) | ||||
Net change in cash and cash equivalents | (461 | ) | 3,015 | |||||
Cash and cash equivalents at beginning of period | 35,841 | 16,921 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 35,380 | $ | 19,936 | ||||
EXHIBIT 4
CHOICE HOTELS INTERNATIONAL, INC.
SUPPLEMENTAL OPERATING INFORMATION
DOMESTIC HOTEL SYSTEM
(UNAUDITED)
For the Three Months Ended March 31, 2007 | For the Three Months Ended March 31, 2006 | Change | |||||||||||||||||||||||||||||
Average Daily Rate | Occupancy | RevPAR | Average Daily Rate | Occupancy | RevPAR | Average Daily Rate | Occupancy | RevPAR | |||||||||||||||||||||||
Comfort Inn | $ | 70.59 | 51.2 | % | $ | 36.11 | $ | 67.12 | 51.7 | % | $ | 34.70 | 5.2 | % | -50 | bps | 4.1 | % | |||||||||||||
Comfort Suites | 83.28 | 56.8 | % | 47.29 | 79.18 | 58.8 | % | 46.58 | 5.2 | % | -200 | bps | 1.5 | % | |||||||||||||||||
Sleep | 64.17 | 51.9 | % | 33.28 | 62.00 | 51.8 | % | 32.14 | 3.5 | % | 10 | bps | 3.5 | % | |||||||||||||||||
Midscale without Food & Beverage | 72.46 | 52.4 | % | 37.98 | 68.98 | 53.1 | % | 36.63 | 5.0 | % | -70 | bps | 3.7 | % | |||||||||||||||||
Quality | 63.45 | 43.4 | % | 27.54 | 61.79 | 44.9 | % | 27.77 | 2.7 | % | -150 | bps | (0.8 | )% | |||||||||||||||||
Clarion | 73.84 | 41.3 | % | 30.48 | 76.25 | 42.5 | % | 32.44 | (3.2 | )% | -120 | bps | (6.0 | )% | |||||||||||||||||
Midscale with Food & Beverage | 65.95 | 42.9 | % | 28.27 | 65.29 | 44.3 | % | 28.95 | 1.0 | % | -140 | bps | (2.3 | )% | |||||||||||||||||
Econo Lodge | 49.42 | 39.2 | % | 19.36 | 48.54 | 39.0 | % | 18.92 | 1.8 | % | 20 | bps | 2.3 | % | |||||||||||||||||
Rodeway | 47.67 | 38.5 | % | 18.37 | 46.80 | 39.0 | % | 18.23 | 1.9 | % | -50 | bps | 0.8 | % | |||||||||||||||||
Economy | 49.06 | 39.0 | % | 19.15 | 48.23 | 39.0 | % | 18.80 | 1.7 | % | 0 | bps | 1.9 | % | |||||||||||||||||
MainStay | 65.90 | 58.2 | % | 38.35 | 65.31 | 57.0 | % | 37.23 | 0.9 | % | 120 | bps | 3.0 | % | |||||||||||||||||
Suburban | 38.67 | 63.6 | % | 24.59 | 36.97 | 69.3 | % | 25.63 | 4.6 | % | -570 | bps | (4.1 | )% | |||||||||||||||||
Extended Stay | 44.11 | 62.4 | % | 27.54 | 41.64 | 66.9 | % | 27.88 | 5.9 | % | -450 | bps | (1.2 | )% | |||||||||||||||||
Total Domestic System | $ | 66.18 | 47.6 | % | $ | 31.52 | $ | 63.85 | 48.7 | % | $ | 31.08 | 3.6 | % | -110 | bps | 1.4 | % | |||||||||||||
For the Quarter Ended | ||||||
3/31/2007 | 3/31/2006 | |||||
System-wide effective royalty rate | 4.14 | % | 4.07 | % |
EXHIBIT 5
CHOICE HOTELS INTERNATIONAL, INC.
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA
(UNAUDITED)
March 31, 2007 | March 31, 2006 | Variance | ||||||||||||||||||
Hotels | Rooms | Hotels | Rooms | Hotels | Rooms | % | % | |||||||||||||
Comfort Inn | 1,421 | 110,980 | 1,418 | 111,032 | 3 | (52 | ) | 0.2 | % | (0.0 | )% | |||||||||
Comfort Suites | 442 | 34,649 | 415 | 32,666 | 27 | 1,983 | 6.5 | % | 6.1 | % | ||||||||||
Sleep | 330 | 24,772 | 322 | 24,384 | 8 | 388 | 2.5 | % | 1.6 | % | ||||||||||
Midscale without Food & Beverage | 2,193 | 170,401 | 2,155 | 168,082 | 38 | 2,319 | 1.8 | % | 1.4 | % | ||||||||||
Quality | 757 | 74,036 | 670 | 66,657 | 87 | 7,379 | 13.0 | % | 11.1 | % | ||||||||||
Clarion | 161 | 23,881 | 151 | 23,157 | 10 | 724 | 6.6 | % | 3.1 | % | ||||||||||
Midscale with Food & Beverage | 918 | 97,917 | 821 | 89,814 | 97 | 8,103 | 11.8 | % | 9.0 | % | ||||||||||
Econo Lodge | 812 | 49,202 | 818 | 50,144 | (6 | ) | (942 | ) | (0.7 | )% | (1.9 | )% | ||||||||
Rodeway | 240 | 14,930 | 185 | 11,387 | 55 | 3,543 | 29.7 | % | 31.1 | % | ||||||||||
Economy | 1,052 | 64,132 | 1,003 | 61,531 | 49 | 2,601 | 4.9 | % | 4.2 | % | ||||||||||
MainStay | 30 | 2,237 | 27 | 2,047 | 3 | 190 | 11.1 | % | 9.3 | % | ||||||||||
Suburban | 61 | 8,088 | 64 | 8,460 | (3 | ) | (372 | ) | (4.7 | )% | (4.4 | )% | ||||||||
Extended Stay | 91 | 10,325 | 91 | 10,507 | — | (182 | ) | 0.0 | % | (1.7 | )% | |||||||||
Domestic Franchises | 4,254 | 342,775 | 4,070 | 329,934 | 184 | 12,841 | 4.5 | % | 3.9 | % | ||||||||||
International Franchises | 1,152 | 98,481 | 1,168 | 98,456 | (16 | ) | 25 | (1.4 | )% | 0.0 | % | |||||||||
Total Franchises | 5,406 | 441,256 | 5,238 | 428,390 | 168 | 12,866 | 3.2 | % | 3.0 | % | ||||||||||
EXHIBIT 6
CHOICE HOTELS INTERNATIONAL, INC.
SUPPLEMENTAL INFORMATION BY BRAND
DEVELOPMENT RESULTS — NEW HOTEL CONTRACTS
(UNAUDITED)
For the Three Months Ended March 31, 2007 | For the Three Months Ended March 31, 2006 | % Change | |||||||||||||||||||
New Construction | Conversion | Total | New Construction | Conversion | Total | New Construction | Conversion | Total | |||||||||||||
Comfort Inn | 5 | 3 | 8 | 15 | 13 | 28 | (67 | )% | (77 | )% | (71 | )% | |||||||||
Comfort Suites | 14 | 1 | 15 | 12 | — | 12 | 17 | % | NM | 25 | % | ||||||||||
Sleep | 8 | — | 8 | 3 | — | 3 | 167 | % | NM | 167 | % | ||||||||||
Midscale without Food & Beverage | 27 | 4 | 31 | 30 | 13 | 43 | (10 | )% | (69 | )% | (28 | )% | |||||||||
Quality | 1 | 35 | 36 | 2 | 25 | 27 | (50 | )% | 40 | % | 33 | % | |||||||||
Clarion | 2 | 6 | 8 | 1 | 9 | 10 | 100 | % | (33 | )% | (20 | )% | |||||||||
Midscale w/ Food & Beverage | 3 | 41 | 44 | 3 | 34 | 37 | 0 | % | 21 | % | 19 | % | |||||||||
Econo Lodge | 1 | 13 | 14 | — | 9 | 9 | NM | 44 | % | 56 | % | ||||||||||
Rodeway | — | 11 | 11 | — | 15 | 15 | NM | (27 | )% | (27 | )% | ||||||||||
Economy | 1 | 24 | 25 | — | 24 | 24 | NM | 0 | % | 4 | % | ||||||||||
MainStay | — | — | — | 2 | 1 | 3 | (100 | )% | (100 | )% | (100 | )% | |||||||||
Suburban | 4 | 1 | 5 | 3 | — | 3 | 33 | % | NM | 67 | % | ||||||||||
Extended Stay | 4 | 1 | 5 | 5 | 1 | 6 | (20 | )% | 0 | % | (17 | )% | |||||||||
Cambria Suites | 6 | — | 6 | 10 | — | 10 | (40 | )% | NM | (40 | )% | ||||||||||
Total Domestic System | 41 | 70 | 111 | 48 | 72 | 120 | (15 | )% | (3 | )% | (8 | )% | |||||||||
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.
March 31, 2007 Units | March 31, 2006 Units | Variance | ||||||||||||||||||||||||||||
Conversion | New Construction | Total | ||||||||||||||||||||||||||||
Conversion | New Construction | Total | Conversion | New Construction | Total | Units | % | Units | % | Units | % | |||||||||||||||||||
Comfort Inn | 35 | 120 | 155 | 46 | 95 | 141 | (11 | ) | -24 | % | 25 | 26 | % | 14 | 10 | % | ||||||||||||||
Comfort Suites | 3 | 232 | 235 | 2 | 181 | 183 | 1 | 50 | % | 51 | 28 | % | 52 | 28 | % | |||||||||||||||
Sleep Inn | — | 123 | 123 | — | 86 | 86 | — | NM | 37 | 43 | % | 37 | 43 | % | ||||||||||||||||
Midscale without Food & Beverage | 38 | 475 | 513 | 48 | 362 | 410 | (10 | ) | -21 | % | 113 | 31 | % | 103 | 25 | % | ||||||||||||||
Quality | 74 | 9 | 83 | 61 | 11 | 72 | 13 | 21 | % | (2 | ) | -18 | % | 11 | 15 | % | ||||||||||||||
Clarion | 13 | 4 | 17 | 18 | 5 | 23 | (5 | ) | -28 | % | (1 | ) | -20 | % | (6 | ) | -26 | % | ||||||||||||
Midscale with Food & Beverage | 87 | 13 | 100 | 79 | 16 | 95 | 8 | 10 | % | (3 | ) | -19 | % | 5 | 5 | % | ||||||||||||||
Econo Lodge | 45 | 5 | 50 | 28 | 7 | 35 | 17 | 61 | % | (2 | ) | -29 | % | 15 | 43 | % | ||||||||||||||
Rodeway | 57 | 2 | 59 | 44 | — | 44 | 13 | 30 | % | 2 | NM | 15 | 34 | % | ||||||||||||||||
Economy | 102 | 7 | 109 | 72 | 7 | 79 | 30 | 42 | % | — | 0 | % | 30 | 38 | % | |||||||||||||||
MainStay | — | 30 | 30 | 1 | 32 | 33 | (1 | ) | -100 | % | (2 | ) | -6 | % | (3 | ) | -9 | % | ||||||||||||
Suburban | 5 | 27 | 32 | 1 | 12 | 13 | 4 | 400 | % | 15 | 125 | % | 19 | 146 | % | |||||||||||||||
Extended Stay | 5 | 57 | 62 | 2 | 44 | 46 | 3 | 150 | % | 13 | 30 | % | 16 | 35 | % | |||||||||||||||
Cambria Suites | — | 49 | 49 | — | 23 | 23 | — | NM | 26 | 113 | % | 26 | 113 | % | ||||||||||||||||
232 | 601 | 833 | 201 | 452 | 653 | 31 | 15 | % | 149 | 33 | % | 180 | 28 | % | ||||||||||||||||
EXHIBIT 8
CHOICE HOTELS INTERNATIONAL, INC.
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
(UNAUDITED)
CALCULATION OF FRANCHISING REVENUES AND FRANCHISING MARGINS
Three Months Ended March 31, | ||||||||
(dollar amounts in thousands) | 2007 | 2006 | ||||||
Franchising Revenues: | ||||||||
Total Revenues | $ | 116,183 | $ | 109,418 | ||||
Adjustments: | ||||||||
Marketing and reservation revenues | (62,041 | ) | (57,976 | ) | ||||
Hotel Operations | (1,096 | ) | (980 | ) | ||||
Franchising Revenues | $ | 53,046 | $ | 50,462 | ||||
Franchising Margins: | ||||||||
Operating Margin: | ||||||||
Total Revenues | $ | 116,183 | $ | 109,418 | ||||
Operating Income* | $ | 27,386 | $ | 30,073 | ||||
Operating Margin | 23.6 | % | 27.5 | % | ||||
Franchising Margin: | ||||||||
Franchising Revenues | $ | 53,046 | $ | 50,462 | ||||
Operating Income* | $ | 27,386 | $ | 30,073 | ||||
Less: Hotel Operations | 355 | 235 | ||||||
$ | 27,031 | $ | 29,838 | |||||
Franchising Margins* | 51.0 | % | 59.1 | % | ||||
EBITDA Reconciliation
(in millions) | Q1 2007 Actuals | Q1 2006 Actuals | Full-Year 2007 Outlook | ||||||
Operating Income (per GAAP)* | $ | 27.4 | $ | 30.1 | $ | 178.0 | |||
Depreciation and amortization | 2.1 | 2.3 | 9.5 | ||||||
Earnings before interest, taxes, depreciation & amortization (non-GAAP) (“EBITDA”)* | $ | 29.5 | $ | 32.4 | $ | 187.5 | |||
* | 2007 Franchising margins, operating income and EBITDA include approximately $3.7 million of severance costs related to the previously announced termination of certain executive officers. |