EXTENDED STAY AMERICA ANNOUNCES THIRD QUARTER 2016 RESULTS
-Third Quarter Net Income of $57.1 million
-Third Quarter Adjusted EBITDA1 of $185.7 million
-Third Quarter Total Revenues of $354.5 million
-Third Quarter Comparable Hotel2 Total Revenues Increase 3.9%
-Third Quarter Comparable Hotel Operating Margin1 Expands 150 basis points
-Updates 2016 Guidance
CHARLOTTE, N.C. - October 25, 2016 (BUSINESS WIRE) - Extended Stay America, Inc. and ESH Hospitality, Inc. (NYSE:STAY) (together, the “Company”) today announced consolidated results for the quarter ended September 30, 2016.
Third Quarter 2016 Highlights
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| • | Comparable Hotel total revenues grew 3.9% to $354.5 million |
| |
| • | Comparable Hotel Revenue Per Available Room (“RevPAR”) grew 3.7% to $54.65 |
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| • | Comparable Hotel Adjusted EBITDA increased 7.4% to $185.7 million |
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| • | Adjusted Paired Share Income1 of $71.5 million, or $0.36 per diluted Paired Share1 |
Nine Months 2016 Highlights
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| • | Comparable Hotel total revenues grew 4.4% to $974.9 million |
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| • | Comparable Hotel RevPAR grew 3.9% to $50.47 |
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| • | Comparable Hotel Adjusted EBITDA increased 4.7% to $473.2 million |
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| • | Adjusted Paired Share Income of $160.3 million, or $0.79 per diluted Paired Share |
Extended Stay America’s Chief Executive Officer, Gerry Lopez, commented, “We were pleased with our performance in the third quarter, as our RevPAR growth ran ahead of our closest competitive chain-scales - Economy and Midscale - as well as above the industry. We were able to show property level flow through over 90%, driving strong EBITDA growth and expanding Comparable Hotel Operating Margin by 150 basis point.”
1 See “Disclosure Regarding Non-GAAP Financial Measures” for an explanation of non-GAAP measures included herein (i.e., EBITDA, Adjusted EBITDA, Hotel Operating Profit, Hotel Operating Margin, Paired Share Income, Adjusted Paired Share Income and Adjusted Paired Share Income per Paired Share).
2 Comparable Hotels include 629 Extended Stay America and Extended Stay Canada-branded hotels owned and operated for the three and nine months ended September 30, 2016 and 2015.
Mr. Lopez continued, “In addition to our strong financial and operating performance during the quarter, we were pleased to make progress on other initiatives. These included refinancing the balance sheet with flexible, long dated, low cost debt, and providing strong capital returns through both dividends and share repurchases. We also began to execute on our real estate monetization strategy we discussed at our Investor Day earlier this year. Lastly, we were very gratified that corporate travel managers voted us the #1 mid-priced extended stay hotel brand this year with Business Travel News, showing the strong progress we have made with corporate guests.”
Financial and Operating Results
Total revenues for the three months ended September 30, 2016 were $354.5 million while Comparable Hotel total revenues increased by 3.9% over the same period in 2015. Total revenues for the nine months ended September 30, 2016 were $974.9 million while Comparable Hotel total revenues increased by 4.4% over the same period in 2015.
RevPAR for the three months ended September 30, 2016 grew 7.5% over the same period in 2015, driven by an improvement in average daily rate (“ADR”) of 6.0%. Occupancy increased to 79.4% compared to 78.3% in the same period in 2015. Comparable Hotel RevPAR grew 3.7% during the quarter to $54.65 driven by a 2.4% increase in ADR and a 100 basis point increase in occupancy. RevPAR for the nine months ended September 30, 2016 increased 7.5% over the same period in 2015, driven by a 7.6% increase in ADR. Occupancy declined to 75.2% compared to 75.3% in the same period in 2015. Comparable Hotel RevPAR grew 3.9% during the first nine months of the year to $50.47 driven by a 4.0% increase in ADR, partially offset by a 10 basis point decrease in occupancy.
Hotel Operating Margin for the three months ended September 30, 2016 was 58.4% compared to 56.2% in the same period in 2015. Comparable Hotel Operating Margin increased 150 basis points over the same period in 2015. Comparable Hotel operating margin flow-through, defined as the change in Comparable Hotel Operating Profit1 divided by the change in Comparable Hotel total revenues, was 94.7%. Comparable Hotel Operating Margin for the nine months ended September 30, 2016 was 55.1% compared to 55.4% in the same period in 2015.
Net income for the three months ended September 30, 2016 was $57.1 million compared to $58.2 million in the same period in 2015. Net income decreased due to the 53 hotel portfolio sale in December 2015, an increase in depreciation expense due to renovations, and higher interest expense due to debt extinguishment costs related to our refinancing activity during the quarter, partially offset by a decrease in income tax expense. Income tax expense for the three months ended September 30, 2016 was $15.9 million compared to $21.3 million in the same period in 2015. Net income for the nine months ended September 30, 2016 was $133.2 million compared to $150.9 million in the same period in 2015. Income tax expense for the nine months ended September 30, 2016 was $26.2 million compared to $48.1 million in the same period in 2015.
Adjusted EBITDA for the three months ended September 30, 2016 was $185.7 million. Adjusted EBITDA excludes non-cash equity-based compensation of $3.0 million, an impairment charge of $2.8 million, and loss on disposal of assets and other net expenses of $2.4 million. Comparable Hotel Adjusted EBITDA increased $12.8 million or 7.4% during the quarter over the same period in 2015. Adjusted EBITDA for the nine months ended September 30, 2016 was $473.2 million. Adjusted EBITDA excludes non-cash equity based compensation of $8.6 million, an impairment charge of $2.8 million, loss on disposal of assets and other net expenses of $6.6 million. Comparable Hotel Adjusted EBITDA increased $21.4 million or 4.7% during the nine months ended September 30, 2016 over the same period in 2015.
Adjusted Paired Share Income for the three months ended September 30, 2016 was $71.5 million, or $0.36 per diluted Paired Share, compared to $66.6 million, or $0.33 per diluted Paired Share, in the same period in 2015. Adjusted Paired Share Income for the nine months ended September 30, 2016 was $160.3 million, or $0.79 per diluted Paired Share, compared to $163.8 million, or $0.80 per diluted Paired Share, in the same period in 2015. Adjusted Paired Share Income, a non-GAAP measure, represents net income, as adjusted, attributable to the consolidated enterprise, whose representative equity security is a Paired Share. A Paired Share entitles its holder to participate in 100% of the common equity and earnings of both Extended Stay America, Inc. and ESH Hospitality, Inc.
Capital and Asset Sales
The Company invested $56.5 million in capital expenditures during the third quarter of 2016 which includes $23.9 million in renovation capital and $28.9 million in maintenance capital. The Company completed 17 hotel renovations in the third quarter of 2016, bringing the total number of renovated hotels to 547. For the nine months ended September 30, 2016, the Company invested $166.5 million in capital expenditures.
In October, the Company executed a purchase and sale agreement to divest one property for $44.8 million. The Company expects to lease back the property at nominal rent for approximately 18 to 24 months and expects to receive all operating income from this hotel in 2017. This transaction is currently in due diligence and the Company expects it to close in December 2016. Separately, the Company has executed a purchase and sale agreement to divest its three Extended Stay Canada hotels for CAD $76.0 million. This transaction is also in due diligence and the Company expects it to close in the first quarter of 2017.
Distribution and Share Repurchases
On October 25, 2016, the Boards of Directors of Extended Stay America, Inc. and ESH Hospitality, Inc., declared cash distributions totaling $0.19 per Paired Share for the third quarter of 2016. The distributions are payable on November 22, 2016 to shareholders of record as of November 8, 2016.
During the third quarter of 2016, the Company repurchased approximately 0.6 million Paired Shares for an aggregate purchase price of approximately $9.2 million. The Company also announced the purchase of 1.95 million Paired Shares for $27.6 million on September 29, 2016 that closed on October 4, 2016. As of October 24, 2016 the Company had $102.8 million in repurchase authorization remaining.
2016 Outlook
The Company’s outlook for 2016 is updated as follows:
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| | | | | | | | | | | | | | | | | | | |
| Full Year 2016 | | Updated Outlook | | Previous Outlook | |
| in millions, except % | Low | | High | | Low | | High | |
| | | | | | | | | |
| Total Revenues | $ | 1,261 | | $ | 1,267 | | $ | 1,257 | | $ | 1,272 | |
Comparable Hotel Revenue % Δ | | 3.6% | | | 4.1% | | | 3.25% | | | 4.5% | |
| Net Income | $ | 153 | | $ | 166 | | | $ | 162 | | $ | 188 | |
| Adjusted EBITDA | $ | 601 | | $ | 606 | | | $ | 595 | | $ | 610 | |
Comparable Hotel Adjusted EBITDA % Δ | 4.7 % | | 5.6% | | 3.6% | | 6.2% | |
| Depreciation and Amortization | $ | 218 | | $ | 223 | | | $ | 215 | | $ | 220 | | | | |
| Net Interest Expense | $ | 164 | | $ | 166 | | | $ | 153 | | $ | 158 | | | | |
| Effective Tax Rate | | 17.5% | | | 18.5% | | | | 15.0% | | | 16.0% | | | | |
| Capital Expenditures | $ | 220 | | $ | 235 | | | $ | 240 | | $ | 260 | | | | |
| Renovation Capital | $ | 100 | | $ | 110 | | | $ | 120 | | $ | 135 | | | | |
Webcast and Conference Call Details
The Company will host a conference call on Tuesday, October 25, 2016 at 8:30 a.m. Eastern Time. The conference call will be webcast simultaneously in the Investor Relations section of the Company’s website at www.aboutstay.com. A replay of the call will be available for 90 days following the webcast on the Company’s website.
Alternatively, the conference call can be accessed by dialing 1-877-705-6003 for domestic callers or 1-201-493-6725 for international callers. A telephone replay will be available from shortly after the call until November 8, 2016, and can be accessed by dialing 1-877-870-5176 for domestic callers or 1-858-384-5517 for international callers. The passcode for the replay is 13647092.
Disclosure Regarding Non-GAAP Financial Measures
EBITDA, Adjusted EBITDA, Hotel Operating Profit, Hotel Operating Margin, Paired Share Income, Adjusted Paired Share Income and Adjusted Paired Share Income per Paired Share, which are detailed in the reconciliation tables that accompany this release, are used by the Company as supplemental performance measures. The Company believes these financial measures, including those provided on a Comparable Hotel basis, provide useful information to investors regarding our results of operations and allow investors to evaluate the ongoing operating performance of our hotels and facilitate comparisons between the Company and other lodging companies, hotel owners and capital-intensive companies.
EBITDA, Adjusted EBITDA, Hotel Operating Profit, Hotel Operating Margin, Paired Share Income, Adjusted Paired Share Income and Adjusted Paired Share Income per Paired Share are not recognized terms under U.S. GAAP. EBITDA, Adjusted EBITDA, Hotel Operating Profit, Hotel Operating Margin, Paired Share Income, Adjusted Paired Share Income and Adjusted Paired Share Income per Paired Share as presented may not be comparable to measures calculated by other companies. These measures should not be considered as alternative measures of operating profit, net income, net income per share or cash flow provided by operating activities calculated in accordance with U.S. GAAP. The Company’s presentation of EBITDA, Adjusted EBITDA, Hotel Operating Profit, Hotel Operating Margin, Paired Share Income, Adjusted Paired Share Income and Adjusted Paired Share Income per Paired Share does not replace the presentation of the Company’s consolidated financial results prepared in accordance with U.S. GAAP.
Forward Looking Statements
This release contains forward-looking statements within the meaning of the federal securities laws. Statements related to, among other things, future financial performance, including our 2016 outlook, expected performance, free cash flow, debt reduction, distribution growth and other growth opportunities, as such, involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results or performance to differ from those projected in the forward-looking statements, possibly materially. For a description of factors that may cause the Company’s actual results or performance to differ from future results or performance implied by forward-looking statements, please review the information under the headings “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” included in the Company’s combined annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 23, 2016 and other documents of the Company on file with or furnished to the SEC. Any forward-looking statements made in this release are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, will have the expected consequences to, or effects on, the Company, its business or operations. Except as required by law, the Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. We caution you that actual results may differ materially from what is expressed, implied or forecasted by the Company’s forward-looking statements.
About Extended Stay America
Extended Stay America, Inc., the largest owner/operator of company-branded hotels in North America, owns and operates 629 hotels in the U.S. and Canada comprising approximately 69,400 rooms and employs over 8,400 employees at its hotel properties and headquarters. The Company’s core brand, Extended Stay America®, serves the mid-priced extended stay segment. Visit www.esa.com for more information about the Company and its services.
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| Contacts | | | | |
Investors: | Media: | | | |
| Rob Ballew | Terry Atkins | | | |
| (980) 345-1546 | (980) 345-1648 | | | |
investorrelations@esa.com | tatkins@esa.com | | | |
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| EXTENDED STAY AMERICA, INC. |
| CONSOLIDATED STATEMENTS OF OPERATIONS |
| FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015 |
| (In thousands) |
| (Unaudited) |
| | | | | | | | | | | | | |
| Three Months Ended | | | | Nine Months Ended |
| September 30, | | | | September 30, |
| 2016 | | 2015 | | % Variance | | | | 2016 | | 2015 | | % Variance |
| | | | | | | REVENUES: | | | | | | |
| $ | 349,076 |
| | $ | 355,445 |
| | (1.8)% | | Room revenues | | $ | 960,046 |
| | $ | 974,127 |
| | (1.4)% |
| 5,445 |
| | 5,071 |
| | 7.4% | | Other hotel revenues | | 14,822 |
| | 14,291 |
| | 3.7% |
| | | | | | | | | | | | | |
| 354,521 |
| | 360,516 |
| | (1.7)% | | Total revenues | | 974,868 |
| | 988,418 |
| | (1.4)% |
| | | | | | | | | | | | | |
| | | | | | | OPERATING EXPENSES: | | | | | | |
| 149,860 |
| | 159,049 |
| | (5.8)% | | Hotel operating expenses | | 444,498 |
| | 450,543 |
| | (1.3)% |
| 24,612 |
| | 24,373 |
| | 1.0% | | General and administrative expenses | | 73,552 |
| | 73,909 |
| | (0.5)% |
| 55,955 |
| | 52,268 |
| | 7.1% | | Depreciation and amortization | | 164,274 |
| | 151,980 |
| | 8.1% |
| 2,756 |
| | 9,011 |
| | (69.4)% | | Impairment of long-lived assets | | 2,756 |
| | 9,011 |
| | (69.4)% |
| | | | | | | | | | | | | |
| 233,183 |
| | 244,701 |
| | (4.7)% | | Total operating expenses | | 685,080 |
| | 685,443 |
| | (0.1)% |
| | | | | | | | | | | | | |
| 2 |
| | 3 |
| | (33.3)% | | OTHER INCOME | | 20 |
| | 44 |
| | (54.5)% |
| | | | | | | | | | | | | |
| 121,340 |
| | 115,818 |
| | 4.8% | | INCOME FROM OPERATIONS | | 289,808 |
| | 303,019 |
| | (4.4)% |
| | | | | | | | | | | | | |
| (305 | ) | | 1,143 |
| | (126.7)% | | OTHER NON-OPERATING (INCOME) EXPENSE | | (1,069 | ) | | 2,035 |
| | (152.5)% |
| | | | | | | | | | | | | |
| 48,713 |
| | 35,157 |
| | 38.6% | | INTEREST EXPENSE, NET | | 131,462 |
| | 101,975 |
| | 28.9% |
| | | | | | | | | | | | | |
| 72,932 |
| | 79,518 |
| | (8.3)% | | INCOME BEFORE INCOME TAX EXPENSE | | 159,415 |
| | 199,009 |
| | (19.9)% |
| | | | | | | | | | | | | |
| 15,867 |
| | 21,293 |
| | (25.5)% | | INCOME TAX EXPENSE | | 26,211 |
| | 48,119 |
| | (45.5)% |
| | | | | | | | | | | | | |
| 57,065 |
| | 58,225 |
| | (2.0)% | | NET INCOME | | 133,204 |
| | 150,890 |
| | (11.7)% |
| | | | | | | | | | | | | |
| (10,509 | ) | | (20,569 | ) | | (48.9)% | | NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS (1) | | (8,873 | ) | | (33,703 | ) | | (73.7)% |
| | | | | | | | | | | | | |
| $ | 46,556 |
| | $ | 37,656 |
| | 23.6% | | NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | | $ | 124,331 |
| | $ | 117,187 |
| | 6.1% |
| | | | | | | | | | | | | |
| $ | 0.23 |
| | $ | 0.18 |
| | | | NET INCOME PER COMMON SHARE - DILUTED | | $ | 0.61 |
| | $ | 0.57 |
| | |
| | | | | | | | | | | | | |
| 200,696 |
| | 204,685 |
| | | | WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING - DILUTED | | 202,252 |
| | 204,538 |
| | |
| | | | | | | | | | | | | |
(1) Noncontrolling interest in Extended Stay America, Inc. include approximately 45% of ESH REIT's common equity. | | |
| | | | | | | | | | | | | |
| | | | | | | CONSOLIDATED BALANCE SHEET DATA | | |
| | | | | | | AS OF SEPTEMBER 30, 2016 AND DECEMBER 31, 2015 | | |
| | | | | | | (In thousands) | | |
| | | | | | | (Unaudited) | | |
| | | | | | | | | | | | | |
| | | | | | | | | September 30, | | December 31, | | |
| | | | | | | | | 2016 | | 2015 | | |
| | | | | | | Cash and cash equivalents | | $ | 149,835 |
| | $ | 373,239 |
| | |
| | | | | | | Restricted cash | | $ | 21,576 |
| | $ | 84,416 |
| | |
| | | | | | | Total assets | | $ | 4,256,936 |
| | $ | 4,528,900 |
| | |
| | | | | | | Total debt, net of unamortized deferred financing costs and debt discount (1) | | $ | 2,587,901 |
| | $ | 2,783,590 |
| | |
| | | | | | | Total equity | | $ | 1,447,693 |
| | $ | 1,488,357 |
| | |
| | | | | | | | | | | | | |
| | | | | | | (1) Unamortized deferred financing costs and debt discounts totaled approximately $58.3 million and $35.2 million as of September 30, 2016 and December 31, 2015, respectively. | | |
| | | | | | | | |
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| | | | | | | | | | | | | | | |
| | EXTENDED STAY AMERICA, INC. |
| | OPERATING METRICS |
| | FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015 |
| | (Unaudited) |
| | | | | | | | | | | | | | |
| | Three Months Ended | | | | Nine Months Ended |
| | September 30, | | | | September 30, |
| | 2016 | | 2015 | | Variance | | | | 2016 | | 2015 | | Variance |
| | 629 | | 682 | | (53) | | Number of hotels (as of September 30) (1) | | 629 | | 682 | | (53) |
| | 69,383 | | 76,000 | | (6,617) | | Number of rooms (as of September 30) (1) | | 69,383 | | 76,000 | | (6,617) |
| | 79.4% | | 78.3% | | 110 bps | | Occupancy | | 75.2% | | 75.3% | | (10) bps |
| | $68.84 | | $64.95 | | 6.0% | | ADR | | $67.09 | | $62.38 | | 7.6% |
| | $54.65 | | $50.83 | | 7.5% | | RevPAR | | $50.47 | | $46.95 | | 7.5% |
| | | | | | | | | | | | | | |
| | | | | | | | Hotel Inventory (as of September 30): | | | | | | |
| | 547 | | 413 | | 134 |
| | Renovated Extended Stay America (2) | | 547 | | 413 | | 134 |
|
| | 82 | | 222 | | (140 | ) | | Unrenovated Extended Stay America and other (1) | | 82 | | 222 | | (140 | ) |
| | — | | 47 | | (47 | ) | | Crossland Economy Studios (1) | | — | | 47 | | (47 | ) |
| | 629 | | 682 | | (53 | ) | | Total number of hotels | | 629 | | 682 | | (53 | ) |
| | | | | | | | | | | | | | |
| | | | | | | | Renovation Displacement Data (in thousands, except percentages): | | | | | | |
| | 6,383 | | 6,993 | | (610 | ) | | Total available room nights | | 19,015 | | 20,747 | | (1,732 | ) |
| | 64 | | 128 | | (64 | ) | | Room nights displaced from renovation | | 243 | | 231 | | 12 |
|
| | 1.0% | | 1.8% | | (80 | ) bps | | % of available room nights displaced | | 1.3% | | 1.1% | | 20 | bps |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | COMPARABLE HOTEL OPERATING METRICS (3) |
| | FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015 |
| | (Unaudited) |
| | | | | | | | | | | | | | |
| | Three Months Ended | | | | Nine Months Ended |
| | September 30, | | | | September 30, |
| | 2016 | | 2015 | | Variance | | | | 2016 | | 2015 | | Variance |
| | 629 | | 629 | | — | | Number of hotels | | 629 | | 629 | | — |
| | 69,383 | | 69,383 | | — | | Number of rooms | | 69,383 | | 69,383 | | — |
| | 79.4% | | 78.4% | | 100 bps | | Comparable Hotel Occupancy | | 75.2% | | 75.3% | | (10) bps |
| | $68.84 | | $67.22 | | 2.4% | | Comparable Hotel ADR | | $67.09 | | $64.54 | | 4.0% |
| | $54.65 | | $52.70 | | 3.7% | | Comparable Hotel RevPAR | | $50.47 | | $48.59 | | 3.9% |
| | | | | | | | | | | | | | |
| | | | | | | | Comparable Hotel Inventory: | | | | | | |
| | 547 | | 413 | | 134 |
| | Renovated Extended Stay America (2) | | 547 | | 413 | | 134 |
|
| | 82 | | 216 | | (134 | ) | | Unrenovated Extended Stay America and other | | 82 | | 216 | | (134 | ) |
| | 629 | | 629 | | — |
| | Comparable Hotel number of hotels | | 629 | | 629 | | — |
|
| | | | | | | | | | | | | | |
| | | | | | | | Comparable Hotel Renovation Displacement Data (in thousands, except percentages): | | | | | | |
| | 6,383 | | 6,383 | | — |
| | Comparable Hotel available room nights | | 19,015 | | 18,944 | | 71 |
|
| | 64 | | 128 | | (64 | ) | | Comparable Hotel room nights displaced from renovation | | 243 | | 231 | | 12 |
|
| | 1.0% | | 2.0% | | (100 | ) bps | | % of Comparable Hotel available room nights displaced | | 1.3% | | 1.2% | | 10 | bps |
| | | | | | | | | | | | | | |
| | (1) In December 2015, the Company sold a portfolio of 53 hotel properties, six of which were included in "Unrenovated Extended Stay America and other" and 47 of which were included in "Crossland Economy Studios" as of September 30, 2015. |
| |
| | (2) Includes three Extended Stay Canada-branded hotels. |
| | (3) Comparable Hotel operating metrics include the results of 629 Extended Stay America and Extended Stay Canada-branded hotels owned and operated for the three and nine months ended September 30, 2016 and 2015. |
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| EXTENDED STAY AMERICA, INC. | |
| NON-GAAP RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA | |
| FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015 | |
| (In thousands) | |
| (Unaudited) | |
| | | | | | | | | | |
| Three Months Ended | | | | Nine Months Ended | |
| September 30, | | | | September 30, | |
| 2016 | | 2015 | | | | 2016 | | 2015 | |
| $ | 57,065 |
| | $ | 58,225 |
| | Net income | | $ | 133,204 |
| | $ | 150,890 |
| |
| 48,713 |
| | 35,157 |
| | Interest expense, net | | 131,462 |
| | 101,975 |
| |
| 15,867 |
| | 21,293 |
| | Income tax expense | | 26,211 |
| | 48,119 |
| |
| 55,955 |
| | 52,268 |
| | Depreciation and amortization | | 164,274 |
| | 151,980 |
| |
| 177,600 |
| | 166,943 |
| | EBITDA | | 455,151 |
| | 452,964 |
| |
| 3,016 |
| | 3,021 |
| | Non-cash equity-based compensation | | 8,635 |
| | 7,940 |
| |
| (305 | ) | | 1,143 |
| | Other non-operating (income) expense | | (1,069 | ) | | 2,035 |
| |
| 2,756 |
| | 9,011 |
| | Impairment of long-lived assets | | 2,756 |
| | 9,011 |
| |
| 2,666 |
| (1) | 1,290 |
| (2) | Other expenses | | 7,718 |
| (3) | 4,034 |
| (4) |
| $ | 185,733 |
| | $ | 181,408 |
| | Adjusted EBITDA | | $ | 473,191 |
| | $ | 475,984 |
| |
| 2.4 | % | | | | % growth | | (0.6 | )% | | | |
| | | | | | | | | | |
NON-GAAP RECONCILIATION OF NET INCOME TO EBITDA AND COMPARABLE HOTEL ADJUSTED EBITDA(5) | |
| FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015 | |
| (In thousands) | |
| (Unaudited) | |
| | | | | | | | | | |
| Three Months Ended |
| | | Nine Months Ended | |
| September 30, |
| | | September 30, | |
| 2016 |
| 2015 |
| | | 2016 | | 2015 | |
| $ | 57,065 |
|
| $ | 58,225 |
|
| Net income | | $ | 133,204 |
| | $ | 150,890 |
| |
| 48,713 |
|
| 35,157 |
|
| Interest expense, net | | 131,462 |
| | 101,975 |
| |
| 15,867 |
|
| 21,293 |
|
| Income tax expense | | 26,211 |
| | 48,119 |
| |
| 55,955 |
|
| 52,268 |
|
| Depreciation and amortization | | 164,274 |
| | 151,980 |
| |
| 177,600 |
|
| 166,943 |
|
| EBITDA | | 455,151 |
| | 452,964 |
| |
| — |
|
| (8,511 | ) |
| Adjusted Property EBITDA of hotels not owned for entirety of periods presented | | — |
| | (24,191 | ) | |
| 3,016 |
|
| 3,021 |
|
| Non-cash equity-based compensation | | 8,635 |
| | 7,940 |
| |
| (305 | ) |
| 1,143 |
|
| Other non-operating (income) expense | | (1,069 | ) | | 2,035 |
| |
| 2,756 |
|
| 9,011 |
|
| Impairment of long-lived assets | | 2,756 |
| | 9,011 |
| |
| 2,666 |
| (1) | 1,290 |
| (2) | Other expenses | | 7,718 |
| (3) | 4,034 |
| (6) |
| $ | 185,733 |
|
| $ | 172,897 |
|
| Comparable Hotel Adjusted EBITDA | | $ | 473,191 |
| | $ | 451,793 |
| |
| 7.4 | % |
|
|
| % growth | | 4.7 | % | | | |
| | | | | | | | | | |
(1) Includes loss on disposal of assets of approximately $2.2 million and costs incurred in connection with the October 2016 secondary offering of approximately $0.4 million. | |
| |
(2) Includes loss on disposal of assets of approximately $1.3 million. | |
| |
(3) Includes loss on disposal of assets of approximately $7.2 million, costs incurred in connection with the October 2016 secondary offering of approximately $0.4 million and transaction costs of approximately of $0.1 million due to the revision of an estimate related to the sale of 53 hotel properties. | |
| |
(4) Includes loss on disposal of assets of approximately $3.3 million and costs incurred in connection with the preparation of the registration statement filed in June 2015 of approximately $0.7 million. | |
| |
(5) Comparable Hotel Adjusted EBITDA includes the results of 629 Extended Stay America and Extended Stay Canada-branded hotels owned and operated for the three and nine months ended September 30, 2016 and 2015. | |
| |
(6) Includes loss on disposal of assets of approximately $3.3 million, $0.2 million of which relates to hotels not owned for entirety of periods presented, and costs incurred in connection with the preparation of the registration statement filed in June 2015 of approximately $0.7 million. | |
| |
|
| | | | | | | | | | | | | | | | | |
| EXTENDED STAY AMERICA, INC. | |
| NON-GAAP RECONCILIATION OF NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS TO PAIRED SHARE | |
| INCOME, ADJUSTED PAIRED SHARE INCOME AND ADJUSTED PAIRED SHARE INCOME PER PAIRED SHARE | |
| FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015 | |
| (In thousands, expect per Paired Share data) | |
| (Unaudited) | |
| | | | | | | | | | |
| Three Months Ended September 30, | | | | Nine Months Ended September 30, | |
| 2016 | | 2015 | | | | 2016 | | 2015 | |
| $ | 46,556 |
| | $ | 37,656 |
| | Net income attributable to common shareholders | | $ | 124,331 |
| | $ | 117,187 |
| |
| 10,505 |
| | 20,565 |
| | Noncontrolling interests attributable to Class B common shares of ESH REIT | | 8,861 |
| | 33,691 |
| |
| 57,061 |
| | 58,221 |
| | Paired Share Income | | 133,192 |
| | 150,878 |
| |
| 14,058 |
| | — |
| | Debt extinguishment costs | | 26,161 |
| | 2,283 |
| |
| (305 | ) | | 1,143 |
| | Other non-operating (income) expense | | (1,069 | ) | | 2,035 |
| |
| 2,756 |
| | 9,011 |
| | Impairment of long-lived assets | | 2,756 |
| | 9,011 |
| |
| 2,666 |
| (1) | 1,290 |
| (2) | Other expenses | | 7,718 |
| (3) | 4,034 |
| (4) |
| (4,775 | ) | | (3,065 | ) | | Tax effect of Paired Share income adjustments | | (8,505 | ) | | (4,438 | ) | |
| $ | 71,461 |
| | $ | 66,600 |
| | Adjusted Paired Share Income | | $ | 160,253 |
| | $ | 163,803 |
| |
| | | | | | | | | | |
| $ | 0.36 |
| | $ | 0.33 |
| | Adjusted Paired Share Income per Paired Share – diluted | | $ | 0.79 |
| | $ | 0.80 |
| |
| | | | | | | | | | |
| 200,696 |
| | 204,685 |
| | Weighted average Paired Shares outstanding – diluted | | 202,252 |
| | 204,538 |
| |
| | | | | | | | | | |
(1) Includes loss on disposal of assets of approximately $2.2 million and costs incurred in connection with the October 2016 secondary offering of approximately $0.4 million. | |
| |
(2) Includes loss on disposal of assets of approximately $1.3 million. | |
| |
(3) Includes loss on disposal of assets of approximately $7.2 million, costs incurred in connection with the October 2016 secondary offering of approximately $0.4 million and transaction costs of approximately $0.1 million due to the revision of an estimate related to the sale of 53 hotel properties. | |
| |
(4) Includes loss on disposal of assets of approximately $3.3 million and costs incurred in connection with the preparation of the registration statement filed in June 2015 of approximately $0.7 million. | |
| |
|
| | | | | | | | | | | | | | | | | | | | | |
| | EXTENDED STAY AMERICA, INC. |
| | NON-GAAP RECONCILIATION OF HOTEL OPERATING PROFIT AND HOTEL OPERATING MARGIN |
| | FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015 |
| | (In thousands) |
| | (Unaudited) |
| | | | | | | | | | | | | | |
| | Three Months Ended | | | | Nine Months Ended |
| | September 30, | | | | September 30, |
| | 2016 | | 2015 | | % Variance | | | | 2016 | | 2015 | | % Variance |
| | $ | 349,076 |
| | $ | 355,445 |
| | (1.8)% | | Room revenues | | $ | 960,046 |
| | $ | 974,127 |
| | (1.4)% |
| | 5,445 |
| | 5,071 |
| | 7.4% | | Other hotel revenues | | 14,822 |
| | 14,291 |
| | 3.7% |
| | 354,521 |
| | 360,516 |
| | (1.7)% | | Total hotel revenues | | 974,868 |
| | 988,418 |
| | (1.4)% |
| | 147,605 |
| | 157,761 |
| | (6.4)% | | Hotel operating expenses (1) | | 437,242 |
| | 447,217 |
| | (2.2)% |
| | $ | 206,916 |
| | $ | 202,755 |
| | 2.1% | | Hotel Operating Profit | | $ | 537,626 |
| | $ | 541,201 |
| | (0.7)% |
| | 58.4 | % | | 56.2 | % | | 220 bps | | Hotel Operating Margin | | 55.1 | % | | 54.8 | % | | 30 bps |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | NON-GAAP RECONCILIATION OF COMPARABLE HOTEL OPERATING PROFIT AND COMPARABLE HOTEL OPERATING MARGIN(2) |
| | FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015 |
| | (In thousands) |
| | (Unaudited) |
| | | | | | | | | | | | | | |
| | Three Months Ended | | | | Nine Months Ended |
| | September 30, | | | | September 30, |
| | 2016 | | 2015 | | % Variance | | | | 2016 | | 2015 | | % Variance |
| | $ | 349,076 |
| | $ | 355,445 |
| | (1.8)% | | Room revenues | | $ | 960,046 |
| | $ | 974,127 |
| | (1.4)% |
| | 5,445 |
| | 5,071 |
| | 7.4% | | Other hotel revenues | | 14,822 |
| | 14,291 |
| | 3.7% |
| | — |
| | (19,371 | ) | | (100.0)% | | Total revenues of hotels not owned for entirety of periods presented | | — |
| | (54,748 | ) | | (100.0)% |
| | 354,521 |
| | 341,145 |
| | 3.9% | | Comparable Hotel total revenues | | 974,868 |
| | 933,670 |
| | 4.4% |
| | 147,605 |
| | 157,761 |
| | (6.4)% | | Hotel operating expenses (1) | | 437,242 |
| | 447,217 |
| | (2.2)% |
| | — |
| | (10,860 | ) | (3) | (100)% | | Hotel operating expenses of hotels not owned for entirety of periods presented | | — |
| | (30,557 | ) | (3) | (100)% |
| | 147,605 |
| | 146,901 |
| | 0.5% | | Comparable Hotel operating expenses | | 437,242 |
| | 416,660 |
| | 4.9% |
| | $ | 206,916 |
| | $ | 194,244 |
| | 6.5% | | Comparable Hotel Operating Profit | | $ | 537,626 |
| | $ | 517,010 |
| | 4.0% |
| | | | | | | | | | | | | | |
| | 58.4 | % | | 56.9 | % | | 150 bps | | Comparable Hotel Operating Margin | | 55.1 | % | | 55.4 | % | | (30) bps |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | (1) Excludes loss on disposal of assets of approximately $2.2 million, $1.3 million, $7.2 million and $3.3 million, respectively. |
| |
| | (2) Comparable Hotel Operating Profit and Comparable Hotel Operating Margin include the results of 629 Extended Stay America and Extended Stay Canada-branded hotels owned and operated for the three and nine months ended September 30, 2016 and 2015. |
| |
| | (3) Excludes loss on disposal of assets of approximately $0 and $0.2 million, respectively. |
|
| | | | | | | | | | | | | | |
| | EXTENDED STAY AMERICA, INC. | |
| | COMPARABLE HOTEL TOTAL REVENUES (1) AND NON-GAAP RECONCILIATION OF NET INCOME TO EBITDA AND COMPARABLE HOTEL ADJUSTED EBITDA (1) | |
| | TWELVE MONTHS ENDED DECEMBER 31, 2015 (ACTUAL) AND 2016 (OUTLOOK) | |
| | (In thousands) | |
| | (Unaudited) | |
| | | | | | | | | |
| | | Twelve Months Ended | | | Twelve Months Ending December 31, 2016 | |
| | | December 31, 2015 | | | (Outlook) | |
| | | (Actual) | | | Low | | High | |
| | | $ | 1,217,354 |
| | Comparable Hotel total revenues | $ | 1,261,000 |
| | $ | 1,267,000 |
| |
| | | | | | | | | |
| | | $ | 283,022 |
| | Net income | $ | 152,660 |
| | $ | 166,083 |
| |
| | | 137,782 |
| | Interest expense, net | 166,000 |
| | 164,000 |
| |
| | | 76,536 |
| | Income tax expense | 34,653 |
| | 35,230 |
| |
| | | 203,897 |
| | Depreciation and amortization | 223,000 |
| | 218,000 |
| |
| | | 701,237 |
| | EBITDA | 576,313 |
| | 583,313 |
| |
| | | (28,948 | ) | | Adjusted Property EBITDA of hotels not owned for entirety of periods presented | — |
| | — |
| |
| | | 10,500 |
| | Non-cash equity-based compensation | 12,000 |
| | 11,000 |
| |
| | | 2,732 |
| | Other non-operating expense (income) | (1,069 | ) | | (1,069 | ) | |
| | | 9,011 |
| | Impairment of long-lived assets | 2,756 |
| | 2,756 |
| |
| | | (130,894 | ) | | Gain on sale of hotel properties | — |
| | — |
| |
| | | 10,495 |
| (2) | Other expenses | 11,000 |
| (3) | 10,000 |
| (3) |
| | | $ | 574,133 |
| | Comparable Hotel Adjusted EBITDA | $ | 601,000 |
| | $ | 606,000 |
| |
| | | | | % growth | 4.7 | % | | 5.6 | % | |
| | | | | | | | | |
| | | | | | | | | |
| | (1) | Comparable Hotel total revenues and Comparable Hotel Adjusted EBITDA include the results of 629 Extended Stay America and Extended Stay Canada-branded hotels owned and operated as of December 31, 2015. |
| |
| | (2) | Includes costs incurred in connection with the preparation of the registration statement filed in June 2015 and the November 2015 secondary offering of approximately $0.9 million, transaction costs of approximately $0.3 million associated with the sale of hotel properties, and loss on disposal of assets of approximately $9.3 million, $0.3 million of which relates to hotels not owned for entirety of the periods presented. |
| |
| | (3) | Includes non-cash loss on disposal of assets and other non-operating transaction costs. |
