SILVER SPRING, Md., Oct. 20 /PRNewswire/ -- Choice Hotels International, Inc. (NYSE: CHH) today reported third quarter 1999 recurring net income of $18.3 million, or $0.33 recurring diluted earnings per share (EPS), increases of 24 percent and 32 percent respectively, over the $14.7 million in recurring net income and $0.25 recurring diluted EPS reported for third quarter 1998.
"Solid unit growth, coupled with an outstanding increase in royalty revenues, continues to drive our strong performance," said Charles A. Ledsinger, Jr., president and chief executive officer. "In addition, we are very pleased with Choice's continued improvement in RevPAR performance."
He continued, "Our franchisees' hotels continue to benefit from the rollout of our proprietary property management system, which is currently in more than 50 percent of our 2,200 mid-priced and upper-end hotels. We also are seeing the positive impact of more targeted brand marketing and better support for our franchisees through our regional Market Area structure."
For the first nine months of 1999, Choice reported recurring net income of $43.1 million, or $0.77 recurring diluted EPS, increases of 20 percent and 28 percent respectively over the $35.9 million of recurring net income and $0.60 recurring diluted EPS reported for the first nine months of 1998.
The company reported revenues of $46.9 million for third quarter 1999, compared to $42.7 million for third quarter 1998, a 10 percent increase. For the first nine months of 1999, revenues increased 8 percent to $114.1 million over the $105.9 million reported for the same period a year ago.
Royalty revenues for third quarter 1999 increased 13 percent to $40.5 million from $35.7 million for the same period a year ago, with the system- wide domestic effective royalty rate also increasing from 3.61 percent in third quarter 1998 to 3.77 percent for the third quarter of 1999. Domestic revenue per available room (RevPAR) increased 2.13 percent from $42.65 in third quarter 1998 to $43.56 in the quarter just ended.
For the first nine months of 1999, royalty revenues increased 11 percent to $95.5 million from $85.7 million for the same period a year ago. The system-wide domestic effective royalty rate increased 14 basis points for the first nine months of 1999 to 3.69 percent from 3.55 percent for the same period a year ago. Domestic RevPAR also was up 3.2 percent from $34.36 for the first three quarters of 1998 to $35.46 for the first nine months of 1999.
As of September 30, 1999:
* The total number of Choice hotels worldwide on-line grew 14.7 percent to
4,179 from 3,643 as of the same date a year ago;
* The total number of rooms worldwide increased 10.4 percent to 335,524
from 303,852 as of the same date a year ago;
* The company had 724 franchised hotels with 59,276 rooms either in design
or under construction in its worldwide hotel system.
Notable Events
Among the notable company events occurring since the previous earnings report:
* Record-breaking performance through the central reservations system,
with single-day revenues topping $6 million on 18 days thus far this
year. Prior to this summer, no single $6 million day had been recorded;
* Announcement of an exclusive agreement with GuesTech, a Baltimore-based
Internet solutions company, to provide in-room, high-speed Internet
access for hotel guests at the company's various brands;
* Opening of a state-of-the-art, $2.5 million Learning Center at the
company's Silver Spring headquarters for introducing new hotel owners
and general managers to the company's marketing, reservations and
business systems, as well as for training associates;
* Expansion of the mid-priced Sleep Inn hotel brand internationally, with
more than 100 new hotels projected to be built in the United Kingdom,
Spain, Japan and South America over the next five years;
* Continuation of the stock repurchase program announced June 25, 1998.
The company has purchased 7.2 million shares of common stock at a total
cost of $103.2 million as of October 20, 1999, and has remaining
authority to acquire up to 1.5 million additional shares. As of October
20, 1999, 54.1 million shares are outstanding.
Choice Hotels International is the second-largest hotel franchisor in the world with 4,179 hotels open, representing 335,524 rooms, and another 724 hotels under development, representing 59,276 rooms, in 37 countries, as of September 30, 1999. Its Comfort, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn and MainStay Suites brands serve guests worldwide.
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. For further information on factors that could impact Choice and the statements contained therein, we refer you to the filings made by Choice with the Securities and Exchange Commission, including its registration statement on Form S-4 and report on Form 10-Q for the quarter ended June 30, 1999.
Additional corporate information may be found on the Choice Hotels' Internet site at www.choicehotels.com.
Comfort, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn and MainStay Suites are registered trademarks and service marks of Choice Hotels International Inc. Choicebuys.com is a pending trademark of Choice Hotels International.
Choice Hotels International, Inc.
Consolidated Balance Sheets
(In thousands) September 30, December 31, 1999 1998
(Unaudited)
ASSETS
Cash and cash equivalents $8,732 $1,692 Other current assets 36,361 33,969 Total current assets 45,093 35,661 Fixed assets and intangibles, net 151,684 144,575 Note receivable from Sunburst Hospitality 138,354 127,849 Investments and other 126,182 90,140 Total assets 461,313 398,225 LIABILITIES Current portion of long-term debt 27,646 22,646 Other current liabilities 51,311 35,822 Total current liabilities 78,957 58,468 Long-term debt 279,846 256,564 Deferred income taxes and other 44,708 26,683 Total liabilities 403,511 341,715 Total shareholders' equity 57,802 56,510 Total liabilities and shareholders' equity $461,313 $398,225 Choice Hotels International, Inc. Consolidated Statements of Income (Unaudited) (In thousands, except per share amounts) Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
Revenues 1999 1998 1999 1998 Royalty fees $40,472 $35,680 $95,545 $85,739 Initial franchise fees and relicensing fees 3,300 4,905 9,893 12,554 Partner service revenue 2,354 1,683 6,162 4,638 Other 733 454 2,471 2,926 Total revenues 46,859 42,722 114,071 105,857 Operating expenses Selling, general and administrative 15,191 14,176 38,808 36,840 Depreciation and amortization 1,774 2,308 5,245 5,858 Total operating expenses 16,965 16,484 44,053 42,698 Operating income 29,894 26,238 70,018 63,159 Non-strategic operations (a) 312 498 552 1,229 Other Gain on sale of stock -- -- (1,260) (2,190) Interest and dividend income (5,244) (3,338) (14,900) (9,298) Interest expense 5,069 4,850 14,796 14,433 Total other (175) 1,512 (1,364) 2,945 Income before income taxes 30,381 25,224 71,934 61,443 Income taxes 12,043 10,506 28,787 25,591 Net income before extraordinary item 18,338 14,718 43,147 35,852 Gain on early extinguishment of debt, net of $4,532 of income taxes -- 7,232 -- 7,232 Net income $18,338 $21,950 $43,147 $43,084 Weighted average shares outstanding 54,619 58,360 55,174 59,130 Diluted shares outstanding 55,501 59,165 55,898 60,124 Diluted earnings per share before extraordinary item $0.33 $0.25 $0.77 $0.60 Diluted earnings per share $0.33 $0.37 $0.77 $0.72
(a) In the fourth quarter of 1998, the company discontinued the group purchasing program as previously operated.
SUPPLEMENTAL OPERATING INFORMATION BY BRAND
DOMESTIC HOTEL SYSTEM
(UNAUDITED)
For the Quarter For the Nine Months Ended Ended September 30, September 30, 1999 1998 1999 1998 COMFORT INN Hotels 1,244 1,210 1,244 1,210 Rooms 97,506 95,862 97,506 95,862 Avg. Daily Rate (ADR) $63.26 $61.16 $58.96 $56.57 Occupancy 75.0 76.6 64.4 65.0 RevPAR $47.45 $46.82 $37.97 $36.76 Effective Royalty Rate 4.23 4.11 4.18 4.02 COMFORT SUITES Hotels 220 176 220 176 Rooms 17,891 14,364 17,891 14,364 Avg. Daily Rate (ADR) $71.56 $69.65 $69.63 $67.60 Occupancy 74.6 76.0 67.7 68.5 RevPAR $53.37 $52.94 $47.12 $46.32 Effective Royalty Rate 4.44 4.27 4.39 4.30 QUALITY Hotels 436 431 436 431 Rooms 50,330 50,196 50,330 50,196 Avg. Daily Rate (ADR) $66.89 $64.94 $62.53 $60.21 Occupancy 66.9 68.1 58.3 59.2 RevPAR $44.75 $44.25 $36.46 $35.66 Effective Royalty Rate 3.30 3.18 3.25 3.13 CLARION Hotels 115 102 115 102 Rooms 19,388 17,422 19,388 17,422 Avg. Daily Rate (ADR) $75.25 $73.20 $73.20 $71.90 Occupancy 63.5 67.5 58.9 60.1 RevPAR $47.75 $49.42 $43.13 $43.23 Effective Royalty Rate 2.32 2.04 2.15 2.13 SLEEP Hotels 220 186 220 186 Rooms 16,847 14,058 16,847 14,058 Avg. Daily Rate (ADR) $56.04 $53.80 $53.84 $51.32 Occupancy 69.3 71.9 60.9 62.6 RevPAR $38.85 $38.70 $32.78 $32.12 Effective Royalty Rate 3.79 3.39 3.72 3.39 MAINSTAY Hotels 27 18 27 18 Rooms 2,506 1,715 2,506 1,715 Avg. Daily Rate (ADR) $60.95 $55.25 $58.31 $55.38 Occupancy 74.7 68.3 65.7 55.6 RevPAR $45.50 $37.74 $38.30 $30.81 Effective Royalty Rate 3.56 2.84 3.27 2.68 ECONO LODGE Hotels 690 701 690 701 Rooms 43,778 45,136 43,778 45,136 Avg. Daily Rate (ADR) $49.42 $48.22 $45.35 $43.75 Occupancy 65.1 65.3 54.4 54.3 RevPAR $32.16 $31.51 $24.68 $23.76 Effective Royalty Rate 3.72 3.57 3.63 3.54 RODEWAY Hotels 169 200 169 200 Rooms 10,646 12,662 10,646 12,662 Avg. Daily Rate (ADR) $50.54 $49.51 $45.66 $44.46 Occupancy 60.7 58.1 50.9 50.1 RevPAR $30.69 $28.78 $23.25 $22.27 Effective Royalty Rate 2.81 2.86 2.66 2.67 TOTAL CHOICE - DOMESTIC Hotels 3,121 3,024 3,121 3,024 Rooms 258,892 251,415 258,892 251,415 Avg. Daily Rate (ADR) $62.22 $ 60.24 $58.49 $56.28 Occupancy 70.0 70.8 60.6 61.1 RevPAR $43.56 $ 42.65 $35.46 $34.36 Effective Royalty Rate 3.77 3.61 3.69 3.55
