Choice Hotels Reports First Quarter Earnings Per Share Gain of 30% and Operating Income Growth Of 7.4%; Company Also Reports Year Over Year Domestic Hotel Unit Growth of 5.1%.Business Editors SILVER SPRING, Md.--(BUSINESS WIRE)--April 22, 2003 Choice Hotels International, Inc. (NYSE NYSE See: New York Stock Exchange :CHH CHH Cartilage Hair Hypoplasia CHH Crustacean Hyperglycemic Hormone CHH Carter Holt Harvey Limited (Australia & New Zealand) CHH Chuan Hup Holdings Limited (Singapore) CHH Certified Hardware Hosineer ) today reported first quarter 2003 net income of $9.7 million, or $0.26 diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of (EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ), a 30% increase in EPS over the same period of a year ago. These results exceeded consensus estimates by $0.02 per share. At the end of first quarter 2002, the company reported net income of $8.6 million, or $0.20 diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS. The company also announced that its operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased to $17.2 million for first quarter 2003, a 7.4% gain over the $16.0 million reported at the end of first quarter 2002. "First quarter results were especially gratifying grat·i·fy tr.v. grat·i·fied, grat·i·fy·ing, grat·i·fies 1. To please or satisfy: His achievement gratified his father. See Synonyms at please. 2. , given the sluggish economy Sluggish Economy A state in the economy in which the growth is slow, flat or declining. The term can refer to the economy as a whole or a component of the economy, such as weak housing starts. and uncertainty in travel markets," said Charles Charles, archduke of Austria Charles, 1771–1847, archduke of Austria; brother of Holy Roman Emperor Francis II. Despite his epilepsy, he was the ablest Austrian commander in the French Revolutionary and Napoleonic wars; however, he was handicapped by A. Ledsinger, Jr., president and chief executive officer. "Choice continues to enjoy very strong unit growth, with this quarter topping 5%. This development pace speaks to the inherent value in our brands and the ongoing demand for them by both hotel owners and consumers." First Quarter Performance The company reported royalty Compensation for the use of property, usually copyrighted works, patented inventions, or natural resources, expressed as a percentage of receipts from using the property or as a payment for each unit produced. revenues of $27.3 million for first quarter 2003, compared to $26.0 million for the same period in 2002, an increase of 5.0%. Royalty revenues in the first quarter of 2003 include $0.9 million attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to Flag Choice Hotels, which the company began consolidating in July July: see month. of 2002. System-wide domestic revenue per available room (RevPAR RevPAR A performance metric in the hotel industry which stands for "revenue per available room." RevPAR is typically calculated by multiplying a hotel's average daily room rate (ADR) by its occupancy rate. ) was $25.78 in first quarter 2003, compared to $26.16 for the first quarter of 2002. The company adopted Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure," and began expensing the cost of stock options based on their estimated fair value for all awards granted after January January: see month. 1, 2003. During the first quarter 2003, the company's net income includes approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $0.1 million of expense related to stock options. For all of 2003, the expense associated with stock options is expected to be $0.7 million. 2003 Unit Growth The total number of domestic Choice hotels on-line grew by 5.1% to 3,516 as of March 31, 2003 from 3,344 as of the same period a year ago. Net domestic property additions in the first quarter of 2003 were 34, compared to 17 net domestic additions in the same period of 2002. Choice executed executed 1) adj. to have been completed. (Example: "it is an executed contract") 2) v. to have completed or fully performed. (Example: "he executed all the promises made in the contract") 3) v. 71 new domestic hotel franchise contracts representing 7,607 rooms in first quarter 2003, compared to 59 new contracts representing 5,208 rooms for the same period a year ago. In the first quarter 2003, 20 contracts for new construction hotels, representing 1,444 rooms were executed, compared to 10 contracts, representing 639 rooms for the same period a year ago. At the end of first quarter 2003, Choice had 297 hotels under development in its domestic hotel system, representing 24,719 rooms. As of March 31, 2003, the total number of Choice hotels worldwide grew 3.0% to 4,678 from 4,541 as of the same date a year ago. This growth represents an increase of 3.5% in the number of rooms open to 375,859 from 363,074. At the end of first quarter 2003, Choice had 385 hotels under development worldwide, representing 35,018 rooms. Second Quarter & Year 2003 Estimates The company's second quarter 2003 earnings, which more fully reflect the effect of the war in Iraq Iraq or Irak (both: ēräk`, ĭrăk`), officially Republic of Iraq, republic (2005 est. pop. 26,075,000), 167,924 sq mi (434,924 sq km), SW Asia. , are expected to be in the range of $0.39 to $0.41. Full year 2003 diluted EPS are expected to be between $1.65 and $1.68. Notable Events Among the notable company events occurring since the previous earnings report: -- Since Choice announced its stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program on June June: see month. 25, 1998, the company has purchased 27.8 million shares of common stock at an average price of $16.75 per share and a total cost of $465.2 million, as of April 22, 2003. During the first quarter of this year, the company purchased 1.3 million shares of common stock. The Company has remaining authorization The right or permission to use a system resource; the process of granting access. See access control. to purchase up to 3.6 million shares. Total shares outstanding as of March 31, 2003, are 36.0 million. -- The company acquired the remaining 45% interest in Melbourne-based Flag Choice Hotels in Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. , giving it 100% ownership of the subsidiary. -- A Best Choice e-Rate E-Rate is the commonly used name for the Schools and Libraries Program of the Universal Service Fund, which is administered by the Universal Service Administrative Company (USAC) under the direction of the Federal Communications Commission (FCC). Guarantee was launched on the company's proprietary Web site, Choicehotels.com, to guarantee consumers the best online rates for stays at Choice brand hotels throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and the Caribbean. Choice Hotels International is the second-largest hotel franchisor in the world with 4,678 hotels open, representing 375,859 rooms, in the United States and 42 other countries and territories. As of March 31, 2003, 297 hotels are under development in the United States, representing 24,719 rooms, and an additional 88 hotels, representing 10,299 rooms, are under development in 18 other countries and territories. Its Comfort, Quality, Clarion A family of application development systems for Windows from SoftVelocity, Inc., Pompano Beach, FL (www.softvelocity.com). Clarion provides a comprehensive set of tools for development, including a screen builder, 4GL and application generator. , Sleep Inn, Econo Lodge Econo Lodge is an economy motel chain based in the United States. Econo Lodge is the second largest brand in the Choice Hotels system. It is one of the best known names of its category and provides affordable rooms to budget travelers. , Rodeway Inn Rodeway Inn is an upper-priced economy chain of motels in the United States and Canada. Rodeway Inn is a brand of the Choice Hotels group. There are over 150 locations in North America. and MainStay Suites Mainstay Suites is a brand of mid-priced extended stay hotels franchised by Choice Hotels International. Mainstay Suites hotels provide comfortable and affordable accommodations to extended stay travelers as well as provide many amenities to its guests. brands serve guests worldwide. Certain matters discussed in this press release may constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 Form 10-Q See 10-Q. for the period ended September September: see month. 30, 2001. Additional corporate information may be found on the Choice Hotels' Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the site, which may be accessed at www.choicehotels.com Comfort, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn, MainStay Suites, Choice Privileges privileges, n the authority granted to a physician or dental professional by a hospital governing board to provide patient care in the hospital. Clinical privileges are limited to the individual's license, experience, and competence. , EA$Y CHOICE and ChoiceBuys.com are registered trademarks, service marks and trade names of Choice Hotels International, Inc. Choice Hotels also owns and uses common law marks, including Profit Manager.
Choice Hotels International, Inc. Exhibit 1
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts) Three Months Ended
March 31, March 31,
REVENUES: 2003 2002
---------- ----------
Royalty fees $27,251 $25,984
Initial franchise and relicensing fees 2,607 2,141
Partner services 2,306 2,151
Marketing and reservation 47,353 43,494
Hotel operations 837 699
Other 1,202 861
---------- ----------
Total revenues 81,556 75,330
OPERATING EXPENSES:
Selling, general and administrative 13,486 12,412
Depreciation and amortization 2,759 2,727
Marketing and reservation expense 47,353 43,494
Hotel operations 726 653
---------- ----------
Total operating expenses 64,324 59,286
Operating income 17,232 16,044
OTHER INCOME AND EXPENSES:
Interest and other investment income (1,291) (1,560)
Interest expense 3,024 3,548
Gain on disposition of property (63) -
---------- ----------
Total other income and expenses 1,670 1,988
---------- ----------
Income before income taxes 15,562 14,056
Income taxes 5,875 5,482
---------- ----------
Net income $9,687 $8,574
========== ==========
Weighted average shares outstanding-basic 36,772 41,276
========== ==========
Weighted average shares outstanding-diluted 37,513 42,012
========== ==========
Basic earnings per share $0.26 $0.21
========== ==========
Diluted earnings per share $0.26 $0.20
========== ==========
Choice Hotels International, Inc. Exhibit 2
Consolidated Balance Sheets
(In thousands) March 31, December 31,
2003 2002
------------ ------------
(Unaudited)
ASSETS
Cash and cash equivalents $14,825 $12,227
Accounts receivable, net 32,961 32,451
Other current assets 2,551 3,349
------------ ------------
Total current assets 50,337 48,027
Fixed assets and intangibles, net 160,283 161,606
Note receivable from Sunburst 41,318 41,318
Receivable -- marketing and reservation fees 51,029 44,916
Other assets 18,931 18,515
------------ ------------
Total assets 321,898 314,382
------------ ------------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current portion of long-term debt 28,354 23,796
Other current liabilities 62,115 61,707
------------ ------------
Total current liabilities 90,469 85,503
Long-term debt 300,393 283,995
Deferred income taxes and other liabilities 62,831 58,683
------------ ------------
Total liabilities 453,693 428,181
------------ ------------
Total shareholders' deficit (131,795) (113,799)
------------ ------------
Total liabilities and
shareholders' deficit $321,898 $314,382
------------ ------------
Choice Hotels International, Inc. Exhibit 3
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands) Three Months Ended
March 31, March 31,
2003 2002
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $9,687 $8,574
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,759 2,727
Provision for bad debts 448 198
Non-cash stock compensation and other charges 402 202
Non-cash interest and other investment income (88) (1,111)
Changes in assets and liabilities, net of
acquisitions:
Receivables (853) (762)
Receivable -- marketing and reservation fees, net (3,067) (3,371)
Current liabilities 4,734 (2,954)
Income taxes payable/receivable and other assets (3,141) (243)
Deferred income taxes and other liabilities 4,803 5,534
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 15,684 8,794
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment (2,515) (2,305)
Acquisition of Flag (1,211) -
Other items, net (1,514) (101)
--------- ---------
NET CASH UTILIZED IN INVESTING ACTIVITIES (5,240) (2,406)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 43,200 103,800
Principal payments of long-term debt (22,260) (84,014)
Purchase of treasury stock (30,362) (30,793)
Proceeds from exercise of stock options 1,576 3,223
--------- ---------
NET CASH UTILIZED IN FINANCING ACTIVITIES (7,846) (7,784)
--------- ---------
Net change in cash and cash equivalents 2,598 (1,396)
Cash and cash equivalents at beginning of period 12,227 16,871
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $14,825 $15,475
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payments during the period for:
Income taxes, net of refunds $7,005 $587
Interest 1,567 2,473
Non-cash financing activities:
Income tax benefit realized from employee stock
options exercised $387 $729
CHOICE HOTELS INTERNATIONAL Exhibit 4
SUPPLEMENTAL OPERATING INFORMATION BY BRAND
DOMESTIC HOTEL SYSTEM
(UNAUDITED)
Three Months Ended
March 31, March 31,
2003 2002
--------- ---------
COMFORT INN
Hotels 1,373 1,316
Rooms 108,019 103,147
Avg. Daily Rate (ADR) $59.65 $58.26
Occupancy % 46.3% 48.0%
RevPAR $27.59 $27.94
COMFORT SUITES
Hotels 352 313
Rooms 28,019 24,684
Avg. Daily Rate (ADR) $70.71 $69.56
Occupancy % 51.7% 52.4%
RevPAR $36.55 $36.46
QUALITY
Hotels 469 438
Rooms 49,406 48,566
Avg. Daily Rate (ADR) $59.15 $59.04
Occupancy % 41.2% 42.3%
RevPAR $24.35 $24.96
CLARION
Hotels 134 125
Rooms 20,183 18,849
Avg. Daily Rate (ADR) $69.27 $69.95
Occupancy % 39.7% 42.9%
RevPAR $27.53 $29.99
SLEEP
Hotels 301 287
Rooms 23,052 22,126
Avg. Daily Rate (ADR) $54.70 $53.40
Occupancy % 45.8% 46.3%
RevPAR $25.06 $24.75
MAINSTAY
Hotels 39 41
Rooms 3,376 3,538
Avg. Daily Rate (ADR) $60.33 $58.66
Occupancy % 54.5% 60.3%
RevPAR $32.90 $35.36
ECONO LODGE
Hotels 715 683
Rooms 44,401 42,457
Avg. Daily Rate (ADR) $43.10 $42.84
Occupancy % 38.4% 39.9%
RevPAR $16.57 $17.10
RODEWAY
Hotels 133 141
Rooms 8,501 9,135
Avg. Daily Rate (ADR) $44.51 $42.97
Occupancy % 36.8% 38.0%
RevPAR $16.37 $16.35
TOTAL CHOICE - DOMESTIC
Hotels 3,516 3,344
Rooms 284,957 272,502
Avg. Daily Rate (ADR) $58.47 $57.46
Occupancy % 44.1% 45.5%
RevPAR $25.78 $26.16
Effective Royalty Rate 3.96% 3.97%
|
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion