• | Net income was $55.5 million for first quarter 2020, representing diluted earnings per share (EPS) of $0.99. |
• | First quarter adjusted net income, excluding certain items described in Exhibit 6, decreased 9% to $42.8 million from first quarter 2019. |
• | Adjusted EPS were $0.76, a 10% decrease from first quarter 2019. |
• | Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the first quarter were $69.2 million, an 8% decrease from first quarter 2019. |
• | Domestic systemwide revenue per available room (RevPAR) declined 15% for first quarter 2020 compared to the same period of the prior year, outperforming total industry results by 430 basis points and exceeding growth within the primary chain scale segments in which the company competes, as reported by STR. |
• | Awarded 42 new conversion franchise agreements in first quarter 2020 compared to 47 in the same period of the prior year. |
• | Recognized a $30.6 million non-cash tax benefit in first quarter 2020 related to a restructuring of the company’s foreign operations. |
• | Domestic system-wide RevPAR decreased 15% for first quarter 2020 compared to the same period of the prior year, exceeding overall industry performance by 430 basis points. In the first quarter, Choice Hotels' brands outperformed the respective chain scales in which they primarily compete - upper-midscale, midscale and economy. |
• | Through February 2020, domestic system-wide RevPAR trended at the high-end of the company’s previous provided guidance. However, in March 2020, domestic system-wide RevPAR decreased 37% over the prior year comparable period, with occupancy levels falling below 50%. Daily occupancy levels softened over the last ten days of the month and ranged between 26% and 33%. |
• | In April, domestic system-wide RevPAR declined 60% over the prior year comparable period, with the last week of the month trending +280 bps in higher occupancy versus the prior week and nearly one-third of the domestic portfolio achieving occupancy levels at or above 40%. These trends of occupancy gains have continued into May and represent outperformance versus the company’s competitive chain scales (See Exhibit 7 for weekly occupancy trends). |
• | The company’s expertise in the extended-stay segment positions Choice Hotels well in the current environment to attract and retain long-term occasion guests, with the WoodSpring Suites brand and the overall extended-stay portfolio experiencing occupancy levels in March at 72% and 69%, respectively. These trends have continued in April and May. WoodSpring Suites’ brand RevPAR decreased only 2.9% in first quarter 2020 over the prior year comparable period, while its occupancy levels have remained above 60% since mid-March, attesting to the brand’s resiliency. |
• | Nearly 90% of the company's domestic hotels are in suburban, small towns and interstate locations, which have consistently reported higher occupancy levels industry-wide driven by relatively stronger consumer demand for these destinations compared to urban or resort locations. |
• | As of May 6, 2020, 97% of the company’s more than 5,920 domestic hotels continue to operate. In addition, fewer than 20% of the company’s over 1,210 international hotels were temporarily closed as of May 6, 2020. The company experienced a higher number of re-openings domestically in the last two weeks and internationally since mid-April 2020. |
• | Total revenues were flat at $218.2 million for first quarter 2020, compared to the total revenues reported for the same period of 2019. |
• | Total revenues excluding marketing and reservation system fees were relatively flat at $107.8 million for first quarter 2020 over the prior year comparable period. |
• | First quarter 2020 domestic royalties were $66.3 million, a 12.2% decrease from the same period of 2019. |
• | The company’s effective domestic royalty rate for first quarter 2020 increased 10 basis points to 4.94% over the prior year first quarter. |
• | Procurement services revenue increased 15% in first quarter 2020 to $13.8 million, compared to the same period of the prior year. |
• | The company’s extended stay portfolio continued to expand, reaching 410 domestic hotels, a 9.6% increase since March 31, 2019, and the domestic extended-stay pipeline reached nearly 300 hotels awaiting conversion, under construction or approved for development. Specifically, the WoodSpring Suites brand achieved over 8% growth in the number of open domestic hotels and a 20% increase in its domestic pipeline. |
• | The number of domestic hotels and rooms, as of March 31, 2020, increased 1.2% and 2.7%, respectively, from March 31, 2019. The upscale room portfolio expanded 42% since March 31, 2019, including a 25% increase for the Cambria Hotels brand and a 48% increase for the Ascend Hotel Collection, which includes 17 properties associated with the company's strategic partnership with AMResorts, an Apple Leisure Group brand. |
• | The number of international hotels and rooms as of March 31, 2020, increased 6.3% and 15.2%, respectively, from the comparable period of 2019. |
• | The company's total domestic pipeline of hotels awaiting conversion, under construction, or approved for development, as of March 31, 2020, reached 1,000 hotels and over 80,000 rooms, with the Comfort brand’s domestic unit pipeline representing over a quarter of the total domestic pipeline. |
• | The company awarded 58 domestic franchise agreements in first quarter 2020, a 27% decrease compared to the same period of the prior year. Nearly 60% of the domestic |
• | Reduced the compensation of the board of directors, chief executive officer and other executive officers for the remainder of 2020. |
• | Implemented a hiring freeze, except for certain critical positions, and suspended 401(k) matching for the remainder of 2020. |
• | Since the beginning of the first quarter, reduced its global workforce by more than 20% through a combination of layoffs and furloughs. |
• | Eliminated, reduced or deferred non-essential expenditures, discretionary capital expenditures and investments. |
• | Temporarily suspended activity under the company’s share repurchase plan. |
• | Suspended future, undeclared dividends in the approximate aggregate amount of $25 million for at least the remainder of 2020. |
• | Implemented fee-deferral and other programs to support franchisees through the crisis. |
• | Advocated with the federal government to secure and expand franchisees’ access to capital resulting in over 6,800 application submissions for government relief SBA programs and other CARES Act benefits. |
• | Established a proactive, ongoing multi-channel franchisee outreach and education program being utilized by thousands of hotel owners to learn how to access newly available capital and reduce their operating costs. |
• | Drove business to its franchised hotels from a wide variety of industries, government and emergency-management agencies, translating to an increase in occupancy. |
• | Revised Choice Hotels’ guest cancellation policy and deferred the expiration of loyalty points to provide travelers greater flexibility during these challenging times. |
• | Launched the “Commitment to Clean” initiative to provide hotels with the latest resources and training to achieve superior levels of cleanliness and address health and safety concerns associated with the COVID-19 pandemic, leveraging the company’s long-standing relationship with Ecolab, an industry expert and global leader in water, hygiene and infection prevention technologies and services; guidance from the Centers for Disease Control and Prevention (CDC), the World Health Organization and the U.S. Travel Association; Choice’s membership in the American Hotel and Lodging Association (AHLA) Safe Stay Advisory Council; and |
• | Offered members of the company’s Choice Privileges loyalty program the option to donate points towards Serta, Inc.’s initiative to help address nationwide hospital bed shortages caused by the pandemic, the American Red Cross’ COVID-19 relief efforts, the International Franchise Association’s “Franchising Gives Back” program and Operation Homefront’s drive to provide hotel rooms for service members and their families who have been displaced from their current housing due to COVID-19. In addition, Choice Hotels is matching loyalty point donations to various degrees and making its own contributions. |
• | Offered discounted hotel rates to essential workers and volunteers serving communities across the country during the COVID-19 crisis. |
Choice Hotels International, Inc. and Subsidiaries | Exhibit 1 | ||||||||||||||
Condensed Consolidated Statements of Income | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended March 31, | |||||||||||||||
Variance | |||||||||||||||
2020 | 2019 | $ | % | ||||||||||||
(In thousands, except per share amounts) | |||||||||||||||
REVENUES | |||||||||||||||
Royalty fees | $ | 70,339 | $ | 80,353 | $ | (10,014 | ) | (12 | )% | ||||||
Initial franchise and relicensing fees | 7,284 | 6,807 | 477 | 7 | % | ||||||||||
Procurement services | 13,797 | 11,947 | 1,850 | 15 | % | ||||||||||
Marketing and reservation system | 110,385 | 110,064 | 321 | 0 | % | ||||||||||
Owned hotels | 9,422 | — | 9,422 | NM | |||||||||||
Other | 6,948 | 9,149 | (2,201 | ) | (24 | )% | |||||||||
Total revenues | 218,175 | 218,320 | (145 | ) | (0 | )% | |||||||||
OPERATING EXPENSES | |||||||||||||||
Selling, general and administrative | 28,835 | 39,514 | (10,679 | ) | (27 | )% | |||||||||
Depreciation and amortization | 6,529 | 3,616 | 2,913 | 81 | % | ||||||||||
Marketing and reservation system | 130,447 | 119,839 | 10,608 | 9 | % | ||||||||||
Owned hotels | 6,034 | — | 6,034 | NM | |||||||||||
Total operating expenses | 171,845 | 162,969 | 8,876 | 5 | % | ||||||||||
Impairment of goodwill & long-lived assets | — | (10,401 | ) | 10,401 | (100%) | ||||||||||
Gain on sale of assets, net | — | 100 | (100 | ) | (100%) | ||||||||||
Operating income | 46,330 | 45,050 | 1,280 | 3 | % | ||||||||||
OTHER INCOME AND EXPENSES, NET | |||||||||||||||
Interest expense | 11,380 | 11,211 | 169 | 2 | % | ||||||||||
Interest income | (2,288 | ) | (2,613 | ) | 325 | (12 | )% | ||||||||
Other losses (gains) | 4,277 | (2,198 | ) | 6,475 | (295 | )% | |||||||||
Loss on extinguishment of debt | 607 | — | 607 | NM | |||||||||||
Equity in net loss of affiliates | 1,955 | 2,171 | (216 | ) | (10 | )% | |||||||||
Total other income and expenses, net | 15,931 | 8,571 | 7,360 | 86 | % | ||||||||||
Income before income taxes | 30,399 | 36,479 | (6,080 | ) | (17 | )% | |||||||||
Income tax (benefit) expense | (25,064 | ) | 6,398 | (31,462 | ) | (492 | )% | ||||||||
Net income | $ | 55,463 | $ | 30,081 | $ | 25,382 | 84 | % | |||||||
Basic earnings per share | $ | 1.00 | $ | 0.54 | $ | 0.46 | 85 | % | |||||||
Diluted earnings per share | $ | 0.99 | $ | 0.54 | $ | 0.45 | 83 | % | |||||||
Choice Hotels International, Inc. and Subsidiaries | Exhibit 2 | ||||||||||
Condensed Consolidated Balance Sheets | |||||||||||
(Unaudited) | |||||||||||
(In thousands, except per share amounts) | March 31, | December 31, | |||||||||
2020 | 2019 | ||||||||||
ASSETS | |||||||||||
Cash and cash equivalents | $ | 321,954 | $ | 33,766 | |||||||
Accounts receivable, net | 148,281 | 141,566 | |||||||||
Other current assets | 61,044 | 61,257 | |||||||||
Total current assets | 531,279 | 236,589 | |||||||||
Intangible assets, net | 292,030 | 290,421 | |||||||||
Goodwill | 159,196 | 159,196 | |||||||||
Property and equipment, net | 351,045 | 351,502 | |||||||||
Investments in unconsolidated entities | 78,583 | 78,655 | |||||||||
Notes receivable, net of allowances | 102,759 | 103,054 | |||||||||
Investments, employee benefit plans, at fair value | 21,083 | 24,978 | |||||||||
Operating lease right-of-use-assets | 23,689 | 24,088 | |||||||||
Other assets | 144,288 | 118,189 | |||||||||
Total assets | $ | 1,703,952 | $ | 1,386,672 | |||||||
LIABILITIES AND SHAREHOLDERS' DEFICIT | |||||||||||
Accounts payable | $ | 68,987 | $ | 73,449 | |||||||
Accrued expenses and other current liabilities | 65,939 | 90,364 | |||||||||
Deferred revenue | 60,442 | 71,594 | |||||||||
Current portion of long-term debt | 7,335 | 7,511 | |||||||||
Liability for guest loyalty program | 52,717 | 82,970 | |||||||||
Total current liabilities | 255,420 | 325,888 | |||||||||
Long-term debt | 1,208,945 | 844,102 | |||||||||
Deferred revenue | 126,656 | 112,662 | |||||||||
Liability for guest loyalty program | 81,291 | 46,698 | |||||||||
Operating lease liabilities | 20,196 | 21,270 | |||||||||
Deferred compensation and retirement plan obligations | 25,869 | 29,949 | |||||||||
Other liabilities | 29,429 | 29,614 | |||||||||
Total liabilities | 1,747,806 | 1,410,183 | |||||||||
Total shareholders' deficit | (43,854 | ) | (23,511 | ) | |||||||
Total liabilities and shareholders' deficit | $ | 1,703,952 | $ | 1,386,672 | |||||||
Choice Hotels International, Inc. and Subsidiaries | Exhibit 3 | ||||||
Condensed Consolidated Statements of Cash Flows | |||||||
(Unaudited) | |||||||
(In thousands) | Three Months Ended March 31, | ||||||
2020 | 2019 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 55,463 | $ | 30,081 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 6,529 | 3,616 | |||||
Depreciation and amortization - marketing and reservation system | 4,873 | 4,521 | |||||
Franchise agreement acquisition cost amortization | 2,819 | 2,685 | |||||
Impairment of goodwill and long lived assets | — | 10,401 | |||||
Gain on disposal of assets | — | (2,120 | ) | ||||
Provision for credit losses, net | 7,686 | 2,983 | |||||
Loss on extinguishment of debt | 607 | — | |||||
Non-cash stock compensation and other charges | (2,575 | ) | 3,989 | ||||
Non-cash interest and other loss (income) | 4,339 | (2,495 | ) | ||||
Deferred income taxes | (26,677 | ) | (2,257 | ) | |||
Equity in net losses from unconsolidated joint ventures, less distributions received | 2,105 | 3,954 | |||||
Franchise agreement acquisition costs, net of reimbursements | (7,122 | ) | (6,401 | ) | |||
Change in working capital & other, net of acquisition | (42,283 | ) | (31,014 | ) | |||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 5,764 | 17,943 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Investment in property and equipment | (6,229 | ) | (14,906 | ) | |||
Investment in intangible assets | (1,004 | ) | (760 | ) | |||
Proceeds from sales of assets | — | 10,585 | |||||
Contributions to equity method investments | (2,201 | ) | (8,495 | ) | |||
Distributions from equity method investments | 157 | 5,724 | |||||
Purchases of investments, employee benefit plans | (1,544 | ) | (1,603 | ) | |||
Proceeds from sales of investments, employee benefit plans | 1,697 | 1,637 | |||||
Issuance of notes receivable | (5,778 | ) | (1,755 | ) | |||
Collections of notes receivable | 63 | 5,096 | |||||
Other items, net | 14 | 197 | |||||
NET CASH USED IN INVESTING ACTIVITIES | (14,825 | ) | (4,280 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Net borrowings pursuant to revolving credit facilities | 396,800 | 42,400 | |||||
Proceeds from the issuance of long-term debt | — | 8,491 | |||||
Principal payments on long-term debt | (33,239 | ) | (123 | ) | |||
Purchase of treasury stock | (54,072 | ) | (31,951 | ) | |||
Dividends paid | (12,791 | ) | (12,163 | ) | |||
Payments on transfer of interest in notes receivable | — | (24,409 | ) | ||||
Proceeds from exercise of stock options | 1,235 | 9,203 | |||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 297,933 | (8,552 | ) | ||||
Net change in cash and cash equivalents | 288,872 | 5,111 | |||||
Effect of foreign exchange rate changes on cash and cash equivalents | (684 | ) | 57 | ||||
Cash and cash equivalents at beginning of period | 33,766 | 26,642 | |||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 321,954 | $ | 31,810 | |||
CHOICE HOTELS INTERNATIONAL, INC AND SUBSIDIARIES | Exhibit 4 | |||||||||||||||||||||||||||||||
SUPPLEMENTAL OPERATING INFORMATION | ||||||||||||||||||||||||||||||||
DOMESTIC HOTEL SYSTEM (1) | ||||||||||||||||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||||||||||||||||
For the Three Months Ended March 31, 2020 | For the Three Months Ended March 31, 2019 | Change | ||||||||||||||||||||||||||||||
Average Daily | Average Daily | Average Daily | ||||||||||||||||||||||||||||||
Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | Rate | Occupancy | RevPAR | ||||||||||||||||||||||||
Comfort(2) | $ | 87.57 | 48.3 | % | $ | 42.33 | $ | 90.78 | 56.0 | % | $ | 50.80 | (3.5 | )% | (770 | ) | bps | (16.7 | )% | |||||||||||||
Sleep | 78.82 | 48.9 | % | 38.54 | 82.35 | 55.7 | % | 45.89 | (4.3 | )% | (680 | ) | bps | (16.0 | )% | |||||||||||||||||
Quality | 72.79 | 41.7 | % | 30.37 | 75.87 | 48.0 | % | 36.40 | (4.1 | )% | (630 | ) | bps | (16.6 | )% | |||||||||||||||||
Clarion(3) | 74.60 | 36.6 | % | 27.33 | 78.39 | 43.2 | % | 33.83 | (4.8 | )% | (660 | ) | bps | (19.2 | )% | |||||||||||||||||
Econo Lodge | 57.25 | 38.3 | % | 21.94 | 59.50 | 42.2 | % | 25.10 | (3.8 | )% | (390 | ) | bps | (12.6 | )% | |||||||||||||||||
Rodeway | 59.61 | 40.9 | % | 24.36 | 60.70 | 44.4 | % | 26.98 | (1.8 | )% | (350 | ) | bps | (9.7 | )% | |||||||||||||||||
WoodSpring Suites | 47.02 | 70.3 | % | 33.05 | 45.36 | 75.0 | % | 34.04 | 3.7 | % | (470 | ) | bps | (2.9 | )% | |||||||||||||||||
MainStay | 78.35 | 53.9 | % | 42.25 | 82.51 | 58.7 | % | 48.46 | (5.0 | )% | (480 | ) | bps | (12.8 | )% | |||||||||||||||||
Suburban | 54.19 | 61.8 | % | 33.51 | 58.36 | 67.7 | % | 39.49 | (7.1 | )% | (590 | ) | bps | (15.1 | )% | |||||||||||||||||
Cambria Hotels | 131.95 | 48.2 | % | 63.55 | 134.26 | 61.3 | % | 82.26 | (1.7 | )% | (1,310 | ) | bps | (22.7 | )% | |||||||||||||||||
Ascend Hotel Collection | 119.06 | 46.2 | % | 54.99 | 116.61 | 56.0 | % | 65.26 | 2.1 | % | (980 | ) | bps | (15.7 | )% | |||||||||||||||||
Total | $ | 74.22 | 46.1 | % | $ | 34.24 | $ | 77.18 | 52.2 | % | $ | 40.28 | (3.8 | )% | (610 | ) | bps | (15.0 | )% | |||||||||||||
Effective Royalty Rate | ||||||||||||||||||||||||||||||||
For the Quarter Ended | ||||||||||||||||||||||||||||||||
3/31/2020 | 3/31/2019 | |||||||||||||||||||||||||||||||
System-wide(4) | 4.94% | 4.84% | ||||||||||||||||||||||||||||||
(1) In response to partial hotel closures resulting from the COVID-19 pandemic, the Company revised its calculation of Occupancy to be reflective of full room availability. Additionally, the Company also made minor revisions to its ADR calculations, with respect to complimentary rooms. The revised ADR, Occupancy and RevPAR are reflected in the tables above for all periods noted. | ||||||||||||||||||||||||||||||||
(2) Includes Comfort family of brand extensions including Comfort and Comfort Suites | ||||||||||||||||||||||||||||||||
(3) Includes Clarion family of brand extensions including Clarion and Clarion Pointe | ||||||||||||||||||||||||||||||||
(4) Includes United States and Caribbean countries and territories |
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES | Exhibit 5 | |||||||||||||||||||||||
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA | ||||||||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||||||||
March 31, 2020 | March 31, 2019 | Variance | ||||||||||||||||||||||
Hotels | Rooms | Hotels | Rooms | Hotels | Rooms | % | % | |||||||||||||||||
Comfort(1) | 1,621 | 127,563 | 1,614 | 126,396 | 7 | 1,167 | 0.4 | % | 0.9 | % | ||||||||||||||
Sleep | 399 | 28,188 | 396 | 28,111 | 3 | 77 | 0.8 | % | 0.3 | % | ||||||||||||||
Quality | 1,688 | 128,951 | 1,642 | 126,735 | 46 | 2,216 | 2.8 | % | 1.7 | % | ||||||||||||||
Clarion(2) | 178 | 22,548 | 173 | 21,908 | 5 | 640 | 2.9 | % | 2.9 | % | ||||||||||||||
Econo Lodge | 794 | 47,774 | 837 | 50,539 | (43 | ) | (2,765 | ) | (5.1 | )% | (5.5 | )% | ||||||||||||
Rodeway | 581 | 33,404 | 602 | 34,523 | (21 | ) | (1,119 | ) | (3.5 | )% | (3.2 | )% | ||||||||||||
WoodSpring Suites | 277 | 33,303 | 256 | 30,766 | 21 | 2,537 | 8.2 | % | 8.2 | % | ||||||||||||||
MainStay | 73 | 4,636 | 64 | 4,281 | 9 | 355 | 14.1 | % | 8.3 | % | ||||||||||||||
Suburban | 60 | 6,082 | 54 | 5,700 | 6 | 382 | 11.1 | % | 6.7 | % | ||||||||||||||
Cambria Hotels | 50 | 7,222 | 41 | 5,797 | 9 | 1,425 | 22.0 | % | 24.6 | % | ||||||||||||||
Ascend Hotel Collection | 205 | 22,202 | 179 | 14,956 | 26 | 7,246 | 14.5 | % | 48.4 | % | ||||||||||||||
Domestic Franchises(3) | 5,926 | 461,873 | 5,858 | 449,712 | 68 | 12,161 | 1.2 | % | 2.7 | % | ||||||||||||||
International Franchises | 1,219 | 136,350 | 1,147 | 118,400 | 72 | 17,950 | 6.3 | % | 15.2 | % | ||||||||||||||
Total Franchises | 7,145 | 598,223 | 7,005 | 568,112 | 140 | 30,111 | 2.0 | % | 5.3 | % | ||||||||||||||
(1) Includes Comfort family of brand extensions including Comfort and Comfort Suites | ||||||||||||||||||||||||
(2) Includes Clarion family of brand extensions including Clarion and Clarion Pointe | ||||||||||||||||||||||||
(3) Includes United States and Caribbean countries and territories |
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES | Exhibit 6 | |||||||||
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION | ||||||||||
(UNAUDITED) | ||||||||||
REVENUES, EXCLUDING MARKETING AND RESERVATION ACTIVITIES | ||||||||||
(dollar amounts in thousands) | Three Months Ended March 31, | |||||||||
2020 | 2019 | |||||||||
Total Revenues | $ | 218,175 | $ | 218,320 | ||||||
Adjustments: | ||||||||||
Marketing and reservation system revenues | (110,385 | ) | (110,064 | ) | ||||||
Revenues, excluding marketing and reservation activities | $ | 107,790 | $ | 108,256 | ||||||
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA") | ||||||||||
(dollar amounts in thousands) | Three Months Ended March 31, | |||||||||
2020 | 2019 | |||||||||
Net income | $ | 55,463 | $ | 30,081 | ||||||
Income taxes | (25,064 | ) | 6,398 | |||||||
Interest expense | 11,380 | 11,211 | ||||||||
Interest income | (2,288 | ) | (2,613 | ) | ||||||
Other losses (gains) | 4,277 | (2,198 | ) | |||||||
Loss on extinguishment of debt | 607 | — | ||||||||
Equity in net loss of affiliates | 1,955 | 2,171 | ||||||||
Depreciation and amortization | 6,529 | 3,616 | ||||||||
Gain on sale of assets, net | — | (100 | ) | |||||||
Impairment of goodwill & long-lived assets | — | 10,401 | ||||||||
Mark to market adjustments on non-qualified retirement plan investments | (4,334 | ) | 2,173 | |||||||
Operational restructuring charges | 1,364 | — | ||||||||
Share-based compensation | (2,327 | ) | 3,084 | |||||||
Marketing and reservation system reimbursable (surplus) deficit | 20,062 | 9,775 | ||||||||
Franchise agreement acquisition costs amortization | 1,598 | 1,521 | ||||||||
Adjusted EBITDA | $ | 69,222 | $ | 75,520 | ||||||
ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS) | ||||||||||
(dollar amounts in thousands, except per share amounts) | Three Months Ended March 31, | |||||||||
2020 | 2019 | |||||||||
Net income | $ | 55,463 | $ | 30,081 | ||||||
Adjustments: | ||||||||||
Marketing and reservation system reimbursable deficit | 16,328 | 7,986 | ||||||||
Impairment of goodwill & long-lived assets | — | 9,149 | ||||||||
Loss on extinguishment of debt | 493 | — | ||||||||
Operational restructuring charges | 1,070 | — | ||||||||
Foreign tax benefit on international restructuring | (30,572 | ) | — | |||||||
Adjusted Net Income | $ | 42,782 | $ | 47,216 | ||||||
Diluted Earnings Per Share | $ | 0.99 | $ | 0.54 | ||||||
Adjustments: | ||||||||||
Marketing and reservation system reimbursable deficit | 0.29 | 0.14 | ||||||||
Impairment of goodwill & long-lived assets | — | 0.16 | ||||||||
Loss on extinguishment of debt | 0.01 | — | ||||||||
Operational restructuring charges | 0.02 | — | ||||||||
Foreign tax benefit on international restructuring | (0.55 | ) | — | |||||||
Adjusted Diluted Earnings Per Share (EPS) | $ | 0.76 | $ | 0.84 | ||||||
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES | Exhibit 7 | |||||
DOMESTIC SYSTEM-WIDE OCCUPANCY VERSUS INDUSTRY (1) | ||||||
(UNAUDITED) | ||||||
Choice | Total | |||||
Week beginning | Hotels | Industry | ||||
March 8, 2020 | 51.2 | % | 53.0 | % | ||
March 15, 2020 | 38.2 | % | 30.3 | % | ||
March 22, 2020 | 30.1 | % | 22.6 | % | ||
March 29, 2020 | 28.8 | % | 21.6 | % | ||
April 5, 2020 | 27.7 | % | 21.0 | % | ||
April 12, 2020 | 30.1 | % | 23.4 | % | ||
April 19, 2020 | 31.6 | % | 26.0 | % | ||
April 26, 2020 | 34.4 | % | 28.6 | % | ||
Average | 34.0 | % | 28.3 | % | ||
(1) Source: Smith Travel Research (STR), STR Weekly Hotel Review. |