October 24, 2012 at 17:20 PM EDT
Choice Hotels Reports Third Quarter 2012 Diluted EPS of $0.76 Per Share and Domestic RevPAR Growth of 5.6%
New Domestic Hotel Franchise Contracts Rise 13%

SILVER SPRING, Md., Oct. 24, 2012 /PRNewswire/ -- Choice Hotels International, Inc., (NYSE: CHH) today reported the following highlights for the third quarter of 2012:

  • Diluted earnings per share ("EPS") for the third quarter of 2012 of $0.76 compared to diluted EPS of $0.71 for the third quarter of 2011, a 7% increase. 
  • Earnings before interest, taxes, depreciation and amortization ("EBITDA") increased 4% to $67.3 million for the three months ended September 30, 2012, compared to $64.5 million for the three months ended September 30, 2011. Operating income increased 5% from $62.4 million for the three months ended September 30, 2011 to $65.3 million for the same period of 2012.
  • Franchising revenues increased 4% to $90.1 million for the three months ended September 30, 2012 from $86.7 million for the same period of 2011.  Total revenues increased 9% to $210.4 million for the three months ended September 30, 2012 compared to the same period of 2011.
  • Domestic royalty fees for the three months ended September 30, 2012 increased $4.1 million to $74.3 million from $70.2 million in the three months ended September 30, 2011, an increase of 6%.
  • Franchising margins increased 50 basis points from 71.6% for the three months ended September 30, 2011 to 72.1% for the same period of the current year.
  • The effective income tax rate for the three months ended September 30, 2012 was 20.3% compared to 25.7% for the same period of the prior year.
  • Income tax expense for the three months ended September 30, 2012 includes discrete items and current tax benefits totaling $7.7 million or $0.13 EPS that were not contemplated in the company's previous EPS guidance.
  • Domestic unit and room growth increased 1.3 percent and 1.0 percent from September 30, 2011, respectively. 
  • Domestic system-wide revenue per available room ("RevPAR") increased 5.6% for the three months ended September 30, 2012 compared to the same period of 2011 as occupancy and average daily rates increased 180 basis points and 2.7 percent, respectively.   
  • The company executed 89 new domestic hotel franchise contracts for the three months ended September 30, 2012 compared to 79 new domestic hotel franchise contracts in the same period of the prior year, a 13% increase.
  • The number of worldwide hotels under construction, awaiting conversion or approved for development as of September 30, 2012 was 435 hotels representing 36,150 rooms.
  • A special cash dividend in the amount of $10.41 per share or approximately $600.7 million in the aggregate was paid on August 23, 2012. The special cash dividend was paid with the proceeds of the company's recent offering of $400 million 5.75% unsecured senior notes and its new $350 million senior credit facility entered into on July 25, 2012. As a result of these transactions, and as contemplated in the company's previously provided EPS guidance, interest expense increased $6.9 million to $10.2 million for the three months ended September 30, 2012 compared to the same period of the prior year.

"The lodging industry continues to improve despite challenging global economic conditions and this is reflected in our third quarter results," said Stephen P. Joyce, president and chief executive officer. "Our RevPAR increased by approximately 6%, driven by a further improvement of hotel occupancy levels and the pricing power of our brands.  We are also pleased by the continued improvement of the development environment. We will continue to invest in programs designed to drive more reservations through our central channels, improve guest loyalty and improve the value of our brands in an effort to drive incremental business to our franchisees."

Use of Free Cash Flow
The company has historically used its free cash flow (cash flow from operations less capital expenditures) to return value to shareholders, primarily through share repurchases and dividends.

Dividends

For the nine months ended September 30, 2012, the company paid $632.8 million of cash dividends to shareholders which included a special cash dividend in the amount of $10.41 per share or approximately $600.7 million paid on August 23, 2012. The company's current quarterly dividend rate per common share is $0.185, subject to declaration by our board of directors.

Share Repurchases

During the nine months ended September 30, 2012, the company repurchased 0.5 million shares for a total cost of $19.9 million and has authorization to purchase up to an additional 1.4 million shares under this program.  The company did not repurchase any shares of common stock under the share repurchase program during the three months ended September 30, 2012. We expect to continue making repurchases under our share repurchase program in the open market and through privately negotiated transactions, subject to market and other conditions. No minimum number of share repurchases has been fixed. Since Choice announced its stock repurchase program on June 25, 1998, the company has repurchased 45.3 million shares of its common stock for a total cost of $1.1 billion through June 30, 2012. Considering the effect of a two-for-one stock split in October 2005, the company had repurchased 78.3 million shares through September 30, 2012 under the share repurchase program at an average price of $13.89 per share.

Other

Our board of directors previously authorized us to enter into programs which permit us to offer financing, investment and guaranty support to qualified franchisees as well as to acquire and resell real estate to incent franchise development for certain brands in strategic markets.  Over the next several years, we expect to continue to opportunistically deploy capital pursuant to these programs to promote growth of our emerging brands.  The amount and timing of the investment in these programs will be dependent on market and other conditions.  Notwithstanding these programs, 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.

Balance Sheet

At September 30, 2012, the company had gross debt of $819.0 million and cash and cash equivalents totaling $115.1 million resulting in net debt of $703.9 million

On June 27, 2012, the company issued unsecured senior notes in an aggregate principal amount of $400 million, in an underwritten, registered public offering. These notes will mature in July 2022 and bear a coupon rate of interest of 5.75%. Considering bond issuance costs, the company's effective interest costs related to these senior notes is approximately 5.94%.

On July 25, 2012, the company entered into a senior secured credit facility consisting of a $200 million revolving credit tranche and a $150 million term loan tranche, with a four year term. The company may elect to have borrowings under the senior secured credit facility bear interest at (i) a base rate plus a margin ranging from 100 to 325 basis points based on the company's total leverage ratio or (ii) LIBOR plus a margin ranging from 200 to 425 basis points based on the company's total leverage ratio.  As a result of entering into the senior secured credit facility, the company's existing $300 million senior unsecured revolving credit facility was terminated. Under the $300 million senior unsecured revolving credit facility the company could elect to have borrowings bear interest at (i) a base rate plus a margin ranging from 5 to 80 basis points based on the company's credit rating or (ii) LIBOR plus a margin ranging from 105 to 180 basis points based on the company's credit rating.

The proceeds from the issuance of the $400 million senior notes and the company's new senior secured credit facility were utilized to pay the special cash dividend.

Outlook
The company's fourth quarter 2012 diluted EPS is expected to be at least $0.40. The company expects full-year 2012 diluted EPS to range between $2.05 and $2.07.  EBITDA for full-year 2012 are expected to range between $201 million and $202.5 million. These estimates include the following assumptions:

  • The company expects net domestic unit growth to increase by approximately 1% in 2012;
  • RevPAR is expected to increase approximately 4% for fourth quarter of 2012 and increase between 6% and 6.5% for full-year 2012;
  • The effective royalty rate is expected to remain flat for full-year 2012;
  • All figures assume the existing share count;
  • An effective tax rate of 33.0% for the fourth quarter and 29.1% for full-year 2012 and we expect our recurring effective tax rate for future periods to be approximately 31.5%.

Conference Call
Choice will conduct a conference call on Thursday, October 25, 2012 at 9:30 a.m. EDT to discuss the company's third quarter 2012 results. The dial-in number to listen to the call is 1-866-383-8003, and the access code is 78277943. International callers should dial 1-617-597-5330 and enter the access code 78277943.  The conference call also will be Webcast simultaneously via the company's Web site, www.choicehotels.com.  Interested investors and other parties wishing to access the call via the Webcast 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 call will be recorded and available for replay beginning at 12:30 p.m. EDT on Thursday, October 25, 2012 through Thursday, November 1, 2012 by calling 1-888-286-8010 and entering access code 20807104. The international dial-in number for the replay is 1-617-801-6888, access code 20807104. In addition, the call will be archived and available on www.choicehotels.com via the Investor Info link.

About Choice Hotels
Choice Hotels International, Inc. franchises approximately 6,200 hotels, representing more than 495,000 rooms, in the United States and more than 30 other countries and territories.  As of September 30, 2012, 360 hotels, representing 29,000 rooms, were under construction, awaiting conversion or approved for development in the United States.  Additionally, 75 hotels, representing approximately 7,000 rooms, were under construction, awaiting conversion or approved for development in more than 20 other countries and territories.  The company's Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge and Rodeway Inn brands serve guests worldwide.  In addition, via its Ascend Collection membership program, travelers have upscale lodging options at historic, boutique and unique hotels.

Additional corporate information may be found on the Choice Hotels International, Inc. web site, which may be accessed at www.choicehotels.com.

Forward-Looking Statements
Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Generally, our use of words such as "expect," "estimate," "believe," "anticipate," "will," "forecast," "plan"," project," "assume" or similar words of futurity identify such forward-looking statements.  These forward-looking statements are based on management's current beliefs, assumptions and expectations regarding future events, which in turn are based on information currently available to management.  Such statements may relate to projections of the company's revenue, earnings and other financial and operational measures, company debt levels, ability to repay outstanding indebtedness, payment of dividends, and future operations, among other matters.   We caution you not to place undue reliance on any such forward-looking statements.  Forward-looking statements do not guarantee future performance and involve known and unknown risks, uncertainties and other factors.

Several factors could cause actual results, performance or achievements of the company to differ materially from those expressed in or contemplated by the forward-looking statements.  Such risks include, but are not limited to, changes to general, domestic and foreign economic conditions;  operating risks common in the lodging and franchising industries; changes to the desirability of our brands as viewed by hotel operators and customers; changes to the terms or termination of our contracts with franchisees; our ability to keep pace with improvements in technology utilized for reservations systems and other operating systems; fluctuations in the supply and demand for hotels rooms; and our ability to manage effectively our indebtedness.  These and other risk factors are discussed in detail in the Risk Factors section of the company's Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission on February 29, 2012 and our quarterly reports filed on Form 10-Q.  We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Statement Concerning Non-GAAP Financial Measurements Presented in Exhibit 8

EBITDA, franchising revenues and franchising margins are non-GAAP financial measurements.  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 operating income, total revenues and operating margins.  The company's calculation of these measurements may be different from the calculations used by other companies and therefore comparability may be limited.  The company has included an exhibit accompanying this release that reconciles these measures to the comparable GAAP measurement. We discuss management's reasons for reporting these non-GAAP measures below.

Earnings Before Interest, Taxes, Depreciation and Amortization: EBITDA reflects earnings excluding the impact of interest expense, tax expense, depreciation and amortization. Our management considers EBITDA to be an indicator of operating performance because it can be used to measure our ability to service debt, fund capital expenditures, and expand our business. EBITDA is a commonly used measure of performance in our industry. In addition, it is used by analysts, lenders, investors and others, as well as by us, to facilitate comparisons between the company and its competitors because it excludes certain items that can vary widely across different industries or among companies within the same industry.

Franchising Revenues and Margins:  The company reports franchising revenues and margins which exclude marketing and reservation revenues and hotel operations.  Marketing and reservation activities are excluded from revenues and operating margins since the company is required by its franchise agreements to use these fees collected for marketing and reservation activities. Cumulative reservation and marketing system fees not expended are recorded as a liability on the company's financial statements and are carried over to the next fiscal year and expended in accordance with the franchise agreements. Cumulative marketing and reservation expenditures in excess of system fees collected for marketing and reservation activities are recorded as a receivable on the company's financial statements. In addition, the company has the contractual authority to require that the franchisees in the system at any given point repay the company for any deficits related to marketing and reservation activities.  Hotel operations are excluded since they do not reflect the most accurate measure of the company's core franchising business. These non-GAAP measures are a commonly used measure of performance in our industry and facilitate comparisons between the company and its competitors.

Choice Hotels, Choice Hotels International, Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge, Rodeway Inn and Ascend Collectionare proprietary trademarks and service marks of Choice Hotels International.

Choice Hotels International, Inc.









 

Exhibit 1

Consolidated Statements of Income











(Unaudited)








































































Three Months Ended September 30,


Nine Months Ended September 30,









Variance






Variance





2012


2011


$


%


2012


2011


$


%

(In thousands, except per share amounts)



































REVENUES:





































   Royalty fees



$                 80,845


$              77,090


$     3,755


5%


$              194,762


$               182,504


$     12,258


7%

   Initial franchise and relicensing fees

3,247


3,583


(336)


(9%)


8,953


9,083


(130)


(1%)

   Procurement services


3,839


4,103


(264)


(6%)


13,990


14,037


(47)


(0%)

   Marketing and reservation 


119,062


104,393


14,669


14%


284,624


258,192


26,432


10%

   Hotel operations



1,238


1,236


2


0%


3,440


3,173


267


8%

   Other




2,182


1,916


266


14%


7,434


5,914


1,520


26%

      Total revenues


210,413


192,321


18,092


9%


513,203


472,903


40,300


9%




















OPERATING EXPENSES:




































   Selling, general and administrative

23,170


22,555


615


3%


72,073


72,941


(868)


(1%)

   Depreciation and amortization


1,995


2,073


(78)


(4%)


5,989


5,976


13


0%

   Marketing and reservation


119,062


104,393


14,669


14%


284,624


258,192


26,432


10%

   Hotel operations



933


900


33


4%


2,609


2,593


16


1%

Total operating expenses


145,160


129,921


15,239


12%


365,295


339,702


25,593


8%




















Operating income



65,253


62,400


2,853


5%


147,908


133,201


14,707


11%




















OTHER INCOME AND EXPENSES, NET:
















   Interest expense



10,166


3,228


6,938


215%


16,823


9,719


7,104


73%

   Interest income



(425)


(506)


81


(16%)


(1,156)


(937)


(219)


23%

   Loss on extinguishment of debt

526


-


526


NM


526


-


526


NM

   Other (gains) and losses


(511)


2,673


(3,184)


(119%)


(2,137)


3,678


(5,815)


(158%)

   Equity in net (income) loss of affiliates

(171)


39


(210)


(538%)


12


(262)


274


(105%)

   Total other income and expenses, net

9,585


5,434


4,151


76%


14,068


12,198


1,870


15%




















Income before income taxes


55,668


56,966


(1,298)


(2%)


133,840


121,003


12,837


11%

Income taxes



11,291


14,664


(3,373)


(23%)


37,604


35,393


2,211


6%

Net income



$                 44,377


$              42,302


$     2,075


5%


$                96,236


$                85,610


$     10,626


12%







































Basic earnings per share


$                     0.77


$                  0.71


$      0.06


8%


$                   1.66


$                    1.43


$        0.23


16%




















Diluted earnings per share


$                     0.76


$                  0.71


$      0.05


7%


$                   1.65


$                    1.43


$        0.22


15%







































 

 

Choice Hotels International, Inc.




Exhibit 2

Consolidated Balance Sheets





















(In thousands, except per share amounts)

 September 30, 


 December 31, 






2012


2011






(Unaudited)











ASSETS















Cash and cash equivalents



$           115,064


$         107,057

Accounts receivable, net



66,196


53,012

Investments, employee benefit plans, at fair value

3,668


12,094

Other current assets



29,749


22,633


Total current assets



214,677


194,796









Fixed assets and intangibles, net


133,382


135,252

Receivable -- marketing and reservation fees

46,249


54,014

Investments, employee benefit plans, at fair value

12,530


11,678

Other assets




76,233


51,949











Total assets


$           483,071


$         447,689

























LIABILITIES AND SHAREHOLDERS' DEFICIT












Accounts payable and accrued expenses

$              87,784


$            92,240

Deferred revenue



76,949


68,825

Deferred compensation & retirement plan obligations

17,870


18,935

Current portion of long-term debt


10,065


673

Other current liabilities



14,506


3,892


Total current liabilities


207,174


184,565









Long-term debt



808,911


252,032

Deferred compensation & retirement plan obligations  

19,992


20,593

Other liabilities




16,391


16,060










Total liabilities



1,052,468


473,250









Common stock, $0.01 par value


581


583

Additional paid-in-capital



107,939


102,665

Accumulated other comprehensive loss

(5,904)


(6,801)

Treasury stock, at cost



(930,487)


(916,955)

Retained earnings



258,474


794,947










Total shareholders' deficit


(569,397)


(25,561)











Total liabilities and shareholders' deficit

$           483,071


$         447,689









 

 

Choice Hotels International, Inc.



Exhibit 3

Consolidated Statements of Cash Flows




(Unaudited)














(In thousands)

Nine Months Ended September 30,






2012


2011

CASH FLOWS FROM OPERATING ACTIVITIES:








Net income

$                    96,236


$              85,610





Adjustments to reconcile net income to net cash provided 




 by operating activities:




  Depreciation and amortization  

5,989


5,976

  Provision for bad debts, net

1,802


845

  Non-cash stock compensation and other charges

7,306


10,262

  Non-cash interest and other (income) loss

(633)


3,079

  Loss on extinguishment of debt

526


-

  Dividends received from equity method investments

855


316

  Equity in net (income) loss of affiliates

12


(262)





Changes in assets and liabilities:




  Receivables

(17,405)


(15,494)

  Receivable - marketing and reservation fees, net

20,811


(1,474)

  Accounts payable

5,980


4,468

  Accrued expenses

(10,309)


(10,584)

  Income taxes payable/receivable

12,786


14,354

  Deferred income taxes

(1,627)


2,839

  Deferred revenue

8,018


9,375

  Other assets

(7,458)


(556)

  Other liabilities

(1,613)


(2,861)





 NET CASH PROVIDED BY OPERATING ACTIVITIES

121,276


105,893





CASH FLOWS FROM INVESTING ACTIVITIES:








Investment in property and equipment

(12,525)


(8,129)

Equity method investments

(9,454)


(3,600)

Purchases of investments, employee benefit plans

(1,191)


(1,051)

Proceeds from sales of investments, employee benefit plans

10,909


566

Issuance of notes receivable

(7,305)


(4,320)

Collections of notes receivable

326


15

Other items, net

(322)


(312)





 NET CASH USED IN INVESTING ACTIVITIES

(19,562)


(16,831)





CASH FLOWS FROM FINANCING ACTIVITIES:








Net borrowings (repayments) pursuant to revolving credit facilities

16,725


(200)

Repayments of long-term debt

(502)


(74)

Proceeds from the issuance of long-term debt

543,500


75

Purchase of treasury stock

(22,227)


(24,796)

Dividends paid

(632,751)


(32,923)

Excess tax benefits from stock-based compensation

793


1,108

Debt issuance costs

(4,753)


(2,356)

Proceeds from exercise of stock options

4,695


3,726





 NET CASH USED IN FINANCING ACTIVITIES

(94,520)


(55,440)





Net change in cash and cash equivalents

7,194


33,622

Effect of foreign exchange rate changes on cash and cash equivalents

813


(147)

Cash and cash equivalents at beginning of period

107,057


91,259





CASH AND CASH EQUIVALENTS AT END OF PERIOD

$                  115,064


$            124,734





 

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 4

SUPPLEMENTAL OPERATING INFORMATION 


DOMESTIC HOTEL SYSTEM


(UNAUDITED)




























































































For the Nine Months Ended September 30, 2012*


For the Nine Months Ended September 30, 2011*


Change



























Average Daily






Average Daily






Average Daily










Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR

























Comfort Inn


$             81.52


59.2%


$          48.24


$             79.24


57.0%


$         45.18


2.9%


220

bps


6.8%



Comfort Suites


85.62


61.8%


52.92


83.92


58.4%


49.05


2.0%


340

bps


7.9%



Sleep


72.29


56.3%


40.68


69.92


53.5%


37.39


3.4%


280

bps


8.8%



Quality


69.84


51.8%


36.14


67.95


49.9%


33.90


2.8%


190

bps


6.6%



Clarion


74.98


49.4%


37.00


73.76


46.7%


34.42


1.7%


270

bps


7.5%



Econo Lodge


55.76


48.7%


27.13


54.75


47.2%


25.83


1.8%


150

bps


5.0%



Rodeway


53.59


51.3%


27.48


52.13


48.6%


25.33


2.8%


270

bps


8.5%



MainStay


69.27


70.4%


48.79


66.17


67.1%


44.38


4.7%


330

bps


9.9%



Suburban


41.24


69.9%


28.82


40.24


67.7%


27.25


2.5%


220

bps


5.8%



Ascend Collection


112.27


63.5%


71.25


109.82


59.9%


65.81


2.2%


360

bps


8.3%

























Total 


$             73.65


55.5%


$          40.89


$             71.78


53.3%


$         38.24


2.6%


220

bps


6.9%

























* Operating statistics represent hotel operations from December through August






























































For the Three Months Ended September 30, 2012*


For the Three Months Ended September 30, 2011*


Change



























Average Daily






Average Daily






Average Daily










Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR


Rate


Occupancy


RevPAR

























Comfort Inn


$             87.58


70.2%


$          61.46


$             85.05


68.6%


$         58.31


3.0%


160

bps


5.4%



Comfort Suites


89.69


70.2%


62.93


87.23


67.8%


59.13


2.8%


240

bps


6.4%



Sleep


76.09


64.8%


49.32


73.15


62.9%


46.02


4.0%


190

bps


7.2%



Quality


75.02


61.2%


45.88


72.90


59.8%


43.60


2.9%


140

bps


5.2%



Clarion


79.73


58.7%


46.82


78.13


55.1%


43.01


2.0%


360

bps


8.9%



Econo Lodge


60.60


57.7%


34.97


59.32


56.4%


33.45


2.2%


130

bps


4.5%



Rodeway


59.62


60.8%


36.23


58.23


58.8%


34.22


2.4%


200

bps


5.9%



MainStay


73.17


76.5%


55.96


69.45


77.3%


53.68


5.4%


(80)

bps


4.2%



Suburban


42.62


75.1%


32.03


41.00


72.8%


29.85


4.0%


230

bps


7.3%



Ascend Collection


115.98


71.4%


82.77


113.61


67.3%


76.50


2.1%


410

bps


8.2%

























Total 


$             78.63


65.0%


$          51.09


$             76.53


63.2%


$         48.39


2.7%


180

bps


5.6%















































* Operating statistics represent hotel operations from June through August





















































































For the Quarter Ended




For the Nine Months Ended














9/30/2012


9/30/2011




9/30/2012


9/30/2011


































System-wide effective royalty rate


4.29%


4.29%




4.31%


4.32%


































 



















CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 5

SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA


(UNAUDITED)


























































September 30, 2012


September 30, 2011


Variance






















Hotels


Rooms


Hotels


Rooms


Hotels


Rooms


%


%




















Comfort Inn


1,367


106,970


1,413


110,652


(46)


(3,682)


(3.3%)


(3.3%)


Comfort Suites


603


46,647


616


47,667


(13)


(1,020)


(2.1%)


(2.1%)


Sleep


390


28,232


392


28,431


(2)


(199)


(0.5%)


(0.7%)


Quality


1,101


95,469


1,037


90,368


64


5,101


6.2%


5.6%


Clarion


187


26,943


189


27,448


(2)


(505)


(1.1%)


(1.8%)


Econo Lodge


803


49,248


782


48,381


21


867


2.7%


1.8%


Rodeway


409


23,336


378


20,820


31


2,516


8.2%


12.1%


MainStay


39


2,997


39


3,027


-


(30)


0.0%


(1.0%)


Suburban


60


6,978


58


6,934


2


44


3.4%


0.6%


Ascend Collection


56


4,946


46


4,084


10


862


21.7%


21.1%


Cambria Suites


19


2,221


19


2,215


-


6


0.0%


0.3%




















Domestic Franchises


5,034


393,987


4,969


390,027


65


3,960


1.3%


1.0%




















International Franchises


1,165


102,942


1,169


103,473


(4)


(531)


(0.3%)


(0.5%)




















Total Franchises


6,199


496,929


6,138


493,500


61


3,429


1.0%


0.7%






































 



















Exhibit 6


CHOICE HOTELS INTERNATIONAL, INC.

SUPPLEMENTAL INFORMATION BY BRAND

DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS

(UNAUDITED)



















































































For the Nine Months Ended September 30, 2012


For the Nine Months Ended September 30, 2011


% Change
























New






New






New








Construction


Conversion


Total


Construction


Conversion


Total


Construction


Conversion


Total






















Comfort Inn


10


17


27


6


28


34


67%


(39%)


(21%)


Comfort Suites


11


4


15


7


4


11


57%


0%


36%


Sleep


17


1


18


6


1


7


183%


0%


157%


Quality


-


88


88


-


49


49


NM


80%


80%


Clarion


-


14


14


-


12


12


NM


17%


17%


Econo Lodge


-


33


33


-


36


36


NM


(8%)


(8%)


Rodeway


-


46


46


-


32


32


NM


44%


44%


MainStay


2


1


3


1


3


4


100%


(67%)


(25%)


Suburban


1


1


2


2


2


4


(50%)


(50%)


(50%)


Ascend Collection


1


8


9


2


9


11


(50%)


(11%)


(18%)


Cambria Suites


4


-


4


4


-


4


0%


NM


0%






















Total Domestic System


46


213


259


28


176


204


64%


21%


27%








































































































For the Three Months Ended September 30, 2012


For the Three Months Ended September 30, 2011


% Change
























New






New






New








Construction


Conversion


Total


Construction


Conversion


Total


Construction


Conversion


Total






















Comfort Inn


4


5


9


1


10


11


300%


(50%)


(18%)


Comfort Suites


4


-


4


6


-


6


(33%)


NM


(33%)


Sleep


6


-


6


3


-


3


100%


NM


100%


Quality


-


25


25


-


14


14


NM


79%


79%


Clarion


-


7


7


-


4


4


NM


75%


75%


Econo Lodge


-


15


15


-


18


18


NM


(17%)


(17%)


Rodeway


-


15


15


-


14


14


NM


7%


7%


MainStay


1


-


1


-


-


-


NM


NM


NM


Suburban


1


-


1


-


1


1


NM


(100%)


0%


Ascend Collection


-


4


4


2


4


6


(100%)


0%


(33%)


Cambria Suites


2


-


2


2


-


2


0%


NM


0%






















Total Domestic System


18


71


89


14


65


79


29%


9%


13%






























































 























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.









































































Variance



September 30, 2012


September 30, 2011















Units


Units


Conversion


New Construction


Total



Conversion


New Construction


Total


Conversion


New Construction


Total


Units


%


Units


%


Units


%


























Comfort Inn


23


39


62


23


47


70


-


0%


(8)


(17%)


(8)


(11%)

Comfort Suites


1


77


78


1


105


106


-


0%


(28)


(27%)


(28)


(26%)

Sleep 


1


38


39


-


62


62


1


NM


(24)


(39%)


(23)


(37%)

Quality


37


3


40


29


5


34


8


28%


(2)


(40%)


6


18%

Clarion


18


1


19


10


1


11


8


80%


-


0%


8


73%

Econo Lodge


23


1


24


31


1


32


(8)


(26%)


-


0%


(8)


(25%)

Rodeway


25


-


25


18


1


19


7


39%


(1)


(100%)


6


32%

MainStay


1


18


19


3


28


31


(2)


(67%)


(10)


(36%)


(12)


(39%)

Suburban


2


14


16


1


20


21


1


100%


(6)


(30%)


(5)


(24%)

Ascend Collection


9


4


13


7


5


12


2


29%


(1)


(20%)


1


8%

Cambria Suites


-


25


25


-


32


32


-


NM


(7)


(22%)


(7)


(22%)




























140


220


360


123


307


430


17


14%


(87)


(28%)


(70)


(16%)



























CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 8


SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION




(UNAUDITED)















CALCULATION OF FRANCHISING REVENUES AND FRANCHISING MARGINS





















(dollar amounts in thousands)


Three Months Ended September 30, 


Nine Months Ended September 30, 


















2012


2011


2012


2011




Franchising Revenues:
























Total Revenues


$              210,413


$               192,321


$               513,203


$              472,903




Adjustments:












     Marketing and reservation revenues


(119,062)


(104,393)


(284,624)


(258,192)




     Hotel operations


(1,238)


(1,236)


(3,440)


(3,173)




Franchising Revenues


$                90,113


$                 86,692


$               225,139


$              211,538
















Franchising Margins:
























Operating Margin:
























Total Revenues


$              210,413


$               192,321


$               513,203


$              472,903




Operating Income


$                65,253


$                 62,400


$               147,908


$              133,201




     Operating Margin


31.0%


32.4%


28.8%


28.2%
















Franchising Margin:
























Franchising Revenues


$                90,113


$                 86,692


$               225,139


$              211,538
















Operating Income


$                65,253


$                 62,400


$               147,908


$              133,201




Hotel operations


(305)


(336)


(831)


(580)






$                64,948


$                 62,064


$               147,077


$              132,621
















    Franchising Margins


72.1%


71.6%


65.3%


62.7%







































EBITDA Reconciliation























(in millions)














Q3 2012 Actuals


Q3 2011 Actuals


Nine Months Ended

September 30, 2012

 Actuals


Nine Months Ended September 30, 2011 Actuals


Full-Year 2012

Outlook














Operating Income (per GAAP)


$                   65.3


$                     62.4


$                   147.9


$                  133.2


 $192.9 - $194.4   


Depreciation and amortization


2.0


2.1


6.0


6.0


8.1


Earnings before interest, taxes, depreciation & amortization (non-GAAP)


$                   67.3


$                     64.5


$                   153.9


$                  139.2


 $201 - $202.5   













 

SOURCE Choice Hotels International, Inc.

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