Posted:13-February-2009
Choice Hotels Reports Full Year 2008 Adjusted Diluted EPS of $1.78, Domestic Unit Growth of 6.1%
Choice Hotels International, Inc. (NYSE: CHH) reported the following highlights for fourth quarter and full year 2008:
- Adjusted diluted earnings per share ("EPS") for full year 2008 were $1.78, compared to $1.74 for full year 2007. Diluted EPS were $1.60 for full year 2008 compared to $1.70 for 2007.
- Adjusted earnings before interest, taxes and depreciation ("Adjusted EBITDA") were $200.5 million for the year ended December 31, 2008, compared to $198.1 million for the same period of 2007. Operating income for full year 2008 was $174.6 million compared to $185.2 million for the same period of 2007.
- Adjusted EBITDA and adjusted EPS for the year ended December 31, 2008 excludes special items totaling $17.7 million and $0.18 diluted EPS, respectively related to $6.6 million of benefits resulting from the previously announced acceleration of the company's management succession plan, $3.5 million related to employee termination costs and $7.6 million related to an increase in reserves related to impaired notes receivable. Adjusted EBITDA and adjusted EPS for the year ended December 31, 2007 excludes special items totaling $4.3 million and $0.04 diluted EPS, respectively related to employee termination benefits.
- Adjusted EPS for the three months ended December 31, 2008 were $0.41, compared to $0.44 for the same period of 2007. Diluted EPS for the three months ended December 31, 2008 were $0.30 compared to $0.44 for the same period of 2007.
- Adjusted EBITDA were $46.9 million for the quarter ended December 31, 2008, compared to $50.4 million for the same period of 2007. Operating income for the three months ended December 31, 2008 was $34.1 million compared to $48.1 million for the same period of 2007.
- Adjusted EBITDA and adjusted EPS for the three months ended December 31, 2008 excludes special items totaling $10.8 million and $0.11 diluted EPS, respectively related to $0.5 million of benefits resulting from the previously announced acceleration of the company's management succession plan, $2.7 million related to employee termination benefits and $7.6 million related to an increase in reserves related to impaired notes receivable. Adjusted EBITDA for the same period of 2007 excludes $0.1 million of employee termination benefits.
- Domestic unit and room growth increased 6.1 percent and 5.6 percent, respectively, for full year 2008.
- Domestic system-wide revenue per available room (RevPAR) declined 1.8% for full year 2008 and 7.7% for fourth quarter 2008 compared to the same periods of 2007. The declines for full year and fourth quarter 2008 were primarily due to a 260 basis point and 500 basis point decline in occupancy, respectively, which was partially offset by increases in the average daily rate.
- The effective royalty rate increased 6 basis points to 4.20% for the full year 2008 compared to 4.14% for the same period of the prior year.
Franchising revenues and total revenues increased 2% and 4%, respectively for full year 2008 compared to the same period in 2007. Franchising revenues declined 8% and total revenues declined 9% for fourth quarter 2008 compared to the same period in 2007.
As a result of the current economic environment and credit market conditions, new domestic hotel franchise contracts for the three months ended December 31, 2008 declined 31% to 207 compared to 301 contracts executed in the same period of the prior year. Overall, new domestic hotel franchise contracts executed for full year 2008 declined 9% to 698 compared to 770 for full year 2007.
The number of domestic hotels under construction, awaiting conversion or approved for development declined 2% from December 31, 2007 to 987 hotels representing 78,915 rooms; the worldwide pipeline increased 1% from December 31, 2007 to 1,108 hotels representing 89,105 rooms.
"While the last six months of 2008 represented a challenging time for the hotel industry, for the year, Choice Hotels was able to demonstrate strong domestic unit and room growth and increase its effective royalty rate, franchising revenues and total revenues," said Stephen P. Joyce, president and chief executive officer. "While we do not see any immediate economic turnaround or increased liquidity in the credit markets, Choice is uniquely positioned for long-term growth in this climate. With our proven, fee-based business model and financial strength, we have historically been able to perform well in a wide range of industry and economic environments. We remain focused on taking advantage of our tremendous long-term growth prospects while at the same time returning excess cash flows to our investors by way of share repurchases and dividends."
