ENP Newswire -
Release date- 10082014 -
Diluted earnings per share ('EPS') from continuing operations for the three months ended
Earnings before interest, taxes, depreciation and amortization ('EBITDA') from franchising activities for the three months ended
Franchising revenues for the three months ended
Franchising margins for the three months ended
Domestic royalty fees for the three months ended
Domestic unit and room growth increased 1.8 percent and 0.9 percent from
Domestic system-wide revenue per available room ('RevPAR') increased 7.6 percent in the second quarter of 2014 as occupancy and average daily rates increased 280 basis points and 2.9 percent, respectively from the same period of 2013. RevPAR for the three months ended
The company executed 125 new domestic hotel franchise contracts for the three months ended
The company's domestic pipeline of hotels under construction, awaiting conversion or approved for development increased 16% from
'During the second quarter, momentum in our core lodging business was very strong and we are pleased with our performance, which exceeded our expectations. We achieved continued net domestic unit growth, strong development results and a nearly 8% percent increase in domestic RevPAR,' said
In the first quarter of 2014, the company entered into a plan to sell its three owned hotels operated under the MainStay Suites brand. The company determined that the disposal of these hotels met the definition of a discontinued operation since the operations and cash flows of these components will be eliminated from the on-going operations of the company and the company will not have significant continuing involvement in the operations of the hotels after the disposal transaction.
The company's consolidated statements of income for the three months and six months ended
The company's consolidated 2014 outlook reflects continued growth of the company's core hotel franchising business, continued investment in the SkyTouch division and the sale of the three company-owned Mainstay Suites hotels described above as well as the following assumptions:
All figures assume no repurchases of common stock under the company's share repurchase program; and
The effective tax rate for continuing operations is expected to be 30.7% for the third quarter and full-year 2014.
EBITDA from franchising activities for full-year 2014 are expected to range between
Net domestic unit growth for 2014 is expected to range between 1% and 2%;
RevPAR is expected to increase approximately 6.5% for the third quarter and 6.25% to 7.25% for full-year 2014; and
The effective royalty rate is expected to decline 4 basis points for full-year 2014.
Reductions in EBITDA from our investment in SkyTouch for full-year 2014 are expected to be approximately
We continue to expect execution of third-party contracts representing annualized revenue ranging between
SG&A expenses related to SkyTouch are forecast to be approximately
Company EBITDA projections exclude the three company-owned Mainstay Suites hotels which generated EBITDA of approximately
Diluted EPS projections for the full-year 2014 include a gain on sale of the three company-owned Mainstay Suites hotels totaling
The company's third quarter 2014 diluted EPS is expected to be
Items Impacting Comparability
We reported on
We believe that this change in the timing of our revenue recognition for these fees will make it easier for analysts and investors to compare our results to other lodging companies.
The financial results and supplemental operating information as of and for the periods ended
As a result of this change, the income statement and cash flow statement included herein for the periods ended
Due to the seasonality of the company's business, the impact of the new revenue recognition practice will generally be positive for the first two quarters of the year and negative in the final two quarters of the year. However, this change is expected to result in immaterial positive revisions to total revenues, operating income and earnings per share for the full years ended
More information about this accounting change and restatement can be found in the Company's Form 8-K filed on
Choice will conduct a conference call on
The call will be recorded and available for replay beginning at
SkyTouch Technology is a division of
Additional corporate information can be found on the
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. Forward-looking statements also include statements regarding expected timing of filings, materiality or significance, the quantitative effects of the restated financial statements, and any anticipated conclusions of the company, the audit committee of our board of directors or management. 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. Specifically, with respect to the restatements, these factors also include the risk that additional information may arise prior to the expected filings with the
Statement Concerning Non-GAAP Financial Measurements Presented in this Press Release
EBITDA, franchising revenues, franchising SG&A, franchising EBITDA and franchising margins are non-GAAP financial measurements. These measures should not be considered as an alternative to any measure of performance or liquidity as promulgated under or authorized by generally accepted accounting principles in
Earnings Before Interest, Taxes, Depreciation and Amortization: EBITDA reflects income from continuing operations excluding the impact of interest expense, interest income, provision for income taxes, depreciation and amortization, other (gains) and losses and equity in net income of unconsolidated affiliates. We consider EBITDA to be an indicator of operating performance because we use it to measure our ability to service debt, fund capital expenditures, and expand our business. We also use EBITDA, as do analysts, lenders, investors and others, to evaluate companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company's capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. EBITDA also excludes depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.
Franchising Revenues, Operating Income, EBITDA, SG&A and Margins: The company reports franchising revenues, operating income, EBITDA, SG&A and margins which exclude marketing and reservation revenues and SkyTouch Technology operations. Marketing and reservation activities are excluded since the company is required by its franchise agreements to use the fees collected for marketing and reservation activities; as such, no income or loss to the company is generated. Cumulative marketing and reservation system fees not expended are recorded as a liability in the company's financial statements and are carried over to the next year and expended in accordance with the franchise agreements. Cumulative marketing and reservation expenditures in excess of fees collected for marketing and reservation activities are deferred and recorded as an asset in the company's financial statements and recovered in future periods. SkyTouch Technology is a division of the company that develops and markets cloud-based technology products, including inventory management, pricing and connectivity to third party channels, to hoteliers not under franchise agreements with the company. The operations for SkyTouch Technology are excluded since they do not reflect the company's core franchising business but are an adjacent, complimentary line of business. These non-GAAP measures are a commonly used measure of performance in our industry and facilitate comparisons between the company and its competitors.
1 See the discussion under 'Items Impacting Comparability' below for information about how the recently announced accounting change and restatement of certain 2013 interim periods impacts the comparative discussion of our results of operations contained herein.
Consolidated Statements of Income: See Full Press Release at:
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