EX-99.1 2 exhibit991-123118.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1


choicea14.jpg


For Immediate Release


CHOICE HOTELS INTERNATIONAL EXCEEDS TOP END OF FULL YEAR GUIDANCE FOR EPS AND REPORTS LARGEST DOMESTIC PIPELINE IN COMPANY’S HISTORY

ROCKVILLE, Md. (Feb. 15, 2019) - Choice Hotels International, Inc. (NYSE: CHH), one of the world's largest hotel companies, today reported its results for the three months and year ended December 31, 2018. Highlights include:

•
Net income was $31.5 million for the fourth quarter 2018 and $216.4 million for the full year, representing diluted earnings per share (EPS) of $0.56 and $3.80, respectively.
 
•
Adjusted net income, excluding certain items described in Exhibit 6, increased 34 percent in 2018 to $221.5 million over the prior year.

•
The company’s full year adjusted EPS increased 34 percent over the prior full year period to $3.89, while full year adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 14 percent over 2017 to $341 million.

•
The company exceeded the top end of its full year adjusted EBITDA guidance by $1 million and the top end of its fourth quarter and full year adjusted EPS guidance by $0.03 per share.

•
The company repurchased 1.9 million shares of common stock for an aggregate cost of $149 million for the full year 2018.
 
•
The company awarded 756 new domestic franchise contracts, making 2018 the company’s best development year in over a decade.

•
Total domestic pipeline of hotels awaiting conversion, under construction, or approved for development, as of December 31, 2018 surpassed 1,000 hotels, representing the largest domestic pipeline in the company’s history.

Additionally, during 2018, the company:

•
Achieved a 14 percent growth in the number of rooms in the company’s upscale brands, Cambria and Ascend as of December 31, 2018 from December 31, 2017.

•
Further strengthened its midscale presence by unveiling and awarding 21 domestic franchise agreements for Clarion Pointe, a midscale select-service brand extension of Clarion that meets strong demand from guests and hotel owners alike.

•
Awarded 161 new franchise agreements across the company’s extended stay portfolio of brands following the acquisition of WoodSpring Suites, the nation’s fastest-growing economy hotel brand.

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•
Continued the $2.5 billion transformation of its flagship Comfort brand, which is progressing on schedule.

“Our strong 2018 performance represents more than a singular good year-it builds on years of success and validates our long-term focus,” said Patrick Pacious, president and chief executive officer, Choice Hotels. “As Choice celebrates 80 years in business, these impressive results are proof that investing in our current brands, launching new brands, and further enhancing our business-delivery capabilities have provided a runway for long-term growth.”

Additional details for the company’s 2018 fourth quarter and full year results are as follows:

Overall Results

•
Total revenues for the fourth quarter and full year 2018 were $245 million and $1 billion, respectively, an increase of 11 percent from the total revenues reported for the same periods of 2017.

•
Total hotel franchising revenues for full year 2018 increased 12 percent over the prior year to $483.4 million and increased 13 percent from the fourth quarter of the prior year to $114.5 million.

•
Adjusted EBITDA from hotel franchising activities for the full year was $346.6 million, a 14 percent increase from full year 2017. Adjusted EBITDA from hotel franchising activities for the fourth quarter was $77.5 million, a 12 percent increase from the fourth quarter of the prior year.

•
Adjusted EPS increased 29 percent in fourth quarter 2018 to $0.88 over the prior year fourth quarter.

Royalties

•
Full year domestic royalties increased 11 percent, to $354.7 million, from the same period of 2017. Domestic royalty fees for the fourth quarter totaled $80.3 million, a 10 percent increase from the fourth quarter of 2017.

•
The number of domestic franchised hotels and rooms, as of December 31, 2018, increased 6.6 percent and 9.0 percent, respectively, from December 31, 2017.

•
International franchised hotels and rooms as of December 31, 2018, increased 2.8 percent and 5.8 percent, respectively, from December 31, 2017.

•
Opened the 40th location, initiated a record number of ground-breakings and have 23 hotels under active construction for its upscale Cambria brand.

•
Opened the 1,600th domestic Quality brand hotel, proving its timelessness and consistent demand.

•
Effective domestic royalty rate for full year 2018 increased 14 basis points over the prior year and increased 11 basis points for the fourth quarter 2018 over the prior year fourth quarter.

•
Domestic systemwide revenue per available room (RevPAR) increased 0.7 percent and 1.2 percent for the fourth quarter and full year 2018, respectively, compared to the same periods of the prior year.

Development


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•
New executed domestic franchise agreements totaled 287 in the fourth quarter of 2018, bringing the total full year executed domestic franchise agreements to 756, an increase of 7 percent over the prior year.

•
New domestic franchise agreements for the company’s extended-stay brands totaled 161 for the full year 2018, an increase of 156 percent (37 percent excluding WoodSpring Suites) from the comparable period of 2017.

•
New construction domestic franchise agreements increased 30 percent for full year 2018 compared to full year 2017.

•
The company awarded 155 new conversion domestic franchise agreements in the fourth quarter of 2018, bringing the total full year new conversion domestic franchise agreements to 434.

•
The company’s total domestic pipeline of hotels awaiting conversion, under construction, or approved for development, as of December 31, 2018, increased 20 percent to 1,026 hotels from December 31, 2017.

•
The new-construction domestic pipeline totaled 773 hotels at December 31, 2018, a 27 percent increase from December 31, 2017.


Use of Cash Flows

Dividends
During full year 2018, the company paid cash dividends totaling approximately $49 million. Based on the current quarterly dividend rate of $0.215 per share of common stock, the company expects to pay dividends totaling approximately $48 million during 2019.

Stock Repurchases
During full year 2018, the company repurchased approximately $149 million in shares of common stock under its stock repurchase program, as well as through repurchases from employees in connection with tax withholding and option exercises relating to awards under the company’s equity incentive plans. At December 31, 2018, the company had authorization to purchase up to 2.2 million additional shares of common stock under its share repurchase program.

Hotel Development & Financing
Pursuant to its program to encourage acceleration of the growth of the upscale Cambria Hotels brand, the company advanced approximately $105 million in support of the brand’s development during the year ended December 31, 2018. The company also recycled approximately $10 million of prior investments in Cambria Hotels development projects, resulting in net advances of $95 million for the year ended December 31, 2018. Advances under this program are primarily in the form of joint-venture investments, forgivable key-money loans, senior mortgage loans, development loans, and mezzanine lending, as well as through the operation of a land-banking program. As of December 31, 2018, the company had approximately $342 million reflected in its consolidated balance sheet pursuant to these financial support activities. With respect to lending and joint-venture investments, the company generally expects to recycle these loans and investments within a five-year period.

Revenue Recognition
Effective January 1, 2018, the company adopted the new revenue recognition standard (“ASC 606”) on a full retrospective basis. As a result, the condensed financial statements for the three months and year ended December 31, 2017, have been recast as if the new revenue standard had been adopted on January 1, 2016. The adoption of ASC 606 did not change the timing of cash flows or cash available for return to shareholders but did alter the timing of earnings recognition. In addition, the

3


adoption of ASC 606 resulted in changes in classifications of certain items within the company’s financial statements. A discussion of the revenue recognition changes can be found in the 2017 Form 10-K the company filed on March 1, 2018, as well as the quarterly reports filed on Form 10-Q for the three, six and nine months ended in 2018 which are available on Choice’s Investor Relations website at http://investor.choicehotels.com/.


Outlook
The adjusted numbers in the company’s outlook exclude the net surplus or deficit generated from the company’s marketing and reservation system activities, as well as other items. See Exhibit 7 for the calculation of adjusted forecasted results and the reconciliation to the comparable GAAP measures.
•
Net income for full-year 2019 is expected to range between $193 million and $201 million, or $3.44 to $3.58 per diluted share.

•
Adjusted diluted EPS for full-year 2019 is expected to range between $4.00 to $4.13. The company expects full-year 2019 adjusted net income to range between $224 million and $232 million.

•
The company’s first quarter 2019 adjusted diluted EPS is expected to range between $0.72 to $0.76.

•
Adjusted EBITDA for full-year 2019 is expected to range between $354 million and $363 million

•
Net domestic unit growth for 2019 is expected to range between 2 percent and 3 percent.

•
Domestic RevPAR is expected to remain unchanged for the first quarter of 2019 against a strong comparable of 3.5 percent growth in the first quarter of 2018. Domestic RevPAR is expected to increase between 0.5 percent and 2.0 percent for full year 2019.

•
The domestic effective royalty rate is expected to increase between 8 and 12 basis points for full year 2019 as compared to full year 2018.

•
The effective tax rate is expected to be approximately 22 percent for first quarter and full-year 2019.

•
Adjusted diluted EPS estimates are based on the current number of shares of common stock outstanding and, therefore, do not reflect any subsequent changes that may occur due to new equity grants or further repurchases of common stock under the company’s stock repurchase program.


Conference Call
Choice Hotels International will conduct a conference call on Friday, February 15, 2019, at 10:00 a.m. ET to discuss the company’s 2018 fourth quarter and full-year earnings results. The dial-in number to listen to the call domestically is 888-349-0087 and the number for international participants is 1-412-902-6767. A live webcast will also be available on the company’s investor relations website, http://investor.choicehotels.com/, and can be accessed via the Events and Presentations tab.  




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About Choice Hotels 
Choice Hotels International, Inc. (NYSE: CHH) is one of the largest and most successful lodging franchisors in the world. With more than 7,000 hotels, representing nearly 570,000 rooms, in over 40 countries and territories as of December 31, 2018, the Choice® family of hotel brands provide business and leisure travelers with a range of high-quality lodging options from limited service to full-service hotels in the upscale, midscale, extended-stay and economy segments. The award-winning Choice Privileges® loyalty program offers members benefits ranging from everyday rewards to exceptional experiences. For more information, visit 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,” “should,” “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, repurchases of common stock, future operations, and expected benefits from the Tax Cuts and Jobs Act, 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; foreign currency fluctuations; 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 marketing and reservations systems and other operating systems; our ability to grow our franchise system; exposure to risks related to our hotel-development and financing activities; fluctuations in the supply and demand for hotels rooms; our ability to realize anticipated benefits from acquired businesses; the level of acceptance of alternative growth strategies we may implement; operating risks associated with our international operations; the outcome of litigation; and our ability to manage our indebtedness. These and other risk factors are discussed in detail in the company's filings with the Securities and Exchange Commission, including our annual reports filed on Form 10-K and our quarterly reports filed on Form 10-Q. Except as may be required by law, we undertake no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Non-GAAP Financial Measurements
The company evaluates its operations utilizing the performance metrics of Adjusted EBITDA, hotel franchising revenues, adjusted hotel franchising SG&A, adjusted EBITDA from hotel franchising activities, adjusted hotel franchising margins, adjusted net income, and adjusted diluted EPS, which are all non-GAAP financial measurements. These measures, which are reconciled to the comparable GAAP measures in Exhibit 6, should not be considered as an alternative to any measure of performance or liquidity as promulgated under or authorized by GAAP, such as net income, EPS, 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.

We discuss management’s reasons for reporting these non-GAAP measures and how each non-GAAP measure is calculated below.

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In addition to the specific adjustments noted below with respect to each measure, the non-GAAP measures presented herein also exclude acquisition-related transition and transaction costs, costs associated with the acceleration of the company’s executive succession plan, impairment of below-market lease intangibles, impairment of goodwill related to the company’s operations that provide Software as a Service (“SaaS”) technology solutions to vacation-rental management companies, loan impairments, estimated one-time transition taxes on tax legislation enacted into law on December 22, 2017, and debt-restructuring costs to allow for period-over-period comparison of ongoing core operations before the impact of these discrete and infrequent charges.

Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization: Adjusted EBITDA reflects net income excluding the impact of interest expense, interest income, provision for income taxes, depreciation and amortization, franchise-agreement acquisition cost amortization, other (gains) and losses, equity in net income (loss) of unconsolidated affiliates, mark-to-market adjustments on non-qualified retirement plan investments, and surplus or deficits generated by marketing and reservation-system activities. We consider adjusted EBITDA to be an indicator of operating performance because it measures our ability to service debt, fund capital expenditures, and expand our business. We also use adjusted EBITDA, as do analysts, lenders, investors, and others, to evaluate companies because it excludes certain items that can vary widely across 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. Adjusted 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 or amortizing franchise-agreement acquisition costs. These differences can result in considerable variability in the relative asset costs and estimated lives and, therefore, the depreciation and amortization expense among companies. Mark-to-market adjustments on non-qualified retirement-plan investments recorded in SG&A are excluded from EBITDA, as the company accounts for these investments in accordance with accounting for deferred-compensation arrangements when investments are held in a rabbi trust and invested. Changes in the fair value of the investments are recognized as both compensation expense in SG&A and other gains and losses. As a result, the changes in the fair value of the investments do not have a material impact on the company’s net income. Surpluses and deficits generated from marketing and reservation activities are excluded, as the company’s franchise agreements require the marketing and reservation-system revenues to be used exclusively for expenses associated with providing franchise services such as central reservation and property-management systems, reservation delivery, and national marketing and media advertising. Franchisees are required to reimburse the company for any deficits generated from these marketing and reservation-system activities and the company is required to spend any surpluses generated in future periods. Since these activities will be managed to break-even over time, quarterly or annual surpluses and deficits have been excluded from the measurements utilized to assess the company’s operating performance.

Adjusted Net Income and Adjusted Diluted Earnings Per Share: Adjusted net income and diluted EPS excludes the impact of surpluses or deficits generated from marketing and reservation-system activities. Surpluses and deficits generated from marketing and reservation activities are excluded, as the company’s franchise agreements require the marketing and reservation system revenues to be used exclusively for expenses associated with providing franchise services, such as central reservation and property-management systems, reservation delivery, and national marketing and media advertising. Franchisees are required to reimburse the company for any deficits generated from these marketing and reservation-system activities and the company is required to spend any surpluses generated in future periods. Since these activities will be managed to break-even over

6


time, quarterly or annual surpluses and deficits have been excluded from the measurements utilized to assess the company’s operating performance. We consider adjusted net income and adjusted diluted EPS to be indicators of operating performance because excluding these items allows for period-over-period comparisons of our ongoing operations.

Hotel Franchising Revenues, Adjusted Hotel Franchising EBITDA, Adjusted Hotel Franchising SG&A, and Margins: The company reports hotel-franchising revenues, adjusted hotel franchising EBITDA, adjusted franchising hotel SG&A, and margins, which exclude marketing and reservation-system activities; the SkyTouch Technology division; vacation rental activities, including operations that provide SaaS technology solutions to vacation-rental management companies; and revenue generated from the ownership of an office building that is leased to a third party. These non-GAAP measures are commonly used measures of performance in our industry and facilitate comparisons between the company and its competitors. Marketing and reservation-system activities are excluded, as the company’s franchise agreements require the marketing and reservation-system revenues to be used exclusively for expenses associated with providing franchise services, such as central reservation and property-management systems, reservation delivery, and national marketing and media advertising. Franchisees are required to reimburse the company for any deficits generated from these marketing and reservation-system activities and the company is required to spend any surpluses generated in future periods. Since these activities will be managed to break-even over time, quarterly or annual surpluses and deficits have been excluded from the measurements utilized to assess the company’s operating performance. 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 and hoteliers not under franchise agreements with the company. The operations for SkyTouch Technology and our vacation-rental activities are excluded since they do not reflect the company’s core franchising business but are adjacent, complementary lines of business.


Contacts
Scott Oaksmith, Senior Vice President, Finance & Chief Accounting Officer
301-592-6659
Oscar Oliveros, Investor Relations Director
301-628-4360



© 2019 Choice Hotels International, Inc. All rights reserved.


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Choice Hotels International, Inc. and Subsidiaries
 
 
 
 
 
 
 
 
 
Exhibit 1
 
Consolidated Statements of Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Year Ended December 31,
 
 
 
 
 
Variance
 
 
 
 
 
Variance
 
2018
 
2017
 
$
 
%
 
2018
 
2017
 
$
 
%
(In thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REVENUES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
         Royalty fees
$
85,750

 
$
78,530

 
$
7,220

 
9
 %
 
$
376,676

 
$
341,745

 
$
34,931

 
10
 %
         Initial franchise and relicensing fees
7,115

 
5,775

 
1,340

 
23
 %
 
26,072

 
23,038

 
3,034

 
13
 %
         Procurement services
12,697

 
9,906

 
2,791

 
28
 %
 
52,088

 
40,451

 
11,637

 
29
 %
         Marketing and reservation system
126,962

 
117,380

 
9,582

 
8
 %
 
543,677

 
499,625

 
44,052

 
9
 %
         Other
12,455

 
9,892

 
2,563

 
26
 %
 
42,791

 
36,438

 
6,353

 
17
 %
                  Total revenues
244,979

 
221,483

 
23,496

 
11
 %
 
1,041,304

 
941,297

 
100,007

 
11
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OPERATING EXPENSES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
         Selling, general and administrative
44,702

 
41,465

 
3,237

 
8
 %
 
170,027

 
165,821

 
4,206

 
3
 %
         Depreciation and amortization
3,793

 
1,694

 
2,099

 
124
 %
 
14,330

 
6,680

 
7,650

 
115
 %
         Marketing and reservation system
140,154

 
113,965

 
26,189

 
23
 %
 
534,266

 
479,400

 
54,866

 
11
 %
                   Total operating expenses
188,649

 
157,124

 
31,525

 
20
 %
 
718,623

 
651,901

 
66,722

 
10
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
         Impairment of goodwill
(4,289
)
 
—

 
(4,289
)
 
NM

 
(4,289
)
 
—

 
(4,289
)
 
NM

         Gain on sale of assets, net
—

 
289

 
(289
)
 
(100
)%
 
82

 
257

 
(175
)
 
(68%)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
52,041

 
64,648

 
(12,607
)
 
(20
)%
 
318,474

 
289,653

 
28,821

 
10
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER INCOME AND EXPENSES, NET
 
 
 
 
 
 
 
 
 
 
 
 
 
 
         Interest expense
11,188

 
11,155

 
33

 
0
 %
 
45,908

 
45,039

 
869

 
2
 %
         Interest income
(2,234
)
 
(1,643
)
 
(591
)
 
36
 %
 
(7,452
)
 
(5,920
)
 
(1,532
)
 
26
 %
Other (gains) losses
2,792

 
(978
)
 
3,770

 
(385
)%
 
1,437

 
(3,229
)
 
4,666

 
(145
)%
Equity in net (income) loss of affiliates
(35
)
 
1,333

 
(1,368
)
 
(103
)%
 
5,323

 
4,546

 
777

 
17
 %
                  Total other income and expenses, net
11,711

 
9,867

 
1,844

 
19
 %
 
45,216

 
40,436

 
4,780

 
12
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
40,330

 
54,781

 
(14,451
)
 
(26
)%
 
273,258

 
249,217

 
24,041

 
10
 %
Income taxes
8,859

 
64,597

 
(55,738
)
 
(86
)%
 
56,903

 
126,890

 
(69,987
)
 
(55
)%
Net income (loss)
$
31,471

 
$
(9,816
)
 
$
41,287

 
421
 %
 
$
216,355

 
$
122,327

 
$
94,028

 
77
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings (loss) per share
$
0.56

 
$
(0.17
)
 
$
0.73

 
429
 %
 
$
3.83

 
$
2.16

 
$
1.67

 
77
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings (loss) per share
$
0.56

 
$
(0.17
)
 
$
0.73

 
429
 %
 
$
3.80

 
$
2.15

 
$
1.65

 
77
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Choice Hotels International, Inc. and Subsidiaries
 
 
Exhibit 2

Consolidated Balance Sheets
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except per share amounts)
December 31,
 
 December 31,
 
 
 
 
 
2018
 
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 
$
26,642

 
$
235,336

Accounts receivable, net
138,018

 
125,870

Other current assets
 
 
79,124

 
39,223

 
Total current assets
 
 
243,784

 
400,429

 
 
 
 
 
 
Intangible assets, net
271,188

 
100,492

Goodwill
168,996

 
80,757

Property and equipment, net
127,535

 
83,374

Investments in unconsolidated entities
109,016

 
134,226

Notes receivable, net of allowances
83,440

 
80,136

Investments, employee benefit plans, at fair value
19,398

 
20,838

Other assets
 
 
115,013

 
94,939

 
 
 
 
 
 
 
 
 
Total assets
 
$
1,138,370

 
$
995,191

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' DEFICIT
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
 
 
$
73,511

 
$
67,839

Accrued expenses and other current liabilities
92,651

 
84,315

Deferred revenue
67,614

 
52,142

Current portion of long-term debt
1,097

 
1,232

Liability for guest loyalty program
83,566

 
79,123

 
Total current liabilities
 
318,439

 
284,651

 
 
 
 
 
 
 
 
Long-term debt
753,514

 
725,292

Deferred revenue
110,278

 
98,459

Liability for guest loyalty program
52,327

 
48,701

Deferred compensation & retirement plan obligations
24,212

 
25,566

Other liabilities
63,372

 
71,123

 
 
 
 
 
 
 
 
 
Total liabilities
 
 
1,322,142

 
1,253,792

 
 
 
 
 
 
 
 
 
Total shareholders' deficit
 
(183,772
)
 
(258,601
)
 
 
 
 
 
 
 
 
 
 
Total liabilities and shareholders' deficit
$
1,138,370

 
$
995,191

 
 
 
 
 
 
 
 
 




Choice Hotels International, Inc. and Subsidiaries
 
 
Exhibit 3

Consolidated Statements of Cash Flows
 
 
 
(Unaudited)
 
 
 
 
 
 
 
(In thousands)
Year Ended December 31,
 
 
 
 
 
2018
 
2017
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
 
 
Net income
$
216,355

 
$
122,327

 
 
 
 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
  Depreciation and amortization
14,330

 
6,680

  Depreciation and amortization - marketing and reservation system
19,597

 
20,609

  Franchise agreement acquisition cost amortization
9,239

 
7,191

  Impairment of goodwill
4,289

 
—

  Gain on sale of assets, net
(56
)
 
(237
)
  Provision for bad debts, net
10,542

 
5,514

  Non-cash stock compensation and other charges
15,986

 
22,857

  Non-cash interest and other (income) loss
3,695

 
(772
)
  Deferred income taxes
(3,510
)
 
57,106

  Equity in net losses from unconsolidated joint ventures, less distributions received
7,389

 
6,579

  Franchise agreement acquisition costs, net of reimbursements
(52,929
)
 
(30,638
)
  Change in working capital & other, net of acquisition
(2,031
)
 
40,158

 
 
 
 
 NET CASH PROVIDED BY OPERATING ACTIVITIES
242,896

 
257,374

 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Investment in property and equipment
(47,673
)
 
(23,437
)
Investment in intangible assets
(1,803
)
 
(2,517
)
Business acquisition, net of cash acquired
(231,317
)
 
—

Asset acquisitions, net of cash acquired
(3,179
)
 
—

Proceeds from sales of assets
3,053

 
1,000

Contributions to equity method investments
(9,604
)
 
(50,554
)
Distributions from equity method investments
1,429

 
4,569

Purchases of investments, employee benefit plans
(2,895
)
 
(2,447
)
Proceeds from sales of investments, employee benefit plans
2,825

 
2,245

Issuance of notes receivable
(36,045
)
 
(19,738
)
Collections of notes receivable
4,997

 
655

Other items, net
(1,040
)
 
109

 
 
 
 
 NET CASH USED IN INVESTING ACTIVITIES
(321,252
)
 
(90,115
)
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Net borrowings (repayments) pursuant to revolving credit facilities
20,600

 
(115,003
)
Proceeds from the issuance of long-term debt
9,037

 
—

Principal payments on long-term debt
(603
)
 
(660
)
Debt issuance costs
(2,590
)
 
—

Purchase of treasury stock
(148,679
)
 
(9,807
)
Dividends paid
(48,715
)
 
(48,651
)
Proceeds from transfer of interest in notes receivable
173

 
24,237

Proceeds from exercise of stock options
41,360

 
14,107

 
 
 
 
 NET CASH USED IN FINANCING ACTIVITIES
(129,417
)
 
(135,777
)



 


Net change in cash and cash equivalents
(207,773
)
 
31,482

Effect of foreign exchange rate changes on cash and cash equivalents
(921
)
 
1,391

Cash and cash equivalents at beginning of period
235,336

 
202,463

 
 
 
 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
26,642

 
$
235,336

 
 
 
 
 
 
 
 



CHOICE HOTELS INTERNATIONAL, INC AND SUBSIDIARIES
Exhibit 4
SUPPLEMENTAL OPERATING INFORMATION
 
 
DOMESTIC HOTEL SYSTEM
 
 
(UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Year Ended December 31, 2018
 
For the Year Ended December 31, 2017
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Daily
 
 
 
 
 
Average Daily
 
 
 
 
 
Average Daily
 
 
 
 
 
 
 
Rate
 
Occupancy
 
RevPAR
 
Rate
 
Occupancy
 
RevPAR
 
Rate
 
Occupancy
 
RevPAR
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comfort Inn
 
$
94.73

 
65.2
%
 
$
61.72

 
$
94.23

 
66.0
%
 
$
62.23

 
0.5
 %
 
(80
)
bps
 
(0.8
)%
Comfort Suites
 
97.64

 
69.7
%
 
68.04

 
97.01

 
70.1
%
 
67.96

 
0.6
 %
 
(40
)
bps
 
0.1
 %
Sleep
 
84.71

 
65.2
%
 
55.20

 
82.96

 
65.5
%
 
54.35

 
2.1
 %
 
(30
)
bps
 
1.6
 %
Quality
 
80.15

 
60.1
%
 
48.20

 
79.25

 
59.8
%
 
47.41

 
1.1
 %
 
30

bps
 
1.7
 %
Clarion
 
84.45

 
57.9
%
 
48.90

 
84.62

 
59.3
%
 
50.14

 
(0.2
)%
 
(140
)
bps
 
(2.5
)%
Econo Lodge
 
63.44

 
54.7
%
 
34.68

 
62.95

 
54.5
%
 
34.29

 
0.8
 %
 
20

bps
 
1.1
 %
Rodeway
 
64.26

 
56.4
%
 
36.21

 
64.51

 
56.0
%
 
36.09

 
(0.4
)%
 
40

bps
 
0.3
 %
WoodSpring Suites(1)
 
45.92

 
80.1
%
 
36.77

 
42.44

 
80.5
%
 
34.16

 
8.2
 %
 
(40
)
bps
 
7.6
 %
MainStay
 
83.08

 
69.7
%
 
57.89

 
76.70

 
68.4
%
 
52.47

 
8.3
 %
 
130

bps
 
10.3
 %
Suburban
 
55.81

 
75.5
%
 
42.16

 
51.76

 
76.0
%
 
39.31

 
7.8
 %
 
(50
)
bps
 
7.3
 %
Cambria Hotels
 
146.71

 
71.5
%
 
104.84

 
137.86

 
73.8
%
 
101.70

 
6.4
 %
 
(230
)
bps
 
3.1
 %
Ascend Hotel Collection
 
126.86

 
58.0
%
 
73.62

 
127.96

 
55.5
%
 
71.05

 
(0.9
)%
 
250

bps
 
3.6
 %
Total
 
$
81.64

 
63.3
%
 
$
51.65

 
$
80.44

 
63.4
%
 
$
51.02

 
1.5
 %
 
(10
)
bps
 
1.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Three Months Ended December 31, 2018
 
For the Three Months Ended December 31, 2017
 
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Daily
 
 
 
 
 
Average Daily
 
 
 
 
 
Average Daily
 
 
 
 
 
 
 
Rate
 
Occupancy
 
RevPAR
 
Rate
 
Occupancy
 
RevPAR
 
Rate
 
Occupancy
 
RevPAR
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comfort Inn
 
$
89.35

 
60.2
%
 
$
53.74

 
$
90.20

 
60.7
%
 
$
54.78

 
(0.9
)%
 
(50
)
bps
 
(1.9
)%
Comfort Suites
 
92.59

 
65.7
%
 
60.84

 
93.68

 
66.1
%
 
61.90

 
(1.2
)%
 
(40
)
bps
 
(1.7
)%
Sleep
 
81.14

 
60.8
%
 
49.35

 
79.79

 
60.7
%
 
48.45

 
1.7
 %
 
10

bps
 
1.9
 %
Quality
 
75.70

 
55.5
%
 
41.98

 
75.31

 
54.9
%
 
41.36

 
0.5
 %
 
60

bps
 
1.5
 %
Clarion
 
78.35

 
52.4
%
 
41.02

 
82.90

 
51.7
%
 
42.90

 
(5.5
)%
 
70

bps
 
(4.4
)%
Econo Lodge
 
60.79

 
50.6
%
 
30.76

 
60.35

 
49.6
%
 
29.93

 
0.7
 %
 
100

bps
 
2.8
 %
Rodeway
 
60.65

 
51.7
%
 
31.33

 
60.57

 
50.5
%
 
30.61

 
0.1
 %
 
120

bps
 
2.4
 %
WoodSpring Suites(1)
 
45.11

 
77.6
%
 
35.00

 
43.40

 
78.5
%
 
34.07

 
3.9
 %
 
(90
)
bps
 
2.7
 %
MainStay
 
82.33

 
64.7
%
 
53.30

 
76.89

 
64.6
%
 
49.70

 
7.1
 %
 
10

bps
 
7.2
 %
Suburban
 
56.21

 
71.7
%
 
40.29

 
51.01

 
72.5
%
 
36.98

 
10.2
 %
 
(80
)
bps
 
9.0
 %
Cambria Hotels
 
148.38

 
69.2
%
 
102.61

 
140.44

 
70.3
%
 
98.78

 
5.7
 %
 
(110
)
bps
 
3.9
 %
Ascend Hotel Collection
 
119.78

 
56.2
%
 
67.33

 
125.42

 
52.8
%
 
66.25

 
(4.5
)%
 
340

bps
 
1.6
 %
Total
 
$
77.67

 
58.9
%
 
$
45.75

 
$
77.39

 
58.7
%
 
$
45.43

 
0.4
 %
 
20

bps
 
0.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective Royalty Rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Quarter Ended
 
For the Year Ended
 
 
 
 
 
 
 
 
 
 
 
12/31/2018
 
12/31/2017
 
12/31/2018
 
12/31/2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
System-wide(1)
 
4.81%
 
4.70%
 
4.75%
 
4.61%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) WoodSpring Suites was acquired on February 1, 2018, however, ADR, Occupancy, RevPAR and effective royalty rate reflect operating performance for the three months and year ended December 31, 2018 and 2017 as if the brand had been acquired on January 1, 2017
 



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES
Exhibit 5
 
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA
 
 
 
(UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
December 31, 2017
 
Variance
 
 
Hotels
 
Rooms
 
Hotels
 
Rooms
 
Hotels
 
Rooms
 
%
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comfort Inn
 
1,056

 
82,901

 
1,083

 
84,626

 
(27
)
 
(1,725
)
 
(2.5
)%
 
(2.0
)%
Comfort Suites
 
571

 
44,381

 
567

 
44,029

 
4

 
352

 
0.7
 %
 
0.8
 %
Sleep
 
393

 
27,962

 
384

 
27,410

 
9

 
552

 
2.3
 %
 
2.0
 %
Quality
 
1,636

 
126,533

 
1,542

 
120,227

 
94

 
6,306

 
6.1
 %
 
5.2
 %
Clarion
 
174

 
22,179

 
166

 
22,138

 
8

 
41

 
4.8
 %
 
0.2
 %
Econo Lodge
 
839

 
50,692

 
840

 
51,233

 
(1
)
 
(541
)
 
(0.1
)%
 
(1.1
)%
Rodeway
 
612

 
35,124

 
600

 
34,488

 
12

 
636

 
2.0
 %
 
1.8
 %
WoodSpring Suites
 
249

 
29,911

 
—

 
—

 
249

 
29,911

 
NM

 
NM

MainStay
 
63

 
4,268

 
60

 
4,249

 
3

 
19

 
5.0
 %
 
0.4
 %
Suburban
 
54

 
5,699

 
61

 
6,698

 
(7
)
 
(999
)
 
(11.5
)%
 
(14.9
)%
Cambria Hotels
 
40

 
5,685

 
36

 
4,917

 
4

 
768

 
11.1
 %
 
15.6
 %
Ascend Hotel Collection
 
176

 
14,693

 
162

 
13,000

 
14

 
1,693

 
8.6
 %
 
13.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Domestic Franchises
 
5,863

 
450,028

 
5,501

 
413,015

 
362

 
37,013

 
6.6
 %
 
9.0
 %
International Franchises
 
1,158

 
119,080

 
1,126

 
112,558

 
32

 
6,522

 
2.8
 %
 
5.8
 %
Total Franchises
 
7,021

 
569,108

 
6,627

 
525,573

 
394

 
43,535

 
5.9
 %
 
8.3
 %




CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES
 
 
 
 
Exhibit 6

SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
 
 
 
 
 
(UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HOTEL FRANCHISING REVENUES AND ADJUSTED HOTEL FRANCHISING MARGINS
(dollar amounts in thousands)
 
Three Months Ended December 31,
 
Year Ended December 31,
 
 
 
 
2018
 
2017
 
2018
 
2017
 
 
Hotel Franchising Revenues:
 
 
 
 
 
 
 
 
 
 
Total Revenues
 
$
244,979

 
$
221,483

 
$
1,041,304

 
$
941,297

 
 
Adjustments:
 
 
 
 
 
 
 
 
 
 
     Marketing and reservation system revenues
 
(126,962
)
 
(117,380
)
 
(543,677
)
 
(499,625
)
 
 
     Non-hotel franchising activities
 
(3,553
)
 
(2,847
)
 
(14,257
)
 
(10,818
)
 
 
Hotel Franchising Revenues
 
$
114,464

 
$
101,256

 
$
483,370

 
$
430,854

 
 
Adjusted Hotel Franchising Margins:
 
 
 
 
 
 
 
 
 
 
Operating Margin:
 
 
 
 
 
 
 
 
 
 
Total Revenues
 
$
244,979

 
$
221,483

 
$
1,041,304

 
$
941,297

 
 
Operating Income
 
$
52,041

 
$
64,648

 
$
318,474

 
$
289,653

 
 
     Operating Margin
 
21.2
%
 
29.2
%
 
30.6
%
 
30.8
%
 
 
Adjusted Hotel Franchising Margin:
 
 
 
 
 
 
 
 
 
 
Hotel Franchising Revenues
 
$
114,464

 
$
101,256

 
$
483,370

 
$
430,854

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income
 
$
52,041

 
$
64,648

 
$
318,474

 
$
289,653

 
 
Mark to market adjustments on non-qualified retirement plan investments
 
(2,689
)
 
978

 
(1,338
)
 
3,192

 
 
Marketing and reservation system reimbursable surplus (deficit)
 
13,192

 
(3,415
)
 
(9,411
)
 
(20,225
)
 
 
Acquisition related transition and transaction costs
 
1,334

 
3,654

 
6,864

 
4,032

 
 
Impairment of goodwill
 
4,289

 
—

 
4,289

 
—

 
 
Impairment of notes receivable
 
2,779

 
—

 
2,779

 
—

 
 
Acceleration of executive succession plan
 
—

 
57

 
—

 
12,021

 
 
Impairment of lease acquisition costs, net
 
—

 
—

 
—

 
(1,185
)
 
 
Non-hotel franchising activities operating loss
 
2,216

 
1,995

 
9,430

 
10,315

 
 
Adjusted Hotel Franchising Operating Income
 
$
73,162

 
$
67,917

 
$
331,087

 
$
297,803

 
 
 
 
 
 
 
 
 
 
 
 
 
     Adjusted Hotel Franchising Margins
 
63.9
%
 
67.1
%
 
68.5
%
 
69.1
%
 
 
 
 
 
 
 
 
 
 
 
ADJUSTED HOTEL FRANCHISING SELLING, GENERAL AND ADMINISTRATION EXPENSES
(dollar amounts in thousands)
 
Three Months Ended December 31,
 
Year Ended December 31,
 
 
 
 
2018
 
2017
 
2018
 
2017
 
 
Total Selling, General and Administrative Expenses
 
$
44,702

 
$
41,465

 
$
170,027

 
$
165,821

 
 
Mark to market adjustments on non-qualified retirement plan investments
 
2,689

 
(978
)
 
1,338

 
(3,192
)
 
 
Acquisition related transition and transaction costs
 
(1,334
)
 
(3,654
)
 
(6,864
)
 
(4,032
)
 
 
Impairment of notes receivable
 
(2,779
)
 
—

 
(2,779
)
 
—

 
 
Acceleration of executive succession plan
 
—

 
(57
)
 
—

 
(12,021
)
 
 
Impairment of lease acquisition costs, net
 
—

 
—

 
—

 
1,185

 
 
Non-hotel franchising activities
 
(4,895
)
 
(3,839
)
 
(19,829
)
 
(17,321
)
 
 
Adjusted Hotel Franchising Selling, General and Administration Expenses
 
$
38,383

 
$
32,937

 
$
141,893

 
$
130,440

 
 
 
 
 
 
 
 
 
 
 



ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA")
(dollar amounts in thousands)
 
Three Months Ended December 31,
 
Year Ended December 31,
 
 
 
 
2018
 
2017
 
2018
 
2017
Net income (loss)
 
$
31,471

 
$
(9,816
)
 
$
216,355

 
$
122,327

 
 
Income taxes
 
8,859

 
64,597

 
56,903

 
126,890

 
 
Interest expense
 
11,188

 
11,155

 
45,908

 
45,039

 
 
Interest income
 
(2,234
)
 
(1,643
)
 
(7,452
)
 
(5,920
)
 
 
Other (gains) losses
 
2,792

 
(978
)
 
1,437

 
(3,229
)
 
 
Equity in net (income) loss of affiliates
 
(35
)
 
1,333

 
5,323

 
4,546

 
 
Depreciation and amortization
 
3,793

 
1,694

 
14,330

 
6,680

 
 
Gain (loss) on sale of land and building, net
 
—

 
(289
)
 
(82
)
 
(257
)
 
 
Impairment of goodwill
 
4,289

 
—

 
4,289

 
—

 
 
Mark to market adjustments on non-qualified retirement plan investments
 
(2,689
)
 
978

 
(1,338
)
 
3,192

 
 
Marketing and reservation system reimbursable surplus (deficit)
 
13,192

 
(3,415
)
 
(9,411
)
 
(20,225
)
 
 
Franchise agreement acquisition costs amortization
 
1,483

 
1,180

 
5,138

 
4,127

 
 
Impairment of notes receivable
 
2,779

 
—

 
2,779

 
—

 
 
Acceleration of executive succession plan
 
—

 
57

 
—

 
12,021

 
 
Impairment of lease acquisition costs, net
 
—

 
—

 
—

 
(1,185
)
 
 
Acquisition related transition and transaction costs
 
1,334

 
3,654

 
6,864

 
4,032

Adjusted EBITDA
 
$
76,222

 
$
68,507

 
$
341,043

 
$
298,038

 
 
 
 
 
 
 
 
 
 
 
Hotel franchising
 
$
77,564

 
$
69,500

 
$
346,615

 
$
304,542

Non-hotel franchising activities
 
(1,342
)
 
(993
)
 
(5,572
)
 
(6,504
)
 
 
 
 
$
76,222

 
$
68,507

 
$
341,043

 
$
298,038

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(dollar amounts in thousands, except per share amounts)
 
Three Months Ended December 31,
 
Year Ended December 31,
 
 
 
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
31,471

 
$
(9,816
)
 
$
216,355

 
$
122,327

Adjustments:
 
 
 
 
 
 
 
 
 
Marketing and reservation system reimbursable surplus (deficit)
 
10,465

 
(2,423
)
 
(7,482
)
 
(13,854
)
 
Acceleration of executive succession plan
 
—

 
36

 
—

 
7,267

 
Impairment of goodwill
 
4,289

 
—

 
4,289

 
—

 
Impairment of notes receivable
 
2,195

 
—

 
2,195

 
—

 
Impairment of lease acquisition costs, net
 
—

 
—

 
—

 
(749
)
 
Acquisition related transition and transaction costs
 
993

 
2,309

 
5,224

 
2,548

 
Debt restructuring costs
 
—

 
—

 
86

 
—

 
Transition costs on previously deferred foreign earnings and impact of tax legislation on deferred tax balances
 
—

 
48,359

 
874

 
48,359

Adjusted Net Income
 
$
49,413

 
$
38,465

 
$
221,541

 
$
165,898

 
 
 
 
 
 
 
 
 
 
 
Diluted Earnings (Loss) Per Share
 
$
0.56

 
$
(0.17
)
 
$
3.80

 
$
2.15

Adjustments:
 
 
 
 
 
 
 
 
 
Marketing and reservation system reimbursable surplus (deficit)
 
0.18

 
(0.04
)
 
(0.13
)
 
(0.24
)
 
Acceleration of executive succession plan
 
—

 
—

 
—

 
0.12

 
Impairment of goodwill
 
0.08

 
—

 
0.07

 
—

 
Impairment of notes receivable
 
0.04

 
—

 
0.04

 
—

 
Impairment of lease acquisition costs, net
 
—

 
—

 
—

 
(0.01
)
 
Acquisition related transition and transaction costs
 
0.02

 
0.04

 
0.09

 
0.04

 
Debt restructuring costs
 
—

 
—

 
—

 
—

 
Transition costs on previously deferred foreign earnings and impact of tax legislation on deferred tax balances
 
—

 
0.85

 
0.02

 
0.85

Adjusted Diluted Earnings Per Share (EPS)
 
$
0.88

 
$
0.68

 
$
3.89

 
$
2.91

 
 
 
 
 
 
 
 
 
 
 




CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES
 
Exhibit 7
 
SUPPLEMENTAL INFORMATION - 2019 OUTLOOK
 
 
 
(UNAUDITED)
 
 
 
 
 
 
 
 
Guidance represents the midpoint of the company's range of estimated outcomes for the year ended December 31, 2019
 
 
 
 
 
 
ADJUSTED EBITDA FULL YEAR FORECAST
 
 
 
(dollar amounts in thousands)
 
 
 
 
 
 
Midpoint
2019 Guidance
 
 
 
 
 
 
Net income
 
$
197,100

 
 
Income taxes
 
56,200

 
 
Interest expense
 
45,800

 
 
Interest income
 
(7,600
)
 
 
Other (gains) losses
 
—

 
 
Depreciation and amortization
 
16,400

 
 
Gain on sale of assets, net
 
—

 
 
Franchise agreement acquisition costs amortization
 
6,700

 
 
Equity in net loss of affiliates
 
3,900

 
 
Marketing and reservation system reimbursable deficit
 
40,000

 
 
Mark to market adjustments on non-qualified retirement plan investments
 
—

 
Adjusted EBITDA
 
$
358,500

 
 
 
 
 
 
 
 
 
 
 
ADJUSTED DILUTED EARNINGS PER SHARE (EPS) FULL YEAR FORECAST
 
(dollar amounts in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Midpoint
2019 Guidance
 
 
 
 
 
 
Net income
 
$
197,100

 
Adjustments
 
 
 
 
Marketing and reservation system reimbursable deficit
 
31,100

 
Adjusted Net Income
 
$
228,200

 
 
 
 
 
 
Diluted Earnings Per Share
 
$
3.51

 
Adjustments:
 
 
 
 
Marketing and reservation system reimbursable deficit
 
0.55

 
Adjusted Diluted Earnings Per Share (EPS)
 
$
4.06