Choice Hotels International Reports Fourth Quarter And Full Year Results And 2018 Outlook

2017 Full-Year New Domestic Hotel Franchise Contracts Increased 9% to 704

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, 2017. Highlights include:

Announced the acquisition of WoodSpring Suites, which added 239 hotels to the company’s system in the first quarter of 2018.

Full-year 2018 net income is projected to range between $190 million and $196 million; Adjusted earnings before income taxes, depreciation and amortization (EBITDA), excluding the application of the new revenue recognition standard and other items, is projected to range between $330 million and $341 million, a 14 percent increase at the midpoint of the range.

Domestic unit growth, including the acquisition of WoodSpring Suites, for 2018 is expected to range between 7 percent and 8 percent.

Total revenues for the three months ended December 31, 2017, increased 14 percent from the fourth quarter of the prior year.

Income before income taxes was $46.7 million for the 2017 fourth quarter, a 7 percent increase from the 2016 fourth quarter.

The impact of the tax legislation signed into law on December 22, 2017, and other items, resulted in a net loss of $6.4 million, or $0.11 per diluted share for the fourth quarter of 2017. Excluding the impact of these items, adjusted net income would have totaled $35.9 million compared to adjusted net income of $31.8 million for the 2016 fourth quarter, a 13 percent increase. See Exhibit 6 for calculation of adjusted results.

Fourth quarter adjusted diluted earnings per share (EPS) was $0.63, a 13 percent increase from the 2016 fourth quarter. Full-year 2017 diluted EPS was $2.02 and adjusted diluted EPS was $2.88, a 14 percent increase from 2016.

Adjusted EBITDA for the fourth quarter and full-year 2017 were $64.5 million and $295.0 million respectively, an increase of 15 percent from the adjusted EBITDA reported for the same periods of 2016.

Repatriated approximately $200 million of foreign earnings in the first quarter of 2018.

“In 2017, Choice Hotels experienced another robust year of performance and exciting milestones, positioning us for future growth. This includes our best development year since 2007 with 704 executed franchise agreements. We recently added to our portfolio of brands with the acquisition of WoodSpring Suites, the fastest growing economy extended-stay brand,” said Patrick Pacious, president and chief executive officer, Choice Hotels. “Choice remains focused on our franchisees’ profitability and has further strengthened our value proposition, which is exemplified by continued increases in proprietary contribution and a 19-basis point increase in effective royalty rate.”

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