Compared to the Same Period Last Year; Domestic Hotel Franchise
Contracts Up 17% / Brand Operating Data
SILVER SPRING, Md., April 25, 2006 - Choice Hotels International, Inc., (NYSE: CHH) today reported the following highlights for the first quarter of 2006:
* Diluted earnings per share (EPS) increased
44% to $0.26, compared to
* Net income grew 47% from $12.0 million in
first quarter 2005 to $17.7
* Earnings before interest, taxes, depreciation
* Operating income increased 35% to $30.1 million,
compared to $22.3
* Total revenues increased 20% to $109.4 million
compared to the first
* Domestic system-wide revenue per available
room (RevPAR) increased 9.4%
* Domestic unit growth increased 5.2% compared
to the first quarter 2005
* Year-to-date new domestic hotel franchise
contracts were up 17% to 120,
* Franchising revenues were up 22% for first quarter.
* The domestic hotel pipeline of hotels under
"Choice's franchising business model continues to deliver strong revenue and earnings growth, as evidenced by our track record of outstanding results and total returns to shareholders, which have been in excess of 45% on an annualized basis over the past five years," said Charles A. Ledsinger, Jr., president and chief executive officer. "Choice has shown that it can generate solid, predictable growth in a wide variety of economic conditions and industry cycles, further underscoring the strength of our business model and the predictability of our business. As a result, we are confident that the combination of our sound operating strategies and the strength of the lodging and hospitality industry positions us well for continued top-line and bottom- line growth."
"We also are quite pleased with the significant increase in our new construction projects, particularly our new upscale Cambria Suites brand," continued Ledsinger. "Since we introduced the brand a little over a year ago, we have executed 23 contracts, including 10 in the first quarter of this year."
Outlook for 2006
The company's second quarter 2006 diluted EPS is expected to be $0.36 to $0.39. Full-year 2006 diluted EPS is expected to be $1.46 to $1.49. Earnings before interest, taxes, depreciation and amortization ("EBITDA") is expected to be $175 million to $179 million for full-year 2006. These estimates include the following assumptions.
* The company expects net domestic unit growth
of approximately 4% in
* RevPAR is expected to increase 6% to 7.5%
for second quarter 2006 and
* The effective royalty rate is expected to
increase 3 basis points for
* All figures assume the existing share count,
Use of Free Cash Flow
The company has consistently used its free cash flow (cash flow from operations less capital expenditures) generated from its operations to return value to shareholders. This is primarily achieved through share repurchases and dividends.
For the quarter ended March 31, 2006, the company paid $8.4 million of cash dividends to shareholders. The annual dividend rate per common share is $0.52.
The company has remaining authorization to purchase up to 5.1 million shares under the share repurchase program. Repurchases will continue to be made in the open market and through privately negotiated transactions subject to market and other conditions. No minimum number of shares has been fixed. Since Choice announced its stock repurchase program on June 25, 1998, the company has repurchased 33.6 million shares of its common stock for a total cost of $711.9 million through April 25, 2006. Considering the effect of the two-for-one stock split in October 2005, the company has repurchased 66.6 million shares at an average price of $10.69 per share.
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.
Choice will conduct a conference call on Wednesday, April 26, 2006, at 10 a.m. EDT to discuss the company's first quarter 2006 results. The call-in number to listen to the call is 1-800-553-0351. The conference call also will be Web cast simultaneously via the company's Web site, http://www.choicehotels.com. Interested investors and other parties wishing to access the call on the Web 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 audio of the call will be archived and available on http://www.choicehotels.com for those unable to listen to the call on April
26. The call will also be available for replay until May 26, 2006, by calling 1-800-475-6701 (access code 824816).
Items Impacting Comparability
Acquisition of Suburban
During 2005, the company acquired Suburban Franchise Holding Company, Inc. ("Suburban"), which included 67 Suburban Extended Stay Hotel units open and operating in the United States. The results of operations for Suburban have been included in the company's results of operations since September 28, 2005.
Two-for-One Stock Split
In October 2005, the company effected a two-for-one stock split of its
outstanding shares of common stock, par value $.01 per share. Unless otherwise
noted, all share information in this release and in the accompanying exhibits,
including per share amounts, have been proportionally adjusted as if the
two- for-one stock split had been effective as of the date or period presented.
About Choice Hotels
Choice Hotels International
|Also See:||Choice Hotels Reports Full Year 2005 Net Income of $87.6 million Compared to Prior Year Net Income of $74.3 million; Executes 639 New Domestic Hotel Franchise Contracts / Hotel Operating Stats / February 2006|
|Choice Hotels Acquires Suburban Franchise Systems, Inc. for Approximately $10.5 million; Suburban Extended Stay Hotels Becomes the Tenth Brand in the Choice Hotels System / September 2005|