2003 Net Income of $71.9 million, Compared
to Prior Year Net Income of $ 60.8 million
Brand Operating Statistics
|SILVER SPRING, Md. (February 11, 2004) – Choice
Hotels International, Inc. (NYSE:CHH) today reported 2003 net income of
$71.9 million, or $1.96 diluted earnings per share (EPS). Net income and
diluted EPS for fourth quarter 2003 were $20.7 million and $0.57 per share,
respectively. Both full year 2003 and fourth quarter net income and diluted
EPS include a $3.4 million, or $0.09 per share, gain resulting from the
December 19, 2003 prepayment of an outstanding senior subordinated note
by Sunburst Hospitality Corporation.
The company also reported full year 2003 adjusted net income of $68.5 million compared to $60.8 million for the same period in 2002. Full year 2003 adjusted diluted earnings per share (EPS) increased to $1.87 or 23% over $1.52 per share reported for the previous year. Adjusted net income and adjusted diluted EPS presented for full year and fourth quarter 2003 exclude the gain on the Sunburst note prepayment.
“Record franchise development was the hallmark of the year, with 470 new executed contracts representing more than 41,000 rooms,” said Charles A. Ledsinger, Jr., president and chief executive officer. “The lodging franchise community greatly values the more than 50 million guest visits made to our hotels each year, as evidenced by the 55% growth in new deals.”
He added, “In addition, our strong multi-brand marketing programs enjoyed great success, such as our ‘two-for-one’ fall promotion that gained nearly a half million members for our Choice Privileges frequent traveler program. This marketing success underscores the strength that we bring to our brands, thus making it possible to drive unit growth of 4.4% and enjoy a 30% increase in initial and relicensing fees.”
Adjusted net income for fourth quarter 2003 was $17.3 million, compared to $15.1 million for fourth quarter 2002. Adjusted diluted EPS was $0.48 for fourth quarter 2003, a 20% increase compared to the same period in 2002. Because of the Sunburst note prepayment, the company anticipates that interest income for 2004 will be reduced by $4.7 million, or $0.08 per diluted share, assuming the existing diluted share count.
Year-End & Fourth Quarter Performance
The company’s 2003 full year revenues were $386.1 million, compared to $365.6 million in 2002. Franchising revenues, which include royalty fees, initial and relicensing fees, partner services income and other income, increased 8.7% to $187.1 million from $172.1 for 2002. For fourth quarter 2003, revenues were $95.2 million compared to $84.3 million for fourth quarter 2002. Franchising revenues for fourth quarter 2003 increased 15.5% to $48.5 million from $42.0 million in fourth quarter 2002.
Operating income increased to $114.0 million for 2003, an increase of
approximately 9% over the $104.7 million reported for 2002. For fourth
quarter 2003, operating income increased 15% from $24.6 million to $28.3
Initial and relicensing fee revenues increased 30.2% and 52.8% for full year 2003 and fourth quarter 2003, respectively. Initial and relicensing fees were $16.8 million and $5.5 million for full year 2003 and fourth quarter 2003, respectively, compared to $12.9 million and $3.6 million for the same periods in 2002.
The company also reported partner services revenues increased to $13.2 million for full year 2003 compared to $11.9 million for 2002, a 10.9% increase. Fourth quarter 2003 partner services revenues increased to $3.6 million from $2.8 million in 2002, a 28.6% increase.
System-wide domestic revenue per available room (RevPAR) was $34.21
in 2003, compared to $34.48 for 2002. For fourth quarter 2003, RevPAR
was $34.07, an approximately 5% increase compared to $32.46 for the same
period a year ago.
2003 Unit Growth
In 2003, the total number of domestic Choice hotels on-line grew 4.4% to 3,636 from 3,482 for 2002. For the year, the total number of domestic hotel rooms increased 4.2% to 294,268 from 282,423 in 2002. Choice executed 470 new domestic hotel franchise contracts in 2003, representing 41,039 rooms, an increase of 54.6% and 60.0% respectively over the 304 executed domestic franchise contracts and 25,657 rooms in 2002. This development activity marked the first time Choice has topped the 40,000 room level in a single year.
A net of 154 domestic hotels, representing 11,845 rooms, were opened in 2003, compared to 155, representing 11,909 rooms, in 2002. At the end of 2003, Choice had 401 hotels under development in its domestic hotel system, representing 31,409 rooms, compared to 310 hotels, representing 23,766 rooms, at the end of 2002.
As of December 31, 2003, the total number of Choice hotels worldwide grew 3.1% to 4,810 from 4,664 as of the same date a year ago. This represents an increase of 4.0% in the number of rooms open to 388,618 from 373,722. At the end of 2003, Choice had 90 hotels under development in countries outside of the United States, representing 8,468 rooms.
First Quarter & Full Year 2004 Estimates
The company also announced that it expects first quarter 2004 diluted EPS to be in the range of $0.26 to $0.28 and full year 2004 diluted EPS in the range of $2.00 to $2.03, assuming the current diluted share count.
Among the notable company events occurring since the previous earnings report:
Adjusted net income, adjusted diluted earnings per share and franchising
revenues are non-GAAP financial measurements. These financial measurements
are presented as supplemental disclosures because they are used by management
in reviewing and analyzing the company’s performance. This information
should not be considered as an alternative to any measure of performance
as promulgated under accounting principles generally accepted in the United
States (GAAP), such as net income, diluted earnings per share or total
revenues. The company’s calculation of adjusted net income, adjusted
diluted earnings per share and franchising revenues may be different from
the calculation used by other companies and therefore comparability may
be limited. The company has included exhibits accompanying this release
which reconcile these measures to the comparable GAAP measurement.
Choice Hotels International is the second-largest hotel franchisor in the world with 4,810 hotels open, representing 388,618 rooms, and another 401 hotels under development in the United States, representing 31,409 rooms, as of December 31, 2003. An additional 90 hotels, representing 8,468 rooms, are under development in 19 other countries as of December 31, 2003. Choice’s Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn and MainStay Suites brands serve guests worldwide.
Certain matters discussed in this press release may constitute forward-looking statements within the meaning of the federal securities law.
Joseph M. Squeri
Senior Vice President, Development, and Chief Financial Officer
Tel: (301) 592-5006
|Also See:||Choice Presents Inn of the Year Awards to the Best of Each Brand / May 2003|
|Choice Hotels Adds 41,000 Franchise Rooms in 2003; Reports 342 Conversions and 128 New Construction Contracts / January 2004|