Choice Hotels International, Inc. · NYSE:CHH
Choice Hotels International — Q4 2021 Earnings Presentation
34 slides from Choice Hotels International's earnings presentation, Feb 16, 2022
Slide 1: Investor Presentation
Cambria Cambria, Hotels, Houston, Downtown TX Phoenix, AZ Investor Presentation February 16, 2022 1
Slide 2: Forward-looking Statements
Forward-looking Statements Certain matters discussed in this presentation 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
Slide 3: Table of Contents
Table of Contents 1 Company Overview 2 Business Update 3 Financial Summary and Highlights 4 Environmental, Social and Governance 5 Appendix Cambria Ascend HotelHotel, Phoenix Collection, Hotel Petaluma, CA
Slide 4: Company Overview
1 Company Overview Cambria Hotels, Sonoma, CA 4
Slide 5: Choice Hotels is one of the world's largest hotel companies
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX Choice Hotels is one of the world’s largest hotel companies with over 80 years of success building a portfolio of diversified brands Only lodging company 1 in 10 ~100% hotels in the U.S. is a Choice Hotels brand franchised and with n
Slide 6: Investment Thesis
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX Investment Thesis Choice Hotels is well-positioned for long-term growth across revenue and profitability levers 1 2 3 Asset-light franchising model Strong net unit and revenue growth North America’s midscale leader generating strong
Slide 7: Franchise-focused business model generates predictable free cash flow
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX The company’s franchise-focused business model generates predictable free cash flow and strong returns on investments throughout economic cycles or a crisis Choice is a leading industry franchisor1 % of domestic franchised hotels Ass
Slide 8: Strategic investments strengthened ability to create long-term shareholder value
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX The strategic investments the company have made, both before and during the pandemic, have strengthened its ability to create long-term shareholder value Strategic Focus Areas Brand Growth Value Proposition Platform Expansion Enhance
Slide 9: Deliberate investments in brand growth
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX The deliberate investments in brand growth enabled Choice to capture more share of consumer demand and emerge as a stronger company than we were two years ago Achievements (2019-2021)1 Drove growth across the higher value and more re
Slide 10: Choice continues to increase market share in the midscale segment
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX Choice Hotels continues to increase market share as a leader in the midscale segment, outperforming the industry’s midscale segment C Choice Midscale Domestic Portfolio versus Competitors1 Choice Midscale Domestic Portfolio Outperfor
Slide 11: Extended stay portfolio is a highly cycle-resilient segment
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX Choice Hotels’ extended stay portfolio has proven to be a highly cycle-resilient segment Choice’s strategic focus and prior investments in extended stay continue to drive a competitive advantage Everhome Suites (January 2020) – first
Slide 12: Building momentum in the upscale segment
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX Choice continues to build on its significant momentum in the upscale segment ‒ expanding our customer reach and strengthening our portfolio offering Leisure-focused select service brand Remains first launched and largest global soft
Slide 13: Investments in franchisee tools and the platform business
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX Deliberate investments in franchisee tools and the platform business enabled Choice to enhance its value proposition and leverage its platform to expand revenue opportunities Achievements (2019-2021)1 Invested in the franchise owners
Slide 14: Value Proposition
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX As a franchisor, Choice provides strong brands, marketing, reservation and training services to drive profitability of our independent hotel owners and operators Value Proposition Scale of Choice’s customer Mutually beneficial long-t
Slide 15: Investments in the platform business attracted new franchisees and guests
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX Choice's investments in the platform business attracted new franchisees and guests to its portfolio while providing additional value to existing customers Strategic partnerships with Penn National Gaming and Bluegreen Vacations Ascen
Slide 16: Domestic leisure travel segment growth expected to continue
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX Domestic leisure travel segment growth is expected to increase from pre-pandemic levels and continue to fuel the performance of our brands Consumer trends favor domestic leisure travel 4 out of 5 3x >40 million 5+ years number of dom
Slide 17: Best-in-class balance sheet and industry-leading credit profile
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX Choice maintains a best-in class balance sheet and industry-leading credit profile Low leverage and ample liquidity provides flexibility to utilize the balance sheet for additional growth Full-year 2021: Did not have to renegotiate O
Slide 18: Disciplined and experienced management team
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX Disciplined and experienced management team focused on fueling long-term growth Patrick Pacious Dominic Dragisich Simone Wu David A. Pepper Janis Cannon President & Chief Chief Financial Officer Senior Vice President, Chief Developme
Slide 19: Business Update
2 Business Update Comfort Inn & Suites, Boise, ID
Slide 20: Fourth Quarter and Full-Year 2021 Performance Recap
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX Fourth Quarter and Full-Year 2021 Performance Recap Domestic Results RevPAR Unit Growth 2.2 % vs. FY ’19 Outperformed industry by +19 percentage points Outperformed chain scales by +680 bps Exceeded guidance by +120 bps Revenue gener
Slide 21: Domestic RevPAR recovery
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX Choice Hotels continues to lead the recovery, exceeding 2019 levels for the last seven months in 2021, with trends continuing into the first quarter 2022 $70 +14.9% 2019 2021 +4.5% $60 +6.5% +12.5% Domestic RevPAR +10.6% $50 +20.7% +
Slide 22: Midscale
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX Comfort Inn & Suites, CrossPlex Village, AL Comfort Inn & Suites, Hurricane, UT Clarion Pointe, South Boston, VA Comfort Family • 870 basis points RevPAR growth outperformance versus the upper-midscale chain scale1 • 1.2% YoY domesti
Slide 23: Extended Stay
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX Everhome Suites Prototype Exterior Rendering WoodSpring Suites Everhome Model Room Extended Extended Stay • 6% YoY domestic unit growth increase • 27% YoY increase in domestic franchise agreements for full-year 2021 Stay WoodSpring S
Slide 24: Upscale
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX Cambria Hotels, Milwaukee, WI Ascend Hotel Collection, Hotel Petaluma, CA Cambria Hotels, Boston, MA Upscale • +13% YoY domestic unit growth increase1 Upscale • +86% YoY increase in domestic franchise agreements for Q4 2021 Cambria •
Slide 25: Financial Summary and Highlights
Financial Summary and 3 Highlights Cambria Hotels, Napa, CA 25
Slide 26: Financial Performance Overview
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX Financial Performance Overview Q4 FULL YEAR 2021 2019 % Growth 2021 2019 % Growth Total Revenues $284.6 M $268.1 M 6% $1,069.3 M $1,114.8 M -4% Revenues excl. marketing & $140.2 M $130.2 M 8% $540.5 M $537.4 M 1% reservation system f
Slide 27: Disciplined approach to capital allocation
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX Choice Hotels maintains a disciplined approach to capital allocation and is committed to driving long-term shareholder value 1 2 3 Growth M&A Capital Initiatives Management Increase the entire platform’s Disciplined approach to poten
Slide 28: Environmental, Social and Governance
Environmental 4 Social Governance Choice Hotels African American resource group (CHAARGE) meeting
Slide 29: Long-standing commitment to ESG initiatives
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX Choice has a long-standing commitment to ESG initiatives within and outside the company Sustainability Diversity & Community Support Governance • Began a property management dashboard • Nearly 70% minority owned franchises • Longstan
Slide 30: Appendix
5 Appendix Cambria Hotels, DC Riverfront, DC 30
Slide 31: Non-GAAP Financial Measurements
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX Non-GAAP Financial Measurements The company evaluates its operations utilizing the performance metrics of adjusted EBITDA, adjusted EBITDA margins, adjusted selling, general and administrative (SG&A) expenses, revenues excluding mark
Slide 32: Reconciliation of Non-GAAP Measures
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX Reconciliation of Non-GAAP Measures ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA") ($thousands) Q4 2021* Q4 2019* FY 2021* FY 2019* Net income $ 64,083 $ 42,169 $ 288,957 $ 222,878 Income taxes 20,
Slide 33: Reconciliation of Non-GAAP Measures
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL HIGHLIGHTS ESG APPENDIX Reconciliation of Non-GAAP Measures ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS) ($thousands) Q4 2021* Q4 2019* FY 2021* FY 2019* Net income $ 64,083 $ 42,169 $ 288,957 $ 222,878 Adjustments: Loss on extinguishme
Slide 34: Cambria Hotels, Philadelphia, PA Cambria Hotels, Houston, TX Cambria Hotels, Chicago Theater District, IL
Cambria Hotels, Philadelphia, PA Cambria Hotels, Houston, TX Cambria Hotels, Chicago Theater District, IL Cambria Hotels, Downtown Phoenix, AZ 34
Choice Hotels International — Q4 2021 Earnings Presentation on 6ix