Choice Hotels International, Inc. · NYSE:CHH
Choice Hotels International — Q4 2022 Earnings Presentation
30 slides from Choice Hotels International's earnings presentation, Feb 15, 2023
Slide 1: 2023 Investor Presentation
Country Inn & Suites, Bloomington, MN 2023 Investor Presentation February 15, 2023 1
Slide 2: Forward-looking Statements
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. Certain, but not necessarily all, of such forward-looking statements can be identified by the use of forward-
Slide 3: Table of Contents
Table of Contents 1 Company Overview 2 Business Update 3 Financial Summary and Highlights 4 Outlook 5 Appendix Everhome Suites, Corona, 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 with over 80 years of success
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX Choice Hotels is one of the world’s largest hotel companies with over 80 years of success building a portfolio of diversified brands Choice Hotels is positioned at the intersection of franchising, hospitality and techno
Slide 6: Investment Thesis
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX Investment Thesis Choice Hotels is well-positioned for long-term growth across all revenue and profitability levers 1 2 3 Asset-light franchising model Proven strategy of growing the North America’s midscale leader gene
Slide 7: Fee-for-service business model generates stable cash flows and strong returns
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX The company’s fee-for-service business model generates stable cash flows and strong returns on investments throughout economic cycles Choice is a leading industry franchisor1 % of domestic franchised hotels2 Asset-light
Slide 8: Strategic decisions and investments strengthened ability to create long-term shareholder value
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX The strategic decisions and investments the company have made have strengthened its ability to create long-term shareholder value Strategic Focus Areas Brand Growth Value Proposition Platform Expansion Enhancements Laun
Slide 9: Distinct strategy of growing brand portfolio is driving impressive results
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX Choice Hotels’ distinct strategy of growing the brand portfolio with hotels that generate higher royalties per unit is driving impressive results Achievements Drove growth that generated Invested in the franchise Entere
Slide 10: Adjusted EBITDA 19% higher than last year, surpassing 2019 by 28%
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX The company delivered step-function growth with adjusted EBITDA 19% higher than last year and surpassing 2019 levels by 28% C Adjusted EBITDA and Growth Rates $479 $404 $374 $241 2019 2020 2021 2022 Growth YoY - -35% 67
Slide 11: Leader in the upper-midscale and midscale segments
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX Choice Hotels continues to be a leader in the upper-midscale and midscale segments C Choice Midscale Domestic Portfolio versus Competitors1 # of upper-midscale and midscale hotels 4,440 ~27% Market Share 3,250 3,111 2,3
Slide 12: Extended stay investments drive a competitive advantage
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX Choice’s strategic focus and prior investments in extended stay continue to drive a competitive advantage 403 domestic extended-stay hotels open Everhome Suites, the first brand to enter Growing and 496 in the pipeline;
Slide 13: Building momentum in the upscale segment
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX Choice Hotels continued to build momentum in the upscale segment, with the Radisson Americas acquisition further cementing the company’s strength 65 hotels open, 69 in development, Remains first launched and Choice adde
Slide 14: Best-in-class franchisee success system drives profitability
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX As a franchisor, Choice Hotels created a best-in-class franchisee success system to drive profitability of the independent hotel owners and operators Value Proposition Scale of Choice’s customer Mutually beneficial long
Slide 15: Best-in-class balance sheet with no significant debt maturities for three years
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX Choice Hotels maintains a best-in class balance sheet, with no significant debt maturities for the next three years Balance Sheet Debt Maturities & Liquidity Next senior note maturity (2029) $850 2.5x Reported leverage
Slide 16: Business Update
2 Business Update Comfort Suites, Natchitoches, LA 16
Slide 17: Fourth Quarter and Full-Year 2022 Performance Recap Update
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX Fourth Quarter and Full-Year 2022 Performance Recap Update Domestic Results1 RevPAR Growth Franchise Pipeline Agreements +20.4% Outperformed industry by +700 bps (12 consecutive quarters of outperformance) ADR vs. Q4 ’1
Slide 18: Midscale
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX Comfort Inn & Suites, CrossPlex Village, AL Comfort Inn & Suites, Hurricane, UT Clarion Pointe, South Boston, VA Midscale • Surpassed 2019 RevPAR levels since June 2021 and achieved 17.3% RevPAR growth1 Midscale • Grew
Slide 19: Extended Stay
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX Everhome Suites Prototype Exterior Rendering WoodSpring Suites Entrance Everhome Model Room Extended Stay • Surpassed 2019 RevPAR levels since April 2021 and achieved 27.8% RevPAR growth1 Extended • Expanded domestic pi
Slide 20: Upscale
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX Radisson Blu, Chicago, IL Ascend, Henderson, NV Cambria Hotels, Boston, MA Upscale • Achieved 10.4% RevPAR growth and outperformed the upscale chain scale by nearly 10 percentage points1 Upscale • Doubled the number of
Slide 21: Financial Summary and Highlights
Financial Summary and 3 Highlights Cambria Hotels, Detroit-Shelby Township, MI 21
Slide 22: Full-Year 2022 Financial Performance
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX Full-Year 2022 Financial Performance Revenue & Profitability Acquisition $1.4B Total Revenues $332.2M Net Income $478.6M Adj. EBITDA $5.27 Adj. diluted EPS $104.2M $18.3M Radisson Americas Radisson Americas revenue Adj.
Slide 23: Disciplined approach to capital allocation
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX Choice Hotels maintains a disciplined approach to capital allocation and is committed to driving long-term shareholder value 1 2 3 Growth M&A Capital Initiatives Management Increase the entire platform’s Disciplined app
Slide 24: Outlook
4 Outlook ComfortHotel, Cambria Inn &Calabasas, Suites, Boise, CA ID 24
Slide 25: FY 2023 Guidance and Revenue Sensitivities
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX The company is expecting to grow adjusted EBITDA by approximately 11% at the midpoint of the guidance, year-over-year FY 2023 Guidance (inclusive of Radisson Americas acquisition) 2023 Revenue Sensitivities Net Income:
Slide 26: Appendix
5 Appendix Cambria Hotels, DC Riverfront, DC 26
Slide 27: Non-GAAP Financial Measurements
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX Non-GAAP Financial Measurements Non-GAAP Financial Measurements and Other Definitions The company evaluates its operations utilizing the performance metrics of adjusted EBITDA, adjusted EBITDA margins, adjusted selling,
Slide 28: Non-GAAP Financial Measurements
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX Non-GAAP Financial Measurements Occupancy Occupancy represents the total number of room nights sold divided by the total number of room nights available at a hotel for a given period. Occupancy measures the utilization
Slide 29: Reconciliation of Non-GAAP Measures: Adjusted Net Income and EPS
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX Reconciliation of Non-GAAP Measures ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS) ($thousands) Q4 2022* Q4 2021* FY 2022* FY 2021* FY 2020* FY 2019* Net income $ 55,514 $ 64,083 $ 332,150 $ 288,957 $
Slide 30: Reconciliation of Non-GAAP Measures: Adjusted EBITDA
COMPANY OVERVIEW BUSINESS UPDATE FINANCIAL SUMMARY & HIGHLIGHTS OUTLOOK APPENDIX Reconciliation of Non-GAAP Measures ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION ("EBITDA") ($thousands) Q4 2022* Q4 2021* FY 2022* FY 2021* FY 2020* FY 2019* Net income $ 55,514 $ 64,083 $332
Choice Hotels International — Q4 2022 Earnings Presentation on 6ix