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Choice Hotels (CHH) Q4 Earnings Miss Estimates, Fall Y/Y
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Choice Hotels International, Inc. (CHH - Free Report) reported dismal fourth-quarter 2020 results, with earnings and revenues missing the Zacks Consensus Estimate as well as declining on a year-over-year basis. Following the announcement, shares of the company fell 3.6% during trading hours on Feb 17.
Q4 Earnings and Revenues
The lodging franchisor reported adjusted earnings of 51 cents per share, which missed the consensus mark of 66 cents by 22.7%. Also, the bottom line plunged 44.6% from the prior-year quarter’s figure of 92 cents.
In the quarter under review, total revenues came in at $193.4 million. The top line missed the consensus mark of $204 million by 5.2%. Moreover, the metric declined 27.9% from the year-ago quarter’s levels.
Choice Hotels International, Inc. Price, Consensus and EPS Surprise
During the fourth quarter, Domestic royalty fees totaled $60.1 million, down 27% year over year. Also, domestic system-wide RevPAR declined 25.1% year over year. Average daily rate was down 12%. Occupancy fell to 44.9% from 52.8% in the prior-year quarter.
The company’s new domestic franchise agreements in 2020 came in at 427, down 38% year over year. Notably, 70% of the agreements comprised conversion hotels.
As of Dec 31, 2020, the number of domestic hotels and rooms rose 0.2% and 0.4% year over year, respectively.
Operating Results
Total operating expenses declined 16% from fourth-quarter 2019 levels to $167.4 million. Adjusted EBITDA declined 34.5% from the prior-year quarter’s figure to $54.7 million.
Balance Sheet
As of Dec 31, 2020, Choice Hotels had cash and cash equivalents of $234.8 million compared with $33.8 million on Dec 31, 2019.
Long-term debt at the end of the fourth quarter was $1,058.7 million, up from $844.1 million at 2019-end. During the quarter, goodwill, as a percentage of total assets, came in at 10% compared with 11.5% at 2019-end.
Due to uncertainties related to the pandemic, the company suspended payout of future dividends. As a result, total dividends paid for 2020 came in at approximately $25 million.
In 2020, the management repurchased nearly $0.7 million shares (for approximately $55.5 million) under the share repurchase program. As of Dec 31, 2020, the company had 3.4 million shares remaining under the current share repurchase authorization.
2020 Highlights
Total revenues in 2020 came in at $774.1 million compared with $1,114.8 million in 2019.
Adjusted EBITDA in 2020 came in at $241.1 million compared with $373.6 million in 2019.
In 2020, adjusted earnings per share (EPS) came in at $2.22 compared with $4.32 in the previous year.
2021 Outlook
Thanks to the pandemic-related uncertainties, the company is not providing any formal guidance for the first quarter or 2021. Factors that are likely to make an impact in future operations include resurgence in COVID-19 cases, pace of vaccination rollout and vaccines effectiveness, the duration and scope of mandated travel and other restrictions as well as broader macroeconomic recovery. Going forward, the company will constantly monitor the situation and provide further updates based on the information then available.
For the quarter ended Mar 31, 2021, the company expects sequential improvement in RevPAR. Year to date (through mid-February, 2021) RevPAR has declined approximately 18% compared with that of 2020 levels.
Other Updates
During the fourth quarter, the company awarded 195 domestic franchise agreements, of which 70% were for conversion hotels. Overall, this indicated 36% decline compared with the prior-year levels. The company's domestic upscale, midscale, and extended stay segments - units and rooms increased by 1.8% and 1.6% respectively, on a year over year basis.
During the quarter, the number of domestic hotels in the midscale segment rose 1.3% year over year. In the Comfort brand segment, number of domestic hotels and rooms increased 2% year over year. Notably, the segment had more than 260 hotels in its domestic pipeline out of which 65 hotels were awaiting conversion.
Coming to the extended-stay portfolio, the company witnessed rapid expansion, thereby reaching 447 domestic hotels as of Dec 31, 2020. Notably, this suggested an 11% increase on a year-over-year basis. Meanwhile, the domestic extended-stay pipeline comprised of 315 hotels awaiting conversion, under construction or approved for development.
In the MainStay Suites segment, domestic hotels rose 23% on a year-over-year basis. Notably, the segment witnessed highest number of hotel openings in 2020. Meanwhile, the Suburban brand witnessed 40% year-over-year growth in domestic franchise agreements.
The Cambria Hotels brand witnessed rise in number of domestic hotels and rooms by 8% and 6%, respectively, from 2019 levels. As of Dec 31, the brand's pipeline comprised nearly 80 domestic hotels, of which 19 hotels were under active construction.
As of Dec 31, the company’s total domestic pipeline of hotels awaiting conversion, under construction or approved for development reached 966 hotels, thereby reaching nearly 80,000 rooms.
Zacks Rank & Peer Release
Choice Hotels, which shares space with Marriott International, Inc. (MAR - Free Report) and Hyatt Hotels Corporation (H - Free Report) in the Zacks Hotels and Motels industry, currently has a Zacks Rank #4 (Sell).
Hilton Worldwide Holdings Inc. (HLT - Free Report) reported dismal fourth-quarter 2020 results, with earnings and revenues missing the Zacks Consensus Estimate as well as declining on a year-over-year basis. Notably, the company’s operations were negatively impacted by strict travel restrictions stemming from rise in COVID-19 cases. In the quarter under review, Hilton’s adjusted loss per share was 10 cents, wider than the Zacks Consensus Estimate of earnings of 4 cents. In the prior-year quarter, the company reported adjusted EPS of $1.00. Quarterly revenues of $890 million missed the consensus mark of $1,057 million and declined 62.4% from the year-ago quarter’s levels.
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You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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Choice Hotels (CHH) Q4 Earnings Miss Estimates, Fall Y/Y
Choice Hotels International, Inc. (CHH - Free Report) reported dismal fourth-quarter 2020 results, with earnings and revenues missing the Zacks Consensus Estimate as well as declining on a year-over-year basis. Following the announcement, shares of the company fell 3.6% during trading hours on Feb 17.
Q4 Earnings and Revenues
The lodging franchisor reported adjusted earnings of 51 cents per share, which missed the consensus mark of 66 cents by 22.7%. Also, the bottom line plunged 44.6% from the prior-year quarter’s figure of 92 cents.
In the quarter under review, total revenues came in at $193.4 million. The top line missed the consensus mark of $204 million by 5.2%. Moreover, the metric declined 27.9% from the year-ago quarter’s levels.
Choice Hotels International, Inc. Price, Consensus and EPS Surprise
Choice Hotels International, Inc. price-consensus-eps-surprise-chart | Choice Hotels International, Inc. Quote
Franchising & Royalties
During the fourth quarter, Domestic royalty fees totaled $60.1 million, down 27% year over year. Also, domestic system-wide RevPAR declined 25.1% year over year. Average daily rate was down 12%. Occupancy fell to 44.9% from 52.8% in the prior-year quarter.
The company’s new domestic franchise agreements in 2020 came in at 427, down 38% year over year. Notably, 70% of the agreements comprised conversion hotels.
As of Dec 31, 2020, the number of domestic hotels and rooms rose 0.2% and 0.4% year over year, respectively.
Operating Results
Total operating expenses declined 16% from fourth-quarter 2019 levels to $167.4 million. Adjusted EBITDA declined 34.5% from the prior-year quarter’s figure to $54.7 million.
Balance Sheet
As of Dec 31, 2020, Choice Hotels had cash and cash equivalents of $234.8 million compared with $33.8 million on Dec 31, 2019.
Long-term debt at the end of the fourth quarter was $1,058.7 million, up from $844.1 million at 2019-end. During the quarter, goodwill, as a percentage of total assets, came in at 10% compared with 11.5% at 2019-end.
Due to uncertainties related to the pandemic, the company suspended payout of future dividends. As a result, total dividends paid for 2020 came in at approximately $25 million.
In 2020, the management repurchased nearly $0.7 million shares (for approximately $55.5 million) under the share repurchase program. As of Dec 31, 2020, the company had 3.4 million shares remaining under the current share repurchase authorization.
2020 Highlights
Total revenues in 2020 came in at $774.1 million compared with $1,114.8 million in 2019.
Adjusted EBITDA in 2020 came in at $241.1 million compared with $373.6 million in 2019.
In 2020, adjusted earnings per share (EPS) came in at $2.22 compared with $4.32 in the previous year.
2021 Outlook
Thanks to the pandemic-related uncertainties, the company is not providing any formal guidance for the first quarter or 2021. Factors that are likely to make an impact in future operations include resurgence in COVID-19 cases, pace of vaccination rollout and vaccines effectiveness, the duration and scope of mandated travel and other restrictions as well as broader macroeconomic recovery. Going forward, the company will constantly monitor the situation and provide further updates based on the information then available.
For the quarter ended Mar 31, 2021, the company expects sequential improvement in RevPAR. Year to date (through mid-February, 2021) RevPAR has declined approximately 18% compared with that of 2020 levels.
Other Updates
During the fourth quarter, the company awarded 195 domestic franchise agreements, of which 70% were for conversion hotels. Overall, this indicated 36% decline compared with the prior-year levels. The company's domestic upscale, midscale, and extended stay segments - units and rooms increased by 1.8% and 1.6% respectively, on a year over year basis.
During the quarter, the number of domestic hotels in the midscale segment rose 1.3% year over year. In the Comfort brand segment, number of domestic hotels and rooms increased 2% year over year. Notably, the segment had more than 260 hotels in its domestic pipeline out of which 65 hotels were awaiting conversion.
Coming to the extended-stay portfolio, the company witnessed rapid expansion, thereby reaching 447 domestic hotels as of Dec 31, 2020. Notably, this suggested an 11% increase on a year-over-year basis. Meanwhile, the domestic extended-stay pipeline comprised of 315 hotels awaiting conversion, under construction or approved for development.
In the MainStay Suites segment, domestic hotels rose 23% on a year-over-year basis. Notably, the segment witnessed highest number of hotel openings in 2020. Meanwhile, the Suburban brand witnessed 40% year-over-year growth in domestic franchise agreements.
The Cambria Hotels brand witnessed rise in number of domestic hotels and rooms by 8% and 6%, respectively, from 2019 levels. As of Dec 31, the brand's pipeline comprised nearly 80 domestic hotels, of which 19 hotels were under active construction.
As of Dec 31, the company’s total domestic pipeline of hotels awaiting conversion, under construction or approved for development reached 966 hotels, thereby reaching nearly 80,000 rooms.
Zacks Rank & Peer Release
Choice Hotels, which shares space with Marriott International, Inc. (MAR - Free Report) and Hyatt Hotels Corporation (H - Free Report) in the Zacks Hotels and Motels industry, currently has a Zacks Rank #4 (Sell).
Hilton Worldwide Holdings Inc. (HLT - Free Report) reported dismal fourth-quarter 2020 results, with earnings and revenues missing the Zacks Consensus Estimate as well as declining on a year-over-year basis. Notably, the company’s operations were negatively impacted by strict travel restrictions stemming from rise in COVID-19 cases. In the quarter under review, Hilton’s adjusted loss per share was 10 cents, wider than the Zacks Consensus Estimate of earnings of 4 cents. In the prior-year quarter, the company reported adjusted EPS of $1.00. Quarterly revenues of $890 million missed the consensus mark of $1,057 million and declined 62.4% from the year-ago quarter’s levels.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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