Choice Hotels Q2 Fees Rise to $383M

TL;DR

**CHOICE HOTELS FEES UP IN Q2** Royalty, Licensing & Mgmt Fees hit $383M (vs $354M LY). Initial Franchise Fees $17M (vs $15M LY).

AI Summary

Choice Hotels International Inc. reported its Q2 2024 results, with Royalty, Licensing and Management Fees for the quarter ending June 30, 2024, totaling $383 million, an increase from $354 million in Q2 2023. For the six months ending June 30, 2024, these fees reached $761 million, up from $707 million in the same period last year. Initial Franchise Fees also saw a rise, with $17 million reported for Q2 2024 compared to $15 million in Q2 2023.

Why It Matters

This filing indicates continued revenue growth for Choice Hotels through its core franchise and management fee structure, suggesting a healthy demand for its brands.

Risk Assessment

Risk Level: low — The filing is a routine quarterly report showing positive financial trends, with no immediate red flags.

Key Numbers

• $383M — Q2 Royalty, Licensing & Management Fees (Represents an increase from $354M in Q2 2023.)
• $761M — Year-to-Date Royalty, Licensing & Management Fees (Represents an increase from $707M in the same period of 2023.)
• $17M — Q2 Initial Franchise Fees (Shows growth from $15M in Q2 2023.)

Key Players & Entities

• CHOICE HOTELS INTERNATIONAL INC (company) — Filer of the 10-Q report
• 20240630 (date) — End of the reporting period for the 10-Q
• $383 million (dollar_amount) — Royalty, Licensing and Management Fees for Q2 2024
• $354 million (dollar_amount) — Royalty, Licensing and Management Fees for Q2 2023
• $761 million (dollar_amount) — Royalty, Licensing and Management Fees for the six months ending June 30, 2024
• $707 million (dollar_amount) — Royalty, Licensing and Management Fees for the six months ending June 30, 2023
• $17 million (dollar_amount) — Initial Franchise Fees for Q2 2024
• $15 million (dollar_amount) — Initial Franchise Fees for Q2 2023

FAQ

Key Financial Figures

• $0.01 — ich Registered Common Stock, Par Value $0.01 per share CHH New York Stock Exchange

Filing Documents

• chh-20240630.htm (10-Q) — 1459KB
• chh-ex311x2024x06x30pacious.htm (EX-31.1) — 9KB
• chh-ex312x2024x06x30oaksmi.htm (EX-31.2) — 9KB
• chh-ex32x2024x06x30oaksmit.htm (EX-32) — 5KB
• 0001046311-24-000028.txt ( ) — 7621KB
• chh-20240630.xsd (EX-101.SCH) — 46KB
• chh-20240630_cal.xml (EX-101.CAL) — 70KB
• chh-20240630_def.xml (EX-101.DEF) — 256KB
• chh-20240630_lab.xml (EX-101.LAB) — 642KB
• chh-20240630_pre.xml (EX-101.PRE) — 455KB
• chh-20240630_htm.xml (XML) — 1204KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

- Financial Statements (Unaudited)

Item 1 - Financial Statements (Unaudited) 3 Consolidated Statements of Income - For the three and six months ended June 3 0 , 2024 and 2023 3 Consolidated Statements of Comprehensive Income - For the three and six months ended June 3 0 , 2024 and 2023 4 Consolidated Balance Sheets - As of June 3 0 , 2024 and December 31, 2023 5 Consolidated Statements of Cash Flows - For the six months ended June 3 0 , 2024 and 2023 6 Consolidated Statements of Shareholders' Equity - For the three and si x months ended June 3 0 , 2024 and 2023 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8

- Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 18

- Quantitative and Qualitative Disclosures About Market Risk

Item 3 - Quantitative and Qualitative Disclosures About Market Risk 32

- Controls and Procedures

Item 4 - Controls and Procedures 32

OTHER INFORMATION

PART II. OTHER INFORMATION

- Legal Proceedings

Item 1 - Legal Proceedings 33

- Risk Factors

Item 1A - Risk Factors 33

- Unregistered Sales of Equity Securities and Use of Proceeds

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds 33

- Defaults Upon Senior Securities

Item 3 - Defaults Upon Senior Securities 33

- Mine Safety Disclosures

Item 4 - Mine Safety Disclosures 33

- Other Information

Item 5 - Other Information 34

- Exhibits

Item 6 - Exhibits 35

SIGNATURES

SIGNATURES 36 2 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS CHOICE HOTELS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 REVENUES Royalty, licensing and management fees $ 141,813 $ 140,499 $ 247,280 $ 247,991 Initial franchise fees 6,562 7,164 13,267 15,046 Platform and procurement services fees 28,126 28,801 41,882 42,644 Owned hotels 28,418 25,504 53,409 47,836 Other 15,037 11,148 31,394 21,775 Other revenues from franchised and managed properties 215,200 214,304 379,873 384,920 Total revenues 435,156 427,420 767,105 760,212 OPERATING EXPENSES Selling, general and administrative 64,995 58,424 113,620 107,345 Business combination, diligence and transition costs 895 9,380 16,739 19,742 Depreciation and amortization 10,827 9,812 21,762 19,835 Owned hotels 20,704 18,150 40,027 35,296 Other expenses from franchised and managed properties 205,113 207,265 382,186 375,754 Total operating expenses 302,534 303,031 574,334 557,972 Operating income 132,622 124,389 192,771 202,240 OTHER EXPENSES AND INCOME, NET Interest expense 23,845 16,270 44,026 30,354 Interest income ( 2,415 ) ( 2,056 ) ( 4,146 ) ( 3,939 ) Other loss (gain) 2,544 ( 2,187 ) 3,880 ( 4,095 ) Equity in net gain of affiliates ( 7,933 ) ( 185 ) ( 7,778 ) ( 122 ) Total other expenses and income, net 16,041 11,842 35,982 22,198 Income before income taxes 116,581 112,547 156,789 180,042 Income tax expense 29,445 27,837 38,644 42,512 Net income $ 87,136 $ 84,710 $ 118,145 $ 137,530 Basic earnings per share $ 1.82 $ 1.66 $ 2.42 $ 2.68 Diluted earnings per share $ 1.80 $ 1.65 $ 2.41 $ 2.66 Cash dividends declared per share $ 0.2875 $ 0.2875 $ 0.5750 $ 0.5750 The accompanying notes are an integral part of these consolidated financial statements. 3 Table of Contents CHOICE HOTELS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (IN THOUSANDS) (UNAUDI

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Basis of Presentation and Significant Accounting Policies Basis of Presentation The accompanying unaudited consolidated financial statements of Choice Hotels International, Inc. and subsidiaries (collectively, "Choice" or the "Company") have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America ("GAAP") pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). All significant intercompany accounts and transactions between the Company and its subsidiaries have been eliminated in consolidation. The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments that are necessary to fairly present the Company's financial position and results of operations. Except as otherwise disclosed, all adjustments are of a normal recurring nature. Certain prior year amounts in our consolidated financial statements have been reclassified in order to maintain comparability with the current year presentation. Business combination, diligence and transition costs, which were previously presented in selling, general and administrative expenses, are now presented within a standalone financial statement line item in the consolidated statements of income. The reclassification had no effect on the Company's previously reported operating income or net income. Certain information and footnote disclosures normally included in the consolidated financial statem

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