Choice Hotels Q3 Fees Rise to $390M

TL;DR

CHOICE HOTELS Q3 FEES UP TO $390M, YTD $1.14B. FRANCHISE FEES ALSO CLIMBING.

AI Summary

Choice Hotels International Inc. reported its Q3 2024 results, with Royalty, Licensing and Management Fees for the third quarter of 2024 reaching $390 million, an increase from $367 million in Q3 2023. For the nine months ended September 30, 2024, these fees totaled $1.14 billion, up from $1.07 billion in the same period of 2023. Initial Franchise Fees for Q3 2024 were $23 million, compared to $21 million in Q3 2023, and year-to-date fees were $67 million, up from $63 million in 2023.

Why It Matters

The increase in royalty and franchise fees indicates continued growth and demand for Choice Hotels' brands, suggesting a positive trend in their franchising business.

Risk Assessment

Risk Level: low — The filing is a standard quarterly report with no immediate red flags or significant negative developments.

Key Numbers

• $390M — Q3 2024 Royalty, Licensing and Management Fees (Represents an increase from the prior year's Q3.)
• $1.14B — Year-to-date 2024 Royalty, Licensing and Management Fees (Shows continued revenue growth over the first nine months.)
• $23M — Q3 2024 Initial Franchise Fees (Indicates ongoing new hotel development and franchise activity.)
• $67M — Year-to-date 2024 Initial Franchise Fees (Reflects a positive trend in attracting new franchisees.)

Key Players & Entities

• CHOICE HOTELS INTERNATIONAL INC (company) — Filer
• 20240930 (date) — Reporting Period End Date
• $390 million (dollar_amount) — Q3 2024 Royalty, Licensing and Management Fees
• $367 million (dollar_amount) — Q3 2023 Royalty, Licensing and Management Fees
• $1.14 billion (dollar_amount) — Year-to-date 2024 Royalty, Licensing and Management Fees
• $1.07 billion (dollar_amount) — Year-to-date 2023 Royalty, Licensing and Management Fees
• $23 million (dollar_amount) — Q3 2024 Initial Franchise Fees
• $21 million (dollar_amount) — Q3 2023 Initial Franchise Fees
• $67 million (dollar_amount) — Year-to-date 2024 Initial Franchise Fees
• $63 million (dollar_amount) — Year-to-date 2023 Initial Franchise Fees

FAQ

Key Financial Figures

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

Filing Documents

• chh-20240930.htm (10-Q) — 1521KB
• chh-ex311x2024x09x30pacious.htm (EX-31.1) — 9KB
• chh-ex312x2024x09x30oaksmi.htm (EX-31.2) — 9KB
• chh-ex32x2024x09x30oaksmit.htm (EX-32) — 5KB
• 0001046311-24-000036.txt ( ) — 7672KB
• chh-20240930.xsd (EX-101.SCH) — 46KB
• chh-20240930_cal.xml (EX-101.CAL) — 72KB
• chh-20240930_def.xml (EX-101.DEF) — 247KB
• chh-20240930_lab.xml (EX-101.LAB) — 638KB
• chh-20240930_pre.xml (EX-101.PRE) — 449KB
• chh-20240930_htm.xml (XML) — 1225KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

- Financial Statements (Unaudited)

Item 1 - Financial Statements (Unaudited) 3 Consolidated Statements of Income - For the three and nine months ended Sept ember 30, 2024 and 2023 3 Consolidated Statements of Comprehensive Income - For the three and nine months ended September 30, 2024 and 2023 4 Consolidated Balance Sheets - As of S eptember 30, 2024 and December 31, 2023 5 Consolidated Statements of Cash Flows - For the nine months ended September 30, 2024 and 2023 6 Consolidated Statements of Shareholders' Equity (Deficit) - For the three and nine months ended September 30, 2024 and 2023 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9

- 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 33

OTHER INFORMATION

PART II. OTHER INFORMATION

- Legal Proceedings

Item 1 - Legal Proceedings 34

- Risk Factors

Item 1A - Risk Factors 34

- Unregistered Sales of Equity Securities and Use of Proceeds

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds 34

- Defaults Upon Senior Securities

Item 3 - Defaults Upon Senior Securities 34

- Mine Safety Disclosures

Item 4 - Mine Safety Disclosures 34

- Other Information

Item 5 - Other Information 35

- Exhibits

Item 6 - Exhibits 36

SIGNATURES

SIGNATURES 37 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 Nine Months Ended September 30, September 30, 2024 2023 2024 2023 REVENUES Royalty, licensing and management fees $ 147,151 $ 148,512 $ 394,431 $ 396,503 Initial franchise fees 5,866 6,194 19,133 21,240 Platform and procurement services fees 16,178 15,542 58,060 58,186 Owned hotels 31,936 26,239 85,345 74,075 Other 13,857 11,436 45,251 33,211 Other revenues from franchised and managed properties 212,976 217,634 592,849 602,554 Total revenues 427,964 425,557 1,195,069 1,185,769 OPERATING EXPENSES Selling, general and administrative 49,077 44,042 162,697 151,387 Business combination, diligence and transition costs 984 10,871 17,723 30,613 Depreciation and amortization 10,861 9,633 32,623 29,468 Owned hotels 22,343 18,628 62,370 53,924 Other expenses from franchised and managed properties 192,916 207,341 575,102 583,095 Total operating expenses 276,181 290,515 850,515 848,487 Operating income 151,783 135,042 344,554 337,282 OTHER EXPENSES AND INCOME, NET Interest expense 22,038 16,168 66,064 46,522 Interest income ( 2,411 ) ( 1,897 ) ( 6,557 ) ( 5,836 ) Loss on extinguishment of debt 331 — 331 — Other (gain) loss ( 4,013 ) 1,343 ( 133 ) ( 2,752 ) Equity in net gain of affiliates ( 1,310 ) ( 1,801 ) ( 9,088 ) ( 1,923 ) Total other expenses and income, net 14,635 13,813 50,617 36,011 Income before income taxes 137,148 121,229 293,937 301,271 Income tax expense 31,432 29,205 70,076 71,717 Net income $ 105,716 $ 92,024 $ 223,861 $ 229,554 Basic earnings per share $ 2.24 $ 1.83 $ 4.64 $ 4.51 Diluted earnings per share $ 2.22 $ 1.81 $ 4.61 $ 4.47 Cash dividends declared per share $ 0.2875 $ 0.2875 $ 0.8625 $ 0.8625 The accompanying notes are an integral part of these consolidated financial statements. 3 Table of Contents CHOICE HOTELS INTERNATIONAL, INC. CONSOL

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. Investments in owned hotel properties and investments in other property and equipment, which were pr

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