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Choice Hotels Q4 Profit Up, Tops View; Guides Q1, FY11 Below Estimates – Update

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(RTTNews) – Hotel franchiser Choice Hotels International Inc. (CHH: News ) Monday reported a higher profit for the fourth quarter, helped mainly by increases in revenue as well as lower charges. Excluding non-recurring items, fourth-quarter net income declined from last year, but still came in above analysts’ estimates. Looking ahead, the company issued earnings guidance for the first quarter and full year 2011, with both projected to come below current Street estimates.

Choice Hotels’ net income for the quarter improved to $24.14 million or $0.40 per share from $23.63 million or $0.40 per share in the fourth quarter of previous year.

Adjusting for special items, net income declined to $24.92 million or $0.42 per share from $25.85 million or $0.43 per share in the comparable quarter a year ago. On average, 20 analysts polled by Thomson Reuters expected the company to earn $0.39 per share in the quarter. Analysts’ estimates typically excludes special items.

Adjusted net income for the recent fourth quarter excludes charges related to employee termination benefits of $0.77 million. The prior year’s adjusted net income excludes employee termination benefits of $1.46 million and a curtailment loss related to the freezing of benefits payable under the company’s supplemental executive retirement plan of $0.76 million.

The Silver Spring, Maryland-headquartered company’s total quarterly revenues grew 10 percent to $155.01 million from $140.70 million in the same quarter of previous year. Analysts’ were looking for revenue of $150.02 million.

Franchising revenues increased 7 percent year over year to $66.9 million.

Domestic system-wide revenue per available room or RevPAR increased 9.7 percent over last year, as a result of occupancy rates increasing 420 basis points and average daily rates increasing 0.6 percent.

The effective royalty rate increased 3 basis points to 4.31 percent from 4.28 percent last year.

The company executed 161 new domestic hotel franchise contracts for the recent fourth quarter, an increase of 44 percent over the prior year period. The increase in franchise sales was primarily driven by Quality, Clarion and Econo Lodge conversion brands.

Interest expense increased by $2.8 million over last year to $3.5 million, primarily as a result of the company’s issuance of $250 million in unsecured senior notes on August 25, 2010. The proceeds from these senior notes were utilized to repay other outstanding indebtedness under the company’s unsecured revolving credit facility.

Further, Choice Hotels’ Board declared a quarterly cash dividend of $0.185 per share, payable on April 15, 2011 to shareholders of record on April 1, 2011.

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From www.rttnews.com


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