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Extended Stay America Announces Third Quarter 2015 Results

The following excerpt is from the company's SEC filing.

-RevPAR Increases 6.5%

-Adjusted EBITDA Increases 11.2%

-Hotel Operating Margin Expands 310 Basis Points

-Raises 2015 Adjusted EBITDA Guidance

CHARLOTTE, N.C. October 27, 2015

(BUSINESS WIRE) Extended Stay America, Inc. (NYSE: STAY) (the Company) today announced consolidated results for the quarter ended September 30, 2015.

Third Quarter 2015 Highlights

RevPAR grew 6.5% to $50.83

Revenue increased 6.5% to $360.5 million

expanded 310 basis points to 56.2%

increased 11.2% to $181.4 million

Net income decreased 3.3% to $58 .2 million

Adjusted Paired Share Income

increased 11.2% to $66.6 million, or $0.33 per diluted Paired Share

Nine Months 2015 Highlights

RevPAR grew 6.5% to $46.95

Revenue increased 6.2% to $988.4 million

expanded 270 basis points to 54.8%

increased 9.8% to $476.0 million

Net income increased 23.1% to $150.9 million

increased 19.6% to $163.8 million, or $0.80 per diluted Paired Share

Extended Stay Americas Chief Executive Officer, Gerry Lopez, commented We are excited by our robust third quarter results and how they demonstrate the staying power of our hotel improvement strategy. In the third quarter, we grew RevPAR by 6.5% and Adjusted EBITDA by 11.2%, both strong numbers, and particularly so in a quarter with heightened industry concerns. Our lack of concentration in any single market and minimal exposure to fluctuations

See Disclosure Regarding Non-GAAP Financial Measures for an explanation of the non-GAAP measures included herein (i.e., EBITDA, Adjusted EBITDA, Hotel Operating Profit, Hotel Operating Margin, Paired Share Income, Adjusted Paired Share Income and Adjusted Paired Share Income per Paired Share).

in international travel help to limit headwinds. We believe that our geographically diverse portfolio, which focuses on domestic markets, transient consumers and longer stay guests, is well positioned at this point in the economic cycle. Importantly, we believe we have additional value creation opportunities going forward, as we begin to realize benefits from the full implementation of our revenue management system, make progress with our Extended Perks loyalty program, build up our sales force, and execute hotel improvement initiatives across more and more of our portfolio.

Mr. Lopez continued, Our portfolio-wide renovation program continues to show strong results, and is on track for completion in early 2017. This quarter alone we completed the renovation of 31 properties and began renovations on another 49 hotels. As if that was not enough, our recently announced agreement to sell 53 economy extended stay hotels for $285.0 million will further enhance the overall quality of our portfolio and will complete our transition to a single, nationwide brand. We believe this newly streamlined and renovated portfolio will be positioned to sustain attractive returns to our shareholders in the coming years.

Financial and Operating Results

Total revenues

for the three months ended September 30, 2015 increased 6.5% over the comparable period in 2014 to $360.5 million. Total revenues for the nine months ended September 30, 2015 increased 6.2% over the comparable period in 2014 to $988.4 million.

Revenue per available room (RevPAR)

for the three months ended September 30, 2015 grew 6.5% over the comparable period in 2014, driven by an improvement in average daily rate (ADR) of 8.0% while occupancy decreased to 78.3% compared to 79.3% in the comparable period in 2014. RevPAR for the nine months ended September 30, 2015 grew 6.5% over the comparable period in 2014, driven by an improvement in ADR of 7.6% while occupancy decreased to 75.3% compared to 76.1% in the comparable period in 2014.

for the three months ended September 30, 2015 was 56.2% compared to 53.1% in the comparable period in 2014. Hotel operating margin flow-through, defined as the change in Hotel Operating Profit

divided by the change in total room and other hotel revenues, was 105.2% for the three months ended September 30, 2015. Hotel Operating Margin

for the nine months ended September 30, 2015 was 54.8% compared to 52.1% in the comparable period in 2014. Hotel operating margin flow-through for the nine months ended September 30, 2015 was 97.5%.

for the three months ended September 30, 2015 increased $18.3 million to $181.4 million, representing 11.2% growth over the comparable period in 2014. Adjusted EBITDA

excludes non-cash equity-based compensation of $3.0 million, loss on disposal of assets of $1.3 million, asset impairment of $9.0 million, and other non-operating expense of $1.1 million. Adjusted EBITDA

for the nine months ended September 30, 2015 increased $42.7 million to $476.0 million, representing 9.8% growth over the comparable period in 2014.

for the three months ended September 30, 2015 was $58.2 million compared to $60.2 million in the comparable period in 2014, a decrease of 3.3%. The decline in net income in the third quarter was due to an asset impairment of $9.0 million and a higher tax rate driven primarily by a provision to return true up for 2014. Income tax expense for the three months ended September 30, 2015 was $21.3 million compared to $19.0 million in the comparable period in 2014. Net income for the nine months ended September 30, 2015 was $150.9 million compared to $122.6 million in the comparable period in 2014, an increase of 23.1%. Income tax expense for the nine months ended September 30, 2015 was $48.1 million compared to $38.2 million in the comparable period in 2014.

for the three months ended September 30, 2015 was $66.6 million, or $0.33 per diluted Paired Share, compared to $59.9 million, or $0.29 per diluted Paired Share, in the comparable period in 2014. Adjusted Paired Share Income

for the nine months ended September 30, 2015 was $163.8 million, or $0.80 per diluted Paired Share, compared to $137.0 million, or $0.67 per diluted Paired Share, in the comparable period in 2014. Adjusted Paired Share Income

, a non-GAAP measure, represents net income, as adjusted, attributable to the consolidated enterprise, whose representative equity security is a Paired Share. A Paired Share entitles...


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