Core Insights - Choice Hotels International reported record adjusted EBITDA of $190.1 million for Q3 2025, a 7% increase despite a decline in US RevPAR [1] - The company's performance was attributed to diversified revenue sources and initial results from ongoing investments [1] Financial Performance - Q3 net income reached $180 million, up from $105.7 million in Q3 2024, with diluted EPS rising to $3.86 from $2.22 YoY [3] - Adjusted diluted EPS for the quarter was $2.10, down from $2.23 in the same period last year due to various expenses and adjustments [4] Revenue and Room Growth - System-wide room count growth and increased revenue from extended stay and upscale segments contributed to performance [2] - Global net rooms grew by 2.3%, with upscale, extended stay, and midscale segments recording 3.3% growth since September 2024 [4] - International net rooms increased by 8.3% YoY, with a global pipeline exceeding 86,000 rooms as of September 30, 2025 [5] Regional Performance - International RevPAR growth was highest in the EMEA region, with an 11% increase YoY [2] - The Americas and Asia-Pacific regions each recorded a 5% increase in RevPAR, while Canada saw a 7% increase [3] - In the US, RevPAR declined by 3.2% YoY, primarily due to reduced demand from government and international inbound segments [3] Strategic Outlook - The CEO expressed optimism about the accelerating momentum in the international business, aiming to double profitability by 2027 [6] - The company is well-positioned for long-term growth with a high-quality pipeline and an enhanced value proposition attracting higher-value guests [7]

Financial Performance - Total revenues for Q3 2025 reached $447.34 million, a 4.8% increase from $427.96 million in Q3 2024[12] - Net income for the nine months ended September 30, 2025, was $306.26 million, compared to $223.86 million for the same period in 2024, reflecting a 37% increase[12] - Basic earnings per share for Q3 2025 were $3.89, up from $2.24 in Q3 2024, representing a 73.2% increase[12] - Operating income for the nine months ended September 30, 2025, was $346.95 million, slightly up from $344.55 million in the same period of 2024[12] - Net income for Q3 2025 reached $179,996,000, up 70% from $105,716,000 in Q3 2024[68] - The company reported a net income available to common shareholders of $304,786,000 for the nine months ended September 30, 2025, compared to $222,726,000 for the same period in 2024, a 37% increase[68] - For the nine months ended September 30, 2025, revenues totaled $1.206 billion, compared to $1.195 billion for the same period in 2024, representing a 0.9% increase[74] - The company experienced a net income of $44,534,000 for the year ending December 31, 2024[21] Assets and Liabilities - Cash and cash equivalents increased to $52.58 million as of September 30, 2025, from $40.18 million at the end of 2024[16] - Total assets grew to $2.91 billion as of September 30, 2025, compared to $2.53 billion at the end of 2024, marking a 14.9% increase[16] - Long-term debt increased to $1.92 billion as of September 30, 2025, from $1.77 billion at the end of 2024[16] - The total outstanding shares decreased from 49,284,204 as of March 31, 2024, to 46,959,039 as of September 30, 2024[20] - The accumulated deficit increased to $2,386,893,000 as of September 30, 2024, compared to $2,332,736,000 as of June 30, 2024[20] Dividends and Share Repurchases - The company declared cash dividends of $0.2875 per share for Q3 2025, consistent with Q3 2024[12] - The company declared dividends of $0.2875 per share, totaling $13,499,000 for the quarter ending September 30, 2024[20] - Cash dividends paid during the nine months ended September 30, 2025, amounted to $40.2 million, with projected annual dividends of approximately $53.5 million for the year ended December 31, 2025[171] - The Company repurchased 0.7 million shares at a total cost of $100.4 million during the nine months ended September 30, 2025, bringing total repurchases to 62.0 million shares for $2.7 billion[173] Revenue Streams - Loyalty net revenues for the three months ended September 30, 2025, were $31.8 million, compared to $23.7 million for the same period in 2024, representing a 34% increase[39] - Franchise and management fees rose to $193.8 million, an increase of 2.9% from $188.2 million in the same quarter of 2024[114] - Domestic royalty fees decreased by $6.9 million to $342.5 million, primarily due to a 1.7% decrease in domestic system-wide RevPAR[129] Acquisitions and Investments - The company reported a gain from an acquisition of a joint venture amounting to $100.03 million in Q3 2025[12] - The Company recognized a gain of approximately $100.0 million from the acquisition of Choice Hotels Canada, which was accounted for as a business combination[80] - The Company acquired the remaining 50% of Choice Hotels Canada for $73.4 million on July 2, 2025, funded through available cash and borrowings[151] Operational Metrics - The company’s performance metrics include revenue per available room (RevPar), occupancy, and average daily room rate (ADR) for assessing segment performance[72] - The company experienced a 3.2% decrease in domestic system-wide RevPAR, attributed to a 2.0% decrease in average daily rates and an 80 basis points decrease in occupancy[117] Future Outlook and Strategic Initiatives - Future outlook includes a projected revenue increase of 10% for Q4 2025, driven by new hotel openings and enhanced marketing strategies[200] - The company is investing $50 million in technology upgrades to improve customer experience and operational efficiency[200] - Market expansion plans include entering three new international markets by the end of 2026[200] - The company is focusing on sustainability initiatives, with a goal to reduce carbon emissions by 30% by 2030[200] Tax and Regulatory Matters - The effective income tax rate for the nine months ended September 30, 2025, was 19.3%, down from 23.8% for the same period in 2024, primarily due to a $100.0 million non-taxable gain from a joint venture acquisition[65] - The effective income tax rate for the three months ended September 30, 2025, was 14.7%, significantly lower than the 22.9% rate in the same period of 2024[124] Miscellaneous - The Company completed the implementation of a new ERP and EPM system, which is expected to strengthen internal controls over financial reporting[185] - The Company is not a party to any material litigation that could adversely affect its financial position[188]

Core Insights - The company is optimistic about the U.S. lodging cycle, expecting stronger demand driven by lower interest rates, AI infrastructure investments, and favorable demographic trends, alongside significant events like the 2026 World Cup [1] - The hotel pipeline is projected to be 1.7 times more accretive than the current portfolio, indicating a focus on high-quality hotel additions that enhance earnings per unit [2] - The company achieved a nearly 2.5% year-over-year increase in global rooms, with a strong emphasis on higher revenue segments, which now constitute 90% of the portfolio [3] Financial Performance - Adjusted EBITDA for the third quarter rose 7% to $190 million, reflecting growth in higher revenue brand mix and international business contributions [4] - The company generated $185 million in operating cash flow year-to-date, with $69 million in the third quarter, supporting capital allocation priorities [38] - Adjusted earnings per share for the third quarter were $2.10, down from $2.23 year-over-year, primarily due to increased amortization expenses from the acquisition of Choice Hotels Canada [37] Market Trends - The U.S. economy transient segment occupancy has improved year-to-date, indicating a potential positive turn in the cycle [5] - The occupancy index across the U.S. portfolio has increased slightly year-to-date, a positive early indicator for broader RevPAR growth [6] - The international business is positioned as the fastest-growing segment, with a 35% growth in adjusted international EBITDA and an 8% year-over-year increase in the international portfolio [8] Strategic Initiatives - The company is focusing on a higher value direct franchising model, which has grown by 22 percentage points over the past three years, now representing 40% of the international rooms portfolio [7] - Investments in technology are aimed at enhancing franchisee support, with a $6 million technology investment program nearing completion [19] - The loyalty program has grown to over 73 million members, with enhancements expected to drive member engagement and direct bookings [23] Future Outlook - The company expects U.S. RevPAR to range between -3% and -2% for the full year, with a tightening of the adjusted EBITDA outlook to between $620 million and $632 million [40] - The focus remains on capturing demand from retirees and the blue-collar workforce, with significant growth expected in these demographics [24][60] - The company anticipates continued growth in international markets and a doubling of international adjusted EBITDA by 2027 [7][68]

Financial Data and Key Metrics Changes - Adjusted EBITDA increased by 7% year-over-year to $190 million, driven by a stronger revenue brand mix and growth in small and medium business traveler revenue [4][24] - Global rooms grew by 2.3% year-over-year, with higher revenue segments expanding by 3.3% [25][28] - Adjusted earnings per share (EPS) for Q3 2025 was $2.10, down from $2.23 in the prior year, primarily due to increased amortization expenses and temporary tax impacts [31][35] Business Line Data and Key Metrics Changes - The U.S. extended stay segment saw a 12% year-over-year growth in room system size, with openings increasing by 14% [25][28] - The international business achieved a 35% growth in adjusted EBITDA, with an 8% year-over-year increase in the international portfolio [9][24] - The economy transient segment outperformed its chain-scale RevPAR by 310 basis points year-to-date [28] Market Data and Key Metrics Changes - International RevPAR increased by 9.5% year-over-year, with EMEA leading at 11% growth [28] - U.S. RevPAR declined by 3.2% year-over-year, attributed to softer government and international inbound demand [28] - Canadian operations reported a 7% increase in RevPAR for Q3 [28] Company Strategy and Development Direction - The company is focusing on expanding its higher revenue-generating segments, with 98% of its global pipeline in these brands [5][24] - A strategic shift towards a higher value direct franchising model has been implemented, with international EBITDA margins expanding to 70% [8][9] - Investments in technology and AI are aimed at enhancing franchisee success and operational efficiency [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the U.S. lodging cycle, citing favorable demographic trends and upcoming events like the 2026 World Cup as demand catalysts [6][7] - The company anticipates sustained RevPAR growth driven by strategic investments and an expanding business travel base [29][36] - The retiree demographic is expected to significantly contribute to future demand, with a projected increase in travel spending [22][49] Other Important Information - The company returned $150 million to shareholders through dividends and share repurchases year-to-date [33] - The full-year adjusted EBITDA guidance has been tightened to a range of $620 million to $632 million [35] - The company is on track to complete its technology investment program, enhancing its operational capabilities [17][23] Q&A Session Summary Question: Clarification on the EverHome joint venture and asset recycling - Management explained that the joint venture allows for longer-term hotel ownership while still focusing on asset recycling, with a net benefit of $25 million from the transaction [37][39] Question: Rationale for not buying back stock during the quarter - The decision was based on prioritizing investments in the business and the acquisition of the remaining interest in Choice Hotels Canada [41][42] Question: Long-term outlook for room growth in the U.S. - Management indicated that the focus remains on high-quality products in the pipeline, with expectations for continued growth in higher value segments [43][44] Question: Insights on the RevPAR environment and competition - Management noted that the current environment is cyclical, with signs of recovery in occupancy rates, particularly in the economy segment [46][48] Question: Expectations for 2026 and growth opportunities - Management highlighted the growing retiree demographic and the resilience of small business travelers as key drivers for future growth [50][52]

Core Insights - Choice Hotels reported revenue of $447.34 million for Q3 2025, a 4.5% year-over-year increase, with EPS of $2.10 compared to $2.23 a year ago, indicating a decline in earnings per share [1] - The revenue exceeded the Zacks Consensus Estimate of $417.29 million by 7.2%, while the EPS fell short of the consensus estimate of $2.18 by 3.67% [1] Financial Performance Metrics - RevPAR growth was 0.2%, compared to an estimated decline of 3.2% by analysts, with RevPAR at $60.33 versus the estimated $60.64 [4] - Domestic franchise rooms totaled 498,307, slightly below the estimated 500,862, while total franchise rooms were 649,677, exceeding the estimate of 646,301 [4] - Occupancy rate was 60.3%, slightly below the average estimate of 60.8, while the Average Daily Rate (ADR) was $100.03, above the estimated $99.75 [4] - Revenue from reimbursable costs from franchised and managed properties was $169.43 million, a 20.4% decrease compared to the previous year, but above the estimate of $163.78 million [4] - Franchise and management fees reached $193.78 million, surpassing the average estimate of $182.48 million [4] - Revenues from owned hotels were $33.17 million, exceeding the estimate of $31.86 million, reflecting a 3.9% year-over-year increase [4] - Partnership services and fees amounted to $28.87 million, above the estimated $25.59 million, while other revenues were $22.09 million, significantly higher than the estimated $14.31 million, representing a 59.4% year-over-year increase [4] Stock Performance - Shares of Choice Hotels have declined by 9.8% over the past month, contrasting with a 1% increase in the Zacks S&P 500 composite, and the stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance in the near term [3]

Global Expansion & Unit Economics - International adjusted EBITDA is projected to grow 4x from 2022 to 2025F, driven by direct franchising and stronger unit economics[2] - The percentage of rooms under direct franchising is expected to increase from 19% in 2022 to 41% in 2025F[3] - EBITDA per unit is projected to increase from $9,000 in 2022 to $28,000 in 2025F[3] - Adjusted EBITDA is expected to increase from $10 million in 2022 to $39 million in 2025F, a 3x increase[3] Pipeline Composition & Growth Drivers - A new MFA partnership in China is expected to add 9,500 rooms[4] - 98% of the global pipeline is comprised of higher-revenue hotels with higher room count, RevPAR, and royalty rates[5] - Midscale and Extended Stay segments constitute 34% and 39% respectively of the 3Q 2025 Global Portfolio[6] - Conversions make up 35% of the 3Q 2025 Global Pipeline, while new builds account for 65%[6] - Average rooms per unit in the global pipeline are 96, compared to 86 in the global portfolio[6] - Average RevPAR in the global pipeline is $70, compared to $54 in the global portfolio[6] - Conversions are typically opened within 3-6 months, approximately 80% faster than new construction[6]

分组1 - Choice Hotels reported quarterly earnings of $2.1 per share, missing the Zacks Consensus Estimate of $2.18 per share, and down from $2.23 per share a year ago, representing an earnings surprise of -3.67% [1] - The company posted revenues of $447.34 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 7.20%, compared to year-ago revenues of $427.96 million [2] - Over the last four quarters, Choice Hotels has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] 分组2 - Choice Hotels shares have lost about 35.6% since the beginning of the year, while the S&P 500 has gained 15.1% [3] - The current consensus EPS estimate for the coming quarter is $1.57 on revenues of $370.44 million, and for the current fiscal year, it is $7.00 on revenues of $1.55 billion [7] - The Zacks Industry Rank for Hotels and Motels is currently in the bottom 21% of over 250 Zacks industries, indicating potential underperformance compared to the top 50% of ranked industries [8]

Group 1 - Baron Focused Growth Fund reported a 4.83% appreciation in Q3 2025, underperforming the Russell 2500 Growth Index's 10.73% gain due to economic growth slowdown concerns affecting Consumer Discretionary stocks [1] - The fund's performance was negatively impacted by rising competitive pressures affecting the valuations of some holdings [1] Group 2 - Choice Hotels International, Inc. (NYSE:CHH) experienced a one-month return of -10.03% and a 52-week loss of 36.67%, closing at $91.50 per share with a market capitalization of $4.23 billion on November 4, 2025 [2] - The decline in Choice Hotels' shares by 15.6% during the quarter hurt the fund's performance by 44 basis points, driven by concerns over slowing revenue-per-available-room (RevPAR) growth [3] - Management is reducing exposure to RevPAR fluctuations by expanding higher-margin, non-RevPAR fee income and leveraging a 70-million-member loyalty database for partnerships [3] - The company is focusing on adding higher-revenue units at a low single-digit rate, emphasizing larger room sizes and premium royalty rates [3] - Revenue growth is expected to accelerate due to a robust pipeline of new projects and synergies from the Radisson Americas acquisition [3] - Choice Hotels has a strong balance sheet, positioning it to return capital to shareholders through dividends and share repurchases [3]

Financial Performance - Net income for Q3 2025 increased to $180.0 million, up from $105.7 million in Q3 2024, resulting in diluted EPS of $3.86, compared to $2.22 in the same period last year[2] - Adjusted EBITDA reached a record $190.1 million in Q3 2025, a 7% increase from $177.6 million in Q3 2024[2] - Total revenues for Q3 2025 rose by 5% to $447.3 million, with franchise and management fees increasing by 3% to $193.8 million[6] - Adjusted net income for Q3 2025 was $180.0 million, compared to $106.0 million in Q3 2024, reflecting a significant increase of 69.5%[40] - Basic earnings per share for Q3 2025 were $3.89, up from $2.24 in Q3 2024, marking an increase of 73.7%[40] - The company expects full-year 2025 net income to be between $353 million and $371 million, revised from a prior outlook of $261 million to $276 million[14] - The company projects full-year 2025 adjusted EBITDA in the range of $620,000,000 to $632,000,000[53] - Full-year 2025 adjusted net income is estimated to be between $320,000,000 and $331,000,000, with diluted EPS expected to range from $7.52 to $7.89[54] Revenue and Expenses - Total revenues for the nine months ended September 30, 2025, reached $1.21 billion, compared to $1.20 billion for the same period in 2024, indicating a year-over-year increase of 0.1%[40] - Selling, general and administrative expenses for Q3 2025 were $79.6 million, compared to $69.0 million in Q3 2024, an increase of 15.5%[40] - Revenue for reimbursable costs from franchised and managed properties was $169.4 million in Q3 2025, down from $171.8 million in Q3 2024, a decrease of 1.4%[40] - Interest expense for Q3 2025 was $23.5 million, compared to $22.0 million in Q3 2024, reflecting an increase of 6.7%[40] - The total operating expenses for the nine months ended September 30, 2025, were $859.7 million, compared to $850.5 million in the same period of 2024, an increase of 1.1%[40] Assets and Liabilities - Total assets increased to $2,907,534, up from $2,530,527, representing a growth of 14.9% year-over-year[41] - Total current liabilities increased slightly to $468,542 from $462,721, a change of 1.8%[41] - Long-term debt increased to $1,918,504 from $1,768,526, marking an increase of 8.5%[41] - Cash and cash equivalents at the end of the period were $52,583, compared to $58,565 at the end of September 30, 2024, a decrease of 10.1%[42] Room Growth and Franchise Activity - Global net rooms grew by 2.3%, with a 3.3% increase in higher revenue segments compared to September 30, 2024[2] - International net rooms increased by 8.3% year-over-year, with a 66% rise in openings, and nearly 80% of the anticipated 9,500 rooms in China onboarded[2] - Global franchise agreements awarded surged by 54% in Q3 2025 compared to the same period in 2024[5] - U.S. extended stay net rooms grew by 12%, with a 14% increase in openings compared to September 30, 2024[5] - Global net upscale rooms grew by 20.8% in Q3 2025, driven by a more than fourfold increase in global openings compared to Q3 2024[10] - The total number of U.S. franchises remained stable at 6,201, with a slight decrease in rooms to 498,307 from 495,194[46] - The company expanded its international franchises to 1,314, an increase of 6.2% year-over-year, with rooms growing by 8.3% to 151,370[46] Cash Flow and Operating Activities - As of September 30, 2025, the company had total available liquidity of $564.2 million, with a net debt-to-adjusted EBITDA ratio of 3.0x[8] - The company reported a net cash provided by operating activities of $184,757 for the nine months ended September 30, 2025, down from $236,540 in 2024, a decrease of 22%[42] Other Financial Metrics - Average Daily Rate (ADR) for the total hotel system decreased by 2.0% to $100.03 for the three months ended September 30, 2025, compared to $102.02 in 2024[44] - The effective royalty rate for the three months ended September 30, 2025, was 5.15%, up from 5.05% in 2024[44] - Share-based compensation for Q3 2025 was $6,397,000, an increase from $5,425,000 in Q3 2024[49] - The company reported a gain from an acquisition of a joint venture amounting to $100,025,000 for the nine months ended September 30, 2025[49] - Total expenses associated with legal claims were recorded as $2,430,000 for the nine months ended September 30, 2024[51]

Core Insights - Choice Hotels International reported a record profitability for the third quarter of 2025, driven by a strategic shift towards higher-value brand segments and international growth [3][4] - The company aims to double its profitability in the international market by 2027, supported by a robust pipeline of high-quality projects [3][4] Financial Performance - Total revenues increased by 5% to $447.3 million in Q3 2025 compared to Q3 2024 [5] - Net income grew to $180 million in Q3 2025 from $106 million in Q3 2024, resulting in diluted EPS of $3.86, up from $2.22 [7] - Adjusted EBITDA for Q3 2025 reached a record $190.1 million, a 7% increase from $177.6 million in Q3 2024 [7] System Size and Development - Global net rooms grew by 2.3%, with a notable 3.3% increase in higher revenue segments [7] - International net rooms increased by 8.3%, with a 66% rise in openings compared to the previous year [7] - The global franchise agreements awarded surged by 54% in Q3 2025 compared to Q3 2024 [7] Revenue and Fees - Franchise and management fees rose by 3% to $193.8 million in Q3 2025 [8] - Partnership services and fees increased by 19% to $28.9 million in Q3 2025 [8] RevPAR and Market Performance - Global RevPAR increased by 0.2% in Q3 2025, with international RevPAR growth of 9.5% offset by a 3.2% decline in U.S. RevPAR [8] - U.S. extended stay portfolio outperformed the U.S. lodging industry by 20 basis points [8] Balance Sheet and Liquidity - As of September 30, 2025, the company had total available liquidity of $564.2 million [10] - The net debt-to-adjusted EBITDA ratio was 3.0x for the trailing twelve months [10] Shareholder Returns - The company returned $150.4 million to shareholders through dividends and share repurchases during the nine months ended September 30, 2025 [11] Outlook - The net income guidance for full-year 2025 has been revised to a range of $353 million to $371 million, up from previous estimates [13] - Adjusted diluted EPS is projected to be between $6.82 and $7.05 for full-year 2025 [13]