Choice Hotels(CHH) - 2025 Q3 - Quarterly Results

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]