Choice Hotels International Reports Second Quarter 2025 Results

Core Insights - Choice Hotels International reported record financial performance in Q2 2025 despite a softer domestic RevPAR environment, highlighting successful execution and diversification of its growth strategy [3][6] - The company achieved significant international growth through strategic acquisitions and partnerships, enhancing its product quality and customer engagement [3][6] Financial Performance - Total revenues for Q2 2025 were $426 million, a decrease from $435 million in Q2 2024 [5] - Net income for Q2 2025 was $82 million, down from $87 million in the same period of 2024, with diluted EPS at $1.75 compared to $1.80 [6][42] - Adjusted EBITDA for Q2 2025 reached $165 million, a 2% increase from Q2 2024 [6] - The company’s adjusted diluted EPS grew to $1.92, a 4% increase compared to the same period in 2024 [6] System Size and Development - The net global rooms system size increased by 2.1% to 644,400 rooms as of June 30, 2025, with a 5.0% increase in international rooms [8][18] - The domestic extended stay segment's net rooms portfolio grew by 10.5% compared to June 30, 2024 [6] - The global pipeline exceeded 93,000 rooms as of June 30, 2025, including nearly 77,000 domestic rooms [6] International Expansion - The company strengthened its presence in Brazil with a 20-year master franchise agreement for over 10,000 rooms [6] - In France, the room count nearly tripled through a direct franchise agreement, while strategic agreements in China are expected to add over 19,500 rooms [6] Balance Sheet and Liquidity - As of June 30, 2025, the company had total available liquidity of $587.5 million, with a net debt leverage ratio of 3.0 times [10] - Cash flows from operating activities increased by 2% to $116.1 million in the first half of 2025 compared to the same period in 2024 [10] Shareholder Returns - The company paid cash dividends totaling $26.9 million and repurchased 811,000 shares for $110 million in the first half of 2025 [11] - As of June 30, 2025, there were 3.0 million shares remaining under the current share repurchase authorization [11] Outlook - The company adjusted its RevPAR outlook to reflect a more moderate domestic expectation, with net income projected between $261 million and $276 million for the full year 2025 [12][13] - The adjusted EBITDA outlook includes an incremental contribution of approximately $6 million from the acquisition of Choice Hotels Canada [12]