Choice Hotels International Inc (CHH) Q1 2024 Earnings: Adjusted EPS Surpasses Analyst … – Yahoo Finance

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  • Net Income: Reported at $31.0 million for Q1 2024, falling short of the estimated $57.10 million.

  • Earnings Per Share (EPS): Achieved $0.62, below the estimated $1.14.

  • Revenue: Totaled $331.9 million, slightly below the estimated $343.17 million.

  • Adjusted Net Income: Increased by 9% year-over-year to $63.7 million.

  • Adjusted EBITDA: Grew 17% year-over-year to a first quarter record of $124.3 million.

  • Global Rooms Pipeline: Expanded by 10% sequentially to over 115,000 rooms as of March 31, 2024.

  • Stock Repurchase: Repurchased 1.5 million shares for $196.6 million year-to-date through April 30, 2024.

Choice Hotels International Inc (CHH) Q1 2024 Earnings: Adjusted EPS Surpasses Analyst Projections Amidst Revenue ChallengesChoice Hotels International Inc (CHH) Q1 2024 Earnings: Adjusted EPS Surpasses Analyst Projections Amidst Revenue Challenges

Choice Hotels International Inc (CHH) Q1 2024 Earnings: Adjusted EPS Surpasses Analyst Projections Amidst Revenue Challenges

On May 8, 2024, Choice Hotels International Inc (NYSE:CHH) disclosed its first quarter results for 2024 through its 8-K filing. The company, a leading global lodging franchisor, reported mixed financial outcomes, with a notable adjusted earnings per share (EPS) of $1.28, which exceeded the analysts’ estimate of $1.14. However, total revenues slightly declined by 0.3% year-over-year to $331.9 million, falling short of the estimated $343.17 million.

Company Overview

As of December 31, 2023, Choice Hotels operated 633,000 rooms across 15 brands targeting the economy and midscale segments. Notable brands include Comfort Inn and Comfort Suites, which represent 27% of the companys total domestic rooms. The acquisition of Radisson in August 2022 significantly expanded its portfolio by adding approximately 70,000 rooms. The company primarily generates revenue through franchises, which account for 100% of its total revenue, with the United States comprising 79% of its total rooms in 2023.

Financial Performance and Strategic Developments

The reported net income for Q1 2024 was $31.0 million, a 41% decrease compared to the previous year, primarily due to one-time items such as due diligence and transaction pursuit costs. However, adjusted net income saw a 9% increase to $63.7 million. The company also highlighted a record first-quarter adjusted EBITDA of $124.3 million, up 17% year-over-year.

Strategically, Choice Hotels has been active in enhancing its portfolio and shareholder value. The relaunch of Park Inn by Radisson marks a significant step in targeting the value-conscious traveler segment. The company’s global rooms pipeline increased by 10% sequentially as of March 31, 2024, including a 36% increase in conversion rooms. Additionally, the Board of Directors approved an increase in the share repurchase program, with 1.5 million shares repurchased for $196.6 million year-to-date through April 30, 2024.

Operational and Market Challenges

The company faced several challenges during the quarter. Domestic revenue per available room (RevPAR) decreased by 590 basis points compared to the same period in 2023, partly due to the timing of Easter weekend and challenging year-over-year comparisons. Despite these headwinds, the company managed an 8.2% increase in RevPAR compared to the same period in 2019, indicating some recovery in market conditions.

Outlook and Forward-Looking Statements

Looking ahead, Choice Hotels has increased its guidance for diluted EPS while reiterating its guidance for net income, adjusted EBITDA, and adjusted diluted EPS for the full year of 2024. The company remains optimistic about its growth prospects, driven by its diversified brand portfolio and robust pipeline development.

Choice Hotels International continues to navigate the complexities of the travel and leisure industry with a strategic focus on expansion and enhancing shareholder value. Despite some revenue challenges, the companys ability to exceed adjusted EPS estimates and maintain a strong development pipeline positions it well for future growth.

For more detailed financial analysis and future updates on Choice Hotels International Inc, stay tuned to GuruFocus.com.

Explore the complete 8-K earnings release (here) from Choice Hotels International Inc for further details.

This article first appeared on GuruFocus.

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