Choice Hotels International (CHH) Q4 2023 earnings summary

Executive summary

• FY 2023 revenue reached a record $1.54 billion, up 10% YoY; adjusted EBITDA rose 13% to a record $540.5 million and adjusted diluted EPS increased 16% to $6.11.

• Full-year unit growth exceeded guidance; the global rooms pipeline topped 105,000, up 6% sequentially, with conversion rooms up 16% QoQ.

Financial highlights

• Q4 revenue was $358.4 million, down 1% YoY; net income was $29.0 million and diluted EPS was $0.58, down 48% and 44%, respectively, with one-time items affecting comparisons.

• Q4 adjusted EBITDA rose 11% YoY to $125.0 million; adjusted diluted EPS increased 14% to $1.44.

• FY reported net income was $258.5 million and diluted EPS was $5.07, down 22% and 15%; adjusted net income was $311.5 million and adjusted diluted EPS was $6.11.

• Royalty, licensing and management fees rose 9% FY to $513.4 million and 1% in Q4 to $116.9 million; platform and procurement services fees rose 18% FY to $75.1 million and 6% in Q4 to $16.9 million.

Outlook and guidance

• FY 2024 net income guidance is $260–$274 million; adjusted net income $316–$331 million; adjusted EBITDA $580–$600 million, with midpoint $590 million.

• FY 2024 diluted EPS guidance is $5.19–$5.49 and adjusted diluted EPS $6.30–$6.60; effective tax rate assumption is 24.5%.

• FY 2024 domestic RevPAR growth is forecast at flat to 2% YoY; domestic effective royalty rate growth at mid-single digits and domestic net unit growth at ~2%.

• Revenue sensitivities: 1% RevPAR growth adds $4.9 million in royalties; a 1 bps royalty-rate increase adds $1 million; 1% unit growth in higher-revenue segments adds $4.7 million.

• Adjusted outlook excludes reimbursable revenue surpluses or deficits, due diligence and transition costs, additional stock repurchases, and other items.