Extended Stay America Announces Second Quarter 2016 Results

Extended Stay America, Inc. (NYSE:STAY) (the “Company”) today announced consolidated results for the quarter ended June 30, 2016.

Second Quarter 2016 Highlights

  • Comparable Hotel total revenues grew 3.4% to $332.8 million
  • Comparable Hotel Revenue Per Available Room (“RevPAR”) grew 3.3% to $51.89
  • Comparable Hotel Adjusted EBITDA increased 0.9% to $164.7 million
  • Adjusted Paired Share Income1 of $63.0 million, or $0.31 per diluted Paired Share1

Six Months 2016 Highlights

  • Comparable Hotel total revenues grew 4.7% to $620.3 million
  • Comparable Hotel RevPAR grew 4.0% to $48.36
  • Comparable Hotel Adjusted EBITDA increased 3.1% to $287.5 million
  • Adjusted Paired Share Income of $88.8 million, or $0.44 per diluted Paired Share

Extended Stay America’s Chief Executive Officer, Gerry Lopez, commented, “Our RevPAR growth for the second quarter and year to date continued to outpace our closest competitive chain-scales – Economy and Midscale. Although we’re disappointed to come in at the low end of our expected range, we believe our Adjusted EBITDA growth will re-accelerate in the back half of 2016 as we begin to cycle on expenses related to initiatives implemented in 2015 and the headwinds from our heavy renovation schedule diminish.”

Mr. Lopez continued, “We were pleased with the progress we made during the second quarter on our future growth initiatives, including significant work on design and cost estimates and closing in on the site selection for our prototype hotel. During the quarter we also completed our strategic portfolio review of all 629 hotels. We have had strong interest and constructive dialogue with owners, franchisees and developers following our New York Investor Day last June 2, and continue to be encouraged by what we hear.”

Financial and Operating Results

Total revenues for the three months ended June 30, 2016 were $332.8 million while Comparable Hotel total revenues increased by 3.4% over the comparable period in 2015. Total revenues for the six months ended June 30, 2016 were $620.3 million while Comparable Hotel total revenues increased by 4.7% over the comparable period in 2015.

RevPAR for the three months ended June 30, 2016 grew 7.0% over the comparable period in 2015, driven by an improvement in average daily rate (“ADR”) of 7.6%. Occupancy declined to 76.7% compared to 77.1% in the comparable period in 2015 due primarily to an increased number of hotel rooms under renovation. Comparable Hotel RevPAR grew 3.3% during the quarter to $51.89 driven by a 4.0% increase in ADR, partially offset by a 50 bps decrease in occupancy. RevPAR for the six months ended June 30, 2016 increased 7.5% over the comparable period in 2015, driven by an 8.4% increase in ADR. Occupancy declined to 73.1% compared to 73.8% in the comparable period in 2015 due primarily to an increased number of hotel rooms under renovation. Comparable Hotel RevPAR grew 4.0% during the first six months of the year to $48.36 driven by a 4.9% increase in ADR, partially offset by a 60 bps decrease in occupancy.

Net income for the three months ended June 30, 2016 was $61.4 million compared to $64.8 million in the comparable period in 2015. Net income decreased due to the 53 hotel portfolio sale in December 2015 and an increase in depreciation expense due to renovations, partially offset by a decrease in income tax expense. Net income for the six months ended June 30, 2016 was $76.1 million compared to $92.7 million in the comparable period in 2015. Income tax expense for the three months ended June 30, 2016 was $7.4 million compared to $17.9 million in the comparable period in 2015. Tax expense decreased primarily due to the reversal of a deferred tax liability related to anticipated receipt of future non-taxable distributions from ESH Hospitality, Inc. Income tax expense for the six months ended June 30, 2016 was $10.3 million compared to $26.8 million in the comparable period in 2015.

Hotel Operating Margin1 for the three months ended June 30, 2016 was 55.8% compared to 57.1% in the comparable period in 2015. Comparable Hotel Operating Margin decreased 190 basis points over the comparable period in 2015. The decrease in Hotel Operating Margin was primarily due to increases in personnel costs and reservation expenses. Comparable Hotel Operating Margin for the six months ended June 30, 2016 was 53.3% compared to 54.5% in the comparable period in 2015.

Adjusted EBITDA for the three months ended June 30, 2016 was $164.7 million. Adjusted EBITDA excludes non-cash equity-based compensation of $2.9 million and loss on disposal of assets and other expenses of $2.1 million. Comparable Hotel Adjusted EBITDA increased $1.5 million or 0.9% during the quarter over the comparable period in 2015. Adjusted EBITDA for the six months ended June 30, 2016 was $287.5 million. Adjusted EBITDA excludes non-cash equity based compensation of $5.6 million and loss on disposal of assets and other net expenses of $4.3 million. Comparable Hotel Adjusted EBITDA increased $8.6 million or 3.1% during the six months ended June 30, 2016 over the comparable period in 2015.

Adjusted Paired Share Income for the three months ended June 30, 2016 was $63.0 million, or $0.31 per diluted Paired Share, compared to $66.8 million, or $0.33 per diluted Paired Share, in the comparable period in 2015. Adjusted Paired Share Income for the six months ended June 30, 2016 was $88.8 million, or $0.44 per diluted Paired Share, compared to $97.2 million, or $0.48 per diluted Paired Share, in the comparable period in 2015. Adjusted Paired Share Income, a non-GAAP measure, represents net income, as adjusted, attributable to the consolidated enterprise, whose representative equity security is a Paired Share. A Paired Share entitles its holder to participate in 100% of the common equity and earnings of both Extended Stay America, Inc. and ESH Hospitality, Inc.

Capital

The Company invested $53.0 million in capital expenditures during the second quarter of 2016 which includes $26.4 million in renovation capital and $24.3 million in maintenance capital. The Company completed 35 hotel renovations in the second quarter of 2016, bringing the total number of renovated hotels to 530. For the six months ended June 30, 2016, the Company invested $109.9 million in capital expenditures.

Distribution and Share Repurchases

On July 28, 2016, the Boards of Directors of Extended Stay America, Inc. and ESH Hospitality, Inc., declared cash distributions totaling $0.19 per Paired Share for the second quarter of 2016. The distributions are payable on August 25, 2016 to shareholders of record as of August 11, 2016.

During the second quarter of 2016, the Company repurchased approximately 2.1 million Paired Shares for an aggregate purchase price of approximately $31.6 million. The Company had $139.6 million remaining for repurchases under the combined Paired Share repurchase program at the end of the second quarter of 2016.

2016 Outlook

The Company’s outlook for 2016 is updated as follows:

  • Total revenues are expected to range from $1.257 billion to $1.272 billion
  • Comparable Hotel total revenues are expected to increase by approximately 3.25% to 4.50%
  • Net income is anticipated to range from $162 million to $188 million
  • Adjusted EBITDA is expected to range from $595 million to $610 million, representing approximately 3.6 % to 6.2% growth over 2015 Comparable Hotel Adjusted EBITDA
  • Depreciation and amortization of $215 million to $220 million
  • Net interest expense of $153 million to $158 million
  • Effective tax rate is expected to range between 15.0% and 16.0%
  • Capital expenditures are expected to range from $240 million to $260 million, including $120 to $135 million in hotel renovation capital and approximately $100 million in maintenance capital

Webcast and Conference Call Details

The Company will host a conference call on Thursday, July 28, 2016 at 8:30 a.m. Eastern Time. The conference call will be webcast simultaneously in the Investor Relations section of the Company’s website at www.aboutstay.com. A replay of the call will be available for 90 days following the webcast on the Company’s website.

Alternatively, the conference call can be accessed by dialing 1-877-705-6003 for domestic callers or 1-201-493-6725 for international callers. A telephone replay will be available from shortly after the call until August 11, 2016, and can be accessed by dialing 1-877-870-5176 for domestic callers or 1-858-384-5517 for international callers. The passcode for the replay is 13640856.

Disclosure Regarding Non-GAAP Financial Measures

EBITDA, Adjusted EBITDA, Hotel Operating Profit, Hotel Operating Margin, Paired Share Income, Adjusted Paired Share Income and Adjusted Paired Share Income per Paired Share, which are detailed in the reconciliation tables that accompany this release, are used by the Company as supplemental performance measures. The Company believes these financial measures, including those provided on a Comparable Hotel basis, provide useful information to investors regarding our results of operations and allow investors to evaluate the ongoing operating performance of our hotels and facilitate comparisons between the Company and other lodging companies, hotel owners and capital-intensive companies. EBITDA, Adjusted EBITDA, Hotel Operating Profit, Hotel Operating Margin, Paired Share Income, Adjusted Paired Share Income and Adjusted Paired Share Income per Paired Share are not recognized terms under U.S. GAAP. EBITDA, Adjusted EBITDA, Hotel Operating Profit, Hotel Operating Margin, Paired Share Income, Adjusted Paired Share Income and Adjusted Paired Share Income per Paired Share as presented may not be comparable to measures calculated by other companies. These measures should not be considered as alternative measures of operating profit, net income, net income per share or cash flow provided by operating activities calculated in accordance with U.S. GAAP. The Company’s presentation of EBITDA, Adjusted EBITDA, Hotel Operating Profit, Hotel Operating Margin, Paired Share Income, Adjusted Paired Share Income and Adjusted Paired Share Income per Paired Share does not replace the presentation of the Company’s consolidated financial results prepared in accordance with U.S. GAAP.

Forward Looking Statements

This release contains forward-looking statements within the meaning of the federal securities laws. Statements related to, among other things, future financial performance, including our 2016 outlook, expected performance, free cash flow, debt reduction, distribution growth and other growth opportunities, as such, involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results or performance to differ from those projected in the forward-looking statements, possibly materially. For a description of factors that may cause the Company’s actual results or performance to differ from future results or performance implied by forward-looking statements, please review the information under the headings “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” included in the Company’s combined annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 23, 2016 and other documents of the Company on file with or furnished to the SEC. Any forward-looking statements made in this release are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, will have the expected consequences to, or effects on, the Company, its business or operations. Except as required by law, the Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. We caution you that actual results may differ materially from what is expressed, implied or forecasted by the Company’s forward-looking statements.

About Extended Stay America

Extended Stay America, Inc., the largest owner/operator of company-branded hotels in North America, owns and operates 629 hotels in the U.S. and Canada comprising approximately 69,400 rooms and employs over 8,500 employees at its hotel properties and headquarters. The Company’s core brand, Extended Stay America®, serves the mid-priced extended stay segment. Visit www.esa.com for more information about the Company and its services.

_______________________


1 See “Disclosure Regarding Non-GAAP Financial Measures” for an explanation of non-GAAP measures included herein (i.e., EBITDA, Adjusted EBITDA, Hotel Operating Profit, Hotel Operating Margin, Paired Share Income, Adjusted Paired Share Income and Adjusted Paired Share Income per Paired Share).

2 Comparable Hotels include 629 Extended Stay America and Extended Stay Canada-branded hotels owned and operated for the three and six months ended June 30, 2016 and 2015.)

EXTENDED STAY AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015
(In thousands)
(Unaudited)
Three Months EndedSix Months Ended
June 30,June 30,
20162015% Variance20162015% Variance
REVENUES:
$ 327,833 $ 335,384 (2.3)% Room revenues $ 610,970 $ 618,682 (1.2)%
4,9564,927 0.6% Other hotel revenues 9,3779,220 1.7%
332,789 340,311 (2.2)% Total revenues 620,347 627,902 (1.2)%
OPERATING EXPENSES:
149,078 146,499 1.8% Hotel operating expenses 294,638 291,494 1.1%
23,988 26,036 (7.9)% General and administrative expenses 48,940 49,536 (1.2)%
55,01150,529 8.9% Depreciation and amortization 108,31999,712 8.6%
228,077 223,064 2.2% Total operating expenses 451,897 440,742 2.5%
-38 (100.0)% OTHER INCOME 1841 (56.1)%
104,712 117,285 (10.7)% INCOME FROM OPERATIONS 168,468 187,201 (10.0)%
114 (873 ) 113.1% OTHER NON-OPERATING EXPENSE (INCOME) (764 ) 892 (185.7)%
35,76435,501 0.7% INTEREST EXPENSE, NET 82,74966,818 23.8%
68,834 82,657 (16.7)% INCOME BEFORE INCOME TAX EXPENSE 86,483 119,491 (27.6)%
7,44817,852 (58.3)% INCOME TAX EXPENSE 10,34426,826 (61.4)%
61,386 64,805 (5.3)% NET INCOME 76,139 92,665 (17.8)%
(657)(6,822) (90.4)% NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS (1)1,636(13,134) (112.5)%
$60,729$57,983 4.7% NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $77,775$79,531 (2.2)%
$ 0.30 $ 0.28 NET INCOME PER COMMON SHARE - DILUTED $ 0.38 $ 0.39
201,689 204,553 WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING - DILUTED 203,029 204,465
(1) Noncontrolling interests in Extended Stay America, Inc. include approximately 45% of ESH REIT's common equity and 125 shares of ESH REIT preferred stock.
CONSOLIDATED BALANCE SHEET DATA
AS OF JUNE 30, 2016 AND DECEMBER 31, 2015
(In thousands)
(Unaudited)
June 30,December 31,
20162015
Cash and cash equivalents $ 137,104 $ 373,239
Restricted cash $ 190,080 $ 84,416
Total assets $ 4,406,586 $ 4,528,900

Total debt, net of unamortized deferred financing
costs and debt discounts (1)

$ 2,768,812 $ 2,783,590
Total equity $ 1,436,708 $ 1,488,357

(1) Unamortized deferred financing costs and debt discounts totaled approximately $50.0
million and $35.2 million as of June 30, 2016 and December 31, 2015, respectively.

EXTENDED STAY AMERICA, INC.
OPERATING METRICS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015
(Unaudited)
Three Months EndedSix Months Ended
June 30,June 30,
20162015Variance20162015Variance
629 682 (53) Number of hotels (as of June 30)(1) 629 682 (53)
69,383 76,000 (6,617) Number of rooms (as of June 30)(1) 69,383 76,000 (6,617)
76.7 % 77.1 % (40) bps Occupancy 73.1 % 73.8 % (70) bps
$ 67.65 $ 62.90 7.6% ADR $ 66.14 $ 60.99 8.4%
$ 51.89 $ 48.49 7.0% RevPAR $ 48.36 $ 44.98 7.5%
Hotel Inventory (as of June 30):
530 382 148 Renovated Extended Stay America (2) 530 382 148
99 253 (154) Unrenovated Extended Stay America and other (1) 99 253 (154)
- 47 (47) Crossland Economy Studios (1) - 47 (47)
629 682 (53) Total number of hotels 629 682 (53)
Renovation Displacement Data (in thousands, except percentages):
6,316 6,917 (601) Total available room nights 12,632 13,754 (1,122)
57 27 30 Room nights displaced from renovation 179 103 76
0.9 % 0.4 % 50 bps % of available room nights displaced 1.4 % 0.7 % 70 bps
COMPARABLE HOTEL OPERATING METRICS (3)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015
(Unaudited)
Three Months EndedSix Months Ended
June 30,June 30,
20162015Variance20162015Variance
629 629 - Number of hotels 629 629 -
69,383 69,383 - Number of rooms 69,383 69,383 -
76.7 % 77.2 % (50) bps Comparable Hotel Occupancy 73.1 % 73.7 % (60) bps
$ 67.65 $ 65.07 4.0% Comparable Hotel ADR $ 66.14 $ 63.07 4.9%
$ 51.89 $ 50.24 3.3% Comparable Hotel RevPAR $ 48.36 $ 46.49 4.0%
Comparable Hotel Inventory:
530 382 148 Renovated Extended Stay America (2) 530 382 148
99 247 (148) Unrenovated Extended Stay America and other 99 247 (148)
629 629 - Comparable Hotel number of hotels 629 629 -
Comparable Hotel Renovation Displacement Data (in thousands, except percentages):
6,316 6,316 - Comparable Hotel available room nights 12,632 12,561 71
57 27 30 Comparable Hotel room nights displaced from renovation 179 103 76
0.9 % 0.4 % 50 bps % of Comparable Hotel available room nights displaced 1.4 % 0.8 % 60 bps
(1) In December 2015, the Company sold a portfolio of 53 hotel properties, six of which were included in "Unrenovated Extended Stay America and other" and 47 of which were included in "Crossland Economy Studios" as of June 30, 2015.
(2) Includes three Extended Stay Canada-branded hotels.
(3) Comparable Hotel operating metrics include the results of 629 Extended Stay America and Extended Stay Canada-branded hotels owned and operated for the three and six months ended June 30, 2016 and 2015.
EXTENDED STAY AMERICA, INC.
NON-GAAP RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015
(In thousands)
(Unaudited)
Three Months EndedSix Months Ended
June 30,June 30,
2016201520162015
$ 61,386 $ 64,805 Net income $ 76,139 $ 92,665
35,764 35,501 Interest expense, net 82,749 66,818
7,448 17,852 Income tax expense 10,344 26,826
55,011 50,529 Depreciation and amortization 108,319 99,712
159,609 168,687 EBITDA 277,551 286,021
2,939 2,803 Non-cash equity-based compensation 5,619 4,919
114 (873) Other non-operating expense (income) (764) 892
1,997 (1) 1,101 (2) Other expenses 5,052 (3) 2,744 (4)
$ 164,659 $ 171,718 Adjusted EBITDA $ 287,458 $ 294,576
(4.1)% % growth (2.4)%
NON-GAAP RECONCILIATION OF NET INCOME TO EBITDA AND COMPARABLE HOTEL ADJUSTED EBITDA(5)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015
(In thousands)
(Unaudited)
Three Months EndedSix Months Ended
June 30,June 30,
2016201520162015
$ 61,386 $ 64,805 Net income $ 76,139 $ 92,665
35,764 35,501 Interest expense, net 82,749 66,818
7,448 17,852 Income tax expense 10,344 26,826
55,011 50,529 Depreciation and amortization 108,319 99,712
159,609 168,687 EBITDA 277,551 286,021
- (8,548)

Adjusted Property EBITDA of hotels not owned for entirety of periods presented

- (15,680)
2,939 2,803 Non-cash equity-based compensation 5,619 4,919
114 (873) Other non-operating expense (income) (764) 892
1,997 (1) 1,101 (6) Other expenses 5,052 (3) 2,744 (7)
$ 164,659 $ 163,170 Comparable Hotel Adjusted EBITDA $ 287,458 $ 278,896
0.9% % growth 3.1%
(1) Includes loss on disposal of assets of approximately $2.1 million and transaction costs of approximately $(0.1) million due to the revision of an estimate related to the sale of 53 hotel properties.
(2) Includes costs incurred in connection with the preparation of the registration statement filed in June 2015 of approximately $0.7 million and loss on disposal of assets of approximately $0.4 million.
(3) Includes loss on disposal of assets of approximately $5.0 million and transaction costs of approximately $0.1 million due to the revision of an estimate related to the sale of 53 hotel properties.
(4) Includes costs incurred in connection with the preparation of the registration statement filed in June 2015 of approximately $0.7 million and loss on disposal of assets of approximately $2.0 million.
(5) Comparable Hotel Adjusted EBITDA includes the results of 629 Extended Stay America and Extended Stay Canada-branded hotels owned and operated for the three and six months ended June 30, 2016 and 2015.
(6) Includes costs incurred in connection with the preparation of the registration statement filed in June 2015 of approximately $0.7 million and loss on disposal of assets of approximately $0.4 million, $0.1 million of which relates to the hotels not owned for entirety of periods presented.
(7) Includes costs incurred in connection with the preparation of the registration statement filed in June 2015 of approximately $0.7 million and loss on disposal of assets of approximately $2.0 million, $0.2 million of which relates to the hotels not owned for entirety of periods presented.
EXTENDED STAY AMERICA, INC.
NON-GAAP RECONCILIATION OF NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS TO PAIRED SHARE
INCOME, ADJUSTED PAIRED SHARE INCOME AND ADJUSTED PAIRED SHARE INCOME PER PAIRED SHARE
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015
(In thousands, expect per Paired Share data)
(Unaudited)
Three Months EndedSix Months Ended
June 30,June 30,
2016201520162015
$ 60,729 $ 57,983 Net income attributable to common shareholders $ 77,775 $ 79,531
653 6,820 Noncontrolling interests attributable to Class B common shares of ESH REIT (1,644) 13,126
61,382 64,803 Paired Share Income 76,131 92,657
- 2,283 Debt extinguishment costs 12,103 2,283
114 (873) Other non-operating expense (income) (764) 892
1,997 (1) 1,101 (2) Other expenses 5,052 (3) 2,744 (4)
(460) (541) Tax effect of adjustments to Paired Share Income (3,730) (1,373)
$ 63,033 $ 66,773 Adjusted Paired Share Income $ 88,792 $ 97,203
$ 0.31 $ 0.33 Adjusted Paired Share Income per Paired Share – diluted $ 0.44 $ 0.48
201,689 204,553 Weighted average Paired Shares outstanding – diluted 203,029 204,465
(1) Includes loss on disposal of assets of approximately $2.1 million and transaction costs of approximately $(0.1) million due to the revision of an estimate related to the sale of 53 hotel properties.
(2) Includes costs incurred in connection with the preparation of the registration statement filed in June 2015 of approximately $0.7 million and loss on disposal of assets of approximately $0.4 million.
(3) Includes loss on disposal of assets of approximately $5.0 million and transaction costs of approximately $0.1 million due to the revision of an estimate related to the sale of 53 hotel properties.
(4) Includes costs incurred in connection with the preparation of the registration statement filed in June 2015 of approximately $0.7 million and loss on disposal of assets of approximately $2.0 million.
EXTENDED STAY AMERICA, INC.
NON-GAAP RECONCILIATION OF HOTEL OPERATING PROFIT AND HOTEL OPERATING MARGIN
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015
(In thousands)
(Unaudited)
Three Months EndedSix Months Ended
June 30,June 30,
20162015% Variance20162015% Variance
$ 327,833 $ 335,384 (2.3)% Room revenues $ 610,970 $ 618,682 (1.2)%
4,956 4,927 0.6% Other hotel revenues 9,377 9,220 1.7%
332,789 340,311 (2.2)% Total hotel revenues 620,347 627,902 (1.2)%
146,973 146,034 0.6% Hotel operating expenses(1) 289,637 289,455 0.1%
$ 185,816 $ 194,277 (4.4)% Hotel Operating Profit $ 330,710 $ 338,447 (2.3)%
55.8 % 57.1 % (130) bps Hotel Operating Margin 53.3 % 53.9 % (60) bps
NON-GAAP RECONCILIATION OF COMPARABLE HOTEL OPERATING PROFIT AND COMPARABLE HOTEL OPERATING MARGIN(2)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015
(In thousands)
(Unaudited)
Three Months EndedSix Months Ended
June 30,June 30,
20162015% Variance20162015% Variance
$ 327,833 $ 335,384 (2.3)% Room revenues $ 610,970 $ 618,682 (1.2)%
4,956 4,927 0.6% Other hotel revenues 9,377 9,220 1.7%
- (18,428 ) (100.0)% Total revenues of hotels not owned for entirety of periods presented - (35,377 ) (100.0)%
332,789 321,883 3.4% Comparable Hotel total revenues 620,347 592,525 4.7%
146,973 146,034 0.6% Hotel operating expenses(1) 289,637 289,455 0.1%
- (9,880 ) (100.0)% Hotel operating expenses of hotels not owned for entirety of periods presented(3) - (19,697 ) (100.0)%
146,973 136,154 7.9% Comparable Hotel operating expenses 289,637 269,758 7.4%
$ 185,816 $ 185,729 0.0% Comparable Hotel Operating Profit $ 330,710 $ 322,767 2.5%
55.8 % 57.7 % (190) bps Comparable Hotel Operating Margin 53.3 % 54.5 % (120) bps
(1) Excludes loss on disposal of assets of approximately $2.1 million, $0.4 million, $5.0 million and $2.0 million, respectively.
(2) Comparable Hotel Operating Profit and Comparable Hotel Operating Margin include the results of 629 Extended Stay America and Extended Stay Canada-branded hotels owned and operated for the three and six months ended June 30, 2016 and 2015.
(3) Excludes loss on disposal of assets of approximately $0, $0.1 million, $0 and $0.2 million, respectively.
EXTENDED STAY AMERICA, INC.
COMPARABLE HOTEL TOTAL REVENUES (1) AND NON-GAAP RECONCILIATION OF NET INCOME TO EBITDA AND COMPARABLE HOTEL ADJUSTED EBITDA(1)
TWELVE MONTHS ENDED DECEMBER 31, 2015 (ACTUAL) AND 2016 (OUTLOOK)
(In thousands)
(Unaudited)
Twelve Months EndedTwelve Months Ending December 31, 2016
December 31, 2015(Outlook)
(Actual)LowHigh
$ 1,217,354 Comparable Hotel total revenues $ 1,256,900 $ 1,272,100
$ 283,022 Net income $ 161,922 $ 188,499
137,782 Interest expense, net 158,000 153,000
76,536 Income tax expense 30,842 33,265
203,897 Depreciation and amortization 220,000 215,000
701,237 EBITDA 570,764 589,764
(28,948 ) Adjusted Property EBITDA of hotels not owned for entirety of periods presented - -
10,500 Non-cash equity-based compensation 14,000 11,000
2,732 Other non-operating expense (income) (764 ) (764 )
9,011 Impairment of long-lived assets - -
(130,894 ) Gain on sale of hotel properties - -
10,495

(2)

Other expenses 11,000

(3)

10,000

(3)

$ 574,133 Comparable Hotel Adjusted EBITDA $ 595,000 $ 610,000
% growth 3.6 % 6.2 %
(1) Comparable Hotel total revenues and Comparable Hotel Adjusted EBITDA include the results of 629 Extended Stay America and Extended Stay Canada-branded hotels owned and operated as of December 31, 2015 and June 30, 2016.
(2) Includes costs incurred in connection with the preparation of the registration statement filed in June 2015 and the November 2015 secondary offering of approximately $0.9 million, transaction costs of approximately $0.3 million associated with the sale of hotel properties, and loss on disposal of assets of approximately $9.3 million, $0.3 million of which relates to hotels not owned for entirety of the period.
(3) Includes non-cash loss on disposal of assets and other non-operating transaction costs.

Contacts:

Extended Stay America, Inc.
Investors:
Rob Ballew, 980-345-1546
investorrelations@extendedstay.com
or
Media:
Terry Atkins, 980-345-1648
tatkins@extendedstay.com

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