CORRESP Filing
CHOICE HOTELS INTERNATIONAL INC /DE
Date: June 25, 2025 · CIK: 0001046311 · Accession: 0001193125-25-146761
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-13393
Referenced dates: June 12, 2025
Letter
Ms. Babette Cooper Mr. Wilson Lee Division of Corporation Finance Office of Real Estate & Construction Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 Re: Choice Hotels International, Inc. Form 8-K filed on May 8, 2025 File No. 001-13393 Dear Ms. Cooper and Mr. Lee: Choice Hotels International, Inc. (the “Company,” “Choice,” “we,” or “our”) is submitting this letter in response to the comment letter dated June 12, 2025 from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”), regarding the Company’s Current Report on Form 8-K filed on May 8, 2025 (the “Form 8-K”). For ease of reference, we have retyped the text of the Staff’s comments in italics below. Form 8-K filed on May 8, 2025 Exhibit 99.1 Supplemental Non-GAAP Financial Information
1. We note your adjustment of “Net reimbursable (surplus) deficit from franchised and managed properties” in order to arrive at Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted Earnings Per Share (EPS), and their related 2025 Outlook measures. Please tell us what consideration you gave to presenting this adjustment on a gross disaggregated basis where the adjustment is split into two separate line items (i.e. one for revenue and another for expense). Your response should highlight all factors considered that would support and/or not support such a presentation. The Company respectfully acknowledges the Staff’s comment and in future filings will present this adjustment on a gross disaggregated basis where the adjustment is split into two separate line items (i.e. one for “Revenue for reimbursable costs from franchised and managed properties” and another for “Reimbursable expenses from franchised and managed properties”). We have provided below a revised presentation of the Adjusted EBITDA, the Adjusted Net Income, and the Adjusted Diluted Earnings Per Share (EPS) reconciliations for the three months ended March 31, 2025 and 2024 reflecting this change, and a presentation of the 2025 Outlook for the full year ended December 31, 2025 reflecting this change.
2. Further to our above comment, we note the amounts disclosed for “Net reimbursable deficit from franchised and managed properties” to arrive at Adjusted EBITDA differs from the amount adjusted to arrive at Adjusted Net Income. Please reconcile the amounts and explain the factors that contributed to differences between the adjustments in arriving at the two Non-GAAP financial measures that share the same labeling description. The Company respectfully notes that the amounts disclosed for “Net reimbursable deficit from franchised and managed properties” to arrive at Adjusted EBITDA is presented before income tax effects, whereas the “Net reimbursable deficit from franchised and managed properties” to arrive at Adjusted Net Income includes income tax effects. The Company respectfully acknowledges the Staff’s comment and in future filings will quantify the total income tax effects on the non-GAAP adjustments in a single line item in the Adjusted Net Income reconciliation, the Adjusted Diluted Earnings Per Share (EPS) reconciliation, and the related Outlook measures. We have provided below a revised presentation of the Adjusted Net Income and the Adjusted Diluted Earnings Per Share (EPS) reconciliations for the three months ended March 31, 2025 and 2024 reflecting this change, and a presentation of the 2025 Outlook for the full year ended December 31, 2025 reflecting this change.
Exhibit 6 CHOICE HOTELS INTERNATIONAL, INC. SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (UNAUDITED) EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (“EBITDA”) AND ADJUSTED EBITDA (dollar amounts in thousands)
Three months ended March 31,
Net income
$ 44,534
$ 31,009
Income tax expense
15,228
9,199
Interest expense
21,242
20,181
Interest income
(1,559 )
(1,731 )
Other loss
1,336
Equity in net loss of affiliates
Depreciation and amortization
13,748
12,815
EBITDA
$ 93,680
$ 72,964
Share-based compensation
5,890
4,933
Mark to market adjustments on non-qualified retirement plan investments
(723 )
3,720
Franchise agreement acquisition costs amortization and charges
5,386
3,527
Revenue for reimbursable costs from franchised and managed properties
(123,424 )
(128,987 )
Reimbursable expenses from franchised and managed properties
143,811
151,549
Global ERP system implementation and related costs
—
Business combination, diligence and transition costs
15,844
Non-recurring operational restructuring charges and executive severance
3,930
Adjusted EBITDA
$ 129,639
$ 124,341
ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS) (dollar amounts in thousands, except per share amounts)
Three months ended March 31,
Net income
$ 44,534
$ 31,009
Loss on investments in equity securities, net of dividend income
—
4,227
Revenue for reimbursable costs from franchised and managed properties
(123,424 )
(128,987 )
Reimbursable expenses from franchised and managed properties
143,811
151,549
Business combination, diligence and transition costs
15,844
Non-recurring operational restructuring charges and executive severance
3,930
Global ERP system implementation and related costs
—
Income tax expense on adjustments
(6,297 )
(10,772 )
Adjusted Net Income
$ 63,643
$ 63,661
Diluted Earnings Per Share
$ 0.94
$ 0.62
Loss on investments in equity securities, net of dividend income
—
0.08
Revenue for reimbursable costs from franchised and managed properties
(2.61 )
(2.59 )
Reimbursable expenses from franchised and managed properties
3.04
3.04
Business combination. diligence and transition costs
—
0.32
Non-recurring operational restructuring charges and executive severance
0.08
0.02
Global ERP system implementation and related costs
0.02
—
Income tax expense on adjustments
(0.13 )
(0.21 )
Adjusted Diluted Earnings Per Store (EPS)
$ 1.34
$ 1.28
Exhibit 7 CHOICE HOTELS INTERNATIONAL, INC. SUPPLEMENTAL INFORMATION - 2025 OUTLOOK (UNAUDITED) Guidance represents the company’s range of estimated outcomes for the full year ended December 31, 2025 EBITDA & ADJUSTED EBITDA (in thousands)
Full Year Lower Range
Full Year Upper Range
Net income
$ 275,000
$ 290,000
Income tax expense
93,100
98,100
Interest expense
89,800
89,800
Interest income
(6,900 )
(6,900 )
Other loss
Equity in net gain of affiliates
(6,300 )
(6,300 )
Depreciation and amortization
57,700
57,700
EBITDA
$ 503,200
$ 523,200
Share-based compensation)
24,400
24,400
Mark to market adjustments on non-qualified retirement plan investments
(700 )
(700 )
Franchise agreement acquisition costs amortization and charges
23,000
23,000
Revenue for reimbursable costs from franchised and managed properties
(597,200 )
(597,200 )
Reimbursable expenses from franchised and managed properties
652,200
652,200
Global ERP system implementation and related costs
6,100
6,100
Non-recurring operational restructuring charges and executive severance
4,000
4,000
Adjusted EBITDA
$ 615,000
$ 635,000
ADJUSTED NET INCOME & DILUTED EARNINGS PER SHARE (EPS) (in thousands, except per share amounts)
Full Year Lower Range
Full Year Upper Range
Net income
$ 275,000
$ 290,000
Revenue for reimbursable costs from franchised and managed properties
(597,200 )
(597,200 )
Reimbursable expenses from franchised and managed properties
652,200
652,200
Global ERP system implementation and related costs
6,100
6,100
Non-recurring operational restructuring charges and executive severance
4,000
4,000
Income tax expense on adjustments
(16,100 )
(16,100 )
Adjusted Net Income
$ 324,000
$ 339,000
Diluted Earnings Per Share
$ 5.86
$ 6.18
Revenue for reimbursable costs from franchised and managed properties
(12.73 )
(12.73 )
Reimbursable expenses from franchised and managed properties
13.90
13.90
Global ERP system implementation and related costs
0.13
0.13
Non-recurring operational restructuring charges and executive severance
0.09
0.09
Income tax expense on adjustments
(0.35 )
(0.35 )
Adjusted Diluted Earnings Per Share (EPS)
$ 6.90
$ 7.22
Please do not hesitate to call me at (301) 592-6659 with any questions or further comments you may have or if you wish to discuss the above responses.
Regards,
CHOICE HOTELS INTERNATIONAL, INC.
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CORRESP 1 filename1.htm CORRESP Ms. Babette Cooper Mr. Wilson Lee Division of Corporation Finance Office of Real Estate & Construction Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 Re: Choice Hotels International, Inc. Form 8-K filed on May 8, 2025 File No. 001-13393 Dear Ms. Cooper and Mr. Lee: Choice Hotels International, Inc. (the “Company,” “Choice,” “we,” or “our”) is submitting this letter in response to the comment letter dated June 12, 2025 from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”), regarding the Company’s Current Report on Form 8-K filed on May 8, 2025 (the “Form 8-K”). For ease of reference, we have retyped the text of the Staff’s comments in italics below. Form 8-K filed on May 8, 2025 Exhibit 99.1 Supplemental Non-GAAP Financial Information 1. We note your adjustment of “Net reimbursable (surplus) deficit from franchised and managed properties” in order to arrive at Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted Earnings Per Share (EPS), and their related 2025 Outlook measures. Please tell us what consideration you gave to presenting this adjustment on a gross disaggregated basis where the adjustment is split into two separate line items (i.e. one for revenue and another for expense). Your response should highlight all factors considered that would support and/or not support such a presentation. The Company respectfully acknowledges the Staff’s comment and in future filings will present this adjustment on a gross disaggregated basis where the adjustment is split into two separate line items (i.e. one for “Revenue for reimbursable costs from franchised and managed properties” and another for “Reimbursable expenses from franchised and managed properties”). We have provided below a revised presentation of the Adjusted EBITDA, the Adjusted Net Income, and the Adjusted Diluted Earnings Per Share (EPS) reconciliations for the three months ended March 31, 2025 and 2024 reflecting this change, and a presentation of the 2025 Outlook for the full year ended December 31, 2025 reflecting this change. 2. Further to our above comment, we note the amounts disclosed for “Net reimbursable deficit from franchised and managed properties” to arrive at Adjusted EBITDA differs from the amount adjusted to arrive at Adjusted Net Income. Please reconcile the amounts and explain the factors that contributed to differences between the adjustments in arriving at the two Non-GAAP financial measures that share the same labeling description. The Company respectfully notes that the amounts disclosed for “Net reimbursable deficit from franchised and managed properties” to arrive at Adjusted EBITDA is presented before income tax effects, whereas the “Net reimbursable deficit from franchised and managed properties” to arrive at Adjusted Net Income includes income tax effects. The Company respectfully acknowledges the Staff’s comment and in future filings will quantify the total income tax effects on the non-GAAP adjustments in a single line item in the Adjusted Net Income reconciliation, the Adjusted Diluted Earnings Per Share (EPS) reconciliation, and the related Outlook measures. We have provided below a revised presentation of the Adjusted Net Income and the Adjusted Diluted Earnings Per Share (EPS) reconciliations for the three months ended March 31, 2025 and 2024 reflecting this change, and a presentation of the 2025 Outlook for the full year ended December 31, 2025 reflecting this change. Exhibit 6 CHOICE HOTELS INTERNATIONAL, INC. SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION (UNAUDITED) EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (“EBITDA”) AND ADJUSTED EBITDA (dollar amounts in thousands) Three months ended March 31, 2025 2024 Net income $ 44,534 $ 31,009 Income tax expense 15,228 9,199 Interest expense 21,242 20,181 Interest income (1,559 ) (1,731 ) Other loss 436 1,336 Equity in net loss of affiliates 51 155 Depreciation and amortization 13,748 12,815 EBITDA $ 93,680 $ 72,964 Share-based compensation 5,890 4,933 Mark to market adjustments on non-qualified retirement plan investments (723 ) 3,720 Franchise agreement acquisition costs amortization and charges 5,386 3,527 Revenue for reimbursable costs from franchised and managed properties (123,424 ) (128,987 ) Reimbursable expenses from franchised and managed properties 143,811 151,549 Global ERP system implementation and related costs 990 — Business combination, diligence and transition costs 99 15,844 Non-recurring operational restructuring charges and executive severance 3,930 791 Adjusted EBITDA $ 129,639 $ 124,341 ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS) (dollar amounts in thousands, except per share amounts) Three months ended March 31, 2025 2024 Net income $ 44,534 $ 31,009 Loss on investments in equity securities, net of dividend income — 4,227 Revenue for reimbursable costs from franchised and managed properties (123,424 ) (128,987 ) Reimbursable expenses from franchised and managed properties 143,811 151,549 Business combination, diligence and transition costs 99 15,844 Non-recurring operational restructuring charges and executive severance 3,930 791 Global ERP system implementation and related costs 990 — Income tax expense on adjustments (6,297 ) (10,772 ) Adjusted Net Income $ 63,643 $ 63,661 Diluted Earnings Per Share $ 0.94 $ 0.62 Loss on investments in equity securities, net of dividend income — 0.08 Revenue for reimbursable costs from franchised and managed properties (2.61 ) (2.59 ) Reimbursable expenses from franchised and managed properties 3.04 3.04 Business combination. diligence and transition costs — 0.32 Non-recurring operational restructuring charges and executive severance 0.08 0.02 Global ERP system implementation and related costs 0.02 — Income tax expense on adjustments (0.13 ) (0.21 ) Adjusted Diluted Earnings Per Store (EPS) $ 1.34 $ 1.28 Exhibit 7 CHOICE HOTELS INTERNATIONAL, INC. SUPPLEMENTAL INFORMATION - 2025 OUTLOOK (UNAUDITED) Guidance represents the company’s range of estimated outcomes for the full year ended December 31, 2025 EBITDA & ADJUSTED EBITDA (in thousands) Full Year Lower Range Full Year Upper Range Net income $ 275,000 $ 290,000 Income tax expense 93,100 98,100 Interest expense 89,800 89,800 Interest income (6,900 ) (6,900 ) Other loss 800 800 Equity in net gain of affiliates (6,300 ) (6,300 ) Depreciation and amortization 57,700 57,700 EBITDA $ 503,200 $ 523,200 Share-based compensation) 24,400 24,400 Mark to market adjustments on non-qualified retirement plan investments (700 ) (700 ) Franchise agreement acquisition costs amortization and charges 23,000 23,000 Revenue for reimbursable costs from franchised and managed properties (597,200 ) (597,200 ) Reimbursable expenses from franchised and managed properties 652,200 652,200 Global ERP system implementation and related costs 6,100 6,100 Non-recurring operational restructuring charges and executive severance 4,000 4,000 Adjusted EBITDA $ 615,000 $ 635,000 ADJUSTED NET INCOME & DILUTED EARNINGS PER SHARE (EPS) (in thousands, except per share amounts) Full Year Lower Range Full Year Upper Range Net income $ 275,000 $ 290,000 Revenue for reimbursable costs from franchised and managed properties (597,200 ) (597,200 ) Reimbursable expenses from franchised and managed properties 652,200 652,200 Global ERP system implementation and related costs 6,100 6,100 Non-recurring operational restructuring charges and executive severance 4,000 4,000 Income tax expense on adjustments (16,100 ) (16,100 ) Adjusted Net Income $ 324,000 $ 339,000 Diluted Earnings Per Share $ 5.86 $ 6.18 Revenue for reimbursable costs from franchised and managed properties (12.73 ) (12.73 ) Reimbursable expenses from franchised and managed properties 13.90 13.90 Global ERP system implementation and related costs 0.13 0.13 Non-recurring operational restructuring charges and executive severance 0.09 0.09 Income tax expense on adjustments (0.35 ) (0.35 ) Adjusted Diluted Earnings Per Share (EPS) $ 6.90 $ 7.22 Please do not hesitate to call me at (301) 592-6659 with any questions or further comments you may have or if you wish to discuss the above responses. Regards, CHOICE HOTELS INTERNATIONAL, INC. By: /s/ Scott E. Oaksmith Name: Scott E. Oaksmith Title: Chief Financial Officer