Choice Hotels International Inc. filed SEC Form 8-K: Other Events
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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| Item 8.01. | Other Events |
As previously disclosed, Choice Hotels International, Inc. (the “Company”) recently reclassified certain prior year amounts in the Company’s consolidated statements of income in order to maintain comparability with the current year presentation. The reclassifications were not as a result of any error in the Company’s consolidated financial statements.
The tables below present the effect of the reclassifications on the three and six months ended June 30, 2024, the three and nine months ended September 30, 2024, and the three and twelve months ended December 31, 2024 consolidated statements of income. The reclassifications are described below:
| • | Royalty, licensing and management fees were revised to franchise and management fees in the consolidated statements of income, and now include the revenues previously presented in royalty, licensing and management fees, with the exception of partnership licensing revenues which are now presented in partnership services and fees in the consolidated statements of income, and the addition of the revenues generated from programs, platforms, and services associated with the Company’s franchise operations which were previously presented in other revenues from franchised and managed properties in the consolidated statements of income. |
| • | Initial franchise fees, which were previously presented as a standalone financial statement line item, are now presented within franchise and management fees in the consolidated statements of income. |
| • | Platform and procurement services fees were revised to partnership services and fees in the consolidated statements of income, and now include the revenues previously presented in platform and procurement services fees, with the exception of the revenues from the Company’s annual franchisee convention which are now presented in other revenues, the addition of partnership licensing revenues which were previously presented in royalty, licensing and management fees, and the addition of the revenues generated from other non-franchising agreements which are primarily software-as-a-service arrangements for non-franchised hoteliers which were previously presented in other revenues in the consolidated statements of income. |
| • | Other revenues from franchised and managed properties were revised to revenue for reimbursable costs from franchised and managed properties in the consolidated statements of income, and now include the revenues previously presented in other revenues from franchised and managed properties, with the exception of the revenues generated from programs, platforms, and services associated with the Company’s franchise operations which are now presented in franchise and management fees in the consolidated statements of income. |
| • | Selling, general and administrative expenses were revised to include the expenses incurred related to programs, platforms, and services associated with the Company’s franchise operations, which were previously presented in other expenses from franchised and managed properties in the consolidated statements of income. |
| • | Depreciation and amortization was revised to include amortization expense from information technology platforms, which was previously presented in other expenses from franchised and managed properties in the consolidated statements of income. |
| • | Other expenses from franchised and managed properties were revised to reimbursable expenses from franchised and managed properties in the consolidated statements of income, and now include the expenses previously presented in other expenses from franchised and managed properties, with the exception of the expenses incurred from programs, platforms, and services associated with the Company’s franchise operations which are now presented in selling, general and administrative expenses, and amortization expense from information technology platforms which is now presented in depreciation and amortization expense in the consolidated statements of income. |
The reclassifications had no effect on the Company’s previously reported total revenues, total operating expenses, operating income, or net income.
The information in Item 8.01 of this Current Report on Form 8-K is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||
| (unaudited) | June 30, 2024 | June 30, 2024 | ||||||||||||||||||||||
| (in thousands) | As previously reported |
Reclassification | As reclassified | As previously reported |
Reclassification | As reclassified | ||||||||||||||||||
| REVENUES |
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| Franchise and management fees |
$ | 141,813 | $ | 37,990 | $ | 179,803 | $ | 247,280 | $ | 75,933 | $ | 323,213 | ||||||||||||
| Initial franchise fees |
6,562 | (6,562 | ) | — | 13,267 | (13,267 | ) | — | ||||||||||||||||
| Partnership services and fees |
28,126 | (763 | ) | 27,363 | 41,882 | 5,325 | 47,207 | |||||||||||||||||
| Owned hotels |
28,418 | — | 28,418 | 53,409 | — | 53,409 | ||||||||||||||||||
| Other |
15,037 | 8,270 | 23,307 | 31,394 | 6,630 | 38,024 | ||||||||||||||||||
| Revenue for reimbursable costs from franchised and managed properties |
215,200 | (38,935 | ) | 176,265 | 379,873 | (74,621 | ) | 305,252 | ||||||||||||||||
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| Total revenues |
435,156 | — | 435,156 | 767,105 | — | 767,105 | ||||||||||||||||||
| OPERATING EXPENSES |
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| Selling, general and administrative |
64,995 | 23,734 | 88,729 | 113,620 | 47,378 | 160,998 | ||||||||||||||||||
| Business combination, diligence and transition costs |
895 | — | 895 | 16,739 | — | 16,739 | ||||||||||||||||||
| Depreciation and amortization |
10,827 | 2,010 | 12,837 | 21,762 | 3,890 | 25,652 | ||||||||||||||||||
| Owned hotels |
20,704 | — | 20,704 | 40,027 | — | 40,027 | ||||||||||||||||||
| Reimbursable expenses from franchised and managed properties |
205,113 | (25,744 | ) | 179,369 | 382,186 | (51,268 | ) | 330,918 | ||||||||||||||||
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| Total operating expenses |
302,534 | — | 302,534 | 574,334 | — | 574,334 | ||||||||||||||||||
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| Operating income |
$ | 132,622 | $ | — | $ | 132,622 | $ | 192,771 | $ | — | $ | 192,771 | ||||||||||||
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| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
| (unaudited) | September 30, 2024 | September 30, 2024 | ||||||||||||||||||||||
| (in thousands) | As previously reported |
Reclassification | As reclassified | As previously reported |
Reclassification | As reclassified | ||||||||||||||||||
| REVENUES |
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| Franchise and management fees |
$ | 147,151 | $ | 41,086 | $ | 188,237 | $ | 394,431 | $ | 117,019 | $ | 511,450 | ||||||||||||
| Initial franchise fees |
5,866 | (5,866 | ) | — | 19,133 | (19,133 | ) | — | ||||||||||||||||
| Partnership services and fees |
16,178 | 8,142 | 24,320 | 58,060 | 13,467 | 71,527 | ||||||||||||||||||
| Owned hotels |
31,936 | — | 31,936 | 85,345 | — | 85,345 | ||||||||||||||||||
| Other |
13,857 | (2,210 | ) | 11,647 | 45,251 | 4,420 | 49,671 | |||||||||||||||||
| Revenue for reimbursable costs from franchised and managed properties |
212,976 | (41,152 | ) | 171,824 | 592,849 | (115,773 | ) | 477,076 | ||||||||||||||||
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| Total revenues |
427,964 | — | 427,964 | 1,195,069 | — | 1,195,069 | ||||||||||||||||||
| OPERATING EXPENSES |
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| Selling, general and administrative |
49,077 | 19,945 | 69,022 | 162,697 | 67,323 | 230,020 | ||||||||||||||||||
| Business combination, diligence and transition costs |
984 | — | 984 | 17,723 | — | 17,723 | ||||||||||||||||||
| Depreciation and amortization |
10,861 | 2,032 | 12,893 | 32,623 | 5,922 | 38,545 | ||||||||||||||||||
| Owned hotels |
22,343 | — | 22,343 | 62,370 | — | 62,370 | ||||||||||||||||||
| Reimbursable expenses from franchised and managed properties |
192,916 | (21,977 | ) | 170,939 | 575,102 | (73,245 | ) | 501,857 | ||||||||||||||||
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| Total operating expenses |
276,181 | — | 276,181 | 850,515 | — | 850,515 | ||||||||||||||||||
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| Operating income |
$ | 151,783 | $ | — | $ | 151,783 | $ | 344,554 | $ | — | $ | 344,554 | ||||||||||||
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| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||
| (unaudited) | December 31, 2024 | December 31, 2024 | ||||||||||||||||||||||
| (in thousands) | As previously reported |
Reclassification | As reclassified | As previously reported |
Reclassification | As reclassified | ||||||||||||||||||
| REVENUES |
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| Franchise and management fees |
$ | 120,138 | $ | 38,049 | $ | 158,187 | $ | 514,569 | $ | 155,068 | $ | 669,637 | ||||||||||||
| Initial franchise fees |
6,473 | (6,473 | ) | — | 25,606 | (25,606 | ) | — | ||||||||||||||||
| Partnership services and fees |
17,692 | 10,272 | 27,964 | 75,752 | 23,739 | 99,491 | ||||||||||||||||||
| Owned hotels |
28,114 | — | 28,114 | 113,459 | — | 113,459 | ||||||||||||||||||
| Other |
16,552 | (2,163 | ) | 14,389 | 61,803 | 2,257 | 64,060 | |||||||||||||||||
| Revenue for reimbursable costs from franchised and managed properties |
200,801 | (39,685 | ) | 161,116 | 793,650 | (155,458 | ) | 638,192 | ||||||||||||||||
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| Total revenues |
389,770 | — | 389,770 | 1,584,839 | — | 1,584,839 | ||||||||||||||||||
| OPERATING EXPENSES |
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| Selling, general and administrative |
57,181 | 25,187 | 82,368 | 219,878 | 92,510 | 312,388 | ||||||||||||||||||
| Business combination, diligence and transition (recoveries) costs |
(490 | ) | — | (490 | ) | 17,233 | — | 17,233 | ||||||||||||||||
| Depreciation and amortization |
10,659 | 2,749 | 13,408 | 43,282 | 8,671 | 51,953 | ||||||||||||||||||
| Owned hotels |
20,778 | — | 20,778 | 83,148 | — | 83,148 | ||||||||||||||||||
| Reimbursable expenses from franchised and managed properties |
182,423 | (27,936 | ) | 154,487 | 757,525 | (101,181 | ) | 656,344 | ||||||||||||||||
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| Total operating expenses |
270,551 | — | 270,551 | 1,121,066 | — | 1,121,066 | ||||||||||||||||||
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| Operating income |
$ | 119,219 | $ | — | $ | 119,219 | $ | 463,773 | $ | — | $ | 463,773 | ||||||||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: May 15, 2025 |
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/s/ Scott E. Oaksmith | |||
| Scott E. Oaksmith | ||||||
| Chief Financial Officer |