- Net Income of $23.8 million in the Fourth Quarter, $165.1 million for the Full Year 2019
- Adjusted EBITDA¹ of $108.8 million in the Fourth Quarter, $535.0 million for the Full Year 2019
- Comparable system-wide RevPAR of -0.8% in the Fourth Quarter, -0.9% for the Full Year 2019
- Over $300 million in capital returns to Paired Shareholders for the Full Year 2019
- Issues 2020 Guidance

CHARLOTTE, N.C., Feb. 26, 2020 (GLOBE NEWSWIRE) -- Extended Stay America, Inc. and ESH Hospitality, Inc. (together, the “Company”) (NASDAQ:STAY) today announced consolidated results for the three and twelve months ended December 31, 2019.

Fourth Quarter 2019 Highlights

• Net income of $23.8 million
• Total revenues of $284.2 million
• Comparable system-wide Revenue Per Available Room (“RevPAR”) declined 0.8%, a RevPAR Index gain of 2.1% compared to our competitive set   
• Adjusted EBITDA of $108.8 million
• Adjusted Funds from Operations (“Adjusted FFO”)¹ of $0.37 per diluted Paired Share
• Adjusted Paired Share Income¹ of $0.14 per diluted Paired Share
• $115 million in capital returns to Paired Shareholders        

Extended Stay America’s President and Chief Executive Officer, Bruce Haase, commented, “We were pleased to finish the year on a strong December performance, where we gained more than 400 basis points of RevPAR index on our competitive set and 210 basis points for the full fourth quarter of 2019.”

Mr. Haase continued, “In 2020, we will focus on a return to the basics and fully exploiting the value inherent in our high margin extended stay business model. We believe there is opportunity to improve the guest experience and property performance, more aggressively curate our asset portfolio, and grow the Extended Stay America brand through an asset-light franchising strategy.  We will also continue to focus on returning significant capital to our shareholders while maintaining strong financial discipline.”

Financial and Operating Results

Total revenues for the three months ended December 31, 2019 were $284.2 million, a decrease of 1.9% over the same period in the prior year due to asset dispositions in 2018 and a decline in Comparable Company-owned RevPAR. Adjusting for asset dispositions in 2018, total revenues declined 1.1% during the fourth quarter. For the full year 2019, total revenues declined 4.5% to $1,218.2 million, driven by asset dispositions and a decrease in Comparable system-wide RevPAR. Adjusting for asset dispositions in 2018, total revenues decreased 0.3%.

Comparable system-wide RevPAR for the three months ended December 31, 2019 decreased 0.8% over the same period in 2018 to $46.94, driven by a 4.0% decline in Average Daily Rate (“ADR”), partially offset by a 240 basis point increase in occupancy. The decline in Comparable system-wide RevPAR was driven by industry softness in October, a -0.8% impact from renovation disruption, and a -0.8% impact from cycling the Boston gas explosion in 2018. Despite the impact from renovation disruption, the Company’s RevPAR outperformed its competitive set by 2.1% during the quarter on a Comparable system-wide basis. Comparable system-wide RevPAR was approximately flat in November and increased 1.8% in December. Company-owned RevPAR decreased 1.7% during the quarter. Comparable system-wide RevPAR for the full year 2019 declined 0.9% over 2018 driven by a 2.9% decline in ADR, partially offset by a 150 basis point increase in occupancy. Excluding renovation disruption and cycling hurricane market benefits in 2018, Comparable system-wide RevPAR for the full year 2019 would have increased 1.0%. The Company’s RevPAR outperformed its competitive set by 0.6% during the full year on a Comparable system-wide basis.

Hotel Operating Margin¹for the three months ended December 31, 2019 was 48.3% compared to 51.1% in the same period in 2018.  While we continued our strategy to maximize targeted marketing efforts to our longest staying customers and other cost saving initiatives, these were offset by an increase in certain operating expenses, including hotel payroll expense, property insurance expense, maintenance expense and property taxes, as well as a decline in Comparable Company-owned RevPAR. Hotel Operating Margin for the full year 2019 was 51.8% compared to 54.0% in 2018.  Property-level margins remain at industry leading levels.

Net income for the three months ended December 31, 2019 was $23.8 million compared to $39.4 million in the same period in 2018, a decrease of 39.5%. Net income this quarter was adversely impacted by CEO and related transition costs, legal settlement expense and an increase in hotel operating expenses. Net income for the full year 2019 was $165.1 million compared to $211.8 million in the same period in 2018, a decrease of 22.0%. The decline in net income for both the three and twelve months ended December 31, 2019 was primarily due to a decline in Hotel Operating Margin driven by increased hotel operating expense, partially offset by lower income tax expense. 

Adjusted EBITDA for the three months ended December 31, 2019 was $108.8 million, a decline of 14.1% compared to the same period in 2018. Adjusted EBITDA was impacted by CEO and related transition costs, legal settlement expense and other unanticipated net expense items arising after our November 2019 guidance totaling approximately $10.0 million. Adjusted EBITDA excludes non-cash equity-based compensation expense of $0.8 million and $0.9 million in other expenses. Adjusted EBITDA for the full year 2019 was $535.0 million, a decline of 10.8%, due primarily to asset dispositions in 2018 resulting in lost contribution of $21.4 million and an increase in Comparable Company-owned hotel operating expenses.

Adjusted FFO for the three months ended December 31, 2019 was $67.8 million compared to $77.8 million in the same period in 2018. The decline in Adjusted FFO was due to an increase in Comparable Company-owned hotel operating expenses, CEO and related transition costs, legal settlements and a decline in Comparable Company-owned RevPAR. Adjusted FFO per diluted Paired Share was $0.37 compared to $0.41 in the same period in 2018. Adjusted FFO, a non-GAAP measure, represents funds from operations, 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.  Adjusted FFO for the full year 2019 was $337.6 million, or $1.81 per diluted Paired Share, compared to $382.8 million, or $2.02 per diluted Paired Share, in 2018.

Adjusted Paired Share Income for the three months ended December 31, 2019 was $24.9 million, or $0.14 per diluted Paired Share, compared to $38.6 million, or $0.21 per diluted Paired Share, in the same period in 2018. The decline in Adjusted Paired Share Income was driven by an increase in Comparable Company-owned hotel operating expenses, CEO and related transition costs, legal settlements and a decline in Comparable Company-owned RevPAR, partially offset by a decrease in effective tax rate. 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.  Adjusted Paired Share Income per diluted Paired Share for the full year 2019 was $0.95 compared to $1.14 in 2018.

Capital Expenditures

The Company invested $83.3 million in capital expenditures during the fourth quarter of 2019. This includes $13.4 million in renovation capital, $8.4 million in IT capital and $35.3 million in capital for hotel development and land acquisitions. The Company invested $261.3 million in capital expenditures for the full year 2019.

Hotel and Development Pipeline

As of December 31, 2019, the Company had a pipeline of 75 hotels representing approximately 9,100 rooms after opening 4 hotels in 2019.

Company Owned Pipeline & Recently Opened Hotels as of December 31, 2019

Under Option

Pre-Development

Under Construction

Total Pipeline

Opened in 2019

# Hotels

# Rooms

# Hotels

# Rooms

# Hotels

# Rooms

# Hotels

# Rooms

# Hotels

# Rooms

1

124

6

752

9

1,128

16

2,004

2

260

Third Party Pipeline & Recently Opened Hotels as of December 31, 2019

Commitments

Applications

Executed

Total Pipeline

Opened in 2019

# Hotels

# Rooms

# Hotels

# Rooms

# Hotels

# Rooms

# Hotels

# Rooms

# Hotels

# Rooms

39

4,804

5

588

15

1,665

59

7,057

2

217

Definitions

Under Option

Locations with a signed purchase and sale agreement

Pre-Development

Land purchased, permitting and/or site work

Under Construction

Hotel is under construction

Commitments

Signed commitment to build a certain number of hotels by a third party

Applications

Third party filed franchise application with deposit

Executed

Franchise application approved, various stages of pre-development or under construction

Distributions and Share Repurchases

On February 26, 2020, the Boards of Directors of Extended Stay America, Inc. and ESH Hospitality, Inc. declared cash distributions totaling $0.23 per Paired Share for the fourth quarter of 2019. The distributions are payable on March 26, 2020 to shareholders of record as of March 12, 2020.  The Company repurchased 5.0 million Paired Shares during the fourth quarter for an aggregate purchase of $73.1 million. For the full year 2019, the Company repurchased 9.0 million Paired Shares for an aggregate purchase of $130.5 million.

Since the end of the fourth quarter of 2019, the Company has repurchased an additional 2.2 million Paired Shares for an aggregate purchase of $31.0 million. The Company’s total remaining repurchase authorization was $101.1 million as of close of the market today.
 

2020 Outlook
The Company’s 2020 Outlook is as follows:

in millions, except % and # of hotels		Low					High
# of hotels owned on 12/31/20					564
Total revenues		$	1,226				$	1,246
Comparable system-wide RevPAR % D			-0.5	%				+1.5	%
Net income		$	133				$	154
Adjusted Paired Share Income/Paired Share		$	0.78				$	0.90
Adjusted FFO/Paired Share		$	1.68				$	1.77
Adjusted EBITDA		$	505				$	525
Depreciation and amortization		$	195				$	200
Net interest expense		$	135				$	135
Effective tax rate			15	%				15	%
Capital expenditures		$	210				$	240
Expected capital returns**		$	215				$	235

Our guidance does not include any potential impact from the COVID-19 virus.

**Expected capital returns assumes no asset dispositions in 2020. We are currently marketing hotel assets and if such asset dispositions occur, a portion of disposition proceeds is expected to be used for incremental Paired Share repurchases.

Webcast and Conference Call Details

The Company will host a conference call on Thursday, February 27, 2020 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 March 5, 2020, and can be accessed by dialing 1-844-512-2921 for domestic callers or 1-412-317-6671 for international callers. The passcode for the replay is 13699082.

Disclosure Regarding Non-GAAP Financial Measures

Hotel Operating Profit, Hotel Operating Margin, EBITDA, Adjusted EBITDA, FFO, Adjusted FFO, Adjusted FFO per diluted Paired Share, Paired Share Income, Adjusted Paired Share Income and Adjusted Paired Share Income per diluted Paired Share (collectively, the “Non-GAAP Financial Measures”), which are detailed in the reconciliation tables that accompany this release, are used by the Company as supplemental performance measures. The Company believes these measures 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, including those which include a REIT as part of their legal entity structure. The Non-GAAP Financial Measures are not recognized terms under U.S. GAAP.  These measures as presented may not be comparable to measures calculated by other companies. These measures should not be considered as alternative measures of, or superior to, operating profit, net income, net income per share or any other measure of the Company, Extended Stay America, Inc. or ESH Hospitality, Inc. calculated in accordance with U.S. GAAP.  The Company’s presentation of the Non-GAAP Financial Measures does not replace the presentation of the Company’s consolidated financial statements and other disclosures prepared in accordance with U.S. GAAP.  

Forward Looking Statements

This release contains forward-looking statements within the meaning of the federal securities laws. These statements include, but are not limited to, statements related to our expectations regarding our business performance, business strategies, financial results, liquidity and capital resources, capital expenditures, capital returns, distribution policy and other non-historical statements, including the statements in the “2020 Outlook” section of this release. Forward looking statements 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 projected 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 26, 2020 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® is the leading brand in the mid-priced extended stay segment in the U.S. with 631 hotels.  ESH Hospitality, Inc. (“ESH”), a subsidiary of Extended Stay America, Inc. (“ESA”), is the largest lodging REIT in North America by unit and room count, with 557 hotels and approximately 61,900 rooms in the U.S.ESA also manages or franchises an additional 74 Extended Stay America® hotels. Visit www.esa.com for more information.

Contacts
Investors or Media:                                                                       
Rob Ballew                                                                                         
(980) 345-1546                                                                  
investorrelations@esa.com             

_______________________________
¹ See “Disclosure Regarding Non-GAAP Financial Measures” for an explanation of  non-GAAP measures included in this release (i.e., Hotel Operating Profit, Hotel Operating Margin, EBITDA, Adjusted EBITDA, Funds from Operations (“FFO”), Adjusted FFO, Adjusted FFO per diluted Paired Share, Paired Share Income, Adjusted Paired Share Income and Adjusted Paired Share Income per diluted Paired Share)

EXTENDED STAY AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2019 AND 2018
(In thousands, except per share data)
Three Months Ended											Twelve Months Ended
December 31,											December 31,
	2019				2018			% Variance				2019				2018			% Variance
(Unaudited)										REVENUES:	(Audited)
$	272,397			$	279,236			(2.4	)%	Room revenues	$	1,171,726			$	1,237,311			(5.3	)%
	6,517				5,161			26.3	%	Other hotel revenues		24,365				21,871			11.4	%
	1,389				1,171			18.6	%	Franchise and management fees		5,412				3,310			63.5	%
	280,303				285,568			(1.8	)%			1,201,503				1,262,492			(4.8	)%
	3,895				4,148			(6.1	)%	Other revenues from franchised and managed properties		16,716				12,567			33.0	%
	284,198				289,716			(1.9	)%	Total revenues		1,218,219				1,275,059			(4.5	)%
										OPERATING EXPENSES:
	145,210				140,004			3.7	%	Hotel operating expenses		582,321				583,029			(0.1	)%
	27,549				21,384			28.8	%	General and administrative expenses		95,155				91,094			4.5	%
	49,857				49,677			0.4	%	Depreciation and amortization		197,400				209,329			(5.7	)%
	-				-			n/a		Impairment of long-lived assets		2,679				43,600			(93.9	)%
	222,616				211,065			5.5	%			877,555				927,052			(5.3	)%
	4,528				4,456			1.6	%	Other expenses from franchised and managed properties		18,870				13,217			42.8	%
	227,144				215,521			5.4	%	Total operating expenses		896,425				940,269			(4.7	)%
	-				879			(100.0	)%	GAIN ON SALE OF HOTEL PROPERTIES, NET		-				42,478			(100.0	)%
	1				168			(99.4	)%	OTHER INCOME		32				669			(95.2	)%
	57,055				75,242			(24.2	)%	INCOME FROM OPERATIONS		321,826				377,937			(14.8	)%
	(143	)			(813	)		(82.4	)%	OTHER NON-OPERATING INCOME		(391	)			(765	)		(48.9	)%
	31,859				29,798			6.9	%	INTEREST EXPENSE, NET		127,764				124,870			2.3	%
	25,339				46,257			(45.2	)%	INCOME BEFORE INCOME TAX EXPENSE		194,453				253,832			(23.4	)%
	1,493				6,858			(78.2	)%	INCOME TAX EXPENSE		29,315				42,076			(30.3	)%
	23,846				39,399			(39.5	)%	NET INCOME		165,138				211,756			(22.0	)%
	(70,680	)			(78,345	)		(9.8	)%	NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		(95,470	)			(98,892	)		(3.5	)%
$	(46,834	)		$	(38,946	)		20.3	%	NET (LOSS) INCOME ATTRIBUTABLE TO EXTENDED STAY AMERICA, INC. COMMON SHAREHOLDERS	$	69,668			$	112,864			(38.3	)%
$	(0.26	)		$	(0.21	)		24.4	%	NET (LOSS) INCOME PER EXTENDED STAY AMERICA, INC. COMMON SHARE - DILUTED	$	0.37			$	0.59			(37.3	)%
	182,046				188,272					WEIGHTED-AVERAGE EXTENDED STAY AMERICA, INC. COMMON SHARES OUTSTANDING - DILUTED		186,822				189,821
										CONSOLIDATED BALANCE SHEET DATA
										AS OF DECEMBER 31, 2019 and 2018
										(In thousands)
										(Audited)
											December 31,
												2019				2018
										Cash and cash equivalents	$	346,812			$	287,458
										Restricted cash	$	14,858			$	15,878
										Total assets	$	4,030,596			$	3,924,210
										Total debt, net of unamortized deferred financing costs and debt discounts (1)	$	2,639,766			$	2,402,637
										Total equity	$	1,176,270			$	1,310,639
										(1) Unamortized deferred financing costs and debt discounts totaled $46.7 million and $41.1 million as of December 31, 2019 and 2018, respectively.

 

	EXTENDED STAY AMERICA, INC.
	OPERATING METRICS
	FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2019 AND 2018
	(Unaudited)
	COMPARABLE SYSTEM-WIDE OPERATING METRICS (1)
	Three Months Ended											Twelve Months Ended
	December 31,											December 31,
		2019				2018			Variance				2019				2018			Variance
		624				624			-		Number of hotels (as of December 31)		623				623			-
		68,700				68,700			-		Number of rooms (as of December 31)		68,585				68,585			-
		75.3	%			72.9	%		240	bps	Comparable System-Wide Occupancy(1)		76.8	%			75.3	%		150	bps
	$	62.31			$	64.94			(4.0	)%	Comparable System-Wide ADR(1)	$	65.86			$	67.84			(2.9	)%
	$	46.94			$	47.34			(0.8	)%	Comparable System-Wide RevPAR(1)	$	50.60			$	51.06			(0.9	)%
	COMPARABLE COMPANY-OWNED OPERATING METRICS (2)
	Three Months Ended											Twelve Months Ended
	December 31,											December 31,
		2019				2018			Variance				2019				2018			Variance
		553				553			-		Number of hotels (as of December 31)		552				552			-
		61,445				61,445			-		Number of rooms (as of December 31)		61,330				61,330			-
		74.8	%			73.4	%		140	bps	Comparable Company-Owned Occupancy(2)		76.8	%			75.9	%		90	bps
	$	64.32			$	66.74			(3.6	)%	Comparable Company-Owned ADR(2)	$	67.96			$	69.67			(2.5	)%
	$	48.13			$	48.96			(1.7	)%	Comparable Company-Owned RevPAR(2)	$	52.19			$	52.88			(1.3	)%
											Renovation Displacement Data (in thousands, except percentages):
		5,653				5,653			-		Total available room nights		22,385				22,385			-
		34				-			34		Room nights displaced from renovation		79				-			79
		0.6	%			0.0	%		60	bps	% of available room nights displaced		0.4	%			0.0	%		40	bps
	COMPANY-OWNED OPERATING METRICS (3)
	Three Months Ended											Twelve Months Ended
	December 31,											December 31,
		2019				2018			Variance				2019				2018			Variance
		557				554			3		Number of hotels (as of December 31)		557				554			3
		61,933				61,552			381		Number of rooms (as of December 31)		61,933				61,552			381
		74.8	%			73.3	%		150	bps	Company-Owned Occupancy(3)		76.7	%			75.9	%		80	bps
	$	64.34			$	66.74			(3.6	)%	Company-Owned ADR(3)	$	67.97			$	69.67			(2.4	)%
	$	48.11			$	48.93			(1.7	)%	Company-Owned RevPAR(3)	$	52.16			$	52.86			(1.3	)%
(1) Includes hotels owned, franchised or managed for the full three and twelve months ended December 31, 2019 and 2018, respectively.
(2) Includes hotels owned and operated by the Company for the full three and twelve months ended December 31, 2019 and 2018, respectively.
(3) Includes results of operations of the Company's owned and operated hotels during the periods presented, which is summarized below:

 

	Date	Number of Hotels (Sold), Acquired or Opened		Number of Rooms		Number of Owned Hotels(1)	Number of Owned Rooms(1)
	December 31, 2017	-		-		624	68,686
	February 2018	(25	)	(2,420	)	599	66,266
	March 2018	(1	)	(101	)	598	66,165
	May 2018	1		115		599	66,280
	September 2018	(32	)	(3,449	)	567	62,831
	November 2018	1		107		568	62,938
	November 2018	(14	)	(1,386	)	554	61,552
	November 2019	1		121		555	61,673
	December 31, 2019	2		260		557	61,933
	(1) As of end of period.

 

	EXTENDED STAY AMERICA, INC.
	NON-GAAP RECONCILIATION OF NET INCOME TO HOTEL OPERATING PROFIT AND HOTEL OPERATING MARGIN
	FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2019 AND 2018
	(In thousands)
	(Unaudited)
	Three Months Ended								Twelve Months Ended
	December 31,								December 31,
	2019			2018			Variance		2019			2018			Variance
	$	23,846		$	39,399		(39.5)%	Net income	$	165,138		$	211,756		(22.0)%
	1,493			6,858			(78.2)%	Income tax expense	29,315			42,076			(30.3)%
	31,859			29,798			6.9%	Interest expense, net	127,764			124,870			2.3%
	(143)			(813)			(82.4)%	Other non-operating income	(391)			(765)			(48.9)%
	(1)			(168)			(99.4)%	Other income	(32)			(669)			(95.2)%
	-			(879)			(100.0)%	Gain on sale of hotel properties, net	-			(42,478)			(100.0)%
	-			-			n/a	Impairment of long-lived assets	2,679			43,600			(93.9)%
	49,857			49,677			0.4%	Depreciation and amortization	197,400			209,329			(5.7)%
	27,549			21,384			28.8%	General and administrative expenses	95,155			91,094			4.5%
	1,035			796			30.0%	Loss on disposal of assets(1)	6,072			3,413			77.9%
	(1,389)			(1,171)			18.6%	Franchise and management fees	(5,412)			(3,310)			63.5%
	633			308			105.5%	Other expenses from franchised and managed properties, net of other revenues	2,154			650			231.4%
	$	134,739		$	145,189		(7.2)%	Hotel Operating Profit	$	619,842		$	679,566		(8.8)%
	$	272,397		$	279,236		(2.4)%	Room revenues	$	1,171,726		$	1,237,311		(5.3)%
	6,517			5,161			26.3%	Other hotel revenues	24,365			21,871			11.4%
	$ 278,914			$ 284,397			(1.9)%	Total room and other hotel revenues	$	1,196,091		$	1,259,182		(5.0)%
	48.3%			51.1%			(280) bps	Hotel Operating Margin	51.8%			54.0%			(220) bps
NON-GAAP RECONCILIATION OF NET INCOME TO COMPARABLE HOTEL(2)
OPERATING PROFIT AND COMPARABLE HOTEL OPERATING MARGIN
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2019 AND 2018
(In thousands)
(Unaudited)
	Three Months Ended								Twelve Months Ended
	December 31,								December 31,
	2019			2018			Variance		2019			2018			Variance
	$	23,846		$	39,399		(39.5)%	Net income	$	165,138		$	211,756		(22.0)%
	1,493			6,858			(78.2)%	Income tax expense	29,315			42,076			(30.3)%
	31,859			29,798			6.9%	Interest expense, net	127,764			124,870			2.3%
	(143)			(813)			(82.4)%	Other non-operating income	(391)			(765)			(48.9)%
	(1)			(168)			(99.4)%	Other income	(32)			(669)			(95.2)%
	-			(879)			(100.0)%	Gain on sale of hotel properties, net	-			(42,478)			(100.0)%
	-			-			n/a	Impairment of long-lived assets	2,679			43,600			(93.9)%
	49,857			49,677			0.4%	Depreciation and amortization	197,400			209,329			(5.7)%
	27,549			21,384			28.8%	General and administrative expenses	95,155			91,094			4.5%
	1,035			796			30.0%	Loss on disposal of assets(1)	6,072			3,413			77.9%
	(1,389)			(1,171)			18.6%	Franchise and management fees	(5,412)			(3,310)			63.5%
	633			308			105.5%	Other expenses from franchised and managed properties, net of other revenues	2,154			650			231.4%
	(283)			(770)			(63.2)%	Hotel operating profit of hotels not owned for entirety of periods presented	(1,641)			(21,423)			(92.3)%
	$	134,456		$	144,419		(6.9)%	Comparable Hotel Operating Profit(2)	$	618,201		$	658,143		(6.1)%
	$	272,397		$	279,236		(2.4)%	Room revenues	$	1,171,726		$	1,237,311		(5.3)%
	6,517			5,161			26.3%	Other hotel revenues	24,365			21,871			11.4%
	(900)			(2,476)			(63.7)%	Total revenues of hotels not owned for entirety of periods presented	(4,202)			(54,753)			(92.3)%
	$	278,014		$	281,921		(1.4)%	Comparable total room and other hotel revenues	$	1,191,889		$	1,204,429		(1.0)%
	48.4%			51.2%			(280) bps	Comparable Hotel Operating Margin(2)	51.9%			54.6%			(270) bps
(1) Included in hotel operating expenses in the consolidated statements of operations.
(2) Includes results of 553 and 552 hotels owned and operated during the full three and twelve months ended December 31, 2019 and 2018, respectively.

 

	EXTENDED STAY AMERICA, INC.
	NON-GAAP RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA
	FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2019 AND 2018
	(In thousands)
	(Unaudited)
	Three Months Ended									Twelve Months Ended
	December 31,									December 31,
		2019				2018					2019				2018
	$	23,846			$	39,399			Net income	$	165,138			$	211,756
		31,859				29,798			Interest expense, net		127,764				124,870
		1,493				6,858			Income tax expense		29,315				42,076
		49,857				49,677			Depreciation and amortization		197,400				209,329
		107,055				125,732			EBITDA		519,617				588,031
		782				1,725			Equity-based compensation		6,913				7,724
		-				-			Impairment of long-lived assets		2,679				43,600
		-				(879	)		Gain on sale of hotel properties, net		-				(42,478	)
		922				(19	)		Other non-operating expense (income)(1)		5,829				2,860
	$	108,759			$	126,559			Adjusted EBITDA	$	535,038			$	599,737
NON-GAAP RECONCILIATION OF NET INCOME TO EBITDA AND COMPARABLE ADJUSTED EBITDA(2)
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2019 AND 2018
(In thousands)
(Unaudited)
	Three Months Ended									Twelve Months Ended
	December 31,									December 31,
		2019				2018					2019				2018
	$	23,846			$	39,399			Net income	$	165,138			$	211,756
		31,859				29,798			Interest expense, net		127,764				124,870
		1,493				6,858			Income tax expense		29,315				42,076
		49,857				49,677			Depreciation and amortization		197,400				209,329
		107,055				125,732			EBITDA		519,617				588,031
		(283	)			(770	)		Adjusted Property EBITDA of hotels not owned for entirety of periods presented		(1,641	)			(21,423	)
		782				1,725			Equity-based compensation		6,913				7,724
		-				-			Impairment of long-lived assets		2,679				43,600
		-				(879	)		Gain on sale of hotel properties, net		-				(42,478	)
		922				(19	)		Other non-operating expense (income)(1)		5,829				2,860
	$	108,476			$	125,789			Comparable Adjusted EBITDA(2)	$	533,397			$	578,314
(1) Includes loss on disposal of assets, non-operating expense (income), including foreign currency transaction costs, and certain costs associated with acquisitions and dispositions. Loss on disposal of assets totaled $1.0 million, $0.8 million, $6.1 million and $3.4 million, respectively.
(2) Includes results of 553 and 552 hotels owned and operated during the full three and twelve months ended December 31, 2019 and 2018, respectively.

 

EXTENDED STAY AMERICA, INC.
NON-GAAP RECONCILIATION OF NET (LOSS) INCOME ATTRIBUTABLE TO EXTENDED STAY AMERICA, INC.
COMMON SHAREHOLDERS TO FUNDS FROM OPERATIONS, ADJUSTED FUNDS FROM OPERATIONS
AND ADJUSTED FUNDS FROM OPERATIONS PER DILUTED PAIRED SHARE
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2019 AND 2018
(In thousands, except per share and per Paired Share data)
(Unaudited)
Three Months Ended									Twelve Months Ended
December 31,									December 31,
	2019				2018					2019				2018
$	(0.26	)		$	(0.21	)		Net (loss) income per Extended Stay America, Inc. common share - diluted	$	0.37			$	0.59
$	(46,834	)		$	(38,946	)		Net (loss) income attributable to Extended Stay America, Inc. common shareholders	$	69,668			$	112,864
	70,676				78,341			Noncontrolling interests attributable to Class B common shares of ESH REIT		95,454				98,876
	48,225				48,307			Real estate depreciation and amortization		191,560				204,095
	-				-			Impairment of long-lived assets		2,679				43,600
	-				(879	)		Gain on sale of hotel properties, net		-				(42,478	)
	(4,451	)			(8,015	)		Tax effect of adjustments to net (loss) income attributable to Extended Stay America, Inc. common shareholders		(27,582	)			(34,517	)
	67,616				78,808			Funds from Operations		331,779				382,440
	17				-			Debt modification and extinguishment costs		6,733				1,621
	-				(1,208	)		Other non-operating income		-				(1,208	)
	132				204			Tax effect of adjustments to Funds from Operations		(956	)			(70	)
$	67,765			$	77,804			Adjusted Funds from Operations	$	337,556			$	382,783
$	0.37			$	0.41			Adjusted Funds from Operations per Paired Share – diluted	$	1.81			$	2.02
	182,046				188,272			Weighted average Paired Shares outstanding – diluted		186,822				189,821

 

EXTENDED STAY AMERICA, INC.
NON-GAAP RECONCILIATION OF NET (LOSS) INCOME ATTRIBUTABLE TO EXTENDED STAY AMERICA, INC.
								COMMON SHAREHOLDERS TO PAIRED SHARE INCOME, ADJUSTED PAIRED SHARE INCOME
AND ADJUSTED PAIRED SHARE INCOME PER DILUTED PAIRED SHARE
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2019 AND 2018
(In thousands, except per share and per Paired Share data)
(Unaudited)
Three Months Ended									Twelve Months Ended
December 31,									December 31,
	2019				2018					2019				2018
$	(0.26	)		$	(0.21	)		Net (loss) income per Extended Stay America, Inc. common share - diluted	$	0.37			$	0.59
$	(46,834	)		$	(38,946	)		Net (loss) income attributable to Extended Stay America, Inc. common shareholders	$	69,668			$	112,864
	70,676				78,341			Noncontrolling interests attributable to Class B common shares of ESH REIT		95,454				98,876
	23,842				39,395			Paired Share Income		165,122				211,740
	17				-			Debt modification and extinguishment costs		6,733				1,621
	-				-			Impairment of long-lived assets		2,679				43,600
	-				(879	)		Gain on sale of hotel properties, net		-				(42,478	)
	922				(19	)		Other non-operating expense (income)(1)		5,829				2,860
	136				152			Tax effect of adjustments to Paired Share Income		(2,163	)			(937	)
$	24,917			$	38,649			Adjusted Paired Share Income	$	178,200			$	216,406
$	0.14			$	0.21			Adjusted Paired Share Income per Paired Share – diluted	$	0.95			$	1.14
	182,046				188,272			Weighted average Paired Shares outstanding – diluted		186,822				189,821
(1) Includes loss on disposal of assets, non-operating expense (income), including foreign currency transaction costs, and certain costs associated with acquisitions and dispositions. Loss on disposal of assets totaled $1.0 million, $0.8 million, $6.1 million and $3.4 million, respectively.

 

EXTENDED STAY AMERICA, INC.
TOTAL REVENUES AND NON-GAAP RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA
FOR THE YEARS ENDED DECEMBER 31, 2019 (ACTUAL) AND 2020 (OUTLOOK)
(In thousands)
(Unaudited)
	Year Ended				Year Ending December 31, 2020
	December 31, 2019				(Outlook)
	(Actual)				Low			High
	$	1,218,219		Total revenues	$	1,226,000		$	1,246,000
	$	165,138		Net income	$	132,600		$	153,850
		127,764		Interest expense, net		135,000			135,000
		29,315		Income tax expense		23,400			27,150
		197,400		Depreciation and amortization		200,000			195,000
		519,617		EBITDA		491,000			511,000
		6,913		Equity-based compensation		8,000			8,000
		2,679		Impairment of long-lived assets		-			-
		5,829		Other expense(1)		6,000			6,000
	$	535,038		Adjusted EBITDA	$	505,000		$	525,000
	(1) Includes loss on disposal of assets, non-operating expense (income), including foreign currency transaction costs, and certain costs associated with acquisitions and dispositions.

 

EXTENDED STAY AMERICA, INC.
NON-GAAP RECONCILIATION OF NET INCOME ATTRIBUTABLE TO EXTENDED STAY AMERICA, INC.
COMMON SHAREHOLDERS TO FUNDS FROM OPERATIONS, ADJUSTED FUNDS FROM OPERATIONS
AND ADJUSTED FUNDS FROM OPERATIONS PER DILUTED PAIRED SHARE
FOR THE YEARS ENDED DECEMBER 31, 2019 (ACTUAL) AND 2020 (OUTLOOK)
(In thousands, except per share and per Paired Share data)
(Unaudited)
Year Ended					Year Ending December 31, 2020
December 31, 2019					(Outlook)
(Actual)					Low				High
$	0.37			Net income per Extended Stay America, Inc. common share - diluted	$	0.28			$	0.36
$	69,668			Net income attributable to Extended Stay America, Inc. common shareholders	$	50,424			$	63,354
	95,454			Noncontrolling interests attributable to Class B common shares of ESH REIT		82,160				90,480
	191,560			Real estate depreciation and amortization		194,000				189,000
	2,679			Impairment of long-lived assets		-				-
	(27,582	)		Tax effect of adjustments to net income attributable to Extended Stay America, Inc. common shareholders		(29,100	)			(28,350	)
	331,779			Funds from Operations		297,484				314,484
	6,733			Debt modification and extinguishment costs		-				-
	(956	)		Tax effect of adjustments to Funds from Operations		-				-
$	337,556			Adjusted Funds from Operations	$	297,484			$	314,484
$	1.81			Adjusted Funds from Operations per Paired Share – diluted	$	1.68			$	1.77
	186,822			Weighted average Paired Shares outstanding – diluted		177,500				177,500

 

EXTENDED STAY AMERICA, INC.
NON-GAAP RECONCILIATION OF NET INCOME ATTRIBUTABLE TO EXTENDED STAY AMERICA, INC.
COMMON SHAREHOLDERS TO PAIRED SHARE INCOME, ADJUSTED PAIRED SHARE INCOME
AND ADJUSTED PAIRED SHARE INCOME PER DILUTED PAIRED SHARE
FOR THE YEARS ENDED DECEMBER 31, 2019 (ACTUAL) AND 2020 (OUTLOOK)
(In thousands, except per share and per Paired Share data)
(Unaudited)
Year Ended					Year Ending December 31, 2020
December 31, 2019					(Outlook)
(Actual)					Low				High
$	0.37			Net income per Extended Stay America, Inc. common share - diluted	$	0.28			$	0.36
$	69,668			Net income attributable to Extended Stay America, Inc. common shareholders	$	50,424			$	63,354
	95,454			Noncontrolling interests attributable to Class B common shares of ESH REIT		82,160				90,480
	165,122			Paired Share Income		132,584				153,834
	6,733			Debt modification and extinguishment costs		-				-
	2,679			Impairment of long-lived assets		-				-
	5,829			Other expense(1)		6,000				6,000
	(2,163	)		Tax effect of adjustments to Paired Share Income		(900	)			(900	)
$	178,200			Adjusted Paired Share Income	$	137,684			$	158,934
$	0.95			Adjusted Paired Share Income per Paired Share – diluted	$	0.78			$	0.90
	186,822			Weighted average Paired Shares outstanding – diluted		177,500				177,500
(1) Includes loss on disposal of assets, non-operating expense (income), including foreign currency transaction costs, and certain costs associated with acquisitions and dispositions.

 

Source: Extended Stay America, Inc.