Extended Stay America records 35 per cent rise in profits

George Sell George Sell Uploaded 25 June 2017

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US: Extended Stay America (ESA) has reported a 35.52 per cent in gross profits for Q1 2017.

The company reported profits of US$23.10 million, or $0.12 a share in the quarter, compared with $17.05 million, or $0.08 a share, for the same period last year.

Revenue during the quarter went up marginally by 1.19 per cent to $290.99 million from $287.56 million in the previous year period. Gross margin for the quarter expanded 194 basis points over the previous year period to 51.32 per cent. Total expenses were 81.81 per cent of quarterly revenues, up from 77.83 per cent for the same period last year. That has resulted in a contraction of 398 basis points in operating margin to 18.19 per cent.

Operating income for the quarter was $52.93 million, compared with $63.76 million in the previous year period.

Adjusted EBITDA for the quarter was $129.60 million, compared with $122.80 million in the prrevious year.

ESA CEO Gerry Lopez said: "We were pleased with our strong topline finish and our solid expense discipline throughout the first quarter. This led to results finishing above our guidance for both RevPAR as well as Adjusted EBITDA. Additionally, both Adjusted Paired Share Income and Adjusted FFO per diluted Paired Share grew more than 10 per cent in the first quarter."

"With our strong free cash flow and outlook for 2017 and beyond, we continue to focus on returning capital to shareholders. This morning, our Boards approved raising our quarterly dividend by 10.5 per cent to $0.21 per Paired Share, marking the third year in a row since becoming a public company that we have increased our dividend by over 10 per cent. This represents a roughly five per cent annual yield at recent trading prices. In addition to our strong dividend, in the last 14 months the Company has repurchased and retired over five per cent of our Paired Shares outstanding. We remain firmly committed to strong capital returns to shareholders as our free cash flow continues to increase and as we recycle capital."

For fiscal year 2017, Extended Stay America projects revenue to be in the range of $1,285 million to $1,310 million. The company expects net income to be in the range of $174.65 million to $188.49 million.

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