Extended Stay America Announces Fourth Quarter and Full Year 2020 Results
– Net income of $65.7 million in the Fourth Quarter, $96.3 million for the Full Year 2020
– Adjusted EBITDA1of $89.3 million in the Fourth Quarter, $374.1 million for the Full Year 2020
– Comparable system-wide RevPAR decrease of 9.4% in the Fourth Quarter, -15.0% for the Full Year 2020
– Announces quarterly distribution of $0.09 per Paired Share
– RevPAR Index increased 40% to 140 in the Fourth Quarter, +31.6% to 127 for the Full Year 20202CHARLOTTE, N.C., Feb. 25, 2021 (GLOBE NEWSWIRE) — Extended Stay America, Inc. (“ESA”) and ESH Hospitality, Inc. (NASDAQ:STAY) (together, the “Company”) today announced consolidated results for the three months and full year ended December 31, 2020.
Fourth Quarter 2020 HighlightsNet income of $65.7 millionTotal revenues of $259.3 millionComparable system-wide Revenue Per Available Room (“RevPAR”) declined 9.4% to $42.46Comparable system-wide occupancy of 73.7%Adjusted EBITDA of $89.3 millionAdjusted Funds From Operations (“Adjusted FFO”)1of $0.36 per diluted Paired ShareAdjusted Paired Share Income1of $0.16 per diluted Paired ShareComparable system-wide RevPAR index of 140, a 40 point increaseExtended Stay America’s President and Chief Executive Officer Bruce Haase, commented, “We are pleased with another strong quarter as we continue to outperform every industry benchmark, improving our RevPAR index by 40% against our closest competition during the fourth quarter. Through last week, Extended Stay America has now had 65 consecutive weeks of RevPAR index gains dating back to well before the pandemic, demonstrating the growing strength of our model relative to the overall lodging industry.”“As we move into 2021, we are very excited about our growth prospects and opportunities. Today we unveiled our new brand segmentation strategy with the launch of the Extended Stay America Premier Suites brand, in addition to our core hotels to be branded as Extended Stay America Suites. And, we continue to see opportunities for growth from improvements to our commercial engine and operating performance as well as unlocking value in our REIT through accretive asset transactions.”Financial and Operating ResultsTotal revenues for the three months ended December 31, 2020 were $259.3 million, a decrease of 8.8% over the same period in 2019 due to the impact of the COVID-19 pandemic. For the full year 2020, total revenues declined 14.4% to $1,042.3 million driven by the decrease in hotel revenues as a result of the impact of the COVID-19 pandemic.Comparable system-wide RevPAR for the three months ended December 31, 2020 declined 9.4% over the same period in 2019 to $42.46, driven by a 7.3% decline in Average Daily Rate (“ADR”) and a 170 basis point decrease in occupancy to 73.7%. Comparable system-wide RevPAR for the full year 2020 decreased 15.0% over 2019 to $42.91, driven by a 11.6% decline in ADR and a 300 basis point decrease in occupancy to 73.8%. Hotel Operating Margin for the three months ended December 31, 2020 was 42.5% compared to 48.3% in the same period in 2019 due a decrease in RevPAR caused by the COVID-19 pandemic and a slight increase in hotel operating expenses. Hotel operating expenses during the fourth quarter of 2020 increased by 2.5% from the same period in 2019 and were approximately flat on a comparable basis. Hotel Operating Margin for the full year 2020 was 44.5% compared to 51.8% in the same period of 2019, driven by a decrease in RevPAR due to the COVID-19 pandemic.Net income for the three months ended December 31, 2020 was $65.7 million compared to net income of $23.8 million for the same period in 2019. The increase in net income was due to a gain on an asset sale, a decrease in corporate overhead expense and an income tax benefit, partially offset by a decline in Comparable system-wide RevPAR. Net income for the full year 2020 was $96.3 million, compared to net income of $165.1 million for the same period in 2019. The full year 2020 decrease in net income was driven by a decline in Comparable system-wide RevPAR, partially offset by a gain on an asset sale and an income tax benefit.Adjusted EBITDA for the three months ended December 31, 2020 was $89.3 million, a decline of 17.9% compared to the same period in 2019. The decline in Adjusted EBITDA was due to a decline in Comparable system-wide RevPAR. Adjusted EBITDA for the quarter excludes a $52.5 million gain on an asset sale, non-cash equity-based compensation expense of $1.9 million, $2.7 million in loss on disposal of assets and $0.2 million in other expenses. Adjusted EBITDA for the full year 2020 was $374.1 million compared to $535.0 million in the same period of 2019.Adjusted FFO for the three months ended December 31, 2020 was $64.2 million, or $0.36 per diluted Paired Share, compared to $67.8 million, or $0.37 per diluted Paired Share in the same period in 2019. The decrease in Adjusted FFO per diluted Paired Share was due to a decline in Comparable system-wide RevPAR, partially offset by an income tax benefit and a reduction in Paired Shares outstanding. Adjusted FFO for the full year 2020 was $220.5 million, or $1.24 per diluted Paired Share, compared to $337.6 million, or $1.81 per diluted Paired Share, for the same period in 2019. 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 Paired Share Income for the three months ended December 31, 2020 was $27.6 million, or $0.16 per diluted Paired Share, compared to $24.9 million in Adjusted Paired Share Income, or $0.14 per diluted Paired Share, for the same period in 2019. The increase in an Adjusted Paired Share Income per diluted Paired Share was due to an income tax benefit, a decrease in corporate overhead expense and a reduction in Paired Shares outstanding, partially offset by the decline in Comparable system-wide RevPAR. Adjusted Paired Share Income for the full year 2020 was $66.2 million, or $0.37 per diluted Paired Share, compared to $178.2 million, or $0.95 per diluted Paired Share, in the same period of 2019. 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.Capital Expenditures and Balance SheetThe Company invested $47.7 million in capital expenditures during the fourth quarter of 2020. This included $7.3 million in renovation capital and $13.9 million in capital for new hotel development. For the full year 2020, the Company invested $192.7 million in capital expenditures, including $20.9 million in renovation capital and $72.4 million for new hotel development.As of December 31, 2020, the Company had $409.9 million in cash and equivalents, including $13.2 million in restricted cash, and total debt outstanding was $2.72 billion.Hotel and Development PipelineAs of December 31, 2020, the Company had a pipeline of 56 hotels representing approximately 6,800 rooms. Two Company-owned hotels and seven franchised hotels opened during the fourth quarter, resulting in a total of 17 system-wide hotels opened for the full year 2020.
Distributions and Share Repurchases
On February 25, 2021, ESH Hospitality, Inc. declared a $0.09 distribution to common shareholders payable on March 26, 2021 to its Class A (ESA) and Class B (Paired Shareholders) holders of record on March 12, 2021. ESH Hospitality, Inc. will continue to distribute at least 90% of its pre-tax earnings to maintain its REIT status. The Company did not repurchase any Paired Shares during the fourth quarter and has $101.1 million in repurchase authorization outstanding.Q1 2021 Outlook UpdateThe Company’s Q1 2021 Outlook is as followsFull Year 2021 Outlook UpdatePerformance and financial results for the first quarter and full year 2021 is subject to risks and uncertainties, in particular the evolving and ongoing impact of the COVID-19 pandemic, which could cause actual results to deviate materially and adversely from current trends and expectations. In such event, the Company does not expect to, and undertakes no obligation to, announce changes in expectations prior to the announcement of actual results.For more information on our results and strategic initiatives, see our Fourth Quarter 2020 Earnings Presentation on our Investor Relations website at www.aboutstay.com or visit the presentation directly at https://extendedstayamerica.gcs-web.com/static-files/8097bc70-f430-48f0-aab9-def9f932b759
Webcast and Conference Call DetailsThe Company will host a conference call on Friday, February 26, 2021 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, 2021 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 13715635.RevPAR IndexRevPAR Index is stated as a percentage and calculated by comparing RevPAR for owned hotels or system-wide hotels to the aggregate RevPAR of a group of competing hotels generally in the same market. As such, RevPAR Index is only a measure of RevPAR relative to certain competing hotels and not a measure of our absolute RevPAR or profitability. We subscribe to STR, Inc. (“STR”), an independent third-party service, which collects and compiles the data used to calculate RevPAR Index. We select the competing hotels included in the RevPAR Index calculation subject to STR’s guidelines. The competing hotels included in STR guidelines will generally include certain hotels that are not considered part of the extended stay lodging segment of the hospitality industry and, instead, fall within the category of short-term stay hotels. STR does not endorse the Company, or any other company, and STR data should not be viewed as investment advice or as a recommendation to take a particular course of action.Disclosure Regarding Non-GAAP Financial MeasuresHotel 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, cash flow from operating activities, 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 StatementsThis 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, financial results, liquidity and capital resources, capital expenditures, Q1 and full year 2021 outlooks, distribution policy, plans, goals, beliefs, business trends and future events, as well as the impact of the COVID-19 pandemic, its effects on the foregoing, government actions taken in response to the pandemic and actions that we have taken or plan to take in response to the pandemic and other non-historical statements. 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 25, 2021. 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 and adversely 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 649 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 563 hotels and over 62,700 rooms in the U.S. ESA also franchises an additional 86 Extended Stay America® hotels. Visit www.esa.com for more information.Contacts
Investors or Media:
Rob Ballew
(980) 345-1546
ir@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).
2 See definition of RevPAR index included in this release.
