Stock Monitor: Despegar.com Post Earnings Reporting
LONDON, UK / ACCESSWIRE / May 21, 2018 / If you want access to our free earnings report on Extended Stay America, Inc. Paired Shares (NYSE: STAY) ("ESA"), all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=STAY. The Company reported its first quarter fiscal 2018 operating and financial results on April 26, 2018. The hotel operator outperformed top- and bottom-line expectations, and also provided guidance for FY18. Register today and get access to over 1,000 Free Research Reports by joining our site below:
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Earnings Highlights and Summary
For the three months ended March 31, 2018, ESA's total revenues were $297.8 million, reflecting an increase of 2.3% compared to $291.0 million in Q1 2017, driven by an increase in revenue per available room (RevPAR). The Company's revenue numbers topped analysts' estimates of $290.7 million.
ESA's comparable system-wide RevPAR grew 3.7% on a y-o-y basis in Q1 2018, driven by an improvement in average daily rate (ADR) of 4.0%, partially offset by a 20-basis point decline in occupancy to 70.3%, attributed to the Easter calendar shift. ESA's comparable Company-owned hotel RevPAR increased 3.8% in the reported quarter to $47.92, driven by an ADR increase of 4.0%. The Company-owned hotel RevPAR increased 4.7%, reflecting the sales of non-core hotels and the increase in comparable Company-owned hotel RevPAR.
ESA's hotel operating margin was 52.2% in Q1 2018 compared to 52.5% in Q1 2017. The Company's hotel operating margin flow-through, defined as the change in hotel operating profit divided by the change in total hotel revenues, was 34.4% in the reported quarter.
For Q1 2018, ESA's net income was $31.1 million compared to $16.1 million in Q1 2017. The Company's earnings for the reported quarter were favorably impacted by increased revenues, a gain on asset sales, a lower effective tax rate, and lower depreciation and amortization.
During Q1 2018, ESA's adjusted paired share income was $37.5 million, or $0.19 per diluted paired share, compared to $28.5 million, or $0.15 per diluted paired share, in Q1 2017. The increase in earnings was driven by a drop in effective tax rate, increased revenues, lower depreciation expenses, and lower interest expenses. The Company's earnings beat Wall Street's estimates of $0.17 per paired share.
ESA's adjusted funds from operations (AFFO) was $80.0 million in Q1 2018, reflecting an increase of 16.5% on a y-o-y basis. The increase in AFFO was primarily due to a lower effective tax rate, increased revenues, and lower interest expenses. The Company's adjusted FFO per diluted paired share was $0.42 in the reported quarter, up 20% compared to $0.35 in the prior year's same quarter.
Asset Dispositions and Acquisitions
ESA completed a 25-portfolio hotel sale in February 2018. Additionally, the Company completed the sale of the Austin property for $44.8 million in March 2018. ESA will continue to manage the Austin property under an interim management agreement until the new owner is ready to commence construction on its alternate use and closes the hotel.
ESA has signed contracts and is engaged in due diligence to acquire two extended stay hotels using proceeds from its prior asset sales. The Company expects to complete the purchase of one hotel during Q2 2018, and the other hotel in Q3 2018. These two hotels will be converted to the Extended Stay America brand.
During Q1 2018, ESA invested $33.6 million in capital expenditure. This included approximately $4.2 million in capital expenditure for new hotel development and $10.1 million in capital expenditure for IT projects.
During Q1 2018, ESA repurchased 1.8 million paired shares for an aggregate purchase price of $35.2 million. Between April 01, 2018, and April 26, 2018, the Company repurchased 0.8 million paired shares for $15.1 million. As of April 26, 2018, ESA had approximately $147.7 million in repurchase authorization remaining.
ESA ended Q1 2018 with its net debt to trailing 12 months adjusted EBITDA ratio at 3.7x on a 598-hotel basis, down from 3.9x on a 625-hotel basis at the end of 2017.
For the full year FY18, ESA is forecasting comparable system-wide RevPAR to increase by 1% to 3% and adjusted EBITDA of $600 million to $620 million. The Company raised its capital expenditure guidance to $205 million to $235 million. For FY18, ESA is projecting adjusted paired share income to be in the range of $1.04 and $1.14 per paired share. Through dividends and share repurchases, the Company expects to return between $260 million and $300 million to its paired shareholders in FY18.
Stock Performance Snapshot
May 18, 2018 - At Friday's closing bell, Extended Stay America's stock rose 1.80%, ending the trading session at $19.83.
Volume traded for the day: 1.67 million shares, which was above the 3-month average volume of 1.61 million shares.
Stock performance in the last three-month – up 1.17%; previous six-month period – up 14.16%; past twelve-month period – up 12.54%; and year-to-date – up 4.37%
After last Friday's close, Extended Stay America's market cap was at $3.81 billion.
Price to Earnings (P/E) ratio was at 51.64.
The stock has a dividend yield of 4.24%.
The stock is part of the Services sector, categorized under the Lodging industry.
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