Extended Stay America Announces Fourth Quarter and Full Year 2019 Results


- 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 Margin1 for 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 
 1124 6752 91,128 162,004 2260 
                
                
 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 
 394,804 5588 151,665 597,057 2217 
                
                
                
 Definitions              
 Under Option Locations with a signed purchase and sale agreement
     
 Pre-DevelopmentLand purchased, permitting and/or site work
     
 Under ConstructionHotel 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% 240bpsComparable System-Wide Occupancy(1) 76.8%  75.3% 150bps
 $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% 140bpsComparable Company-Owned Occupancy(2) 76.8%  75.9% 90bps
 $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% 60bps% of available room nights displaced 0.4%  0.0% 40bps
            
  
 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% 150bpsCompany-Owned Occupancy(3) 76.7%  75.9% 80bps
 $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:  


 DateNumber of Hotels
(Sold), Acquired or
Opened
Number of
Rooms
Number of
Owned Hotels
(1)
Number of
Owned Rooms
(1)
 
  
 December 31, 2017- - 62468,686 
 February 2018(25)(2,420)59966,266 
 March 2018(1)(101)59866,165 
 May 20181 115 59966,280 
 September 2018(32)(3,449)56762,831 
 November 20181 107 56862,938 
 November 2018(14)(1,386)55461,552 
 November 20191 121 55561,673 
 December 31, 20192 260 55761,933 
       
 (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 expense29,315 42,076 (30.3)%
 31,859 29,798 6.9%Interest expense, net127,764 124,870 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/aImpairment of long-lived assets2,679 43,600 (93.9)%
 49,857 49,677 0.4%Depreciation and amortization197,400 209,329 (5.7)%
 27,549 21,384 28.8%General and administrative expenses95,155 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 revenues2,154 650 231.4%
 $ 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 revenues24,365 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) bpsHotel Operating Margin51.8% 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 expense29,315 42,076 (30.3)%
 31,859 29,798 6.9%Interest expense, net127,764 124,870 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/aImpairment of long-lived assets2,679 43,600 (93.9)%
 49,857 49,677 0.4%Depreciation and amortization197,400 209,329 (5.7)%
 27,549 21,384 28.8%General and administrative expenses95,155 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 revenues2,154 650 231.4%
 (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 revenues24,365 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) bpsComparable 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.