Extended Stay America, Inc. (NYSE:ESA) today reported the results of its operations for the three months and six months ended June 30, 1998. Net income for the second quarter was $10.1 million or $0.10 per diluted share. Net income increased by 91% as compared to the second quarter of 1997 (adjusted for certain non-recurring expenses incurred in 1997). Net income for the six months ended June 30, 1998 was $14.9 million or $0.15 per diluted share.
Revenue increased by 141% to $70.0 million as compared to $29.0 million for the second quarter last year. Earnings before interest, taxes, depreciation and amortization (EBITDA) of $31.4 million, or $0.32 per diluted share, for the second quarter increased by 223% as compared to the same quarter of last year (excluding certain non-recurring expenses incurred in 1997). Earnings before depreciation, amortization, and non-current deferred taxes (EBDADT) of $24.1 million, or $0.25 per diluted share, for the second quarter increased by 103% as compared to the same quarter of last year (adjusted for certain non-recurring expenses incurred in 1997).
The results for the second quarter reflect the opening of 10 additional EXTENDED STAYAMERICA Efficiency Studios, 4 StudioPLUS Deluxe Studios and 7 Crossland Economy Studios during the quarter. A total of 21 properties were opened during the second quarter.
Property operating results for the second quarter include 49 EXTENDED STAYAMERICA properties (33% of open properties), 28 StudioPLUS properties (36% of open properties) and 11 Crossland properties (79% of open properties), that were opened during the quarter or had been open for less than six months at the beginning of the quarter. Including these 88 properties (37% of all opened properties), the Company realized average occupancies of 76% and average weekly room rates of $288 for the quarter. Average occupancy rates for EXTENDED STAYAMERICA, StudioPLUS and Crossland were 77%, 77% and 61%, respectively, while average weekly rates were $283, $319, and $194, respectively, for the quarter. Facility level EBITDA was 59% of revenue or $41.2 million for the second quarter, including the 88 properties open for less than nine months at the end of the quarter. Facility level EBITDA does not include corporate operating and site selection expenses of $9.7 million, which decreased as a percentage of revenue to 14% as compared to 24% for the second quarter of 1997.
As of June 30, 1998, the Company had total borrowings of $450 million under its $900 million available credit facilities and had cash balances of approximately $65 million.
George D. Johnson Jr., President and CEO, commented: “We continue to be pleased with the operating performance of our properties, particularly considering that we have more than doubled the number of properties from 116 at June 30, 1997 to 239 at June 30, 1998. With a total of 335 properties open or under construction as of June 30, 1998, we look forward to continued growth in revenue and cash flow as the newer properties mature and as we open in new markets.”
Certain statements and information included in this release constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance, or achievements expressed or implied in such forward-looking statements. Additional discussion of factors that could cause actual results to differ materially from management`s projections, forecasts, estimates and expectations is contained in the Company`s SEC filings.