Extended Stay America, Inc. (NYSE:ESA) today reported the results of its operations for the three months ended March 31, 1999.
Net income before the cumulative effect of an accounting change for the first quarter, was $7.7 million or $0.08 per diluted share, compared with $4.8 million or $0.05 per diluted share for the first quarter last year.
Revenue increased by 65% to $89.4 million as compared to $54.2 million for the first quarter last year. Excluding the cumulative effect of an accounting change, earnings before depreciation, amortization and deferred taxes (EBDADT) of $27.4 million, or $0.28 per diluted share, for the quarter increased by 38% as compared to the first quarter of last year. Excluding the cumulative effect of an accounting change, earnings before interest, taxes, depreciation and amortization (EBITDA) of $38.1 million, or $0.39 per diluted share, for the quarter increased by 105% as compared to the first quarter last year.
The results for the first quarter reflect the opening of 18 additional EXTENDED STAYAMERICA Efficiency Studios, 5 StudioPLUS Deluxe Studios and 6 Crossland Economy Studios during the quarter. A total of 29 properties were opened during the first quarter.
Property operating results include 51 EXTENDED STAYAMERICA properties (26% of open properties), 19 StudioPLUS properties (20% of open properties) and 25 Crossland properties (64% of open properties), that were opened during the quarter or had been open for less than six months as of the beginning of the quarter. Including these 95 properties (28% of all opened properties), the Company realized average occupancies of 71% and average weekly room rates of $284 for the quarter. For the first quarter of 1998, the Company operated a total of 218 properties and realized average occupancies of 68% and average weekly room rates of $278.
Average occupancy rates for EXTENDED STAYAMERICA, StudioPLUS and Crossland were 73%, 70% and 61%, respectively, while average weekly rates were $289, $315, and $203, respectively, for the first quarter of 1999. The 185 properties opened for at least one year at the beginning of the first quarter realized average occupancy rates of 75% and average weekly rates of $280 during the quarter.
Facility level EBITDA for the first quarter of 1999, including the 95 properties open for less than nine months at the end of the quarter, was 54% of revenue or $48.4 million, compared to 52% of revenue or $27.9 million for the first quarter of 1998. Facility level EBITDA does not include corporate operating and site selection expenses of $10.3 million which decreased as a percentage of revenue to 12% as compared to 17% for the first quarter of 1998.
Pursuant to Statement of Position 98-5, “Reporting on the Costs of Start-up Activities”, issued by the Accounting Standards Executive Committee, effective January 1, 1999, the Company changed its method of accounting for start-up activities. Accordingly, the Company recorded an expense of $779,000, net of income tax benefit of $520,000 in the first quarter.
As of March 31, 1999, the Company had utilized $745 million of its $1.0 billion available credit facilities and had cash balances of approximately $5.4 million.
George D. Johnson, Jr., President and CEO, commented: “We continue to be pleased with the operating performance of our properties, particularly considering the number of properties opened in the quarter and the traditional seasonal impact on occupancy in the first quarter. We look forward to continued growth in revenue and cash flow as the newly opened properties reach stabilized operating levels in the second and third quarters.”
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.