Extended Stay America, Inc. (NYSE:ESA), a leading provider of extended-stay lodging, today reported the results of its operations for the three months and nine months ended September 30, 2000. Net income for the third quarter increased by 40% to $22.7 million or $0.23 per diluted share, compared with $16.3 million or $0.17 per diluted share for the third quarter last year. Net income for the nine months ended September 30, 2000 was $55.3 million or $0.57 per diluted share.
Revenue increased by 22% to $142.2 million as compared to $116.5 million for the third quarter last year. Earnings before interest, taxes, depreciation and amortization (EBITDA) of $74.9 million, or $0.77 per diluted share, for the quarter increased by 30% as compared to the third quarter last year.
The results for the third quarter reflect the opening of 5 properties during the quarter (4 EXTENDED STAYAMERICA Efficiency Studios and 1 StudioPLUS Deluxe Studios). At September 30, 2000, the Company had 383 operating facilities (39 Crossland Economy Studios, 252 EXTENDED STAYAMERICA Efficiency Studios, and 92 StudioPLUS Deluxe Studios) and had 23 facilities under construction (21 EXTENDED STAYAMERICA Efficiency Studios and 2 StudioPLUS Deluxe Studios). The Company expects to open a total of 30 properties with total costs of approximately $250 million during the year.
Average occupancy rates for Crossland, EXTENDED STAYAMERICA, and StudioPLUS were 85%, 86% and 82%, respectively, while average weekly rates were $215, $315, and $343, respectively, for the third quarter of 2000. Property operating results for the quarter include 30 EXTENDED STAYAMERICA properties (12% of open properties) and 6 StudioPLUS properties (7% of open properties) that were open for less than one year at the beginning of the quarter. Including these 36 properties (9% of all opened properties), the Company realized average occupancies of 85% and average weekly room rates of $307 for the quarter. The 347 properties opened for at least one year at the beginning of the third quarter realized average occupancy rates of 86% and average weekly rates of $299 during the quarter.
Facility level EBITDA for the third quarter of 2000, including the 36 properties that were open for less than one year at the beginning of the quarter, was 61% of revenue or $86.1 million, compared to 59% of revenue or $68.3 million for the third quarter of 1999. Facility level EBITDA does not include corporate operating and site selection expenses of $11.2 million which decreased as a percentage of revenue to 8% as compared to 9% for the third quarter of 1999.
As of September 30, 2000, the Company had invested approximately $2.0 billion in the 383 open properties and had invested approximately $153 million in sites under development. The Company had cash balances of approximately $8.5 million. The Company did not increase amounts borrowed under its credit facilities during the third quarter of 2000. As of September 30, 2000, the Company had outstanding loans of $920 million (including $200 million of senior subordinated notes), leaving $278 million available under its $1.2 billion total credit facilities.
George D. Johnson Jr., CEO, commented: “We are extremely pleased with our results for the third quarter. We continue to gain occupancy and market share and convert those gains into increasing margins and EBITDA. We believe our extended stay competitors have substantially reduced or eliminated their development in response to the difficult capital markets prevailing the last two years. The existing capacity under our credit facilities, combined with substantial internally generated cash flows, position us to increase our development and market share in the future. Therefore, we are intensifying our development activities and will seek to increase our annual investment in extended-stay properties from our current rate of $250 million to $350 million for 2002.”
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.