Choice Hotels International Reports 2022 Fourth Quarter and Full-Year Results

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Exhibit 7

CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES

SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION

(UNAUDITED)

REVENUES EXCLUDING REIMBURSABLE REVENUE FROM FRANCHISED AND MANAGED PROPERTIES AND EXTRAORDINARY TERMINATION FEES

FROM FRANCHISEE

(dollar amounts in thousands)

Three Months Ended December 31,

Year Ended December 31,

2022

2021

2022

2021

Total Revenues

$        361,982

$        284,638

$      1,401,949

$      1,069,298

Adjustments:

      Reimbursable revenue from franchised and managed properties

(175,967)

(144,463)

(682,612)

(528,843)

      Extraordinary termination fees from franchisee

(22,647)

Revenues, excluding reimbursable revenue from franchised and managed

properties and extraordinary termination fees from franchisee

$        186,015

$        140,175

$        696,690

$        540,455

ADJUSTED SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

(dollar amounts in thousands)

Three Months Ended December 31,

Year Ended December 31,

2022

2021

2022

2021

Total Selling, General and Administrative Expenses

$          62,861

$          45,776

$        207,275

$        145,623

Mark to market adjustments on non-qualified retirement plan investments

(2,050)

(2,153)

5,929

(5,555)

Operational restructuring charges

(1,298)

(89)

(6,714)

(813)

Share-based compensation

(6,268)

(3,028)

(19,137)

(11,427)

Due diligence and transition costs

(9,306)

(32,863)

Exceptional allowances attributable to COVID-19

1,241

(2,080)

1,241

(5,167)

Expenses associated with legal claims

(3,000)

Adjusted Selling, General and Administrative Expenses

$          45,180

$          38,426

$        155,731

$        119,661

ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (“EBITDA”) AND ADJUSTED EBITDA MARGINS

(dollar amounts in thousands)

Three Months Ended December 31,

Year Ended December 31,

2022

2021

2022

2021

Net income

$          55,513

$          64,083

$        332,152

$        288,957

Income tax expense

14,656

20,256

104,654

87,535

Interest expense

11,713

11,574

43,797

46,680

Interest income

(2,032)

(1,264)

(7,288)

(4,981)

Other (gain) loss

(2,560)

(2,228)

7,018

(5,134)

Equity in operating net (gain) loss of affiliates, net of impairments

(637)

(140)

(1,916)

3,408

Loss (gain) on sale of affiliates, business & assets, and impairments, net

623

14,793

(16,065)

12,737

Depreciation and amortization

9,989

6,296

30,425

24,773

Mark to market adjustments on non-qualified retirement plan investments

2,050

2,153

(5,929)

5,555

Operational restructuring charges

1,298

89

6,714

813

Share-based compensation

6,268

3,028

19,137

11,427

Due diligence and transition costs

9,306

32,863

Exceptional allowances attributable to COVID-19

(1,241)

2,080

(1,241)

5,167

Expenses associated with legal claims

3,000

Extraordinary termination fees from franchisee

(22,647)

Net reimbursable deficit (surplus) from franchised and managed properties

5,181

(27,191)

(52,102)

(83,897)

Franchise agreement acquisition costs amortization

2,375

1,983

8,995

7,517

Adjusted EBITDA

$        112,502

$          95,512

$        478,567

$        403,557

Revenues, excluding reimbursable revenue from franchised and managed

properties and extraordinary termination fees from franchisee

$        186,015

$        140,175

$        696,690

$        540,455

Adjusted EBITDA margins

60.5 %

68.1 %

68.7 %

74.7 %

ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS)

(dollar amounts in thousands, except per share amounts)

Three Months Ended December 31,

Year Ended December 31,

2022

2021

2022

2021

Net income

$          55,513

$          64,083

$        332,152

$        288,957

Adjustments:

Loss (gain) on sale of affiliates, business & assets, and impairments, net

474

11,065

(12,208)

9,642

Operational restructuring charges

986

65

5,103

582

Due diligence and transition costs

7,073

24,976

Exceptional allowances attributable to COVID-19

(943)

1,556

(943)

3,911

Expenses associated with legal claims

2,271

Extraordinary termination fees from franchisee

(17,212)

Net reimbursable deficit (surplus) from franchised and managed properties

4,088

(20,602)

(39,233)

(64,337)

Adjusted Net Income

$          67,191

$          56,167

$        292,635

$        241,026

Diluted Earnings Per Share

$              1.04

$              1.14

$              5.99

$              5.15

Adjustments:

Loss (gain) on sale of affiliates, business & assets, and impairments, net

0.01

0.19

(0.22)

0.17

Operational restructuring charges

0.02

0.09

0.01

Due diligence and transition costs

0.13

0.45

Exceptional allowances attributable to COVID-19

(0.02)

0.03

(0.02)

0.07

Expenses associated with legal claims

0.04

Extraordinary termination fees from franchisee

(0.31)

Net reimbursable deficit (surplus) from franchised and managed properties

0.08

(0.37)

(0.71)

(1.15)

Adjusted Diluted Earnings Per Share (EPS)

$              1.26

$              0.99

$              5.27

$              4.29

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