Wyndham Worldwide Reports Second Quarter 2013 Earnings
Second Quarter Adjusted EPS Up 13% Year-Over-Year
Share Repurchase Authorization Increased
Raised Full Year EPS Guidance
Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months ended June 30, 2013.
• Second quarter diluted earnings per share (EPS) was $0.98 on both a reported and adjusted basis, an increase of 13% from adjusted diluted EPS of $0.87 in the second quarter of 2012. Reported diluted EPS was $0.88 in the second quarter of 2012.
• Revenues increased 10% from the prior-year period.
• Free cash flow increased 15% for the six months ended June 30, 2013, compared with the same period in 2012. Net cash provided by operating activities increased 17% over the same period.
• During the quarter, the Company repurchased 2.9 million shares of its common stock for $175 million.
• The Company announced today that its Board of Directors approved a $750 million increase in the share repurchase authorization, bringing the remaining available authorization to $874 million.
• On July 23, 2013, the Company completed a term securitization transaction involving the issuance of $325 million of asset-backed notes with a 2.68% weighted average coupon and a 98% advance rate.
“We once again delivered strong results this quarter, reflecting great operating momentum and disciplined capital allocation,” said Stephen P. Holmes, chairman and CEO. “This winning combination, along with continued innovation and a commitment to customer service, has enabled us to achieve outstanding results for our shareholders during our seven years as a public company, which is an anniversary we mark next week. The decision by our Board of Directors to increase our share repurchase authorization is evidence of our confidence that this powerful formula will continue to deliver and create value.”
SECOND QUARTER 2013 OPERATING RESULTS
Second quarter revenues were $1.3 billion, an increase of 10% from the prior year period. The increase reflects strong growth across all of the Company’s business segments.
Second quarter net income was $133 million, or $0.98 per diluted share, compared with $128 million, or $0.87 per adjusted diluted share for the same period in 2012. Reported diluted EPS was $0.88 in the second quarter of 2012. The increase in net income reflects stronger operating results in all of the Company’s segments. EPS also benefited from the Company’s share repurchase program.
Free cash flow was $654 million for the six months ended June 30, 2013, compared with $569 million for the same period in 2012, a 15% increase. The growth of free cash flow largely reflects favorable working capital timing. The Company defines free cash flow as net cash provided by operating activities less capital expenditures. For the six months ended June 30, 2013, net cash provided by operating activities was $758 million, compared with $647 million in the prior year period.
BUSINESS UNIT RESULTS
Lodging (Wyndham Hotel Group)
Revenues were $262 million in the second quarter of 2013, a 12% increase over the second quarter of 2012. The increase reflects higher hotel management reimbursable fees and revenues associated with the Company’s owned hotels.
Domestic RevPAR increased 5.3% compared with the second quarter of 2012. Total system-wide RevPAR increased 2.1%, reflecting proportionally higher growth of lower RevPAR hotels in China.
Adjusted EBITDA for the second quarter of 2013 was $78 million, a 5% increase compared with the second quarter of 2012. The increase was primarily due to higher royalties and ancillary fees.
As of June 30, 2013, the Company’s hotel system consisted of approximately 7,410 properties and over 635,100 rooms, a 4.4% room increase compared with the second quarter of 2012. The development pipeline included over 940 hotels and approximately 112,000 rooms, of which 57% were international and 62% were new construction.
Vacation Exchange and Rentals (Wyndham Exchange & Rentals)
Revenues were $376 million in the second quarter of 2013, an 8% increase over the second quarter of 2012. In constant currency and excluding the impact of acquisitions, revenues increased 4%.
Exchange revenues were $168 million, an increase of 4% compared with the second quarter of 2012. Exchange revenue per member increased 3.0%, while the average number of members remained flat.
Vacation rental revenues were $192 million, a 13% increase compared with the second quarter of 2012. Excluding acquisitions, vacation rental revenues were up 5%, reflecting a 4.0% increase in the average net price per vacation rental and a 1.2% increase in transaction volume.
EBITDA for the second quarter of 2013 was $85 million, a 4% increase over the second quarter of 2012.
Vacation Ownership (Wyndham Vacation Ownership)
Revenues were $630 million in the second quarter of 2013, an 11% increase over the second quarter of 2012, primarily reflecting higher gross VOI sales and the acquisition of Shell Vacations Club.
Gross VOI sales were $481 million in the second quarter of 2013, an increase of 5% over the second quarter of 2012, primarily reflecting a 10.8% increase in tour flow offset by a 4.4% decrease in volume per guest. Excluding Shell Vacations Club, volume per guest decreased 2.7%.
EBITDA for the second quarter of 2013 was $161 million, a 7% increase compared with the second quarter of 2012. The increase was primarily due to higher gross VOI sales, a lower loan loss provision and lower operating costs.
• The Company repurchased 2.9 million shares of common stock for $175 million during the second quarter of 2013. From July 1 through July 23, 2013, the Company repurchased an additional 1.2 million shares for $68 million. The Company’s new share repurchase authorization totals $874 million.
• Net interest expense in the second quarter of 2013 was $32 million, compared with $30 million in the second quarter of 2012, due to higher debt levels.
• On July 23, 2013, the Company completed a term securitization transaction involving the issuance of $325 million of asset-backed notes. Sierra Timeshare 2013-2 Receivables Funding LLC issued $226 million of A rated notes, $62 million of BBB rated notes and $37 million of BB rated notes. The notes had a 2.68% weighted average coupon and a 98% advance rate.
Balance Sheet Information as of June 30, 2013:
• Cash and cash equivalents of $342 million, compared with $195 million at December 31, 2012
• Vacation ownership contract receivables, net, of $2.8 billion, compared with $2.9 billion at December 31, 2012
• Vacation ownership and other inventory of $1.0 billion, compared with $1.1 billion at December 31, 2012
• Securitized vacation ownership debt of $1.9 billion, compared with $2.0 billion at December 31, 2012
• Long-term debt of $2.9 billion, compared with $2.6 billion at December 31, 2012. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.3 billion as of June 30, 2013, compared with $0.6 billion as of December 31, 2012
A schedule of debt is included in Table 5 of this press release.
Note to Editors: The guidance excludes possible future share repurchases, while analysts’ estimates often include share repurchases. This results in discrepancies between Company guidance and database consensus forecasts.
For the full year 2013, the Company expects:
• Revenues of approximately $4.925 - $5.100 billion
• Adjusted EBITDA of approximately $1.140 - $1.165 billion
• Adjusted EPS of approximately $3.66 - $3.76 based on a diluted share count of 136 million, from $3.60 - $3.70 based on a diluted share count of 138 million
The guidance reflects assumptions used for internal planning purposes. Guidance may exclude non-recurring or special items, which may have a positive or negative impact on reported results. If economic conditions change materially from current levels, the Company’s assumptions and guidance may change materially.
Conference Call Information
Wyndham Worldwide Corporation will hold a conference call with investors to discuss this news on Wednesday, July 24, 2013 at 8:30 a.m. EDT. Listeners may access the webcast live through the Company’s website at www.wyndhamworldwide.com/investors/. An archive of this webcast will be available at the website for approximately 90 days beginning at noon EDT on July 24, 2013. The conference call may also be accessed by dialing 800-369-2125 and providing the passcode “WYNDHAM.” Listeners are urged to call at least 10 minutes prior to the scheduled start time. A telephone replay will be available for approximately 90 days beginning at noon EDT on July 24, 2013, at 866-430-8799.
Presentation of Financial Information
Financial information discussed in this press release includes non-GAAP measures, which include or exclude certain items. These non-GAAP measures differ from reported GAAP results and are intended to illustrate what management believes are relevant period-over-period comparisons and are helpful to investors as an additional tool for further understanding and assessing the Company’s ongoing core operating performance. Exclusion of items in our non-GAAP presentation should not be considered an inference that these items are unusual, infrequent or non-recurring. A complete reconciliation of reported GAAP results to the comparable non-GAAP information appears in the financial tables section of the press release. It is not practicable to provide a reconciliation of forecasted adjusted EBITDA and adjusted EPS to the most directly comparable GAAP measure because certain items cannot be reasonably estimated or predicted at this time. Any such items could be significant to the Company’s reported results.
About Wyndham Worldwide Corporation
One of the world’s largest hospitality companies, Wyndham Worldwide (NYSE: WYN) provides a wide range of hospitality products and services through its global portfolio of world-renowned brands. The world’s largest hotel company based on the number of properties, Wyndham Hotel Group is home to many of the world’s best-known hotel brands, with over 7,410 franchised hotels and over 635,100 hotel rooms worldwide. Wyndham Exchange & Rentals is the worldwide leader in vacation exchange and the world’s largest professionally managed vacation rentals business, providing more than 5 million leisure-bound families annually with access to over 106,000 vacation properties in 100 countries through its prominent exchange and vacation rental brands. The industry and timeshare ownership market leader, Wyndham Vacation Ownership develops, markets, and sells vacation ownership interests and provides consumer financing to owners through its network of 190 vacation ownership resorts serving approximately 915,000 owners throughout the United States, Canada, Mexico, the Caribbean, and the South Pacific. Based in Parsippany, NJ, Wyndham Worldwide employs approximately 32,500 associates globally. For more information, please visit www.wyndhamworldwide.com.
This press release contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, conveying management’s expectations as to the future based on plans, estimates and projections at the time the Company makes the statements. 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 by such forward-looking statements. The forward-looking statements contained in this press release include statements related to the Company’s revenues, earnings and related financial and operating measures.
You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Factors that could cause actual results to differ materially from those in the forward-looking statements include general economic conditions, the performance of the financial and credit markets, the economic environment for the hospitality industry, the impact of war, terrorist activity or political strife, operating risks associated with the hotel, vacation exchange and rentals and vacation ownership businesses, as well as those described in the Company’s Annual Report on Form 10-K, filed with the SEC on February 15, 2013. Except for the Company’s ongoing obligations to disclose material information under the federal securities laws, it undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.
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