PARSIPPANY, N.J. (April 29, 2010) — Wyndham Worldwide Corporation (NYSE:WYN) yesterday announced results for the three months ended March 31, 2010.
FIRST QUARTER HIGHLIGHTS:
- Adjusted first quarter 2010 diluted earnings per share (EPS) was $0.34, compared with Company-issued guidance of $0.27 – $0.32.
- Reported first quarter 2010 diluted EPS was $0.27, compared with $0.25 in the first quarter of 2009.
- Free cash flow, which the Company defines as net cash from operations less capital expenditures, equity investments and development advances, increased 7% to $166 million in the first quarter of 2010, compared with $155 million during the same period in 2009.
- For the quarter, the Company repurchased approximately 757,000 shares of its common stock at an average price of $24.20. The repurchase program was reactivated on February 19, 2010.
- As previously announced, the Company tripled its quarterly dividend, paying its first dividend at the $0.12 per share level on March 15, 2010.
“Each of our three business units met or exceeded expectations in the first quarter, delivering terrific results while continuing to generate strong free cash flow. We are seeing great momentum at Wyndham Hotels and Resorts, with our flagship brand gaining significant market presence this year. Wyndham Exchange & Rentals continues to deliver stable, fee-for-service results from two fantastic business models, and Wyndham Vacation Ownership is performing better than ever, reflecting transformational changes implemented over the past 18 months,” said Stephen P. Holmes, chairman and CEO, Wyndham Worldwide. “We are sharply focused to execute on our growth opportunities, not only as the economy recovers, but well into the future.”
FIRST QUARTER 2010 OPERATING RESULTS
First quarter revenues of $886 million declined 2% from the prior-year period, due to the fact that first quarter 2009 revenues included a $67 million benefit from the recognition of revenues previously deferred under the percentage-of-completion (POC) accounting method associated with the Company’s Vacation Ownership business. Excluding the effects of the POC method of accounting and favorable foreign currency of $12 million, adjusted revenue grew by 5%. The Company has decided to alter its business approach so that POC deferred revenue is eliminated going forward.
Reported net income for the first quarter of 2010 grew 11% to $50 million, or $0.27 per diluted share, compared with net income of $45 million, or $0.25 per diluted share, for the first quarter of 2009.
Adjusted net income for the first quarter of 2010 was $64 million, or $0.34 per diluted share, compared with $74 million, or $0.41 per diluted share, in the first quarter of 2009. The 2010 results reflect the absence of deferred revenues from the POC method of accounting included in 2009 and higher interest expense.
Excluded from the first quarter of 2010 adjusted net income are after-tax costs of $10 million associated with the early extinguishment of debt, $3 million of expenses related to the acquisition of Hoseasons Holdings Ltd. and $1 million of legacy expenses. Excluded from the first quarter of 2009 adjusted net income are after-tax costs of $27 million related to restructuring and $2 million of legacy expenses.
BUSINESS UNIT RESULTS
Lodging (Wyndham Hotel Group)
Revenues were $144 million in the first quarter of 2010, a decline of 6% compared with the first quarter of 2009, primarily reflecting a decline in RevPAR of 6.8% or 8.7% in constant currency.
First quarter 2010 EBITDA was $33 million compared with $38 million of adjusted EBITDA in the first quarter of 2009, which excluded $3 million of restructuring costs. The decrease reflects the decline in RevPAR, which was partially offset by expense reductions.
As of March 31, 2010, the Company’s hotel system consisted of approximately 7,090 properties and 593,300 rooms, of which 22% were international. The development pipeline included approximately 910 hotels and 106,500 rooms, of which 53% were new construction and 45% were international.
Vacation Exchange and Rentals (Wyndham Exchange & Rentals)
Revenues were $300 million in the first quarter of 2010, a 5% increase compared with the first quarter of 2009. In constant currency, revenues were flat.
Exchange revenues were $189 million, a 2% increase compared with the first quarter of 2009. In constant currency, exchange revenues were flat compared with the first quarter of 2009, reflecting relatively flat performance in exchange revenue per member and average number of members.
Vacation rental revenues were $105 million, a 9% increase compared with the first quarter of 2009. In constant currency, vacation rental revenues increased 2% compared with the first quarter of 2009, reflecting the acquisition of UK rental brand Hoseasons, which closed in March.
First quarter 2010 Exchange and Rentals adjusted EBITDA was $84 million, which excluded $4 million of costs related to the Hoseasons acquisition, compared with $80 million in the first quarter of 2009, which excluded $4 million of restructuring costs. Excluding a favorable net effect of foreign currency of $2 million, first quarter 2010 adjusted EBITDA increased 3% compared with the first quarter of 2009.
Vacation Ownership (Wyndham Vacation Ownership)
Gross Vacation Ownership Interest (VOI) sales were $308 million in the first quarter of 2010, up 10% from the first quarter of 2009, reflecting an increase of 25% in volume per guest, partially offset by a 10% decrease in tour flow consistent with the Company’s planned restructuring of the business.
Total segment revenues were $444 million in the first quarter of 2010 compared with $462 million in the first quarter of 2009, which included the recognition of $67 million of previously deferred POC revenues. This unfavorable impact was partially offset by the increase in gross VOI sales and a reduction in the provision for loan losses of $21 million, primarily related to improved credit metrics of the portfolio.
EBITDA for the first quarter of 2010 was $82 million, compared with adjusted EBITDA of $79 million in the first quarter of 2009, which excluded $35 million of restructuring costs. Excluding an estimated $31 million impact from the POC method of accounting in the first quarter of 2009, first quarter 2010 adjusted EBITDA increased 71%, reflecting the increase in gross VOI sales and the lower provision for loan losses.
- The Company repurchased approximately 757,000 shares of stock during the first quarter of 2010 at an average price of $24.20 and an additional 474,000 shares at an average price of $26.53 through April 27, 2010.
- Interest expense in the first quarter of 2010 was $50 million, an increase of $31 million from the first quarter of 2009, reflecting a $16 million charge primarily related to the early extinguishment of the Company’s term loan facility in March 2010 and higher interest expense related to long-term debt issuances in May 2009 and February 2010.
- On March 29, 2010, the Company closed on a new $950 million revolving credit facility, which matures October 1, 2013.
Balance Sheet Information as of March 31, 2010:
- Cash and cash equivalents of approximately $165 million, compared with $155 million at December 31, 2009
- Vacation ownership contract receivables, net, of $3.0 billion, compared with $3.1 billion at December 31, 2009
- Vacation ownership and other inventory of approximately $1.3 billion, unchanged from December 31, 2009
- Securitized vacation ownership debt of $1.5 billion, unchanged from December 31, 2009
- Other debt of $2.1 billion, compared with $2.0 billion at December 31, 2009, reflecting an increase in fair value of the conversion feature related to the Company’s convertible notes. The remaining borrowing capacity on the revolving credit facility was $721 million, compared with $869 million as of December 31, 2009.
A schedule of debt is included in the financial tables section of this press release.
The Company increased full-year 2010 guidance:
- Revenues increased to $3.6 – $3.9 billion from $3.5 – $3.9 billion
- Adjusted EBITDA increased to $805 – $840 million from $775 – $825 million
- Adjusted diluted EPS increased to $1.56 – $1.71 from $1.48 – $1.69
For the second quarter of 2010, the Company expects adjusted diluted EPS of $0.38 – $0.42 based on weighted average shares of 189 million.
The guidance reflects assumptions used for internal planning purposes. All guidance excludes legacy items, restructuring costs, debt extinguishment and acquisition costs, if any, which may have a positive or negative impact on reported results. If economic conditions change materially from current levels, these assumptions and our guidance may change materially.
Conference Call Information
Wyndham Worldwide Corporation held a conference call with investors to discuss this news on Wednesday, April 28, 2010 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 April 28, 2010. A telephone replay will be available for approximately 90 days beginning at noon EDT on April 28, 2010, at (888) -566-0509.
Presentation of Financial Information
Financial information discussed in this press release includes both GAAP and non-GAAP measures, which include or exclude certain items. These non-GAAP measures differ from reported results and are intended to illustrate what management believes are relevant period-over-period comparisons. A complete reconciliation of reported GAAP results to the comparable non-GAAP information appears in the financial tables section of the press release.
About Wyndham Worldwide Corporation
As one of the world’s largest hospitality companies, Wyndham Worldwide offers individual consumers and business-to-business customers a broad suite of hospitality products and services across various accommodation alternatives and price ranges through its premier portfolio of world-renowned brands. Wyndham Hotel Group encompasses approximately 7,090 franchised hotels and approximately 593,300 hotel rooms worldwide. Wyndham Exchange & Rentals offers leisure travelers, including its 3.8 million members, access to over 65,000 vacation properties located in approximately 100 countries. Wyndham Vacation Ownership develops, markets and sells vacation ownership interests and provides consumer financing to owners through its network of over 155 vacation ownership resorts serving over 820,000 owners throughout North America, the Caribbean and the South Pacific. Wyndham Worldwide, headquartered in Parsippany, N.J., employs approximately 25,000 employees globally.
For more information about Wyndham Worldwide, please visit the Company’s website at 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 and terrorist activity, 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 19, 2010. 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.
Investor and Media contact:
Margo C. Happer
Senior Vice President, Investor Relations
Wyndham Worldwide Corporation
SOURCE: Wyndhame Worldwide Corporation