MIAMI, FL (Nov 08, 2010) — Interval Leisure Group (IILG) (“ILG”) has announced results for the three months ended September 30, 2010.
THIRD QUARTER 2010 HIGHLIGHTS
- ILG generated diluted earnings per share of $0.16, a 14.3% increase from 3Q 2009.
- Year over year, third quarter 2010 consolidated revenue increased 2.8%; Consolidated EBITDA increased by 4.9%.
- The Interval segment delivered revenue of $83.6 million; Average revenue per member increased 4.5% from the same period in 2009.
- Aston reported improved results in management fee revenue, RevPAR, ADR and occupancy.
- Free cash flow was $58.8 million for the first nine months of 2010.
“Interval Leisure Group reported a resoundingly positive quarter with revenue and EBITDA growth coming from both segments. Interval International continued to add new resort affiliations and renew our existing contracts. Additionally, we greatly expanded our relationships with Spinnaker Resorts and Grand Crowne Resorts, both multi-site vacation ownership developers. Once again, average revenue per member and transaction fee revenue increased from last year,” said Craig M. Nash, Chairman, President and Chief Executive Officer of Interval Leisure Group. “Aston is turning around. Management fees improved by nearly 16% from a year ago as we are seeing a positive contribution from the mainland and a more favorable Hawaiian market. ILG consolidated EBITDA growth for the quarter reflects these top-line improvements and continued cost control in both operating segments.”
* “EBITDA” and “Free cash flow” are non-GAAP measures as defined by the Securities and Exchange Commission (the “SEC”). Please see “Presentation of Financial Information,” “Glossary of Terms” and “Reconciliations of Non-GAAP Measures” below for an explanation of non-GAAP measures used throughout this release.
Discussion of Results
Third Quarter 2010 Consolidated Operating Results
Consolidated revenue for the third quarter ended September 30, 2010 was $100.5 million, compared to $97.8 million for the third quarter of 2009. Consolidated revenue was comprised of 83% and 17% from Interval and Aston, respectively.
Net income attributable to common stockholders for the three months ended September 30, 2010 was $9.3 million, an increase of 14.2% from $8.1 million for the same period of 2009. Diluted earnings per share were $0.16 compared to $0.14 for the same period of 2009.
EBITDA was $36.6 million for the quarter ended September 30, 2010, compared to EBITDA of $34.9 million for the same period of 2009, representing an increase of 4.9%.
Business Segment Results
Interval’s revenue for the three months ended September 30, 2010 was $83.6 million, increasing 0.4% over the comparable period in 2009. Third quarter of 2010 membership fee revenue was $32.4 million, a decrease of 2.0% and transaction revenue was $45.1 million, an increase of 3.6% when compared to the same period of 2009. Total active members at September 30, 2010 were approximately 1.8 million, a decrease of 2.8% over total active members at September 30, 2009, reflecting stable retention at approximately 88% and the entry of fewer new members from developer point of sale during the 12 month period.
Average revenue per member for the third quarter of 2010 increased 4.5% to $44.02 from the third quarter of 2009. The increase in average revenue per member was largely attributable to an increase in transaction revenue from both exchange and getaway related revenue.
Interval’s EBITDA was $34.6 million in the third quarter representing an increase of 2.1% over the segment’s EBITDA of $33.8 million in the third quarter of 2009. This increase was due primarily to a $1.0 million increase in gross profit and a decrease of $0.2 million in selling and marketing expenses, offset by an increase of $0.4 million in general and administrative expenses, in each case excluding non-cash compensation expense. The increase in general and administrative expenses was in part due to an unfavorable variance of $0.7 million in operating currency impact resulting from foreign currency remeasurements of operating assets and liabilities primarily related to our Euro-denominated Value Added Tax liabilities.
Interval segment revenue and EBITDA in constant currency for the third quarter of 2010 were essentially unaffected by foreign currency translations.
Aston’s revenue for the three months ended September 30, 2010 was $16.8 million, an increase of 16.4% from the comparable period of 2009. Management fee revenue for the third quarter of 2010 was $6.1 million, an increase of 15.9% from the third quarter of 2009. Aston revenue for the third quarter included $10.8 million of pass-through revenue.
The increase in Aston management fee revenue was primarily driven by an increase in revenue per available room (“RevPAR”) and positive contributions from the mainland during the quarter. RevPAR for the quarter ended September 30, 2010 was $99.74 compared to $89.37 for the same period in 2009, an increase of 11.6%, resulting from both a higher average daily rate and improved occupancy rates. For Aston’s managed properties in Hawaii, RevPAR for the third quarter of 2010 increased 12.8% from the comparable period of 2009 to $100.77, primarily due to an increase in occupancy partly related to a decrease in available room nights, and an increase of 3.2% in average daily rate.
Aston reported EBITDA of $2.0 million in the third quarter of 2010, an increase of 98.4% from EBITDA of $1.0 million in the prior year period.
Capital Resources and Liquidity
As of September 30, 2010, ILG’s cash and cash equivalents totaled $189.1 million, compared to $160.0 million as of December 31, 2009. The Company’s total debt outstanding, which was incurred in connection with the spin-off from IAC, was $367.0 million, net of unamortized bond discount, as of September 30, 2010. During the third quarter, the Company made a $10 million voluntary prepayment of principal on its term loan.
For the first nine months of 2010, ILG’s capital expenditures totaled $12.9 million, or 4.1% of revenue, net cash provided by operating activities was $71.7 million and free cash flow (defined below) was $58.8 million. Total interest paid, net of amounts capitalized, during the nine-month period was $30.3 million.
Presentation of Financial Information
ILG management believes that the presentation of non-generally accepted accounting principles (non-GAAP) financial measures, including, among others, EBITDA and free cash flow, serves to enhance the understanding of ILG’s performance. These non-GAAP financial measures should be considered in addition to and not as substitutes for, or superior to, measures of financial performance prepared in accordance with generally accepted accounting principles (GAAP). In addition, EBITDA (with certain additional add-backs) is used to calculate compliance with certain financial covenants in ILG’s credit agreement. Management believes that these non-GAAP measures improve the transparency of our disclosures, provide meaningful presentations of our results from our business operations excluding the impact of certain items not related to our core business operations and improve the period to period comparability of results from business operations. These measures may also be useful in comparing our results to those of other companies, however, our calculations may differ from the calculations of these measures used by other companies. More information about the non-GAAP financial measures, including reconciliations of GAAP results to the non-GAAP measures, is available in the financial tables that accompany this press release.
ILG will host a conference call today at 4:30 p.m. Eastern Daylight Time to discuss its results for the third quarter 2010, with access via the Internet and telephone. Investors and analysts may participate in the live conference call by dialing (866) 322-1501 (toll-free domestic) or (706) 679-2585 (international); conference ID: 17834706 or password: Interval. Please register at least 10 minutes before the conference call begins. A live webcast of the conference call will be available on the Investor Relations section of ILG’s Web site at www.iilg.com. The replay can be accessed at (800) 642-1687 (toll-free domestic) or (706) 645-9291 (international); conference ID: 17834706. The webcast will be archived on ILG’s Web site for 90 days after the call.
About Interval Leisure Group
Interval Leisure Group (ILG) is a leading global provider of membership and leisure services to the vacation industry.
Its principal business segment, Interval, has been serving the vacation ownership market for more than 34 years. Interval operates mainly through Interval International, a membership-based organization that offers a comprehensive array of year-round benefits, including the opportunity to exchange the use of shared ownership vacation time. Today, Interval’s primary vacation network comprises more than 2,500 resorts in over 75 nations. Through offices in 14 countries, Interval offers high-quality products and benefits to resort clients and approximately 2 million families who are enrolled in various membership programs.
ILG’s other business segment is Aston which traces its roots in lodging back 60 years. Through a portfolio of approximately 4,700 units, Aston Hotels & Resorts and Maui Condo and Home provide hotel and resort management and vacation rental services to vacationers and property owners primarily in the Hawaiian Islands.
ILG is headquartered in Miami, Florida, and has more than 2,500 employees worldwide.
More information about the Company is available at www.iilg.com.
This press release contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, relating to: our future financial performance, our business prospects and strategy, anticipated financial position, liquidity and capital needs and other similar matters. These forward-looking statements are based on management’s current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict.
Actual results could differ materially from those contained in the forward-looking statements included herein for a variety of reasons, including, among others: adverse trends in economic conditions generally or in the vacation ownership, vacation rental and travel industries; adverse changes to, or interruptions in, relationships with third parties; lack of available financing for, or insolvency or consolidation of developers; decreased demand from prospective purchasers of vacation interests; travel related health concerns, such as pandemics; changes in our senior management; regulatory changes; our ability to compete effectively; the effects of our significant indebtedness and our compliance with the terms thereof; adverse events or trends in key vacation destinations; business interruptions in connection with the rearchitecture of our technology systems and our ability to expand successfully in international markets and manage risks specific to international operations. Certain of these and other risks and uncertainties are discussed in our filings with the SEC. Other unknown or unpredictable factors that could also adversely affect our business, financial condition and results of operations may arise from time to time. In light of these risks and uncertainties, the forward-looking statements discussed in this release may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of our management as of the date of this press release. Except as required by applicable law, ILG does not undertake to update these forward-looking statements.
SOURCE: Interval Leisure Group