MIAMI–(BUSINESS WIRE)–Nov. 4, 2013– Interval Leisure Group (Nasdaq: IILG) (“ILG”) today announced results for the three months ended September 30, 2013.
THIRD QUARTER 2013 HIGHLIGHTS
- ILG consolidated revenue increased year-over-year by 1.7%
- ILG consolidated adjusted EBITDA improved year-over-year by 8.4%
- The Company generated third quarter diluted earnings per share of $0.29
- Interval International added 26 new resort affiliations during the quarter
- Management fee and rental revenue improved by 7.2%
- ILG free cash flow of $80 million year to date, an increase of 48.9%
“The third quarter results demonstrate our commitment to growing organically while Interval Leisure Group continues strategic efforts to broaden its fee-for-service offerings in the non-traditional leisure market,” said Craig M. Nash, Chairman, President and Chief Executive Officer of Interval Leisure Group. “Adjusted EBITDA growth of 8.4% and strong free cash flow reflect execution across our businesses while we continue to pursue additional opportunities.”
Financial Summary & Operating Metrics (USD in millions except per share amounts)
|Three Months EndedSeptember 30,||Quarter
|Membership and Exchange revenue||86.6||86.1||0.6%|
|Management and Rental revenue||32.5||31.1||4.6%|
|Net income attributable to common stockholders||17.1||0.1||NM|
|Non-GAAP net income*||17.1||11.0||54.9%|
|Non-GAAP diluted EPS*||$0.29||$0.19||52.6%|
|BALANCE SHEET DATA||September 30, 2013||December 31, 2012|
|Cash and cash equivalents||103.6||101.2|
|Nine Months EndedSeptember 30,||Year
|CASH FLOW DATA||2013||2012||Change|
|Net cash provided by operating activities||89.3||64.1||39.3%|
|Free cash flow*||80.0||53.7||48.9%|
* “Non-GAAP net income”, “Non-GAAP diluted EPS”, “Adjusted 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 2013 Consolidated Operating Results
Consolidated revenue for the third quarter ended September 30, 2013 was $119.2 million, an increase of 1.7% from $117.2 million for the third quarter of 2012. The increase was largely driven by our Management and Rental segment, reflecting higher fee income earned from managed hotel and condominium resort properties during the period.
Net income for the three months ended September 30, 2013 was $17.1 million, versus non-GAAP net income (defined below) for the three months ended September 30, 2012 of $11.0 million, an increase of $6.1 million.
The year-over-year increase in net income was driven by higher operating income of $5.8 million, primarily attributable to$4.7 million of lower amortization of intangibles expense coupled with stronger gross profit contribution from both of our operating segments, in addition to a reduction in interest expense of $5.2 million. Accordingly, income tax expense in the quarter increased by $5.3 million over the prior year, when adjusted to exclude the income tax benefit associated with our third quarter 2012 loss on extinguishment of debt. Diluted earnings per share were $0.29 in the third quarter of 2013 compared to non-GAAP diluted earnings per share (defined below) of $0.19 for the same period of 2012.
Adjusted EBITDA (defined below) was $40.9 million for the quarter ended September 30, 2013, compared to adjusted EBITDA of $37.7 million for the same period of 2012.
Business Segment Results
Membership and Exchange
Membership and Exchange segment revenue for the three months ended September 30, 2013 was $86.6 million, comparable to $86.1 million for the same period in 2012.
For the third quarter of 2013, transaction and membership fee revenue (defined below) were $46.0 million and $32.3 million, respectively, decreases of 1.2% and 0.7% over the same period in 2012.
Total active members at September 30, 2013 were 1.82 million, approximately 2.2% less than the number of total active members at September 30, 2012. Average revenue per member for the third quarter of 2013 was $44.06, an increase of 1.2% from the third quarter of 2012. During the third quarter of 2013, Interval International affiliated 26 new vacation ownership resorts located in 10 countries.
Membership and Exchange segment adjusted EBITDA was $35.3 million in the third quarter, an increase of 4.9% from the segment’s adjusted EBITDA of $33.6 million in 2012. The improvement in this segment’s adjusted EBITDA was primarily driven by an increase in transaction activity and other membership programs outside of the Interval Network, together with lower general and administrative expense during the quarter after adjusting for acquisition related and restructuring costs (defined below).
Management and Rental
Management and Rental segment revenue for the three months ended September 30, 2013 was $32.5 million, which includes $16.2 million of management fee and rental revenue (defined below). Year-over-year, management fee and rental revenue grew by 7.2%, primarily driven by an increase in revenue per available room (RevPAR) at Aston. Aston RevPAR for the quarter ended September 30, 2013 was $145.53, increasing 8.2% from $134.45 for the same period in 2012. The growth in RevPAR resulted from a 9.9% higher average daily rate (ADR) which was partly offset by a 1.5% drop in occupancy rates during the quarter compared to the prior year.
In the third quarter of 2013, Management and Rental segment adjusted EBITDA was $5.6 million, compared to $4.1 million in the prior year period.
CAPITAL RESOURCES AND LIQUIDITY
As of September 30, 2013, ILG had $103.6 million of cash and cash equivalents, including $94.9 million of U.S. dollar equivalent or denominated cash deposits held by foreign subsidiaries which are subject to changes in foreign exchange rates. Of this amount, $61.8 million is held in foreign jurisdictions, principally the U.K.
Debt outstanding as of September 30, 2013 was $190 million. As of this date, ILG had $310 million available on its revolving credit facility, which may be increased by an additional $200 million, subject to specified conditions.
For the first nine months of 2013, ILG’s capital expenditures totaled $9.3 million, or 2.5% of revenue, net cash provided by operating activities was $89.3 million and free cash flow (defined below) was $80 million, an increase of 48.9% from the same period of 2012. This improvement in free cash flow was driven by lower interest paid in 2013 compared to 2012.
The Board of Directors of Interval Leisure Group declared a quarterly dividend payment of $0.11 per share to shareholders of record on September 4, 2013. On September 18, 2013, a cash dividend of $6.3 million was paid. Additionally, the board of directors has declared a fourth quarter dividend of $0.11 per share which is scheduled to be paid on December 18, 2013 to shareholders of record on December 4, 2013.
PRESENTATION OF FINANCIAL INFORMATION
ILG management believes that the presentation of non-generally accepted accounting principles (non-GAAP) financial measures, including, among others, EBITDA, adjusted EBITDA, non-GAAP net income, non-GAAP basic and diluted EPS 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, adjusted 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 Time to discuss its results for the third quarter 2013, with access via the Internet and telephone. Investors and analysts may participate in the live conference call by dialing (866) 318-8616 (toll-free domestic) or (617) 399-5135 (international); participant pass code: 45720818. 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 website at www.iilg.com. A replay of the call will be available for fourteen days via telephone starting approximately two hours after the call ends. The replay can be accessed at (888) 286-8010 (toll-free domestic) or (617) 801-6888 (international); pass code: 81170777. The webcast will be archived on Interval Leisure Group’s website for 90 days after the call. A transcript of the call will also be available on the website.
ABOUT INTERVAL LEISURE GROUP
Interval Leisure Group (ILG) is a leading global provider of membership and leisure services to the vacation industry. Headquartered in Miami, Florida, ILG has approximately 4,000 employees worldwide. The company’s Membership and Exchange segment offers leisure and travel-related products and services to about 2 million member families who are enrolled in various programs. Interval International, the segment’s principal business, has been a leader in vacation ownership exchange since 1976. With offices in 16 countries, it operates the Interval Network of more than 2,800 resorts in over 75 nations. ILG delivers additional opportunities for vacation ownership exchange through its Trading Places International (TPI) and Preferred Residences networks. ILG’s Management and Rental segment includes Aston Hotels & Resorts, VRI Europe (VRIE), Vacation Resorts International (VRI), and TPI. These businesses provide hotel, condominium resort, timeshare resort, and homeowners’ association management, as well as rental services, to travelers and owners at more than 200 vacation properties, resorts and club locations throughout North America and Europe. 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 of developers; consolidation of developers; decreased demand from prospective purchasers of vacation interests; travel related health concerns; changes in our senior management; regulatory changes; our ability to compete effectively and successfully add new products and services; our ability to successfully manage and integrate acquisitions; impairment of assets; the restrictive covenants in our revolving credit facility; adverse events or trends in key vacation destinations; business interruptions in connection with the rearchitecture of our technology systems; ability of managed homeowners associations to collect sufficient maintenance fees; third parties not repaying advances or extensions of credit; 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
Interval Leisure Group
Jennifer Klein, 305-925-7302
Christine Boesch, 305-925-7267