MIAMI, FL (March 3, 2014) — Interval Leisure Group (Nasdaq: IILG) (“ILG”) has announced results for the three months and full year ended December 31, 2013.
FOURTH QUARTER AND FULL YEAR 2013 HIGHLIGHTS
- ILG consolidated fourth quarter revenue increased by 10.3% from the same period last year, while full year revenue increased by 5.9%.
- The Company generated fourth quarter diluted earnings per share of $0.32, up 18.5% from the prior year period. Full year diluted earnings per share were $1.40.
- Consolidated adjusted EBITDA for 2013 rose by 5.8% year-over-year, driven by a 34.2% full year increase in Management and Rental segment adjusted EBITDA.
- During 2013, ILG paid $18.9 million in shareholder dividends.
- Free cash flow was $95.2 million for 2013, an increase of $29.8 million from 2012.
“ILG drove growth in revenue and EPS in 2013 as we began to see the benefits of our strategy to broaden the Company’s role in the global non-traditional hospitality market. Additionally, adjusted EBITDA increased by 5.8% for the full year and we generated a 45.5% increase in free cash flow while making significant investments to further our long-term goals,” saidCraig M. Nash, Chairman, President and Chief Executive Officer of Interval Leisure Group. “The continued diversification of our business is being executed on and creating meaningful shareholder value.”
Financial Summary & Operating Metrics (USD in millions except per share amounts)
|Membership and Exchange revenue||80.8||81.0||(0.3)%||365.0||357.7||2.0%|
|Management and Rental revenue||41.4||29.7||39.3%||136.2||115.6||17.8%|
|Net income attributable to common stockholders||18.5||15.3||21.4%||81.2||40.7||99.5%|
|Non-GAAP net income*||18.5||15.3||21.4%||79.1||52.0||52.2%|
|Non-GAAP diluted EPS*||$0.32||$0.27||18.5%||$1.37||$0.91||50.5%|
|BALANCE SHEET DATA||December 31, 2013||December 31, 2012|
|Cash and cash equivalents||48.5||101.2|
|CASH FLOW DATA||2013||2012||Change|
|Net cash provided by operating activities||109.9||80.4||36.6%|
|Free cash flow*||95.2||65.4||45.5%|
* “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
Fourth Quarter 2013 Consolidated Operating Results
Consolidated revenue for the quarter ended December 31, 2013 was $122.2 million, an increase of 10.3% compared to the fourth quarter of 2012.
Net income attributable to common stockholders for the three months ended December 31, 2013 was $18.5 million, an increase of $3.3 million from $15.3 million for the same period of 2012. Net income growth for the 2013 period reflects a one-time income tax benefit of $3.5 million in the fourth quarter of 2013 related to a favorable regulatory ruling. Additionally, this ruling reduced current year state income taxes and will continue to positively impact our effective tax rate going forward. Diluted earnings per share (EPS) were $0.32 compared to diluted EPS of $0.27 for the same period of 2012.
Adjusted EBITDA (defined below) for the quarter ended December 31, 2013 of $34.8 million includes the results of our VRI Europe and Aqua Resorts businesses acquired in the fourth quarter and compares to $34.1 million for the same period of 2012.
Full Year 2013 Consolidated Operating Results
Consolidated revenue for the year ended December 31, 2013 was $501.2 million, an increase of 5.9% from $473.3 millionfor 2012. The increase was largely driven by incremental revenue contribution from our Management and Rental segment, primarily from the inclusion of acquired companies.
Net income attributable to common stockholders for the year ended December 31, 2013 was $81.2 million or $1.40 of diluted EPS, compared to $40.7 million or $0.71 for the same period of 2012. Full year 2013 non-GAAP net income (defined below) of $79.1 million increased $27.1 million, or 52.2%, over non-GAAP net income for the comparable 2012 period which excludes the impact of an $18.5 million non-cash, pre-tax loss associated with the early extinguishment of debt. This year-over-year increase was primarily attributable to a $19.5 million reduction in interest expense and $14.9 million of lower amortization of intangibles expense.
Adjusted EBITDA was $166.2 million for the year ended December 31, 2013, compared to $157.1 million in 2012.
Business Segment Results
Membership and Exchange
Membership and Exchange segment revenue for the three months and year ended December 31, 2013, was $80.8 millionand $365.0 million, respectively. For the full year 2013, Interval Network membership fee and transaction revenue were$135.2 million and $198.9 million, respectively, representing increases of 3.4% and 0.3%, respectively, over the prior year. Average revenue per member in 2013 increased 2.6% to $187.13, year-over-year, while fourth quarter average revenue per member was up 0.8% from the prior year to $41.65.
At December 31, 2013, the Membership and Exchange segment had approximately two million members enrolled in its various membership programs. The Interval Network had approximately 1.82 million active members, consistent with the prior year.
Membership and Exchange adjusted EBITDA was $29.7 million and $146.9 million in the fourth quarter and full year 2013, respectively, representing a decrease of 3.5% and an increase of 3.0% from the segment’s adjusted EBITDA of $30.8 million and $142.7 million in the fourth quarter and full year 2012, respectively. The improvement in full year segment adjusted EBITDA is primarily driven by revenue growth largely attributable to the positive contributions from our Platinum and Club Interval products and higher transaction revenue and other membership programs outside of the Interval Network. Additionally, segment adjusted EBITDA in the period benefitted from lower compensation and employee-related costs within general and administrative expense.
Throughout 2013, Interval affiliated 106 vacation ownership resorts in domestic and international markets. In 2013, approximately 80% of all new affiliations were located in non-US locations. Membership mix as of December 31, 2013included 60% traditional and 40% corporate members, compared to 62% and 38%, respectively, as of December 31, 2012.
Management and Rental
Management and Rental segment revenue for the three months and year ended December 31, 2013, was $41.4 million and$136.2 million, respectively, including $23.7 million and $71.6 million of management fee and rental revenue (defined below).
Year-over-year, management fee and rental revenue grew by 72.2% for the fourth quarter and 30.2% for the year endedDecember 31, 2013. The improvement was primarily driven by the incremental revenue contribution from our acquired businesses. For the year ended December 31, 2013, revenue per available room (“RevPAR”) (defined below) was$138.90, an increase of 6.6% over RevPAR of $130.28 in 2012. The increase in full year RevPAR was driven primarily by a higher average daily rate. For the quarter ended December 31, 2013, RevPAR was $119.48 compared to RevPAR of$125.58 for the same period in 2012. The drop in RevPAR in the quarter reflects a decrease in occupancy rate on a year-over-year basis and the inclusion of Aqua. Excluding Aqua, RevPAR for the fourth quarter and full year 2013 was $122.10and $140.55, respectively.
Management and Rental segment adjusted EBITDA was $5.1 million in the fourth quarter of 2013, an increase of 53.8% from the prior year period. Management and Rental segment adjusted EBITDA for the full year 2013 was $19.3 million, an increase of 34.2% from adjusted EBITDA of $14.4 million for the same period in 2012.
CAPITAL RESOURCES AND LIQUIDITY
As of December 31, 2013, ILG’s cash and cash equivalents totaled $48.5 million, compared to $101.2 million as ofDecember 31, 2012. As of December 31, 2013, the Company’s total debt outstanding was $253 million, compared to $260 million as of December 31, 2012. ILG had $247 million available on its revolving credit facility as of December 31, 2013, which may be increased by an additional $200 million, subject to specified conditions.
For the year ended December 31, 2013, ILG’s net cash provided by operating activities was $109.9 million and free cash flow was $95.2 million, an increase over the comparable prior year of $80.4 million and $65.4 million, respectively. The change was primarily due to lower interest paid of $26 million together with higher net cash receipts, partially offset by an increase of $17.1 million in income tax payments as a result of higher taxable income in the period. Lower interest paid in 2013 is primarily due to lower average balance outstanding and interest rate under our revolving credit facility compared to the term loan and senior notes which were extinguished during 2012.
Net cash used in investing activities of $134 million in 2013 primarily related to business acquisitions, net of cash acquired, of $127.3 million, as well as capital expenditures of $14.7 million primarily related to IT initiatives. These cash outflows were partially offset by the early repayment of a loan receivable totaling $9.9 million.
Net cash used in financing activities was $27.5 million for the year ended December 31, 2013. This compares to $131.8 million net cash used in financing activities for 2012 principally resulting from the refinancing of our indebtedness.
For the full year 2013, ILG paid $18.9 million, or thirty-three cents per share in dividends, compared to $28.4 million in the prior year. The decline in annual dividends paid in 2013 reflects an accelerated dividend payment of $0.10 per share paid in the fourth quarter of 2012 that otherwise would have been paid in the first quarter of 2013.
In February 2014, our Board of Directors declared a $0.11 per share dividend payable March 27, 2014 to shareholders of record on March 13, 2014.
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 Daylight Time to discuss its results for the fourth quarter and full year 2013, with access via the Internet and telephone. Investors and analysts may participate in the live conference call by dialing (866) 318-8617 (toll-free domestic) or (617) 399-5136 (international); participant pass code: 24620032. Please register at least 10 minutes before the conference call begins. 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: 58296288. 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 following the call.
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 5,000 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 nearly 2,900 resorts in over 80 nations. ILG delivers additional opportunities for vacation ownership exchange through its Trading Places International (TPI) network. ILG’s Management and Rental segment includes Aston Hotels & Resorts, Aqua Hospitality, 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 250 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.
PRESS RELEASE SOURCE: Interval Leisure Group