PARSIPPANY, N.J. (October 27, 2014) — Wyndham Worldwide Corporation (NYSE:WYN) has announced results for the three months ended September 30, 2014.
THIRD QUARTER HIGHLIGHTS:
• Adjusted diluted earnings per share (EPS) was $1.67, an increase of 18% from adjusted diluted EPS of $1.41 in the third quarter of 2013. Reported diluted EPS was $1.64, compared with $1.40 in the third quarter of 2013.
• Revenues increased 6% compared with the third quarter of 2013.
• Adjusted EBITDA increased 11% compared with the third quarter of 2013.
• The Company repurchased 2.0 million shares of its common stock for $161 million during the quarter.
• The Company announced today that its Board of Directors approved a $1 billion increase in the share repurchase authorization.
“We delivered strong results in the third quarter, with 11% growth in adjusted EBITDA and 18% growth in adjusted EPS,” said Stephen P. Holmes, chairman and chief executive officer. “Domestic RevPAR growth once again exceeded 8%, our vacation rentals business had a robust summer and our vacation ownership business significantly increased sales to new owners while continuing to benefit from improved lending practices. Based on our confidence in the prospects of our business, the Board of Directors approved a one billion dollar increase in our share repurchase authorization.”
THIRD QUARTER 2014 OPERATING RESULTS
Third quarter revenues were $1.5 billion, an increase of 6% from the prior year period. The increase reflects growth in all of the Company’s business segments.
Adjusted net income was $210 million, or $1.67 per diluted share, compared with $187 million, or $1.41 per diluted share for the same period in 2013. The performance reflects solid operating results across all of the Company’s businesses. EPS growth also benefited from the Company’s share repurchase activity.
Reported net income for the third quarter of 2014 was $206 million, or $1.64 per diluted share, compared with $187 million, or $1.40 per diluted share, for the third quarter of 2013. Reported net income included items excluded from adjusted net income. The net result of these items unfavorably impacted third quarter 2014 net income by $4 million. Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.
Free cash flow was $750 million for the nine months ended September 30, 2014, compared with $705 million for the same period in 2013. The growth of free cash flow largely reflects the favorable timing of working capital. The Company defines free cash flow as net cash provided by operating activities less capital expenditures. For the nine months ended September 30, 2014, net cash provided by operating activities was $899 million, compared with $858 million in the prior year period.
BUSINESS UNIT RESULTS
Lodging (Wyndham Hotel Group)
Revenues were $315 million in the third quarter of 2014, a 6% increase over the third quarter of 2013. The increase predominantly reflects higher RevPAR and increased ancillary fees related to our co-branded credit card program. The increase was partially offset by the absence of $11 million of fees from a global franchisee conference held in the third quarter of 2013, which were fully offset in expenses.
Domestic RevPAR increased 8.4%, partially offset by a 3.5% decline in international RevPAR, resulting in a 4.6% increase in total system-wide RevPAR compared with the third quarter of 2013. International RevPAR declined due to growth in lower RevPAR countries and unfavorable currency effects.
Adjusted EBITDA for the third quarter of 2014 was $107 million, a 13% increase compared with the third quarter of 2013, primarily reflecting the revenue increases.
As of September 30, 2014, the Company’s hotel system consisted of approximately 7,590 properties and 655,300 rooms, a 2.7% room increase compared with the third quarter of 2013. The development pipeline included over 960 hotels and over 116,000 rooms, of which 57% were international and 66% were new construction
Vacation Exchange and Rentals (Wyndham Exchange & Rentals)
Revenues were $512 million in the third quarter of 2014, a 9% increase over the third quarter of 2013. In constant currency and excluding the impact of acquisitions, revenues were up 6%.
Exchange revenues were $162 million, up 3% compared with the third quarter of 2013, as the average number of members increased 1.8% and exchange revenue per member increased 1.1%.
Vacation rental revenues were $331 million, a 13% increase over the third quarter of 2013. Excluding the impact of foreign currency and acquisitions, vacation rental revenues were up 8%, reflecting a 3.8% increase in the average net price per vacation rental and a 3.6% increase in transaction volume.
EBITDA for the third quarter of 2014 was $159 million, a 13% increase compared with the third quarter of 2013. Excluding the impact of acquisitions and the net effect of foreign currency, EBITDA increased 6% compared with the prior year period.
Vacation Ownership (Wyndham Vacation Ownership)
Revenues were $704 million in the third quarter of 2014, a 4% increase over the third quarter of 2013, primarily reflecting 8% higher net VOI revenues, which benefited from a lower loan loss provision. Revenues also increased due to higher resort management fees.
Gross VOI sales were $513 million in the third quarter of 2014, a decrease of 4% compared with the third quarter of 2013, reflecting a 5.3% decrease in volume per guest. VPG declined primarily due to an increase in the percentage of new owner tours, which generally have a lower VPG than tours to existing owners. Total tour flow was flat compared with the third quarter of 2013.
EBITDA for the third quarter of 2014 was $188 million, a 7% increase compared with the third quarter of 2013, primarily reflecting the net revenue increases.
• The Company repurchased 2.0 million shares of common stock for $161 million during the third quarter of 2014. From October 1 through October 23, 2014, the Company repurchased an additional 0.6 million shares for $50 million. The Company’s remaining share repurchase authorization, including the $1 billion authorization increase, totals $1.1 billion as of October 23, 2014.
• Reported net interest expense in the third quarter of 2014 was $26 million, compared with $29 million in the third quarter of 2013, reflecting lower rates associated with fixed-for-floating interest rate swaps and an increase in capitalized interest.
BALANCE SHEET INFORMATION AS OF SEPTEMBER 30, 2014:
• Cash and cash equivalents of $252 million, compared with $194 million at December 31, 2013
• Vacation ownership contract receivables, net, of $2.7 billion, compared with $2.8 billion at December 31, 2013
• Vacation ownership and other inventory of $1.0 billion, unchanged from December 31, 2013
• Securitized vacation ownership debt of $1.9 billion, unchanged from December 31, 2013
• Long-term debt of $2.9 billion, unchanged from December 31, 2013. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.2 billion as of September 30, 2014, compared with $1.3 billion as of December 31, 2013
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 2014, the Company provides the following guidance:
• Revenues of approximately $5.250 – $5.350 billion (unchanged)
• Adjusted EBITDA of approximately $1.230 – $1.245 billion (unchanged)
• Adjusted EPS of approximately $4.45 – $4.48 based on a diluted share count of 127 million up from $4.34 – $4.44 based on a diluted share count of 128 million
The Company’s preliminary guidance for the full-year 2015 is as follows:
• Revenues of approximately $5.400 – $5.500 billion
• EBITDA of approximately $1.300 – $1.330 billion
• EPS of approximately $4.70 – $4.85 based on a diluted share count of 125 million. EPS guidance assumes a higher year-over-year tax rate and higher depreciation and amortization.
CONFERENCE CALL INFORMATION
Wyndham Worldwide Corporation will hold a conference call with investors to discuss the Company’s results, outlook and guidance on Friday, October 24, 2014 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 on the website for approximately 90 days beginning at noon EDT on October 24, 2014. 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 October 24, 2014, at 800-841-4360.
The Company will post guidance information on its website following the conference call.
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 measures 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 services and products 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 approximately 7,600 franchised hotels and over 655,000 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 107,000 vacation properties in over 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 over 200 vacation ownership resorts serving approximately 907,000 owners throughout the United States, Canada, Mexico, the Caribbean, and the South Pacific. Based in Parsippany, NJ, Wyndham Worldwide employs approximately 32,800 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 14, 2014. 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
Vice President, Investor Relations
Wyndham Worldwide Corporation