Results Exceed Expectations
PARSIPPANY, NJ (April 28, 2011) — Wyndham Worldwide Corporation (NYSE:WYN) has announced results for the three months ended March 31, 2011.
- First quarter 2011 adjusted diluted earnings per share (EPS) was $0.44, compared with $0.34 in the first quarter of 2010, an increase of 29%. First quarter 2011 reported diluted EPS was $0.41, an increase of 52%, compared with the same period in 2010.
- Free cash flow increased 11% to $185 million for the quarter ended March 31, 2011, compared with $166 million during the same period in 2010. The Company defines free cash flow as net cash provided by operating activities less capital expenditures, equity investments and development advances.
- Year-to-date, the Company repurchased approximately 8.2 million shares of its common stock at an average price of $31.01 for approximately $255 million.
- The Company announced today that its Board of Directors approved a $500 million increase to the share repurchase authorization.
- The Company is increasing its full-year adjusted EPS guidance from a range of $2.05 – $2.15 to a range of $2.15 – $2.25 based on a diluted share count of 173 million.
“We are pleased to report that 2011 started as 2010 ended, with strong operating performance and accelerating earnings per share growth,” said Stephen P. Holmes, chairman and CEO, Wyndham Worldwide. “We delivered strong operating performance across all our businesses and are confident in the sustainability of our growth and cash flow. Our confidence in growth and cash flow generation is reflected in our substantial share repurchase activity so far this year, the significant increase in our share repurchase program, as well as the previously announced 25% increase in our dividend for 2011.”
FIRST QUARTER 2011 OPERATING RESULTS
First quarter revenues increased 7.4% from the prior year period to $952 million. The revenue growth reflects continued sales momentum across the Company’s three business units and incremental contributions from acquisitions.
For the first quarter of 2011, adjusted net income increased by 23% to $79 million, or $0.44 per diluted share compared with $64 million, or $0.34 per diluted share for the same period in 2010. The increase reflects strong operational performance by the Company’s three business units. Adjusted net income for the first quarter of 2011 excludes a $7 million after-tax charge related to the repurchase of a portion of the Company’s convertible notes and an $8 million after-tax non-cash impairment charge related to a write-down of an international joint venture in the Company’s hotel business. These were partially offset by an $8 million after-tax benefit related to the resolution of certain contingent liabilities and assets.
First quarter 2011 reported net income grew 44% to $72 million, or $0.41 per diluted share, compared with net income of $50 million, or $0.27 per diluted share, for the first quarter of 2010.
Free cash flow increased 11% to $185 million for the quarter ended March 31, 2011, compared with $166 million during the same period in 2010. The growth in free cash flow reflects higher cash earnings and more efficient working capital utilization. For the quarter ended March 31, 2011, cash provided by operating activities was $229 million, compared with $205 million in the prior year period.
BUSINESS UNIT RESULTS
Lodging (Wyndham Hotel Group)
Revenues were $149 million in the first quarter of 2011, an increase of 3%, compared with the first quarter of 2010, reflecting a RevPAR increase of 7.4%, or 6.4% in constant currency, and incremental revenues related to the TRYP hotel brand.
First quarter 2011 adjusted EBITDA was $40 million, an increase of 21%, compared with the first quarter of 2010, primarily as a result of the RevPAR improvement and lower costs. Adjusted EBITDA excludes a $13 million impairment charge related to the write-down of an investment in an international joint venture in the Company’s hotel business.
As of March 31, 2011, the Company’s hotel system consisted of approximately 7,190 properties and 609,600 rooms. The development pipeline included approximately 830 hotels and over 102,000 rooms, of which 57% were new construction and 57% were international.
Vacation Exchange and Rentals (Wyndham Exchange & Rentals)
Revenues were $356 million in the first quarter of 2011, an increase of 19% compared with the first quarter of 2010, reflecting overall strength in vacation rentals and incremental revenues from acquisitions.
Exchange revenues were $194 million, an increase of 3%, compared with the first quarter of 2010. In constant currency, exchange revenues increased 2%, reflecting a modest increase in both exchange revenue per member and the average number of members.
Vacation rental revenues were $150 million, which included $25 million of incremental revenues related to acquisitions, compared with $105 million in the first quarter of 2010. Excluding the impact of the incremental revenues from acquisitions, net revenues generated from rental transactions and related services increased 19%, reflecting strong performance in the German rental market.
Excluding $4 million of acquisition costs in the first quarter of 2010, first quarter of 2011 EBITDA increased 11% compared with adjusted EBITDA of $84 million in the prior-year period, reflecting increases in vacation rental volume and average net price per rental.
Vacation Ownership (Wyndham Vacation Ownership)
Gross Vacation Ownership Interest (VOI) sales were $319 million in the first quarter of 2011, up 4% from the first quarter of 2010, reflecting an 11% increase in tour flow, partially offset by a 6% decrease in volume per guest. The changes in tour flow and volume per guest reflect the Company’s focus on increasing sales to new owners.
Total segment revenues were $450 million in the first quarter of 2011, compared with $444 million in the first quarter of 2010, reflecting incremental commission revenues under the Wyndham Asset Affiliation Model (WAAM) and a lower provision for loan losses.
Adjusted EBITDA for the first quarter of 2011 increased 17% to $96 million, compared with EBITDA of $82 million in the first quarter of 2010. This EBITDA increase reflected growth in the property management business and the lower provision for loan losses. Results were also impacted by lower sales commission expenses and the absence of a litigation charge in the first quarter 2011 that was incurred in the first quarter 2010.
- The Company repurchased approximately 5.7 million shares of its common stock during the first quarter of 2011 at an average price of $30.62 and an additional 2.5 million shares at an average price of $31.84 through April 26, 2011.
- During the first quarter of 2011, the Company repurchased approximately 85% of its outstanding convertible notes, principally resulting from the completion of a cash tender offer.
- Net interest expense in the first quarter of 2011 was $42 million. Net interest includes $12 million of costs associated with the repurchase of a portion of the Company’s convertible notes, which is excluded from adjusted net income.
Balance Sheet Information as of March 31, 2011:
- Cash and cash equivalents of approximately $175 million, compared with approximately $155 million from December 31, 2010.
- Vacation ownership contract receivables, net, of $2.9 billion, compared with $3.0 billion at December 31, 2010.
- Vacation ownership and other inventory of approximately $1.2 billion, unchanged from December 31, 2010.
- Securitized vacation ownership debt of $1.8 billion, compared with $1.7 billion at December 31, 2010.
- Other debt of $2.0 billion, compared with $2.1 billion at December 31, 2010. The remaining borrowing capacity on the revolving credit facility was $962 million, compared with $788 million as of December 31, 2010.
- A schedule of debt is included in the financial tables section of this press release.
The Company is increasing full-year 2011 adjusted EPS guidance from $2.05 – $2.15 to $2.15 – $2.25, based on a diluted share count of 173 million.
The Company reiterates full-year 2011 guidance:
- Revenues of approximately $4.0 – $4.2 billion
- Adjusted EBITDA of approximately $925 – $955 million
The guidance reflects assumptions used for internal planning purposes. All guidance excludes legacy items, restructuring costs, debt extinguishment, asset impairments, 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. It is not practicable to provide a reconciliation of forecasted adjusted EBITDA to the most directly comparable GAAP measure because certain items cannot be reasonably estimated or predicted at this time. Any such items could be significant to our financial results.
Conference Call Information
Wyndham Worldwide Corporation will hold a conference call with investors to discuss this news on Wednesday, April 27, 2011 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 27, 2011. The conference call may also be accessed by dialing (800) 369-2052 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 April 27, 2011, at (866) 509-3896.
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 services and products across various accommodation alternatives and price ranges through its premier portfolio of world-renowned brands. Wyndham Worldwide encompasses approximately 7,360 franchised hotels and vacation ownership resorts with approximately 630,300 rooms worldwide. Wyndham Exchange & Rentals offers leisure travelers, including its 3.8 million members, access to approximately 97,000 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 vacation ownership resorts serving nearly 815,000 owners throughout North America, the Caribbean and the South Pacific. Wyndham Worldwide, headquartered in Parsippany, N.J., employs approximately 26,000 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, 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 22, 2011. 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.
SOURCE: Wyndham Worldwide Corporation