Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months ended June 30, 2012.
Highlights:
- Second quarter adjusted diluted earnings per share (EPS) was $0.87, compared with $0.64 in the second quarter of 2011, an increase of 36%. Second quarter 2012 reported diluted EPS was $0.88, an increase of 31% from the same period in 2011.
- Second quarter Adjusted EBITDA increased 10% to $281 million.
- During the quarter, the Company repurchased 3.8 million shares of its common stock for $190 million at an average price of $49.35.
- The Company announced on July 19, 2012 that it completed a term securitization transaction involving the issuance of $300 million of investment-grade asset-backed notes at an advance rate of 90% and an overall weighted average coupon of 2.66%.
- Raises full year Adjusted EPS Guidance to $3.10 – $3.20 from $3.00 – $3.15
?In the first half of 2012 we achieved back-to-back 36% increases in quarterly adjusted EPS growth in an economic environment that remains uncertain,? said Stephen P. Holmes, chairman and CEO, Wyndham Worldwide. ?Underlying this growth is strong execution from each of our businesses and diversified product offerings well positioned to capitalize on consumers? desire to travel. In addition, we benefited from capital allocation that included the return of capital to shareholders.?
SECOND QUARTER 2012 OPERATING RESULTS Second quarter revenues were $1.1 billion, an increase of 4% from the prior year period. The increase reflected growth in our Lodging and Vacation Ownership businesses partially offset by unfavorable currency movements in our Vacation Exchange and Rentals business.
For the second quarter of 2012, adjusted net income was $128 million, or $0.87 per diluted share, compared with $108 million, or $0.64 per diluted share for the same period in 2011. The increase in adjusted net income primarily reflected stronger operating results in our Lodging and Vacation Ownership businesses. The increase in EPS also benefited from our share repurchase program, which decreased our weighted average share count by 14%.
Reported net income for the second quarter of 2012 was $128 million, or $0.88 per diluted share, compared with net income of $114 million, or $0.67 per diluted share, for the second quarter of 2011. The second quarter of 2011 included a refund of value added taxes, restructuring costs and legacy adjustments costs.
Free cash flow was $567 million for the six months ended June 30, 2012, compared to $595 million for the same period in 2011. Excluding a $51 million refund of value added taxes received in the first half of 2011, free cash flow increased by 4%. The Company defines free cash flow as net cash provided by operating activities less capital expenditures, equity investments and development advances. For the six months ended June 30, 2012, cash provided by operating activities was $647 million, compared with $696 million in the prior year period, which included the refund of value added taxes.
BUSINESS UNIT RESULTS
Lodging (Wyndham Hotel Group) Revenues were $233 million in the second quarter of 2012, an increase of 23%, compared with the second quarter of 2011. The increase reflected domestic RevPAR gains of 8%, as part of a total system RevPAR increase of 5%, revenues associated with the Wyndham Grand hotel in Orlando, which opened at the beginning of the fourth quarter of 2011, and higher intersegment licensing fees for use of the Wyndham brand trade name. The revenue increase also included a combined $21 million of reclassifications and incremental global conference fees, both of which were fully offset in expenses.
Adjusted EBITDA was $74 million, an increase of 12% compared with the second quarter of 2011, largely a result of the revenue increases, partially offset by the operating costs associated with the Wyndham Grand hotel in Orlando and higher marketing costs.
As of June 30, 2012, the Company?s hotel system consisted of over 7,170 properties and approximately 608,300 rooms. The development pipeline included approximately 900 hotels and 113,900 rooms, of which 53% were new construction and 53% were international.
Vacation Exchange and Rentals (Wyndham Exchange & Rentals) Revenues were $348 million in the second quarter of 2012, compared to $361 million in the second quarter of 2011. In constant currency and excluding the impact of acquisitions, revenues were flat.
Exchange revenues were $162 million, a decrease of 4% compared with the second quarter of 2011. In constant currency, exchange revenues were flat, as a 2% increase in exchange revenue per member was offset by a 2% decline in the average number of members due to the non-renewal of an affiliation agreement in the beginning of 2012.
Vacation rental revenues were $170 million, a 6% decrease compared with the second quarter of 2011. Excluding the impact of foreign currency and acquisitions, vacation rental revenues were flat, reflecting a 4% increase in the average net price per vacation rental offset by a 3% decrease in transaction volume.
Adjusted EBITDA for the second quarter of 2012 was $82 million, flat compared with the prior-year period.
Vacation Ownership (Wyndham Vacation Ownership) Revenues were $570 million in the second quarter of 2012, a 5% increase over the second quarter of 2011, primarily reflecting increased vacation ownership interest (VOI) sales.
Gross VOI sales were $460 million in the second quarter of 2012, up 12% from the second quarter of 2011, primarily reflecting a 6% increase in volume per guest and a 5% increase in tour flow.
Adjusted EBITDA for the second quarter of 2012 was $150 million, a 15% increase compared with the second quarter of 2011, primarily reflecting contributions from increased VOI sales.
Other Items
- The Company repurchased 3.8 million shares of common stock for $190 million during the second quarter of 2012 at an average price of $49.35. From July 1 through July 24, 2012, the Company repurchased an additional 1.1 million shares for $58 million at an average price of $50.77. The Company has $733 million remaining on its current share repurchase authorization.
- Net interest expense in the second quarter of 2012 was $30 million, compared to $34 million in the second quarter of 2011. The decline was primarily due to the absence of an accrual for interest on value added taxes in the second quarter of 2011 and a lower average cost of funds resulting from our debt tender and issuance activity during the first quarter of 2012.
Balance Sheet Information as of June 30, 2012:
- Cash and cash equivalents of approximately $285 million, compared with $142 million at December 31, 2011
- Vacation ownership contract receivables, net, of $2.8 billion, unchanged from December 31, 2011
- Vacation ownership and other inventory of approximately $1.1 billion, unchanged from December 31, 2011
- Securitized vacation ownership debt of $1.9 billion, unchanged from December 31, 2011
- Long-term debt of $2.3 billion, compared with $2.2 billion at December 31, 2011. The remaining borrowing capacity on the revolving credit facility was $908 million, compared with $771 million as of December 31, 2011
A schedule of debt is included in Table 5 of this press release.
Outlook
For the full year 2012, the Company:
- Reiterates Revenues of approximately $4.425 ? $4.6 billion
- Updates Adjusted EBITDA guidance to $1.040 ? $1.055 billion from $1.030 – $1.055 billion
- Raises Adjusted EPS Guidance to $3.10 – $3.20 from $3.00 – $3.15
- Reduces diluted shares to 147 million from 149 million
The guidance reflects assumptions used for internal planning purposes. Guidance may exclude non-recurring or special items, 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.
Conference Call Information Wyndham Worldwide Corporation will hold a conference call with investors to discuss this news on Wednesday, July 25, 2012 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 July 25, 2012. 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 July 25, 2012, at (800) 551-8154.
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. 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 EPS 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 reported results.
Source: Wyndham Worldwide?