Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months ended June 30, 2011.
Highlights:
- Second quarter 2011 adjusted diluted earnings per share (EPS) was $0.64, compared with $0.51 in the second quarter of 2010, an increase of 25%. Second quarter 2011 reported diluted EPS was $0.67, an increase of 31%, compared with the same period in 2010.
- Free cash flow increased 22% to $595 million for the first half, compared with $486 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.
- During the quarter, the Company repurchased approximately 6.2 million shares of its common stock at an average price of $32.50 for $200 million.
- The Company is increasing its full-year adjusted EPS guidance from a range of $2.15 – $2.25 to a range of $2.32 – $2.40 based on a diluted share count of 171 million.
"Wyndham Worldwide once again delivered strong results across all three of our businesses, which are each well-positioned to deliver profit growth in the future," said Stephen P. Holmes, chairman and CEO, Wyndham Worldwide. "In addition, we continue to generate significant and growing levels of sustainable free cash flow that we are deploying to drive shareholder value."
SECOND QUARTER 2011 OPERATING RESULTS
Second quarter revenues increased 13% from the prior year period to $1.1 billion. The revenue growth reflects strong RevPAR growth of 9.7% in our hotel business, contributions from acquisitions of vacation rental businesses and higher sales in the vacation ownership business.
For the second quarter of 2011, adjusted net income increased to $108 million, compared with $95 million in the second quarter of 2010. On a per share basis, adjusted net income grew 25% to $0.64 per diluted share, compared with the same period in 2010. The increase reflects strong operational performance by the Company's three business units and the significant benefit from the Company's share repurchase program, partially offset by higher tax rates compared with the second quarter of 2010. Adjusted net income for the second quarter of 2011 excludes an after-tax net benefit of $13 million related to a refund of value added taxes. This was partially offset by $5 million of after-tax costs related to a previously announced restructuring of call centers at the Company's vacation exchange and rentals business and a $2 million after-tax expense related to the resolution of certain contingent liabilities and assets.
Including the above adjustments, second quarter 2011 net income grew 20% to $114 million, or $0.67 per diluted share, compared with net income of $95 million, or $0.51 per diluted share, for the second quarter of 2010.
Free cash flow increased 22% to $595 million for the first half, compared with $486 million during the same period in 2010. The growth in free cash flow reflects higher cash earnings, more efficient working capital utilization and a refund of value added taxes. For the first half, cash provided by operating activities was $696 million, compared with $557 million in the prior year period.
BUSINESS UNIT RESULTS
Lodging (Wyndham Hotel Group)
Revenues were $190 million in the second quarter of 2011, an increase of 7%, compared with the second quarter of 2010, reflecting a RevPAR increase and incremental revenues related to the acquisition of the TRYP hotel brand in June of 2010.
In the second quarter of 2011 system-wide RevPAR increased 9.7%. Excluding the impact of the TRYP by Wyndham hotel brand and in constant currency, the increase was 5.8%.
Second quarter 2011 EBITDA was $66 million, an increase of 32%, compared with second quarter 2010 adjusted EBITDA, primarily as a result of the RevPAR improvement and lower bad debt expense.
As of June 30, 2011, the Company's hotel system consisted of approximately 7,220 properties and 612,900 rooms. The development pipeline included over 840 hotels and approximately 111,000 rooms, of which 58% were new construction. International rooms accounted for 64% of the development pipeline.
Vacation Exchange and Rentals (Wyndham Exchange & Rentals)
Revenues were $361 million in the second quarter of 2011, an increase of 28% compared with the second quarter of 2010, reflecting incremental revenues from acquisitions and the favorable impact from foreign currency.
Exchange revenues were $168 million, an increase of 4%, compared with the second quarter of 2010. In constant currency, exchange revenues increased 2%, reflecting a 1% increase in exchange revenue per member. The average number of members remained relatively flat.
Vacation rental revenues were $180 million, which included $46 million of incremental revenues related to acquisitions, compared with $115 million in the second quarter of 2010. In constant currency, excluding the impact of the incremental revenues from acquisitions, net revenues generated from rental transactions and related services increased 3%, reflecting a 5% increase in the average net price per vacation rental, partially offset by a 1% decline in rental transaction volume.
Adjusted EBITDA for the second quarter of 2011 was $82 million, a 5% increase compared with $78 million in the prior year period. The increase reflects incremental contributions from acquisitions. Second quarter 2011 adjusted EBITDA excludes a net benefit of $31 million related to a refund of value added taxes and $7 million of costs related to a previously announced restructuring initiative.
Vacation Ownership (Wyndham Vacation Ownership)
Gross Vacation Ownership Interest (VOI) sales were $412 million in the second quarter of 2011, up 11% from the second quarter of 2010, reflecting a 9% increase in tour flow and a 3% increase in volume per guest.
Total segment revenues were $541 million in the second quarter of 2011, compared with $505 million in the second quarter of 2010, reflecting the increase in gross VOI sales and a lower provision for loan losses.
EBITDA for the second quarter of 2011 increased 25% to $130 million, compared with EBITDA of $104 million in the second quarter of 2010. This EBITDA increase reflects the increase in VOI sales and the lower provision for loan losses.
Other Items
* The Company repurchased approximately 6.2 million shares of its common stock during the second quarter of 2011 at an average price of $32.50 and an additional 1.5 million shares at an average price of $34.11 through July 26, 2011.
* Net interest expense in the second quarter of 2011 was $35 million. Net interest includes $3 million of expenses related to value added tax accruals and $1 million of costs associated with the early repurchase of a portion of the Company's convertible notes, which are excluded from adjusted net income.
* The Company previously announced the closing of a new $1 billion revolving credit facility with a maturity date of July 15, 2016 to replace its existing $980 million facility, which had been scheduled to mature in October 2013. There is no change to the Company's overall corporate debt balance as a result of this transaction.
Balance Sheet Information as of June 30, 2011:
* Cash and cash equivalents of approximately $295 million, compared with approximately $155 million at 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 $1.1 billion, compared with $1.2 billion at December 31, 2010.
* Securitized vacation ownership debt of $1.7 billion, unchanged from 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 $860 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.
Outlook
The Company is increasing full-year 2011 adjusted EPS guidance from $2.15 – $2.25 to $2.32 – $2.40, based on a diluted share count of 171 million.
The Company is increasing full-year 2011 guidance:
* Revenues from approximately $4.0 – $4.2 billion to approximately $4.2 – $4.3 billion
* Adjusted EBITDA from approximately $925 – $955 million to approximately $960 – $975 million
The guidance reflects assumptions used for internal planning purposes. Guidance may exclude legacy items, restructuring costs, debt extinguishment, asset impairments, value added tax refunds 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 and 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 our financial results.
Conference Call Information
Wyndham Worldwide Corporation will hold a conference call with investors to discuss this news on Wednesday, July 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 July 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 July 27, 2011, at (866) 443-1216.
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 7,380 franchised hotels and vacation ownership resorts with approximately 633,700 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.
Forward-Looking Statements
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 Quarterly Report on Form 10-Q, filed with the SEC on April 29, 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.
Investor and Media contact:
Margo C. Happer
Senior Vice President, Investor Relations
Wyndham Worldwide Corporation
(973) 753-6472
margo.happer@wyn.com
