Company Results

Wyndham Worldwide First Quarter 2014 Revenues Up 5%

Adjusted diluted earnings per share (EPS) was $0.78, an increase of 10% from adjusted diluted EPS of $0.71 in the first quarter of 2013. Reported diluted EPS was $0.69, compared with $0.19 in the first quarter of 2013.

Wyndham

Wyndham Worldwide Corporation (NYSE: WYN) today announced results for the three months ended March 31, 2014.

First Quarter Highlights:

  • Adjusted diluted earnings per share (EPS) was $0.78, an increase of 10% from adjusted diluted EPS of $0.71 in the first quarter of 2013.  Reported diluted EPS was $0.69, compared with $0.19 in the first quarter of 2013.
  • Domestic RevPAR up 7.6%.
  • Net Vacation Ownership Interest sales up 15%.
  • The Company repurchased 2.1 million shares of its common stock for $150 million.  

"We are off to a great start in 2014," said Stephen P. Holmes, chairman and CEO.  "In our Hotel Group, domestic RevPAR growth accelerated.  In Vacation Ownership, a combination of increased sales and a lower loan loss provision drove strong revenue growth.  In our Exchange and Rentals business, peak season summer vacation rental bookings are up from last year.  We continued to generate strong free cash flow and to return a significant portion of that cash to shareholders." 

FIRST QUARTER 2014 OPERATING RESULTS

First quarter revenues were $1.2 billion, an increase of 5% from the prior year period.  The increase reflects growth in the Company's lodging and vacation ownership business segments.

Adjusted net income was $102 million, or $0.78 per diluted share, compared with $98 million, or $0.71 per diluted share for the same period in 2013.  The performance reflects solid operating results across all of the Company's businesses and lower interest expense.  EPS growth also benefited from the Company's share repurchase program.

Reported net income for the first quarter of 2014 was $90 million, or $0.69 per diluted share, compared with $27 million, or $0.19 per diluted share, for the first quarter of 2013.  Reported net income included several items not included in adjusted net income.  The net result of these items unfavorably impacted first quarter 2014 net income by $12 million and unfavorably impacted first quarter 2013 net income by $71 million.  Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.

Free cash flow was $269 million for the three months ended March 31, 2014, compared with $233 million for the same period in 2013.  The growth of free cash flow largely reflects favorable timing of working capital.  The Company defines free cash flow as net cash provided by operating activities less capital expenditures.  For the three months ended March 31, 2014, net cash provided by operating activities was $315 million, compared with $274 million in the prior year period.

BUSINESS UNIT RESULTS

Lodging (Wyndham Hotel Group)

Revenues were $237 million in the first quarter of 2014, a 7% increase over the first quarter of 2013.  The increase reflects higher RevPAR, franchise fees and EBITDA-neutral hotel management reimbursable fees. 

Total system-wide RevPAR increased 4.0% compared with the first quarter of 2013.  The increase reflects a 7.6% domestic increase, partially offset by a 4.3% decline in international RevPAR, primarily reflecting unfavorable currency movements. 

Adjusted EBITDA for the first quarter of 2014 was $68 million, a 17% increase compared with the first quarter of 2013.  The increase was primarily due to the revenue increases and the favorable timing of marketing expenditures.  

As of March 31, 2014, the Company's hotel system consisted of approximately 7,500 properties and 646,900 rooms, a 2.4% room increase compared with the first quarter of 2013.  The development pipeline included over 955 hotels and approximately 117,000 rooms, of which 60% were international and 69% were new construction.

Vacation Exchange and Rentals (Wyndham Exchange & Rentals)

Revenues were $379 million in the first quarter of 2014, a 1% increase over the first quarter of 2013.  In constant currency, revenues were flat.

Exchange revenues were $187 million, a decline of 3% from the first quarter of 2013.  In constant currency, exchange revenues declined 2%, as a 1.6% increase in average number of members was offset by a 3.7% decline in exchange revenue per member.

Vacation rental revenues were $176 million, a 6% increase over the first quarter of 2013.  Excluding foreign currency, vacation rental revenues were up 2%, reflecting a 1.4% increase in transaction volume and a 0.8% increase in the average net price per vacation rental.  

Adjusted EBITDA for the first quarter of 2014 was $95 million, a 1% increase compared with the first quarter of 2013, reflecting the impact of foreign currency and acquisitions.

Vacation Ownership (Wyndham Vacation Ownership)

Revenues were $593 million in the first quarter of 2014, an 8% increase over the first quarter of 2013, primarily reflecting higher gross VOI sales and a lower loan loss provision. 

Gross VOI sales were $410 million in the first quarter of 2014, an increase of 7% over the first quarter of 2013, reflecting a 4.3% increase in tour flow and a 2.8% increase in volume per guest. 

Adjusted EBITDA for the first quarter of 2014 was $115 million, a 2% increase compared with the first quarter of 2013, reflecting the revenue increases.  Excluding the favorable resolution of a lawsuit in the prior-year quarter, adjusted EBITDA increased an additional $11 million.

Other Items

  • The Company repurchased 2.1 million shares of common stock for $150 million during the first quarter of 2014.  From April 1 through April 23, 2014, the Company repurchased an additional 0.6 million shares for $42 million.  The Company's remaining share repurchase authorization totals $476 million as of April 23, 2014.
  • Net interest expense in the first quarter of 2014 was $25 million, compared with $30 million in the first quarter of 2013, reflecting lower rates associated with recent financings and the benefit of a fixed-for-floating rate swap.

Balance Sheet Information as of March 31, 2014:

  • Cash and cash equivalents of $203 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 $2.0 billion, compared with $1.9 billion at 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 $1.3 billion as of March 31, 2014, unchanged from December 31, 2013

A schedule of debt is included in Table 5 of this press release.

Outlook

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
  • Adjusted EBITDA of approximately $1.215 - $1.240 billion
  • Adjusted EPS of approximately $4.23 - $4.33 based on a diluted share count of 130 million

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 products and services 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 7,500 franchised hotels and 646,900 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 190 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. 

Wyndham Worldwide Corporation

OPERATING RESULTS OF REPORTABLE SEGMENTS

(In millions)

In addition to other measures, management evaluates the operating results of each of its reportable segments based upon net revenues and "EBITDA", which is defined as net income before depreciation and amortization, interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing interest) and income taxes, each of which is presented on the Company's Consolidated Statements of Income. The Company believes that EBITDA is a useful measure of performance for the Company's industry segments which when considered with GAAP measures, gives a more complete understanding of its operating performance. The Company's presentation of EBITDA may not be comparable to similarly-titled measures used by other companies.

The following tables summarize net revenues and EBITDA for reportable segments, as well as reconcile EBITDA to Net Income for the three months ended March 31, 2014 and 2013:

Three Months Ended March 31,

2014

2013

Net Revenues

EBITDA

Net Revenues

EBITDA

Lodging

$

237

$

64

$

222

$

58

Vacation Exchange and Rentals

379

85

374

94

Vacation Ownership

593

115

549

111

    Total Reportable Segments

1,209

264

1,145

263

Corporate and Other (a)

(16)

(34)

(12)

(29)

    Total Company

$

1,193

$

230

$

1,133

$

234

Reconciliation of EBITDA to Net Income

Three Months Ended March 31,

2014

2013

EBITDA

$

230

$

234

Depreciation and amortization

56

52

Interest expense

27

32

Early extinguishment of debt

-

111

Interest income

(2)

(2)

Income before income taxes

149

41

Provision for income taxes

59

14

Net income

$

90

$

27

__________

(a) Includes the elimination of transactions between segments.

The following tables summarize net revenues and Adjusted EBITDA for reportable segments for the three months ended March 31, 2014 and 2013 (for a description of adjustments by segment, see Table 7):

Three Months Ended March 31,

2014

2013

Net Revenues

Adjusted

EBITDA

Net Revenues

Adjusted

EBITDA

Lodging

$

237

$

68

$

222

$

58

Vacation Exchange and Rentals

379

95

374

94

Vacation Ownership

593

115

549

113

Total Reportable Segments

1,209

278

1,145

265

Corporate and Other

(16)

(34)

(12)

(29)

Total Company

$

1,193

$

244

$

1,133

$

236

 

 

Table 2

Wyndham Worldwide Corporation

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

Three Months Ended

March 31,

2014

2013

Net revenues

Service and membership fees

$

590

$

569

Vacation ownership interest sales

303

263

Franchise fees

127

122

Consumer financing

105

105

Other

68

74

Net revenues

1,193

1,133

Expenses

Operating

534

506

Cost of vacation ownership interests

39

32

Consumer financing interest

17

21

Marketing and reservation

181

177

General and administrative

195

164

Depreciation and amortization

56

52

Total expenses

1,022

952

Operating income

171

181

Other income, net

(3)

(1)

Interest expense

27

32

Early extinguishment of debt

-

111

Interest income

(2)

(2)

Income before income taxes

149

41

Provision for income taxes

59

14

Net income

$

90

$

27

Earnings per share

Basic

$

0.70

$

0.19

Diluted

0.69

0.19

Weighted average shares outstanding

Basic

128

137

Diluted

130

138

__________

Note: For a description of adjustments to Net Income, see Table 8.

 

 

Table 3

(1 of 3)

Wyndham Worldwide Corporation

OPERATING STATISTICS

The following operating statistics are the drivers of our revenues and therefore provide an enhanced understanding of our businesses:

Year

Q1

Q2

Q3

Q4

Full Year

Lodging

Number of Rooms

2014

646,900

N/A

N/A

N/A

N/A

2013

631,800

635,100

638,300

645,400

N/A

2012

609,300

608,300

618,100

627,400

N/A

2011

609,600

612,900

611,200

613,100

N/A

RevPAR

2014

$

32.30

N/A

N/A

N/A

N/A

2013

$

31.05

$

38.00

$

41.78

$

33.07

$

36.00

2012

$

29.73

$

37.23

$

40.39

$

31.86

$

34.80

2011

$

27.71

$

35.38

$

39.49

$

30.65

$

33.34

Vacation Exchange and Rentals

Average Number of Members (in 000s)

2014

3,727

N/A

N/A

N/A

N/A

2013

3,668

3,686

3,711

3,728

3,698

2012

3,684

3,670

3,672

3,670

3,674

2011

3,766

3,755

3,744

3,734

3,750

Exchange Revenue Per Member

2014

$

200.78

N/A

N/A

N/A

N/A

2013

$

210.96

$

182.42

$

169.95

$

161.21

$

181.02

2012

$

204.56

$

177.07

$

171.14

$

165.86

$

179.68

2011

$

205.64

$

178.46

$

172.38

$

161.68

$

179.59

Vacation Rental Transactions (in 000s) (a)

2014

429

N/A

N/A

N/A

N/A

2013

423

355

433

273

1,483

2012

418

325

390

259

1,392

2011

398

328

370

250

1,347

Average Net Price Per Vacation Rental (a)

2014

$

410.04

N/A

N/A

N/A

N/A

2013

$

392.64

$

540.38

$

677.81

$

506.62

$

532.11

2012

$

379.40

$

524.40

$

635.44

$

484.69

$

504.55

2011

$

377.71

$

549.09

$

701.81

$

497.04

$

530.78

Vacation Ownership (a)

Gross Vacation Ownership Interest (VOI) Sales (in 000s) (b)

2014

$

410,000

N/A

N/A

N/A

N/A

2013

$

384,000

$

481,000

$

536,000

$

488,000

$

1,889,000

2012

$

384,000

$

460,000

$

502,000

$

435,000

$

1,781,000

2011

$

319,000

$

412,000

$

455,000

$

409,000

$

1,595,000

Tours (in 000s) (c)

2014

170

N/A

N/A

N/A

N/A

2013

163

206

225

195

789

2012

148

186

207

183

724

2011

137

177

197

173

685

Volume Per Guest (VPG) (c)

2014

$

2,272

N/A

N/A

N/A

N/A

2013

$

2,211

$

2,256

$

2,278

$

2,370

$

2,281

2012

$

2,414

$

2,361

$

2,315

$

2,225

$

2,324

2011

$

2,192

$

2,227

$

2,197

$

2,296

$

2,229

Note: Full year amounts may not add across due to rounding.

(a)

Includes the impact of acquisitions from the acquisition dates forward. Therefore, the operating statistics are not presented on a comparable basis.

(b)

Includes Gross VOI sales under the Company's Wyndham Asset Affiliate Model (WAAM) Just-in-Time beginning in the second quarter of 2012 (see Table 9 for a reconciliation of Gross

VOI sales to vacation ownership interest sales).

(c)

Includes the impact of WAAM Just-in-Time related tours beginning in the second quarter of 2012.

Table 3

(2 of 3)

Wyndham Worldwide Corporation

ADDITIONAL DATA

Year

Q1

Q2

Q3

Q4

Full Year

Lodging

Number of Properties

2014

7,500

N/A

N/A

N/A

N/A

2013

7,380

7,410

7,440

7,490

N/A

2012

7,150

7,170

7,260

7,340

N/A

2011

7,190

7,220

7,190

7,210

N/A

Vacation Ownership

Provision for Loan Losses (in 000s) (a)

2014

$

60,000

N/A

N/A

N/A

N/A

2013

$

84,000

$

90,000

$

102,000

$

73,000

$

349,000

2012

$

96,000

$

100,000

$

124,000

$

89,000

$

409,000

2011

$

79,000

$

80,000

$

96,000

$

83,000

$

339,000

Sales under WAAM Fee-for-Service (in 000s) (b)

2014

$

44,000

N/A

N/A

N/A

N/A

2013

$

36,000

$

44,000

$

51,000

$

29,000

$

160,000

2012

$

17,000

$

18,000

$

5,000

$

10,000

$

49,000

2011

$

18,000

$

19,000

$

38,000

$

31,000

$

106,000

WAAM Fee-for-Service Commission Revenues (in 000s)

2014

$

33,000

N/A

N/A

N/A

N/A

2013

$

24,000

$

30,000

$

33,000

$

20,000

$

107,000

2012

$

12,000

$

11,000

$

4,000

$

6,000

$

33,000

2011

$

10,000

$

11,000

$

23,000

$

21,000

$

65,000

Sales under WAAM Just-in-Time (in 000s) (c)

2014

$

-

N/A

N/A

N/A

N/A

2013

$

13,000

$

1,000

$

-

$

-

$

14,000

2012

$

-

$

12,000

$

57,000

$

30,000

$

99,000

Note: Full year amounts may not add across due to rounding.

(a)

Represents provision for estimated losses on vacation ownership contract receivables originated during the period, which is recorded as a contra revenue to vacation ownership interest

sales on the Consolidated Statements of Income.

(b)

Represents Gross VOI sales under the Company's WAAM Fee-for-Service for which the Company earns commission revenue (WAAM Fee-for-Service Commission Revenues). The

commission revenue earned on these sales is included in service fees and membership revenues on the Consolidated Statements of Income.

(c)

Represents Gross VOI sales under the Company's WAAM Just-in-Time which enables the Company to acquire and own completed timeshare units close to the timing of the sales of such

units. This significantly reduces the period between the deployment of capital to acquire inventory and the subsequent return on investment which occurs at the time of its sale to a

timeshare purchaser. The Company implemented this sales model during the second quarter of 2012 and as such, there is no historical data prior to 2012.

Table 3

(3 of 3)

Wyndham Worldwide Corporation

OPERATING STATISTICS

GLOSSARY OF TERMS

Lodging



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