Wyndham Worlwide Reports Strong Second Quarter 2007 Results
|
Wyndham Worlwide Reports Strong Second Quarter 2007 Results
|
Category: Worldwide -
This is a press release selected by our editorial committee and published online for free on 2007-08-02
Double-Digit Top- and Bottom-Line Growth; Robust Performance Across All Three Businesses
Vacation Ownership Continues to Set Records With Sales Up 21%
Board of Directors Declares First Quarterly Dividend
Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months ended June 30, 2007.
Financial information discussed in this press release include both GAAP and non-GAAP measures, which include or exclude certain items, or reflect pro forma adjustments, related to the Company’s spin-off effective July 31, 2006. These non-GAAP measures differ from reported results and are intended to illustrate what management believes are relevant period-over-period comparisons. Non-GAAP measures are indicated as “Adjusted.” A complete reconciliation of reported GAAP results to the comparable Adjusted information appears in the financial tables section of this press release.
SECOND QUARTER 2007 HIGHLIGHTS (as compared to second quarter 2006):
* Revenues increased to over $1.1 billion, up 15%, with strong, organic growth across all businesses: Lodging, Vacation Exchange and Rentals, and Vacation Ownership
* Net income for the second quarter of 2007 increased 28% to $96 million, or $0.52 per diluted share, compared to second quarter 2006 net income of $75 million, or $0.37 per diluted share
* Vacation Ownership gross sales and revenues each surged 21%
* Vacation Ownership tours increased 11% and volume per guest increased 12%
* Comparable revenue per available room (RevPAR) increased 5.1% and system-wide RevPAR increased 3.7%
* Hotel pipeline was over 100,000 rooms as of June 30, 2007
* Average number of vacation exchange members increased 5%
* Vacation rental transactions increased 5% and average net price per vacation rental increased 11%
* The Board of Directors declared a dividend of $0.04 per share payable September 4, 2007 to shareholders of record as of August 13, 2007.
“In the one year since our spin-off, we have continued to drive strong results in all three of our businesses,” said Stephen P. Holmes, Wyndham Worldwide chairman and chief executive officer. “Leading the way again this quarter was our Vacation Ownership business, where performance continues to be phenomenal.
We continued to invest in and build momentum behind the Wyndham brand by re-flagging well-known hotels including locations in London and Puerto Rico, launching Wingate by Wyndham, and flying new Wyndham banners over some of our great vacation ownership resorts. Additionally, operating statistics for our Vacation Exchange and Rentals business (Group RCI) showed continued strength in the quarter.”
SECOND QUARTER 2007 OPERATING RESULTS
Revenues for the second quarter of 2007 were $1.1 billion, up 15% over the same period in 2006, reflecting strong organic growth across the businesses.
Net income for the second quarter of 2007 was $96 million or $0.52 diluted earnings per share, compared to $75 million or $0.37 diluted earnings per share for the second quarter of 2006.
Net income for the second quarter of 2007 includes $4 million after-tax of separation and related costs associated with Wyndham Worldwide’s spin-off from Cendant Corporation (now Avis Budget Group) and $11 million of an after-tax net benefit from the resolution of and adjustment to certain legacy items. Excluding these items, Adjusted net income for the second quarter of 2007 was $89 million, or $0.49 diluted earnings per share.
Second quarter of 2006 includes $3 million after-tax of separation and related costs and excludes $16 million after-tax of estimated incremental stand-alone costs (assuming Wyndham Worldwide had been a stand-alone, public company). Assuming these items, Adjusted net income for the second quarter of 2006 was $62 million, or $0.31 diluted earnings per share.
Second quarter of 2006 also includes $32 million ($22 million, after-tax) of expenses related to an accrual for local foreign taxes at our European vacation rental operations.
BUSINESS UNIT RESULTS
Lodging (Wyndham Hotel Group)
Revenues increased 6% to $186 million in the second quarter of 2007 compared with the second quarter of 2006, primarily reflecting RevPAR gains.
Comparable RevPAR increased 5.1% in the second quarter of 2007 and system-wide RevPAR increased 3.7% from the prior year period.
The Wyndham brand comparison was affected by the expected attrition of certain properties. Excluding these properties, the majority of which have left the system, RevPAR for the Wyndham Hotels and Resorts brand was up 9.9%.
Lodging EBITDA grew 11% to $59 million compared to the second quarter of 2006, reflecting strong fundamentals and timing of marketing spend.
As of June 30, 2007, the Company’s hotel system consisted of 541,700 rooms and 6,460 properties with a development pipeline of over 100,000 rooms and approximately 900 hotels, of which 46% were new construction and 25% were international.
Vacation Exchange and Rentals (Group RCI)
Revenues increased 10% to $288 million in the second quarter of 2007 compared with the second quarter of 2006, reflecting continued momentum in both vacation exchange and vacation rentals as well as favorable currency translations.
Vacation exchange revenues were $116 million, a 7% increase compared to the second quarter of 2006. The average number of members increased 5% and annual dues and exchange revenue per member increased 2% from the second quarter of 2006.
Vacation rentals revenues were $136 million, a 17% increase compared to the second quarter of 2006, reflecting a 5% increase in vacation rental transactions and an 11% increase in the average net price per rental. Bookings and arrivals at Novasol and Landal GreenParks were strong as a result of enhanced marketing programs, supporting an expansion strategy to provide consumers with broader inventories and more destinations, as well as improved local economies.
Other ancillary revenues generated primarily from additional products and services provided to affiliates and members were $36 million in the second quarter of 2007, relatively flat to last year.
Second quarter of 2007 EBITDA was $49 million compared to second quarter of 2006 EBITDA of $32 million, which included a $21 million charge related to an accrual for local foreign taxes at our European vacation rental operations and $1 million of separation and related costs. Second quarter 2007 EBITDA included higher cost of sales on increased rentals and incremental expenses in operational infrastructures, including technology and call center costs to support higher volumes, as well as a reduction in results of $6 million related to certain Asia Pacific consulting relationships.
Compared to the second quarter of 2006, currency translations increased revenues by $10 million, principally rental related, and increased expenses by $9 million, resulting in a $1 million lift to EBITDA.
Vacation Ownership (Wyndham Vacation Ownership)
Revenues increased 21% to $629 million in the second quarter of 2007 compared with the second quarter of 2006 reflecting continued success in marketing and sales.
Gross Vacation Ownership Interest sales were $523 million for the second quarter of 2007, up 21% compared to the second quarter of 2006, driven by marketing efforts resulting in an 11% growth in tour flow and a 12% increase in volume per guest from strong performance by our sales force and continued strength in transaction pricing.
Consumer finance revenues increased 26% for the second quarter of 2007 compared to the second quarter of 2006 reflecting continued Vacation Ownership sales growth.
EBITDA for the second quarter of 2007 was $100 million. Excluding separation and related costs of $5 million, Adjusted EBITDA for the second quarter of 2007 was $105 million, increasing 22% from the second quarter of 2006, excluding $2 million from separation and related costs during that period. This EBITDA growth is consistent with the growth in Vacation Ownership sales.
As previously announced, the Company successfully completed a $600 million vacation ownership receivables securitization during the second quarter of 2007.
Other Items
Interest expense for the second quarter of 2007 was $18 million, a decrease of $5 million from the second quarter of 2006. This decrease is primarily due to interest related to a foreign tax accrual of $11 million in the second quarter of 2006, partially offset by higher rates and higher average borrowings due to differences in the Company’s capital structure since the spin-off. Interest income for the quarter was $2 million compared to $12 million in 2006, principally due to differences in the Company’s capital structure since the spin-off. Depreciation and amortization rose $5 million to $41 million.
Balance Sheet Information as of June 30, 2007:
* Cash and cash equivalents of approximately $250 million compared to approximately $270 million at December 31, 2006
* Vacation ownership and other inventory of approximately $1.1 billion compared to approximately $955 million at December 31, 2006
* Vacation ownership contract receivables, net, of $2.6 billion compared to $2.4 billion at December 31, 2006
* Securitized vacation ownership debt of $1.8 billion compared to $1.5 billion at December 31, 2006
* Other debt of $1.6 billion, compared to $1.4 billion at December 31, 2006
A schedule of debt is included in the financial tables section of this press release.
Share Repurchase
The Company repurchased 6.5 million shares of stock during the second quarter of 2007 at an average price of $36.10. The Company has substantially completed its program announced February 13, 2007, repurchasing a total of 11.7 million shares at an average price of $35.26.
Dividend
The Board of Directors declared a dividend of $0.04 per share payable September 4, 2007 to shareholders of record as of August 13, 2007.
Outlook and Guidance Increase
Wyndham Worldwide updates full year 2007 guidance as follows:
* Revenues of $4,340 – $4,480 million
* Adjusted EBITDA of $845 – $860 million, excluding separation and related costs of $10 – $20 million ($6 – $12 million, after-tax), as well as legacy matters
* Full year depreciation and amortization expense of $160 – $170 million
* Interest expense of $65 – $75 million
* Effective tax rate of 38%, excluding separation and related costs, as well as legacy matters
* Adjusted net income of $372 – $392 million, excluding separation and related costs, as well as legacy matters
* Full year Adjusted EPS of $2.02 – $2.13, excluding separation and related costs, as well as legacy matters, based on weighted average shares of approximately 184 million
* Third quarter Adjusted EPS of $0.70 – $0.73, excluding separation and related costs, as well as legacy matters, based on weighted average shares of approximately 184 million
"I am extremely proud of our results and accomplishments this year, which reflect the talent, dedication, and enthusiasm of our employees around the world. Their efforts have fostered an industry leading brand portfolio and built valued relationships with franchisees and developers. We offer the right products, brands and geographic distribution to capture the strength in worldwide leisure travel and deliver value to consumers around the globe. We look forward to continued success,” concluded Holmes.
|
|
