Wyndham Worldwide Reports Fourth Quarter and Full Year 2013 Earnings
Full Year Adjusted Diluted EPS Growth of 19% Increases Dividend 21%
February 07, 2014 // Franchising.com // PARSIPPANY, N.J. – Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months and year ended December 31, 2013.
- Fourth quarter adjusted diluted earnings per share (EPS) was $0.73, an increase of 16% from adjusted diluted EPS of $0.63 in the fourth quarter of 2012. Reported diluted EPS was $0.65 in the fourth quarter of 2013, compared with $0.57 during the same period in 2012.
- Fourth quarter adjusted EBITDA increased 10% from the prior-year period.
- The Company’s Board of Directors authorized an increase in the quarterly cash dividend to $0.35 from $0.29 per share, beginning with the dividend that is expected to be declared in the first quarter of 2014.
- During the quarter, the Company repurchased 1.8 million shares of its common stock for $115 million. For the full year, the Company spent $590 million to repurchase 9.7 million shares of its common stock.
"We finished the year with another strong quarter, marking our fourth consecutive year of double-digit growth in adjusted EPS," said Stephen P. Holmes, chairman and CEO. "We are excited about our prospects for 2014 as we continue to execute and innovate across our businesses and maintain our capital allocation discipline to enhance value for shareholders."
Fourth Quarter 2013 Operating Results
Fourth quarter revenues were $1.2 billion, an increase of 9% from the prior year period. The increase reflects growth in all of the Company’s business segments.
Adjusted net income was $96 million, or $0.73 per diluted share, compared with $89 million, or $0.63 per diluted share for the same period in 2012. The increases reflect stronger operating results in the Company’s lodging and vacation ownership businesses. EPS growth also benefited from the Company’s share repurchase program, which decreased weighted average diluted share count by 7% year-over-year.
Reported net income for the fourth quarter of 2013 was $86 million, or $0.65 per diluted share, compared with $81 million, or $0.57 per diluted share, for the fourth quarter of 2012. Reported net income included several items not included in adjusted net income. The net result of these items unfavorably impacted fourth quarter 2013 net income by $10 million and unfavorably impacted fourth quarter 2012 net income by $8 million. Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.
Full Year 2013 Operating Results
Revenues for full year 2013 were $5.0 billion, an increase of 10% over the prior-year period. Adjusted net income for the full year 2013 was $515 million, or $3.83 per diluted share, compared with $469 million, or $3.23 per diluted share, for the prior year. The increases reflect stronger operating results across all of the Company’s businesses. EPS growth also benefited from the Company’s share repurchase program, which decreased weighted average diluted share count by 7% compared with 2012.
Reported net income for full year 2013 was $432 million, or $3.21 per diluted share, compared with reported net income of $400 million, or $2.75 per diluted share, for the prior-year period. Reported net income included several items not included in adjusted net income. The net result of these items unfavorably impacted full year 2013 net income by $83 million and unfavorably impacted full year 2012 net income by $69 million. Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.
Free cash flow was $770 million for the year ended December 31, 2013, compared with $796 million for the same period in 2012, reflecting higher capital expenditures. The Company defines free cash flow as net cash provided by operating activities less capital expenditures. For the year ended December 31, 2013, net cash provided by operating activities was $1,008 million, compared with $1,004 million in the prior year period.
Business Unit Results
Lodging (Wyndham Hotel Group)
Revenues were $245 million in the fourth quarter of 2013, a 10% increase over the fourth quarter of 2012. The increase reflects higher RevPAR, a larger system size and increased hotel management reimbursable fees.
Domestic RevPAR increased 4.7% compared with the fourth quarter of 2012. Total system-wide RevPAR increased 3.8%, reflecting proportionally higher growth of lower RevPAR hotels in China.
Adjusted EBITDA for the fourth quarter of 2013 was $64 million, a 3% increase compared with the fourth quarter of 2012. The increase was primarily due to higher RevPAR and a larger system size, partially offset by the unfavorable timing of marketing expenditures. Adjusted EBITDA excludes a $9 million restructuring charge and $8 million of non-cash asset impairment charges.
As of December 31, 2013, the Company’s hotel system consisted of approximately 7,490 properties and over 645,400 rooms, a 2.9% room increase compared with the fourth quarter of 2012. The development pipeline included over 970 hotels and approximately 114,000 rooms, of which 58% were international and 68% were new construction.
Vacation Exchange and Rentals (Wyndham Exchange & Rentals)
Revenues were $305 million in the fourth quarter of 2013, a 4% increase over the fourth quarter of 2012. In constant currency and excluding the impact of acquisitions, revenues increased 1%.
Exchange revenues were $150 million, a decline of 2% from the fourth quarter of 2012. In constant currency, exchange revenues were flat, as a 1.6% increase in average number of members was offset by a 1.8% decline in exchange revenue per member.
Vacation rental revenues were $138 million, a 10% increase over the fourth quarter of 2012. In constant currency and excluding acquisitions, vacation rental revenues were up 4%, reflecting a 4.4% increase in the average net price per vacation rental and flat transaction volume.
Adjusted EBITDA for the fourth quarter of 2013 was $36 million, compared with $42 million for the fourth quarter of 2012, primarily reflecting the impact of seasonality from acquisitions and foreign currency movements.
Vacation Ownership (Wyndham Vacation Ownership)
Revenues were $658 million in the fourth quarter of 2013, a 12% increase over the fourth quarter of 2012, primarily reflecting higher gross VOI sales.
Gross VOI sales were $488 million in the fourth quarter of 2013, an increase of 12% over the fourth quarter of 2012, primarily reflecting a 6.6% increase in tour flow and a 6.5% increase in volume per guest.
Adjusted EBITDA for the fourth quarter of 2013 was $172 million, a 19% increase compared with the fourth quarter of 2012, primarily due to higher gross VOI sales and a lower loan loss provision.
- The Company repurchased 1.8 million shares of common stock for $115 million during the fourth quarter of 2013. For the full year, the Company repurchased 9.7 million shares of common stock for $590 million. From January 1 through February 6, 2014, the Company repurchased an additional 0.3 million shares for $24 million. The Company’s remaining share repurchase authorization totals $643 million as of February 6, 2014.
- Net interest expense in the fourth quarter of 2013 was $32 million, compared with $33 million in the fourth quarter of 2012, as lower rates associated with recent financings offset higher debt levels.
Balance Sheet Information as of December 31, 2013:
- Cash and cash equivalents of $194 million, compared with $195 million at December 31, 2012
- Vacation ownership contract receivables, net, of $2.8 billion, compared with $2.9 billion at December 31, 2012
- Vacation ownership and other inventory of $1.0 billion, compared with $1.1 billion at December 31, 2012
- Securitized vacation ownership debt of $1.9 billion, compared with $2.0 billion at December 31, 2012
- Long-term debt of $2.9 billion, compared with $2.6 billion at December 31, 2012. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.3 billion as of December 31, 2013, compared with $0.6 billion as of December 31, 2012
A schedule of debt is included in Table 5 of this press release.
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 $4.18 - $4.28 based on a diluted share count of 131 million
Conference Call Information
Wyndham Worldwide Corporation will hold a conference call with investors to discuss the Company’s results, outlook and guidance on Friday, February 7, 2014 at 8:30 a.m. EST. Listeners may access the webcast live through the Company’s website at www.wyndhamworldwide.com/investors. An archive of this webcast will be available on the website for approximately 90 days beginning at noon EST on February 7, 2014. The conference call may also be accessed by dialing 800-369-2125 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 EST on February 7, 2014, at 866-415-2340.
The Company will post guidance information on its website following the conference call.
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 7,490 franchised hotels and over 645,400 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. For more information, please visit 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, dividends 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 15, 2013. 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
Investor and Media Contacts:
Margo C. Happer
Senior Vice President
Wyndham Worldwide Corporation
Wyndham Worldwide Corporation