PARSIPPANY, N.J., July 24, 2014 -- Wyndham Worldwide Corporation (NYSE: WYN) today announced results for the three months ended June 30, 2014.
SECOND QUARTER HIGHLIGHTS:
- Adjusted diluted earnings per share (EPS) was $1.17, an increase of 19% from adjusted diluted EPS of $0.98 in the second quarter of 2013. Reported diluted EPS was $1.20, compared with $0.98 in the second quarter of 2013.
- Revenues increased 7% compared with the second quarter of 2013.
- Adjusted EBITDA increased 9% compared with the second quarter of 2013.
- The Company repurchased 2.3 million shares of its common stock for $170 million.
"We delivered strong results in the second quarter, improving upon the positive trends from the first quarter," said Stephen P. Holmes, chairman and CEO. "Domestic RevPAR growth continued to accelerate, net Vacation Ownership Interest sales increased ten percent and we are seeing continued strong growth in rental transaction volume."
SECOND QUARTER 2014 OPERATING RESULTS
Second quarter revenues were $1.3 billion, an increase of 7% from the prior year period. The increase reflects growth in all of the Company's business segments.
Adjusted net income was $150 million, or $1.17 per diluted share, compared with $133 million, or $0.98 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 second quarter of 2014 was $153 million, or $1.20 per diluted share, compared with $133 million, or $0.98 per diluted share, for the second quarter of 2013. Reported net income included items excluded from adjusted net income. The net result of these items favorably impacted second quarter 2014 net income by $3 million. Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.
Free cash flow was $695 million for the six months ended June 30, 2014, compared with $654 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 six months ended June 30, 2014, net cash provided by operating activities was $793 million, compared with $758 million in the prior year period.
BUSINESS UNIT RESULTS
Lodging (Wyndham Hotel Group)
Revenues were $283 million in the second quarter of 2014, an 8% increase over the second quarter of 2013. The increase predominantly reflects higher RevPAR.
Domestic RevPAR increased 8.8%, partially offset by a 1.8% decline in international RevPAR, resulting in a 5.6% increase in total system-wide RevPAR compared with the second quarter of 2013. International RevPAR declined due to unfavorable currency movements and growth in lower-RevPAR countries such as China.
Adjusted EBITDA for the second quarter of 2014 was $87 million, a 12% increase compared with the second quarter of 2013. The increase was primarily due to higher RevPAR.
As of June 30, 2014, the Company's hotel system consisted of approximately 7,540 properties and 650,200 rooms, a 2.4% room increase compared with the second quarter of 2013. The development pipeline included over 970 hotels and approximately 117,000 rooms, of which 57% were international and 67% were new construction.
Vacation Exchange and Rentals (Wyndham Exchange & Rentals)
Revenues were $402 million in the second quarter of 2014, a 7% increase over the second quarter of 2013. In constant currency and excluding the impact of acquisitions, revenues were up 3%.
Exchange revenues were $168 million, flat compared with the second quarter of 2013, as a 1.7% increase in average number of members was offset by a 1.8% decline in exchange revenue per member.
Vacation rental revenues were $217 million, a 13% increase over the second quarter of 2013. Excluding the impact of foreign currency and acquisitions, vacation rental revenues were up 6%, reflecting a 4.9% increase in transaction volume and a 1.2% increase in the average net price per vacation rental.
Adjusted EBITDA for the second quarter of 2014 was $87 million, a 2% increase compared with the second quarter of 2013.
Vacation Ownership (Wyndham Vacation Ownership)
Revenues were $673 million in the second quarter of 2014, a 7% increase over the second quarter of 2013, primarily reflecting higher gross VOI sales and a lower loan loss provision.
Gross VOI sales were $496 million in the second quarter of 2014, an increase of 3% over the second quarter of 2013, reflecting a 1.1% increase in volume per guest, a 1.0% increase in tour flow and increased tele-sales upgrades.
Adjusted EBITDA for the second quarter of 2014 was $185 million, a 15% increase compared with the second quarter of 2013, primarily reflecting the revenue increases.
- The Company repurchased 2.3 million shares of common stock for $170 million during the second quarter of 2014. From July 1 through July 23, 2014, the Company repurchased an additional 0.5 million shares for $37 million. The Company's remaining share repurchase authorization totals $311 million as of July 23, 2014.
- Reported net interest expense in the second quarter of 2014 was $26 million, compared with $32 million in the second quarter of 2013, reflecting lower rates associated with a fixed-for-floating rate swap and a $2 million benefit from a value added tax adjustment.
BALANCE SHEET INFORMATION AS OF JUNE 30, 2014:
- Cash and cash equivalents of $247 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 $1.9 billion, unchanged from December 31, 2013
- Long-term debt of $2.8 billion, compared with $2.9 billion at December 31, 2013. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.4 billion as of June 30, 2014, compared with $1.3 billion as of December 31, 2013
A schedule of debt is included in Table 5 of this press release.
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 (unchanged)
- Adjusted EBITDA of approximately $1.230 - $1.245 billion up from $1.215 - $1.240 billion
- Adjusted EPS of approximately $4.34 - $4.44 based on a diluted share count of 128 million up from $4.23 - $4.33 based on a diluted share count of 130 million
CONFERENCE CALL INFORMATION
Wyndham Worldwide Corporation will hold a conference call with investors to discuss the Company's results, outlook and guidance on Thursday, July 24, 2014 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 on the website for approximately 90 days beginning at noon EDT on July 24, 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 EDT on July 24, 2014, at 888-296-6944.
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.
To view corresponding tables for this release please visit: