Wyndham Worldwide Reports Fourth Quarter and Full Year 2011 Earnings
Full Year Adjusted EPS Growth of 25%
Completes $902 Million of Share Repurchases and Increases Dividend 53%
PARSIPPANY, N.J. (February 8, 2012) –
Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months and year ended December 31, 2011.
- Fourth quarter adjusted diluted earnings per share (EPS) was $0.47, compared with $0.46 in the fourth quarter of 2010, an increase of 2%. Fourth quarter 2011 reported diluted EPS was $0.37, a decrease of 14% from the same period in 2010, reflecting non-cash impairment charges in the Company’s Lodging business.
- Free cash flow increased to $754 million for the year ended December 31, 2011, compared with $603 million in 2010.
- The Company’s Board of Directors authorized an increase in the quarterly cash dividend to $0.23 from $0.15 per share, beginning with the dividend that is expected to be declared in the first quarter of 2012.
- During the quarter, the Company repurchased 6.7 million shares of its common stock for $225 million at an average price of $33.78. For the full-year 2011, the Company repurchased 28.7 million shares of its common stock for $902 million at an average price of $31.45.
“2011 was another excellent year for our company,” said Stephen P. Holmes, chairman and CEO, Wyndham Worldwide. “In an environment of ongoing economic uncertainty, our businesses continued to execute at a high level. As expected, we generated robust free cash flow and effectively deployed that cash flow. We remain well positioned for growth and that confidence is reflected in the 53% dividend increase authorized by our Board of Directors.”
FOURTH QUARTER 2011 OPERATING RESULTS
Fourth quarter revenues increased 7% from the prior year period to $1.0 billion. The increase reflects organic growth in the Company’s Lodging and Vacation Ownership businesses and incremental contributions from acquisitions at its Vacation Exchange and Rentals business.
For the fourth quarter of 2011, adjusted net income was $73 million, or $0.47 per diluted share, compared with $84 million, or $0.46 per diluted share for the same period in 2010. The decrease in adjusted net income primarily reflects a higher adjusted tax rate and higher adjusted net interest expense. Adjusted net income for the fourth quarter of 2011 excludes $27 million, after-tax, of non-cash impairment charges at our Lodging business, a $7 million tax benefit related to value added tax (VAT) adjustments, and a $3 million tax benefit related to legacy adjustments. Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.
Reported net income for the fourth quarter of 2011 was $56 million, or $0.37 per diluted share, compared with net income of $78 million, or $0.43 per diluted share, for the fourth quarter of 2010.
FULL YEAR 2011 OPERATING RESULTS
Reported revenues for full year 2011 were $4.3 billion, an increase of 10% over the prior-year period. The revenue increase resulted from higher RevPAR in the Lodging business, higher Vacation Ownership Interest (VOI) sales and Wyndham Asset Affiliation Model (WAAM) commissions in the Vacation Ownership business, and contributions from acquisitions along with higher average net price per vacation rental in the Vacation Exchange and Rentals business. Adjusted net income for the full year 2011 was $414 million or $2.49 per diluted share, compared with $368 million or $2.00 per diluted share for the prior-year period. Adjusted net income for the full year 2011 excludes an aggregate of $3 million of net benefits, after tax. Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.
Reported net income for full year 2011 was $417 million, or $2.51 per diluted share, compared with net income of $379 million, or $2.05 per diluted share, for the prior-year period.
Free cash flow increased to $754 million in the year ended December 31, 2011 compared with $603 million in the same period in 2010. The growth of free cash flow largely reflects stronger operating results and a $67 million benefit generated by a refund of VAT and related interest income. The Company defines free cash flow as net cash provided by operating activities less capital expenditures, equity investments and development advances and excludes a 2010 cash payment of $145 million related to contingent IRS tax liabilities. For the year ended December 31, 2011, cash provided by operating activities was $1.0 billion compared with $635 million for the prior-year period.
BUSINESS UNIT RESULTS
Lodging (Wyndham Hotel Group)
Revenues were $188 million in the fourth quarter of 2011, an increase of 15%, compared with the fourth quarter of 2010, reflecting a RevPAR improvement of 5% and revenues associated with the newly opened Wyndham Grand hotel in Orlando. The revenue increase also included a $15 million reclassification, primarily related to certain reservation fees, which had no impact on EBITDA.
Excluding $44 million of non-cash impairment charges, adjusted EBITDA was $41 million, an increase of 3% compared with the fourth quarter of 2010, largely reflecting RevPAR improvement and lower bad debt expense. These benefits were partially offset by the timing of higher marketing costs.
As of December 31, 2011, the Company’s hotel system consisted of 7,205 properties and over 613,100 rooms. The development pipeline included nearly 850 hotels and 111,900 rooms, of which 57% were new construction and 60% were international.
Vacation Exchange and Rentals (Wyndham Exchange & Rentals)
Revenues were $291 million in the fourth quarter of 2011, an increase of 3% compared with the fourth quarter of 2010. In constant currency and excluding the impact of acquisitions, revenues were flat.
Exchange revenues were $150 million, a decrease of 2% compared with the fourth quarter of 2010. The average number of members was flat. In constant currency, exchange revenues and exchange revenue per member were also flat.
Vacation rental revenues were $125 million, a 10% increase compared with the fourth quarter of 2010. Excluding the impact of foreign currency and acquisitions, vacation rental revenues were flat as a 5% increase in the average net price per vacation rental was offset by a 5% decline in vacation rental transactions.
Adjusted EBITDA for the fourth quarter of 2011 decreased $4 million compared with the prior-year period, reflecting the impact of unfavorable foreign currency and the seasonality of recently acquired businesses.
Vacation Ownership (Wyndham Vacation Ownership)
Revenues were $527 million in the fourth quarter of 2011, a 6% increase over the fourth quarter of 2010, reflecting increased VOI sales and WAAM commissions.
Gross VOI sales were $409 million in the fourth quarter of 2011, up 10% from the fourth quarter of 2010, primarily reflecting an 8% increase in tour flow and a 4% increase in volume per guest.
EBITDA for the fourth quarter of 2011 was $139 million, compared with EBITDA of $131 million in the fourth quarter of 2010, a 6% increase. EBITDA growth includes contributions from increased VOI sales and WAAM commissions.
- The Company repurchased approximately 6.7 million shares of common stock for $225 million during the fourth quarter of 2011 at an average price of $33.78 and an additional 1.5 million shares for $60 million at an average price of $39.02 through February 7, 2012. The Company has $311 million remaining on its current share repurchase authorization.
- Net interest expense in the fourth quarter of 2011 was $36 million, an increase of $2 million from the fourth quarter of 2010, primarily reflecting higher average borrowings, partially offset by the absence of $3 million of charges for the early extinguishment of debt in the fourth quarter of 2010.
Balance Sheet Information as of December 31, 2011:
- Cash and cash equivalents of approximately $140 million, compared with $156 million at December 31, 2010
- Vacation ownership contract receivables, net, of $2.8 billion, compared with $3.0 billion at December 31, 2010
- Vacation ownership and other inventory of approximately $1.1 billion, compared with $1.2 billion at December 31, 2010
- Securitized vacation ownership debt of $1.9 billion, compared with $1.7 billion at December 31, 2010
- Long-term debt of $2.2 billion, compared with $2.1 billion at December 31, 2010. The remaining borrowing capacity on the revolving credit facility was $771 million, compared with $788 million as of December 31, 2010
A schedule of debt is included in Table 5 of this press release.
For the full year 2012, the Company expects:
- Revenues of approximately $4.4 – $4.6 billion
- Adjusted EBITDA of approximately $1.030 – $1.055 billion
- EPS Guidance of $2.85 - $3.00, up from $2.72 - $2.82
- Diluted shares of 153 million
The guidance reflects assumptions used for internal planning purposes. Guidance may exclude non-recurring or special items, 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.
Conference Call Information
Wyndham Worldwide Corporation will hold a conference call with investors to discuss this news on Wednesday, February 8, 2012 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 at the website for approximately 90 days beginning at noon EST on February 8, 2012. 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 EST on February 8, 2012, at (800) 947-6332.
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. 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 to the most directly comparable GAAP measure because certain items cannot be reasonably estimated or predicted at this time. Any such items could be significant to our reported results.
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 products and services across various accommodation alternatives and price ranges through its premier portfolio of world-renowned brands. Wyndham Hotel Group encompasses 7,205 hotels with approximately 613,100 rooms worldwide. Wyndham Exchange & Rentals offers leisure travelers, including its 3.7 million members, access to approximately 100,000 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 over 160 vacation ownership resorts serving over 813,000 owners throughout North America, the Caribbean and the South Pacific. Wyndham Worldwide, headquartered in Parsippany, N.J., employs approximately 27,800 employees globally.
For more information about Wyndham Worldwide, 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 Quarterly Report on Form 10-Q, filed with the SEC on October 26, 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