WYNDHAM WORLDWIDE REPORTS STRONG FOURTH QUARTER AND FULL YEAR 2006 RESULTS
Double Digit Revenue Growth in 4th Quarter Closes Out Banner Year
Company Announces New $400 Million Share Repurchase Program
Parsippany, NJ (February 13, 2007) –
Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three-months and year ended December 31, 2006.
Download and view the Wyndham Worldwide Fourth Quarter 2006 Financial Tables (MS Excel File).
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.
FOURTH QUARTER 2006 HIGHLIGHTS INCLUDE:
- Net income for the quarter was $92 million, or $0.48 per diluted share. Adjusted net income was $84 million or $0.44 per diluted share, at the upper end of company-issued guidance, or 11% ahead of last year’s results on an Adjusted basis.
- Revenue increased 13% compared to the fourth quarter of 2005, with strong top-line growth across the Company’s three businesses: Lodging, Vacation Exchange and Rentals, and Vacation Ownership.
- Lodging revenues grew 6% and franchise fees grew 5% compared to the fourth quarter of 2005. Wyndham Worldwide added approximately 10,000 net rooms to its hotel portfolio.
- Positive momentum continued in the Vacation Exchange and Rentals business, with revenue increasing 13% compared to the fourth quarter of 2005.
- Continued robust growth of the Vacation Ownership business, with gross vacation ownership interest sales increasing more than 30% compared to the fourth quarter of 2005 driven by strong increases in both tour flow and volume per guest.
- The Company’s Board of Directors has authorized a new share repurchase program of $400 million. The Company recently completed a share repurchase announced in August 2006, under which it repurchased 13.5 million shares at an average price of $29.72.
“We finished the year with great momentum in each of our three businesses,” said Stephen P. Holmes, Wyndham Worldwide chairman and chief executive officer. “We posted double-digit revenue and Adjusted EBITDA growth in the fourth quarter of 2006. Our portfolio of diverse brands, locations and products gives us great financial stability, particularly since more than half of our revenue stems from fees related to services for consumers and business partners. Our strength in leisure accommodations allows us to capture share and expand our presence in a growing global travel industry.”
Fourth Quarter 2006 Operating Results
Revenues for the fourth quarter of 2006 were $970 million, up 13% over the same period in 2005, reflecting strong growth across the businesses. Adjusted EBITDA for the fourth quarter was $192 million, excluding separation and related costs and the net benefit from the resolution of certain contingent liabilities, compared to $164 million for the fourth quarter of 2005. Adjusted net income for the fourth quarter of 2006 was $84 million or $0.44 per diluted earnings per share excluding:
- $22 million after-tax separation and related costs associated with Wyndham Worldwide’s spin-off from Cendant Corporation (now Avis Budget Group)
- A $30 million after-tax net benefit from the resolution of certain contingent liabilities
Net income for the fourth quarter of 2006 was $92 million, compared to $91 million for the fourth quarter of 2005. Net income for 2005 excludes stand-alone corporate costs and interest expense associated with corporate debt since Wyndham Worldwide was a subsidiary of Cendant for all of 2005. Had Wyndham Worldwide been a stand-alone, public company during the fourth quarter of 2005 compared to the fourth quarter of 2006, Adjusted net income would have increased 11% to $84 million from $76 million.
Lodging (Wyndham Hotel Group)
Lodging revenues increased 6% to $152 million for the fourth quarter of 2006 compared to $144 million for the fourth quarter of 2005. EBITDA for the fourth quarter of 2006 was $47 million. Adjusted EBITDA for the fourth quarter of 2006 increased 7% to $48 million (excluding separation and related costs of $1 million) compared to EBITDA for the prior year period of $45 million.
EBITDA for the fourth quarter of 2006 includes incremental marketing expense of approximately $3 million associated with increasing Wyndham brand recognition.
RevPAR for the fourth quarter of 2006 increased 7% from the fourth quarter of 2005, excluding Wyndham and Baymont. Including these brands, fourth quarter 2006 RevPAR was $31.41, a 6% increase from the comparable prior year period.
At December 31, 2006, the Wyndham Hotel Group system consisted of nearly 6,500 properties with over 543,000 rooms, an increase of approximately 10,000 net rooms from the third quarter of 2006. The Company’s hotel development pipeline as of December 31, 2006 included approximately 845 hotels and approximately 92,000 rooms, of which approximately 15% are international and approximately 45% are new construction.
Vacation Exchange and Rentals (RCI Global Vacation Network)
Vacation Exchange and Rentals revenues increased 13% to $266 million in the fourth quarter of 2006 from $235 million in the fourth quarter of 2005, reflecting continued momentum in transaction volume, pricing and members.
Vacation exchange revenues were $110 million, an 8% increase compared to the fourth quarter of 2005. The average number of members as well as the annual dues and exchange revenue per member increased 5% and 3%, respectively, from the fourth quarter of 2005, reflecting new members, higher transaction volume and price increases implemented in the third quarter of 2006.
Vacation rentals revenues were $105 million, a 16% increase compared to the fourth quarter of 2005, supported by improved inventory offerings, enhanced marketing and local economic conditions. Vacation rental transactions and average net price per vacation rentals increased 6% and 9%, respectively, from the fourth quarter of 2005.
Other ancillary revenues generated primarily from additional products and services provided to affiliates and members were $51 million in the fourth quarter of 2006.
Vacation Exchange and Rentals EBITDA grew to $59 million for the fourth quarter of 2006, a 28% increase compared to $46 million in the fourth quarter of 2005 which reflected a $14 million restructuring charge taken to combine our vacation exchange and vacation rentals operations. Absent that charge, EBITDA was relatively flat due to continued investment during 2006 in new offerings to leverage our leading position in the growing leisure travel industry worldwide.
Vacation Ownership (Wyndham Vacation Ownership)
Gross Vacation Ownership Interest sales were $469 million for the fourth quarter of 2006, up more than 30% compared to the fourth quarter of 2005, driven by a 17% growth in tour flow and an 8% increase in volume per guest. The strong tour flow growth was the result of ongoing development of in-house sales programs, enhancements to local marketing efforts and continued industry demand.
Vacation Ownership fourth quarter 2006 revenues were $554 million and EBITDA was $89 million, including separation and related costs of $15 million. Excluding separation and related costs, Adjusted EBITDA for the fourth quarter of 2006 rose 18% compared to EBITDA for the fourth quarter of 2005 of $88 million. These 2006 results reflect the adoption of SFAS No. 152, “Accounting for Real Estate Time-Sharing Transactions,” which reduced comparative quarterly revenue by $63 million and increased EBITDA by $5 million.
Wyndham Vacation Ownership active development pipeline consists of approximately 3,900 units in 15 U.S. states, the Virgin Islands and 3 foreign countries. The Company expects the pipeline to support both new purchases of vacation ownership and upgrade sales to existing owners.
Full Year 2006 Operating Results
Revenues for full year 2006 were $3,842 million, up 11% compared to full year 2005, reflecting strong growth across all the businesses. Full year 2006 Adjusted EBITDA was $762 million, excluding separation and related costs and the net benefit from the resolution of certain contingent liabilities, but including pro forma incremental stand-alone corporate costs, a 9% increase over 2005 Adjusted EBITDA of $699 million. Full year EBITDA was $725 million compared to $751 million in the prior year period including separation and related costs and the net benefit from the resolution of certain contingent liabilities in 2006 and excluding pro forma incremental stand-alone corporate costs for both periods.
Adjusted net income for full year 2006 was $339 million, excluding the cumulative effect of SFAS No. 152, separation and related costs and the net benefit from the resolution of certain contingent liabilities, but including pro forma incremental stand-alone corporate costs. Income before the cumulative effect of SFAS No. 152 for full year 2006 was $352 million, compared to $431 million for full year 2005. Net income for 2005 excludes stand-alone corporate costs and interest expense associated with corporate debt since Wyndham Worldwide was a subsidiary of Cendant for all of 2005.
Full year 2006 highlights include:
- Lodging revenues grew by 24%
- Vacation exchange and rentals revenues were up 5%
- Gross Vacation Ownership Interest Sales grew more than 25%
Holmes continued: “2006 was a landmark year for Wyndham Worldwide. We exceeded our initial revenue guidance and hit our Adjusted EBITDA guidance, despite taking the previously reported second quarter 2006 $21 million tax accrual; excluding the accrual, we would have exceeded our Adjusted EBITDA guidance. These results would be commendable in any year, but are extraordinary in light of our corporate and operating initiatives this year: our transformation into an independent, publicly traded company, the integration of two hotel companies, and the re-branding of our vacation ownership business to Wyndham.”
The Company provided the following balance sheet data as of December 31, 2006:
- Cash and cash equivalents of approximately $270 million compared to $99 million at December 31, 2005
- Vacation ownership contract receivables, net, of $2.4 billion compared to $2.1 billion at December 31, 2005
- Vacation ownership inventory of approximately $955 million, including approximately $170 million related to the effect of SFAS No. 152. Excluding the effect of SFAS No. 152, inventory was approximately $785 million compared to $636 million at December 31, 2005
- Securitized vacation ownership debt of $1.5 billion and other debt of $1.4 billion as of December 31, 2006
A debt table is included in the financial tables section of this press release.
Wyndham Worldwide reiterates the following full year 2007 guidance:
- Revenue of $4,110 – $4,260 million
- Adjusted EBITDA of $820 – $855 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 $75 - $85 million
- Provision for income taxes of $215 - $236 million
- Adjusted net income of $350 - $385 million
New company guidance for 2007:
- Full year Adjusted EPS increased from $1.77 - $1.95 to $1.84 - $2.02, excluding separation and related costs, as well as legacy matters, based on a diluted share count of approximately 190 million at December 31, 2006 (prior share count guidance was 198 million)
- First quarter Adjusted EPS of $0.37 - $0.40, excluding separation and related costs, as well as legacy matters
On August 24, 2006, Wyndham Worldwide announced the launch of a stock repurchase program of up to $400 million. Through December 31, 2006, the Company had repurchased 11.9 million shares at an average price of $29.35. During January 2007, the Company repurchased an additional 1.6 million shares, completing the program with 13.5 million shares purchased at an average price of $29.72.
Wyndham Worldwide today announced that its Board of Directors has authorized a new stock repurchase program that enables the Company to purchase up to $400 million of its common stock. The amount and timing of specific repurchases are subject to market conditions, applicable legal requirements and other factors. Repurchases may be conducted in the open market or in privately negotiated transactions.
“We believe our stock is a terrific value and that a repurchase program is an effective way to enhance shareholder value,” added Holmes. “2006 was a banner year and we look forward to continued growth in 2007: growth in our global presence, expansion of our Wyndham brand across our hotels and vacation ownership resorts and growth in consumer preference for our brands. We are well-positioned to benefit from many consumer trends through our global reach, familiar brands and unparalleled scale. I am pleased with what we’ve accomplished, but, more importantly, with what we see in the future for Wyndham Worldwide.”
Wyndham Worldwide Corporation will provide a webcast of its conference call to discuss the Company’s fourth-quarter and full year 2006 financial results on Tuesday, February 13 at 9 a.m. EST. Listeners may access the webcast live through the Company’s Web site at www.wyndhamworldwide.com/investors/. An archive of this webcast will be available at the Web site for approximately 90 days beginning at noon EST on February 13. The conference call also may be accessed by dialing (517) 308-9029 and providing the pass code "Wyndham." Listeners are urged to call at least 10 minutes prior to the scheduled start time. A telephone replay will be available at (203) 369-0940 beginning at noon EST on February 13 until 5 p.m. EST on February 18.
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 almost 6,500 franchised hotels and over 543,000 hotel rooms worldwide. RCI Global Vacation Network offers its more than 3.4 million members access to over 60,000 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 approximately 150 vacation ownership resorts serving over 800,000 owners throughout North America, the Caribbean and the South Pacific. Wyndham Worldwide, headquartered in Parsippany, N.J., employs more than 30,000 employees globally.
For more information about Wyndham Worldwide, please visit the company’s web site at 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 trends for the Company’s revenues, earnings and related financial and operating measures, the number of hotels and resorts the Company intends to add in future periods, debt levels, rebranding initiatives and share repurchases.
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 economic environment for the hospitality industry, the impact of war and terrorist activity, operating risks associated with the hotel, vacation exchange and rentals and vacation ownership businesses, as well as those specified in the Company’s Quarterly Report on Form 10-Q, filed August 18, 2006 under the heading “Risk Factors.” 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.
Margo C. Happer
Senior Vice President
Seven Sylvan Way
Parsippany, NJ 07054
Senior Vice President
Marketing and Communications
Seven Sylvan Way
Parsippany, NJ 07054