WYNDHAM WORLDWIDE REPORTS STRONG FIRST QUARTER 2007 RESULTS
Exceeds Earnings Expectations with Strong Organic Growth in All Businesses
Company to Initiate Cash Dividend
Increasing 2007 Revenue and Earnings Guidance
PARSIPPANY, N.J. (May 1, 2007) –
Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months ended March 31, 2007. The Company also announced plans to pay a cash dividend on its common stock beginning in the third quarter of 2007.
Download and view the Wyndham Worldwide First Quarter 2007 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.
FIRST QUARTER 2007 RESULTS HIGHLIGHTS:
- Revenues increased to over $1.0 billion, up 16% compared to the first quarter of 2006, with top-line growth across the Company's three businesses: Lodging, Vacation Exchange and Rentals, and Vacation Ownership.
- Net income for the quarter was $86 million, or $0.45 per diluted share. Adjusted net income was $81 million.
- Adjusted earnings per diluted share of $0.43 exceeded Company issued guidance and were 10% ahead of last year's first quarter results on an Adjusted basis (assuming Wyndham Worldwide had been a stand-alone, public company).
"This was a terrific quarter for Wyndham Worldwide, with great performance across our businesses, reflecting solid execution in a healthy and growing global travel industry," said Stephen P. Holmes, Wyndham Worldwide chairman and chief executive officer. "Our strong and diverse brand and service portfolio appeals to consumers and business partners around the world, enabling us to deliver strong financial results that should return value to shareholders today and in years to come. I am extremely proud of our results and the dedication of our team to continually deliver quality service to our partners and customers."
Wyndham Worldwide to Initiate Dividend
Wyndham Worldwide's Board of Directors approved a dividend plan and anticipates an initial quarterly cash dividend of $0.04 per share, or $0.16 annually, beginning in the third quarter of 2007. The actual declaration of dividends and the establishment of record and payment dates are subject to final determination by the Board of Directors.
"As we approach our first anniversary as a public company, we are pleased to initiate a dividend program, which is possible due to our strong results, coupled with a healthy balance sheet and an efficient capital structure," said Holmes.
First Quarter 2007 Operating Results
Revenues for the first quarter of 2007 were $1,012 million, up 16% over the same period in 2006, reflecting strong organic growth across the businesses. Adjusted net income for the first quarter of 2007 was $81 million or $0.43 per diluted earnings per share, excluding $4 million after-tax of separation and related costs associated with Wyndham Worldwide's spin-off from Cendant Corporation (now Avis Budget Group) and $9 million of an after-tax net benefit from the resolution of and adjustment to certain legacy items.
Lodging (Wyndham Hotel Group)
Revenues increased 6% to $152 million in the first quarter of 2007 compared with the first quarter of 2006, primarily reflecting RevPAR gains and the April 2006 acquisition of Baymont Inn & Suites. EBITDA grew 10% to $45 million.
RevPAR for the first quarter of 2007 increased 3.0% from the first quarter of 2006 or 6.8% excluding the Wyndham brand. The Wyndham brand comparison was affected by the expected attrition of certain properties. Excluding these properties, which have left or are expected to leave the system, Wyndham Hotel and Resorts RevPAR was up 5.2% compared to a 4.8% increase for the upscale sector. Additional RevPAR highlights include:
- RevPAR growth for the Company's economy brands continued to outperform the industry; Days Inn increased domestic RevPAR by 2.7% and Super 8 increased domestic RevPAR by 5.6% compared to industry segment growth of 2.1%.
- Ramada increased domestic RevPAR by 5.0% compared to 2.2% in the midscale with food and beverage industry segment.
- Wingate increased domestic RevPAR by 8.0% versus a 5.6% increase for the midscale without food and beverage industry segment.
The total lodging system grew in line with the Company's expectations, with weighted average rooms available and number of properties increasing 2% to 529,700 and 6,450, respectively, over the same period in 2006.
The Company's hotel development pipeline as of March 31, 2007 included approximately 820 hotels and approximately 95,000 rooms, of which 21% are international and 42% are new construction.
Vacation Exchange and Rentals (RCI Global Vacation Network)
Revenues increased 11% to $314 million in the first quarter of 2007 compared with the first quarter of 2006, reflecting continued momentum in both vacation exchange and vacation rentals as well as favorable currency translations. EBITDA grew to $85 million for the first quarter of 2007, a 10% increase compared to the first quarter of 2006.
Vacation exchange revenues were $135 million, an 8% increase compared to the first quarter of 2006. The average number of members increased 6% and annual dues and exchange revenue per member increased 2% from the first quarter of 2006.
Vacation rentals revenues were $139 million, a 16% increase compared to the first quarter of 2006, due to a 3% increase in vacation rental transactions and a 12% increase in the average net price per rental. These results were primarily driven by double-digit revenue growth at Landal Parks and Novasol rental brands, which benefited from expanded offerings and targeted marketing to consumers for winter destinations.
Other ancillary revenues generated primarily from additional products and services provided to affiliates and members were $40 million in the first quarter 2007 compared to $37 million in the same period last year.
Currency translations contributed $11 million to revenues and increased expenses by $9 million, resulting in a $2 million lift to EBITDA.
Vacation Ownership (Wyndham Vacation Ownership)
Revenues increased 23% to $549 million in the first quarter 2007 compared with the first quarter of 2006 reflecting strong organic growth. EBITDA for the first quarter of 2007 was $63 million, including separation and related costs of $3 million. Excluding separation and related costs, Adjusted EBITDA for the first quarter of 2007 rose 3%. Year-over-year comparisons were significantly affected by a first quarter 2006 operational change made in conjunction with the adoption of SFAS No. 152, "Accounting for Real Estate Time-Sharing Transactions," which contributed $39 million to revenues and $20 million to EBITDA in the first quarter of 2006.
Gross Vacation Ownership Interest sales were $430 million for the first quarter of 2007, up more than 20% compared to the first quarter of 2006, driven by expanded marketing efforts resulting in a 15% growth in tour flow and a 9% increase in volume per guest.
The strong results reflect continued robust purchases of the Company's vacation ownership products among both new and existing owners, contribution from sales offices opened throughout 2006, and new marketing programs to existing owners. Price increases and larger transactions size also contributed to growth.
Consumer finance revenues increased 25% for the first quarter of 2007 compared to the first quarter of 2006, reflecting continued growth in the Company's contract receivables portfolio, consistent with Vacation Ownership Interest revenue growth. The strong consumer finance revenues were partially offset by higher interest expense due to an increase in both our secured borrowings and interest rates.
Net income for the first quarter of 2007 reflects an increase in interest expense of $8 million and a decrease in interest income of $9 million, both associated with the Company's current capital structure, as well as an increase in depreciation and amortization of $4 million compared to the first quarter of 2006.
The Company provided the following balance sheet data as of March 31, 2007:
- Cash and cash equivalents of approximately $175 million compared to approximately $270 million at December 31, 2006
- Vacation ownership contract receivables, net, of $2.5 billion compared to $2.4 billion at December 31, 2006
- Vacation ownership and other inventory of approximately $1.1 billion compared to approximately $955 million at December 31, 2006
- Securitized vacation ownership debt of $1.7 billion compared to $1.5 billion at December 31, 2006
- Other debt of $1.4 billion, unchanged from December 31, 2006
A debt table is included in the financial tables section of this press release.
The Company repurchased 6.7 million shares of stock during the first quarter 2007 at an average price of $33.78 and an additional 2.6 million shares at an average price of $35.04 during April 2007. The Company has approximately $140 million remaining under its current program.
Outlook and Guidance Increase
Wyndham Worldwide is increasing full year 2007 guidance as follows:
- Revenues of $4,350 – $4,510 million, up from $4,110 – $4,260 million
- Adjusted EBITDA of $835 – $875 million, up from $820 – $855 million, and still 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, unchanged
- Interest expense of $70 – $80 million, down from $75 – $85 million
- Tax rate of 38%, unchanged
- Adjusted net income of $365 – $400 million, up from $350 – $385 million, excluding separation and related costs, as well as legacy matters
- Full year Adjusted EPS of $1.98 – $2.17, up from $1.84 – $2.02, excluding separation and related costs, as well as legacy matters, based on weighted average shares of approximately 184 million (as calculated based on share count on March 31, 2007 of approximately 184 million). Prior share count guidance was 190 million.
- Second quarter Adjusted EPS of $0.43 – $0.46, excluding separation and related costs, as well as legacy matters, based on weighted average shares of approximately 184 million (as calculated based on share count on March 31, 2007 of approximately 184 million).
"Our customers and business partners continue to believe in us and our future as evidenced by the number of new construction contracts in our hotel pipeline, the innovative partnerships that are occurring within all of our businesses and the tremendous increase in vacation ownership sales to both new and existing customers. The Wyndham Worldwide winning formula is working," concluded Holmes.
Wyndham Worldwide Corporation will provide a webcast of its conference call to discuss the Company's first quarter 2007 financial results on Tuesday, May 1 at 9 a.m. EDT. 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 May 1. The conference call also may be accessed by dialing (517) 308-9108 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 (402) 998-0463 beginning at noon EDT on May 1 until 5 p.m. EST on May 6.
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 539,000 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, share repurchases and dividends.
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 in the Company's Annual Report on Form 10-K, filed with the SEC on March 7, 2007. 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.
It is not practical to provide a reconciliation of forecasted Adjusted EBITDA for the full year 2007 to the most directly comparable GAAP measure, net income, because certain items cannot be reasonably estimated or predicted at this time. Any of those items could be significant to our financial results.
Margo C. Happer
Senior Vice President, Investor Relations
Wyndham Worldwide Corporation
Senior Vice President, Marketing and Communications
Wyndham Worldwide Corporation