Wyndham Worldwide Reports First Quarter 2012 Earnings
First Quarter Adjusted EPS Growth of 36% – Increases 2012 EPS Guidance – Share Repurchase Authorization Increased
Wyndham Worldwide Corporation (NYSE: WYN) today announced results for the three months ended March 31, 2012.
Highlights:
- First quarter adjusted diluted earnings per share (EPS) was $0.60, compared with $0.44 in the first quarter of 2011, an increase of 36%. First quarter 2012 reported diluted EPS was $0.21, a decrease of 49% from the same period in 2011, reflecting early extinguishment charges related to $650 million of debt tender offers.
- First quarter Adjusted EBITDA increased 8% to $220 million.
- Free cash flow increased to $193 million for the quarter ended March 31, 2012, compared with $185 million from the same period in 2011.
- During the quarter, the Company repurchased 3.6 million shares of its common stock for $150 million at an average price of $42.05.
- The Company announced today that its Board of Directors approved a $750 million increase to the share repurchase authorization.
“First quarter results were strong, reflecting the power of our fee-for-service business model across economic cycles, continuing innovation throughout the Company, robust free cash flow and disciplined capital allocation,” said Stephen P. Holmes, chairman and CEO, Wyndham Worldwide. “Furthermore, consumers are traveling. Our Vacation Ownership and Hotel businesses are showing great momentum and our Exchange and Rentals business proved resilient despite the difficult economic climate in Europe. As always, we will continue to focus on driving operational improvements in 2012 and beyond.”
FIRST QUARTER 2012 OPERATING RESULTS
First quarter revenues were $1.0 billion, an increase of 9% from the prior year period. The increase reflects growth in all of our business units led by the Company’s Lodging and Vacation Ownership businesses.
For the first quarter of 2012, adjusted net income was $90 million, or $0.60 per diluted share, compared with $79 million, or $0.44 per diluted share for the same period in 2011. The increase in adjusted net income primarily reflects stronger operating results in our Lodging and Vacation Ownership businesses. Adjusted net income for the first quarter of 2012 excludes a $62 million early extinguishment charge related to $650 million of debt tender offers and $4 million of benefits related to legacy and other adjustments.
Including the early extinguishment charge and legacy benefits, reported net income for the first quarter of 2012 was $32 million, or $0.21 per diluted share, compared with net income of $72 million, or $0.41 per diluted share, for the first quarter of 2011.
Free cash flow increased 4% to $193 million for the quarter ended March 31, 2012, compared with $185 million during the same period in 2011. The growth in free cash flow primarily reflects reduced capital expenditures. The Company defines free cash flow as net cash provided by operating activities less capital expenditures, equity investments and development advances. For the quarter ended March 31, 2012, cash provided by operating activities was $228 million, compared with $229 million in the prior year period.
BUSINESS UNIT RESULTS
Lodging (Wyndham Hotel Group)
Revenues were $185 million in the first quarter of 2012, an increase of 24%, compared with the first quarter of 2011. The increase reflects domestic RevPAR gains of 9%, as part of a total system RevPAR improvement of 7%, revenues associated with the recently opened Wyndham Grand hotel in Orlando, and higher inter-segment licensing fees for use of the Wyndham brand trade name. The revenue increase also includes $10 million of reclassifications, primarily related to certain reservation fees, which had no impact on Adjusted EBITDA.
Adjusted EBITDA was $49 million, an increase of 23% compared with the first quarter of 2011, largely reflecting the revenue increases discussed above, partially offset by the operating costs associated with the recently opened Wyndham Grand hotel and higher marketing costs. Excluding the higher inter-segment licensing fees, Adjusted EBITDA increased by 13%.
As of March 31, 2012, the Company’s hotel system consisted of over 7,150 properties and approximately 609,300 rooms. The development pipeline included approximately 840 hotels and 108,200 rooms, of which 56% were new construction and 55% were international.
Vacation Exchange and Rentals (Wyndham Exchange & Rentals)
Revenues were $361 million in the first quarter of 2012, compared to $356 million in the first quarter of 2011. In constant currency and excluding the impact of acquisitions, revenues were flat.
Exchange revenues were $188 million, a decrease of 3% compared with the first quarter of 2011, primarily due to a 2% decline in the average number of members resulting from the non-renewal of an affiliation agreement. In constant currency, exchange revenues were down 2% and exchange revenue per member was flat.
Vacation rental revenues were $159 million, a 6% increase compared with the first quarter of 2011. Excluding the impact of foreign currency and acquisitions, vacation rental revenues were up 3% primarily due to a 2% increase in vacation rental transactions. Average net price per vacation rental remained flat.
Adjusted EBITDA for the first quarter of 2012 was $93 million, flat compared with the prior-year period. Excluding the impact of foreign currency and acquisitions, Adjusted EBITDA declined by 2%, reflecting the continued economic challenges in Europe.
Vacation Ownership (Wyndham Vacation Ownership)
Revenues were $501 million in the first quarter of 2012, an 11% increase over the first quarter of 2011, primarily reflecting increased vacation ownership interest (VOI) sales.
Gross VOI sales were $384 million in the first quarter of 2012, up 20% from the first quarter of 2011, primarily reflecting a 10% increase in volume per guest and an 8% increase in tour flow.
Adjusted EBITDA for the first quarter of 2012 was $103 million, a 7% increase compared with the first quarter of 2011. Excluding the higher inter-segment licensing fee paid for the use of the Wyndham brand trade name, Adjusted EBITDA increased by 11%, reflecting contributions from increased VOI sales.
Other Items
- The Board of Directors approved a $750 million increase in the Company’s share repurchase program.
- The Company repurchased approximately 3.6 million shares of common stock for $150 million during the first quarter of 2012 at an average price of $42.05, and an additional 850,000 shares for $40 million at an average price of $46.85 through April 24, 2012. The Company has $940 million remaining on its current share repurchase authorization, including the $750 million increase mentioned above.
- Net interest expense in the first quarter of 2012 was $31 million, compared to $30 million in the first quarter of 2011.
- During the quarter, the Company purchased $207 million of our 9.875% 2014 senior notes and $443 million of our 6.0% 2016 senior notes. We also issued $300 million of 5 year notes at 2.95% and $650 million of 10 year notes at 4.25%. A portion of the proceeds was used to reduce revolver borrowings by approximately $170 million.
Balance Sheet Information as of March 31, 2012:
- Cash and cash equivalents of approximately $240 million, compared with $142 million at December 31, 2011
- Vacation ownership contract receivables, net, of $2.8 billion, unchanged from December 31, 2011
- Vacation ownership and other inventory of approximately $1.1 billion, unchanged from December 31, 2011
- Securitized vacation ownership debt of $2.0 billion, compared with $1.9 billion at December 31, 2011
- Long-term debt of $2.3 billion, compared with $2.2 billion at December 31, 2011. The remaining borrowing capacity on the revolving credit facility was $942 million, compared with $771 million as of December 31, 2011
Outlook
For the full year 2012, the Company:
- Reiterates Revenues of approximately $4.425 – $4.6 billion
- Reiterates Adjusted EBITDA of approximately $1.030 – $1.055 billion
- Raises Adjusted EPS Guidance to $3.00 – $3.15 from $2.85 – $3.00
- Reduces diluted shares to 149 million from 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.
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 over 7,150 hotels with approximately 609,300 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.
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Table 1 |
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Wyndham Worldwide Corporation |
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OPERATING RESULTS OF REPORTABLE SEGMENTS |
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(In millions) |
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In addition to other measures, management evaluates the operating results of each of its reportable segments based upon net revenues and “EBITDA,” which is defined as net income before depreciation and amortization, interest expense (excluding consumer financing interest), interest income (excluding consumer financing interest) and income taxes, each of which is presented on the Company’s Consolidated Statements of Income. The Company believes that EBITDA is a useful measure of performance for the Company’s industry segments which, when considered with GAAP measures, the Company believes gives a more complete understanding of its operating performance. The Company’s presentation of EBITDA may not be comparable to similarly-titled measures used by other companies. |
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The following tables summarize net revenues and EBITDA for reportable segments, as well as reconcile EBITDA to net income attributable to Wyndham Worldwide for the three months ended March 31, 2012 and 2011: |
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Three Months Ended March 31, |
|||||||||||||||||||
|
2012 |
2011 |
||||||||||||||||||
|
Net Revenues |
EBITDA |
Net Revenues |
EBITDA |
||||||||||||||||
|
Lodging |
$ 185 |
$ 49 |
$ 149 |
$ 27 |
(e) |
||||||||||||||
|
Vacation Exchange and Rentals |
361 |
95 |
(c) |
356 |
93 |
||||||||||||||
|
Vacation Ownership |
501 |
103 |
450 |
97 |
(f) |
||||||||||||||
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Total Reportable Segments |
1,047 |
247 |
955 |
217 |
|||||||||||||||
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Corporate and Other (a) (b) |
(11) |
(21) |
(3) |
(14) |
|||||||||||||||
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Total Company |
$ 1,036 |
$ 226 |
$ 952 |
$ 203 |
|||||||||||||||
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Reconciliation of EBITDA to Net Income attributable to Wyndham Worldwide |
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EBITDA |
$ 226 |
$ 203 |
|||||||||||||||||
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Depreciation and amortization |
45 |
45 |
|||||||||||||||||
|
Interest expense |
33 |
32 |
|||||||||||||||||
|
Early extinguishment of debt |
106 |
(d) |
12 |
(g) |
|||||||||||||||
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Interest income |
(2) |
(2) |
|||||||||||||||||
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Income before income taxes |
44 |
116 |
|||||||||||||||||
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Provision for income taxes |
13 |
44 |
|||||||||||||||||
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Net income |
31 |
72 |
|||||||||||||||||
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Net loss attributable to noncontrolling interest |
1 |
- |
|||||||||||||||||
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Net income attributable to Wyndham Worldwide |
$ 32 |
$ 72 |
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__________ |
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(a) Includes the elimination of transactions between segments. |
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(b) Includes $4 million and $11 million of a net benefit during the three months ended March 31, 2012 and 2011, respectively, related to the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant. |
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(c) Includes a $2 million benefit related to the reversal of an allowance associated with a previously divested asset. |
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(d) Represents costs incurred for the early repurchase of a portion of the Company’s 9.875% senior unsecured notes and 6.00% senior unsecured notes. |
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(e) Includes a non-cash impairment charge of $13 million to reduce the value of an international joint venture. |
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(f) Includes a $1 million benefit for the reversal of costs incurred as a result of various strategic initiatives commenced by the Company during 2008. |
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(g) Represents costs incurred for the early repurchase of a portion of the Company’s convertible notes. |
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The following tables summarize net revenues and Adjusted EBITDA for reportable segments for the three months ended March 31, 2012 and 2011 (for a description of adjustments by segment, see Table 7): |
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Three Months Ended March 31, |
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2012 |
2011 |
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Adjusted |
Adjusted |
||||||||||||||||||
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Net Revenues |
EBITDA |
Net Revenues |
EBITDA |
||||||||||||||||
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Lodging |
$ 185 |
$ 49 |
$ 149 |
$ 40 |
|||||||||||||||
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Vacation Exchange and Rentals |
361 |
93 |
356 |
93 |
|||||||||||||||
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Vacation Ownership |
501 |
103 |
450 |
96 |
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Total Reportable Segments |
1,047 |
245 |
955 |
229 |
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Corporate and Other |
(11) |
(25) |
(3) |
(25) |
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Total Company |
$ 1,036 |
$ 220 |
$ 952 |
$ 204 |
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Table 2 |
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Wyndham Worldwide Corporation |
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CONSOLIDATED STATEMENTS OF INCOME |
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(In millions, except per share data) |
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Three Months Ended |
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March 31, |
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2012 |
2011 |
|||||
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Net revenues |
||||||
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Service and membership fees |
$ 504 |
$ 495 |
||||
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Vacation ownership interest sales |
271 |
222 |
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Franchise fees |
118 |
101 |
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Consumer financing |
103 |
102 |
||||
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Other |
40 |
32 |
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Net revenues |
1,036 |
952 |
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Expenses |
||||||
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Operating |
442 |
411 |
||||
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Cost of vacation ownership interests |
28 |
32 |
||||
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Consumer financing interest |
23 |
23 |
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Marketing and reservation |
167 |
137 |
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General and administrative(a) |
153 |
140 |
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Asset impairments |
- |
13 |
(b) |
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Restructuring |
- |
(1) |
(c) |
|||
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Depreciation and amortization |
45 |
45 |
||||
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Total expenses |
858 |
800 |
||||
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Operating income |
178 |
152 |
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Other income, net |
(3) |
(d) |
(6) |
(e) |
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Interest expense |
33 |
32 |
||||
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Early extinguishment of debt |
106 |
(f) |
12 |
(g) |
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Interest income |
(2) |
(2) |
||||
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Income before income taxes |
44 |
116 |
||||
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Provision for income taxes |
13 |
44 |
||||
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Net income |
31 |
72 |
||||
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Net loss attributable to noncontrolling interest |
1 |
- |
||||
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Net income attributable to Wyndham Worldwide |
$ 32 |
$ 72 |
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Earnings per share |
||||||
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Basic |
$ 0.22 |
$ 0.42 |
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Diluted |
0.21 |
0.41 |
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Weighted average shares outstanding |
||||||
|
Basic |
146 |
173 |
||||
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Diluted |
149 |
179 |
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__________ |
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(a) Includes $4 million and $7 million of a net benefit during the three months ended March 31, 2012 and 2011, respectively, related to the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant. |
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(b) Represents a non-cash impairment charge related to a write-down of an international joint venture at the Company’s lodging business. |
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(c) Relates to the reversal of costs incurred as a result of various strategic initiatives commenced by the Company during 2008. |
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(d) Includes a $2 million benefit related to the reversal of an allowance associated with a previously divested asset at the Company’s vacation exchange and rentals business. |
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(e) Includes $4 million of a gain related to the redemption of a preferred stock investment allocated to the Company in connection with our separation from Cendant. |
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(f) Represents costs incurred for the early repurchase of a portion of the Company’s 9.875% senior unsecured notes and 6.00% senior unsecured notes. |
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(g) Represents costs incurred for the early repurchase of a portion of the Company’s convertible notes. |
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Table 3 |
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(1 of 3) |
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Wyndham Worldwide Corporation |
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OPERATING STATISTICS |
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Year |
Q1 |
Q2 |
Q3 |
Q4 |
Full Year |
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Lodging (a) |
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Number of Rooms |
2012 |
609,300 |
N/A |
N/A |
N/A |
N/A |
||||
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2011 |
609,600 |
612,900 |
611,200 |
613,100 |
N/A |
|||||
|
2010 |
593,300 |
606,800 |
605,700 |
612,700 |
N/A |
|||||
|
2009 |
588,500 |
590,200 |
590,900 |
597,700 |
N/A |
|||||
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RevPAR |
2012 |
$ 29.73 |
N/A |
N/A |
N/A |
N/A |
||||
|
2011 |
$ 27.71 |
$ 35.38 |
$ 39.49 |
$ 30.65 |
$ 33.34 |
|||||
|
2010 |
$ 25.81 |
$ 32.25 |
$ 37.14 |
$ 29.18 |
$ 31.14 |
|||||
|
2009 |
$ 27.69 |
$ 32.38 |
$ 34.81 |
$ 26.47 |
$ 30.34 |
|||||
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Vacation Exchange and Rentals |
||||||||||
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Average Number of Members (in 000s) |
2012 |
3,684 |
N/A |
N/A |
N/A |
N/A |
||||
|
2011 |
3,766 |
3,755 |
3,744 |
3,734 |
3,750 |
|||||
|
2010 |
3,746 |
3,741 |
3,766 |
3,759 |
3,753 |
|||||
|
2009 |
3,789 |
3,795 |
3,781 |
3,765 |
3,782 |
|||||
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Exchange Revenue Per Member |
2012 |
$ 204.56 |
N/A |
N/A |
N/A |
N/A |
||||
|
2011 |
$ 205.64 |
$ 178.46 |
$ 172.38 |
$ 161.68 |
$ 179.59 |
|||||
|
2010 |
$ 201.93 |
$ 172.20 |
$ 173.44 |
$ 162.59 |
$ 177.53 |
|||||
|
2009 |
$ 194.83 |
$ 174.22 |
$ 173.90 |
$ 163.89 |
$ 176.73 |
|||||
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Vacation Rental Transactions (in 000s) (b) |
2012 |
418 |
N/A |
N/A |
N/A |
N/A |
||||
|
2011 |
398 |
328 |
370 |
250 |
1,347 |
|||||
|
2010 |
291 |
297 |
322 |
253 |
1,163 |
|||||
|
2009 |
273 |
231 |
264 |
196 |
964 |
|||||
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Average Net Price Per Vacation Rental(b) |
2012 |
$ 379.40 |
N/A |
N/A |
N/A |
N/A |
||||
|
2011 |
$ 377.71 |
$ 549.09 |
$ 701.81 |
$ 497.04 |
$ 530.78 |
|||||
|
2010 |
$ 361.17 |
$ 387.01 |
$ 500.31 |
$ 449.12 |
$ 425.38 |
|||||
|
2009 |
$ 353.15 |
$ 471.74 |
$ 594.34 |
$ 499.66 |
$ 477.38 |
|||||
|
Vacation Ownership |
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Gross Vacation Ownership Interest (VOI) Sales (in 000s) (c) |
2012 |
$ 384,000 |
N/A |
N/A |
N/A |
N/A |
||||
|
2011 |
$ 319,000 |
$ 412,000 |
$ 455,000 |
$ 409,000 |
$ 1,595,000 |
|||||
|
2010 |
$ 308,000 |
$ 371,000 |
$ 412,000 |
$ 373,000 |
$ 1,464,000 |
|||||
|
2009 |
$ 280,000 |
$ 327,000 |
$ 366,000 |
$ 343,000 |
$ 1,315,000 |
|||||
|
Tours (d) |
2012 |
148,000 |
N/A |
N/A |
N/A |
N/A |
||||
|
2011 |
137,000 |
177,000 |
197,000 |
173,000 |
685,000 |
|||||
|
2010 |
123,000 |
163,000 |
187,000 |
160,000 |
634,000 |
|||||
|
2009 |
137,000 |
164,000 |
173,000 |
142,000 |
617,000 |
|||||
|
Volume Per Guest (VPG) (d) |
2012 |
$ 2,414 |
N/A |
N/A |
N/A |
N/A |
||||
|
2011 |
$ 2,192 |
$ 2,227 |
$ 2,197 |
$ 2,296 |
$ 2,229 |
|||||
|
2010 |
$ 2,334 |
$ 2,156 |
$ 2,081 |
$ 2,214 |
$ 2,183 |
|||||
|
2009 |
$ 1,866 |
$ 1,854 |
$ 1,944 |
$ 2,210 |
$ 1,964 |
|||||
|
Note: Full year amounts may not add across due to rounding. |
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(a) Includes the impact of the acquisition of the Tryp hotel brand (June 2010) from the acquisition date forward. Therefore, the operating statistics are not presented on a comparable basis. |
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(b) Includes the impact of the acquisitions of Hoseasons (March 2010), ResortQuest (September 2010), James Villa Holidays (November 2010) and two tuck-in acquisitions (third quarter 2011) from the acquisition dates forward. Therefore, the operating statistics are not presented on a comparable basis. |
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(c) Includes gross VOI sales under the Company’s Wyndham Asset Affiliate Model (WAAM) beginning in the first quarter of 2010 (see Table 9 for a reconciliation of gross VOI sales to vacation ownership interest sales). |
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(d) Includes the impact of WAAM related tours beginning in the first quarter of 2010. |
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Table 3 |
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(2 of 3) |
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Wyndham Worldwide Corporation |
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ADDITIONAL DATA |
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|
Year |
Q1 |
Q2 |
Q3 |
Q4 |
Full Year |
|||||
|
Lodging (a) |
||||||||||
|
Number of Properties |
2012 |
7,150 |
N/A |
N/A |
N/A |
N/A |
||||
|
2011 |
7,190 |
7,220 |
7,190 |
7,210 |
N/A |
|||||
|
2010 |
7,090 |
7,160 |
7,150 |
7,210 |
N/A |
|||||
|
2009 |
6,990 |
7,020 |
7,040 |
7,110 |
N/A |
|||||
|
Vacation Ownership |
||||||||||
|
Provision for Loan Losses (in 000s) (b) |
2012 |
$ 96,000 |
N/A |
N/A |
N/A |
N/A |
||||
|
2011 |
$ 79,000 |
$ 80,000 |
$ 96,000 |
$ 83,000 |
$ 339,000 |
|||||
|
2010 |
$ 86,000 |
$ 87,000 |
$ 85,000 |
$ 82,000 |
$ 340,000 |
|||||
|
2009 |
$ 107,000 |
$ 122,000 |
$ 117,000 |
$ 103,000 |
$ 449,000 |
|||||
|
Sales under WAAM (in 000s) (c) |
2012 |
$ 17,000 |
N/A |
N/A |
N/A |
N/A |
||||
|
2011 |
$ 18,000 |
$ 19,000 |
$ 38,000 |
$ 31,000 |
$ 106,000 |
|||||
|
2010 |
$ 5,000 |
$ 13,000 |
$ 20,000 |
$ 14,000 |
$ 51,000 |
|||||
|
WAAM Commission Revenues (in 000s) |
2012 |
$ 12,000 |
N/A |
N/A |
N/A |
N/A |
||||
|
2011 |
$ 10,000 |
$ 11,000 |
$ 23,000 |
$ 21,000 |
$ 65,000 |
|||||
|
2010 |
$ 3,000 |
$ 8,000 |
$ 12,000 |
$ 9,000 |
$ 31,000 |
|||||
|
Note: Full year amounts may not add across due to rounding. |
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|
(a) Includes the impact of the acquisition of Tryp hotel brand (June 2010) from the acquisition date forward. Therefore, the operating statistics are not presented on a comparable basis. |
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|
(b) Represents provision for estimated losses on vacation ownership contract receivables originated during the period, which is recorded as a contra revenue to vacation ownership interest sales on the Consolidated Statements of Income. |
||||||||||
|
(c) Represents gross VOI sales under the Company’s WAAM for which the Company earns commission revenue (WAAM Commission Revenues). The commission revenue earned on these sales is included in service fees and membership revenues on the Consolidated Statements of Income. The Company implemented this sales model during the first quarter of 2010 and, as such, there is no historical data prior to 2010. |
||||||||||
|
Table 3 |
||||||||||
|
(3 of 3) |
||||||||||
|
Wyndham Worldwide Corporation |
||||||||||
|
OPERATING STATISTICS |
||||||||||
|
GLOSSARY OF TERMS |
||||||||||
|
Lodging |
||||||||||
|
Number of Rooms: Represents the number of rooms at lodging properties at the end of the period which are either (i) under franchise and/or management agreements, or company owned, (ii) properties under affiliation agreements for which we receive a fee for reservation and/or other services provided or (iii) properties managed under a joint venture. |
||||||||||
|
Average Occupancy Rate: Represents the percentage of available rooms occupied during the period. |
||||||||||
|
Average Daily Rate (ADR): Represents the average rate charged for renting a lodging room for one day. |
||||||||||
|
RevPAR: Represents revenue per available room and is calculated by multiplying average occupancy rate by ADR. Comparable RevPAR represents RevPAR of hotels which are included in both periods. |
||||||||||
|
Vacation Exchange and Rentals |
||||||||||
|
Average Number of Members: Represents members in our vacation exchange programs who pay annual membership dues. For additional fees, such participants are entitled to exchange intervals for intervals at other properties affiliated with our vacation exchange business. In addition, certain participants may exchange intervals for other leisure-related services and products. |
||||||||||
|
Exchange Revenue Per Member: Represents total annualized revenues generated from fees associated with memberships, exchange transactions, member-related rentals and other servicing for the period divided by the average number of vacation exchange members during the period. |
||||||||||
|
Vacation Rental Transactions: Represents the number of transactions that are generated in connection with customers booking their vacation rental stays through us. One rental transaction is recorded for each standard one-week rental. |
||||||||||
|
Average Net Price Per Vacation Rental: Represents the net rental price generated from renting vacation properties to customers and other related rental servicing fees divided by the number of vacation rental transactions. |
||||||||||
|
Vacation Ownership |
||||||||||
|
Gross Vacation Ownership Interest Sales: Represents sales of vacation ownership interest (VOIs), including Wyndham Asset Affiliation Model sales, before the net effect of percentage-of-completion accounting and loan loss provisions. See Table 9 for a reconciliation of Gross VOI sales to Vacation Ownership Interest Sales. We believe that Gross VOI sales provides an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period. |
||||||||||
|
Tours: Represents the number of tours taken by guests in our efforts to sell vacation ownership interests. |
||||||||||
|
Volume per Guest (VPG): Represents gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) divided by the number of tours. We have excluded non-tour upgrade sales in the calculation of VPG because non-tour upgrade sales are generated by a different marketing channel. See Table 9 for a detail of tele-sales upgrades for 2009-2012. We believe that VPG provides an enhanced understanding of the performance of our vacation ownership business because it directly measures the efficiency of this business’ tour selling efforts during a given reporting period. |
||||||||||
|
General |
||||||||||
|
Constant Currency: Represents a comparison eliminating the effects of foreign exchange rate fluctuations between periods. |
||||||||||
|
Table 4 |
|||||||||||||
|
Wyndham Worldwide Corporation |
|||||||||||||
|
REVENUE DETAIL BY REPORTABLE SEGMENT |
|||||||||||||
|
(In millions) |
|||||||||||||
|
2012 |
2011 |
||||||||||||
|
Q1 |
Q2 |
Q3 |
Q4 |
Year |
Q1 |
Q2 |
Q3 |
Q4 |
Year |
||||
|
Lodging |
|||||||||||||
|
Royalties and Franchise Fees |
$ 62 |
N/A |
N/A |
N/A |
N/A |
$ 58 |
$ 75 |
$ 85 |
$ 66 |
$ 284 |
|||
|
Marketing, Reservation and Wyndham Rewards Revenues (a) |
68 |
N/A |
N/A |
N/A |
N/A |
54 |
75 |
94 |
76 |
299 |
|||
|
Hotel Management Reimbursable Revenues (b) |
21 |
N/A |
N/A |
N/A |
N/A |
19 |
19 |
21 |
20 |
79 |
|||
|
Inter-segment Trademark Fees (c) |
8 |
N/A |
N/A |
N/A |
N/A |
1 |
2 |
3 |
4 |
10 |
|||
|
Owned Hotel Revenues |
8 |
N/A |
N/A |
N/A |
N/A |
- |
- |
- |
5 |
5 |
|||
|
Ancillary Revenues (d) |
18 |
N/A |
N/A |
N/A |
N/A |
17 |
19 |
19 |
17 |
72 |
|||
|
Total Lodging |
185 |
N/A |
N/A |
N/A |
N/A |
149 |
190 |
222 |
188 |
749 |
|||
|
Vacation Exchange and Rentals |
|||||||||||||
|
Exchange Revenues |
188 |
N/A |
N/A |
N/A |
N/A |
194 |
168 |
161 |
150 |
673 |
|||
|
Rental Revenues |
159 |
N/A |
N/A |
N/A |
N/A |
150 |
180 |
260 |
125 |
715 |
|||
|
Ancillary Revenues (e) |
14 |
N/A |
N/A |
N/A |
N/A |
12 |
13 |
15 |
16 |
56 |
|||
|
Total Vacation Exchange and Rentals |
361 |
N/A |
N/A |
N/A |
N/A |
356 |
361 |
436 |
291 |
1,444 |
|||
|
Vacation Ownership |
|||||||||||||
|
Vacation Ownership Interest Sales |
271 |
N/A |
N/A |
N/A |
N/A |
222 |
313 |
320 |
295 |
1,150 |
|||
|
Consumer Financing |
103 |
N/A |
N/A |
N/A |
N/A |
102 |
103 |
105 |
105 |
415 |
|||
|
Property Management Fees |
110 |
N/A |
N/A |
N/A |
N/A |
110 |
108 |
105 |
101 |
424 |
|||
|
WAAM Commissions |
12 |
N/A |
N/A |
N/A |
N/A |
10 |
11 |
23 |
21 |
65 |
|||
|
Ancillary Revenues (f) |
5 |
N/A |
N/A |
N/A |
N/A |
6 |
6 |
6 |
5 |
23 |
|||
|
Total Vacation Ownership |
501 |
N/A |
N/A |
N/A |
N/A |
450 |
541 |
559 |
527 |
2,077 |
|||
|
Total Reportable Segments |
$ 1,047 |
N/A |
N/A |
N/A |
N/A |
$ 955 |
$ 1,092 |
$ 1,217 |
$ 1,006 |
$ 4,270 |
|||
|
2010 |
2009 |
||||||||||||
|
Q1 |
Q2 |
Q3 |
Q4 |
Year |
Q1 |
Q2 |
Q3 |
Q4 |
Year |
||||
|
Lodging |
|||||||||||||
|
Royalties and Franchise Fees |
$ 52 |
$ 69 |
$ 82 |
$ 62 |
$ 265 |
$ 57 |
$ 68 |
$ 72 |
$ 57 |
$ 254 |
|||
|
Marketing, Reservation and Wyndham Rewards Revenues (a) |
50 |
65 |
76 |
60 |
251 |
54 |
66 |
73 |
53 |
246 |
|||
|
Hotel Management Reimbursable Revenues (b) |
21 |
20 |
18 |
18 |
77 |
22 |
23 |
21 |
19 |
85 |
|||
|
Ancillary Revenues (d) |
21 |
24 |
27 |
23 |
95 |
21 |
17 |
17 |
20 |
75 |
|||
|
Total Lodging |
144 |
178 |
203 |
163 |
688 |
154 |
174 |
183 |
149 |
660 |
|||
|
Vacation Exchange and Rentals |
|||||||||||||
|
Exchange Revenues |
189 |
161 |
163 |
153 |
666 |
185 |
165 |
164 |
154 |
668 |
|||
|
Rental Revenues |
105 |
115 |
161 |
114 |
495 |
96 |
109 |
157 |
98 |
460 |
|||
|
Ancillary Revenues (e) |
6 |
5 |
6 |
15 |
32 |
6 |
6 |
6 |
6 |
24 |
|||
|
Total Vacation Exchange and Rentals |
300 |
281 |
330 |
282 |
1,193 |
287 |
280 |
327 |
258 |
1,152 |
|||
|
Vacation Ownership |
|||||||||||||
|
Vacation Ownership Interest Sales |
217 |
271 |
308 |
276 |
1,072 |
239 |
242 |
285 |
287 |
1,053 |
|||
|
Consumer Financing |
105 |
106 |
107 |
107 |
425 |
109 |
109 |
108 |
109 |
435 |
|||
|
Property Management Fees |
100 |
100 |
104 |
101 |
405 |
91 |
94 |
96 |
95 |
376 |
|||
|
WAAM Commissions (g) |
3 |
8 |
12 |
8 |
31 |
- |
- |
- |
- |
- |
|||
|
Ancillary Revenues (f) |
19 |
20 |
2 |
5 |
46 |
23 |
22 |
19 |
17 |
81 |
|||
|
Total Vacation Ownership |
444 |
505 |
533 |
497 |
1,979 |
462 |
467 |
508 |
508 |
1,945 |
|||
|
Total Reportable Segments |
$ 888 |
$ 964 |
$ 1,066 |
$ 942 |
$ 3,860 |
$ 903 |
$ 921 |
$ 1,018 |
$ 915 |
$ 3,757 |
|||
|
Note: Full year amounts may not add across due to rounding. |
|||||||||||||
|
(a) Marketing and reservation revenues represent fees we receive from franchised and managed hotels that are to be expended for marketing purposes or the operation of a centralized, brand-specific reservation system. These fees are typically based on a percentage of the gross room revenues of each hotel. Wyndham Rewards revenues represent fees we receive relating to our loyalty program. |
|||||||||||||
|
(b) Primarily represents payroll costs in our hotel management business that we pay on behalf of property owners and for which we are reimbursed by the property owners. |
|||||||||||||
|
(c) During 2011, $3 million, $1 million and $2 million of inter-segment trademark fees were recorded as a reduction of expenses in Q1, Q2 and Q3, respectively. As such, total inter-segment trademark fees for 2011 were $16 million. |
|||||||||||||
|
(d) Primarily includes additional services provided to franchisees. |
|||||||||||||
|
(e) Primarily includes fees generated from programs with affiliated resorts and homeowners. |
|||||||||||||
|
(f) Primarily includes revenues associated with bonus points/credits that are provided as purchase incentives on VOI sales and fees generated from other non-core operations. |
|||||||||||||
|
(g) The Company implemented the WAAM sales model during the first quarter of 2010 and, as such, there is no historical data for 2009. |
|||||||||||||
|
Table 5 |
|||||||||||||||
|
Wyndham Worldwide Corporation |
|||||||||||||||
|
SCHEDULE OF DEBT |
|||||||||||||||
|
(In millions) |
|||||||||||||||
|
March 31, 2012 |
December 31, 2011 |
September 30, 2011 |
June 30, 2011 |
March 31, 2011 |
|||||||||||
|
Securitized vacation ownership debt (a) |
|||||||||||||||
|
Term notes |
$ 1,896 |
$ 1,625 |
$ 1,512 |
$ 1,446 |
$ 1,666 |
||||||||||
|
Bank conduit facility (b) |
104 |
237 |
218 |
242 |
148 |
||||||||||
|
Securitized vacation ownership debt (c) |
2,000 |
1,862 |
1,730 |
1,688 |
1,814 |
||||||||||
|
Less: Current portion of securitized vacation ownership debt |
206 |
196 |
179 |
190 |
216 |
||||||||||
|
Long-term securitized vacation ownership debt |
$ 1,794 |
$ 1,666 |
$ 1,551 |
$ 1,498 |
$ 1,598 |
||||||||||
|
Debt: |
|||||||||||||||
|
Revolving credit facility (due July 2016) (d) |
$ 47 |
$ 218 |
$ 169 |
$ 107 |
$ 5 |
||||||||||
|
3.50% convertible notes (due May 2012) (e) |
44 |
36 |
27 |
32 |
41 |
||||||||||
|
9.875% senior unsecured notes (due May 2014) (f) |
42 |
243 |
243 |
242 |
241 |
||||||||||
|
6.00% senior unsecured notes (due December 2016) (g) |
362 |
811 |
812 |
803 |
797 |
||||||||||
|
2.95% senior unsecured notes (due March 2017) (h) |
298 |
- |
- |
- |
- |
||||||||||
|
5.75% senior unsecured notes (due February 2018) (i) |
247 |
247 |
247 |
247 |
247 |
||||||||||
|
7.375% senior unsecured notes (due March 2020) (j) |
248 |
247 |
247 |
247 |
247 |
||||||||||
|
5.625% senior unsecured notes (due March 2021) (k) |
245 |
245 |
245 |
245 |
245 |
||||||||||
|
4.25% senior unsecured notes (due March 2022) (l) |
643 |
- |
- |
- |
- |
||||||||||
|
Vacation rentals capital leases |
103 |
102 |
108 |
120 |
120 |
||||||||||
|
Other |
1 |
4 |
1 |
1 |
28 |
||||||||||
|
Total debt |
2,280 |
2,153 |
2,099 |
2,044 |
1,971 |
||||||||||
|
Less: Current portion of debt |
54 |
46 |
37 |
43 |
12 |
||||||||||
|
Long-term debt |
$ 2,226 |
$ 2,107 |
$ 2,062 |
$ 2,001 |
$ 1,959 |
||||||||||
|
__________ |
|||||||||||||||
|
(a) The Company’s vacation ownership contract receivables are securitized through bankruptcy-remote special purpose entities (“SPE”) that are consolidated within our financial statements. These bankruptcy-remote SPEs are legally separate from the Company. The receivables held by the bankruptcy-remote SPEs are not available to the Company’s creditors and legally are not the Company’s assets. Additionally, the creditors of these SPEs have no recourse to the Company for principal and interest. |
|||||||||||||||
|
(b) Represents a non-recourse vacation ownership bank conduit facility with a term through June 2013 and borrowing capacity of $600 million. As of March 31, 2012, this facility had remaining borrowing capacity of $496 million. |
|||||||||||||||
|
(c) This debt is collateralized by $2,622 million, $2,638 million, $2,502 million, $2,672 million and $2,778 million of underlying vacation ownership contract receivables and related assets as of March 31, 2012, December 31, 2011, September 30, 2011, June 30, 2011 and March 31, 2011, respectively. |
|||||||||||||||
|
(d) Represents a $1.0 billion revolving credit facility that expires on July 15, 2016. As of March 31, 2012, the Company had $11 million of outstanding letters of credit and a remaining borrowing capacity of $942 million. |
|||||||||||||||
|
(e) Represents convertible notes issued by the Company during May 2009. The balance at March 31, 2012 represents $12 million aggregate principal plus a $32 million liability related to a bifurcated conversion feature. |
|||||||||||||||
|
(f) Represents senior unsecured notes issued by the Company during May 2009. The balance as of March 31, 2012 represents $43 million aggregate principal less $1 million of unamortized discount. |
|||||||||||||||
|
(g) Represents senior unsecured notes issued by the Company during December 2006. The balance as of March 31, 2012 represents $357 million aggregate principal less $1 million of unamortized discount, plus $6 million of unamortized gains from the settlement of a derivative. |
|||||||||||||||
|
(h) Represents senior unsecured notes issued by the Company during March 2012. The balance as of March 31, 2012 represents $300 million aggregate principal less $2 million of unamortized discount. |
|||||||||||||||
|
(i) Represents senior unsecured notes issued by the Company during September 2010. The balance as of March 31, 2012 represents $250 million aggregate principal less $3 million of unamortized discount. |
|||||||||||||||
|
(j) Represents senior unsecured notes issued by the Company during February 2010. The balance as of March 31, 2012 represents $250 million aggregate principal less $2 million of unamortized discount. |
|||||||||||||||
|
(k) Represents senior unsecured notes issued by the Company during March 2011. The balance as of March 31, 2012 represents $250 million aggregate principal less $5 million of unamortized discount. |
|||||||||||||||
|
(l) Represents senior unsecured notes issued by the Company during March 2012. The balance as of March 31, 2012 represents $650 million aggregate principal less $7 million of unamortized discount. |
|||||||||||||||
|
Table 7 |
|||||||||||||
|
(2 of 2) |
|||||||||||||
|
Wyndham Worldwide |
|||||||||||||
|
NON-GAAP RECONCILIATION |
|||||||||||||
|
(In millions) |
|||||||||||||
|
Reported |
Legacy |
Asset |
Restructuring |
VAT |
CTA |
Adjusted |
|||||||
|
Three months ended March 31, 2011 |
Net Revenues |
EBITDA |
Adjustments (b) |
Impairments |
Costs |
Adjustments (e) |
Writeoff (f) |
EBITDA |
|||||
|
Lodging |
$ 149 |
$ 27 |
$ - |
$ 13 |
(c) |
$ - |
$ - |
$ - |
$ 40 |
||||
|
Vacation Exchange and Rentals |
356 |
93 |
- |
- |
- |
- |
- |
93 |
|||||
|
Vacation Ownership |
450 |
97 |
- |
- |
(1) |
(d) |
- |
- |
96 |
||||
|
Total Reportable Segments |
955 |
217 |
- |
13 |
(1) |
- |
- |
229 |
|||||
|
Corporate and Other (a) |
(3) |
(14) |
(11) |
- |
- |
- |
- |
(25) |
|||||
|
Total Company |
$ 952 |
$ 203 |
$ (11) |
$ 13 |
$ (1) |
$ - |
$ - |
$ 204 |
|||||
|
Three months ended June 30, 2011 |
|||||||||||||
|
Lodging |
$ 190 |
$ 66 |
$ - |
$ - |
$ - |
$ - |
$ - |
$ 66 |
|||||
|
Vacation Exchange and Rentals |
361 |
106 |
- |
- |
7 |
(g) |
(31) |
- |
82 |
||||
|
Vacation Ownership |
541 |
130 |
- |
- |
- |
- |
- |
130 |
|||||
|
Total Reportable Segments |
1,092 |
302 |
- |
- |
7 |
(31) |
- |
278 |
|||||
|
Corporate and Other (a) |
(2) |
(26) |
3 |
- |
- |
- |
- |
(23) |
|||||
|
Total Company |
$ 1,090 |
$ 276 |
$ 3 |
$ - |
$ 7 |
$ (31) |
$ - |
$ 255 |
|||||
|
Three months ended September 30, 2011 |
|||||||||||||
|
Lodging |
$ 222 |
$ 67 |
$ - |
$ - |
$ - |
$ - |
$ - |
$ 67 |
|||||
|
Vacation Exchange and Rentals |
436 |
131 |
- |
- |
- |
- |
4 |
135 |
|||||
|
Vacation Ownership |
559 |
149 |
- |
- |
- |
- |
- |
149 |
|||||
|
Total Reportable Segments |
1,217 |
347 |
- |
- |
- |
- |
4 |
351 |
|||||
|
Corporate and Other (a) |
(5) |
(18) |
(8) |
- |
- |
- |
- |
(26) |
|||||
|
Total Company |
$ 1,212 |
$ 329 |
$ (8) |
$ - |
$ - |
$ - |
$ 4 |
$ 325 |
|||||
|
Three months ended December 31, 2011 |
|||||||||||||
|
Lodging |
$ 188 |
$ (3) |
$ - |
$ 44 |
(h) |
$ - |
$ - |
$ - |
$ 41 |
||||
|
Vacation Exchange and Rentals |
291 |
38 |
- |
- |
- |
- |
- |
38 |
|||||
|
Vacation Ownership |
527 |
139 |
- |
- |
- |
- |
- |
139 |
|||||
|
Total Reportable Segments |
1,006 |
174 |
- |
44 |
- |
- |
- |
218 |
|||||
|
Corporate and Other (a) |
(6) |
(26) |
(4) |
- |
- |
- |
- |
(30) |
|||||
|
Total Company |
$ 1,000 |
$ 148 |
$ (4) |
$ 44 |
$ - |
$ - |
$ - |
$ 188 |
|||||
|
Twelve months ended December 31, 2011 |
|||||||||||||
|
Lodging |
$ 749 |
$ 157 |
$ - |
$ 57 |
(c) (h) |
$ - |
$ - |
$ - |
$ 214 |
||||
|
Vacation Exchange and Rentals |
1,444 |
368 |
- |
- |
7 |
(g) |
(31) |
4 |
348 |
||||
|
Vacation Ownership |
2,077 |
515 |
- |
- |
(1) |
(d) |
- |
- |
514 |
||||
|
Total Reportable Segments |
4,270 |
1,040 |
- |
57 |
6 |
(31) |
4 |
1,076 |
|||||
|
Corporate and Other (a) |
(16) |
(84) |
(16) |
- |
- |
- |
- |
(100) |
|||||
|
Total Company |
$ 4,254 |
$ 956 |
$ (16) |
$ 57 |
$ 6 |
$ (31) |
$ 4 |
$ 976 |
|||||
|
________________ |
|||||||||||||
|
(a) Includes the elimination of transactions between segments. |
|||||||||||||
|
(b) Relates to the net expense/(benefit) from the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant. |
|||||||||||||
|
(c) Relates to a non-cash impairment charge related to a write-down of an international joint venture at the Company’s lodging business. |
|||||||||||||
|
(d) Relates to the reversal of costs incurred as a result of various strategic initiatives commenced by the Company during 2008. |
|||||||||||||
|
(e) Relates to a net benefit resulting from a refund of value added taxes. |
|||||||||||||
|
(f) Relates to the write-off of foreign exchange translation adjustments associated with the liquidation of a foreign entity. |
|||||||||||||
|
(g) Relates to costs incurred as a result of a strategic initiative commenced by the Company during 2010. |
|||||||||||||
|
(h) Relates to non-cash impairment charges primarily related to the write-down of certain franchise and management agreements and development advance notes at the Company’s lodging business. |
|||||||||||||
|
Table 9 |
||||||
|
Wyndham Worldwide Corporation |
||||||
|
NON-GAAP RECONCILIATIONS AND FINANCIAL INFORMATION |
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(In millions) |
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FREE CASH FLOW |
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The Company defines free cash flow as net cash provided by operating activities less capital expenditures, equity investments and development advances and excluding cash payments related to the Company’s contingent tax liabilities that it assumed and is responsible for pursuant to its separation from Cendant. The Company considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after the acquisition of property and equipment, equity investments and development advances, can be used for strategic opportunities, including making acquisitions, paying dividends, repurchasing the Company’s common stock and strengthening the balance sheet. Analysis of free cash flow also facilitates management’s comparisons of the Company’s operating results to its competitors’ operating results. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities as a means for evaluating Wyndham Worldwide is that free cash flow does not represent the total increase or decrease in the cash balance from operations for the period. |
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The following table provides more details on the GAAP financial measure that is most directly comparable to the non-GAAP financial measure and the related reconciliation between these financial measures: |
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Three Months Ended March 31, |
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2012 |
2011 |
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Net cash provided by operating activities |
$ 228 |
$ 229 |
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Less: Property and equipment additions |
(33) |
(41) |
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Less: Equity investments and development advances |
(2) |
(3) |
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Free cash flow |
$ 193 |
$ 185 |
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GROSS VOI SALES |
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The following table provides a reconciliation of Gross VOI sales (see Table 3) to Vacation ownership interest sales (see Table 4): |
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Year |
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2012 |
Q1 |
Q2 |
Q3 |
Q4 |
Full Year |
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Gross VOI sales |
$ 384 |
N/A |
N/A |
N/A |
N/A |
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Less: Sales under the WAAM |
(17) |
N/A |
N/A |
N/A |
N/A |
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Gross VOI sales, net of WAAM sales |
367 |
N/A |
N/A |
N/A |
N/A |
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Less: Loan loss provision |
(96) |
N/A |
N/A |
N/A |
N/A |
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Vacation ownership interest sales |
$ 271 |
N/A |
N/A |
N/A |
N/A |
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2011 |
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Gross VOI sales |
$ 319 |
$ 412 |
$ 455 |
$ 409 |
$ 1,595 |
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Less: Sales under the WAAM |
(18) |
(19) |
(38) |
(31) |
(106) |
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Gross VOI sales, net of WAAM sales |
302 |
393 |
417 |
378 |
1,489 |
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Less: Loan loss provision |
(79) |
(80) |
(96) |
(83) |
(339) |
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Vacation ownership interest sales |
$ 222 |
$ 313 |
$ 320 |
$ 295 |
$ 1,150 |
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2010 |
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Gross VOI sales |
$ 308 |
$ 371 |
$ 412 |
$ 373 |
$ 1,464 |
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Less: Sales under the WAAM |
(5) |
(13) |
(20) |
(14) |
(51) |
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Gross VOI sales, net of WAAM sales |
303 |
358 |
392 |
359 |
1,413 |
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Less: Loan loss provision |
(86) |
(87) |
(85) |
(82) |
(340) |
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Vacation ownership interest sales |
$ 217 |
$ 271 |
$ 308 |
$ 276 |
$ 1,072 |
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2009 |
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Gross VOI sales |
$ 280 |
$ 327 |
$ 366 |
$ 343 |
$ 1,315 |
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Plus: Net effect of percentage-of-completion accounting (a) |
67 |
37 |
36 |
47 |
187 |
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Less: Loan loss provision |
(107) |
(122) |
(117) |
(103) |
(449) |
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Vacation ownership interest sales |
$ 239 |
$ 242 |
$ 285 |
$ 287 |
$ 1,053 |
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Note: Amounts may not add due to rounding. |
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(a) Represents the revenue that is deferred under the percentage of completion method of accounting. |
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The following includes primarily tele-sales upgrades and other non-tour revenues, which are excluded from Gross VOI sales in the Company’s VPG calculation (see Table 3): |
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Q1 |
Q2 |
Q3 |
Q4 |
Full Year |
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2012 |
$ 27 |
N/A |
N/A |
N/A |
N/A |
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2011 |
$ 18 |
$ 18 |
$ 21 |
$ 11 |
$ 68 |
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2010 |
$ 20 |
$ 20 |
$ 23 |
$ 17 |
$ 80 |
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2009 |
$ 24 |
$ 23 |
$ 29 |
$ 28 |
$ 104 |
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_____________ |
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Note: Amounts may not add across due to rounding. |
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SOURCE Wyndham Worldwide Corporation
http://www.wyndhamworldwide.com
Categories: Financial
