May 3, 2017 — Wyndham Worldwide Corporation (NYSE: WYN) today announced results for the three months ended March 31, 2017.
FIRST QUARTER 2017 OPERATING RESULTS
First quarter revenues were $1.3 billion, up 1% compared with the prior year period. Full reconciliations of GAAP results to non-GAAP measures for all reported periods appear in the tables to this press release.
Net income for the first quarter of 2017 was $141 million compared with $96 million for the first quarter of 2016. Diluted earnings per share (EPS) were $1.33 compared with $0.84 for the prior year period. Adjusted net income for the first quarter of 2017, which excludes charges and gains in 2017 and charges in 2016 as detailed in Table 7 of this press release, was $120 million compared with $127 million for the first quarter of 2016, primarily reflecting a higher provision for loan losses and benefits in the prior-year period related to business interruption claims that were absent in the first quarter of 2017. Adjusted diluted EPS was $1.14 compared with $1.12 per share in the prior year period, reflecting the benefit of the Company’s share repurchase program.
First quarter EBITDA was $266 million, compared with $267 million in the prior year period. Adjusted EBITDA, which excludes charges in both 2017 and 2016 as detailed in Table 8 of this press release, was $278 million, compared with $291 million in the prior year period, primarily reflecting a higher provision for loan losses and benefits in the prior-year period related to business interruption claims that were absent in the first quarter of 2017.
“Our first quarter results were right in line with our expectations,” said Stephen P. Holmes, chairman and CEO. “We’re excited by the progress we’re making in connecting our customers and brands through Wyndham Rewards to enhance customer acquisition, experience and retention. We expect this to result in stronger growth and greater long-term value for our shareholders this year and for years to come.
“In addition, we are pleased to welcome Mike Brown as the new CEO and president of our vacation ownership business,” continued Mr. Holmes. “Mike is a 25-year hospitality industry veteran and brings an ideal combination of strategic vision, operational expertise, and industry knowledge to the role. I am confident that Mike is the right leader to take Wyndham Vacation Ownership to the next level.”
For the three months ended March 31, 2017, net cash provided by operating activities was $238 million, compared with $261 million in the prior year period. The decrease primarily reflects changes in the timing of inventory purchases.
Free cash flow was $203 million for the three months ended March 31, 2017, compared with $218 million for the same period in 2016, primarily reflecting the changes in net cash provided by operating activities. The Company defines free cash flow as net cash provided by operating activities less capital expenditures.
FIRST QUARTER 2017 BUSINESS UNIT RESULTS
Revenues were $298 million in the first quarter of 2017, compared with $295 million in the first quarter of 2016. EBITDA was $85 million in the first quarter compared with $84 million in the prior-year quarter, growing 2% on a currency-neutral basis. Results reflect higher franchise fees and growth in the Wyndham Rewards credit card program, partially offset by lower occupancy at the Company’s owned hotel in Puerto Rico due to consumer concerns about the Zika virus.
First quarter domestic same-store RevPAR increased 1.7% compared with the first quarter of 2016. In constant currency, total system-wide same-store RevPAR increased 2.2%.
As of March 31, 2017, the Company’s hotel system consisted of approximately 8,100 properties and 699,800 rooms, a 3.0% net room increase compared with the first quarter of 2016. The development pipeline increased to 1,130 hotels and approximately 143,100 rooms, of which 59% were international and 68% were new construction.
Revenues were $391 million in the first quarter of 2017, compared with $385 million in the first quarter of 2016, an increase of 2%. In constant currency and excluding acquisitions, revenues increased 1%.
Vacation rental revenues were $184 million compared with $183 million in the prior year quarter. In constant currency and excluding acquisitions, vacation rental revenues increased 1%, reflecting a 2.8% increase in transaction volume partially offset by a 2.0% decline in the average net price per rental. Transaction volume benefited from capacity increases across the Company’s U.K.-based cottages and parks brands and Denmark-based Novasol brand, partially offset by the impact from the timing of the Easter holiday. Average net price per rental declined due to the mix impact of growth in the Company’s more modestly priced brands and the timing of the Easter holiday.
Exchange revenues were $183 million compared with $182 million in the prior year quarter. In constant currency, exchange revenue per member increased 0.8% and the average number of members declined 0.6%.
EBITDA was $102 million in the first quarter of 2017, including $2 million from acquisitions. This compares with first quarter 2016 EBITDA of $81 million or adjusted EBITDA of $105 million. 2016 adjusted EBITDA excluded a $24 million loss related to a currency devaluation. First quarter year-over-year EBITDA and adjusted EBITDA comparisons reflect the absence of a benefit of $3 million from business disruption claims received in the first quarter of 2016, as well as the unfavorable impact of the timing of the Easter holiday.
Revenues were $648 million in the first quarter of 2017, compared with $641 million in the first quarter of 2016.
Gross VOI sales increased 3% in the first quarter of 2017. Volume per guest (VPG) was up 4.9%, reflecting both a higher average close rate and transaction size. Tour flow declined 1.7% due to the closure of sales offices as part of a restructuring in the second half of last year.
EBITDA was $118 million in the first quarter of 2017 compared with $136 million in the prior year quarter. Adjusted EBITDA was $124 million in the first quarter of 2017. First quarter year-over-year EBITDA and adjusted EBITDA results reflect higher gross VOI sales offset by a higher provision for loan losses and the absence of a $6 million benefit from business interruption insurance claims received in the first quarter of 2016.
- The Company repurchased 1.9 million shares of common stock for $150 million during the first quarter of 2017 at an average price of $80.93. From April 1 through April 25, 2017, the Company repurchased an additional 0.4 million shares for $36 million.
- Net interest expense in the first quarter of 2017 was $31 million, flat compared with the first quarter of 2016.
- Depreciation and amortization in the first quarter of 2017 was $63 million, compared with $62 million in the first quarter of 2016.
Balance Sheet Information as of March 31, 2017:
- Cash and cash equivalents of $222 million, compared with $185 million at December 31, 2016
- Vacation ownership contract receivables, net of $2.8 billion, unchanged from December 31, 2016
- Vacation ownership and other inventory of $1.4 billion, unchanged from December 31, 2016
- Securitized vacation ownership debt of $2.1 billion, unchanged from December 31, 2016
- Long-term debt of $3.6 billion, compared with $3.4 billion at December 31, 2016. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.3 billion as of March 31, 2017, compared with $1.1 billion at December 31, 2016.
Note to Editors: The guidance excludes possible future share repurchases, while analysts’ estimates often include share repurchases. This results in discrepancies between Company guidance and database consensus forecasts.
The Company provides the following guidance for the full year 2017:
- Reiterates revenues of approximately $5.80 billion to $5.95 billion
- Updates adjusted net income to approximately $631 million to $652 million from $637 million to $658 million, reflecting higher interest expense from a new long-term debt issuance in the first quarter 2017 that replaced lower cost borrowings
- Reiterates adjusted EBITDA of approximately $1.41 billion to $1.44 billion
- Updates adjusted diluted EPS to approximately $5.98 to $6.18 based on a diluted share count of 105.5 million from $5.90 to $6.10 based on a diluted share count of 108 million
In determining adjusted net income, adjusted EBITDA and adjusted EPS, the Company excludes certain items which are otherwise included in determining the comparable GAAP financial measures. A description of the adjustments that have been applicable for the reported periods in determining adjusted net income, adjusted EBITDA and adjusted EPS are reflected in Tables 7 and 8 of this press release. The Company is providing an outlook for net income, EBITDA and EPS only on a non-GAAP basis because the Company is unable to predict with reasonable certainty the totality or ultimate outcome or occurrence of these adjustments or other potential adjustments that may arise in the future during the outlook period, which can be dependent on future events that may not be reliably predicted. See Table 10 for certain non-GAAP information concerning the outlook period.
The Company will post full guidance information on its website following the conference call.
CONFERENCE CALL INFORMATION
Wyndham Worldwide Corporation held a conference call with investors to discuss the Company’s results, outlook and guidance on Wednesday, April 26, 2017 at 8:30 a.m. ET. An archive of this webcast will be available on the website for approximately 90 days beginning at 12:00 p.m. ET on April 26, 2017. A telephone replay will be available for approximately 10 days beginning at 12:00 p.m. ET on April 26, 2017 at 800-839-4012.
PRESENTATION OF FINANCIAL INFORMATION
Financial information discussed in this press release includes non-GAAP measures, which include or exclude certain items. These non-GAAP measures differ from reported GAAP results and are intended to illustrate what management believes are relevant period-over-period comparisons and are helpful to investors as an additional tool for further understanding and assessing the Company’s ongoing operating performance. Exclusion of items in the Company’s non-GAAP presentation should not be considered an inference that these items are unusual, infrequent or non-recurring. Full reconciliations of GAAP results to the comparable non-GAAP measures for the reported periods appear in the financial tables section of the press release.
ABOUT WYNDHAM WORLDWIDE
Wyndham Worldwide (NYSE: WYN) is one of the largest global hospitality companies, providing travelers with access to a collection of trusted hospitality brands in hotels, vacation ownership, and unique accommodations including vacation exchange, holiday parks, and managed home rentals. With a collective inventory of nearly 130,000 places to stay across more than 110 countries on six continents, Wyndham Worldwide and its 38,000 associates welcomes people to experience travel the way they want. This is enhanced by Wyndham Rewards®, the Company’s re-imagined guest loyalty program across its businesses, which is making it simpler for members to earn more rewards and redeem their points faster. For more information, 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. Forward-looking statements are those that convey management’s expectations as to the future based on plans, estimates and projections at the time the Company makes the statements and may be identified by terminology such as “will,” “expect,” believe,” “plan,” “anticipate,” “goal,” “future,” “outlook,” guidance,” “target,” “estimate” and similar expressions. 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, cash flow 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 Annual Report on Form 10-K, filed with the SEC on February 17, 2017. 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.