Wyndham Worldwide Reports Fourth Quarter and Full Year 2012 Earnings

Full Year Adjusted EPS Growth of 30%
Increases Dividend 26%
Increases EPS and EBITDA Guidance for 2013

PARSIPPANY, N.J. , 2013-02-07 — /travelprnews.com/— Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months and year ended December 31, 2012.

Highlights:

  • Fourth quarter adjusted diluted earnings per share (EPS) was $0.63, compared with $0.47 in the fourth quarter of 2011, an increase of 34%.  Fourth quarter 2012 reported diluted EPS was $0.57, an increase of 54% from the same period in 2011.
  • Free cash flow increased to $796 million for the year ended December 31, 2012, compared with $764 million in 2011.
  • The Company’s Board of Directors authorized an increase in the quarterly cash dividend to $0.29 from $0.23 per share, beginning with the dividend that is expected to be declared in the first quarter of 2013.
  • During the quarter, the Company repurchased 2.9 million shares of its common stock for $151 million.  For the full year, the Company spent $623 million to repurchase 12.9 million shares of its common stock.

“I’m pleased by our 30% adjusted EPS growth in 2012, especially coming off of 25% growth in 2011.  These results reflect the momentum in our business, the strong execution by our teams and a capital allocation philosophy that works for shareholders,” said Stephen P. Holmes, chairman and CEO, Wyndham Worldwide.

FOURTH QUARTER 2012 OPERATING RESULTS

Fourth quarter revenues increased 9% from the prior year period to $1.1 billion. The increase primarily reflects growth in the Company’s lodging and vacation ownership businesses.

For the fourth quarter of 2012, adjusted net income was $89 million, or $0.63 per diluted share, compared with $73 million, or $0.47 per diluted share, for the same period in 2011.  The increase in adjusted net income primarily reflects stronger operating results at the Company’s lodging and vacation ownership businesses.  EPS also benefited from the Company’s share repurchase program, which reduced fourth quarter weighted average share count by 8% compared with the same period in 2011.

Reported net income for the fourth quarter of 2012 was $81 million, or $0.57 per diluted share, compared with net income of $56 million, or $0.37 per diluted share, for the fourth quarter of 2011.  Reported net income included several items not included in adjusted net income.  The net effect of these items was a reduction to net income of $8 million in the fourth quarter of 2012 and $17 million in the fourth quarter of 2011.  Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.

FULL YEAR 2012 OPERATING RESULTS

Revenues for full year 2012 were $4.5 billion, an increase of 7% over the prior-year period. The revenue increase resulted from growth in the lodging and vacation ownership businesses, partially offset by adverse foreign exchange translation impacts in the vacation exchange and rentals business.

Adjusted net income for the full year 2012 was $469 million, or $3.23 per diluted share, compared with $414 million, or $2.49 per diluted share, for the prior year.  The increase in adjusted net income primarily reflects stronger operating results at the Company’s lodging and vacation ownership businesses.  EPS also benefited from the Company’s share repurchase program, which reduced weighted average diluted share count by 13% compared with 2011.

Reported net income for full year 2012 was $400 million, or $2.75 per diluted share, compared with net income of $417 million, or $2.51 per diluted share, for the prior-year period.  Reported net income included several items not included in adjusted net income.  The net effect of these items reduced full year 2012 net income by $69 million and increased full year 2011 net income by $3 million.  Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.

Free cash flow increased to $796 million in the year ended December 31, 2012 compared with $764 million in 2011, which included a $67 million benefit from a refund of value added taxes and related interest income.  The growth of free cash flow largely reflects debt refinancing transactions and lower capital expenditures.  The Company defines free cash flow as net cash provided by operating activities less capital expenditures.  For the year ended December 31, 2012, cash provided by operating activities was $1.0 billion, flat compared with the prior year.

BUSINESS UNIT RESULTS

Lodging (Wyndham Hotel Group)
Revenues were $223 million in the fourth quarter of 2012, an increase of 19%, compared with the fourth quarter of 2011.  The increase primarily reflects RevPAR gains, incremental revenues associated with the Company’s owned hotels and higher intersegment licensing fees for use of the Wyndham brand trade name.

Adjusted EBITDA was $62 million, an increase of 51% compared with the fourth quarter of 2011.  The increase largely reflects RevPAR gains, cost savings and higher intersegment licensing fees.

Domestic RevPAR increased 6% compared with the fourth quarter of 2011, while system-wide RevPAR increased 4%.

As of December 31, 2012, the Company’s hotel system consisted of over 7,340 properties and 627,400 rooms. The development pipeline included approximately 930 hotels and 110,700 rooms, of which 59% were new construction and 56% were international.

Vacation Exchange and Rentals (Wyndham Exchange & Rentals)
Revenues were $293 million in the fourth quarter of 2012, compared with $291 million in the fourth quarter of 2011.  In constant currency and excluding the impact of acquisitions, revenues were flat.

Exchange revenues were $153 million, an increase of 2% compared with the fourth quarter of 2011.  In constant currency, exchange revenues were up 1% as a 3% increase in exchange revenue per member was partially offset by the impact of a 2% decline in the average number of members.  The decline in the average number of members was due to the non-renewal of an affiliation agreement at the beginning of 2012.

Vacation rental revenues were $125 million, flat compared with the fourth quarter of 2011, reflecting a 3% increase in transaction volume offset by a 2% decrease in the average net price per vacation rental.

Adjusted EBITDA for the fourth quarter of 2012 was $42 million, excluding $14 million of charges and impairments, up 11% compared with the prior-year period.  Excluding the impact of acquisitions and the net effect of foreign currency, adjusted EBITDA increased by 3% compared with the prior year period, primarily due to operating efficiencies in the business.

Vacation Ownership (Wyndham Vacation Ownership)
Revenues were $590 million in the fourth quarter of 2012, a 12% increase over the fourth quarter of 2011.  Excluding the acquisition of Shell Vacations Club, revenues increased 6%, primarily reflecting increased VOI sales and higher resort management fees.

Gross VOI sales were $435 million in the fourth quarter of 2012, up 6% from the fourth quarter of 2011, primarily reflecting a 6% increase in tour flow, supported by the Shell acquisition.

Adjusted EBITDA for the fourth quarter of 2012 was $144 million, excluding $2 million of acquisition related restructuring costs, compared with EBITDA of $139 million in the fourth quarter of 2011, a 4% increase.  Such increase was primarily due to the revenue increases and the impact of the Shell acquisition, partially offset by higher general and administrative costs and incremental intersegment licensing fees.

Other Items

  • During 2013, the Company repurchased an additional 1.1 million shares for $60 million through February 5.  The Company has $447 million remaining on its current share repurchase authorization.
  • Net interest expense in the fourth quarter of 2012 was $33 million, a decrease of $3 million from the fourth quarter of 2011, primarily due to lower interest rates offsetting higher average borrowings.

Balance Sheet Information as of December 31, 2012:

  • Cash and cash equivalents of $195 million, compared with $142 million at December 31, 2011
  • Vacation ownership contract receivables, net, of $2.9 billion, compared with $2.8 billion at December 31, 2011
  • Vacation ownership and other inventory of $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 $2.6 billion, compared with $2.2 billion at December 31, 2011. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $631 million, compared with $771 million as of December 31, 2011

A schedule of debt is included in Table 5 of this press release.

Outlook

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.

For the full year 2013, the Company raises guidance as follows:

  • Revenues of $4.925 – $5.100 billion, up from $4.90 – $5.05 billion
  • EBITDA of $1.140 – $1.165 billion, up from $1.125 – $1.150 billion
  • EPS of $3.57 – $3.70, up from $3.50 – $3.60
  • Weighted average diluted shares of 140 million, down from 143 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 the Company’s guidance may change materially.

Conference Call Information
Wyndham Worldwide Corporation will hold a conference call with investors to discuss this news on Wednesday, February 6, 2013 at 8:30 a.m. EST. Listeners may access the webcast live through the Company’s website at www.wyndhamworldwide.com/investors/. An archive of this webcast will be available at the website for approximately 90 days beginning at noon EST on February 6, 2013. The conference call may also be accessed by dialing (888) 942-9868 and providing the passcode “WYNDHAM.” Listeners are urged to call at least 10 minutes prior to the scheduled start time. A telephone replay will be available for approximately 90 days beginning at noon EST on February 6, 2013, at (888) 473-0137.

Presentation of Financial Information
Financial information discussed in this press release includes non-GAAP measures, which include or exclude certain items.  These non-GAAP measures differ from reported GAAP results and are intended to illustrate what management believes are relevant period-over-period comparisons.  A complete reconciliation of reported GAAP results to the comparable non-GAAP information appears in the financial tables section of the press release.  It is not practicable to provide a reconciliation of forecasted EBITDA and EPS to the most directly comparable GAAP measure because certain items cannot be reasonably estimated or predicted at this time.  Any such items could be significant to the Company’s reported results.

About Wyndham Worldwide Corporation
One of the world’s largest hospitality companies, Wyndham Worldwide (NYSE: WYN) provides a wide range of hospitality products and services through its global portfolio of world-renowned brands.  The world’s largest hotel company based on the number of properties, Wyndham Hotel Group is home to many of the world’s best-known hotel brands, with over 7,340 franchised hotels and 627,400 hotel rooms worldwide. Wyndham Exchange & Rentals is the worldwide leader in vacation exchange and the world’s largest professionally managed vacation rentals business, providing more than 5 million leisure-bound families annually with access to over 103,000 vacation properties in 100 countries through its prominent exchange and vacation rental brands. The industry and timeshare ownership market leader, Wyndham Vacation Ownership develops, markets, and sells vacation ownership interests and provides consumer financing to owners through its network of 190 vacation ownership resorts serving approximately 915,000 owners throughout the United States, Canada, Mexico, the Caribbean, and the South Pacific. Based in Parsippany, NJ, Wyndham Worldwide employs approximately 32,500 associates globally. For more information, please visit www.wyndhamworldwide.com.

Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, conveying management’s expectations as to the future based on plans, estimates and projections at the time the Company makes the statements.  Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  The forward-looking statements contained in this press release include statements related to the Company’s revenues, earnings, dividends and related financial and operating measures.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.  Factors that could cause actual results to differ materially from those in the forward-looking statements include general economic conditions, the performance of the financial and credit markets, the economic environment for the hospitality industry, the impact of war, terrorist activity or political strife, operating risks associated with the hotel, vacation exchange and rentals and vacation ownership businesses, as well as those described in the Company’s Quarterly Report on Form 10-Q, filed with the SEC on October 24, 2012.  Except for the Company’s ongoing obligations to disclose material information under the federal securities laws, it undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

Investor and Media contact:

Margo C. Happer
Senior Vice President, Investor Relations
Wyndham Worldwide Corporation
(973) 753-6472
margo.happer@wyn.com

Barry Goldschmidt
Vice President, Investor Relations
Wyndham Worldwide Corporation
(973) 753-7703
barry.goldschmidt@wyn.com