PARSIPPANY, N.J. (July 27, 2016) – Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months ended June 30, 2016.
Second quarter revenues were $1.4 billion, flat compared with the prior year period. In constant currency and excluding acquisitions, revenues increased 1%.
Net income for the second quarter of 2016 was $156 million, or $1.39 per diluted share, compared with $159 million, or $1.33 per diluted share, for the second quarter of 2015. Adjusted net income for the second quarter of 2016 was $156 million, or $1.40 per diluted share, compared with $159 million, or $1.32 per diluted share, for the second quarter of 2015. Net income was impacted by higher interest expense and depreciation, as well as a higher tax rate, which offset growth in EBITDA. EPS benefited from the Company’s share repurchase program. Full reconciliations of adjusted net income and adjusted EPS appear on table 7 of this press release.
Second quarter EBITDA was $340 million, compared with $332 million in the prior year period, an increase of 2%. On a currency-neutral basis and excluding acquisitions, adjusted EBITDA increased 3%. Full reconciliations of EBITDA to net income appear on Table 2 of this press release.
"In the second quarter, we continued to execute our strategy to drive growth and free cash flow while maintaining our disciplined capital allocation framework to enhance shareholder value,” said Stephen P. Holmes, chairman and CEO. "We are looking ahead – making sure we continually innovate and invest for the future in order to ensure strong, continued growth in the years to come.”
For the six months ended June 30, 2016, net cash provided by operating activities was $706 million, compared with $737 million in the prior year period. The decrease reflects unfavorable currency movements of $35 million, including a $24 million devaluation of the Venezuelan bolivar in the first quarter of 2016.
Free cash flow was $616 million for the six months ended June 30, 2016, compared with $625 million for the same period in 2015, reflecting the changes in net cash provided by operating activities highlighted above in addition to the favorable timing of capital expenditures. The Company defines free cash flow as net cash provided by operating activities less capital expenditures as illustrated in Table 4 of this press release.
SECOND QUARTER 2016 BUSINESS UNIT RESULTS
Hotel Group
Revenues were $334 million in the second quarter of 2016, flat compared with the second quarter 2015. Revenues reflected growth in royalties and the Company’s Wyndham Rewards credit card program, offset by the absence of pass-through revenues associated with the Company’s franchisee conference in the second quarter of 2015.
EBITDA grew 5% to $101 million, reflecting growth in royalties and the Company’s Wyndham Rewards credit card program, and expense management.
Second quarter domestic RevPAR increased 2.0%. In constant currency, total system-wide RevPAR declined by 0.6% compared with the second quarter of 2015, which reflects continued weakness in domestic and Canadian oil markets and higher unit growth in lower RevPAR countries such as China.
As of June 30, 2016, the Company’s hotel system consisted of approximately 7,880 properties and over 683,300 rooms, a 2.2% net room increase compared with the second quarter of 2015. The development pipeline included over 1,000 hotels and approximately 128,000 rooms, of which 61% were international and 66% were new construction.
Destination Network (formerly Vacation Exchange and Rentals)
Revenues were $384 million in the second quarter of 2016, flat compared with the second quarter of 2015. In constant currency and excluding acquisitions, revenues increased 1%.
Exchange revenues were $159 million. In constant currency, exchange revenues grew 1% as the average number of members increased 0.7% and exchange revenue per member increased 0.3%.
Vacation rental revenues were $202 million. In constant currency and excluding the impact of acquisitions, vacation rental revenues were up 1%, reflecting a 4.0% increase in transaction volume, partially offset by a 3.3% decrease in average net price per vacation rental reflecting faster growth in our more moderate product offerings.
EBITDA for the second quarter of 2016 was $85 million, a 1% increase compared with the second quarter of 2015. On a currency-neutral basis and excluding the impact of acquisitions, EBITDA increased 2% compared with the prior year period, largely reflecting growth in rental transactions and exchange members.
Vacation Ownership
Revenues were $705 million in the second quarter of 2016, a 1% increase over the second quarter of 2015.
Net VOI sales declined by 2%, as higher gross VOI sales volume was offset by an increase in the provision for loan losses, which was in line with the Company’s expectations.
Gross VOI sales were $518 million in the second quarter of 2016, an increase of 3% compared with the second quarter of 2015. Results reflect tour flow growth of 3.4%, partially offset by a volume per guest (VPG) decline of 0.8% in constant currency, reflecting higher sales to new owners. The number of new owners added increased 13% from the second quarter of 2015.
EBITDA for the second quarter of 2016 was $187 million, an increase of 3% compared with the second quarter of 2015, reflecting higher gross VOI sales, a lower cost of sales and higher management fees, partially offset by an increase in the provision for loan losses.
OTHER ITEMS
- The Company repurchased 2.1 million shares of common stock for $150 million during the second quarter of 2016. From July 1 through July 26, 2016, the Company repurchased an additional 0.6 million shares for $42 million.
- Reported net interest expense in the second quarter of 2016 was $32 million, compared with $28 million in the second quarter of 2015, reflecting increased debt levels including the $350 million 5.10% bond issued in September 2015 and the absence of a fixed-to-floating interest rate swap terminated in 2015.
- Depreciation and amortization in the second quarter of 2016 was $63 million, compared with $58 million in the second quarter of 2015, reflecting new projects that were placed into service.
Balance Sheet Information as June 30, 2016:
- Cash and cash equivalents of $478 million, compared with $171 million at December 31, 2015, reflecting higher seasonal cash collections at the Company’s vacation rental businesses
- Vacation ownership contract receivables, net, of $2.7 billion, unchanged from December 31, 2015
- Vacation ownership and other inventory of $1.3 billion, unchanged from December 31, 2015
- Securitized vacation ownership debt of $2.0 billion, compared with $2.1 billion at December 31, 2015
- Long-term debt of $3.4 billion, compared with $3.1 billion at December 31, 2015. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.1 billion as of June 30, 2016, compared with $1.4 billion at December 31, 2015.
A schedule of debt is included in Table 12 of this press release.
OUTLOOK
Full reconciliations of the outlook for adjusted EBITDA, adjusted net income and adjusted EPS to GAAP results appear in Table 10 of this press release.
The Company provides the following guidance for the full year 2016:
- Revenues of approximately $5.650 – $5.800 billion.
- Adjusted net income of approximately $635 – $651 million.
- Adjusted EBITDA of approximately $1.375 – $1.400 billion.
- Adjusted diluted EPS of approximately $5.68 – $5.82 based on a diluted share count of 112 million.
To view full financial release and corresponding tables please click the PDF icon or visit:
http://investor.wyndhamworldwide.com/phoenix.zhtml?c=200690&p=irol-newsarticle&ID=2188716
