PARSIPPANY, N.J., April 26, 2016 / — Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months ended March 31, 2016.
HIGHLIGHTS:
- First quarter adjusted diluted earnings per share (EPS) was $1.12, an increase of 9% from $1.03 in the first quarter of 2015. Reported diluted EPS was $0.84, compared with $1.00 in the first quarter of 2015.
- First quarter 2016 adjusted EBITDA increased 4%, or 6% on a currency neutral basis and excluding acquisitions compared with the first quarter of 2015.
- The Company repurchased 2.5 million shares of its common stock for $175 million during the quarter.
"We're off to a good start this year," said Stephen P. Holmes, chairman and CEO. "We continue to execute and innovate across our businesses to drive growth, profitability and shareholder value. Our businesses are well positioned for long term growth and they are resilient, regardless of economic and industry cycle dynamics. Of course, disciplined capital allocation continues to be a hallmark and commitment of our company."
FIRST QUARTER 2016 OPERATING RESULTS
First quarter revenues were $1.3 billion, an increase of 3% from the prior year period.
First quarter adjusted EBITDA was $291 million, compared with $279 million in the prior year period, an increase of 4%. Year-over-year adjusted EBITDA comparisons were adversely affected by foreign currency effects of $6 million in 2016. On a currency-neutral basis and excluding acquisitions, adjusted EBITDA increased 6%.
Adjusted net income was $127 million, or $1.12 per diluted share, compared with $126 million, or $1.03 per diluted share for the same period in 2015. Adjusted net income and earnings per share benefited from solid operating results, but were reduced by higher interest expense and higher depreciation and amortization. EPS also benefited from the Company's share repurchase program.
Reported net income for the first quarter of 2016 was $96 million, or $0.84 per diluted share, compared with $122 million, or $1.00 per diluted share, for the first quarter of 2015. Reported net income in both periods reflects several items excluded from adjusted net income. The net result of these items unfavorably impacted first quarter 2016 net income by $31 million and unfavorably impacted first quarter 2015 net income by $4 million. Full reconciliations of adjusted net income to GAAP results appear in Table 8 of this press release.
Free cash flow was $218 million for the three months ended March 31, 2016, compared with $197 million for the same period in 2015. The increase reflects solid operating results and the timing of capital expenditures, partially offset by a $24 million unfavorable impact from the devaluation of the Venezuelan currency. For the three months ended March 31, 2016, net cash provided by operating activities was $261 million, compared with $253 million in the prior year period. The Company defines free cash flow as net cash provided by operating activities less capital expenditures.
FIRST QUARTER 2016 BUSINESS UNIT RESULTS
Hotel Group
Revenues were $295 million in the first quarter of 2016, a 1% increase compared with the first quarter 2015. Despite weaker RevPAR, adjusted EBITDA grew 6% to $84 million reflecting growth in our Wyndham Rewards credit card program, strong performance at our owned hotels and expense management.
First quarter domestic RevPAR was flat. In constant currency, total system-wide RevPAR declined 1.6% compared with the first 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 March 31, 2016, the Company's hotel system consisted of approximately 7,830 properties and approximately 679,100 rooms, a 1.8% net room increase compared with the first quarter of 2015. The development pipeline included over 1,000 hotels and over 124,000 rooms, of which 61% were international and 65% were new construction.
Destination Network (formerly Vacation Exchange and Rentals)
Revenues were $385 million in the first quarter of 2016, a 4% increase compared with the first quarter of 2015. In constant currency and excluding acquisitions, revenues increased 5%.
Exchange revenues were $182 million, down 2% compared with the first quarter of 2015. In constant currency, exchange revenues and exchange revenue per member were flat, as was the average number of members.
Vacation rental revenues were $183 million, a 10% increase compared with the first quarter of 2015. In constant currency and excluding the impact of acquisitions, vacation rental revenues were up 9%, reflecting a 7.0% increase in transaction volume and a 2.3% increase in average net price per vacation rental.
Adjusted EBITDA for the first quarter of 2016 was $105 million, a 1% increase compared with the first quarter of 2015. On a currency-neutral basis and excluding the impact of acquisitions, adjusted EBITDA increased 3% compared with the prior year period.
Vacation Ownership
Revenues were $641 million in the first quarter of 2016, a 4% increase over the first quarter of 2015.
Gross VOI sales were $428 million in the first quarter of 2016, an increase of 10% compared with the first quarter of 2015. Volume per guest (VPG) for the quarter increased 3.8% in constant currency and tour flow increased 6.5%.
EBITDA for the first quarter of 2016 was $136 million, an increase of 5% compared with the first quarter of 2015, reflecting higher sales volume and stronger resort management and consumer finance results, partially offset by an increase in the provision for loan losses.
OTHER ITEMS
- The Company repurchased 2.5 million shares of common stock for $175 million during the first quarter of 2016. From April 1 through April 25, 2016, the Company repurchased an additional 0.6 million shares for $45 million.
- Reported net interest expense in the first quarter of 2016 was $31 million, compared with $23 million in the first quarter of 2015, reflecting 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 first quarter of 2016 was $62 million, compared with $56 million in the first quarter of 2015, reflecting new projects that were placed into service.
Balance Sheet Information as March 31, 2016:
- Cash and cash equivalents of $318 million, compared with $171 million at December 31, 2015
- 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 $2.1 billion, unchanged from December 31, 2015
- Long-term debt of $3.3 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 March 31, 2016, compared with $1.4 billion at December 31, 2015.
A schedule of debt is included in Table 5 of this press release.
OUTLOOK
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 2016, the Company reiterates the following guidance:
- Revenues of approximately $5.800 – $5.950 billion.
- Adjusted EBITDA of approximately $1.375 – $1.400 billion.
For the full year 2016, the Company updates the following guidance:
- Adjusted diluted EPS of approximately $5.61 – $5.75 based on a diluted share count of 113 million, up from $5.46 – $5.60 based on a diluted share count of 116 million.
The Company will post guidance information on its website following the conference call.
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