PARSIPPANY, N.J. (February 15, 2017) — Wyndham Worldwide Corporation (NYSE: WYN) today announced results for the three months and year ended December 31, 2016.
FOURTH QUARTER 2016 OPERATING RESULTS Fourth 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 fourth quarter of 2016 was $164 million compared with $140 million for the fourth quarter of 2015. Diluted earnings per share (EPS) increased 26% to $1.53 per diluted share compared with $1.21 for the prior year period. Adjusted net income for the fourth quarter of 2016, which excludes charges and gains in both 2016 and 2015 as detailed in Table 7 of this press release, was $146 million compared with $113 million for the fourth quarter of 2015. Adjusted diluted EPS increased 38% to $1.35 from $0.98 per diluted share in the prior year period. Adjusted net income and EPS benefited from earnings growth across all of our businesses. EPS also benefited from the Company's share repurchase program.
Fourth quarter EBITDA was $322 million, compared with $275 million in the prior year period, an increase of 17%. Adjusted EBITDA, which excludes charges and gains in 2016 and charges in 2015 as detailed in Table 8 of this press release, was $318 million, compared with $273 million in the prior year period, an increase of 16%.
"In 2016, we delivered earnings growth and free cash flow that were both in line with our targets despite headwinds from a higher provision for loan losses and foreign exchange rates," said Stephen P. Holmes, chairman and CEO. "We achieved these results through consistent execution, careful expense management, and continued disciplined capital allocation."
FULL YEAR 2016 OPERATING RESULTS Revenues for full year 2016 were $5.6 billion, an increase of 1% over the prior year.
Net income for full year 2016 was $611 million compared with $612 million for full year 2015. Diluted EPS increased 8% to $5.53 from $5.14 per diluted share in the prior year. Adjusted net income for full year 2016, which excludes charges and gains in both 2016 and 2015 as detailed in Table 7 of this press release, was $636 million compared with $608 million for full year 2015. Adjusted diluted EPS increased 13% to $5.75 from $5.11 in the prior year period. Adjusted net income and EPS benefited from earnings growth across all of our businesses. EPS also benefited from the Company's share repurchase program.
Full year 2016 EBITDA was $1,331 million, compared with $1,266 million in the prior year, an increase of 5%. Adjusted EBITDA, which excludes charges and gains in 2016 and charges in 2015 as detailed in Table 8 of this press release, was $1,373 million. This compares with $1,297 million in the prior year, an increase of 6%. On a currency-neutral basis and excluding acquisitions, adjusted EBITDA increased 7%.
For the twelve months ended December 31, 2016, net cash provided by operating activities was $973 million, compared with $991 million in the prior year period. The decrease reflects unfavorable currency movements of $48 million, including a $24 million devaluation of the Venezuelan bolivar in the first quarter of 2016.
Free cash flow was $782 million for the twelve months ended December 31, 2016, compared with $769 million for the same period in 2015, reflecting lower capital expenditures that were partially offset by the unfavorable currency movements referenced above. The Company defines free cash flow as net cash provided by operating activities less capital expenditures.
FOURTH QUARTER 2016 BUSINESS UNIT RESULTS
Hotel Group Revenues were $316 million in the fourth quarter of 2016, compared with $314 million in the fourth quarter of 2015. Revenues reflected higher franchise fees and growth in the Company's Wyndham Rewards credit card program, partially offset by lower reimbursable property management revenues.
EBITDA was $99 million in the fourth quarter compared with $94 million in the prior year quarter. Adjusted EBITDA grew 6% to $99 million. In constant currency and excluding acquisitions, adjusted EBITDA increased 8%. This reflects the higher franchise fees and growth in the Company's Wyndham Rewards credit card program.
Fourth quarter domestic same store RevPAR increased 2.9%. Excluding oil markets, domestic same store RevPAR increased 3.7%. In constant currency, total systemwide same store RevPAR increased 2.7% compared with the fourth quarter of 2015, which reflects softness in domestic and Canadian oil markets.
As of December 31, 2016, the Company's hotel system consisted of over 8,000 properties and over 697,600 rooms, a 2.9% net room increase compared with year-end 2015. The development pipeline increased to more than 1,110 hotels and approximately 138,300 rooms, of which 60% were international and 67% were new construction.
Destination Network Revenues were $317 million in the fourth quarter of 2016, compared with $310 million in the fourth quarter of 2015, an increase of 2%. In constant currency and excluding acquisitions, revenues increased 3%.
Vacation rental revenues were $151 million compared with $144 million in the prior year quarter. In constant currency and excluding the impact of acquisitions, vacation rental revenues were up 5%, reflecting a 5.3% increase in transaction volume, which benefited from enhanced yield management as well as capacity increases across our Denmark-based Novasol brand and our U.K. cottage and parks brands. Average net price per rental was flat.
Exchange revenues were $145 million compared with $146 million in the prior year quarter. In constant currency, exchange revenues grew 1% as exchange revenue per member increased 0.4% and the average number of members increased 0.2%.
EBITDA was $53 million in the fourth quarter, compared with $44 million in the prior year quarter. Adjusted EBITDA increased $9 million to $52 million for the fourth quarter of 2016, which reflects the revenue gains from continued strong vacation rental performance and lower costs.
Vacation Ownership Revenues were $705 million in the fourth quarter of 2016, compared with $706 million in the fourth quarter of 2015.
Gross VOI sales in the fourth quarter of 2016 were flat, impacted by sales office closures from a restructuring and Hurricane Matthew. The number of new owners added during the quarter was up 8% from the prior year quarter. Volume per guest was up 0.4% and tour flow declined 1.5%, reflecting the closure of sales sites as noted above.
EBITDA was $182 million in the fourth quarter compared with $174 million in the prior year quarter. Adjusted EBITDA was $191 million for the fourth quarter of 2016, an increase of 10% compared with the prior year quarter, due to lower costs.
OTHER ITEMS
- The Company's Board of Directors authorized an increase in the quarterly cash dividend to $0.58 from $0.50 per share, beginning with the dividend that is expected to be declared in the first quarter of 2017.
- The Company repurchased 2.1 million shares of common stock for $150 million during the fourth quarter of 2016 at an average price of $70.34. From January 1 through February 14, 2017, the Company repurchased an additional 1.0 million shares for $75 million.
- Net interest expense in the fourth quarter of 2016 was $32 million, compared with $35 million in the fourth quarter of 2015. This reflects a larger proportion of lower cost variable debt partially offset by higher debt levels.
- Depreciation and amortization in the fourth quarter of 2016 was $65 million, compared with $61 million in the fourth quarter of 2015, reflecting new projects that were placed into service.
Balance Sheet Information as of December 31, 2016:
- Cash and cash equivalents of $185 million, compared with $171 million at December 31, 2015
- Vacation ownership contract receivables, net, of $2.8 billion, compared with $2.7 billion at December 31, 2015
- Vacation ownership and other inventory of $1.4 billion, compared with $1.3 billion at December 31, 2015
- Securitized vacation ownership debt of $2.1 billion, unchanged from 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 December 31, 2016, compared with $1.4 billion at December 31, 2015.
Tables are available via this link: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzY2NzM1fENoaWxkSUQ9LTF8VHlwZT0z&t=1&cb=636227016077355736
