Wyndham's Earnings Beat, Revs in Line
Leading hospitality company Wyndham Worldwide Corporation’s (WYN) first-quarter 2013 adjusted earnings of 71 cents per share surpassed the Zacks Consensus Estimate by 7.6% and also grew 18.3% year over year. Wyndham’s growing Lodging as well as Vacation Ownership businesses and share buybacks pushed up the earnings for the quarter.
Net revenues grew 9% year over year to $1.1 billion during the quarter, in line with the Zacks Consensus Estimate.
Inside the Headline Numbers
Wyndham has three operating segments including Lodging, Vacation Exchange and Rentals and Vacation Ownership. All the three segments have both domestic and international operations.
Wyndham’s Lodging segment reported revenues of $222.0 million for the quarter, increased 20% year over year, driven by a 4.0% rise in revenue per available room (RevPAR) and higher hotel management reimbursable fees. International expansion and higher revenues earned from the company-owned property in Puerto Rico also boosted the segment’s sales during the quarter.
Revenues from the Vacation Exchange and Rentals segment nudged up 3.6% year over year to $374.0 million. However, in constant currency, segment revenues were up 1% year over year (acquisitions excluded).
Vacation rental revenues surged 4% year over year to $166.0 million while Exchange revenues were up 3% year over year to $193.0 million, driven by 3% rise in exchange revenue per member.
Revenues from the Vacation Ownership segment at Wyndham rose 9.6% to $549.0 million. However, the same has improved 2% without the impact of Shell Vacations Club acquisition. Vacation Ownership Interest (:VOI) sales remained flat year over year to $384 million as 10% rise in tour flow was neutralized by an 8% drop in volume per guest.
In the first quarter, operating income increased annually by 1.7% to $181.0 million. The earnings before income tax, depreciation and amortization (:EBITDA) grew 3.5% year over year to $234 million during the quarter, buoyed by higher EBITDA gain in Wyndham’s Lodging and Vacation Ownership businesses.
Hotels Update
At the end of the quarter, Wyndham owned 7,380 properties with 631,800 guestrooms. Additionally, 950 hotels with nearly 110,000 rooms are currently under the company’s construction pipeline.
Share Repurchase
Wyndham has bought back approximately 2.4 million shares worth $140.0 million in the first quarter. During April, Wyndham repurchased 620,000 shares at the cost of $39 million. Currently about $328.0 million worth of shares remained under its existing share repurchase program.
Guidance Retained
Management maintained its revenue and EBITDA guidance for 2013. Wyndham expects revenues to be within $4.925 - $5.100 billion while adjusted EBITDA outlook ranges from $1.140 to $1.165 billion. Wyndham now projects adjusted earnings per share between $3.60 - $3.70 in 2013.
Our Take
Amid a sluggish economic environment, Wyndham has gained from its strong operational performance in the Vacation Ownership and Lodging businesses, increased global travel demand, revival of the North American market and further international expansion. Wyndham’s achievement of more than 18% growth in adjusted earnings in the reported quarter depicts the strength in its fundamentals.
However, Wyndham’s European business will face a headwind from the prevailing economic uncertainties, especially in the U.K., where austerity measures are hurting consumer confidence.
Wyndham currently carries a Zacks Rank #3 (Hold). Some other hoteliers like Marriott International, Inc. (MAR) and Hyatt Hotels Corporation (H) are going to report their first-quarter earnings on May 1. Another hotelier Starwood Hotels & Resorts Worldwide Inc. (HOT) is expected to report on Apr 30.
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