Wyndham Worldwide Corporation
's (
WYN
) first quarter 2012 adjusted earnings of 60 cents per share
surpassed the Zacks Consensus Estimate of 55 cents and improved 36%
year over year.
On a reported basis, Wyndham delivered earnings of 21 cents per
share versus 41 cents in the prior-year quarter.
The increase was mainly driven by higher revenue per available
room (RevPAR) in the Lodging business as well as strong operational
performance of the Vacation Ownership business. The performance of
the Vacation Exchange and Rentals business was remarkable,
considering the challenging economic environment in Europe. The
company's share repurchase program also aided the earnings
growth.
Net revenue increased 9% year over year to $1,036 million in the
reported quarter, reflecting growth across Wyndham's Vacation
Ownership and Hotel businesses. Quarterly revenue also came ahead
of the Zacks Consensus Estimate of $1,008 million.
Inside the Headline Numbers
The company's Lodging segment reported revenue of $185.0 million
for the quarter, up 24% year over year, driven by a 7.0% rise in
RevPAR, market share gain and a gain on reclassification of certain
reservation fees.
Revenues from the Vacation Exchange and Rentals segment crept up
1.4% year over year to $361.0 million. However, in constant
currency, excluding the impact of acquisitions, segment revenues
were flat. Vacation rental revenues were $159.0 million, up 6% and
Exchange revenues were $188.0 million, down 3% year over year.
Revenues from the Vacation Ownership segment at Wyndham upped
11.0% to $501 million, on the back of an increase in Vacation
Ownership Interest sales.
Hotel Update
At the end of the quarter, Wyndham owned approximately 7,150
properties or 609,300 rooms. The development pipeline included over
840 hotels and around 108,200 rooms, of which 56% were newly
constructed and 55% were in the international market.
Financials
Wyndham exited the quarter with cash and cash equivalents of
approximately $240 million. Securitized vacation ownership debt was
$2.0 billion.
During the quarter, the company repurchased approximately 3.6
million shares of its common stock at an average price of $42.05
per share. To enhance the shareholders' value, the board of
directors also approved an additional share repurchase worth $750
million.
Guidance
For full-year 2012, management continues to expect revenue in
the range of $4.4-$4.6 million and adjusted EBITDA between $1.03
billion and $1.06 billion. However, Wyndham raised its earnings per
share guidance range from $2.85-$3.00 to $3.00-$3.15.
Our Take
We expect Wyndham to benefit from its repositioning to a more
fee-for-service-based business, free cash flow generation and
increased global travel demand and thus remain optimistic on the
stock.
Moreover, the company is strengthening its presence in Europe
and Latin America as well as in the Asian markets of China and
India. The continued increase in earnings guidance and additional
share repurchase depicts the strength in the company's
fundamentals.
One of Wyndham's competitors
Marriott International Inc.
(
MAR
) reported first-quarter 2012 adjusted earnings per share of 30
cents, which surpassed the Zacks Consensus Estimate by a penny as
well as the year-ago quarter adjusted earnings of 23 cents.
Wyndham, which also competes with
Starwood Hotels & Resorts Worldwide Inc.
(
HOT
), currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. We are maintaining our long-term Neutral
recommendation on the stock.
STARWOOD HOTELS (
HOT
): Free Stock Analysis Report
MARRIOTT INTL-A (
MAR
): Free Stock Analysis Report
WYNDHAM WORLDWD (
WYN
): Free Stock Analysis Report
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