Leading hospitality company,
Wyndham Worldwide Corporation
), posted mixed fourth-quarter 2013 results. The company's
fourth-quarter adjusted earnings of 73 cents per share missed the
Zacks Consensus Estimate of 74 cents by a penny which we believe
was due to higher total expenses.
However, quarterly earnings were up 15.9% year over year led
by strong performance by the company's Lodging as well as
Vacation Ownership businesses and share repurchase
Net revenue grew 9.2% year over year to $1.2 billion in the
quarter, beating the Zacks Consensus Estimate of $1.18 billion by
1.7%. Solid revenue growth in all three operating segments aided
Inside the Headline Numbers
Wyndham has three operating segments - Lodging, Vacation
Exchange and Rentals and Vacation Ownership. All the segments
have both domestic and international operations.
revenues grew 10% year over year to $245.0 million in the fourth
quarter, driven by a 4.7% rise in domestic revenue per available
room (RevPAR) and higher hotel management reimbursable fees. The
segment's revenues also gained from the increase in the company's
Systemwide RevPAR grew 3.8% gaining from higher RevPAR growth
Revenues from the
Vacation Exchange and Rentals
segment were up 4% year over year to $305.0 million. However, in
constant currency, segment revenues were up only 1% year over
year (acquisitions excluded).
Vacation rental revenues went up 10% year over year to $138.0
million, while Exchange revenues were down 2% to $150.0 million,
reflecting the negative currency translation. In constant
currency, exchange revenues remained flat year over year because
a 1.6% improvement in average number of members was neutralized
by a 1.8% drop in exchange revenue per member.
Revenues from the
segment rose 12.0% year over year to $658.0 million, driven by
higher gross Vacation Ownership Interest (VOI) sales. Gross VOI
sales were up 12% year over year to $488 million, gaining from a
6.6% rise in tour flow and 6.5% increment in volume per
Adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA) grew 9.6% year over year to $239 million
during the quarter, riding on higher EBITDA in Lodging and
Vacation Ownership segments.
Wyndham had 7,490 properties with 645,400 guestrooms at the
end of the fourth quarter. Additionally, 970 hotels with nearly
114,000 rooms are currently in the company's construction
pipeline, most of which are located internationally.
Wyndham has bought back approximately 9.7 million shares worth
$590.0 million for full-year 2013. In the period between Jan 1,
2014 and Feb 6, 2014, Wyndham bought back another 0.3 million
shares for $24 million. Currently, it has $643 million remaining
under its share repurchase programs as of Feb 6, 2014.
Wyndham also hiked quarterly dividend by 20.7% to 35 cents,
thus bringing the annualized dividend to $1.40 compared with the
previous payout of $1.16 per share.
Full-Year 2013 Highlights
In full-year 2013, adjusted earnings per share were $3.83
ahead of the Zacks Consensus Estimate of $3.82 by 0.3% and the
year-ago quarter's earnings of $3.23 by 18.6%. In 2013, revenues
increased 10% year over year to $5.0 billion which was in line
with the Zacks Consensus Estimate.
Guidance for 2014
Wyndham maintained its revenues and EBITDA guidance for 2014.
It expects revenues within $5.250-$5.350 billion while adjusted
EBITDA is expected in the $1.215 to $1.240 billion range.
After posting year over year earnings growth throughout 2013,
the company has raised its earnings guidance for 2014. The
company now anticipates adjusted earnings per share within the
range of $4.18-$4.28, up from the prior range of $4.12-$4.22. The
Zacks Consensus Estimate for 2014 stands at $4.38.
Although the Zacks Rank #2 (Buy) company missed the Zacks
Consensus Estimate marginally due to higher expenses, the company
has performed impressively on the revenue front. We are
encouraged by the company's consecutive rise in earnings
guidance, a strong developmental pipeline, significant
international exposure and transition to a greater
Marriott International, Inc.
) is slated to report fourth-quarter 2013 earnings on February
19, 2014. Some better-ranked stocks in the hotels sector include
Choice Hotels International Inc.
Hyatt Hotels Corp.
) both carrying a Zacks Rank #2.
CHOICE HTL INTL (CHH): Free Stock Analysis
HYATT HOTELS CP (H): Free Stock Analysis
MARRIOTT INTL-A (MAR): Free Stock Analysis
WYNDHAM WORLDWD (WYN): Free Stock Analysis
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