Marriott (MAR) Q1 Earnings Beat, Revenues Miss Estimates

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Marriott International, Inc.MAR reported mixed first-quarter 2018 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues lagged the same. Adjusted earnings per share of $1.34 surpassed the Zacks Consensus Estimate of $1.25 and increased 40% year over year.  Total revenues came in at $5,006 million, which missed the consensus mark of $5,753 million but improved 2% from the year-ago quarter.

Strong revenue per available room (RevPAR) gains and room growth drove the company's results. Notably, with its owners and franchisees, Marriott opened approximately 15,000 rooms in the first quarter. In a year's time, the company's shares have surged 35%, outperforming the industry 's gain of 23.2%.

RevPAR & Margins

In the quarter under review, RevPAR for worldwide comparable system-wide properties increased 3.6% in constant dollar (up 5.5% in actual dollars) driven by 1.4% growth in occupancy and 1.5% improvement in average daily rate (ADR). In fact, the reported figure came above management's guided range of flat to up 2% on a constant-dollar basis.

Comparable system-wide RevPAR in North America grew 2% in constant dollars (up 2.3% in actual dollars). Occupancy rate and ADR also increased 0.7% and 1.1%, respectively.

At constant dollar, international comparable system-wide RevPAR rose 7.5% (up 14.1% in actual dollars). Both occupancy rate and ADR rose 3.2% and 2.5%, respectively.

Worldwide comparable company-operated house profit margin expanded 70 basis points (bps) in the reported quarter. The upswing can be attributed to higher RevPAR, robust cost controls, improved productivity and synergies from the Starwood acquisition.

However, North American comparable company-operated house profit margins contracted 10 bps. Meanwhile, house profit margins for comparable company-operated properties outside North America rose 160 bps.

Total expenses were up 3% year over year to $4,506 million mainly owing to higher general, administrative and other expenses. General, administrative and other expenses totaled $247 million, up 17% from the year-ago quarter.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $707 million, up 8% year over year.

Second-Quarter 2018 Outlook

For the second quarter, the company anticipates comparable system-wide RevPAR to increase in the range of 3-4% (on a constant-dollar basis) in North America. This reflects the favorable impact of shift of the Easter holiday. Outside North America, Marriott expects the same to rise in the range of 5-6% and worldwide in the 3-4% band.

Furthermore, gross fee revenues are projected between $935 million and $945 million, up 10-11% on a year-over-year basis. General, administrative, and other expenses are expected to be nearly $250 million. Adjusted EBITDA is anticipated to be in the range of $880-$890 million, up 7-9% year over year.

Earnings per share are envisioned in the range of $1.34-$1.36. The Zacks Consensus Estimate for second-quarter earnings is pegged at $1.37.

Marriott International Price, Consensus and EPS Surprise

Marriott International Price, Consensus and EPS Surprise | Marriott International Quote

2018 View

For 2018, Marriott anticipates earnings in the band of $5.43-$5.55 per share, up from the prior-guided range of $5.11-$5.34.

Comparable system-wide RevPAR is expected to increase 2-3% in North America, 5-6% outside North America and 3-4% worldwide on a constant-dollar basis. Room deletions are expected to lie between 5.5% and 6% for the current year.

Additionally, Marriott projects fee revenues between $3,650 million and $3,690 million, including $360-$380 million of credit card branding fees. Incentive management fees are anticipated to increase by nearly 10% from $607 million in 2017.

While operating income is projected in the range of $2,715-$2,765 million, general, administrative and other expenses are envisioned in the $940-$950 million band. Adjusted EBITDA is anticipated between $3,445 million and $3,500 million.

Zacks Rank & Peer Releases

Marriott carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Darden DRI reported mixed third-quarter fiscal 2018 results, wherein earnings surpassed the Zacks Consensus Estimate, while revenues lagged the same. Adjusted earnings of $1.71 per share increased 29.5% year over year on the back of higher revenues.

Restaurant Brands' QSR first-quarter 2018 earnings and revenues surpassed the Zacks Consensus Estimate. Earnings under the previous accounting standard came in at 67 cents, improving 86.1% year over year.

Chipotle's CMG first-quarter 2018 earnings surpassed analysts' expectations while revenues were in line with the same. Adjusted earnings of $2.13 increased 33.1% from the year-ago quarter driven by higher revenues and lower food costs.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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