Wyndham Second-Quarter Revenue Down 19% but Company's Cash Drawer is Full
(PARSIPPANY, NJ) -- Revenue is down, but compared to the rest of the lodging industry, Wyndham Worldwide Corp (NYSE:WYN) is doing just fine, says company chairman and CEO Stephen P. Holmes.
The Parsippany, NJ-based hotel company's second-quarter results were in line with what Holmes says he was anticipating.
"Wyndham Worldwide delivered strong second quarter results," says Holmes. "Our diversified business model has proved to be flexible and efficient. In addition, we are well positioned to capitalize on an economic recovery."
And, oh, yes, Holmes didn't mention - Wyndham's balance sheet shows cash and cash equivalents of approximately $175 million compared with $135 million from December 31, 2008.
That should be enough to weather still another financial storm, some industry analysts' note.Highlights of Wyndham's second-quarter, June 30-ending report show:
The company generated diluted adjusted earnings per share (EPS) of $0.41, compared with company-issued guidance of $0.36 - $0.41
- The company reaffirms full-year 2009 revenue and adjusted EBITDA guidance
- Wyndham Hotel Group's concentration in the economy and mid-scale segments led it to outperform the overall industry average domestic revenue per available room (RevPAR), posting a decline of 13.6% compared with a decline of 19.5%, as reported by Smith Travel Research
- Group RCI adjusted EBITDA, excluding the net effect of foreign currency impacts, increased 30%
- Volume per guest (VPG) at Wyndham Vacation Ownership increased 17%, reflecting strong pricing and higher close rates
- In May 2009, the company successfully completed $480 million of debt issuances maturing in 2012 and 2014; increasing available capacity on its revolving credit facility to approximately $840 million as of June 30, 2009
Holmes says second quarter revenues of $920 million declined by 19% from the prior-year period, due to continued weakness in the global lodging industry; unfavorable foreign exchange rate movements which negatively impacted the vacation exchange and rental business; and the previously announced initiative to reduce sales in the company's vacation ownership business.
Reported net income for the second quarter of 2009 was $71 million, or $0.39 diluted EPS, compared with net income of $98 million, or $0.55 diluted EPS, for the second quarter of 2008.
Adjusted net income for the second quarter of 2009 was $75 million, or $0.41 diluted EPS, compared with adjusted net income of $94 million, or $0.53 diluted EPS, for the second quarter of 2008.
Second quarter 2009 adjusted EPS excludes the after-tax impact of $4 million in restructuring costs and legacy items. Second quarter 2008 adjusted EPS excludes the after-tax net benefit of $4 million related to legacy items.Vacation Exchange and Rentals (Group RCI)
Revenues were $280 million in the second quarter of 2009, an 11% decrease compared with the second quarter of 2008, primarily related to the impact of unfavorable foreign currency movements. In constant currency, revenues decreased only 1%, as favorability in vacation rental revenues was offset by lower ancillary revenues.
Annual dues and exchange revenues were $112 million, relatively flat in constant currency compared with the second quarter of 2008 reflecting a 3% increase in the average number of members and a 4% decline in revenue per member. Including the impact of foreign currency, revenues declined 6% from the second quarter of 2008.
Vacation rental revenues were $137 million, an increase of $7 million, or 5%, in constant currency compared with the second quarter of 2008, driven by a 3% increase in the average net price per rental and a 2% increase in rental transaction volume.