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Wyndham Beats on Both Lines

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Wyndham Worldwide Corporation (WYN - Free Report) announced fourth quarter 2012 adjusted earnings of 63 cents per share, which surpassed the Zacks Consensus Estimate of 60 cents per share and increased 34% year over year.

The company’s improved operational performance at the lodging as well as vacation ownership businesses and its share repurchase program pushed up the earnings for the quarter. On a reported basis, Wyndham delivered earnings of 57 cents per share versus 37 cents per share in the prior-year quarter.

In full-year 2012, adjusted earnings per share were $3.23 ahead of the Zacks Consensus Estimate of $3.20 and the year-ago earnings of $2.49. On a reported basis, earnings were $2.75 per share versus $2.51 in the year-ago period.

Net revenues climbed 9% year over year to $1,094 million in the reported quarter. The quarterly revenues beat the Zacks Consensus Estimate of $1,056 million. The increase reflected growth across Wyndham’s lodging and vacation ownership businesses. In 2012, revenue increased 7% to $4,534 million year over year.

Inside the Headline Numbers

The company’s Lodging segment reported revenue of $223.0 million for the quarter, up 19% year over year, driven by a 4.0% rise in RevPAR and higher licensing fees.

Revenues from the Vacation Exchange and Rentals segment nudged up 0.7% year over year to $293.0 million. However, in constant currency, excluding the impact of acquisitions, segment revenues remained flat. Vacation rental revenues were $125.0 million, remained consistent year over year and Exchange revenues were $153.0 million, up 2% year over year.

Revenues from the Vacation Ownership segment at Wyndham rose 12.0% to $590.0 million. However, without the impact of acquisition of Shell Vacations Club, revenues improved 6% on the back of increased Vacation Ownership Interest sales and increased fees in resort management.

Operating income jumped 53.5% to $155 million in the fourth quarter.

Hotels Update

At the end of the quarter, Wyndham owned approximately 7,340 properties with 627,400 rooms. Additionally, 930 hotels with an approximately 110,700 rooms come under the company’s construction pipeline. Among these properties, 59% were newly constructed and 56% were in the international market.


Wyndham exited the quarter with cash and cash equivalents of approximately $195.0 million as compared with $230.0 million at the end of previous quarter. As of December 31, 2012, long-term debt was $2.6 billion versus $2.5 billion at September 30, 2012.

Share Repurchase & Dividend

The company has bought back approximately 2.9 million shares of its common stock worth $151.0 million in the fourth quarter. In 2012, Wyndham repurchased 12.9 million shares for $623 million. Year to date, the company has repurchased 1.1 million shares worth $60 million. Currently about $447.0 million shares remained under its existing share repurchase program.

Wyndham also hiked its quarterly dividend by 26% to 29 cents, thus bringing the annualized dividend to $1.16 compared with the previous payout of 92 cents per share.


Management revised its revenue, earnings per share and EBITDA guidance for full-year 2013. The company increased its revenue expectation from $4.90 – $5.05 billion to $4.925 - $5.100 billion. Wyndham increased the earnings per share guidance range from $3.50 - $3.60 to $3.57 - $3.70 and adjusted EBITDA outlook from $1.125 – $1.150 billion to $1.140 - $1.165 billion.

Our Take

Despite the challenging economic environment, Wyndham’s achievement of more than 30% growth in adjusted earnings and continued increase in guidance depict the strength in the company’s fundamentals.

Some other hotel companies worth a mention include Choice Hotels International Inc. (CHH - Free Report) and The Marcus Corporation (MCS - Free Report) both carrying a Zacks Rank #1 (Strong Buy) and Starwood Hotels & Resorts Worldwide, Inc. carrying a Zacks Rank #2 (Buy).

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