Wyndham Beats Q3, Raises Outlook

| About: Wyndham Worldwide (WYN)

Wyndham Worldwide Corporation (NYSE:WYN) reported third-quarter earnings of 57 cents per share. Adjusted earnings of 58 cents were 2 pennies ahead of the Zacks Consensus Estimate of 56 cents. However, results were down from the prior-year period when the company had earned 83 cents on an adjusted basis.

While revenues were down in the quarter, the company reported a drop in expenses which improved the company’s bottom-line. Wyndham has also raised its full-year 2009 adjusted EBITDA guidance to $775 - $825, compared with the prior guidance of $760 - $810 million. The company expects to earn 35 cents to 38 cents in the fourth quarter. Revenues were down 17% from the year-ago quarter to $1.02 billion, primarily due to Wyndham’s decision to invest less in its timeshare business.

Additionally, the lodging industry continues to suffer as a result of the challenging macroeconomic environment which continues to impact both business and leisure travels. Also, the foreign exchange rate movements had an unfavorable impact on the company’s Exchange and Rentals business. Wyndham Hotel Group’s revenue was down 14% year-over-year to $183 million.

The decrease was driven by the decline in revenue per available room (RevPAR). System-wide RevPAR dropped 17.0%, including declines of 16.0% and 21.9% in domestic and international RevPAR, respectively. Revenue for Wyndham Exchange and Rentals, previously Group RCI, fell 8% from the prior-year period to $327 million, primarily due to the negative impact of foreign currency movements.

Excluding the impact of foreign currency, revenues were flat. Gross Vacation Ownership Interest or timeshare sales plunged 35% year-over-year to $366 million. The company has decided to invest less in this business. This included some sales office closures and a reduction of marketing efforts which led to fewer tours.

Revenues were down 23% from the prior-year period to $508 million. Net interest expense was $33 million, up $14 million from the year-ago quarter, due to higher interest rates, primarily reflecting the impact of the long-term debt issuances in May 2009. The company used the net proceeds to reduce its revolving credit facility borrowings and lower capitalized interest.

Management expects interest expenses in 2010 to increase from the 2009 levels as a resulted of financings being completed in 2009 and lower capitalized interest in 2010. Expenses were down 18% from the prior-year period to $810 million. Wyndham’s cash and cash equivalents were approximately $170 million compared with $175 million on Jun 30, 2009 and $135 million on Dec 31, 2008.

About this article:

Tagged: , Lodging, Earnings
Problem with this article? Please tell us. Disagree with this article? .