Consensus estimates, management guidance and commentary, and questions for management in preparation for the earnings release/call tomorrow.
Q1 2014 CONSENSUS ESTIMATES
• Total revenues: $1,195 million
o Vacation Ownership: $576 million
o Vacation Exchange & Rentals $393 million
o Lodging $235 million
• EBITDA $242 million
• EPS $0.75/share
- Adjusted EPS: $0.72 to $0.75,
- No share repurchases factored into guidance
- Lodging RevPAR: 4% - 6%
- Repurchased 700,000 shares at average $71.02/share through February 13, 2014
Full Year 2014:
- Revenues: $5.25 - $5.35 billion
- EBITDA: $1.215 - $1.24 billion, organic growth 6% - 8%
- EPS: $4.18 - $4.28, 17% - 21% from 2011 to 2015
- Corporate & Other: $122 - $125 million
- Interest Expense: $113 - $117 million
- Weighted average diluted shares of 131 million
QUESTIONS FOR MANAGEMENT
- Discuss current M&A pipeline and pricing vs. return expectations
- View on increasing dividend as compared to growth in free cash flow
- With the WYN stock trading near $73/share, what is managements view on stock valuation?
- Discuss recent credit trends within Vacation Ownership segment - receivables write-downs, reserves, and impairments?
- Plans for a time-share receivables securitization during 2014?
COMMENTARY FROM 4Q CONFERENCE CALL
- In the Hotel Group, revenues were up 10% reflecting higher RevPAR, adjusted EBITDA increased 3%, offset by nearly $7 million in higher marketing expenses.
- Domestic RevPAR grew 4.7% in Q4 on the strength of our upscale Wyndham brand, which grew 10.5% for the quarter and 12.4% for the full year
- International RevPAR continues to run at lower rates due to expansion of our lower RevPAR brands in China
- Hotel Group will see first ever umbrella marketing program with a national advertising campaign in the spring 2014.
- Redirecting resources to strengthen Wyndham Rewards Loyalty Program.
- Increasing incentives for franchisees to achieve enrollment targets.
- European markets appear to be on the upswing and through January, bookings at each of our European brands were ahead of 2013.
Vacation Exchange & Rentals:
- Exchange and Rentals revenues excluding FX increased 3% - average exchange members increased 1.6% but revenue per member fell 1.8% while average net price per vacation rental increased 4.4% on flat volume. Introduced dynamic pricing earlier in 2013 at UK cottage and Dutch park segments.
- WVO revenues increased 12% and EBITDA was up 19% based on sales of $53 million were up 12%. Receivables write-offs decreased 12% to $68 million and provisions of $73 million were down from $89 million in the prior year.
- Foreign exchange negatively impacted quarterly results by $14 million.
- Our FCF guidance remains at a target of $750mm as stronger business performance will be offset by higher inventory spend (manage inventory spend to $150mm as a five-year average starting in 2011) and the $40mm increase in cash taxes