Wyndham International Reports Second Quarter 2005 Results
DALLAS -- Wyndham International, Inc. (AMEX:WBR):
Results Summary:
(1) Adjusted second quarter EBITDA was $62.0 million, exceeding company guidance - a 24.0 percent increase year-over-year. Quarterly adjusted EBITDA excludes a $5.9 million accrual related to a judgment associated with a lawsuit filed in 2001. (2) Year-to-date EBITDA, as adjusted, on a comparable property basis was $132.8 million or an increase of 13.5 percent versus the same period last year. (3) RevPAR for the company's owned and leased properties increased 7.4 percent, meeting second quarter guidance. (4) Wyndham posted a second quarter and year-to-date net loss of $78.4 million and $98.3 million, respectively. (5) Wyndham.com generated $22.8 million in revenue, up 13.5 percent from the same period last year. (6) Wyndham sold two properties during the quarter for gross proceeds of $23.7 million. (7) As of June 30, 2005, Wyndham's total debt was $1.8 billion. (8) On June 14, 2005, Wyndham announced that it had entered into a merger agreement to be acquired by The Blackstone Group in a transaction valued at $3.24 billion or $1.15 per common share. The company anticipates that the transaction will close as soon as practicable following the annual stockholder meeting to be held on Aug. 11, 2005.
Wyndham International, Inc. (AMEX:WBR) today reported its second quarter 2005 financial results. Exceeding its quarterly guidance, Wyndham's earnings before interest, taxes, depreciation and amortization (EBITDA) on a comparable property basis was $62.0 million, an increase of 24.0 percent versus the same period last year. Wyndham's quarterly EBITDA results exclude a $5.9 million accrual related to a judgment associated with a lawsuit filed in 2001.
The company experienced solid RevPAR increases during the quarter throughout all of its business segments. For the second quarter, 96.0 percent of Wyndham's RevPAR growth was driven by an increase in average daily rate (ADR). Comparable owned and leased RevPAR was $119.02 or an increase of 7.4 percent. Wyndham's brands produced the following RevPAR results during the quarter:
Wyndham Hotels & Resorts $107.40 or a 7.0 percent increase
Wyndham Luxury Resorts $120.51 or an 8.6 percent increase
Wyndham Garden Hotels $87.25 or an 8.8 percent increase
Fred J. Kleisner, chairman, president and chief executive officer, stated: "Wyndham has been able to increase our RevPAR and resulting EBITDA margins as the hospitality industry continues to accelerate through pricing power with the return of business and group travelers. With 96 percent of our RevPAR increase attributed to strong gains in ADR, our resulting flow through has improved property EBITDA margins by 390 basis points."
During the second quarter, Wyndham reported a $78.4 million net loss compared to a net loss of $394.9 million from the prior year. After the effect of the company's preferred dividend, the resulting net loss per share was $0.45 on a fully diluted basis compared to a net loss of $2.33 from the prior year.
Six Months Ended Results:
For the six months ended June 30, 2005, adjusted EBITDA was $132.8 million or an increase of 13.5 percent. Comparable owned and leased RevPAR was $123.57, an increase of 7.1 percent versus the same period in 2004.
Wyndham reported a $98.3 million net loss compared to a net loss of $465.1 million from the prior year. After the effect of the preferred dividend, the resulting net loss per share was $0.57 on a fully diluted basis compared to a net loss of $2.76 from the prior year.
Brand Distribution:
During the second quarter, the company experienced significant increases in revenue and ADR across all distribution channels. Net wyndham.com revenue increased 13.5 percent and posted revenue of $22.8 million. Wyndham.com continues to lead the online third-party channels, posting a consumer ADR of $131.80 or an increase of 38.0 percent versus total third-party Internet sites' net rate to Wyndham of $95.45.
Wyndham's call center experienced an increase of 6.4 percent in call volume versus the same quarter the prior year and achieved a call conversion rate of 42.9 percent. The call center's ADR was $127.35 or a 6.3 percent increase year-over-year.
With a membership of 2.4 million members, Wyndham ByRequest, the company's guest recognition program, is centered on fulfilling - and exceeding - guest requests. Now that the program is five years strong, Wyndham has evaluated both the program's growth and impact of how doing business differently has benefited the company:
-- More than half of Wyndham ByRequest's member base is comprised
of the lucrative Baby Boomer and Generation X markets.
-- The average revenue per stay for ByRequest members is 31.0
percent higher than non-members.
-- Wyndham ByRequest members are three times more brand loyal
with triple the number of stays than non-members.
nd Recognition:
Wyndham recently received recognition from three organizations for its commitment to diversity. The company earned the No. 1 ranking on the National Association for the Advancement of Colored People (NAACP)'s Lodging Industry Report Card moving up from No. 2 in 2004. Wyndham's corporate diversity efforts have also earned the company a perfect score on the Human Rights Campaign Corporate Equality Index, and a place on DiversityInc.'s "25 Noteworthy Companies for Diversity."
"We have worked hard to make Wyndham the hotel brand of choice for diverse customers, employees and business partners. I challenged our management team and refocused our corporate mission to transform Wyndham into the diversity leader that it is today. It is not just about doing the right thing, but rather, diversity increases our revenue and lowers our business risk in that we are better protected from the external economic and social events that shift hotel demand patterns of any one particular group. This determined focus has created significant increases in our fair market share over the last five years," said Kleisner.
Non-Strategic Asset Disposition:
During the second quarter 2005, Wyndham sold two hotels for approximately $23.7 million. On June 1, 2005, Wyndham sold its lease interest in the Wyndham Hotel in Manhattan to the land owner. Wyndham continues to manage the property under an interim management agreement until Sept. 1, 2005, at which time it will close for redevelopment. As part of the transaction, Wyndham now has full control of its naming rights in Manhattan without the obligation to pay royalties to any party. On June 15, 2005, Wyndham sold the Marriott Atlanta to RLJ Atlanta Century Center Hotel, LLC.
Corporate Finance/Accounting:
As of June 30, 2005, Wyndham's total debt was approximately $1.8 billion, an increase of $130.2 million since the end of the first quarter 2005. The increase in debt is primarily due to certain costs associated with the company's corporate debt refinancing, including $100.0 million of pre-funded capital. Company debt breaks down as follows: Revolver $20.4 million; Term Loan B $528.7 million; Term Loan C $139.7 million and Mortgage and Other Indebtedness $1.1 billion. Wyndham's total debt excludes $166.9 million in debt related to the Wyndham Anatole, a third-party owned hotel. Wyndham has no obligation to repay the Anatole debt.
At the quarter's end, Wyndham's liquidity, defined as revolver availability plus cash in its overnight account, was approximately $160.2 million, a decrease of $41.1 million over the first quarter 2005. The decrease in liquidity is a result of the company's new refinancing terms and the corresponding reduction in its revolving credit facility.
Future Guidance:
Full-year EBITDA guidance is maintained and is expected to be in the range of $220.0 to $230.0 million. RevPAR growth for the full-year is expected to be in the range of 7.0 to 9.0 percent.
Merger Agreement:
On June 14, 2005, Wyndham International entered into a merger agreement to be acquired by an affiliate of The Blackstone Group in a transaction valued at $3.24 billion. Under the terms of the agreement, Blackstone will acquire all of the outstanding stock of Wyndham for $1.15 per common share and $72.17 per preferred share in cash, subject to potential adjustment to reflect additional shares that may be issued as dividends after June 30, 2005. The transaction, which is subject to stockholder approval and the satisfaction of other customary closing conditions, is expected to close as soon as practicable following the annual stockholder meeting to be held on Aug. 11, 2005.
Kleisner added, "The completion of the Blackstone merger will culminate a long and rewarding journey - a path taken to position Wyndham for long-term success by implementing strategies that helped us simplify our corporate structure, dramatically reduce our debt, and sell all our non-strategic assets. Simultaneously, Wyndham emerged as a hotel brand of choice in the upscale and luxury hotel segments. We're very proud of the leaner, more focused organization we have become. As a company whose brand, assets and service philosophy have been admired and emulated by other hotel companies, our accomplishments over the last several years have made Wyndham a much sought-after company and are among the primary reasons that Blackstone chose to invest in our future."
Wyndham's annual stockholder meeting will be held on Aug. 11, 2005, at the Wyndham Anatole Hotel in Dallas at 9 a.m. CDT, at which time the Blackstone merger proposal, the previously announced recapitalization proposal, the election of directors and the ratification of the appointment of PricewaterhouseCoopers LLP as Wyndham's independent public accounting firm for 2005 will be voted upon.
About Wyndham International, Inc.:
Based in Dallas, Wyndham International, Inc. offers upscale and luxury hotel and resort accommodations. Wyndham owns, leases, manages and franchises hotels and resorts in the U.S., Canada, Mexico, the Caribbean and Europe, and guarantees that the best rates for its properties will be found on its proprietary Web site. For more information or to make a reservation, visit
EBITDA:
EBITDA represents earnings before interest, taxes, depreciation and amortization. The company believes that this metric is useful to investors and management as a measure of the company's operating performance due to the significance of the company's long-lived assets and level of indebtedness and because such metric can be used to measure the company's ability to service debt and fund capital expenditures. EBITDA is not intended to represent cash flow from operations as defined by accounting principles generally accepted in the United States (GAAP) and such metric should not be considered as an alternative to net income, cash flow from operations or any other performance measure prescribed by GAAP. The company's calculation of EBITDA may be different from the calculation used by other companies and, therefore, comparability may be limited.
This press release contains certain forward-looking statements within the meaning of Sections 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including projections about future operating results and the proposed Blackstone merger. Statements about the expected effects, timing and completion of the proposed transaction and all other statements in this release other than historical facts constitute forward-looking statements. You can identify forward-looking statements because they contain words such as "believes," "expects," "may," "will," "would," "should," "seeks," "approximately," "intends," "plans," "estimates," or "anticipates" or similar expressions which concern our strategy, plans or intentions. All statements we make relating to estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. All of these forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those we expected. We derive most of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions.
WYNDHAM INTERNATIONAL, INC.
2005 OPERATING STATISTICS BY QUARTER
Second Quarter Six Months Ended June 30
--------------------------- ---------------------------
2005 2004 % Change 2005 2004 % Change
-------- -------- --------- -------- -------- ---------
COMPARABLE WYNDHAM
BRANDED HOTELS (a)
Wyndham Hotels
& Resorts
---------------
Average
daily rate $136.50 $128.20 6.5% $145.61 $136.37 6.8%
Occupancy 78.7% 78.3% 0.4 ppt 77.4% 77.1% 0.3 ppt
RevPAR $107.40 $100.39 7.0% $112.75 $105.15 7.2%
Wyndham Luxury
Resorts (b)
---------------
Average
daily rate $238.96 $222.52 7.4% $245.56 $239.75 2.4%
Occupancy 50.4% 49.9% 0.5 ppt 50.2% 49.7% 0.5 ppt
RevPAR $120.51 $110.93 8.6% $123.23 $119.16 3.4%
Wyndham Garden
---------------
Average
daily rate $118.92 $102.02 16.6% $113.58 $101.82 11.6%
Occupancy 73.4% 78.6% -5.3 ppt 66.5% 69.8% -3.3 ppt
RevPAR $87.25 $80.21 8.8% $75.57 $71.10 6.3%
COMPARABLE OWNED &
LEASED HOTELS
Proprietary
Branded (c)
---------------
Average
daily rate $145.34 $135.54 7.2% $154.97 $145.54 6.5%
Occupancy 82.4% 82.5% -0.1 ppt 80.3% 80.0% 0.3 ppt
RevPAR $119.76 $111.81 7.1% $124.41 $116.36 6.9%
Non-
Proprietary
Branded (d)
---------------
Average
daily rate $89.70 $81.92 9.5% $93.34 $83.96 11.2%
Occupancy 91.2% 74.9% 16.3 ppt 87.4% 80.7% 6.7 ppt
RevPAR $81.76 $61.34 33.3% $81.57 $67.76 20.4%
Total
Portfolio
--------------
Average
daily rate $144.13 $134.58 7.1% $153.66 $144.32 6.5%
Occupancy 82.6% 82.3% 0.3 ppt 80.4% 80.0% 0.4 ppt
RevPAR $119.02 $110.82 7.4% $123.57 $115.41 7.1%
NOTE: All hotel statistics exclude assets sold or held for sale during
2005 and assets sold in 2004.
(a) Brand statistics are based on comparable owned, managed and
leased hotels for respective periods.
(b) Reflects results of the Boulders, Carmel Valley Ranch, Isla
Navidad, Kelly House and Harbor View.
(c) Reflects Wyndham Hotels & Resorts, Wyndham Luxury Resorts and
Wyndham Garden Hotels that were branded as of Jan. 1, 2004.
(d) This represents our Park Shore hotel located in Hawaii.
WYNDHAM INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2005 2004 2005 2004
-------------------- --------------------
Revenues:
Room revenues $124,497 $115,914 $258,049 $242,326
Food and beverage
revenues 68,327 66,487 135,743 133,955
Other revenues 36,193 35,518 79,616 78,737
Anatole hotel revenues 28,355 23,958 59,094 56,281
--------- ---------- --------- ----------
Total hotel revenues 257,372 241,877 532,502 511,299
Management fees and
service fee income 5,567 4,088 10,936 8,805
Interest and other income 1,296 528 2,081 1,044
--------- ---------- --------- ----------
Total revenues 264,235 246,493 545,519 521,148
--------- ---------- --------- ----------
Expenses:
Room expenses 28,808 27,810 57,624 55,717
Food and beverage
expenses 44,164 44,146 88,520 88,748
Other expenses 87,894 88,303 180,522 179,637
Anatole hotel expenses 17,874 17,069 37,101 37,207
--------- ---------- --------- ----------
Total hotel expenses 178,740 177,328 363,767 361,309
General and
administrative costs 16,878 16,687 27,893 30,730
Interest expense 40,072 45,459 83,166 92,378
Interest expense -
Anatole 3,135 3,208 6,285 6,403
--------- ---------- --------- ----------
Total operating costs
and expenses 238,825 242,682 481,111 490,820
--------- ---------- --------- ----------
Revenues net of direct
expenses 25,410 3,811 64,408 30,328
Adjustments:
Professional fees and
other 420 208 2,107 359
Loss (gain) on derivative
instruments 181 (2,402) (10) 1,934
Loss on extinguishment of
debt 19,925 -- 19,925 --
Litigation accrual 5,917 -- 5,917 --
Strategic reorganization
costs 3,499 -- 5,821 49
Write-off of management
contract and leasehold
costs 340 -- 779 --
--------- ---------- --------- ----------
Total adjustments 30,282 (2,194) 34,539 2,342
--------- ---------- --------- ----------
Depreciation and
amortization 24,372 25,470 48,855 54,908
Depreciation and
amortization - Anatole 4,778 2,489 7,809 4,712
Equity in earnings from
unconsolidated subsidiaries (1,008) (575) (1,381) (1,366)
Minority interest in
consolidated subsidiaries 76 5 185 6
Minority interest in
consolidated subsidiaries -
Anatole 3,230 1,918 9,238 9,414
--------- ---------- --------- ----------
31,448 29,307 64,706 67,674
--------- ---------- --------- ----------
Loss from continued
operations before taxes (36,320) (23,302) (34,837) (39,688)
Income tax (provision)
benefit (1,366) 3,783 (3,104) (1,834)
--------- ---------- --------- ----------
Loss from continued
operations (37,686) (19,519) (37,941) (41,522)
--------- ---------- --------- ----------
Income from operations of
discontinued hotels 1,339 5,168 3,636 749
Gain on sale of assets 2,795 2,162 25,083 1,144
Impairment of assets held
for sale -- (340,258) -- (342,221)
Other 221 (786) 180 (819)
--------- ---------- --------- ----------
(Loss) income from
discontinued operations
before taxes 4,355 (333,714) 28,899 (341,147)
Income tax provision -- -- -- --
--------- ---------- --------- ----------
(Loss) income from
discontinued operations 4,355 (333,714) 28,899 (341,147)
Net loss $(33,331) $(353,233) $(9,042) $(382,669)
========= ========== ========= ==========
EBITDA, as adjusted $56,138 $49,964 $132,840 $117,041
========= ========== ========= ==========
WYNDHAM INTERNATIONAL, INC.
EBITDA Reconciliation
(in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2005 2004 2005 2004
---------- --------- ----------- --------
EBITDA Reconciliation
Loss from continued
operations $(37,686) $(19,519) $(37,941) $(41,522)
Interest expense 40,072 45,459 83,166 92,378
Depreciation and
amortization 24,372 25,470 48,855 54,908
Income tax provision
(benefit) 1,366 (3,783) 3,104 1,834
--------- ---------- --------- ----------
EBITDA 28,124 47,627 97,184 107,598
Interest, depreciation
and amortization from
equity interest in
unconsolidated
subsidiaries 1,365 1,499 2,700 2,776
Interest, depreciation
and amortization
attributable to minority
interests 188 (94) 163 (234)
Write-off of management
contract and leasehold
costs 340 -- 779 --
Profession fees and other 420 121 2,107 181
Amortization of unearned
compensation 456 691 891 1,465
Loss on extinguishment of
debt 19,925 -- 19,925 --
Strategic reorganization
costs 3,499 -- 5,821 --
Loss (gain) on derivative
instruments 181 (2,402) (10) 1,934
Taxes - franchise 531 1,413 1,063 1,104
Consolidation of Anatole 1,109 1,109 2,217 2,217
--------- ---------- --------- ----------
EBITDA, as adjusted $56,138 $49,964 $132,840 $117,041
========= ========== ========= ==========
Per Share Calculations:
Loss from continued
operations $(37,686) $(19,519) $(37,941) $(41,522)
(Loss) income from
discontinued operations 4,355 (333,714) 28,899 (341,147)
--------- ---------- --------- ----------
Net loss $(33,331) $(353,233) $(9,042) $(382,669)
Adjustment for preferred
stock (45,056) (41,622) (89,246) (82,435)
--------- ---------- --------- ----------
Net loss attributable
to common
shareholders $(78,387) $(394,855) $(98,288) $(465,104)
========= ========== ========= ==========
Basic and diluted loss
per common share:
Loss from continued
operations $(0.48) $(0.36) $(0.74) $(0.73)
(Loss) income from
discontinued
operations 0.03 (1.97) 0.17 (2.03)
--------- ---------- --------- ----------
Loss per common
share $(0.45) $(2.33) $(0.57) $(2.76)
========= ========== ========= ==========
Basic and diluted
weighted average common
shares and share
equivalents 172,703 169,361 172,355 168,808