Wyndham International, Inc. (NYSE:WYN) today reported earnings before interest, taxes, depreciation and amortization (EBITDA), as adjusted, of $165.4 million for the quarter ended June 30, 1999, compared with $147.1 million for the comparable 1998 period. Revenues rose nearly 40% in the quarter to $651.2 million from $465.5 million the prior year quarter.
As expected, Wyndham`s results in the quarter included $893.8 million in non-recurring, largely non-cash charges associated with its recent restructuring, including $675 million for deferred taxes as it converted from a REIT to a C corporation and $201.8 million for expenses related to restructuring and strategic reorganization. Other non-recurring charges in the quarter reflect the announced sale of Arcadian International Limited`s historic-style hotels, severance, and goodwill relating to the disposition of certain non-strategic assets. As a result, Wyndham reported a net loss for the quarter of $877.2 million, or $5.76 per share diluted, compared with a net loss of $26.3 million, or $0.21 per share in the prior year.
James D. Carreker, Chairman and Chief Executive Officer of Wyndham, said: “We continue to outperform the industry averages for RevPAR growth and we completed a series of initiatives that significantly strengthened our financial position, streamlined our corporate structure and sharpened our business focus. Most visibly, we realigned our capital structure and de-leveraged our balance sheet, infusing $1 billion in new equity into the Company. We closed on $2.5 billion in new corporate debt, repaid $336 million in forward equity commitments, and completed $581 million in mortgage financing. Over the next 18 months, we have less than $180 million in principal payments.”
Last month, Wyndham named Fred J. Kleisner to the position of President and Chief Operating Officer. Kleisner, 54, joined Wyndham from Starwood Hotels & Resorts Worldwide, Inc., where he was President of the Americas division. In May, Wyndham named Richard Mahoney, 46, Chief Financial Officer. A former CFO of Westin Hotels & Resorts, Mahoney joined Wyndham from Starwood Hotels & Resorts, where he was Executive Vice President and Chief Operating Officer of its gaming division.
Carreker added, “In addition to building our management team, we continued to build equity in our proprietary brands, opening three flagship hotels in key downtown markets (Chicago, Atlanta and Boston). We also introduced the new prototype for our suburban product, The Wyndham Hotel in Billerica, MA.”
Second Quarter Operating Performance: The Company`s total owned hotels generated a 2% RevPAR increase in the quarter and 2.7% year to date, as compared with an industry average of 2.5% for the six first months. Performance was supported by a 3.3% gain in proprietary branded hotels for the quarter and 4.5% year to date. RevPAR for non-proprietary branded hotels rose 0.5% and 0.6% for the quarter and year to date, respectively, largely reflecting the significant number of hotels in transition following the Interstate spin-off and other asset dispositions. Gross operating profit (GOP) margin of owned assets increased to 35.7% from 35.4% of revenues.
Wyndham said the performance of its core upscale brands continues to be strong. RevPAR for Wyndham Hotels & Resorts rose 7.6% in the second quarter to $96.73. The Summerfield Suites division achieved a 4.6% RevPAR gain to $91.77. Grand Bay, the luxury division, posted a 3.2% gain in RevPAR in the period - a significant improvement from its performance in the two previous quarters. The Wyndham brand increased its GOP margin to 35.3% from 34.3% of revenues.
Fred Kleisner, President and Chief Operating Officer, said, “I continue to be impressed by the Wyndham organization - its brands, its assets, and most importantly its people, who share an unstoppable drive to create long term shareholder value. With our financial situation stabilized, our mission is to realize the full potential of Wyndham International, building on the tremendous equity and momentum of its outstanding portfolio of brands.”
Six Months Performance:
For the first half, Wyndham reported EBITDA as adjusted of $354.8 million, compared with $261.2 million for the comparable 1998 period. Revenues were $1.3 billion in the 1999 first half, up from $815.3 million in the prior year.
For the six months, Wyndham reported a net loss of $876.7 million, including $907.5 million of largely non-cash, non-recurring charges related principally to the items noted above for the second quarter.
Rights Offering: As previously disclosed, the Company intends to conduct a $300 million rights offering. The Company intends to file a registration statement with the SEC for the rights offering within the next few days. Commencement of the rights offering is subject to finalizing the settlement of certain litigation, court approval of the settlement, and effectiveness of the registration statement.