DALLAS, Feb 6, 2003 (BUSINESS WIRE)—Wyndham International, Inc. (AMEX:WBR) today reported results for the fourth quarter and full year ending Dec. 31, 2002.
On a comparable pro forma basis, which reflects adjustments for acquisitions and dispositions, earnings before interest, taxes, depreciation and amortization (EBITDA), as adjusted, was $55.7 million for the fourth quarter versus $54.4 million for the same period in 2001. For the full year of 2002, pro forma EBITDA, as adjusted, was $301.3 million, versus $398.5 million in 2001. The pro forma results have been adjusted to remove the operating results of all assets sold during 2002, as if sold on Jan. 1, 2001.
Wyndham reported a net loss of $37 million and a pro forma net loss of $43.1 million for the fourth quarter, versus a $57.1 million net loss and $61.7 million pro forma net loss for the same period in 2001. After the effect of the Company`s preferred dividend, this resulted in a net loss of $0.44 per share and a pro forma net loss per share of $0.48 for the quarter. For the full year 2002, the net loss was $500 million and the pro forma net loss was $513.8 million, versus a $139 million net loss and $492.9 million pro forma net loss for the prior year. Significant components of the difference between the pro forma net loss of $513.8 million and the pro forma EBITDA, as adjusted, of $301.3 million include $324.1 million of goodwill write-off, $267.1 million of depreciation and amortization, $227.8 million of interest expense, and $84.8 million of derivative losses offset by a $122.4 million tax benefit. (See attached schedule for complete reconciliation between net loss and EBITDA.)
Revenue per available room (RevPAR) continued to improve each quarter of the year. RevPAR for the Company`s comparable owned and leased hotels improved from a decline of 23.1 percent in the fourth quarter 2001 to an increase of 7.6 percent in the fourth quarter of 2002, which exceeded the Company`s guidance of 5.0 to 7.0 percent. The increase for the fourth quarter was comprised of a 7.1 percentage point increase in occupancy and a 4.2 percent reduction in average daily rate (ADR) for a RevPAR of $67.82.
“Given the challenging climate for the lodging industry, we made a strategic decision to grow our market share through a focus on occupancy. Our strategy paid off as RevPAR improved steadily throughout the year,” said Wyndham International Chairman and Chief Executive Officer Fred J. Kleisner.
Branded Performance: For the fourth quarter 2002, comparable owned and operated Wyndham hotels and resorts had a RevPAR of $75.75, a 14.2 percent increase from the fourth quarter of 2001. For the year, these hotels and resorts experienced a RevPAR decline of only 2.4 percent, derived from a 3.1 percentage point increase in occupancy and a 6.7 percent decline in ADR. RevPAR on all comparable Wyndham owned and leased properties declined 6.8 percent during the year, which was comprised of a 1.1 percentage point increase in occupancy and an 8.3 percent decline in rate compared to 2001. Wyndham-branded owned and leased properties increased their RevPAR penetration index within its competitive set each month of the fourth quarter versus the prior year:
October +150 bps November +230 bps December +620 bps / Further, these properties ended the year with a RevPAR index of over 100 percent.
Mr. Kleisner stated: “The marked improvement of our branded properties compared to our total owned and leased portfolio underscores our core strategy to focus on proprietary-branded operations and, specifically, reflects the strength of Wyndham ByRequest(R), our guest loyalty program. Wyndham ByRequest is a unique program that has helped us grow market share by treating our guests as individuals. The market response has been outstanding; we have tripled membership since June 2002 with almost 1.2 million members.”
The operating margins for Wyndham-branded properties remained strong despite occupancy gains from guests paying lower rates, creating margin compression. For the fourth quarter, hotel gross operating profit margins at Wyndham-branded owned and operated hotels and resorts maintained the same margins as in the prior year even with significant cost increases in property and casualty insurance. These fixed cost increases were offset by variable cost reductions reflecting the effectiveness of proactive business planning.
Financial Highlights: Cash and equivalents were $181.1 million as of Dec. 31, 2002, inclusive of $143.8 million of restricted cash. Cash and equivalents increased by $15.7 million from the $165.4 million on hand at the end of the third quarter 2002.
During the fourth quarter, debt decreased by $460 million due primarily to the application of net asset sale proceeds. As of Dec. 31, 2002, the Company`s total debt was $2.827 billion. The breakdown of the debt at year-end was as follows: Revolver $156.4 million; IRLs $447.7 million; Term Loans $1.183 billion; and Mortgage and other indebtedness $1.039 billion. At the end of the fourth quarter, liquidity was approximately $256 million. The Company defines liquidity as revolver availability, plus cash available at the corporate level.
Said Mr. Kleisner: “Since the beginning of 2000, we have maintained a strong liquidity position, notwithstanding the sluggish economy that began in 2001 and continues into 2003. We will continue to manage cash very tightly and make prudent spending decisions in light of the current economic conditions.”
Wyndham began 2002 with approximately $280 million of mortgage loans coming due in the year. Through extensions and refinancings, the Company eliminated its 2002 maturities. In addition, it is currently in the process of receiving bids to refinance its 2003 and 2004 mortgage pool maturities and to push the maturity dates by at least five years.
Additionally, during the quarter, the Company spent approximately $23 million on capital expenditures. For the full year of 2003, Wyndham expects to commit approximately $83 million in maintenance capital expenditures.