Wyndham International, Inc. (AMEX:WBR)
Results Summary: Despite the nation`s current economic downturn and start of Operation Iraqi Freedom, Wyndham International, Inc. exceeded its guidance for first quarter 2003, posting actual EBITDA of $87.9 million. The Company had a net loss of $107.4 million, including a non-cash impairment. RevPAR for the Company`s comparable owned and leased properties was in-line with expectations at a 2.0 percent decline versus prior year. Wyndham-branded properties also posted RevPAR consistent with guidance at a 0.8 percent decline versus prior year. Wyndham aggressively focused on pursuing occupancy through building a brand-loyal customer base in Wyndham ByRequest(R) and maintained its operating margins by enacting its war plans that allowed the Company to generate positive, consistent results. The Company continued to sell non-strategic assets to reduce debt while strategically growing its proprietary Wyndham brand through new management and franchise agreements.
Wyndham International, Inc. (AMEX:WBR) today reported results for the first quarter ended March 31, 2003. “The lodging industry is still operating in a difficult environment that has been made even more challenging by world events. The flexibility and focus of our operations created the environment that allowed us to manage through these tough times,” stated Fred J. Kleisner, Wyndham`s chairman and chief executive officer. “We will remain nimble to react to changes in our industry and we intend to make the necessary adjustments to our business operating plan in order to continue generating positive cash flow and maintain a financially sound Company.”
On an actual basis, earnings before interest, taxes, depreciation and amortization (EBITDA), as adjusted, was $87.9 million for the three months ending March 31, 2003 versus $114.3 million for the same period in 2002, an increase from the original guidance of $82.0 million to $87.0 million, based on market share gains and strong operating margins. On a pro forma basis, EBITDA, as adjusted, was $87.0 million compared to $99.6 million for the same quarter last year. Wyndham reported a net loss of $107.4 million and a pro forma net loss of $20.6 million for the first quarter, versus a $343.2 million net loss and an $18.7 million pro forma net loss for the same period in 2002. After the effect of the Company`s preferred dividend, this resulted in a net loss of $0.87 per share and a pro forma net loss per share of $0.35 for the quarter.
Total Company comparable owned and leased revenue per available room (RevPAR) was $78.03, a decline of 2.0 percent versus the same period in 2002. This decline was comprised of a 6.8 percent decline in average daily rate and a 3.2 percentage point decline in occupancy.
The performance of the comparable Wyndham branded owned and leased properties continues to outperform our non-Wyndham branded properties, posting a RevPAR of $88.27, a decline of 0.8 percent versus the first quarter 2002. The results are comprised of a 4.6 percentage point increase in occupancy and a 7.2 percent decline in average daily rate.
Wyndham branded owned and leased properties ended the quarter with a RevPAR penetration index of 101.7 percent, a 360 basis point improvement over the same period last year.
“Given the fact that the first quarter 2002 benefited from pent-up demand from the fourth quarter 2001, we are particularly pleased with how well the Wyndham branded properties performed. Our strategy of continuing to build occupancy and our brand loyal customer base has been a contributing factor in achieving these results,” added Kleisner.
At the end of the first quarter, liquidity was approximately $273.0 million. The Company defines liquidity as revolver availability, plus cash in our overnight investment account. As of March 31, 2003, cash and equivalents were $223.1 million inclusive of $146.2 million of restricted cash. Cash and equivalents increased by $42.0 million from the $181.0 million on hand at the end of 2002 due primarily to cash generated from operations and asset sales.
The Company`s total debt was $2.8 billion as of March 31, 2003, approximately the same as the end of 2002. The breakdown of the debt at quarter-end was as follows: Revolver $171.4 million; IRL`s $447.7 million; Term Loans $1.175 billion; and Mortgage and other indebtedness $1.034 billion.
Said Mr. Kleisner: “We have continued to maintain strong liquidity, overcoming the obstacles the industry has endured over the past year and a half. As we have done in the past, we will continue to manage cash very tightly and make prudent spending decisions given the current economic conditions.”
Wyndham is currently in the process of refinancing its 2003 and 2004 mortgage pool maturities and extending the maturity dates by five years. The debt maturities coming due include the $146 million Lehman I pool and the Bear Stearns pool currently at $126 million, maturing in June 2003 and July 2004, respectively. Additionally, four property-specific mortgages totaling $77 million will mature in 2004. The Company fully expects to refinance or extend all remaining 2003 and 2004 maturities.
For the second quarter 2003, RevPAR is forecasted to be negative 2.0 to 4.0 percent versus the same period last year and EBITDA, as adjusted, is forecasted to be between $75.0 million and $80.0 million. As stated during the 2002 year-end earnings call, original EBITDA guidance for the full year 2003 was $300.0 million to $305.0 million. Given the effect of asset sales, the guidance for the full year 2003 EBITDA is being adjusted to $290.0 million to $300.0 million. Full year 2003 RevPAR is estimated to be negative 1.0 to 2.0 percent versus full year 2002.
Wyndham maintained its consistent management of expenses to counteract the margin compression associated with revenue growth through occupancy gains. The Company reduced operating expenses and corporate expenses in order to mitigate the increases in fixed costs. Increased fixed costs included property insurance, health insurance and property taxes.
Wyndham was prepared, and when necessary, implemented the “war plans” to neutralize the impact on operations associated with Operation Iraqi Freedom. Since the war began in mid-March, Wyndham had only $7.2 million of cancelled group business, of which, 54 percent rebooked.
Wyndham remains committed to its business plan focused on growing the Wyndham brand, through new franchise and management agreements, as well as to dispose of all non-strategic assets. “Since June 1999 when we re-capitalized the Company, Wyndham`s vision has been very clear: sell all non-strategic assets to reduce debt, and focus on our proprietary brand to build a differentiated hotel experience,” stated Kleisner. “With over $1.5 billion in asset sales complete and the Wyndham brand continuing to gain market share due to its award-winning, personalized service approach, we believe our strategy is successful and well positions us for better economic conditions.”