Exhibit 99.1
INTERVAL LEISURE GROUP REPORTS THIRD QUARTER 2013 RESULTS
MIAMI, November 4, 2013 (BUSINESS WIRE) — Interval Leisure Group (Nasdaq: IILG) (“ILG”) today announced results for the three months ended September 30, 2013.
THIRD QUARTER 2013 HIGHLIGHTS
· ILG consolidated revenue increased year-over-year by 1.7%
· ILG consolidated adjusted EBITDA improved year-over-year by 8.4%
· The Company generated third quarter diluted earnings per share of $0.29
· Interval International added 26 new resort affiliations during the quarter
· Management fee and rental revenue improved by 7.2%
· ILG free cash flow of $80 million year to date, an increase of 48.9%
“The third quarter results demonstrate our commitment to growing organically while Interval Leisure Group continues strategic efforts to broaden its fee-for-service offerings in the non-traditional leisure market,” said Craig M. Nash, Chairman, President and Chief Executive Officer of Interval Leisure Group. “Adjusted EBITDA growth of 8.4% and strong free cash flow reflect execution across our businesses while we continue to pursue additional opportunities.”
Financial Summary & Operating Metrics (USD in millions except per share amounts)
|
|
|
Three Months Ended |
|
Quarter |
| ||||
|
|
|
September 30, |
|
Over Quarter |
| ||||
|
METRICS |
|
2013 |
|
2012 |
|
Change |
| ||
|
Revenue |
|
119.2 |
|
117.2 |
|
1.7 |
% | ||
|
Membership and Exchange revenue |
|
86.6 |
|
86.1 |
|
0.6 |
% | ||
|
Management and Rental revenue |
|
32.5 |
|
31.1 |
|
4.6 |
% | ||
|
Gross profit |
|
77.2 |
|
75.5 |
|
2.3 |
% | ||
|
Net income attributable to common stockholders |
|
17.1 |
|
0.1 |
|
NM |
| ||
|
Non-GAAP net income* |
|
17.1 |
|
11.0 |
|
54.9 |
% | ||
|
Diluted EPS |
|
$ |
0.29 |
|
$ |
0.00 |
|
NM |
|
|
Non-GAAP diluted EPS* |
|
$ |
0.29 |
|
$ |
0.19 |
|
52.6 |
% |
|
Adjusted EBITDA* |
|
40.9 |
|
37.7 |
|
8.4 |
% | ||
|
BALANCE SHEET DATA |
|
September 30, 2013 |
|
December 31, 2012 |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
103.6 |
|
101.2 |
|
|
Debt |
|
190.0 |
|
260.0 |
|
|
|
|
Nine Months Ended |
|
Year |
| ||
|
|
|
September 30, |
|
Over Year |
| ||
|
CASH FLOW DATA |
|
2013 |
|
2012 |
|
Change |
|
|
Net cash provided by operating activities |
|
89.3 |
|
64.1 |
|
39.3 |
% |
|
Free cash flow* |
|
80.0 |
|
53.7 |
|
48.9 |
% |
* “Non-GAAP net income”, “Non-GAAP diluted EPS”, “Adjusted EBITDA”, and “Free cash flow” are non-GAAP measures as defined by the Securities and Exchange Commission (the “SEC”). Please see “Presentation of Financial Information,” “Glossary of Terms” and “Reconciliations of Non-GAAP Measures” below for an explanation of non-GAAP measures used throughout this release.
DISCUSSION OF RESULTS
Third Quarter 2013 Consolidated Operating Results
Consolidated revenue for the third quarter ended September 30, 2013 was $119.2 million, an increase of 1.7% from $117.2 million for the third quarter of 2012. The increase was largely driven by our Management and Rental segment, reflecting higher fee income earned from managed hotel and condominium resort properties during the period.
Net income for the three months ended September 30, 2013 was $17.1 million, versus non-GAAP net income (defined below) for the three months ended September 30, 2012 of $11.0 million, an increase of $6.1 million.
The year-over-year increase in net income was driven by higher operating income of $5.8 million, primarily attributable to $4.7 million of lower amortization of intangibles expense coupled with stronger gross profit contribution from both of our operating
segments, in addition to a reduction in interest expense of $5.2 million. Accordingly, income tax expense in the quarter increased by $5.3 million over the prior year, when adjusted to exclude the income tax benefit associated with our third quarter 2012 loss on extinguishment of debt. Diluted earnings per share were $0.29 in the third quarter of 2013 compared to non-GAAP diluted earnings per share (defined below) of $0.19 for the same period of 2012.
Adjusted EBITDA (defined below) was $40.9 million for the quarter ended September 30, 2013, compared to adjusted EBITDA of $37.7 million for the same period of 2012.
Business Segment Results
Membership and Exchange
Membership and Exchange segment revenue for the three months ended September 30, 2013 was $86.6 million, comparable to $86.1 million for the same period in 2012.
For the third quarter of 2013, transaction and membership fee revenue (defined below) were $46.0 million and $32.3 million, respectively, decreases of 1.2% and 0.7% over the same period in 2012.
Total active members at September 30, 2013 were 1.82 million, approximately 2.2% less than the number of total active members at September 30, 2012. Average revenue per member for the third quarter of 2013 was $44.06, an increase of 1.2% from the third quarter of 2012. During the third quarter of 2013, Interval International affiliated 26 new vacation ownership resorts located in 10 countries.
Membership and Exchange segment adjusted EBITDA was $35.3 million in the third quarter, an increase of 4.9% from the segment’s adjusted EBITDA of $33.6 million in 2012. The improvement in this segment’s adjusted EBITDA was primarily driven by an increase in transaction activity and other membership programs outside of the Interval Network, together with lower general and administrative expense during the quarter after adjusting for acquisition related and restructuring costs (defined below).
Management and Rental
Management and Rental segment revenue for the three months ended September 30, 2013 was $32.5 million, which includes $16.2 million of management fee and rental revenue (defined below). Year-over-year, management fee and rental revenue grew by 7.2%, primarily driven by an increase in revenue per available room (RevPAR) at Aston. Aston RevPAR for the quarter ended September 30, 2013 was $145.53, increasing 8.2% from $134.45 for the same period in 2012. The growth in RevPAR resulted from a 9.9% higher average daily rate (ADR) which was partly offset by a 1.5% drop in occupancy rates during the quarter compared to the prior year.
In the third quarter of 2013, Management and Rental segment adjusted EBITDA was $5.6 million, compared to $4.1 million in the prior year period.
CAPITAL RESOURCES AND LIQUIDITY
As of September 30, 2013, ILG had $103.6 million of cash and cash equivalents, including $94.9 million of U.S. dollar equivalent or denominated cash deposits held by foreign subsidiaries which are subject to changes in foreign exchange rates. Of this amount, $61.8 million is held in foreign jurisdictions, principally the U.K.
Debt outstanding as of September 30, 2013 was $190 million. As of this date, ILG had $310 million available on its revolving credit facility, which may be increased by an additional $200 million, subject to specified conditions.
For the first nine months of 2013, ILG’s capital expenditures totaled $9.3 million, or 2.5% of revenue, net cash provided by operating activities was $89.3 million and free cash flow (defined below) was $80 million, an increase of 48.9% from the same period of 2012. This improvement in free cash flow was driven by lower interest paid in 2013 compared to 2012.
Dividend
The Board of Directors of Interval Leisure Group declared a quarterly dividend payment of $0.11 per share to shareholders of record on September 4, 2013. On September 18, 2013, a cash dividend of $6.3 million was paid. Additionally, the board of directors has declared a fourth quarter dividend of $0.11 per share which is scheduled to be paid on December 18, 2013 to shareholders of record on December 4, 2013.
PRESENTATION OF FINANCIAL INFORMATION
ILG management believes that the presentation of non-generally accepted accounting principles (non-GAAP) financial measures, including, among others, EBITDA, adjusted EBITDA, non-GAAP net income, non-GAAP basic and diluted EPS and free cash flow, serves to enhance the understanding of ILG’s performance. These non-GAAP financial measures should be considered in addition to and not as substitutes for, or superior to, measures of financial performance prepared in accordance with generally accepted accounting principles (GAAP). In addition, adjusted EBITDA (with certain additional add-backs) is used to calculate compliance with certain financial covenants in ILG’s credit agreement. Management believes that these non-GAAP measures improve the transparency of our disclosures, provide meaningful presentations of our results from our business operations excluding the impact of certain items not related to our core business operations and improve the period to period comparability of results from business operations. These measures may also be useful in comparing our results to those of other companies; however, our calculations may differ from the calculations of these measures used by other companies. More information about the non-GAAP financial measures, including reconciliations of GAAP results to the non-GAAP measures, is available in the financial tables that accompany this press release.
CONFERENCE CALL
ILG will host a conference call today at 4:30 p.m. Eastern Time to discuss its results for the third quarter 2013, with access via the Internet and telephone. Investors and analysts may participate in the live conference call by dialing (866) 318-8616 (toll-free domestic) or (617) 399-5135 (international); participant pass code: 45720818. Please register at least 10 minutes before the conference call begins. A live webcast of the conference call will be available on the Investor Relations section of ILG’s website at www.iilg.com. A replay of the call will be available for fourteen days via telephone starting approximately two hours after the call ends. The replay can be accessed at (888) 286-8010 (toll-free domestic) or (617) 801-6888 (international); pass code: 81170777. The webcast will be archived on Interval Leisure Group’s website for 90 days after the call. A transcript of the call will also be available on the website.
ABOUT INTERVAL LEISURE GROUP
Interval Leisure Group (ILG) is a leading global provider of membership and leisure services to the vacation industry. Headquartered in Miami, Florida, ILG has approximately 4,000 employees worldwide. The company’s Membership and Exchange segment offers leisure and travel-related products and services to about 2 million member families who are enrolled in various programs. Interval International, the segment’s principal business, has been a leader in vacation ownership exchange since 1976. With offices in 16 countries, it operates the Interval Network of more than 2,800 resorts in over 75 nations. ILG delivers additional opportunities for vacation ownership exchange through its Trading Places International (TPI) and Preferred Residences networks. ILG’s Management and Rental segment includes Aston Hotels & Resorts, VRI Europe (VRIE), Vacation Resorts International (VRI), and TPI. These businesses provide hotel, condominium resort, timeshare resort, and homeowners’ association management, as well as rental services, to travelers and owners at more than 200 vacation properties, resorts and club locations throughout North America and Europe. More information about the Company is available at www.iilg.com.
FORWARD-LOOKING STATEMENTS
This press release contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, relating to: our future financial performance, our business prospects and strategy, anticipated financial position, liquidity and capital needs and other similar matters. These forward-looking statements are based on management’s current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict.
Actual results could differ materially from those contained in the forward-looking statements included herein for a variety of reasons, including, among others: adverse trends in economic conditions generally or in the vacation ownership, vacation rental and
travel industries; adverse changes to, or interruptions in, relationships with third parties; lack of available financing for, or insolvency of developers; consolidation of developers; decreased demand from prospective purchasers of vacation interests; travel related health concerns; changes in our senior management; regulatory changes; our ability to compete effectively and successfully add new products and services; our ability to successfully manage and integrate acquisitions; impairment of assets; the restrictive covenants in our revolving credit facility; adverse events or trends in key vacation destinations; business interruptions in connection with the rearchitecture of our technology systems; ability of managed homeowners associations to collect sufficient maintenance fees; third parties not repaying advances or extensions of credit; and our ability to expand successfully in international markets and manage risks specific to international operations. Certain of these and other risks and uncertainties are discussed in our filings with the SEC. Other unknown or unpredictable factors that could also adversely affect our business, financial condition and results of operations may arise from time to time. In light of these risks and uncertainties, the forward-looking statements discussed in this release may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which only reflect the views of our management as of the date of this press release. Except as required by applicable law, ILG does not undertake to update these forward-looking statements.
INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
|
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
|
September 30, |
|
September 30, |
| ||||||||
|
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Revenue |
|
$ |
119,156 |
|
$ |
117,195 |
|
$ |
379,020 |
|
$ |
362,602 |
|
|
Cost of sales |
|
41,991 |
|
41,741 |
|
131,788 |
|
127,793 |
| ||||
|
Gross profit |
|
77,165 |
|
75,454 |
|
247,232 |
|
234,809 |
| ||||
|
Selling and marketing expense |
|
12,951 |
|
13,282 |
|
40,958 |
|
41,323 |
| ||||
|
General and administrative expense |
|
27,387 |
|
26,626 |
|
81,917 |
|
79,032 |
| ||||
|
Amortization expense of intangibles |
|
1,950 |
|
6,669 |
|
5,858 |
|
21,001 |
| ||||
|
Depreciation expense |
|
3,499 |
|
3,311 |
|
10,859 |
|
9,839 |
| ||||
|
Operating income |
|
31,378 |
|
25,566 |
|
107,640 |
|
83,614 |
| ||||
|
Other income (expense): |
|
|
|
|
|
|
|
|
| ||||
|
Interest income |
|
60 |
|
535 |
|
282 |
|
1,538 |
| ||||
|
Interest expense |
|
(1,295 |
) |
(6,485 |
) |
(4,559 |
) |
(23,874 |
) | ||||
|
Other income (expense), net |
|
(65 |
) |
(915 |
) |
893 |
|
(2,408 |
) | ||||
|
Loss on extinguishment of debt |
|
— |
|
(17,925 |
) |
— |
|
(18,527 |
) | ||||
|
Total other expense, net |
|
(1,300 |
) |
(24,790 |
) |
(3,384 |
) |
(43,271 |
) | ||||
|
Earnings before income taxes and noncontrolling interest |
|
30,078 |
|
776 |
|
104,256 |
|
40,343 |
| ||||
|
Income tax provision |
|
(12,973 |
) |
(624 |
) |
(41,571 |
) |
(14,911 |
) | ||||
|
Net income |
|
17,105 |
|
152 |
|
62,685 |
|
25,432 |
| ||||
|
Net income attributable to noncontrolling interest |
|
(4 |
) |
(3 |
) |
(10 |
) |
(6 |
) | ||||
|
Net income attributable to common stockholders |
|
$ |
17,101 |
|
$ |
149 |
|
$ |
62,675 |
|
$ |
25,426 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Earnings per share attributable to common stockholders: |
|
|
|
|
|
|
|
|
| ||||
|
Basic |
|
$ |
0.30 |
|
$ |
0.00 |
|
$ |
1.10 |
|
$ |
0.45 |
|
|
Diluted |
|
$ |
0.29 |
|
$ |
0.00 |
|
$ |
1.09 |
|
$ |
0.45 |
|
|
Weighted average number of shares of common stock outstanding: |
|
|
|
|
|
|
|
|
| ||||
|
Basic |
|
57,353 |
|
56,714 |
|
57,199 |
|
56,448 |
| ||||
|
Diluted |
|
57,986 |
|
57,364 |
|
57,738 |
|
57,120 |
| ||||
|
Dividends declared per share of common stock |
|
$ |
0.11 |
|
$ |
0.10 |
|
$ |
0.22 |
|
$ |
0.30 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Non-GAAP net income(1) |
|
$ |
17,101 |
|
$ |
11,042 |
|
$ |
60,566 |
|
$ |
36,684 |
|
|
Non-GAAP earnings per share(1): |
|
|
|
|
|
|
|
|
| ||||
|
Basic |
|
$ |
0.30 |
|
$ |
0.19 |
|
$ |
1.06 |
|
$ |
0.65 |
|
|
Diluted |
|
$ |
0.29 |
|
$ |
0.19 |
|
$ |
1.05 |
|
$ |
0.64 |
|
(1) “Non-GAAP net income” and “Non-GAAP earnings per share” are non-GAAP measures as defined by the SEC. Please see “Reconciliations of Non-GAAP Measures” for a reconciliation to the comparable GAAP measure.
INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
|
|
|
September 30, 2013 |
|
December 31, 2012 |
| ||
|
|
|
|
|
|
| ||
|
ASSETS |
|
|
|
|
| ||
|
Cash and cash equivalents |
|
$ |
103,563 |
|
$ |
101,162 |
|
|
Deferred membership costs |
|
9,957 |
|
12,349 |
| ||
|
Prepaid income taxes |
|
9,435 |
|
12,973 |
| ||
|
Other current assets |
|
78,872 |
|
83,011 |
| ||
|
Total current assets |
|
201,827 |
|
209,495 |
| ||
|
Goodwill and intangible assets, net |
|
599,044 |
|
604,452 |
| ||
|
Deferred membership costs |
|
11,196 |
|
11,058 |
| ||
|
Other non-current assets |
|
69,548 |
|
81,915 |
| ||
|
TOTAL ASSETS |
|
$ |
881,615 |
|
$ |
906,920 |
|
|
|
|
|
|
|
| ||
|
LIABILITIES AND EQUITY LIABILITIES: |
|
|
|
|
| ||
|
Accounts payable, trade |
|
$ |
10,963 |
|
$ |
11,086 |
|
|
Deferred revenue |
|
95,228 |
|
93,367 |
| ||
|
Other current liabilities |
|
66,625 |
|
70,950 |
| ||
|
Total current liabilities |
|
172,816 |
|
175,403 |
| ||
|
Long-term debt |
|
190,000 |
|
260,000 |
| ||
|
Deferred revenue |
|
103,218 |
|
111,273 |
| ||
|
Other long-term liabilities |
|
88,441 |
|
87,752 |
| ||
|
Redeemable noncontrolling interest |
|
435 |
|
426 |
| ||
|
TOTAL STOCKHOLDERS’ EQUITY |
|
326,705 |
|
272,066 |
| ||
|
TOTAL LIABILITIES AND EQUITY |
|
$ |
881,615 |
|
$ |
906,920 |
|
INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
|
|
|
Nine Months Ended September 30, |
| ||||
|
|
|
2013 |
|
2012 |
| ||
|
Cash flows from operating activities: |
|
|
|
|
| ||
|
Net income |
|
$ |
62,685 |
|
$ |
25,432 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
| ||
|
Amortization expense of intangibles |
|
5,858 |
|
21,001 |
| ||
|
Amortization of debt issuance costs |
|
587 |
|
1,180 |
| ||
|
Depreciation expense |
|
10,859 |
|
9,839 |
| ||
|
Accretion of original issue discount |
|
— |
|
1,840 |
| ||
|
Non-cash compensation expense |
|
7,753 |
|
8,733 |
| ||
|
Non-cash interest expense |
|
277 |
|
338 |
| ||
|
Non-cash interest income |
|
— |
|
(651 |
) | ||
|
Deferred income taxes |
|
656 |
|
1,370 |
| ||
|
Excess tax benefits from stock-based awards |
|
(2,602 |
) |
(3,014 |
) | ||
|
Loss (gain) on disposal of property and equipment |
|
163 |
|
(256 |
) | ||
|
Loss on extinguishment of debt |
|
— |
|
18,527 |
| ||
|
Change in fair value of contingent consideration |
|
485 |
|
(670 |
) | ||
|
Changes in operating assets and liabilities |
|
2,581 |
|
(19,547 |
) | ||
|
Net cash provided by operating activities |
|
89,302 |
|
64,122 |
| ||
|
Cash flows from investing activities: |
|
|
|
|
| ||
|
Acquisition, net of cash acquired |
|
— |
|
(39,963 |
) | ||
|
Acquisition of assets |
|
(1,952 |
) |
— |
| ||
|
Capital expenditures |
|
(9,338 |
) |
(10,425 |
) | ||
|
Proceeds from disposal of property and equipment |
|
7 |
|
230 |
| ||
|
Investment in financing receivables |
|
— |
|
(9,480 |
) | ||
|
Payments received on financing receivables |
|
9,876 |
|
16,989 |
| ||
|
Net cash used in investing activities |
|
(1,407 |
) |
(42,649 |
) | ||
|
Cash flows from financing activities: |
|
|
|
|
| ||
|
Principal payments on term loan |
|
— |
|
(56,000 |
) | ||
|
Redemption of senior notes |
|
— |
|
(300,000 |
) | ||
|
Payments on revolving credit facility |
|
(70,000 |
) |
— |
| ||
|
Borrowings on revolving credit facility |
|
— |
|
290,000 |
| ||
|
Payments of debt issuance costs |
|
— |
|
(3,912 |
) | ||
|
Dividend payments |
|
(12,617 |
) |
(16,996 |
) | ||
|
Withholding taxes on vesting of restricted stock units |
|
(4,478 |
) |
(6,174 |
) | ||
|
Proceeds from the exercise of stock options |
|
399 |
|
634 |
| ||
|
Excess tax benefits from stock-based awards |
|
2,602 |
|
3,014 |
| ||
|
Net cash used in financing activities |
|
(84,094 |
) |
(89,434 |
) | ||
|
Effect of exchange rate changes on cash and cash equivalents |
|
(1,400 |
) |
4,401 |
| ||
|
Net increase (decrease) in cash and cash equivalents |
|
2,401 |
|
(63,560 |
) | ||
|
Cash and cash equivalents at beginning of period |
|
101,162 |
|
195,517 |
| ||
|
Cash and cash equivalents at end of period |
|
$ |
103,563 |
|
$ |
131,957 |
|
|
|
|
|
|
|
| ||
|
Supplemental disclosures of cash flow information: |
|
|
|
|
| ||
|
Cash paid during the period for: |
|
|
|
|
| ||
|
Interest, net of amounts capitalized |
|
$ |
4,068 |
|
$ |
29,528 |
|
|
Income taxes, net of refunds |
|
$ |
35,091 |
|
$ |
24,813 |
|
OPERATING STATISTICS
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
| ||||||||||||
|
|
|
2013 |
|
% Change |
|
2012 |
|
2013 |
|
% Change |
|
2012 |
| ||||
|
Membership and Exchange |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Total active members at end of period (000’s) |
|
1,815 |
|
(2.2 |
)% |
1,857 |
|
1,815 |
|
(2.2 |
)% |
1,857 |
| ||||
|
Average revenue per member |
|
$ |
44.06 |
|
1.2 |
% |
$ |
43.54 |
|
$ |
145.48 |
|
3.2 |
% |
$ |
141.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Management and Rental |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Available room nights (000’s) |
|
381 |
|
(0.0 |
)% |
381 |
|
1,095 |
|
(2.8 |
)% |
1,126 |
| ||||
|
RevPAR |
|
$ |
145.53 |
|
8.2 |
% |
$ |
134.45 |
|
$ |
146.74 |
|
11.3 |
% |
$ |
131.84 |
|
ADDITIONAL DATA
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
| ||||||||||||
|
|
|
2013 |
|
% Change |
|
2012 |
|
2013 |
|
% Change |
|
2012 |
| ||||
|
|
|
(Dollars in thousands) |
|
(Dollars in thousands) |
| ||||||||||||
|
Membership and Exchange |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Transaction revenue |
|
$ |
46,039 |
|
(1.2 |
)% |
$ |
46,588 |
|
$ |
157,361 |
|
0.3 |
% |
$ |
156,822 |
|
|
Membership fee revenue |
|
32,289 |
|
(0.7 |
)% |
32,518 |
|
102,471 |
|
4.9 |
% |
97,652 |
| ||||
|
Ancillary member revenue |
|
1,751 |
|
(3.2 |
)% |
1,808 |
|
5,487 |
|
NM |
|
5,542 |
| ||||
|
Total member revenue |
|
80,079 |
|
(1.0 |
)% |
80,914 |
|
265,319 |
|
2.0 |
% |
260,016 |
| ||||
|
Other revenue |
|
6,536 |
|
26.2 |
% |
5,178 |
|
18,908 |
|
13.2 |
% |
16,709 |
| ||||
|
Total revenue |
|
$ |
86,615 |
|
0.6 |
% |
$ |
86,092 |
|
$ |
284,227 |
|
2.7 |
% |
$ |
276,725 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Management and Rental |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Management fee and rental revenue |
|
$ |
16,209 |
|
7.2 |
% |
$ |
15,117 |
|
$ |
47,825 |
|
16.2 |
% |
$ |
41,165 |
|
|
Pass-through revenue |
|
16,332 |
|
2.2 |
% |
15,986 |
|
46,968 |
|
5.0 |
% |
44,712 |
| ||||
|
Total revenue |
|
$ |
32,541 |
|
4.6 |
% |
$ |
31,103 |
|
$ |
94,793 |
|
10.4 |
% |
$ |
85,877 |
|
|
Management and Rental gross margin |
|
33.8 |
% |
6.1 |
% |
31.8 |
% |
33.4 |
% |
8.4 |
% |
30.8 |
% | ||||
|
Management and Rental gross margin without Pass-through Revenue |
|
67.8 |
% |
3.6 |
% |
65.5 |
% |
66.2 |
% |
3.0 |
% |
64.3 |
% | ||||
RECONCILIATIONS OF NON-GAAP MEASURES
|
|
|
Nine Months Ended September 30, |
| ||||||
|
|
|
2013 |
|
% Change |
|
2012 |
| ||
|
|
|
(Dollars in thousands) |
| ||||||
|
|
|
|
|
|
|
|
| ||
|
Net cash provided by operating activities |
|
$ |
89,302 |
|
39.3 |
% |
$ |
64,122 |
|
|
Less: Capital expenditures |
|
(9,338 |
) |
(10.4 |
)% |
(10,425 |
) | ||
|
Free cash flow |
|
$ |
79,964 |
|
48.9 |
% |
$ |
53,697 |
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
| ||||
|
|
|
(Dollars in thousands, except per share data) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net income attributable to common stockholders |
|
$ |
17,101 |
|
$ |
149 |
|
$ |
62,675 |
|
$ |
25,426 |
|
|
Prior period item(1) |
|
— |
|
— |
|
(3,496 |
) |
— |
| ||||
|
Income tax provision on adjusting item(2) |
|
— |
|
— |
|
1,387 |
|
— |
| ||||
|
Loss on extinguishment of debt |
|
— |
|
17,925 |
|
— |
|
18,527 |
| ||||
|
Income tax benefit of adjusting items(2) |
|
— |
|
(7,032 |
) |
— |
|
(7,269 |
) | ||||
|
Non-GAAP net income |
|
$ |
17,101 |
|
$ |
11,042 |
|
$ |
60,566 |
|
$ |
36,684 |
|
|
Non-GAAP earnings per share: |
|
|
|
|
|
|
|
|
| ||||
|
Basic |
|
$ |
0.30 |
|
$ |
0.19 |
|
$ |
1.06 |
|
$ |
0.65 |
|
|
Diluted |
|
$ |
0.29 |
|
$ |
0.19 |
|
$ |
1.05 |
|
$ |
0.64 |
|
(1) During the second quarter of 2013, we identified an immaterial net understatement of membership revenue, related membership expenses, and income for the period commencing January 1, 2011 through March 31, 2013. In accordance with ASC 250, “Accounting Changes and Error Corrections,” we assessed the materiality of the misstatement, both quantitatively and qualitatively, and concluded it is not material to any of our previously issued or current year financial statements.
(2) Tax rate utilized is the applicable effective tax rate respective to the period to the extent amounts are deductible.
|
|
|
Three Months Ended September 30, |
| ||||||||||||||||
|
|
|
2013 |
|
2012 |
| ||||||||||||||
|
|
|
Membership |
|
Management |
|
Consolidated |
|
Membership |
|
Management |
|
Consolidated |
| ||||||
|
|
|
(Dollars in thousands) |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
35,276 |
|
$ |
5,597 |
|
$ |
40,873 |
|
$ |
33,644 |
|
$ |
4,074 |
|
$ |
37,718 |
|
|
Non-cash compensation expense |
|
(2,354 |
) |
(255 |
) |
(2,609 |
) |
(2,311 |
) |
(253 |
) |
(2,564 |
) | ||||||
|
Other non-operating income (expense), net |
|
(70 |
) |
5 |
|
(65 |
) |
(915 |
) |
— |
|
(915 |
) | ||||||
|
Acquisition related and restructuring costs |
|
(187 |
) |
(1,250 |
) |
(1,437 |
) |
57 |
|
335 |
|
392 |
| ||||||
|
Loss on extinguishment of debt |
|
— |
|
— |
|
— |
|
(17,925 |
) |
— |
|
(17,925 |
) | ||||||
|
EBITDA |
|
32,665 |
|
4,097 |
|
36,762 |
|
12,550 |
|
4,156 |
|
16,706 |
| ||||||
|
Amortization expense of intangibles |
|
(337 |
) |
(1,613 |
) |
(1,950 |
) |
(4,968 |
) |
(1,701 |
) |
(6,669 |
) | ||||||
|
Depreciation expense |
|
(3,186 |
) |
(313 |
) |
(3,499 |
) |
(3,011 |
) |
(300 |
) |
(3,311 |
) | ||||||
|
Less: Other non-operating income (expense), net |
|
70 |
|
(5 |
) |
65 |
|
915 |
|
— |
|
915 |
| ||||||
|
Less: Loss on extinguishment of debt |
|
— |
|
— |
|
— |
|
17,925 |
|
— |
|
17,925 |
| ||||||
|
Operating income |
|
$ |
29,212 |
|
$ |
2,166 |
|
31,378 |
|
$ |
23,411 |
|
$ |
2,155 |
|
25,566 |
| ||
|
Interest income |
|
|
|
|
|
60 |
|
|
|
|
|
535 |
| ||||||
|
Interest expense |
|
|
|
|
|
(1,295 |
) |
|
|
|
|
(6,485 |
) | ||||||
|
Other non-operating expense, net |
|
|
|
|
|
(65 |
) |
|
|
|
|
(915 |
) | ||||||
|
Loss on extinguishment of debt |
|
|
|
|
|
— |
|
|
|
|
|
(17,925 |
) | ||||||
|
Income tax provision |
|
|
|
|
|
(12,973 |
) |
|
|
|
|
(624 |
) | ||||||
|
Net income |
|
|
|
|
|
17,105 |
|
|
|
|
|
152 |
| ||||||
|
Net income attributable to noncontrolling interest |
|
|
|
|
|
(4 |
) |
|
|
|
|
(3 |
) | ||||||
|
Net income attributable to common stockholders |
|
|
|
|
|
$ |
17,101 |
|
|
|
|
|
$ |
149 |
| ||||
|
|
|
Nine Months Ended September 30, |
| ||||||||||||||||
|
|
|
2013 |
|
2012 |
| ||||||||||||||
|
|
|
Membership |
|
Management |
|
Consolidated |
|
Membership |
|
Management |
|
Consolidated |
| ||||||
|
|
|
(Dollars in thousands) |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Adjusted EBITDA |
|
$ |
117,186 |
|
$ |
14,220 |
|
$ |
131,406 |
|
$ |
111,942 |
|
$ |
11,019 |
|
$ |
122,961 |
|
|
Non-cash compensation expense |
|
(6,962 |
) |
(791 |
) |
(7,753 |
) |
(7,954 |
) |
(779 |
) |
(8,733 |
) | ||||||
|
Other non-operating income (expense), net |
|
1,061 |
|
(168 |
) |
893 |
|
(2,259 |
) |
(149 |
) |
(2,408 |
) | ||||||
|
Prior period item |
|
3,496 |
|
— |
|
3,496 |
|
— |
|
— |
|
— |
| ||||||
|
Acquisition related and restructuring costs |
|
(356 |
) |
(2,436 |
) |
(2,792 |
) |
(79 |
) |
305 |
|
226 |
| ||||||
|
Loss on extinguishment of debt |
|
— |
|
— |
|
— |
|
(18,527 |
) |
— |
|
(18,527 |
) | ||||||
|
EBITDA |
|
114,425 |
|
10,825 |
|
125,250 |
|
83,123 |
|
10,396 |
|
93,519 |
| ||||||
|
Amortization expense of intangibles |
|
(1,011 |
) |
(4,847 |
) |
(5,858 |
) |
(15,808 |
) |
(5,193 |
) |
(21,001 |
) | ||||||
|
Depreciation expense |
|
(9,872 |
) |
(987 |
) |
(10,859 |
) |
(9,025 |
) |
(814 |
) |
(9,839 |
) | ||||||
|
Less: Other non-operating income (expense), net |
|
(1,061 |
) |
168 |
|
(893 |
) |
2,259 |
|
149 |
|
2,408 |
| ||||||
|
Less: Loss on extinguishment of debt |
|
— |
|
— |
|
— |
|
18,527 |
|
— |
|
18,527 |
| ||||||
|
Operating income |
|
$ |
102,481 |
|
$ |
5,159 |
|
107,640 |
|
$ |
79,076 |
|
$ |
4,538 |
|
83,614 |
| ||
|
Interest income |
|
|
|
|
|
282 |
|
|
|
|
|
1,538 |
| ||||||
|
Interest expense |
|
|
|
|
|
(4,559 |
) |
|
|
|
|
(23,874 |
) | ||||||
|
Other non-operating income (expense), net |
|
|
|
|
|
893 |
|
|
|
|
|
(2,408 |
) | ||||||
|
Loss on extinguishment of debt |
|
|
|
|
|
— |
|
|
|
|
|
(18,527 |
) | ||||||
|
Income tax provision |
|
|
|
|
|
(41,571 |
) |
|
|
|
|
(14,911 |
) | ||||||
|
Net income |
|
|
|
|
|
62,685 |
|
|
|
|
|
25,432 |
| ||||||
|
Net income attributable to noncontrolling interest |
|
|
|
|
|
(10 |
) |
|
|
|
|
(6 |
) | ||||||
|
Net income attributable to common stockholders |
|
|
|
|
|
$ |
62,675 |
|
|
|
|
|
$ |
25,426 |
| ||||
GLOSSARY OF TERMS
Acquisition related and restructuring costs - Represents transaction fees, costs incurred in connection with performing due diligence, subsequent adjustments to our initial estimate of contingent consideration obligations associated with business acquisitions, and other direct costs related to acquisition activities. Additionally, this item includes certain restructuring charges primarily related to workforce reductions and estimated costs of exiting contractual commitments.
Adjusted EBITDA - EBITDA, excluding, if applicable: (1) non-cash compensation expense, (2) goodwill and asset impairments, (3) acquisition related and restructuring costs, (4) other non-operating income and expense (including loss on extinguishment of debt), and (5) the impact of correcting prior period items. The Company’s presentation of adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.
Ancillary Member Revenue - Other Interval Network member related revenue including insurance and travel related services.
Available Room Nights - Number of nights available for rental by Aston at managed vacation properties during the period, which excludes all rooms under renovation.
Average Revenue per Member - Membership fee revenue, transaction revenue and ancillary member revenue for the Interval Network for the applicable period, divided by the monthly weighted average number of Interval Network active members during the applicable period.
EBITDA - Net income excluding, if applicable: (1) interest income and interest expense, (2) income taxes, (3) depreciation expense, and (4) amortization expense of intangibles.
Free Cash Flow - Cash provided by operating activities less capital expenditures.
Gross Lodging Revenue - Total room revenue collected from all Aston-managed occupied rooms during the period.
Management Fee and Rental Revenue — Represents revenue earned by our Management and Rental segment exclusive of pass-through revenue.
Membership Fee Revenue — Represents fees paid for membership in the Interval Network.
Non-GAAP Basic EPS — Non-GAAP Net Income divided by the weighted average number of shares of common stock outstanding during the period.
Non-GAAP Diluted EPS — Non-GAAP Net Income divided by the weighted average number of shares of common stock and dilutive securities outstanding during the period.
Non-GAAP Net Income - Net income attributable to common stockholders excluding the impact of correcting an immaterial prior period net understatement in the current year-to-date financials and excluding the prior year non-cash loss on extinguishment of our indebtedness, net of tax.
Pass-through Revenue - Represents the compensation and other employee-related costs directly associated with management of the properties and homeowner associations that are included in both revenue and cost of sales and that are passed on to the property owners and homeowner associations without mark-up. Management believes presenting gross margin without these expenses provides management and investors a relevant period-over-period comparison.
RevPAR - Gross Lodging Revenue divided by Available Room Nights during the period for Aston.
Total Active Members - Active members of the Interval Network as of the end of the period. Active members are members in good standing that have paid membership fees and any other applicable charges in full as of the end of the period or are within the allowed grace period.
Transaction Revenue — Interval Network transactional and service fees paid primarily for exchanges, Getaways, and reservation servicing.
SOURCE: Interval
Leisure Group
Interval
Leisure Group
Investor
Contact:
Jennifer Klein, Investor
Relations,
305-925-7302
Jennifer.Klein@iilg.com