EX-99.1 2 a14-18315_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

INTERVAL LEISURE GROUP REPORTS SECOND QUARTER 2014 RESULTS

 

MIAMI—(BUSINESS WIRE)—August 5, 2014— Interval Leisure Group (Nasdaq: IILG) (“ILG”) today announced results for the three months ended June 30, 2014.

 

SECOND QUARTER 2014 HIGHLIGHTS

 

·                  ILG reports record second quarter consolidated revenue; revenue increased by 14.8% year-over-year

·                  Net income of $18.4 million. Adjusted net income was $19.3 million, an increase of 8%

·                  Adjusted EBITDA increased 7.0%

·                  Management and rental segment revenue, excluding pass-throughs, increased by 128.4% reflecting the contribution from accretive acquisitions

·                  Interval International affiliated 24 resorts during the quarter

 

“ILG continues to execute its strategy of broadening its role in non-traditional lodging. Our record second quarter revenue stems from the inclusion of VRI Europe and Aqua Hospitality,” said Craig M. Nash, chairman, president and Chief Executive Officer of Interval Leisure Group.  “An 8% increase in adjusted net income was driven by both acquisitions and organic improvement from our existing vacation ownership resort management businesses. We are building a strong foundation for future growth as the management and rental segment now contributes nearly 40% of revenue and over 20% of adjusted EBITDA.  We look to realize further benefits as ILG continues the integration of our acquisitions.”

 

1



 

Financial Summary & Operating Metrics (USD in millions except per share amounts)

 

 

 

Three Months Ended
June 30,

 

Quarter
Over
Quarter

 

METRICS

 

2014

 

2013

 

Change

 

Revenue

 

143.5

 

125.0

 

14.8

%

Membership and Exchange revenue

 

86.9

 

95.5

 

(9.0

)%

Management and Rental revenue

 

56.6

 

29.5

 

92.0

%

Gross profit

 

83.8

 

81.6

 

2.7

%

Net income attributable to common stockholders

 

18.4

 

20.6

 

(10.7

)%

Adjusted net income*

 

19.3

 

17.9

 

8.0

%

Diluted EPS

 

$

0.32

 

$

0.36

 

(11.1

)%

Adjusted diluted EPS*

 

$

0.33

 

$

0.31

 

7.4

%

Adjusted EBITDA*

 

41.5

 

38.8

 

7.0

%

 

BALANCE SHEET DATA

 

June 30, 2014

 

December 31, 2013

 

Cash and cash equivalents

 

74.6

 

48.5

 

Debt

 

268.0

 

253.0

 

 

 

 

Six Months Ended
June 30,

 

Year
Over Year

 

CASH FLOW DATA

 

2014

 

2013

 

Change

 

Net cash provided by operating activities

 

55.7

 

61.3

 

(9.1

)%

Free cash flow*

 

46.5

 

54.7

 

(14.9

)%

 


* “Adjusted EBITDA,” “adjusted net income,” “adjusted earnings per share” 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

 

Second Quarter 2014 Consolidated Operating Results

 

Consolidated revenue for the second quarter ended June 30, 2014 was $143.5 million, an increase of 14.8% from $125.0 million for the second quarter of 2013. Excluding the impact of a $4.1 million second quarter 2013 out of period item, consolidated revenue increased 18.7% year over year.

 

Net income attributable to common stockholders for the three months ended June 30, 2014 was $18.4 million from $20.6 million in 2013. Adjusted net income, which excludes acquisition related and restructuring costs, non-operating foreign currency remeasurements and a 2013 prior period correction, increased 8.0% to $19.3 million for the second quarter of 2014 from $17.9 million for the second quarter of 2013. The year-over-year increase in adjusted net income reflects incremental earnings contribution from recently acquired businesses in the Management and Rental segment and positive contributions from ILG’s other vacation ownership management businesses, partially offset by lower profit from the Membership and Exchange segment.

 

2



 

Second quarter 2014 diluted earnings per share were $0.32 from $0.36 in 2013. Adjusted diluted earnings per share (defined below) were $0.33 for the 2014 quarter compared to $0.31 for the 2013 quarter.

 

Adjusted EBITDA (defined below) was $41.5 million for the quarter ended June 30, 2014, an increase of 7.0% from adjusted EBITDA of $38.8 million for the same period of 2013.

 

Business Segment Results

 

Membership and Exchange

 

Membership and Exchange segment revenue for the three months ended June 30, 2014 was $86.9 million, a decrease of 9.0% from the comparable period in 2013 or 4.9% excluding the $4.1 million prior period item recorded in 2013. Segment results, year-to-date, have been negatively impacted by lower transaction volumes and membership revenue resulting from the shift in the percentage mix of the Interval Network membership base from traditional, direct renewal members to corporate members and reduced profitability in connection with renewals of several large corporate developer contracts. Membership mix as of June 30, 2014 is comprised of 59.3% traditional versus 40.7% corporate members, compared to 60.5% and 39.5%, respectively, as of June 30, 2013.

 

For the second quarter of 2014, membership fee revenue (defined below) was $31.6 million, a decrease of 14.2%, or 3.6% excluding the prior period item recorded in 2013, and transaction revenue (defined below) was $47.3 million, a decrease of 5.7% from the comparable period in 2013.

 

Total active members at June 30, 2014 were approximately 1.82 million, relatively consistent with June 30, 2013. Average revenue per member for the second quarter of 2014 was $44.36, a decrease of 8.7% from the second quarter of 2013. Excluding the impact of the prior period item recorded in the second quarter of 2013, average revenue per member decreased 4.3% from $46.37 in the prior year to $44.38 this quarter. During the second quarter of 2014, Interval affiliated 24 new vacation ownership resorts in domestic and international markets.

 

Membership and Exchange segment adjusted EBITDA was $32.9 million in the second quarter, declining 8.9% from the prior year.

 

Management and Rental

 

Management and Rental segment revenue for the three months ended June 30, 2014 was $56.6 million, including $32.4 million of management fee and rental revenue (defined below). Year-over-year, management fee and rental revenue increased 128.4%, primarily driven by the incremental contribution from recently acquired businesses - VRI Europe and Aqua Hotels.

 

Combined Aston and Aqua RevPAR (defined below) for the quarter ended June 30, 2014 was $110.39. Aston standalone RevPAR was $125.41 compared to $129.17 for the same period in 2013.

 

Management and Rental segment adjusted EBITDA was $8.6 million in the second quarter, an increase of 222.6% from the prior year.

 

CAPITAL RESOURCES AND LIQUIDITY

 

As of June 30, 2014, ILG’s cash and cash equivalents totaled $74.6 million, compared to $48.5 million as of December 31, 2013.

 

3



 

Debt outstanding as of June 30, 2014 was $268 million, compared to $253 million as of December 31, 2013. In April 2014, ILG amended its revolving credit facility and increased its borrowing capacity to $600 million from $500 million, which may be increased by an additional $100 million, subject to specified conditions.

 

For the first six months of 2014, ILG’s capital expenditures totaled $9.1 million, or 3.0% of revenue, net cash provided by operating activities was $55.7 million and free cash flow (defined below) was $46.5 million. The decline in free cash flow was principally due to payments made during the first quarter of 2014 in connection with long-term agreements.

 

Share Repurchase Program

 

Effective August 3, 2011 and June 4, 2014, ILG’s Board of Directors authorized a share repurchase program for up to $25.0 million and $20.0 million, respectively, excluding commissions, of the Company’s outstanding common stock.

 

During the six months ended June 30, 2014, the Company repurchased 0.2 million shares of common stock for $4.1 million, including commissions, under the August 2011 repurchase program, and 0.4 million shares of common stock for $9.5 million, including commissions, under the June 2014 repurchase program. As of June 30, 2014, the remaining availability for future repurchases of ILG common stock was $10.5 million.

 

Dividend

 

For the second quarter 2014, ILG paid $6.3 million, or $0.11 cents per share in dividends.

 

In August 2014, the Board of Directors declared a $0.11 per share dividend payable September 17, 2014 to shareholders of record on September 3, 2014.

 

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, adjusted net income, adjusted 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 its disclosures, provide meaningful presentations of its results from business operations excluding the impact of certain items not related to its core business operations and improve the period to period comparability of results from business operations. These measures may also be useful in comparing its results to those of other companies; however, its 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.

 

4



 

CONFERENCE CALL

 

ILG will host a conference call today at 4:30 p.m. Eastern Daylight Time to discuss its results for the second quarter 2014, with access via the Internet and telephone. Investors and analysts may participate in the live conference call by dialing (877) 280-4955 (toll-free domestic) or (857) 244-7312 (international); Conference ID: 75023015. Please register at least 10 minutes before the conference call begins. A replay of the call will be available for 14 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); Conference ID: 71507623. 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 5,000 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 nearly 2,900 resorts in over 80 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, Aqua Hospitality, 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 225 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: its future financial performance, its 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 its senior management; regulatory changes; its ability to compete effectively and successfully add new products and services; its ability to successfully manage and integrate acquisitions; impairment of assets; the restrictive covenants in its revolving credit facility; adverse events or trends in key vacation destinations; business interruptions in connection with the rearchitecture of its technology systems; ability of managed homeowners associations to collect sufficient maintenance fees; third parties not repaying advances or extensions of credit; failure to consummate a previously

 

5



 

announced transaction; and its 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 its filings with the SEC. Other unknown or unpredictable factors that could also adversely affect its 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 its 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.

 

6



 

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

143,528

 

$

124,983

 

$

300,569

 

$

259,864

 

Cost of sales

 

59,761

 

43,421

 

123,611

 

89,797

 

Gross profit

 

83,767

 

81,562

 

176,958

 

170,067

 

Selling and marketing expense

 

13,808

 

14,272

 

28,378

 

28,007

 

General and administrative expense

 

31,251

 

28,227

 

62,688

 

54,532

 

Amortization expense of intangibles

 

2,895

 

1,896

 

5,861

 

3,908

 

Depreciation expense

 

3,876

 

3,696

 

7,669

 

7,360

 

Operating income

 

31,937

 

33,471

 

72,362

 

76,260

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest income

 

55

 

72

 

99

 

223

 

Interest expense

 

(1,628

)

(1,611

)

(2,952

)

(3,264

)

Other income (expense), net

 

(280

)

1,479

 

(416

)

959

 

Total other expense, net

 

(1,853

)

(60

)

(3,269

)

(2,082

)

Earnings before income taxes and noncontrolling interest

 

30,084

 

33,411

 

69,093

 

74,178

 

Income tax provision

 

(10,690

)

(12,841

)

(25,005

)

(28,598

)

Net income

 

19,394

 

20,570

 

44,088

 

45,580

 

Net income attributable to noncontrolling interest

 

(1,034

)

 

(2,013

)

(6

)

Net income attributable to common stockholders

 

$

18,360

 

$

20,570

 

$

42,075

 

$

45,574

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.32

 

$

0.36

 

$

0.73

 

$

0.80

 

Diluted

 

$

0.32

 

$

0.36

 

$

0.72

 

$

0.79

 

Weighted average number of shares of common stock outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

57,669

 

57,315

 

57,587

 

57,121

 

Diluted

 

58,169

 

57,795

 

58,123

 

57,615

 

Dividends declared per share of common stock

 

$

0.11

 

$

0.11

 

$

0.22

 

$

0.11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income(1)

 

$

19,309

 

$

17,875

 

$

43,696

 

$

43,461

 

Adjusted earnings per share(1):

 

 

 

 

 

 

 

 

 

Basic

 

$

0.33

 

$

0.31

 

$

0.76

 

$

0.76

 

Diluted

 

$

0.33

 

$

0.31

 

$

0.75

 

$

0.75

 

 


(1) “Adjusted net income” and “Adjusted 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.

 

7



 

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

June 30, 2014

 

December 31, 2013

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Cash and cash equivalents

 

$

74,610

 

$

48,462

 

Deferred membership costs

 

9,152

 

9,828

 

Prepaid income taxes

 

13,809

 

11,211

 

Other current assets

 

97,345

 

89,061

 

Total current assets

 

194,916

 

158,562

 

Goodwill and intangible assets, net

 

762,665

 

766,703

 

Deferred membership costs

 

11,452

 

10,741

 

Other non-current assets

 

91,885

 

88,613

 

TOTAL ASSETS

 

$

1,060,918

 

$

1,024,619

 

 

 

 

 

 

 

LIABILITIES AND EQUITY LIABILITIES:

 

 

 

 

 

Accounts payable, trade

 

$

11,807

 

$

13,793

 

Deferred revenue

 

102,473

 

92,503

 

Other current liabilities

 

85,108

 

83,262

 

Total current liabilities

 

199,388

 

189,558

 

Long-term debt

 

268,000

 

253,000

 

Deferred revenue

 

100,038

 

100,494

 

Other long-term liabilities

 

93,586

 

104,608

 

TOTAL LIABILITIES

 

661,012

 

647,660

 

Redeemable noncontrolling interest

 

444

 

426

 

Total ILG stockholders’ equity

 

364,733

 

343,825

 

Noncontrolling interest

 

34,729

 

32,708

 

TOTAL EQUITY

 

399,462

 

376,533

 

TOTAL LIABILITIES AND EQUITY

 

$

1,060,918

 

$

1,024,619

 

 

8



 

INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

 

Six Months Ended June 30,

 

 

 

2014

 

2013

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

Net income

 

$

44,088

 

$

45,580

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Amortization expense of intangibles

 

5,861

 

3,908

 

Amortization of debt issuance costs

 

407

 

391

 

Depreciation expense

 

7,669

 

7,360

 

Non-cash compensation expense

 

5,480

 

5,144

 

Non-cash interest expense

 

7

 

170

 

Deferred income taxes

 

310

 

(1,427

)

Excess tax benefits from stock-based awards

 

(1,908

)

(2,598

)

Loss (gain) on disposal of property and equipment

 

10

 

163

 

Change in fair value of contingent consideration

 

(1,606

)

337

 

Changes in operating assets and liabilities:

 

(4,662

)

2,231

 

Net cash provided by operating activities

 

55,656

 

61,259

 

Cash flows from investing activities:

 

 

 

 

 

Capital expenditures

 

(9,146

)

(6,592

)

Proceeds from disposal of property and equipment

 

(7

)

7

 

Investment in financing receivables

 

(750

)

 

Payments received on financing receivables

 

 

9,876

 

Net cash provided by (used in) investing activities

 

(9,903

)

3,291

 

Cash flows from financing activities:

 

 

 

 

 

Borrowings on revolving credit facility

 

30,000

 

 

Payments on revolving credit facility

 

(15,000

)

(45,000

)

Payments of debt issuance costs

 

(1,711

)

 

Payments of contingent consideration

 

(7,272

)

 

Repurchases of common stock

 

(10,999

)

 

Dividend payments

 

(12,681

)

(6,304

)

Withholding taxes on vesting of restricted stock units

 

(3,972

)

(4,466

)

Proceeds from the exercise of stock options

 

310

 

377

 

Excess tax benefits from stock-based awards

 

1,908

 

2,598

 

Net cash used in financing activities

 

(19,417

)

(52,795

)

Effect of exchange rate changes on cash and cash equivalents

 

(188

)

(3,918

)

Net increase in cash and cash equivalents

 

26,148

 

7,837

 

Cash and cash equivalents at beginning of period

 

48,462

 

101,162

 

Cash and cash equivalents at end of period

 

$

74,610

 

$

108,999

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest, net of amounts capitalized

 

$

2,386

 

$

2,819

 

Income taxes, net of refunds

 

$

26,281

 

$

25,872

 

 

9



 

OPERATING STATISTICS

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2014

 

% Change

 

2013

 

2014

 

% Change

 

2013

 

Membership and Exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

Total active members at end of period (000’s)

 

1,818

 

(0.2

)%

1,821

 

1,818

 

(0.2

)%

1,821

 

Average revenue per member(1)

 

$

44.36

 

(8.7

)%

$

48.59

 

$

93.68

 

(7.6

)%

$

101.39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Management and Rental

 

 

 

 

 

 

 

 

 

 

 

 

 

Available room nights (000’s)

 

742

 

103.8

%

364

 

1,478

 

107.3

%

713

 

RevPAR

 

$

110.39

 

(14.5

)%

$

129.17

 

$

125.85

 

(14.6

)%

$

147.39

 

 


(1) Excluding the $4.1 million of membership revenue included in the prior year related to the prior period item, average revenue per member for the three and six month periods ending June 30, 2013 would have been $46.37 and $99.17, respectively.

 

ADDITIONAL DATA

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2014

 

% Change

 

2013

 

2014

 

% Change

 

2013

 

 

 

(Dollars in thousands)

 

(Dollars in thousands)

 

Membership and Exchange

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction revenue

 

$

47,315

 

(5.7

)%

$

50,174

 

$

103,426

 

(7.1

)%

$

111,322

 

Membership fee revenue(1)

 

31,602

 

(14.2

)%

36,819

 

63,420

 

(9.6

)%

70,183

 

Ancillary member revenue

 

1,709

 

(5.6

)%

1,811

 

3,332

 

(10.8

)%

3,736

 

Total member revenue

 

80,626

 

(9.2

)%

88,804

 

170,178

 

(8.1

)%

185,241

 

Other revenue

 

6,314

 

(5.9

)%

6,713

 

12,107

 

(2.1

)%

12,371

 

Total revenue

 

$

86,940

 

(9.0

)%

$

95,517

 

$

182,285

 

(7.8

)%

$

197,612

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Management and Rental

 

 

 

 

 

 

 

 

 

 

 

 

 

Management fee and rental revenue

 

$

32,364

 

128.4

%

$

14,172

 

$

68,955

 

118.1

%

$

31,617

 

Pass-through revenue

 

24,224

 

58.4

%

15,294

 

49,329

 

61.0

%

30,635

 

Total revenue

 

$

56,588

 

92.0

%

$

29,466

 

$

118,284

 

90.0

%

$

62,252

 

Management and Rental gross margin

 

31.5

%

5.4

%

29.9

%

33.5

%

0.9

%

33.2

%

Management and Rental gross margin without Pass-through Revenue

 

55.1

%

(11.6

)%

62.3

%

57.5

%

(12.1

)%

65.4

%

 


(1) Excluding the $4.1 million of membership revenue included in the prior year related to the prior period item, membership fee revenue for the three and six month periods ending June 30, 2013 as presented in this table would have been $32,766 and $66,130, respectively.

 

10



 

RECONCILIATIONS OF NON-GAAP MEASURES

 

 

 

Six Months Ended June 30,

 

 

 

2014

 

% Change

 

2013

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

55,656

 

(9.1

)%

$

61,259

 

Less: Capital expenditures

 

(9,146

)

38.7

%

(6,592

)

Free cash flow

 

$

46,510

 

(14.9

)%

$

54,667

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

(Dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to common stockholders

 

$

18,360

 

$

20,570

 

$

42,075

 

$

45,574

 

Acquisition related and restructuring costs

 

1,167

 

599

 

2,406

 

1,353

 

Other non-operating foreign currency remeasurements

 

305

 

(1,478

)

135

 

(1,298

)

Prior period item(1)

 

 

(3,496

)

 

(3,496

)

Income tax impact on adjusting items(2)

 

(523

)

1,680

 

(920

)

1,328

 

Adjusted net income

 

$

19,309

 

$

17,875

 

$

43,696

 

$

43,461

 

Adjusted earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.33

 

$

0.31

 

$

0.76

 

$

0.76

 

Diluted

 

$

0.33

 

$

0.31

 

$

0.75

 

$

0.75

 

 


(1) During the prior year, 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.

 

11



 

 

 

Three Months Ended June 30,

 

 

 

2014

 

2013

 

 

 

Membership
and
Exchange

 

Management
and
Rental

 

Consolidated

 

Membership
and
Exchange

 

Management
and
Rental

 

Consolidated

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

32,880

 

$

8,594

 

$

41,474

 

$

36,089

 

$

2,664

 

$

38,753

 

Non-cash compensation expense

 

(2,276

)

(357

)

(2,633

)

(2,329

)

(258

)

(2,587

)

Other non-operating income (expense), net

 

(319

)

39

 

(280

)

1,481

 

(2

)

1,479

 

Acquisition related and restructuring costs

 

(816

)

(351

)

(1,167

)

44

 

(643

)

(599

)

Prior period item

 

 

 

 

3,496

 

 

3,496

 

EBITDA

 

29,469

 

7,925

 

37,394

 

38,781

 

1,761

 

40,542

 

Amortization expense of intangibles

 

(334

)

(2,561

)

(2,895

)

(337

)

(1,559

)

(1,896

)

Depreciation expense

 

(3,411

)

(465

)

(3,876

)

(3,367

)

(329

)

(3,696

)

Less: Net income attributable to noncontrolling interest

 

 

1,034

 

1,034

 

 

 

 

Less: Other non-operating income (expense), net

 

319

 

(39

)

280

 

(1,481

)

2

 

(1,479

)

Operating income (loss)

 

$

26,043

 

$

5,894

 

31,937

 

$

33,596

 

$

(125

)

33,471

 

Interest income

 

 

 

 

 

55

 

 

 

 

 

72

 

Interest expense

 

 

 

 

 

(1,628

)

 

 

 

 

(1,611

)

Other non-operating income (expense), net

 

 

 

 

 

(280

)

 

 

 

 

1,479

 

Income tax provision

 

 

 

 

 

(10,690

)

 

 

 

 

(12,841

)

Net income

 

 

 

 

 

19,394

 

 

 

 

 

20,570

 

Net income attributable to noncontrolling interest

 

 

 

 

 

(1,034

)

 

 

 

 

 

Net income attributable to common stockholders

 

 

 

 

 

$

18,360

 

 

 

 

 

$

20,570

 

 

 

 

Six Months Ended June 30,

 

 

 

2014

 

2013

 

 

 

Membership
and
Exchange

 

Management
and
Rental

 

Consolidated

 

Membership
and
Exchange

 

Management
and
Rental

 

Consolidated

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

71,410

 

$

20,354

 

$

91,764

 

$

81,908

 

$

8,615

 

$

90,523

 

Non-cash compensation expense

 

(4,844

)

(635

)

(5,479

)

(4,608

)

(536

)

(5,144

)

Other non-operating income (expense), net

 

(302

)

(114

)

(416

)

1,132

 

(173

)

959

 

Acquisition related and restructuring costs

 

(1,182

)

(1,224

)

(2,406

)

(168

)

(1,185

)

(1,353

)

Prior period item

 

 

 

 

3,496

 

 

3,496

 

EBITDA

 

65,082

 

18,381

 

83,463

 

81,760

 

6,721

 

88,481

 

Amortization expense of intangibles

 

(668

)

(5,193

)

(5,861

)

(674

)

(3,234

)

(3,908

)

Depreciation expense

 

(6,746

)

(923

)

(7,669

)

(6,686

)

(674

)

(7,360

)

Less: Net income attributable to noncontrolling interest

 

 

2,013

 

2,013

 

 

6

 

6

 

Less: Other non-operating income (expense), net

 

302

 

114

 

416

 

(1,132

)

173

 

(959

)

Operating income

 

$

57,970

 

$

14,392

 

72,362

 

$

73,268

 

$

2,992

 

76,260

 

Interest income

 

 

 

 

 

99

 

 

 

 

 

223

 

Interest expense

 

 

 

 

 

(2,952

)

 

 

 

 

(3,264

)

Other non-operating income (expense), net

 

 

 

 

 

(416

)

 

 

 

 

959

 

Income tax provision

 

 

 

 

 

(25,005

)

 

 

 

 

(28,598

)

Net income

 

 

 

 

 

44,088

 

 

 

 

 

45,580

 

Net income attributable to noncontrolling interest

 

 

 

 

 

(2,013

)

 

 

 

 

(6

)

Net income attributable to common stockholders

 

 

 

 

 

$

42,075

 

 

 

 

 

$

45,574

 

 

12



 

GLOSSARY OF TERMS

 

Acquisition related and restructuring costs - Represents transaction fees, costs incurred in connection with performing due diligence, subsequent adjustments to its 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 earnings per share (EPS) - Adjusted net income divided by the weighted average number of shares of common stock outstanding during the period for basic EPS and, additionally, inclusive of dilutive securities for diluted EPS.

 

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.

 

Adjusted net income - Net income attributable to common stockholders, excluding the impact of (1) acquisition related and restructuring costs, (2) other non-operating foreign currency remeasurements, (3) correcting an immaterial prior period net understatement in the prior period financials, and (4) other special items, as applicable.

 

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 and Aqua at managed vacation properties, which excludes all rooms under renovation. Aqua occupied room nights are included only from the acquisition date.

 

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 attributable to common stockholders 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 and Aqua-managed occupied rooms. Aqua occupied room nights are included only from the acquisition date.

 

Management Fee and Rental Revenue — Represents revenue earned by its Management and Rental segment exclusive of pass-through revenue.

 

Membership Fee Revenue — Represents fees paid for membership in the Interval Network.

 

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

 

13



 

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 and Aqua.

 

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.

 

Interval Leisure Group

Investor Contact:

Jennifer Klein, 305-925-7302

Investor Relations

Jennifer.Klein@iilg.com

 

Or

 

Media Contact:

Christine Boesch, 305-925-7267

Corporate Communications

Chris.Boesch@intervalintl.com

 

14