Interval Leisure Group Reports First Quarter 2013 Results

  Interval Leisure Group Reports First Quarter 2013 Results

Business Wire

MIAMI -- May 06, 2013

Interval Leisure Group (Nasdaq:IILG) ("ILG") today announced results for the
three months ended March 31, 2013.


  *ILG consolidated revenue increased by 6.4% year over year.
  *Net income increased by 64.2% from last year to $25.0 million.
  *Earnings per share of $0.44 vs. $0.27 in the prior year.
  *Adjusted EBITDA increased by 6.7%.
  *Free cash flow was $44.4 million, an increase of 28.5% from the same
    period last year.

"The first quarter brought positive results from our ongoing strategic
initiatives. Primarily driven by the contribution of the management and rental
segment, Interval Leisure Group increased top line results," said Craig M.
Nash, Chairman, President and Chief Executive Officer of Interval Leisure
Group. "The membership and exchange segment drove the increase in adjusted
EBITDA and showed improvements in membership fee revenue and average revenue
per member. We are committed to growing ILG and believe that a meaningful
number of opportunities exist to further expand ILG’s role in non-traditional

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

                                        Three Months Ended
                                                           Over Quarter
                                        March 31,
Metrics                                2013       2012    
Revenue                                 134.9      126.7    6.4%
Membership and Exchange revenue         102.1       100.9    1.2%
Management and Rental revenue           32.8        25.8     26.9%
Gross profit                            88.5        83.9     5.4%
Net income attributable to common       25.0        15.2     64.2%
Diluted EPS                             $0.44       $0.27    63.0%
Adjusted EBITDA*                        51.0        47.8     6.7%
Balance sheet data                     March 31, 2013      December 31, 2012
Cash and cash equivalents               132.5                101.2
Debt                                    240.0                260.0
                                                             Quarter Over
                                        Three Months Ended
                                        March 31,
Cash flow data                         2013       2012    
Net cash provided by operating          47.4        37.6     26.1%
Free cash flow*                        44.4       34.5    28.5%

* “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.


First Quarter 2013 Consolidated Operating Results

Consolidated revenue for the first quarter ended March 31, 2013 was $134.9
million, an increase of 6.4% from $126.7 million for the first quarter of

Net income for the three months ended March 31, 2013 was $25.0 million, an
increase of 64.2% from net income of $15.2 million for the same period of
2012. The year over year increase in net income reflects a $17.0 million
increase in pre-tax income resulting from a $4.6 million rise in gross profit,
a decline in amortization of intangibles expense of $5.0 million, as well as a
$6.9 million decrease in interest expense. First quarter 2013 diluted earnings
per share were $0.44 compared to diluted earnings per share of $0.27 for the
same period of 2012.

Adjusted EBITDA (defined below) was $51.0 million for the quarter ended March
31, 2013, compared to adjusted EBITDA of $47.8 million for the same period of

Business Segment Results

Membership and Exchange

Membership and Exchange segment revenue for the three months ended March 31,
2013 was $102.1 million, an increase of 1.2% from the comparable period in

For the first quarter of 2013, membership fee revenue (defined below) was
$33.4 million, an increase of 2.3%, and transaction revenue (defined below)
was $61.1 million, consistent with the same period in 2012.

Total active members at March 31, 2013 were approximately 1,829,000, a
decrease of 0.8% from March 31, 2012. Average revenue per member for the first
quarter of 2013 was $52.79, an increase of 0.9% from the first quarter of
2012. During the first quarter of 2013, Interval affiliated 36 vacation
ownership resorts in domestic and international markets.

Membership and Exchange segment adjusted EBITDA was $45.6 million in the first
quarter, an increase of 4.8% from the prior year. Membership and Exchange
segment adjusted EBITDA during the quarter reflects a 1.2% increase in segment
revenue and a decrease in general and administrative expense.

Management and Rental

Management and Rental segment revenue for the three months ended March 31,
2013 was $32.8 million, including $17.4 million of management fee and rental
revenue (defined below). Year-over-year, management fee and rental revenue
grew by 40.3%. The improvement was primarily driven by the acquisition of
Vacation Resorts International at the end of February 2012 and stronger
revenue per available room ("RevPAR") at Aston. Aston RevPAR for the quarter
ended March 31, 2013 was $166.39 compared to $143.75 for the same period in
2012, resulting from a 14.4% higher average daily rate (ADR) and a 1.2%
improvement in occupancy rates during the quarter.

In the first quarter of 2013, Management and Rental segment adjusted EBITDA
was $5.4 million, an increase of 25.5% from the prior year period.


As of March 31, 2013, ILG's cash and cash equivalents totaled $132.5 million,
compared to $101.2 million as of December 31, 2012.

Debt outstanding as of March 31, 2013 was $240 million. As of March 31, 2013,
ILG had $260 million available on its revolving credit facility, which may be
increased by an additional $200 million, subject to specified conditions.

For the first quarter of 2013, ILG's capital expenditures totaled $3.1
million, or 2.3% of revenue, net cash provided by operating activities was
$47.4 million and free cash flow (defined below) was $44.4 million.


ILG initiated its regular quarterly dividend in March 2012. The dividend
payment of $0.10 per share that would have been paid in the first quarter of
2013 was accelerated and paid during the fourth quarter of 2012. As a result,
no dividend was paid during the first quarter. The board of directors has
declared a second quarter dividend of $0.11 per share which is scheduled to be
paid on June 18^th to shareholders of record as of June 4, 2013.


ILG management believes that the presentation of non-generally accepted
accounting principles (non-GAAP) financial measures, including, among others,
EBITDA, Adjusted EBITDA 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.


ILG will host a conference call today at 4:30 p.m. Eastern Daylight Time to
discuss its results for the first quarter of 2013, with access via the
Internet and telephone. Investors and analysts may participate in the live
conference call by dialing (877) 415-3186 (toll-free domestic) or (857)
244-7326 (international); participant pass code: 93164985. 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 The replay can be accessed at (888) 286-8010
(toll-free domestic) or (617) 801-6888 (international); pass code: 42016210.
The webcast will be archived on ILG's website for 90 days after the call.


Interval Leisure Group (ILG) is a leading global provider of membership and
leisure services to the vacation industry. Headquartered in Miami, Florida,
ILG has more than 3,500 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 approximately 2,800 resorts in more than 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, Vacation
Resorts International (VRI), and TPI. These businesses provide hotel,
condominium resort, timeshare resort, and homeowners’ association management,
as well as rental services, to travellers and owners at more than 200 vacation
properties, resorts and club locations throughout North America. More
information about the Company is available at


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

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.

(In thousands, except per share data)

                                                    Three Months Ended
                                                     March 31,
                                                     2013         2012
Revenue                                              $ 134,881     $ 126,739
Cost of sales                                         46,376      42,791  
Gross profit                                           88,505        83,948
Selling and marketing expense                          13,735        13,773
General and administrative expense                     26,305        25,426
Amortization expense of intangibles                    2,012         7,043
Depreciation expense                                  3,664       3,306   
Operating income                                       42,789        34,400
Other income (expense):
Interest income                                        151           426
Interest expense                                       (1,653  )     (8,564  )
Other expense, net                                    (520    )    (2,473  )
Total other expense, net                              (2,022  )    (10,611 )
Earnings before income taxes and noncontrolling        40,767        23,789
Income tax provision                                  (15,757 )    (8,560  )
Net income                                             25,010        15,229
Net income attributable to noncontrolling interest    (6      )    (4      )
Net income attributable to common stockholders       $ 25,004     $ 15,225  
Earnings per share attributable to common
Basic                                                $ 0.44        $ 0.27
Diluted                                              $ 0.44        $ 0.27
Weighted average number of common stock
Basic                                                  56,928        56,089
Diluted                                                57,435        56,676
Dividends declared per share of common stock         $ -           $ 0.10

(In thousands)

                                     March 31, 2013  December 31, 2012
Cash and cash equivalents             $    132,527     $     101,162
Deferred membership costs                  10,453            12,349
Prepaid income taxes                       -                 12,973
Other current assets                      103,661          83,011
Total current assets                       246,641           209,495
Goodwill and intangible assets, net        602,440           604,452
Deferred membership costs                  12,483            11,058
Other non-current assets                  69,194           81,915
TOTAL ASSETS                          $    930,758     $     906,920
Accounts payable, trade               $    13,380      $     11,086
Deferred revenue                           113,950           93,367
Other current liabilities                 72,648           70,950
Total current liabilities                  199,978           175,403
Long-term debt                             240,000           260,000
Deferred revenue                           107,251           111,273
Other long-term liabilities                86,964            87,752
Redeemable noncontrolling interest         432               426
TOTAL STOCKHOLDERS' EQUITY                296,133          272,066
TOTAL LIABILITIES AND EQUITY          $    930,758     $     906,920

(In thousands)

                                                 Three Months Ended March 31,
                                                  2013            2012
Cash flows from operating activities:
Net income                                        $  25,010        $ 15,229
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization expense of intangibles                  2,012           7,043
Amortization of debt issuance costs                  196             424
Depreciation expense                                 3,664           3,306
Accretion of original issue discount                 -               677
Non-cash compensation expense                        2,557           3,077
Non-cash interest expense                            68              109
Non-cash interest income                             -               (190    )
Deferred income taxes                                (985     )      (526    )
Excess tax benefits from stock-based awards          (2,474   )      (2,127  )
Loss (gain) on disposal of property and              156             (230    )
Change in fair value of contingent                   425             -
Changes in assets and liabilities                   16,820        10,838  
Net cash provided by operating activities           47,449        37,630  
Cash flows from investing activities:
Acquisition, net of cash acquired                    -               (39,963 )
Capital expenditures                                 (3,075   )      (3,107  )
Investment in financing receivables                  -               (9,480  )
Payments received on financing receivables           9,876           1,318
Proceeds from disposal of property and              5             230     
Net cash provided by (used in) in investing         6,806         (51,002 )
Cash flows from financing activities:
Principal payments on term loan                      -               (5,000  )
Payments on revolving credit facility                (20,000  )      -
Withholding taxes on vesting of restricted           (2,680   )      (3,395  )
stock units
Proceeds from the exercise of stock options          350             201
Excess tax benefits from stock-based awards         2,474         2,127   
Net cash used in financing activities               (19,856  )     (6,067  )
Effect of exchange rate changes on cash and         (3,034   )     3,807   
cash equivalents
Net increase (decrease) in cash and cash             31,365          (15,632 )
Cash and cash equivalents at beginning of           101,162       195,517 
Cash and cash equivalents at end of period        $  132,527      $ 179,885 
Supplemental disclosures of cash flow
Cash paid during the period for:
Interest, net of amounts capitalized              $  1,283         $ 14,646
Income taxes, net of refunds                      $  231           $ 1,165
Other non-cash item:
Dividends declared and unpaid                     $  -             $ 5,849


                                         Three Months Ended March 31,
                                          2013         % Change  2012
Membership and Exchange
Total active members at end of period       1,829       (0.8  )%     1,845
Average revenue per member                $ 52.79       0.9   %    $ 52.32
Management and Rental
Available room nights (000's)               349         (5.4  )%     369
RevPAR                                    $ 166.39      15.8  %    $ 143.75
                                          Three Months Ended March 31,
                                          2013          % Change   2012
                                          (Dollars in thousands)
Membership and Exchange
Transaction revenue                       $ 61,148      NM         $ 61,151
Membership fee revenue                      33,364      2.3   %      32,599
Ancillary member revenue                   1,924      (3.4  )%    1,991   
Total member revenue                        96,436      0.7   %      95,741
Other revenue                              5,659      9.5   %     5,166   
Total revenue                             $ 102,095    1.2   %    $ 100,907 
Management and Rental
Management fee and rental revenue         $ 17,445      40.3  %    $ 12,433
Pass-through revenue                       15,341     14.5  %     13,399  
Total revenue                             $ 32,786     26.9  %    $ 25,832  
Management and Rental gross margin          36.2    %   14.5  %      31.6    %
Management and Rental gross margin          68.0    %   3.6   %      65.7    %
without Pass-through Revenue


               Three Months Ended March 31,                                        
                2013         % Change      2012
                (Dollars in thousands)
Net cash
provided by     $ 47,449        26.1   %     $ 37,630
Less: Capital    (3,075 )     (1.0   )%     (3,107  )
Free cash       $ 44,374      28.5   %     $ 34,523  
                Three Months Ended March 31,
                2013                                        2012
                Membership    Management                    Membership    Management

                and           and            Consolidated   and           and           Consolidated

                Exchange      Rental                        Exchange      Rental
                (Dollars in thousands)
Adjusted        $ 45,607      $ 5,415        $ 51,022       $ 43,511      $ 4,315       $  47,826
compensation      (2,279 )      (278   )       (2,557  )      (2,808 )      (269   )       (3,077  )
non-operating    (349   )     (171   )      (520    )     (2,324 )     (149   )      (2,473  )
expense, net
EBITDA            42,979        4,966          47,945         38,379        3,897          42,276
expense of        (337   )      (1,675 )       (2,012  )      (5,420 )      (1,623 )       (7,043  )
Depreciation      (3,319 )      (345   )       (3,664  )      (3,063 )      (243   )       (3,306  )
Less: Other
non-operating    349         171          520          2,324       149          2,473   
expense, net
Operating       $ 39,672     $ 3,117         42,789       $ 32,220     $ 2,180         34,400
Interest                                       151                                         426
Interest                                       (1,653  )                                   (8,564  )
non-operating                                  (520    )                                   (2,473  )
expense, net
Income tax                                    (15,757 )                                  (8,560  )
Net income                                     25,010                                      15,229
Net income attributable to                    (6      )                                  (4      )
noncontrolling interest
Net income attributable to                   $ 25,004                                  $  15,225  
common stockholders


Adjusted EBITDA - EBITDA, excluding, if applicable: (1) non-cash compensation
expense, (2) goodwill and asset impairments and (3) other non-operating income
and expense (including loss on extinguishment of debt). 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

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

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

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
Jennifer Klein, 305-925-7302
Investor Relations
Christine Boesch, 305-925-7267
Corporate Communications
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