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. FIRST QUARTER 2013 HIGHLIGHTS *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 lodging." Financial Summary & Operating Metrics (USD in millions except per share amounts) Quarter Three Months Ended Over Quarter March 31, Change 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% stockholders 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 Quarter March 31, Change Cash flow data 2013 2012 Net cash provided by operating 47.4 37.6 26.1% activities 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. DISCUSSION OF RESULTS 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 2012. 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 2012. 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 2012. 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. CAPITAL RESOURCES AND LIQUIDITY 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. Dividend 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. 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 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 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 www.iilg.com. 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. 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 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 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 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 interest 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 stockholders: Basic $ 0.44 $ 0.27 Diluted $ 0.44 $ 0.27 Weighted average number of common stock outstanding: Basic 56,928 56,089 Diluted 57,435 56,676 Dividends declared per share of common stock $ - $ 0.10 INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) March 31, 2013 December 31, 2012 ASSETS 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 LIABILITIES AND EQUITY LIABILITIES: 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 INTERVAL LEISURE GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (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 ) equipment Change in fair value of contingent 425 - consideration 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 equipment Net cash provided by (used in) in investing 6,806 (51,002 ) activities 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 ) equivalents Cash and cash equivalents at beginning of 101,162 195,517 period Cash and cash equivalents at end of period $ 132,527 $ 179,885 Supplemental disclosures of cash flow information: 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 OPERATING STATISTICS Three Months Ended March 31, 2013 % Change 2012 Membership and Exchange Total active members at end of period 1,829 (0.8 )% 1,845 (000's) 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 ADDITIONAL DATA 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 RECONCILIATIONS OF NON-GAAP MEASURES Three Months Ended March 31, 2013 % Change 2012 (Dollars in thousands) Net cash provided by $ 47,449 26.1 % $ 37,630 operating activities Less: Capital (3,075 ) (1.0 )% (3,107 ) expenditures Free cash $ 44,374 28.5 % $ 34,523 flow 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 EBITDA Non-cash compensation (2,279 ) (278 ) (2,557 ) (2,808 ) (269 ) (3,077 ) expense Other 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 Amortization expense of (337 ) (1,675 ) (2,012 ) (5,420 ) (1,623 ) (7,043 ) intangibles Depreciation (3,319 ) (345 ) (3,664 ) (3,063 ) (243 ) (3,306 ) expense 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 income Interest 151 426 income Interest (1,653 ) (8,564 ) expense Other non-operating (520 ) (2,473 ) expense, net Income tax (15,757 ) (8,560 ) provision Net income 25,010 15,229 Net income attributable to (6 ) (4 ) noncontrolling interest Net income attributable to $ 25,004 $ 15,225 common stockholders GLOSSARY OF TERMS 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 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. 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 Contact: Interval Leisure Group Investor: Jennifer Klein, 305-925-7302 Investor Relations Jennifer.Klein@iilg.com or Media: Christine Boesch, 305-925-7267 Corporate Communications Chris.Boesch@intervalintl.com
Interval Leisure Group Reports First Quarter 2013 Results
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