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Starwood Reports Fourth Quarter 2012 Results

Stocks in this article: HOT

Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) today reported fourth quarter 2012 financial results.

Fourth Quarter 2012 Highlights

  • Excluding special items, EPS from continuing operations was $0.70. Including special items, EPS from continuing operations was $0.33.
  • Adjusted EBITDA was $325 million, which included $32 million of EBITDA from the St. Regis Bal Harbour residential project.
  • Excluding special items, income from continuing operations was $137 million. Including special items, income from continuing operations was $65 million.
  • Worldwide Systemwide REVPAR for Same-Store Hotels increased 4.1% in constant dollars (3.6% in actual dollars) compared to 2011. Systemwide REVPAR for Same-Store Hotels in North America increased 5.2% in constant dollars (5.4% in actual dollars).
  • Management fees, franchise fees and other income increased 5.1% compared to 2011. Management and franchise revenues increased 11.2% compared to 2011.
  • Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 45 basis points compared to 2011.
  • Worldwide REVPAR for Starwood Same-Store Owned Hotels increased 1.2% in constant dollars (0.8% in actual dollars) compared to 2011.
  • Margins at Starwood Same-Store Owned Hotels Worldwide decreased approximately 90 basis points compared to 2011.
  • Earnings from Starwood’s vacation ownership and residential business increased approximately $5 million compared to 2011.
  • During the quarter, the Company signed 40 hotel management and franchise contracts, representing approximately 8,400 rooms, and opened 17 hotels and resorts with approximately 3,900 rooms.
  • During the quarter, the Company completed sales of hotels for gross cash proceeds of approximately $275 million, retired $725 million of debt, issued $350 million of 3.125% Senior Notes due 2023, paid an annual dividend of $1.25 per share, and repurchased 3.5 million shares at a total cost of $180 million and an average price of $52.07 per share.

Full Year 2012 Highlights

  • Excluding special items, EPS from continuing operations was $2.61. Including special items, EPS from continuing operations was $2.39.
  • Adjusted EBITDA was $1.220 billion, which included $157 million of EBITDA from the St. Regis Bal Harbour residential project.
  • Excluding special items, income from continuing operations was $513 million. Including special items, income from continuing operations was $470 million.
  • Worldwide Systemwide REVPAR for Same-Store Hotels increased 5.0% in constant dollars (3.2% in actual dollars) compared to 2011. Systemwide REVPAR for Same-Store Hotels in North America increased 6.0% in constant dollars (5.8% in actual dollars).
  • Management fees, franchise fees and other income increased 9.1% compared to 2011. Management and franchise revenues increased 11.5% compared to 2011.
  • Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 90 basis points compared to 2011.
  • Worldwide REVPAR for Starwood Same-Store Owned Hotels increased 2.6% in constant dollars (0.1% in actual dollars) compared to 2011.
  • Margins at Starwood Same-Store Owned Hotels Worldwide increased approximately 40 basis points compared to 2011.
  • Earnings from Starwood’s vacation ownership and residential business increased approximately $144 million compared to 2011, including a $130 million increase in earnings from the St. Regis Bal Harbour residential project.
  • During the year, the Company signed 131 hotel management and franchise contracts, representing approximately 30,500 rooms, and opened 69 hotels and resorts with approximately 17,600 rooms.
  • During the year, the Company completed sales of hotels for gross cash proceeds of approximately $542 million, retired $1.272 billion of debt, issued $350 million of 3.125% Senior Notes due 2023, paid an annual dividend of $1.25 per share, and repurchased 6.3 million shares at a total cost of $320 million and an average price of $50.83 per share.

Fourth Quarter 2012 Earnings Summary

Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) today reported EPS from continuing operations for the fourth quarter of 2012 of $0.33 compared to $0.80 in the fourth quarter of 2011. Excluding special items, EPS from continuing operations was $0.70 for the fourth quarter of 2012 compared to $0.71 in the fourth quarter of 2011. Special items in the fourth quarter of 2012, which totaled a charge of $72 million (after-tax), included a pre-tax charge of $113 million primarily related to tender premiums associated with the early redemption of $725 million senior notes with maturities ranging between 2014 and 2019 as well as pre-tax charges of $14 million associated with the impairment of certain hotels and investments. Special items in the fourth quarter of 2011, which totaled a credit of $18 million (after-tax), included a pre-tax charge of approximately $70 million related to an unfavorable legal decision, a pre-tax charge of $14 million related to certain hotel impairments and a pre-tax charge of $16 million related to costs associated with the early redemption of $605 million of senior notes. Special items in the fourth quarter of 2011 also included an income tax benefit of $116 million, primarily associated with the utilization of capital losses which had previously been fully reserved. Excluding special items, the effective income tax rate in the fourth quarter of 2012 was 35.7% compared to 28.3% in the fourth quarter of 2011.

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