Marriott International Inc MAR

Consumer Cyclical Lodging

Marriott International, Inc. is an operator, franchisor, and licensor of hotel, residential, timeshare, and other lodging properties under various brand names. The Company's segments include U.S. & Canada, Europe, Middle East, and Africa, Asia Pacific excluding China, and Greater China. Its Classic Luxury hotel brands include JW Marriott, The Ritz-Carlton, and St. Regis. Its Distinctive Luxury hotel brands include The Luxury Collection, W Hotels, EDITION, and Bvlgari. Its Classic Premium brands include Marriott Hotels, Sheraton, Delta Hotels by Marriott, Marriott Executive Apartments, and Marriott Vacation Club. Its Distinctive Premium brands include Westin, Autograph Collection Hotels, Renaissance Hotels, Le Meridien, Tribute Portfolio, Gaylord Hotels, and Apartments by Marriott Bonvoy. Classic Select hotel brands include Courtyard, SpringHill Suites, TownePlace Suites, and Protea Hotels. Its Midscale brands include City Express by Marriott and Four Points Express by Sheraton.

NDAQ:MAR - Post by User

Marriott International Inc

Bullboard Posts

Post by bc4uon Oct 04, 2012 2:31am

557 Views

Post# 20445871

Marriott International Reports Third Quarter 2012

Marriott International Reports Third Quarter 2012 Results

BETHESDA, Md., Oct. 3, 2012 /PRNewswire/ --

THIRD QUARTER HIGHLIGHTS
•Diluted earnings per share (EPS) totaled $0.44, a 52 percent increase over prior year adjusted results;
•During the third quarter, the company completed the sale of its equity interest in the Courtyard joint venture resulting in cash proceeds of $96 million and a $41 million pre-tax gain;
•North America comparable company-operated REVPAR rose 7.0 percent in the third quarter. On a constant dollar basis, worldwide comparable systemwide REVPAR rose 6.0 percent and average daily rate rose 4.7 percent using constant dollars;
•At the end of the third quarter, the company's worldwide pipeline of hotels under construction, awaiting conversion or approved for development totaled over 120,000 rooms, not including the 8,100 rooms from the acquisition of the Gaylord brand and hotel management business;
•Nearly 5,000 rooms opened during the quarter, including over 1,400 rooms converted from competitor brands and over 1,600 rooms in international markets. The company signed nearly 13,000 rooms in the third quarter;
•Marriott repurchased 9.6 million shares of the company's common stock for $353 million during the quarter. Year-to-date through the third quarter, the company repurchased 24.3 million shares for $903 million;
•For comparable Marriott Hotels & Resorts properties in North America, group room revenue increased 8 percent in the third quarter compared to the year ago quarter.

Marriott International, Inc. (NYSE: MAR) today reported third quarter 2012 results.

THIRD QUARTER 2012 RESULTS

Third quarter 2012 net income totaled $143 million, a 40 percent increase compared to third quarter 2011 adjusted net income. Diluted EPS totaled $0.44, a 52 percent increase from adjusted diluted EPS in the year-ago quarter. On July 11, 2012, the company forecasted third quarter diluted EPS of $0.39 to $0.41.

For the third quarter of 2011, the company reported a net loss of $179 million and reported diluted losses per share of $0.52. Adjusted net income and adjusted diluted EPS for the year-ago quarter excluded $349 million pretax ($281 million after-tax and $0.81 per diluted share) of timeshare spin-off adjustments totaling $321 million pretax and other charges totaling $28 million pretax. Timeshare spin-off adjustments included items such as the removal of timeshare business operating results and spin-off transaction costs, as well as the addition of license fees and other related items as if the spin-off had occurred on the first day of fiscal 2011. Other charges included an $18 million pretax impairment charge on an investment in equity securities and a $10 million pretax write-off related to one property whose owner filed for bankruptcy. See page A-1 for third quarter 2011 reported results, the timeshare spin-off adjustments, other charges and adjusted results.

Arne M. Sorenson, president and chief executive officer of Marriott International, said, "We were pleased with our third quarter performance. Pricing power continued to improve in the quarter as hotel occupancy levels approached prior peaks. Group revenue at comparable Marriott Hotels and Resorts in North America rose 8 percent in the third quarter with room rates up 3 percent. Transient REVPAR rose 6 percent with strong last-minute retail demand and reduced discounting.

"Looking ahead, we expect 2013 worldwide constant dollar REVPAR to increase at a mid single-digit rate despite moderate economic growth in many markets around the world. We are particularly bullish about our prospects in North America and expect North American systemwide REVPAR to increase 5 to 7 percent in 2013. In that market, negotiations for special corporate business are already underway and we are targeting room rates to increase at a high single-digit rate. Group revenue on the books for 2013 for the Marriott brand in North America is up over 7 percent with rates up nearly 4 percent.

"Worldwide we opened nearly 5,000 rooms during the quarter and signed 13,000 rooms. We are delighted to welcome the Gaylord brand and its five hotels located in Orlando, Nashville, Dallas and Washington, DC to our system in the fourth quarter. Across 14 lodging brands worldwide, our pipeline of hotels under development, under construction or pending conversion increased to over 120,000 rooms during the quarter. Around the world, we expect to add 28,000 rooms in 2012, 30,000 to 35,000 rooms in 2013 and 90,000 to 105,000 for the three-year period from 2012 to 2014. Our market share of hotels continues to grow around the world."

For the 2012 third quarter, REVPAR for worldwide comparable systemwide properties increased 6.0 percent (a 4.6 percent increase using actual dollars).

In North America, comparable systemwide REVPAR increased 6.3 percent in the third quarter of 2012, including a 4.9 percent increase in average daily rate. REVPAR for comparable systemwide North American full-service and luxury hotels (including Marriott Hotels & Resorts, The Ritz-Carlton, Renaissance Hotels and Autograph Collection Hotels) increased 6.8 percent with a 4.6 percent increase in average daily rate. REVPAR for comparable systemwide North American limited-service hotels (including Courtyard, Residence Inn, SpringHill Suites, TownePlace Suites and Fairfield Inn & Suites) increased 5.9 percent in the third quarter with a 5.0 percent increase in average daily rate.

International comparable systemwide REVPAR rose 5.0 percent (a 1.5 percent decline using actual dollars), including a 3.8 percent increase in average daily rate (a 2.6 percent decline using actual dollars) in the third quarter of 2012.

Marriott added 35 new properties (4,874 rooms) to its worldwide lodging portfolio in the 2012 third quarter, including the Renaissance Shanghai Caohejing, the Renaissance Istanbul Bosphorus and The Ritz-Carlton, Vienna. Thirteen properties (3,103 rooms) exited the system during the quarter. At quarter-end, the company's lodging group encompassed 3,770 properties and timeshare resorts for a total of nearly 648,000 rooms.

The company's worldwide pipeline of hotels under construction, awaiting conversion or approved for development totaled approximately 730 properties with over 120,000 rooms at quarter-end, not including the 8,100 Gaylord rooms joining the system in the fourth quarter.

MARRIOTT REVENUES totaled over $2.7 billion in the 2012 third quarter compared to adjusted revenues of $2.5 billion for the third quarter of 2011. Base management and franchise fees rose 9 percent over prior year adjusted levels to $283 million, reflecting higher REVPAR at existing hotels and fees from new hotels, as well as $7 million of deferred base management fees recognized in the quarter related to the sale of the Courtyard joint venture. Third quarter worldwide incentive management fees increased 24 percent to $36 million. In the third quarter, 28 percent of worldwide company-managed hotels earned incentive management fees compared to 24 percent in the year-ago quarter.

Worldwide comparable company-operated house profit margins increased 180 basis points in the third quarter. House profit margins for comparable company-operated properties outside North America increased 160 basis points and North American comparable company-operated house profit margins increased 200 basis points from the year-ago quarter.

Owned, leased, corporate housing and other revenue, net of direct expenses, totaled $26 million, compared to $35 million in the year-ago quarter. The $9 million decline reflected a $7 million decline in termination fees and a $2 million decrease in residential branding fees.

GENERAL, ADMINISTRATIVE and OTHER expenses for the 2012 third quarter declined 8 percent in the 2012 third quarter, to $132 million compared to adjusted expenses of $143 million in the 2011 third quarter. Third quarter 2012 expenses reflected a favorable litigation settlement, partially offset by higher legal expenses, netting to a favorable $5 million. In the prior year, expenses reflected the $5 million combined impact of the guarantee reserve for one hotel and the write-off of deferred contract acquisition costs.

GAINS AND OTHER INCOME totaled $36 million in the quarter, primarily reflecting the $41 million gain related to the sale of the Courtyard joint venture offset by a $7 million impairment charge on an investment.

INTEREST EXPENSE totaled $29 million in the third quarter, compared to adjusted interest expense of $32 million in the year-ago quarter. Capitalized interest totaled $7 million in the quarter, compared to $5 million in the year-ago quarter.

EBITDA totaled $284 million in the 2012 third quarter, a 27 percent increase over 2011 third quarter adjusted EBITDA of $223 million. See page A-9 for the EBITDA and adjusted EBITDA calculations.

BALANCE SHEET

At the end of the third quarter 2012, total debt was $2,509 million and cash balances totaled $105 million, compared to $2,171 million in debt and $102 million of cash at year-end 2011.

At the beginning of the fourth quarter, the company issued $350 million of Series L bonds due in 2022 with a 3.25 percent interest rate coupon. The company expects to use the net proceeds for general corporate purposes.

COMMON STOCK

Weighted average fully diluted shares outstanding used to calculate diluted EPS totaled 329.3 million in the 2012 third quarter, compared to 356.8 million in the year-ago quarter.

The company repurchased 9.6 million shares of common stock in the third quarter at a cost of $353 million. Year-to-date through the third quarter, Marriott repurchased 24.3 million shares of its stock for $903 million. The remaining share repurchase authorization, as of September 7, 2012, totaled 16.2 million shares.

FOURTH QUARTER 2012 OUTLOOK

For the fourth quarter, the company expects comparable systemwide REVPAR on a constant dollar basis will increase 5 to 7 percent in North America, increase roughly 3 percent outside North America and improve 4 to 6 percent worldwide.

The company expects to add approximately 28,000 rooms worldwide for the full year 2012. The company also expects approximately 10,000 rooms will leave the system during the year.

https://investor.shareholder.com/mar/releasedetail.cfm?ReleaseID=711076