Starwood Hotels & Resorts Worldwide, Inc. today reported fourth quarter 2011 financial results.
Fourth Quarter 2011 Highlights
- Excluding special items, EPS from continuing operations was $0.71, including income from the St. Regis Bal Harbour residential project. Including special items, EPS from continuing operations was $0.80, including an income tax benefit of $0.40 primarily related to the use of tax capital losses, offset by charges totaling $0.31 primarily related to an unfavorable legal decision, the early extinguishment of debt and hotel impairments.
- Adjusted EBITDA was $321 million, which included $33 million of EBITDA from the St. Regis Bal Harbour residential project, up 19.3% compared to 2010.
- Excluding special items, income from continuing operations was $140 million, including income from the St. Regis Bal Harbour residential project. Including special items, income from continuing operations was $158 million.
- Worldwide System-wide REVPAR for Same-Store Hotels increased 5.9% (5.8% in constant dollars) compared to 2010. System-wide REVPAR for Same-Store Hotels in North America increased 7.7% (7.6% in constant dollars).
- Management fees, franchise fees and other income increased 12.0% compared to 2010.
- Worldwide Same-Store company-operated gross operating profit margins increased approximately 110 basis points compared to 2010.
- Worldwide REVPAR for Starwood branded Same-Store Owned Hotels increased 5.7% (5.0% in constant dollars) compared to 2010.
- Margins at Starwood branded Same-Store Owned Hotels Worldwide increased approximately 230 basis points compared to 2010.
- Earnings from our vacation ownership and residential business increased approximately $40 million compared to 2010, including $33 million of earnings from the St. Regis Bal Harbour residential project.
- During the quarter, the Company signed 36 hotel management and franchise contracts representing approximately 7,600 rooms and opened 28 hotels and resorts with approximately 7,900 rooms.Fourth Quarter 2011 Earnings SummaryStarwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) today reported EPS from continuing operations for the fourth quarter of 2011 of $0.80 compared to $1.08 in the fourth quarter of 2010. Excluding special items, EPS from continuing operations was $0.71 for the fourth quarter of 2011, including income from the St. Regis Bal Harbour residential project (“Bal Harbour”), compared to $0.52 in the fourth quarter of 2010. Special items in the fourth quarter of 2011 included a pre-tax charge of $98 million, representing a charge of approximately $70 million related to an unfavorable legal decision, a charge of $14 million related to certain hotel impairments and a charge of $16 million related to costs associated with the early extinguishment of debt. 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 and the tax effects of the special items discussed above. Special items in the fourth quarter of 2010 included a pre-tax benefit of $69 million, primarily related to the favorable settlement of a lawsuit. Special items in the fourth quarter of 2010 also included a $38 million income tax benefit primarily related to the favorable settlement with the IRS regarding the 1998 disposition of World Directories, Inc. Excluding special items, the effective income tax rate in the fourth quarter of 2011 was 28.3%, including income from Bal Harbour, compared to 24.9% in the fourth quarter of 2010. Income from continuing operations was $158 million in the fourth quarter of 2011 compared to $206 million in the fourth quarter of 2010. Excluding special items, income from continuing operations was $140 million in the fourth quarter of 2011, including income from Bal Harbour, compared to $99 million in the fourth quarter of 2010. Net income was $167 million and $0.85 per share in the fourth quarter of 2011 compared to $339 million and $1.78 per share in the fourth quarter of 2010. In addition to the special items discussed above, 2010 results benefited from a gain of $132 million reflected in discontinued operations related to the final settlement with the IRS regarding the 1998 disposition of World Directories, Inc. Frits van Paasschen, CEO said, “We grew worldwide systemwide REVPAR by 5.8%, delivering strong fourth quarter EBITDA and EPS. Each of our nine brands performed well, driving REVPAR index gains for the tenth quarter in a row." “Our strong and growing presence in the emerging markets fueled almost 21,000 room openings in 2011, the most in our Company’s history. These openings bring our five year total to 389 new hotels. In other words, over one-third of our 1,090 hotels are newly opened. When combined with a full year REVPAR increase of 7.4%, our fees jumped 14.3%, a strong acceleration from 2010’s growth rate. As we look to 2012, it is shaping up to be another record year of room additions and strong REVPAR growth.” “Our efforts to Own the Global Guest are helping us grow faster than the market and driving returns for owners and shareholders. The changes we have made to reinvent the SPG program should allow us to deepen the relationships with our loyal guests as well as attract the next generation of global travel elites."Year Ended December 31, 2011 Earnings SummaryIncome from continuing operations was $502 million for the year ended December 31, 2011 compared to $310 million in the same period in 2010. Excluding special items, income from continuing operations was $378 million for the year ended December 31, 2011, including income from Bal Harbour, compared to $237 million in the same period in 2010. In addition to the fourth quarter special items discussed above, the results for the year ended December 31, 2011 included an income tax benefit of approximately $92 million, primarily as a result of the favorable settlement of an IRS audit and tax benefits associated with asset sales. Excluding special items, the effective income tax rate for the year ended December 31, 2011 was 26.1%, including income from Bal Harbour, when compared to 21.3% in the same period in 2010. Net income was $489 million and $2.51 per share for the year ended December 31, 2011 compared to $477 million and $2.51 per share in the same period in 2010. In addition to the special items discussed above, 2010 benefited from a gain of $168 million reflected in discontinued operations related to the final settlement with the IRS regarding the 1998 disposition of World Directories, Inc. and a tax benefit in connection with the sale of one wholly-owned hotel. Adjusted EBITDA was $1.032 billion for the year ended December 31, 2011, including $27 million of EBITDA from Bal Harbour, an increase of approximately 17.4% compared to $879 million in the same period in 2010.
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