Marriott International Earns $0.32 Per Share For The 2002 First Quarter
Marriott International Earns $0.32 Per Share For The 2002 First Quarter
WASHINGTON, April 18 /PRNewswire-FirstCall/ -- Marriott International, Inc. (NYSE: MAR - news) today reported diluted earnings per share of 32 cents in its 2002 first quarter ended March 22, down 32 percent from the first quarter of 2001. Net income for the quarter was $82 million compared to $121 million a year ago. Systemwide sales totaled $4.6 billion, a decrease of four percent compared to the 2001 first quarter.
J.W. Marriott, Jr., chairman and chief executive officer of Marriott International, said he was pleased that the company's 2002 first quarter performance came in ahead of expectations. "We are encouraged by the first quarter trends in occupancy. While the company's overall occupancy at comparable hotels in the U.S. declined nearly four percentage points, stronger than expected leisure and group business, especially at our Marriott, Hotels, Resorts and Suites hotels, helped offset the impact of continued soft business transient demand. Our efforts to keep our guests satisfied have proven successful as well. Even with discounting prevalent in the industry, our brands' REVPAR (revenue per available room) premiums have increased over our competitors during the past several months.
"Our results in controlling costs this quarter were truly outstanding. With U.S. REVPAR down 12.7 percent during the first quarter, the house profit margins at our hotels declined approximately 1 percent, reflecting the strength of our management team and the dedication of our associates.
"Room openings for 2002 are on track, with 7,000 new rooms opened in the first quarter. Interest in converting hotels to a Marriott brand has increased, reflecting owners' and franchisees' desire to have the best performing lodging brands in this challenging economic environment. For the year, we continue to expect to add between 25,000 and 30,000 hotel rooms to our worldwide lodging portfolio. At the end of the first quarter, the company's pipeline of properties either under construction or approved for development was approximately 55,000 rooms."
MARRIOTT LODGING reported a 31 percent decrease in operating profit and 7 percent sales decline in the 2002 first quarter. Results reflected weaker lodging demand and lower profits in the vacation timeshare business, partially offset by contributions from new properties worldwide.
Across Marriott's lodging brands, REVPAR for comparable U.S. properties declined by an average of 12.7 percent in the 2002 first quarter. Average room rates for these hotels decreased nearly 8 percent, while occupancy declined to 67 percent. Marriott's full service brands (including Marriott Hotels, Resorts and Suites, The Ritz-Carlton, and Renaissance Hotels, Resorts and Suites) experienced a REVPAR decline of 13.2 percent in the quarter, driven largely by an 8 percent decline in rate. Marriott's select service and extended stay brands (including Courtyard, Fairfield Inn, Residence Inn, TownePlace Suites, and SpringHill Suites) posted a REVPAR decline of 12.0 percent in the first quarter of 2002, with declines in both rate and occupancy.
Results for international lodging operations reflected slightly better trends than in the United States in the 2002 first quarter, with REVPAR in constant U.S. dollars down only 7 percent and improved margins. Demand was particularly healthy in Hong Kong, China and Central Europe.
Marriott's timeshare business achieved an 11 percent increase in contract sales in the quarter. Sales growth was especially robust at timeshare resorts in Colorado, Hawaii, and California, but remained soft in Orlando. Profits for the quarter in the timeshare business declined 28 percent largely as a result of higher sales and marketing expenses.
The company has added 281 hotels and timeshare resorts (44,751 rooms) to its worldwide lodging portfolio over the past 12 months, while 16 properties (3,456 rooms) exited the system. A net total of 30 hotels and resorts (6,784 rooms) were added in the 2002 first quarter, including four Marriott Hotels, Resorts and Suites (1,208 rooms) and nine Courtyard hotels (1,752 rooms). At quarter-end, the Marriott lodging group encompassed 2,428 hotels and timeshare resorts (442,767 rooms).
MARRIOTT SENIOR LIVING SERVICES posted 9 percent sales growth in the quarter. The division produced $6 million in operating profit, a substantial improvement from $1 million a year ago, due to the continued maturation of communities and a $2 million one-time payment relating to the sale of the communities owned by Crestline Capital Corporation. Occupancy for comparable communities was 83 percent in the quarter, stable with a year ago. The company operates 156 facilities totaling 26,218 residential units.
MARRIOTT DISTRIBUTION SERVICES reported a 4 percent increase in sales in the 2002 first quarter. The division posted an operating loss of $6 million, primarily resulting from lower margins on existing business and reduced levels of Sodexho business. Results were also impacted by a $2 million (pre-tax) write-off relating to an investment in a customer contract. Marriott is continuing its strategic review of this business.
CORPORATE EXPENSES decreased 3 percent in the 2002 first quarter, benefiting substantially from cost containment plans implemented in 2001. Corporate expenses for the quarter also included a $5 million reserve related to the pending sale of a land parcel. Interest expense was down $3 million, reflecting lower average borrowings and lower interest rates. Long-term debt at the end of the quarter, net of cash reserves, was $2.2 billion, down slightly from $2.3 billion at year end. Interest income totaled $19 million for the quarter, up $3 million from a year ago, largely due to income associated with higher average loan balances and cash reserves.
The company's synthetic fuel investment began to produce results sooner than anticipated and posted an operating deficit of $6 million, pre-tax, for the first quarter of 2002. As a result of this investment, taxes declined by $8 million, resulting in almost $0.01 per share of earnings in the quarter. The company's effective income tax rate decreased to approximately 30.5 percent in the first quarter of 2002, compared to 36.5 percent in the 2001 first quarter.
During the 2002 first quarter, the company sold four hotels for approximately $100 million. The company ended the first quarter owning just six open hotels. Contingent liabilities at the end of the quarter remained essentially flat compared to year end 2001 levels.
Outlook
Given the strong margin performance in our lodging business, lower than
anticipated average borrowings and corporate expenses, and higher than
expected volumes from synthetic fuel, the company believes that earnings per
share of $1.65 to $1.70 is achievable in 2002.
This outlook assumes an
average REVPAR decline of 2 to 3 percent and a house profit margin decline of
approximately 1 to 2 percentage points.
The following table provides updated
quarterly earnings guidance for the remainder of 2002.
2002 Fully Diluted Earnings Per Share
First Quarter Actual $.32
Second Quarter Estimate $.41 to $.43
Third Quarter Estimate $.41 to $.43
Fourth Quarter Estimate $.51 to $.53
Full Year 2002 Estimate $1.65 to $1.70
The company expects investment spending in 2002 to include approximately $50 million for maintenance spending and approximately $300 million for new company-developed hotels. We anticipate timeshare spending to total approximately $200 million. We expect to invest $300 million in equity slivers, mezzanine financing and mortgage loans for hotels developed by our partners.
We invite individual investors and members of the news media to listen to our first quarter earnings conference call on April 18 at 10 a.m. ET on the Internet. Go to web page http://www.marriott.com/investor and click on "recent investor news." A recording of the call will be available by telephone until April 25, 2002 at 8:00 p.m. ET by calling (719) 457-0820, reservation number 459717.
Note: This press release contains "forward-looking statements" within the meaning of federal securities laws, including REVPAR, profit margin and earning trends; statements concerning the number of lodging properties expected to be added in future years; expected investment spending; anticipated results from synthetic fuel operations; and similar statements concerning anticipated future events and expectations that are not historical facts. We caution you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including the duration and severity of the current economic slowdown and the pace of the lodging industry's recovery from the terrorist attacks of September 11, 2001; supply and demand changes for hotel rooms, vacation ownership intervals, corporate housing and senior living accommodations; competitive conditions in the lodging, senior living and food service distribution industries; relationships with clients and property owners; and the availability of capital to finance growth, any of which could cause actual results to differ materially from those expressed in or implied by the statements herein. These statements are made as of the date of this press release, and we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
MARRIOTT INTERNATIONAL, INC. (NYSE: MAR - news), a leading worldwide hospitality company celebrating its 75th Anniversary in 2002, has nearly 2,600 operating units in the United States and 64 other countries and territories. Marriott International operates and franchises hotels under the Marriott, JW Marriott, The Ritz-Carlton, Renaissance, Residence Inn, Courtyard, TownePlace Suites, Fairfield Inn, SpringHill Suites and Ramada International brand names; develops and operates vacation ownership resorts under the Marriott Vacation Club International, Horizons, The Ritz-Carlton Club and Marriott Grand Residence Club brands; operates Marriott Executive Apartments; provides furnished corporate housing through its Marriott ExecuStay division; and operates conference centers. Other Marriott businesses include senior living communities and services, wholesale food distribution and synthetic fuel. The company is headquartered in Washington, D.C., and has approximately 142,500 employees. In fiscal year 2001, Marriott International reported systemwide sales of $20 billion. For more information or reservations, please visit our web site at http://www.marriott.com.
MARRIOTT INTERNATIONAL, INC.
Financial Highlights
12 Weeks Ended March 22, 2002
(in millions, except per share amounts)
Senior
Living Distribution Synthetic
Sales Lodging Services Services Fuel Total
Management and
franchise fees $168 $8 $-- $-- $176
Other 373 82 376 5 836
---- ---- ---- ---- ----
541 90 376 5 1,012
Other revenues from
managed and
franchised properties 1,262 90 -- -- 1,352
----- ----- ----- ----- -----
1,803 180 376 5 2,364
----- ----- ----- ----- -----
Operating costs and expenses
Operating costs 388 84 382 11 865
Other costs from
managed and
franchised properties 1,262 90 -- -- 1,352
----- ----- ----- ----- -----
1,650 174 382 11 2,217
------ ----- ----- ----- ------
Operating profit (loss)
before corporate
expenses and interest $153 $6 $(6) $(6) 147
===== ===== ===== =====
Corporate expenses (29)
Interest expense (19)
Interest income 19
------
Income before income taxes 118
Provision for income taxes (36)
------
Net income $82
======
Basic Earnings Per Share $0.34
======
Diluted Earnings Per Share $0.32
======
Diluted Shares 254.3
12 Weeks Ended March 23, 2001
(in millions, except per share amounts)
Senior
Living Distribution Synthetic Better/
Sales Lodging Services Services Fuel Total (Worse)
Management and
franchise fees $196 $8 $-- $-- $204
Other 405 76 361 -- 842
----- ----- ----- ----- -----
601 84 361 -- 1,046
Other revenues from
managed and
franchised properties 1,334 81 -- -- 1,415
----- ----- ----- ----- -----
1,935 165 361 -- 2,461 -4%
----- ----- ----- ----- -----
Operating costs and expenses
Operating costs 378 83 359 -- 820
Other costs from
managed and franchised
properties 1,334 81 -- -- 1,415
----- ----- ----- ---- -----
1,712 164 359 -- 2,235 1%
----- ----- ----- ---- -----
Operating profit (loss)
before corporate
expenses and interest $223 $1 $2 $-- 226 -35%
===== ===== ===== ====
Corporate expenses (30)
Interest expense (22)
Interest income 16
-----
Income before income taxes 190 -38%
Provision for income taxes (69)
-----
Net income $121 -32%
======
Basic Earnings Per Share $0.50 -32%
======
Diluted Earnings Per Share $0.47 -32%
======
Diluted Shares 257.6
MARRIOTT INTERNATIONAL, INC.
Business Segment Results
2002 First Quarter
Twelve weeks ended
($ in millions) March 22, 2002 March 23, 2001
Sales
Full-Service $1,221 $1,349
Select-Service 207 213
Timeshare 254 234
Extended-Stay 121 139
------- -------
Total Lodging 1,803 1,935
Senior Living Services 180 165
Distribution Services 376 361
Synthetic Fuel 5 --
------- -------
$2,364 $2,461
======= =======
Operating profit (loss) before
corporate expenses and interest
Full-Service $86 $117
Select-Service 28 44
Timeshare 31 43
Extended-Stay 8 19
------ ------
Total Lodging 153 223
Senior Living Services 6 1
Distribution Services (6) 2
Synthetic Fuel (6) --
------- ------
$147 $226
======= ======
MARRIOTT INTERNATIONAL, INC.
Key Lodging Statistics
First Quarter
REVPAR Occupancy Average Daily Rate
Brand vs.2001 2002 vs.2001 2002 vs.2001
Marriott Hotels,
Resorts and Suites -12.7% 69.4% -3.5% pts. $142.25 -8.2%
The Ritz-Carlton -14.0% 67.1% -1.9% pts. $248.86 -11.6%
Renaissance Hotels,
Resorts and Suites -15.3% 64.5% -5.7% pts. $134.70 -7.8%
Domestic Composite -
Full-Service (1) -13.2% 68.5% -3.8% pts. $147.39 -8.4%
Residence Inn -15.6% 74.2% -5.0% pts. $99.38 -10.0%
Courtyard -15.1% 65.8% -7.2% pts. $97.01 -5.8%
Fairfield Inn -5.2% 60.9% -2.4% pts. $63.76 -1.4%
TownePlace Suites -5.8% 69.9% +3.3% pts. $62.67 -10.2%
SpringHill Suites -3.4% 67.7% +1.6% pts. $79.92 -5.7%
Domestic Composite - Select-
Service & Extended-Stay (2) -12.0% 66.0% -3.9% pts. $83.49 -6.7%
Domestic Composite - All (3) -12.7% 67.2% -3.8% pts. $113.43 -7.7%
Note: Statistics for above tables are based on comparable company-operated
U.S. properties, except for Fairfield Inn, TownePlace Suites, and
SpringHill Suites, which data also include franchised units.
Number of Number of
Properties Rooms/Suites
March vs.March March vs. March
Brand 2002 2001 2002 2001
Full-Service Lodging
Marriott Hotels, Resorts and Suites 428 +27 159,320 +7,038
The Ritz-Carlton 46 +7 15,365 +2,119
Renaissance Hotels, Resorts and Suites 124 +11 45,130 +3,638
Ramada International 137 +75 19,890 +8,533
Select-Service Lodging
Courtyard 562 +33 80,537 +5,488
Fairfield Inn 487 +40 46,748 +4,388
SpringHill Suites 87 +22 9,975 +3,019
Extended-Stay Lodging
Residence Inn 395 +33 46,698 +4,392
TownePlace Suites 99 +10 10,260 +1,186
Marriott Executive Apartments 12 +3 2,068 +335
Timeshare
Marriott Vacation Club International 44 +1 6,287 +886
Horizons 2 -- 146 --
The Ritz-Carlton Club 4 +2 144 +74
Marriott Grand Residence Club 1 +1 199 +199
-----------------------------------
Total 2,428 +265 442,767 +41,295
===================================
(1) Full-service composite statistics include domestic managed comparable
properties for the Marriott Hotels, Resorts and Suites, Renaissance
Hotels, Resorts and Suites and The Ritz-Carlton brands. Statistics
exclude non-U.S. properties.
(2) Select-Service and Extended-Stay composite statistics include domestic
managed comparable properties for the Courtyard, and Residence Inn
brands, and domestic managed and franchised comparable properties for
the TownePlace Suites, Fairfield Inn and SpringHill Suites brands.
Statistics exclude non-U.S. properties.
(3) Composite statistics include domestic managed comparable properties
for the Marriott Hotels, Resorts and Suites, Renaissance Hotels,
Resorts and Suites, The Ritz-Carlton, Courtyard, and Residence Inn
brands, and domestic managed and franchised comparable properties for
the TownePlace Suites, Fairfield Inn and SpringHill Suites brands.
Statistics exclude non-U.S. properties.