10-QPeriod: Q1 FY2013

MARRIOTT INTERNATIONAL INC /MD/ Quarterly Report for Q1 Ended Mar 31, 2013

Filed May 2, 2013For Securities:MAR

Summary

Marriott International Inc. reported strong financial performance for the first quarter of 2013, with net income increasing by 30.8% to $136 million compared to the same period in the prior year. Diluted earnings per share also saw a significant rise of 43.2% to $0.43. This growth was driven by a 23% increase in total revenues, largely due to a substantial rise in cost reimbursements and improved management, franchise, and incentive fees. The company benefited from a longer reporting period this quarter (93 days vs. 84 days in the prior year), which contributed an estimated $37 million to fee revenues and $23 million to operating income. Operationally, the lodging business showed continued improvement with a 4.6% increase in worldwide systemwide RevPAR. Luxury and full-service properties performed particularly well, though corporate group demand saw some dampening effects from economic uncertainties. Marriott also continued to expand its global footprint, adding 5,257 rooms to its system in the quarter and maintaining a robust development pipeline. The company's liquidity remains strong, supported by its credit facilities and operating cash flows, allowing for continued investment in growth and shareholder returns, including a dividend payment of $0.13 per share.

Financial Highlights

49 data points
Beta

Revenue

$3.14B

Net Income

$136.00M

4.3% Net Margin

EPS (Diluted)

$0.43

Total Assets

$6.52B

Cash & Equivalents

$221.00M

Free Cash Flow

$48.00M

Financial Statements
Beta
Revenue$3.14B
Operating Expenses$2.92B
Operating Income$226.00M
Interest Expense$31.00M
Net Income$136.00M
EPS (Basic)$0.44
EPS (Diluted)$0.43
Shares Outstanding (Basic)311.80M
Shares Outstanding (Diluted)320.00M

Key Highlights

  • 1Net income increased by 30.8% to $136 million and diluted EPS rose 43.2% to $0.43 in Q1 2013.
  • 2Total revenues grew by 23% to $3,142 million, driven by higher cost reimbursements and increased management, franchise, and incentive fees.
  • 3Worldwide systemwide RevPAR increased by 4.6%, indicating a strengthening lodging market.
  • 4The company added 5,257 net new rooms to its system in the quarter, reflecting ongoing global expansion.
  • 5Operating income increased by $51 million to $226 million, benefiting from revenue growth and operational efficiencies.
  • 6Cash and cash equivalents increased by $133 million to $221 million, demonstrating strong liquidity.
  • 7Marriott declared and paid a quarterly cash dividend of $0.13 per share.

Frequently Asked Questions

The primary driver of the revenue increase was a substantial rise in cost reimbursements, which grew by $513 million. This was supplemented by increases in base management fees ($29 million), franchise fees ($25 million), and incentive management fees ($16 million). The company also noted that a longer reporting period (93 days in Q1 2013 vs. 84 days in Q1 2012) contributed approximately $37 million to fee revenues.

Marriott's lodging business showed continued improvement. Comparable worldwide systemwide RevPAR increased by 4.6%, with average daily rates up 3.8% and occupancy up 0.6 percentage points. Luxury and full-service properties saw strong demand, while international markets showed mixed performance with some areas of softness, particularly in Europe and parts of Asia, contrasted by strong performance in Thailand and Indonesia. Corporate group demand was somewhat constrained by economic uncertainties.

Marriott's liquidity remains strong, with cash and cash equivalents increasing to $221 million. The company has available borrowing capacity of $732 million under its credit facilities. It continues to execute its growth strategy through investments in new properties and renovations, while also returning capital to shareholders through dividends and share repurchases. The company repaid $402 million of long-term debt, including the maturity of its Series J Senior Notes.

Long-term debt increased by $320 million to $3,255 million, primarily due to a $737 million increase in commercial paper borrowings, partially offset by the $400 million retirement of Series J Senior Notes. The company also has a $1,750 million revolving credit facility expiring in 2016, which supports its commercial paper program and general corporate needs. Future debt payments are well-scheduled, and the company has access to capital markets and its credit facility to meet its obligations.