Wyndham Worldwide not looking to tap debt market or deleverage

By Andrea Heisinger

New York, Oct. 26 - Wyndham Worldwide Corp. is focused on common stock repurchases rather than debt in 2011, company officials said during a third-quarter earnings call on Wednesday.

The company has a "well-stacked capital deck with no significant near-term maturities," chairman and chief executive officer Steven Holmes said during the call.

Wyndham had earnings per share of 94 cents versus 68 cents in the third quarter of 2010, which was a 38% increase. Revenue grew 14% from the same quarter a year ago to $1.2 billion.

Free cash flow was $699 million, compared with $564 million for the same quarter in 2010, said executive vice president and chief financial officer Thomas Conforti.

"It's clear that the free cash flow generated for the year will exceed expectations," he said. About $725 million of cash flow is expected for all of 2011.

"Cash is the great enabler," Conforti said. "The current leverage ratio reflects an investment-grade profile. We will seek to maintain the current leverage ratio. This means as we group EBITDA, we will prudently add debt."

Wyndham is split-rated with a high-yield rating from Moody's Investors Service and an investment-grade rating from Standard & Poor's, Conforti said, adding that it's important to retain the investment-grade rating in the current environment.

While answering a question about the company's debt-to-capital ratio, Conforti said that the company "doesn't believe there's a need to delever."

The ratio now is between 3 and 3.3 times EBITDA, he said.

"We could seek to add a couple hundred million dollars in debt to our balance sheet," he said. "We have ample cash flow and ample levers to pull if we need to sustain or enhance that cash flow without impacting the momentum of our business."

The hospitality chain is based in Parsippany, N.J.

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