GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

Marriott International Inc. Reports Operating Results (10-Q)

July 12, 2012 | About:
10qk

10qk

18 followers
Marriott International Inc. (MAR) filed Quarterly Report for the period ended 2012-06-15.

Marriott International, Inc. has a market cap of $13.04 billion; its shares were traded at around $36.05 with a P/E ratio of 27.8 and P/S ratio of 1.1. The dividend yield of Marriott International, Inc. stocks is 1.3%.

Highlight of Business Operations:

Twelve Weeks. Net income increased by $8 million to $143 million in the second quarter of 2012 from $135 million in the second quarter of 2011, and diluted earnings per share increased by $0.05 per share (14 percent) to $0.42 per share from $0.37 per share in the second quarter of 2011. As discussed in more detail in the preceding sections beginning with “Operating Income,” the $8 million increase in net income compared to the year-ago quarter was due to higher owned, leased, corporate housing, and other revenue net of direct expenses ($32 million), higher franchise fees across our lodging business ($11 million), higher incentive management fees across our lodging business ($6 million), higher base management fees across our lodging business ($5 million), and higher gains and other income across our lodging business ($3 million). These increases were partially offset by higher general, administrative, and other expenses across our lodging business ($20 million), the income before taxes impact of the spin-off ($12 million), higher interest expense across our lodging business ($9 million), and higher equity in losses ($8 million).

Twenty-four Weeks. Net income increased by $11 million to $247 million in the first half of 2012 from $236 million in the first half of 2011, and diluted earnings per share increased by $0.09 per share (14 percent) to $0.72 per share from $0.63 per share in the first half of 2011. As discussed in more detail in the preceding sections beginning with “Operating Income,” the $11 million increase in net income compared to the prior year was due to higher owned, leased, corporate housing, and other revenue net of direct expenses ($34 million), higher franchise fees across our lodging business ($21 million), higher incentive management fees across our lodging business ($14 million), lower income taxes ($8 million), higher base management fees across our lodging business ($8 million), and higher gains and other income across our lodging business ($3 million). These increases were partially offset by the income before taxes impact of the spin-off ($33 million), higher general, administrative, and other expenses across our lodging business ($26 million), higher interest expense across our lodging business ($13 million), and higher equity in losses ($5 million).

The $21 million increase in segment results, compared to the 2011 second quarter, primarily reflected $9 million of higher owned, leased, and other revenue net of direct expenses, $7 million of higher base management and franchise fees, $4 million of higher incentive management fees, and $1 million of lower general, administrative, and other expenses. The $9 million increase in owned, leased, and other revenue net of direct expenses primarily reflected a $14 million termination fee for one property in the 2012 second quarter, partially offset by weaker results at one property driven by lower RevPAR and other miscellaneous items. Higher base management and franchise fees primarily reflected increased RevPAR and, to a lesser extent, unit growth, including properties added to the Autograph Collection. The $4 million increase in incentive management fees primarily reflected higher property-level income resulting from higher property-level revenue and margins. The $1 million decrease in general, administrative, and other expenses primarily reflected the accelerated amortization of $7 million of deferred contract acquisition costs related to a property for which we earned the $14 million termination fee, partially offset by a $5 million performance cure payment for one property in the 2011 second quarter, and other lower miscellaneous costs.

The $5 million increase in segment results, compared to the second quarter of 2011, primarily reflected $14 million of higher owned, leased, and other revenue net of direct expenses and a $2 million increase in incentive management fees, partially offset by $9 million of increased joint venture equity losses and a $4 million increase in general, administrative, and other expenses. The $14 million increase in owned, leased, and other revenue net of direct expenses primarily reflected a $6 million increase associated with our leased property in Japan (which experienced very low demand in 2011 as a result of the earthquake and tsunami and received a $2 million business interruption payment in the 2012 second quarter from a utility company) and $6 million of increased branding fees associated with the sale of real estate by others. The $2 million increase in incentive management fees primarily reflected higher net property-level income resulting from higher property-level revenue and margins at several properties and, to a lesser extent, new unit growth. The $9 million increase in joint venture equity losses reflected increased losses at one joint venture primarily related to impairment of certain underlying residential properties. The $4 million increase in general, administrative, and other expenses primarily reflected miscellaneous net cost increases in the second quarter of 2012.

As of the end of the 2012 second quarter, guarantees where we are secondarily liable increased by $48 million to $306 million, compared to $258 million at year-end 2011, and primarily reflected a $69 million increase for an operating profit guarantee and an $11 million increase for a guarantee related to one lease, partially offset by an $18 million decrease in guarantees associated with other lease obligations and lifecare bonds, a $9 million decrease in guarantees and commitments related to the spin-off of the timeshare business, and a $5 million decrease in lease obligations for which we became secondarily liable when we acquired the Renaissance Hotel Group N.V. in 1997. At the end of the 2012 second quarter, future guarantee commitment expirations are as follows: $23 million in 2012; $77 million in 2013; $71 million in 2014; $33 million in 2015; $26 million in 2016; and $76 million thereafter. See the "Guarantees" caption in Footnote No. 12 "Contingencies" for additional information on our guarantees.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 2.5/5 (2 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide