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Wyndham Worldwide Reports First Quarter 2015 Earnings

By: Wyndham Hotels & Resorts |  0 Shares     69 Reads

First Quarter Adjusted Diluted EPS Growth of 32%
Increases Full Year EPS Guidance

PARSIPPANY, N.J. - April 28, 2015 // PRNewswire // - Wyndham Worldwide Corporation (NYSE: WYN) today announced results for the three months ended March 31, 2015.

First Quarter Highlights:

• First quarter adjusted diluted earnings per share (EPS) was $1.03, an increase of 32% from adjusted diluted EPS of $0.78 in the first quarter of 2014. Reported diluted EPS was $1.00 in the first quarter of 2015, an increase of 45% from reported diluted EPS of $0.69 from the same period in 2014.

• Revenues increased 6% compared with the first quarter of 2014. In constant currency, revenues increased 9%.

• Adjusted EBITDA increased 14% compared with the first quarter of 2014. In constant currency, adjusted EBITDA increased 18%.

• During the quarter, the Company repurchased 1.7 million shares of its common stock for $150 million.   

"We are off to a strong start this year. Despite significant currency headwinds, adjusted diluted EPS increased 32% and adjusted EBITDA increased 14% in the first quarter," said Stephen P. Holmes, chairman and CEO. "All three businesses once again performed well, highlighted by strong domestic RevPAR growth at our Hotel Group, improved provision and cost of sales at Vacation Ownership and strong growth across our vacation rentals businesses. We continue to deliver strong results, allocate capital to both invest in the business and return to shareholders, and innovate to build a strong competitive position going forward."

FIRST QUARTER 2015 OPERATING RESULTS

First quarter revenues were $1.3 billion, an increase of 6% from the prior year period. In constant currency revenues increased 9%, reflecting growth across the Company's business segments.

Adjusted net income was $126 million, or $1.03 per diluted share, compared with $102 million, or $0.78 per diluted share for the same period in 2014. The increase reflects stronger financial results in all of the Company's businesses. EPS also benefited from the Company's share repurchase program, which decreased weighted average diluted share count by 6% year-over-year.

Reported net income for the first quarter of 2015 was $122 million, or $1.00 per diluted share, compared with $90 million, or $0.69 per diluted share, for the first quarter of 2014. Reported net income in both periods reflects several items excluded from adjusted net income. The net result of these items unfavorably impacted first quarter 2015 net income by $4 million and unfavorably impacted first quarter 2014 net income by $12 million. Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.

Free cash flow was $197 million for the three months ended March 31, 2015, compared with $269 million for the same period in 2014. The decline in free cash flow reflects the timing of working capital including inventory spending. The Company defines free cash flow as net cash provided by operating activities less capital expenditures. For the three months ended March 31, 2015, net cash provided by operating activities was $253 million, compared with $315 million in the prior year period. The Company expects free cash flow for the full year 2015 of approximately $800 million compared with $749 million in free cash flow in 2014.

BUSINESS UNIT RESULTS

Lodging (Wyndham Hotel Group)
Revenues were $292 million in the first quarter of 2015, a 23% increase over the first quarter of 2014. Excluding an acquisition and in constant currency, revenues increased 14%, reflecting higher domestic RevPAR and worldwide room growth as well as incremental global conference fees.

Total system-wide RevPAR increased 1.7% compared with the first quarter of 2014. Domestic RevPAR increased 7.7%, but was partially offset by a 9.8% decline in international RevPAR. In constant currency and excluding acquisitions, total system-wide RevPAR increased 4.0%.

Adjusted EBITDA for the first quarter of 2015 was $79 million, a 16% increase compared with the first quarter of 2014. The increase primarily reflects higher domestic RevPAR and worldwide room growth as well as higher inter-segment licensing fees for use of the Wyndham brand trade name.

As of March 31, 2015, the Company's hotel system consisted of over 7,670 properties and over 667,000 rooms, a 3.2% room increase compared with the first quarter of 2014. The development pipeline included 925 hotels and approximately 116,000 rooms, of which 58% were international and 62% were new construction.

Vacation Exchange and Rentals (Wyndham Exchange & Rentals)
Revenues were $369 million in the first quarter of 2015, a 3% decrease over the first quarter of 2014. In constant currency, revenues increased 5%.

Exchange revenues were $185 million, a 1% decrease compared with the first quarter of 2014. In constant currency, exchange revenues increased 2%, as the average number of members increased 2.5% and exchange revenue per member was flat.

Vacation rental revenues were $166 million, a 6% decrease compared to the first quarter of 2014. In constant currency, vacation rental revenues were up 8%, reflecting a 7.0% increase in transaction volume and a 0.9% increase in average net price per vacation rental.

Adjusted EBITDA for the first quarter of 2015 was $104 million, a 9% increase compared with the first quarter of 2014. On a currency-neutral basis and excluding the divestiture of a business, adjusted EBITDA increased 9% compared with the prior year period primarily reflecting higher revenue and a $4 million reserve reversal resulting from a favorable ruling associated with value-added taxes.

Vacation Ownership (Wyndham Vacation Ownership)
Revenues were $617 million in the first quarter of 2015, a 4% increase over the first quarter of 2014.

Net VOI sales increased 11%, primarily reflecting a lower loan loss provision and the recognition of deferred revenues. Gross VOI sales were $390 million in the first quarter of 2015, a decrease of 5% compared with the first quarter of 2014, reflecting a 4.2% decline in volume per guest (VPG) and a 1.2% decline in tour flow. In constant currency, VPG declined 3.1% primarily reflecting a higher mix of new owner tours, which generally have a lower VPG than tours to existing owners.

Adjusted EBITDA for the first quarter of 2015 was $130 million, an increase of 13% compared with the first quarter of 2014, primarily reflecting the net revenue increase and lower cost of sales.

Other Items

• The Company repurchased 1.7 million shares of common stock for $150 million during the first quarter of 2015.  From April 1 through April 27, 2015, the Company repurchased an additional 0.5 million shares for $45 million.  The Company's remaining share repurchase authorization totals$821 million as of April 27, 2015.
• Reported net interest expense in the first quarter of 2015 was $23 million, compared with $25 million in the first quarter of 2014. 

Balance Sheet Information as of March 31, 2015:

• Cash and cash equivalents of $180 million, compared with $183 million at December 31, 2014
• Vacation ownership contract receivables, net, of $2.6 billion, compared with $2.7 billion at December 31, 2014
• Vacation ownership and other inventory of $1.2 billion, unchanged from December 31, 2014
• Securitized vacation ownership debt of $2.2 billion, unchanged from December 31, 2014
• Long-term debt of $3.0 billion, compared with $2.9 billion at December 31, 2014. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.1 billion as of March 31, 2015, compared to $1.3 billion from December 31, 2014

A schedule of debt is included in Table 5 of this press release.

Outlook

Note to Editors:  The guidance excludes possible future share repurchases, while analysts' estimates often include share repurchases.  This results in discrepancies between Company guidance and database consensus forecasts.

For the full year 2015, the Company reiterates the following guidance:

• Revenues of approximately $5.450 - $5.550 billion.
• Adjusted EBITDA of approximately $1.285 - $1.315 billion. Guidance reflects a $42 million adverse impact from foreign exchange compared with 2014 full year results.

For the full year 2015, the Company updates the following guidance:

• Adjusted diluted EPS of approximately $4.81 - $4.96 based on a diluted share count of 121.4 million, up from $4.75 - $4.90 based on a diluted share count of 123 million.

Conference Call Information

Wyndham Worldwide Corporation will hold a conference call with investors to discuss the Company's results, outlook and guidance on Tuesday, April 28, 2015 at 8:30 a.m. EDT. Listeners may access the webcast live through the Company's website at www.wyndhamworldwide.com/investors. An archive of this webcast will be available on the website for approximately 90 days beginning at noon EDT on April 28, 2015. The conference call may also be accessed by dialing 800-369-2125 and providing the passcode "WYNDHAM." Listeners are urged to call at least 10 minutes prior to the scheduled start time. A telephone replay will be available for approximately 90 days beginning at noon EDT on April 28, 2015, at 800-388-4923.

The Company will post guidance information on its website following the conference call.

Presentation of Financial Information

Financial information discussed in this press release includes non-GAAP measures, which include or exclude certain items. These non-GAAP measures differ from reported GAAP results and are intended to illustrate what management believes are relevant period-over-period comparisons and are helpful to investors as an additional tool for further understanding and assessing the Company's ongoing core operating performance. Exclusion of items in our non-GAAP presentation should not be considered an inference that these items are unusual, infrequent or non-recurring. A complete reconciliation of reported GAAP results to the comparable non-GAAP information appears in the financial tables section of the press release. It is not practicable to provide a reconciliation of forecasted adjusted EBITDA and adjusted EPS to the most directly comparable GAAP measures because certain items cannot be reasonably estimated or predicted at this time. Any such items could be significant to the Company's reported results.

About Wyndham Worldwide Corporation

One of the world's largest hospitality companies, Wyndham Worldwide (NYSE: WYN) provides a wide range of hospitality services and products through its global portfolio of world-renowned brands. The world's largest hotel company based on the number of properties, Wyndham Hotel Group is home to many of the world's best-known hotel brands, with over 7,670 franchised hotels and over 667,000 hotel rooms worldwide. Wyndham Exchange & Rentals is the worldwide leader in vacation exchange and the world's largest professionally managed vacation rentals business, providing more than 5 million leisure-bound families annually with access to over 109,000 vacation properties in over 100 countries through its prominent exchange and vacation rental brands. The industry and timeshare ownership market leader, Wyndham Vacation Ownership develops, markets, and sells vacation ownership interests and provides consumer financing to owners through its network of 210 vacation ownership resorts serving approximately 904,000 owners throughout the United States, Canada, Mexico, the Caribbean, and the South Pacific. Based in Parsippany, NJ, Wyndham Worldwide employs over 34,000 associates globally. For more information, please visit www.wyndhamworldwide.com.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, conveying management's expectations as to the future based on plans, estimates and projections at the time the Company makes the statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements contained in this press release include statements related to the Company's revenues, earnings, cash flow and related financial and operating measures.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Factors that could cause actual results to differ materially from those in the forward-looking statements include general economic conditions, the performance of the financial and credit markets, the economic environment for the hospitality industry, the impact of war, terrorist activity or political strife, operating risks associated with the hotel, vacation exchange and rentals and vacation ownership businesses, as well as those described in the Company's Annual Report on Form 10-K, filed with the SEC on February 13, 2015. Except for the Company's ongoing obligations to disclose material information under the federal securities laws, it undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

Table 1
Wyndham Worldwide Corporation
OPERATING RESULTS OF REPORTABLE SEGMENTS
(In millions)
In addition to other measures, management evaluates the operating results of each of its reportable segments based upon net revenues and "EBITDA", which is defined as net income before depreciation and amortization, interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing interest) and income taxes, each of which is presented on the Company's Consolidated Statements of Income.  The Company believes that EBITDA is a useful measure of performance for the Company's segments which when considered with GAAP measures, gives a more complete understanding of its operating performance.  The Company's presentation of EBITDA may not be comparable to similarly-titled measures used by other companies.
The following tables summarize net revenues and EBITDA for the Company's reportable segments, as well as reconcile EBITDA to Net income for the three months ended March 31, 2015 and 2014:
		Three Months Ended March 31,
		2015						2014
		Net Revenues			EBITDA			Net Revenues			EBITDA
Lodging		$	292		$	76		$	237		$	64
Vacation Exchange and Rentals			369			105			379			85
Vacation Ownership			617			130			593			115
Total Reportable Segments			1,278			311			1,209			264
Corporate and Other (a)			(16)			(34)			(16)			(34)
Total Company		$	1,262		$	277		$	1,193		$	230
Reconciliation of EBITDA to Net income
					Three Months Ended March 31,
					2015						2014
EBITDA					$	277					$	230
Depreciation and amortization						56						56
Interest expense						26						27
Interest income						(3)						(2)
Income before income taxes						198						149
Provision for income taxes						76						59
Net income					$	122					$	90
__________
(a)    Includes the elimination of transactions between segments.
The following tables summarize net revenues and adjusted EBITDA for the Company's reportable segments for the three months ended March 31, 2015 and 2014 (for a description of adjustments by segment, see Table 7):
		Three Months Ended March 31,
		2015						2014
		Net Revenues			Adjusted  EBITDA			Net Revenues			Adjusted  EBITDA
Lodging		$	292		$	79		$	237		$	68
Vacation Exchange and Rentals			369			104			379			95
Vacation Ownership			617			130			593			115
Total Reportable Segments			1,278			313			1,209			278
Corporate and Other			(16)			(34)			(16)			(34)
Total Company		$	1,262		$	279		$	1,193		$	244

 

							Table 2
Wyndham Worldwide Corporation
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
			Three Months Ended
			March 31,
			2015			2014
Net revenues
	Service and membership fees		$	599		$	590
	Vacation ownership interest sales			336			303
	Franchise fees			147			127
	Consumer financing			104			105
	Other			76			68
Net revenues				1,262			1,193
Expenses
	Operating			564			534
	Cost of vacation ownership interests			33			39
	Consumer financing interest			18			17
	Marketing and reservation			195			181
	General and administrative			181			195
	Restructuring			(1)			-
	Depreciation and amortization			56			56
Total expenses				1,046			1,022
Operating income				216			171
Other income, net				(5)			(3)
Interest expense				26			27
Interest income				(3)			(2)
Income before income taxes				198			149
Provision for income taxes				76			59
Net income			$	122		$	90
Earnings per share
	Basic		$	1.01		$	0.70
	Diluted			1.00			0.69
Weighted average shares outstanding
	Basic			121			128
	Diluted			122			130
__________
Note: For a description of adjustments to Net Income, see Table 8.

 

															Table 3
															(1 of 2)
Wyndham Worldwide Corporation
OPERATING STATISTICS
The following operating statistics are the drivers of our revenues and therefore provide an enhanced understanding of our businesses:
					Year		Q1		Q2		Q3		Q4		Full Year
Lodging (a)
	Number of Rooms				2015		667,400		N/A		N/A		N/A		N/A
					2014		646,900		650,200		655,300		660,800		N/A
					2013		631,800		635,100		638,300		645,400		N/A
					2012		609,300		608,300		618,100		627,400		N/A
	RevPAR				2015	$	32.84		N/A		N/A		N/A		N/A
					2014	$	32.30	$	40.11	$	43.71	$	34.06	$	37.57
					2013	$	31.05	$	38.00	$	41.78	$	33.07	$	36.00
					2012	$	29.73	$	37.23	$	40.39	$	31.86	$	34.80
Vacation Exchange and Rentals
	Average Number of Members (in 000s)				2015		3,822		N/A		N/A		N/A		N/A
					2014		3,727		3,748		3,777		3,808		3,765
					2013		3,668		3,686		3,711		3,728		3,698
					2012		3,684		3,670		3,672		3,670		3,674
	Exchange Revenue Per Member				2015	$	194.06		N/A		N/A		N/A		N/A
					2014	$	200.78	$	179.17	$	171.77	$	157.24	$	177.12
					2013	$	210.96	$	182.42	$	169.95	$	161.21	$	181.02
					2012	$	204.56	$	177.07	$	171.14	$	165.86	$	179.68
	Vacation Rental Transactions (in 000s) (a)				2015		459		N/A		N/A		N/A		N/A
					2014		429		376		455		293		1,552
					2013		423		355		433		273		1,483
					2012		418		325		390		259		1,392
	Average Net Price Per Vacation Rental(a)				2015	$	361.20		N/A		N/A		N/A		N/A
					2014	$	410.04	$	577.13	$	727.40	$	492.25	$	558.95
					2013	$	392.64	$	540.38	$	677.81	$	506.62	$	532.11
					2012	$	379.40	$	524.40	$	635.44	$	484.69	$	504.55
Vacation Ownership (a)
	Gross Vacation Ownership Interest (VOI) Sales (in 000s) (b)				2015	$	390,000		N/A		N/A		N/A		N/A
					2014	$	410,000	$	496,000	$	513,000	$	470,000	$	1,889,000
					2013	$	384,000	$	481,000	$	536,000	$	488,000	$	1,889,000
					2012	$	384,000	$	460,000	$	502,000	$	435,000	$	1,781,000
	Tours (in 000s) (c)				2015		168		N/A		N/A		N/A		N/A
					2014		170		208		225		191		794
					2013		163		206		225		195		789
					2012		148		186		207		183		724
	Volume Per Guest (VPG) (c)				2015	$	2,177		N/A		N/A		N/A		N/A
					2014	$	2,272	$	2,280	$	2,158	$	2,336	$	2,257
					2013	$	2,211	$	2,256	$	2,278	$	2,370	$	2,281
					2012	$	2,414	$	2,361	$	2,315	$	2,225	$	2,324
Note: Full year amounts may not add across due to rounding.
(a)	Includes the impact of acquisitions/dispositions from the acquisition/disposition dates forward. Therefore, the operating statistics are not presented on a comparable basis.
(b)	Includes Gross VOI sales under the Company's Wyndham Asset Affiliate Model (WAAM) Just-in-Time beginning in the second quarter of 2012 (see Table 9 for a reconciliation of Gross VOI sales to vacation ownership interest sales).
(c)	Includes the impact of WAAM Just-in-Time related tours beginning in the second quarter of 2012.
ADDITIONAL DATA
					Year		Q1		Q2		Q3		Q4		Full Year
Lodging
	Number of Properties				2015		7,670		N/A		N/A		N/A		N/A
					2014		7,500		7,540		7,590		7,650		N/A
					2013		7,380		7,410		7,440		7,490		N/A
					2012		7,150		7,170		7,260		7,340		N/A
Vacation Ownership
	Provision for Loan Losses (in 000s) (*)				2015	$	46,000		N/A		N/A		N/A		N/A
					2014	$	60,000	$	70,000	$	70,000	$	60,000	$	260,000
					2013	$	84,000	$	90,000	$	102,000	$	73,000	$	349,000
					2012	$	96,000	$	100,000	$	124,000	$	89,000	$	409,000
Note: Full year amounts may not add across due to rounding.
(*)	Represents provision for estimated losses on vacation ownership contract receivables originated during the period, which is recorded as a contra revenue to vacation ownership interest sales on the Consolidated Statements of Income.

Wyndham Worldwide Corporation

OPERATING STATISTICS

GLOSSARY OF TERMS

Lodging

Number of Rooms: Represents the number of rooms at lodging properties at the end of the period which are either (i) under franchise and/or management agreements, or company owned and (ii) properties under affiliation agreements for which the Company receives a fee for reservation and/or other services provided.

Average Occupancy Rate: Represents the percentage of available rooms occupied during the period.

Average Daily Rate (ADR): Represents the average rate charged for renting a lodging room for one day.

RevPAR: Represents revenue per available room and is calculated by multiplying average occupancy rate by ADR. Comparable RevPAR represents RevPAR of hotels which are included in both periods.

Vacation Exchange and Rentals

Average Number of Members: Represents members in our vacation exchange programs who paid annual membership dues as of the end of the period or who are within the allowed grace period. For additional fees, such participants are entitled to exchange intervals for intervals at other properties affiliated with the Company's vacation exchange business. In addition, certain participants may exchange intervals for other leisure-related services and products.

Exchange Revenue Per Member: Represents total annualized revenues generated from fees associated with memberships, exchange transactions, member-related rentals and other servicing for the period divided by the average number of vacation exchange members during the period.

Vacation Rental Transactions: Represents the number of transactions that are generated during the period in connection with customers booking their vacation rental stays through the Company. One rental transaction is recorded for each standard one-week rental.

Average Net Price Per Vacation Rental: Represents the net rental price generated from renting vacation properties to customers and other related rental servicing fees during the period divided by the number of vacation rental transactions during the period.

Vacation Ownership

Gross Vacation Ownership Interest Sales: Represents sales of vacation ownership interest (VOIs), including WAAM sales, before the net effect of percentage-of-completion accounting and loan loss provisions. See Table 9 for a reconciliation of Gross VOI sales to vacation ownership interest sales.

Tours: Represents the number of tours taken by guests in our efforts to sell VOIs.

Volume per Guest (VPG): Represents Gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) divided by the number of tours. The Company has excluded non-tour upgrade sales in the calculation of VPG because non-tour upgrade sales are generated by a different marketing channel. See Table 9 for a detail of tele-sales upgrades for 2012-2015.

General

Constant Currency: Represents a comparison eliminating the effects of foreign exchange rate fluctuations between periods (foreign currency translation).

Currency-Neutral: Represents a comparison eliminating the effects of foreign exchange rate fluctuations between periods (foreign currency translation) and the impact caused by any foreign exchange related activities (i.e., hedges, balance sheet remeasurements and/or adjustments).

																							Table 4
Wyndham Worldwide Corporation
REVENUE DETAIL BY REPORTABLE SEGMENT
(In millions)
			2015											2014
				Q1		Q2		Q3		Q4		Year			Q1		Q2		Q3		Q4		Year
Lodging
	Royalties and Franchise Fees		$	74		N/A		N/A		N/A		N/A		$	68	$	88	$	100	$	83	$	339
	Marketing, Reservation and Wyndham Rewards Revenues (a)			96		N/A		N/A		N/A		N/A			76		101		117		91		385
	Hotel Management Reimbursable Revenues (b)			61		N/A		N/A		N/A		N/A			37		39		39		39		154
	Intersegment Trademark Fees			12		N/A		N/A		N/A		N/A			9		11		11		10		41
	Owned Hotel Revenues			25		N/A		N/A		N/A		N/A			24		20		18		20		81
	Ancillary Revenues (c)			24		N/A		N/A		N/A		N/A			23		24		30		24		101
	Total Lodging			292		N/A		N/A		N/A		N/A			237		283		315		267		1,101
Vacation Exchange and Rentals
	Exchange Revenues			185		N/A		N/A		N/A		N/A			187		168		162		150		667
	Rental Revenues			166		N/A		N/A		N/A		N/A			176		217		331		144		868
	Ancillary Revenues (d)			18		N/A		N/A		N/A		N/A			16		17		19		17		69
	Total Vacation Exchange and Rentals			369		N/A		N/A		N/A		N/A			379		402		512		311		1,604
Vacation Ownership
	Vacation Ownership Interest Sales			336		N/A		N/A		N/A		N/A			303		382		415		385		1,485
	Consumer Financing			104		N/A		N/A		N/A		N/A			105		106		108		108		427
	Property Management Fees and Reimbursable Revenues			153		N/A		N/A		N/A		N/A			143		145		150		142		581
	WAAM Fee-for-Service Commissions			12		N/A		N/A		N/A		N/A			33		30		18		16		98
	Ancillary Revenues (e)			12		N/A		N/A		N/A		N/A			9		10		13		17		47
	Total Vacation Ownership			617		N/A		N/A		N/A		N/A			593		673		704		668		2,638
Total Reportable Segments			$	1,278		N/A		N/A		N/A		N/A		$	1,209	$	1,358	$	1,531	$	1,246	$	5,343
			2013											2012
				Q1		Q2		Q3		Q4		Year			Q1		Q2		Q3		Q4		Year
Lodging
	Royalties and Franchise Fees		$	64	$	79	$	91	$	75	$	309		$	62	$	80	$	88	$	71	$	301
	Marketing, Reservation and Wyndham Rewards Revenues (a)			73		92		118		83		365			68		99		98		80		345
	Hotel Management Reimbursable Revenues (b)			25		38		37		35		135			21		22		25		23		91
	Intersegment Trademark Fees			8		10		11		10		39			8		9		9		8		34
	Owned Hotel Revenues			26		20		18		19		84			8		8		7		18		41
	Ancillary Revenues (c)			26		23		22		23		95			18		15		22		23		78
	Total Lodging			222		262		297		245		1,027			185		233		249		223		890
Vacation Exchange and Rentals
	Exchange Revenues			193		168		158		150		669			188		162		157		153		660
	Rental Revenues			166		192		293		138		789			159		170		248		125		702
	Ancillary Revenues (d)			15		16		19		17		68			14		16		15		15		60
	Total Vacation Exchange and Rentals			374		376		470		305		1,526			361		348		420		293		1,422
Vacation Ownership
	Vacation Ownership Interest Sales			263		347		384		384		1,379			271		342		373		337		1,323
	Consumer Financing			105		106		107		108		426			103		102		106		110		421
	Property Management Fees			146		141		143		137		567			110		108		117		125		460
	WAAM Fee-for-Service Commissions			24		30		33		20		107			12		11		4		6		33
	Ancillary Revenues (e)			11		6		10		9		36			5		7		8		12		32
	Total Vacation Ownership			549		630		677		658		2,515			501		570		608		590		2,269
Total Reportable Segments			$	1,145	$	1,268	$	1,444	$	1,208	$	5,068		$	1,047	$	1,151	$	1,277	$	1,106	$	4,581
Note: Full year amounts may not add across due to rounding.
(a)	Marketing and reservation revenues represent fees the Company receives from franchised and managed hotels that are to be expended for marketing purposes or the operation of a centralized, brand-specific reservation system.  These fees are typically based on a percentage of the gross room revenues of each hotel.  Wyndham Rewards revenues represent fees the Company receives relating to its loyalty program.
(b)	Primarily represents payroll costs in the hotel management business that the Company pays on behalf of property owners and for which it is reimbursed by the property owners. During 2014, reimbursable revenues of $2 million in each of Q1, Q2 and Q3 and $1 million in Q4 which were charged to the Company's vacation ownership business and were eliminated in consolidation. During 2013, such amounts include reimbursable revenues of $1 million, $3 million and $2 million, in Q2, Q3 and Q4 respectively, which were charged to the Company's vacation ownership business and were eliminated in consolidation.
(c)	Primarily includes additional services provided to franchisees.
(d)	Primarily includes fees generated from programs with affiliated resorts and homeowners.
(e)	Primarily includes revenues associated with bonus points/credits that are provided as purchase incentives on VOI sales and fees generated from other non-core operations.

 

																			Table 5
Wyndham Worldwide Corporation
SCHEDULE OF DEBT
(In millions)
						March 31, 2015			December 31, 2014			September 30, 2014			June 30, 2014			March 31, 2014
Securitized vacation ownership debt (a)
Term notes						$	2,090		$	1,962		$	1,670		$	1,600		$	1,823
Bank conduit facility (b)							98			203			271			291			156
Total securitized vacation ownership debt (c)							2,188			2,165			1,941			1,891			1,979
Less: Current portion of securitized vacation ownership debt							217			214			192			187			192
Long-term securitized vacation ownership debt						$	1,971		$	1,951		$	1,749		$	1,704		$	1,787
Debt:
Revolving credit facility (due July 2020) (d)						$	14		$	25		$	18		$	16		$	10
Commercial paper (e)							346			189			237			107			184
$315 million 6.00% senior unsecured notes (due December 2016) (f)							317			317			317			318			318
$300 million 2.95% senior unsecured notes (due March 2017)							299			299			299			299			299
$14 million 5.75% senior unsecured notes (due February 2018)							14			14			14			14			14
$450 million 2.50% senior unsecured notes (due March 2018)							448			448			448			448			447
$40 million 7.375% senior unsecured notes (due March 2020)							40			40			40			40			40
$250 million 5.625% senior unsecured notes (due March 2021)							247			247			247			246			246
$650 million 4.25% senior unsecured notes (due March 2022) (g)							650			648			646			646			645
$400 million 3.90% senior unsecured notes (due March 2023) (h)							418			410			401			403			395
Capital leases							161			170			175			186			188
Other							70			81			80			99			100
Total long-term debt							3,024			2,888			2,922			2,822			2,886
Less: Current portion of long-term debt							53			47			49			50			52
Long-term debt						$	2,971		$	2,841		$	2,873		$	2,772		$	2,834
__________

 

(a)	The Company's vacation ownership contract receivables are securitized through bankruptcy-remote special purpose entities ("SPEs") that are consolidated within our financial statements. These bankruptcy-remote SPEs are legally separate from the Company. The receivables held by the bankruptcy-remote SPEs are not available to the Company's creditors and legally are not the Company's assets. Additionally, the creditors of these SPEs have no recourse to the Company for principal and interest.
(b)	Represents a non-recourse vacation ownership bank conduit facility with a term through August 2016 and borrowing capacity of $650 million. As of March 31, 2015, this facility had a remaining borrowing capacity of $552 million.
(c)	This debt is collateralized by $2,609 million, $2,629 million, $2,326 million, $2,287 million and $2,328 million of underlying vacation ownership contract receivables and related assets as of March 31, 2015, December 31, 2014, September 30, 2014, June 30, 2014 and March 31, 2014.
(d)	Represents a $1.5 billion revolving credit facility that expires in July 2020. As of March 31, 2015, the Company had $1 million of outstanding letters of credit. After considering outstanding commercial paper borrowings of $346 million, the remaining borrowing capacity was $1.1 billion as of March 31, 2015.
(e)	Represents commercial paper programs of $1.25 billion with a remaining borrowing capacity of $904 million, as of March 31, 2015.
(f)	Includes unamortized gains from the settlement of a derivative in the amount of $2 million as of March 31, 2015, December 31, 2014 and September 30, 2014 and $3 million as of June 30, 2014 and March 31, 2014.
(g)	Includes a $4 million and $3 million increase in the carrying value resulting from a fair value hedge derivative as of March 31, 2015 and December 31, 2014, respectively.
(h)	Includes a $21 million and $13 million increase in the carrying value resulting from a fair value hedge derivative as of March 31, 2015 and December 31, 2014, respectively.

 

						Table 6
Wyndham Worldwide Corporation
BRAND SYSTEM DETAILS
		As of and For the Three Months Ended March 31, 2015
Brand		Number of  Properties	Number of Rooms	Average  Occupancy Rate	Average Daily  Rate (ADR)	Average Revenue  Per Available  Room (RevPAR)
Lodging
Super 8		2,519	161,538	50.9%	$48.46	$24.66
Days Inn		1,784	144,231	45.2%	$64.08	$28.98
Ramada		840	116,409	51.5%	$74.72	$38.49
Howard Johnson		419	45,588	44.1%	$62.50	$27.59
Wyndham Hotels and Resorts		201	44,042	56.0%	$112.18	$62.85
Travelodge		422	31,025	45.5%	$62.05	$28.24
Baymont		373	30,012	47.0%	$65.21	$30.63
Knights Inn		392	24,476	44.1%	$45.16	$19.91
Microtel Inns & Suites by Wyndham		325	23,302	53.5%	$66.83	$35.73
TRYP by Wyndham		122	17,455	51.3%	$76.01	$39.02
Wingate by Wyndham		153	13,929	58.5%	$85.97	$50.33
Hawthorn Suites by Wyndham		99	9,825	64.8%	$80.39	$52.11
Dolce		24	5,530	54.4%	$131.50	$71.47
	Total Lodging	7,673	667,362	49.4%	$66.43	$32.84
Vacation Ownership
Wyndham Vacation Ownership resorts		210	23,965	N/A	N/A	N/A
	Total Wyndham Worldwide	7,883	691,327
		As of and For the Three Months Ended March 31, 2014
Brand		Number of  Properties	Number of Rooms	Average  Occupancy Rate	Average Daily  Rate (ADR)	Average Revenue  Per Available  Room (RevPAR)
Lodging
Super 8		2,413	154,270	51.5%	$48.27	$24.88
Days Inn		1,812	146,643	44.6%	$61.92	$27.61
Ramada		826	113,304	50.2%	$79.47	$39.87
Howard Johnson		449	47,303	43.6%	$61.87	$26.98
Wyndham Hotels and Resorts		170	38,565	55.3%	$112.69	$62.30
Travelodge		431	31,833	44.7%	$61.78	$27.61
Baymont		336	27,504	46.9%	$61.60	$28.89
Knights Inn		374	22,792	40.8%	$44.04	$17.97
Microtel Inns & Suites by Wyndham		313	22,425	53.7%	$62.45	$33.51
TRYP by Wyndham		114	16,283	51.4%	$85.87	$44.11
Wingate by Wyndham		161	14,722	59.1%	$83.30	$49.22
Hawthorn Suites by Wyndham		96	9,609	60.9%	$76.01	$46.33
Dream		5	989	73.8%	$189.89	$140.22
Night		3	630	59.8%	$114.63	$68.51
	Total Lodging	7,503	646,872	48.8%	$66.14	$32.30
Vacation Ownership
Wyndham Vacation Ownership resorts		192	23,530	N/A	N/A	N/A
	Total Wyndham Worldwide	7,695	670,402
_______________
NOTE: A glossary of terms is included in Table 3 (2 of 2); RevPAR may not recalculate by multiplying average occupancy rate by ADR due to rounding.

 

																Table 7
																(1 of 2)
Wyndham Worldwide Corporation
NON-GAAP RECONCILIATION
(In millions)
Three months ended March 31, 2015			Net Revenues			Reported  EBITDA			Acquisition    Costs (b)			Restructuring     Costs (c)			Adjusted  EBITDA
Lodging			$	292		$	76		$	3		$	-		$	79
Vacation Exchange and Rentals				369			105			-			(1)			104
Vacation Ownership				617			130			-			-			130
Total Reportable Segments				1,278			311			3			(1)			313
Corporate and Other (a)				(16)			(34)			-			-			(34)
Total Company			$	1,262		$	277		$	3		$	(1)		$	279
________________
(a)	Includes the elimination of transactions between segments.
(b)	Relates to costs incurred in connection with the acquisition of Dolce Hotels and Resorts (January 2015).
(c)	Relates to the reversal of a portion of the restructuring reserve established during the fourth quarter of 2014.

 

																												Table 7
																												(2 of 2)
Wyndham Worldwide Corporation
NON-GAAP RECONCILIATION
(In millions)
Three months ended March 31, 2014			Net Revenues			Reported EBITDA			Executive Departure Costs			Venezuela  Currency      Devaluation(b)			VAT    Adjustment(c)			Restructuring Costs (d)			Loss on Sale  and Asset     Impairments(e)			Legacy     Adjustments(f)			Adjusted  EBITDA
Lodging			$	237		$	64		$	4		$	-		$	-		$	-		$	-		$	-		$	68
Vacation Exchange and Rentals				379			85			-			10			-			-			-			-			95
Vacation Ownership				593			115			-			-			-			-			-			-			115
Total Reportable Segments				1,209			264			4			10			-			-			-			-			278
Corporate and Other (a)				(16)			(34)			-			-			-			-			-			-			(34)
Total Company			$	1,193		$	230		$	4		$	10		$	-		$	-		$	-		$	-		$	244
Three months ended June 30, 2014
Lodging			$	283		$	87		$	-		$	-		$	-		$	-		$	-		$	-		$	87
Vacation Exchange and Rentals				402			89			-			-			(2)			-			-			-			87
Vacation Ownership				673			185			-			-			-			-			-			-			185
Total Reportable Segments				1,358			361			-			-			(2)			-			-			-			359
Corporate and Other (a)				(15)			(35)			-			-			-			-			-			-			(35)
Total Company			$	1,343		$	326		$	-		$	-		$	(2)		$	-		$	-		$	-		$	324
Three months ended September 30, 2014
Lodging			$	315		$	100		$	-		$	-		$	-		$	(1)		$	8		$	-		$	107
Vacation Exchange and Rentals				512			159			-			-			-			-			-			-			159
Vacation Ownership				704			188			-			-			-			-			-			-			188
Total Reportable Segments				1,531			447			-			-			-			(1)			8			-			454
Corporate and Other (a)				(17)			(36)			-			-			-			-			-			-			(36)
Total Company			$	1,514		$	411		$	-		$	-		$	-		$	(1)		$	8		$	-		$	418
Three months ended December 31, 2014
Lodging			$	267		$	77		$	-		$	-		$	-		$	2		$	-		$	-		$	79
Vacation Exchange and Rentals				311			2			-			-			-			10			27			-			39
Vacation Ownership				668			172			-			-			-			-			-			-			172
Total Reportable Segments				1,246			251			-			-			-			12			27			-			290
Corporate and Other (a)				(15)			(36)			-			-			-			-			-			(2)			(38)
Total Company			$	1,231		$	215		$	-		$	-		$	-		$	12		$	27		$	(2)		$	252
Twelve months ended December 31, 2014
Lodging			$	1,101		$	327		$	4		$	-		$	-		$	1		$	8		$	-		$	340
Vacation Exchange and Rentals				1,604			335			-			10			(2)			10			27			-			380
Vacation Ownership				2,638			660			-			-			-			-			-			-			660
Total Reportable Segments				5,343			1,322			4			10			(2)			11			35			-			1,380
Corporate and Other (a)				(62)			(141)			-			-			-			-			-			(1)			(142)
Total Company			$	5,281		$	1,181		$	4		$	10		$	(2)		$	11		$	35		$	(1)		$	1,238
________________
Note: The sum of the quarters may not agree to the twelve months ended December 31, 2014 due to rounding.

 

(a)	Includes the elimination of transactions between segments.
(b)	Represents the devaluation of the official exchange rate of Venezuela.
(c)	Reversal of a reserve for value-added taxes.
(d)	Relates to (i) the reversal of a portion of a restructuring reserve established during the fourth quarter of 2013 and (ii) costs incurred as a result of various organizational realignment initiatives by the Company.
(e)	Relates to (i) a loss on the sale of a business and a write-down of an equity investment at the Company's vacation exchange and rentals business and (ii) a write-down of an investment in a joint venture at the Company's lodging business.
(f)	Relates to the net benefit from the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.

 

													Table 8
													(1 of 2)
Wyndham Worldwide Corporation
NON-GAAP FINANCIAL INFORMATION
(In millions, except per share data)
			Three Months Ended March 31, 2015
			As Reported			Acquisition     Costs (a)			Restructuring     Costs (c)			As Adjusted non-GAAP
Net revenues
	Service and membership fees		$	599		$			$			$	599
	Vacation ownership interest sales			336									336
	Franchise fees			147									147
	Consumer financing			104									104
	Other			76									76
Net revenues				1,262			-			-			1,262
Expenses
	Operating			564			(3)						561
	Cost of vacation ownership interests			33									33
	Consumer financing interest			18									18
	Marketing and reservation			195									195
	General and administrative			181									181
	Restructuring			(1)						1			-
	Depreciation and amortization			56									56
Total expenses				1,046			(3)			1			1,044
Operating income				216			3			(1)			218
Other income, net				(5)									(5)
Interest expense				26									26
Interest income				(3)									(3)
Income before income taxes				198			3			(1)			200
Provision for income taxes				76			(1)	(b)		(1)	(d)		74
Net income			$	122		$	4		$	-		$	126
Earnings per share
	Basic		$	1.01		$	0.03		$	-		$	1.04
	Diluted			1.00			0.03			-			1.03
Weighted average shares outstanding
	Basic			121			121			121			121
	Diluted			122			122			122			122
__________
The above table reconciles certain non-GAAP financial measures.  The presentation of these adjustments is intended to permit the comparison of particular adjustments as they appear in the line items of the income statement in order to assist investors' understanding of the overall impact of such adjustments.  This non-GAAP reconciliation table should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP.
(a)	Relates to costs incurred in connection with the acquisition of Dolce Hotels and Resorts (January 2015) at the Company's lodging business.
(b)	Relates to (i) the tax effect of the adjustment and (ii) a valuation allowance established in connection with the acquisition.
(c)	Relates to the reversal of a portion of the restructuring reserve established during the fourth quarter of 2014 at the Company's vacation exchange and rentals business.
(d)	Relates to the tax effect of the adjustment.

 

													Table 8
													(2 of 2)
Wyndham Worldwide Corporation
NON-GAAP FINANCIAL INFORMATION
(In millions, except per share data)
			Three Months Ended March 31, 2014
			As Reported			Executive Departure     Costs (a)			Venezuela Currency    Devaluation (c)			As Adjusted  non-GAAP
Net revenues
	Service fees and membership		$	590		$			$			$	590
	Vacation ownership interest sales			303									303
	Franchise fees			127									127
	Consumer financing			105									105
	Other			68									68
Net revenues				1,193			-			-			1,193
Expenses
	Operating			534						(10)			524
	Cost of vacation ownership interests			39									39
	Consumer financing interest			17									17
	Marketing and reservation			181									181
	General and administrative			195			(4)						191
	Depreciation and amortization			56									56
Total expenses				1,022			(4)			(10)			1,008
Operating income				171			4			10			185
Other income, net				(3)									(3)
Interest expense				27									27
Interest income				(2)									(2)
Income before income taxes				149			4			10			163
Provision for income taxes				59			1	(b)		1	(b)		61
Net income			$	90		$	3		$	9		$	102
Earnings per share
	Basic		$	0.70		$	0.02		$	0.07		$	0.80
	Diluted			0.69			0.02			0.07			0.78
Weighted average shares outstanding
	Basic			128			128			128			128
	Diluted			130			130			130			130
__________
The above table reconciles certain non-GAAP financial measures.  The presentation of these adjustments is intended to permit the comparison of particular adjustments as they appear in the line items of the income statement in order to assist investors' understanding of the overall impact of such adjustments.  This non-GAAP reconciliation table should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP.
Note: EPS amounts may not add due to rounding.
(a)	Relates to costs associated with an executive's departure at the Company's lodging business.
(b)	Relates to the tax effect of the adjustment.
(c)	Represents the devaluation of the official exchange rate of Venezuela at the Company's vacation exchange and rental business.

 

											Table 9
Wyndham Worldwide Corporation
NON-GAAP RECONCILIATIONS AND FINANCIAL INFORMATION
(In millions)
FREE CASH FLOW
We define free cash flow to be net cash provided by operating activities less property and equipment additions which we also refer to as capital expenditures.
We believe free cash flow to be a useful operating performance measure to evaluate the ability of our operations to generate cash for uses other than capital expenditures and, after debt service and other obligations, our ability to grow our business through acquisitions, development advances and equity investments, as well as our ability to return cash to shareholders through dividends and share repurchases. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities, net cash used in investing activities and net cash used in financing activities as a means for evaluating Wyndham Worldwide is that free cash flow does not represent the total cash movement for the period as detailed in the consolidated statement of cash flows.
The following table provides more details on the GAAP financial measure that is most directly comparable to the non-GAAP financial measure and the related reconciliation between these financial measures:
		Three Months Ended March 31,
		2015				2014
Net cash provided by operating activities		$	253			$	315
Less: Property and equipment additions			(56)				(46)
Free cash flow		$	197			$	269
GROSS VOI SALES
The following table provides a reconciliation of Gross VOI sales (see Table 3) to vacation ownership interest sales (see Table 4):
Year
2015		Q1		Q2		Q3		Q4		Full Year
Gross VOI sales (a)		$	390		N/A		N/A		N/A		N/A
Less: Sales under WAAM Fee-for-Service			(21)		N/A		N/A		N/A		N/A
Gross VOI sales, net of WAAM Fee-for-Service sales			369		N/A		N/A		N/A		N/A
Less: Loan loss provision			(46)		N/A		N/A		N/A		N/A
Plus: Impact of percentage-of-completion accounting			13		N/A		N/A		N/A		N/A
Vacation ownership interest sales (a)		$	336		N/A		N/A		N/A		N/A
2014
Gross VOI sales (a)		$	410	$	496	$	513	$	470	$	1,889
Less: Sales under WAAM Fee-for-Service			(44)		(40)		(27)		(21)		(132)
Gross VOI sales, net of WAAM Fee-for-Service sales			366		456		486		449		1,757
Less: Loan loss provision			(60)		(70)		(70)		(60)		(260)
Less: Impact of percentage-of-completion accounting			(3)		(4)		(1)		(4)		(12)
Vacation ownership interest sales (a)		$	303	$	382	$	415	$	385	$	1,485
2013
Gross VOI sales (a)		$	384	$	481	$	536	$	488	$	1,889
Less: Sales under WAAM Fee-for-Service			(36)		(44)		(51)		(29)		(160)
Gross VOI sales, net of WAAM Fee-for-Service sales			347		437		486		459		1,729
Less: Loan loss provision			(84)		(90)		(102)		(73)		(349)
Less: Impact of percentage-of-completion accounting			-		-		-		(1)		(1)
Vacation ownership interest sales (a)		$	263	$	347	$	384	$	384	$	1,379
2012
Gross VOI sales (a)		$	384	$	460	$	502	$	435	$	1,781
Less: Sales under WAAM Fee-for-Service			(17)		(18)		(5)		(10)		(49)
Gross VOI sales, net of WAAM Fee-for-Service sales			367		442		497		426		1,732
Less: Loan loss provision			(96)		(100)		(124)		(89)		(409)
Vacation ownership interest sales (a)		$	271	$	342	$	373	$	337	$	1,323
_____________
Note: Amounts may not add due to rounding.
(a) Includes VOI sales under WAAM Just-in-Time beginning in the second quarter of 2012.
The following includes primarily tele-sales upgrades and other non-tour revenues, which are excluded from Gross VOI sales in the Company's VPG calculation (see Table 3):
		Q1		Q2		Q3		Q4		Full Year
2015		$	24		N/A		N/A		N/A		N/A
2014		$	25	$	21	$	27	$	24	$	97
2013		$	24	$	18	$	22	$	25	$	89
2012		$	27	$	20	$	22	$	28	$	97

SOURCE Wyndham Worldwide Corporation

Investor and Media contact:

Margo C. Happer
Senior Vice President
Investor Relations
Wyndham Worldwide Corporation
(973) 753-6472
margo.happer@wyn.com

Barry Goldschmidt
Vice President
Investor Relations
Wyndham Worldwide Corporation
(973) 753-7703
barry.goldschmidt@wyn.com

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