Wyndham Hotels & Resorts Reports Second Quarter 2020 Results
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Wyndham Hotels & Resorts Reports Second Quarter 2020 Results

PARSIPPANY, N.J., July 28, 2020 // PRNewswire // - Wyndham Hotels & Resorts (NYSE: WH) today announced results for the three months ended June 30, 2020. Highlights include:

  • Diluted loss per share was $1.86, and adjusted diluted earnings per share was $0.10.
  • Net loss was $174 million for the second quarter and adjusted net income was $9 million.
  • Adjusted EBITDA was $63 million.
  • System-wide rooms remained flat year-over-year.
  • Global comparable RevPAR declined 54% year-over-year.
  • Paid quarterly cash dividend of $0.08 per share.

"We generated positive adjusted EBITDA in the second quarter, driven by our drive-to and leisure-oriented franchise business model, along with our immediate and concerted cost savings initiatives," said Geoffrey A. Ballotti, president and chief executive officer. "We were pleased to see a steady improvement in Average Daily Rate, Occupancy and RevPAR over the past three months. Our select-service, small business owners are uniquely positioned to both remain open and capture emerging travel demand, whatever the shape of the recovery may be. Approximately 85% of our hotels have remained open globally throughout the pandemic, and over 99% of our domestic hotels are open today. Importantly, our economy and midscale brands continue to outperform versus their local markets. We remain committed to supporting our owners during this difficult period, while showing our guests and team members that they can "Count on Us" to put their safety first."

Revenues declined to $258 million in the second quarter of 2020, compared with $533 million in the second quarter of 2019. The decline includes lower pass-through cost-reimbursement revenues of $94 million, which have no impact on adjusted EBITDA, in the Company's hotel management business. Excluding cost-reimbursement revenues, revenues declined $181 million reflecting a 54% decline in comparable RevPAR and the impact from hotels temporarily closed due to COVID-19.

The Company generated a net loss of $174 million, or $1.86 per diluted share, in the second quarter of 2020, reflecting $1.71 per diluted share in non-cash impairment charges related to certain intangible assets and $0.18 per diluted share in restructuring and transaction-related costs. Net income in the second quarter of 2019 was $26 million, or $0.27 per diluted share, which included a non-cash impairment charge of $0.34 per diluted share and $0.16 per diluted share in transaction-related, separation-related and contract termination expenses. The decline in net income of $200 million, or $2.13 per diluted share, was primarily due to the impact of the non-cash impairment charges and the revenue declines, which were partially offset by lower volume-related expenses as well as cost containment initiatives, including restructuring actions. Full reconciliations of GAAP results to the Company's non-GAAP adjusted measures for all reported periods appear in the tables to this press release.

Business Segment Discussion

The following discussion of second quarter operating results focuses on revenue and adjusted EBITDA for each of the Company's segments.

Hotel Franchising

 

2020

   

2019

   

% Change

 

System size

754,700

   

751,300

   

 

Global RevPAR

$

17.05

   

$

42.04

   

(59)

 
           

Revenue (millions)

$

182

   

$

331

   

(45)

 

Adjusted EBITDA (millions)

83

   

162

   

(49)

 

The Company's managed system decreased 11% globally primarily reflecting the transfer of 7,500 rooms to the hotel franchising segment as a result of CorePoint Lodging asset sales. Excluding the transfer of rooms to the hotel franchising segment, the Company's managed system grew 1%, reflecting 13% growth internationally, partially offset by a 3% decline in the U.S. primarily due to the loss of rooms that were previously covered by unprofitable hotel management guarantees.

RevPAR declined 69% globally, or 63% on a comparable basis, primarily reflecting a 68% decline in the U.S., or 63% on a comparable basis, and a 72% decline internationally, or 60% on a comparable basis.

Revenues decreased $125 million compared to the prior-year period primarily due to $94 million of lower cost-reimbursement revenues, which have no impact on adjusted EBITDA. Absent cost-reimbursements, revenues declined $31 million due to the unfavorable impact of COVID-19 on travel demand globally, while adjusted EBITDA declined $20 million as the RevPAR impacts were partially mitigated by lower volume-related expenses as well as cost containment initiatives.

Development

As of June 30, 2020, the Company's hotel system of over 9,000 properties and 813,000 rooms remained flat year-over-year. During the second quarter of 2020, the Company opened 62 new hotels totaling 5,700 rooms, a year-over-year decline of 65% as new construction openings were delayed and conversion volumes were lower.

As expected, the Company's global retention rate over the last twelve months declined to 93.7% compared to 95.2% during the same period last year due to the Company's removal of approximately 9,000 non-compliant master franchise rooms in China, as previously disclosed.

The Company's development pipeline consisted of over 1,300 hotels and approximately 180,000 rooms, a 4% year-over-year room decline, or a 5% decline sequentially, as a result of softer sales activity in the second quarter due to travel restrictions, increased hurdle rates and a more conservative probability factor applied to projects in the pipeline which have not yet secured financing. Approximately 64% of the Company's development pipeline is international and 76% is new construction, of which 34% have broken ground.

Impairment Charge

The continued disruption to the travel industry resulting from COVID-19 prompted the Company to perform an evaluation and comparison of the carrying value of its assets to their fair value. As a result of this evaluation, the Company recorded a net impairment charge of $206 million ($159 million, net of tax) during the second quarter of 2020 primarily related to the La Quinta tradename. The future cash flows expected to be generated from the La Quinta tradename have not changed materially; rather, the impairment charge was principally attributable to a higher discount rate primarily resulting from increased share price volatility, consistent with the lodging sector and broader equity markets.

Restructuring Charge

In an effort to mitigate the revenue declines resulting from COVID-19 and to further position itself for growth during the recovery period, the Company undertook various restructuring actions that resulted in a charge of $16 million ($13 million, net of tax) during the second quarter. This charge is comprised of $11 million for severance and related benefit costs resulting from the elimination of approximately 180 positions and $5 million of lease-related costs. In combination with the Company's first quarter COVID-19 related restructuring charge, the Company has now reduced approximately 440 positions and expects to realize $50 million to $55 million of annual savings as a result of these actions.

Cash

During the second quarter of 2020, the Company's cash balance decreased $85 million to $664 million. The impact of the Company's franchisee fee deferral program was approximately $67 million during the second quarter. In addition, the Company made $28 million of special-item cash outlays, including restructuring payments, during the second quarter.

Dividends

The Company paid common stock dividends of $8 million, or $0.08 per share, in the second quarter of 2020.

Outlook

The Company's ability to assess the impact of COVID-19 on its full-year financial results continues to be limited due to the uncertainty in travel demand during the remainder of 2020.

Conference Call Information

Wyndham Hotels will hold a conference call with investors to discuss the Company's results and outlook on Wednesday, July 29, 2020 at 8:30 a.m. ET. Listeners can access the webcast live through the Company's website. The conference call may also be accessed by dialing 866 342-8591 and providing the passcode "Wyndham". Listeners are urged to call at least five minutes prior to the scheduled start time. An archive of this webcast will be available on the website for approximately 90 days beginning at noon ET on July 29, 2020. A telephone replay will be available for approximately ten days beginning at noon ET on July 29, 2020 at 800 839-5484.

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 operating performance. The Company uses these measures internally to assess its operating performance, both absolutely and in comparison to other companies, and to make day to day operating decisions, including in the evaluation of selected compensation decisions. Exclusion of items in the Company's non-GAAP presentation should not be considered an inference that these items are unusual, infrequent or non-recurring. Full reconciliations of GAAP results to the comparable non-GAAP measures for the reported periods appear in the financial tables section of this press release.

About Wyndham Hotels & Resorts

Wyndham Hotels & Resorts (NYSE: WH) is the world's largest hotel franchising company by the number of properties, with over 9,000 hotels across approximately 90 countries on six continents. Through its network of 813,000 rooms appealing to the everyday traveler, Wyndham commands a leading presence in the economy and midscale segments of the lodging industry. The Company operates a portfolio of 20 hotel brands, including Super 8®, Days Inn®, Ramada®, Microtel®, La Quinta®, Baymont®, Wingate®, AmericInn®, Hawthorn Suites®, Trademark Collection® and Wyndham®. Wyndham Hotels & Resorts is also a leading provider of hotel management services. The Company's award-winning Wyndham Rewards loyalty program offers 84 million enrolled members the opportunity to redeem points at thousands of hotels, vacation club resorts and vacation rentals globally. The Company may use its website as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Disclosures of this nature will be included on the Company's website in the Investors section, which can currently be accessed at www.investor.wyndhamhotels.com. Accordingly, investors should monitor this section of the Company's website in addition to following the Company's press releases, filings submitted with the Securities and Exchange Commission and any public conference calls or webcasts.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of federal securities laws, including statements related to Wyndham Hotels' current views and expectations with respect to its future performance and operations, including revenues, earnings, cash flow and other financial and operating measures and dividends, restructuring charges and statements related to the COVID-19 pandemic. Forward-looking statements include those that convey management's expectations as to the future based on plans, estimates and projections at the time Wyndham Hotels makes the statements and may be identified by words such as "will," "expect," "believe," "plan," "anticipate," "intend," "goal," "future," "outlook," "guidance," "target," "estimate," "projection" and similar words or expressions, including the negative version of such words and expressions. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of Wyndham Hotels to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. 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, without limitation, general economic conditions; the continuation or worsening of the effects from the COVID-19 pandemic, its scope, duration and impact on the Company's business operations, financial results, cash flows and liquidity, as well as the impact on the Company's franchisees and property owners, guests and team members, the hospitality industry and overall demand for travel; the success of the Company's mitigation efforts in response to the COVID-19 pandemic; the Company's performance in any recovery from the COVID-19 pandemic; the performance of financial and credit markets; the economic environment for the hospitality industry; operating risks associated with the hotel franchising and management businesses; the Company's relationships with franchisees and property owners; the impact of war, terrorist activity or political strife; concerns with or threats of pandemics, contagious diseases or health epidemics, including the effects of the COVID-19 pandemic and any resurgence of the virus and actions governments, businesses and individuals take in response to the pandemic, including stay-in-place directives and other travel restrictions; risks related to the acquisition of La Quinta and the Company's relationship with CorePoint Lodging; the Company's ability to satisfy obligations and agreements under its outstanding indebtedness, including the payment of principal and interest and compliance with covenants thereunder; risks related to the Company's ability to obtain financing and the terms of such financing, including access to liquidity and capital as a result of COVID-19; and the restrictions on share repurchases or the Company's ability and plans to pay dividends including the timing and amount of any future dividends, as well as the risks described in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission and any subsequent reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, subsequent events or otherwise.

                             

Table 1

WYNDHAM HOTELS & RESORTS

INCOME (LOSS) STATEMENT

(In millions, except per share data)

(Unaudited)

               
 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2020

 

2019

 

2020

 

2019

Net revenues

             

Royalties and franchise fees

$

61

   

$

126

   

$

154

   

$

228

 

Marketing, reservation and loyalty

82

   

140

   

188

   

254

 

Management and other fees

6

   

36

   

38

   

75

 

License and other fees

21

   

33

   

42

   

61

 

Cost reimbursements

66

   

160

   

192

   

315

 

Other

22

   

38

   

53

   

68

 

Net revenues

258

   

533

   

667

   

1,001

 
               

Expenses

             

Marketing, reservation and loyalty

85

   

149

   

204

   

278

 

Operating

23

   

38

   

57

   

81

 

General and administrative

26

   

31

   

54

   

65

 

Cost reimbursements

66

   

160

   

192

   

315

 

Depreciation and amortization

25

   

27

   

49

   

56

 

Impairments, net

206

   

45

   

206

   

45

 

Restructuring

16

   

   

29

   

 

Transaction-related, net

5

   

11

   

13

   

18

 

Separation-related

   

1

   

1

   

22

 

Contract termination

   

9

   

   

9

 

Total expenses

452

   

471

   

805

   

889

 
               

Operating (loss)/income

(194)

   

62

   

(138)

   

112

 

Interest expense, net

28

   

26

   

54

   

50

 
               

(Loss)/income before income taxes

(222)

   

36

   

(192)

   

62

 

(Benefit)/provision for income taxes

(48)

   

10

   

(40)

   

15

 

Net (loss)/income

$

(174)

   

$

26

   

$

(152)

   

$

47

 
               

(Loss)/earnings per share

             

Basic

$

(1.86)

   

$

0.27

   

$

(1.63)

   

$

0.49

 

Diluted

(1.86)

   

0.27

   

(1.63)

   

0.49

 
               

Weighted average shares outstanding

             

Basic

93.3

   

97.1

   

93.5

   

97.5

 

Diluted

93.3

   

97.4

   

93.5

   

97.8

 
 

Table 2

 

WYNDHAM HOTELS & RESORTS

 

HISTORICAL REVENUE AND ADJUSTED EBITDA BY SEGMENT

       
 

The reportable segments presented below represent our operating segments for which separate financial information is available and is utilized on a regular basis by our chief operating decision maker to assess performance and allocate resources. In identifying our reportable segments, we also consider the nature of services provided by our operating segments. Management evaluates the operating results of each of our reportable segments based upon net revenues and adjusted EBITDA. We believe that adjusted EBITDA is a useful measure of performance for our segments which, when considered with GAAP measures, allows a more complete understanding of our operating performance. We use these measures internally to assess operating performance, both absolutely and in comparison to other companies, and to make day to day operating decisions, including in the evaluation of selected compensation decisions. Our presentation of adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.

 
 
 
                       
     

First Quarter

 

Second Quarter

 

Third Quarter

 

Fourth Quarter

 

Full Year

 

Hotel Franchising

                 
   

Net revenues

                 
   

2020

$

243

   

$

182

   

n/a

   

n/a

   

n/a

 
   

2019

269

   

331

   

379

   

300

   

1,279

 
   

2018

203

   

289

   

348

   

295

   

1,135

 
   

Adjusted EBITDA

                   
   

2020

$

108

   

$

83

   

n/a

   

n/a

   

n/a

 
   

2019

113

   

162

   

195

   

151

   

622

 
   

2018

86

   

129

   

178

   

122

   

515

 
                       
 

Hotel Management

                 
   

Net revenues

                 
   

2020

$

167

   

$

76

   

n/a

   

n/a

   

n/a

 
   

2019

197

   

201

   

180

   

190

   

768

 
   

2018

99

   

146

   

252

   

229

   

726

 
   

Adjusted EBITDA

                 
   

2020

$

17

   

$

(4)

   

n/a

   

n/a

   

n/a

 
   

2019

16

   

16

   

13

   

21

   

66

 
   

2018

16

   

8

   

5

   

18

   

47

 
                       
 

Corporate and Other

                 
   

Net revenues

                 
   

2020

$

   

$

   

n/a

   

n/a

   

n/a

 
   

2019

2

   

1

   

1

   

2

   

6

 
   

2018

   

   

4

   

3

   

7

 
   

Adjusted EBITDA

                 
   

2020

$

(18)

   

$

(16)

   

n/a

   

n/a

   

n/a

 
   

2019

(18)

   

(19)

   

(18)

   

(19)

   

(75)

 
   

2018

(10)

   

(12)

   

(17)

   

(15)

   

(55)

 
                       
 

Total Company

                 
   

Net revenues

                 
   

2020

$

410

   

$

258

   

n/a

   

n/a

   

n/a

 
   

2019

468

   

533

   

560

   

492

   

2,053

 
   

2018

302

   

435

   

604

   

527

   

1,868

 
   

Net income/(loss)

                 
   

2020

$

22

   

$

(174)

   

n/a

   

n/a

   

n/a

 
   

2019

21

   

26

   

45

   

64

   

157

 
   

2018

39

   

21

   

58

   

43

   

162

 
   

Adjusted EBITDA

                           
   

2020

$

107

   

$

63

   

n/a

   

n/a

   

n/a

 
   

2019

111

   

159

   

190

   

153

   

613

 
   

2018

92

   

125

   

166

   

125

   

507

 

 

____________________

NOTE: Amounts may not add across due to rounding.

See Table 7 for definitions and Table 8 for reconciliations of Total Company non-GAAP measures.

Table 3

WYNDHAM HOTELS & RESORTS

CASH FLOWS

(In millions)

(Unaudited)

       
 

Six Months Ended June 30,

 

2020

 

2019

Operating activities

     

Net (loss)/income

$

(152)

   

$

47

 

Depreciation and amortization

49

   

56

 

Impairment (a)

209

   

45

 

Payment of tax liability assumed in La Quinta acquisition

   

(188)

 

Other, net

(146)

   

(97)

 

Net cash used in operating activities

(40)

   

(137)

 

Investing activities

     

Property and equipment additions

(18)

   

(25)

 

Issuance of loans, net

(1)

   

(2)

 

Net cash used in investing activities

(19)

   

(27)

 

Financing activities

     

Proceeds from borrowings

744

   

 

Principal payments on long-term debt

(18)

   

(8)

 

Capital contribution from former Parent

   

68

 

Dividends to shareholders

(38)

   

(56)

 

Repurchases of common stock

(50)

   

(95)

 

Other, net

(8)

   

(5)

 

Net cash provided by/(used in) financing activities

630

   

(96)

 

Effect of changes in exchange rates on cash, cash equivalents and restricted cash

(1)

   

1

 

Net increase/(decrease) in cash, cash equivalents and restricted cash

570

   

(259)

 

Cash, cash equivalents and restricted cash, beginning of period

94

   

366

 

Cash, cash equivalents and restricted cash, end of period

$

664

   

$

107

 
       

Free Cash Flow:

     

We define free cash flow to be net cash provided by/(used in) 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 us and investors 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 and investments, as well as our ability to return cash to shareholders through dividends and share repurchases. This non-GAAP measure is not necessarily a representation of how we will use excess cash. A limitation of using free cash flow versus the GAAP measure of net cash provided by/(used in) operating activities as a means for evaluating Wyndham Hotels is that free cash flow does not represent the total cash movement for the period as detailed in the condensed consolidated statement of cash flows.

   
 

Six Months Ended June 30,

 

2020

 

2019

Net cash used in operating activities (b)

$

(40)

   

$

(137)

 

Less: Property and equipment additions

(18)

   

(25)

 

Free cash flow

$

(58)

   

$

(162)

 
 

____________________

(a) 

2020 excludes $3 million of cash proceeds from a previously impaired asset.

   

(b) 

Includes special-item cash outlays of $48 million and $45 million in 2020 and 2019, respectively, primarily relating to transaction-related and separation-related cash payments, as well as our restructuring initiatives. Additionally, 2020 includes an estimated impact of $67 million from the Company's franchisee fee deferral program and 2019 includes $188 million of payments to tax authorities related to the La Quinta acquisition.

Table 4

WYNDHAM HOTELS & RESORTS

DEBT

(In millions)

(Unaudited)

       
 

As of

June 30, 2020

 

As of
December 31, 2019

   

$750 million revolving credit facility (due May 2023)

$

734

   

$

 

Term loan (due May 2025)

1,561

   

1,568

 

5.375% senior unsecured notes (due April 2026)

495

   

494

 

Finance leases

57

   

60

 

Total debt

2,847

   

2,122

 

Cash and cash equivalents

664

   

94

 

Net debt

$

2,183

   

$

2,028

 
       

Our outstanding debt as of June 30, 2020 matures as follows:

     
     

Amount

Within 1 year

   

$

21

 

Between 1 and 2 years

   

21

 

Between 2 and 3 years

   

755

 

Between 3 and 4 years

   

22

 

Between 4 and 5 years

   

1,503

 

Thereafter

   

525

 

Total

   

$

2,847

 
 
                         

Table 5

WYNDHAM HOTELS & RESORTS

REVENUE DRIVERS

                   
 

Six Months Ended June 30,

   
 

2020

 

2019

 

Change

 

% Change

   

Beginning Room Count (January 1)

                   

United States

510,200

   

506,100

   

4,100

   

1%

   

International

320,800

   

303,800

   

17,000

   

6

   

Total

831,000

   

809,900

   

21,100

   

3

   
                     

Additions

                   

United States

5,400

   

13,400

   

(8,000)

   

(60)

   

International

6,500

   

14,400

   

(7,900)

   

(55)

   

Total

11,900

   

27,800

   

(15,900)

   

(57)

   
                     

Deletions

                     

United States

(13,600)

   

(11,200)

   

(2,400)

   

(21)

   

International

(16,400)

   

(9,900)

   

(6,500)

   

(66)

   

Total

(30,000)

   

(21,100)

   

(8,900)

   

(42)

   
                   

Ending Room Count (June 30)

                   

United States

502,000

   

508,300

   

(6,300)

   

(1)

   

International

310,900

   

308,300

   

2,600

   

1

   

Total

812,900

   

816,600

   

(3,700)

   

—%

   
                   
 

As of June 30,

 

FY 2019
Royalty
Contribution

 

2020

 

2019

 

Change

 

% Change

 

System Size

                 

United States

                 

Economy

254,300

   

263,300

   

(9,000)

   

(3%)

   

Midscale and Upper Midscale

206,800

   

205,800

   

1,000

   

   

Extended Stay/Lifestyle

24,200

   

20,800

   

3,400

   

16

   

Upscale

16,700

   

18,400

   

(1,700)

   

(9)

   

Total United States

502,000

   

508,300

   

(6,300)

   

(1)

 

86%

                   

International

                   

Greater China

144,300

   

149,300

   

(5,000)

   

(3)

 

3

Rest of Asia Pacific

27,800

   

24,500

   

3,300

   

13

 

1

Europe, the Middle East and Africa

69,000

   

66,500

   

2,500

   

4

 

4

Canada

40,600

   

39,900

   

700

   

2

 

5

Latin America

29,200

   

28,100

   

1,100

   

4

 

1

Total International

310,900

   

308,300

   

2,600

   

1

 

14

                   

Global

812,900

   

816,600

   

(3,700)

   

—%

 

100%

Table 5 (continued)

WYNDHAM HOTELS & RESORTS

REVENUE DRIVERS

                   
 

Three Months Ended June 30,

   
 

2020

 

2019

 

% Change

 

Constant
Currency %

  Change (a)

   

Regional RevPAR Growth

                 

United States

                 

Economy

$

23.00

   

$

41.16

   

(44%)

       

Midscale and Upper Midscale

23.85

   

56.62

   

(58)

       

Extended Stay/Lifestyle

21.46

   

73.90

   

(71)

       

Upscale

19.75

   

111.45

   

(82)

       

Total United States

$

23.19

   

$

50.98

   

(55)

       
                   

International

                 

Greater China

$

8.42

   

$

18.74

   

(55)

 

(53%)

   

Rest of Asia Pacific

8.43

   

34.13

   

(75)

 

(74)

   

Europe, the Middle East and Africa

5.37

   

53.21

   

(90)

 

(90)

   

Canada

13.71

   

46.51

   

(71)

 

(70)

   

Latin America

2.71

   

34.07

   

(92)

 

(90)

   

Total International

$

7.96

   

$

32.47

   

(75)

 

(75)

   
                   

Global

$

17.31

   

$

44.06

   

(61%)

 

(60%)

   
                   

Average Royalty Rate

                 

United States

4.6

%

 

4.5

%

 

10 bps

       

International

2.4

%

 

2.0

%

 

40 bps

       

Global

4.2

%

 

3.8

%

 

40 bps

       
                   
 

Six Months Ended June 30,

   
 

2020

 

2019

 

% Change

 

Constant
Currency %

  Change (a)

   

Regional RevPAR Growth

                 

United States

                 

Economy

$

24.88

   

$

36.36

   

(32%)

       

Midscale and Upper Midscale

30.65

   

51.77

   

(41)

       

Extended Stay/Lifestyle

33.99

   

66.22

   

(49)

       

Upscale

47.49

   

101.72

   

(53)

       

Total United States

$

28.33

   

$

45.83

   

(38)

       
                   

International

                 

Greater China

$

6.88

   

$

18.17

   

(62)

 

(61%)

   

Rest of Asia Pacific

17.50

   

35.71

   

(51)

 

(49)

   

Europe, the Middle East and Africa

19.69

   

49.50

   

(60)

 

(59)

   

Canada

21.39

   

40.41

   

(47)

 

(46)

   

Latin America

15.89

   

34.33

   

(54)

 

(46)

   

Total International

$

13.20

   

$

30.71

   

(57)

 

(55)

   
                   

Global

$

22.50

   

$

40.17

   

(44%)

 

(43%)

   
                   

Average Royalty Rate

                 

United States

4.6

%

 

4.5

%

 

10 bps

       

International

2.3

%

 

2.0

%

 

30 bps

       

Global

4.1

%

 

3.8

%

 

30 bps

       
 

 

____________________

(a)

Excludes the impact of currency exchange movements.

Table 6

WYNDHAM HOTELS & RESORTS

HISTORICAL REVPAR AND ROOMS

 
                                           
     

First Quarter

 

Second Quarter

 

Third Quarter

 

Fourth Quarter

 

Full Year

Hotel Franchising

                   
 

Global RevPAR

                 
 

2020

 

$

25.90

   

$

17.05

   

n/a

   

n/a

   

n/a

 
 

2019

 

$

33.76

   

$

42.04

   

$

45.23

   

$

34.51

   

$

38.91

 
 

2018

 

$

32.34

   

$

41.07

   

$

46.34

   

$

35.39

   

$

38.86

 
 

U.S. RevPAR

                   
 

2020

 

$

31.43

   

$

23.19

   

n/a

   

n/a

   

n/a

 
 

2019

 

$

37.69

   

$

48.65

   

$

51.93

   

$

37.96

   

$

44.09

 
 

2018

 

$

34.20

   

$

46.17

   

$

52.36

   

$

38.92

   

$

43.04

 
 

International RevPAR

               
 

2020

 

$

17.39

   

$

7.66

   

n/a

   

n/a

   

n/a

 
 

2019

 

$

27.56

   

$

31.59

   

$

34.79

   

$

29.15

   

$

30.80

 
 

2018

 

$

29.39

   

$

32.85

   

$

36.42

   

$

29.68

   

$

32.09

 
 

Global Rooms (a)

                 
 

2020

 

769,000

   

754,700

   

n/a

   

n/a

   

n/a

 
 

2019

 

745,300

   

751,300

   

758,400

   

770,200

   

770,200

 
 

2018

 

697,300

   

725,700

   

731,200

   

742,800

   

742,800

 
 

U.S. Rooms (a)

                   
 

2020

 

463,900

   

460,200

   

n/a

   

n/a

   

n/a

 
 

2019

 

454,900

   

457,600

   

460,100

   

464,600

   

464,600

 
 

2018

 

424,500

   

450,900

   

451,100

   

453,900

   

453,900

 
 

International Rooms (a)

               
 

2020

 

305,100

   

294,500

   

n/a

   

n/a

   

n/a

 
 

2019

 

290,400

   

293,700

   

298,300

   

305,600

   

305,600

 
 

2018

 

272,800

   

274,700

   

280,100

   

288,900

   

288,900

 
                       

Hotel Management

                 
 

Global RevPAR

                 
 

2020

 

$

50.00

   

$

20.67

   

n/a

   

n/a

   

n/a

 
 

2019

 

$

63.25

   

$

66.67

   

$

66.65

   

$

59.19

   

$

64.01

 
 

2018

 

$

77.61

   

$

76.52

   

$

68.53

   

$

61.00

   

$

68.72

 
 

U.S. RevPAR

                   
 

2020

 

$

54.35

   

$

23.21

   

n/a

   

n/a

   

n/a

 
 

2019

 

$

65.58

   

$

71.61

   

$

70.75

   

$

60.89

   

$

67.32

 
 

2018

 

$

94.28

   

$

87.43

   

$

71.95

   

$

61.43

   

$

72.76

 
 

International RevPAR

               
 

2020

 

$

38.07

   

$

13.78

   

n/a

   

n/a

   

n/a

 
 

2019

 

$

55.12

   

$

49.53

   

$

52.49

   

$

53.67

   

$

52.69

 
 

2018

 

$

61.82

   

$

55.08

   

$

55.19

   

$

59.36

   

$

57.84

 
 

Global Rooms (b)

                 
 

2020

 

59,300

   

58,200

   

n/a

   

n/a

   

n/a

 
 

2019

 

66,800

   

65,200

   

63,400

   

60,800

   

60,800

 
 

2018

 

25,700

   

66,700

   

67,000

   

67,200

   

67,200

 
 

U.S. Rooms (b)

                   
 

2020

 

42,900

   

41,800

   

n/a

   

n/a

   

n/a

 
 

2019

 

51,700

   

50,700

   

49,100

   

45,600

   

45,600

 
 

2018

 

12,800

   

53,400

   

53,300

   

52,200

   

52,200

 
 

International Rooms

               
 

2020

 

16,400

   

16,400

   

n/a

   

n/a

   

n/a

 
 

2019

 

15,100

   

14,500

   

14,300

   

15,200

   

15,200

 
 

2018

 

12,900

   

13,300

   

13,700

   

15,000

   

15,000

 
 
                                           

Table 6 (continued)

WYNDHAM HOTELS & RESORTS

HISTORICAL REVPAR AND ROOMS

                       
     

First Quarter

 

Second Quarter

 

Third Quarter

 

Fourth Quarter

 

Full Year

Total System

                   
 

Global RevPAR

                 
 

2020

 

$

27.68

   

$

17.31

   

n/a

   

n/a

   

n/a

 
 

2019

 

$

36.21

   

$

44.06

   

$

46.94

   

$

36.36

   

$

40.92

 
 

2018

 

$

33.95

   

$

42.95

   

$

48.21

   

$

37.54

   

$

40.80

 
 

U.S. RevPAR

                   
 

2020

 

$

33.45

   

$

23.19

   

n/a

   

n/a

   

n/a

 
 

2019

 

$

40.56

   

$

50.98

   

$

53.79

   

$

40.09

   

$

46.39

 
 

2018

 

$

35.91

   

$

48.50

   

$

54.42

   

$

41.28

   

$

45.30

 
 

International RevPAR

               
 

2020

 

$

18.45

   

$

7.96

   

n/a

   

n/a

   

n/a

 
 

2019

 

$

28.92

   

$

32.47

   

$

35.63

   

$

30.29

   

$

31.85

 
 

2018

 

$

30.90

   

$

33.89

   

$

37.31

   

$

31.08

   

$

33.31

 
 

Global Rooms

                 
 

2020

 

828,300

   

812,900

   

n/a

   

n/a

   

n/a

 
 

2019

 

812,100

   

816,600

   

821,800

   

831,000

   

831,000

 
 

2018

 

723,000

   

792,300

   

798,300

   

809,900

   

809,900

 
 

U.S. Rooms

                   
 

2020

 

506,800

   

502,000

   

n/a

   

n/a

   

n/a

 
 

2019

 

506,600

   

508,300

   

509,200

   

510,200

   

510,200

 
 

2018

 

437,200

   

504,300

   

504,500

   

506,100

   

506,100

 
 

International Rooms

                 
 

2020

 

321,500

   

310,900

   

n/a

   

n/a

   

n/a

 
 

2019

 

305,500

   

308,300

   

312,600

   

320,800

   

320,800

 
 

2018

 

285,800

   

288,000

   

293,800

   

303,800

   

303,800

 

 

____________________

 

NOTE: Amounts may not foot due to rounding. Beginning with the second quarter of 2018, results reflect the reclassification of rooms from the Hotel Management segment to the Hotel Franchising segment related to the CorePoint Lodging asset sales.

 
   

(a)

Second quarter 2018 reflects the addition of 48,200 La Quinta rooms (46,300 U.S. and 1,900 international) acquired in May 2018 and the deletion of 21,300 Knights Inn rooms (20,100 U.S. and 1,200 international) divested in May 2018.

   

(b)

Second quarter 2018 reflects the addition of 40,400 La Quinta rooms in the U.S. acquired in May 2018.

Table 7

WYNDHAM HOTELS & RESORTS

DEFINITIONS

 

Adjusted Net Income and Adjusted Diluted EPS: Represents net income (loss) and diluted earnings (loss) per share excluding acquisition-related amortization, impairment charges, restructuring and related charges, contract termination costs, transaction-related items (acquisition-, disposition-, or separation-related) and foreign currency impacts of highly inflationary countries. We calculate the income tax effect of the adjustments using an estimated effective tax rate applicable to each adjustment.

 

Adjusted EBITDA: Represents net income (loss) excluding interest expense, depreciation and amortization, impairment charges, restructuring and related charges, contract termination costs, transaction-related items (acquisition-, disposition-, or separation-related), foreign currency impacts of highly inflationary countries, stock-based compensation expense and income taxes. Adjusted EBITDA is a financial measure that is not recognized under U.S. GAAP and should not be considered as an alternative to net income (loss) or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. In addition, our definition of adjusted EBITDA may not be comparable to similarly titled measures of other companies.

 

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

 

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

 

Comparable RevPAR: Represents RevPAR in constant currency and excluding hotels temporarily closed due to COVID-19 for the period closed and the comparable prior-year period. The use of the term "comparable" herein in connection with RevPAR refers to the defined term Comparable RevPAR.

 

Constant Currency: 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).

 

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

 

RevPAR: Represents revenue per available room and is calculated by multiplying average occupancy rate by ADR.

 

Royalty Rate: Represents the average royalty rate earned on our franchised properties and is calculated by dividing total royalties, excluding the impact of amortization of development advance notes, by total room revenues.

 
                                       

Table 8

WYNDHAM HOTELS & RESORTS

NON-GAAP RECONCILIATIONS

(In millions)

                   

The tables below reconcile certain non-GAAP financial measures. The presentation of these adjustments is intended to permit the comparison of particular adjustments as they appear in the income statement in order to assist investors' understanding of the overall impact of such adjustments. We believe that adjusted EBITDA, adjusted net income and adjusted EPS financial measures provide useful information to investors about us and our financial condition and results of operations because these measures are used by our management team to evaluate our operating performance and make day-to-day operating decisions and adjusted EBITDA is frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in our industry.  These measures also assist our investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over different reporting periods, by adjusting for certain items which may be recurring or non-recurring and which in our view do not necessarily reflect ongoing performance. We also internally use these measures to assess our operating performance, both absolutely and in comparison to other companies, and in evaluating or making selected compensation decisions. These supplemental disclosures are in addition to GAAP reported measures. These non-GAAP reconciliation tables should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP.

                   

Reconciliation of Net Income (Loss) to Adjusted EBITDA:

   
 

First Quarter

 

Second Quarter

 

Third Quarter

 

Fourth Quarter

 

Full Year

2020

                 

Net income/(loss)

$

22

   

$

(174)

             

Provision/(benefit) for income taxes

9

   

(48)

             

Depreciation and amortization

25

   

25

             

Interest expense, net

25

   

28

             

Stock-based compensation expense

4

   

5

             

Impairments, net (a)

   

206

             

Restructuring costs (b)

13

   

16

             

Transaction-related expenses, net (c)

8

   

5

             

Separation-related expenses (d)

1

   

             

Adjusted EBITDA

$

107

   

$

63

               
                   

2019

 

Net income

$

21

   

$

26

   

$

45

   

$

64

   

$

157

 

Provision for income taxes

5

   

10

   

21

   

14

   

50

 

Depreciation and amortization

29

   

27

   

26

   

28

   

109

 

Interest expense, net

24

   

26

   

25

   

25

   

100

 

Stock-based compensation expense

3

   

4

   

4

   

4

   

15

 

Impairment, net (e)

   

45

   

   

   

45

 

Contract termination costs (f)

   

9

   

34

   

(1)

   

42

 

Restructuring costs (g)

   

   

   

8

   

8

 

Transaction-related expenses, net (c)

7

   

11

   

12

   

10

   

40

 

Separation-related expenses (d)

21

   

1

   

   

   

22

 

Transaction-related item (h)

   

   

20

   

   

20

 

Foreign currency impact of highly inflationary countries (i)

1

   

   

3

   

1

   

5

 

Adjusted EBITDA

$

111

   

$

159

   

$

190

   

$

153

   

$

613

 
                   

2018

 

Net income

$

39

   

$

21

   

$

58

   

$

43

   

$

162

 

Provision for income taxes

16

   

8

   

23

   

14

   

61

 

Depreciation and amortization

19

   

22

   

30

   

29

   

99

 

Interest expense, net

1

   

10

   

24

   

25

   

60

 

Stock-based compensation expense

3

   

1

   

3

   

2

   

9

 

Transaction-related expenses, net (c)

2

   

28

   

7

   

(1)

   

36

 

Separation-related expenses (d)

12

   

35

   

17

   

14

   

77

 

Foreign currency impact of highly inflationary countries (i)

   

   

4

   

(1)

   

3

 

Adjusted EBITDA

$

92

   

$

125

   

$

166

   

$

125

   

$

507

 

 

____________________

 

NOTE: Amounts may not add across due to rounding.

 

(a)

Represents a non-cash charge to reduce the carrying values of certain intangible assets to their fair values principally attributable to higher discount rates primarily resulting from increased share price volatility, partially offset by $3 million of cash proceeds from a previously impaired asset.

   

(b)

Represents charges associated with restructuring initiatives implemented in response to the effects on travel demand as a result of COVID-19.

   

(c)

Primarily relates to integration costs incurred in connection with our acquisition of La Quinta.

   

(d)

Represents costs associated with our spin-off from Wyndham Worldwide.

   

(e)

Represents a non-cash charge associated with the termination of certain hotel-management arrangements.

   

(f)

Represents costs associated with the termination of certain hotel-management arrangements.

   

(g)

Represents a charge focused on enhancing our organizational efficiency and rationalizing our operations.

   

(h)

Represents the one-time fee credit related to our agreement with CorePoint Lodging, which is reflected as a reduction to hotel management revenues on the income statement.

   

(i)

Relates to the foreign currency impact from hyper-inflation in Argentina, which is reflected in operating expenses on the income statement.

Table 8 (continued)

WYNDHAM HOTELS & RESORTS

NON-GAAP RECONCILIATIONS

(In millions, except per share data)

               

Reconciliation of Net Income (Loss) and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS:

           
 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2020

 

2019

 

2020

 

2019

Diluted EPS

$

(1.86)

   

$

0.27

   

$

(1.63)

   

$

0.49

 
               

Net (loss)/income

$

(174)

   

$

26

   

$

(152)

   

$

47

 
               

Adjustments:

             

Impairments, net

206

   

45

   

206

   

45

 

Restructuring costs

16

   

   

29

   

 

Transaction-related expenses, net

5

   

11

   

13

   

18

 

Separation-related expenses

   

1

   

1

   

22

 

Contract termination costs

   

9

   

   

9

 

Foreign currency impact of highly inflationary countries

   

   

1

   

1

 

Acquisition-related amortization expense (a)

9

   

10

   

19

   

19

 

Total adjustments before tax

236

   

76

   

269

   

114

 

Income tax provision (b)

53

   

20

   

61

   

28

 

Total adjustments after tax

183

   

56

   

208

   

86

 

Adjusted net income

$

9

   

$

82

   

$

56

   

$

133

 

Adjustments - EPS impact

1.96

   

0.57

   

2.22

   

0.87

 

Adjusted diluted EPS

$

0.10

   

$

0.84

   

$

0.59

   

$

1.36

 
               

Diluted weighted average shares outstanding

93.3

   

97.4

   

93.6

   

97.8

 
 

 

____________________

(a)

Reflected in depreciation and amortization on the income (loss) statement.

   

(b)

Reflects the estimated tax effects of the adjustments.

SOURCE Wyndham Hotels & Resorts

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