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

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

  • Diluted earnings per share was $0.29, and adjusted diluted earnings per share was $0.36.
  • Net income was $27 million for the third quarter and adjusted net income was $34 million.
  • Adjusted EBITDA was $101 million.
  • Generated $97 million of net cash provided by operating activities and $92 million of free cash flow.
  • Global comparable RevPAR declined 35% year-over-year.
  • System-wide rooms declined 2% year-over-year.
  • Paid quarterly cash dividend of $0.08 per share.
  • Issued $500 million aggregate principal amount of 4.375% senior unsecured notes in August 2020, due 2028, the net proceeds of which were used in full to repay then-outstanding revolver borrowings.

"In the face of continued industry uncertainty, our leisure-oriented, drive-to franchise business model generated $101 million of adjusted EBITDA and $92 million of free cash flow," said Geoffrey A. Ballotti, president and chief executive officer. "Over 99% of our domestic and over 97% of our global portfolio are open today. RevPAR improved sequentially across the globe, and in the U.S., our economy and midscale brands continued to gain market share. Third quarter room openings also improved sequentially both in the U.S. and internationally and we grew our pipeline by 3% to 185,000 rooms globally. Importantly, we executed 152 hotel agreements, including 23% more domestic conversion signings than the third quarter of 2019. As always, we remain dedicated to supporting our owners around the world during these very challenging times."

Revenues declined from $560 million in the third quarter of 2019 to $337 million in the third quarter of 2020. The decline includes lower pass-through cost-reimbursement revenues of $79 million, which have no impact on adjusted EBITDA, in the Company's hotel management business. Excluding cost-reimbursement revenues, revenues declined $144 million primarily reflecting a 35% decline in comparable RevPAR and the impact from hotels temporarily closed due to COVID-19.

The Company generated net income of $27 million, or $0.29 per diluted share, compared to $45 million, or $0.47 per diluted share, in the third quarter of 2019. The decline in net income of $18 million, or $0.18 per diluted share, was primarily due to the revenue declines, which were partially offset by cost containment initiatives, lower volume-related expenses and the absence of contract termination and transaction-related expenses. 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 third quarter operating results focuses on revenue and adjusted EBITDA for each of the Company's segments.

Hotel Franchising

 

2020

 

2019

 

% Change

System size

 

748,200

   

758,400

 

(1)

Global RevPAR

$

28.83

 

$

45.23

 

(36)

               

Revenue (millions)

$

236

 

$

379

 

(38)

Adjusted EBITDA (millions)

 

117

   

195

 

(40)

The Company's managed system globally decreased 12%, primarily reflecting the transfer of 8,500 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 increased 2% primarily reflecting growth internationally, partially offset by the Company's previously announced removal of approximately 1,300 unprofitable management guarantee hotel rooms during the third quarter.

RevPAR declined 48% globally, including a 45% decline in the U.S. and a 56% decline internationally. On a comparable basis, which excludes hotels temporarily closed due to COVID-19, global RevPAR declined 46%, including a 43% decline in the U.S. and a 51% decline internationally.

Revenues decreased $79 million compared to the prior-year period primarily due to lower cost-reimbursement revenues, which have no impact on adjusted EBITDA. Absent cost-reimbursements, revenues were unchanged as the unfavorable impact of COVID-19 on travel demand globally was offset by the absence of a $20 million fee credit recorded as a reduction to hotel-management revenues in the third quarter of 2019, which was considered transaction-related and therefore did not impact Adjusted EBITDA. Adjusted EBITDA declined $11 million as the RevPAR impacts were partially mitigated by cost containment initiatives and lower volume-related expenses.

Development

As of September 30, 2020, the Company's hotel system of approximately 9,000 properties and 804,000 rooms declined 2% year-over-year. During the third quarter of 2020, the Company opened 76 hotels totaling 9,600 rooms, a year-over-year decline of 34% due to delays resulting from the pandemic.

As expected, the Company's global retention rate over the last twelve months declined to 92.6% compared to 94.9% during the same period last year due to the Company's removal of approximately 9,000 non-compliant master franchise rooms in China during the second quarter; and the Company's removal of approximately 9,200 additional non-compliant, unprofitable and brand detracting rooms in the third quarter.

The Company's development pipeline consisted of 1,400 hotels and approximately 185,000 rooms, a 3% decline year-over-year, or a 3% increase sequentially. Approximately 64% of the Company's development pipeline is international and 76% is new construction, of which 33% have broken ground.

Cash and Liquidity

During the third quarter of 2020, the Company's cash balance increased $71 million to $735 million, including the issuance of $500 million of senior unsecured notes bearing interest at 4.375%, the net proceeds of which were used in full to repay then-outstanding revolver borrowings. In addition, the Company made $10 million of special-item cash outlays, primarily reflecting COVID-19 related restructuring payments, during the third quarter. As of September 30, 2020, the total capacity under the Company's revolving credit facility was $501 million and the Company had approximately $1.2 billion in total liquidity.

Dividends

The Company paid common stock dividends of $7 million, or $0.08 per share, in the third quarter of 2020.

Conference Call Information

Wyndham Hotels will hold a conference call with investors to discuss the Company's results and outlook on Thursday, October 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 877 876-9173 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 October 29, 2020. A telephone replay will be available for approximately ten days beginning at noon ET on October 29, 2020 at 800 753-9197.

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 approximately 9,000 hotels across approximately 90 countries on six continents. Through its network of 804,000 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 85 million enrolled members the opportunity to redeem points at thousands of hotels, vacation club resorts and vacation rentals globally. For more information, visit the company website. 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 their website. 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 the 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 Company's limitations related to share repurchases and ability to pay dividends under its credit facility and 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 September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

2020

 

2019

Net revenues

             

Royalties and franchise fees

$

96

   

$

140

   

$

250

   

$

368

 

Marketing, reservation and loyalty

99

   

167

   

288

   

421

 

Management and other fees

12

   

12

   

50

   

88

 

License and other fees

21

   

35

   

63

   

97

 

Cost reimbursements

82

   

161

   

274

   

476

 

Other

27

   

45

   

79

   

111

 

Net revenues

337

   

560

   

1,004

   

1,561

 
               

Expenses

             

Marketing, reservation and loyalty

107

   

160

   

311

   

437

 

Operating

25

   

43

   

82

   

124

 

General and administrative

28

   

33

   

82

   

98

 

Cost reimbursements

82

   

161

   

274

   

476

 

Depreciation and amortization

24

   

26

   

73

   

81

 

Impairments, net

   

   

206

   

45

 

Restructuring

   

   

29

   

 

Transaction-related, net

   

12

   

13

   

30

 

Separation-related

   

   

1

   

22

 

Contract termination

   

34

   

   

43

 

Total expenses

266

   

469

   

1,071

   

1,356

 
               

Operating income/(loss)

71

   

91

   

(67)

   

205

 

Interest expense, net

29

   

25

   

83

   

76

 
               

Income/(loss) before income taxes

42

   

66

   

(150)

   

129

 

Provision/(benefit) for income taxes

15

   

21

   

(25)

   

36

 

Net income/(loss)

$

27

   

$

45

   

$

(125)

   

$

93

 
               

Earnings/(loss) per share

             

Basic

$

0.29

   

$

0.47

   

$

(1.34)

   

$

0.95

 

Diluted

0.29

   

0.47

   

(1.34)

   

0.95

 
               

Weighted average shares outstanding

             

Basic

93.3

   

96.2

   

93.4

   

97.0

 

Diluted

93.4

   

96.3

   

93.4

   

97.2

 

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

   

$

236

   

n/a

 

n/a

 

2019

269

   

331

   

379

   

300

 

1,279

 

2018

203

   

289

   

348

   

295

 

1,135

 

Adjusted EBITDA

                 
 

2020

$

108

   

$

83

   

$

117

   

n/a

 

n/a

 

2019

113

   

162

   

195

   

151

 

622

 

2018

86

   

129

   

178

   

122

 

515

                     

Hotel Management

                 
 

Net revenues

                 
 

2020

$

167

   

$

76

   

$

101

   

n/a

 

n/a

 

2019

197

   

201

   

180

   

190

 

768

 

2018

99

   

146

   

252

   

229

 

726

 

Adjusted EBITDA

                 
 

2020

$

17

   

$

(4)

   

$

2

   

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

 

2019

2

   

1

   

1

   

2

 

6

 

2018

   

   

4

   

3

 

7

 

Adjusted EBITDA

                 
 

2020

$

(18)

   

$

(16)

   

$

(18)

   

n/a

 

n/a

 

2019

(18)

   

(19)

   

(18)

   

(19)

 

(75)

 

2018

(10)

   

(12)

   

(17)

   

(15)

 

(55)

                     

Total Company

                 
 

Net revenues

                 
 

2020

$

410

   

$

258

   

$

337

   

n/a

 

n/a

 

2019

468

   

533

   

560

   

492

 

2,053

 

2018

302

   

435

   

604

   

527

 

1,868

 

Net income/(loss)

                 
 

2020

$

22

   

$

(174)

   

$

27

   

n/a

 

n/a

 

2019

21

   

26

   

45

   

64

 

157

 

2018

39

   

21

   

58

   

43

 

162

 

Adjusted EBITDA

                 
 

2020

$

107

   

$

63

   

$

101

   

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

Table 3

WYNDHAM HOTELS & RESORTS

CASH FLOWS

(In millions)

(Unaudited)

       
 

Nine Months Ended September 30,

 

2020

 

2019

Operating activities

     

Net (loss)/income

$

(125)

   

$

93

 

Depreciation and amortization

73

   

81

 

Impairment (a)

209

   

45

 

Payment of tax liability assumed in La Quinta acquisition

   

(188)

 

Working capital changes and other, net

(100)

   

(22)

 

Net cash provided by operating activities

57

   

9

 

Investing activities

     

Property and equipment additions

(23)

   

(35)

 

Other, net

(1)

   

(2)

 

Net cash used in investing activities

(24)

   

(37)

 

Financing activities

     

Proceeds from borrowings

1,244

   

 

Principal payments on long-term debt

(522)

   

(12)

 

Debt issuance costs

(10)

   

 

Capital contribution from former Parent

   

68

 

Dividends to shareholders

(45)

   

(84)

 

Repurchases of common stock

(50)

   

(168)

 

Other, net

(8)

   

(8)

 

Net cash provided by/(used in) financing activities

609

   

(204)

 

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

(1)

   

 

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

641

   

(232)

 

Cash, cash equivalents and restricted cash, beginning of period

94

   

366

 

Cash, cash equivalents and restricted cash, end of period

$

735

   

$

134

 
       

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 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 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.

   
 

Nine Months Ended September 30,

 

2020

 

2019

Net cash provided by operating activities (b)

$

57

   

$

9

 

Less: Property and equipment additions

(23)

   

(35)

 

Free cash flow

$

34

   

$

(26)

 
     
   

(a)

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

(b) 

Includes special-item cash outlays of $58 million in 2020 and 2019, primarily relating to transaction-related and separation-related cash payments, as well as our restructuring initiatives. Additionally, 2019 includes $188 million of payments to tax authorities related to the La Quinta acquisition.

Table 4

WYNDHAM HOTELS & RESORTS

BALANCE SHEET SUMMARY AND DEBT

(In millions)

(Unaudited)

       
 

As of
September 30, 2020

 

As of
December 31, 2019

Assets

     

Cash and cash equivalents

$

735

   

$

94

 

Trade receivables, net

324

   

304

 

Property and equipment, net

284

   

307

 

Goodwill and intangible assets, net

3,250

   

3,485

 

Other current and non-current assets

301

   

343

 

Total assets

$

4,894

   

$

4,533

 
       

Liabilities and stockholders' equity

     

Total debt

$

2,835

   

$

2,122

 

Other current liabilities

360

   

441

 

Deferred income tax liabilities

323

   

387

 

Other non-current liabilities

413

   

371

 

Total liabilities

3,931

   

3,321

 

Total stockholders' equity

963

   

1,212

 

Total liabilities and stockholders' equity

$

4,894

   

$

4,533

 
       

Our outstanding debt as of September 30, 2020 was as follows:

     
 

As of
September 30, 2020

 

As of
December 31, 2019

   

$750 million revolving credit facility (due May 2023)

$

234

   

$

 

Term loan (due May 2025)

1,558

   

1,568

 

5.375% senior unsecured notes (due April 2026)

495

   

494

 

4.375% senior unsecured notes (due August 2028)

492

   

 

Finance leases

56

   

60

 

Total debt

2,835

   

2,122

 

Cash and cash equivalents

735

   

94

 

Net debt

$

2,100

   

$

2,028

 
       

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

     
     

Amount

Within 1 year

   

$

21

 

Between 1 and 2 years

   

21

 

Between 2 and 3 years

   

255

 

Between 3 and 4 years

   

22

 

Between 4 and 5 years

   

1,500

 

Thereafter

   

1,016

 

Total

   

$

2,835

 

Table 5

WYNDHAM HOTELS & RESORTS

REVENUE DRIVERS

                   
 

Nine Months Ended September 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

8,400

   

18,800

   

(10,400)

   

(55)

   

International

13,100

   

23,500

   

(10,400)

   

(44)

   

Total

21,500

   

42,300

   

(20,800)

   

(49)

   
                   

Deletions

                 

United States (a)

(20,900)

   

(15,700)

   

(5,200)

   

(33)

   

International (a)(b)

(27,600)

   

(14,700)

   

(12,900)

   

(88)

   

Total

(48,500)

   

(30,400)

   

(18,100)

   

(60)

   
                   

Ending Room Count (September 30)

                 

United States

497,700

   

509,200

   

(11,500)

   

(2)

   

International

306,300

   

312,600

   

(6,300)

   

(2)

   

Total

804,000

   

821,800

   

(17,800)

   

(2%)

   
                   
 

As of September 30,

 

FY 2019 Royalty Contribution

 

2020

 

2019

 

Change

 

% Change

 

System Size

                 

United States

                 

Economy

253,000

   

261,200

   

(8,200)

   

(3%)

   

Midscale and Upper Midscale

204,900

   

207,700

   

(2,800)

   

(1)

   

Extended Stay/Lifestyle

24,200

   

21,800

   

2,400

   

11

   

Upscale (a)

15,600

   

18,500

   

(2,900)

   

(16)

   

Total United States (a)

497,700

   

509,200

   

(11,500)

   

(2)

 

86%

                   

International

                 

Greater China (a)(b)

142,000

   

151,400

   

(9,400)

   

(6)

 

3

Rest of Asia Pacific (a)

27,000

   

25,300

   

1,700

   

7

 

1

Europe, the Middle East and Africa (a)

67,400

   

66,800

   

600

   

1

 

4

Canada

40,600

   

40,700

   

(100)

   

 

5

Latin America

29,300

   

28,400

   

900

   

3

 

1

Total International

306,300

   

312,600

   

(6,300)

   

(2)

 

14

                   

Global

804,000

   

821,800

   

(17,800)

   

(2%)

 

100%

                         
     
   

(a) 

2020 reflects the global impact from the Company's removal of approximately 9,200 non-compliant, unprofitable and brand detracting rooms during the third quarter.

(b) 

2020 reflects the impact from the Company's removal of approximately 9,000 non-compliant master franchise rooms in China during the second quarter.

Table 5 (continued)

WYNDHAM HOTELS & RESORTS

REVENUE DRIVERS

               
 

Three Months Ended September 30,

 

2020

 

2019

 

% Change

 

Constant Currency %

 Change (a)

Regional RevPAR Growth

             

United States

             

Economy

$

33.86

   

$

44.97

   

(25%)

   

Midscale and Upper Midscale

38.74

   

58.96

   

(34)

   

Extended Stay/Lifestyle

38.35

   

72.78

   

(47)

   

Upscale

41.15

   

108.23

   

(62)

   

Total United States

$

36.31

   

$

53.79

   

(32)

   
               

International

             

Greater China

$

13.26

   

$

18.60

   

(29)

 

(30%)

Rest of Asia Pacific

18.59

   

40.52

   

(54)

 

(55)

Europe, the Middle East and Africa

21.93

   

56.54

   

(61)

 

(62)

Canada

33.01

   

62.18

   

(47)

 

(47)

Latin America

6.84

   

33.60

   

(80)

 

(76)

Total International

$

17.72

   

$

35.63

   

(50)

 

(50)

               

Global

$

29.23

   

$

46.94

   

(38%)

 

(38%)

               

Average Royalty Rate

             

United States

4.4%

   

4.5%

   

(10 bps)

   

International

2.1%

   

2.1%

   

   

Global

3.9%

   

3.8%

   

10 bps

   
               
 

Nine Months Ended September 30,

 

2020

 

2019

 

% Change

 

Constant Currency %

 Change (a)

Regional RevPAR Growth

             

United States

             

Economy

$

27.87

   

$

39.26

   

(29%)

   

Midscale and Upper Midscale

33.34

   

54.19

   

(38)

   

Extended Stay/Lifestyle

35.51

   

68.59

   

(48)

   

Upscale

45.36

   

103.93

   

(56)

   

Total United States

$

30.99

   

$

48.52

   

(36)

   
               

International

             

Greater China

$

8.94

   

$

18.32

   

(51)

 

(51%)

Rest of Asia Pacific

17.87

   

37.38

   

(52)

 

(51)

Europe, the Middle East and Africa

20.43

   

51.88

   

(61)

 

(60)

Canada

25.28

   

47.86

   

(47)

 

(47)

Latin America

12.87

   

34.08

   

(62)

 

(56)

Total International

$

14.69

   

$

32.39

   

(55)

 

(54)

               

Global

$

24.73

   

$

42.46

   

(42%)

 

(41%)

               

Average Royalty Rate

             

United States

4.5%

   

4.5%

   

   

International

2.2%

   

2.1%

   

10 bps

   

Global

4.0%

   

3.8%

   

20 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

   

$

28.83

   

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

   

$

36.06

   

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

   

$

17.39

   

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

   

748,200

   

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

   

459,600

   

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

   

288,600

   

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

   

$

34.34

   

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

   

$

39.12

   

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

   

$

23.16

   

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

   

55,800

   

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

   

38,100

   

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

   

17,700

   

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

   

$

29.23

   

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

   

$

36.31

   

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

   

$

17.72

   

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

   

804,000

   

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

   

497,700

   

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

   

306,300

   

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

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)

   

$

27

         

Provision/(benefit) for income taxes

9

   

(48)

   

15

         

Depreciation and amortization

25

   

25

   

24

         

Interest expense, net

25

   

28

   

29

         

Stock-based compensation expense

4

   

5

   

5

         

Impairments, net (a)

   

206

   

         

Restructuring costs (b)

13

   

16

   

         

Transaction-related expenses, net (c)

8

   

5

   

         

Separation-related expenses (d)

1

   

   

         

Foreign currency impact of highly inflationary countries (e)

   

   

1

         

Adjusted EBITDA

$

107

   

$

63

   

$

101

         
                   

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 (f)

   

45

   

   

   

45

 

Contract termination costs (g)

   

9

   

34

   

(1)

   

42

 

Restructuring costs (h)

   

   

   

8

   

8

 

Transaction-related expenses, net (c)

7

   

11

   

12

   

10

   

40

 

Separation-related expenses (d)

21

   

1

   

   

   

22

 

Transaction-related item (i)

   

   

20

   

   

20

 

Foreign currency impact of highly inflationary countries (e)

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 (e)

   

   

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) 

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

(f) 

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

(g) 

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

(h) 

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

(i) 

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. 

Table 7 (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 September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

2020

 

2019

Diluted EPS

$

0.29

   

$

0.47

   

$

(1.34)

   

$

0.95

 
               

Net income/(loss)

$

27

   

$

45

   

$

(125)

   

$

93

 
               

Adjustments:

             

Impairments, net

   

   

206

   

45

 

Restructuring costs

   

   

29

   

 

Transaction-related expenses, net

   

12

   

13

   

30

 

Separation-related expenses

   

   

1

   

22

 

Contract termination costs

   

34

   

   

43

 

Transaction-related item

   

20

   

   

20

 

Foreign currency impact of highly inflationary countries

1

   

3

   

2

   

4

 

Acquisition-related amortization expense (a)

9

   

9

   

28

   

28

 

Total adjustments before tax

10

   

78

   

279

   

192

 

Income tax provision (b)

3

   

17

   

65

   

46

 

Total adjustments after tax

7

   

61

   

214

   

146

 

Adjusted net income

$

34

   

$

106

   

$

89

   

$

239

 

Adjustments - EPS impact

0.07

   

0.63

   

2.30

   

1.51

 

Adjusted diluted EPS

$

0.36

   

$

1.10

   

$

0.96

   

$

2.46

 
               

Diluted weighted average shares outstanding

93.4

   

96.3

   

93.5

   

97.2

 
     
   

(a) 

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

(b) 

Reflects the estimated tax effects of the adjustments.

Table 8
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" or "comparable basis" 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.

SOURCE Wyndham Hotels & Resorts

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