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Wyndham Hotels & Resorts Reports Third Quarter 2020 Results

·14 min read

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:

(PRNewsfoto/Wyndham Hotels & Resorts)
(PRNewsfoto/Wyndham Hotels & Resorts)
  • 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 franchised system, which included 8,500 rooms transferred from the hotel management segment related to the CorePoint Lodging asset sales, declined 1% globally. Excluding the transfer, franchised net rooms declined 2% globally, reflecting the Company's previously announced removal of non-compliant and brand detracting rooms, of which approximately 9,000 were removed during the second quarter and approximately 7,900 were removed during the third quarter.

RevPAR declined 36% globally, reflecting a 31% decline in the U.S. and a 50% decline internationally. On a comparable basis, which is in constant currency and excludes hotels temporarily closed due to COVID-19, global RevPAR declined 33%, reflecting a 30% decline in the U.S. and a 43% decline internationally.

Revenues decreased $143 million compared to third quarter 2019 reflecting the impact of COVID-19 on travel demand globally, while a decline in adjusted EBITDA of $78 million was partially mitigated by cost containment initiatives and lower volume-related expenses.

Hotel Management


2020


2019


% Change

System size


55,800



63,400


(12)

Global RevPAR

$

34.34


$

66.65


(48)








Revenue (millions)

$

101


$

180


(44)

Adjusted EBITDA (millions)


2



13


N/A

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 at www.investor.wyndhamhotels.com . 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 www.wyndhamhotels.com . 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 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.

Contacts


Investors:  

Media:

Matt Capuzzi 

Dave DeCecco  

Senior Vice President, Investor Relations 

Group Vice President, Global Communications 

973 753-6453 

973 753-7474 

ir@wyndham.com  

WyndhamHotelsNews@wyndham.com

 

 

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.

Cision
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SOURCE Wyndham Hotels & Resorts