Wyndham Hotels & Resorts Reports Fourth Quarter and Full-Year 2020 Results

Rhea-AI Summary

Wyndham Hotels & Resorts (NYSE: WH) reported Q4 2020 results showing a diluted loss per share of $0.08 and a net loss of $7 million. Full-year losses reached $132 million, with adjusted net income of $96 million. Global RevPAR declined 33% for Q4 and 35% for the year. Revenues fell from $492 million in Q4 2019 to $296 million in Q4 2020, primarily due to COVID-19 impacts. The company has a cash balance of $493 million and increased its quarterly dividend by 100% to $0.16, highlighting strong adjusted EBITDA and free cash flow despite challenges.

Positive

• Generated $67 million in net cash from operating activities for the full year.
• Maintained a strong adjusted EBITDA of $56 million for Q4 2020 and $327 million for the full year.
• Increased quarterly cash dividend by 100% to $0.16 per share.

Negative

• Reported a net loss of $132 million for the full year, compared to a profit of $157 million in 2019.
• Global RevPAR decreased by 33% in Q4 and 35% for the year, reflecting significant impacts from COVID-19.
• Revenues declined from $2,053 million in 2019 to $1,300 million in 2020.

PARSIPPANY, N.J., Feb. 10, 2021 /PRNewswire/ -- Wyndham Hotels & Resorts (NYSE: WH) today announced results for the three months and year ended December 31, 2020. Highlights include:

• Diluted loss per share for the quarter was $0.08 and adjusted diluted earnings per share was $0.07; diluted loss per share for the full-year was $1.42 and adjusted diluted earnings per share was $1.03.
• Net loss for the quarter was $7 million and adjusted net income was $7 million; net loss for the full-year was $132 million and adjusted net income was $96 million.
• Adjusted EBITDA was $56 million for the quarter and $327 million for the full-year.
• Global comparable RevPAR for the quarter declined 33% year-over-year; global comparable RevPAR for the year declined 35% year-over-year.
• System-wide rooms declined 4% year-over-year.
• Net cash provided by operating activities for the full-year was $67 million and free cash flow was $34 million.
• Paid quarterly cash dividend of $0.08 per share in fourth quarter, and Board of Directors recently authorized a 100% increase in the quarterly cash dividend to $0.16 per share beginning with the dividend expected to be declared in first quarter 2021.
• Repaid all remaining revolver credit facility borrowings.

"We generated strong adjusted EBITDA and free cash flow in the worst year our industry has ever experienced. At the same time, we strengthened our portfolio with the completion of our strategic termination plan and drove sequential growth in hotel openings and our development pipeline," said Geoffrey A. Ballotti, president and chief executive officer. "Our non-urban, drive-to economy and midscale hotels, combined with our ongoing investment in sales and marketing, captured rising pent-up leisure travel demand, which continued to produce sequential RevPAR improvements and domestic market share gains for our franchisees over the course of 2020."

Fourth Quarter 2020 Operating Results

Revenues declined from $492 million in the fourth quarter of 2019 to $296 million in the fourth quarter of 2020. The decline includes lower pass-through cost-reimbursement revenues of $70 million, which have no impact on adjusted EBITDA, in the Company's hotel management business. Excluding cost-reimbursement revenues, revenues declined $126 million primarily reflecting a 33% decline in comparable RevPAR and the impact from hotels temporarily closed due to COVID-19, as well as a $15 million decline in license and other fees also reflecting the impact of COVID-19 on travel demand globally.

The Company generated a net loss of $7 million, or $0.08 per diluted share, compared to net income of $64 million, or $0.68 per diluted share, in the fourth quarter of 2019. The decrease of $71 million, or $0.76 per diluted share, was primarily due to the RevPAR and license fee declines, as well as excess marketing fund spend, which were partially offset by cost containment initiatives, lower volume-related expenses and the absence of 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.

Fourth Quarter 2020 Business Segment Discussion

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

Hotel Franchising

			2020						2019						% Change
System size			746,500						770,200						(3)
Global RevPAR			$	23.19					$	34.51					(33)
Revenue (millions)			$	202					$	300					(33)
Adjusted EBITDA (millions)			75						151						(50)

The Company's franchised system declined 3% primarily reflecting the Company's previously announced removal of approximately 18,500 non-compliant and brand detracting rooms. In addition, net franchised rooms includes approximately 7,800 rooms that were transferred from the hotel management segment primarily related to the CorePoint Lodging asset sales, which were partially offset by the deletion of approximately 5,300 low-royalty rooms in connection with the sale of certain hotels by a strategic partner.

RevPAR declined 33% globally reflecting a 28% decline in the U.S. and a 43% decline internationally. On a comparable basis, which is in constant currency and excludes hotels temporarily closed due to COVID-19, global RevPAR declined 31% reflecting a 28% decline in the U.S. and a 40% decline internationally.

Revenues decreased $98 million compared to fourth quarter 2019 reflecting the impact of COVID-19 on travel demand globally, while a decline in adjusted EBITDA of $76 million further reflected excess marketing fund spend, partially mitigated by cost containment initiatives and lower volume-related expenses.

Hotel Management

			2020						2019						% Change
System size			49,400						60,800						(19)
Global RevPAR			$	32.91					$	59.19					(44)
Revenue (millions)			$	94					$	190					(51)
Adjusted EBITDA (millions)			(1)						21						N/A

The Company's managed system declined 19% primarily reflecting approximately 7,800 rooms that were transferred to the hotel franchising segment primarily as a result of CorePoint Lodging asset sales. Excluding the transfer of these rooms, the Company's managed system decreased 7% primarily reflecting the Company's previously announced removal of approximately 2,900 unprofitable management guarantee hotel rooms.

RevPAR declined 44% globally, domestically and internationally. On a comparable basis, which excludes hotels temporarily closed due to COVID-19, global RevPAR declined 43%, including a 44% decline in the U.S. and a 42% decline internationally.

Revenues decreased $96 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 decreased $26 million due to the unfavorable impact of COVID-19 on travel demand globally. Adjusted EBITDA declined $22 million as the RevPAR impacts were partially mitigated by lower volume-related expenses.

Full-Year 2020 Operating Results

Revenues declined from $2,053 million in 2019 to $1,300 million in 2020. The decline includes lower pass-through cost-reimbursement revenues of $273 million, which have no impact on adjusted EBITDA, in the Company's hotel management business. Excluding cost-reimbursement revenues, revenues declined $480 million primarily reflecting a 35% decline in comparable RevPAR and the impact from hotels temporarily closed due to COVID-19, as well as a $47 million decline in license and other fees also reflecting the impact of COVID-19 on travel demand globally.

The Company generated a net loss of $132 million, or $1.42 per diluted share, in 2020 compared to net income of $157 million, or $1.62 per diluted share, in 2019. The decline of $289 million, or $3.04 per diluted share, was primarily due to the revenue decline, impact of the non-cash impairment charges and excess marketing fund spend, which were partially offset by cost containment initiatives, lower volume-related, separation-related and transaction-related expenses and the absence of contract termination 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.

Development

As of December 31, 2020, the Company's hotel system of over 8,900 properties and approximately 796,000 rooms declined 4% year-over-year primarily reflecting unusual termination events resulting in the deletion of approximately 26,700 rooms, comprised of 18,500 non-compliant, brand detracting rooms, 5,300 rooms in connection with the strategic partner hotel sales and 2,900 unprofitable management guarantee rooms. As a result, the Company's global retention rate declined 330 basis points year-over-year to 91.5%.

The Company awarded over 580 new contracts this year and its development pipeline at year-end consisted of approximately 1,400 hotels and approximately 185,000 rooms, growing sequentially by 120 basis points domestically and 20 basis points globally. Approximately 64% of the Company's development pipeline is international and 75% is new construction, of which 34% have broken ground.

Cash and Liquidity

During the fourth quarter of 2020, the Company repaid all remaining borrowings under its revolving credit facility. Accordingly, the Company's cash balance decreased $242 million since September 30, 2020 to $493 million as of December 31, 2020. The Company had over $1.2 billion in total liquidity available as of December 31, 2020.

The Company generated $67 million of net cash provided by operating activities in 2020 and $34 million of free cash flow in 2020. Excluding $66 million of special-item cash outlays, primarily relating to the Company's restructuring initiatives, as well as transaction-related and separation-related cash payments, adjusted free cash flow in 2020 was $100 million.

Dividends

The Company paid common stock dividends of $7 million, or $0.08 per share, in the fourth quarter of 2020. For the full-year, the Company paid $53 million, or $0.56 per share, in common stock dividends.

The Company's Board of Directors authorized a 100% increase in the quarterly cash dividend to $0.16 per share from $0.08 per share, beginning with the dividend that is expected to be declared in the first quarter of 2021.

2021 Projections

The Company is not providing a complete outlook for full-year 2021 given the RevPAR uncertainties ahead; however, provided below is the Company's best view of certain operating statistics and financial metrics for full-year 2021:

• Net rooms growth of 1% to 2%.
• Every point of RevPAR change versus 2020 is expected to generate approximately $2.5 million of adjusted EBITDA change versus 2020. This estimate does not include impacts from license fees or the marketing funds.
• License fees are expected to be $70 million reflecting the minimum levels outlined in the underlying agreements.
• Marketing, reservation and loyalty expenses are not expected to exceed marketing, reservation and loyalty revenues. As such, the Company expects no meaningful impact to full-year 2021 adjusted EBITDA from the marketing, reservation and loyalty funds.
• The Company does not expect any meaningful special-item cash outlays in 2021.

More detailed projections are available in Table 8 of this press release. The Company is providing certain financial metrics only on a non-GAAP basis because, without unreasonable efforts, it is unable to predict with reasonable certainty the occurrence or amount of all of the adjustments or other potential adjustments that may arise in the future during the forward-looking period, which can be dependent on future events that may not be reliably predicted. Based on past reported results, where one or more of these items have been applicable, such excluded items could be material, individually or in the aggregate, to the reported results.

Conference Call Information

Wyndham Hotels will hold a conference call with investors to discuss the Company's results and outlook on Thursday, February 11, 2021 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 beginning at noon ET on February 11, 2021. A telephone replay will be available for approximately ten days beginning at noon ET on February 11, 2021 at 800 723-7372.

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 8,900 hotels across nearly 95 countries on six continents. Through its network of approximately 796,000 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 86 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: Matt Capuzzi Senior Vice President, Investor Relations 973 753-6453 ir@wyndham.com			Media:  Dave DeCecco   Group Vice President, Global Communications  973 753-7474  WyndhamHotelsNews@wyndham.com

 

Table 1
WYNDHAM HOTELS & RESORTS
INCOME (LOSS) STATEMENT
(In millions, except per share data)
(Unaudited)
			Three Months Ended December 31,												Year Ended December 31,
			2020						2019						2020						2019
Net revenues
Royalties and franchise fees			$	78					$	113					$	328					$	480
Marketing, reservation and loyalty			82						142						370						562
Management and other fees			14						37						64						125
License and other fees			20						35						84						131
Cost reimbursements			76						146						350						623
Other			26						19						104						132
Net revenues			296						492						1,300						2,053
Expenses
Marketing, reservation and loyalty			108						126						419						563
Operating			27						40						109						164
General and administrative			34						32						116						130
Cost reimbursements			76						146						350						623
Depreciation and amortization			24						28						98						109
Impairments, net			—						—						206						45
Restructuring			5						8						34						8
Transaction-related, net			—						10						12						40
Separation-related			1						—						2						22
Contract termination			—						(1)						—						42
Total expenses			275						389						1,346						1,746
Operating income/(loss)			21						103						(46)						307
Interest expense, net			30						25						112						100
(Loss)/income before income taxes			(9)						78						(158)						207
(Benefit from)/provision for income taxes			(2)						14						(26)						50
Net (loss)/income			$	(7)					$	64					$	(132)					$	157
(Loss)/earnings per share
Basic			$	(0.08)					$	0.68					$	(1.42)					$	1.63
Diluted			(0.08)						0.68						(1.42)						1.62
Weighted average shares outstanding
Basic			93.3						94.8						93.4						96.5
Diluted			93.3						95.0						93.4						96.6

 

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 this measure 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					$	202					$	863
			2019			269						331						379						300						1,279
			2018			203						289						348						295						1,135
			Adjusted EBITDA
			2020			$	108					$	83					$	117					$	75					$	383
			2019			113						162						195						151						622
			2018			86						129						178						122						515
Hotel Management
			Net revenues
			2020			$	167					$	76					$	101					$	94					$	437
			2019			197						201						180						190						768
			2018			99						146						252						229						726
			Adjusted EBITDA
			2020			$	17					$	(4)					$	2					$	(1)					$	13
			2019			16						16						13						21						66
			2018			16						8						5						18						47
Corporate and Other
			Net revenues
			2020			$	—					$	—					$	—					$	—					$	—
			2019			2						1						1						2						6
			2018			—						—						4						3						7
			Adjusted EBITDA
			2020			$	(18)					$	(16)					$	(18)					$	(18)					$	(69)
			2019			(18)						(19)						(18)						(19)						(75)
			2018			(10)						(12)						(17)						(15)						(55)
Total Company
			Net revenues
			2020			$	410					$	258					$	337					$	296					$	1,300
			2019			468						533						560						492						2,053
			2018			302						435						604						527						1,868
			Net income/(loss)
			2020			$	22					$	(174)					$	27					$	(7)					$	(132)
			2019			21						26						45						64						157
			2018			39						21						58						43						162
			Adjusted EBITDA
			2020			$	107					$	63					$	101					$	56					$	327
			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 9 for definitions.

 

Table 3
WYNDHAM HOTELS & RESORTS
CONDENSED CASH FLOWS
(In millions)
				Year Ended December 31,
				2020						2019
Operating activities
Net (loss)/income				$	(132)					$	157
Depreciation and amortization				98						109
Impairment (a)				209						45
Trade receivables				(38)						(27)
Accounts payable, accrued expenses and other current liabilities				(46)						(28)
Payment of tax liability assumed in La Quinta acquisition				—						(195)
Deferred revenues				(54)						33
Other, net				30						6
Net cash provided by operating activities				67						100
Investing activities
Property and equipment additions				(33)						(50)
Other, net				2						(3)
Net cash used in investing activities				(31)						(53)
Financing activities
Proceeds from borrowings				1,244						—
Principal payments on long-term debt				(760)						(16)
Debt issuance costs				(10)						—
Capital contribution from former Parent				—						68
Dividends to shareholders				(53)						(112)
Repurchases of common stock				(50)						(242)
Other, net				(8)						(18)
Net cash provided by/(used in) financing activities				363						(320)
Effect of changes in exchange rates on cash, cash equivalents and restricted cash				—						1
Net increase/(decrease) in cash, cash equivalents and restricted cash				399						(272)
Cash, cash equivalents and restricted cash, beginning of period				94						366
Cash, cash equivalents and restricted cash, end of period				$	493					$	94
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, to the extent permitted. 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 consolidated statement of cash flows.
				Year Ended December 31,
				2020						2019
Net cash provided by operating activities				$	67					$	100
Less: Property and equipment additions				(33)						(50)
Free cash flow				$	34					$	50
Adjusted free cash flow (b)				$	100					$	360
(a) 2020 excludes $3 million of cash proceeds from a previously impaired asset.
(b) Excludes $36 million and $78 million in 2020 and 2019, respectively, relating to transaction-related and separation-related cash payments in connection with our acquisition of La Quinta, our spin-off from Wyndham Worldwide and our agreement with CorePoint Lodging. Additionally, 2020 excludes $30 million of cash outlays relating to our restructuring initiatives and 2019 excludes $195 million of payments to tax authorities related to the La Quinta acquisition, $35 million related to a payment to terminate an unprofitable hotel-management arrangement and $2 million of capital expenditures at our owned hotel in Puerto Rico, reimbursed by insurance proceeds in 2018. See Table 9 for definition of adjusted free cash flow.

 

Table 4
WYNDHAM HOTELS & RESORTS
BALANCE SHEET SUMMARY AND DEBT
(In millions)
			As of December 31, 2020						As of December 31, 2019
Assets
Cash and cash equivalents			$	493					$	94
Trade receivables, net			295						304
Property and equipment, net			278						307
Goodwill and intangible assets, net			3,240						3,485
Other current and non-current assets			338						343
Total assets			$	4,644					$	4,533
Liabilities and stockholders' equity
Total debt			$	2,597					$	2,122
Other current liabilities			325						441
Deferred income tax liabilities			359						387
Other non-current liabilities			400						371
Total liabilities			3,681						3,321
Total stockholders' equity			963						1,212
Total liabilities and stockholders' equity			$	4,644					$	4,533
Our outstanding debt as of December 31, 2020 was as follows:
			As of December 31, 2020						As of December 31, 2019
$750 million revolving credit facility (due May 2023)			$	—					$	—
Term loan (due May 2025)			1,554						1,568
5.375% senior unsecured notes (due April 2026)			496						494
4.375% senior unsecured notes (due August 2028)			492						—
Finance leases			55						60
Total debt			2,597						2,122
Cash and cash equivalents			493						94
Net debt			$	2,104					$	2,028
Our outstanding debt as of December 31, 2020 matures as follows:
									Amount
Within 1 year									$	21
Between 1 and 2 years									21
Between 2 and 3 years									22
Between 3 and 4 years									22
Between 4 and 5 years									1,496
Thereafter									1,015
Total									$	2,597

 

Table 5
WYNDHAM HOTELS & RESORTS
REVENUE DRIVERS
				Year Ended December 31,
				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
Global				831,000						809,900						21,100						3
Additions
United States				13,600						27,000						(13,400)						(50)
International				22,000						36,500						(14,500)						(40)
Global				35,600						63,500						(27,900)						(44)
Deletions
United States (a)				(36,500)						(22,900)						(13,600)						(59)
International (a)				(34,200)						(19,500)						(14,700)						(75)
Global (a)				(70,700)						(42,400)						(28,300)						(67)
Ending Room Count (December 31)
United States				487,300						510,200						(22,900)						(4)
International				308,600						320,800						(12,200)						(4)
Global				795,900						831,000						(35,100)						(4%)
				As of December 31,																								FY 2019 Royalty Contribution (b)
				2020						2019						Change						% Change
System Size
United States
Economy				250,700						259,900						(9,200)						(4%)
Midscale and Upper Midscale				203,700						209,200						(5,500)						(3)
Extended Stay/Lifestyle				17,000						23,600						(6,600)						(28)
Upscale				15,900						17,500						(1,600)						(9)
Total United States (a)				487,300						510,200						(22,900)						(4)						86%
International
Greater China (a)				144,500						154,600						(10,100)						(7)						3
Rest of Asia Pacific (a)				27,800						27,600						200						1						1
Europe, the Middle East and Africa (a)				66,200						68,700						(2,500)						(4)						4
Canada				40,700						40,700						—						—						5
Latin America (a)				29,400						29,200						200						1						1
Total International (a)				308,600						320,800						(12,200)						(4)						14
Global				795,900						831,000						(35,100)						(4%)						100%
(a) 2020 includes the global impacts from the Company's removal of approximately 18,500 non-compliant brand detracting rooms, 2,900 unprofitable rooms in connection with a guaranteed management contract and 5,300 low-royalty rooms in connection with hotel sales by a strategic partner.
(b) FY 2019 provided to illustrate pre COVID-19 results.

 

Table 5 (continued)
WYNDHAM HOTELS & RESORTS
REVENUE DRIVERS
				Three Months Ended December 31,
				2020						2019						% Change						Constant Currency %  Change (a)
Regional RevPAR Growth
United States
Economy				$	25.67					$	31.75					(19%)
Midscale and Upper Midscale				29.70						44.57						(33)
Extended Stay/Lifestyle				29.56						59.08						(50)
Upscale				36.12						94.91						(62)
Total United States				$	27.80					$	40.09					(31)
International
Greater China				$	17.42					$	18.26					(5)						(10%)
Rest of Asia Pacific				20.22						39.52						(49)						(51)
Europe, the Middle East and Africa				16.34						48.68						(66)						(66)
Canada				21.22						37.25						(43)						(44)
Latin America				10.84						33.30						(67)						(63)
Total International				$	17.37					$	30.29					(43)						(44)
Global				$	23.84					$	36.36					(34%)						(35%)
Average Royalty Rate
United States				4.5%						4.5%						—
International				1.8%						2.0%						(20 bps)
Global				3.8%						3.7%						10 bps
				Year Ended December 31,
				2020						2019						% Change						Constant Currency %  Change (a)
Regional RevPAR Growth
United States
Economy				$	27.32					$	37.38					(27%)
Midscale and Upper Midscale				32.44						51.73						(37)
Extended Stay/Lifestyle				33.97						65.98						(49)
Upscale				43.21						101.78						(58)
Total United States				$	30.20					$	46.39					(35)
International
Greater China				$	10.99					$	18.30					(40)						(41%)
Rest of Asia Pacific				18.45						37.94						(51)						(51)
Europe, the Middle East and Africa				19.41						51.07						(62)						(61)
Canada				24.26						45.16						(46)						(46)
Latin America				12.36						33.88						(64)						(58)
Total International				$	15.35					$	31.85					(52)						(51)
Global				$	24.51					$	40.92					(40%)						(40%)
Average Royalty Rate
United States				4.5%						4.5%						—
International				2.1%						2.0%						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							$	23.19					$	23.74
			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							$	27.28					$	29.50
			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							$	16.71					$	14.75
			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								746,500						746,500
			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								452,600						452,600
			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								293,900						293,900
			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							$	32.91					$	34.67
			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							$	34.14					$	37.97
			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							$	29.86					$	26.21
			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								49,400						49,400
			2019									66,800							65,200							63,400								60,800						60,800
			2018									25,700							66,700							67,000								67,100						67,100
			U.S. Rooms (b)
			2020									42,900							41,800							38,100								34,700						34,700
			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								14,700						14,700
			2019									15,100							14,500							14,300								15,200						15,200
			2018									12,900							13,300							13,700								14,900						14,900

 

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					$	23.84					$	24.51
			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					$	27.80					$	30.20
			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					$	17.37					$	15.35
			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						795,900						795,900
			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						487,300						487,300
			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						308,600						308,600
			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					$	(7)					$	(132)
Provision for/(benefit from) income taxes			9						(48)						15						(2)						(26)
Depreciation and amortization			25						25						24						24						98
Interest expense, net			25						28						29						30						112
Stock-based compensation expense			4						5						5						5						19
Impairments, net (a)			—						206						—						—						206
Restructuring costs (b)			13						16						—						5						34
Transaction-related expenses, net (c)			8						5						—						—						12
Separation-related expenses (d)			1						—						—						1						2
Foreign currency impact of highly inflationary countries (e)			—						—						1						—						2
Adjusted EBITDA			$	107					$	63					$	101					$	56					$	327
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 December 31,												Year Ended December 31,
				2020						2019						2020						2019
Diluted EPS				$	(0.08)					$	0.68					$	(1.42)					$	1.62
Net (loss)/income				$	(7)					$	64					$	(132)					$	157
Adjustments:
Impairments, net				—						—						206						45
Restructuring costs				5						8						34						8
Transaction-related expenses, net				—						10						12						40
Separation-related expenses				1						—						2						22
Contract termination costs				—						(1)						—						42
Transaction-related item				—						—						—						20
Foreign currency impact of highly inflationary countries				—						1						2						5
Acquisition-related amortization expense (a)				9						9						37						37
Total adjustments before tax				15						27						293						219
Income tax provision (b)				1						14						65						59
Total adjustments after tax				14						13						228						160
Adjusted net income				$	7					$	77					$	96					$	317
Adjustments - EPS impact				0.15						0.13						2.45						1.66
Adjusted diluted EPS				$	0.07					$	0.81					$	1.03					$	3.28
Diluted weighted average shares outstanding				93.6						95.0						93.5						96.6
(a) Reflected in depreciation and amortization on the income (loss) statement.
(b) Reflects the estimated tax effects of the adjustments. In fourth quarter 2020, this amount was reduced by a $3 million impact from changes in state effective tax rates. 2019 includes a one-time $6 million benefit resulting from a change in our state income tax filing position due to our spin-off from Wyndham Worldwide.

 

Table 8
WYNDHAM HOTELS & RESORTS
2021 PROJECTIONS
As of February 10, 2021
(In millions, except per share data)
				Projections
Adjusted EBITDA sensitivity to global RevPAR change (a)				$			2.5 per point
License fees (b)				$			70
Marketing, reservation and loyalty funds							Break even
Depreciation and amortization expense (c)				$			60 - 62
Stock-based compensation expense				$			27 - 29
Interest expense, net				$			113 - 115
Adjusted tax rate							28%
Capital expenditures							Approx. $40
Development advances							Approx. $40
Free cash flow conversion rate (d)							Approx. 50%
Diluted shares (e)							94.1
Year-over-Year Growth
Number of rooms							1% - 2%
(a) Does not include impacts from license fees or the marketing funds.
(b) Reflects the minimum levels outlined in the underlying agreements.
(c) Excludes amortization of acquisition-related intangible assets of $36 - $38 million.
(d) Represents the percentage of adjusted EBITDA that is expected to produce free cash flow.
(e) Excludes the impact of any share repurchases in 2021.
In determining adjusted EBITDA sensitivity to global RevPAR, the adjusted tax rate and the free cash flow conversion rate, we exclude certain items which are otherwise included in determining the comparable GAAP financial measures. We are providing these measures on a non-GAAP basis only because, without unreasonable efforts, we are unable to predict with reasonable certainty the occurrence or amount of all the adjustments or other potential adjustments that may arise in the future during the forward-looking period, which can be dependent on future events that may not be reliably predicted. Based on past reported results, where one or more of these items have been applicable, such excluded items could be material, individually or in the aggregate, to the reported results.

Table 9
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 net 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.

Adjusted Free Cash Flow: Adjusted free cash flow represents free cash flow excluding special-item, cash outlays, which are related to our separation from Wyndham Worldwide, our acquisition and integration of La Quinta, our 2019 contract terminations, impairments and restructuring costs, including COVID-19 related. We believe adjusted 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, to the extent permitted. This non-GAAP measure is not necessarily a representation of how we will use excess cash. A limitation of using adjusted free cash flow versus the GAAP measure of net cash provided by operating activities as a means for evaluating Wyndham Hotels is that adjusted free cash flow does not represent the total cash movement for the period as detailed in the consolidated statement of cash flows.

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).

Free Cash Flow: See Table 3 for definition.

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.

View original content to download multimedia:http://www.prnewswire.com/news-releases/wyndham-hotels--resorts-reports-fourth-quarter-and-full-year-2020-results-301226235.html

SOURCE Wyndham Hotels & Resorts