Wyndham Worldwide Reports Second Quarter 2017 Results

PARSIPPANY, N.J., Aug. 2, 2017 (hospitalitybusinessnews.com) — Wyndham Worldwide Corporation today announced results for the three months ended June 30, 2017.  Earlier today the Company also announced its plan to separate into two publicly traded hospitality companies.

SECOND QUARTER 2017 OPERATING RESULTS
Second quarter revenues were $1.5 billion, up 5% compared with the prior year period. Full reconciliations of GAAP results to non-GAAP measures for all reported periods appear in the tables to this press release.

Net income for the second quarter of 2017 was $78 million compared with $156 million for the second quarter of 2016, reflecting a non-cash impairment charge on the write-down of undeveloped land detailed in Table 7 of this press release.  Diluted earnings per share (EPS) were $0.75 compared with $1.39 for the prior year period.

Adjusted net income for the second quarter of 2017, which excludes charges in both 2016 and 2017 as detailed in Table 7 of this press release, was $159 million compared with $156 million for the second quarter of 2016, reflecting strong top-line momentum across the Company, partially offset by a higher provision for loan losses and higher legal fees at Wyndham Vacation Ownership.  Adjusted diluted EPS was $1.53 compared with $1.40 per share in the prior year period, further reflecting the benefit of the Company’s share repurchase program.

Second quarter EBITDA was $214 million, compared with $340 million in the prior year period, reflecting the previously referenced non-cash impairment charge on the write-down of undeveloped land detailed in Table 8 of this press release.  Adjusted EBITDA, which excludes charges in both 2017 and 2016 as detailed in Table 8 of this press release, was $350 million, compared with $340 million in the prior year period, primarily reflecting strong top-line momentum across the Company, partially offset by a higher provision for loan losses and higher legal fees at Wyndham Vacation Ownership.  Adjusted EBITDA increased 4% on a currency-neutral basis.

“With summer closing in on the half-way point, all of our businesses are performing well,” said Stephen P. Holmes, chairman and CEO. “Our hotel group is seeing constant currency RevPAR growth both domestically and internationally, our vacation rentals business is benefiting from continued strong booking trends, and sales sharply accelerated at our vacation ownership business as we continue to execute on our new owner growth strategy. This strong topline momentum further reflects how these businesses are poised for continued success as stand-alone public companies.”

For the six months ended June 30, 2017, net cash provided by operating activities was $663 million, compared with $706 million in the prior year period. The decrease primarily reflects higher inventory spending and the timing of working capital.

Free cash flow was $581 million for the six months ended June 30, 2017, compared with $616 million for the same period in 2016, primarily reflecting the changes in net cash provided by operating activities.  The Company defines free cash flow as net cash provided by operating activities less capital expenditures.

SECOND QUARTER 2017 BUSINESS UNIT RESULTS

Hotel Group
Revenues were $345 million in the second quarter of 2017, compared with $334 million in the second quarter of 2016.  EBITDA was $106 million in the second quarter compared with $101 million in the prior year quarter, growing 6% on a currency-neutral basis.  Results reflect higher franchise fees and growth in the Wyndham Rewards credit card program.

Second quarter domestic same-store RevPAR increased 2.8% compared with the second quarter of 2016.  In constant currency, global system-wide, same-store RevPAR increased 3.3%.

As of June 30, 2017, the Company’s hotel system consisted of over 8,100 properties and approximately 705,700 rooms, a 3.3% net room increase compared with the second quarter of 2016.  The development pipeline increased to nearly 1,230 hotels and over 150,800 rooms, an 18% year-over-year room increase, of which 57% were international and 67% were new construction.

Destination Network
Revenues were $405 million in the second quarter of 2017, compared with $384 million in the second quarter of 2016, an increase of 5%.

Vacation rental revenues were $220 million compared with $202 million in the prior year quarter.  In constant currency and excluding acquisitions, vacation rental revenues increased 9%, reflecting a 7.8% increase in transaction volume and a 0.9% increase in the average net price per rental.  Transaction volume benefited from capacity increases across the Company’s European brands and the favorable impact from the timing of the Easter holiday.

Exchange revenues were $159 million, an increase of 1% in constant currency compared with the prior year quarter.  Exchange revenue per member increased 2.4% and the average number of members declined 1.7%.

EBITDA was $89 million in the second quarter of 2017, a 5% increase compared with the second quarter of 2016.  On a currency-neutral basis and excluding the impact of acquisitions, EBITDA increased 6%, reflecting stronger performance in our vacation rental brands, which benefited from the favorable impact of the timing of the Easter holiday, as well as the reversal of a previously recorded value-added tax reserve.

Vacation Ownership
Revenues increased 6% to $750 million in the second quarter of 2017, compared with $705 million in the second quarter of 2016.  The increase reflects an increase in gross VOI sales of 9% as well as higher consumer financing revenues, partially offset by a higher provision for loan losses.

Tour flow increased 10.3% driven by increased tours to new owners.  Volume per guest (VPG) declined 1.1%, primarily reflecting a 14% increase in sales to new owners in North America, which produce a lower VPG.

EBITDA was $47 million in the second quarter of 2017 compared with $187 million in the prior year quarter.  The EBITDA decline reflects the previously mentioned impairment charge on the write-down of undeveloped land as detailed in Table 8 of this press release.  Adjusted EBITDA was $183 million in the second quarter of 2017, a 2% decline compared with the second quarter of 2016.  Results reflect the increase in revenues, offset by higher legal expenses and the absence of a $4 million benefit from business interruption insurance claims received in the second quarter of 2016.

OTHER ITEMS

  • The Company repurchased 1.6 million shares of common stock for $150 million during the second quarter of 2017 at an average price of $95.82.  From July 1 through August 1, 2017, the Company repurchased an additional 0.5 million shares for $50 million.
  • Net interest expense in the second quarter of 2017 was $37 million compared with $32 million in the second quarter of 2016, reflecting the issuance of a $300 million 4.15% 7-year unsecured note and $400 million 4.50% 10-year unsecured note in March.
  • Depreciation and amortization in the second quarter of 2017 was $66 million, compared with $63 million in the second quarter of 2016, as additional long-term projects came into service.

Balance Sheet Information as of June 30, 2017:

  • Cash and cash equivalents of $415 million, compared with $185 million at December 31, 2016
  • Vacation ownership contract receivables, net of $2.8 billion, unchanged from December 31, 2016
  • Vacation ownership and other inventory of $1.3 billion, compared with $1.4 billion at December 31, 2016
  • Securitized vacation ownership debt of $2.1 billion, unchanged from December 31, 2016
  • Long-term debt of $3.7 billion, compared with $3.4 billion at December 31, 2016. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.1 billion as of June 30, 2017, unchanged from December 31, 2016.

A schedule of debt is included in Table 12 of this press release.

OUTLOO

The Company provides the following guidance for the full year 2017:

  • Reiterates revenues of approximately $5.80 billion to $5.95 billion
  • Reiterates adjusted net income of approximately $631 million to $652 million
  • Reiterates adjusted EBITDA of approximately $1.41 billion to $1.44 billion
  • Updates adjusted diluted EPS to approximately $6.04 to $6.24 based on a diluted share count of 104.5 million from $5.98 to $6.18 based on a diluted share count of 105.5 million

In determining adjusted net income, adjusted EBITDA and adjusted EPS, the Company excludes certain items which are otherwise included in determining the comparable GAAP financial measures. A description of the adjustments that have been applicable for the reported periods in determining adjusted net income, adjusted EBITDA and adjusted EPS are reflected in Tables 7 and 8 of this press release. The Company is providing an outlook for net income, EBITDA and EPS only on a non-GAAP basis because the Company is unable to predict with reasonable certainty the totality or ultimate outcome or occurrence of these adjustments or other potential adjustments that may arise in the future during the outlook period, which can be dependent on future events that may not be reliably predicted. See Table 10 for certain non-GAAP information concerning the outlook period.

 

Wyndham Worldwide Corporation
Earnings Release Schedules

Quarter Two – June 30, 2017

Table of Contents

Table No.

Consolidated Statements of Income (Unaudited)

1

Operating Results of Reportable Segments

2

Operating Statistics

3

Condensed Consolidated Statements of Cash Flows and Reconciliation of Free Cash Flows (Unaudited)

4

Revenue Detail by Reportable Segment

5

Brand System Details

6

Non-GAAP Reconciliation of Adjusted Net Income and EPS

7

Non-GAAP Reconciliation of Adjusted EBITDA by Reportable Segment

8

Non-GAAP Reconciliation of Gross VOI Sales

9

Non-GAAP Reconciliation of 2017 Outlook

10

Non-GAAP Reconciliation – Constant Currency, Currency Neutral and Acquisitions

11

Schedule of Debt

12

Table 1

Wyndham Worldwide Corporation

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

(Unaudited)

 Three Months Ended 

 Six Months Ended 

 June 30, 

 June 30, 

2017

2016

2017

2016

Net revenues

Service and membership fees

$

653

$

632

$

1,289

$

1,266

Vacation ownership interest sales

448

409

798

750

Franchise fees

177

172

318

310

Consumer financing

114

108

224

215

Other

87

82

169

165

Net revenues

1,479

1,403

2,798

2,706

Expenses

Operating

654

622

1,254

1,236

Cost of vacation ownership interests 

38

32

75

68

Consumer financing interest

19

19

37

36

Marketing and reservation

231

211

426

403

General and administrative

191

185

383

372

Asset impairments 

135

140

Restructuring

7

Depreciation and amortization

66

63

128

125

Total expenses

1,334

1,132

2,450

2,240

Operating income

145

271

348

466

Other (income)/expense, net

(3)

(6)

(4)

(16)

Interest expense

39

34

73

68

Early extinguishment of debt

11

Interest income

(2)

(2)

(4)

(4)

Income before income taxes

111

245

283

407

Provision for income taxes

33

89

64

156

Net income

$

78

$

156

$

219

$

251

Earnings per share

Basic

$

0.75

$

1.40

$

2.10

$

2.25

Diluted

0.75

1.39

2.09

2.23

Weighted average shares outstanding

Basic

104

111

104

112

Diluted

104

112

105

113

Table 2

(1 of 2)

Wyndham Worldwide Corporation

OPERATING RESULTS OF REPORTABLE SEGMENTS

(In millions)

In addition to other measures, management evaluates the operating results of each of its reportable segments based upon net revenues and “EBITDA”, which is defined as net income before depreciation and amortization, interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing revenues) and income taxes, each of which is presented on the Company’s Consolidated Statements of Income.  The Company also uses adjusted EBITDA as a financial measure of its operating performance.  The Company believes that EBITDA and adjusted EBITDA are useful measures of assessing performance of the Company and for the Company’s segments which, when considered with GAAP measures, give a more complete understanding of its operating performance and 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 nonrecurring and which in our view do not necessarily reflect ongoing operating performance. We also internally use these measures to assess our operating performance, both in absolute terms and in comparison to other companies, and in evaluating or making selected compensation decisions.  These supplemental disclosures are in addition to GAAP reported measures.  The Company’s presentation of EBITDA and adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.

The following tables summarize net revenues and EBITDA for the Company’s reportable segments, as well as reconcile Net Income to EBITDA for the three months ended June 30, 2017 and 2016:

Three Months Ended June 30, 

2017

2016

 Net Revenues 

 EBITDA 

 Net Revenues 

 EBITDA 

Hotel Group

$

345

$

106

$

334

$

101

Destination Network

405

89

384

85

Vacation Ownership

750

47

705

187

     Total Reportable Segments

1,500

242

1,423

373

Corporate and Other (a)

(21)

(28)

(20)

(33)

     Total Company

$

1,479

$

214

$

1,403

$

340

Reconciliation of Net Income to EBITDA

 Three Months Ended June 30,  

2017

2016

Net income

$

78

$

156

Provision for income taxes

33

89

Depreciation and amortization

66

63

Interest expense

39

34

Interest income

(2)

(2)

EBITDA

$

214

$

340

Note: Amounts may not add due to rounding. 

(a)  Includes the elimination of transactions between segments.  

The following tables summarize net revenues and adjusted EBITDA for the Company’s reportable segments for the three months ended June 30, 2017 and 2016 (for a description of adjustments and reconciliation by segment, see Table 8):

Three Months Ended June 30, 

2017

2016

Adjusted 

Adjusted 

 Net Revenues 

 EBITDA 

 Net Revenues 

 EBITDA 

Hotel Group

$

345

$

106

$

334

$

101

Destination Network

405

89

384

85

Vacation Ownership

750

183

705

187

     Total Reportable Segments

1,500

378

1,423

373

Corporate and Other (a)

(21)

(28)

(20)

(33)

     Total Company

$

1,479

$

350

$

1,403

$

340

Table 2

(2 of 2)

Wyndham Worldwide Corporation

OPERATING RESULTS OF REPORTABLE SEGMENTS

(In millions)

The following tables summarize net revenues and EBITDA for the Company’s reportable segments, as well as reconcile EBITDA to net income attributable to Wyndham shareholders for the six months ended June 30, 2017 and 2016:

Six Months Ended June 30, 

2017

2016

 Net Revenues 

 EBITDA 

 Net Revenues 

 EBITDA 

Hotel Group

$

643

$

191

$

629

$

185

Destination Network

797

191

768

166

Vacation Ownership

1,399

166

1,345

323

     Total Reportable Segments

2,839

548

2,742

674

Corporate and Other (a)

(41)

(68)

(36)

(67)

     Total Company

$

2,798

$

480

$

2,706

$

607

Reconciliation of Net income

Six Months Ended June 30, 

2017

2016

Net income

$

219

$

251

Provision for income taxes

64

156

Depreciation and amortization

128

125

Interest expense

73

68

Early extinguishment of debt

11

Interest income

(4)

(4)

EBITDA

$

480

$

607

Note: Amounts may not add due to rounding. 

(a)   Includes the elimination of transactions between segments.  

The following tables summarize net revenues and adjusted EBITDA for the Company’s reportable segments for the six months ended June 30, 2017 and 2016 (for a description of adjustments and reconciliation by segment, see Table 8):

Six Months Ended June 30, 

2017

2016

Adjusted 

Adjusted 

 Net Revenues 

 EBITDA 

 Net Revenues 

 EBITDA 

Hotel Group

$

643

$

192

$

629

$

185

Destination Network

797

191

768

190

Vacation Ownership

1,399

306

1,345

323

     Total Reportable Segments

2,839

689

2,742

698

Corporate and Other (a)

(41)

(62)

(36)

(66)

     Total Company

$

2,798

$

627

$

2,706

$

632

Table 3

(1 of 2)

Wyndham Worldwide Corporation

OPERATING STATISTICS

The following operating statistics are the drivers of our revenues and therefore provide an enhanced understanding of our businesses:

Year

Q1

Q2

Q3

Q4

Full Year

Hotel Group(a)

Number of Rooms 

2017

699,800

705,700

 N/A 

 N/A 

 N/A 

2016

679,100

683,300

689,800

697,600

 N/A 

2015

667,400

668,500

671,900

678,000

 N/A 

2014

646,900

650,200

655,300

660,800

 N/A 

RevPAR

2017

$

31.73

$

39.43

$

 N/A 

$

 N/A 

$

 N/A 

2016

$

31.59

$

39.10

$

43.04

$

32.92

$

36.67

2015

$

32.84

$

39.82

$

43.34

$

32.98

$

37.26

2014

$

32.30

$

40.11

$

43.71

$

34.06

$

37.57

Destination Network

Average Number of Members (in 000s)

2017

3,817

3,791

 N/A 

 N/A 

 N/A 

2016

3,841

3,857

3,868

3,843

3,852

2015

3,822

3,831

3,835

3,836

3,831

2014

3,727

3,748

3,777

3,808

3,765

Exchange Revenue Per Member

2017

$

192.01

$

168.27

$

 N/A 

$

 N/A 

$

 N/A 

2016

$

189.78

$

164.61

$

164.39

$

151.19

$

167.48

2015

$

194.06

$

167.81

$

163.38

$

152.00

$

169.29

2014

$

200.78

$

179.17

$

171.77

$

157.24

$

177.12

Vacation Rental Transactions (in 000s) (a) (b)

2017

538

461

 N/A 

 N/A 

 N/A 

2016

500

409

508

350

1,767

2015

459

390

462

319

1,630

2014

429

376

455

293

1,552

Average Net Price Per Vacation Rental(a) (b)

2017

$

343.07

$

476.72

$

 N/A 

$

 N/A 

$

 N/A 

2016

$

366.08

$

492.83

$

599.59

$

430.14

$

475.24

2015

$

361.20

$

513.14

$

642.00

$

452.19

$

494.92

2014

$

410.04

$

577.13

$

727.40

$

492.25

$

558.95

Vacation Ownership (a)

Gross Vacation Ownership Interest (VOI) Sales (in 000s) (c)

2017

$

439,000

$

563,000

$

 N/A 

$

 N/A 

$

 N/A 

2016

$

428,000

$

518,000

$

564,000

$

502,000

$

2,012,000

2015

$

390,000

$

502,000

$

565,000

$

507,000

$

1,965,000

2014

$

410,000

$

496,000

$

513,000

$

470,000

$

1,889,000

Tours (in 000s)

2017

176

235

 N/A 

 N/A 

 N/A 

2016

179

213

230

197

819

2015

168

206

227

200

801

2014

170

208

225

191

794

Volume Per Guest (VPG)

2017

$

2,354

$

2,302

$

 N/A 

$

 N/A 

$

 N/A 

2016

$

2,244

$

2,328

$

2,320

$

2,399

$

2,324

2015

$

2,177

$

2,353

$

2,354

$

2,390

$

2,326

2014

$

2,272

$

2,280

$

2,158

$

2,336

$

2,257

Note: Full year amounts may not add across due to rounding.

(a)

Includes the impact of acquisitions/dispositions from the acquisition/disposition dates forward. Therefore, the operating statistics are not presented on a comparable basis.

(b)

The destination network operating statistics excluding our U.K.-based camping business sold in Q4 2014 are as follows:

Year

Q1

Q2

Q3

Q4

Full Year

Vacation Rental Transactions (in 000s)

2014

429

367

431

292

1,518

Average Net Price Per Vacation Rental

2014

$

410.02

$

578.02

$

700.56

$

492.64

$

548.93

(c)

Includes Gross VOI sales under the Company’s Wyndham Asset Affiliate Model (WAAM) Just-in-Time. (See Table 9 for a reconciliation of Gross VOI sales to vacation ownership interest sales).

ADDITIONAL DATA

Year

Q1

Q2

Q3

Q4

Full Year

Hotel Group

Number of Properties

2017

8,080

8,140

 N/A 

 N/A 

 N/A 

2016

7,830

7,880

7,930

8,040

 N/A 

2015

7,670

7,700

7,760

7,810

 N/A 

2014

7,500

7,540

7,590

7,650

 N/A 

Vacation Ownership

Provision for Loan Losses (in 000s) (*) 

2017

$

85,000

$

110,000

$

 N/A 

$

 N/A 

$

 N/A 

2016

$

63,000

$

90,000

$

104,000

$

86,000

$

342,000

2015

$

46,000

$

60,000

$

78,000

$

64,000

$

248,000

2014

$

60,000

$

70,000

$

70,000

$

60,000

$

260,000

Note: Full year amounts may not add across due to rounding.

(*)

Represents provision for estimated losses on vacation ownership contract receivables originated during the period, which is recorded as a contra revenue to vacation ownership interest sales on the Consolidated Statements of Income.

Table 3

(2 of 2)

Wyndham Worldwide Corporation

OPERATING STATISTICS

GLOSSARY OF TERMS

Hotel Group

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

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

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

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

Destination Network

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

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

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

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

Vacation Ownership

Gross Vacation Ownership Interest Sales: Represents sales of vacation ownership interest (VOIs), including WAAM sales, before the net effect of percentage-of-completion accounting and loan loss provisions. We believe gross VOI sales provide an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period. See Table 9 for a reconciliation of Gross VOI sales to vacation ownership interest sales.

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

Volume per Guest (VPG): Represents Gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) divided by the number of tours.  The Company has excluded non-tour upgrade sales in the calculation of VPG because non-tour upgrade sales are generated by a different marketing channel.  See Table 9 for a detail of tele-sales upgrades for 2014-2017. 

General

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

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

Table 4

Wyndham Worldwide Corporation

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND RECONCILIATION OF FREE CASH FLOWS

(In millions)

(Unaudited)

Condensed Consolidated Statements of Cash Flows:

Six Months Ended June 30, 

2017

2016

Net cash provided by operating activities

$

663

$

706

Net cash used in investing activities

(133)

(140)

Net cash used in financing activities

(309)

(251)

Effect of changes in exchange rates on cash and cash equivalents

9

(8)

Net increase in cash and cash equivalents

$

230

$

307

Free Cash Flow:

We define free cash flow to be net cash provided by operating activities less property and equipment additions which we also refer to as capital expenditures.

We believe free cash flow to be a useful operating performance measure to evaluate the ability of our operations to generate cash for uses other than capital expenditures and, after debt service and other obligations, our ability to grow our business through acquisitions, development advances and equity investments, as well as our ability to return cash to shareholders through dividends and share repurchases. A limitation of using free cash flow versus the GAAP measures of net cash provided by operating activities, net cash used in investing activities and net cash used in financing activities as a means for evaluating Wyndham Worldwide is that free cash flow does not represent the total cash movement for the period as detailed in the consolidated statement of cash flows.

The following table provides more details on the GAAP financial measure that is most directly comparable to the non-GAAP financial measure and the related reconciliation between these financial measures:

Six Months Ended June 30, 

2017

2016

Net cash provided by operating activities

$

663

$

706

Less: Property and equipment additions

(82)

(90)

Free cash flow

$

581

$

616

Table 5

Wyndham Worldwide Corporation

REVENUE DETAIL BY REPORTABLE SEGMENT

(In millions)

2017

2016

 Q1 

 Q2 

 Q3 

 Q4 

 Year 

 Q1 

 Q2 

 Q3 

 Q4 

 Year 

Hotel Group

Royalties and Franchise Fees

$

79

$

98

 N/A 

 N/A 

 N/A 

$

74

$

94

$

105

$

94

$

367

Marketing, Reservation and Wyndham Rewards Revenues (a)

83

106

 N/A 

 N/A 

 N/A 

83

103

125

92

405

Hotel Management Reimbursable Revenues (b)

66

69

 N/A 

 N/A 

 N/A 

67

71

67

65

271

Intersegment Trademark Fees

13

15

 N/A 

 N/A 

 N/A 

13

15

16

14

56

Owned Hotel Revenues

23

21

 N/A 

 N/A 

 N/A 

27

19

17

17

81

Ancillary Revenues (c)

34

36

 N/A 

 N/A 

 N/A 

31

32

34

34

129

Total Hotel Group

298

345

 N/A 

 N/A 

 N/A 

295

334

364

316

1,309

Destination Network

Exchange Revenues

183

159

 N/A 

 N/A 

 N/A 

182

159

159

145

645

Rental Revenues

184

220

 N/A 

 N/A 

 N/A 

183

202

304

151

840

Ancillary Revenues (d)

24

26

 N/A 

 N/A 

 N/A 

20

23

23

21

86

Total Destination Network

391

405

 N/A 

 N/A 

 N/A 

385

384

486

317

1,571

Vacation Ownership

Vacation Ownership Interest Sales

351

448

 N/A 

 N/A 

 N/A 

342

409

441

415

1,606

Consumer Financing

111

114

 N/A 

 N/A 

 N/A 

107

108

112

113

440

Property Management Fees and Reimbursable Revenues

175

175

 N/A 

 N/A 

 N/A 

164

161

168

168

660

WAAM Fee-for-Service Commissions

2

4

 N/A 

 N/A 

 N/A 

17

16

13

46

Ancillary Revenues (e)

9

9

 N/A 

 N/A 

 N/A 

11

11

10

9

42

Total Vacation Ownership

648

750

 N/A 

 N/A 

 N/A 

641

705

744

705

2,794

Total Reportable Segments

$

1,337

$

1,500

 N/A 

 N/A 

 N/A 

$

1,321

$

1,423

$

1,594

$

1,338

$

5,674

2015

2014

 Q1 

 Q2 

 Q3 

 Q4 

 Year 

 Q1 

 Q2 

 Q3 

 Q4 

 Year 

Hotel Group

Royalties and Franchise Fees

$

74

$

96

$

103

$

87

$

361

$

68

$

88

$

100

$

83

$

339

Marketing, Reservation and Wyndham Rewards Revenues (a)

96

108

112

92

407

76

101

117

91

385

Hotel Management Reimbursable Revenues (b)

61

71

73

68

273

37

39

39

39

154

Intersegment Trademark Fees

12

15

16

15

57

9

11

11

10

41

Owned Hotel Revenues

25

20

16

19

79

24

20

18

20

81

Ancillary Revenues (c)

24

24

37

33

120

23

24

30

24

101

Total Hotel Group

292

334

357

314

1,297

237

283

315

267

1,101

Destination Network

Exchange Revenues

185

161

157

146

649

187

168

162

150

667

Rental Revenues

166

200

296

144

807

176

217

331

144

868

Ancillary Revenues (d)

18

22

23

20

82

16

17

19

17

69

Total Destination Network

369

383

476

310

1,538

379

402

512

311

1,604

Vacation Ownership

Vacation Ownership Interest Sales

336

417

448

403

1,604

303

382

415

385

1,485

Consumer Financing

104

105

108

109

427

105

106

108

108

427

Property Management Fees and Reimbursable Revenues

153

149

159

155

615

143

145

150

142

581

WAAM Fee-for-Service Commissions

12

19

23

28

83

33

30

18

16

98

Ancillary Revenues (e)

12

9

12

11

43

9

10

13

17

47

Total Vacation Ownership

617

699

750

706

2,772

593

673

704

668

2,638

Total Reportable Segments

$

1,278

$

1,416

$

1,583

$

1,330

$

5,607

$

1,209

$

1,358

$

1,531

$

1,246

$

5,343

Note: Full year amounts may not add across due to rounding.

(a)

Marketing and reservation revenues represent fees the Company receives from franchised and managed hotels that are to be expended for marketing purposes or the operation of a centralized, brand-specific reservation system.  These fees are typically based on a percentage of the gross room revenues of each hotel.  Wyndham Rewards revenues represent fees the Company receives relating to its loyalty program.

(b)

Primarily represents payroll costs in the hotel management business that the Company pays on behalf of property owners and for which it is reimbursed by the property owners. During 2014, reimbursable revenues of $2 million in each of Q1, Q2 and Q3 and $1 million in Q4 were charged to the Company’s vacation ownership business and were eliminated in consolidation. 

(c)

Primarily includes additional services provided to franchisees and managed properties and fees related to our co-branded credit card program.

(d)

Primarily includes fees generated from programs with affiliated resorts and homeowners.

(e)

Primarily includes revenues associated with bonus points/credits that are provided as purchase incentives on VOI sales and fees generated from other non-core operations.

Table 6

(1 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

As of and For the Three Months Ended June 30, 2017

Brand

Number of
Properties

Number of Rooms

Average
Occupancy Rate

Average Daily
Rate (ADR)

Average Revenue
Per Available
Room (RevPAR)

Hotel Group

Super 8 

2,873

180,930

60.1%

$48.66

$29.25

Days Inn 

1,777

142,304

55.1%

$69.87

$38.53

Ramada 

873

122,066

56.4%

$70.95

$40.02

Wyndham Hotels and Resorts

254

55,557

61.5%

$103.26

$63.53

Howard Johnson 

364

42,650

52.6%

$60.22

$31.70

Baymont

449

35,135

56.9%

$73.20

$41.65

Travelodge 

415

30,622

54.1%

$72.65

$39.34

Microtel Inns & Suites by Wyndham

337

24,278

61.7%

$71.55

$44.15

Knights Inn 

364

22,098

49.0%

$51.11

$25.05

TRYP by Wyndham

115

16,031

71.2%

$83.01

$59.13

Wingate by Wyndham

155

14,215

66.6%

$92.99

$61.90

Hawthorn Suites by Wyndham

108

10,613

68.3%

$83.52

$57.07

Dolce

19

4,394

56.2%

$164.17

$92.24

Trademark (*)

15

2,555

N/A

N/A

N/A

Dazzler

12

1,525

65.3%

$93.27

$60.90

Esplendor

10

697

63.8%

$79.41

$50.63

Total Hotel Group

8,140

705,670

57.9%

$68.09

$39.43

Vacation Ownership

Wyndham Vacation Ownership resorts

221

24,918

N/A

N/A

N/A

Total Wyndham Worldwide

8,361

730,588

NOTE: A glossary of terms is included in Table 3 (4 of 4); RevPAR may not recalculate by multiplying average occupancy rate by ADR due to rounding. 

(*) Rooms added at days end on June 30, 2017, therefore, RevPAR, Occupancy and Average Daily Rate statistics are not applicable.

As of and For the Three Months Ended June 30, 2016

Brand

Number of
Properties

Number of Rooms

Average
Occupancy Rate

Average Daily
Rate (ADR)

Average Revenue
Per Available
Room (RevPAR)

Hotel Group

Super 8 

2,707

172,924

60.4%

$49.33

$29.81

Days Inn 

1,791

142,987

53.6%

$68.92

$36.92

Ramada 

842

117,964

56.5%

$72.86

$41.18

Wyndham Hotels and Resorts

226

49,776

62.3%

$106.74

$66.52

Howard Johnson 

377

43,538

49.5%

$60.57

$29.99

Baymont

424

33,711

55.0%

$71.93

$39.58

Travelodge 

404

29,705

53.1%

$71.45

$37.96

Microtel Inns & Suites by Wyndham

334

24,102

59.9%

$69.69

$41.77

Knights Inn 

381

23,228

48.3%

$50.28

$24.27

TRYP by Wyndham

113

16,120

70.2%

$79.96

$56.09

Wingate by Wyndham

148

13,493

68.1%

$93.21

$63.49

Hawthorn Suites by Wyndham

107

10,618

70.0%

$82.98

$58.06

Dolce

22

5,110

55.9%

$171.50

$95.89

Total Hotel Group

7,876

683,276

57.2%

$68.30

$39.10

Vacation Ownership

Wyndham Vacation Ownership resorts

216

24,475

N/A

N/A

N/A

Total Wyndham Worldwide

8,092

707,751

Note: A glossary of terms is included in Table 3 (2 of 2); RevPAR may not recalculate by multiplying average occupancy rate by ADR due to rounding.

Table 6

(2 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

As of and For the Six Months Ended June 30, 2017

Brand

Number of
Properties

Number of Rooms

Average
Occupancy Rate

Average Daily
Rate (ADR)

Average Revenue
Per Available
Room (RevPAR)

Hotel Group

Super 8 

2,873

180,930

56.5%

$46.67

$26.35

Days Inn 

1,777

142,304

50.2%

$67.75

$34.00

Ramada 

873

122,066

53.2%

$70.31

$37.44

Wyndham Hotels and Resorts

254

55,557

57.4%

$102.33

$58.69

Howard Johnson 

364

42,650

49.2%

$58.77

$28.92

Baymont

449

35,135

51.5%

$70.39

$36.26

Travelodge 

415

30,622

48.8%

$69.89

$34.13

Microtel Inns & Suites by Wyndham

337

24,278

56.9%

$68.87

$39.21

Knights Inn 

364

22,098

45.2%

$50.03

$22.63

TRYP by Wyndham

115

16,031

64.7%

$78.84

$51.00

Wingate by Wyndham

155

14,215

61.9%

$89.59

$55.45

Hawthorn Suites by Wyndham

108

10,613

65.0%

$83.15

$54.01

Dolce

19

4,394

51.4%

$159.60

$81.96

Trademark (*)

15

2,555

N/A

N/A

N/A

Dazzler

12

1,525

64.4%

$92.58

$59.60

Esplendor

10

697

64.8%

$85.42

$55.39

Total Hotel Group

8,140

705,670

53.8%

$66.24

$35.61

Vacation Ownership

Wyndham Vacation Ownership resorts

221

24,918

N/A

N/A

N/A

Total Wyndham Worldwide

8,361

730,588

NOTE: A glossary of terms is included in Table 3 (4 of 4); RevPAR may not recalculate by multiplying average occupancy rate by ADR due to rounding. 

(*) Rooms added at days end on June 30, 2017, therefore, RevPAR, Occupancy and Average Daily Rate statistics are not applicable.

As of and For the Six Months Ended June 30, 2016

Brand

Number of
Properties

Number of Rooms

Average Occupancy Rate

Average Daily Rate (ADR)

Average Revenue Per Available Room (RevPAR)

Hotel Group

Super 8 

2,707

172,924

56.0%

$47.68

$26.69

Days Inn 

1,791

142,987

49.0%

$66.61

$32.60

Ramada 

842

117,964

52.7%

$73.28

$38.65

Wyndham Hotels and Resorts

226

49,776

58.5%

$105.36

$61.64

Howard Johnson 

377

43,538

46.8%

$60.19

$28.17

Baymont

424

33,711

50.0%

$69.32

$34.66

Travelodge 

404

29,705

49.2%

$67.64

$33.29

Microtel Inns & Suites by Wyndham

334

24,102

55.5%

$66.91

$37.14

Knights Inn 

381

23,228

44.9%

$49.58

$22.25

TRYP by Wyndham

113

16,120

62.3%

$76.80

$47.84

Wingate by Wyndham

148

13,493

62.2%

$90.16

$56.04

Hawthorn Suites by Wyndham

107

10,618

66.2%

$82.88

$54.84

Dolce

22

5,110

50.6%

$162.73

$82.42

Total Hotel Group

7,876

683,276

53.0%

$66.76

$35.35

Vacation Ownership

Wyndham Vacation Ownership resorts

216

24,475

N/A

N/A

N/A

Total Wyndham Worldwide

8,092

707,751

Note: A glossary of terms is included in Table 3 (2 of 2); RevPAR may not recalculate by multiplying average occupancy rate by ADR due to rounding.

Table 7

(1 of 2)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION OF ADJUSTED NET INCOME AND EPS

(In millions, except per share data)

Location on Consolidated
Statements of Income

Three Months Ended June 30, 

2017

2016

Diluted weighted average shares outstanding

104

112

Diluted EPS

$

0.75

$

1.39

Net income

$

78

$

156

Adjustments:

VOI inventory impairments (a)

Asset impairments 

135

Acquisition costs (b)

Operating

1

Total adjustments before tax

135

1

Income tax (benefit)/expense (c) (d)

Provision for income taxes

(54)

(1)

Total adjustments after tax

81

Adjustments – EPS impact

$

0.78

$

0.01

Adjusted Net income

$

159

$

156

Adjusted diluted EPS

$

1.53

$

1.40

Note: Amounts may not add due to rounding.

(a)

Represents non-cash impairment charges primarily related to the writedown of undeveloped VOI land resulting from the Company’s decision to no longer pursue future development at certain locations. 

(b)

Represents costs related to an acquisition that closed on July 1, 2016 at the Company’s destination network business.

(c)

The amount for 2017 relates to (i) the tax effect of the adjustments and (ii) a tax benefit recognized from an internal restructuring.

(d)

The amount for 2016 relates to the tax effect of the adjustments. 

The above tables 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.  In addition to GAAP financial measures, the Company provides adjusted net income and adjusted EPS financial measures to 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.  This non-GAAP reconciliation table should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP.

Table 7

(2 of 2)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION OF ADJUSTED NET INCOME AND EPS

(In millions, except per share data)

Location on Consolidated
Statements of Income

Six Months Ended June 30, 

2017

2016

Diluted weighted average shares outstanding

105

113

Diluted EPS

$

2.09

$

2.23

Net income

$

219

$

251

Adjustments:

VOI inventory impairments (a)

Asset impairments 

135

Restructuring costs (b) 

Restructuring

7

Asset impairment (c)

Asset impairments 

5

Venezuela currency devaluation (d)

Operating

24

Acquisition costs (e)

Operating

1

Legacy costs (f)

General and administrative

1

Early extinguishment of debt (g)

Early extinguishment of debt

11

Total adjustments before tax

147

37

Income tax (benefit)/expense (h) (i)

Provision for income taxes

(87)

(5)

Total adjustments after tax

61

32

Total adjustments – EPS impact

$

0.58

$

0.29

Adjusted net income attributable to Wyndham shareholders

$

280

$

283

Adjusted diluted EPS

$

2.66

$

2.52

Note: Amounts may not add due to rounding.

(a)

Represents non-cash impairment charges primarily related to the writedown of undeveloped VOI land resulting from the Company’s decision to no longer pursue future development at certain locations. 

(b)

Relates to expenses associated with restructuring initiatives at the Company’s (i) corporate operations which focused on rationalizing its sourcing function and outsourcing certain information technology functions and (ii) hotel group business which primarily focused on realigning its brand operations.

(c)

Represents a non-cash impairment charge related to the write-down of assets resulting from the decision to abandon a new product initiative at the Company’s vacation ownership business.

(d)

Represents the impact from the devaluation of the exchange rate of Venezuela at the Company’s destination network business during 2016.

(e)

Represents costs related to an acquisition that closed July 1, 2016 at the Company’s destination network business. 

(f)

Relates to the net benefit from the resolution of and adjustment to certain contingent liabilities and assets resulting from the Company’s separation from Cendant.

(g)

Represents costs incurred in connection with the Company’s early repurchase of its 6.0% senior unsecured notes during 2016.

(h)

The amount for 2017 relates to (i) the tax effect of the adjustments and (ii) a tax benefit on foreign currency losses recognized from an internal restructuring.

(i)

The amount for 2016 relates to (i) the tax effect of the adjustments. There was no tax benefit associated with the $24 million Venezuela currency devaluation adjustment.

The above tables 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.  In addition to GAAP financial measures, the Company provides adjusted net income and adjusted EPS financial measures to 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.  This non-GAAP reconciliation table should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP.

Table 8

(1 of 3)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION OF ADJUSTED EBITDA BY REPORTABLE SEGMENT

(In millions)

Restructuring

Asset

VOI Inventory

Adjusted

EBITDA

Costs(b)

Impairment (c)

Impairment (d)

EBITDA

Three months ended March 31, 2017

Hotel Group

$

85

$

1

$

$

$

85

Destination Network

102

102

Vacation Ownership

118

5

124

Total Reportable Segments

305

1

5

311

Corporate and Other (a)

(39)

6

(33)

Total Company

$

266

$

7

$

5

$

278

Three months ended June 30, 2017

Hotel Group

$

106

$

$

$

$

106

Destination Network

89

89

Vacation Ownership

47

135

183

Total Reportable Segments

242

135

378

Corporate and Other (a)

(28)

(28)

Total Company

$

214

$

$

$

135

$

350

Note: Amounts may not add down or across due to rounding. 

(a)

Includes the elimination of transactions between segments.

(b)

Relates to expenses associated with restructuring initiatives at the Company’s (i) corporate operations which focused on rationalizing its sourcing function and outsourcing certain information technology functions and (ii) hotel group business which primarily focused on realigning its brand operations.

(c)

Represents a non-cash impairment charge related to the write-down of assets resulting from the decision to abandon a new product initiative.

(d)

Represents non-cash impairment charges primarily related to the writedown of undeveloped VOI land resulting from the Company’s decision to no longer pursue future development at certain locations. 

Table 8

(2 of 3)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION OF ADJUSTED EBITDA BY REPORTABLE SEGMENT

(In millions)

Venezuela 

Executive

Bargain

Currency 

Acquisition

Legacy

Restructuring

Contract

Departure

Purchase

Adjusted

EBITDA

Devaluation(b)

Costs(c)

Costs(d)

Costs(e)

Termination(f)

Costs (g)

Gain (h)

EBITDA

Three months ended March 31, 2016

Hotel Group

$

84

$

$

$

$

$

$

$

$

84

Destination Network

81

24

105

Vacation Ownership

136

136

Total Reportable Segments

301

24

325

Corporate and Other (a)

(34)

(34)

Total Company

$

267

$

24

$

$

$

$

$

$

$

291

Three months ended June 30, 2016

Hotel Group

$

101

$

$

$

$

$

$

$

$

101

Destination Network

85

1

85

Vacation Ownership

187

187

Total Reportable Segments

373

1

373

Corporate and Other (a)

(33)

(33)

Total Company

$

340

$

$

1

$

$

$

$

$

$

340

Three months ended September 30, 2016

Hotel Group

$

107

$

$

$

$

3

$

7

$

$

$

117

Destination Network

138

4

142

Vacation Ownership

189

6

195

Total Reportable Segments

434

13

7

454

Corporate and Other (a)

(32)

(1)

1

(31)

Total Company

$

402

$

$

$

(1)

$

14

$

7

$

$

$

423

Three months ended December 31, 2016

Hotel Group

$

99

$

$

1

$

$

(1)

$

$

$

$

99

Destination Network

53

1

(2)

52

Vacation Ownership

182

2

6

191

Total Reportable Segments

334

2

1

6

(2)

342

Corporate and Other (a)

(12)

(11)

(24)

Total Company

$

322

$

$

2

$

(11)

$

1

$

$

6

$

(2)

$

318

Note: Amounts may not add across due to rounding. The sum of the quarters may not add down due to rounding.

(a)

Includes the elimination of transactions between segments.

(b)

Represents the impact from the devaluation of the exchange rate of Venezuela.

(c)

Represents costs related to acquisitions.

(d)

Relates to a benefit from adjustments to certain contingent liabilities from the Company’s separation from Cendant.

(e)

Relates to costs incurred due to enhancing organizational efficiency and rationalizing existing facilities across the Company.

(f)

Relates to additional costs associated with the termination of a management contract.

(g)

Represents costs associated with the departure of the chief executive officer at the Company’s vacation ownership business. 

(h)

Represents a gain from a bargain purchase on an acquisition of a vacation rentals business.

Table 8

(3 of 3)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION OF ADJUSTED EBITDA BY REPORTABLE SEGMENT

SHARED-BASED COMPENSATION EXPENSE

(In millions)

The following tables provide detail regarding share-based compensation expense which is included within adjusted EBITDA:

2017

Q1

Q2

Q3

Q4

Full Year

Adjusted EBITDA

$

278

$

350

 N/A 

 N/A 

 N/A 

Share-based compensation expense (*)

14

14

 N/A 

 N/A 

 N/A 

Adjusted EBITDA excluding share-based compensation expense

$

292

$

364

 N/A 

 N/A 

 N/A 

2016

Q1

Q2

Q3

Q4

Full Year

Adjusted EBITDA

$

291

$

340

$

423

$

318

$

1,373

Share-based compensation expense (*)

13

20

14

13

61

Adjusted EBITDA excluding share-based compensation expense

$

304

$

360

$

437

$

331

$

1,434

Note: Full year amounts may not add across due to rounding.

(*)

Excludes share-based compensation expenses for which there was no impact on adjusted EBITDA. Such costs amounted to $1 million during both Q1 2017 and Q2 2017. During 2016, such costs amounted to $1 million during Q1, Q2 and Q3, and $4 million during Q4 and $7 million for the full year. The Company believes providing adjusted EBITDA with the additional exclusion of share-based compensation expense assists our investors and management by providing an additional financial measure to evaluate ongoing operations by excluding the variations among companies in timing, amount and reporting of share-based compensation expense, which may differ significantly among companies.

Table 9

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION OF GROSS VOI SALES

(In millions)

GROSS VOI SALES

We believe gross vacation ownership sales provide an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period.

The following table provides a reconciliation of Gross VOI sales (see Table 3) to vacation ownership interest sales (see Table 5):

Year

2017

Q1

Q2

Q3

Q4

Full Year

Gross VOI sales

$

439

$

563

$

 N/A 

$

 N/A 

$

 N/A 

Less: Sales under WAAM Fee-for-Service

(3)

(5)

 N/A 

 N/A 

 N/A 

Gross VOI sales, net of WAAM Fee-for-Service sales

436

558

 N/A 

 N/A 

 N/A 

Less: Loan loss provision

(85)

(110)

 N/A 

 N/A 

 N/A 

Vacation ownership interest sales

$

351

$

448

$

 N/A 

$

 N/A 

$

 N/A 

2016

Gross VOI sales

$

428

$

518

$

564

$

502

$

2,012

Less: Sales under WAAM Fee-for-Service

(23)

(20)

(20)

(1)

(64)

Gross VOI sales, net of WAAM Fee-for-Service sales

405

498

544

501

1,948

Less: Loan loss provision

(63)

(90)

(104)

(86)

(342)

Vacation ownership interest sales

$

342

$

409

$

441

$

415

$

1,606

2015

Gross VOI sales

$

390

$

502

$

565

$

507

$

1,965

Less: Sales under WAAM Fee-for-Service

(21)

(26)

(37)

(42)

(126)

Gross VOI sales, net of WAAM Fee-for-Service sales

369

477

528

464

1,838

Less: Loan loss provision

(46)

(60)

(78)

(64)

(248)

Less: Impact of percentage-of-completion accounting

13

(2)

2

13

Vacation ownership interest sales

$

336

$

417

$

448

$

403

$

1,604

2014

Gross VOI sales

$

410

$

496

$

513

$

470

$

1,889

Less: Sales under WAAM Fee-for-Service

(44)

(40)

(27)

(21)

(132)

Gross VOI sales, net of WAAM Fee-for-Service sales

366

456

486

449

1,757

Less: Loan loss provision

(60)

(70)

(70)

(60)

(260)

Less: Impact of percentage-of-completion accounting

(3)

(4)

(1)

(4)

(12)

Vacation ownership interest sales

$

303

$

382

$

415

$

385

$

1,485

_____________

Note: Amounts may not add due to rounding.

The following includes primarily tele-sales upgrades and other non-tour revenues, which are excluded from Gross VOI sales in the Company’s VPG calculation (see Table 3):

Q1

Q2

Q3

Q4

Full Year

2017

$

25

$

22

$

 N/A 

$

 N/A 

$

 N/A 

2016

$

25

$

22

$

31

$

30

$

108

2015

$

24

$

17

$

32

$

27

$

100

2014

$

25

$

21

$

27

$

24

$

97

Table 10

Wyndham Worldwide Corporation

2017 OUTLOOK –  NON-GAAP

(In millions, except per share data)

Outlook (a) 

Outlook (a) 

As Adjusted

As Adjusted

(Non-GAAP)

(Non-GAAP)

Low

High

Net revenues

$

5,800

$

5,950

Adjusted EBITDA

$

1,410

$

1,440

Depreciation and amortization

(268)

(263)

Interest expense, net

(152)

(148)

Adjusted income before taxes 

990

1,023

Income taxes

(359)

(371)

Adjusted net income

$

631

$

652

Adjusted diluted earnings per share

$

6.04

$

6.24

Diluted shares

104.5

104.5

In determining adjusted EBITDA, adjusted Net Income and adjusted EPS, the Company excludes certain items which are otherwise included in determining the comparable GAAP financial measures. A description of the adjustments which have been applicable in determining adjusted EBITDA, adjusted Net Income and adjusted EPS is included in Tables 7 and 8.  The Company is providing outlook on a non-GAAP basis because the Company is unable to predict with reasonable certainty the totality or ultimate outcome or occurrence of potential adjustments for the forward-looking period, which can be dependent on future events that may not be reliably predicted, such as acquisitions, legacy expenses, restructuring events, asset impairments, contract terminations, currency devaluations, or early extinguishment of debt instruments. Based on past reported results, where one or more of these items have been applicable, such excluded special items could be material, individually or in the aggregate, to the reported results. See Tables 7 and 8 for historical adjustments.

(a) 

Outlook represents Company’s approximate projection of performance for the outlook period.  Projections may not total because the Company does not expect the actual results of all items to be at the precise amount simultaneously.

Table 11

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION – CONSTANT CURRENCY, CURRENCY NEUTRAL AND ACQUISITIONS

(In millions, except per share data)

The Company reports certain current year period financial measures on a constant currency and currency-neutral basis and excluding the impact of acquisitions.  The Company believes providing certain financial measures on a constant currency and currency-neutral basis as well as excluding the impact of acquisitions assists management and investors in better understanding underlying results and trends by excluding the impact of period over period changes in foreign exchange rates and changes resulting from acquisitions.

Constant currency results assume foreign results are translated from foreign currencies to the U.S. dollar at exchange rates consistent with those in the comparable period.

Currency Neutral results (i) assume foreign results are translated from foreign currencies to the U.S. dollar at exchange rates consistent with those in the comparable period and (ii) eliminating foreign exchange related activities such as foreign exchange hedges, balance sheet remeasurements, currency devaluations and/or other adjustments.  

Acquisition results are defined as the incremental period over period changes in the Company’s results directly attributable to acquisitions.

Revenues in Constant Currency and Excluding Acquisitions:

Three Months Ended June 30, 

2017

2016

% Change

Total revenues as reported

$

1,479

$

1,403

5%

Adjustments:

Incremental revenues from acquisitions

(14)

*

Foreign currency – constant currency

10

*

Total revenues in constant currency

$

1,475

$

1,403

5%

Hotel Group revenues as reported

$

345

$

334

3%

Adjustments:

Incremental revenues from acquisitions

(1)

*

Foreign currency – constant currency

1

*

Hotel Group revenues in constant currency and excluding acquisitions

$

345

$

334

3%

Destination Network revenues as reported

$

405

$

384

5%

Adjustments:

Incremental revenues from acquisitions

(12)

*

Foreign currency – constant currency

10

*

Destination Network revenues in constant currency and excluding acquisitions

$

403

$

384

5%

Exchange revenues as reported

$

159

$

159

*

Adjustments:

Foreign currency – constant currency

1

*

Total Exchange revenues in constant currency 

$

160

$

159

1%

Rental revenues as reported

$

220

$

202

9%

Adjustments:

Incremental revenues from acquisitions

(9)

*

Foreign currency – constant currency

9

*

Total Rental revenues in constant currency and excluding acquisitions

$

220

$

202

9%

Currency-neutral Adjusted EBITDA:

Three Months Ended June 30, 

2017

2016

% Change

Hotel Group EBITDA (a)

$

106

$

101

5%

Adjustments:

Foreign currency – currency-neutral

1

*

Hotel Group currency-neutral Adjusted EBITDA

$

107

$

101

6%

EBITDA in Constant Currency and Excluding Acquisitions:

Three Months Ended June 30, 

2017

2016

% Change

Total Adjusted EBITDA (a)

$

350

$

340

3%

Adjustments:

Foreign currency – currency-neutral

3

*

Incremental EBITDA from acquisitions

(1)

*

Total currency-neutral adjusted EBITDA excluding acquisitions

$

352

$

340

4%

Destination Network EBITDA (a)

$

89

$

85

5%

Adjustments:

Foreign currency – currency-neutral

2

*

Incremental EBITDA from acquisitions

(1)

*

Destination Network currency-neutral EBITDA excluding acquisitions

$

90

$

85

6%

*

Not meaningful.

(a)

See Table 8 for a reconciliation of EBITDA to adjusted EBITDA and Table 2 for a reconciliation of Net Income to EBITDA.

Table 12

Wyndham Worldwide Corporation

SCHEDULE OF DEBT

(In millions)

June 30,

December 31,

June 30,

2017

2016

2016

Securitized vacation ownership debt: (a)

   Term notes

$

1,648

$

1,857

$

1,717

   Bank conduit facility (b)

404

284

315

Total securitized vacation ownership debt (c)

2,052

2,141

2,032

Less: Current portion of securitized vacation ownership debt

185

195

198

Long-term securitized vacation ownership debt

$

1,867

$

1,946

$

1,834

Debt:

   Revolving credit facility (due July 2020) (d)

$

9

$

14

$

16

   Commercial paper (e)

355

427

408

   Term loan (due March 2021)

324

323

323

   $300 million 2.95% senior unsecured notes (due March 2017) (f)

300

300

   $14 million 5.75% senior unsecured notes (due February 2018) (g)

14

14

14

   $450 million 2.50% senior unsecured notes (due March 2018) (g)

449

449

449

   $40 million 7.375% senior unsecured notes (due March 2020)

40

40

40

   $250 million 5.625% senior unsecured notes (due March 2021)

248

248

247

   $650 million 4.25% senior unsecured notes (due March 2022)

648

648

648

   $400 million 3.90% senior unsecured notes (due March 2023)

406

407

407

   $300 million 4.15% senior unsecured notes (due April 2024)

297

   $350 million 5.10% senior unsecured notes (due October 2025)

339

338

338

   $400 million 4.50% senior unsecured notes (due April 2027)

400

   Capital leases

144

143

152

   Other

35

20

32

Total long-term debt

3,708

3,371

3,374

Less: Current portion of long-term debt

41

34

46

Long-term debt

$

3,667

$

3,337

$

3,328

__________

(a)

The Company’s vacation ownership contract receivables are securitized through bankruptcy-remote special purpose entities (“SPEs”) that are consolidated within our financial statements. These bankruptcy-remote SPEs are legally separate from the Company. The receivables held by the bankruptcy-remote SPEs are not available to the Company’s creditors and legally are not the Company’s assets. Additionally, the non-recourse debt that is securitized through the SPEs is legally not a liability of the Company and thus, the creditors of these SPEs have no recourse to the Company for principal and interest.

(b)

Represents a non-recourse vacation ownership bank conduit facility with a term through August 2018 and borrowing capacity of $650 million. As of June 30, 2017, this facility had a remaining borrowing capacity of $246 million.

(c)

This debt is collateralized by $2,558 million, $2,601 million and $2,526 million, of underlying vacation ownership contract receivables and related assets as of June 30 2017, December 31, 2016, and June 30, 2016, respectively.

(d)

Represents a $1.5 billion revolving credit facility that expires in July 2020. As of June 30 2017, the Company had $1 million of outstanding letters of credit. After considering outstanding commercial paper borrowings of $355 million, the remaining borrowing capacity was $1.1 billion as of June 30, 2017.

(e)

Represents commercial paper programs of $1.25 billion with a remaining borrowing capacity of $895 million as of June 30, 2017.

(f)

Classified as long-term as of December 31, 2016 and June 30, 2016 as the Company had the intent to refinance such debt on a long-term basis and the ability to do so with its revolving credit facility.

(g)

Classified as long-term as of June 30, 2017 as the Company has the intent to refinance such debt on a long-term basis and the ability to do so with its revolving credit facility.

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