Company Raises Full-Year 2022 Outlook
Board Increases Share Repurchase Authorization by $400 Million
Company Grows System-Wide Rooms by 4% and Development Pipeline by 10%

PARSIPPANY, N.J., Oct. 25, 2022 /PRNewswire/ -- Wyndham Hotels & Resorts (NYSE: WH) today announced results for the three months ended September 30, 2022. Highlights include:

• Global RevPAR grew 12% compared to third quarter 2021 in constant currency.
• U.S. RevPAR grew 2% compared to third quarter 2021 and represents 110% of 2019 levels.
• System-wide rooms grew 4% year-over-year, including 1% of growth in the U.S. and 9% of growth internationally.
• Development pipeline grew 10% year-over-year to 212,000 rooms and U.S. development signings increased 82%, including 48 new construction projects for the Company's new extended-stay brand, bringing the total number to 120 since launch in March.
• Hotel Franchising segment revenues grew 9% year-over-year.
• Diluted earnings per share of $1.13 and adjusted diluted earnings per share of $1.21; net income of $101 million and adjusted net income of $108 million.
• Adjusted EBITDA of $191 million.
• Year-to-date net cash provided by operating activities of $349 million and free cash flow of $321 million.
• Returned $161 million to shareholders through $132 million of share repurchases and a quarterly cash dividend of $0.32 per share.

"With our brands delivering record U.S. RevPAR and our global development teams driving net unit growth towards the top end of our initial guidance, we are raising our full-year 2022 outlook. Despite the broader macro-economic climate, we are confident in the continued resiliency of our franchise model as we continue to invest in the business and generate substantial shareholder returns," said Geoffrey A. Ballotti, president and chief executive officer. "This quarter, we grew our development pipeline by 10%, surpassed our full-year development goal for our new extended-stay brand and completed the acquisition of our 23^rd brand - Vienna House. We remain committed to a disciplined capital allocation strategy that will deliver outstanding value to our shareholders, guests, franchisees and team members in any environment." 

Fee-related and other revenues was $375 million compared to $377 million in third quarter 2021, which included $34 million from the Company's select-service management business and owned hotels - both of which were exited in the first half of this year. On a comparable basis, fee-related and other revenues increased 9% year-over-year reflecting global constant currency RevPAR growth of 12% and higher license fees.

The Company generated net income of $101 million, or $1.13 per diluted share, compared to $103 million, or $1.09 per diluted share, in third quarter 2021. The decline in net income was primarily due to the exit of the

Company's select-service management business and owned hotels, partially offset by higher adjusted EBITDA in the Company's hotel franchising segment. Adjusted EBITDA was $191 million compared to $194 million in third quarter 2021, which included a $10 million contribution from the Company's select-service management business and owned hotels - both of which were exited in the first half of this year. On a comparable basis, adjusted EBITDA increased 4% year-over-year reflecting higher fee-related and other revenues, partially offset by a 600 basis point unfavorable timing impact from the marketing fund.

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.

System Size

The Company's global system grew 4%, reflecting 1% growth in the U.S. and 9% growth internationally. As expected, these increases included strong growth in both the higher RevPAR midscale and above segments in the U.S. and the direct franchising business in China, which grew 6% and 8%, respectively, as well as 80 basis points of growth globally and 200 basis points internationally from the acquisition of the Vienna House brand.

RevPAR

Third quarter global RevPAR grew by 12% in constant currency compared to 2021 as the U.S. grew 2% and international grew 46%. Global RevPAR was 111% of 2019 levels in constant currency, with the U.S. at 110% and international at 117%. The increases compared to both 2021 and 2019 were driven primarily by stronger pricing power.

Business Segment Discussion

Hotel Franchising revenues increased 9% year-over-year to $367 million primarily due to the global RevPAR increase and higher license fees. Hotel Franchising adjusted EBITDA of $201 million increased 4% reflecting the growth in revenues, partially offset by an unfavorable timing impact from the marketing fund, excluding which Hotel Franchising adjusted EBITDA would have increased 12%.

Hotel Management revenues decreased 68% year-over-year to $40 million, including a $54 million decrease in cost-reimbursement revenues, which have no impact on adjusted EBITDA. Absent cost-reimbursements, Hotel Management revenues decreased $32 million, or 80%, and adjusted EBITDA decreased $9 million reflecting the exit of the Company's select-service management business and owned hotels.

During the third quarter 2022, the Company's marketing fund revenues exceeded expenses by $12 million; while in third quarter 2021, the Company's marketing fund revenues exceeded expenses by $19 million.

Development

The Company awarded 214 new contracts this quarter compared to 151 in the third quarter 2021. On September 30, 2022, the Company's global development pipeline consisted of over 1,600 hotels and over 212,000 rooms, of which approximately 76% is in the midscale and above segments (61% in the U.S.). The pipeline grew 10% year-over-year - 24% in the U.S. and 2% internationally. Approximately 60% of the Company's development pipeline is international and 80% is new construction, of which approximately 36% has broken ground. The pipeline includes 120 new contracts awarded for the Company's new extended-stay brand since its launch in March 2022.

Acquisition of Vienna House

On September 8, 2022, the Company completed the acquisition of the Vienna House brand, adding an upscale and midscale portfolio of over 40 hotels and more than 6,400 rooms to the Company's existing footprint in the EMEA region. The purchase price was $44 million.

Cash and Liquidity

The Company generated year-to-date net cash provided by operating activities of $349 million and free cash flow of $321 million. The Company ended the quarter with a cash balance of $286 million and approximately $1.0 billion in total liquidity.

Share Repurchases and Dividends

During the third quarter, the Company repurchased approximately 2.0 million shares of its common stock for $132 million. In October 2022, the Company's Board of Directors increased the Company's share repurchase authorization by $400 million.

The Company paid common stock dividends of $29 million, or $0.32 per share.

Full-Year 2022 Outlook

The Company is updating its outlook as follows:

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 Wednesday, October 26, 2022 at 8:30 a.m. ET. Listeners can access the webcast live through the Company's website at https://investor.wyndhamhotels.com. The conference call may also be accessed by dialing 800 225-9448 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 October 26, 2022. A telephone replay will be available for approximately ten days beginning at noon ET on October 26, 2022 at 800 839-4197.

Presentation of Financial Information

Financial information discussed in this press release includes non-GAAP measures, which include or exclude certain items. These non-GAAP measures differ from reported GAAP results and are intended to illustrate what management believes are relevant period-over-period comparisons and are helpful to investors as an additional tool for further understanding and assessing the Company's ongoing operating performance. The Company uses these measures internally to assess its operating performance, both absolutely and in comparison to other companies, and to make day to day operating decisions, including in the evaluation of selected compensation decisions. Exclusion of items in the Company's non-GAAP presentation should not be considered an inference that these items are unusual, infrequent or non-recurring. Full reconciliations of GAAP results to the comparable non-GAAP measures for the reported periods appear in the financial tables section of this press release.

About Wyndham Hotels & Resorts

Wyndham Hotels & Resorts (NYSE: WH) is the world's largest hotel franchising company by the number of properties, with approximately 9,100 hotels across over 95 countries on six continents. Through its network of approximately 836,000 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 23 hotel brands, including Super 8®, Days Inn®, Ramada®, Microtel®, La Quinta®, Baymont®, Wingate®, AmericInn®, Hawthorn Suites®, Trademark Collection® and Wyndham®. The Company's award-winning Wyndham Rewards loyalty program offers over 97 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 the federal securities laws, including statements related to the Company's current views and expectations with respect to its future performance and operations, including revenues, earnings, cash flow and other financial and operating measures, share repurchases and dividends, restructuring charges and statements related to the coronavirus pandemic ("COVID-19"). Forward-looking statements include those that convey management's expectations as to the future based on plans, estimates and projections at the time the Company makes the statements and may be identified by words such as "will," "expect," "believe," "plan," "anticipate," "intend," "goal," "future," "outlook," "guidance," "target," "objective," "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 the Company 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 COVID-19, its scope, duration, resurgence 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 COVID-19; the Company's performance during the recovery from COVID-19 and any resurgence or mutations of the virus; various actions governments, businesses and individuals continue to take in response to the pandemic, including stay-in-place directives (including, for instance, quarantine and isolation guidelines and mandates), safety mitigation guidance, as well as the timing, availability and adoption rates of vaccinations, booster shots and other treatments for COVID-19; concerns with or threats of other pandemics, contagious diseases or health epidemics, including the effects of COVID-19; the performance of the 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, political instability or political strife; risks related to restructuring or strategic initiatives; 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; and the Company's ability to make or pay, plans for, and the timing and amount of any future share repurchases and/or 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In determining adjusted EBITDA, interest expense, net, adjusted income before income taxes, adjusted net income, adjusted diluted EPS and 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), (gain)/loss on asset sales and foreign currency impacts of highly inflationary countries. The Company calculates 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, early extinguishment of debt charges, impairment charges, restructuring and related charges, contract termination costs, transaction-related items (acquisition-, disposition-, or separation-related), (gain)/loss on asset sales, foreign currency impacts of highly inflationary countries, stock-based compensation expense, income taxes and development advance notes amortization. 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, the Company's definition of adjusted EBITDA may not be comparable to similarly titled measures of other companies.

During the first quarter of 2021, the Company modified the definition of adjusted EBITDA to exclude the amortization of development advance notes to reflect how the Company's chief operating decision maker reviews operating performance beginning in 2021. The Company has applied the modified definition of adjusted EBITDA to all periods presented.

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.

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.

Net Debt Leverage Ratio: Calculated by dividing total debt less cash and cash equivalents by trailing twelve months adjusted EBITDA.

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.

 

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SOURCE Wyndham Hotels & Resorts