EXHIBIT 99.1

 

WW_Logo_1clr_Spot

 

 

Wyndham Worldwide Reports First Quarter 2015 Earnings

First Quarter Adjusted Diluted EPS Growth of 32%

Increases Full Year EPS Guidance

 

 

PARSIPPANY, N.J. (April 28, 2015) – Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months ended March 31, 2015.

 

First Quarter Highlights:

 

·First quarter adjusted diluted earnings per share (EPS) was $1.03, an increase of 32% from adjusted diluted EPS of $0.78 in the first quarter of 2014. Reported diluted EPS was $1.00 in the first quarter of 2015, an increase of 45% from reported diluted EPS of $0.69 from the same period in 2014.

 

·Revenues increased 6% compared with the first quarter of 2014. In constant currency, revenues increased 9%.

 

·Adjusted EBITDA increased 14% compared with the first quarter of 2014. In constant currency, adjusted EBITDA increased 18%.

 

·During the quarter, the Company repurchased 1.7 million shares of its common stock for $150 million.

  

 

“We are off to a strong start this year. Despite significant currency headwinds, adjusted diluted EPS increased 32% and adjusted EBITDA increased 14% in the first quarter,” said Stephen P. Holmes, chairman and CEO. “All three businesses once again performed well, highlighted by strong domestic RevPAR growth at our Hotel Group, improved provision and cost of sales at Vacation Ownership and strong growth across our vacation rentals businesses. We continue to deliver strong results, allocate capital to both invest in the business and return to shareholders, and innovate to build a strong competitive position going forward.”

 
 

 

FIRST QUARTER 2015 OPERATING RESULTS

First quarter revenues were $1.3 billion, an increase of 6% from the prior year period. In constant currency revenues increased 9%, reflecting growth across the Company’s business segments.

 

Adjusted net income was $126 million, or $1.03 per diluted share, compared with $102 million, or $0.78 per diluted share for the same period in 2014. The increase reflects stronger financial results in all of the Company’s businesses. EPS also benefited from the Company’s share repurchase program, which decreased weighted average diluted share count by 6% year-over-year.

 

Reported net income for the first quarter of 2015 was $122 million, or $1.00 per diluted share, compared with $90 million, or $0.69 per diluted share, for the first quarter of 2014. Reported net income in both periods reflects several items excluded from adjusted net income. The net result of these items unfavorably impacted first quarter 2015 net income by $4 million and unfavorably impacted first quarter 2014 net income by $12 million. Full reconciliations of adjusted results to GAAP results appear in Table 8 of this press release.

 

Free cash flow was $197 million for the three months ended March 31, 2015, compared with $269 million for the same period in 2014. The decline in free cash flow reflects the timing of working capital including inventory spending. The Company defines free cash flow as net cash provided by operating activities less capital expenditures. For the three months ended March 31, 2015, net cash provided by operating activities was $253 million, compared with $315 million in the prior year period. The Company expects free cash flow for the full year 2015 of approximately $800 million compared with $749 million in free cash flow in 2014.

 

BUSINESS UNIT RESULTS

 

Lodging (Wyndham Hotel Group)

Revenues were $292 million in the first quarter of 2015, a 23% increase over the first quarter of 2014. Excluding an acquisition and in constant currency, revenues increased 14%, reflecting higher domestic RevPAR and worldwide room growth as well as incremental global conference fees.

 

Total system-wide RevPAR increased 1.7% compared with the first quarter of 2014. Domestic RevPAR increased 7.7%, but was partially offset by a 9.8% decline in international RevPAR. In constant currency and excluding acquisitions, total system-wide RevPAR increased 4.0%.

 

Adjusted EBITDA for the first quarter of 2015 was $79 million, a 16% increase compared with the first quarter of 2014. The increase primarily reflects higher domestic RevPAR and worldwide room growth as well as higher inter-segment licensing fees for use of the Wyndham brand trade name.

 

 
 

 

 

As of March 31, 2015, the Company’s hotel system consisted of over 7,670 properties and over 667,000 rooms, a 3.2% room increase compared with the first quarter of 2014. The development pipeline included 925 hotels and approximately 116,000 rooms, of which 58% were international and 62% were new construction.

 

Vacation Exchange and Rentals (Wyndham Exchange & Rentals)

Revenues were $369 million in the first quarter of 2015, a 3% decrease over the first quarter of 2014. In constant currency, revenues increased 5%.

 

Exchange revenues were $185 million, a 1% decrease compared with the first quarter of 2014. In constant currency, exchange revenues increased 2%, as the average number of members increased 2.5% and exchange revenue per member was flat.

 

Vacation rental revenues were $166 million, a 6% decrease compared to the first quarter of 2014. In constant currency, vacation rental revenues were up 8%, reflecting a 7.0% increase in transaction volume and a 0.9% increase in average net price per vacation rental.

 

Adjusted EBITDA for the first quarter of 2015 was $104 million, a 9% increase compared with the first quarter of 2014. On a currency-neutral basis and excluding the divestiture of a business, adjusted EBITDA increased 9% compared with the prior year period primarily reflecting higher revenue and a $4 million reserve reversal resulting from a favorable ruling associated with value-added taxes.

 

Vacation Ownership (Wyndham Vacation Ownership)

Revenues were $617 million in the first quarter of 2015, a 4% increase over the first quarter of 2014.

 

Net VOI sales increased 11%, primarily reflecting a lower loan loss provision and the recognition of deferred revenues. Gross VOI sales were $390 million in the first quarter of 2015, a decrease of 5% compared with the first quarter of 2014, reflecting a 4.2% decline in volume per guest (VPG) and a 1.2% decline in tour flow. In constant currency, VPG declined 3.1% primarily reflecting a higher mix of new owner tours, which generally have a lower VPG than tours to existing owners.

 

Adjusted EBITDA for the first quarter of 2015 was $130 million, an increase of 13% compared with the first quarter of 2014, primarily reflecting the net revenue increase and lower cost of sales.

 

 
 

Other Items

·The Company repurchased 1.7 million shares of common stock for $150 million during the first quarter of 2015. From April 1 through April 27, 2015, the Company repurchased an additional 0.5 million shares for $45 million. The Company’s remaining share repurchase authorization totals $821 million as of April 27, 2015.
·Reported net interest expense in the first quarter of 2015 was $23 million, compared with $25 million in the first quarter of 2014.

 

Balance Sheet Information as of March 31, 2015:

·Cash and cash equivalents of $180 million, compared with $183 million at December 31, 2014
·Vacation ownership contract receivables, net, of $2.6 billion, compared with $2.7 billion at December 31, 2014
·Vacation ownership and other inventory of $1.2 billion, unchanged from December 31, 2014
·Securitized vacation ownership debt of $2.2 billion, unchanged from December 31, 2014
·Long-term debt of $3.0 billion, compared with $2.9 billion at December 31, 2014. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.1 billion as of March 31, 2015, compared to $1.3 billion from December 31, 2014

 

A schedule of debt is included in Table 5 of this press release.

 

Outlook

 

Note to Editors: The guidance excludes possible future share repurchases, while analysts’ estimates often include share repurchases. This results in discrepancies between Company guidance and database consensus forecasts.

 

For the full year 2015, the Company reiterates the following guidance:

·Revenues of approximately $5.450 - $5.550 billion.
·Adjusted EBITDA of approximately $1.285 - $1.315 billion. Guidance reflects a $42 million adverse impact from foreign exchange compared with 2014 full year results.

For the full year 2015, the Company updates the following guidance:

·Adjusted diluted EPS of approximately $4.81 - $4.96 based on a diluted share count of 121.4 million, up from $4.75 - $4.90 based on a diluted share count of 123 million.

 

 

 
 

Conference Call Information

Wyndham Worldwide Corporation will hold a conference call with investors to discuss the Company’s results, outlook and guidance on Tuesday, April 28, 2015 at 8:30 a.m. EDT. Listeners may access the webcast live through the Company’s website at www.wyndhamworldwide.com/investors. An archive of this webcast will be available on the website for approximately 90 days beginning at noon EDT on April 28, 2015. The conference call may also be accessed by dialing 800-369-2125 and providing the passcode "WYNDHAM." Listeners are urged to call at least 10 minutes prior to the scheduled start time. A telephone replay will be available for approximately 90 days beginning at noon EDT on April 28, 2015, at 800-388-4923.

 

The Company will post guidance information on its website following the conference call.

 

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 core operating performance. Exclusion of items in our non-GAAP presentation should not be considered an inference that these items are unusual, infrequent or non-recurring. A complete reconciliation of reported GAAP results to the comparable non-GAAP information appears in the financial tables section of the press release. It is not practicable to provide a reconciliation of forecasted adjusted EBITDA and adjusted EPS to the most directly comparable GAAP measures because certain items cannot be reasonably estimated or predicted at this time. Any such items could be significant to the Company’s reported results.

 

About Wyndham Worldwide Corporation

One of the world’s largest hospitality companies, Wyndham Worldwide (NYSE: WYN) provides a wide range of hospitality services and products through its global portfolio of world-renowned brands.  The world’s largest hotel company based on the number of properties, Wyndham Hotel Group is home to many of the world’s best-known hotel brands, with over 7,670 franchised hotels and over 667,000 hotel rooms worldwide. Wyndham Exchange & Rentals is the worldwide leader in vacation exchange and the world’s largest professionally managed vacation rentals business, providing more than 5 million leisure-bound families annually with access to over 109,000 vacation properties in over 100 countries through its prominent exchange and vacation rental brands. The industry and timeshare ownership market leader, Wyndham Vacation Ownership develops, markets, and sells vacation ownership interests and provides consumer financing to owners through its network of 210 vacation ownership resorts serving approximately 904,000 owners throughout the United States, Canada, Mexico, the Caribbean, and the South Pacific. Based in Parsippany, NJ, Wyndham Worldwide employs over 34,000 associates globally. For more information, please visit www.wyndhamworldwide.com.

 

 
 

 

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, conveying management’s expectations as to the future based on plans, estimates and projections at the time the Company makes the statements. 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. The forward-looking statements contained in this press release include statements related to the Company’s revenues, earnings, cash flow and related financial and operating measures.

 

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 general economic conditions, the performance of the financial and credit markets, the economic environment for the hospitality industry, the impact of war, terrorist activity or political strife, operating risks associated with the hotel, vacation exchange and rentals and vacation ownership businesses, as well as those described in the Company’s Annual Report on Form 10-K, filed with the SEC on February 13, 2015. Except for the Company’s ongoing obligations to disclose material information under the federal securities laws, it undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

 

# # #

 

Investor and Media contact:

Margo C. Happer

Senior Vice President, Investor Relations

Wyndham Worldwide Corporation

(973) 753-6472

margo.happer@wyn.com

 

Barry Goldschmidt

Vice President, Investor Relations

Wyndham Worldwide Corporation

(973) 753-7703

barry.goldschmidt@wyn.com

 

 
 

 

 

Table 1

 

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 interest) and income taxes, each of which is presented on the Company’s Consolidated Statements of Income. The Company believes that EBITDA is a useful measure of performance for the Company's segments which when considered with GAAP measures, gives a more complete understanding of its operating performance. The Company’s presentation of 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 EBITDA to Net income for the three months ended March 31, 2015 and 2014:

 

   Three Months Ended March 31, 
   2015   2014 
   Net Revenues   EBITDA   Net Revenues   EBITDA 
Lodging  $292   $76   $237   $64 
Vacation Exchange and Rentals   369    105    379    85 
Vacation Ownership   617    130    593    115 
Total Reportable Segments   1,278    311    1,209    264 
Corporate and Other (a)   (16)   (34)   (16)   (34)
Total Company  $1,262   $277   $1,193   $230 

 

Reconciliation of EBITDA to Net income

 

   Three Months Ended March 31, 
   2015      2014 
EBITDA  $277     $230 
Depreciation and amortization   56       56 
Interest expense   26       27 
Interest income   (3)      (2)
Income before income taxes   198       149 
Provision for income taxes   76       59 
Net income  $122      $90 

  

 

(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 March 31, 2015 and 2014 (for a description of adjustments by segment, see Table 7):

 

   Three Months Ended March 31, 
   2015   2014 
   Net Revenues   Adjusted
EBITDA
   Net Revenues   Adjusted
EBITDA
 
Lodging  $292   $79   $237   $68 
Vacation Exchange and Rentals   369    104    379    95 
Vacation Ownership   617    130    593    115 
Total Reportable Segments   1,278    313    1,209    278 
Corporate and Other   (16)   (34)   (16)   (34)
Total Company  $1,262   $279   $1,193   $244 

 

 
 

Table 2

 

Wyndham Worldwide Corporation

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

 

   Three Months Ended 
   March 31, 
   2015   2014 
Net revenues          
Service and membership fees  $599   $590 
Vacation ownership interest sales   336    303 
Franchise fees   147    127 
Consumer financing   104    105 
Other   76    68 
Net revenues   1,262    1,193 
           
Expenses          
Operating   564    534 
Cost of vacation ownership interests   33    39 
Consumer financing interest   18    17 
Marketing and reservation   195    181 
General and administrative   181    195 
Restructuring   (1)   - 
Depreciation and amortization   56    56 
Total expenses   1,046    1,022 
           
Operating income   216    171 
Other income, net   (5)   (3)
Interest expense   26    27 
Interest income   (3)   (2)
           
Income before income taxes   198    149 
Provision for income taxes   76    59 
Net income  $122   $90 
           
Earnings per share          
Basic  $1.01   $0.70 
Diluted   1.00    0.69 
           
Weighted average shares outstanding          
Basic   121    128 
Diluted   122    130 

 

 

 

Note: For a description of adjustments to Net Income, see Table 8.

 

 
 

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 
Lodging (a)                            
Number of Rooms   2015   667,400    N/A    N/A    N/A    N/A 
   2014   646,900    650,200    655,300    660,800    N/A 
   2013   631,800    635,100    638,300    645,400    N/A 
   2012   609,300    608,300    618,100    627,400    N/A 
                             
RevPAR  2015  $32.84    N/A    N/A    N/A    N/A 
   2014  $32.30   $40.11   $43.71   $34.06   $37.57 
   2013  $31.05   $38.00   $41.78   $33.07   $36.00 
   2012  $29.73   $37.23   $40.39   $31.86   $34.80 
                             
Vacation Exchange and Rentals                            
Average Number of Members (in 000s)  2015   3,822    N/A    N/A    N/A    N/A 
   2014   3,727    3,748    3,777    3,808    3,765 
   2013   3,668    3,686    3,711    3,728    3,698 
   2012   3,684    3,670    3,672    3,670    3,674 
                             
Exchange Revenue Per Member  2015  $194.06    N/A    N/A    N/A    N/A 
   2014  $200.78   $179.17   $171.77   $157.24   $177.12 
   2013  $210.96   $182.42   $169.95   $161.21   $181.02 
   2012  $204.56   $177.07   $171.14   $165.86   $179.68 
                             
Vacation Rental Transactions (in 000s) (a)  2015   459    N/A    N/A    N/A    N/A 
   2014   429    376    455    293    1,552 
   2013   423    355    433    273    1,483 
   2012   418    325    390    259    1,392 
                             
Average Net Price Per Vacation Rental (a)  2015  $361.20    N/A    N/A    N/A    N/A 
   2014  $410.04   $577.13   $727.40   $492.25   $558.95 
   2013  $392.64   $540.38   $677.81   $506.62   $532.11 
   2012  $379.40   $524.40   $635.44   $484.69   $504.55 
                             
Vacation Ownership (a)                            
Gross Vacation Ownership Interest (VOI) Sales (in 000s) (b)  2015  $390,000    N/A    N/A    N/A    N/A 
   2014  $410,000   $496,000   $513,000   $470,000   $1,889,000 
   2013  $384,000   $481,000   $536,000   $488,000   $1,889,000 
   2012  $384,000   $460,000   $502,000   $435,000   $1,781,000 
                             
Tours (in 000s) (c)  2015   168    N/A    N/A    N/A    N/A 
   2014   170    208    225    191    794 
   2013   163    206    225    195    789 
   2012   148    186    207    183    724 
                             
Volume Per Guest (VPG) (c)  2015  $2,177    N/A    N/A    N/A    N/A 
   2014  $2,272   $2,280   $2,158   $2,336   $2,257 
   2013  $2,211   $2,256   $2,278   $2,370   $2,281 
   2012  $2,414   $2,361   $2,315   $2,225   $2,324 

 

 

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)Includes Gross VOI sales under the Company's Wyndham Asset Affiliate Model (WAAM) Just-in-Time beginning in the second quarter of 2012 (see Table 9 for a reconciliation of Gross VOI sales to vacation ownership interest sales).
(c)Includes the impact of WAAM Just-in-Time related tours beginning in the second quarter of 2012.

 

ADDITIONAL DATA

 

   Year  Q1   Q2   Q3   Q4   Full Year 
Lodging                            
Number of Properties  2015   7,670    N/A    N/A    N/A    N/A 
   2014   7,500    7,540    7,590    7,650    N/A 
   2013   7,380    7,410    7,440    7,490    N/A 
   2012   7,150    7,170    7,260    7,340    N/A 
                             
Vacation Ownership                            
Provision for Loan Losses (in 000s) (*)   2015  $46,000    N/A    N/A    N/A    N/A 
   2014  $60,000   $70,000   $70,000   $60,000   $260,000 
   2013  $84,000   $90,000   $102,000   $73,000   $349,000 
   2012  $96,000   $100,000   $124,000   $89,000   $409,000 

 

 

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

 

Lodging

 

Number of Rooms: Represents the number of rooms at lodging 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.

 

Vacation Exchange and Rentals

 

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 during the period in connection with customers booking their vacation rental stays through the Company. 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 during the period divided by the number of vacation rental transactions during the period.

 

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. 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 2012-2015.

 

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

REVENUE DETAIL BY REPORTABLE SEGMENT

(In millions)

 

   2015   2014 
   Q1   Q2   Q3   Q4   Year   Q1   Q2   Q3   Q4   Year 
Lodging                                                  
Royalties and Franchise Fees  $74    N/A    N/A    N/A    N/A   $68   $88   $100   $83   $339 
Marketing, Reservation and Wyndham Rewards Revenues (a)   96    N/A    N/A    N/A    N/A    76    101    117    91    385 
Hotel Management Reimbursable Revenues (b)   61    N/A    N/A    N/A    N/A    37    39    39    39    154 
Intersegment Trademark Fees   12    N/A    N/A    N/A    N/A    9    11    11    10    41 
Owned Hotel Revenues   25    N/A    N/A    N/A    N/A    24    20    18    20    81 
Ancillary Revenues (c)   24    N/A    N/A    N/A    N/A    23    24    30    24    101 
Total Lodging   292    N/A    N/A    N/A    N/A    237    283    315    267    1,101 
                                                   
Vacation Exchange and Rentals                                                  
Exchange Revenues   185    N/A    N/A    N/A    N/A    187    168    162    150    667 
Rental Revenues   166    N/A    N/A    N/A    N/A    176    217    331    144    868 
Ancillary Revenues (d)   18    N/A    N/A    N/A    N/A    16    17    19    17    69 
Total Vacation Exchange and Rentals   369    N/A    N/A    N/A    N/A    379    402    512    311    1,604 
                                                   
Vacation Ownership                                                  
Vacation Ownership Interest Sales   336    N/A    N/A    N/A    N/A    303    382    415    385    1,485 
Consumer Financing   104    N/A    N/A    N/A    N/A    105    106    108    108    427 
Property Management Fees and Reimbursable Revenues   153    N/A    N/A    N/A    N/A    143    145    150    142    581 
WAAM Fee-for-Service Commissions   12    N/A    N/A    N/A    N/A    33    30    18    16    98 
Ancillary Revenues (e)   12    N/A    N/A    N/A    N/A    9    10    13    17    47 
Total Vacation Ownership   617    N/A    N/A    N/A    N/A    593    673    704    668    2,638 
Total Reportable Segments  $1,278    N/A    N/A    N/A    N/A   $1,209   $1,358   $1,531   $1,246   $5,343 

 

   2013   2012 
   Q1   Q2   Q3   Q4   Year   Q1   Q2   Q3   Q4   Year 
Lodging                                                  
Royalties and Franchise Fees  $64   $79   $91   $75   $309   $62   $80   $88   $71   $301 
Marketing, Reservation and Wyndham Rewards Revenues (a)   73    92    118    83    365    68    99    98    80    345 
Hotel Management Reimbursable Revenues (b)   25    38    37    35    135    21    22    25    23    91 
Intersegment Trademark Fees   8    10    11    10    39    8    9    9    8    34 
Owned Hotel Revenues   26    20    18    19    84    8    8    7    18    41 
Ancillary Revenues (c)   26    23    22    23    95    18    15    22    23    78 
Total Lodging   222    262    297    245    1,027    185    233    249    223    890 
                                                   
Vacation Exchange and Rentals                                                  
Exchange Revenues   193    168    158    150    669    188    162    157    153    660 
Rental Revenues   166    192    293    138    789    159    170    248    125    702 
Ancillary Revenues (d)   15    16    19    17    68    14    16    15    15    60 
Total Vacation Exchange and Rentals   374    376    470    305    1,526    361    348    420    293    1,422 
                                                   
Vacation Ownership                                                  
Vacation Ownership Interest Sales   263    347    384    384    1,379    271    342    373    337    1,323 
Consumer Financing   105    106    107    108    426    103    102    106    110    421 
Property Management Fees   146    141    143    137    567    110    108    117    125    460 
WAAM Fee-for-Service Commissions   24    30    33    20    107    12    11    4    6    33 
Ancillary Revenues (e)   11    6    10    9    36    5    7    8    12    32 
Total Vacation Ownership   549    630    677    658    2,515    501    570    608    590    2,269 
Total Reportable Segments  $1,145   $1,268   $1,444   $1,208   $5,068   $1,047   $1,151   $1,277   $1,106   $4,581 

 

 

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 which were charged to the Company's vacation ownership business and were eliminated in consolidation. During 2013, such amounts include reimbursable revenues of $1 million, $3 million and $2 million, in Q2, Q3 and Q4 respectively, which were charged to the Company's vacation ownership business and were eliminated in consolidation.
(c)Primarily includes additional services provided to franchisees.
(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 5

  

Wyndham Worldwide Corporation

SCHEDULE OF DEBT

(In millions)

 

   March 31,
2015
   December 31,
2014
   September 30,
2014
   June 30,
2014
   March 31,
2014
 
                     
Securitized vacation ownership debt (a)                         
Term notes  $2,090   $1,962   $1,670   $1,600   $1,823 
Bank conduit facility (b)   98    203    271    291    156 
Total securitized vacation ownership debt (c)   2,188    2,165    1,941    1,891    1,979 
Less: Current portion of securitized vacation ownership debt   217    214    192    187    192 
Long-term securitized vacation ownership debt  $1,971   $1,951   $1,749   $1,704   $1,787 
                          
                          
Debt:                         
Revolving credit facility (due July 2020) (d)  $14   $25   $18   $16   $10 
Commercial paper (e)   346    189    237    107    184 
$315 million 6.00% senior unsecured notes (due December 2016) (f)   317    317    317    318    318 
$300 million 2.95% senior unsecured notes (due March 2017)   299    299    299    299    299 
$14 million 5.75% senior unsecured notes (due February 2018)   14    14    14    14    14 
$450 million 2.50% senior unsecured notes (due March 2018)   448    448    448    448    447 
$40 million 7.375% senior unsecured notes (due March 2020)   40    40    40    40    40 
$250 million 5.625% senior unsecured notes (due March 2021)   247    247    247    246    246 
$650 million 4.25% senior unsecured notes (due March 2022) (g)   650    648    646    646    645 
$400 million 3.90% senior unsecured notes (due March 2023) (h)   418    410    401    403    395 
Capital leases   161    170    175    186    188 
Other   70    81    80    99    100 
Total long-term debt   3,024    2,888    2,922    2,822    2,886 
Less: Current portion of long-term debt   53    47    49    50    52 
Long-term debt  $2,971   $2,841   $2,873   $2,772   $2,834 

 

 

(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 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 2016 and borrowing capacity of $650 million. As of March 31, 2015, this facility had a remaining borrowing capacity of $552 million.
(c)This debt is collateralized by $2,609 million, $2,629 million, $2,326 million, $2,287 million and $2,328 million of underlying vacation ownership contract receivables and related assets as of March 31, 2015, December 31, 2014, September 30, 2014, June 30, 2014 and March 31, 2014.
(d)Represents a $1.5 billion revolving credit facility that expires in July 2020. As of March 31, 2015, the Company had $1 million of outstanding letters of credit. After considering outstanding commercial paper borrowings of $346 million, the remaining borrowing capacity was $1.1 billion as of March 31, 2015.
(e)Represents commercial paper programs of $1.25 billion with a remaining borrowing capacity of $904 million, as of March 31, 2015.
(f)Includes unamortized gains from the settlement of a derivative in the amount of $2 million as of March 31, 2015, December 31, 2014 and September 30, 2014 and $3 million as of June 30, 2014 and March 31, 2014.
(g)Includes a $4 million and $3 million increase in the carrying value resulting from a fair value hedge derivative as of March 31, 2015 and December 31, 2014, respectively.
(h)Includes a $21 million and $13 million increase in the carrying value resulting from a fair value hedge derivative as of March 31, 2015 and December 31, 2014, respectively.

 

 
 

Table 6

  

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

 

   As of and For the Three Months Ended March 31, 2015 
Brand  Number of
Properties
   Number of Rooms   Average
Occupancy Rate
   Average Daily
Rate (ADR)
   Average Revenue
Per Available
Room (RevPAR)
 
                     
Lodging                         
Super 8   2,519    161,538    50.9%  $48.46   $24.66 
                          
Days Inn   1,784    144,231    45.2%  $64.08   $28.98 
                          
Ramada   840    116,409    51.5%  $74.72   $38.49 
                          
Howard Johnson   419    45,588    44.1%  $62.50   $27.59 
                          
Wyndham Hotels and Resorts   201    44,042    56.0%  $112.18   $62.85 
                          
Travelodge   422    31,025    45.5%  $62.05   $28.24 
                          
Baymont   373    30,012    47.0%  $65.21   $30.63 
                          
Knights Inn   392    24,476    44.1%  $45.16   $19.91 
                          
Microtel Inns & Suites by Wyndham   325    23,302    53.5%  $66.83   $35.73 
                          
TRYP by Wyndham   122    17,455    51.3%  $76.01   $39.02 
                          
Wingate by Wyndham   153    13,929    58.5%  $85.97   $50.33 
                          
Hawthorn Suites by Wyndham   99    9,825    64.8%  $80.39   $52.11 
                          
Dolce   24    5,530    54.4%  $131.50   $71.47 
                          
Total Lodging   7,673    667,362    49.4%  $66.43   $32.84 
                          
Vacation Ownership                         
Wyndham Vacation Ownership resorts   210    23,965    N/A    N/A    N/A 
                          
Total Wyndham Worldwide   7,883    691,327                

 

   As of and For the Three Months Ended March 31, 2014 
Brand  Number of
Properties
   Number of Rooms   Average
Occupancy Rate
   Average Daily
Rate (ADR)
   Average Revenue
Per Available
Room (RevPAR)
 
                     
Lodging                         
Super 8   2,413    154,270    51.5%  $48.27   $24.88 
                          
Days Inn   1,812    146,643    44.6%  $61.92   $27.61 
                          
Ramada   826    113,304    50.2%  $79.47   $39.87 
                          
Howard Johnson   449    47,303    43.6%  $61.87   $26.98 
                          
Wyndham Hotels and Resorts   170    38,565    55.3%  $112.69   $62.30 
                          
Travelodge   431    31,833    44.7%  $61.78   $27.61 
                          
Baymont   336    27,504    46.9%  $61.60   $28.89 
                          
Knights Inn   374    22,792    40.8%  $44.04   $17.97 
                          
Microtel Inns & Suites by Wyndham   313    22,425    53.7%  $62.45   $33.51 
                          
TRYP by Wyndham   114    16,283    51.4%  $85.87   $44.11 
                          
Wingate by Wyndham   161    14,722    59.1%  $83.30   $49.22 
                          
Hawthorn Suites by Wyndham   96    9,609    60.9%  $76.01   $46.33 
                          
Dream   5    989    73.8%  $189.89   $140.22 
                          
Night   3    630    59.8%  $114.63   $68.51 
                          
Total Lodging   7,503    646,872    48.8%  $66.14   $32.30 
                          
Vacation Ownership                         
Wyndham Vacation Ownership resorts   192    23,530    N/A    N/A    N/A 
                          
Total Wyndham Worldwide   7,695    670,402                

 

 

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

(In millions)

 

Three months ended March 31, 2015  Net Revenues   Reported
EBITDA
   Acquisition
   Costs (b)
   Restructuring
    Costs (c)
   Adjusted
EBITDA
 
Lodging  $292   $76   $3   $-   $79 
Vacation Exchange and Rentals   369    105    -    (1)   104 
Vacation Ownership   617    130    -    -    130 
Total Reportable Segments   1,278    311    3    (1)   313 
Corporate and Other (a)   (16)   (34)   -    -    (34)
Total Company  $1,262   $277   $3   $(1)  $279 

 

 

(a)Includes the elimination of transactions between segments.
(b)Relates to costs incurred in connection with the acquisition of Dolce Hotels and Resorts (January 2015).
(c)Relates to the reversal of a portion of the restructuring reserve established during the fourth quarter of 2014.

 

 
 

Table 7

(2 of 2)

  

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION

(In millions)

 

Three months ended March 31, 2014  Net Revenues   Reported
EBITDA
   Executive
Departure
Costs
   Venezuela
Currency
    Devaluation (b)
   VAT
  Adjustment (c)
   Restructuring
Costs (d)
   Loss on Sale
and Asset
   Impairments (e)
   Legacy
   Adjustments (f)
   Adjusted
EBITDA
 
Lodging  $237   $64   $4   $-   $-   $-   $-   $-   $68 
Vacation Exchange and Rentals   379    85    -    10    -    -    -    -    95 
Vacation Ownership   593    115    -    -    -    -    -    -    115 
Total Reportable Segments   1,209    264    4    10    -    -    -    -    278 
Corporate and Other (a)   (16)   (34)   -    -    -    -    -    -    (34)
Total Company  $1,193   $230   $4   $10   $-   $-   $-   $-   $244 
                                              
Three months ended June 30, 2014                                             
Lodging  $283   $87   $-   $-   $-   $-   $-   $-   $87 
Vacation Exchange and Rentals   402    89    -    -    (2)   -    -    -    87 
Vacation Ownership   673    185    -    -    -    -    -    -    185 
Total Reportable Segments   1,358    361    -    -    (2)   -    -    -    359 
Corporate and Other (a)   (15)   (35)   -    -    -    -    -    -    (35)
Total Company  $1,343   $326   $-   $-   $(2)  $-   $-   $-   $324 
                                              
Three months ended September 30, 2014                                             
Lodging  $315   $100   $-   $-   $-   $(1)  $8   $-   $107 
Vacation Exchange and Rentals   512    159    -    -    -    -    -    -    159 
Vacation Ownership   704    188    -    -    -    -    -    -    188 
Total Reportable Segments   1,531    447    -    -    -    (1)   8    -    454 
Corporate and Other (a)   (17)   (36)   -    -    -    -    -    -    (36)
Total Company  $1,514   $411   $-   $-   $-   $(1)  $8   $-   $418 
                                              
Three months ended December 31, 2014                                             
Lodging  $267   $77   $-   $-   $-   $2   $-   $-   $79 
Vacation Exchange and Rentals   311    2    -    -    -    10    27    -    39 
Vacation Ownership   668    172    -    -    -    -    -    -    172 
Total Reportable Segments   1,246    251    -    -    -    12    27    -    290 
Corporate and Other (a)   (15)   (36)   -    -    -    -    -    (2)   (38)
Total Company  $1,231   $215   $-   $-   $-   $12   $27   $(2)  $252 
                                              
Twelve months ended December 31, 2014                                             
Lodging  $1,101   $327   $4   $-   $-   $1   $8   $-   $340 
Vacation Exchange and Rentals   1,604    335    -    10    (2)   10    27    -    380 
Vacation Ownership   2,638    660    -    -    -    -    -    -    660 
Total Reportable Segments   5,343    1,322    4    10    (2)   11    35    -    1,380 
Corporate and Other (a)   (62)   (141)   -    -    -    -    -    (1)   (142)
Total Company  $5,281   $1,181   $4   $10   $(2)  $11   $35   $(1)  $1,238 

 

 

Note: The sum of the quarters may not agree to the twelve months ended December 31, 2014 due to rounding.

 

(a)Includes the elimination of transactions between segments.

(b)Represents the devaluation of the official exchange rate of Venezuela.

(c)Reversal of a reserve for value-added taxes.

(d)Relates to (i) the reversal of a portion of a restructuring reserve established during the fourth quarter of 2013 and (ii) costs incurred as a result of various organizational realignment initiatives by the Company.

(e)Relates to (i) a loss on the sale of a business and a write-down of an equity investment at the Company's vacation exchange and rentals business and (ii) a write-down of an investment in a joint venture at the Company's lodging business.

(f)Relates to the net benefit from the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.

 

 
 

Table 8

(1 of 2)

  

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

   Three Months Ended March 31, 2015 
   As Reported   Acquisition
    Costs (a)
   Restructuring
    Costs (c)
   As Adjusted
non-GAAP
 
Net revenues                    
Service and membership fees  $599   $   $   $599 
Vacation ownership interest sales   336              336 
Franchise fees   147              147 
Consumer financing   104              104 
Other   76              76 
Net revenues   1,262    -    -    1,262 
                     
Expenses                    
Operating   564    (3)        561 
Cost of vacation ownership interests   33              33 
Consumer financing interest   18              18 
Marketing and reservation   195              195 
General and administrative   181              181 
Restructuring   (1)        1    - 
Depreciation and amortization   56              56 
Total expenses   1,046    (3)   1    1,044 
                     
Operating income   216    3    (1)   218 
Other income, net   (5)             (5)
Interest expense   26              26 
Interest income   (3)             (3)
                     
Income before income taxes   198    3    (1)   200 
Provision for income taxes   76    (1)(b)   (1)(d)   74 
                     
Net income  $122   $4   $-   $126 
                     
Earnings per share                    
Basic  $1.01   $0.03   $-   $1.04 
Diluted   1.00    0.03    -    1.03 
                     
Weighted average shares outstanding                    
Basic   121    121    121    121 
Diluted   122    122    122    122 

 

 

The above table reconciles certain non-GAAP financial measures. The presentation of these adjustments is intended to permit the comparison of particular adjustments as they appear in the line items of the income statement in order to assist investors' understanding of the overall impact of such adjustments. 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.

 

(a)Relates to costs incurred in connection with the acquisition of Dolce Hotels and Resorts (January 2015) at the Company's lodging business.
(b)Relates to (i) the tax effect of the adjustment and (ii) a valuation allowance established in connection with the acquisition.

(c)Relates to the reversal of a portion of the restructuring reserve established during the fourth quarter of 2014 at the Company's vacation exchange and rentals business.

(d)Relates to the tax effect of the adjustment.

 

 
 

Table 8

(2 of 2)

  

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

   Three Months Ended March 31, 2014 
   As Reported   Executive
Departure
    Costs (a)
   Venezuela
Currency
   Devaluation (c)
   As Adjusted
non-GAAP
 
Net revenues                    
Service fees and membership  $590   $   $   $590 
Vacation ownership interest sales   303              303 
Franchise fees   127              127 
Consumer financing   105              105 
Other   68              68 
Net revenues   1,193    -    -    1,193 
                     
Expenses                    
Operating   534         (10)   524 
Cost of vacation ownership interests   39              39 
Consumer financing interest   17              17 
Marketing and reservation   181              181 
General and administrative   195    (4)        191 
Depreciation and amortization   56              56 
Total expenses   1,022    (4)   (10)   1,008 
                     
Operating income   171    4    10    185 
Other income, net   (3)             (3)
Interest expense   27              27 
Interest income   (2)             (2)
                     
Income before income taxes   149    4    10    163 
Provision for income taxes   59    1(b)   1(b)   61 
                     
Net income  $90   $3   $9   $102 
                     
Earnings per share                    
Basic  $0.70   $0.02   $0.07   $0.80 
Diluted   0.69    0.02    0.07    0.78 
                     
Weighted average shares outstanding                    
Basic   128    128    128    128 
Diluted   130    130    130    130 

 

 

The above table reconciles certain non-GAAP financial measures. The presentation of these adjustments is intended to permit the comparison of particular adjustments as they appear in the line items of the income statement in order to assist investors' understanding of the overall impact of such adjustments. 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.

 

Note: EPS amounts may not add due to rounding.

(a)Relates to costs associated with an executive's departure at the Company's lodging business.
(b)Relates to the tax effect of the adjustment.
(c)Represents the devaluation of the official exchange rate of Venezuela at the Company's vacation exchange and rental business.

 

 
 

Table 9

  

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATIONS AND FINANCIAL INFORMATION

(In millions)

 

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 measure 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:

 

   Three Months Ended March 31, 
   2015      2014 
            
Net cash provided by operating activities  $253     $315 
Less: Property and equipment additions   (56)      (46)
Free cash flow  $197      $269 

 

GROSS VOI SALES

 

 

The following table provides a reconciliation of Gross VOI sales (see Table 3) to vacation ownership interest sales (see Table 4):

 

Year                    
2015  Q1   Q2   Q3   Q4   Full Year 
Gross VOI sales (a)  $390    N/A    N/A    N/A    N/A 
Less: Sales under WAAM Fee-for-Service   (21)   N/A    N/A    N/A    N/A 
Gross VOI sales, net of WAAM Fee-for-Service sales   369    N/A    N/A    N/A    N/A 
Less: Loan loss provision   (46)   N/A    N/A    N/A    N/A 
Plus: Impact of percentage-of-completion accounting   13    N/A    N/A    N/A    N/A 
Vacation ownership interest sales (a)  $336    N/A    N/A    N/A    N/A 
2014                         
Gross VOI sales (a)  $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 (a)  $303   $382   $415   $385   $1,485 
2013                         
Gross VOI sales (a)  $384   $481   $536   $488   $1,889 
Less: Sales under WAAM Fee-for-Service   (36)   (44)   (51)   (29)   (160)
Gross VOI sales, net of WAAM Fee-for-Service sales   347    437    486    459    1,729 
Less: Loan loss provision   (84)   (90)   (102)   (73)   (349)
Less: Impact of percentage-of-completion accounting   -    -    -    (1)   (1)
Vacation ownership interest sales (a)  $263   $347   $384   $384   $1,379 
2012                         
Gross VOI sales (a)  $384   $460   $502   $435   $1,781 
Less: Sales under WAAM Fee-for-Service   (17)   (18)   (5)   (10)   (49)
Gross VOI sales, net of WAAM Fee-for-Service sales   367    442    497    426    1,732 
Less: Loan loss provision   (96)   (100)   (124)   (89)   (409)
Vacation ownership interest sales (a)  $271   $342   $373   $337   $1,323 

 

 

Note: Amounts may not add due to rounding.

(a) Includes VOI sales under WAAM Just-in-Time beginning in the second quarter of 2012.

 

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 
2015  $24     N/A     N/A     N/A     N/A 
2014  $25   $21   $27   $24   $97 
2013  $24   $18   $22   $25   $89 
2012  $27   $20   $22   $28   $97