WW_Logo_1clr_Spot EXHIBIT 99.1

  

Wyndham Worldwide Reports First Quarter 2016 Results

Increases Full Year EPS Guidance

 

PARSIPPANY, N.J. (April 26, 2016) – Wyndham Worldwide Corporation (NYSE:WYN) today announced results for the three months ended March 31, 2016.

 

HIGHLIGHTS:

 

·First quarter adjusted diluted earnings per share (EPS) was $1.12, an increase of 9% from $1.03 in the first quarter of 2015. Reported diluted EPS was $0.84, compared with $1.00 in the first quarter of 2015.

 

·First quarter 2016 adjusted EBITDA increased 4%, or 6% on a currency neutral basis and excluding acquisitions compared with the first quarter of 2015.

 

·The Company repurchased 2.5 million shares of its common stock for $175 million during the quarter.

 

"We're off to a good start this year," said Stephen P. Holmes, chairman and CEO. "We continue to execute and innovate across our businesses to drive growth, profitability and shareholder value. Our businesses are well positioned for long term growth and they are resilient, regardless of economic and industry cycle dynamics. Of course, disciplined capital allocation continues to be a hallmark and commitment of our company.”

 

FIRST QUARTER 2016 OPERATING RESULTS

First quarter revenues were $1.3 billion, an increase of 3% from the prior year period.

 

First quarter adjusted EBITDA was $291 million, compared with $279 million in the prior year period, an increase of 4%. Year-over-year adjusted EBITDA comparisons were adversely affected by foreign currency effects of $6 million in 2016. On a currency-neutral basis and excluding acquisitions, adjusted EBITDA increased 6%.

 

Adjusted net income was $127 million, or $1.12 per diluted share, compared with $126 million, or $1.03 per diluted share for the same period in 2015. Adjusted net income and earnings per share benefited from solid operating results, but were reduced by higher interest expense and higher depreciation and amortization. EPS also benefited from the Company’s share repurchase program.

 

Reported net income for the first quarter of 2016 was $96 million, or $0.84 per diluted share, compared with $122 million, or $1.00 per diluted share, for the first quarter of 2015. Reported net income in both periods reflects several items excluded from adjusted net income. The net result of these items unfavorably impacted first quarter 2016 net income by $31 million and unfavorably impacted first quarter 2015 net income by $4 million. Full reconciliations of adjusted net income to GAAP results appear in Table 8 of this press release.

 

 

 

 

Free cash flow was $218 million for the three months ended March 31, 2016, compared with $197 million for the same period in 2015. The increase reflects solid operating results and the timing of capital expenditures, partially offset by a $24 million unfavorable impact from the devaluation of the Venezuelan currency. For the three months ended March 31, 2016, net cash provided by operating activities was $261 million, compared with $253 million in the prior year period. The Company defines free cash flow as net cash provided by operating activities less capital expenditures.

 

FIRST QUARTER 2016 BUSINESS UNIT RESULTS

 

Hotel Group

Revenues were $295 million in the first quarter of 2016, a 1% increase compared with the first quarter 2015. Despite weaker RevPAR, adjusted EBITDA grew 6% to $84 million reflecting growth in our Wyndham Rewards credit card program, strong performance at our owned hotels and expense management.

 

First quarter domestic RevPAR was flat. In constant currency, total system-wide RevPAR declined 1.6% compared with the first quarter of 2015, which reflects continued weakness in domestic and Canadian oil markets and higher unit growth in lower RevPAR countries such as China.

 

As of March 31, 2016, the Company’s hotel system consisted of approximately 7,830 properties and approximately 679,100 rooms, a 1.8% net room increase compared with the first quarter of 2015. The development pipeline included over 1,000 hotels and over 124,000 rooms, of which 61% were international and 65% were new construction.

 

Destination Network (formerly Vacation Exchange and Rentals)

Revenues were $385 million in the first quarter of 2016, a 4% increase compared with the first quarter of 2015. In constant currency and excluding acquisitions, revenues increased 5%.

 

Exchange revenues were $182 million, down 2% compared with the first quarter of 2015. In constant currency, exchange revenues and exchange revenue per member were flat, as was the average number of members.

 

Vacation rental revenues were $183 million, a 10% increase compared with the first quarter of 2015. In constant currency and excluding the impact of acquisitions, vacation rental revenues were up 9%, reflecting a 7.0% increase in transaction volume and a 2.3% increase in average net price per vacation rental.

 

Adjusted EBITDA for the first quarter of 2016 was $105 million, a 1% increase compared with the first quarter of 2015. On a currency-neutral basis and excluding the impact of acquisitions, adjusted EBITDA increased 3% compared with the prior year period.

 

 

 

 

Vacation Ownership

Revenues were $641 million in the first quarter of 2016, a 4% increase over the first quarter of 2015.

 

Gross VOI sales were $428 million in the first quarter of 2016, an increase of 10% compared with the first quarter of 2015. Volume per guest (VPG) for the quarter increased 3.8% in constant currency and tour flow increased 6.5%.

 

EBITDA for the first quarter of 2016 was $136 million, an increase of 5% compared with the first quarter of 2015, reflecting higher sales volume and stronger resort management and consumer finance results, partially offset by an increase in the provision for loan losses.

 

OTHER ITEMS

·The Company repurchased 2.5 million shares of common stock for $175 million during the first quarter of 2016. From April 1 through April 25, 2016, the Company repurchased an additional 0.6 million shares for $45 million.
·Reported net interest expense in the first quarter of 2016 was $31 million, compared with $23 million in the first quarter of 2015, reflecting the $350 million 5.10% bond issued in September 2015 and the absence of a fixed-to-floating interest rate swap terminated in 2015.
·Depreciation and amortization in the first quarter of 2016 was $62 million, compared with $56 million in the first quarter of 2015, reflecting new projects that were placed into service.

 

Balance Sheet Information as March 31, 2016:

·Cash and cash equivalents of $318 million, compared with $171 million at December 31, 2015
·Vacation ownership contract receivables, net, of $2.7 billion, unchanged from December 31, 2015
·Vacation ownership and other inventory of $1.3 billion, unchanged from December 31, 2015
·Securitized vacation ownership debt of $2.1 billion, unchanged from December 31, 2015
·Long-term debt of $3.3 billion, compared with $3.1 billion at December 31, 2015. The remaining borrowing capacity on the revolving credit facility, net of commercial paper borrowings, was $1.1 billion as of March 31, 2016, compared with $1.4 billion at December 31, 2015.

 

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 2016, the Company reiterates the following guidance:

·Revenues of approximately $5.800 - $5.950 billion.
·Adjusted EBITDA of approximately $1.375 - $1.400 billion.

 

For the full year 2016, the Company updates the following guidance:

·Adjusted diluted EPS of approximately $5.61 - $5.75 based on a diluted share count of 113 million, up from $5.46 - $5.60 based on a diluted share count of 116 million.

 

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

 

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 26, 2016 at 8:30 a.m. ET. Listeners can access the webcast live through the company’s website at http://www.wyndhamworldwide.com/investors/. The conference call may also be accessed by dialing 877-876-9177 and providing the pass code "WYNDHAM." Listeners are urged to call at least 10 minutes prior to the scheduled start time. An archive of this webcast will be available on the website for approximately 90 days beginning at 12:00pm ET on April 26, 2016. A telephone replay will be available for approximately 10 days beginning at 12:00pm ET on April 26, 2016 at 800-723-5154.

 

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 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

Wyndham Worldwide (NYSE: WYN) is one of the largest global hospitality companies, providing travelers with access to a collection of trusted hospitality brands in hotels, vacation ownership, and unique accommodations including vacation exchange, holiday parks, and managed home rentals. With a collective inventory of more than 120,000 places to stay across 100 countries on six continents, Wyndham Worldwide and its 38,000 associates welcomes people to experience travel the way they want. This is enhanced by Wyndham Rewards®, the Company’s re-imagined guest loyalty program across its businesses, which is making it simpler for members to earn more rewards and redeem their points faster. 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 12, 2016. 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 revenues) 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, 2016 and 2015:

 

   Three Months Ended March 31, 
   2016   2015 
   Net Revenues   EBITDA   Net Revenues   EBITDA 
Hotel Group  $295   $84   $292   $76 
Destination Network   385    81    369    105 
Vacation Ownership   641    136    617    130 
Total Reportable Segments   1,321    301    1,278    311 
Corporate and Other (a)   (18)   (34)   (16)   (34)
Total Company  $1,303   $267   $1,262   $277 

 

Reconciliation of EBITDA to Net income        
   Three Months Ended March 31, 
   2016   2015 
EBITDA  $267   $277 
Depreciation and amortization    62    56 
Interest expense   33    26 
Early extinguishment of debt   11    - 
Interest income   (2)   (3)
Income before income taxes   163    198 
Provision for income taxes   67    76 
Net income  $96   $122 

 

 

(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, 2016 and 2015 (for a description of adjustments by segment, see Table 7):

 

   Three Months Ended March 31, 
   2016    2015 
        Adjusted       Adjusted 
   Net Revenues    EBITDA    Net Revenues   EBITDA 
Hotel Group  $295   $84   $292   $79 
Destination Network   385    105    369    104 
Vacation Ownership   641    136    617    130 
Total Reportable Segments   1,321    325    1,278    313 
Corporate and Other   (18)   (34)   (16)   (34)
Total Company  $1,303   $291   $1,262   $279 

 

 

 

  

Table 2

Wyndham Worldwide Corporation

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

 

   Three Months Ended 
   March 31, 
   2016   2015 
Net revenues          
Service and membership fees  $634   $599 
Vacation ownership interest sales   342    336 
Franchise fees   138    147 
Consumer financing   107    104 
Other   82    76 
Net revenues   1,303    1,262 
           
Expenses          
Operating   613    564 
Cost of vacation ownership interests   37    33 
Consumer financing interest   18    18 
Marketing and reservation   192    195 
General and administrative   186    181 
Restructuring   -    (1)
Depreciation and amortization   62    56 
Total expenses   1,108    1,046 
           
Operating income   195    216 
Other (income)/expense, net   (10)   (5)
Interest expense   33    26 
Early extinguishment of debt   11    - 
Interest income   (2)   (3)
           
Income before income taxes   163    198 
Provision for income taxes   67    76 
Net income  $96   $122 
           
Earnings per share          
Basic  $0.85   $1.01 
Diluted   0.84    1.00 
           
Weighted average shares outstanding          
Basic   113    121 
Diluted   114    122 

 

 

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 
Hotel Group (a)                            
Number of Rooms  2016   679,100    N/A    N/A    N/A    N/A 
   2015   667,400    668,500    671,900    678,000    N/A 
   2014   646,900    650,200    655,300    660,800    N/A 
   2013   631,800    635,100    638,300    645,400    N/A 
                             
RevPAR  2016  $31.59    N/A    N/A    N/A    N/A 
   2015  $32.84   $39.82   $43.34   $32.98   $37.26 
   2014  $32.30   $40.11   $43.71   $34.06   $37.57 
   2013  $31.05   $38.00   $41.78   $33.07   $36.00 
                             
Destination Network                            
Average Number of Members (in 000s)  2016   3,841    N/A    N/A    N/A    N/A 
   2015   3,822    3,831    3,835    3,836    3,831 
   2014   3,727    3,748    3,777    3,808    3,765 
   2013   3,668    3,686    3,711    3,728    3,698 
                             
Exchange Revenue Per Member  2016  $189.78    N/A    N/A    N/A    N/A 
   2015  $194.06   $167.81   $163.38   $152.00   $169.29 
   2014  $200.78   $179.17   $171.77   $157.24   $177.12 
   2013  $210.96   $182.42   $169.95   $161.21   $181.02 
                             
Vacation Rental Transactions (in 000s) (a) (b)  2016   500    N/A    N/A    N/A    N/A 
   2015   459    390    462    319    1,630 
   2014   429    376    455    293    1,552 
   2013   423    355    433    273    1,483 
                             
Average Net Price Per Vacation Rental (a) (b)  2016  $366.08    N/A    N/A    N/A    N/A 
   2015  $361.20   $513.14   $642.00   $452.19   $494.92 
   2014  $410.04   $577.13   $727.40   $492.25   $558.95 
   2013  $392.64   $540.38   $677.81   $506.62   $532.11 
                             
Vacation Ownership (a)                            
Gross Vacation Ownership Interest (VOI) Sales (in 000s) (c)  2016  $428,000    N/A    N/A    N/A    N/A 
   2015  $390,000   $502,000   $565,000   $507,000   $1,965,000 
   2014  $410,000   $496,000   $513,000   $470,000   $1,889,000 
   2013  $384,000   $481,000   $536,000   $488,000   $1,889,000 
                             
Tours (in 000s)  2016   179    N/A    N/A    N/A    N/A 
   2015   168    206    227    200    801 
   2014   170    208    225    191    794 
   2013   163    206    225    195    789 
                             
Volume Per Guest (VPG)  2016  $2,244    N/A    N/A    N/A    N/A 
   2015  $2,177   $2,353   $2,354   $2,390   $2,326 
   2014  $2,272   $2,280   $2,158   $2,336   $2,257 
   2013  $2,211   $2,256   $2,278   $2,370   $2,281 

 

 

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  2016   7,830    N/A    N/A    N/A    N/A 
   2015   7,670    7,700    7,760    7,810    N/A 
   2014   7,500    7,540    7,590    7,650    N/A 
   2013   7,380    7,410    7,440    7,490    N/A 
                             
Vacation Ownership                            
Provision for Loan Losses (in 000s) (*)   2016  $63,000    N/A    N/A    N/A    N/A 
   2015  $46,000   $60,000   $78,000   $64,000   $248,000 
   2014  $60,000   $70,000   $70,000   $60,000   $260,000 
   2013  $84,000   $90,000   $102,000   $73,000   $349,000 

 

 

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. 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 2013-2016.

 

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)

 

   2016  2015 
   Q1   Q2  Q3  Q4  Year  Q1   Q2   Q3   Q4   Year 
Hotel Group                                          
Royalties and Franchise Fees  $74   N/A  N/A  N/A  N/A  $74   $96   $103   $87   $361 
Marketing, Reservation and Wyndham Rewards Revenues (a)   83   N/A  N/A  N/A  N/A   96    108    112    92    407 
Hotel Management Reimbursable Revenues (b)   67   N/A  N/A  N/A  N/A   61    71    73    68    273 
Intersegment Trademark Fees   13   N/A  N/A  N/A  N/A   12    15    16    15    57 
Owned Hotel Revenues   27   N/A  N/A  N/A  N/A   25    20    16    19    79 
Ancillary Revenues (c)   31   N/A  N/A  N/A  N/A   24    24    37    33    120 
Total Hotel Group   295   N/A  N/A  N/A  N/A   292    334    357    314    1,297 
                                           
Destination Network                                          
Exchange Revenues   182   N/A  N/A  N/A  N/A   185    161    157    146    649 
Rental Revenues   183   N/A  N/A  N/A  N/A   166    200    296    144    807 
Ancillary Revenues (d)   20   N/A  N/A  N/A  N/A   18    22    23    20    82 
Total Destination Network   385   N/A  N/A  N/A  N/A   369    383    476    310    1,538 
                                           
Vacation Ownership                                          
Vacation Ownership Interest Sales   342   N/A  N/A  N/A  N/A   336    417    448    403    1,604 
Consumer Financing   107   N/A  N/A  N/A  N/A   104    105    108    109    427 
Property Management Fees and Reimbursable Revenues   164   N/A  N/A  N/A  N/A   153    149    159    155    615 
WAAM Fee-for-Service Commissions   17   N/A  N/A  N/A  N/A   12    19    23    28    83 
Ancillary Revenues (e)   11   N/A  N/A  N/A  N/A   12    9    12    11    43 
Total Vacation Ownership   641   N/A  N/A  N/A  N/A   617    699    750    706    2,772 
Total Reportable Segments  $1,321   N/A  N/A  N/A  N/A  $1,278   $1,416   $1,583   $1,330   $5,607 

 

   2014   2013 
   Q1   Q2   Q3   Q4   Year   Q1   Q2   Q3   Q4   Year 
Hotel Group                                                  
Royalties and Franchise Fees  $68   $88   $100   $83   $339   $64   $79   $91   $75   $309 
Marketing, Reservation and Wyndham Rewards Revenues (a)   76    101    117    91    385    73    92    118    83    365 
Hotel Management Reimbursable Revenues (b)   37    39    39    39    154    25    38    37    35    135 
Intersegment Trademark Fees   9    11    11    10    41    8    10    11    10    39 
Owned Hotel Revenues   24    20    18    20    81    26    20    18    19    84 
Ancillary Revenues (c)   23    24    30    24    101    26    23    22    23    95 
Total Hotel Group   237    283    315    267    1,101    222    262    297    245    1,027 
                                                   
Destination Network                                                  
Exchange Revenues   187    168    162    150    667    193    168    158    150    669 
Rental Revenues   176    217    331    144    868    166    192    293    138    789 
Ancillary Revenues (d)   16    17    19    17    69    15    16    19    17    68 
Total Destination Network   379    402    512    311    1,604    374    376    470    305    1,526 
                                                   
Vacation Ownership                                                  
Vacation Ownership Interest Sales   303    382    415    385    1,485    263    347    384    384    1,379 
Consumer Financing   105    106    108    108    427    105    106    107    108    426 
Property Management Fees   143    145    150    142    581    146    141    143    137    567 
WAAM Fee-for-Service Commissions   33    30    18    16    98    24    30    33    20    107 
Ancillary Revenues (e)   9    10    13    17    47    11    6    10    9    36 
Total Vacation Ownership   593    673    704    668    2,638    549    630    677    658    2,515 
Total Reportable Segments  $1,209   $1,358   $1,531   $1,246   $5,343   $1,145   $1,268   $1,444   $1,208   $5,068 

 

 

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 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 5

Wyndham Worldwide Corporation

SCHEDULE OF DEBT

(In millions)

 

   March 31,    December 31,    March 31, 
   2016   2015   2015 
             
Securitized vacation ownership debt (a)               
Term notes  $2,005   $1,867   $2,062 
Bank conduit facility (b)   121    239    98 
Total securitized vacation ownership debt (c)   2,126    2,106    2,160 
Less: Current portion of securitized vacation ownership debt   207    209    217 
Long-term securitized vacation ownership debt  $1,919   $1,897   $1,943 
                
Debt:               
Revolving credit facility (due July 2020) (d)  $10   $7   $14 
Commercial paper (e)   343    109    346 
Term loan (due March 2021)   323    -    - 
$315 million 6.00% senior unsecured notes (due December 2016)   -    316    316 
$300 million 2.95% senior unsecured notes (due March 2017) (f)   299    299    299 
$14 million 5.75% senior unsecured notes (due February 2018)   14    14    14 
$450 million 2.50% senior unsecured notes (due March 2018)   448    448    448 
$40 million 7.375% senior unsecured notes (due March 2020)   40    40    40 
$250 million 5.625% senior unsecured notes (due March 2021)   247    247    247 
$650 million 4.25% senior unsecured notes (due March 2022)   648    648    649 
$400 million 3.90% senior unsecured notes (due March 2023)   408    408    417 
$350 million 5.10% senior unsecured notes (due October 2025)   337    337    - 
Capital leases   158    153    161 
Other   31    49    70 
Total long-term debt   3,306    3,075    3,021 
Less: Current portion of long-term debt   45    44    53 
Long-term debt  $3,261   $3,031   $2,968 

 

 

(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 2017 and borrowing capacity of $650 million. As of March 31, 2016, this facility had a remaining borrowing capacity of $529 million.
(c)This debt is collateralized by $2,548 million, $2,576 million and $2,609, of underlying vacation ownership contract receivables and related assets as of March 31, 2016, December 31, 2015, and March 31, 2015. respectively.
(d)Represents a $1.5 billion revolving credit facility that expires in July 2020. As of March 31, 2016, the Company had $1 million of outstanding letters of credit. After considering outstanding commercial paper borrowings of $343 million, the remaining borrowing capacity was $1.1 billion as of March 31, 2016.
(e)Represents commercial paper programs of $1.25 billion with a remaining borrowing capacity of $907 million as of March 31, 2016.
(f)Classified as long-term 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.

 

 

 

  

Table 6

 

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS

 

   As of and For the Three Months Ended March 31, 2016 
                   Average Revenue 
   Number of       Average   Average Daily   Per Available 
Brand  Properties   Number of Rooms   Occupancy Rate   Rate (ADR)   Room (RevPAR) 
                     
Hotel Group                         
Super 8   2,665    170,454    51.5%  $45.73   $23.54 
                          
Days Inn   1,791    143,212    44.3%  $63.81   $28.28 
                          
Ramada   837    117,409    49.0%  $73.76   $36.12 
                          
Wyndham Hotels and Resorts   228    49,952    54.7%  $103.78   $56.73 
                          
Howard Johnson   381    41,555    44.1%  $59.74   $26.33 
                          
Baymont   416    33,070    44.9%  $66.07   $29.66 
                          
Travelodge   406    29,760    45.3%  $63.18   $28.63 
                          
Microtel Inns & Suites by Wyndham   333    24,045    51.1%  $63.64   $32.52 
                          
Knights Inn   381    23,258    41.5%  $48.76   $20.22 
                          
TRYP by Wyndham   120    17,274    54.8%  $72.93   $39.97 
                          
Wingate by Wyndham   149    13,610    56.3%  $86.52   $48.70 
                          
Hawthorn Suites by Wyndham   105    10,466    62.3%  $82.76   $51.57 
                          
Dolce   22    5,080    45.5%  $152.13   $69.17 
                          
Total Hotel Group   7,834    679,145    48.6%  $64.93   $31.59 
                          
Vacation Ownership                         
Wyndham Vacation Ownership resorts   216    24,442    N/A    N/A    N/A 
                          
Total Wyndham Worldwide   8,050    703,587                

 

   As of and For the Three Months Ended March 31, 2015 
                   Average Revenue 
   Number of       Average   Average Daily   Per Available 
Brand  Properties   Number of Rooms   Occupancy Rate   Rate (ADR)   Room (RevPAR) 
                     
Hotel Group                         
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 
                          
Wyndham Hotels and Resorts   201    44,042    56.0%  $112.18   $62.85 
                          
Howard Johnson   419    45,588    44.1%  $62.50   $27.59 
                          
Baymont   373    30,012    47.0%  $65.21   $30.63 
                          
Travelodge   422    31,025    45.5%  $62.05   $28.24 
                          
Microtel Inns & Suites by Wyndham   325    23,302    53.5%  $66.83   $35.73 
                          
Knights Inn   392    24,476    44.1%  $45.16   $19.91 
                          
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 Hotel Group   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                

 

 

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 3)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION

(In millions)

 

           Venezuela     
       Reported   Currency   Adjusted 
Three months ended March 31, 2016  Net Revenues   EBITDA   Devaluation (b)   EBITDA 
Hotel Group  $295   $84   $-   $84 
Destination Network   385    81    24    105 
Vacation Ownership   641    136    -    136 
Total Reportable Segments   1,321    301    24    325 
Corporate and Other (a)   (18)   (34)   -    (34)
Total Company  $1,303   $267   $24   $291 

 

 

(a) Includes the elimination of transactions between segments.

(b) Represents the impact from the devaluation of the exchange rate of Venezuela.

 

 

 

  

Table 7

(2 of 3)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION

(In millions)

 

       Reported   Legacy   Acquisition   Restructuring   Asset   Contract   Adjusted 
Three months ended March 31, 2015  Net Revenues   EBITDA   Adjustments (b)   Costs (c)   Costs (d)   Impairment (e)   Termination (f)   EBITDA 
Hotel Group  $292   $76   $-   $3   $-   $-   $-   $79 
Destination Network   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 
                                         
Three months ended June 30, 2015                                        
Hotel Group  $334   $96   $-   $1   $-   $-   $-   $97 
Destination Network   383    84    -    -    -    -    -    84 
Vacation Ownership   699    182    -    -    -    -    -    182 
Total Reportable Segments   1,416    362    -    1    -    -    -    363 
Corporate and Other (a)   (18)   (30)   (1)   -    -    -    -    (31)
Total Company  $1,398   $332   $(1)  $1   $-   $-   $-   $332 
                                         
Three months ended September 30, 2015                                        
Hotel Group  $357   $83   $-   $-   $4   $7   $14   $108 
Destination Network   476    134    -    -    3    -    -    137 
Vacation Ownership   750    200    -    -    1    -    -    201 
Total Reportable Segments   1,583    417    -    -    8    7    14    446 
Corporate and Other (a)   (19)   (35)   1    -    -    -    -    (34)
Total Company  $1,564   $382   $1   $-   $8   $7   $14   $412 
                                         
Three months ended December 31, 2015                                        
Hotel Group  $314   $94   $-   $-   $(1)  $-   $-   $93 
Destination Network   310    44    -    -    (1)   -    -    43 
Vacation Ownership   706    174    -    -    -    -    -    174 
Total Reportable Segments   1,330    312    -    -    (2)   -    -    310 
Corporate and Other (a)   (19)   (37)   -    -    -    -    -    (37)
Total Company  $1,311   $275   $-   $-   $(2)  $-   $-   $273 
                                         
Twelve months ended December 31, 2015                                        
Hotel Group  $1,297   $349   $-   $3   $3   $7   $14   $376 
Destination Network   1,538    367    -    1    2    -    -    370 
Vacation Ownership   2,772    687    -    -    1    -    -    688 
Total Reportable Segments   5,607    1,403    -    4    6    7    14    1,434 
Corporate and Other (a)   (71)   (137)   -    -    -    -    -    (137)
Total Company  $5,536   $1,266   $-   $4   $6   $7   $14   $1,297 

 

 

Note: The sum of the quarters may not agree to the twelve months ended December 31, 2015 due to rounding.

(a)Includes the elimination of transactions between segments.
(b)Relates to the net (benefit)/expense from the resolution of and adjustment to certain contingent liabilities and assets resulting from our separation from Cendant.
(c)Relates primarily to costs incurred in connection with the acquisition of Dolce Hotels and Resorts (January 2015).
(d)Relates to costs incurred as a result of various organizational realignment initiatives and the reversal of a portion of restructuring reserves that were established in prior periods.
(e)Relates to a non-cash impairment charge related to the write-down of terminated in-process technology projects resulting from the Company's decision to outsource its reservation system to a third-party provider.
(f)Relates to costs associated with the anticipated termination of a management contract.

 

 

 

  

Table 7

(3 of 3)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION

ADDITIONAL DATA ON SHARE-BASED COMPENSATION EXPENSE

(In millions)

 

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

 

   2016
   Q1   Q2  Q3  Q4  Full Year
Adjusted EBITDA  $291   N/A  N/A  N/A  N/A
Share-based compensation expense (*)   13   N/A  N/A  N/A  N/A
Adjusted EBITDA excluding share-based compensation expense  $304   N/A  N/A  N/A  N/A

 

   2015 
   Q1   Q2   Q3   Q4   Full Year 
Adjusted EBITDA  $279   $332   $412   $273   $1,297 
Share-based compensation expense (*)   15    13    13    15    55 
Adjusted EBITDA excluding share-based compensation expense  $294   $345   $425   $288   $1,352 

 

 

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

(*)Excludes share-based compensation expenses for which there was no impact on EBITDA. Such costs amounted to $1 million during Q1 2016 and $3 million for the full year 2015.

 

 

 

  

Table 8

(1 of 2)

 

Wyndham Worldwide Corporation

NON-GAAP FINANCIAL INFORMATION

(In millions, except per share data)

 

   Three Months Ended March 31, 2016 
       Venezuela   Early     
       Currency   Extinguishment of   As Adjusted 
   As Reported   Devaluation  (a)   Debt (b)   non-GAAP 
Net revenues                    
Service and membership fees  $634   $   $   $634 
Vacation ownership interest sales   342              342 
Franchise fees   138              138 
Consumer financing   107              107 
Other   82              82 
Net revenues   1,303    -    -    1,303 
                     
Expenses                    
Operating   613    (24)        589 
Cost of vacation ownership interests   37              37 
Consumer financing interest   18              18 
Marketing and reservation   192              192 
General and administrative   186              186 
Depreciation and amortization   62              62 
Total expenses   1,108    (24)   -    1,084 
                     
Operating income   195    24    -    219 
Other (income)/expense, net   (10)             (10)
Interest expense   33              33 
Early extinguishment of debt   11         (11)   - 
Interest income   (2)             (2)
                     
Income before income taxes   163    24    11    198 
Provision for income taxes   67    -    4(c)   71 
                     
Net income  $96   $24   $7   $127 
                     
Earnings per share                    
Basic  $0.85   $0.21   $0.06   $1.13 
Diluted   0.84    0.21    0.06    1.12 
                     
Weighted average shares outstanding                    
Basic   113    113    113    113 
Diluted   114    114    114    114 

 

 

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)Represents the impact from the devaluation of the exchange rate of Venezuela at the Company's destination network business.
(b)Represents costs incurred in connection with the Company's early repurchase of its 6.0% senior unsecured notes.
(c)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, 2015 
       Acquisition   Restructuring   As Adjusted 
   As Reported   Costs (a)   Costs (c)   non-GAAP 
Net revenues                    
Service fees and membership  $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)/expense, 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.

 

Note: EPS amounts may not add due to rounding.

(a)Relates to costs incurred in connection with the acquistion of Dolce Hotels and Resorts (January 2015) at the Company's hotel group 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 a restructuring reserve established during the fourth quarter of 2014 at the Company's destination network business.
(d)Relates to the tax effect of the adjustment.

 

 

 

  

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, 
   2016   2015 
         
Net cash provided by operating activities  $261   $253 
Less: Property and equipment additions   (43)   (56)
Free cash flow  $218   $197 

 

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    
2016  Q1   Q2   Q3   Q4   Full Year 
                     
Gross VOI sales  $428    N/A    N/A    N/A    N/A 
Less: Sales under WAAM Fee-for-Service   (23)   N/A    N/A    N/A    N/A 
Gross VOI sales, net of WAAM Fee-for-Service sales   405    N/A    N/A    N/A    N/A 
Less: Loan loss provision   (63)   N/A    N/A    N/A    N/A 
Plus: Impact of percentage-of-completion accounting   -    N/A    N/A    N/A    N/A 
Vacation ownership interest sales  $342    N/A    N/A    N/A    N/A 
                          
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 
                          
2013                         
                          
Gross VOI sales  $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  $263   $347   $384   $384   $1,379 

 

 

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 
                     
2016  $25    N/A    N/A    N/A    N/A 
2015  $24   $17   $32   $27   $100 
2014  $25   $21   $27   $24   $97 
2013  $24   $18   $22   $25   $89