TRAVEL + LEISURE CO. PARSIPPANY, N.J., Oct. 26, 2016 /PRNewswire/ -- Wyndham Worldwide Corporation (NYSE: WYN) today announced results for the three months ended September 30, 2016.
Third quarter revenues were $1.6 billion, up 1% compared with the prior year period. In constant currency and excluding acquisitions, revenues also increased 1%. Full reconciliations of GAAP results to non-GAAP measures appear in the tables to this press release.
Net income for the third quarter of 2016 was $196 million, or $1.78 per diluted share, compared with $190 million, or $1.61 per diluted share, for the third quarter of 2015. Adjusted net income for the third quarter of 2016 was $207 million, or $1.89 per diluted share, compared with $210 million, or $1.78 per diluted share, for the third quarter of 2015. EPS benefited from the Company's share repurchase program.
Third quarter EBITDA was $402 million, compared with $382 million in the prior year period, an increase of 5%. Adjusted EBITDA, which excludes charges in both 2016 and 2015 as detailed in Table 8 of this press release, was $423 million, compared with $412 million in the prior year period, an increase of 3%. On a currency-neutral basis and excluding acquisitions, adjusted EBITDA increased 5%.
"Wyndham continues to deliver solid earnings and strong cash flow," said Stephen P. Holmes, chairman and CEO. "These results reflect successful execution of our strategy, a resilient portfolio of complementary, fee-based businesses, and disciplined capital allocation."
For the nine months ended September 30, 2016, net cash provided by operating activities was $786 million, compared with $817 million in the prior year period. The decrease reflects unfavorable currency movements of $34 million, including a $24 million devaluation of the Venezuelan bolivar in the first quarter of 2016.
Free cash flow was $650 million for the nine months ended September 30, 2016, compared with $660 million for the same period in 2015, reflecting the currency movements referenced above partially offset by lower capital expenditures. The Company defines free cash flow as net cash provided by operating activities less capital expenditures.
THIRD QUARTER 2016 BUSINESS UNIT RESULTS
Hotel Group
Revenues were $364 million in the third quarter of 2016, compared with $357 million in the third quarter of 2015. Revenues reflected higher royalties, growth in the Company's Wyndham Rewards credit card program and fees associated with the Company's global franchise conference, partially offset by lower reimbursable property management revenues.
EBITDA was $107 million in the third quarter compared with $83 million in the prior year quarter. Adjusted EBITDA, which excludes charges and benefits during both 2016 and 2015 as detailed in Table 8 of this press release, grew 8% to $117 million. This reflects higher royalties, growth in the Company's Wyndham Rewards credit card program and expense management.
Third quarter domestic RevPAR increased 1.9%. In constant currency, total system-wide same store RevPAR increased 1.4% compared with the third quarter of 2015, which reflects ongoing pressure in domestic and Canadian oil markets and decelerating industry RevPAR trends.
As of September 30, 2016, the Company's hotel system consisted of approximately 7,930 properties and approximately 689,800 rooms, a 2.7% net room increase compared with the third quarter of 2015. The development pipeline included nearly 1,100 hotels and approximately 133,800 rooms, of which 60% were international and 66% were new construction.
Destination Network
Revenues were $486 million in the third quarter of 2016, compared with $476 million in the third quarter of 2015, an increase of 2%. In constant currency and excluding acquisitions, revenues increased 5%.
Exchange revenues were $159 million compared with $157 million in the prior year quarter. In constant currency, exchange revenues grew 2% as exchange revenue per member increased 1.4% and the average number of members increased 0.9%.
Vacation rental revenues were $304 million compared with $296 million in the prior year quarter. In constant currency and excluding the impact of acquisitions, vacation rental revenues were up 6%, reflecting an 8.0% increase in transaction volume, partially offset by a 1.7% decrease in average net price per vacation rental. Transaction growth benefited from our dynamic pricing initiative as well as capacity increases. Faster growth in our more moderately priced products decreased the average net price per rental.
EBITDA was $138 million during the third quarter compared with $134 million in the prior year quarter. Adjusted EBITDA, which excludes restructuring costs, was $142 million for the third quarter of 2016, a 4% increase compared with the prior year quarter. On a currency-neutral basis and excluding the impact of acquisitions, adjusted EBITDA increased 8% compared with the prior year period.
Vacation Ownership
Revenues were $744 million in the third quarter of 2016, compared with $750 million in the third quarter of 2015.
Net VOI sales in the third quarter of 2016 declined 2% due to a higher provision for loan losses and flat Gross VOI sales. Results reflect tour flow growth of 1.3%, offset by a volume per guest (VPG) decline of 1.4%, reflecting proportionally higher sales to new owners. The number of new owners added increased 10% from the third quarter of 2015.
EBITDA was $189 million during the third quarter compared with $200 million in the prior year quarter. Adjusted EBITDA, which excludes restructuring costs, was $195 million for the third quarter of 2016, a decline of 3% compared with the prior year quarter. This reflects a higher loan loss provision and higher marketing costs, partially offset by higher property management fees, increased consumer financing income and expense management.
OTHER ITEMS
-- The Company repurchased 2.1 million shares of common stock for $150
million during the third quarter of 2016. From October 1 through October
25, 2016, the Company repurchased an additional 0.7 million shares for
$50 million.
-- Net interest expense in the third quarter of 2016 was $32 million,
compared with $31 million in the third quarter of 2015.
-- Depreciation and amortization in the third quarter of 2016 was $63
million, compared with $59 million in the third quarter of 2015,
reflecting new projects that were placed into service.
Balance Sheet Information as of September 30, 2016:
-- Cash and cash equivalents of $332 million, compared with $171 million at
December 31, 2015
-- Vacation ownership contract receivables, net, of $2.8 billion, compared
with $2.7 billion at 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 $3.4 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
September 30, 2016, compared with $1.4 billion at December 31, 2015.
A schedule of debt is included in Table 12 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.
Full reconciliations of the outlook for adjusted net income, adjusted EBITDA and adjusted EPS to GAAP results appear in Table 10 of this press release.
The Company provides the following guidance for the full year 2016:
-- Revenues of approximately $5.650 billion.
-- Adjusted net income of approximately $630 million.
-- Adjusted EBITDA of approximately $1.375 billion.
-- Adjusted diluted EPS of approximately $5.68 - $5.71 based on a diluted
share count of 111 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 Wednesday, October 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 888-632-3384 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 October 26, 2016. A telephone replay will be available for approximately 10 days beginning at 12:00pm ET on October 26, 2016 at 800-388-6197.
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 the Company's 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. A reconciliation of forecasted adjusted net income, adjusted EBITDA and adjusted EPS to the most directly comparable GAAP measures is provided in Table 10 of this press release.
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.
Wyndham Worldwide Corporation
Earnings Release Schedules
Quarter Three - September 30, 2016
Table of Contents
Table No.
---------
Consolidated Statements of Income
(Unaudited) 1
Operating Results of Reportable
Segments 2
Operating Statistics 3
Condensed Consolidated Statements
of Cash Flows and Reconciliation
of Free Cash Flows (Unaudited) 4
Revenue Detail by Reportable
Segment 5
Brand System Details 6
Non-GAAP Reconciliation of
Adjusted Net Income and EPS 7
Non-GAAP Reconciliation of
Adjusted EBITDA by Reportable
Segment 8
Non-GAAP Reconciliation of Gross
VOI Sales 9
Non-GAAP Reconciliation of 2016
Outlook 10
Non-GAAP Reconciliation -
Constant Currency and Currency
Neutral 11
Schedule of Debt 12
Table 1
Wyndham Worldwide Corporation
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2016 2015 2016 2015
---- ---- ---- ----
Net revenues
Service and membership fees $735 $734 $2,001 $1,957
Vacation ownership interest sales 441 448 1,191 1,201
Franchise fees 203 192 513 517
Consumer financing 112 108 327 318
Other 82 82 247 231
Net revenues 1,573 1,564 4,279 4,224
----- ----- ----- -----
Expenses
Operating 679 691 1,915 1,865
Cost of vacation ownership interests 47 43 115 123
Consumer financing interest 19 18 55 55
Marketing and reservation 242 218 645 624
General and administrative 173 200 545 562
Asset impairments - 7 - 7
Restructuring 14 8 14 8
Depreciation and amortization 63 59 187 173
Total expenses 1,237 1,244 3,476 3,417
----- ----- ----- -----
Operating income 336 320 803 807
Other (income)/expense, net (3) (3) (19) (11)
Interest expense 34 33 102 89
Early extinguishment of debt - - 11 -
Interest income (2) (2) (6) (7)
--- --- --- ---
Income before income taxes 307 292 715 736
Provision for income taxes 110 102 267 265
--- --- --- ---
Net income 197 190 448 471
Net income attributable to noncontrolling interest (1) - (1) -
--- --- --- ---
Net income attributable to Wyndham shareholders $196 $190 $447 $471
==== ==== ==== ====
Earnings per share
Basic $1.79 $1.62 $4.03 $3.96
Diluted 1.78 1.61 4.01 3.93
Weighted average shares outstanding
Basic 109 117 111 119
Diluted 110 118 112 120
Note: For a description of adjustments to Net Income, see Table 7.
Table 2
(1 of 2)
Wyndham Worldwide Corporation
OPERATING RESULTS OF REPORTABLE SEGMENTS
(In millions)
In addition to other measures, management evaluates the operating results of each of its reportable segments based upon net revenues and "EBITDA", which is defined as net income before depreciation and amortization, interest expense (excluding consumer financing interest), early
extinguishment of debt, interest income (excluding consumer financing revenues) and income taxes, each of which is presented on the Company's Consolidated Statements of Income. The Company also uses adjusted EBITDA as a financial measure of its operating performance. The Company believes
that EBITDA and Adjusted EBITDA are useful measures of assessing performance of the Company and for the Company's segments which, when considered with GAAP measures, give a more complete understanding of its operating performance and assist our investors in evaluating our ongoing operating
performance for the current reporting period and, where provided, over different reporting periods, by adjusting for certain items which may be recurring or nonrecurring and which in our view do not necessarily reflect ongoing operating performance. We also internally use these measures to
assess our operating performance, both in absolute terms and in comparison to other companies, and in evaluating or making selected compensation decisions. These supplemental disclosures are in addition to GAAP reported measures. The Company's presentation of EBITDA and Adjusted EBITDA
may not be comparable to similarly-titled measures used by other companies.
The following tables summarize net revenues and EBITDA for the Company's reportable segments, as well as reconcile EBITDA to Net income attributable to Wyndham shareholders for the three months ended September 30, 2016 and 2015:
Three Months Ended September 30,
--------------------------------
2016 2015
---- ----
Net Revenues EBITDA Net Revenues EBITDA
------------ ------ ------------ ------
Hotel Group $364 $107 $357 $83
Destination Network 486 138 476 134
Vacation Ownership 744 189 750 200
--- --- --- ---
Total Reportable Segments 1,594 434 1,583 417
Corporate and Other (a) (21) (32) (19) (35)
Total Company $1,573 $402 $1,564 $382
====== ==== ====== ====
Reconciliation of EBITDA to Net income attributable to Wyndham shareholders
---------------------------------------------------------------------------
Three Months Ended September 30,
--------------------------------
2016 2015
---- ----
EBITDA $402 $382
Depreciation and amortization 63 59
Interest expense 34 33
Interest income (2) (2)
--- ---
Income before income taxes 307 292
Provision for income taxes 110 102
--- ---
Net income 197 190
Net income attributable to noncontrolling interest (1) -
Net income attributable to Wyndham shareholders $196 $190
==== ====
(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 September 30, 2016 and 2015 (for a description of adjustments and reconciliation by segment, see Table 8):
Three Months Ended September 30,
--------------------------------
2016 2015
---- ----
Adjusted Adjusted
Net Revenues EBITDA Net Revenues EBITDA
------------ ------ ------------ ------
Hotel Group $364 $117 $357 $108
Destination Network 486 142 476 137
Vacation Ownership 744 195 750 201
--- --- --- ---
Total Reportable Segments 1,594 454 1,583 446
Corporate and Other (21) (31) (19) (34)
---
Total Company $1,573 $423 $1,564 $412
====== ==== ====== ====
Table 2
(2 of 2)
Wyndham Worldwide Corporation
OPERATING RESULTS OF REPORTABLE SEGMENTS
(In millions)
The following tables summarize net revenues and EBITDA for the Company's reportable segments, as well as reconcile EBITDA to Net income
attributable to Wyndham shareholders for the nine months ended September 30, 2016 and 2015:
Nine Months Ended September 30,
-------------------------------
2016 2015
---- ----
Net Revenues EBITDA Net Revenues EBITDA
------------ ------ ------------ ------
Hotel Group $993 $291 $983 $255
Destination Network 1,255 303 1,228 323
Vacation Ownership 2,089 512 2,067 513
----- --- ----- ---
Total Reportable Segments 4,337 1,106 4,278 1,091
Corporate and Other (a) (58) (97) (54) (100)
Total Company $4,279 $1,009 $4,224 $991
====== ====== ====== ====
Reconciliation of EBITDA to Net income attributable to Wyndham shareholders
---------------------------------------------------------------------------
Nine Months Ended September 30,
-------------------------------
2016 2015
---- ----
EBITDA $1,009 $991
Depreciation and amortization 187 173
Interest expense 102 89
Early extinguishment of debt 11 -
Interest income (6) (7)
--- ---
Income before income taxes 715 736
Provision for income taxes 267 265
--- ---
Net income 448 471
Net income attributable to noncontrolling interest (1) -
Net income attributable to Wyndham shareholders $447 $471
==== ====
(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 nine months ended September 30,
2016 and 2015 (for a description of adjustments and reconciliation by segment, see Table 8):
Nine Months Ended September 30,
-------------------------------
2016 2015
---- ----
Adjusted Adjusted
Net Revenues EBITDA Net Revenues EBITDA
------------ ------ ------------ ------
Hotel Group $993 $301 $983 $284
Destination Network 1,255 333 1,228 326
Vacation Ownership 2,089 518 2,067 514
----- --- ----- ---
Total Reportable Segments 4,337 1,152 4,278 1,124
Corporate and Other (58) (97) (54) (101)
--- ----
Total Company $4,279 $1,055 $4,224 $1,023
====== ====== ====== ======
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 679,100 683,300 689,800 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 $39.10 $43.04 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 3,857 3,868 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 $164.61 $164.39 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 500 409 508 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 $492.83 $599.59 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 $518,000 $564,000 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 179 213 230 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 $2,328 $2,320 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 7,880 7,930 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 $90,000 $104,000 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. We believe gross VOI sales provide an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period. See Table 9 for a reconciliation of Gross VOI sales to vacation ownership interest sales.
Tours: Represents the number of tours taken by guests in our efforts to sell VOIs.
Volume per Guest (VPG): Represents Gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) divided by the number of tours. The Company has excluded non-tour upgrade sales in the calculation of VPG because non-tour upgrade sales are generated by a different marketing channel. See Table 9 for a detail of tele-sales upgrades for 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
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND RECONCILIATION OF FREE CASH FLOWS
(In millions)
(Unaudited)
Condensed Consolidated Statements of Cash Flows:
Nine Months Ended September 30,
-------------------------------
2016 2015
---- ----
Net cash provided by operating activities $786 $817
Net cash used in investing activities (172) (244)
Net cash used in financing activities (442) (477)
Effect of changes in exchange rates on cash and cash equivalents (11) (20)
Net increase in cash and cash equivalents $161 $76
==== ===
Free Cash Flow:
We define free cash flow to be net cash provided by operating activities less property and equipment additions which we also refer to as capital expenditures.
We believe free cash flow to be a useful operating performance measure to evaluate the ability of our operations to generate cash for uses other than capital expenditures and, after debt service and other obligations, our ability to grow our business through
acquisitions, development advances and equity investments, as well as our ability to return cash to shareholders through dividends and share repurchases. A limitation of using free cash flow versus the GAAP measures of net cash provided by operating activities, net cash
used in investing activities and net cash used in financing activities as a means for evaluating Wyndham Worldwide is that free cash flow does not represent the total cash movement for the period as detailed in the consolidated statement of cash flows.
The following table provides more details on the GAAP financial measure that is most directly comparable to the non-GAAP financial measure and the related reconciliation between these financial measures:
Nine Months Ended September 30,
-------------------------------
2016 2015
---- ----
Net cash provided by operating activities $786 $817
Less: Property and equipment additions (136) (157)
Free cash flow $650 $660
==== ====
Table 5
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 $94 $105 N/A N/A $74 $96 $103 $87 $361
Marketing, Reservation and Wyndham Rewards Revenues (a) 83 103 125 N/A N/A 96 108 112 92 407
Hotel Management Reimbursable Revenues (b) 67 71 67 N/A N/A 61 71 73 68 273
Intersegment Trademark Fees 13 15 16 N/A N/A 12 15 16 15 57
Owned Hotel Revenues 27 19 17 N/A N/A 25 20 16 19 79
Ancillary Revenues (c) 31 32 34 N/A N/A 24 24 37 33 120
Total Hotel Group 295 334 364 N/A N/A 292 334 357 314 1,297
Destination Network
Exchange Revenues 182 159 159 N/A N/A 185 161 157 146 649
Rental Revenues 183 202 304 N/A N/A 166 200 296 144 807
Ancillary Revenues (d) 20 23 23 N/A N/A 18 22 23 20 82
Total Destination Network 385 384 486 N/A N/A 369 383 476 310 1,538
Vacation Ownership
Vacation Ownership Interest Sales 342 409 441 N/A N/A 336 417 448 403 1,604
Consumer Financing 107 108 112 N/A N/A 104 105 108 109 427
Property Management Fees and Reimbursable Revenues 164 161 168 N/A N/A 153 149 159 155 615
WAAM Fee-for-Service Commissions 17 16 13 N/A N/A 12 19 23 28 83
Ancillary Revenues (e) 11 11 10 N/A N/A 12 9 12 11 43
Total Vacation Ownership 641 705 744 N/A N/A 617 699 750 706 2,772
Total Reportable Segments $1,321 $1,423 $1,594 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 6
(1 of 2)
Wyndham Worldwide Corporation
BRAND SYSTEM DETAILS
As of and For the Three Months Ended September 30, 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 2,747 175,094 63.7% $52.27 $33.28
Days Inn 1,784 142,789 57.5% $73.31 $42.15
Ramada 850 120,092 58.0% $78.30 $45.39
Wyndham Hotels and Resorts 235 51,898 57.4% $109.11 $62.66
Howard Johnson 376 43,226 55.5% $67.43 $37.41
Baymont 425 33,732 58.9% $75.52 $44.49
Travelodge 406 30,012 59.0% $79.62 $46.99
Microtel Inns & Suites by Wyndham 337 24,325 63.7% $73.28 $46.70
Knights Inn 375 22,841 49.3% $54.80 $27.00
TRYP by Wyndham 114 16,322 73.7% $79.77 $58.75
Wingate by Wyndham 149 13,568 68.4% $94.68 $64.75
Hawthorn Suites by Wyndham 109 10,743 71.1% $82.32 $58.49
Dolce 22 5,110 58.8% $170.72 $100.43
Total Hotel Group 7,929 689,752 59.9% $71.80 $43.04
Vacation Ownership
Wyndham Vacation Ownership resorts 218 24,582 N/A N/A N/A
--- ------
Total Wyndham Worldwide 8,147 714,334
============ =====
As of and For the Three Months Ended September 30, 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 2,600 166,656 65.1% $52.68 $34.29
Days Inn 1,785 142,613 58.1% $71.39 $41.48
Ramada 838 117,044 59.0% $76.94 $45.42
Wyndham Hotels and Resorts 210 45,537 65.5% $108.30 $70.92
Howard Johnson 403 43,803 59.0% $62.54 $36.88
Baymont 396 31,480 60.0% $72.04 $43.20
Travelodge 414 30,692 59.8% $74.56 $44.56
Microtel Inns & Suites by Wyndham 333 23,960 64.2% $72.00 $46.20
Knights Inn 383 23,464 49.2% $52.00 $25.58
TRYP by Wyndham 122 17,641 70.3% $84.05 $59.05
Wingate by Wyndham 148 13,450 70.4% $91.42 $64.39
Hawthorn Suites by Wyndham 101 10,053 70.1% $81.67 $57.28
Dolce 24 5,530 58.8% $160.45 $94.40
Total Hotel Group 7,757 671,923 61.4% $70.63 $43.34
Vacation Ownership
Wyndham Vacation Ownership resorts 211 24,095 N/A N/A N/A
--- ------
Total Wyndham Worldwide 7,968 696,018
============ =====
Note: A glossary of terms is included in Table 3 (2 of 2); RevPAR may not recalculate by multiplying average occupancy rate by ADR due to rounding.
Table 6
(2 of 2)
Wyndham Worldwide Corporation
BRAND SYSTEM DETAILS
As of and For the Nine Months Ended September 30, 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 2,747 175,094 58.6% $49.38 $28.93
Days Inn 1,784 142,789 51.8% $69.10 $35.80
Ramada 850 120,092 54.5% $75.09 $40.94
Wyndham Hotels and Resorts 235 51,898 58.1% $106.62 $61.99
Howard Johnson 376 43,226 49.8% $62.94 $31.32
Baymont 425 33,732 53.0% $71.67 $38.01
Travelodge 406 30,012 52.5% $72.15 $37.88
Microtel Inns & Suites by Wyndham 337 24,325 58.3% $69.26 $40.36
Knights Inn 375 22,841 46.3% $51.42 $23.83
TRYP by Wyndham 114 16,322 66.0% $77.88 $51.40
Wingate by Wyndham 149 13,568 64.2% $91.77 $58.96
Hawthorn Suites by Wyndham 109 10,743 67.8% $82.68 $56.09
Dolce 22 5,110 53.4% $165.67 $88.44
Total Hotel Group 7,929 689,752 55.3% $68.60 $37.95
Vacation Ownership
Wyndham Vacation Ownership resorts 218 24,582 N/A N/A N/A
--- ------
Total Wyndham Worldwide 8,147 714,334
============ =====
As of and For the Nine Months Ended September 30, 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 2,600 166,656 59.2% $51.01 $30.17
Days Inn 1,785 142,613 52.5% $68.20 $35.83
Ramada 838 117,044 55.5% $75.78 $42.08
Wyndham Hotels and Resorts 210 45,537 61.8% $111.39 $68.87
Howard Johnson 403 43,803 51.1% $62.91 $32.15
Baymont 396 31,480 54.5% $69.23 $37.72
Travelodge 414 30,692 52.9% $69.14 $36.55
Microtel Inns & Suites by Wyndham 333 23,960 59.8% $69.81 $41.73
Knights Inn 383 23,464 46.9% $48.56 $22.79
TRYP by Wyndham 122 17,641 62.4% $80.87 $50.42
Wingate by Wyndham 148 13,450 65.4% $89.70 $58.66
Hawthorn Suites by Wyndham 101 10,053 68.5% $81.16 $55.62
Dolce 24 5,530 57.5% $149.84 $86.20
Total Hotel Group 7,757 671,923 56.1% $68.97 $38.72
Vacation Ownership
Wyndham Vacation Ownership resorts 211 24,095 N/A N/A N/A
--- ------
Total Wyndham Worldwide 7,968 696,018
============ =====
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
Wyndham Worldwide Corporation
NON-GAAP RECONCILIATION OF ADJUSTED NET INCOME AND EPS
(In millions, except per share data)
Location on Consolidated Three Months Ended September 30,
Statements of Income
--------------------
2016 2015
---- ----
Diluted weighted average shares outstanding 110 118
Diluted EPS $1.78 $1.61
Net income attributable to Wyndham shareholders $196 $190
Adjustments:
Legacy costs (b) General and administrative (1) 1
Restructuring costs (c) Operating 14 8
Asset impairments (d) Operating - 7
Contract termination (e) Operating 7 14
Total adjustments before tax 20 30
Income tax benefit/(expense) on adjustments
(f) Provision for income taxes (9) (10)
Total adjustments after tax 11 20
Adjustments - EPS impact $0.11 $0.17
Adjusted net income attributable to Wyndham shareholders $207 $210
==== ====
Adjusted diluted EPS $1.89 $1.78
===== =====
Nine Months Ended September 30,
-------------------------------
2016 2015
---- ----
Diluted weighted average shares outstanding 112 120
Diluted EPS $4.01 $3.93
Net income attributable to Wyndham shareholders $447 $471
Adjustments:
Venezuela currency devaluation (g) Operating 24 -
Acquisition costs (a) Operating 1 3
Restructuring costs (c) Operating 14 8
Early extinguishment of debt (h) Interest expense 11 -
Asset impairments (d) Operating - 7
Contract termination (e) Operating 7 14
Total adjustments before tax 57 32
Income tax benefit/(expense) on adjustments
(i) Provision for income taxes (14) (9)
Total adjustments after tax 43 23
Total adjustments - EPS impact $0.39 $0.19
Adjusted net income attributable to Wyndham shareholders $490 $494
==== ====
Adjusted diluted EPS $4.40 $4.12
===== =====
Note:Amounts may not add due to rounding.
(a) The amount for 2016 represents costs
related to an acquisition that closed on
July 1, 2016 at the Company's destination
network business. The amount for 2015
relates primarily to costs incurred in
connection with the acquisition of Dolce
Hotels and Resorts at the Company's hotel
group business during 2015.
(b) Relates to the net (benefit)/expense from
the resolution of and adjustment to
certain contingent liabilities and assets
resulting from the Company's separation
from Cendant.
(c) Relates to costs incurred as a result of
(i) enhancing organizational efficiency
and rationalizing existing facilities
during the three and nine months ended
September 30, 2016 and (ii) various
organization realignment initiatives
across the Company during the three and
nine months ended September 30, 2015.
(d) Relates to a non-cash impairment charge
related to the write-down of terminated
in-process technology projects resulting
from the decision to outsource its
reservation system to a third-party
provider at the Company's hotel group
business.
(e) Relates to costs associated with the
anticipated termination of a management
contract at the Company's hotel group
business during both the three and nine
months ended September 30, 2016 and 2015.
(f) Relates to (i) the tax effect of the
adjustments during both 2016 and 2015 and
(ii) a $2 million state tax refund for
legacy tax matters during 2016.
(g) Represents the impact from the devaluation
of the exchange rate of Venezuela at the
Company's destination network business
during 2016.
(h) Represents costs incurred in connection
with the Company's early repurchase of
its 6.0% senior unsecured notes during
2016.
(i) Relates to (i) the tax effect of the
adjustments during both 2016 and 2015;
(ii) a valuation allowance established in
connection with the acquisition of Dolce
Hotels and Resorts during 2015 and (iii)
a $2 million state tax refund for legacy
tax matters during 2016. There was no tax
impact associated with the $24 million
Venezuela currency devaluation
adjustment.
The above tables reconcile certain non-GAAP
financial measures. The presentation of these
adjustments is intended to permit the comparison of
particular adjustments as they appear in the income
statement in order to assist investors'
understanding of the overall impact of such
adjustments. In addition to GAAP financial
measures, the Company provides adjusted net income
and adjusted EPS financial measures to assist our
investors in evaluating our ongoing operating
performance for the current reporting period and,
Table 8
(1 of 3)
Wyndham Worldwide Corporation
NON-GAAP RECONCILIATION OF ADJUSTED EBITDA BY REPORTABLE SEGMENT
(In millions)
Venezuela
Currency Acquisition Legacy Restructuring Contract Adjusted
Three months ended March 31, 2016 EBITDA Devaluation (b) Costs(c) Costs(d) Costs(e) Termination(f) EBITDA
------ --------------- ------- ------- ------- ------------- ------
Hotel Group $84 $ - $ - $ - $ - $ - $84
Destination Network 81 24 - - - - 105
Vacation Ownership 136 - - - - - 136
--- --- --- --- --- --- ---
Total Reportable Segments 301 24 - - - - 325
Corporate and Other (a) (34) - - - - - (34)
--- --- --- --- --- --- ---
Total Company $267 $24 $ - $ - $ - $ - $291
==== === === === === === === === === === ====
Three months ended June 30, 2016
Hotel Group $101 $ - $ - $ - $ - $ - $101
Destination Network 85 - 1 - - 85
Vacation Ownership 187 - - - - - 187
--- --- --- --- --- --- ---
Total Reportable Segments 373 - 1 - - - 373
Corporate and Other (a) (33) - - - - - (33)
--- --- --- --- --- --- ---
Total Company $340 $ - $1 $ - $ - $ - $340
==== === === === === === === === === === ====
Three months ended September 30, 2016
Hotel Group $107 $ - $ - $ - $3 $7 $117
Destination Network 138 - - - 4 - 142
Vacation Ownership 189 - - - 6 - 195
--- --- --- --- --- --- ---
Total Reportable Segments 434 - - - 13 7 454
Corporate and Other (a) (32) - (1) 1 - (31)
--- --- --- --- --- ---
Total Company $402 $ - $ - $(1) $14 $7 $423
==== === === === === === === === ====
Note: Amounts may not add across due to rounding.
(a) Includes the elimination of transactions between segments.
(b) Represents the impact from the devaluation of the exchange rate of Venezuela.
(c) Represents costs related to an acquisition that closed on July 1, 2016.
(d) Relates to the net benefit from the resolution of and adjustment to certain contingent liabilities and assets resulting from the Company's separation from Cendant.
(e) Relates to costs incurred due to enhancing organizational efficiency and rationalizing existing facilities across the Company.
(f) Relates to additional costs associated with the anticipated termination of a management contract.
Table 8
(2 of 3)
Wyndham Worldwide Corporation
NON-GAAP RECONCILIATION OF ADJUSTED EBITDA BY REPORTABLE SEGMENT
(In millions)
Legacy Acquisition Restructuring Asset Contract Adjusted
Three months ended March 31, 2015 EBITDA Adjustments(b) Costs (c) Costs (d) Impairment (e) Termination (f) EBITDA
------ ------------- -------- -------- ------------- -------------- ------
Hotel Group $76 $ - $3 $ - $ - $ - $79
Destination Network 105 - - (1) - - 104
Vacation Ownership 130 - - - - - 130
--- --- --- --- --- --- ---
Total Reportable Segments 311 - 3 (1) - - 313
Corporate and Other (a) (34) - - - - - (34)
--- --- --- --- --- --- ---
Total Company $277 $ - $3 $(1) $ - $ - $279
==== === === === === === === === === ====
Three months ended June 30, 2015
Hotel Group $96 $ - $1 $ - $ - $ - $97
Destination Network 84 - - - - - 84
Vacation Ownership 182 - - - - - 182
--- --- --- --- --- --- ---
Total Reportable Segments 362 - 1 - - - 363
Corporate and Other (a) (30) (1) - - - - (31)
--- --- --- --- --- --- ---
Total Company $332 $(1) $1 $ - $ - $ - $332
==== === === === === === === === === ====
Three months ended September 30, 2015
Hotel Group $83 $ - $ - $4 $7 $14 $108
Destination Network 134 - - 3 - - 137
Vacation Ownership 200 - - 1 - - 201
--- --- --- --- --- --- ---
Total Reportable Segments 417 - - 8 7 14 446
Corporate and Other (a) (35) 1 - - - - (34)
--- --- --- --- --- --- ---
Total Company $382 $1 $ - $8 $7 $14 $412
==== === === === === === === ====
Three months ended December 31, 2015
Hotel Group $94 $ - $ - $(1) $ - $ - $93
Destination Network 44 - - (1) - - 43
Vacation Ownership 174 - - - - - 174
--- --- --- --- --- --- ---
Total Reportable Segments 312 - - (2) - - 310
Corporate and Other (a) (37) - - - - - (37)
--- --- --- --- --- --- ---
Total Company $275 $ - $ - $(2) $ - $ - $273
==== === === === === === === === === === ====
Twelve months ended December 31, 2015
Hotel Group $349 $ - $3 $3 $7 $14 $376
Destination Network 367 - 1 2 - - 370
Vacation Ownership 687 - - 1 - - 688
--- --- --- --- --- --- ---
Total Reportable Segments 1,403 - 4 6 7 14 1,434
Corporate and Other (a) (137) - - - - - (137)
---- --- --- --- --- --- ----
Total Company $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 the Company's 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 8
(3 of 3)
Wyndham Worldwide Corporation
NON-GAAP RECONCILIATION OF ADJUSTED EBITDA BY REPORTABLE SEGMENT
SHARED-BASED COMPENSATION EXPENSE
(In millions)
The following tables provide detail regarding share-based compensation expense which is included within adjusted EBITDA:
2016
----
Q1 Q2 Q3 Q4 Full Year
--- --- --- --- ---------
Adjusted EBITDA $291 $340 $423 N/A N/A
Share-based compensation expense (*) 13 20 14 N/A N/A
Adjusted EBITDA excluding share-based compensation expense $304 $360 $437 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, Q2 and Q3 2016
and $3 million for the full year 2015. The Company believes providing Adjusted EBITDA with the additional exclusion of share-based compensation
expense assists our investors and management by providing an additional financial measure to evaluate ongoing operations by excluding the variations
among companies in timing, amount and reporting of share-based compensation expense, which may differ significantly among companies.
Table 9
Wyndham Worldwide Corporation
NON-GAAP RECONCILIATION OF GROSS VOI SALES
(In millions)
GROSS VOI SALES
---------------
We believe gross vacation ownership sales provide an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this
business during a given reporting period.
The following table provides a reconciliation of Gross VOI sales (see Table 3) to vacation ownership interest sales (see Table 5):
Year
----
2016 Q1 Q2 Q3 Q4 Full Year
---- --- --- --- --- ---------
Gross VOI sales $428 $518 $564 N/A N/A
Less: Sales under WAAM Fee-for-Service (23) (20) (20) N/A N/A
--- --- --- --- ---
Gross VOI sales, net of WAAM Fee-for-Service sales 405 498 544 N/A N/A
Less: Loan loss provision (63) (90) (104) N/A N/A
---
Vacation ownership interest sales $342 $409 $441 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)
Plus: 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 FullYear
--- --- --- --- --------
2016 $25 $22 $31 N/A N/A
2015 $24 $17 $32 $27 $100
2014 $25 $21 $27 $24 $97
2013 $24 $18 $22 $25 $89
Table 10
Wyndham Worldwide Corporation
NON-GAAP RECONCILIATION OF 2016 OUTLOOK
(In millions, except per share data)
Outlook (a)
Outlook (a) As Adjusted
(GAAP) Adjustments (Non-GAAP)
----- ----------- ---------
Net revenues $5,650 $ - $5,650
EBITDA $1,329 $46 (b) $1,375
Depreciation and amortization (252) - (252)
Interest expense, net (139) 11 (c) (128)
---- --- --- ----
Income before taxes 938 57 995
Income taxes (348) (14) (d) (362)
Net income attributable to noncontrolling interest (1) - (1)
--- --- ---
Net income attributable to Wyndham shareholders $587 $43 $630
==== === ====
$5.68 - $5.71
Diluted earnings per share
$5.29 - $5.32
Diluted shares 111 111
(a) Outlook represents Company's approximate projection of performance for the fourth quarter of 2016. Projections may not total because the Company does not expect the actual results of all items to be at the precise amount simultaneously.
(b) For a description of such adjustments, see Table 7.
(c) Adjustment represents early extinguishment of debt in the first quarter of 2016.
(d) Represents the tax effect of the adjustments and a $2 million state tax refund for legacy tax matters.
Table 11
Wyndham Worldwide Corporation
NON-GAAP RECONCILIATION - CONSTANT CURRENCY AND CURRENCY NEUTRAL
(In millions, except per share data)
The Company reports certain current year period financial measures on a constant currency and currency-neutral basis and excluding the impact of acquisitions. The Company believes providing certain financial measures on a constant currency and currency-neutral basis as well as excluding the impact of acquisitions assists management and investors in better
understanding underlying results and trends by excluding the impact of period over period changes in foreign exchange rates and changes resulting from acquisitions.
Constant currency results assume foreign results are translated from foreign currencies to the U.S. dollar at exchange rates consistent with those in the comparable period.
Currency Neutral results (i) assume foreign results are translated from foreign currencies to the U.S. dollar at exchange rates consistent with those in the comparable period and (ii) eliminating foreign exchange related activities such as foreign exchange hedges, balance sheet remeasurements, currency devaluations and/or other adjustments.
Acquisition results are defined as the incremental period over period changes in the Company's results directly attributable to acquisitions.
Revenues in Constant Currency and Excluding Acquisitions: Three months ended September 30,
--------------------------------
2016 2015 % Change
---- ---- --------
Total revenues as reported $1,573 $1,564 1%
Adjustments:
Foreign currency - constant currency 18 - *
Incremental revenues from acquisitions (7) - *
Total revenues in constant currency and excluding acquisitions $1,584 $1,564 1%
===
Destination Network revenue as reported $486 $476 2%
Adjustments:
Foreign currency - constant currency 19 - *
Incremental revenues from acquisitions (7) - *
--- ---
Total Destination Network revenues in constant currency and excluding acquisitions $498 $476 5%
===
Exchange revenue as reported $159 $157 1%
Adjustments:
Foreign currency - constant currency 1 - *
Total Exchange revenues in constant currency and excluding
acquisitions $160 $157 2%
==== ==== ===
Rental revenue as reported $304 $296 3%
Adjustments:
Foreign currency - constant currency 18 - *
Incremental revenues from acquisitions (7) - *
Total Rental revenues in constant currency and excluding acquisitions $315 $296 6%
==== ==== ===
Currency-neutral Adjusted EBITDA: Three months ended September 30,
--------------------------------
2016 2015 % Change
---- ---- --------
Adjusted EBITDA (a) $423 $412 3%
Adjustments:
Foreign currency - currency-neutral 10 - *
Incremental EBITDA from acquisitions (2) - *
Currency-neutral Adjusted EBITDA excluding acquisitions $431 $412 5%
===
Destination Network Adjusted EBITDA (a) $142 $137 4%
Adjustments:
Foreign currency - currency-neutral 8 - *
Incremental EBITDA from acquisitions (2) - *
Destination Network Currency-neutral Adjusted EBITDA excluding acquisitions $148 $137 8%
===
* Not meaningful.
(a) See Table 8 for a reconciliation of EBITDA to Adjusted EBITDA and Table 2 for a reconciliation of EBITDA to Net Income
Table 12
Wyndham Worldwide Corporation
SCHEDULE OF DEBT
(In millions)
September 30, December 31, September 30,
2016 2015 2015
---- ---- ----
Securitized vacation ownership debt (a)
Term notes $1,818 $1,867 $1,819
Bank conduit facility (b) 280 239 267
---
Total securitized vacation ownership debt (c) 2,098 2,106 2,086
Less: Current portion of securitized vacation ownership debt 200 209 210
Long-term securitized vacation ownership debt $1,898 $1,897 $1,876
====== ====== ======
Debt:
Revolving credit facility (due July 2020) (d) $12 $7 $20
Commercial paper (e) 404 109 87
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) 300 299 299
$14 million 5.75% senior unsecured notes (due February 2018) 14 14 14
$450 million 2.50% senior unsecured notes (due March 2018) 449 448 448
$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) 648 648 648
$400 million 3.90% senior unsecured notes (due March 2023) 407 408 408
$350 million 5.10% senior unsecured notes (due October 2025) 338 337 337
Capital leases 151 153 158
Other 18 49 48
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Total long-term debt 3,351 3,075 3,070
Less: Current portion of long-term debt 33 44 44
Long-term debt $3,318 $3,031 $3,026
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(a) The Company's vacation ownership contract receivables are securitized through bankruptcy-remote special purpose entities ("SPEs") that are consolidated within our financial statements. These bankruptcy-remote
SPEs are legally separate from the Company. The receivables held by the bankruptcy-remote SPEs are not available to the Company's creditors and legally are not the Company's assets. Additionally, the non-recourse
debt that is securitized through the SPEs is legally not a liability of the Company and thus, the creditors of these SPEs have no recourse to the Company for principal and interest.
(b) Represents a non-recourse vacation ownership bank conduit facility with a term through August 2018 and borrowing capacity of $650 million. As of September 30, 2016, this facility had a remaining borrowing
capacity of $370 million.
(c) This debt is collateralized by $2,560 million, $2,576 million and $2,582 million, of underlying vacation ownership contract receivables and related assets as of September 30, 2016, December 31, 2015, and September
30, 2015, respectively.
(d) Represents a $1.5 billion revolving credit facility that expires in July 2020. As of September 30, 2016, the Company had $1 million of outstanding letters of credit. After considering outstanding commercial paper
borrowings of $404 million, the remaining borrowing capacity was $1.1 billion as of September 30, 2016.
(e) Represents commercial paper programs of $1.25 billion with a remaining borrowing capacity of $846 million as of September 30, 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.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/wyndham-worldwide-reports-third-quarter-2016-results-300351260.html
SOURCE Wyndham Worldwide Corporation
