Company Increases Dividend 10% and Provides Full-Year 2020 Projections
PARSIPPANY, N.J., February 13, 2020 – Wyndham Hotels & Resorts (NYSE: WH) today announced results for the three months and year ended December 31, 2019. Highlights include:
Diluted earnings per share for the quarter increased 58% to $0.68 and was unchanged for the full-year at $1.62; adjusted diluted EPS grew 40% to $0.81 for the quarter and 21% to $3.28 for the full-year.
Net income increased 49% to $64 million for the quarter, and decreased 3% to $157 million for the full-year; adjusted net income increased 35% to $77 million for the quarter, and 17% to $317 million for the full-year.
Adjusted EBITDA increased 22% to $153 million for the quarter, and 21% to $613 million for the full-year.
System-wide rooms grew 3% year-over-year, including S. rooms growth of 1% and international rooms growth of 6%.
The Company’s development pipeline grew 7% year-over-year to 193,000
S. RevPAR declined 3% compared to the prior-year quarter, and international RevPAR remained unchanged compared to the prior-year quarter in constant currency.
Returned over $100 million to shareholders in the quarter, through share repurchases and dividends, and over $350 million for the full-year 2019.
“We finished 2019 with another solid quarter, capping off a year in which we delivered rooms growth, earnings growth and free cash flow that were in line with our expectations despite headwinds from a soft RevPAR environment. We achieved these results through consistent execution, careful expense management and disciplined capital allocation,” said Geoffrey A. Ballotti, chief executive officer. “As we enter 2020, we are confident in the strength and resilience of our business and remain focused on executing every day to deliver exceptional value for our hotel owners, hotel guests and shareholders.”
Fourth Quarter 2019 Operating Results
Revenues decreased 7% to $492 million, compared to $527 million in the fourth quarter of 2018. The decline reflects lower pass-through cost-reimbursement revenues, which are inconsequential to adjusted EBITDA, in the Company’s hotel management business. Excluding cost-reimbursements, revenue grew 2% reflecting growth in royalties and franchise fees, higher license fees, and an increase in marketing, reservation and loyalty fees, partially offset by lower other revenues.
Net income increased 49% to $64 million, or $0.68 per diluted share, compared to $43 million, or $0.43 per diluted share, in the fourth quarter of 2018. Fourth quarter 2019 results include costs primarily related to a restructuring charge focused on enhancing the Company’s organizational efficiency and rationalizing its operations, transaction-related expenses associated with the integration of La Quinta and separation-related expenses associated with the Company’s spin-off. Fourth quarter 2018 results include costs primarily related to separation-related expenses associated with the Company’s spin-off.
Adjusted net income increased 35% to $77 million, or $0.81 per diluted share, compared to $57 million, or $0.58 per diluted share, in the fourth quarter of 2018. Fourth quarter adjusted net income benefited from the growth in revenues (excluding cost-reimbursement revenues), as well as lower marketing expenses due to timing and increased synergies from the integration of La Quinta. Full reconciliations of GAAP results to the Company’s non-GAAP adjusted measures for all reported periods appear in the tables to this press release.
Fourth quarter adjusted EBITDA was $153 million, compared to $125 million in the fourth quarter of 2018, an increase of 22%. The increase in adjusted EBITDA primarily reflects the growth in revenues (excluding cost-reimbursement revenues), as well as, lower marketing expenses due to timing and increased synergies from the integration of La Quinta.
Full-Year 2019 Operating Results
Revenues increased 10% to $2,053 million, compared to $1,868 million in 2018. Results reflect $267 million of incremental revenues from La Quinta and $115 million of lower cost-reimbursement revenues in the Company’s hotel management business, which have no impact on adjusted EBITDA. Excluding the impact of these items, revenues increased 3% primarily due to higher license fees, an increase in marketing, reservation and loyalty fees and higher other revenues, partially offset by a $20 million reduction to revenues related to the Company’s agreement with CorePoint Lodging.
Net income was $157 million, or $1.62 per diluted share, compared to $162 million, or $1.62 per diluted share, in 2018. Full-year 2019 results reflect separation-related, transaction-related, impairment, contract-termination and restructuring expenses. Prior-year results included separation-related and transaction-related expenses associated with the Company’s spin-off and acquisition of La Quinta.
Adjusted net income was $317 million, or $3.28 per diluted share, compared to $270 million, or $2.71 per diluted share, in 2018. Full-year adjusted net income benefited from revenue growth, as well as incremental adjusted net income and increased synergies from the acquisition and integration of La Quinta, partially offset by higher interest expense. Full reconciliations of GAAP results to the Company’s non-GAAP adjusted measures for all reported periods appear in the tables to this press release.
Adjusted EBITDA increased 21% to $613 million, compared to $507 million in 2018. Results are consistent with the Company’s recent projection of adjusted EBITDA of $610 million to $615 million for the full year. Excluding $63 million of incremental EBITDA from La Quinta and $17 million of incremental synergies, adjusted EBITDA increased 6%, primarily reflecting the growth in revenues.
As of December 31, 2019, the Company’s hotel system consisted of approximately 9,300 properties and over 831,000 rooms, a 3% year-over-year increase. The Company’s development pipeline consisted of 1,500 hotels and approximately 193,000 rooms, a 7% year-over-year room increase or 2% sequentially. Approximately 57% of the Company’s development pipeline is international and 70% is new construction.
Fourth Quarter 2019 Business Segment Information
The following discussion of fourth quarter operating results focuses on revenue and adjusted EBITDA for each of the Company’s segments.
Revenues increased 2% compared to fourth quarter 2018, due to growth in royalties and franchise fees, higher license fees, and an increase in marketing, reservation and loyalty fees, partially offset by lower other revenues. Adjusted EBITDA grew 24% to $151 million, reflecting the growth in revenues, lower marketing expenses and increased synergies from the integration of La Quinta.
Revenues decreased $39 million compared to the prior-year period, due to lower cost-reimbursement revenues, which have no impact on adjusted EBITDA. The decline in cost-reimbursement revenues is primarily due to a change in the way the Company is required to account for certain costs at a portion of its managed hotels. Absent cost-reimbursements, revenues increased $3 million primarily related to management contract termination fees. Adjusted EBITDA increased $3 million compared to the prior-year quarter primarily reflecting the management contract termination fees.
Share Repurchases and Dividend Payments – The Company repurchased approximately 1.3 million shares of its common stock for $75 million in the fourth quarter. The Company paid common stock dividends of $27 million, or $0.29 per share, in the fourth quarter. For the full-year, the Company repurchased approximately 4.5 million shares of stock, or 5% of shares outstanding, for $244 million and paid $112 million, or $1.16 per share in dividends.
Dividend Increase – The Company’s Board of Directors authorized a 10% increase in the quarterly cash dividend to 32 cents from 29 cents per share, beginning with the dividend that is expected to be declared in the first quarter of 2020.
Restructuring Charge – The Company recorded a restructuring charge of $8 million during the fourth quarter for actions focused on enhancing organizational efficiency and rationalizing its operations.
The Company provided the following outlook for full-year 2020, excluding any potential impact from the Coronavirus:
Revenues of $1.89 billion to $1.93 billion driven by lower cost-reimbursement revenues, which have no impact on adjusted EBITDA. Excluding cost-reimbursement revenues, the Company expects revenues of $1.46 billion to $1.49 billion.
Adjusted net income of $329 million to $339 million.
Adjusted EBITDA of $635 million to $645 million, as illustrated below.
Adjusted diluted EPS of $3.48 to $3.58, based on an adjusted diluted share count of 94.6 million that excludes future share repurchases.
Rooms growth of 2% to 4%, including an expected (0.7%) adverse impact from the loss of rooms that were previously covered by unprofitable hotel-management guarantees.
RevPAR of flat to down (2%) in constant currency, including an expected (0.7%) adverse impact from the loss of rooms that were previously covered by unprofitable hotel-management guarantees.
The Company views its year-over-year growth in adjusted EBITDA as follows (in millions):
More detailed projections are available in Table 6 of this press release. The Company is providing outlook for net income and EPS only on a non-GAAP basis because it is unable to predict with reasonable certainty the occurrence or amount of potential adjustments that may arise in the future. Details regarding potential impacts from the Coronavirus will be provided on the Company’s conference call.
Conference Call Information
Wyndham Hotels will hold a conference call with investors to discuss the Company’s results and outlook on Thursday, February 13, 2020 at 8:30 a.m. ET. Listeners can access the webcast live through the Company’s website at www.investor.wyndhamhotels.com. The conference call may also be accessed by dialing 877 876-9173 and providing the passcode “Wyndham”. Listeners are urged to call at least five minutes prior to the scheduled start time. An archive of this webcast will be available on the website for approximately 90 days beginning at noon ET on February 13, 2020. A telephone replay will be available for approximately ten days beginning at noon ET on February 13, 2020 at 800 839-4012.
Presentation of Financial Information
Financial information discussed in this press release includes non-GAAP measures, which include or exclude certain items. These non-GAAP measures differ from reported GAAP results and are intended to illustrate what management believes are relevant period-over-period comparisons and are helpful to investors as an additional tool for further understanding and assessing the Company’s ongoing operating performance. The Company uses these measures internally to assess its operating performance, both absolutely and in comparison to other companies, and to make day to day operating decisions, including in the evaluation of selected compensation decisions. Exclusion of items in the Company’s non-GAAP presentation should not be considered an inference that these items are unusual, infrequent or non-recurring. Full reconciliations of GAAP results to the comparable non-GAAP measures for the reported periods appear in the financial tables section of this press release.
About Wyndham Hotels & Resorts
Wyndham Hotels & Resorts (NYSE: WH) is the world’s largest hotel franchising company by the number of properties, with approximately 9,300 hotels across approximately 90 countries on six continents. Through its network of over 831,000 rooms appealing to the everyday traveler, Wyndham commands a leading presence in the economy and midscale segments of the lodging industry. The Company operates a portfolio of 20 hotel brands, including Super 8®, Days Inn®, Ramada®, Microtel Inn & Suites®, La Quinta®, Baymont®, Wingate®, AmericInn®, Hawthorn Suites®, The Trademark Collection® and Wyndham®. Wyndham Hotels & Resorts is also a leading provider of hotel management services, with approximately 400 properties under management. The Company’s award-winning Wyndham Rewards loyalty program offers approximately 81 million enrolled members the opportunity to redeem points at thousands of hotels, vacation club resorts and vacation rentals globally. For more information, visit www.wyndhamhotels.com. The Company may use its website as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Disclosures of this nature will be included on the Company’s website in the Investors section, which can currently be accessed at www.investor.wyndhamhotels.com. Accordingly, investors should monitor this section of the Company’s website in addition to following the Company’s press releases, filings submitted with the Securities and Exchange Commission and any public conference calls or webcasts.
This press release contains “forward-looking statements” within the meaning of federal securities laws, including statements related to Wyndham Hotels’ current views and expectations with respect to its future performance and operations, including revenues, earnings, cash flow and other financial and operating measures, share repurchases and dividends. Forward-looking statements include those that convey management’s expectations as to the future based on plans, estimates and projections at the time Wyndham Hotels makes the statements and may be identified by words such as “will,” “expect,” “believe,” “plan,” “anticipate,” “intend,” “goal,” “future,” “outlook,” “guidance,” “target,” “estimate,” “projection” and similar words or expressions, including the negative version of such words and expressions. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of Wyndham Hotels to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.
Factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, general economic conditions, the performance of financial and credit markets, the economic environment for the hospitality industry, operating risks associated with the hotel franchising and management businesses, the impact of war, terrorist activity or political strife, concerns with or threats of pandemics, contagious diseases or health epidemics, risks related to the acquisition of La Quinta and our relationship with CorePoint Lodging, risks related to our ability to obtain financing and the terms of such financing and the timing and amount of future share repurchases and dividends, as well as the risks described in Wyndham Hotels’ most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission and any subsequent reports filed with the Securities and Exchange Commission. Except as required by law, Wyndham Hotels undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, subsequent events or otherwise.