Wyndham Hotels & Resorts Reports Second Quarter 2022 Results
Company Raises Full-Year 2022 Outlook and Grows Global Development Pipeline by 9% to a Record 208,000 Rooms
PARSIPPANY, N.J., July 26, 2022 – Wyndham Hotels & Resorts (NYSE: WH) today announced results for the three months ended June 30, 2022. Highlights include:
Global RevPAR grew 23% compared to second quarter 2021 in constant currency.
System-wide rooms grew 3% year-over-year, including 2% of growth in the U.S. and 4% of growth internationally.
Hotel Franchising segment revenues grew 18% year-over-year.
Diluted earnings per share of $1.00 and adjusted diluted earnings per share of $1.07.
Net income of $92 million and adjusted net income of $99 million .
Adjusted EBITDA of $175 million.
Year-to-date net cash provided by operating activities of $242 million and free cash flow of $224 million.
Domestic development signings increased 77%, including 22 new construction projects for the Company’s new extended-stay brand, bringing the total number to 72 since launch in March.
Completed the sale of the Wyndham Grand Rio Mar Resort.
Returned $171 million to shareholders through $142 million of share repurchases and a quarterly cash dividend of $0.32 per share.
Company raises full-year 2022 outlook.
“We kicked off our high-demand summer season with the strongest Memorial Day we’ve ever experienced, as guests traveled further, stayed longer and spent more at our hotels than they did pre-pandemic,” said Geoffrey A. Ballotti, president and chief executive officer. “Our business experienced another strong quarter performing above both last year and 2019 as international recovery accelerated and our development teams grew our pipeline to a record level. Our second quarter results once again demonstrated the strength and durability of our business model and we are well on track to deliver on our 2022 commitments.”
Fee-related and other revenues increased 10% year-over-year to $354 million as the impact from the increase of global RevPAR and higher license fees were partially offset by a $21 million impact from the sale of the Company’s owned hotels and the exit of its select-service management business.
The Company generated net income of $92 million, or $1.00 per diluted share, an increase of $24 million, or $0.27 per diluted share, reflecting higher adjusted EBITDA, lower depreciation and amortization expense due to the sale of the Company’s owned hotels and lower expenses associated with the early extinguishment of debt. Adjusted EBITDA increased $7 million, or 4%, versus 2021 to $175 million reflecting the revenue growth, which was partially offset by an $8 million impact from the sale of the Company’s owned hotels and the exit of its select-service management business as well as a $2 million unfavorable timing impact from the marketing fund.
Full reconciliations of GAAP results to the Company’s non-GAAP adjusted measures for all reported periods appear in the tables to this press release.
The Company’s global system grew 3%, reflecting 2% growth in the U.S. and 4% growth internationally. As expected, these increases included strong growth in both the higher RevPAR midscale and above segments in the U.S. and the direct franchising business in China, which grew 7% and 12%, respectively. The Company remains solidly on track with its goal of achieving a retention rate above 95% and its net room growth outlook of 2 to 4% for the full year 2022.
Second quarter RevPAR grew 23% globally in constant currency, including 15% growth in the U.S. and 59% growth internationally. The increase is approximately 80% driven by stronger pricing power and 20% driven by higher occupancy levels.
Business Segment Discussion
Hotel Franchising revenues increased 18% year-over-year to $335 million primarily due to the global RevPAR increase and higher license and other fees. Hotel Franchising adjusted EBITDA increased 11% to $185 million reflecting the growth in revenues, partially offset by a 340 basis point unfavorable timing impact from the marketing fund.
Hotel Management revenues decreased 59% year-over-year to $51 million, including a $53 million decrease in cost-reimbursement revenues, which have no impact on adjusted EBITDA. Absent cost-reimbursements, Hotel Management revenues decreased $19 million, or 50%, to $19 million due to the sale of the Company’s owned hotels and the exit of its select-service management business. Hotel Management adjusted EBITDA decreased $10 million year-over-year reflecting the same.
The Company awarded 187 new contracts this quarter compared to 154 in the second quarter 2021. On June 30, 2022, the Company’s global development pipeline consisted of approximately 1,600 hotels and approximately 208,000 rooms, of which approximately 80% is in the midscale and above segments (nearly 70% in the U.S.). The pipeline grew 9% year-over-year, including 17% domestically and 5% internationally. Approximately 62% of the Company’s development pipeline is international and 78% is new construction, of which approximately 36% has broken ground.
Sale of Owned Hotel
On May 24, 2022, the Company completed the sale of the Wyndham Grand Rio Mar Resort in Puerto Rico for gross proceeds of approximately $62 million. There was no gain or loss on the sale as the proceeds approximated adjusted net book value. The Company entered into a 20-year franchise agreement with the buyer.
Cash and Liquidity
The Company generated $242 million of net cash provided by operating activities year-to-date and $224 million of free cash flow. The Company ended the quarter with a cash balance of $400 million and approximately $1.1 billion in total liquidity.
Share Repurchases and Dividends
During the second quarter, the Company repurchased approximately 1.9 million shares of its common stock for $142 million. The Company also paid common stock dividends of $29 million, or $0.32 per share, in the second quarter.
Full-Year 2022 Outlook
The Company is increasing its outlook as follows to reflect future projections related to the Company’s license fees from Travel & Leisure based on their full-year 2022 Gross VOI Sales outlook provided on April 28, 2022 as well as the impact of second quarter share repurchase activity:
(a) Represents the percentage of adjusted EBITDA that is expected to produce free cash flow.
More detailed projections are available in Table 8 of this press release. The Company is providing certain financial metrics only on a non-GAAP basis because, without unreasonable efforts, it is unable to predict with reasonable certainty the occurrence or amount of all of the adjustments or other potential adjustments that may arise in the future during the forward-looking period, which can be dependent on future events that may not be reliably predicted. Based on past reported results, where one or more of these items have been applicable, such excluded items could be material, individually or in the aggregate, to the reported results.
Conference Call Information Wyndham Hotels will hold a conference call with investors to discuss the Company’s results and outlook on Wednesday, July 27, 2022 at 8:30 a.m. ET. Listeners can access the webcast live through the Company’s website at https://investor.wyndhamhotels.com. The conference call may also be accessed by dialing 888 632-3382 and providing the passcode “Wyndham”. Listeners are urged to call at least five minutes prior to the scheduled start time. An archive of this webcast will be available on the website beginning at noon ET on July 27, 2022. A telephone replay will be available for approximately ten days beginning at noon ET on July 27, 2022 at 800 925-9942.
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 9,000 hotels across over 95 countries on six continents. Through its network of approximately 819,000 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 22 hotel brands, including Super 8®, Days Inn®, Ramada®, Microtel®, La Quinta®, Baymont®, Wingate®, AmericInn®, Hawthorn Suites®, Trademark Collection® and Wyndham®. The Company’s award-winning Wyndham Rewards loyalty program offers over 95 million enrolled members the opportunity to redeem points at thousands of hotels, vacation club resorts and vacation rentals globally. For more information, visit www.wyndhamhotels.com. The Company may use its website as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Disclosures of this nature will be included on the Company’s website in the Investors section, which can currently be accessed at www.investor.wyndhamhotels.com. Accordingly, investors should monitor this section of the Company’s website in addition to following the Company’s press releases, filings submitted with the Securities and Exchange Commission and any public conference calls or webcasts.
Forward-Looking Statements This press release contains “forward-looking statements” within the meaning of the federal securities laws, including statements related to the Company’s current views and expectations with respect to its future performance and operations, including revenues, earnings, cash flow and other financial and operating measures, share repurchases and dividends, restructuring charges and statements related to the coronavirus pandemic (“COVID-19”). Forward-looking statements include those that convey management’s expectations as to the future based on plans, estimates and projections at the time the Company makes the statements and may be identified by words such as “will,” “expect,” “believe,” “plan,” “anticipate,” “intend,” “goal,” “future,” “outlook,” “guidance,” “target,” “objective,” “estimate,” “projection” and similar words or expressions, including the negative version of such words and expressions. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.
Factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, general economic conditions; the continuation or worsening of the effects from COVID-19, its scope, duration, resurgence and impact on the Company’s business operations, financial results, cash flows and liquidity, as well as the impact on the Company’s franchisees and property owners, guests and team members, the hospitality industry and overall demand for travel; the success of the Company’s mitigation efforts in response to COVID-19; the Company’s performance during the recovery from COVID-19 and any resurgence or mutations of the virus; various actions governments, businesses and individuals continue to take in response to the pandemic, including stay-in-place directives (including, for instance, quarantine and isolation guidelines and mandates), safety mitigation guidance, as well as the timing, availability and adoption rates of vaccinations, booster shots and other treatments for COVID-19; concerns with or threats of other pandemics, contagious diseases or health epidemics, including the effects of COVID-19; the performance of the financial and credit markets; the economic environment for the hospitality industry; operating risks associated with the hotel franchising and management businesses; the Company’s relationships with franchisees and property owners; the impact of war, terrorist activity, political instability or political strife; risks related to restructuring or strategic initiatives; the Company’s ability to satisfy obligations and agreements under its outstanding indebtedness, including the payment of principal and interest and compliance with the covenants thereunder; risks related to the Company’s ability to obtain financing and the terms of such financing, including access to liquidity and capital; and the Company’s ability to make or pay, plans for, and the timing and amount of any future share repurchases and/or dividends, as well as the risks described in the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission and any subsequent reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, subsequent events or otherwise.
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