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Wyndham Worldwide Reports Fourth Quarter and Full-Year 2017 Results
European Vacation Rentals Business Has Been Classified as a Discontinued Operation
Increases Dividend 14%
Company Also Provides Full-Year 2018 Projections

PARSIPPANY, N.J., Feb. 14, 2018 /PRNewswire/ -- Wyndham Worldwide Corporation (NYSE: WYN) today announced results for the fourth quarter and year ended December 31, 2017. The Company's adjusted results exceeded its most recent projections, published in October, and its reported results were further increased by the favorable impact of U.S. corporate tax reform on fourth quarter earnings.

In the fourth quarter, the Company classified its European vacation rentals business, for which it is exploring strategic alternatives, as a discontinued operation.  As a result of this reclassification, the Company's results from continuing operations are not comparable to its previously reported results or its prior projections. The following table highlights results from continuing and discontinued operations:


Three Months Ended December 31, 2017


Twelve Months Ended December 31, 2017



Continuing
Operations



Discontinued
Operations



Combined



Continuing
Operations



Discontinued
Operations



Combined



















Revenues

$

1,246


$

148


$

1,394


$

5,076


$

745


$

5,821



















Net Income/(Loss)*

$

462


$

(13)


$

449


$

818


$

53


$

871



















Adjusted Net Income/(Loss)*

$

152


$

(2)


$

150


$

570


$

68


$

639



















Adjusted EBITDA

$

320


$

14


$

334


$

1,256


$

141


$

1,397



















Diluted EPS

$

4.54


$

(0.13)


$

4.41


$

7.89


$

0.51


$

8.40



















Adjusted Diluted EPS

$

1.49


$

(0.02)


$

1.47


$

5.50


$

0.66


$

6.16

*Includes non-controlling interests.


















Full-year adjusted EBITDA from continuing and discontinued operations of $1,397 million compares to the Company's October projection of $1,380 million to $1,395 million of adjusted EBITDA in 2017. Table 9 of this release provides additional information regarding continuing and discontinued operations for both 2017 and 2016. Full reconciliations of GAAP results to non-GAAP measures for all reported periods appear in the tables to this press release.

FOURTH QUARTER 2017 OPERATING RESULTS
Fourth quarter revenues from continuing operations were $1.2 billion, up 4% compared with the prior-year period.

Net income from continuing operations in the fourth quarter of 2017 was $462 million compared with $164 million for the fourth quarter of 2016.  Diluted earnings per share (EPS) from continuing operations was $4.54, versus $1.53 in the prior-year period.  Net income from continuing operations was impacted by $426 million ($4.18 per share) of tax benefit recorded primarily as a result of the recently enacted Tax Cuts and Jobs Act and a $4 million after-tax expense ($0.04 per share) from the Act's impact on long-term incentive awards, $87 million ($0.86 per share) of after-tax impairment expense, $22 million ($0.22 per share) of after-tax separation costs and $2 million ($0.02 per share) of after-tax acquisition costs.

Adjusted net income from continuing operations for the fourth quarter of 2017 was $152 million or $1.49 per diluted share, compared with $147 million or $1.36 per diluted share in the fourth quarter of 2016.  Adjusted results exclude separation costs, the initial impact of the Tax Cuts and Jobs Act, impairment expense and other items as detailed in Tables 7 and 8 of this press release.  The growth in earnings primarily reflects higher revenues in all three of the Company's operating segments, partially offset by increased interest expense.  Adjusted diluted EPS also reflects the benefit of the Company's share repurchase program.

"As we continue the process of separating into two publicly traded companies, our business momentum remains strong," said Stephen P. Holmes, chairman and CEO. "Our teams have continued to execute against our strategic and operating plans; we continued to return cash to shareholders through dividends and share repurchases; and we have positioned our businesses for future growth."    

Fourth quarter EBITDA from continuing operations was $174 million, compared with $308 million in the prior-year period, reflecting asset impairments and separation costs recorded in fourth quarter 2017.  Adjusted EBITDA from continuing operations was $320 million, compared with $305 million in the fourth quarter of 2016, an increase of 5%.  Results primarily reflect the growth in revenues along with cost containment efforts, partially offset by $16 million of hurricane impacts.  The Company's results have been adjusted to reflect the classification of the European vacation rentals business as a discontinued operation.

As previously reported, weather events in the third quarter had an unusually pronounced effect on fourth quarter operating results.  The Company estimates that the third quarter hurricanes reduced fourth quarter revenues, net income and EBITDA by $15 million, $10 million, and $16 million, respectively.  The reductions primarily reflect the temporary closure of vacation ownership sales centers, particularly in the Caribbean, and remediation efforts at the Company's Wyndham Rio Mar hotel in Puerto Rico.

FULL-YEAR 2017 OPERATING RESULTS
Full-year revenues from continuing operations were $5.1 billion, up 3% compared with the prior year.

Full-year net income from continuing operations was $819 million compared with $545 million in the prior year.  Diluted earnings per share from continuing operations was $7.89, versus $4.93 in the prior year.  The growth in earnings is primarily due to the tax benefit recorded as a result of the recently enacted Tax Cuts and Jobs Act, partially offset by impairment expenses and separation costs. 

Full-year adjusted net income from continuing operations was $570 million or $5.50 per diluted share, compared with $569 million or $5.15 per diluted share in 2016.  Adjusted results exclude items as detailed in Tables 7 and 8 of this press release.  The growth in revenues was offset by higher year-over-year interest, depreciation and variable compensation expenses along with the impact of the third quarter hurricanes.  The growth in adjusted diluted EPS primarily reflects the Company's repurchase of 6% of its outstanding shares in 2017.     

Full-year 2017 EBITDA from continuing operations was $952 million, compared with $1,197 million in 2016, primarily reflecting asset impairments and separation costs.  Adjusted EBITDA from continuing operations was $1,256 million, compared with $1,239 million in the prior year.  The increase in adjusted EBITDA primarily reflects the growth in revenues, partially offset by $26 million of hurricane impacts.

The Company estimates that the third quarter weather events reduced full-year revenues, net income and EBITDA by $28 million, $17 million and $26 million, respectively.  The reductions primarily reflect the temporary closure of vacation ownership sales centers, particularly in the Caribbean, and remediation efforts at Company's Wyndham Rio Mar hotel in Puerto Rico.

For the twelve months ended December 31, 2017, net cash provided by operating activities from continuing operations was $880 million, compared with $846 million in the prior year. The increase primarily reflects higher net income.

Free cash flow from continuing operations was $727 million in 2017, compared with $686 million for the prior year, primarily reflecting the changes in net cash provided by operating activities.  Total free cash flow (from continuing and discontinued operations) was $799 million in 2017, compared with $782 million in 2016.  The Company defines free cash flow as net cash provided by operating activities less capital expenditures.

FOURTH QUARTER 2017 BUSINESS UNIT RESULTS

Hotel Group
Revenues increased 5% to $332 million in the fourth quarter of 2017, compared with $316 million in fourth quarter 2016.  Results reflect higher royalties and franchise fees as well as higher pass-through marketing, reservation and Wyndham Rewards revenues.   

EBITDA was $55 million in the fourth quarter compared with $99 million in the prior-year quarter, primarily due to $41 million of impairment expense related to a hotel management contract and the write-down of other intangible assets in 2017.  Adjusted EBITDA was $102 million compared with $99 million in the prior-year period, primarily reflecting the revenue increases, partially offset by the adverse impact of Hurricane Maria on the Company's owned hotel in Puerto Rico.  

Fourth quarter domestic RevPAR increased 4.5% compared with fourth quarter 2016.  In constant currency, global RevPAR increased 4.6%.

As of December 31, 2017, the Company's hotel system consisted of over 8,400 properties and approximately 728,200 rooms, a 4% increase compared with a year earlier, including almost 12,000 rooms we added to the system with the acquisition of AmericInn in October.  The development pipeline increased to nearly 1,160 hotels and 148,200 rooms, a 7% year-over-year room increase, of which 58% are international and 68% are new construction.  

Destination Network
This segment no longer includes the Company's European vacation rentals business, which is now classified as a discontinued operation.  Revenues were $200 million in the fourth quarter of 2017, compared with $190 million in the fourth quarter of 2016, an increase of 5%.  Exchange revenue per member increased 7%, driven by favorable pricing, while the average number of members declined 1%.

EBITDA was $40 million compared with $39 million in the fourth quarter of 2016, reflecting $8 million of separation costs.  Adjusted EBITDA was $48 million compared with $39 million in the prior-year period, an increase of 23%, primarily reflecting favorable pricing as well as cost-saving initiatives.

Vacation Ownership
Revenues were $734 million in the fourth quarter of 2017, compared with $705 million in the fourth quarter of 2016, an increase of 4%.  The increase reflects a 7% increase in gross VOI sales, despite the negative impact of the hurricanes on VOI sales, as well as higher consumer financing revenues.

Tour flow increased 7%, driven by increased tours to new owners.  Volume per guest (VPG) increased 2%. 

EBITDA was $133 million in the fourth quarter of 2017 compared with $182 million in the prior-year quarter, reflecting a $65 million asset impairment directly attributable to the recent hurricanes and their continuing effects on the Caribbean.  Adjusted EBITDA was $200 million compared with $191 million in the prior-year quarter.  Results reflect higher gross VOI sales and consumer financing revenue, partially offset by a higher provision for loan losses.

OTHER ITEMS

  • La Quinta Acquisition - The Company recently announced its intention to purchase La Quinta Holdings' hotel franchising and hotel management operations for $1.95 billion in cash. The transaction will add nearly 900 managed and franchised hotels to our Hotel Group's portfolio and is expected to close in the second quarter of 2018.
  • Corporate Tax Reform - The Company recorded a one-time, net tax benefit of $426 million, primarily driven by a reduction in its net deferred tax liability due to the lower corporate tax rate as a result of the Tax Cuts and Jobs Act of 2017.
  • Impairment Charges - Non-cash impairment charges totaled $106 million in the fourth quarter of 2017. The charges are for the write-down of VOI inventory along with property and equipment at our Vacation Ownership business due to the impact of the third quarter hurricanes, the write-down of a guarantee asset and a note receivable related to a hotel management agreement, and the write-down of certain intangible assets in our Hotel Group business.
  • Share Repurchases - The Company repurchased 1.4 million shares of common stock for $150 million during the fourth quarter of 2017 at an average price of $110.06. Over the course of 2017, the Company repurchased 6.3 million shares of stock, or 6% of shares outstanding, at a cost of $601 million. From January 1 through February 13, 2018, the Company repurchased an additional 0.2 million shares for $21 million.
  • Dividend Increase - The Company's Board of Directors authorized an increase in the quarterly cash dividend to $0.66 from $0.58 per share, beginning with the dividend that is expected to be declared in the first quarter of 2018.
  • Upcoming Separation - As previously announced, the Company plans to become two publicly traded hospitality companies through the spin-off of the Company's Hotel Group to shareholders. The process is proceeding as planned, and the Company expects to complete the separation in the second quarter of 2018.

OUTLOOK

Note to Editors: The Company has classified its European vacation rentals business, for which it is exploring strategic alternatives, as a discontinued operation and is therefore excluded from the outlook below.  In addition, the outlook excludes possible future share repurchases.  Current analysts' estimates include projections of the European vacation rentals business and often include projected share repurchases.  These factors result in discrepancies between the Company's projections and database consensus forecasts.

The Company projects the following results for full-year 2018:

  • Revenues of $5.26 billion to $5.40 billion, an increase of 4% to 6%.
  • An effective tax rate applicable to adjusted pretax earnings of approximately 25%.
  • Adjusted net income from continuing operations of $702 million to $722 million, an increase of 23% to 27%, approximately 19 points of which is due to a lower effective tax rate.
  • Adjusted EBITDA of $1.330 billion to $1.355 billion, which represents year-over-year growth of 6% to 8% and is comprised of:
    • Hotel Group adjusted EBITDA growth of 7% to 9%
    • Destination Network adjusted EBITDA growth of 1% to 5%
    • Vacation Ownership adjusted EBITDA growth of 6% to 8%
  • Adjusted diluted EPS from continuing operations of $6.90 to $7.05, which is an increase of 25% to 28% and is based on a diluted share count of 101.7 million.

These projections exclude the impact of the La Quinta acquisition and the financing thereof, exclude any impact from our European vacation rentals business, which is treated as a discontinued operation, exclude costs associated with the Company's planned separation into two separate publicly-traded companies and are consistent with our historical recognition of revenues, without adjustment for the required 2018 change in revenue recognition accounting.  See Table 12 for detailed projections.

In determining adjusted net income, adjusted EBITDA and adjusted EPS, the Company excludes certain items which are otherwise included in determining the comparable GAAP financial measures. A description of the adjustments that have been applicable for the reported periods in determining adjusted net income, adjusted EBITDA and adjusted EPS are reflected in Tables 7 and 8 of this press release. The Company is providing an outlook for net income, EBITDA and EPS only on a non-GAAP basis because the Company is unable to predict with reasonable certainty the totality or ultimate outcome or occurrence of these adjustments or other potential adjustments that may arise in the future during the outlook period, which can be dependent on future events that may not be reliably predicted.

CONFERENCE CALL INFORMATION
Wyndham Worldwide Corporation will hold a conference call with investors to discuss the Company's results and outlook on Wednesday, February 14, 2018 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 800-895-1549 and providing the passcode 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 12:00 p.m. ET on February 14, 2018.  A telephone replay will be available for approximately 10 days beginning at 12:00 p.m. ET on February 14, 2018 at 800-839-1320.

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.  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 the 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 and managed home rentals. With a collective inventory of over 22,000 places to stay across 110 countries on six continents, Wyndham Worldwide and its 39,000 associates welcome people to experience travel the way they want. This is enhanced by Wyndham Rewards®, the Company's award-winning 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.  Forward-looking statements are those that convey management's expectations as to the future based on plans, estimates and projections at the time Wyndham Worldwide makes the statements and may be identified by terminology such as "will," "expect," believe," "plan," "anticipate," "goal," "future," "outlook," guidance," "target," "estimate" and similar expressions. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of Wyndham Worldwide or the post-spin companies 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, taxes, cash flow and related financial and operating measures, dividends, share repurchases, acquisitions, dispositions and expectations with respect to the spin-off and related transactions, as well as the post-spin companies' future operating, financial and business performance.

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, differences between the actual impact of recently enacted corporate tax reform and our current expectations, uncertainties that may delay or negatively impact the spin-off or cause the spin-off to not occur at all, uncertainties related to the post-spin companies' ability to realize the anticipated benefits of the spin-off, uncertainties related to Wyndham Worldwide's ability to successfully complete the spin-off on a tax-free basis within the expected time frame or at all, unanticipated developments that delay or otherwise negatively affect the spin-off, uncertainties related to Wyndham Worldwide's ability to obtain financing for the two companies or the terms of such financing, unanticipated developments related to the impact of the spin-off on our relationships with our customers, suppliers, employees and others with whom we have relationships, unanticipated developments resulting from possible disruption to our operations resulting from the proposed spin-off, the potential impact of the spin-off and related transactions on Wyndham Worldwide's credit rating, uncertainties relating to Wyndham Worldwide's exploration of strategic alternatives for its European vacation rentals business and the outcome and timing of that process, uncertainties relating to Wyndham Worldwide's pending acquisition of La Quinta Holdings' hotel franchising and hotel management operations and the outcome and timing of that process, the timing and amount of future share repurchases and dividends, as well as those factors described in Wyndham Worldwide's Annual Report on Form 10-K, filed with the SEC on February 17, 2017, and in Wyndham Worldwide's subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Except for Wyndham Worldwide'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 Four - December 31, 2017

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 Financial Data for Continuing and Discontinued Operations

9



Non-GAAP Reconciliation for Discontinued Operations

10



Non-GAAP Reconciliation of Gross VOI Sales

11



Non-GAAP Reconciliation of 2018 Outlook 

12



Schedule of Summarized Balance Sheet Information

13

 

 

 















Table 1

Wyndham Worldwide Corporation

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

(Unaudited)



































 Three Months Ended 


 Twelve Months Ended 





 December 31, 


 December 31, 





2017


2016


2017


2016

Net revenues














Service and membership fees


$

448


$

424


$

1,895


$

1,879


Vacation ownership interest sales



423



415



1,689



1,606


Franchise fees



173



164



695



677


Consumer financing



120



113



463



440


Other




82



77



334



324

Net revenues



1,246



1,193



5,076



4,926
















Expenses















Operating



545



521



2,194



2,144


Cost of vacation ownership interests 



35



31



150



146


Consumer financing interest



19



19



74



75


Marketing and reservation



180



167



773



740


General and administrative



160



147



648



631


Separation-related 



31



-



51



-


Impairment 



106



-



246



-


Restructuring



-



1



15



14


Depreciation and amortization



55



51



213



202

Total expenses



1,131



937



4,364



3,952
















Operating income



115



256



712



974

Other income, net



(4)



(1)



(27)



(21)

Interest expense



42



33



156



133

Early extinguishment of debt



-



-



-



11

Interest income



(2)



(2)



(7)



(7)
















Income before income taxes



79



226



590



858

(Benefit)/provision for income taxes



(383)



62



(229)



313

Income from continuing operations



462



164



819



545

Income/(loss) from discontinued operations, net of income taxes



(13)



-



53



67
















Net income




449



164



872



612

Net income attributable to noncontrolling interest



-



-



(1)



(1)

Net income attributable to Wyndham shareholders


$

449


$

164


$

871


$

611
















Basic Earnings per share 














Continuing operations


$

4.58


$

1.54


$

7.94


$

4.96


Discontinued operations



(0.13)



-



0.52



0.60





$

4.45


$

1.54


$

8.46


$

5.56
















Diluted Earnings per share 














Continuing operations


$

4.54


$

1.53


$

7.89


$

4.93


Discontinued operations



(0.13)



-



0.51



0.60





$

4.41


$

1.53


$

8.40


$

5.53
















Weighted average shares outstanding














Basic




101



107



103



110


Diluted



102



108



104



111

 

 

 














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 its investors in evaluating its 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 the Company's view do not necessarily reflect ongoing operating performance. The Company also internally uses these measures to assess its 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 Net Income to EBITDA for the three months ended December 31, 2017 and 2016:




















Three Months Ended December 31, 





2017


2016





 Net Revenues 


 EBITDA 


 Net Revenues 


 EBITDA 


Hotel Group

$

332


$

55


$

316


$

99


Destination Network


200



40



190



39


Vacation Ownership


734



133



705



182


     Total Reportable Segments


1,266



228



1,211



320


Corporate and Other (a)


(20)



(54)



(18)



(12)


     Total Company

$

1,246


$

174


$

1,193


$

308

















Reconciliation of Net Income to EBITDA


































 Three Months Ended December 31,  








2017





2016


Net income





$

449





$

164


Income from discontinued operations, net of tax





13






-


(Benefit)/provision for income taxes





(383)






62


Depreciation and amortization





55






51


Interest expense





42






33


Interest income





(2)






(2)


EBITDA





$

174





$

308
































Note: Amounts may not add due to rounding. 


(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 twelve months ended December 31, 2017 and 2016 (for a description of adjustments and reconciliation by segment, see Table 8):





















Three Months Ended December 31, 





2017


2016







Adjusted 




Adjusted 





 Net Revenues 


 EBITDA 


 Net Revenues 


 EBITDA 


Hotel Group

$

332


$

102


$

316


$

99


Destination Network


200



48



190



39


Vacation Ownership


734



200



705



191


     Total Reportable Segments


1,266



350



1,211



329


Corporate and Other (a)


(20)



(30)



(18)



(24)


     Total Company

$

1,246


$

320


$

1,193


$

305

















 

 

 














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 net income attributable to Wyndham shareholders to EBITDA for the twelve months ended December 31, 2017 and 2016:




















Twelve Months Ended December 31, 





2017


2016





 Net Revenues 


 EBITDA 


 Net Revenues 


 EBITDA 


Hotel Group

$

1,343


$

367


$

1,309


$

391


Destination Network


912



257



898



222


Vacation Ownership


2,905



489



2,794



694


     Total Reportable Segments


5,160



1,113



5,001



1,307


Corporate and Other (a)


(84)



(161)



(75)



(110)


     Total Company

$

5,076


$

952


$

4,926


$

1,197

















Reconciliation of Net income attributable to Wyndham shareholders to EBITDA






















Twelve Months Ended December 31, 








2017





2016


Net income attributable to Wyndham shareholders




$

871





$

611


Net income attributable to noncontrolling interest





1






1


Income from discontinued operations, net of tax





(53)






(67)


(Benefit)/provision for income taxes





(229)






313


Depreciation and amortization





213






202


Interest expense





156






133


Early extinguishment of debt





-






11


Interest income





(7)






(7)


EBITDA





$

952





$

1,197
































Note: Amounts may not add due to rounding. 


(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 twelve months ended December 31, 2017 and 2016 (for a description of adjustments and reconciliation by segment, see Table 8):





















Twelve Months Ended December 31, 





2017


2016







Adjusted 




Adjusted 





 Net Revenues 


 EBITDA 


 Net Revenues 


 EBITDA 


Hotel Group

$

1,343


$

416


$

1,309


$

401


Destination Network


912



262



898



251


Vacation Ownership


2,905



696



2,794



708


     Total Reportable Segments


5,160



1,374



5,001



1,360


Corporate and Other (a)


(84)



(118)



(75)



(121)


     Total Company

$

5,076


$

1,256


$

4,926


$

1,239

















 

 

 

















Table 3

















(1 of 2)

Wyndham Worldwide Corporation

OPERATING STATISTICS


















The following operating statistics are the drivers of the Company's revenues and therefore provide an enhanced understanding of the Company's businesses:
























Year


Q1


Q2


Q3


Q4


Full Year

Hotel Group (a)













Number of Rooms 

2017


699,800


705,700


708,500


728,200


728,200



2016


679,100


683,300


689,800


697,600


697,600



2015


667,400


668,500


671,900


678,000


678,000



2014


646,900


650,200


655,300


660,800


660,800















RevPAR

2017

$

31.73

$

39.43

$

44.36

$

34.88

$

37.63



2016

$

31.59

$

39.10

$

43.04

$

32.92

$

36.67



2015

$

32.84

$

39.82

$

43.34

$

32.98

$

37.26



2014

$

32.30

$

40.11

$

43.71

$

34.06

$

37.57














Destination Network (a)













Average Number of Members (in 000s) 

2017


3,817


3,791


3,792


3,796


3,799



2016


3,841


3,857


3,868


3,843


3,852



2015


3,822


3,831


3,835


3,836


3,831



2014


3,727


3,748


3,777


3,808


3,765















Exchange Revenue Per Member 

2017

$

192.01

$

168.27

$

166.35

$

162.26

$

172.25



2016

$

189.78

$

164.61

$

164.39

$

151.19

$

167.48



2015

$

194.06

$

167.81

$

163.38

$

152.00

$

169.29



2014

$

200.78

$

179.17

$

171.77

$

157.24

$

177.12














Vacation Ownership (a)













Gross Vacation Ownership Interest (VOI) Sales (in 000s) (b)

2017

$

439,000

$

563,000

$

602,000

$

539,000

$

2,144,000



2016

$

428,000

$

518,000

$

564,000

$

502,000

$

2,012,000



2015

$

390,000

$

502,000

$

565,000

$

507,000

$

1,965,000



2014

$

410,000

$

496,000

$

513,000

$

470,000

$

1,889,000















Tours (in 000s)

2017


176


235


247


210


869



2016


179


213


230


197


819



2015


168


206


227


200


801



2014


170


208


225


191


794















Volume Per Guest (VPG)

2017

$

2,354

$

2,302

$

2,299

$

2,438

$

2,345



2016

$

2,244

$

2,328

$

2,320

$

2,399

$

2,324



2015

$

2,177

$

2,353

$

2,354

$

2,390

$

2,326



2014

$

2,272

$

2,280

$

2,158

$

2,336

$

2,257


















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


(a)

Includes the impact of acquisitions from the acquisition dates forward. 



(b)

Includes Gross VOI sales under the Company's Wyndham Asset Affiliate Model (WAAM) Just-in-Time. (See Table 11 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

2017


8,080


8,140


8,150


8,420


8,420



2016


7,830


7,880


7,930


8,040


8,040



2015


7,670


7,700


7,760


7,810


7,810



2014


7,500


7,540


7,590


7,650


7,650














Vacation Ownership













Provision for Loan Losses (in 000s) (*) 

2017

$

85,000

$

110,000

$

123,000

$

101,000

$

420,000



2016

$

63,000

$

90,000

$

104,000

$

86,000

$

342,000



2015

$

46,000

$

60,000

$

78,000

$

64,000

$

248,000



2014

$

60,000

$

70,000

$

70,000

$

60,000

$

260,000


















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 the Company's 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 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. The Company believes gross VOI sales provide an enhanced understanding of the performance of its vacation ownership business because it directly measures the sales volume of this business during a given reporting period. See Table 11 for a reconciliation of Gross VOI sales to vacation ownership interest sales. 


















Tours: Represents the number of tours taken by guests in the Company's 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 11 for a detail of tele-sales upgrades for 2014-2017.  


















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:










Twelve Months Ended December 31, 




2017


2016









Net cash provided by operating activities - Continuing Operations

$

880


$

846

Net cash provided by operating activities - Discontinued Operations


107



127

Net cash provided by operating activities



987



973









Net cash used in investing activities - Continuing Operations


(362)



(259)

Net cash used in investing activities - Discontinued Operations


(32)



(94)

Net cash used in investing activities



(394)



(353)









Net cash used in financing activities - Continuing Operations


(538)



(576)

Net cash used in financing activities - Discontinued Operations


(21)



(10)

Net cash used in financing activities



(559)



(586)









Effect of changes in exchange rates on cash and cash equivalents


14



(20)









Net increase in cash and cash equivalents


$

48


$

14

















Free Cash Flow:
















The Company defines free cash flow to be net cash provided by operating activities less property and equipment additions which the Company also refers to as capital expenditures. The Company believes free cash flow to be a useful operating performance measure to evaluate the ability of its operations to generate cash for uses other than capital expenditures and, after debt service and other obligations, its ability to grow its business through acquisitions, development advances and equity investments, as well as its 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:




Twelve Months Ended December 31, 




2017


2016

Net cash provided by operating activities - Continuing Operations

$

880


$

846

Less: Property and equipment additions-Continuing Operations


(153)



(160)

Free cash flow - Continuing Operations


$

727


$

686









Net cash provided by operating activities - Discontinued Operations

$

107


$

127

Less: Property and equipment additions-Discontinued Operations


(35)



(31)

Free cash flow - Discontinued Operations


$

72


$

96









Total free cash flow


$

799


$

782









 

 

 

























Table 5

Wyndham Worldwide Corporation

REVENUE DETAIL BY REPORTABLE SEGMENT

(In millions)























































2017


2016






 Q1 


 Q2 


 Q3 


 Q4 


 Year 



 Q1 


 Q2 


 Q3 


 Q4 


 Year 

Hotel Group
























Royalties and Franchise Fees


$

79

$

98

$

114

$

100

$

391


$

74

$

94

$

105

$

94

$

367


Marketing, Reservation and Wyndham Rewards Revenues (a)


83


106


120


98


407



83


103


125


92


405


Hotel Management Reimbursable Revenues (b)


66


69


64


64


264



67


71


67


65


271


Intersegment Trademark Fees



13


15


16


14


59



13


15


16


14


56


Owned Hotel Revenues



23


21


16


18


78



27


19


17


17


81


Ancillary Revenues (c)



34


36


38


38


144



31


32


34


34


129


Total Hotel Group



298


345


368


332


1,343



295


334


364


316


1,309


























Destination Network
























Exchange Revenues



183


159


158


154


654



182


159


159


145


645


Rental Revenues North America



38


46


63


25


172



39


44


62


25


169


Ancillary Revenues (d)



19


23


22


21


86



19


22


22


20


84


Total Destination Network



240


228


243


200


912



240


225


243


190


898


























Vacation Ownership
























Vacation Ownership Interest Sales



351


448


467


423


1,689



342


409


441


415


1,606


Consumer Financing



111


114


119


120


463



107


108


112


113


440


Property Management Fees and Reimbursable Revenues


175


175


171


172


692



164


161


168


168


660


WAAM Fee-for-Service Commissions



2


4


8


10


24



17


16


13


-


46


Ancillary Revenues (e)



9


9


8


9


37



11


11


10


9


42


Total Vacation Ownership



648


750


773


734


2,905



641


705


744


705


2,794

Total Reportable Segments


$

1,186

$

1,323

$

1,384

$