Wyndham Hotels & Resorts (NYSE: WH) today announced results for the three months and year ended December 31, 2020. Highlights include:

  • Diluted loss per share for the quarter was $0.08 and adjusted diluted earnings per share was $0.07; diluted loss per share for the full-year was $1.42 and adjusted diluted earnings per share was $1.03.
  • Net loss for the quarter was $7 million and adjusted net income was $7 million; net loss for the full-year was $132 million and adjusted net income was $96 million.
  • Adjusted EBITDA was $56 million for the quarter and $327 million for the full-year.
  • Global comparable RevPAR for the quarter declined 33% year-over-year; global comparable RevPAR for the year declined 35% year-over-year.
  • System-wide rooms declined 4% year-over-year.
  • Net cash provided by operating activities for the full-year was $67 million and free cash flow was $34 million.
  • Paid quarterly cash dividend of $0.08 per share in fourth quarter, and Board of Directors recently authorized a 100% increase in the quarterly cash dividend to $0.16 per share beginning with the dividend expected to be declared in first quarter 2021.
  • Repaid all remaining revolver credit facility borrowings.

"We generated strong adjusted EBITDA and free cash flow in the worst year our industry has ever experienced. At the same time, we strengthened our portfolio with the completion of our strategic termination plan and drove sequential growth in hotel openings and our development pipeline," said Geoffrey A. Ballotti, president and chief executive officer. "Our non-urban, drive-to economy and midscale hotels, combined with our ongoing investment in sales and marketing, captured rising pent-up leisure travel demand, which continued to produce sequential RevPAR improvements and domestic market share gains for our franchisees over the course of 2020."

Fourth Quarter 2020 Operating Results

Revenues declined from $492 million in the fourth quarter of 2019 to $296 million in the fourth quarter of 2020. The decline includes lower pass-through cost-reimbursement revenues of $70 million, which have no impact on adjusted EBITDA, in the Company's hotel management business. Excluding cost-reimbursement revenues, revenues declined $126 million primarily reflecting a 33% decline in comparable RevPAR and the impact from hotels temporarily closed due to COVID-19, as well as a $15 million decline in license and other fees also reflecting the impact of COVID-19 on travel demand globally.

The Company generated a net loss of $7 million, or $0.08 per diluted share, compared to net income of $64 million, or $0.68 per diluted share, in the fourth quarter of 2019. The decrease of $71 million, or $0.76 per diluted share, was primarily due to the RevPAR and license fee declines, as well as excess marketing fund spend, which were partially offset by cost containment initiatives, lower volume-related expenses and the absence of transaction-related expenses. 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 2020 Business Segment Discussion

The following discussion of fourth quarter operating results focuses on revenue and adjusted EBITDA for each of the Company's segments.

Hotel Franchising

2020

2019

% Change

System size

746,500

770,200

(3)

Global RevPAR

$

23.19

$

34.51

(33)

Revenue (millions)

$

202

$

300

(33)

Adjusted EBITDA (millions)

75

151

(50)

The Company's franchised system declined 3% primarily reflecting the Company's previously announced removal of approximately 18,500 non-compliant and brand detracting rooms. In addition, net franchised rooms includes approximately 7,800 rooms that were transferred from the hotel management segment primarily related to the CorePoint Lodging asset sales, which were partially offset by the deletion of approximately 5,300 low-royalty rooms in connection with the sale of certain hotels by a strategic partner.

RevPAR declined 33% globally reflecting a 28% decline in the U.S. and a 43% decline internationally. On a comparable basis, which is in constant currency and excludes hotels temporarily closed due to COVID-19, global RevPAR declined 31% reflecting a 28% decline in the U.S. and a 40% decline internationally.

Revenues decreased $98 million compared to fourth quarter 2019 reflecting the impact of COVID-19 on travel demand globally, while a decline in adjusted EBITDA of $76 million further reflected excess marketing fund spend, partially mitigated by cost containment initiatives and lower volume-related expenses.

Hotel Management

2020

2019

% Change

System size

49,400

60,800

(19)

Global RevPAR

$

32.91

$

59.19

(44)

Revenue (millions)

$

94

$

190

(51)

Adjusted EBITDA (millions)

(1)

21

N/A

The Company's managed system declined 19% primarily reflecting approximately 7,800 rooms that were transferred to the hotel franchising segment primarily as a result of CorePoint Lodging asset sales. Excluding the transfer of these rooms, the Company's managed system decreased 7% primarily reflecting the Company's previously announced removal of approximately 2,900 unprofitable management guarantee hotel rooms.

RevPAR declined 44% globally, domestically and internationally. On a comparable basis, which excludes hotels temporarily closed due to COVID-19, global RevPAR declined 43%, including a 44% decline in the U.S. and a 42% decline internationally.

Revenues decreased $96 million compared to the prior-year period primarily due to lower cost-reimbursement revenues, which have no impact on adjusted EBITDA. Absent cost-reimbursements, revenues decreased $26 million due to the unfavorable impact of COVID-19 on travel demand globally. Adjusted EBITDA declined $22 million as the RevPAR impacts were partially mitigated by lower volume-related expenses.

Full-Year 2020 Operating Results

Revenues declined from $2,053 million in 2019 to $1,300 million in 2020. The decline includes lower pass-through cost-reimbursement revenues of $273 million, which have no impact on adjusted EBITDA, in the Company's hotel management business. Excluding cost-reimbursement revenues, revenues declined $480 million primarily reflecting a 35% decline in comparable RevPAR and the impact from hotels temporarily closed due to COVID-19, as well as a $47 million decline in license and other fees also reflecting the impact of COVID-19 on travel demand globally.

The Company generated a net loss of $132 million, or $1.42 per diluted share, in 2020 compared to net income of $157 million, or $1.62 per diluted share, in 2019. The decline of $289 million, or $3.04 per diluted share, was primarily due to the revenue decline, impact of the non-cash impairment charges and excess marketing fund spend, which were partially offset by cost containment initiatives, lower volume-related, separation-related and transaction-related expenses and the absence of contract termination expenses. 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.

Development

As of December 31, 2020, the Company's hotel system of over 8,900 properties and approximately 796,000 rooms declined 4% year-over-year primarily reflecting unusual termination events resulting in the deletion of approximately 26,700 rooms, comprised of 18,500 non-compliant, brand detracting rooms, 5,300 rooms in connection with the strategic partner hotel sales and 2,900 unprofitable management guarantee rooms. As a result, the Company's global retention rate declined 330 basis points year-over-year to 91.5%.

The Company awarded over 580 new contracts this year and its development pipeline at year-end consisted of approximately 1,400 hotels and approximately 185,000 rooms, growing sequentially by 120 basis points domestically and 20 basis points globally. Approximately 64% of the Company's development pipeline is international and 75% is new construction, of which 34% have broken ground.

Cash and Liquidity

During the fourth quarter of 2020, the Company repaid all remaining borrowings under its revolving credit facility. Accordingly, the Company's cash balance decreased $242 million since September 30, 2020 to $493 million as of December 31, 2020. The Company had over $1.2 billion in total liquidity available as of December 31, 2020.

The Company generated $67 million of net cash provided by operating activities in 2020 and $34 million of free cash flow in 2020. Excluding $66 million of special-item cash outlays, primarily relating to the Company's restructuring initiatives, as well as transaction-related and separation-related cash payments, adjusted free cash flow in 2020 was $100 million.

Dividends

The Company paid common stock dividends of $7 million, or $0.08 per share, in the fourth quarter of 2020. For the full-year, the Company paid $53 million, or $0.56 per share, in common stock dividends.

The Company's Board of Directors authorized a 100% increase in the quarterly cash dividend to $0.16 per share from $0.08 per share, beginning with the dividend that is expected to be declared in the first quarter of 2021.

2021 Projections

The Company is not providing a complete outlook for full-year 2021 given the RevPAR uncertainties ahead; however, provided below is the Company's best view of certain operating statistics and financial metrics for full-year 2021:

  • Net rooms growth of 1% to 2%.
  • Every point of RevPAR change versus 2020 is expected to generate approximately $2.5 million of adjusted EBITDA change versus 2020. This estimate does not include impacts from license fees or the marketing funds.
  • License fees are expected to be $70 million reflecting the minimum levels outlined in the underlying agreements.
  • Marketing, reservation and loyalty expenses are not expected to exceed marketing, reservation and loyalty revenues. As such, the Company expects no meaningful impact to full-year 2021 adjusted EBITDA from the marketing, reservation and loyalty funds.
  • The Company does not expect any meaningful special-item cash outlays in 2021.

About Wyndham Hotels & Resorts

Wyndham Hotels & Resorts (NYSE: WH) is the world's largest hotel franchising company by the number of properties, with over 8,900 hotels across nearly 95 countries on six continents. Through its network of approximately 796,000 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®, La Quinta®, Baymont®, Wingate®, AmericInn®, Hawthorn Suites®, Trademark Collection® and Wyndham®. Wyndham Hotels & Resorts is also a leading provider of hotel management services.

Table 1

WYNDHAM HOTELS & RESORTS

INCOME (LOSS) STATEMENT

(In millions, except per share data)

(Unaudited)

Three Months Ended December 31,

Year Ended December 31,

2020

2019

2020

2019

Net revenues

Royalties and franchise fees

$

78

$

113

$

328

$

480

Marketing, reservation and loyalty

82

142

370

562

Management and other fees

14

37

64

125

License and other fees

20

35

84

131

Cost reimbursements

76

146

350

623

Other

26

19

104

132

Net revenues

296

492

1,300

2,053

Expenses

Marketing, reservation and loyalty

108

126

419

563

Operating

27

40

109

164

General and administrative

34

32

116

130

Cost reimbursements

76

146

350

623

Depreciation and amortization

24

28

98

109

Impairments, net

206

45

Restructuring

5

8

34

8

Transaction-related, net

10

12

40

Separation-related

1

2

22

Contract termination

(1)

42

Total expenses

275

389

1,346

1,746

Operating income/(loss)

21

103

(46)

307

Interest expense, net

30

25

112

100

(Loss)/income before income taxes

(9)

78

(158)

207

(Benefit from)/provision for income taxes

(2)

14

(26)

50

Net (loss)/income

$

(7)

$

64

$

(132)

$

157

(Loss)/earnings per share

Basic

$

(0.08)

$

0.68

$

(1.42)

$

1.63

Diluted

(0.08)

0.68

(1.42)

1.62

Weighted average shares outstanding

Basic

93.3

94.8

93.4

96.5

Diluted

93.3

95.0

93.4

96.6

Table 2

WYNDHAM HOTELS & RESORTS

HISTORICAL REVENUE AND ADJUSTED EBITDA BY SEGMENT

The reportable segments presented below represent our operating segments for which separate financial information is available and is utilized on a regular basis by our chief operating decision maker to assess performance and allocate resources. In identifying our reportable segments, we also consider the nature of services provided by our operating segments. Management evaluates the operating results of each of our reportable segments based upon net revenues and adjusted EBITDA. We believe that adjusted EBITDA is a useful measure of performance for our segments which, when considered with GAAP measures, allows a more complete understanding of our operating performance. We use this measure internally to assess 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. Our presentation of adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.

 First Quarter

 Second Quarter

 Third Quarter

 Fourth Quarter

Full Year

Hotel Franchising

Net revenues

2020

$

243

$

182

$

236

$

202

$

863

2019

269

331

379

300

1,279

2018

203

289

348

295

1,135

Adjusted EBITDA

2020

$

108

$

83

$

117

$

75

$

383

2019

113

162

195

151

622

2018

86

129

178

122

515

Hotel Management

Net revenues

2020

$

167

$

76

$

101

$

94

$

437

2019

197

201

180

190

768

2018

99

146

252

229

726

Adjusted EBITDA

2020

$

17

$

(4)

$

2

$

(1)

$

13

2019

16

16

13

21

66

2018

16

8

5

18

47

Corporate and Other

Net revenues

2020

$

$

$

$

$

2019

2

1

1

2

6

2018

4

3

7

Adjusted EBITDA

2020

$

(18)

$

(16)

$

(18)

$

(18)

$

(69)

2019

(18)

(19)

(18)

(19)

(75)

2018

(10)

(12)

(17)

(15)

(55)

Total Company

Net revenues

2020

$

410

$

258

$

337

$

296

$

1,300

2019

468

533

560

492

2,053

2018

302

435

604

527

1,868

Net income/(loss)

2020

$

22

$

(174)

$

27

$

(7)

$

(132)

2019

21

26

45

64

157

2018

39

21

58

43

162

Adjusted EBITDA

2020

$

107

$

63

$

101

$

56

$

327

2019

111

159

190

153

613

2018

92

125

166

125

507

NOTE: Amounts may not add across due to rounding.

See Table 7 for reconciliations of Total Company non-GAAP measures and Table 9 for definitions.

Table 3

WYNDHAM HOTELS & RESORTS

CONDENSED CASH FLOWS

(In millions)

Year Ended December 31,

2020

2019

Operating activities

Net (loss)/income

$

(132)

$

157

Depreciation and amortization

98

109

Impairment (a)

209

45

Trade receivables

(38)

(27)

Accounts payable, accrued expenses and other current liabilities

(46)

(28)

Payment of tax liability assumed in La Quinta acquisition

(195)

Deferred revenues

(54)

33

Other, net

30

6

Net cash provided by operating activities

67

100

Investing activities

Property and equipment additions

(33)

(50)

Other, net

2

(3)

Net cash used in investing activities

(31)

(53)

Financing activities

Proceeds from borrowings

1,244

Principal payments on long-term debt

(760)

(16)

Debt issuance costs

(10)

Capital contribution from former Parent

68

Dividends to shareholders

(53)

(112)

Repurchases of common stock

(50)

(242)

Other, net

(8)

(18)

Net cash provided by/(used in) financing activities

363

(320)

Effect of changes in exchange rates on cash, cash equivalents and restricted cash

1

Net increase/(decrease) in cash, cash equivalents and restricted cash

399

(272)

Cash, cash equivalents and restricted cash, beginning of period

94

366

Cash, cash equivalents and restricted cash, end of period

$

493

$

94

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 us and investors 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 and investments, as well as our ability to return cash to shareholders through dividends and share repurchases, to the extent permitted. This non-GAAP measure is not necessarily a representation of how we will use excess cash. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities as a means for evaluating Wyndham Hotels is that free cash flow does not represent the total cash movement for the period as detailed in the consolidated statement of cash flows.

Year Ended December 31,

 

2020

 

2019

Net cash provided by operating activities

$

67

$

100

Less: Property and equipment additions

(33)

(50)

Free cash flow

$

34

$

50

Adjusted free cash flow (b)

$

100

$

360

(a) 2020 excludes $3 million of cash proceeds from a previously impaired asset.

(b) Excludes $36 million and $78 million in 2020 and 2019, respectively, relating to transaction-related and separation-related cash payments in connection with our acquisition of La Quinta, our spin-off from Wyndham Worldwide and our agreement with CorePoint Lodging. Additionally, 2020 excludes $30 million of cash outlays relating to our restructuring initiatives and 2019 excludes $195 million of payments to tax authorities related to the La Quinta acquisition, $35 million related to a payment to terminate an unprofitable hotel-management arrangement and $2 million of capital expenditures at our owned hotel in Puerto Rico, reimbursed by insurance proceeds in 2018. See Table 9 for definition of adjusted free cash flow.

Table 4

WYNDHAM HOTELS & RESORTS

BALANCE SHEET SUMMARY AND DEBT

(In millions)

As of

December 31, 2020

As of

December 31, 2019

Assets

Cash and cash equivalents

$

493

$

94

Trade receivables, net

295

304

Property and equipment, net

278

307

Goodwill and intangible assets, net

3,240

3,485

Other current and non-current assets

338

343

Total assets

$

4,644

$

4,533

Liabilities and stockholders' equity

Total debt

$

2,597

$

2,122

Other current liabilities

325

441

Deferred income tax liabilities

359

387

Other non-current liabilities

400

371

Total liabilities

3,681

3,321

Total stockholders' equity

963

1,212

Total liabilities and stockholders' equity

$

4,644

$

4,533

Our outstanding debt as of December 31, 2020 was as follows:

As of

December 31, 2020

As of

December 31, 2019

$750 million revolving credit facility (due May 2023)

$

$

Term loan (due May 2025)

1,554

1,568

5.375% senior unsecured notes (due April 2026)

496

494

4.375% senior unsecured notes (due August 2028)

492

Finance leases

55

60

Total debt

2,597

2,122

Cash and cash equivalents

493

94

Net debt

$

2,104

$

2,028

Our outstanding debt as of December 31, 2020 matures as follows:

Amount

Within 1 year

$

21

Between 1 and 2 years

21

Between 2 and 3 years

22

Between 3 and 4 years

22

Between 4 and 5 years

1,496

Thereafter

1,015

Total

$

2,597

Table 5

WYNDHAM HOTELS & RESORTS

REVENUE DRIVERS

Year Ended December 31,

2020

2019

Change

%

Change

Beginning Room Count (January 1)

United States

510,200

506,100

4,100

1%

International

320,800

303,800

17,000

6

Global

831,000

809,900

21,100

3

Additions

United States

13,600

27,000

(13,400)

(50)

International

22,000

36,500

(14,500)

(40)

Global

35,600

63,500

(27,900)

(44)

Deletions

United States (a)

(36,500)

(22,900)

(13,600)

(59)

International (a)

(34,200)

(19,500)

(14,700)

(75)

Global (a)

(70,700)

(42,400)

(28,300)

(67)

Ending Room Count (December 31)

United States

487,300

510,200

(22,900)

(4)

International

308,600

320,800

(12,200)

(4)

Global

795,900

831,000

(35,100)

(4%)

As of December 31,

FY 2019

Royalty Contribution (b)

2020

2019

Change

%

Change

System Size

United States

Economy

250,700

259,900

(9,200)

(4%)

Midscale and Upper Midscale

203,700

209,200

(5,500)

(3)

Extended Stay/Lifestyle

17,000

23,600

(6,600)

(28)

Upscale

15,900

17,500

(1,600)

(9)

Total United States (a)

487,300

510,200

(22,900)

(4)

86%

International

Greater China (a)

144,500

154,600

(10,100)

(7)

3

Rest of Asia Pacific (a)

27,800

27,600

200

1

1

Europe, the Middle East and Africa (a)

66,200

68,700

(2,500)

(4)

4

Canada

40,700

40,700

5

Latin America (a)

29,400

29,200

200

1

1

Total International (a)

308,600

320,800

(12,200)

(4)

14

Global

795,900

831,000

(35,100)

(4%)

100%

(a) 2020 includes the global impacts from the Company's removal of approximately 18,500 non-compliant brand detracting rooms, 2,900 unprofitable rooms in connection with a guaranteed management contract and 5,300 low-royalty rooms in connection with hotel sales by a strategic partner.

(b) FY 2019 provided to illustrate pre COVID-19 results.

Table 5 (continued)

WYNDHAM HOTELS & RESORTS

REVENUE DRIVERS

Three Months Ended December 31,

2020

2019

% Change

Constant Currency %

 Change (a)

Regional RevPAR Growth

United States

Economy

$

25.67

$

31.75

(19%)

Midscale and Upper Midscale

29.70

44.57

(33)

Extended Stay/Lifestyle

29.56

59.08

(50)

Upscale

36.12

94.91

(62)

Total United States

$

27.80

$

40.09

(31)

International

Greater China

$

17.42

$

18.26

(5)

(10%)

Rest of Asia Pacific

20.22

39.52

(49)

(51)

Europe, the Middle East and Africa

16.34

48.68

(66)

(66)

Canada

21.22

37.25

(43)

(44)

Latin America

10.84

33.30

(67)

(63)

Total International

$

17.37

$

30.29

(43)

(44)

Global

$

23.84

$

36.36

(34%)

(35%)

Average Royalty Rate

United States

4.5%

4.5%

International

1.8%

2.0%

(20 bps)

Global

3.8%

3.7%

10 bps

Year Ended December 31,

2020

2019

% Change

Constant Currency %

 Change (a)

Regional RevPAR Growth

United States

Economy

$

27.32

$

37.38

(27%)

Midscale and Upper Midscale

32.44

51.73

(37)

Extended Stay/Lifestyle

33.97

65.98

(49)

Upscale

43.21

101.78

(58)

Total United States

$

30.20

$

46.39

(35)

International

Greater China

$

10.99

$

18.30

(40)

(41%)

Rest of Asia Pacific

18.45

37.94

(51)

(51)

Europe, the Middle East and Africa

19.41

51.07

(62)

(61)

Canada

24.26

45.16

(46)

(46)

Latin America

12.36

33.88

(64)

(58)

Total International

$

15.35

$

31.85

(52)

(51)

Global

$

24.51

$

40.92

(40%)

(40%)

Average Royalty Rate

United States

4.5%

4.5%

International

2.1%

2.0%

10 bps

Global

4.0%

3.8%

20 bps

(a) Excludes the impact of currency exchange movements.

Table 6

WYNDHAM HOTELS & RESORTS

HISTORICAL REVPAR AND ROOMS

First Quarter

 Second Quarter

Third Quarter

 Fourth Quarter

Full Year

Hotel Franchising

Global RevPAR

2020

$

25.90

$

17.05

$

28.83

$

23.19

$

23.74

2019

$

33.76

$

42.04

$

45.23

$

34.51

$

38.91

2018

$

32.34

$

41.07

$

46.34

$

35.39

$

38.86

U.S. RevPAR

2020

$

31.43

$

23.19

$

36.06

$

27.28

$

29.50

2019

$

37.69

$

48.65

$

51.93

$

37.96

$

44.09

2018

$

34.20

$

46.17

$

52.36

$

38.92

$

43.04

International RevPAR

2020

$

17.39

$

7.66

$

17.39

$

16.71

$

14.75

2019

$

27.56

$

31.59

$

34.79

$

29.15

$

30.80

2018

$

29.39

$

32.85

$

36.42

$

29.68

$

32.09

Global Rooms (a)

2020

769,000

754,700

748,200

746,500

746,500

2019

745,300

751,300

758,400

770,200

770,200

2018

697,300

725,700

731,200

742,800

742,800

U.S. Rooms (a)

2020

463,900

460,200

459,600

452,600

452,600

2019

454,900

457,600

460,100

464,600

464,600

2018

424,500

450,900

451,100

453,900

453,900

International Rooms (a)

2020

305,100

294,500

288,600

293,900

293,900

2019

290,400

293,700

298,300

305,600

305,600

2018

272,800

274,700

280,100

288,900

288,900

Hotel Management

Global RevPAR

2020

$

50.00

$

20.67

$

34.34

$

32.91

$

34.67

2019

$

63.25

$

66.67

$

66.65

$

59.19

$

64.01

2018

$

77.61

$

76.52

$

68.53

$

61.00

$

68.72

U.S. RevPAR

2020

$

54.35

$

23.21

$

39.12

$

34.14

$

37.97

2019

$

65.58

$

71.61

$

70.75

$

60.89

$

67.32

2018

$

94.28

$

87.43

$

71.95

$

61.43

$

72.76

International RevPAR

2020

$

38.07

$

13.78

$

23.16

$

29.86

$

26.21

2019

$

55.12

$

49.53

$

52.49

$

53.67

$

52.69

2018

$

61.82

$

55.08

$

55.19

$

59.36

$

57.84

Global Rooms (b)

2020

59,300

58,200

55,800

49,400

49,400

2019

66,800

65,200

63,400

60,800

60,800

2018

25,700

66,700

67,000

67,100

67,100

U.S. Rooms (b)

2020

42,900

41,800

38,100

34,700

34,700

2019

51,700

50,700

49,100

45,600

45,600

2018

12,800

53,400

53,300

52,200

52,200

International Rooms

2020

16,400

16,400

17,700

14,700

14,700

2019

15,100

14,500

14,300

15,200

15,200

2018

12,900

13,300

13,700

14,900

14,900

Table 6 (continued)

WYNDHAM HOTELS & RESORTS

HISTORICAL REVPAR AND ROOMS

First Quarter

 Second Quarter

Third Quarter

 Fourth Quarter

Full Year

Total System

Global RevPAR

2020

$

27.68

$

17.31

$

29.23

$

23.84

$

24.51

2019

$

36.21

$

44.06

$

46.94

$

36.36

$

40.92

2018

$

33.95

$

42.95

$

48.21

$

37.54

$

40.80

U.S. RevPAR

2020

$

33.45

$

23.19

$

36.31

$

27.80

$

30.20

2019

$

40.56

$

50.98

$

53.79

$

40.09

$

46.39

2018

$

35.91

$

48.50

$

54.42

$

41.28

$

45.30

International RevPAR

2020

$

18.45

$

7.96

$

17.72

$

17.37

$

15.35

2019

$

28.92

$

32.47

$

35.63

$

30.29

$

31.85

2018

$

30.90

$

33.89

$

37.31

$

31.08

$

33.31

Global Rooms

2020

828,300

812,900

804,000

795,900

795,900

2019

812,100

816,600

821,800

831,000

831,000

2018

723,000

792,300

798,300

809,900

809,900

U.S. Rooms

2020

506,800

502,000

497,700

487,300

487,300

2019

506,600

508,300

509,200

510,200

510,200

2018

437,200

504,300

504,500

506,100

506,100

International Rooms

2020

321,500

310,900

306,300

308,600

308,600

2019

305,500

308,300

312,600

320,800

320,800

2018

285,800

288,000

293,800

303,800

303,800

NOTE: Amounts may not foot due to rounding. Beginning with the second quarter of 2018, results reflect the reclassification of rooms from the Hotel Management segment to the Hotel Franchising segment related to the CorePoint Lodging asset sales.

(a) Second quarter 2018 reflects the addition of 48,200 La Quinta rooms (46,300 U.S. and 1,900 international) acquired in May 2018 and the deletion of 21,300 Knights Inn rooms (20,100 U.S. and 1,200 international) divested in May 2018.

(b) Second quarter 2018 reflects the addition of 40,400 La Quinta rooms in the U.S. acquired in May 2018.

Table 7

WYNDHAM HOTELS & RESORTS

NON-GAAP RECONCILIATIONS

(In millions)

The tables below 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. We believe that adjusted EBITDA, adjusted net income and adjusted EPS financial measures provide useful information to investors about us and our financial condition and results of operations because these measures are used by our management team to evaluate our operating performance and make day-to-day operating decisions and adjusted EBITDA is frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in our industry. These measures also 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 non-recurring and which in our view do not necessarily reflect ongoing performance. We also internally use these measures to assess our operating performance, both absolutely and in comparison to other companies, and in evaluating or making selected compensation decisions. These supplemental disclosures are in addition to GAAP reported measures. These non-GAAP reconciliation tables should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP.

Reconciliation of Net Income (Loss) to Adjusted EBITDA:

First Quarter

 Second Quarter

Third Quarter

Fourth Quarter

Full Year

2020

Net income/(loss)

$

22

$

(174)

$

27

$

(7)

$

(132)

Provision for/(benefit from) income taxes

9

(48)

15

(2)

(26)

Depreciation and amortization

25

25

24

24

98

Interest expense, net

25

28

29

30

112

Stock-based compensation expense

4

5

5

5

19

Impairments, net (a)

206

206

Restructuring costs (b)

13

16

5

34

Transaction-related expenses, net (c)

8

5

12

Separation-related expenses (d)

1

1

2

Foreign currency impact of highly inflationary countries (e)

1

2

Adjusted EBITDA

$

107

$

63

$

101

$

56

$

327

2019

Net income

$

21

$

26

$

45

$

64

$

157

Provision for income taxes

5

10

21

14

50

Depreciation and amortization

29

27

26

28

109

Interest expense, net

24

26

25

25

100

Stock-based compensation expense

3

4

4

4

15

Impairment, net (f)

45

45

Contract termination costs (g)

9

34

(1)

42

Restructuring costs (h)

8

8

Transaction-related expenses, net (c)

7

11

12

10

40

Separation-related expenses (d)

21

1

22

Transaction-related item (i)

20

20

Foreign currency impact of highly inflationary countries (e)

1

3

1

5

Adjusted EBITDA

$

111

$

159

$

190

$

153

$

613

2018

Net income

$

39

$

21

$

58

$

43

$

162

Provision for income taxes

16

8

23

14

61

Depreciation and amortization

19

22

30

29

99

Interest expense, net

1

10

24

25

60

Stock-based compensation expense

3

1

3

2

9

Transaction-related expenses, net (c)

2

28

7

(1)

36

Separation-related expenses (d)

12

35

17

14

77

Foreign currency impact of highly inflationary countries (e)

4

(1)

3

Adjusted EBITDA

$

92

$

125

$

166

$

125

$

507

NOTE: Amounts may not add across due to rounding.

(a) Represents a non-cash charge to reduce the carrying values of certain intangible assets to their fair values principally attributable to higher discount rates primarily resulting from increased share price volatility, partially offset by $3 million of cash proceeds from a previously impaired asset.

(b) Represents charges associated with restructuring initiatives implemented in response to the effects on travel demand as a result of COVID-19.

(c) Primarily relates to integration costs incurred in connection with our acquisition of La Quinta.

(d) Represents costs associated with our spin-off from Wyndham Worldwide.

(e) Relates to the foreign currency impact from hyper-inflation in Argentina, which is reflected in operating expenses on the income statement.

(f) Represents a non-cash charge associated with the termination of certain hotel-management arrangements.

(g) Represents costs associated with the termination of certain hotel-management arrangements.

(h) Represents a charge focused on enhancing our organizational efficiency and rationalizing our operations.

(i) Represents the one-time fee credit related to our agreement with CorePoint Lodging, which is reflected as a reduction to hotel management revenues on the income statement.

Table 7 (continued)

WYNDHAM HOTELS & RESORTS

NON-GAAP RECONCILIATIONS

(In millions, except per share data)

Reconciliation of Net Income (Loss) and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS:

Three Months Ended December 31,

Year Ended December 31,

2020

2019

2020

2019

Diluted EPS

$

(0.08)

$

0.68

$

(1.42)

$

1.62

Net (loss)/income

$

(7)

$

64

$

(132)

$

157

Adjustments:

Impairments, net

206

45

Restructuring costs

5

8

34

8

Transaction-related expenses, net

10

12

40

Separation-related expenses

1

2

22

Contract termination costs

(1)

42

Transaction-related item

20

Foreign currency impact of highly inflationary countries

1

2

5

Acquisition-related amortization expense (a)

9

9

37

37

Total adjustments before tax

15

27

293

219

Income tax provision (b)

1

14

65

59

Total adjustments after tax

14

13

228

160

Adjusted net income

$

7

$

77

$

96

$

317

Adjustments - EPS impact

0.15

0.13

2.45

1.66

Adjusted diluted EPS

$

0.07

$

0.81

$

1.03

$

3.28

Diluted weighted average shares outstanding

93.6

95.0

93.5

96.6

(a) Reflected in depreciation and amortization on the income (loss) statement.

(b) Reflects the estimated tax effects of the adjustments. In fourth quarter 2020, this amount was reduced by a $3 million impact from changes in state effective tax rates. 2019 includes a one-time $6 million benefit resulting from a change in our state income tax filing position due to our spin-off from Wyndham Worldwide.

Table 8

WYNDHAM HOTELS & RESORTS

2021 PROJECTIONS

As of February 10, 2021

(In millions, except per share data)

Projections

Adjusted EBITDA sensitivity to global RevPAR change (a)

$

2.5 per point

License fees (b)

$

70

Marketing, reservation and loyalty funds

Break even

Depreciation and amortization expense (c)

$

60 - 62

Stock-based compensation expense

$

27 - 29

Interest expense, net

$

113 - 115

Adjusted tax rate

28%

Capital expenditures

 Approx. $40

Development advances

Approx. $40

Free cash flow conversion rate (d)

 Approx. 50%

Diluted shares (e)

94.1

Year-over-Year Growth

Number of rooms

1% - 2%

(a) Does not include impacts from license fees or the marketing funds.

(b) Reflects the minimum levels outlined in the underlying agreements.

(c) Excludes amortization of acquisition-related intangible assets of $36 - $38 million.

(d) Represents the percentage of adjusted EBITDA that is expected to produce free cash flow.

(e) Excludes the impact of any share repurchases in 2021.

In determining adjusted EBITDA sensitivity to global RevPAR, the adjusted tax rate and the free

cash flow conversion rate, we exclude certain items which are otherwise included in determining

the comparable GAAP financial measures. We are providing these measures on a non-GAAP

basis only because, without unreasonable efforts, we are unable to predict with reasonable

certainty the occurrence or amount of all 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.

Table 9

WYNDHAM HOTELS & RESORTS

DEFINITIONS

Adjusted Net Income and Adjusted Diluted EPS: Represents net income (loss) and diluted earnings (loss) per share excluding acquisition-related amortization, impairment charges, restructuring and related charges, contract termination costs, transaction-related items (acquisition-, disposition-, or separation-related) and foreign currency impacts of highly inflationary countries. We calculate the income tax effect of the adjustments using an estimated effective tax rate applicable to each adjustment.

Adjusted EBITDA: Represents net income (loss) excluding net interest expense, depreciation and amortization, impairment charges, restructuring and related charges, contract termination costs, transaction-related items (acquisition-, disposition-, or separation-related), foreign currency impacts of highly inflationary countries, stock-based compensation expense and income taxes. Adjusted EBITDA is a financial measure that is not recognized under U.S. GAAP and should not be considered as an alternative to net income (loss) or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. In addition, our definition of adjusted EBITDA may not be comparable to similarly titled measures of other companies.

Adjusted Free Cash Flow: Adjusted free cash flow represents free cash flow excluding special-item, cash outlays, which are related to our separation from Wyndham Worldwide, our acquisition and integration of La Quinta, our 2019 contract terminations, impairments and restructuring costs, including COVID-19 related. We believe adjusted free cash flow to be a useful operating performance measure to us and investors 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 and investments, as well as our ability to return cash to shareholders through dividends and share repurchases, to the extent permitted. This non-GAAP measure is not necessarily a representation of how we will use excess cash. A limitation of using adjusted free cash flow versus the GAAP measure of net cash provided by operating activities as a means for evaluating Wyndham Hotels is that adjusted free cash flow does not represent the total cash movement for the period as detailed in the consolidated statement of cash flows.

Average Daily Rate (ADR): Represents the average rate charged for renting a lodging room for one day.

Average Occupancy Rate: Represents the percentage of available rooms occupied during the period.

Comparable RevPAR: Represents RevPAR in constant currency and excluding hotels temporarily closed due to COVID-19 for the period closed and the comparable prior-year period. The use of the term "comparable" or "comparable basis" herein in connection with RevPAR refers to the defined term Comparable RevPAR.

Constant Currency: 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).

Free Cash Flow: See Table 3 for definition.

Number of Rooms: Represents the number of rooms at the end of the period which are (i) either under franchise and/or management agreements or Company-owned and (ii) properties under affiliation agreements for which we receive a fee for reservation and/or other services provided.

RevPAR: Represents revenue per available room and is calculated by multiplying average occupancy rate by ADR.

Royalty Rate: Represents the average royalty rate earned on our franchised properties and is calculated by dividing total royalties, excluding the impact of amortization of development advance notes, by total room revenues.

SOURCE Wyndham Hotels & Resorts