Company Increases Quarterly Dividend 50% and Provides Full Year 2021 Outlook

Wyndham Hotels & Resorts (NYSE: WH) yesterday announced results for the three months ended June 30, 2021. Highlights include:

  • Second quarter diluted earnings per share was $0.73 compared to diluted loss per share of $1.86 in second quarter 2020; second quarter adjusted diluted EPS was $0.95 compared to adjusted diluted EPS of $0.10 in second quarter 2020.
  • Second quarter net income was $68 million compared to a net loss of $174 million in second quarter 2020; second quarter adjusted net income was $89 million compared to adjusted net income of $9 million in second quarter 2020.
  • Second quarter adjusted EBITDA was $168 million compared to adjusted EBITDA of $66 million in second quarter 2020.
  • Second quarter net cash provided by operating activities was $116 million and free cash flow was $104 million compared to net cash used in operating activities of $57 million and free cash flow of $(68) million in second quarter 2020.
  • Global RevPAR increased 110% compared to second quarter 2020 and declined 17% compared to second quarter 2019 in constant currency.
  • Paid quarterly cash dividend of $0.16 per share in second quarter and Board of Directors recently authorized a 50% increase in the quarterly cash dividend to $0.24 per share beginning with the dividend expected to be declared in third quarter 2021.
  • Company provides full-year 2021 outlook.

"With continued increasing demand from our leisure and everyday business travelers, our select-service franchise business model generated another strong quarter of adjusted EBITDA and cash flow, allowing us to increase our dividend by 50%," said Geoffrey A. Ballotti, president and chief executive officer. "Our brands continue to capture market share gains above pre-pandemic levels, while our economy brands here in the U.S. actually exceeded 2019 RevPAR for the quarter. We opened over 70% more rooms than we did last year while growing our development pipeline by 6% vs. prior year, and by 2% sequentially - to over 190,000 rooms. We are extremely proud of all that our team members around the world have achieved, as they remain focused on delivering exceptional value for our owners, guests and shareholders."

Fee-related and other revenues increased 67% to $321 million, compared to $192 million in the second quarter of 2020 primarily reflecting the ongoing recovery in travel demand and its impact on global RevPAR, which has now recovered to 83% of 2019 levels, including domestic RevPAR at 95% of 2019 levels.

The Company generated net income of $68 million, or $0.73 per diluted share, compared to a net loss of $174 million, or $1.86 loss per diluted share, in the second quarter of 2020. The increase of $242 million, or $2.59 per diluted share, reflects: the ongoing recovery in travel demand; a $10 million, or $0.11 per diluted share, after-tax benefit from the marketing fund related to timing; and the absence of $176 million, or $1.89 per diluted share, after-tax of special-item charges incurred during second quarter 2020. These results were partially offset by a $14 million, or $0.15 per diluted share, after-tax impact in 2021 related to the early extinguishment of the Company's 5.375% senior unsecured notes.

The following discussion of second quarter operating results focuses on the Company's key drivers as well as revenue and adjusted EBITDA for each of the Company's segments. 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.

System Size

June 30, 2021

December 31, 2020

YTD Change (bps)

United States

484,800

487,300

(50)

International

313,200

308,600

150

Global

798,000

795,900

30

During the first half of 2021, the Company's global system grew 30 basis points primarily reflecting continued growth in the Company's direct-franchising business in China. This was partially offset by the anticipated decline in domestic system size as conversion and new construction activities continue to ramp-up following the pandemic and recent supply chain delays. Year-to-date deletions ran 27% below 2019 levels putting the Company solidly on track with its goal of achieving a 95% retention rate for the full year 2021.

RevPAR

Second Quarter 2021

Constant Currency

YOY % Change

Constant Currency %

Change

vs. 2019

United States

$

48.37

109

%

(5)

%

International

18.84

119

(44)

Global

36.92

110

(17)

Global and international RevPAR began to lap the onset of the COVID-19 pandemic in January 2021, while the U.S. began to lap its onset in March 2021. As such, comparisons to 2019 (on a two-year, constant currency basis) are more meaningful when evaluating trends. On this basis, global RevPAR declined 17% reflecting a 5% decline in the U.S. and a 44% decline internationally. The 5% decline in the U.S. represents continued sequential improvement compared to a decline of 25% in the first quarter of 2021. Importantly, RevPAR for the Company's economy brands exceeded 2019 levels by 4% in the second quarter. The 44% international decline primarily represents a 68% decline in the Company's EMEA region and a 7% decline in China.

Business Segment Results

Revenue

Adjusted EBITDA

Second

Quarter 2021

Second

Quarter 2020

% Change

Second

Quarter 2021

Second

Quarter 2020

% Change

Hotel Franchising

$

283

$

182

55

%

$

166

$

86

93

%

Hotel Management

123

76

62

16

(4)

n/a

Corporate and Other

(14)

(16)

13

Total Company

$

406

$

258

57

$

168

$

66

155

Hotel Franchising revenues increased 55% year-over-year to $283 million, primarily reflecting the global RevPAR increase. Adjusted EBITDA increased 93% to $166 million as the growth in revenues and the timing benefit from the marketing fund was partially offset by higher volume-related expenses.

Hotel Management revenues increased 62% year-over-year to $123 million, reflecting a $19 million increase in cost-reimbursement revenues, which have no impact on adjusted EBITDA. Absent cost-reimbursements, Hotel Management revenues increased 280% to $38 million, primarily due to the global RevPAR increase, as well as improved performance at the Company's owned hotels and incremental management contract termination fees resulting from the sale of CorePoint Lodging properties. Hotel Management adjusted EBITDA increased $20 million year-over-year reflecting the revenue increases, partially offset by higher volume-related expenses.

During the second quarter 2021, the Company's marketing fund revenues exceeded expenses by $14 million; while in second quarter 2020, the Company's marketing fund expenses exceeded revenues by $3 million. While the Company does not expect the marketing fund to have a significant impact on full year 2021 adjusted EBITDA, there may continue to be timing differences in quarterly comparisons.

Development

The Company awarded 154 new contracts this quarter compared to 116 in second quarter 2020 and 173 in second quarter 2019. On June 30, 2021, the Company's global development pipeline consisted of over 1,400 hotels and over 190,000 rooms. The pipeline grew 580 basis points year-over-year and 170 basis points sequentially - including 70 basis points domestically and 230 basis points internationally. Approximately 64% of the Company's development pipeline is international and 74% is new construction, of which approximately 34% has broken ground.

Cash and Liquidity

The Company generated $116 million of net cash provided by operating activities in the second quarter of 2021 compared to net cash used in operating activities of $57 million in second quarter 2020. Free cash flow increased $172 million year-over-year as the Company generated free cash flow of $104 million in the second quarter of 2021 compared to using $68 million in the second quarter 2020 (which included $33 million of special-item cash outlays).

At June 30, 2021, the Company had $103 million of cash on its balance sheet and approximately $840 million in total liquidity.

Dividends

The Company paid common stock dividends of $15 million, or $0.16 per share, in the second quarter of 2021.

The Company's Board of Directors authorized a 50% increase in the quarterly cash dividend to $0.24 per share from $0.16 per share, beginning with the dividend that is expected to be declared in third quarter 2021.

2021 Outlook

The Company provided the following outlook for full-year 2021:

  • Fee-related and other revenues of $1.16 billion to $1.19 billion.
  • Adjusted net income of $244 million to $254 million.
  • Adjusted EBITDA of $525 million to $535 million.
  • Adjusted diluted EPS of $2.60 to $2.70, based on an adjusted diluted share count of 94.0 million that excludes any future share repurchases.
  • Rooms growth of 1% to 2%.
  • A RevPAR increase of approximately 40% versus 2020, or a decline of approximately 16% compared to 2019.
  • Free cash conversion from Adjusted EBITDA of approximately 55%.

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 nearly 95 countries on six continents.

Table 1

WYNDHAM HOTELS & RESORTS

INCOME/(LOSS) STATEMENT

(In millions, except per share data)

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Net revenues

Royalties and franchise fees

$

122

$

61

$

200

$

154

Marketing, reservation and loyalty

119

82

204

188

Management and other fees

30

6

50

38

License and other fees

20

21

40

42

Other

30

22

60

53

Fee-related and other revenues

321

192

554

475

Cost reimbursements

85

66

155

192

Net revenues

406

258

709

667

Expenses

Marketing, reservation and loyalty

105

85

198

204

Operating

31

23

58

57

General and administrative

27

26

51

54

Cost reimbursements

85

66

155

192

Depreciation and amortization

24

25

47

49

Separation-related

1

3

1

Impairments, net

206

206

Restructuring

16

29

Transaction-related, net

5

13

Total expenses

273

452

512

805

Operating income/(loss)

133

(194)

197

(138)

Interest expense, net

22

28

51

54

Early extinguishment of debt

18

18

Income/(loss) before income taxes

93

(222)

128

(192)

Provision for/(benefit from) income taxes

25

(48)

35

(40)

Net income/(loss)

$

68

$

(174)

$

93

$

(152)

Earnings/(loss) per share

Basic

$

0.73

$

(1.86)

$

0.99

$

(1.63)

Diluted

0.73

(1.86)

0.99

(1.63)

Weighted average shares outstanding

Basic

93.6

93.3

93.5

93.5

Diluted

94.1

93.3

93.9

93.5

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. During the first quarter of 2021, we modified the definition of adjusted EBITDA to exclude the amortization of development advance notes to reflect how our chief operating decision maker reviews operating performance beginning in 2021. We have applied the modified definition of adjusted EBITDA to all periods presented.

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Full Year

Hotel Franchising

Net revenues

2021

$

209

$

283

2020

243

182

236

202

863

2019

269

331

379

300

1,279

Adjusted EBITDA (a)

2021

$

105

$

166

2020

110

86

119

77

392

2019

115

164

197

153

629

Hotel Management

Net revenues

2021

$

94

$

123

2020

167

76

101

94

437

2019

197

201

180

190

768

Adjusted EBITDA

2021

$

5

$

16

2020

17

(4)

2

(1)

13

2019

16

16

13

21

66

Corporate and Other

Net revenues

2021

$

$

2020

2019

2

1

1

2

6

Adjusted EBITDA

2021

$

(13)

$

(14)

2020

(18)

(16)

(18)

(18)

(69)

2019

(18)

(19)

(18)

(19)

(74)

Total Company

Net revenues

2021

$

303

$

406

2020

410

258

337

296

1,300

2019

468

533

560

492

2,053

Net income/(loss)

2021

$

24

$

68

2020

22

(174)

27

(7)

(132)

2019

21

26

45

64

157

Adjusted EBITDA (a)

2021

$

97

$

168

2020

109

66

103

58

336

2019

113

161

192

155

621

____________________

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.

(a) 

Adjusted EBITDA for 2020 and 2019 has been recast to exclude the amortization of development advance notes to be consistent with the current year presentation.

Table 3

WYNDHAM HOTELS & RESORTS

CONDENSED CASH FLOWS

(In millions)

(Unaudited)

Six Months Ended June 30,

2021

2020

Operating activities

Net income/(loss)

$

93

$

(152)

Depreciation and amortization

47

49

Impairment (a)

209

Deferred income taxes

3

(47)

Trade receivables

(16)

(44)

Accounts payable, accrued expenses and other current liabilities

6

(51)

Deferred revenues

11

(22)

Other, net

36

18

Net cash provided by/(used in) operating activities

180

(40)

Investing activities

Property and equipment additions

(17)

(18)

Other, net

(1)

(1)

Net cash used in investing activities

(18)

(19)

Financing activities

Proceeds from/(payments of) long-term debt, net

(521)

726

Dividends to shareholders

(30)

(38)

Repurchases of common stock

(50)

Other, net

(1)

(8)

Net cash (used in)/provided by financing activities

(552)

630

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

(1)

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

(390)

570

Cash, cash equivalents and restricted cash, beginning of period

493

94

Cash, cash equivalents and restricted cash, end of period

$

103

$

664

Free Cash Flow:

We define free cash flow to be net cash provided by/(used in) 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. 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/(used in) 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 condensed consolidated statement of cash flows.

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Net cash provided by/(used in) operating activities (b)

$

116

$

(57)

$

180

$

(40)

Less: Property and equipment additions

(12)

(11)

(17)

(18)

Free cash flow

$

104

$

(68)

$

163

$

(58)

____________________

(a)

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

(b)

The three and six months ended June 30, 2020 include $33 million and $48 million, respectively, of payments in connection with our restructuring initiatives, our acquisition of La Quinta and our spin-off from Wyndham Worldwide, as well as an estimated impact of $67 million from the Company's franchisee fee deferral program.

Table 4

WYNDHAM HOTELS & RESORTS

BALANCE SHEET SUMMARY AND DEBT

(In millions)

(Unaudited)

As of

June 30, 2021

As of

December 31, 2020

Assets

Cash and cash equivalents

$

103

$

493

Trade receivables, net

298

295

Property and equipment, net

267

278

Goodwill and intangible assets, net

3,220

3,240

Other current and non-current assets

353

338

Total assets

$

4,241

$

4,644

Liabilities and stockholders' equity

Total debt

$

2,092

$

2,597

Other current liabilities

340

325

Deferred income tax liabilities

368

359

Other non-current liabilities

381

400

Total liabilities

3,181

3,681

Total stockholders' equity

1,060

963

Total liabilities and stockholders' equity

$

4,241

$

4,644

Our outstanding debt was as follows:

As of

June 30, 2021

As of

December 31, 2020

$750 million revolving credit facility (due May 2023)

$

$

Term loan (due May 2025)

1,547

1,554

5.375% senior unsecured notes (due April 2026) (a)

496

4.375% senior unsecured notes (due August 2028)

492

492

Finance leases

53

55

Total debt

2,092

2,597

Cash and cash equivalents

103

493

Net debt

$

1,989

$

2,104

____________________

(a)

The Company redeemed these notes on April 15, 2021 primarily with available cash.

Our outstanding debt as of June 30, 2021 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

1,505

Between 4 and 5 years

6

Thereafter

517

Total

$

2,092

Table 5

WYNDHAM HOTELS & RESORTS

REVENUE DRIVERS

Six Months Ended June 30,

2021

2020

Change

% Change

Beginning Room Count (January 1)

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)

Additions

United States

8,100

5,400

2,700

50

International

9,300

6,500

2,800

43

Global

17,400

11,900

5,500

46

Deletions

United States

(10,600)

(13,600)

3,000

22

International (a)

(4,700)

(16,400)

11,700

71

Global (a)

(15,300)

(30,000)

14,700

49

Ending Room Count (June 30)

United States

484,800

502,000

(17,200)

(3)

International

313,200

310,900

2,300

1

Global

798,000

812,900

(14,900)

(2%)

As of June 30,

FY 2019 Royalty

Contribution (c)

2021

2020

Change

% Change (b)

System Size

United States

Economy

247,500

254,300

(6,800)

(3%)

Midscale and Upper Midscale

219,600

231,000

(11,400)

(5)

Upscale and Above

17,700

16,700

1,000

6

Total United States

484,800

502,000

(17,200)

(3%)

86%

International

Greater China

148,600

144,300

4,300

3%

3

Rest of Asia Pacific

28,300

27,800

500

2

1

Europe, the Middle East and Africa

66,700

69,000

(2,300)

(3)

4

Canada

39,600

40,600

(1,000)

(2)

5

Latin America

30,000

29,200

800

3

1

Total International

313,200

310,900

2,300

1%

14

Global

798,000

812,900

(14,900)

(2%)

100%

____________________

(a)

2020 includes the second quarter termination of approximately 9,000 master-franchisee rooms in Greater China in connection with the Company's previously announced strategic termination plan.

(b)

Includes the global impact from the Company's previously announced strategic termination plan in 2020 resulting in the removal of 17,700 rooms in 2020, including 8,200 rooms in the U.S., 5,000 master-franchise rooms in Greater China and 4,500 unprofitable rooms in Europe, the Middle East and Africa and the rest of Asia Pacific.

(c)

FY 2019 provided to illustrate pre-pandemic results.

Table 5 (continued)

WYNDHAM HOTELS & RESORTS

REVENUE DRIVERS

Three Months Ended

June 30, 2021

Constant Currency

% Change (a)

Two-Year Basis

% Change (b)

Regional RevPAR Growth

United States

Economy

$

42.70

86%

4%

Midscale and Upper Midscale

53.00

124

(9)

Upscale and Above

75.79

284

(32)

Total United States

$

48.37

109%

(5%)

International

Greater China

$

18.43

99%

(7%)

Rest of Asia Pacific

22.13

140

(38)

Europe, the Middle East and Africa

16.47

202

(68)

Canada

25.84

67

(49)

Latin America

12.98

371

(54)

Total International

$

18.84

119%

(44%)

Global

$

36.92

110%

(17%)

Three Months Ended June 30,

2021

2020

% Change (c)

Average Royalty Rate

United States

4.6%

4.6%

International

2.2%

2.4%

(20 bps)

Global

4.2%

4.2%

Six Months

Ended

June 30, 2021

Constant Currency

% Change (a)

Two-Year Basis

% Change (b)

Regional RevPAR Growth

United States

Economy

$

35.07

41%

(4%)

Midscale and Upper Midscale

43.26

40

(18)

Upscale and Above

60.53

27

(40)

Total United States

$

39.53

40%

(14%)

International

Greater China

$

16.09

115%

(16%)

Rest of Asia Pacific

21.56

13

(42)

Europe, the Middle East and Africa

16.06

(19)

(67)

Canada

23.38

(46)

Latin America

13.79

(6)

(48)

Total International

$

17.35

24%

(44%)

Global

$

30.94

36%

(23%)

Six Months Ended June 30,

2021

2020

% Change (c)

Average Royalty Rate

United States

4.6%

4.6%

International

2.1%

2.3%

(20 bps)

Global

4.1%

4.1%

____________________

(a)

International excludes the impact of currency exchange movements.

(b)

Compares 2021 to 2019; international excludes the impact of currency exchange movements.

(c)

Decline in international royalty rate is a result of the revenue mix impact contributed by the Company's outsized growth in Greater China.

Table 6

WYNDHAM HOTELS & RESORTS

HISTORICAL REVPAR AND ROOMS

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Full Year

Hotel Franchising

Global RevPAR

2021

$

24.02

$

35.69

2020

$

25.90

$

17.05

$

28.83

$

23.19

$

23.74

2019

$

33.76

$

42.04

$

45.23

$

34.51

$

38.91

U.S. RevPAR

2021

$

29.68

$

46.99

2020

$

31.43

$

23.19

$

36.06

$

27.28

$

29.50

2019

$

37.69

$

48.65

$

51.93

$

37.96

$

44.09

International RevPAR

2021

$

15.26

$

18.21

2020

$

17.39

$

7.66

$

17.39

$

16.71

$

14.75

2019

$

27.56

$

31.59

$

34.79

$

29.15

$

30.80

Global Rooms

2021

748,700

752,500

2020

769,000

754,700

748,200

746,500

746,500

2019

745,300

751,300

758,400

770,200

770,200

U.S. Rooms

2021

452,500

454,200

2020

463,900

460,200

459,600

452,600

452,600

2019

454,900

457,600

460,100

464,600

464,600

International Rooms

2021

296,200

298,300

2020

305,100

294,500

288,600

293,900

293,900

2019

290,400

293,700

298,300

305,600

305,600

Hotel Management

Global RevPAR

2021

$

38.17

$

56.08

2020

$

50.00

$

20.67

$

34.34

$

32.91

$

34.67

2019

$

63.25

$

66.67

$

66.65

$

59.19

$

64.01

U.S. RevPAR

2021

$

42.89

$

67.42

2020

$

54.35

$

23.21

$

39.12

$

34.14

$

37.97

2019

$

65.58

$

71.61

$

70.75

$

60.89

$

67.32

International RevPAR

2021

$

27.12

$

31.20

2020

$

38.07

$

13.78

$

23.16

$

29.86

$

26.21

2019

$

55.12

$

49.53

$

52.49

$

53.67

$

52.69

Global Rooms

2021

48,500

45,500

2020

59,300

58,200

55,800

49,400

49,400

2019

66,800

65,200

63,400

60,800

60,800

U.S. Rooms

2021

33,500

30,600

2020

42,900

41,800

38,100

34,700

34,700

2019

51,700

50,700

49,100

45,600

45,600

International Rooms

2021

15,000

14,900

2020

16,400

16,400

17,700

14,700

14,700

2019

15,100

14,500

14,300

15,200

15,200

Table 6 (continued)

WYNDHAM HOTELS & RESORTS

HISTORICAL REVPAR AND ROOMS

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Full Year

Total System

Global RevPAR

2021

$

24.90

$

36.92

2020

$

27.68

$

17.31

$

29.23

$

23.84

$

24.51

2019

$

36.21

$

44.06

$

46.94

$

36.36

$

40.92

U.S. RevPAR

2021

$

30.62

$

48.37

2020

$

33.45

$

23.19

$

36.31

$

27.80

$

30.20

2019

$

40.56

$

50.98

$

53.79

$

40.09

$

46.39

International RevPAR

2021

$

15.83

$

18.84

2020

$

18.45

$

7.96

$

17.72

$

17.37

$

15.35

2019

$

28.92

$

32.47

$

35.63

$

30.29

$

31.85

Global Rooms

2021

797,200

798,000

2020

828,300

812,900

804,000

795,900

795,900

2019

812,100

816,600

821,800

831,000

831,000

U.S. Rooms

2021

486,000

484,800

2020

506,800

502,000

497,700

487,300

487,300

2019

506,600

508,300

509,200

510,200

510,200

International Rooms

2021

311,200

313,200

2020

321,500

310,900

306,300

308,600

308,600

2019

305,500

308,300

312,600

320,800

320,800

NOTE: Amounts may not foot due to rounding. Results reflect the reclassification of rooms from the Hotel Management segment to the Hotel Franchising segment related to the CorePoint Lodging asset sales.

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

2021

Net income

$

24

$

68

Provision for income taxes

11

25

Depreciation and amortization

24

24

Interest expense, net

28

22

Early extinguishment of debt (a)

18

Stock-based compensation expense

5

8

Development advance notes amortization (b)

2

2

Separation-related expenses (c)

2

1

Foreign currency impact of highly inflationary countries (d)

1

Adjusted EBITDA

$

97

$

168

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

Development advance notes amortization (b)

2

2

2

2

9

Impairments, net (e)

206

206

Restructuring costs (f)

13

16

5

34

Transaction-related expenses, net (g)

8

5

12

Separation-related expenses (c)

1

1

2

Foreign currency impact of highly inflationary countries (d)

1

2

Adjusted EBITDA

$

109

$

66

$

103

$

58

$

336

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

Development advance notes amortization (b)

2

2

2

2

8

Impairment, net (h)

45

45

Contract termination costs (i)

9

34

(1)

42

Restructuring costs (j)

8

8

Transaction-related expenses, net (g)

7

11

12

10

40

Separation-related expenses (c)

21

1

22

Transaction-related item (k)

20

20

Foreign currency impact of highly inflationary countries (d)

1

3

1

5

Adjusted EBITDA

$

113

$

161

$

192

$

155

$

621

____________________

NOTE: Amounts may not add due to rounding.

(a)

Relates to the redemption premium and non-cash expenses associated with the early redemption of the Company's 5.375% senior unsecured notes. These expenses were recorded in interest expense, net on the Company's income/(loss) statement.

(b)

Represents the non-cash amortization of development advance notes, which is now excluded from adjusted EBITDA to reflect how the Company's chief operating decision maker reviews operating performance.

(c)

Represents costs associated with the Company's spin-off from Wyndham Worldwide.

(d)

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

(e)

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.

(f)

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

(g)

Primarily relates to integration costs incurred in connection with the Company's acquisition of La Quinta.

(h)

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

(i)

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

(j)

Represents a charge related to enhancing the Company's organizational efficiency and rationalizing our operations.

(k)

Represents the one-time fee credit related to the Company's 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 Earnings/(Loss) Per Share to Adjusted Net Income and Adjusted Diluted EPS:

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Diluted earnings/(loss) per share

$

0.73

$

(1.86)

$

0.99

$

(1.63)

Net income/(loss)

$

68

$

(174)

$

93

$

(152)

Adjustments:

Early extinguishment of debt (a)

18

18

Acquisition-related amortization expense (b)

9

9

18

19

Separation-related expenses

1

3

1

Foreign currency impact of highly inflationary countries

1

1

Impairments, net

206

206

Restructuring costs

16

29

Transaction-related expenses, net

5

13

Total adjustments before tax

28

236

40

269

Income tax provision (c)

7

53

10

61

Total adjustments after tax

21

183

30

208

Adjusted net income

$

89

$

9

$

123

$

56

Adjustments - EPS impact

0.22

1.96

0.32

2.22

Adjusted diluted EPS

$

0.95

$

0.10

$

1.31

$

0.59

Diluted weighted average shares outstanding

94.1

93.3

93.9

93.6

____________________

(a)

Relates to the redemption premium and non-cash expenses associated with the early redemption of the Company's 5.375% senior unsecured notes. These expenses were recorded in interest expense, net on the Company's income/(loss) statement.

(b)

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

(c)

Reflects the estimated tax effects of the adjustments.

Table 8

WYNDHAM HOTELS & RESORTS

2021 OUTLOOK

As of July 28, 2021

(In millions, except per share data)

2021 Outlook

Fee-related and other revenues (a)

$

1,160 - 1,190

Adjusted EBITDA

525 - 535

Depreciation and amortization expense (b)

56 - 58

Development advance notes amortization expense

9 - 11

Stock-based compensation expense

27 - 29

Interest expense, net (c)

94 - 96

Adjusted income before income taxes

333 - 348

Income tax expense (d)

89 - 94

Adjusted net income

$

244 - 254

Adjusted diluted EPS

$

2.60 - 2.70

Diluted shares (e)

94.0

Marketing, reservation and loyalty funds

Break even

Capital expenditures

 Approx. $40

Development advance notes

Approx. $40

Free cash flow conversion rate (f)

 Approx. 55%

Year-over-Year Growth

Global RevPAR (g)

Approx. 40%

Number of rooms

1% - 2%

____________________

(a)

Includes $70 million of license fees, which reflects the minimum levels outlined in the underlying agreements.

(b)

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

(c)

Excludes charges relating to the early extinguishment of debt.

(d)

Outlook assumes an effective tax rate of approximately 27%.

(e)

Excludes the impact of any share repurchases in 2021.

(f)

Represents the percentage of adjusted EBITDA that is expected to produce free cash flow. Free cash flow plus capital expenditures equals net cash from operating activities.

(g)

Compared to 2019, outlook represents a 16% decline in global RevPAR.