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Wyndham Worldwide Reports Third Quarter 2017 Results

THIRD QUARTER 2017 OPERATING RESULTS
Third quarter revenues were $1.6 billion, up 4% compared with the prior-year period. Full reconciliations of GAAP results to non-GAAP measures for all reported periods appear in the tables to this press release.

Net income in the third quarter of 2017 was $203 million compared with $196 million for the third quarter of 2016. Diluted earnings per share (EPS) increased 11% to $1.97, versus $1.78 in the prior-year period.

Adjusted net income for the third quarter of 2017 was $209 million or $2.03 per diluted share, compared with $207 million or $1.89 per diluted share in the third quarter of 2016. Adjusted results exclude restructuring and separation costs and other items as detailed in Tables 7 and 8 of this press release. Third quarter earnings benefited from the growth in revenues, partially offset by higher year-over-year interest, depreciation and variable compensation expenses along with the impact of Hurricanes Irma and Maria. The increase in adjusted diluted EPS also reflects the benefit of the Company's share repurchase program.

Third quarter EBITDA was $422 million, compared with $402 million in the prior-year period. Adjusted EBITDA was $436 million, compared with $423 million in the third quarter of 2016. Results primarily reflect the growth in revenues, partially offset by higher variable compensation expenses and the hurricane impacts.

Weather events in the third quarter had an unusually pronounced effect on operating results. In particular, the Company estimates that the third quarter hurricanes reduced revenues, net income and EBITDA by $13 million, $6 million, and $9 million, respectively. The reductions primarily reflect the temporary closure of vacation ownership sales centers in the Caribbean and Florida, the closure of portions of the Company's Wyndham Rio Mar hotel in Puerto Rico, and reduced timeshare exchanges due to travel disruptions. Two of the Company's vacation ownership sales centers in the Caribbean remain closed.

"Our team's sharp focus on executing against our strategic and operating plans allowed us to deliver solid growth in line with our prior projections," said Stephen P. Holmes, chairman and CEO. "While the barrage of recent hurricanes negatively impacted our results, our efforts to drive revenue and control costs successfully mitigated their impact in the quarter. I am especially proud of how our employees and affiliates in affected areas have served our guests throughout a difficult period.

"Despite the weather-related challenges in the quarter, we generated a strong increase in new timeshare owners and year-over-year growth in our earnings per share. We have also strengthened our presence in the midscale hotel segment with the addition of the AmericInn brand and its 200 franchised hotels in October. Furthermore, we have increased our share repurchase authorization to reflect our continued focus on returning cash to shareholders, and we are working tirelessly to execute our previously announced separation into two publicly-traded companies," Mr. Holmes added.

For the nine months ended September 30, 2017, net cash provided by operating activities was $666 million, compared with $786 million in the prior-year period. The decrease primarily reflects timing differences and additions to the Company's vacation ownership receivables portfolio.

Free cash flow was $541 million for the nine months ended September 30, 2017, compared with $650 million for the same period in 2016, primarily reflecting the changes in net cash provided by operating activities. The Company defines free cash flow as net cash provided by operating activities less capital expenditures.

THIRD QUARTER 2017 BUSINESS UNIT RESULTS

Hotel Group
Revenues were $368 million in the third quarter of 2017, compared with $364 million in the third quarter of 2016. Results reflect 9% higher royalties and franchise fees, as well as increased other revenue due to growth in the Wyndham Rewards credit card program. In addition, results reflected the absence in 2017 of $13 million of global franchisee conference revenues, which are "pass-through" revenues that were fully offset by reduced expenses.

EBITDA was $121 million in the third quarter compared with $107 million in the prior-year quarter. Adjusted EBITDA was $122 million compared with $117 million in the prior-year period, an increase of 4%, primarily reflecting the growth in revenues.

Third quarter domestic same-store RevPAR increased 2.3% compared with third quarter 2016. In constant currency, global same-store RevPAR increased 3.3%.

As of September 30, 2017, the Company's hotel system consisted of over 8,100 properties and over 708,500 rooms, a 3% increase compared with the third quarter of 2016. The development pipeline increased to nearly 1,190 hotels and over 146,900 rooms, a 10% year-over-year room increase, of which 57% are international and 68% are new construction. In addition, we are adding almost 12,000 rooms to our system with the acquisition of AmericInn that we completed in October.

Destination Network
Revenues were $511 million in the third quarter of 2017, compared with $486 million in the third quarter of 2016, an increase of 5%. In constant currency and excluding acquisitions, revenues increased 2%.

Vacation rental revenues were $327 million compared with $304 million in the prior-year quarter. In constant currency and excluding acquisitions, vacation rental revenues increased 3%, reflecting a 2% increase in transaction volume and a 1% increase in the average net price per rental.

Exchange revenues were $158 million, a decline of 1% compared with the prior-year quarter, reflecting the adverse impact of the hurricanes. Exchange revenue per member increased 1% and the average number of members declined 2%.

EBITDA was $154 million in the third quarter of 2017, compared with $138 million in the third quarter of 2016. Adjusted EBITDA was $150 million compared with $142 million in the prior-year quarter, an increase of 6%, reflecting increased vacation rental volumes and favorable foreign currency movements, partially offset by the adverse impact of the hurricanes.

Vacation Ownership
Revenues were $773 million in the third quarter of 2017, compared with $744 million in the third quarter of 2016, an increase of 4%. The increase reflects a 7% increase in gross VOI sales as well as higher consumer financing revenues, even though the third quarter hurricanes negatively impacted VOI sales.

Tour flow increased 7%, driven by increased tours to new owners. Volume per guest (VPG) declined 1%, primarily reflecting a 16% increase in sales in North America to new owners, which produce a lower VPG.

EBITDA was $190 million in the third quarter of 2017 compared with $189 million in the prior-year quarter. Adjusted EBITDA was $190 million compared with $195 million in the prior-year quarter, a decline of 3%. Results reflect higher gross VOI sales and consumer financing revenue, offset by a higher provision for loan losses and increased variable compensation expenses.

OTHER ITEMS

  • The Company repurchased 1.5 million shares of common stock for $150 million during the third quarter of 2017 at an average price of $101.18. From October 1 through October 24, 2017, the Company repurchased an additional 0.3 million shares for $34 million.
  • The Company's Board of Directors approved a $1.0 billion increase in the share repurchase authorization. Including the increase, the Company's remaining share repurchase authorization totals $1.3 billion as of October 24, 2017.
  • Net interest expense in the third quarter of 2017 was $40 million compared with $32 million in the third quarter of 2016, reflecting higher corporate debt levels.
  • Depreciation and amortization in the third quarter of 2017 was $69 million, compared with $63 million in the third quarter of 2016, as additional long-term capital projects came into service, strengthening the Company's technology capabilities.
  • 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, although there can be no assurance regarding the timing of the separation or that the separation will ultimately occur. The Company is also continuing to explore strategic alternatives for its European vacation rentals business.
  • The Company completed the acquisition of AmericInn on October 2, adding 200 franchised properties with nearly 12,000 rooms to the Company's midscale hotel portfolio. The net purchase price was $142 million, which included a simultaneous sale of ten owned hotels to an unrelated third party for $28 million.

Balance Sheet Information as of September 30, 2017:

  • Cash and cash equivalents were $289 million, compared with $185 million at December 31, 2016.
  • Vacation ownership contract receivables, net totaled $2.9 billion, compared with $2.8 billion at December 31, 2016.
  • Vacation ownership and other inventory was $1.3 billion, compared with $1.4 billion at December 31, 2016.
  • Securitized vacation ownership debt was $2.0 billion, compared with $2.1 billion at December 31, 2016.
  • Long-term debt totaled $3.9 billion, compared with $3.4 billion at December 31, 2016. The increase in debt reflects higher vacation ownership contract receivables, higher VOI inventory, lower securitized borrowings and an increase in the Company's cash balance. The remaining borrowing capacity under the Company's revolving credit facility, net of commercial paper borrowings, was $0.9 billion as of September 30, 2017, compared with $1.1 billion at December 31, 2016.

A schedule of debt is included in Table 12 of this press release.

OUTLOOK

Note to Editors: The outlook below excludes possible future share repurchases, while analysts' estimates often include projected share repurchases. This results in discrepancies between the Company's projections and database consensus forecasts.

The Company has updated the following projections for the full year 2017 to reflect the financial effects of the recent weather events on both our third quarter and fourth quarter results:

  • Revenues of $5.80 billion to $5.85 billion.
  • Adjusted net income of $618 million to $628 million.
  • Adjusted diluted EPS to $5.95 to $6.05, based on a diluted share count of 103.9 million.

The third quarter weather events will affect the Company's fourth quarter results, particularly in its Vacation Ownership and Hotel Group segments. The Company estimates the weather events will reduce fourth quarter revenues by $20 to $30 million, net income by $9 to $15 million, and EBITDA by $15 to $23 million. For the full year, the Company estimates the weather events will reduce revenues by $33 to $43 million, net income by $15 to $21 million and EBITDA by $24 to $32 million. While the Company's business interruption insurance may ultimately offset a portion of these effects, any such insurance recoveries are unlikely to be realized in 2017.

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. See Table 10 for certain non-GAAP information concerning the outlook period.

The Company will post more detailed projections on its website following the conference call.

CONFERENCE CALL INFORMATION
Wyndham Worldwide Corporation will hold a conference call with investors to discuss the Company's results and outlook on Wednesday, October 25, 2017 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 800-862-9098 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 October 25, 2017. A telephone replay will be available for approximately 10 days beginning at 12:00 p.m. ET on October 25, 2017 at 800-688-7036.

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, holiday parks, and managed home rentals. With a collective inventory of nearly 130,000 places to stay across more than 110 countries on six continents, Wyndham Worldwide and its 38,000 associates welcome people to experience travel the way they want. This is enhanced by Wyndham Rewards®, the Company's re-imagined 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, cash flow, related financial and operating measures 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, 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 rentals brands and the outcome and timing of that process, the timing and amount of future share repurchases, 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 Three - September 30, 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 Reconciliation of Gross VOI Sales

9



Non-GAAP Reconciliation of 2017 Outlook

10



Non-GAAP Reconciliation - Constant Currency, Currency Neutral and Acquisitions

11



Schedule of Debt

12















Table 1

Wyndham Worldwide Corporation

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

(Unaudited)



































Three Months Ended


Nine Months Ended





September 30,


September 30,





2017


2016


2017


2016

Net revenues














Service and membership fees


$

754


$

735


$

2,043


$

2,001


Vacation ownership interest sales



467



441



1,265



1,191


Franchise fees



204



203



522



513


Consumer financing



119



112



343



327


Other




85



82



254



247

Net revenues



1,629



1,573



4,427



4,279
















Expenses















Operating



713



679



1,968



1,915


Cost of vacation ownership interests



41



47



115



115


Consumer financing interest



17



19



54



55


Marketing and reservation



250



242



676



645


General and administrative



173



173



557



545


Separation and related costs



24



-



24



-


Asset impairments



-



-



140



-


Restructuring



8



14



15



14


Depreciation and amortization



69



63



197



187

Total expenses



1,295



1,237



3,746



3,476
















Operating income



334



336



681



803

Other income, net



(19)



(3)



(24)



(19)

Interest expense



42



34



115



102

Early extinguishment of debt



-



-



-



11

Interest income



(2)



(2)



(6)



(6)
















Income before income taxes



313



307



596



715

Provision for income taxes



110



110



173



267

Net income




203



197



423



448

Net income attributable to noncontrolling interest



-



(1)



(1)



(1)

Net income attributable to Wyndham shareholders


$

203


$

196


$

422


$

447
















Earnings per share














Basic



$

1.98


$

1.79


$

4.07


$

4.03


Diluted



1.97



1.78



4.05



4.01
















Weighted average shares outstanding














Basic




102



109



104



111


Diluted



103



110



104



112














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 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 nonrecurring and which in our view do not necessarily reflect ongoing operating performance. We also internally use these measures to assess our 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 attributable to Wyndham shareholders to EBITDA for the three months ended September 30, 2017 and 2016:




















Three Months Ended September 30,





2017


2016





Net Revenues


EBITDA


Net Revenues


EBITDA


Hotel Group

$

368


$

121


$

364


$

107


Destination Network


511



154



486



138


Vacation Ownership


773



190



744



189


Total Reportable Segments


1,652



465



1,594



434


Corporate and Other (a)


(23)



(43)



(21)



(32)


Total Company

$

1,629


$

422


$

1,573


$

402

















Reconciliation of Net income attributable to Wyndham shareholders to EBITDA

























Three Months Ended September 30,








2017





2016


Net income attributable to Wyndham shareholders




$

203





$

196


Net income attributable to noncontrolling interest





-






1


Provision for income taxes





110






110


Depreciation and amortization





69






63


Interest expense





42






34


Interest income





(2)






(2)


EBITDA





$

422





$

402
































Note: Amounts may not add due to rounding.


(a) Includes the elimination of transactions between segments.
































































Three Months Ended September 30,





2017


2016





Net Revenues


Adjusted

EBITDA


Net Revenues


Adjusted
EBITDA


Hotel Group

$

368


$

122


$

364


$

117


Destination Network


511



150



486



142


Vacation Ownership


773



190



744



195


Total Reportable Segments


1,652



462



1,594



454


Corporate and Other (a)


(23)



(26)



(21)



(31)


Total Company

$

1,629


$

436


$

1,573


$

423





























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 nine months ended September 30, 2017 and 2016:




















Nine Months Ended September 30,





2017


2016





Net Revenues


EBITDA


Net Revenues


EBITDA


Hotel Group

$

1,011


$

312


$

993


$

291


Destination Network


1,308



345



1,255



303


Vacation Ownership


2,171



356



2,089



512


Total Reportable Segments


4,490



1,013



4,337



1,106


Corporate and Other (a)


(63)



(111)



(58)



(97)


Total Company

$

4,427


$

902


$

4,279


$

1,009

















Reconciliation of Net income attributable to Wyndham shareholders to EBITDA























Nine Months Ended September 30,








2017





2016


Net income attributable to Wyndham shareholders




$

422





$

447


Net income attributable to noncontrolling interest





1






1


Provision for income taxes





173






267


Depreciation and amortization





197






187


Interest expense





115






102


Early extinguishment of debt





-






11


Interest income





(6)






(6)


EBITDA





$

902





$

1,009
































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 nine months ended September 30, 2017 and 2016 (for a description of adjustments and reconciliation by segment, see Table 8):





















Nine Months Ended September 30,





2017


2016





Net Revenues


Adjusted

EBITDA


Net Revenues


Adjusted
EBITDA


Hotel Group



$

1,011


$

314


$

993


$

301


Destination Network


1,308



341



1,255



333


Vacation Ownership


2,171



497



2,089



518


Total Reportable Segments


4,490



1,152



4,337



1,152


Corporate and Other (a)


(63)



(89)



(58)



(97)


Total Company

$

4,427


$

1,063


$

4,279


$

1,055

































Table 3

















(1 of 2)

Wyndham Worldwide Corporation

OPERATING STATISTICS


















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
























Year


Q1


Q2


Q3


Q4


Full Year

Hotel Group(a)













Number of Rooms

2017


699,800


705,700


708,500


N/A


N/A



2016


679,100


683,300


689,800


697,600


N/A



2015


667,400


668,500


671,900


678,000


N/A



2014


646,900


650,200


655,300


660,800


N/A















RevPAR

2017

$

31.73

$

39.43

$

44.36

$

N/A

$

N/A



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













Average Number of Members (in 000s) (a)

2017


3,817


3,791


3,792


N/A


N/A



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 (a)

2017

$

192.01

$

168.27

$

166.35

$

N/A

$

N/A



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 Rental Transactions (in 000s) (a) (b)

2017


538


461


529


N/A


N/A



2016


500


409


508


350


1,767



2015


459


390


462


319


1,630



2014


429


376


455


293


1,552















Average Net Price Per Vacation Rental(a) (b)

2017

$

343.07

$

476.72

$

618.39

$

N/A

$

N/A



2016

$

366.08

$

492.83

$

599.59

$

430.14

$

475.24



2015

$

361.20

$

513.14

$

642.00

$

452.19

$

494.92



2014

$

410.04

$

577.13

$

727.40

$

492.25

$

558.95














Vacation Ownership (a)













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

2017

$

439,000

$

563,000

$

602,000

$

N/A

$

N/A



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


N/A


N/A



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

$

N/A

$

N/A



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/dispositions from the acquisition/disposition dates forward.

(b)

The destination network operating statistics excluding our U.K.-based camping business sold in Q4 2014 are as follows:
























Year


Q1


Q2


Q3


Q4


Full Year


Vacation Rental Transactions (in 000s)

2014


429


367


431


292


1,518


Average Net Price Per Vacation Rental

2014

$

410.02

$

578.02

$

700.56

$

492.64

$

548.93



































(c)

Includes Gross VOI sales under the Company's Wyndham Asset Affiliate Model (WAAM) Just-in-Time. (See Table 9 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


N/A


N/A



2016


7,830


7,880


7,930


8,040


N/A



2015


7,670


7,700


7,760


7,810


N/A



2014


7,500


7,540


7,590


7,650


N/A














Vacation Ownership













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

2017

$

85,000

$

110,000

$

123,000

$

N/A

$

N/A



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 our 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 Rental Transactions: Represents the number of transactions that are generated in connection with customers booking their vacation rental stays through one of our vacation brands. One rental transaction is recorded for each standard one-week rental.





















Average Net Price Per Vacation Rental: Represents the net rental price generated from renting vacation properties to customers and other related rental servicing fees divided by the number of vacation rental transactions.





















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. We believe gross VOI sales provide an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period. See Table 9 for a reconciliation of Gross VOI sales to vacation ownership interest sales.





















Tours: Represents the number of tours taken by guests in our 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 9 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:










Nine Months Ended September 30,




2017


2016

Net cash provided by operating activities


$

666


$

786









Net cash used in investing activities



(171)



(172)









Net cash used in financing activities



(404)



(442)









Effect of changes in exchange rates on cash and cash equivalents



13



(11)









Net increase in cash and cash equivalents


$

104


$

161

















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 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, development advances and equity investments, as well as our 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:





Nine Months Ended September 30,




2017


2016

Net cash provided by operating activities


$

666


$

786

Less: Property and equipment additions



(125)



(136)

Free cash flow



$

541


$

650









View Table Fullscreen
























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


N/A


N/A


$

74

$

94

$

105

$

94

$

367


Marketing, Reservation and Wyndham Rewards Revenues (a)


83


106


120


N/A


N/A



83


103


125


92


405


Hotel Management Reimbursable Revenues (b)


66


69


64


N/A


N/A



67


71


67


65


271


Intersegment Trademark Fees



13


15


16


N/A


N/A



13


15


16


14


56


Owned Hotel Revenues



23


21


16


N/A


N/A



27


19


17


17


81


Ancillary Revenues (c)



34


36


38


N/A


N/A



31


32


34


34


129


Total Hotel Group



298


345


368


N/A


N/A



295


334


364


316


1,309


























Destination Network
























Exchange Revenues



183


159


158


N/A


N/A



182


159


159


145


645


Rental Revenues



184


220


327


N/A


N/A



183


202


304


151


840


Ancillary Revenues (d)



24


26


26


N/A


N/A



20


23


23


21


86


Total Destination Network



391


405


511


N/A


N/A



385


384


486


317


1,571


























Vacation Ownership
























Vacation Ownership Interest Sales



351


448


467


N/A


N/A



342


409


441


415


1,606


Consumer Financing



111


114


119


N/A


N/A



107


108


112


113


440


Property Management Fees and Reimbursable Revenues


175


175


171


N/A


N/A



164


161


168


168


660


WAAM Fee-for-Service Commissions



2


4


8


N/A


N/A



17


16


13


-


46


Ancillary Revenues (e)



9


9


8


N/A


N/A



11


11


10


9


42


Total Vacation Ownership



648


750


773


N/A


N/A



641


705


744


705


2,794

Total Reportable Segments


$

1,337

$

1,500

$

1,652


N/A


N/A


$

1,321

$

1,423

$

1,594

$

1,338

$

5,674























































2015


2014






Q1


Q2


Q3


Q4


Year



Q1


Q2


Q3


Q4


Year

Hotel Group
























Royalties and Franchise Fees


$

74

$

96

$

103

$

87

$

361


$

68

$

88

$

100

$

83

$

339


Marketing, Reservation and Wyndham Rewards Revenues (a)


96


108


112


92


407



76


101


117


91


385


Hotel Management Reimbursable Revenues (b)


61


71


73


68


273



37


39


39


39


154


Intersegment Trademark Fees



12


15


16


15


57



9


11


11


10


41


Owned Hotel Revenues



25


20


16


19


79



24


20


18


20


81


Ancillary Revenues (c)



24


24


37


33


120



23


24


30


24


101


Total Hotel Group



292


334


357


314


1,297



237


283


315


267


1,101


























Destination Network
























Exchange Revenues



185


161


157


146


649



187


168


162


150


667


Rental Revenues



166


200


296


144


807



176


217


331


144


868


Ancillary Revenues (d)



18


22


23


20


82



16


17


19


17


69


Total Destination Network



369


383


476


310


1,538



379


402


512


311


1,604


























Vacation Ownership
























Vacation Ownership Interest Sales



336


417


448


403


1,604



303


382


415


385


1,485


Consumer Financing



104


105


108


109


427



105


106


108


108


427


Property Management Fees and Reimbursable Revenues


153


149


159


155


615



143


145


150


142


581


WAAM Fee-for-Service Commissions



12


19


23


28


83



33


30


18


16


98


Ancillary Revenues (e)



12


9


12


11


43



9


10


13


17


47


Total Vacation Ownership



617


699


750


706


2,772



593


673


704


668


2,638

Total Reportable Segments


$

1,278

$

1,416

$

1,583

$

1,330

$

5,607


$

1,209

$

1,358

$

1,531

$

1,246

$

5,343



















































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

(a)

Marketing and reservation revenues represent fees the Company receives from franchised and managed hotels that are to be expended for marketing purposes or the operation of a centralized, brand-specific reservation system. These fees are typically based on a percentage of the gross room revenues of each hotel. Wyndham Rewards revenues represent fees the Company receives relating to its loyalty program.

(b)

Primarily represents payroll costs in the hotel management business that the Company pays on behalf of property owners and for which it is reimbursed by the property owners. During 2014, reimbursable revenues of $2 million in each of Q1, Q2 and Q3 and $1 million in Q4 were charged to the Company's vacation ownership business and were eliminated in consolidation.

(c)

Primarily includes additional services provided to franchisees and managed properties and fees related to our co-branded credit card program.

(d)

Primarily includes fees generated from programs with affiliated resorts and homeowners.

(e)

Primarily includes revenues associated with bonus points/credits that are provided as purchase incentives on VOI sales and fees generated from other non-core operations.











Table 6








(1 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS




















As of and For the Three Months Ended September 30, 2017

Brand

Number of
Properties

Number of Rooms

Average
Occupancy Rate

Average Daily
Rate (ADR)

Average Revenue
Per Available
Room (RevPAR)









Hotel Group







Super 8

2,854

178,733

62.5%

$53.13

$33.20









Days Inn

1,773

141,571

57.9%

$75.33

$43.62









Ramada

848

118,170

59.7%

$75.92

$45.31









Wyndham Hotels and Resorts

260

57,010

63.7%

$101.52

$64.63









Howard Johnson

356

42,003

58.9%

$65.72

$38.70









Baymont

458

36,161

59.9%

$78.36

$46.97









Travelodge

413

30,591

60.5%

$83.76

$50.68









Microtel Inns & Suites by Wyndham

336

24,281

63.9%

$76.18

$48.67









Knights Inn

367

22,447

49.8%

$54.97

$27.35









TRYP by Wyndham

118

16,946

71.4%

$87.05

$62.15









Wingate by Wyndham

153

14,008

67.5%

$95.43

$64.44









Hawthorn Suites by Wyndham

110

10,744

69.5%

$84.70

$58.91









Dolce

20

4,710

56.9%

$179.59

$102.25









Trademark

57

9,039

74.7%

$84.67

$63.23









Dazzler

12

1,525

74.3%

$89.84

$66.71









Esplendor

10

606

67.7%

$77.13

$52.18










Total Hotel Group

8,145

708,545

61.0%

$72.75

$44.36









Vacation Ownership






Wyndham Vacation Ownership resorts

221

24,942

N/A

N/A

N/A










Total Wyndham Worldwide

8,366

733,487












NOTE: A glossary of terms is included in Table 3 (2 of 2); RevPAR may not recalculate by multiplying average occupancy rate by ADR due to rounding.












As of and For the Three Months Ended September 30, 2016

Brand

Number of
Properties

Number of Rooms

Average
Occupancy Rate

Average Daily
Rate (ADR)

Average Revenue
Per Available
Room (RevPAR)









Hotel Group







Super 8

2,747

175,094

63.7%

$52.27

$33.28









Days Inn

1,784

142,789

57.5%

$73.31

$42.15









Ramada

850

120,092

58.0%

$78.30

$45.39









Wyndham Hotels and Resorts

235

51,898

57.4%

$109.11

$62.66









Howard Johnson

376

43,226

55.5%

$67.43

$37.41









Baymont

425

33,732

58.9%

$75.52

$44.49









Travelodge

406

30,012

59.0%

$79.62

$46.99









Microtel Inns & Suites by Wyndham

337

24,325

63.7%

$73.28

$46.70









Knights Inn

375

22,841

49.3%

$54.80

$27.00









TRYP by Wyndham

114

16,322

73.7%

$79.77

$58.75









Wingate by Wyndham

149

13,568

68.4%

$94.68

$64.75









Hawthorn Suites by Wyndham

109

10,743

71.1%

$82.32

$58.49









Dolce

22

5,110

58.8%

$170.72

$100.43










Total Hotel Group

7,929

689,752

59.9%

$71.80

$43.04









Vacation Ownership






Wyndham Vacation Ownership resorts

218

24,582

N/A

N/A

N/A










Total Wyndham Worldwide

8,147

714,334












Note: A glossary of terms is included in Table 3 (2 of 2); RevPAR may not recalculate by multiplying average occupancy rate by ADR due to rounding.








Table 6








(2 of 2)

Wyndham Worldwide Corporation

BRAND SYSTEM DETAILS




















As of and For the Nine Months Ended September 30, 2017

Brand

Number of
Properties

Number of Rooms

Average
Occupancy Rate

Average Daily
Rate (ADR)

Average Revenue
Per Available
Room (RevPAR)









Hotel Group







Super 8

2,854

178,733

58.5%

$49.00

$28.67









Days Inn

1,773

141,571

52.8%

$70.54

$37.22









Ramada

848

118,170

55.4%

$72.32

$40.05









Wyndham Hotels and Resorts

260

57,010

59.5%

$102.04

$60.72









Howard Johnson

356

42,003

52.5%

$61.44

$32.28









Baymont

458

36,161

54.4%

$73.38

$39.91









Travelodge

413

30,591

52.8%

$75.34

$39.81









Microtel Inns & Suites by Wyndham

336

24,281

59.3%

$71.53

$42.41









Knights Inn

367

22,447

46.7%

$51.78

$24.20









TRYP by Wyndham

118

16,946

67.0%

$81.82

$54.80









Wingate by Wyndham

153

14,008

63.8%

$91.69

$58.51









Hawthorn Suites by Wyndham

110

10,744

66.5%

$83.70

$55.65









Dolce

20

4,710

53.1%

$166.46

$88.46









Trademark

57

9,039

74.7%

$84.67

$63.23









Dazzler

12

1,525

67.7%

$91.56

$62.01









Esplendor

10

606

65.8%

$82.47

$54.27










Total Hotel Group

8,145

708,545

56.2%

.64

$38.58









Vacation Ownership






Wyndham Vacation Ownership resorts

221

24,942

N/A

N/A

N/A










Total Wyndham Worldwide

8,366

733,487












NOTE: A glossary of terms is included in Table 3 (2 of 2); RevPAR may not recalculate by multiplying average occupancy rate by ADR due to rounding.












As of and For the Nine Months Ended September 30, 2016

Brand

Number of
Properties

Number of Rooms

Average
Occupancy Rate

Average Daily
Rate (ADR)

Average Revenue
Per Available
Room (RevPAR)









Hotel Group







Super 8

2,747

175,094

58.6%

$49.38

$28.93









Days Inn

1,784

142,789

51.8%

$69.10

$35.80









Ramada

850

120,092

54.5%

$75.09

$40.94









Wyndham Hotels and Resorts

235

51,898

58.1%

$106.62

$61.99









Howard Johnson

376

43,226

49.8%

$62.94

$31.32









Baymont

425

33,732

53.0%

$71.67

$38.01









Travelodge

406

30,012

52.5%

$72.15

$37.88









Microtel Inns & Suites by Wyndham

337

24,325

58.3%

$69.26

$40.36









Knights Inn

375

22,841

46.3%

$51.42

$23.83









TRYP by Wyndham

114

16,322

66.0%

$77.88

$51.40









Wingate by Wyndham

149

13,568

64.2%

$91.77

$58.96









Hawthorn Suites by Wyndham

109

10,743

67.8%

$82.68

$56.09









Dolce

22

5,110

53.4%

$165.67

$88.44










Total Hotel Group

7,929

689,752

55.3%

.60

$37.95









Vacation Ownership






Wyndham Vacation Ownership resorts

218

24,582

N/A

N/A

N/A










Total Wyndham Worldwide

8,147

714,334












Note: A glossary of terms is included in Table 3 (2 of 2); RevPAR may not recalculate by multiplying average occupancy rate by ADR due to rounding.



















Table 7











(1 of 2)













Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION OF ADJUSTED NET INCOME AND EPS

(In millions, except per share data)


















Location on Consolidated Statements of Income


Three Months Ended September 30,







2017


2016

Diluted weighted average shares outstanding



103



110













Diluted EPS





$

1.97


$

1.78













Net income attributable to Wyndham shareholders


$

203


$

196













Adjustments:











Separation and related costs (a)


Separation and related costs



24



-


Acquisition gain (b)


Other income, net



(13)



-


Restructuring costs (c)


Restructuring



8



14


Legacy benefit (d)


General and administrative



(7)



(1)


Acquisition costs (e)


General and administrative



2



-


Contract termination (f)


Operating



-



7



Total adjustments before tax





14



20


Income tax benefit (g) (h)


Provision for income taxes



(8)



(9)

Total adjustments after tax





6



11













Adjustments - EPS impact



0.06



0.11













Adjusted Net income attributable to Wyndham shareholders


$

209


$

207













Adjusted diluted EPS




$

2.03


$

1.89

























Note: Amounts may not add due to rounding.













(a)

Represent costs associated with the Company's planned separation of its hotel franchising business and the exploration of strategic alternatives for its European rental brands.

(b)

Represents a gain recorded in connection with the acquisition of a controlling interest in Love Home Swap at our destination network business.

(c)

Relates to costs incurred as a result of (i) enhancing organizational efficiency and rationalizing operations at the Company's destination network business during 2017 and (ii) enhancing organizational efficiency and rationalizing existing facilities across the Company during 2016.

(d)

Relates to the net benefit from the resolution of and adjustment to certain contingent liabilities resulting from the Company's separation from Cendant.

(e)

Represents costs related to acquisitions.

(f)

Relates to a non-cash impairment charge related to the write-down of terminated in process technology projects resulting from the decision to outsource its reservation system to a third-party provider at the Company's hotel group business.

(g)

The amount for 2017 relates to the tax effect of the adjustments. There was no tax provision associated with the $13 million acquisition gain.

(h)

The amount for 2016 relates to (i) the tax effect of the adjustments and (ii) a $2 million state tax refund for legacy tax matters during 2016.













The above tables 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. In addition to GAAP financial measures, the Company provides adjusted net income and adjusted EPS financial measures to 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. This non-GAAP reconciliation table should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP.












Table 7












(2 of 2)













Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION OF ADJUSTED NET INCOME AND EPS

(In millions, except per share data)


















Location on Consolidated Statements of Income


Nine Months Ended September 30,







2017


2016

Diluted weighted average shares outstanding



104



112













Diluted EPS





$

4.05


$

4.01













Net income attributable to Wyndham shareholders


$

422


$

447













Adjustments:











VOI inventory impairments (a)


Asset impairments



135



-


Separation and related costs (b)


Separation and related costs



24



-


Restructuring costs (c)


Restructuring



15



14


Acquisition gain (d)


Other income, net



(13)



-


Legacy benefit (e)


General and administrative



(6)



-


Asset impairment (f)


Asset impairments



5



-


Acquisition costs (g)


Operating



2



1


Venezuela currency devaluation (h)


Operating



-



24


Early extinguishment of debt (i)


Early extinguishment of debt



-



11


Contract termination (j)


Operating



-



7



Total adjustments before tax





162



57


Income tax benefit (k) (l)


Provision for income taxes



(95)



(14)

Total adjustments after tax





66



43













Total adjustments - EPS impact





0.64



0.39













Adjusted net income attributable to Wyndham shareholders


$

488


$

490













Adjusted diluted EPS




$

4.69


$

4.40













Note: Amounts may not add due to rounding.













(a)

Represents non-cash impairment charges primarily related to the writedown of undeveloped VOI land resulting from the Company's decision to no longer pursue future development at certain locations.

(b)

Represent costs associated with the Company's planned separation of its hotel franchising business and the exploration of strategic alternatives for its European rental brands.

(c)

During 2017, relates to expenses associated with restructuring initiatives at the Company's (i) corporate operations which focused on rationalizing its sourcing function and outsourcing certain information technology functions, (ii) hotel group business which primarily focused on realigning its brand operations and (iii) destination network business which primarily focused on enhancing organizational efficiency and rationalizing operations. During 2016, relates to enhancing organizational efficiency and rationalizing existing facilities across the Company.

(d)

Represents a gain recorded in connection with the acquisition of a controlling interest in Love Home Swap at our destination network business.

(e)

Relates to the net benefit from the resolution of and adjustment to certain contingent liabilities resulting from the Company's separation from Cendant.

(f)

Represents a non-cash impairment charge related to the write-down of assets resulting from the decision to abandon a new product initiative at the Company's vacation ownership business.

(g)

Represents costs related to acquisitions.

(h)

Represents the impact from the devaluation of the exchange rate of Venezuela at the Company's destination network business.

(i)

Represents costs incurred in connection with the Company's early repurchase of its 6.0% senior unsecured notes.

(j)

Relates to costs associated with the anticipated termination of a management contract at the Company's hotel group business.

(k)

The amount for 2017 relates to (i) the tax effect of the adjustments and (ii) a tax benefit on foreign currency losses recognized from an internal restructuring. There was no tax provision associated with the $13 million acquisition gain.

(l)

The amount for 2016 relates to (i) the tax effect of the adjustments and (ii) a $2 million state tax refund for legacy tax matters during 2016. There was no tax benefit associated with the $24 million Venezuela currency devaluation adjustment.













The above tables 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. In addition to GAAP financial measures, the Company provides adjusted net income and adjusted EPS financial measures to 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. This non-GAAP reconciliation table should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP.

View Table Fullscreen
























Table 8
























(1 of 3)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION OF ADJUSTED EBITDA BY REPORTABLE SEGMENT

(In millions)













































































EBITDA



Legacy
benefit, net (b)

Restructuring
Costs(c)



VOI Inventory
and Asset
Impairment



Separation
and Related
Costs (e)



Acquisition
(Gain)/ Loss, net (f)


Adjusted
EBITDA

Three months ended March 31, 2017






















Hotel Group



$

85


$

-


$

1


$

-


$

-


$

-


$

85

Destination Network




102



-



-



-



-



-



102

Vacation Ownership




118



-



-



5

(d)


-



-



124

Total Reportable Segments



305



-



1



5



-



-



311

Corporate and Other (a)



(39)



-



6



-



-



-



(33)

Total Company



$

266


$

-


$

7


$

5


$

-


$

-


$

278


























Three months ended June 30, 2017






















Hotel Group



$

106


$

-


$

-


$

-


$

-


$

-


$

106

Destination Network




89



-



-



-



-



-



89

Vacation Ownership




47



-



-



135

(e)


-



-



183

Total Reportable Segments



242



-



-



135



-



-



378

Corporate and Other (a)



(28)



-



-



-



-



-



(28)

Total Company



$

214


$

-


$

-


$

135


$

-


$

-


$

350


























Three months ended September 30, 2017






















Hotel Group



$

121


$

-


$

-


$

-


$

-


$

1


$

122

Destination Network




154



-



8



-



-



(12)



150

Vacation Ownership




190



-



-



-



-



-



190

Total Reportable Segments



465



-



8



-



-



(11)



462

Corporate and Other (a)



(43)



(7)






-



24



-



(26)

Total Company



$

422


$

(7)


$

8


$

-


$

24


$

(11)


$

436

View Table Fullscreen


























Note: Amounts may not add down or across due to rounding.


(a)

Includes the elimination of transactions between segments.

(b)

Relates to a net benefit from adjustments to certain contingent liabilities from the Company's separation from Cendant.

(c)

Relates to expenses associated with restructuring initiatives at the Company's (i) corporate operations which focused on rationalizing its sourcing function and outsourcing certain information technology
functions, (ii) hotel group business which primarily focused on realigning its brand operations and (iii) destination network business which primarily focused on enhancing organizational efficiency and
rationalizing its operations.

(d)

Represents a $5 million non-cash impairment charge related to the write-down of assets resulting from the decision to abandon a new product initiative.

(e)

Represents a $135 million non-cash impairment charges primarily related to the writedown of undeveloped VOI land resulting from the Company's decision to no longer pursue future development at certain locations.

(f)

Represent costs associated with the Company's planned separation of its hotel franchising business and the exploration of strategic alternatives for its European rental brands.

(g)

Represent (i) a gain recorded in connection with the acquisition of a controlling interest in Love Home Swap ($13 million) partially offset by $1 million of acquisition costs and (ii) $1 million of costs related
to the AmericInn acquisition which closed in October 2017.

View Table Fullscreen






























Table 8






























(2 of 3)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION OF ADJUSTED EBITDA BY REPORTABLE SEGMENT

(In millions)























































































































EBITDA


Venezuela
Currency
Devaluation (b)


Acquisition
Costs (c)


Legacy
Costs (d)


Restructuring
Costs (e)


Contract
Termination (f)



Executive
Departure
Costs (g)



Bargain
Purchase
Gain (b)


Adjusted
EBITDA

Three months ended March 31, 2016




























Hotel Group


$

84


$

-


$

-


$

-


$

-


$

-


$

-


$

-


$

84

Destination Network



81



24



-



-



-



-



-



-



105

Vacation Ownership



136



-



-



-



-



-



-



-



136

Total Reportable Segments



301



24



-



-



-



-



-



-



325

Corporate and Other (a)



(34)



-



-



-



-



-



-



-



(34)

Total Company


$

267


$

24


$

-


$

-


$

-


$

-


$

-


$

-


$

291





























Three months ended June 30, 2016




























Hotel Group


$

101


$

-


$

-


$

-


$

-


$

-


$

-


$

-


$

101

Destination Network



85



-



1






-



-



-



-



85

Vacation Ownership



187



-



-



-



-



-



-



-



187

Total Reportable Segments



373



-



1



-



-



-



-



-



373

Corporate and Other (a)



(33)



-



-



-



-



-



-



-



(33)

Total Company


$

340


$

-


$

1


$

-


$

-


$

-


$

-


$

-


$

340





























Three months ended September 30, 2016




























Hotel Group


$

107


$

-


$

-


$

-


$

3


$

7


$

-


$

-


$

117

Destination Network



138



-



-



-



4



-



-



-



142

Vacation Ownership



189



-



-



-



6



-



-



-



195

Total Reportable Segments



434



-



-



-



13



7



-



-



454

Corporate and Other (a)



(32)



-






(1)



1



-



-



-



(31)

Total Company

$

402


$

-


$

-


$

(1)


$

14


$

7


$

-


$

-


$

423




























Three months ended December 31, 2016



























Hotel Group

$

99


$

-


$

1


$

-


$

(1)


$

-


$

-


$

-


$

99

Destination Network


53



-



1



-



-



-



-



(2)



52

Vacation Ownership


182



-






-



2



-



6



-



191

Total Reportable Segments



334



-



2



-



1



-



6



(2)



342

Corporate and Other (a)



(12)



-



-



(11)



-



-



-



-



(24)

Total Company

$

322


$

-


$

2


$

(11)


$

1


$

-


$

6


$

(2)


$

318




























Twelve months ended December 31, 2016




























Hotel Group


$

391


$

-


$

1


$

-


$

2


$

7


$

-


$

-


$

401

Destination Network



356



24



1



-



5



-



-



(2)



385

Vacation Ownership



694



-



-



-



8



-



6



-



708

Total Reportable Segments



1,441



24



2



-



15



7



6



(2)



1,494

Corporate and Other (a)



(110)



-



-



(11)



-



-



-



-



(121)

Total Company


$

1,331


$

24


$

2


$

(11)


$

15


$

7


$

6


$

(2)


$

1,373






























Note: Amounts may not add across due to rounding. The sum of the quarters may not add down due to rounding.


(a)

Includes the elimination of transactions between segments.

(b)

Represents the impact from the devaluation of the exchange rate of Venezuela.

(c)

Represents costs related to acquisitions.

(d)

Relates to a benefit from adjustments to certain contingent liabilities from the Company's separation from Cendant.

(e)

Relates to costs incurred due to enhancing organizational efficiency and rationalizing existing facilities across the Company.

(f)

Relates to additional costs associated with the termination of a management contract.

(g)

Represents costs associated with the departure of the chief executive officer at the Company's vacation ownership business.

(h)

Represents a gain from a bargain purchase on an acquisition of a vacation rentals business.

















Table 8

















(3 of 3)

Wyndham Worldwide Corporation

NON-GAAP RECONCILIATION OF ADJUSTED EBITDA BY REPORTABLE SEGMENT

SHARED-BASED COMPENSATION EXPENSE

(In millions)





































The following tables provide detail regarding share-based compensation expense which is included within adjusted EBITDA:









































2017





Q1


Q2


Q3


Q4


Full Year

Adjusted EBITDA


$

278


$

350


$

436



N/A



N/A


Share-based compensation expense (*)



14



14



14



N/A



N/A

Adjusted EBITDA excluding share-based compensation expense


$

292


$

364


$

450



N/A



N/A



























































2016





Q1


Q2


Q3


Q4


Full Year

Adjusted EBITDA


$

291


$

340


$

423


$

318


$

1,373


Share-based compensation expense (*)



13



20



14



13



61

Adjusted EBITDA excluding share-based compensation expense


$

304


$

360


$

437


$

331


$

1,434





































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

(*)

Excludes share-based compensation expenses for which there was no impact on adjusted EBITDA. Such costs amounted to $1 million during Q1, Q2, and Q3 2017. During 2016, such costs amounted to $1 million during Q1, Q2 and Q3, and $4 million during Q4 and $7 million for the full year. The Company believes providing adjusted EBITDA with the additional exclusion of share-based compensation expense assists our investors and management by providing an additional financial measure to evaluate ongoing operations by excluding the variations among companies in timing, amount and reporting of share-based compensation expense, which may differ significantly among companies.



Table 9

Wyndham Worldwide Corporation


NON-GAAP RECONCILIATION OF GROSS VOI SALES


(In millions)
















GROSS VOI SALES












We believe gross vacation ownership sales provide an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period.




The following table provides a reconciliation of Gross VOI sales (see Table 3) to vacation ownership interest sales (see Table 5):














Year












2017


Q1

Q2

Q3

Q4

Full Year













Gross VOI sales


$

439

$

563

$

602

$

N/A

$

N/A

Less: Sales under WAAM Fee-for-Service



(3)


(5)


(11)


N/A


N/A

Gross VOI sales, net of WAAM Fee-for-Service sales



436


558


590


N/A


N/A

Less: Loan loss provision



(85)


(110)


(123)


N/A


N/A

Vacation ownership interest sales


$

351

$

448

$

467

$

N/A

$

N/A













2016
























Gross VOI sales


$

428

$

518

$

564

$

502

$

2,012

Less: Sales under WAAM Fee-for-Service



(23)


(20)


(20)


(1)


(64)

Gross VOI sales, net of WAAM Fee-for-Service sales



405


498


544


501


1,948

Less: Loan loss provision



(63)


(90)


(104)


(86)


(342)

Vacation ownership interest sales


$

342

$

409

$

441

$

415

$

1,606













2015
























Gross VOI sales


$

390

$

502

$

565

$

507

$

1,965

Less: Sales under WAAM Fee-for-Service



(21)


(26)


(37)


(42)


(126)

Gross VOI sales, net of WAAM Fee-for-Service sales



369


477


528


464


1,838

Less: Loan loss provision



(46)


(60)


(78)


(64)


(248)

Less: Impact of percentage-of-completion accounting



13


-


(2)


2


13

Vacation ownership interest sales


$

336

$

417

$

448

$

403

$

1,604













2014
























Gross VOI sales


$

410

$

496

$

513

$

470

$

1,889

Less: Sales under WAAM Fee-for-Service



(44)


(40)


(27)


(21)


(132)

Gross VOI sales, net of WAAM Fee-for-Service sales



366


456


486


449


1,757

Less: Loan loss provision



(60)


(70)


(70)


(60)


(260)

Less: Loan loss provision



(3)


(4)


(1)


(4)


(12)

Vacation ownership interest sales


$

303

$

382

$

415

$

385

$

1,485

_____________












Note: Amounts may not add due to rounding.






The following includes primarily tele-sales upgrades and other non-tour revenues, which are excluded from Gross VOI sales in the Company's VPG calculation (see Table 3):















Q1

Q2

Q3

Q4

Full Year













2017


$

25

$

22

$

33

$

N/A

$

N/A

2016


$

25

$

22

$

31

$

30

$

108

2015


$

24

$

17

$

32

$

27

$

100

2014


$

25

$

21

$

27

$

24

$

97




















Table 10

Wyndham Worldwide Corporation

2017 OUTLOOK - NON-GAAP

(In millions, except per share data)




















Outlook (a)

Outlook (a)




As Adjusted

As Adjusted




(Non-GAAP)

(Non-GAAP)




Low


High









Net revenues

$

5,800


$

5,850

















Adjusted EBITDA

$

1,380


$

1,395

Depreciation and amortization


(267)



(265)

Interest expense, net


(152)



(150)

Adjusted income before taxes


961



980

Income taxes


(343)



(352)

Adjusted net income

$

618


$

628









Adjusted diluted earnings per share

$

5.95


$

6.05









Diluted shares


103.9



103.9

















In determining adjusted EBITDA, adjusted Net Income and adjusted EPS, the Company excludes certain items which are otherwise included in determining the comparable GAAP financial measures. A description of the adjustments which have been applicable in determining adjusted EBITDA, adjusted Net Income and adjusted EPS is included in Tables 7 and 8. The Company is providing outlook on a non-GAAP basis because the Company is unable to predict with reasonable certainty the totality or ultimate outcome or occurrence of potential adjustments for the forward-looking period, which can be dependent on future events that may not be reliably predicted, such as separation costs, acquisitions, legacy expenses, restructuring events, asset impairments, contract terminations, currency devaluations, or early extinguishment of debt instruments. Based on past reported results, where one or more of these items have been applicable, such excluded special items could be material, individually or in the aggregate, to the reported results. See Tables 7 and 8 for historical adjustments.



(a) Outlook represents Company's approximate projection of performance for the outlook period. Projections may not total because the Company
does not expect the actual results of all items to be at the precise amount simultaneously.




























Table 11


Wyndham Worldwide Corporation


NON-GAAP RECONCILIATION - CONSTANT CURRENCY, CURRENCY NEUTRAL AND ACQUISITIONS


(In millions, except per share data)




The Company reports certain current year period financial measures on a constant currency and currency-neutral basis and excluding the impact of acquisitions. The Company believes providing certain financial measures on a constant currency and currency-neutral basis as well as excluding the impact of acquisitions assists management and investors in better understanding underlying results and trends by excluding the impact of period over period changes in foreign exchange rates and changes resulting from acquisitions.




Constant currency results assume foreign results are translated from foreign currencies to the U.S. dollar at exchange rates consistent with those in the comparable period.




Currency Neutral results (i) assume foreign results are translated from foreign currencies to the U.S. dollar at exchange rates consistent with those in the comparable period and (ii) eliminating foreign exchange related activities such as foreign exchange hedges, balance sheet remeasurements, currency devaluations and/or other adjustments.




Acquisition results are defined as the incremental period over period changes in the Company's results directly attributable to acquisitions.




Revenues Excluding Impact of Hurricanes

Three Months Ended September 30,



2017


2016


% Change


Total revenues as reported

$

1,629


$

1,573


4%



Adjustments:










Impact of hurricanes


13



-


*



Total revenues excluding impact of hurricanes

$

1,642


$

1,573


4%











Revenues in Constant Currency and Excluding Acquisitions:

Three Months Ended September 30,



2017


2016


% Change


Destination Network revenues as reported

$

511


$

486


5%



Adjustments:










Incremental revenues from acquisitions


(9)



-


*



Foreign currency - constant currency


(8)



-


*



Destination Network revenues in constant currency and excluding acquisitions

$

494


$

486


2%











Rental revenues as reported

$

327


$

304


8%



Adjustments:










Incremental revenues from acquisitions


(6)



-


*



Foreign currency - constant currency


(7)



-


*



Rental revenues in constant currency and excluding acquisitions

$

314


$

304


3%











Adjusted EBITDA Excluding Impact of Hurricanes

Three Months Ended September 30,



2017


2016


% Change


Total Adjusted EBITDA (a)

$

436


$

423


3%



Adjustments:










Impact of hurricanes


9



-


*



Total adjusted EBITDA excluding the impact of hurricanes

$

445


$

423


5%




















Adjusted diluted EPS Excluding the Impact of Hurricanes

Three Months Ended September 30,



2017


2016


% Change


Adjusted diluted EPS (b)

$

2.03


$

1.89


7%



Adjustments:










Impact of hurricanes


0.06



-


*



Adjusted diluted EPS excluding the impact of hurricanes

$

2.09


$

1.89


11%











_________


* Not meaningful.


(a) See Table 8 for a reconciliation of EBITDA to adjusted EBITDA and Table 2 for a reconciliation of Net Income to EBITDA.


(b) See Table 7 for a reconciliation of NON-GAAP of Net Income and EPS.


















































Table 12


Wyndham Worldwide Corporation

SCHEDULE OF DEBT

(In millions)


























September 30,


December 31,


September 30,










2017


2016


2016



















Securitized vacation ownership debt: (a)










Term notes

$

1,419


$

1,857


$

1,818


Bank conduit facility (b)


582



284



280


Total securitized vacation ownership debt (c)


2,001



2,141



2,098


Less: Current portion of securitized vacation ownership debt


192



195



200


Long-term securitized vacation ownership debt

$

1,809


$

1,946


$

1,898




































Debt:












Revolving credit facility (due July 2020) (d)

$

455


$

14


$

12


Commercial paper (e)


100



427



404


Term loan (due March 2021)


324



323



323


$300 million 2.95% senior unsecured notes (due March 2017) (f)


-



300



300


$450 million 2.50% senior unsecured notes (due March 2018) (g)


450



449



449


$40 million 7.375% senior unsecured notes (due March 2020)


40



40



40


$250 million 5.625% senior unsecured notes (due March 2021)


248



248



247


$650 million 4.25% senior unsecured notes (due March 2022)


648



648



648


$400 million 3.90% senior unsecured notes (due March 2023)


406



407



407


$300 million 4.15% senior unsecured notes (due April 2024)


297



-



-


$350 million 5.10% senior unsecured notes (due October 2025)


339



338



338


$400 million 4.50% senior unsecured notes (due April 2027)


400



-



-


Capital leases


143



143



151


Other


50



34



32


Total long-term debt







3,900



3,371



3,351


Less: Current portion of long-term debt


42



34



33


Long-term debt

$

3,858


$

3,337


$

3,318


__________

(a)

The Company's vacation ownership contract receivables are securitized through bankruptcy-remote special purpose entities ("SPEs") that are consolidated within our financial statements. These bankruptcy-remote SPEs are legally separate from the Company. The receivables held by the bankruptcy-remote SPEs are not available to the Company's creditors and legally are not the Company's assets. Additionally, the non-recourse debt that is securitized through the SPEs is legally not a liability of the Company and thus, the creditors of these SPEs have no recourse to the Company for principal and interest.

(b)

Represents a non-recourse vacation ownership bank conduit facility with borrowing capability through August 2018 and a borrowing capacity of $650 million. As of September 30, 2017, this facility had a remaining borrowing capacity of million. Borrowings under this facility are required to be repaid as the collateralized receivables amortize.

(c)

This debt is collateralized by $2,614 million, $2,601 million and $2,560 million, of underlying vacation ownership contract receivables and related assets as of September 30 2017, December 31, 2016, and September 30, 2016, respectively.

(d)

Represents a $1.5 billion revolving credit facility that expires in July 2020. As of September 30 2017, the Company had $1 million of outstanding letters of credit. After considering outstanding commercial paper borrowings of $100 million, the remaining borrowing capacity was $0.9 billion as of September 30, 2017.

(e)

Represents commercial paper programs of $1.25 billion with a remaining borrowing capacity of $1.15 billion as of September 30, 2017.

(f)

Classified as long-term as of December 31, 2016 and September 30, 2016 as the Company had the intent to refinance such debt on a long-term basis and the ability to do so with its revolving credit facility.

(g)

Classified as long-term as of September 30, 2017 as the Company has the intent to refinance such debt on a long-term basis and the ability to do so with its revolving credit facility.

SOURCE Wyndham Worldwide Corporation


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