Company Grows Development Pipeline by 11% and Global RevPAR by 12%. Raises Full-Year 2023 Outlook.

Wyndham;

Wyndham Hotels & Resorts (NYSE: WH) today announced results for the three months ended March 31, 2023.  Highlights include:

  • Global RevPAR grew 12% compared to first quarter 2022 in constant currency.
  • U.S. RevPAR grew 4% compared to first quarter 2022.
  • System-wide rooms grew 4% year-over-year, including 1% of growth in the U.S. and 9% of growth internationally.
  • Development pipeline grew 11% year-over-year to 226,000 rooms, and signings increased 7%, excluding ECHO Suites Extended Stay by Wyndham.
  • Awarded 35 new construction projects for ECHO Suites Extended Stay by Wyndham, bringing the total number to 205 since launch in March 2022.
  • Returned $87 million to shareholders through $56 million of share repurchases and a quarterly cash dividend of $0.35 per share.
  • Company raises full-year 2023 outlook.

"Our impressive first quarter results demonstrate continued momentum with global RevPAR growth of 12%, net room growth of 4% and the 11th consecutive quarter of sequential growth in our development pipeline," said Geoffrey A. Ballotti, president and chief executive officer.  "We outperformed our adjusted EBITDA expectations, leading us to raise our full-year outlook as a result.  With our seasonally strongest summer season on the horizon and no signs of slowdown in our middle-income guests' desire to spend on travel, we're enthusiastic about the opportunities that lie ahead and our ability to deliver outstanding value to our shareholders, guests, franchisees and team members."

First Quarter Financial Results

The comparability of the Company's first quarter results is impacted by the sale of its owned hotels and the exit of its select-service management business, both of which occurred in 2022, as well as quarterly timing variances from its marketing funds.  The Company's reported results and comparable-basis results (adjusted to neutralize these impacts) are presented below to enhance transparency and provide a better understanding of the results of the Company's ongoing operations:

Fee-related

and other

revenues

Net

income (a)

Adjusted

EBITDA

Reported

diluted

EPS (a)

Adjusted

diluted

EPS (a)

2022 reported

$         316

$    106

$      159

$      1.14

$   0.95

Less: CPLG/Owned asset contribution

(38)

(36)

(15)

(0.38)

(0.12)

2022 ex. CPLG/Owned asset contribution

278

70

144

0.76

0.83

2023 reported

308

67

147

0.77

0.86

Change

30

(3)

3

0.01

0.03

Less: Marketing fund variability

n/a

8

11

0.09

0.09

Comparable growth

$           30

$        5

$        14

$      0.10

$   0.12

Comparable growth rate

11 %

7 %

10 %

13 %

15 %

_____________________

Note: Growth rates may not recalculate due to rounding; see Table 7 for a reconciliation of non-GAAP metrics.

(a)     

Includes estimated tax impact for the select-service management business, owned assets and marketing fund variability.

  • Fee-related and other revenues was $308 million compared to $316 million in first quarter 2022, which included $38 million from the Company's select-service management business and owned hotels. On a comparable basis, fee-related and other revenues increased 11% year-over-year primarily reflecting global RevPAR growth of 9%, higher franchise fees and incremental license fees.
  • The Company generated net income of $67 million, or $0.77 per diluted share, compared to $106 million, or $1.14 per diluted share, in first quarter 2022. The decline in net income was primarily due to the sale of the Company's owned hotels and the exit of its select-service management business, partially offset by higher adjusted EBITDA in the Company's hotel franchising segment.
  • Adjusted EBITDA was $147 million compared to $159 million in first quarter 2022, which included a $15 million contribution from the Company's select-service management business and owned hotels. On a comparable basis - which excludes the marketing fund variability - adjusted EBITDA increased 10% year-over-year reflecting higher fee-related and other revenues.
  • During first quarter 2023, the Company's marketing fund expenses exceeded revenues by $4 million; while in first quarter 2022, the Company's marketing fund revenues exceeded expenses by $7 million.

System Size

Rooms

March 31,

2023

March 31,

2022

YOY

Change (bps)

United States

494,400

491,900

50

International

350,400

321,400

900

Global

844,800

813,300

390

The Company's global system grew 4%, reflecting 1% growth in the U.S. and 9% growth internationally.  As expected, these increases included strong growth in both the higher RevPAR midscale and above segments in the U.S. and the direct franchising business in China, which grew 4% and 10%, respectively, as well as 80 basis points of growth globally and 200 basis points internationally from the acquisition of the Vienna House brand.  The Company remains solidly on track to achieve its net room growth outlook of 2 to 4% for the full year 2023, including an increase in its retention rate compared to 2022. 

RevPAR

First

Quarter 2023

YOY

Constant

Currency

% Change

United States

$           43.84

4 %

International

27.99

37

Global

37.20

12

First quarter global RevPAR grew by 12% in constant currency compared to 2022 as the U.S. grew 4% and international grew 37%.  Approximately two-thirds of this increase is driven by stronger pricing power, while the remainder is driven by higher occupancy levels.

Development

  • On March 31, 2023, the Company's global development pipeline consisted of approximately 1,800 hotels and 226,000 rooms, representing an 11% year-over-year increase, including 28% growth in the U.S.
  • Approximately 72% of the Company's pipeline is in the midscale and above segments.
  • Approximately 57% of the Company's development pipeline is international and 80% is new construction, of which approximately 35% has broken ground.
  • During first quarter 2023, the Company awarded 123 new contracts for its legacy brands, an increase of 7% year-over-year, and 35 new contracts for its ECHO Suites Extended Stay by Wyndham brand, bringing the total number of contracts awarded for the brand to 205 since its launch. The pipeline includes over 25,000 rooms associated with the Company's ECHO brand.

Cash and Liquidity

The Company generated net cash provided by operating activities of $93 million and free cash flow of $84 million in first quarter 2023.  The Company ended the quarter with a cash balance of $150 million and approximately $890 million in total liquidity.

Share Repurchases and Dividends

During the first quarter, the Company repurchased approximately 790,200 shares of its common stock for $56 million.

The Company paid common stock dividends of $31 million, or $0.35 per share.

Full-Year 2023 Outlook

The Company is increasing its outlook as follows: 

Updated Outlook

Prior Outlook

Year-over-year rooms growth

2 - 4%

2 - 4%

Year-over-year global RevPAR growth (a)

4 - 6%

4 - 6%

Fee-related and other revenues

$1.38 - $1.41 billion

$1.38 - $1.41 billion

Adjusted EBITDA

$654 - $664 million

$650 - $660 million

Adjusted net income

$340 - $352 million

$337 - $349 million

Adjusted diluted EPS

$3.92 - $4.06

$3.84 - $3.98

Free cash flow conversion rate (b)

50 - 55%

50 - 55%

________________________

(a)     

Outlook represents global RevPAR growth of 6% to 8% compared to 2019.

(b)     

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

Year-over-year growth rates are not comparable due to the sale of the Company's owned hotels and the exit of its select-service management business, both of which occurred during 2022, as well as the variability in its marketing funds due to the support that the Company provided to its owners during 2020.

More detailed projections are available in Table 8 of this press release.  The Company is providing certain financial metrics only on a non-GAAP basis because, without unreasonable efforts, it is unable to predict with reasonable certainty the occurrence or amount of all of the adjustments or other potential adjustments that may arise in the future during the forward-looking period, which can be dependent on future events that may not be reliably predicted. Based on past reported results, where one or more of these items have been applicable, such excluded items could be material, individually or in the aggregate, to the reported results.

About Wyndham Hotels & Resorts

Wyndham Hotels & Resorts (NYSE: WH) is the world's largest hotel franchising company by the number of properties, with approximately 9,100 hotels across over 95 countries on six continents.  Through its network of approximately 845,000 rooms appealing to the everyday traveler, Wyndham commands a leading presence in the economy and midscale segments of the lodging industry.  The Company operates a portfolio of 24 hotel brands, including Super 8, Days Inn, Ramada, Microtel, La Quinta, Baymont, Wingate, AmericInn, Hawthorn Suites, Trademark Collection and Wyndham.

Table 1

WYNDHAM HOTELS & RESORTS

INCOME STATEMENT

(In millions, except per share data)

(Unaudited)

Three Months Ended

March 31,

2023

2022

Net revenues

Royalties and franchise fees

$          121

$          110

Marketing, reservation and loyalty

120

111

Management and other fees

3

35

License and other fees

23

19

Other

41

41

Fee-related and other revenues

308

316

Cost reimbursements

5

55

Net revenues

313

371

Expenses

Marketing, reservation and loyalty

124

104

Operating

20

35

General and administrative

30

29

Cost reimbursements

5

55

Depreciation and amortization

19

24

Separation-related

2

Gain on asset sale

(36)

Total expenses

200

211

Operating income

113

160

Interest expense, net

22

20

Income before income taxes

91

140

Provision for income taxes

24

34

Net income

$            67

$          106

Earnings per share

Basic

$        0.77

$        1.15

Diluted

0.77

1.14

Weighted average shares outstanding

Basic

86.5

92.5

Diluted

87.1

93.2

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.  During the first quarter of 2023, we changed the composition of our reportable  segments to reflect the recent changes in our Hotel Management segment, including the sale of our owned assets, the exit of our select-service management business and the exit from substantially all of our U.S. full-service management business.  The remaining hotel management business, which is predominately the full-service international managed business, has been aggregated, on a prospective basis, within our Hotel Franchising segment.  We believe that adjusted EBITDA is a useful measure of performance for our segments which, when considered with GAAP measures, allows a more complete understanding of our operating performance. We use this measure internally to assess operating performance, both absolutely and in comparison to other companies, and to make day to day operating decisions, including in the evaluation of selected compensation decisions. Our presentation of adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.

First

Quarter

Second

Quarter

Third

Quarter

Fourth

Quarter

Full Year

Hotel Franchising (a)

Net revenues

2023

$            313

n/a

n/a

n/a

n/a

2022

272

$            335

$            367

$            303

$         1,277

2021

209

283

337

270

1,099

Adjusted EBITDA

2023

$            164

n/a

n/a

n/a

n/a

2022

155

$            185

$            201

$            138

$            679

2021

105

166

193

128

592

Hotel Management

Net revenues

2023

n/a

n/a

n/a

n/a

n/a

2022

$              99

$              51

$              40

$              31

$            221

2021

94

123

126

122

466

Adjusted EBITDA

2023

n/a

n/a

n/a

n/a

n/a

2022

$              20

$                6

$                7

$                4

$              37

2021

5

16

16

19

57

Corporate and Other

Net revenues

2023

$               —

n/a

n/a

n/a

n/a

2022

$               —

$               —

$               —

$               —

2021

Adjusted EBITDA

2023

$            (17)

n/a

n/a

n/a

n/a

2022

(16)

$            (16)

$            (17)

$            (16)

$            (66)

2021

(13)

(14)

(15)

(16)

(59)

Total Company

Net revenues

2023

$            313

n/a

n/a

n/a

n/a

2022

371

$            386

$            407

$            334

$         1,498

2021

303

406

463

392

1,565

Net income/(loss)

2023

$              67

n/a

n/a

n/a

n/a

2022

106

$              92

$            101

$              56

$            355

2021

24

68

103

48

244

Adjusted EBITDA

2023

$            147

n/a

n/a

n/a

n/a

2022

159

$            175

$            191

$            126

$            650

2021

97

168

194

131

590

____________________

NOTE: 

Amounts include the results of the Company's Wyndham Grand Bonnet Creek Resort and Wyndham Grand Rio Mar Resort, which were sold in March 2022 and May 2022, respectively, and its select-service management business, which was exited in March 2022, through their sale/exit dates.  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)     

For 2023, the Hotel Franchising segment includes the former Hotel Management segment, which is primarily comprised of the Company's remaining full-service management business.

Table 3

WYNDHAM HOTELS & RESORTS

CONDENSED CASH FLOWS

(In millions)

(Unaudited)

Three Months Ended

March 31,

2023

2022

Operating activities

Net income

$            67

$          106

Depreciation and amortization

19

24

Gain on asset sale

(36)

Trade receivables

4

17

Accounts payable, accrued expenses and other current liabilities

(40)

(32)

Deferred revenues

24

19

Payments of development advance notes, net

(13)

(7)

Other, net

32

44

Net cash provided by operating activities

93

135

Investing activities

Property and equipment additions

(9)

(10)

Proceeds from asset sales, net (a)

202

Net cash (used in)/provided by investing activities

(9)

192

Financing activities

Payments of long-term debt

(4)

Dividends to shareholders

(31)

(30)

Repurchases of common stock

(54)

(39)

Other, net

(10)

(9)

Net cash used in financing activities

(95)

(82)

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

(11)

245

Cash, cash equivalents and restricted cash, beginning of period

161

171

Cash, cash equivalents and restricted cash, end of period

$          150

$          416

Free Cash Flow:

We define free cash flow to be net cash provided by operating activities less property and equipment additions, which we also refer to as capital expenditures. We believe free cash flow to be a useful operating performance measure to us and investors to evaluate the ability of our operations to generate cash for uses other than capital expenditures and, after debt service and other obligations, our ability to grow our business through acquisitions and investments, as well as our ability to return cash to shareholders through dividends and share repurchases. Free cash flow is not necessarily a representation of how we will use excess cash. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities as a means for evaluating Wyndham Hotels is that free cash flow does not represent the total cash movement for the period as detailed in the condensed consolidated statement of cash flows.

Three Months Ended March 31,

2023

2022

Net cash provided by operating activities (b)

$            93

$          135

Less: Property and equipment additions

(9)

(10)

Free cash flow

$            84

$          125

____________________

(a)     

Includes proceeds of $118 million, net of transaction costs, received from the Company's sales of the Wyndham Grand Bonnet Creek Resort and the Wyndham Grand Rio Mar Resort and $84 million of proceeds from CorePoint Lodging related to the Company's exit of its select-service management business.

(b)     

2022 includes the select-service management business and owned hotels as well as a reduced level of marketing spend due to Omicron concerns.  While the Company will lap the sale of its owned hotels and the exit of its select-service management business by third quarter 2023, the marketing fund variability will impact the quarterly year-over-year comparisons for the remainder of 2023.

Table 4

WYNDHAM HOTELS & RESORTS

BALANCE SHEET SUMMARY AND DEBT

(In millions)

(Unaudited)

As of

March 31, 2023

As of

December 31, 2022

Assets

Cash and cash equivalents

$                               150

$                               161

Trade receivables, net

230

234

Property and equipment, net

96

99

Goodwill and intangible assets, net

3,124

3,131

Other current and non-current assets

484

498

Total assets

$                           4,084

$                           4,123

Liabilities and stockholders' equity

Total debt

$                           2,077

$                           2,077

Other current liabilities

379

386

Deferred income tax liabilities

342

345

Other non-current liabilities

350

353

Total liabilities

3,148

3,161

Total stockholders' equity

936

962

Total liabilities and stockholders' equity

$                           4,084

$                           4,123

Our outstanding debt was as follows:

Net Effective

Interest Rate (a)

As of

March 31, 2023

As of

December 31, 2022

$750 million revolving credit facility (due April 2027)

$                                 —

$                                 —

$400 million term loan A (due April 2027)

6.2 %

399

399

$1.6 billion term loan B (due May 2025)

3.7 %

1,141

1,139

4.375% senior unsecured notes (due August 2028)

4.4 %

494

494

Finance leases

4.5 %

43

45

Total debt

4.4 %

2,077

2,077

Cash and cash equivalents

150

161

Net debt

$                           1,927

$                           1,916

_____________________

(a) Represents weighted average interest rates for the first quarter 2023, including the effects from hedging.

Our outstanding debt as of March 31, 2023 matures as follows:

Amount

Within 1 year

$                                   26

Between 1 and 2 years

26

Between 2 and 3 years

1,176

Between 3 and 4 years

37

Between 4 and 5 years

306

Thereafter

506

Total

$                             2,077

Table 5

WYNDHAM HOTELS & RESORTS

REVENUE DRIVERS

Three Months Ended March 31,

2023

2022

Change

% Change

Beginning Room Count (January 1)

United States

493,800

490,600

3,200

1 %

International

348,700

319,500

29,200

9

Global

842,500

810,100

32,400

4

Additions

United States

6,100

6,800

(700)

(10)

International

4,200

4,600

(400)

(9)

Global

10,300

11,400

(1,100)

(10)

Deletions

United States

(5,500)

(5,500)

0

International

(2,500)

(2,700)

200

7

Global

(8,000)

(8,200)

200

2

Ending Room Count (March 31)

United States

494,400

491,900

2,500

1

International (a)

350,400

321,400

29,000

9

Global

844,800

813,300

31,500

4 %

As of March 31,

FY 2022

Royalty

Distribution

2023

2022

Change

% Change

System Size

United States

Economy

233,600

240,400

(6,800)

(3 %)

Midscale and Upper Midscale

241,700

232,900

8,800

4

Upscale and Above

19,100

18,600

500

3

Total United States

494,400

491,900

2,500

1 %

85 %

International

Greater China 

162,100

154,900

7,200

5 %

2

Rest of Asia Pacific

30,500

29,400

1,100

4

1

Europe, the Middle East and Africa (a)

79,800

66,600

13,200

20

5

Canada

39,500

39,100

400

1

5

Latin America

38,500

31,400

7,100

23

2

Total International

350,400

321,400

29,000

9 %

15

Global

844,800

813,300

31,500

4 %

100 %

_________________________ 

(a)     

2023 includes 6,400 rooms associated with the acquisition of Vienna House in third quarter of 2022.

Table 5 (continued)

WYNDHAM HOTELS & RESORTS

REVENUE DRIVERS

Three Months

Ended

March 31, 2023

 Constant Currency

% Change (a)

Regional RevPAR Growth

United States

Economy

$                         35.64

1 %

Midscale and Upper Midscale

49.58

5

Upscale and Above

86.46

9

Total United States

$                         43.84

4 %

International

Greater China

$                         14.14

15 %

Rest of Asia Pacific

31.23

43

Europe, the Middle East and Africa

41.37

48

Canada

40.86

30

Latin America

47.54

59

Total International

$                         27.99

37 %

Global

$                         37.20

12 %

Three Months Ended March 31,

2023

2022

% Change

Average Royalty Rate

United States

4.5 %

4.6 %

(10 bps)

International

2.3 %

2.3 %

Global

3.9 %

4.0 %

(10 bps)

______________________

(a)     International excludes the impact of currency exchange movements.

Table 6

WYNDHAM HOTELS & RESORTS

HISTORICAL REVPAR AND ROOMS

First

Quarter

Second

Quarter

Third

Quarter

Fourth

Quarter

Full

Year

Hotel Franchising (a)

Global RevPAR

2023

$         37.20

n/a

n/a

n/a

n/a

2022

$         33.08

$         43.74

$         48.61

$         39.18

$         41.23

2021

$         24.02

$         35.69

$         44.67

$         34.77

$         34.85

U.S. RevPAR

2023

$         43.84

n/a

n/a

n/a

n/a

2022

$         41.01

$         54.70

$         58.45

$         45.49

$         50.00

2021

$         29.68

$         46.99

$         56.38

$         42.45

$         43.95

International RevPAR

2023

$         27.99

n/a

n/a

n/a

n/a

2022

$         21.05

$         26.80

$         33.90

$         30.16

$         28.11

2021

$         15.26

$         18.21

$         26.62

$         23.13

$         20.86

Global Rooms (b)

2023

844,800

n/a

n/a

n/a

n/a

2022

793,200

799,200

816,300

827,100

827,100

2021

748,700

752,500

758,600

769,400

769,400

U.S. Rooms

2023

494,400

n/a

n/a

n/a

n/a

2022

486,600

487,600

488,100

493,500

493,500

2021

452,500

454,200

458,000

465,100

465,100

International Rooms (b)

2023

350,400

n/a

n/a

n/a

n/a

2022

306,600

311,600

328,200

333,600

333,600

2021

296,200

298,300

300,600

304,300

304,300

Hotel Management

Global RevPAR

2023

n/a

n/a

n/a

n/a

n/a

2022

$         56.55

$         65.13

$         71.54

$         68.04

$         64.07

2021

$         38.17

$         56.08

$         64.63

$         57.57

$         53.81

U.S. RevPAR

2023

n/a

n/a

n/a

n/a

n/a

2022

$         69.92

$       135.35

$       126.34

$         98.28

$         92.66

2021

$         42.89

$         67.42

$         78.27

$         66.77

$         63.20

International RevPAR

2023

n/a

n/a

n/a

n/a

n/a

2022

$         40.26

$         40.89

$         53.57

$         59.49

$         48.61

2021

$         27.12

$         31.20

$         37.53

$         40.96

$         34.31

Global Rooms

2023

n/a

n/a

n/a

n/a

n/a

2022

20,100

19,700

19,700

15,400

15,400

2021

48,500

45,500

44,000

40,700

40,700

U.S. Rooms

2023

n/a

n/a

n/a

n/a

n/a

2022

5,300

4,800

4,800

300

300

2021

33,500

30,600

28,800

25,500

25,500

International Rooms

2023

n/a

n/a

n/a

n/a

n/a

2022

14,800

14,900

14,900

15,100

15,100

2021

15,000

14,900

15,200

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

2023

$         37.20

n/a

n/a

n/a

n/a

2022

$         34.06

$         44.28

$         49.17

$         39.86

$         41.88

2021

$         24.90

$         36.92

$         45.80

$         35.99

$         35.95

U.S. RevPAR

2023

$         43.84

n/a

n/a

n/a

n/a

2022

$         42.11

$         55.57

$         59.15

$         45.96

$         50.72

2021

$         30.62

$         48.37

$         57.73

$         43.84

$         45.19

International RevPAR

2023

$         27.99

n/a

n/a

n/a

n/a

2022

$         21.95

$         27.46

$         34.79

$         31.44

$         29.05

2021

$         15.83

$         18.84

$         27.15

$         23.99

$         21.52

Global Rooms (b)

2023

844,800

n/a

n/a

n/a

n/a

2022

813,300

818,900

836,000

842,500

842,500

2021

797,200

798,000

802,600

810,100

810,100

U.S. Rooms

2023

494,400

n/a

n/a

n/a

n/a

2022

491,900

492,400

492,900

493,800

493,800

2021

486,000

484,800

486,800

490,600

490,600

International Rooms (b)

2023

350,400

n/a

n/a

n/a

n/a

2022

321,400

326,500

343,100

348,700

348,700

2021

311,200

313,200

315,800

319,500

319,500

_____________________

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, including approximately 19,000 rooms in first quarter 2022.

(a)     

For 2023, the Hotel Franchising segment includes the former Hotel Management segment, which is primarily comprised of the Company's remaining full-service management business.

(b)     

Includes 6,400 Vienna House rooms acquired in the third quarter of 2022.

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

2023

Net income

$             67

Provision for income taxes

24

Depreciation and amortization

19

Interest expense, net

22

Stock-based compensation expense

9

Development advance notes amortization

3

Separation-related expenses (a)

2

Foreign currency impact of highly inflationary countries (b)

1

Adjusted EBITDA

$           147

2022

Net income

$           106

$             92

$           101

$             56

$           355

Provision for income taxes

34

31

38

16

121

Depreciation and amortization

24

17

18

19

77

Interest expense, net

20

20

21

21

80

Early extinguishment of debt (c)

2

2

Stock-based compensation expense

8

9

8

8

33

Development advance notes amortization

3

3

3

3

12

Gain on asset sale, net (d)

(36)

1

(35)

Separation-related (income)/expenses (a)

(1)

1

1

1

Foreign currency impact of highly inflationary countries (b)

1

1

2

4

Adjusted EBITDA

$           159

$           175

$           191

$           126

$           650

2021

Net income

$             24

$             68

$           103

$             48

$           244

Provision for income taxes

11

25

36

19

91

Depreciation and amortization

24

24

23

25

95

Interest expense, net

28

22

22

22

93

Early extinguishment of debt (c)

18

18

Stock-based compensation expense

5

8

7

8

28

Development advance notes amortization

2

2

3

3

11

Impairments, net (e)

6

6

Separation-related expenses (a)

2

1

3

Foreign currency impact of highly inflationary countries (b)

1

1

Adjusted EBITDA

$             97

$           168

$           194

$           131

$           590

_____________________

NOTE: Amounts may not add due to rounding.

(a)

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

(b)

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

(c)

Amount in 2022 relates to non-cash charges associated with the Company's extension of its revolving credit facility and the prepayment of $400 million of its term loan B. Amount in 2021 relates to the redemption premium and non-cash expenses associated with the early redemption of the Company's 5.375% senior unsecured notes.

(d)     

Represents net gain on sale of the Company's owned hotel, the Wyndham Grand Bonnet Creek Resort. There was no gain or loss on sale of the Company's Wyndham Grand Rio Mar Resort as the proceeds received approximated adjusted net book value.

(e)

Represents a non-cash charge to reduce the carrying values of the Company's owned hotels long-lived assets to their fair value in connection with the Company's Board approval of a plan to sell these assets in 2022.

Table 7 (continued)

WYNDHAM HOTELS & RESORTS

NON-GAAP RECONCILIATIONS

(In millions, except per share data)

Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS:

Three Months Ended

March 31,

2023

2022

Diluted EPS

$       0.77

$       1.14

Net income

$           67

$         106

Adjustments:

Acquisition-related amortization expense (a)

7

12

Separation-related expenses

2

Foreign currency impact of highly inflationary countries

1

Gain on asset sale (b)

(36)

Total adjustments before tax

10

(24)

Income tax provision/(benefit) (c)

2

(6)

Total adjustments after tax

8

(18)

Adjusted net income

$           75

$           88

Adjustments - EPS impact

0.09

(0.19)

Adjusted diluted EPS

$       0.86

$       0.95

Diluted weighted average shares outstanding

87.1

93.2

_________________________

(a)     

Reflected in depreciation and amortization on the income statement.

(b)     

Represents gain on sale of the Company's owned hotel, the Wyndham Grand Bonnet Creek Resort.

(c)     

Reflects the estimated tax effects of the adjustments.

Table 8

WYNDHAM HOTELS & RESORTS

2023 OUTLOOK

As of April 26, 2023

(In millions, except per share data)

2023 Outlook

Fee-related and other revenues

$

1,379 - 1,409

Adjusted EBITDA (a)

654 - 664

Depreciation and amortization expense (b)

48 - 50

Development advance notes amortization expense

13 - 15

Stock-based compensation expense

37 - 39

Interest expense, net

93 - 97

Adjusted income before income taxes

454 - 468

Income tax expense (c)

114 - 116

Adjusted net income

$

340 - 352

Adjusted diluted EPS

$

3.92 - 4.06

Diluted shares (d)

86.8

Marketing, reservation and loyalty funds (e)

Approx. $10

Capital expenditures

Approx. $35

Development advance notes

Approx. $60

Free cash flow conversion rate (f)

50% - 55%

Year-over-Year Growth

Global RevPAR (g)

4% - 6%

Number of rooms

2% - 4%

_____________________

(a) 

Year-over-year growth rates are not comparable due to the sale of the Company's owned hotels and the exit of its select-service management business during 2022, as well as the variability in its marketing funds due to the recovery of the COVID support that the Company provided to its owners during 2020. 

(b)

Excludes amortization of acquisition-related intangible assets of ~$27 million.

(c)

Outlook assumes an effective tax rate of approximately 25%.

(d)

Excludes the impact of any share repurchases after March 31, 2023.

(e)

Represents the recovery of $49 million COVID support that the Company provided to its owners during 2020. The Company recovered $38 million of the $49 million support during 2021 and 2022 combined.  

(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)

Outlook represents global RevPAR growth of 6% - 8% compared to 2019.

In determining adjusted EBITDA, interest expense, net, adjusted income before income taxes, adjusted net income, adjusted diluted EPS and free cash flow conversion rate, we exclude certain items which are otherwise included in determining the comparable GAAP financial measures. We are providing these measures on a non-GAAP basis only because, without unreasonable efforts, we are unable to predict with reasonable certainty the occurrence or amount of all the adjustments or other potential adjustments that may arise in the future during the forward-looking period, which can be dependent on future events that may not be reliably predicted. Based on past reported results, where one or more of these items have been applicable, such excluded items could be material, individually or in the aggregate, to the reported results.