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Wyndham Hotels & Resorts Reports Second Quarter 2018 Results

7 August, 2018

Wyndham Hotels & Resorts (NYSE: WH) announces results for the three months ended June 30, 2018, which included its spin-off as an independent public company and the acquisition of La Quinta, adding over 900 hotels and nearly 89,000 rooms to its franchise system.  Highlights include:

  • Revenues increased 31% compared with second quarter 2017, to $435 million.
  • Net income was $21 million for the second quarter; adjusted net income was $73 million, a 43% increase over the prior-year quarter.
  • Diluted earnings per share were $0.21 and adjusted diluted EPS were $0.73.
  • Further Adjusted diluted EPS (calculated as if our spin-off and our acquisition and integration of La Quinta had occurred on January 1) were $0.86, above our projection of $0.79 to $0.84.
  • Adjusted EBITDA increased 19% compared with the prior-year quarter, to $125 million.
  • Further Adjusted EBITDA was $159 million, consistent with our projection of $150 to $160 million.
  • Global RevPAR increased 9% year-over-year and 4% in constant currency and excluding our 2018 acquisitions and divestitures.
  • System-wide rooms grew 12% year-over-year, and 3% excluding our 2018 acquisitions and divestitures.

"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, in our initial quarter as an independent public company," said Geoffrey A. Ballotti, chief executive officer. "We also continued to strengthen our presence in the midscale hotel segment with the addition of the La Quinta brand and its over 900 hotels in May."

Revenues were $435 million, compared with $331 million in the second quarter of 2017. Results reflect $77 million of incremental revenues from La Quinta. Excluding the impact from the acquisition of La Quinta, revenues increased 8% primarily due to 8% higher royalties and franchise fees, as well as a 17% increase in marketing, reservation and loyalty fees that in 2018 included global franchisee conference revenues that were fully offset by conference-related expenses.

Net income was $21 million compared with $48 million for the second quarter of 2017, reflecting separation-related and transaction-related costs incurred this year. Diluted EPS was $0.21.

Adjusted net income was $73 million, or $0.73 per diluted share, compared with $51 million in the second quarter of 2017. Second quarter earnings benefited from our revenue growth and lower taxes, partially offset by the timing of marketing expenses and higher interest expense. Full reconciliations of GAAP results to our non-GAAP adjusted measures for all reported periods appear in the tables to this press release.

Second quarter adjusted EBITDA was $125 million, compared with $105 million in the second quarter of 2017. Results primarily reflect the growth in revenues and $12 million of adjusted EBITDA from the La Quinta acquisition, partially offset by the timing of marketing expenses.

The Company estimates that, if it had completed its spin-off and had acquired and fully integrated La Quinta prior to April, its Further Adjusted EBITDA in the second quarter would have been $159 million, and its Further Adjusted diluted earnings per share would have been $0.86. See Tables 5 and 6 for additional information.

As of June 30, 2018, the Company's hotel system consisted of nearly 9,000 properties and more than 792,000 rooms, a 12% increase compared with the second quarter of 2017. Room count is up 3% year-over-year excluding our 2018 acquisitions and divestitures. Our development pipeline increased to nearly 1,400 hotels and over 171,000 rooms, a 13% year-over-year room increase, reflecting the addition of 24,000 La Quinta pipeline rooms and the removal of 2,000 Knights Inn pipeline rooms. Approximately 51% of our pipeline is international and 70% is new construction.


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