WYNDHAM HOTELS & RESORTS REPORTS STRONG FOURTH QUARTER AND FULL-YEAR 2021 RESULTS (United States)
Exceeds top end of full-year outlook and reports largest pipeline in company’s history company provides full-year 2022 outlook board increases share repurchase authorization by $400 Million |
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WYNDHAM HOTELS & RESORTS REPORTS STRONG FOURTH QUARTER AND FULL-YEAR 2021 RESULTS (United States)
Exceeds top end of full-year outlook and reports largest pipeline in company’s history company provides full-year 2022 outlook board increases share repurchase authorization by $400 Million |
Category: North America & West Indies / Carribean islands - United States - Industry economy
- Figures / Studies
This is a press release selected by our editorial committee and published online for free on 2022-02-17
Wyndham Hotels & Resorts (NYSE: WH) today announced results for the three months and year ended December 31, 2021. Highlights include:
- S. RevPAR for the quarter exceeded 2019 levels by 9%, growing 58% versus 2020.
- System-wide rooms grew 180 basis points year-over-year, including 70 basis points of growth in the U.S. and 350 basis points of growth internationally.
- Diluted earnings per share for the quarter of $0.52 and net income of $48 million; diluted EPS for the full-year of $2.60 and net income of $244 million.
- Adjusted diluted earnings per share of $0.69 for the quarter and adjusted net income of $64 million; adjusted earnings per share for the full-year of $3.16 and adjusted net income of $297 million.
- Adjusted EBITDA of $131 million for the quarter and $590 million for the full-year.
- Net cash provided by operating activities for the full-year of $426 million and free cash flow of $389 million.
- Returned over $190 million to shareholders for the full-year through share repurchases and dividends.
“With a 9% U.S. RevPAR increase and another 340 basis points of domestic market-share gains versus 2019 – we were very pleased with our performance this quarter as each month saw stronger growth than the month prior,” said Geoffrey A. Ballotti, president and chief executive officer.
“New COVID variants did not impact our domestic, drive-to leisure travel business and consumer demand portends a very busy Spring Break for our franchisees. We enter 2022 with strong occupancy trends in the U.S., our largest ever development pipeline and a multitude of new technology services and marketing programs to enhance our franchisees’ top and bottom lines. In addition, our Board authorized a quarterly dividend of $0.32 per share and increased our share repurchase authorization, which reflects the ongoing strength of the business and our strong free cash flow.”
Fourth Quarter 2021 Operating Results
Fee-related and other revenues increased 43% to $314 million primarily reflecting strong ADR growth in the U.S., which drove fourth quarter U.S. RevPAR 9% above 2019 levels.
The Company generated net income of $48 million, or $0.52 per diluted share, an increase of $55 million, or $0.60 per diluted share, reflecting an increase in adjusted EBITDA and lower net interest expense. Adjusted EBITDA for the quarter was $131 million, an increase of 126% versus 2020. The increase of $73 million reflects the increase in fee-related and other revenues and lower excess marketing spend, partially offset by higher volume-related expenses due to the ongoing recovery in travel demand.
During the fourth quarter 2021, the Company’s marketing fund expenses exceeded revenues by $8 million; while in fourth quarter 2020, the Company’s marketing fund expenses exceeded revenues by $26 million.
Full reconciliations of GAAP results to the Company’s non-GAAP adjusted measures for all reported periods appear in the tables to this press release.
System Size
The Company’s global system grew 180 basis points, reflecting 70 basis points of growth in the U.S. and 350 basis points of 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 5% and 15%, respectively. Fourth quarter room openings recovered to 97% of 2019 levels globally reflecting a 21% increase in domestic additions. The Company also achieved its goal of a 95% retention rate for the full year 2021.
RevPAR
Global and international RevPAR began to lap the onset of the COVID-19 pandemic in January 2021, while the U.S. began to lap its onset in March 2021. As such, comparisons to 2019 (on a two-year, constant currency basis) are more meaningful when evaluating trends. On this basis, fourth quarter RevPAR in the U.S. exceeded 2019 levels by 9% while international RevPAR declined 19%. Global RevPAR recovered to 100% of 2019 levels. The 9% increase in the U.S. is primarily due to pricing power where average daily rate exceeded 2019 levels by 8%. The 19% international decline demonstrates sequential progress from a 25% decline in third quarter.
Fourth Quarter 2021 Business Segment Discussion
Hotel Franchising revenues increased 34% year-over-year to $270 million primarily due to the global RevPAR increase. Hotel Franchising adjusted EBITDA increased 66% to $128 million reflecting the growth in revenues and lower excess marketing spend, partially offset by higher volume-related expenses.
Hotel Management revenues increased 30% year-over-year to $122 million, including a $2 million increase in cost-reimbursement revenues, which have no impact on adjusted EBITDA. Absent cost-reimbursements, Hotel Management revenues increased $26 million, or 144%, to $44 million primarily due to the global RevPAR increase, as well as improved performance at the Company’s owned hotels. Hotel Management adjusted EBITDA increased $20 million year-over-year reflecting the revenue increases, partially offset by higher volume-related expenses.
Full-Year 2021 Operating Results
Fee-related and other revenues increased 31% to $1,245 million primarily reflecting the recovery in travel demand and its impact on global RevPAR, as well as 2% growth in the Company’s global system size. Global RevPAR recovered to 88% of 2019 levels on a constant currency basis, including domestic RevPAR at 97% of 2019 levels.
The Company generated net income of $244 million, or $2.60 per diluted share, compared to net loss of $132 million, or $1.42 loss per diluted share, for the full-year 2020. Adjusted EBITDA for the full-year was $590 million, an increase of 76% versus 2020. The increase of $254 million in adjusted EBITDA primarily reflects the increase in fee-related and other revenues and marketing fund favorability, partially offset by higher volume-related expenses due to the recovery in travel demand throughout the year. The increase of $376 million, or $4.02 per diluted share, in net income reflects a further decline in after-tax special-item charges and lower net interest expense.
During full-year 2021, the Company’s marketing fund revenues exceeded expenses by $18 million; while in full-year 2020, the Company’s marketing fund expenses exceeded revenues by $49 million.
Development
The Company awarded 655 new contracts this year. On December 31, 2021, the Company’s global development pipeline consisted of over 1,500 hotels and over 194,000 rooms, the highest level on record. The pipeline grew 5% year-over-year, including 3% domestically and 6% internationally. Approximately 65% of the Company’s development pipeline is international and 79% is new construction, of which approximately 35% has broken ground. Over 80% of the global development pipeline is in the midscale and above segments, including over 70% in the U.S.
Cash and Liquidity
The Company generated $426 million of net cash provided by operating activities in the full-year 2021, compared to $67 million in 2020 and $100 million in 2019. The Company generated $389 million of free cash flow in the full-year 2021, which includes a benefit from the collection of prior year receivables that were outsized due to COVID deferrals.
At December 31, 2021, the Company had $171 million of cash on its balance sheet and over $900 million in total liquidity. The Company’s net debt leverage ratio was 3.2 times at December 31, 2021, within the Company’s 3 to 4 times stated target range, compared to 3.3 times at December 31, 2019.
Share Repurchases and Dividends
During the fourth quarter of 2021, the Company repurchased approximately 994,000 shares of its common stock for $83 million at an average price of $83.42 per share. For the full-year 2021, the Company repurchased approximately 1.4 million shares of its common stock for $110 million at an average price of $80.60 per share. The Company’s Board of Directors recently increased the Company’s share repurchase authorization by $400 million.
The Company paid common stock dividends of $29 million, or $0.32 per share, in the fourth quarter of 2021 for a total of $82 million, or $0.88 per share, for the full-year 2021. The Company’s Board of Directors recently authorized a quarterly cash dividend of $0.32 per share of common stock beginning with the dividend that is expected to be declared in the first quarter of 2022.
Potential Sale of Owned Hotels
During the fourth quarter of 2021, the Company decided to pursue the sale of its two owned hotels. As of December 31, 2021, the assets and liabilities of these owned hotels were reported in assets held for sale and liabilities held for sale on the Consolidated Balance Sheet. As a result of the plan to sell these owned hotels, in the fourth quarter of 2021, the Company recorded a non-cash impairment charge of $6 million to reflect the expected value upon potential sale.
Full-Year 2022 Outlook
The Company provided the following outlook for full-year 2022:
- Net rooms growth of 2% to 4%.
- RevPAR growth of 12% to 16% versus 2021, which is consistent with 2019 levels.
- Fee-related and other revenues of $1.34 billion to $1.37 billion, a year-over-year increase of 8% to 10%.
- Adjusted EBITDA of $605 million to $625 million, which is consistent with 2019 levels, and reflects a year-over-year increase of 3% to 6%.
- Adjusted net income of $308 million to $320 million, which is consistent with 2019 levels, and reflects a year-over-year increase of 4% to 8%.
- Adjusted diluted EPS of $3.28 to $3.40, based on a diluted share count of 93.9 million that excludes any share repurchases after December 31, 2021. Reflects growth up to 4% compared to 2019, and a year-over-year increase of 4% to 8%.
- Free cash flow conversion from adjusted EBITDA of approximately 55%.
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