EX-99.1 2 wynd3q2018earningsrelease.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1

wyndlogoa01.jpg

Wyndham Destinations Reports Third Quarter 2018 Results

ORLANDO, Fla. (November 1, 2018) Wyndham Destinations, Inc. (NYSE:WYND), the world’s largest vacation ownership and exchange company, today reported third quarter 2018 financial results for the three months ended September 30, 2018.

Results are reported in accordance with U.S. generally accepted accounting principles (GAAP) adjusting for certain items (non-GAAP). The Company is also presenting non-GAAP results on a further adjusted basis as if the spin-off of its hotel business and the sale of its European vacation rentals business had occurred for all periods presented. Full reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures for the reported periods appear in the financial tables section of this press release. Highlights include:

Income from continuing operations increased 28% to $131 million and diluted earnings per share (EPS) from continuing operations increased 32% to $1.31. Adjusted EBITDA increased 6% to $269 million.

Further adjusted EBITDA increased 5% to $271 million, compared to guidance of $262 million to $272 million.

Further adjusted diluted EPS increased 15% to $1.47, compared to guidance of $1.37 to $1.47.

Total revenue increased 5% to $1.1 billion and gross VOI sales increased 7% to $640 million.

Repurchased $106 million of stock in the third quarter and an additional $32 million in October.

Revised full-year further adjusted EBITDA guidance to a range of $952 million to $960 million to reflect the impact from hurricanes Florence and Michael and stronger operating performance in the third quarter of 2018.

"Our company reported another outstanding quarter, demonstrated by strong operational results that came in above expectations," said Michael D. Brown, president and chief executive officer of Wyndham Destinations.

"During the third quarter, gross VOI sales increased 7%, further adjusted EBITDA increased 5% and we maintained margins while we continue to track ahead on new owner sales mix, which increased 330 basis points in the third quarter. We also meaningfully increased the pace of share buybacks in the third quarter, repurchasing $106 million in stock."

"As we have demonstrated this quarter, Wyndham Destinations continued to execute upon our key strategic initiatives, which included increasing our new owner sales mix and further integration with the Blue Thread, all while preserving our margins. Our elevated level of share repurchases in the third quarter underscored our commitment of returning value to shareholders," said Brown.

Results From Continuing Operations

In May 2018, the Company sold its European vacation rentals business and completed the spin-off of its hotel business into a separate publicly traded company. For all periods presented, the results of

1


operations for the hotel business and the European vacation rentals business have been classified as discontinued operations.

During the third quarter of 2018, reported revenues, income from continuing operations and income from continuing operations per diluted share were $1.1 billion, $131 million and $1.31, respectively. This compared to reported revenues of $1.0 billion, income from continuing operations of $102 million and income from continuing operations per diluted share of $0.99 in the third quarter of 2017. Total third quarter 2018 adjusted EBITDA from continuing operations increased 6% to $269 million.

Company Results — Further Adjusted

Further adjusted results are presented as if Wyndham Hotels & Resorts were separated from Wyndham Destinations and the sale of the European rentals business was completed for all periods presented.

During the third quarter of 2018, further adjusted net income was $146 million and further adjusted diluted EPS was $1.47 based on 100 million diluted shares outstanding. Further adjusted EBITDA was $271 million, compared to $257 million in the third quarter of 2017, and was near the top-end of the Company's guidance range of $262 million to $272 million. Hurricane Florence was estimated to have negatively impacted further adjusted EBITDA by $10 million in the third quarter of 2018.

Business Segment Results

Vacation Ownership
$ in millions
2018
2017
% change

Revenue

$820


$768

7
%
Adjusted EBITDA

$203


$194

5
%
Further Adjusted EBITDA

$203


$186

9
%

Vacation Ownership revenues increased 7%, primarily due to a 7% increase in gross vacation ownership interest (VOI) sales of $640 million. Tours increased 5% year-over-year and Volume Per Guest (VPG) increased 2%. The mix of new owner sales increased 330 basis points over the prior year and new owner sales volume increased 15%.

Vacation Ownership further adjusted EBITDA increased 9% to $203 million, primarily due to revenue growth of 7%, consumer finance income growth and cost efficiencies in general and administrative expenses.

Consumer finance gross receivables grew 5% year-over-year to $3.7 billion. The provision for loan loss as a percentage of gross VOI sales, net of fee-for-service sales, was 20.8% at the end of the third quarter of 2018. The provision for loan loss increased to $132 million, with the $9 million year-over-year increase due to higher gross VOI sales.

Exchange & Rentals
$ in millions
2018
2017
% change

Revenue

$243


$248

(2
)%
Adjusted EBITDA

$79


$80

(1
)%
Further Adjusted EBITDA

$79


$80

(1
)%

Exchange & Rentals revenues decreased 2%, primarily due to a 5% decline in exchange revenue per member. The decline in exchange revenue per member was due to lower inventory levels, a change in customer mix, economic headwinds in Latin America and Hurricane Florence.

2


Further adjusted EBITDA decreased $1 million, or 1%, due to lower revenue per member, offset by cost efficiencies within the business.

Balance Sheet and Liquidity

Net DebtAs of September 30, 2018, the Company's leverage ratio was 2.9x. The Company had $3.0 billion of corporate debt outstanding, which excluded $2.2 billion of non-recourse debt related to its securitized notes receivable. Additionally, the Company had cash and cash equivalents of $164 million. Refer to Table 9 for definitions of net debt and leverage ratio.

Cash Flow For the nine months ended September 30, 2018, net cash provided by operating activities from continuing operations was $205 million, compared to $264 million in the prior year period. Free cash flow from continuing operations was $236 million for the nine months ended September 30, 2018, compared to $42 million for the same period in 2017, primarily due to securitization activity in 2018. Further adjusted free cash flow from continuing operations was $356 million and $187 million for the same periods, respectively.

Share Repurchases During the third quarter of 2018, the Company repurchased 2.4 million shares of common stock for $106 million at a weighted average price of $43.39 per share. As of September 30, 2018, the Company had $916 million remaining in its share repurchase authorization. Subsequent to the end of the quarter, the Company repurchased another $32 million of shares in the month of October.

Dividend The Company announced a cash dividend of $0.41 per share on July 27, 2018, which was paid on September 28, 2018 to shareholders of record as of September 14, 2018.

Securitization — On July 18, 2018, the Company closed a $500 million term securitization with a weighted average coupon of 3.65% and an advance rate of 88.7%. Subsequent to the end of the quarter, the Company closed a $350 million term securitization with a weighted average coupon of 4.02% and an advance rate of 98.0%.

Outlook

The Company is revising its further adjusted full-year 2018 guidance as follows:
Revenues of $3.925 billion to $3.975 billion, compared to the previous expectation of $3.975 billion to $4.085 billion
Further adjusted EBITDA of $952 million to $960 million, compared to the previous expectation of $955 million to $975 million
Further adjusted net income of $475 million to $483 million, compared to the previous expectation of $476 million to $496 million
Stock based compensation of $17 million to $19 million, compared to the previous expectation of $16 million to $20 million
Further adjusted diluted EPS of $4.77 to $4.85, compared to the previous expectation of $4.74 to $4.94

The Company's guidance assumes that the spin-off of its hotel business and the sale of its European vacation rentals business had been completed on January 1, 2018. This guidance is presented only on a non-GAAP further adjusted basis because not all of the information necessary for a quantitative reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measure is available without unreasonable effort, primarily due to uncertainties relating to the occurrence or amount of these adjustments that may arise in the future. Please refer to Table 8 for further information.


3


Conference Call Information
Wyndham Destinations will hold a conference call with investors to discuss the Company’s results and outlook today at 8:30 a.m. ET. Participants may listen to a simultaneous webcast of the conference call, which may be accessed through the Company's website at investor.wyndhamdestinations.com, or by dialing 877-876-9177, passcode WYND, approximately 10 minutes before the scheduled start time. For those unable to listen to the live broadcast, an archive of the webcast will be available on the Company's website for approximately 90 days beginning at 12:00 p.m. ET today. Additionally, a telephone replay will be available for approximately 10 days beginning at 12:00 p.m. ET today at 800-723-7372.

Presentation of Financial Information
Financial information discussed in this press release includes non-GAAP measures, which include or exclude certain items. The Company utilizes non-GAAP measures, defined in Table 9, on a regular basis to assess performance of its reportable segments and allocate resources. 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. Management also internally uses these measures to assess our operating performance, both absolutely and in comparison to other companies, and in evaluating or making selected compensation decisions. 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. The Company is also presenting non-GAAP results on a further adjusted basis as if the spin-off of its hotel business and the sale of its European vacation rentals business had occurred for all periods presented. Full reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures for the reported periods appear in the financial tables section of the press release.

About Wyndham Destinations
Wyndham Destinations (NYSE:WYND) believes in putting the world on vacation. As the world’s largest vacation ownership and exchange company, Wyndham Destinations offers everyday travelers the opportunity to own, exchange or rent their vacation experience while enjoying the quality, flexibility and value that Wyndham delivers. The company’s global presence in 110 countries means more vacation choices for its nearly four million members and owner families: Wyndham’s 220 vacation club resorts, which offer a contemporary take on the timeshare model, with signature brands including CLUB WYNDHAM®, WorldMark® by Wyndham, Margaritaville Vacation Club® by Wyndham, and Shell Vacations Club; 4,300+ affiliated resorts through RCI, the world’s leader in vacation exchange; and 10,000 rental properties from coast to coast through Wyndham Vacation Rentals, North America’s largest professionally managed vacation rental business. Year after year, a worldwide team of 25,000 associates delivers exceptional vacation experiences to families around the globe as they make memories to last a lifetime. At Wyndham Destinations, our world is your destination. Learn more at wyndhamdestinations.com.




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Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include those that convey management's expectations as to the future based on plans, estimates and projections at the time Wyndham Destinations makes the statements and may be identified by words such as "will," "expect," "believe," "plan," "anticipate," "intend," "goal," "future," "outlook," "guidance," "target," "projection," "estimate" and similar words or expressions, including the negative version of such words and expressions. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of Wyndham Destinations 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 Wyndham Destinations’ current views and expectations with respect to its future performance and operations (including the statements in the “Outlook” section of this press release). 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 without limitation general economic conditions, the performance of the financial and credit markets, our ability to obtain financing, our credit ratings (including changes thereto as result of the spin-off and other related transactions), post-closing credit obligations as result of the sale of our European vacation rentals business, the competition in and the economic environment for the timeshare industry, the impact of war, terrorist activity or political strife, operating risks associated with the vacation ownership and vacation exchange businesses, 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, uncertainties related to our ability to realize the anticipated benefits of the spin-off, as well as those factors described in our Quarterly Report on Form 10-Q, filed with the SEC on August 8, 2018, and subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Except as required by law, Wyndham Destinations undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, subsequent events or otherwise.

Investor and Media Contacts                 
Christopher Agnew
Vice President, Investor Relations
(407) 626-4050
Christopher.Agnew@wyn.com

Steven Goldsmith
Corporate Communications
(407) 626-5882
Steven.Goldsmith@wyn.com

5


Wyndham Destinations
Table of Contents

Table Number
1.
Condensed Consolidated Statements of Income (Unaudited)
2.
3.
Operating Statistics
4.
Revenue by Reportable Segment
5.
Non-GAAP Measure: Reconciliation of Net Income to Adjusted EBITDA to Further Adjusted EBITDA to Further Adjusted Net Income From Continuing Operations
6.
Non-GAAP Measure: Reconciliation of Gross VOI Sales
7.
Non-GAAP Measure: Reconciliation of Free Cash Flows and Further Adjusted Free Cash Flows
8.
2018 Further Adjusted Guidance
9.
Definitions


6

Table 1


Wyndham Destinations
Condensed Consolidated Statements of Income (Unaudited)
(in millions, except per share amounts)
 
Three Month Ended September 30
 
Nine Months Ended September 30
 
2018
 
2017
 
2018
 
2017
Net revenues
 
 
 
 
 
 
 
VOI sales
$
503

 
$
466

 
$
1,323

 
$
1,262

Service and membership fees
417

 
416

 
1,245

 
1,225

Consumer financing
126

 
119

 
363

 
343

Other
16

 
14

 
45

 
46

Net revenues
1,062

 
1,015

 
2,976

 
2,876

 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
Operating
431

 
429

 
1,252

 
1,238

Cost of vacation ownership interests
53

 
41

 
131

 
115

Consumer financing interest
23

 
17

 
62

 
54

Marketing and reservation
179

 
154

 
465

 
412

General and administrative
116

 
131

 
402

 
439

Separation and related costs
35

 
16

 
198

 
16

Asset impairments
(4
)
 

 
(4
)
 
140

Restructuring

 
8

 

 
14

Depreciation and amortization
32

 
35

 
105

 
100

Total expenses
865

 
831

 
2,611

 
2,528

 
 
 
 
 
 
 
 
Operating income
197

 
184

 
365

 
348

Other (income), net
(22
)
 
(19
)
 
(33
)
 
(24
)
Interest expense
37

 
40

 
129

 
114

Interest (income)

 
(1
)
 
(3
)
 
(4
)
Income before income taxes
182

 
164

 
272

 
262

Provision for income taxes
51

 
62

 
112

 
60

Income from continuing operations
131

 
102

 
160

 
202

Income (loss) from discontinued operations, net
(3
)
 
162

 
(52
)
 
237

Income on disposal of discontinued operations, net
20

 

 
452

 

Net income
148

 
264

 
560

 
439

Net income attributable to noncontrolling interest

 

 

 
(1
)
Net income attributable to Wyndham Destinations shareholders
$
148

 
$
264

 
$
560

 
$
438

 
 
 
 
 
 
 
 
Basic earnings per share
 
 
 
 
 
 
 
Continuing operations
$
1.32

 
$
1.00

 
$
1.61

 
$
1.94

Discontinued operations
0.17

 
1.58

 
4.01

 
2.29

 
$
1.49

 
$
2.58

 
$
5.62

 
$
4.23

 
 
 
 
 
 
 
 
Diluted earnings per share
 
 
 
 
 
 
 
Continuing operations
$
1.31

 
$
0.99

 
$
1.60

 
$
1.93

Discontinued operations
0.18

 
1.58

 
4.00

 
2.28

 
$
1.49

 
$
2.57

 
$
5.60

 
$
4.21

 
 
 
 
 
 
 
 
Weighted average shares outstanding
 
 
 
 
 
 
 
Basic
99.1
 
102.4
 
99.7
 
103.7
Diluted
99.5
 
102.9
 
100.1
 
104.2
 
 
 
 
 
 
 
 
Cash dividends declared per share
$
0.41

 
$
0.58

 
$
1.48

 
$
1.74


7

Table 2


Wyndham Destinations
Summary Data Sheet
(in millions, except per share amounts, unless otherwise indicated)
 
 
Three Month Ended September 30
 
Nine Months Ended September 30
 

2018

2017
 
Change
 
2018
 
2017
 
Change
Consolidated Results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to Wyndham Destinations shareholders
 
$
148

 
$
264

 
(44
)%
 
$
560

 
$
438

 
28
 %
Diluted earnings per share
 
$
1.49

 
$
2.57

 
(42
)%
 
$
5.60

 
$
4.21

 
33
 %
Income from continuing operations
 
$
131

 
$
102

 
28
 %
 
$
160

 
$
202

 
(21
)%
Diluted earnings per share from continuing operations
 
$
1.31

 
$
0.99

 
32
 %
 
$
1.60

 
$
1.93

 
(17
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Earnings from Continuing Operations
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
$
269

 
$
253

 
6
 %
 
$
702

 
$
657

 
7
 %
Adjusted net income
 
$
148

 
$
102

 
45
 %
 
$
343

 
$
264

 
30
 %
Adjusted diluted earnings per share
 
$
1.48

 
$
0.99

 
49
 %
 
$
3.42

 
$
2.54

 
35
 %
 
 
 
 
 
 


 
 
 
 
 
 
Further Adjusted Earnings Metrics (a)
 
 
 
 
 
 
 
 
 
 
 
 
Further adjusted EBITDA
 
$
271

 
$
257

 
5
 %
 
$
717

 
$
679

 
6
 %
Further adjusted net income
 
$
146

 
$
132

 
11
 %
 
$
357

 
$
331

 
8
 %
Further adjusted diluted earnings per share
 
$
1.47

 
$
1.28

 
15
 %
 
$
3.57

 
$
3.18

 
12
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Revenues
 
 
 
 
 
 
 
 
 
 
 
 
Vacation Ownership
 
$
820

 
$
768

 
7
 %
 
$
2,251

 
$
2,152

 
5
 %
Exchange & Rentals
 
243

 
248

 
(2
)%
 
727

 
725

 
 %
Corporate and other
 
(1
)
 
(1
)
 


 
(2
)
 
(1
)
 
 
Total
 
$
1,062

 
$
1,015

 
5
 %
 
$
2,976

 
$
2,876

 
3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
 
 
 
 
 
 
 
 
 
 
 
Vacation Ownership
 
$
203

 
$
194

 
5
 %
 
$
530

 
$
506

 
5
 %
Exchange & Rentals
 
79

 
80

 
(1
)%
 
228

 
222

 
3
 %
Segment Adjusted EBITDA
 
282

 
274

 
 
 
758

 
728

 
 
Corporate and other
 
(13
)
 
(21
)
 
 
 
(56
)
 
(71
)
 
 
Total Adjusted EBITDA
 
$
269

 
$
253

 
6
 %
 
$
702

 
$
657

 
7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Further Adjusted EBITDA
 
 
 
 
 
 
 
 
 
 
 
 
Vacation Ownership
 
$
203

 
$
186

 
9
 %
 
$
520

 
$
487

 
7
 %
Exchange & Rentals
 
79

 
80

 
(1
)%
 
228

 
222

 
3
 %
Further Adjusted EBITDA
 
282

 
266

 
 
 
748

 
709

 
 
Corporate and other
 
(11
)
 
(9
)
 
 
 
(31
)
 
(30
)
 
 
Total Further Adjusted EBITDA
 
$
271

 
$
257

 
5
 %
 
$
717

 
$
679

 
6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Further Adjusted EBITDA Margin
 
25.5
%
 
25.3
%
 
 
 
24.1
%
 
23.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Key Operating Statistics
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vacation Ownership
 
 
 
 
 
 
 
 
 
 
 
 
Gross VOI sales
 
$
640

 
$
600

 
7
 %
 
$
1,707

 
$
1,600

 
7
 %
Tours (in thousands)
 
259

 
247

 
5
 %
 
690

 
658

 
5
 %
VPG (in dollars)
 
$
2,350

 
$
2,299

 
2
 %
 
$
2,358

 
$
2,315

 
2
 %
New owner sales mix
 
40.9
%
 
37.6
%
 
 
 
38.8
%
 
35.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exchange & Rentals
 
 
 
 
 
 
 
 
 
 
 
 
Average number of members (in thousands)
 
3,857

 
3,792

 
2
 %
 
3,851

 
3,800

 
1
 %
Exchange revenue per member (in dollars)
 
$
163.84

 
$
172.43

 
(5
)%
 
$
177.19

 
$
180.83

 
(2
)%

8

Table 2
(continued)

Note: Amounts may not add due to rounding. See Table 9 for definitions. For a full reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, refer to Table 5.

(a)     Includes incremental license fees paid to Wyndham Hotels & Resorts and other changes being effected in conjunction
with the spin-off. Corporate and other costs reflect the Company’s position as if it were a standalone company during all
reported periods.

9

Table 3


Wyndham Destinations
Operating Statistics

The following operating statistics are the drivers of the Company's revenues and therefore provide an enhanced understanding of the Company's businesses:
 
Year
 
Q1
 
Q2
 
Q3
 
Q4
 
Full Year
Vacation Ownership (a)
 
 
 
 
 
 
 
 
 
 
 
Gross VOI Sales (in millions) (b)
2018
 
$
465

 
$
602

 
$
640

 
N/A

 
N/A

 
2017
 
$
438

 
$
562

 
$
600

 
$
538

 
$
2,138

 
2016
 
$
427

 
$
517

 
$
563

 
$
501

 
$
2,007

 
 
 
 
 
 
 
 
 
 
 
 
Tours (in thousands)
2018
 
190

 
241

 
259

 
N/A

 
N/A

 
2017
 
176

 
235

 
247

 
210

 
869

 
2016
 
179

 
213

 
230

 
197

 
819

 
 
 
 
 
 
 
 
 
 
 
 
VPG
2018
 
$
2,303

 
$
2,411

 
$
2,350

 
N/A

 
N/A

 
2017
 
$
2,354

 
$
2,302

 
$
2,299

 
$
2,438

 
$
2,345

 
2016
 
$
2,244

 
$
2,328

 
$
2,320

 
$
2,399

 
$
2,324

 
 
 
 
 
 
 
 
 
 
 
 
Provision for Loan Losses
(in millions) (c)
2018
 
$
(92
)
 
$
(126
)
 
$
(132
)
 
N/A

 
N/A

2017
 
$
(85
)
 
$
(110
)
 
$
(123
)
 
$
(101
)
 
$
(420
)
 
2016
 
$
(63
)
 
$
(90
)
 
$
(104
)
 
$
(86
)
 
$
(342
)
 
 
 
 
 
 
 
 
 
 
 
 
Provision for Loan Loss as a Percentage of Gross VOI Sales,
net of fee-for-service sales
2018
 
20.4
%
 
21.4
%
 
20.8
%
 
N/A

 
N/A

2017
 
19.6
%
 
19.8
%
 
20.9
%
 
19.3
%
 
20.0
%
2016
 
15.6
%
 
18.0
%
 
19.0
%
 
17.2
%
 
17.6
%
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for Loan Losses
(in millions)
2018
 
$
684

 
$
705

 
$
743

 
N/A

 
N/A

2017
 
$
619

 
$
643

 
$
684

 
$
691

 
$
691

 
2016
 
$
570

 
$
585

 
$
619

 
$
621

 
$
621

 
 
 
 
 
 
 
 
 
 
 
 
Gross Vacation Ownership
Contract Receivables (in millions)
2018
 
$
3,560

 
$
3,609

 
$
3,732

 
N/A

 
N/A

2017
 
$
3,377

 
$
3,435

 
$
3,547

 
$
3,591

 
$
3,591

 
2016
 
$
3,270

 
$
3,297

 
$
3,379

 
$
3,398

 
$
3,398

 
 
 
 
 
 
 
 
 
 
 
 
Allowance for Loan Loss as a Percentage of Gross Vacation Ownership Contract Receivables
2018
 
19.2
%
 
19.5
%
 
19.9
%
 
N/A

 
N/A

2017
 
18.3
%
 
18.7
%
 
19.3
%
 
19.2
%
 
19.2
%
2016
 
17.4
%
 
17.7
%
 
18.3
%
 
18.3
%
 
18.3
%
 
 
 
 
 
 
 
 
 
 
 
 
Exchange & Rentals (a)
 
 
 
 
 
 
 
 
 
 
 
Average Number of Members
(in thousands)
2018
 
3,852

 
3,844

 
3,857

 
N/A

 
N/A

2017
 
3,817

 
3,791

 
3,792

 
3,796

 
3,799

 
2016
 
3,841

 
3,857

 
3,868

 
3,843

 
3,852

 
 
 
 
 
 
 
 
 
 
 
 
Exchange Revenue Per Member
2018
 
$
194.70

 
$
173.05

 
$
163.84

 
N/A

 
N/A

 
2017
 
$
195.84

 
$
174.12

 
$
172.43

 
$
164.45

 
$
176.74

 
2016
 
$
193.06

 
$
170.48

 
$
169.18

 
$
157.56

 
$
172.56

 
 
 
 
 
 
 
 
 
 
 
 

Note:    Full year amounts and percentages may not compute due to rounding.
(a)     Includes the impact of acquisitions from the acquisition dates forward.
(b)     Includes Gross VOI sales under the Company's fee-for-service sales. (See Table 6 for a reconciliation of Gross VOI
sales to Net VOI sales).
(c)     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.


10

Table 4


Wyndham Destinations
Revenue by Reportable Segment
(in millions)
 
 
2018
 
 
Q1
 
Q2
 
Q3
 
Q4
 
Full Year
Vacation Ownership
 
 
 
 
 
 
 
 
 
 
Net VOI Sales
 
$
358

 
$
462

 
$
503

 
 N/A

 
 N/A

Consumer Financing
 
118

 
120

 
126

 
 N/A

 
 N/A

Property Management Fees and Reimbursable Revenues
 
164

 
162

 
172

 
 N/A

 
 N/A

Other Revenues
 
21

 
26

 
19

 
 N/A

 
 N/A

Total Vacation Ownership
 
661

 
770

 
820

 
 N/A

 
 N/A

 
 
 
 
 
 
 
 
 
 
 
Exchange & Rentals
 
 
 
 
 
 
 
 
 
 
Exchange Revenues
 
188

 
166

 
158

 
N/A

 
N/A

Rental & Other Revenues
 
58

 
72

 
85

 
N/A

 
N/A

Total Exchange & Rentals
 
246

 
238

 
243

 
N/A

 
N/A

Total Reportable Segments
 
$
907

 
$
1,008

 
$
1,063

 
 N/A

 
 N/A

 
 
 
 
 
 
 
 
 
 
 
 
 
2017
 
 
Q1
 
Q2
 
Q3
 
Q4
 
Full Year
Vacation Ownership
 
 
 
 
 
 
 
 
 
 
Net VOI Sales
 
$
350

 
$
446

 
$
466

 
$
422

 
$
1,684

Consumer Financing
 
111

 
114

 
119

 
120

 
463

Property Management Fees and Reimbursable Revenues
 
163

 
164

 
160

 
162

 
649

Other Revenues
 
15

 
21

 
23

 
25

 
85

Total Vacation Ownership
 
639

 
745

 
768

 
729

 
2,881

 
 
 
 
 
 
 
 
 
 
 
Exchange & Rentals
 
 
 
 
 
 
 
 
 
 
Exchange Revenues
 
187

 
165

 
163

 
156

 
671

Rental & Other Revenues
 
56

 
69

 
85

 
46

 
256

Total Exchange & Rentals
 
243

 
234

 
248

 
202

 
927

Total Reportable Segments
 
$
882

 
$
978

 
$
1,016

 
$
931

 
$
3,805

 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
 
Q1
 
Q2
 
Q3
 
Q4
 
Full Year
Vacation Ownership
 
 
 
 
 
 
 
 
 
 
Net VOI Sales
 
$
341

 
$
407

 
$
439

 
$
414

 
$
1,601

Consumer Financing
 
107

 
108

 
112

 
113

 
440

Property Management Fees and Reimbursable Revenues
 
153

 
151

 
160

 
159

 
623

Other Revenues
 
33

 
34

 
29

 
14

 
110

Total Vacation Ownership
 
634

 
700

 
740

 
700

 
2,774

 
 
 
 
 
 
 
 
 
 
 
Exchange & Rentals
 
 
 
 
 
 
 
 
 
 
Exchange Revenues
 
185

 
164

 
164

 
151

 
665

Rental & Other Revenues
 
58

 
67

 
83

 
45

 
251

Total Exchange & Rentals
 
243

 
231

 
247

 
196

 
916

Total Reportable Segments
 
$
877

 
$
931

 
$
987

 
$
896

 
$
3,690


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


11

Table 5

Wyndham Destinations
Non-GAAP Measure: Reconciliation of Net Income to Adjusted EBITDA to Further Adjusted EBITDA
to Further Adjusted Net Income From Continuing Operations
(in millions, except diluted per share amounts)
 
Three Month Ended September 30
 
Nine Months Ended September 30
 
2018
EPS
 
2017
EPS
 
2018
EPS
 
2017
EPS
Net Income attributable to Wyndham Destinations shareholders
$
148

 
$
1.49

 
$
264

 
$
2.57

 
$
560

 
$
5.60

 
$
438

 
$
4.21

Income on disposal of discontinued operations, net of income taxes
20

 
 
 

 
 
 
452

 
 
 

 
 
Income (loss) from discontinued operations, net of income taxes
(3
)
 
 
 
162

 
 
 
(52
)
 
 
 
237

 
 
Net income attributable to noncontrolling interest

 
 
 

 
 
 

 
 
 
(1
)
 
 
Income from continuing operations
$
131

 
$
1.31

 
$
102

 
$
0.99

 
$
160

 
$
1.60

 
$
202

 
$
1.93

Restructuring costs

 
 
 
8

 
 
 

 
 
 
14

 
 
Separation-related
35

 
 
 
16

 
 
 
198

 
 
 
16

 
 
Legacy items

 
 
 
(7
)
 
 
 

 
 
 
(6
)
 
 
Amortization of acquired intangibles (a)
3

 
 
 
3

 
 
 
9

 
 
 
8

 
 
Debt modification costs in interest expense (b)

 
 
 

 
 
 
2

 
 
 

 
 
Impairments
(4
)
 
 
 

 
 
 
(4
)
 
 
 
140

 
 
Acquisition-related deal costs

 
 
 
(13
)
 
 
 

 
 
 
(13
)
 
 
Value-added tax refund
(16
)
 
 
 

 
 
 
(16
)
 
 
 

 
 
Tax effect of adjustments (c)
(1
)
 
 
 
(8
)
 
 
 
(7
)
 
 
 
(97
)
 
 
Adjusted net income from continuing operations
$
148

 
$
1.48

 
$
102

 
$
0.99

 
$
343

 
$
3.42

 
$
264

 
$
2.54

Income taxes on adjusted net income
52

 
 
 
70

 
 
 
119

 
 
 
157

 
 
Stock-based compensation expense (d)
3

 
 
 
11

 
 
 
21

 
 
 
34

 
 
Depreciation (a)
29

 
 
 
32

 
 
 
96

 
 
 
92

 
 
Interest expense (b)
37

 
 
 
40

 
 
 
127

 
 
 
114

 
 
Interest income

 
 
 
(1
)
 
 
 
(3
)
 
 
 
(4
)
 
 
Adjusted EBITDA
$
269

 
 
 
$
253

 
 
 
$
702

 
 
 
$
657

 
 
Separation adjustments (e)

 
 
 
(8
)
 
 
 
(10
)
 
 
 
(19
)
 
 
Corporate and other costs (f)
1

 
 
 
12

 
 
 
26

 
 
 
41

 
 
Further adjusted EBITDA
$
271

 
 
 
$
257

 
 
 
$
717

 
 
 
$
679

 
 
Depreciation (a) (g)
(29
)
 
 
 
(29
)
 
 
 
(91
)
 
 
 
(81
)
 
 
Interest expense (h)
(40
)
 
 
 
(40
)
 
 
 
(120
)
 
 
 
(120
)
 
 
Stock-based compensation (d)
(3
)
 
 
 
(8
)
 
 
 
(15
)
 
 
 
(25
)
 
 
Further adjusted taxes (i)
(52
)
 
 
 
(49
)
 
 
 
(133
)
 
 
 
(122
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Further adjusted net income from continuing operations
$
146

 
$
1.47

 
$
132

 
$
1.28

 
$
357

 
$
3.57

 
$
331

 
$
3.18

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted Shares Outstanding
99.5
 
 
 
102.9

 
 
 
100.1

 
 
 
104.2

 
 

Amounts may not add due to rounding. The table above reconciles certain non-GAAP financial measures to their closest GAAP measure. 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 from continuing operations and adjusted diluted EPS from continuing operations 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 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. The Company is also presenting non-GAAP results on a further adjusted basis as if the spin-off of its hotel business and the sale of its European vacation rentals business had occurred for all periods presented. These supplemental disclosures are in addition to GAAP reported measures. Non-GAAP measures should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP.

12

Table 5
(continued)

(a)    Amortization of acquisition-related assets is excluded from adjusted net income from continuing operations, adjusted
EBITDA, further adjusted EBITDA and further adjusted net income from continuing operations.
(b)    Debt modification costs in interest expense are excluded from adjusted net income from continuing operations, adjusted
EBITDA, further adjusted EBITDA and further adjusted net income from continuing operations.
(c)     In the nine months ended September 30, 2018, amounts represent the tax effect of the adjustments partially offset by
$30 million of non-cash state tax expense related to the separation of the hotel business and $13 million of non-cash
tax expense from certain internal restructurings associated with the sale of its European vacation rentals business.
(d)     Stock-based compensation is excluded from further adjusted EBITDA but included as a reduction to further adjusted net
income from continuing operations.
(e)     Includes incremental license fees paid to Wyndham Hotels & Resorts and other changes being effected in conjunction
with the spin-off.
(f)    Corporate and other costs reflect the Company’s position as if the spin-off of its hotel business and the sale of its
European vacation rentals business had occurred for all reported periods.
(g)    Includes expected depreciation related to retained Wyndham Destinations' corporate assets.
(h)    Interest expense was calculated based on $3.0 billion of outstanding debt, excluding non-recourse vacation ownership
debt, and a non-investment-grade rating, resulting in higher interest rates for select tranches of notes.
(i)    For comparative purposes this assumes a stabilized effective tax rate of 27% in all quarters prior to the spin-off, which
occurred in the second quarter of 2018. The rate used for 2017 reflects the benefit of the tax rate reduction resulting
from the U.S. Tax Cuts and Jobs Act.



13

Table 6


Wyndham Destinations
Non-GAAP Measure: Reconciliation of Gross VOI Sales
(in millions)

The Company believes gross VOI sales provide an enhanced understanding of the performance of its 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 Net VOI sales (see Table 4):

Year
 
 
 
 
 
 
 
 
 
 
2018
 
Q1
 
Q2
 
Q3
 
Q4
 
Full Year
 
 
 
 
 
 
 
 
 
 
 
 
Gross VOI sales
 
 
$
465

 
$
602

 
$
640

 
 N/A

 
 N/A

Less: Sales under fee-for-service
 
(15
)
 
(14
)
 
(5
)
 
N/A

 
 N/A

Gross VOI sales, net of fee-for-service sales
 
450

 
588

 
635

 
N/A

 
 N/A

Less: Loan loss provision
 
(92
)
 
(126
)
 
(132
)
 
N/A

 
 N/A

Net VOI sales
 
$
358

 
$
462

 
$
503

 
N/A

 
N/A

 
 
 
 
 
 
 
 
 
 
 
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross VOI sales
 
 
$
438

 
$
562

 
$
600

 
$
538

 
$
2,138

Less: Sales under fee-for-service
 
(3
)
 
(5
)
 
(11
)
 
(15
)
 
(35
)
Gross VOI sales, net of fee-for-service sales
 
435

 
556

 
589

 
523

 
2,104

Less: Loan loss provision
 
(85
)
 
(110
)
 
(123
)
 
(101
)
 
(420
)
Net VOI sales
 
$
350

 
$
446

 
$
466

 
$
422

 
$
1,684

 
 
 
 
 
 
 
 
 
 
 
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross VOI sales
 
 
$
427

 
$
517

 
$
563

 
$
501

 
$
2,007

Less: Sales under fee-for-service
 
(23
)
 
(20
)
 
(20
)
 
(1
)
 
(64
)
Gross VOI sales, net of fee-for-service sales
 
404

 
497

 
543

 
500

 
1,944

Less: Loan loss provision
 
(63
)
 
(90
)
 
(104
)
 
(86
)
 
(342
)
Net VOI sales
 
$
341

 
$
407

 
$
439

 
$
414

 
$
1,601



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):
Non-tour revenues
 
Q1
 
Q2
 
Q3
 
Q4
 
Full Year
 
 
 
 
 
 
 
 
 
 
 
2018
 
$
28

 
$
21

 
$
31

 
N/A

 
N/A

2017
 
$
24

 
$
20

 
$
32

 
$
26

 
$
102

2016
 
$
24

 
$
23

 
$
30

 
$
29

 
$
105


Note: Amounts may not add due to rounding.

14

Table 7


Wyndham Destinations
Non-GAAP Measure: Reconciliation of Free Cash Flows and Further Adjusted Free Cash Flows
(in millions)

 
 
Nine Months Ended September 30
 
 
2018
 
2017
Continuing Operations
 
 
 
 
 
 
 
 
 
Net cash provided by operating activities
 
$
205

 
$
264

Less: Property and equipment additions
 
(63
)
 
(76
)
Less: Sum of proceeds and principal payments of non-recourse vacation ownership debt
 
94

 
(146
)
Free cash flow from continuing operations
 
$
236

 
$
42

Corporate and other costs (a)
 
27

 
145

Separation adjustments
 
93

 

 
 
 
 
 
Further adjusted free cash flow from continuing operations
 
$
356

 
$
187

 
 
 
 
 
Discontinued Operations
 
 
 
 
Net cash provided by operating activities
 
$
150

 
$
400

Less: Property and equipment additions
 

 

Less: Sum of proceeds and principal payments of non-recourse vacation ownership debt
 

 

Free cash flow from discontinued operations
 
$
150

 
$
400

Corporate and other costs (a)
 

 

Separation adjustments
 

 

 
 
 
 
 
Further adjusted free cash flow from discontinued operations
 
$
150

 
$
400