Wyndham Destinations Reports First Quarter 2019 Results

Wyndham Destinations, Inc. (NYSE: WYND), the world’s largest vacation ownership and exchange company, today reported first quarter 2019 financial results for the period ended March 31, 2019. Highlights include:

• Income from continuing operations increased 98% to $81 million and diluted earnings per share (EPS) from continuing operations increased 107% to $0.85
• Net revenue of $918 million and gross VOI sales of $484 million increased 1% and 4%, respectively
• Adjusted EBITDA increased 4%¹ to $205 million and adjusted diluted EPS from continuing operations increased 23%¹ to $1.03
• Delivered net cash provided by operating activities from continuing operations of $152 million and further adjusted free cash flow of $249 million
• Repurchased 1.9 million shares of common stock for $80 million in the first four months of 2019
• Increased 2019 adjusted diluted EPS from continuing operations guidance to a range of $5.21 to $5.42 and reaffirmed adjusted EBITDA guidance range of $995 million to $1,015 million

Michael D. Brown, president and chief executive officer of Wyndham Destinations, said, “Our team delivered solid results in the first quarter. Strong volume per guest combined with cost efficiencies led to a 60 basis point margin improvement year-over-year and adjusted EBITDA growth of 4%.”¹

“We have increased our EPS outlook and are on track to deliver against our strategic goals and key performance indicators in 2019. We continue to generate strong free cash flows and year-to-date we have returned $122 million of capital to shareholders in the form of dividends and share repurchases,” said Brown.

During the first quarter of 2019, reported revenue was $918 million, compared to $907 million during the same period in 2018. Income from continuing operations was $81 million, compared to $41 million during the same period in 2018, and EPS from continuing operations per diluted share was $0.85 in the first quarter of 2019, compared to $0.41 in the same period in 2018.

Total first quarter 2019 adjusted net income from continuing operations increased 15%¹ to $98 million. Adjusted EBITDA increased 4%¹ to $205 million and adjusted diluted EPS from continuing operations increased 23%¹ to $1.03.

Business Segment Results

Vacation Ownership revenues increased 3%, primarily due to a 4% increase in gross vacation ownership interest (VOI) sales of $484 million. Tours increased 1.4% year-over-year and Volume Per Guest (VPG) increased 4.5%.

Adjusted EBITDA increased 7%¹ to $138 million, primarily due to VPG-led revenue growth and cost efficiencies.

Gross vacation ownership contract 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 22.5% for the first quarter of 2019.

Exchange & Rentals revenues decreased 4%, primarily due to a 5% decline in exchange revenue per member, which included a 2% negative impact from currency. The decline in exchange revenue per member was largely driven by member mix and inventory supply challenges.

Adjusted EBITDA increased 1%¹ to $80 million, primarily driven by cost savings initiatives and partially offset by a negative impact from currency.

Balance Sheet and Liquidity

Net Debt — As of March 31, 2019, the Company’s leverage ratio was 2.7x, within the Company’s target range of 2.25x to 3.0x. The Company had $2.8 billion of corporate debt outstanding, which excluded $2.5 billion of non-recourse debt related to its securitized notes receivable. Additionally, the Company had cash and cash equivalents of $217 million. Refer to Table 9 for definitions of net debt and leverage ratio.

Cash Flow — For the three months ended March 31, 2019, net cash provided by operating activities from continuing operations was $152 million, compared to net cash used in operating activities from continuing operations of $23 millionin the prior year period. The increase was driven by an increase in net income from continuing operations and a decrease in cash used for working capital. Further adjusted free cash flow from continuing operations was $249 millionfor the first quarter of 2019, compared to negative $122 million for the same period in 2018. The increase in further adjusted free cash flow was due to the increase in net cash provided by operating activities and due to the timing of the Company’s securitization activity.

Share Repurchases — During the first quarter of 2019, the Company repurchased 1.4 million shares of common stock for $60 million at a weighted average price of $41.86 per share. As of March 31, 2019, the Company had $756 millionremaining in its share repurchase authorization. Subsequent to the end of the first quarter, the Company repurchased an additional $20 million of shares in the month of April.

Dividend — The Company paid a cash dividend of $0.45 per share on March 29, 2019 to shareholders of record as of March 18, 2019. The cash dividend represents a 10% increase over dividends paid in the fourth quarter of 2018.

Timeshare Receivables Financing — In March, the Company closed a $400 million term securitization with a weighted average coupon rate of 3.57% and an advance rate of 98%. Subsequent to the end of the first quarter, the Company renewed its $800 million conduit facility with a new maturity date of August 2021.

Other

Wyndham Vacation Rentals — The Company continues to explore strategic alternatives for Wyndham Vacation Rentals, one of North America’s largest professionally managed vacation rental businesses.

Outlook

The Company reaffirmed its full-year 2019 guidance as follows:

• Adjusted EBITDA of $995 million to $1,015 million
• Adjusted net income from continuing operations of $493 million to $513 million
• Further adjusted free cash flow of $540 million to $560 million
• Provision for loan loss as a percentage of gross VOI sales to be comparable to 2018, which was 20.5%

The Company increased its full-year 2019 guidance as follows:

• Adjusted diluted EPS from continuing operations of $5.21 to $5.42, based on a diluted share count of 94.6 million, which assumes no future share repurchases after March 31, 2019. The guidance has increased to reflect a lower share count from share repurchases

This guidance is presented only on a non-GAAP 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.

1. The variance between 2019 Adjusted EBITDA, adjusted diluted EPS from continuing operations and adjusted net income from continuing operations compared to the prior year was calculated using 2019 Adjusted data and 2018 Further Adjusted data in order to provide a more accurate comparison. See “Presentation of Financial Information” and the tables for the definitions and reconciliations of these non-GAAP measures in accordance with GAAP.

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 877-876-9174, passcode WYND, 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 90 days beginning at 12:00 p.m. ET today. Additionally, a telephone replay will be available for 10 days beginning at 12:00 p.m. ET today at 800-753-9146.

Presentation of Financial Information

Financial information discussed in this press release includes non-GAAP measures such as adjusted EBITDA, adjusted diluted EPS from continuing operations and adjusted net income from continuing operations, 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 by adjusting for items which in our view do not necessarily reflect ongoing 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 for prior period comparison 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. See definitions at the end of this press release for an explanation of our non-GAAP measures.

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 approximately 110 countries means more vacation choices for its more than four million members and owner families: Wyndham’s more than 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 over 9,000 rental properties from coast to coast through Wyndham Vacation Rentals, one of North America’slargest professionally managed vacation rental businesses. Year-after-year, a worldwide team of more than 24,000 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.