WYND Wyndham Destinations Inc

ORLANDO, Fla., Oct. 28, 2020 /PRNewswire/ -- Wyndham Destinations, Inc. (NYSE:WYND), the world's largest vacation ownership and exchange company, today reported third quarter 2020 financial results for the three months ended September 30, 2020. Highlights include:

• Net income from continuing operations of $40 million and diluted earnings per share of $0.47 on net revenue of $614 million
• Adjusted EBITDA of $139 million and adjusted diluted earnings per share of $0.83 ⁽¹⁾ 
• Net cash provided by operating activities of $224 million and adjusted free cash flow of $120 million for the first nine months of 2020
• Leverage ratio for covenant purposes of 4.1x at the end of September, well within covenant restriction of 6.5x
• Cash and cash equivalents of $1.3 billion at the end of September; $1.5 billion of liquidity available in cash and cash equivalents and revolving credit facility
• Company expects to recommend a fourth quarter dividend of $0.30 per share for approval by the Board of Directors

"We were very encouraged with our third quarter results. Our ability to recover quickly during this re-opening phase demonstrates the resiliency of our business," commented Michael D. Brown, president and CEO of Wyndham Destinations. "Early indications show buyer behavior remains unchanged, in fact VPG is 30% higher year-over-year at Wyndham Vacation Clubs. Our two business segments, Wyndham Vacation Clubs and Panorama, saw strong demand in net bookings improving throughout the quarter."

"Our focus on leisure travel, and our geographically diverse resort and sales and marketing footprint, gives us confidence for the fourth quarter and heading into 2021. We believe we are well-positioned to lead the broader travel industry in recovery," said Brown. "Our resilient business model means that we expect to be adjusted free cash flow positive for the full-year."

Business Segment Results

The results of operations during the third quarter of 2020 include impacts related to the COVID-19 global pandemic, which have been significantly negative to the travel industry, the Company, its customers and employees. Refer to Table 8 for a breakout of COVID-19 related impacts.

Wyndham Vacation Clubs

Wyndham Vacation Clubs revenue declined 44% to $477 million in the third quarter. Gross vacation ownership interest (VOI) sales decreased 61% to $256 million with tours 70% lower year-over-year. Volume Per Guest (VPG) increased 30% to $3,039. Third quarter adjusted EBITDA was $96 million compared to $203 million in the prior year.

The provision for loan loss as a percentage of gross VOI sales, net of fee-for-service sales, was 18.8% for third quarter of 2020, an improvement from 20.3% during the third quarter of 2019.

Panorama

Panorama revenue decreased 45% to $138 million in the third quarter. Adjusted EBITDA decreased 28% to $60 million. Excluding the sale of North American vacation rentals and the acquisition of Alliance Reservations Network (ARN), revenue decreased 24% and adjusted EBITDA decreased 16%. Cancellations continue to run at elevated levels and cross-border transactions are down significantly, particularly in international regions. This decrease was offset in part by sequential improvement in exchange bookings yielding September gross bookings which exceeded the prior year by 1%.

Balance Sheet and Liquidity

Net Debt — As of September 30, 2020, the Company's leverage ratio for covenant purposes was 4.1x, well within covenant restriction of 6.5x. The Company had $4.2 billion of corporate debt outstanding as of September 30, 2020, which excluded $2.5 billion of non-recourse debt related to its securitized notes receivable. Additionally, the Company had cash and cash equivalents of $1.3 billion. The Company's next long-term debt maturity is $250 million of secured notes due March 2021. Refer to Table 9 for definitions of net debt and leverage ratio.

The Company amended its $1.0 billion revolving credit facility in July. The Credit Amendment raised the first lien leverage-based financial covenant by varying levels for each applicable fiscal quarter during the relief period providing the Company with significant financial flexibility.

In July, the Company also completed the private placement issuance of $650 million senior secured notes due 2026 with an interest rate of 6.625%.

At the end of the third quarter, the Company had $1.5 billion of liquidity available in cash and cash equivalents and revolving credit facility.

Timeshare Receivables Financing — During the quarter, Wyndham Destinations closed on a $575 million securitization with a weighted average coupon of 2.81% and 90% advance rate.

Cash Flow — For the nine months ended September 30, 2020, net cash provided by operating activities from continuing operations was $224 million, compared to $321 million in the prior year period. Adjusted free cash flow from continuing operations was $120 million for the nine months ended September 30, 2020, compared to $466 million in the same period of 2019.

Share Repurchases — The Company has suspended share repurchase activity.

Dividend — The Company paid $26 million ($0.30 per share) in cash dividends on September 30, 2020 to shareholders of record as of September 15, 2020.

The Company expects to recommend a fourth quarter dividend of $0.30 per share for approval by the Company's Board of Directors in November.

Conference Call Information

Wyndham Destinations will hold a conference call with investors to discuss the Company's results and forward-looking information 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 877-876-9176, 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 four days beginning at 12:00 p.m. ET today at 800-283-8183.

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, adjusted free cash flow from continuing operations, gross VOI sales and adjusted net income/(loss) from continuing operations, which include or exclude certain items. The Company utilizes non-GAAP measures 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 when considered with GAAP measures 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. 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 on Table 9 for an explanation of our non-GAAP measures.

About Wyndham Destinations

Wyndham Destinations (NYSE:WYND), the world's largest vacation club and exchange company, is on a mission to put the world on vacation. The company offers more than four million members and owner families the opportunity to own, exchange or rent their vacation experience while enjoying quality, flexibility and great value from a trusted brand. The company's Wyndham Vacation Clubs offer 230 resorts that provide a contemporary take on the timeshare model through brands Club Wyndham® WorldMark® by Wyndham, and Margaritaville Vacation Club® by Wyndham. With a global presence in 110 countries, the company's membership travel business -- Panorama -- includes today's leading vacation exchange, leisure travel, and technology brands including RCI, the world's leader in vacation exchange that provides access to 4,200+ affiliated resorts around the world; and Extra Holidays, offering condo vacations at hotel prices. Year after year, our worldwide team of 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.

Forward-Looking Statements

This press release includes "forward-looking statements" as that term is defined by the Securities and Exchange Commission ("SEC"). Forward-looking statements are any statements other than statements of historical fact, including statements regarding our expectations, beliefs, hopes, intentions or strategies regarding the future. In some cases, forward-looking statements can be identified by the use of words such as "may," "will," "expects," "should," "believes," "plans," "anticipates," "estimates," "predicts," "potential," "continue," "future," "intends," "projects" or other words of similar meaning. Forward-looking statements are subject to risks and uncertainties that could cause actual results of Wyndham Destinations, Inc. ("Wyndham Destinations") to differ materially from those discussed in, or implied by, the 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, and other anticipated future events and expectations that are not historical facts. 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 might cause such a difference include, but are not limited to, uncertainty with respect to the scope and duration of the novel coronavirus global pandemic (COVID-19) and any resurgences and the pace of recovery; the timing of the development and distribution of an effective vaccine or treatment for COVID-19; the potential impact of the COVID-19 pandemic and governmental, business and individuals' actions in response to the pandemic and our related contingency plans and cost and investment reductions on our business, vacation ownership interest (VOI) sales and tour flow, consumer demand and liquidity, our ability to comply with financial and restrictive covenants under our indebtedness and our ability to access capital on reasonable terms, at a reasonable cost or at all, our and Wyndham Hotels' ability to maintain credit ratings, general economic conditions and unemployment rates, the performance of the financial and credit markets, the competition in and the economic environment for the timeshare industry; risks associated with employees working remotely or operating with a reduced workforce; the impact of war, terrorist activity, political strife, severe weather events and other natural disasters, and pandemics (including COVID-19) or threats of pandemics; operating risks associated with the Wyndham Vacation Clubs and Panorama segments; uncertainties related to our ability to realize the anticipated benefits of the spin-off of the hotel business ("spin-off") Wyndham Hotels & Resorts, Inc. ("Wyndham Hotels") or the divestiture of our North American and European vacation rentals businesses, or the acquisition of Alliance Reservations Network ("ARN"); unanticipated developments related to the impact of the spin-off, the divestiture of our North American and European vacation rentals businesses, the acquisition of ARN and related transactions, including any potential impact on our relationships with our customers, suppliers, employees and others with whom we have relationships, and possible disruption to our operations; our ability to execute on our strategy, the timing and amount of future dividends and share repurchases, if any, and those other factors disclosed as risks under "Risk Factors" in documents we have filed with the SEC, including in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on February 26, 2020 and Part II, Item 1A of our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2020, to be filed with the SEC on October 28, 2020. We caution readers that any such statements are based on currently available operational, financial and competitive information, and they should not place undue reliance on these forward-looking statements, which reflect management's opinion only as of the date on which they were made. Except as required by law, we undertake no obligation to review or update these forward-looking statements to reflect events or circumstances as they occur.                        

Wyndham Destinations
Table of Contents

Table Number

1. Condensed Consolidated Statements of Income/(Loss) (Unaudited)
2. Summary Data Sheet
3. Operating Statistics
4. Revenue by Reportable Segment
5. Non-GAAP Measure: Reconciliation of Net Income/(Loss) to Adjusted Net Income/(Loss) from Continuing Operations to Adjusted EBITDA
6. Non-GAAP Measure: Reconciliation of Net VOI Sales to Gross VOI Sales
7. Non-GAAP Measure: Reconciliation of Net Cash Provided by Operating Activities from Continuing Operations to Adjusted Free Cash Flow from Continuing Operations
8. COVID-19 Impacts
9. Definitions