Wyndham Hotels & Resorts, Inc. · NYSE:WH
Wyndham Hotels & Resorts — Q2 2020 Earnings Presentation
31 slides from Wyndham Hotels & Resorts's earnings presentation, Jul 29, 2020
Slide 1: Investor Presentation
Investor Presentation July 28, 2020
Slide 2: Resilient Business Model Driving Performance
Resilient Business Model Driving Performance 1 Second Quarter – Improving Trends 2 Supporting Franchisee Health Clear focus and priorities to drive shareholder value 3 Financial Profile Remains Strong 4 Business Model - Positioned to Outperform 2
Slide 3: In Worst Lodging Quarter In History, Wyndham Hotels & Resorts…
In Worst Lodging Quarter In History, Wyndham Hotels & Resorts… $101M $79M Restructured its Realized $101M Provided $79M operations to drive of cash savings (b) of support to our future profitable growth franchisees (c) >40% >1 per day $63M Collected over 40% of ~120 new contracts Generated $63M bill
Slide 4: …And Our Franchisees Continued to Welcome Guests
…And Our Franchisees Continued to Welcome Guests OPEN FOR BUSINESS GAINED MARKET SHARE >99% in U.S. Economy and Midscale brands >95% globally (a) gain >300 and >1,000 bps of RevPAR index (c) IMPROVED OCCUPANCY WELL POSITIONED Steadily improved Continue to benefit from occupancy with ~70% of ~70% lei
Slide 5: RevPAR Steadily Improving, Benefiting From Economy/Midscale Positioning
RevPAR Steadily Improving, Benefiting From Economy/Midscale Positioning Weekly WH U.S. RevPAR Change Weekly WH U.S. Occupancy Levels Normalized for seasonality of 4th of July holiday Economy/Midscale 50% 49% segments * 43% 37% (39%) 35% 31% (45%) 33% (50%) 31% (52%) 23% 19% Higher-end (59%) 23% segm
Slide 6: Positive Cash Flow Generated Before Franchisee Support and Special Items
Positive Cash Flow Generated Before Franchisee Support and Special Items ($millions) +$10 million Change in Cash before Franchisee Support and Special Items $63 $749 ($28) ($14) ($8) ($3) ($67) $664 ($28) Beginning Cash Adjusted(a) Interest Capital Dividends Working Capital Franchisee Special-Item (
Slide 7: Diversified Global Pipeline Provides Runway for Growth
Diversified Global Pipeline Provides Runway for Growth Diversification Composition U.S. 55% 45% Scale New 36% 64% construction Conversion ~180K ~1,350 U.S. International Global rooms Global hotels Globally ~46k New construction rooms in the ground 8K or 4% 76% 24% Year-over-year New 13 New countries
Slide 8: Positioning Company for Post-COVID-19 Success
Positioning Company for Post-COVID-19 Success ($millions) Key Actions # 2019 Rooms Adjusted • Removing unprofitable and Exiting Region EBITDA operationally challenged 7,000 China hotels in monetary default $0 hotels, redeploying infrastructure to support 4,300 Legacy European portfolio in monetary d
Slide 9: Resilient Business Model Driving Performance
Resilient Business Model Driving Performance 1 Second Quarter – Improving Trends 2 Supporting Franchisee Health Clear focus and priorities to drive shareholder value 3 Financial Profile Remains Strong 4 Business Model - Positioned to Outperform 9
Slide 10: Our Franchisees Have Benefited From Various Relief Programs…
Our Franchisees Have Benefited From Various Relief Programs… 90% 41% <10% of U.S. franchisees of U.S. franchisees of U.S. franchisees took a PPP loan took an EIDL have CMBS loans >60% ~70% of U.S. franchisees received of U.S. franchisees some form of debt relief above 40% occupancy * from lenders 10
Slide 11: ...and We Are Providing Wide-Ranging Support to Our Franchisees
...and We Are Providing Wide-Ranging Support to Our Franchisees Revenue Generation Champion of Count On Us Support Financial Relief Advocacy Efforts • Comprehensive initiative to build • Rate strategy training and • Generous fee relief and deferral • Actively supporting efforts guest confidence and
Slide 12: Resilient Business Model Driving Performance
Resilient Business Model Driving Performance 1 Second Quarter – Improving Trends 2 Supporting Franchisee Health Clear focus and priorities to drive shareholder value 3 Financial Profile Remains Strong 4 Business Model - Positioned to Outperform 12
Slide 13: Capital Allocation Principles Unchanged
Capital Allocation Principles Unchanged 1. Maintain Strong 3. Return Capital to 2. Invest in Business Balance Sheet Shareholders • $664 million of cash on hand • Supporting franchisees with fee • Expect to continue paying at June 30, 2020 deferrals/waivers until dividends, increase when September 1,
Slide 14: Strong Balance Sheet and Substantial Cash Reserves
Strong Balance Sheet and Substantial Cash Reserves Balance Sheet Debt Maturities $2,000 • Cash on hand at June 30, 2020 $664 million $1,500 • Major maturities due prior to 2023 None $1,000 • First lien leverage ratio of 5.0x June 30, 2021 testing waived until: $500 • Financial and operating liabilit
Slide 15: Wyndham's Business Model is Capital Efficient and Generates Substantial Cash Flow
Wyndham’s Business Model is Capital Efficient and Generates Substantial Cash Flow Capital Spend as a Percentage of Revenue is Favorable versus Competition and Closest Peer 60% Conversion Yield ~60% Conversion 30% $613 CHH ($59) 20% ($100) $360 ($50) ($17) Peers ($27) 10% Wyndham 0% 2017 2018 2019 20
Slide 16: Disciplined Capital Allocation Has Generated Strong Shareholder Returns
Disciplined Capital Allocation Has Generated Strong Shareholder Returns 2018 – 2019 Capital Allocation 2020 – 2021 Priorities Capital Spend 18% Maintain strong liquidity Debt Reduction 3% Invest in the business for future growth Share 52% Repurchase Reduce leverage 27% Dividends Shareholder
Slide 17: Resilient Business Model Driving Performance
Resilient Business Model Driving Performance 1 Second Quarter – Improving Trends 2 Supporting Franchisee Health Clear focus and priorities to drive shareholder value 3 Financial Profile Remains Strong 4 Business Model - Positioned to Outperform 17
Slide 18: Uniquely Positioned to Outperform
Uniquely Positioned to Outperform 1 2 3 4 5 Primarily Predominately Select-Service Powerful Growth Low Risk Leisure-Focused “Drive to” Leader Engine Business Model Locations 18
Slide 19: Leisure Guests Power our Business; Expected to Recover First
REASON #1 Leisure Guests Power our Business; Expected to Recover First Nearly 70% Leisure Focus Leisure 69% Corporate/ Contract 30% Group 1% Business Minimal Exposure to Group Business 19 All data based on 2019 results.
Slide 20: "Drive to" Destinations Not Reliant on Air Travel or International Travelers
REASON #2 “Drive to” Destinations Not Reliant on Air Travel or International Travelers 87% U.S. Hotels in “Drive to” Locations 96% of U.S. Guests Originate Domestically Suburban 35% U.S. 96% Interstate 23% 87% Europe 1% Small Metro 29% Canada 1% Airport 5% Latin America 1% Urban 5% Resorts 3% Asia P
Slide 21: Leader in the Attractive Select-Service Space
REASON #3 Leader in the Attractive Select-Service Space Percent of U.S. Hotels in Advantageous Features of Select Service vs. Full Service Select-Service Hotels Hotels 1% Less labor-intensive and lower operating 6,000 4% costs Higher operating margins 4,000 99% Lower construction costs, manage
Slide 22: Proven Track Record of Growing During a Recession
REASON #4 Proven Track Record of Growing During a Recession Global Organic System Growth Conversion Activity as a Last Recession Percent of Total Room Openings 3% 86% 568,000 83% 563,200 72% 67% 550,600 2007 2008 2009 2007-2009 2010-2012 2013-2015 2016-2019 22 System size excludes rooms acquired in
Slide 23: Significant Growth Opportunity in Large Conversion Market
REASON #4 Significant Growth Opportunity in Large Conversion Market Strong Value Proposition, Significant Addressable Market in the Especially in Lodging Down-Cycles Economy and Midscale Segments World-class Distribution Hotels in U.S. Platform and Industry- 16,000 Leading Loyalty Program 12,000 Hot
Slide 24: World's Largest Hotel Franchisor with Minimal Exposure to Asset Risk
REASON #5 World’s Largest Hotel Franchisor with Minimal Exposure to Asset Risk Number of Hotels Worldwide Percent of Franchised Hotels 9,250 Wyndham 96% Choice 100% 7,420 7,145 Hilton 87% 6,162 5,895 IHG 82% Marriott 71% Limited exposure to operating costs and capital requirements associated with
Slide 25: Resilient Business Model Driving Performance
IN SUMMARY Resilient Business Model Driving Performance 1 Second Quarter – Improving Trends 2 Supporting Franchisee Health Clear focus and priorities to drive shareholder value 3 Financial Profile Remains Strong 4 Business Model - Positioned to Outperform 25
Slide 26: The Wyndham Family of Brands
The Wyndham Family of Brands Wherever people go, Wyndham will be there to welcome them. Economy Midscale Upper Midscale Upscale Upper Upscale Select-service 26
Slide 27: Highly Flexible Business Model Provides Significant Cost Savings Opportunities
APPENDIX Highly Flexible Business Model Provides Significant Cost Savings Opportunities OVERHEAD/ TOTAL 2020 VOLUME-RELATED OTHER SAVINGS SAVINGS REDUCTIONS To be redeployed Marketing, reservation on an ~$170 million ~$110 million ~$60 million opportunistic and loyalty fund savings basis* Operating,
Slide 28: Second Quarter Impairment Charge – Non-Cash
APPENDIX Second Quarter Impairment Charge – Non-Cash $206 million impairment charge Attributable to higher discount rate due Principally related to the La Quinta to increased share price acquisition volatility, consistent Impairment charges are non-cash with the lodging sector and do not impac
Slide 29: RevPAR Sensitivities in Global Downturn of Large Magnitude
APPENDIX RevPAR Sensitivities in Global Downturn of Large Magnitude RevPAR Sensitivity vs. 2019 (for every point/100bps change) ($millions) 2020 Full Year U.S.-based franchise and management fees $4.0 Typically offset by variable expense International franchise and management fees 1.5 reductions but
Slide 30: Non-GAAP Reconciliations
APPENDIX Non-GAAP Reconciliations The following tables reconcile certain non-GAAP financial measures. 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
Slide 31: Definitions and Disclaimer
APPENDIX Definitions and Disclaimer Definitions: Adjusted EBITDA: Represents net income excluding interest expense, depreciation and amortization, impairment charges, restructuring and related charges, contract termination costs, transaction-related items (acquisition-, disposition-, or separation-r
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