WYNDHAM HOTELS & RESORTS REPORTS STRONG FOURTH QUARTER AND FULL-YEAR 2022 RESULTS

Company Exceeds Top End of Full-Year Outlook
Grows Development Pipeline by 12%
Increases Quarterly Dividend by 9% and Provides Full-Year 2023 Outlook

PARSIPPANY, N.J., Feb. 15, 2023 /PRNewswire/ -- Wyndham Hotels & Resorts (NYSE: WH) today announced results for the three months and year ended December 31, 2022.  Highlights include:

• Global RevPAR grew 15% compared to fourth quarter 2021 in constant currency, a 300 basis point improvement sequentially, representing 116% of 2019 levels; full-year global RevPAR grew 20% year-over-year in constant currency.
• U.S. RevPAR grew 5% compared to fourth quarter 2021, a 300 basis point improvement sequentially, representing 115% of 2019 levels; full-year U.S. RevPAR grew 12%.
• System-wide rooms grew 4% year-over-year, including 1% in the U.S. and 9% internationally.
• Development pipeline grew 12% year-over-year, including 170 new construction projects added for the Company's ECHO Suites Extended Stay by Wyndham brand since launch in March.
• Hotel Franchising segment revenues grew 12% compared to fourth quarter 2021 and 16% for the full-year.
• Diluted earnings per share of $0.63 and net income of $56 million for the quarter; full-year diluted earnings per share of $3.91 and net income of $355 million.
• Adjusted diluted earnings per share of $0.72 and adjusted net income of $64 million for the quarter; full-year adjusted diluted earnings per share of $3.96 and adjusted net income of $360 million.
• Adjusted EBITDA of $126 million for the quarter and $650 million for the full-year, which exceeded our full-year outlook of $636 million to $644 million.
• Net cash provided by operating activities of $399 million and free cash flow of $360 million for the full-year.
• Returned $561 million to shareholders for the full-year through $445 million of share repurchases and quarterly cash dividends of $0.32 per share.
• Board of Directors recently authorized a 9% increase in the quarterly cash dividend to $0.35 per share beginning with the dividend expected to be declared in first quarter 2023.

"We are incredibly proud of our team's ability to close out 2022 with RevPAR and adjusted EBITDA results that exceeded our outlook. Our development pipeline increased sequentially for the 10^th consecutive quarter reflecting robust developer interest in our brands for both conversion and new construction opportunities despite the broader macro-economic climate," said Geoffrey A. Ballotti, president and chief executive officer. "Given the continued occupancy recovery across the globe and infrastructure business growth in 2023, we are enthusiastic about the opportunities that lie ahead and our ability to deliver outstanding value to our shareholders, guests, franchisees and team members."

Fourth Quarter 2022 Operating Results

Fee-related and other revenues was $310 million compared to $314 million in fourth quarter 2021, which included $38 million from the Company's select-service management business and owned hotels - both of which were exited in the first half of 2022.  On a comparable basis, fee-related and other revenues increased 12% year-over-year primarily reflecting global RevPAR growth and higher license fees.

The Company generated net income of $56 million, or $0.63 per diluted share, compared to $48 million, or $0.52 per diluted share, in fourth quarter 2021. The increase in net income was primarily due to higher adjusted EBITDA in the Company's hotel franchising segment, partially offset by the impact from the exit of the Company's select-service management business and owned hotels.  Adjusted EBITDA was $126 million compared to $131 million in fourth quarter 2021, which included a $12 million contribution from the Company's select-service management business and owned hotels - both of which were exited in the first half of 2022.  On a comparable basis, adjusted EBITDA increased 6% year-over-year reflecting higher fee-related and other revenues, partially offset by an unfavorable timing impact from the marketing fund and the inflationary impact on expenses, both of which were anticipated.

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 4%, reflecting 1% growth in the U.S. and 9% 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 4% and 10%, respectively, as well as 80 basis points of growth globally and 200 basis points internationally from the acquisition of the Vienna House brand in September 2022.  The Company also achieved its goal of a retention rate above 95% for the full-year 2022. 

RevPAR

Fourth quarter global RevPAR grew by 15% in constant currency compared to 2021 reflecting 5% growth in the U.S. and 46% internationally.  Global RevPAR was 116% of 2019 levels in constant currency, with the U.S. at 115% and international at 123%.  The increases compared to both 2021 and 2019 were driven primarily by stronger pricing power.

Fourth Quarter 2022 Business Segment Discussion

Hotel Franchising revenues increased 12% year-over-year to $303 million primarily due to the global RevPAR increase and higher license fees.  Hotel Franchising adjusted EBITDA of $138 million increased 8% reflecting the growth in revenues, partially offset by the expected unfavorable timing impact from the marketing fund, excluding which Hotel Franchising adjusted EBITDA would have increased 13%.

Hotel Management revenues decreased 75% year-over-year to $31 million, including a $54 million decrease in cost-reimbursement revenues, which have no impact on adjusted EBITDA.  Absent cost-reimbursements, Hotel Management revenues decreased $37 million, or 84%, and adjusted EBITDA decreased $15 million, or 79%, reflecting the exit of the Company's select-service management business and owned hotels. 

Full-Year 2022 Operating Results

Fee-related and other revenues was $1,354 million compared to $1,245 million in full-year 2021.  The Company's select-service management business and owned hotels - both of which were exited in the first half of 2022 - contributed $50 million and $125 million during 2022 and 2021, respectively.  On a comparable basis, fee-related and other revenues increased 16% year-over-year primarily reflecting global RevPAR growth and higher license fees.

The Company generated net income of $355 million, or $3.91 per diluted share, compared to $244 million, or $2.60 per diluted share, in full-year 2021. The increase in net income was primarily due to higher adjusted EBITDA in the Company's hotel franchising segment and lower net interest expense, partially offset by the impact from the exit of the Company's select-service management business and owned hotels.  Adjusted EBITDA was $650 million compared to $590 million in full-year 2021.  The Company's select-service management business and owned hotels - both of which were exited in the first half of 2022 - contributed $18 million and $37 million during 2022 and 2021, respectively.  On a comparable basis, adjusted EBITDA increased 14% year-over-year reflecting higher fee-related and other revenues, partially offset by the inflationary impact on expenses.

During full-year 2020, the Company's marketing fund expenses exceeded revenues by $49 million in order to support its owners during COVID.  During the full-year 2022, the Company's marketing fund revenues exceeded expenses by $20 million; while in full-year 2021, the Company's marketing fund revenues exceeded expenses by $18 million.  As such, the Company has now recovered $38 million of the $49 million of support provided during 2020.

Development

The Company awarded 882 new contracts this year, a 35% increase compared to the 655 contracts awarded during 2021. 

On December 31, 2022, the Company's global development pipeline consisted of over 1,700 hotels and approximately 219,000 rooms, of which approximately 73% is in the midscale and above segments (56% in the U.S.).  The pipeline grew 12% year-over-year, including 34% growth in the U.S.  Approximately 60% of the Company's development pipeline is international and over 80% is new construction, of which approximately 36% has broken ground.  The pipeline includes 170 new contracts awarded for the Company's ECHO Suites Extended Stay by Wyndham brand since its launch in March 2022.  In line with development expectations, the first three ECHO Suites hotels broke ground in 2022 and are anticipated to open in the second half of 2023.

Cash and Liquidity

The Company generated $399 million of net cash provided by operating activities and free cash flow of $360 million in the full-year 2022.  The Company ended the quarter with a cash balance of $161 million and approximately $900 million in total liquidity. The Company's net debt leverage ratio was 2.9 times at December 31, 2022, just below the Company's 3 to 4 times stated target range.

Share Repurchases and Dividends

During the fourth quarter of 2022, the Company repurchased approximately 1.9 million shares of its common stock for $133 million.  For the full-year 2022, the Company repurchased approximately 6.2 million shares of its common stock for $445 million.  Since the Company's spin-off in June 2018, it has repurchased 15% of its outstanding common stock.

The Company paid common stock dividends of $28 million, or $0.32 per share, in the fourth quarter of 2022 for a total of $116 million, or $1.28 per share, for the full-year 2022.

For the full-year 2022, the Company returned $561 million to shareholders through share repurchases and quarterly cash dividends.

The Company's Board of Directors authorized a 9% increase in the quarterly cash dividend to $0.35 per share, beginning with the dividend expected to be declared in first quarter 2023.

Full-Year 2023 Outlook

The Company provided the following outlook for full-year 2023:

Year-over-year growth rates are not comparable due to the exit of the Company's select-service management business, the sale of its two owned hotels during 2022 and the variability in its marketing funds due to the support that the Company provided to its owners during 2020.

More detailed projections are available in Table 8 of this press release.  The Company is providing certain financial metrics only on a non-GAAP basis because, without unreasonable efforts, it is unable to predict with reasonable certainty the occurrence or amount of all of the adjustments or other potential adjustments that may arise in the future during the forward-looking period, which can be dependent on future events that may not be reliably predicted. Based on past reported results, where one or more of these items have been applicable, such excluded items could be material, individually or in the aggregate, to the reported results.

Conference Call Information

Wyndham Hotels will hold a conference call with investors to discuss the Company's results and outlook on Thursday, February 16, 2023 at 8:00 a.m. ET.  Listeners can access the webcast live through the Company's website at https://investor.wyndhamhotels.com.  The conference call may also be accessed by dialing 800 245-3047 and providing the passcode "Wyndham".  Listeners are urged to call at least five minutes prior to the scheduled start time.  An archive of this webcast will be available on the website beginning at noon ET on February 16, 2023.  A telephone replay will be available for approximately ten days beginning at noon ET on February 16, 2023 at 800 839-9815.

Presentation of Financial Information

Financial information discussed in this press release includes non-GAAP measures, which include or exclude certain items. 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.  The Company uses these measures internally to assess its operating performance, both absolutely and in comparison to other companies, and to make day to day operating decisions, including in the evaluation of 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 GAAP results to the comparable non-GAAP measures for the reported periods appear in the financial tables section of this press release.

About Wyndham Hotels & Resorts

Wyndham Hotels & Resorts (NYSE: WH) is the world's largest hotel franchising company by the number of properties, with approximately 9,100 hotels across over 95 countries on six continents.  Through its network of approximately 843,000 rooms appealing to the everyday traveler, Wyndham commands a leading presence in the economy and midscale segments of the lodging industry.  The Company operates a portfolio of 24 hotel brands, including Super 8®, Days Inn®, Ramada®, Microtel®, La Quinta®, Baymont®, Wingate®, AmericInn®, Hawthorn Suites®, Trademark Collection® and Wyndham®.  The Company's award-winning Wyndham Rewards loyalty program offers approximately 99 million enrolled members the opportunity to redeem points at thousands of hotels, vacation club resorts and vacation rentals globally.  For more information, visit www.wyndhamhotels.com.  The Company may use its website as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.  Disclosures of this nature will be included on the Company's website in the Investors section, which can currently be accessed at www.investor.wyndhamhotels.com.  Accordingly, investors should monitor this section of the Company's website in addition to following the Company's press releases, filings submitted with the Securities and Exchange Commission and any public conference calls or webcasts.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the federal securities laws, including statements related to the Company's current views and expectations with respect to its future performance and operations, including revenues, earnings, cash flow and other financial and operating measures, share repurchases and dividends and restructuring charges. Forward-looking statements include those that convey management's expectations as to the future based on plans, estimates and projections at the time the Company makes the statements and may be identified by words such as "will," "expect," "believe," "plan," "anticipate," "intend," "goal," "future," "outlook," "guidance," "target," "objective," "estimate," "projection" 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 the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. 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, including inflation, higher interest rates and potential recessionary pressures; the worsening of the effects from the coronavirus pandemic ("COVID-19"); COVID-19's scope, duration, resurgence and impact on the Company's business operations, financial results, cash flows and liquidity, as well as the impact on the Company's franchisees, guests and team members, the hospitality industry and overall demand for and restrictions on travel the Company's continued performance during the recovery from COVID-19 and any resurgence or mutations of the virus concerns with or threats of other pandemics, contagious diseases or health epidemics, including the effects of COVID-19; the performance of the financial and credit markets; the economic environment for the hospitality industry; operating risks associated with the hotel franchising businesses; the Company's relationships with franchisees; the impact of war, terrorist activity, political instability or political strife, including the ongoing conflict between Russia and Ukraine; the Company's ability to satisfy obligations and agreements under its outstanding indebtedness, including the payment of principal and interest and compliance with the covenants thereunder; risks related to the Company's ability to obtain financing and the terms of such financing, including access to liquidity and capital; and the Company's ability to make or pay, plans for and the timing and amount of any future share repurchases and/or dividends, as well as the risks described in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission and any subsequent reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, subsequent events or otherwise.