UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
____________
Date of report (Date of earliest event reported) May 2, 2018
Wyndham Worldwide Corporation
(Exact Name of Registrant as Specified in Charter)
Delaware (State or Other Jurisdiction of Incorporation) |
1-32876 (Commission File Number) |
20-0052541 (IRS Employer Identification No.) |
22 Sylvan Way Parsippany, NJ (Address of Principal Executive Offices) |
|
07054 (Zip Code)
|
Registrant's telephone number, including area code (973) 753-6000
None
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02. | Results of Operations and Financial Condition. |
Wyndham Worldwide Corporation (Company) today issued a press release reporting financial results for the quarter ended March 31, 2018.
A copy of the Company’s press release is furnished as Exhibit 99.1 and is incorporated by reference.
The information included in this Item 2.02 and Exhibit 99.1 to this Current Report on Form 8-K shall not be deemed “filed” for the purposes of or otherwise subject to the liabilities under Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act). Unless expressly incorporated into a filing of the Company under the Securities Act of 1933, as amended (Securities Act), or the Exchange Act made after the date hereof, the information contained in this Item 2.02 and Exhibit 99.1 hereto shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 7.01. | Regulation FD Disclosure. |
As previously announced, the Company’s spin-off transaction is expected to result in two separate, publicly traded companies. As a result of the spin-off, the Company’s hotel group business is expected to become a new publicly traded hotel franchising and management company, Wyndham Hotels & Resorts, Inc. and the Company’s vacation ownership business is expected to be combined with its destination network business and be renamed Wyndham Destinations, Inc.
On May 2, 2018, the Company posted to the investor relations section of its website certain updated supplemental business and financial information about Wyndham Destinations and Wyndham Hotels & Resorts.
Wyndham Hotels & Resorts’ Registration Statement on Form 10, as amended, including an Information Statement describing the spin-off and Wyndham Hotels & Resorts’ business, is filed with the Securities and Exchange Commission and is also posted to the investor relations section of the Company’s website.
The information included in this Item 7.01 to this Current Report on Form 8-K shall not be deemed “filed” for the purposes of or otherwise subject to the liabilities under Section 18 of the Exchange Act. Unless expressly incorporated into a filing of the Company under the Securities Act or the Exchange Act made after the date hereof, the information contained in this Item 7.01 shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits. The following exhibit is furnished with this report:
Exhibit No. |
Description | |
Exhibit 99.1 | Press Release of Wyndham Worldwide Corporation, dated May 2, 2018, reporting financial results for the quarter ended March 31, 2018. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
WYNDHAM WORLDWIDE CORPORATION | ||
Date: May 2, 2018 | By: | /s/Nicola Rossi |
Nicola Rossi Chief Accounting Officer |
WYNDHAM WORLDWIDE CORPORATION
CURRENT REPORT ON FORM 8-K
Report Dated May 2, 2018
EXHIBIT INDEX
Exhibit No. | Description |
Exhibit 99.1 | Press Release of Wyndham Worldwide Corporation, dated May 2, 2018, reporting financial results for the quarter ended March 31, 2018. |
Exhibit 99.1
Wyndham Worldwide Reports First Quarter 2018 Results
Key Metrics Reflect Robust Growth and Strong Execution
Planned Separation into Two Independent,
Publicly Traded Companies Expected
to be Completed Later This Quarter
PARSIPPANY, N.J. (May 2, 2018) – Wyndham Worldwide Corporation (NYSE: WYN) today announced results for the three months ended March 31, 2018. Full reconciliations of GAAP to non-GAAP measures for all reported periods appear in the tables to this press release.
First quarter revenues from continuing operations were $1.2 billion, an increase of 3% compared with the prior-year period. Results reflect the required adoption of the new revenue recognition standard, which had an immaterial year-over-year impact on the Company’s results on a comparable basis.
Net income from continuing operations in the first quarter of 2018 was $81 million compared with $127 million for the first quarter of 2017. Diluted earnings per share (EPS) from continuing operations were $0.80, versus $1.20 in the prior-year period. Net income from continuing operations was impacted by $53 million ($0.53 per diluted share) of after-tax separation- and transaction-related costs in first quarter 2018.
Adjusted net income from continuing operations was $134 million or $1.33 per diluted share, compared with $106 million or $1.01 per diluted share in the first quarter of 2017. Adjusted diluted EPS increased 32%, and 10% excluding the benefit of a reduced effective income tax rate. Adjusted results exclude separation costs and other items as detailed in Tables 7 and 8 of this press release. The growth in adjusted earnings primarily reflects higher revenues in all three of the Company’s operating segments, hurricane-related insurance recoveries and lower taxes, partially offset by increased interest expense. Adjusted diluted EPS also reflects the benefit of the Company’s share repurchase program.
“We’ve started the year with strong growth in our businesses,” said Stephen P. Holmes, chairman and CEO. “Our teams delivered solid financial results while executing on several key strategic initiatives, including the pending sale of our European vacation rentals business, the planned spin-off of Wyndham Hotels & Resorts into a separate publicly traded company, and the pending acquisition of La Quinta’s hotel franchising and hotel management business.”
First quarter EBITDA from continuing operations was $221 million, compared with $237 million in the prior-year period, due to separation-related costs recorded in first quarter 2018. Adjusted EBITDA from continuing operations increased 10%, to $274 million, compared with $249 million in the first quarter of 2017. Results primarily reflect the growth in revenues as well as an approximately $5 million net benefit from hurricane-related impacts and insurance proceeds.
FIRST QUARTER 2018 BUSINESS UNIT RESULTS
Hotel Group
Revenues increased 4% to $302 million in the first quarter of 2018, compared with $289 million in first quarter 2017. Results reflect higher royalties and franchise fees as well as higher marketing, reservation and Wyndham Rewards revenues, which are generally offset in expenses.
EBITDA was $83 million in the first quarter, unchanged from the prior-year quarter, primarily due to $12 million of separation- and acquisition-related costs. Adjusted EBITDA was $98 million compared with $84 million in the prior-year period, an increase of 17%, primarily reflecting the growth in revenue and a net benefit of $6 million from hurricane-related insurance recoveries and costs.
First quarter domestic RevPAR increased 5.6% compared with first quarter 2017. Global RevPAR increased 7.0%, and 4.7% in constant currency.
As of March 31, 2018, the Company’s hotel system consisted of over 8,300 properties and approximately 723,000 rooms, a 3% increase compared with a year earlier that includes almost 12,000 rooms the Company added with the acquisition of AmericInn in October 2017. The development pipeline increased to over 1,100 hotels and nearly 147,700 rooms, a 3% year-over-year room increase, of which 58% are international and 67% are new construction.
Destination Network
Revenues were $246 million in the first quarter of 2018, compared with $243 million in the first quarter of 2017, an increase of 1%. The average number of members increased 1%, while exchange revenue per member declined 1%.
EBITDA was $66 million compared with $75 million in the first quarter of 2017, reflecting $11 million of separation costs. Adjusted EBITDA was $77 million compared with $75 million in the prior-year period, an increase of 3%, primarily reflecting hurricane-related insurance recoveries and cost savings.
This segment no longer includes the Company’s European vacation rentals business, which is classified as a discontinued operation.
Vacation Ownership
Revenues were $661 million in the first quarter of 2018, compared with $639 million in the first quarter of 2017, an increase of 3%. The increase reflects 6% growth in both gross vacation ownership interest (VOI) sales and consumer financing revenues, partially offset by a higher provision for loan losses. Tour flow increased 8% and sales volume per guest (VPG) declined 2%, driven by increased tours to new owners. New owner sales volume increased 19% year-over-year.
EBITDA was $124 million in the first quarter of 2018 compared with $117 million in the prior-year quarter. Adjusted EBITDA was $129 million compared with $122 million in the prior-year quarter, an increase of 6%. Results primarily reflect the growth in revenues.
OTHER ITEMS
· | Upcoming Separation – As previously announced, the Company plans to separate into two publicly traded hospitality companies through the spin-off of the Company’s Hotel Group business to shareholders. In the spin-off, Wyndham Hotels & Resorts, Inc. will become an independent hotel franchising and hotel management company whose common stock is expected to trade on the New York Stock Exchange under the ticker “WH.” In conjunction with the spin-off, Wyndham Worldwide will change its name to Wyndham Destinations, Inc. and will be primarily comprised of Wyndham’s Vacation Ownership and Destination Network operations, making it the world’s largest vacation ownership and exchange company. Wyndham Destinations’ stock will trade on the New York Stock Exchange under the ticker “WYND.” The separation process has been proceeding as planned, and the Company expects to complete the spin-off this quarter. |
· | Sale of European Vacation Rentals Business – In the first quarter, the Company agreed to sell its European vacation rentals business to an affiliate of Platinum Equity for approximately $1.3 billion in cash. This transaction is expected to be completed this quarter. |
· | La Quinta Acquisition – As previously announced, the Company has agreed to purchase La Quinta Holdings’ hotel franchising and hotel management operations for $1.95 billion in cash. The acquisition will add approximately 900 managed and/or franchised hotels to our Hotel Group’s portfolio and is expected to close this quarter. In preparation for the La Quinta acquisition and the spin-off, Wyndham Hotels & Resorts issued $500 million of senior unsecured notes due 2026 and arranged for commitments from lenders for a $1.6 billion senior secured term loan facility. Wyndham Hotels & Resorts has also arranged a $750 million senior secured revolving credit facility, which it expects to be undrawn at the time of spin-off and acquisition of La Quinta. |
· | Share Repurchases – The Company repurchased 0.6 million shares of common stock for $75 million during the first quarter of 2018 at an average price of $115.91. From April 1 through May 1, 2018, the Company repurchased an additional 0.2 million shares for $22 million. |
· | Sale of Knights Inn – In April, the Company agreed to sell its Knights Inn franchise brand, consisting of approximately 350 franchised hotels with 21,000 rooms, to Red Lion Hotels for approximately $27 million in cash. The transaction is expected to close this quarter. |
· | New Revenue Recognition Standard – In the first quarter, the Company adopted the new U.S. GAAP revenue recognition standard, as required. This new standard reduced previously reported first quarter 2017 revenues and adjusted EBITDA by $14 million and $3 million, respectively, and reduced first quarter 2018 revenues and adjusted EBITDA by $16 million and $3 million, respectively. |
OUTLOOK
Note to Editors: The Company has classified its European vacation rentals business, which it has agreed to sell, as a discontinued operation; its results are therefore excluded from the outlook below. In addition, the outlook excludes possible future share repurchases. Analysts’ estimates may include projections of the European vacation rentals business and/or include projected share repurchases, and may not have been adjusted to reflect the impact of the new U.S. GAAP revenue recognition standard. These factors may result in discrepancies between the Company’s projections and database consensus forecasts.
The Company’s outlook for 2018 adjusted EBITDA from continuing operations is unchanged from the outlook it provided in February. The Company projects the following results for full-year 2018:
· | Revenues of $5.195 billion to $5.335 billion, an increase of 4% to 7%. The change from the Company’s prior projection is entirely due to the impact of the new revenue recognition standard, which did not affect projected year-over-year revenue growth calculated on a comparable basis. |
· | An effective tax rate applicable to adjusted pretax earnings of approximately 25%. |
· | Adjusted net income from continuing operations of $702 million to $717 million, an increase of 25% to 28%, approximately 19 points of which is due to a lower effective tax rate. |
· | Adjusted EBITDA of $1.330 billion to $1.355 billion, which represents year-over-year growth of 7% to 9% and is comprised of: |
o | Hotel Group adjusted EBITDA of $445 million to $455 million |
o | Destination Network adjusted EBITDA of $265 million to $275 million |
o | Vacation Ownership adjusted EBITDA of $735 million to $750 million |
· | Adjusted diluted EPS from continuing operations of $6.96 to $7.11, which is an increase of 28% to 31% and is based on a diluted share count of 100.8 million. |
These projections exclude the impact of the La Quinta acquisition and the financing thereof, exclude any impact from our European vacation rentals business, which is treated as a discontinued operation, and exclude costs associated with the Company’s planned separation into two separate publicly traded companies. Projections now reflect the required change in revenue recognition accounting. See Table 12 for detailed projections. In addition, we are publishing two presentations on our website (http://investor.wyndhamworldwide.com) with additional information on our projections for the two separate companies post-spin.
In determining adjusted net income, adjusted EBITDA and adjusted EPS, the Company excludes certain items which are otherwise included in determining the comparable GAAP financial measures. A description of the adjustments that have been applicable for the reported periods in determining adjusted net income, adjusted EBITDA and adjusted EPS are reflected in Tables 7 and 8 of this press release. The Company is providing an outlook for net income, EBITDA and EPS only on a non-GAAP basis because the Company is unable to predict with reasonable certainty the totality or ultimate outcome or occurrence of these adjustments or other potential adjustments that may arise in the future during the outlook period, which can be dependent on future events that may not be reliably predicted.
CONFERENCE CALL INFORMATION
Wyndham Worldwide Corporation will hold a conference call with investors to discuss the Company’s results and outlook on Wednesday, May 2, 2018 at 8:30 a.m. ET. Listeners can access the webcast live through the Company’s website at http://www.wyndhamworldwide.com/investors/. The conference call may also be accessed by calling 877-876-9177 and providing the passcode WYNDHAM. Listeners are urged to call at least 10 minutes prior to the scheduled start time. An archive of this webcast will be available on the website for approximately 90 days beginning at 12:00 p.m. ET on May 2, 2018. A telephone replay will be available for approximately 10 days beginning at 12:00 p.m. ET on May 2, 2018 at 800-374-1375.
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. 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 release.
ABOUT WYNDHAM WORLDWIDE
Wyndham Worldwide (NYSE: WYN) is one of the largest global hospitality companies, providing travelers with access to a collection of trusted hospitality brands in hotels, vacation ownership, and unique accommodations including vacation exchange and managed vacation rentals. With a collective inventory of over 22,000 places to stay across 110 countries on six continents, Wyndham Worldwide and its 39,000 associates welcome people to experience travel the way they want. This is enhanced by Wyndham Rewards®, the Company’s award-winning guest loyalty program across its businesses, which is making it simpler for members to earn more rewards and redeem their points faster. For more information, please visit www.wyndhamworldwide.com.
FORWARD-LOOKING STATEMENTS
This press release contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are those that convey management’s expectations as to the future based on plans, estimates and projections at the time Wyndham Worldwide makes the statements and may be identified by terminology such as “will,” “expect,” “believe,” “plan,” “anticipate,” “goal,” “future,” “outlook,” “guidance,” “target,” “projection,” “estimate” and similar expressions. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of Wyndham Worldwide or the post-spin companies 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 the Company’s revenues, earnings, taxes, cash flow and related financial and operating measures, dividends, share repurchases, acquisitions, dispositions and expectations with respect to the spin-off and related transactions, as well as the post-spin companies’ future operating, financial and business performance.
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 general economic conditions, the performance of the financial and credit markets, the economic environment for the hospitality industry, the impact of war, terrorist activity or political strife, operating risks associated with the hotel, vacation exchange and rentals and vacation ownership businesses, differences between the actual impact of recently enacted corporate tax reform and our current expectations, uncertainties that may delay or negatively impact the spin-off or cause the spin-off to not occur at all, uncertainties related to the post-spin companies’ ability to realize the anticipated benefits of the spin-off, uncertainties related to Wyndham Worldwide’s ability to successfully complete the spin-off on a tax-free basis within the expected time frame or at all, unanticipated developments that delay or otherwise negatively affect the spin-off, uncertainties related to Wyndham Worldwide’s ability to obtain financing for the two companies or the terms of such financing, 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, unanticipated developments resulting from possible disruption to our operations resulting from the proposed spin-off, the potential impact of the spin-off and related transactions on Wyndham Worldwide’s credit rating, uncertainties relating to Wyndham Worldwide’s planned sale of its European vacation rentals business and the outcome and timing of that process, uncertainties relating to Wyndham Worldwide’s pending acquisition of La Quinta Holdings’ hotel franchising and hotel management operations and the outcome and timing of that process, the timing and amount of future share repurchases and dividends, as well as those factors described in Wyndham Worldwide’s Annual Report on Form 10-K, filed with the SEC on February 16, 2018. Except for Wyndham Worldwide’s ongoing obligations to disclose material information under the federal securities laws, it undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.
# # #
Investor and Media Contacts:
Margo C. Happer
Senior Vice President, Investor Relations
Wyndham Worldwide Corporation
973-753-6472
margo.happer@wyn.com
Barry Goldschmidt
Vice President, Investor Relations
Wyndham Worldwide Corporation
973-753-7703
barry.goldschmidt@wyn.com
Wyndham Worldwide Corporation
Earnings Release Schedules
Quarter One - March 31, 2018
Table of Contents
Table No. | |
Consolidated Statements of Income (Unaudited) | 1 |
Operating Results of Reportable Segments | 2 |
Operating Statistics | 3 |
Condensed Consolidated Statements of Cash Flows and Reconciliation of Free Cash Flows (Unaudited) | 4 |
Revenue Detail by Reportable Segment | 5 |
Brand System Details | 6 |
Non-GAAP Reconciliation of Adjusted Net Income and EPS | 7 |
Non-GAAP Reconciliation of Adjusted EBITDA by Reportable Segment | 8 |
Non-GAAP Financial Data for Continuing and Discontinued Operations | 9 |
Non-GAAP Reconciliation for Discontinued Operations | 10 |
Non-GAAP Reconciliation of Gross VOI Sales | 11 |
Non-GAAP Reconciliation of 2018 Outlook | 12 |
Schedule of Summarized Balance Sheet Information | 13 |
Table 1
Wyndham Worldwide Corporation
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2018 | 2017 | |||||||
Net revenues | ||||||||
Service and membership fees | $ | 487 | $ | 476 | ||||
Vacation ownership interest sales | 358 | 350 | ||||||
Franchise fees | 151 | 140 | ||||||
Consumer financing | 118 | 111 | ||||||
Other | 76 | 77 | ||||||
Net revenues | 1,190 | 1,154 | ||||||
Expenses | ||||||||
Operating | 513 | 506 | ||||||
Cost of vacation ownership interests | 31 | 36 | ||||||
Consumer financing interest | 19 | 18 | ||||||
Marketing and reservation | 188 | 174 | ||||||
General and administrative | 173 | 172 | ||||||
Separation-related | 51 | - | ||||||
Impairment | - | 5 | ||||||
Restructuring | - | 7 | ||||||
Depreciation and amortization | 56 | 51 | ||||||
Total expenses | 1,031 | 969 | ||||||
Operating income | 159 | 185 | ||||||
Other income, net | (6 | ) | (1 | ) | ||||
Interest expense | 45 | 34 | ||||||
Interest income | (1 | ) | (1 | ) | ||||
Income before income taxes | 121 | 153 | ||||||
Provision for income taxes | 40 | 26 | ||||||
Income from continuing operations | 81 | 127 | ||||||
Loss from discontinued operations, net of income taxes | (47 | ) | (37 | ) | ||||
Net income | $ | 34 | $ | 90 | ||||
Basic earnings per share | ||||||||
Continuing operations | $ | 0.81 | $ | 1.21 | ||||
Discontinued operations | (0.47 | ) | (0.35 | ) | ||||
$ | 0.34 | $ | 0.86 | |||||
Diluted earnings per share | ||||||||
Continuing operations | $ | 0.80 | $ | 1.20 | ||||
Discontinued operations | (0.46 | ) | (0.35 | ) | ||||
$ | 0.34 | $ | 0.85 | |||||
Weighted average shares outstanding | ||||||||
Basic | 100 | 105 | ||||||
Diluted | 101 | 106 |
Table 2
Wyndham Worldwide Corporation
OPERATING RESULTS OF REPORTABLE SEGMENTS
(In millions)
In addition to other measures, management evaluates the operating results of each of its reportable segments based upon net revenues and “EBITDA”, which is defined as net income before depreciation and amortization, interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing revenues) and income taxes, each of which is presented on the Company’s Consolidated Statements of Income. The Company also uses adjusted EBITDA as a financial measure of its operating performance. The Company believes that EBITDA and adjusted EBITDA are useful measures of assessing performance of the Company and for the Company's segments which, when considered with GAAP measures, give a more complete understanding of its operating performance and assist its investors in evaluating its ongoing operating performance for the current reporting period and, where provided, over different reporting periods, by adjusting for certain items which may be recurring or nonrecurring and which in the Company's view do not necessarily reflect ongoing operating performance. The Company also internally uses these measures to assess its operating performance, both in absolute terms and in comparison to other companies, and in evaluating or making selected compensation decisions. These supplemental disclosures are in addition to GAAP reported measures. The Company’s presentation of EBITDA and adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.
The following tables summarize net revenues and EBITDA for the Company's reportable segments, as well as reconcile Net Income to EBITDA for the three months ended March 31, 2018 and 2017:
Three Months Ended March 31, | ||||||||||||||||
2018 | 2017 | |||||||||||||||
Net Revenues | EBITDA | Net Revenues | EBITDA | |||||||||||||
Hotel Group | $ | 302 | $ | 83 | $ | 289 | $ | 83 | ||||||||
Destination Network | 246 | 66 | 243 | 75 | ||||||||||||
Vacation Ownership | 661 | 124 | 639 | 117 | ||||||||||||
Total Reportable Segments | 1,209 | 273 | 1,171 | 275 | ||||||||||||
Corporate and Other (a) | (19 | ) | (52 | ) | (17 | ) | (38 | ) | ||||||||
Total Company | $ | 1,190 | $ | 221 | $ | 1,154 | $ | 237 |
Reconciliation of Net Income to EBITDA
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Net income | $ | 34 | $ | 90 | ||||
Loss from discontinued operations, net of income taxes | 47 | 37 | ||||||
Provision for income taxes | 40 | 26 | ||||||
Depreciation and amortization | 56 | 51 | ||||||
Interest expense | 45 | 34 | ||||||
Interest income | (1 | ) | (1 | ) | ||||
EBITDA | $ | 221 | $ | 237 |
The following tables summarize net revenues and adjusted EBITDA for the Company's reportable segments for the three months ended March 31, 2018 and 2017 (for a description of adjustments and reconciliation by segment, see Table 8):
Three Months Ended March 31, | ||||||||||||||||
2018 | 2017 | |||||||||||||||
Adjusted | Adjusted | |||||||||||||||
Net Revenues | EBITDA | Net Revenues | EBITDA | |||||||||||||
Hotel Group | $ | 302 | $ | 98 | $ | 289 | $ | 84 | ||||||||
Destination Network | 246 | 77 | 243 | 75 | ||||||||||||
Vacation Ownership | 661 | 129 | 639 | 122 | ||||||||||||
Total Reportable Segments | 1,209 | 304 | 1,171 | 281 | ||||||||||||
Corporate and Other (a) | (19 | ) | (30 | ) | (17 | ) | (32 | ) | ||||||||
Total Company | $ | 1,190 | $ | 274 | $ | 1,154 | $ | 249 |
Note: Amounts may not add due to rounding.
(a) | Includes the elimination of transactions between segments. |
Table 3
(1 of 2)
Wyndham Worldwide Corporation
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 | |||||||||||||||||
Hotel Group (a) | ||||||||||||||||||||||
Number of Rooms | 2018 | 723,000 | N/A | N/A | N/A | N/A | ||||||||||||||||
2017 | 699,800 | 705,700 | 708,500 | 728,200 | 728,200 | |||||||||||||||||
2016 | 679,100 | 683,300 | 689,800 | 697,600 | 697,600 | |||||||||||||||||
RevPAR | 2018 | $ | 33.95 | N/A | N/A | N/A | N/A | |||||||||||||||
2017 | $ | 31.73 | $ | 39.43 | $ | 44.36 | $ | 34.88 | $ | 37.63 | ||||||||||||
2016 | $ | 31.59 | $ | 39.10 | $ | 43.04 | $ | 32.92 | $ | 36.67 | ||||||||||||
Destination Network (a) | ||||||||||||||||||||||
Average Number of Members (in 000s) | 2018 | 3,852 | N/A | N/A | 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 | N/A | N/A | 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 | ||||||||||||
Vacation Ownership (a) | ||||||||||||||||||||||
Gross Vacation Ownership Interest (VOI) Sales (in 000s) (b) | 2018 | $ | 465,000 | N/A | N/A | N/A | N/A | |||||||||||||||
2017 | $ | 438,000 | $ | 562,000 | $ | 600,000 | $ | 538,000 | $ | 2,139,000 | ||||||||||||
2016 | $ | 427,000 | $ | 517,000 | $ | 563,000 | $ | 501,000 | $ | 2,007,000 | ||||||||||||
Tours (in 000s) | 2018 | 190 | N/A | N/A | N/A | N/A | ||||||||||||||||
2017 | 176 | 235 | 247 | 210 | 869 | |||||||||||||||||
2016 | 179 | 213 | 230 | 197 | 819 | |||||||||||||||||
Volume Per Guest (VPG) | 2018 | $ | 2,303 | N/A | N/A | 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 |
Note: Full year amounts may not add across due to rounding.
(a) | Includes the impact of acquisitions from the acquisition dates forward. |
(b) | Includes Gross VOI sales under the Company's Wyndham Asset Affiliate Model (WAAM) Just-in-Time. (See Table 11 for a reconciliation of Gross VOI sales to vacation ownership interest sales). |
ADDITIONAL DATA
Year | Q1 | Q2 | Q3 | Q4 | Full Year | |||||||||||||||||
Hotel Group | ||||||||||||||||||||||
Number of Properties | 2018 | 8,340 | N/A | N/A | N/A | N/A | ||||||||||||||||
2017 | 8,080 | 8,140 | 8,150 | 8,420 | 8,420 | |||||||||||||||||
2016 | 7,830 | 7,880 | 7,930 | 8,040 | 8,040 | |||||||||||||||||
Vacation Ownership | ||||||||||||||||||||||
Provision for Loan Losses (in 000s) (c) | 2018 | $ | 92,000 | N/A | N/A | N/A | N/A | |||||||||||||||
2017 | $ | 85,000 | $ | 110,000 | $ | 123,000 | $ | 101,000 | $ | 420,000 | ||||||||||||
2016 | $ | 63,000 | $ | 90,000 | $ | 104,000 | $ | 86,000 | $ | 342,000 |
Note: Full year amounts may not add across due to rounding.
(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. |
Table 3
(2 of 2)
Wyndham Worldwide Corporation
OPERATING STATISTICS
GLOSSARY OF TERMS
Hotel Group
Number of Rooms: Represents the number of rooms at hotel group properties at the end of the period which are either (i) under franchise and/or management agreements, or company owned and (ii) properties under affiliation agreements for which the Company receives a fee for reservation and/or other services provided.
Average Occupancy Rate: Represents the percentage of available rooms occupied during the period.
Average Daily Rate (ADR): Represents the average rate charged for renting a lodging room for one day.
RevPAR: Represents revenue per available room and is calculated by multiplying average occupancy rate by ADR. Comparable RevPAR represents RevPAR of hotels which are included in both periods.
Destination Network
Average Number of Members: Represents members in the Company's vacation exchange programs who paid annual membership dues as of the end of the period or who are within the allowed grace period. For additional fees, such participants are entitled to exchange intervals for intervals at other properties affiliated with the Company's vacation exchange business. In addition, certain participants may exchange intervals for other leisure-related services and products.
Exchange Revenue Per Member: Represents total annualized revenues generated from fees associated with memberships, exchange transactions, member-related rentals and other servicing for the period divided by the average number of vacation exchange members during the period.
Vacation Ownership
Gross Vacation Ownership Interest Sales: Represents sales of vacation ownership interest (VOIs), including WAAM sales, before the net effect of percentage-of-completion accounting and loan loss provisions. 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. See Table 11 for a reconciliation of Gross VOI sales to vacation ownership interest sales.
Tours: Represents the number of tours taken by guests in the Company's efforts to sell VOIs.
Volume per Guest (VPG): Represents Gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) divided by the number of tours. The Company has excluded non-tour upgrade sales in the calculation of VPG because non-tour upgrade sales are generated by a different marketing channel. See Table 11 for a detail of tele-sales upgrades for 2016-2018.
General
Constant Currency: Represents a comparison eliminating the effects of foreign exchange rate fluctuations between periods (foreign currency translation).
Currency-Neutral: Represents a comparison eliminating the effects of foreign exchange rate fluctuations between periods (foreign currency translation) and the impact caused by any foreign exchange related activities (i.e., hedges, balance sheet remeasurements and/or adjustments).
Table 4
Wyndham Worldwide Corporation
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND RECONCILIATION OF FREE CASH FLOWS
(In millions)
(Unaudited)
Condensed Consolidated Statements of Cash Flows:
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Net cash provided by operating activities - Continuing Operations | $ | 1 | $ | 123 | ||||
Net cash provided by operating activities - Discontinued Operations | 132 | 115 | ||||||
Net cash provided by operating activities | 133 | 238 | ||||||
Net cash used in investing activities - Continuing Operations | (22 | ) | (30 | ) | ||||
Net cash (used in) provided by investing activities - Discontinued Operations | (8 | ) | 9 | |||||
Net cash used in investing activities | (30 | ) | (21 | ) | ||||
Net cash provided by (used in) financing activities - Continuing Operations | 75 | (114 | ) | |||||
Net cash used in financing activities - Discontinued Operations | (6 | ) | (9 | ) | ||||
Net cash provided by (used in) financing activities | 69 | (123 | ) | |||||
Effect of changes in exchange rates on cash and cash equivalents | 1 | 3 | ||||||
Net increase in cash and cash equivalents | $ | 173 | $ | 97 |
Free Cash Flow:
The Company defines free cash flow to be net cash provided by operating activities less property and equipment additions which the Company also refers to as capital expenditures. The Company believes free cash flow to be a useful operating performance measure to evaluate the ability of its operations to generate cash for uses other than capital expenditures and, after debt service and other obligations, its ability to grow its business through acquisitions, development advances and equity investments, as well as its ability to return cash to shareholders through dividends and share repurchases. A limitation of using free cash flow versus the GAAP measures of net cash provided by operating activities, net cash used in investing activities and net cash used in financing activities as a means for evaluating Wyndham Worldwide is that free cash flow does not represent the total cash movement for the period as detailed in the consolidated statement of cash flows.
The following table provides more details on the GAAP financial measure that is most directly comparable to the non-GAAP financial measure and the related reconciliation between these financial measures:
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Net cash provided by operating activities - Continuing Operations | $ | 1 | $ | 123 | ||||
Less: Property and equipment additions - Continuing Operations | (28 | ) | (28 | ) | ||||
Free cash flow - Continuing Operations | $ | (27 | ) | $ | 95 | |||
Net cash provided by operating activities - Discontinued Operations | $ | 132 | $ | 115 | ||||
Less: Property and equipment additions - Discontinued Operations | (6 | ) | (7 | ) | ||||
Free cash flow - Discontinued Operations | $ | 126 | $ | 108 | ||||
Total free cash flow | $ | 99 | $ | 203 |
Table 5
(1 of 2)
Wyndham Worldwide Corporation
REVENUE DETAIL BY REPORTABLE SEGMENT
(In millions)
2018 | ||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Year | ||||||||||||||||
Hotel Group | ||||||||||||||||||||
Royalties and Franchise Fees | $ | 84 | N/A | N/A | N/A | N/A | ||||||||||||||
Marketing, Reservation and Wyndham Rewards Revenues (a) | 83 | N/A | N/A | N/A | N/A | |||||||||||||||
Hotel Management Reimbursable Revenues (b) | 66 | N/A | N/A | N/A | N/A | |||||||||||||||
Intersegment Trademark Fees | 13 | N/A | N/A | N/A | N/A | |||||||||||||||
Owned Hotel Revenues | 23 | N/A | N/A | N/A | N/A | |||||||||||||||
Ancillary Revenues (c) | 33 | N/A | N/A | N/A | N/A | |||||||||||||||
Total Hotel Group | 302 | N/A | N/A | N/A | N/A | |||||||||||||||
Destination Network | ||||||||||||||||||||
Exchange Revenues | 188 | N/A | N/A | N/A | N/A | |||||||||||||||
Rental Revenues North America | 38 | N/A | N/A | N/A | N/A | |||||||||||||||
Ancillary Revenues (d) | 20 | N/A | N/A | N/A | N/A | |||||||||||||||
Total Destination Network | 246 | N/A | N/A | N/A | N/A | |||||||||||||||
Vacation Ownership | ||||||||||||||||||||
Vacation Ownership Interest Sales | 358 | N/A | N/A | N/A | N/A | |||||||||||||||
Consumer Financing | 118 | N/A | N/A | N/A | N/A | |||||||||||||||
Property Management Fees and Reimbursable Revenues | 164 | N/A | N/A | N/A | N/A | |||||||||||||||
WAAM Fee-for-Service Commissions | 10 | N/A | N/A | N/A | N/A | |||||||||||||||
Ancillary Revenues (e) | 11 | N/A | N/A | N/A | N/A | |||||||||||||||
Total Vacation Ownership | 661 | N/A | N/A | N/A | N/A | |||||||||||||||
Total Reportable Segments | $ | 1,209 | N/A | N/A | N/A | N/A |
2017 | ||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Year | ||||||||||||||||
Hotel Group | ||||||||||||||||||||
Royalties and Franchise Fees | $ | 78 | $ | 98 | $ | 110 | $ | 95 | $ | 380 | ||||||||||
Marketing, Reservation and Wyndham Rewards Revenues (a) | 77 | 96 | 109 | 89 | 371 | |||||||||||||||
Hotel Management Reimbursable Revenues (b) | 66 | 69 | 64 | 64 | 264 | |||||||||||||||
Intersegment Trademark Fees | 13 | 15 | 16 | 14 | 59 | |||||||||||||||
Owned Hotel Revenues | 23 | 21 | 16 | 18 | 78 | |||||||||||||||
Ancillary Revenues (c) | 32 | 32 | 32 | 32 | 128 | |||||||||||||||
Total Hotel Group | 289 | 331 | 347 | 312 | 1,280 | |||||||||||||||
Destination Network | ||||||||||||||||||||
Exchange Revenues | 187 | 165 | 163 | 156 | 671 | |||||||||||||||
Rental Revenues North America | 38 | 46 | 63 | 25 | 172 | |||||||||||||||
Ancillary Revenues (d) | 18 | 23 | 22 | 21 | 84 | |||||||||||||||
Total Destination Network | 243 | 234 | 248 | 202 | 927 | |||||||||||||||
Vacation Ownership | ||||||||||||||||||||
Vacation Ownership Interest 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 | |||||||||||||||
WAAM Fee-for-Service Commissions | 2 | 4 | 8 | 10 | 24 | |||||||||||||||
Ancillary Revenues (e) | 13 | 17 | 15 | 15 | 61 | |||||||||||||||
Total Vacation Ownership | 639 | 745 | 768 | 729 | 2,881 | |||||||||||||||
Total Reportable Segments | $ | 1,171 | $ | 1,310 | $ | 1,363 | $ | 1,243 | $ | 5,088 |
Table 5
(2 of 2)
Wyndham Worldwide Corporation
REVENUE DETAIL BY REPORTABLE SEGMENT
(In millions)
2016 | ||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Year | ||||||||||||||||
Hotel Group | ||||||||||||||||||||
Royalties and Franchise Fees | $ | 75 | $ | 94 | $ | 104 | $ | 95 | $ | 369 | ||||||||||
Marketing, Reservation and Wyndham Rewards Revenues (a) | 79 | 94 | 114 | 84 | 372 | |||||||||||||||
Hotel Management Reimbursable Revenues (b) | 67 | 71 | 67 | 65 | 271 | |||||||||||||||
Intersegment Trademark Fees | 13 | 15 | 16 | 14 | 56 | |||||||||||||||
Owned Hotel Revenues | 27 | 19 | 17 | 17 | 81 | |||||||||||||||
Ancillary Revenues (c) | 30 | 31 | 31 | 30 | 120 | |||||||||||||||
Total Hotel Group | 291 | 324 | 349 | 305 | 1,269 | |||||||||||||||
Destination Network | ||||||||||||||||||||
Exchange Revenues | 185 | 164 | 164 | 151 | 665 | |||||||||||||||
Rental Revenues North America | 39 | 44 | 62 | 25 | 169 | |||||||||||||||
Ancillary Revenues (d) | 19 | 23 | 21 | 20 | 82 | |||||||||||||||
Total Destination Network | 243 | 231 | 247 | 196 | 916 | |||||||||||||||
Vacation Ownership | ||||||||||||||||||||
Vacation Ownership Interest 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 | |||||||||||||||
WAAM Fee-for-Service Commissions | 17 | 16 | 13 | - | 46 | |||||||||||||||
Ancillary Revenues (e) | 16 | 18 | 16 | 14 | 64 | |||||||||||||||
Total Vacation Ownership | 634 | 700 | 740 | 700 | 2,774 | |||||||||||||||
Total Reportable Segments | $ | 1,168 | $ | 1,255 | $ | 1,336 | $ | 1,201 | $ | 4,959 |
Note: Full year amounts may not add across due to rounding.
(a) | Marketing and reservation revenues represent fees the Company receives from franchised and managed hotels that are to be expended for marketing purposes or the operation of a centralized reservation system. These fees are typically based on a percentage of the gross room revenues of each hotel. Wyndham Rewards revenues represent fees the Company receives relating to its loyalty program. |
(b) | Primarily represents payroll costs in the hotel management business that the Company pays on behalf of property owners and for which it is reimbursed by the property owners. |
(c) | Primarily includes additional services provided to franchisees and managed properties and fees related to the Company's co-branded credit card program. |
(d) | Primarily includes fees generated from programs with affiliated resorts and property owners. |
(e) | Primarily includes revenues associated with bonus points/credits that are provided as purchase incentives on VOI sales and fees generated from other non-core operations. |
Table 6
Wyndham Worldwide Corporation
BRAND SYSTEM DETAILS
As of and For the Three Months Ended March 31, 2018
Brand | Number of Properties | Number of Rooms | Average Occupancy Rate | Average Daily Rate (ADR) | Average Revenue Per Available Room (RevPAR) | |||||||||||||||
Hotel Group | ||||||||||||||||||||
Super 8 | 2,822 | 175,628 | 53.5 | % | $ | 44.72 | $ | 23.93 | ||||||||||||
Days Inn | 1,759 | 141,039 | 45.8 | % | $ | 66.75 | $ | 30.57 | ||||||||||||
Ramada | 847 | 118,788 | 50.9 | % | $ | 70.30 | $ | 35.78 | ||||||||||||
Wyndham | 266 | 58,411 | 56.2 | % | $ | 102.34 | $ | 57.49 | ||||||||||||
Howard Johnson | 347 | 41,784 | 46.6 | % | $ | 58.58 | $ | 27.32 | ||||||||||||
Baymont | 486 | 38,636 | 47.8 | % | $ | 69.08 | $ | 32.99 | ||||||||||||
Travelodge | 432 | 30,971 | 46.2 | % | $ | 68.57 | $ | 31.65 | ||||||||||||
Microtel Inns & Suites by Wyndham | 339 | 24,630 | 52.5 | % | $ | 69.32 | $ | 36.38 | ||||||||||||
Knights Inn | 351 | 21,204 | 43.3 | % | $ | 51.62 | $ | 22.35 | ||||||||||||
TRYP by Wyndham | 112 | 16,107 | 60.6 | % | $ | 85.09 | $ | 51.58 | ||||||||||||
Wingate by Wyndham | 154 | 14,078 | 55.7 | % | $ | 87.71 | $ | 48.82 | ||||||||||||
Trademark | 67 | 12,015 | 61.8 | % | $ | 99.95 | $ | 61.74 | ||||||||||||
AmericInn | 199 | 11,701 | 44.1 | % | $ | 89.75 | $ | 39.61 | ||||||||||||
Hawthorn Suites by Wyndham | 111 | 10,793 | 62.1 | % | $ | 83.66 | $ | 51.94 | ||||||||||||
Dolce | 21 | 4,976 | 47.6 | % | $ | 150.73 | $ | 71.78 | ||||||||||||
Dazzler | 13 | 1,621 | 72.4 | % | $ | 88.06 | $ | 63.75 | ||||||||||||
Esplendor | 10 | 608 | 70.7 | % | $ | 83.23 | $ | 58.83 | ||||||||||||
Total Hotel Group | 8,336 | 722,990 | 50.7 | % | $ | 66.94 | $ | 33.95 | ||||||||||||
Vacation Ownership | ||||||||||||||||||||
Wyndham Vacation Ownership resorts | 222 | 25,082 | N/A | N/A | N/A | |||||||||||||||
Total Wyndham Worldwide | 8,558 | 748,072 |
As of and For the Three Months Ended March 31, 2017
Brand | Number of Properties | Number of Rooms | Average Occupancy Rate | Average Daily Rate (ADR) | Average Revenue Per Available Room (RevPAR) | |||||||||||||||
Hotel Group | ||||||||||||||||||||
Super 8 | 2,839 | 179,268 | 52.7 | % | $ | 44.35 | $ | 23.39 | ||||||||||||
Days Inn | 1,786 | 142,872 | 45.2 | % | $ | 65.14 | $ | 29.44 | ||||||||||||
Ramada | 862 | 120,647 | 50.0 | % | $ | 69.58 | $ | 34.82 | ||||||||||||
Wyndham | 254 | 55,694 | 53.1 | % | $ | 101.23 | $ | 53.75 | ||||||||||||
Howard Johnson | 367 | 42,318 | 45.8 | % | $ | 57.08 | $ | 26.12 | ||||||||||||
Baymont | 437 | 34,519 | 46.1 | % | $ | 66.85 | $ | 30.79 | ||||||||||||
Travelodge | 406 | 29,725 | 43.4 | % | $ | 66.41 | $ | 28.85 | ||||||||||||
Microtel Inns & Suites by Wyndham | 336 | 24,226 | 52.1 | % | $ | 65.65 | $ | 34.21 | ||||||||||||
Knights Inn | 370 | 22,589 | 41.5 | % | $ | 48.78 | $ | 20.25 | ||||||||||||
TRYP by Wyndham | 115 | 16,223 | 58.0 | % | $ | 73.59 | $ | 42.67 | ||||||||||||
Wingate by Wyndham | 153 | 14,073 | 57.1 | % | $ | 85.49 | $ | 48.79 | ||||||||||||
Hawthorn Suites by Wyndham | 108 | 10,633 | 61.6 | % | $ | 82.74 | $ | 50.98 | ||||||||||||
Dolce | 21 | 4,747 | 46.8 | % | $ | 154.48 | $ | 72.36 | ||||||||||||
Dazzler | 12 | 1,525 | 63.4 | % | $ | 91.84 | $ | 58.25 | ||||||||||||
Esplendor | 10 | 698 | 66.1 | % | $ | 92.14 | $ | 60.90 | ||||||||||||
Total Hotel Group | 8,076 | 699,757 | 49.5 | % | $ | 64.04 | $ | 31.73 | ||||||||||||
Vacation Ownership | ||||||||||||||||||||
Wyndham Vacation Ownership resorts | 221 | 24,859 | N/A | N/A | N/A | |||||||||||||||
Total Wyndham Worldwide | 8,297 | 724,616 |
Note: A glossary of terms is included in Table 3 (2 of 2); RevPAR may not recalculate by multiplying average occupancy rate by ADR due to rounding.
Table 7
Wyndham Worldwide Corporation
NON-GAAP RECONCILIATION OF ADJUSTED NET INCOME AND EPS FROM CONTINUING OPERATIONS
(In millions, except per share data)
Location on Consolidated Statements of Income | Three Months Ended March 31, | |||||||||
2018 | 2017 | |||||||||
Diluted weighted average shares outstanding | 101 | 106 | ||||||||
Diluted EPS from continuing operations | $ | 0.80 | $ | 1.20 | ||||||
Income from continuing operations | $ | 81 | $ | 127 | ||||||
Adjustments: | ||||||||||
Separation-related costs (a) | Separation-related | 51 | - | |||||||
Acquisition and integration costs (b) | Operating | 7 | - | |||||||
Reversal of accrued contingency (c) | Operating | (5 | ) | - | ||||||
Restructuring costs (d) | Restructuring | - | 7 | |||||||
Impairment expense (e) | Impairment | - | 5 | |||||||
Total adjustments before tax | 53 | 12 | ||||||||
Income tax provision (benefit) (f) (g) | Provision for income taxes | - | (33 | ) | ||||||
Total adjustments after tax | 53 | (21 | ) | |||||||
Adjustments - EPS impact | 0.53 | (0.20 | ) | |||||||
Adjusted net income from continuing operations | $ | 134 | $ | 106 | ||||||
Adjusted diluted EPS from continuing operations | $ | 1.33 | $ | 1.01 |
Note: Amounts may not add due to rounding.
(a) | Represents costs associated with the Company’s planned separation into two separate publicly traded companies. |
(b) | Primarily relates to costs incurred in connection with the Company's planned acquisition of La Quinta Holdings. |
(c) | Represents the reversal of an accrued acquisition-related contingency associated with the Company's Rio Mar property. |
(d) | Relates to expenses associated with restructuring initiatives at the Company's corporate operations which focused on rationalizing its sourcing function and outsourcing certain information technology functions as well at its Hotel Group segment which primarily focused on realigning its brand operations. |
(e) | Represents a non-cash impairment charge related to the write-down of assets resulting from the decision to abandon a new product initiative at the Company’s vacation ownership business. |
(f) | The amount for 2018 relates to the tax effect of the adjustments amounting to $12 million offset by tax charges of $12 million resulting from certain internal restructuring actions associated with the planned divestiture of the Company's European vacation rentals business. |
(g) | The amount for 2017 relates to (i) the tax effect of the adjustments and (ii) a tax benefit on foreign currency losses recognized from an internal restructuring. |
The above 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 impact of such adjustments. In addition to GAAP financial measures, the Company provides adjusted net income and adjusted EPS financial measures to assist its investors in evaluating its ongoing operating performance for the current reporting period and, where provided, over different reporting periods, by adjusting for certain items which may be recurring or non-recurring and which in the Company's view do not necessarily reflect ongoing performance. The Company also internally uses these measures to assess its operating performance, both absolutely and in comparison to other companies, and in evaluating or making selected compensation decisions. These supplemental disclosures are in addition to GAAP reported measures. This non-GAAP reconciliation table should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP.
Table 8
(1 of 2)
Wyndham Worldwide Corporation
NON-GAAP RECONCILIATION OF ADJUSTED EBITDA BY REPORTABLE SEGMENT
(In millions)
Separation- | Reversal of | |||||||||||||||||||
related | Acquisition- | Accrued | Adjusted | |||||||||||||||||
EBITDA | Costs (b) | related (c) | Contingency (d) | EBITDA (e) | ||||||||||||||||
Three months ended March 31, 2018 | ||||||||||||||||||||
Hotel Group | $ | 83 | $ | 12 | $ | 7 | $ | (5 | ) | $ | 98 | |||||||||
Destination Network | 66 | 11 | - | - | 77 | |||||||||||||||
Vacation Ownership | 124 | 5 | - | - | 129 | |||||||||||||||
Total Reportable Segments | 273 | 28 | 7 | (5 | ) | 304 | ||||||||||||||
Corporate and Other (a) | (52 | ) | 23 | - | - | (30 | ) | |||||||||||||
Total Company | $ | 221 | $ | 51 | $ | 7 | $ | (5 | ) | $ | 274 |
Note: Amounts may not add down or across due to rounding.
(a) | Includes the elimination of transactions between segments. |
(b) | Represents costs associated with the Company’s planned separation into two separate publicly-traded companies. |
(c) | Primarily represents transaction costs related to the Company's planned acquisition of La Quinta Holdings' hotel franchising and hotel management business. |
(d) | Represents the reversal of an accrued acquisition-related contingency associated with the Company's Rio Mar property. |
(e) | Adjusted EBITDA for the first quarter of 2018 includes share-based compensation expense of $21 million. |
Table 8
(2 of 2)
Wyndham Worldwide Corporation
NON-GAAP RECONCILIATION OF ADJUSTED EBITDA BY REPORTABLE SEGMENT
(In millions)
Long-term | ||||||||||||||||||||||||||||||||
Separation- | Performance- | Acquisition | ||||||||||||||||||||||||||||||
Legacy | Restructuring | related | Impairment | vested | (Gain)/Loss, | Adjusted | ||||||||||||||||||||||||||
EBITDA | Benefit, net (b) | Costs (c) | Costs (d) | Expense (e) | Awards (f) | net (g) | EBITDA (h) | |||||||||||||||||||||||||
Three months ended March 31, 2017 | ||||||||||||||||||||||||||||||||
Hotel Group | $ | 83 | $ | - | $ | 1 | $ | - | $ | - | $ | - | $ | - | $ | 84 | ||||||||||||||||
Destination Network | 75 | - | - | - | - | - | - | 75 | ||||||||||||||||||||||||
Vacation Ownership | 117 | - | - | - | 5 | - | - | 122 | ||||||||||||||||||||||||
Total Reportable Segments | 275 | - | 1 | - | 5 | - | - | 281 | ||||||||||||||||||||||||
Corporate and Other (a) | (38 | ) | - | 6 | - | - | - | - | (32 | ) | ||||||||||||||||||||||
Total Company | $ | 237 | $ | - | $ | 7 | $ | - | $ | 5 | $ | - | $ | - | $ | 249 | ||||||||||||||||
Three months ended June 30, 2017 | ||||||||||||||||||||||||||||||||
Hotel Group | $ | 110 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 110 | ||||||||||||||||
Destination Network | 63 | - | - | - | - | - | - | 63 | ||||||||||||||||||||||||
Vacation Ownership | 47 | - | - | - | 135 | - | - | 182 | ||||||||||||||||||||||||
Total Reportable Segments | 220 | - | - | - | 135 | - | - | 355 | ||||||||||||||||||||||||
Corporate and Other (a) | (28 | ) | - | - | - | - | - | - | (28 | ) | ||||||||||||||||||||||
Total Company | $ | 192 | $ | - | $ | - | $ | - | $ | 135 | $ | - | $ | - | $ | 327 | ||||||||||||||||
Three months ended September 30, 2017 | ||||||||||||||||||||||||||||||||
Hotel Group | $ | 128 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 1 | $ | 129 | ||||||||||||||||
Destination Network | 83 | - | 8 | - | - | - | (12 | ) | 79 | |||||||||||||||||||||||
Vacation Ownership | 191 | - | - | - | - | - | - | 191 | ||||||||||||||||||||||||
Total Reportable Segments | 402 | - | 8 | - | - | - | (11 | ) | 399 | |||||||||||||||||||||||
Corporate and Other (a) | (39 | ) | (7 | ) | - | 21 | - | - | - | (25 | ) | |||||||||||||||||||||
Total Company | $ | 363 | $ | (7 | ) | $ | 8 | $ | 21 | $ | - | $ | - | $ | (11 | ) | $ | 373 | ||||||||||||||
Three months ended December 31, 2017 | ||||||||||||||||||||||||||||||||
Hotel Group | $ | 36 | $ | - | $ | - | $ | 3 | $ | 41 | $ | 1 | $ | 2 | $ | 83 | ||||||||||||||||
Destination Network | 35 | - | - | 8 | - | 1 | - | 44 | ||||||||||||||||||||||||
Vacation Ownership | 133 | - | - | 1 | 65 | 1 | - | 200 | ||||||||||||||||||||||||
Total Reportable Segments | 204 | - | - | 12 | 106 | 3 | 2 | 327 | ||||||||||||||||||||||||
Corporate and Other (a) | (53 | ) | - | - | 19 | - | 4 | - | (30 | ) | ||||||||||||||||||||||
Total Company | $ | 151 | $ | - | $ | - | $ | 31 | $ | 106 | $ | 7 | $ | 2 | $ | 297 | ||||||||||||||||
Twelve months ended December 31, 2017 | ||||||||||||||||||||||||||||||||
Hotel Group | $ | 357 | $ | - | $ | 1 | $ | 3 | $ | 41 | $ | 1 | $ | 3 | $ | 406 | ||||||||||||||||
Destination Network | 256 | - | 8 | 8 | - | 1 | (12 | ) | 261 | |||||||||||||||||||||||
Vacation Ownership | 489 | - | - | 1 | 205 | 1 | - | 696 | ||||||||||||||||||||||||
Total Reportable Segments | 1,102 | - | 9 | 12 | 246 | 3 | (9 | ) | 1,363 | |||||||||||||||||||||||
Corporate and Other (a) | (160 | ) | (6 | ) | 6 | 39 | - | 4 | - | (118 | ) | |||||||||||||||||||||
Total Company | $ | 942 | $ | (6 | ) | $ | 15 | $ | 51 | $ | 246 | $ | 7 | $ | (9 | ) | $ | 1,245 |
Note: Amounts may not add down or across due to rounding.
(a) | Includes the elimination of transactions between segments. |
(b) | Relates to a net benefit from adjustments to certain contingent liabilities from the Company's 2006 separation from Cendant. |
(c) | Relates to expenses associated with restructuring initiatives at the Company's (i) corporate operations which focused on rationalizing its sourcing function and outsourcing certain information technology functions, (ii) hotel group business which primarily focused on realigning its brand operations and (iii) destination network business which primarily focused on enhancing organizational efficiency and rationalizing its operations. |
(d) | Represents costs associated with the Company’s planned separation into two separate publicly-traded companies. |
(e) | Represents non-cash impairment charges related to (i) writedown of undeveloped VOI land resulting from the Company's decision to no longer pursue future development at certain locations, (ii) the writedown of a guarantee asset and note receivable related to a management agreement at the Company's hotel group business, (iii) the write-down of assets resulting from the decision to abandon a new product initiative at the Company's vacation ownership business, (iv) the writedown of certain management agreements at the Company's hotel group business and (v) the write-down of property and equipment and VOI inventory in Saint Thomas, U.S. Virgin Islands due to a reduction in its fair value resulting from the disruption of VOI sales caused by natural disasters impacting the Caribbean. |
(f) | Reflects the impact on the performance metrics of the performance-vested restricted stock unit grants resulting from the enactment of the Tax Cuts and Jobs Act. |
(g) | Represents (i) a gain recorded in connection with the acquisition of a controlling interest in Love Home Swap ($13 million) partially offset by $1 million of acquisition costs, (ii) $2 million of costs related to the Company's planned acquisition of La Quinta Holding's hotel franchising and hotel management business and (iii) $1 million of costs related to the AmericInn acquisition which closed in October 2017. |
(h) | Adjusted EBITDA for 2017 includes share-based compensation expense of $14 million in each of the first, second and third quarters, $13 million in the fourth quarter and $55 million for the full year. |
Table 9
Wyndham Worldwide Corporation
NON-GAAP FINANCIAL DATA FOR CONTINUING AND DISCONTINUED OPERATIONS
(In millions)
The following tables highlight selected financial data from continuing and discontinued operations:
Three Months Ended March 31, | ||||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||||
Continuing Operations | Discontinued Operations | Total | Continuing Operations | Discontinued Operations | Total | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Hotel Group | $ | 302 | $ | - | $ | 302 | $ | 289 | $ | - | $ | 289 | ||||||||||||
Destination Network | 246 | 107 | 353 | 243 | 79 | 322 | ||||||||||||||||||
Vacation Ownership | 661 | - | 661 | 639 | - | 639 | ||||||||||||||||||
Corporate and Other | (19 | ) | - | (19 | ) | (17 | ) | - | (17 | ) | ||||||||||||||
Total Revenues | $ | 1,190 | $ | 107 | $ | 1,297 | $ | 1,154 | $ | 79 | $ | 1,233 | ||||||||||||
Net Income/(Loss)* | $ | 81 | $ | (47 | ) | $ | 34 | $ | 127 | $ | (37 | ) | $ | 90 | ||||||||||
Diluted EPS | $ | 0.80 | $ | (0.47 | ) | $ | 0.33 | $ | 1.20 | $ | (0.35 | ) | $ | 0.85 | ||||||||||
Adjusted Net Income/(Loss)* | $ | 134 | $ | (36 | ) | $ | 98 | $ | 106 | $ | (37 | ) | $ | 69 | ||||||||||
Adjusted Diluted EPS | $ | 1.33 | $ | (0.36 | ) | $ | 0.97 | $ | 1.01 | $ | (0.35 | ) | $ | 0.66 | ||||||||||
Adjusted EBITDA: | ||||||||||||||||||||||||
Hotel Group | $ | 98 | $ | - | $ | 98 | $ | 84 | $ | - | $ | 84 | ||||||||||||
Destination Network (a) | 77 | (36 | ) | 41 | 75 | (37 | ) | 38 | ||||||||||||||||
Vacation Ownership | 129 | - | 129 | 122 | - | 122 | ||||||||||||||||||
Corporate and Other | (30 | ) | - | (30 | ) | (32 | ) | - | (32 | ) | ||||||||||||||
Total Adjusted EBITDA | $ | 274 | $ | (36 | ) | $ | 238 | $ | 249 | $ | (37 | ) | $ | 212 |
Note: Amounts may not add across due to rounding.
(*) | Includes non-controlling interests. |
(a) | Adjusted EBITDA from discontinued operations excludes costs previously allocated to the Company's European vacation rentals business of $8 million in 2017. |
Table 10
Wyndham Worldwide Corporation
NON-GAAP RECONCILIATION FOR DISCONTINUED OPERATIONS
ADJUSTED NET INCOME , DILUTED EPS AND ADJUSTED EBITDA FOR THE THREE ENDED MARCH 31, 2018 AND 2017
(In millions, except per share data)
Adjusted Net Loss and Adjusted Diluted EPS:
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Diluted weighted average shares outstanding | 101 | 106 | ||||||
Diluted EPS from discontinued operations | $ | (0.47 | ) | $ | (0.35 | ) | ||
Loss from discontinued operations, net of income taxes | $ | (47 | ) | $ | (37 | ) | ||
Adjustments: | ||||||||
Separation-related costs (a) | 11 | - | ||||||
Total adjustments before tax | 11 | - | ||||||
Income tax provision/(benefit) (b) | - | - | ||||||
Total adjustments after tax | 11 | - | ||||||
Adjusted loss from discontinued operations, net of income taxes | $ | (36 | ) | $ | (37 | ) | ||
Adjusted diluted EPS from discontinued operations | $ | (0.36 | ) | $ | (0.35 | ) |
Adjusted EBITDA:
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Loss from discontinued operations, net of income taxes | $ | (47 | ) | $ | (37 | ) | ||
Benefit from income taxes | (14 | ) | (9 | ) | ||||
Depreciation and amortization | 15 | 11 | ||||||
Interest expense | (1 | ) | (2 | ) | ||||
EBITDA from discontinued operations | (47 | ) | (37 | ) | ||||
Adjustments: | ||||||||
Separation-related costs (a) | 11 | - | ||||||
Total adjustments | 11 | - | ||||||
Adjusted EBITDA from discontinued operations | $ | (36 | ) | $ | (37 | ) |
Note: Amounts may not add due to rounding. All adjustments are reflected in loss from discontinued operations, net of income taxes.
(a) | Represents separation-related costs associated with the Company’s expected sale of its European vacation rentals business. | |
(b) | No tax benefit on costs associated with the Company’s European vacation rentals business. |
The above 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 impact of such adjustments. In addition to GAAP financial measures, the Company provides adjusted net income and adjusted EPS financial measures to assist its investors in evaluating its ongoing operating performance for the current reporting period and, where provided, over different reporting periods, by adjusting for certain items which may be recurring or non-recurring and which in the Company's view do not necessarily reflect ongoing performance. The Company also internally uses these measures to assess its operating performance, both absolutely and in comparison to other companies, and in evaluating or making selected compensation decisions. These supplemental disclosures are in addition to GAAP reported measures. This non-GAAP reconciliation table should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP.
Table 11
Wyndham Worldwide Corporation
NON-GAAP RECONCILIATION OF GROSS VOI SALES
(In millions)
The Company believes gross vacation ownership 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 vacation ownership interest sales (see Table 5):
Year | Q1 | Q2 | Q3 | Q4 | Full Year | |||||||||||||||
2018 | ||||||||||||||||||||
Gross VOI sales | $ | 465 | N/A | N/A | N/A | N/A | ||||||||||||||
Less: Sales under WAAM Fee-for-Service | (15 | ) | N/A | N/A | N/A | N/A | ||||||||||||||
Gross VOI sales, net of WAAM Fee-for-Service sales | 450 | N/A | N/A | N/A | N/A | |||||||||||||||
Less: Loan loss provision | (92 | ) | N/A | N/A | N/A | N/A | ||||||||||||||
Vacation ownership interest sales | $ | 358 | N/A | N/A | N/A | N/A | ||||||||||||||
2017 | ||||||||||||||||||||
Gross VOI sales | $ | 438 | $ | 562 | $ | 600 | $ | 538 | $ | 2,139 | ||||||||||
Less: Sales under WAAM Fee-for-Service | (3 | ) | (5 | ) | (11 | ) | (15 | ) | (35 | ) | ||||||||||
Gross VOI sales, net of WAAM Fee-for-Service sales | 435 | 556 | 589 | 523 | 2,104 | |||||||||||||||
Less: Loan loss provision | (85 | ) | (110 | ) | (123 | ) | (101 | ) | (420 | ) | ||||||||||
Vacation ownership interest sales | $ | 350 | $ | 446 | $ | 466 | $ | 422 | $ | 1,684 | ||||||||||
2016 | ||||||||||||||||||||
Gross VOI sales | $ | 427 | $ | 517 | $ | 563 | $ | 501 | $ | 2,007 | ||||||||||
Less: Sales under WAAM Fee-for-Service | (23 | ) | (20 | ) | (20 | ) | (1 | ) | (64 | ) | ||||||||||
Gross VOI sales, net of WAAM Fee-for-Service sales | 404 | 497 | 543 | 500 | 1,944 | |||||||||||||||
Less: Loan loss provision | (63 | ) | (90 | ) | (104 | ) | (86 | ) | (342 | ) | ||||||||||
Vacation ownership interest sales | $ | 341 | $ | 407 | $ | 439 | $ | 414 | $ | 1,601 |
Note: Amounts may not add due to rounding.
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):
Q1 | Q2 | Q3 | Q4 | Full Year | ||||||||||||||||
2018 | $ | 28 | N/A | N/A | N/A | N/A | ||||||||||||||
2017 | $ | 24 | $ | 20 | $ | 32 | $ | 26 | $ | 102 | ||||||||||
2016 | $ | 24 | $ | 23 | $ | 30 | $ | 29 | $ | 105 |
Table 12
Wyndham Worldwide Corporation
2018 Earnings and Driver Outlook
As of May 2, 2018
(In millions, except per share data)
• | Actuals and outlook have been restated and adjusted to reflect required changes in revenue recognition. |
• | Amounts exclude the Company's European vacation rentals business, which has been classified as a discontinued operation |
• | Amounts exclude the Company's planned acquisition of La Quinta's hotel franchising and hotel management business and the costs of financing such acquisition |
• | Amounts exclude costs associated with the Company's planned separation into two separate publicly traded companies |
• | Pro forma outlook for the two separate companies post-spin can be found on our website (http://investor.wyndhamworldwide.com) |
2018 Outlook | ||||||||||||||||
2017 Actual (a) | Low | High | ||||||||||||||
Full-Year (b) | ||||||||||||||||
Net Revenues | ||||||||||||||||
Hotel Group | $ | 1,280 | $ | 1,300 | (a) | $ | 1,340 | (a) | ||||||||
Destination Network | 927 | 935 | 965 | |||||||||||||
Vacation Ownership | 2,881 | 3,040 | 3,120 | |||||||||||||
Corporate and Other (c) | (84 | ) | (80 | ) | (90 | ) | ||||||||||
Total Revenues | $ | 5,004 | $ | 5,195 | (a) | $ | 5,335 | (a) | ||||||||
Adjusted EBITDA | ||||||||||||||||
Hotel Group | $ | 406 | $ | 445 | $ | 455 | ||||||||||
Destination Network | 261 | 265 | 275 | |||||||||||||
Vacation Ownership | 696 | 735 | 750 | |||||||||||||
Corporate and Other | (118 | ) | (115 | ) | (125 | ) | ||||||||||
Total Adjusted EBITDA | $ | 1,245 | $ | 1,330 | $ | 1,355 | ||||||||||
Depreciation and amortization | (213 | ) | (219 | ) | (224 | ) | ||||||||||
Interest expense, net | (150 | ) | (173 | ) | (177 | ) | ||||||||||
Tax rate | 36.2 | % | 25.2 | % | 24.8 | % | ||||||||||
Adjusted Net Income | $ | 562 | $ | 702 | $ | 717 | ||||||||||
Adjusted Diluted Earnings per Share | $ | 5.42 | $ | 6.96 | $ | 7.11 | ||||||||||
Diluted Shares | 103.7 | 100.8 | 100.8 | |||||||||||||
EBITDA Impact of 100bps Change (f) | ||||||||||||||||
Full-Year Drivers (a) (d) | ||||||||||||||||
Hotel Group | ||||||||||||||||
Global RevPAR (e) | 3 | % | 2 | % | 3 | % | $ | 4.0 | ||||||||
Number of Rooms (e) | 4 | % | 2 | % | 4 | % | 4.0 | |||||||||
Destination Network | ||||||||||||||||
Average Number of Members | (1 | )% | 1 | % | 3 | % | 4.5 | |||||||||
Exchange Revenue per Member | 3 | % | 1 | % | 3 | % | 7.0 | |||||||||
Vacation Ownership | ||||||||||||||||
Tours | 6 | % | 5 | % | 7 | % | 6.0 | |||||||||
Volume per Guest | 1 | % | 1 | % | 3 | % | 9.0 | |||||||||
Second Quarter (b) | ||||||||||||||||
Pro Forma Adjusted EBITDA | ||||||||||||||||
Wyndham Hotels & Resorts (g) | $ | 149 | $ | 150 | $ | 160 | ||||||||||
Wyndham Destinations (h) | 234 | 240 | 250 |
(a) | Restated to reflect the required change in revenue recognition accounting. |
(b) | Outlook is based upon March 31, 2018 foreign exchange rates. |
(c) | Primarily reflects elimination of intercompany fees included within the business segments. |
(d) | A glossary of terms is included in Table 3. |
(e) | Amounts exclude the Company's planned disposition of the Knights Inn brand. |
(f) | EBITDA sensitivities for revenue drivers are based on average systemwide trends. Operating circumstances including but not limited to brand mix, product mix, geographical concentration or market segment result in variability, which may change the impact. |
(g) | Represents Adjusted EBITDA before stock-based compensation expense and including the pro forma effect of separation adjustments, incremental costs to be incurred in connection with becoming a separate publicly traded company and our acquisition of La Quinta (including synergies). |
(h) | Represents Adjusted EBITDA before stock-based compensation expense and including the pro forma effect of separation adjustments and corporate costs to be incurred following the spin-off. |
Table 13
Wyndham Worldwide Corporation
SUMMARIZED BALANCE SHEET INFORMATION
(In millions)
At March 31, | ||||||||
2018 | 2017 | |||||||
Cash and cash equivalents (a) | $ | 291 | $ | 85 | ||||
Vacation ownership contract receivables, net | 2,876 | 2,758 | ||||||
Vacation ownership and other inventory | 1,225 | 1,357 | ||||||
Securitized vacation ownership debt | 1,977 | 2,138 | ||||||
Corporate debt (b) | 4,284 | 3,508 |
As of March 31, 2018, the available capacity under the Company's borrowing arrangements was as follows:
Securitized
Bank Conduit Facilities (c) | Revolving Credit Facilities | |||||||
Total capacity | $ | 1,400 | $ | 1,900 | ||||
Less: outstanding borrowings | 949 | 1,302 | ||||||
Commercial paper borrowings (d) | - | 136 | ||||||
Available capacity | $ | 451 | $ | 462 |
(a) | Excludes cash and cash equivalents of discontinued operations of $84 million and $137 million at March 31, 2018 and 2017, respectively. |
(b) | Corporate debt excludes capital leases of discontinued operations of $88 million and $67 million at March 31, 2018 and 2017, respectively. |
(c) | The capacity of these facilities is subject to the Company's ability to provide additional assets to collateralize additional securitized borrowings. |
(d) | The Company considers outstanding borrowings under its commercial paper programs to be a reduction of the available capacity of its revolving credit facilities. |