ORLANDO, Fla., July 20, 2020 /PRNewswire/ -- Wyndham
Destinations, Inc. (NYSE:WYND) (the "Company") announced today
that it has entered into an amendment (the "Credit Amendment") to
its $1.0 billion revolving credit
facility (the "Revolving Credit Facility"). The Company also
announced preliminary second quarter 2020 financial results and
updated its full year Adjusted Free cash flow outlook.
"We are pleased to deliver on our financial and operational
objectives in the second quarter and believe they reinforce the
resiliency of our business model. As expected, we were Adjusted
Free cash flow positive in the first half of the year and we
finished the quarter with 85% of our resorts open," said
Michael D. Brown, President and CEO
of Wyndham Destinations. "With the continued and likely extended
period of uncertainty with COVID-19, the amendment announced today
provides us with additional near-term flexibility to mitigate any
impact on the leisure travel industry. We are very thankful to our
valuable lending partners for their ongoing support and
partnership. Our liquidity position is strong and we are confident
that we will emerge stronger once leisure travel returns to
normal."
- The Credit Amendment establishes a covenant relief period and
modifies the existing quarterly-tested financial covenants from the
date of the Credit Amendment until the earlier of (i) April 1, 2022 and (ii) termination by the Company
of the relief period, subject to certain conditions. Among other
things, the Credit Amendment raises the first lien leverage-based
financial covenant by varying levels for each applicable fiscal
quarter during the relief period to provide the Company with
significant financial flexibility.
- Maintains the ability to pay current dividends and continue to
invest in its business throughout the covenant relief period. The
Company expects to recommend a third quarter dividend of
$0.30 per share for approval by the
Company's Board of Directors in August.
- The Company expects to report second quarter 2020 net loss from
continuing operations of $164 million
and Adjusted EBITDA(1) of $16
million.
- The Company expects to report second quarter 2020 Net cash
provided by operating activities from continuing operations of
$73 million and Adjusted Free cash
flow from continuing operations of $166
million.
- The Company is withdrawing its previous outlook for 2020 full
year Adjusted Free cash flow from continuing operations of
$100 million to $150 million and instead is targeting to be
Adjusted Free cash flow positive for the full year.
(1) This press release includes Adjusted EBITDA and Adjusted
Free cash flow from continuing operations, which are metrics that
are not calculated in accordance with Generally Accepted Accounting
Principles in the U.S. ("GAAP"). See "Presentation of Financial
Information" and the financial schedules for the definitions and
reconciliations of these non-GAAP measures in accordance with
GAAP.
Key Terms of the Credit Amendment:
- The first lien leverage-based financial covenant for the
Revolving Credit Facility will be increased by varying levels for
each applicable fiscal quarter during the covenant relief period,
in each case which represents an increase to the existing
leverage-based financial covenant of 4.25:1.00 (see below).
- The minimum interest coverage ratio will be 2.0x through the
end of the relief period.
- The Company has maintained the ability to pay the existing
level of dividends per share.
- Adds a minimum liquidity covenant of $250 million during the covenant relief
period.
- The minimum liquidity covenant will increase by $0.50 for every $1.00 of dividend distribution during the relief
period.
- The Company has the option to terminate the relief period at
its discretion (subject to certain conditions), at which time those
restrictions established by the Credit Amendment would be
lifted.
PJT Partners served as independent financial advisor to the
Company on its credit facility amendment.
First Lien Leveraged-Based Financial Covenant during Covenant
Relief Period
The minimum first lien leverage ratio for the Revolving Credit
Facility during covenant relief period or until early termination
thereof is as follows:
- Quarter ended September 30, 2020:
<6.50x
- Quarter ended December 31, 2020:
<7.50x
- Quarter ended March 31, 2021
through the quarter ended June 30,
2021: <7.50x (with annualization1)
- Quarter ended September 30, 2021:
<6.75x (with annualization1)
- Quarter ended December 31, 2021:
<6.00x
- Quarter ended March 31, 2022:
<5.25x
1 For the purposes of calculating the first lien
leverage ratio in certain specified quarters during the relief
period, the Company may, by providing the requisite notice to the
administrative agent and complying with other requirements set
forth in the amendment, elect to calculate the consolidated EBITDA
on an annualized basis for the applicable test period (see
8k for further details).
Preliminary Financial Data
The preliminary financial information included in this release
is subject to completion of the Company's quarter-end close
procedures and further financial review. These estimates are
preliminary, unaudited and are inherently uncertain. During the
course of the preparation of our condensed consolidated financial
statements and related notes, and completion of our financial close
and review procedures for the three and six months ended
June 30, 2020, adjustments to the
preliminary estimates may be identified, and such adjustments may
be material. In addition, other developments may arise between now
and the time the financial statements for the three and six months
ended June 30, 2020 are finalized.
These preliminary estimates should not be viewed as a substitute
for full interim financial statements prepared in accordance with
GAAP, and they should not be viewed as indicative of our results
for any future period. Actual results for the three and six months
ended June 30, 2020 and future
periods could differ materially from the estimates, trends and
expectations discussed below. Accordingly, you should not place
undue reliance on such estimates. The Company currently
expects to file its second quarter 2020 Form 10-Q on or about
July 30, 2020.
Preliminary Second Quarter 2020 Highlights:
The Company expects to report:
- Net revenues of $343 million
- Net loss from continuing operation of ($164) million
- Adjusted EBITDA of $16 million
(see table below for non-GAAP reconciliation)
-
- $15 million was timing
favorability of employee retention tax credits
- Net cash provided by operating activities from continuing
operations of $73 million
($130 million for the six months
ended June 30)
- Adjusted Free cash flow from continuing operations of
$166 million ($88 million for the six months ended June 30) (see table below for non-GAAP
reconciliation)
- Cash and cash equivalents at the end of June of $1.05 billion
Update to 2020 Outlook
The Company is withdrawing its previous outlook for 2020 full
year Adjusted Free cash flow from continuing operations of
$100 million to $150 million and instead is targeting to be
Adjusted Free cash flow positive for the full year. The Company's
previous guidance in early May was based on pre-opening
projections. The revised outlook is based on current trends
including the continued uncertainty around COVID-19 and related
impacts to travel. The Company's new guidance assumes a 60%
reduction in tour volumes in the second half of 2020 over the prior
year and reflects continued elevated level of vacation cancellation
activity. New booking activity is in line with prior year levels
but cancellations have remained elevated for longer than
anticipated and reflects consumer caution around travel in light of
the spread of COVID-19 in the U.S. The Company had previously
withdrawn its normal comprehensive outlook on March 25, 2020.
Presentation of Financial Information
Financial information discussed in this press release includes
non-GAAP financial measures, such as Adjusted EBITDA and Adjusted
Free cash flow, which include or exclude certain items. The Company
utilizes non-GAAP measures on a regular basis to assess performance
of its reportable segments and allocate resources. These
non-GAAP measures differ from reported GAAP results and are
intended to illustrate what management believes are relevant
period-over-period comparisons and are helpful to investors when
considered with GAAP measures as an additional tool for further
understanding and assessing the Company's ongoing operating
performance by adjusting for items which in our view do not
necessarily reflect ongoing performance. Management also internally
uses these measures to assess our operating performance, both
absolutely and in comparison to other companies, and in evaluating
or making selected compensation decisions. Exclusion of items in
the Company's non-GAAP presentation should not be considered an
inference that these items are unusual, infrequent or
non-recurring. Full reconciliations of non-GAAP financial measures
to the most directly comparable GAAP financial measures for the
reported periods appear in the financial schedules that
follow. See definitions set forth on the financial schedules
for an explanation of our non-GAAP measures.
Second Quarter 2020 Financial Results Conference Call
The Company will release second quarter 2020 financial results
on Thursday, July 30, 2020, before
market open, followed by a conference call at 8:00 a.m. ET. Michael D.
Brown, President and CEO, and Michael Hug, CFO, will discuss the Company's
financial performance and business outlook.
Participants may listen to a simultaneous webcast of the
conference call, which may be accessed through the Company's
website at investor.wyndhamdestinations.com, or by dialing
800-459-5346, passcode WYND, 10 minutes before the scheduled start
time. For those unable to listen to the live broadcast, an archive
of the webcast will be available on the Company's website for 90
days beginning at 12:00 p.m. ET on
July 30, 2020. Additionally, a
telephone replay will be available for four days beginning at
12:00 p.m. ET on July 30, 2020 at 800-839-5204.
The following condensed table reconciles Net (loss)/income from
continuing operations to Adjusted EBITDA for each of the periods
presented below:
(Loss)/income from
continuing operations to Adjusted EBITDA
(Unaudited)
|
|
|
|
|
Three Months
Ended June 30th
(Preliminary)
|
|
Three Months
Ended June 30th
(Actual)
|
(in
millions)
|
2020
|
|
2019
|
|
|
|
|
Net (loss)/income
from continuing operations
|
$
|
(164)
|
$
|
118
|
Separation and
related costs
|
—
|
|
22
|
Impairments &
Restructuring (a)
|
61
|
|
1
|
COVID-19 related
costs & other (b)
|
29
|
|
—
|
Taxes
(c)
|
(21)
|
|
(5)
|
Adjusted net
(loss)/income from continuing operations
|
(95)
|
|
135
|
Income taxes on
adjusted net income
|
32
|
|
49
|
Stock–based
compensation expense (d)
|
6
|
|
5
|
Depreciation
|
29
|
|
27
|
Interest
expense
|
46
|
|
40
|
Interest
income
|
(2)
|
|
(2)
|
Adjusted EBITDA
(e)
|
$
|
16
|
$
|
255
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) For the three months ended June 30,
2020, the preliminary estimated results include $22 million of restructuring and $24 million of impairment related to the
decisions to abandon the remaining portion of administrative
offices in New Jersey as well as
$14 million of impairment charges for
other assets.
(b) Includes primarily employee compensation related expenses as
a result of COVID-19.
(c) Amounts represent the estimated tax effect of the
adjustments.
(d) All stock based compensation is excluded from Adjusted
EBITDA.
(e) Adjusted EBITDA is a non-GAAP measure, defined by the
Company as net (loss)/income before depreciation and amortization,
interest expense (excluding consumer financing interest), early
extinguishment of debt, interest income (excluding consumer
financing revenues) and income taxes. Adjusted EBITDA also excludes
stock based compensation costs, separation and restructuring costs,
transaction costs, impairments, gains and losses on sale/
disposition of business, and items that meet the conditions of
unusual and/or infrequent. We believe that when considered with
GAAP measures, Adjusted EBITDA is useful to assist our investors in
evaluating our ongoing operating performance for the current
reporting period and, where provided, over different reporting
periods. We also internally use this measure to assess our
operating performance, both absolutely and in comparison to other
companies, and in evaluating or making selected compensation
decisions. Adjusted EBITDA should not be considered in isolation or
as a substitute for net (loss)/ income or other income statement
data prepared in accordance with GAAP and our presentation of
Adjusted EBITDA may not be comparable to similarly-titled measures
used by other companies.
The following table reconciles net cash provided by operating
activities to free cash flow from continuing operations and
Adjusted Free cash flow from continuing operations for each of the
periods presented below:
Adjusted Free cash
flow from Continuing Operations (Unaudited)
|
|
For the three
months ended
June 30, 2020
(Preliminary)
|
For the three
months ended
June 30, 2019
(Actual)
|
For the six
months ended
June 30, 2020
(Preliminary)
|
For the six
months ended
June 30, 2019
(Actual)
|
|
(in
millions)
|
Net cash provided by
operating activities from continuing operations
|
$73
|
$114
|
$130
|
$266
|
Property and
equipment additions
|
(18)
|
(30)
|
(39)
|
(50)
|
Sum of proceeds and
principal payments of non–recourse vacation ownership
debt
|
89
|
(83)
|
(33)
|
17
|
Free cash flow
from continuing operations (a)
|
$144
|
$1
|
$58
|
$233
|
Separation and other
adjustments (b)
|
21
|
49
|
30
|
$65
|
Adjusted Free cash
flow from continuing operations (c)
|
$166
|
$50
|
$88
|
$298
|
(a) Free cash flow from continuing operations (FCF) is a
non-GAAP measure, defined by the Company as net cash provided by
operating activities from continuing operations less property and
equipment additions (capital expenditures) plus the sum of proceeds
and principal payments of non-recourse vacation ownership debt. The
Company believes FCF 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
and equity investments, as well as its ability to return cash to
shareholders through dividends and share repurchases. A limitation
of using FCF versus the GAAP measures of net cash provided by
operating activities as a means for evaluating Wyndham Destinations
is that FCF does not represent the total cash movement for the
period as detailed in the consolidated statement of cash flows.
(b) Includes cash paid for separation related activities and
transaction costs for acquisitions and divestitures in 2019 and
certain COVID-19 related payments in 2020.
(c) Adjusted Free cash flow from continuing operations is a
non–GAAP measure, defined by the Company as net cash provided by
operating activities from continuing operations less property and
equipment additions (capital expenditures) plus the sum of proceeds
and principal payments of non–recourse vacation ownership debt,
while also adding back transaction costs for acquisitions and
divestitures, certain COVID-19 related payments in 2020 and
separation adjustments associated with the spin-off of the hotel
business ("Spin-off") Wyndham Hotels & Resorts, Inc.
About Wyndham Destinations
Wyndham Destinations, Inc. (NYSE:WYND) believes in putting the
world on vacation. As the world's largest vacation ownership and
exchange company, Wyndham Destinations offers everyday travelers
the opportunity to own or exchange their vacation experience while
enjoying the quality, flexibility and value that Wyndham delivers.
The Company's global presence in approximately 110 countries means
more vacation choices for its more than four million members and
owner families, with 230 resorts which offer a contemporary take on
the timeshare model - including vacation club brands Club Wyndham®,
WorldMark® by Wyndham, and Margaritaville Vacation Club® by Wyndham
- and 4,200+ affiliated resorts through RCI, the world's leader in
vacation exchange. Year after year, a worldwide team of more than
17,000 associates delivers exceptional vacation experiences to
families around the globe as they make memories to last a lifetime.
At Wyndham Destinations, our world is your destination. Learn more
at WyndhamDestinations.com.
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, conveying management's expectations as to the future based
on plans, estimates and projections at the time the Company makes
the statements. Forward-looking statements are any statements other
than statements of historical fact, including statements regarding
our expectations, beliefs, hopes, intentions or strategies
regarding the future. In some cases, forward-looking statements can
be identified by the use of words such as "may," "will," "expects,"
"should," "believes," "plans," "anticipates," "estimates,"
"predicts," "potential," "continue," "future" or other words of
similar meaning. 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. The forward-looking statements contained in this press
release include statements related to the Company's current views
and expectations with respect to its future performance and
operations (including the statements in the "Update to 2020
Outlook" section of this press release) and other anticipated
future events and expectations that are not historical
facts.
You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release. Factors that could cause actual results to differ
materially from those in the forward-looking statements include,
but are not limited to, the potential impact of the COVID-19
pandemic and our related contingency plans and cost and investment
reductions on our business, vacation ownership interest sales and
tour flow and liquidity, general economic conditions, the
performance of the financial and credit markets, access to
liquidity, capital and financing as a result of COVID-19 and the
terms and cost thereof, as well as the Company's credit rating, the
competition in and the economic environment for the timeshare
industry, the impact of war, terrorist activity, political strife,
severe weather events and other natural disasters, pandemics
(including the COVID-19 pandemic) or threats of pandemics,
operating risks associated with the vacation ownership and vacation
exchange businesses, uncertainties related to our ability to
realize the anticipated benefits of the Spin-Off or the divestiture
of our North American and European vacation rentals businesses or
the acquisition of Alliance Reservations Network ("ARN"),
unanticipated developments related to the impact of the Spin-off,
the divestiture of our North American and European vacation rentals
businesses, the acquisition of ARN and related transactions,
including any potential impact on our relationships with our
customers, suppliers, employees and others with whom we have
relationships, and possible disruption to our operations, our
ability to execute on our strategy, the timing and amount of future
dividends and share repurchases, if any, as well as those described
in the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission (the "SEC") on February 26, 2020, its Quarterly Report on Form
10-Q filed with the SEC on May 6,
2020 and subsequent periodic reports filed with the SEC. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
subsequent events or otherwise.
Web Resources:
Wyndham Destinations
Wyndham Destinations Investor Relations
Twitter: @WynDestinations
LinkedIn: @WyndhamDestinations
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