Wyndham Destinations, Inc. (NYSE: WYND) today reported fourth quarter and full-year 2019 financial results for the period ended December 31, 2019. Highlights include:

Net VOI sales increased 4% to $464 million; gross VOI sales increased 3% to $582 million in the fourth quarter
Fourth quarter GAAP diluted EPS from continuing operations increased 57% to $1.73
Adjusted diluted EPS from continuing operations in the fourth quarter increased 24% to $1.58
Net income from continuing operations increased 46% to $155 million and adjusted net income from continuing operations increased 15% to $142 million in the fourth quarter
Fourth quarter adjusted EBITDA increased 10% to $265 million ⁽¹⁾
Delivered full-year net cash provided by operating activities from continuing operations of $453 million (55% increase) and adjusted free cash flow from continuing operations of $617 million (6% increase)
Repurchased 7.6 million shares of common stock for $340 million in 2019
Full-year 2020 Adjusted EBITDA is projected to be between $1.03 billion and $1.05 billion
The Board of Directors authorized an 11% increase in the quarterly dividend to $0.50 per share

Michael D. Brown, president and CEO of Wyndham Destinations, noted, "In our first full year as a standalone public company, Wyndham Destinations delivered on our promise to provide value to shareholders through steady growth, strong margins and robust free cash flow. We are pleased with our fourth quarter and full-year results as adjusted EBITDA, gross VOI sales and tours each grew 4% in 2019."

"We delivered full-year adjusted free cash flow of $617 million, further demonstrating the strength in our underlying business model and our continued focus on the optimization of our balance sheet. Our business has steady momentum and we believe we're well-positioned for growth in 2020. As we begin the year, our priorities remain the same — delivering great vacations for our owners and members while providing strong returns for our shareholders."

Business Segment Results

Vacation Ownership

$ in millions

Q4 2019

Q4 2018

% change

FY 2019

FY 2018

% change

Revenue

$801

$765

$3,151

$3,016

$721

Adjusted EBITDA ⁽¹⁾

$222

$201

10%

$756

During the fourth quarter, Vacation Ownership revenue increased 5%, primarily due to a 3% increase in gross vacation ownership interest (VOI) sales to $582 million. Tours increased 9% year-over-year and Volume Per Guest (VPG) decreased 5%, due to a mix shift from increased new owner tours.

Adjusted EBITDA increased 10% to $222 million, due to revenue growth of 5%, lower product costs and lower general and administrative costs, offset by increased sales and marketing costs.

The provision for loan loss as a percentage of gross VOI sales, net of fee-for-service sales, was 18.6% for the fourth quarter of 2019, an improvement from 19.3% during the fourth quarter of 2018. For the full-year of 2019, the provision percentage was 20.6%, flat compared to 2018.

Vacation Exchange

$ in millions	Q4 2019	Q4 2018	% change	FY 2019	FY 2018	% change
Revenue	$181	$191	(5)%	$898	$918	(2)%
Adjusted EBITDA	$55	$50	10%	$289	$278	4%

During the fourth quarter, Vacation Exchange revenue decreased 5%, primarily due to the sale of North American vacation rentals, partially offset by the acquisition of Alliance Reservations Network (ARN). Excluding the impact of these two transactions, revenue increased 3%.

Adjusted EBITDA increased 10% to $55 million, driven by the sale of North American vacation rentals and the acquisition of ARN.

Balance Sheet and Liquidity

Net Debt — As of December 31, 2019, the Company's leverage ratio was 2.7x, compared to 2.8x as of December 31, 2018 and 2.9x as of September 30, 2019. The Company's target range remains at 2.25x to 3.0x. The Company had $3.0 billion of corporate debt outstanding, which excluded $2.5 billion of non-recourse debt related to its securitized notes receivable. Additionally, the Company had cash and cash equivalents of $355 million. Refer to Table 9 for definitions of net debt and leverage ratio.

Cash Flow — For the full-year 2019, net cash provided by operating activities from continuing operations was $453 million compared to $292 million in the prior year. The increase was driven by higher net income and a decrease in cash used for working capital. Adjusted free cash flow from continuing operations was $617 million in 2019 compared to $580 million in the prior year, with the increase driven primarily by the increase in net cash provided by operating activities.

Share Repurchases — During the fourth quarter of 2019, the Company repurchased 2.6 million shares of common stock for $125 million at a weighted average price of $47.36 per share. For the full-year 2019, Wyndham Destinations repurchased 7.6 million shares of common stock for $340 million at a weighted average price of $44.63 per share. As of December 31, 2019, the Company had $476 million remaining in its share repurchase authorization.

Dividend — The Company paid a cash dividend of $0.45 per share on December 30, 2019 to shareholders of record as of December 13, 2019. For the full-year 2019, Wyndham Destinations paid an aggregate $166 million in dividends to shareholders. Subsequent to the end of the fourth quarter, the Company's Board of Directors authorized an 11% increase in the quarterly cash dividend to $0.50 per share, beginning with the dividend that is expected to be declared in the first quarter of 2020.

Timeshare Receivables Financing — The Company closed a $300 million term securitization on October 23, 2019 with a weighted average coupon of 2.76% and an advance rate of 98%.

Senior Secured Notes — In December, the Company issued $350 million of senior secured notes with an interest rate of 4.625%. The notes will mature on March 1, 2030.

Other

North American Vacation Rentals — On October 22, 2019, the Company completed the sale of North American vacation rentals to Vacasa for $162 million. After customary closing adjustments, Wyndham Destinations received $156 million in cash and $10 million in Vacasa equity.

Outlook

The Company is providing its full-year 2020 guidance:

Net revenue of $4.04 billion to $4.14 billion
- Revenue guidance includes an expected increase of $160 million in fee-for-service sales. Adjusting for the impact of fee-for-service sales, the sale of North American vacation rentals and the acquisition of ARN, comparable revenue growth over 2019 is 5% to 7%
Adjusted EBITDA of $1.03 billion to $1.05 billion
Adjusted diluted EPS from continuing operations of $5.90 to $6.10, based on a diluted share count of 89.2 million, which assumes no future share repurchases after December 31, 2019
Adjusted free cash flow from continuing operations of $560 million to $580 million
Provision for loan loss as a percentage of gross VOI sales, net of fee-for-service sales, to be around 20%

Wyndham Destinations' outlook excludes any potential impact of the COVID-19 coronavirus and is based on foreign exchange rates as of December 31, 2019. This guidance is presented only on a non-GAAP basis because not all of the information necessary for a quantitative reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measure is available without unreasonable effort, primarily due to uncertainties relating to the occurrence or amount of these adjustments that may arise in the future. Please refer to Table 8 for further information.

Additional Information on North American Vacation Rentals and ARN

In October 2019, Wyndham Destinations sold North American vacation rentals and results of its operations will not be thereafter. Its contribution to 2019 is noted below.

	2019
(in millions)	Q1		Q2		Q3		Q4		Full Year
North American Vacation Rentals
Revenue	$	53	$	66	$	77	$	11	$	207
Adjusted EBITDA	$	(1)	$	4	$	12	$	(2)	$	13

In August 2019, Wyndham Destinations purchased ARN and the contribution is noted below.

	2019
(in millions)	Q1		Q2		Q3		Q4		Full Year
Alliance Reservations Network
Revenue	$	—	$	—	$	12	$	15	$	27
Adjusted EBITDA	$	—	$	—	$	1	$	1	$	2

For 2020, Wyndham Destinations expects ARN to contribute approximately $100 million of revenue and $10 million of adjusted EBITDA in the Vacation Exchange segment, spread evenly across all four quarters.

SOURCE Wyndham Destinations, Inc.

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Wyndham Destinations Results

Wyndham Destinations Reports Fourth Quarter and Full-Year 2019 Results