ORLANDO, FL—Wyndham Destinations Inc., a vacation ownership and exchange company, reported net vacation ownership interest (VOI) sales up 4% to $464 million; gross VOI sales climbed 3% to $582 million in the fourth quarter.
In addition, net income from continuing operations increased 46% to $155 million and adjusted net income from continuing operations increased 15% to $142 million, according to the earnings results.
Wyndham Destinations’ board of directors authorized an 11% increase in the quarterly dividend to $0.50 per share.
“In our first full year as a stand-alone public company, Wyndham Destinations delivered on our promise to provide value to shareholders through steady growth, strong margins and robust free cash flow,” said Michael D. Brown, president/CEO, Wyndham Destinations. “We are pleased with our fourth quarter and full-year results as adjusted EBITDA, gross VOI sales and tours each grew 4% in 2019.”
Brown added, “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.”
More highlights:
- 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
- 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
Vacation Ownership
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
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.
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.
