Wyndham Hotels & Resorts (NYSE: WH) has reported strong fourth-quarter results with record openings, retention, and system growth, along with a 9% increase in quarterly dividend. The company's system-wide rooms grew organically by 3.5% year-over-year, a record high, and it opened a record 66,000 organic rooms, representing a year-over-year increase of 3%. The global retention rate, including all terminations, improved by 30 basis points to a record 95.6%.
Geoff Ballotti, President and CEO of Wyndham Hotels & Resorts, commented on the results, stating, "We are tremendously proud to report fourth quarter results that demonstrate the continued success of our global strategy and our accelerating momentum. Despite the distraction, uncertainty, and misperceptions caused by choice and their slanted and constant communications to our franchisee base, room openings accelerated, and our global development pipeline grew by 10% to an all-time high of 240,000 rooms."
The company's full-year 2023 diluted earnings per share were $3.41 and net income was $289 million, with adjusted diluted EPS of $4.01, adjusted net income of $341 million, and adjusted EBITDA of $659 million. The company returned $515 million to shareholders for the full year through $397 million of share repurchases and quarterly cash dividends of $0.35 per share. The board of directors has also authorized a 9% increase in the quarterly cash dividend to $0.38 per share, beginning with the dividend expected to be declared in the first quarter of 2024.
Wyndham Hotels & Resorts' global system grew 3.5%, marking 12 consecutive quarters of organic growth, and reflecting 1% growth in the U.S. and 7% internationally. The company's global development pipeline consisted of over 1,950 hotels and approximately 240,000 rooms, representing another record-high level and a 10% year-over-year increase. The company's full-year 2024 outlook includes year-over-year rooms growth of 3-4% and year-over-year global RevPAR growth of 2-3%.
The company's full 8-K submission is available here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $1,868 | $1,430 | $950 | $1,565 | $1,498 | $1,267 |
| Revenue Growth | n/a | -23.45% | -33.57% | 64.74% | -4.28% | -15.42% |
| Operating Margins | 15% | 21% | -5% | 28% | 37% | 39% |
| Net Margins | 9% | 11% | -14% | 16% | 24% | 23% |
| Net Income (MM) | $162 | $157 | -$132 | $244 | $355 | $296 |
| Net Interest Expense (MM) | $60 | $100 | $112 | $93 | $80 | $92 |
| Depreciation & Amort. (MM) | $99 | $109 | $98 | $95 | $77 | $75 |
| Earnings Per Share | $1.62 | $1.62 | -$1.42 | $2.6 | $3.91 | $3.44 |
| EPS Growth | n/a | 0.0% | -187.65% | 283.1% | 50.38% | -12.02% |
| Diluted Shares (MM) | 99 | 95 | 93 | 94 | 91 | 84 |
| Free Cash Flow (MM) | $158 | $50 | $34 | $389 | $360 | $264 |
| Capital Expenditures (MM) | $73 | $50 | $33 | $37 | $39 | $39 |
| Current Ratio | 1.23 | 1.08 | 2.6 | 1.81 | 1.34 | 1.07 |
| Total Debt (MM) | $2,120 | $2,122 | $2,597 | $2,084 | $2,077 | $2,123 |
| Net Debt / EBITDA | 4.59 | 4.88 | 40.46 | 3.54 | 3.02 | 3.6 |
Wyndham Hotels & Resorts has strong operating margins with a positive growth rate, generally positive cash flows, and a strong EPS growth trend. However, the firm suffers from declining revenues and decreasing reinvestment in the business and a highly leveraged balance sheet. Finally, we note that Wyndham Hotels & Resorts has just enough current assets to cover current liabilities, as shown by its current ratio of 1.07.
